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Home My WebLink About09 - CC-9 - Housing Authority Budget Amendment FY15- - 6/21/2016CITY COUNCIL/HOUSING AUTHOR/TY AGENDA REPORT MEETING DATE: June 21, 2016 ITEM NUMBER: CC -9 SUBJECT: FY 15-16 HOUSING AUTHORITY BUDGET AMENDMENT DATE: JUNE 6, 2016 FROM: FINANCE DEPARTMENT PRESENTATION BY: COLLEEN O'DONOGHUE, CPA ASSISTANT FINANCE DIRECTOR FOR FURTHER COLLEEN O'DONOGHUE, CPA INFORMATION ASSISTANT FINANCE DIRECTOR CONTACT: 714.754.5219 colleen.odonocihue(�costamesaca.gov RECOMMENDED ACTION: CITY COUNCIL and HOUSING AUTHORITY: Adopt Joint Resolution of City Council and Housing Authority relating to FY 15-16 Housing Authority Budget Amendment for the Housing and Community Development Department (HCD) relating to revenues and expenses for the James StAN.18th St. Properties. BACKGROUND On June 2, 2015 the City Council and Housing Authority approved the Housing Authority budget for Fiscal Year 2015-16. The Housing Authority budget was comprised of $95,500 for Housing Administration and $71,158 for Homeless Prevention/Rapid Rehousing for a total budget of $166,658. The Housing Authority operations were to be funded exclusively from 20% of the Department of Finance (DOF) reinstated City/Agency loan under Section 34191.4 and from the ground lease rent paid by Costa Mesa Family Village, residual receipts payments on certain affordable housing project loans, and other program income. During FY 15-16 the City and Housing Authority, through foreclosure proceedings and successful credit bids at trustee sales, acquired a total of 30 units in four affordable housing projects ("James St./W.18th St. Properties") from Civic Center Barrio Housing Corporation ("CCBHC"). The foreclosures occurred due to the defaults by CCBHC on the contracts, loans documents and 55 -year covenants/regulatory agreements between CCBHC and the City or Authority, respectively. Further, the foreclosures were necessary to prevent foreclosure by the first lien lenders, which thereby preserved existing affordable housing that, if not acquired by Costa Mesa, was at -risk of converting to market rate housing. All of the James St./W.18th St. Properties are now vested in fee with the Housing Authority as the entity expressly authorized under the law to own and operate affordable housing. The James St./W.18th St. Properties are being managed by Pro Active Realty Investments, a professional property management company; and, the project revenues, primarily tenants' rent, are being expended for ongoing repairs, capital improvements, unit inspections required by federal regulations, tenants' income certifications, property taxes, utilities, appraisals for financial statement disclosure purposes and property management fees and related property management and operations. ANALYSIS At the time the original Housing Authority FY 15-16 budget was approved on June 2, 2015, the Housing Authority had not yet acquired the James St./W.18th St. Properties, so the expenses were not appropriated for, nor revenues budgeted; however, all 30 units were acquired during current FY 15-16 so the revenues and expenses should be accounted for in the FY 15-16 budget, which is the requested action here. Staff anticipates that for FY 15- 16 ending June 30, 2016, the total revenues from the James St./W.18th St. Properties will be approximately $175,000. And, staff anticipates $100,000 in expenses will be have been, and will be, expended by June 30 that are directly related to these properties. The Housing Authority, as housing successor under the Dissolution Law (Parts 1.8 and 1.85, Division 24, Health and Safety Code, in particular sections 34176, 34176.1) manages all housing assets and maintains the accounts of the Low to Moderate Income Housing Asset Fund ("LMIHAF"). In addition to the annual expenses for administration and the prevention of homelessness and rapid rehousing program, all monies in the LMIHAF are required to be directed to "development" of affordable housing. The term "development" is defined in Section 34176.1 to include various activities, including: "new construction, acquisition and rehabilitation, substantial rehabilitation acquisition of long-term affordability covenants on multifamily units ..., or the preservation of an assisted housing development ...". The Housing Authority's actions to foreclose, acquire and to continue operation of the James St./W.18th St. Properties have occurred in preservation of, and will continue to preserve, this affordable housing that was previously assisted by the City and former Redevelopment Agency (now the Housing Authority as housing successor.) FISCAL IMPACT There will be no fiscal impact to the City's General Fund relating to this FY 15-16 Housing Authority Budget Amendment because the Housing Authority's revenues generated by the James St./W.18th Street Properties will fund 100% of the expenses. For FY 15-16, staff estimates the Housing Authority will receive $175,000 in revenues and incur $100,000 in expenses for these properties. Residual or other income, if any, generated by the James St./W.18th Street Properties will be reserved for future expenses. A recap of the Housing Authority's revenues and expenditures by programs are as follows: Revenues: Covenant Monitoring, Administration, Homeless Prevention/Rapid Rehousing $166,658 Housing Development & Preservation of Low Income Housing 175,000 TOTAL REVENUES $341,658 Expenditures: Covenant Monitoring, Administration, Homeless Prevention/Rapid Rehousing $166,658 Housing Development & Preservation of Low Income Housing 100,000 TOTAL EXPENDITURES $266,658 RESIDUAL $ 75,000 LEGAL IMPACT There is no adverse legal impact anticipated by the City Council and Housing Authority actions approving the FY 15-16 Housing Authority Budget Amendment. CONCLUSION Staff recommends the Council and Housing Authority adopt the attached joint Resolution approving the FY 15-16 Housing Authority Budget Amendment of $175,000 revenues and $100,000 of expenses, all relating to the James St./W.18th St. Properties during the period the Housing Authority continues its ownership, operation, and preservation of this affordable housing project. GARY ARMSTRONG, AICP Economic & Development Services Director/Deputy CEO WILLA BOUWENS-KILLEEN, AICP Zoning Administrator COLLEEN O'DONOGHUE, CPA Assistant Finance Director Attachments: Attachment "A" Joint City Council/Housing Authority Resolution Attachment "B" Housing Authority Budgeted Expenditures for FY 15-16 ATTACHMENT: A RESOLUTION NO. A JOINT RESOLUTION OF THE CITY COUNCIL OF THE CITY OF COSTA MESA AND THE COSTA MESA HOUSING AUTHORITY APPROVING THE FISCAL YEAR 15-16 HOUSING AUTHORITY BUDGET AMENDMENT FOR THE HOUSING AND COMMUNITY DEVELOPMENT DEPARTMENT (HCD) RELATING TO REVENUES AND EXPENSES FOR THE JAMES ST./W.18TH ST. PROPERTIES THE CITY COUNCIL OF THE CITY OF COSTA MESA AND THE COSTA MESA HOUSING AUTHORITY DO HEREBY RESOLVE AS FOLLOWS: WHEREAS, the City Council by Resolution adopted on January 17, 2012 declared the need for a housing authority to function in the City of Costa Mesa, established the "Costa Mesa Housing Authority" ("Housing Authority"), and declared that the members of the City Council are the Commissioners of the Housing Authority so formed all pursuant to the California Housing Authorities Law, commencing with Health & Safety Code Section 34200, et seq. ("HAL"); and WHEREAS, the City of Costa Mesa is a California municipal corporation and general law city ("City"); and WHEREAS, on June 2, 2015, the City Council and Housing Authority approved the Housing Authority's budget for Fiscal Year 15-16 ("FY 15-16"); and WHEREAS, the City and Housing Authority desire to amend the FY 15-16 Housing Authority budget due to the acquisition through foreclosure, and the continued ownership and operation of real properties and the 30 housing units of affordable housing thereon referred to as the "James St./W.18th St. Properties"; and WHEREAS, since acquisition by the Housing Authority, the James St./W.18th St. Properties have generated and will continue to generate income, primarily from tenants' rent, of approximately $175,000 ("Revenues") per fiscal year, and such income is being expended for ongoing repairs, capital improvements, unit inspections required by federal regulations, tenants' income certifications, property taxes, utilities, appraisals for financial statement disclosure purposes and property management fees and related property management and operations (together, "Expenses"); and WHEREAS, the Housing Authority's actions to foreclose, acquire and to continue operation of the James St./W.18th St. Properties have occurred in preservation of, and will continue to preserve, this affordable housing that was previously assisted by the City and former Redevelopment Agency (now the Housing Authority as housing successor); and WHEREAS, at the time the original Housing Authority FY 15-16 budget was approved on June 2, 2015, the Housing Authority had not yet acquired the subject James St./W.18th St. Properties, so the Revenues were not appropriated for, nor Expenses allocated to or accounted for, in that budget; however, all 30 units were acquired during current FY 15-16 so by this Resolution the City Council and Housing Authority desire to appropriate and account for the Revenues and Expenses in the FY 15-16 budget and approve this FY 15-16 Housing Authority Budget Amendment; and WHEREAS, the Chief Executive Officer of the City and Executive Director of the Housing Authority have directed preparation of this FY 15-16 Housing Authority Budget Amendment in compliance with Section 2-119 of the Costa Mesa Municipal Code; and WHEREAS, this FY 15-16 Housing Authority Budget Amendment confirms and accounts for the Revenues and Expenses relating to the James St./W.18th St. Properties, and is consistent with the plan of expenditures and the priorities of the Costa Mesa Housing Authority and the Housing and Community Development division of the Development Services Department of the City, in particular as to the functions, duties, and operations of the Housing Authority pursuant to the HAL and as to the affordable housing assets, functions, and duties created by dissolution of the former Costa Mesa Redevelopment Agency pursuant to the Dissolution Law, Parts 1.8 and 1.85, Division 24, of the California Health and Safety Code. NOW, THEREFORE, BE IT RESOLVED as follows: SECTION 1: The FY 15-16 Housing Authority Budget Amendment as prepared and submitted by the CEO/Executive Director is hereby approved and adopted as set forth in the agenda report presented with this joint Resolution. SECTION 2: The City Clerk and Housing Authority Secretary shall certify to the adoption of this Resolution. PASSED AND ADOPTED this 21St day of June 2016. CITY COUNCIL: Stephen M. Mensinger, Mayor ATTEST: Brenda Green, City Clerk COSTA MESA HOUSING AUTHORITY: Stephen M. Mensinger, Chair ATTEST: Brenda Green, Secretary APPROVED AS TO FORM: Thomas P. Duarte, City Attorney APPROVED AS TO FORM: Thomas P. Duarte, General Counsel STATE OF CALIFORNIA ) COUNTY OF ORANGE ) ss CITY OF COSTA MESA ) I, BRENDA GREEN, City Clerk of the City of Costa Mesa and Secretary of the Costa Mesa Housing Authority, DO HEREBY CERTIFY that the above and foregoing Resolution No. 16 --is the original joint resolution of the City Council and Housing Authority that was duly passed and adopted by the City Council of the City of Costa Mesa and the Costa Mesa Housing Authority at a regular meeting held on the 21St day of June 2016, by the following roll call vote, to wit: CITY COUNCIL: AYES: COUNCIL MEMBERS: NOES: COUNCIL MEMBERS: ABSENT: COUNCIL MEMBERS: Housing Authority: AYES: BOARD MEMBERS: ABSENT: BOARD MEMBERS: IN WITNESS WHEREOF, I have hereby set my hand and affixed the seal of the City of Costa Mesa this 2211 day of June 2016. BRENDA GREEN City Clerk and Housing Authority Secretary Attachment B HOUSING AUTHORITY BUDGETED EXPENDITURES FOR FY 15/16 F:\FINANCE\ADMINISTRATION\Agenda Items\2016\Jun 21\HA Budget Amendment Report\JUN21-Attach_B-HA_Budgeted_Expenditures Staff Time Repairs and Salaries Non Salaries Part Legal - Maintenance Utilities 515500, Consulting - Sworn - Time - Cafeteria - Medicare - Retirement - Program Program Program # 530300 525000 515700,515100 530200 501200 501300 505100 505200 505300 Total Covenent Monitoring: First Time Homebuyer 20625 5,000 - 5,000 Civic Center Barrio 20635 15,000 - - - - - 15,000 Habitat for Humanity 20630 5,000 - 5,000 St. John's Manor 20650 - 250 250 CM Family Village 20620 15,000 - 15,000 CM Village/SRO 20655 - 750 750 Loan Impairment Analysis 20600 10,000 10,000 Housing Authority -Mgmt Analyst 20600 - - 17,341 2,206 251 5,202 25,000 HA - General Administration 20600 12,000 - - - - - 12,000 Housing Audit 20600 - 7,500 - - - 7,500 52,000 18,500 17,341 - 2,206 251 5,202 95,500 Subtotal Housing Administration: Community Outreach Worker 20600 - - - 44,070 - - 14,458 58,528 Management Analyst 20600 9,249 3,381 12,630 - - - - 53,319 17,839 71,158 Subtotal Civic Center Barrio Properties: James St./W.18th Street 20635 30,000 25,000 20,000 25,000 - - 100,000 30,000 25,000 20,000 25,000 100,000 Total 266,658 TOTAL HOUSING AUTHORITY BUDGET F:\FINANCE\ADMINISTRATION\Agenda Items\2016\Jun 21\HA Budget Amendment Report\JUN21-Attach_B-HA_Budgeted_Expenditures