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Home My WebLink AboutMINUTES - 08081989 - 1.67 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA TO: BOARD OF COMMISSIONERS DATE: August 8, 1989 FROM: Perfecto Villarreal, Executive Director cc: SUBJECT: RECOMMENDATION TO INCREASE SECURITY DEPOSIT AMOUNT FOR NEW FAMILIES HOUSED IN THE PUBLIC HOUSING PROGRAM I. RECOMMENDED ACTION: ADOPT change in the security deposit policy for the Housing Authority of the County of Contra Costa public housing program by increasing the minimum security deposit to $200 or one month's Total Tenant Payment, whichever is greater; with revised security deposit policy applying only to new families housed in public housing effective September 1, 1989 and not the current residents of public housing or residents who transfer from one unit to another in the public housing program, and that the Housing Authority' s security deposit policy outlined in the Statement of Policy and Procedure Governing Admission to and Continued Occupancy of HUD Aided Low-Rent Housing Programs be revised to reflect this change in the security deposit policy, as recommended by the Advisory Housing Commission. II. FINANCIAL IMPACT: Following an in-depth analysis, the Housing Operations Department of the Housing Authority of the County of Contra Costa has determined that an increase in the security deposit amount would serve to reduce total Collection Loss Write-Off figures over a period of time, thus reducing financial losses and strengthening the incentive for residents to pay any rent or charges owed to the Housing Authority when moving out of public housing. III. REASONS FOR RECOMMENDATION/BACKGROUND: The Housing Authority manages 1140 public housing units in 14 housing developments. Each family housed in public housing must pay a security deposit prior to moving in to public housing. If any rent or charges are unpaid when a family moves out of public housing, the security deposit is used to offset a portion or all of the outstanding balance owed to the Housing Authority by a public housing resident. The current security deposit policy is as follows: At the time the dwelling lease is executed, each new family accepted as a tenant shall pay as a security deposit the greater of one month's Total CONTINUED ON ATTACHMENT: YES SIGNATURE: RECOMMENDATION OF EXECUTIVE DIRECTOR RECOMMENDATI N OF BOARD COMMITTEE APPROVE OTHER SIGNATURE(S) ACTION OF BOARD ONAub 8 1989 APPROVED AS RECOMMENDED OTHER VOTE OF COMMISSIONERS _4 UNANIMOUS (ABSENT ) I HEREBY CERTIFY THAT THIS A TRUE AND AYES: NOES: CORRECT COPY OF AN ACTION TAKEN AND ABSENT: ABSTAIN: ENTERED ON THE MINUTES OF THE BOARD OF COMMISSIONERS ON THE DATE SHOWN. CC: ATTESTED AUG 8 1989 Phil Batchelor, Clerk of the Board of Commissioners M382/7-e3 BY , DEPUTY I Board of Commissioners August 8, 1989 Page -2- Tenant Payment or $100. No increase in security deposit will be required for tenants in residence or in the event of transfer. After termination of the dwelling lease, the security deposit will be returned to the tenants, without interest, provided all charges properly deductible from said deposit have been paid. The Housing Operations Department has completed an in-depth analysis of the impact the change of security deposit will have on the Collection Loss Write-Off and on prospective tenants and recommends that the security deposit be changed by increasing the minimum security deposit to $200 or one month's Total Tenant Payment, whichever is greater. This policy change would only apply to new families housed in public housing effective September 1, 1989. It would not be applied to families who currently live in public housing or who transfer from one unit to another unit in the public housing program. The last increase in the security deposit amount was in 1982. Since April , 1982 the average rent has increased from $116.80 per month to $196.20 per month in May of 1989. This is an increase of $79.40 per month. The analysis done by the Housing Operations Department indicates an increase in the security deposit amount would serve to reduce the Collection Loss Write-Offs over a period of time. This would help to reduce financial losses and strengthen the incentive for residents to pay any rent or charges which are owed to the Housing Authority when a resident moves out of public housing. To avoid any financial hardship to new residents, the Housing Authority would continue the practice of permitting new residents, on a case by case review basis, to pay their security deposits in monthly installments, as approved by a housing manager. In addition, there are now various agencies which help low-income families to pay their security deposits, enabling them to move into affordable rental housing. IV. CONSEQUENCES OF NEGATIVE ACTION: Should the Board of Commissioner elect to not adopt the increase of the security deposit to $200 or one month' s Total Tenant Payment, whichever is greater, applicable to new families housed in public housing effective September 1, 1989; over a period of time, there could be significant impact on the Collection Loss Write-Off. HOUSING AUTHORITY OF THE COUNTY OF CONTA' COSTA INTER-OFFICE MEMORANDUM TO: Perfecto Villarreal DATE: 6-26-89 Exe tive Director FROM: usan / I� w u cc: R. Martinez Housing Management Officer L. Lambert RE: Security Deposit Analysis Recently we discussed what impact a minimum security deposit of $200 or one month' s gross contribution, whichever is greater, would have on Collection Loss Write-Offs and tenants. The following is a breakdown of security deposits currently held in our public housing program; in the last column I have included units removed from the rent roll for CIAP, CAL 11-5 Senior Center and guard unit, and all vacant units . Project Total S/D S/D S/D at S/D Vacants, Number Units $200+ $199-101 $100 $99-0 CIAP,etc. CAL 11-1 52 9 18 1 24 0 CAL 11-2 86 15 43 1 26 1 CAL 11-3 36 8 12 1 14 1 CAL 11-4 44 10 7 2 25 0 CAL 11-5 176 17 57 5 50 47 CAL 11-6 76 20 31 0 18 7 CAL 11-8 30 11 10 0 8 1 CAL 11-9A 90 17 14 0 53 6 CAL 11-9B 60 15 12 0 26 7 CAL 11-10 250 48 84 7 104 7 CAL 11-11 50 5 22 3 19 1 CAL 11-12 40 7 12 2 16 3 CAL 11-13 50 7 19 4 119 1 CAL 11-15 100 22 26 9 39 4 TOTALS 1140 211 367 35 441 86 (19%) ( 32%) ( 3%) ( 39%) ( 7%) INTER-OFFICE MEMORANDUM P. Villarreal 6-23-89 page 2 Other Data and Observations: The average security deposit in the $200+ range is $274. The average security deposit in the $199-101 range is $157. If the minimum security deposit had been set at $200 in 1982, the 402 tenants in the $199-101 and $100 ranges would have $200 deposits on the books at an average increase of $71 per tenant. This $71 average increase would conceivably mean an additional $28,542 in deposits accuring interest. A minimum security deposit of $200 is a bargain when compared to the private sector and does not have to be a hardship for moderate and low-income families because the PHA can prorate payments over a three month period ( longer if the circumstances warrant) . What Impact On Quarterly Collection Loss Write-Off? Using the Collection Loss Write-Offs for the quarter ending March 31, 1989, the following impact would have been made if each tenant had an additional $71 in security deposit: Of the 23 accounts written-off, 5 would have been eliminated and 4 greatly reduced. The 10 largest write-off requests were evictions that took months to process. The $71 increase in security deposit would have little impact on them individually but as a group it would mean $710 less for the agency to write-off. The total amount of the Write-Off request for the quarter would have been reduced from $10,803.68 to $9, 555.29; a difference of $1, 248.39. Recommendation: Itis my recommendation that the minimum security deposit be increased to $200 or one month's gross contribution, whichever is greater. There are two main reasons why I feel this increase is viable. First, our agency' s flexibility in arranging payments on security deposits reduces the financial burden at move-in. And, second, there is assistance available from other agencies in paying security deposits (Social Services, Shelter, Inc. , Housing Alliance, and United Council of Spanish Speaking Organizations) .