"Which of Florida's four DSC tests applies to this deal's specific debt stack — and did the pro forma pick the version that's actually achievable?"
Debt service coverage branches by financing type, not one flat number
| Financing type | Minimum DSC |
|---|---|
| Competitive 9% HC alone (no debt) | Breakeven required if no first mortgage; an approved Operating Deficit Reserve can count as income for this test |
| 9% HC with a first/second mortgage | 1.10x combined, on all superior mortgages |
| Paired SAIL/HOME loan | 1.10x, reducible to 1.00x if ≥35% of Developer Fee is deferred past cost certification with cash flow as primary repayment source; 1.50x max (waivable higher) |
| 9% HC gap-sizing test (minimum qualifying first mortgage) | 15-year pro forma at 1.25x DSC (2%/yr revenue cap / 3%/yr expense floor), or the greater of 1.50x DSC / $1,500-per-unit year-1 cash flow |
| 4%/bond operating deficit guarantee release | 1.15x DSC, plus 90% occupancy and 90% gross potential rental income, sustained 12 consecutive months |
Vacancy follows the same branching pattern: there is no single fixed vacancy percentage. A 7% floor applies specifically inside the 15-year gap-sizing test's vacancy-and-collection-loss factor; separately, the Credit Underwriter needs the submarket to show ≥92% average physical occupancy (≤8% vacancy) before issuing a favorable market-feasibility recommendation at all, and a 4%/bond deal additionally needs ≥90% occupancy sustained for 12 months to release its operating deficit guarantee.
Reserves, developer fee, and escalation are rule-set
The only state-mandated escalation figures found are inside the 15-year gap-sizing test itself: annual revenue growth capped at the lesser of 2% or the actual underwritten rate, and annual expense growth floored at the greater of 3% or the actual underwritten rate. Outside that specific test, escalation assumptions are whatever the Credit Underwriter accepts as market-supported — there is no blanket statewide trend rate.
Income limits and AMI mix are federal, with a real geographic Florida layer
Florida sets no blanket average-AMI ceiling beyond the federal minimum set-aside election (20% at ≤50% AMI, 40% at ≤60% AMI, or the Average Income Test). Deeper commitments — Extremely Low Income set-asides, Link units for Persons with Special Needs — are elected voluntarily per RFA and then become binding LURA/Extended Use Agreement obligations. Two separate ELI mechanics are easy to conflate: the ELI Set-Aside itself is a flat share of units (10%/15%/30%, depending on Applicant/demographic type), while the ELI AMI Level — the income percentage that actually defines "extremely low income" for a given deal — is published per county and does vary geographically, running from 30% in Monroe County (the Keys) up to 40% in most Small/Medium counties and in Polk among the large counties (Duval sits at 35%, not the top tier) — a real, geography-driven amplifier on deal economics that a screen built from a single statewide percentage would miss. This session did not independently verify whether FHFC publishes a Florida-specific utility allowance schedule beyond the standard federal options (HUD Utility Schedule Model, local PHA schedule, or an energy consumption model) — treat any Florida-specific utility allowance number as unconfirmed until checked directly.
Where this goes wrong
- Applying a single flat DSC number to every Florida deal — the actual minimum branches by financing type, and even the SAIL/HOME test drops from 1.10x to 1.00x only under a specific 35%-deferred-fee condition.
- Using the 7% vacancy floor from the gap-sizing test as the market-feasibility bar — the Credit Underwriter's favorable market-feasibility finding requires ≥92% average submarket occupancy, a materially tighter standard.
- Applying the 16% developer fee cap to a 4%/bond new-construction deal — that program's cap is 18%, with different tiered sub-caps for rehab/preservation entirely.
- Using $1,000/unit for the gap-sizing test's year-1 cash-flow alternative — that figure was superseded by a rule amendment effective 7/10/2025; the current figure is $1,500/unit.
- Confusing the ELI Set-Aside (a flat 10%/15%/30% share of units, by applicant/demographic type) with the ELI AMI Level (the county-specific income percentage that defines "extremely low income" there) — they are two different mechanics, and the AMI-level figures vary by county.
- Distributing the >16% developer fee premium (Homeless/Special-Needs deals) as cash — the excess up to 21% must go into a Corporation-held operating subsidy reserve account, not be paid out as fee.
- Assuming reserves are drawable immediately — new construction/redevelopment reserves can't be drawn for 5 years (or until a 5-year accumulated balance exists); rehab/preservation reserves can't be drawn before year 3.
- Modeling long-term reserve draws without the required Capital Needs Assessment cadence — due by year 10, again by year 15, then every 5 years after first building placed in service.
- Assuming a Florida-specific utility allowance schedule exists beyond the standard federal options — not independently verified this session.
- HUD
- LIHTC
- State QAPs
- IRS § 42
- Housing Finance Agencies