** The Florida Affordable Housing Guarantee Program suspended the issuance of additional guarantee commitments, effective March 13, 2009. **
The Florida Affordable Housing Guarantee Program was created in 1992 by the Florida Legislature to overcome the lack of available credit enhancement for the production of affordable housing in the State of Florida. The Guarantee Program, governed by Chapter 67-39, Florida Administrative Code, worked in concert with federal, state and local government financing sources, as well as other qualified lending institutions, to effectively lower the overall cost of borrowing capital for the construction and rehabilitation of affordable multifamily rental housing.
These cost savings are achieved by the Guarantee Program guaranteeing the payment of mortgages that secure multifamily mortgage revenue bonds. When combined with bond insurance, Guarantee Program-enhanced securities typically received a “AAA” rating, thus lowering the overall cost of borrowing. This reduction in financing costs ultimately allowed for a reduction in rents to individuals earning incomes totaling no more than sixty percent of the area median income. While this financing structure minimized the credit deficiencies inherent in financing affordable rental housing, it also created security mechanisms that enabled the sale of loans within the secondary marketplace.
No new commitments occurred after June 2005 due to increased availability of credit enhancement in the private sector and an industry shift toward variable-rate financing which resulted in cheaper debt service costs.
As a result of adverse market conditions, Florida Housing suspended the issuance of additional guarantees and is reducing the portfolio of the Guarantee Program with the intent to ultimately eliminate all risk.