HomeMy WebLinkAboutMINUTES - 08122008 - SD.4 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA
TO: BOARD OF COMMISSIONERS
FROM: Joseph Villarreal, Executive Director
DATE: August 12, 2008
SUBJECT: 2008 Federal Administrative & Subsidy Funding Background & Update
SPECIFIC REQUEST(S) OR RECOMMENDATION(S) & BACKGROUND AND JUSTIFICATION
I. RECOMMENDED ACTION:
ACCEPT report providing background information-on the federal funding process for housing
authorities and an update on the status of calendar year 2008 funding for the public housing and housing
choice voucher programs.
II. FINANCIAL IMPACT:
None. Informational only.
III. REASONS FOR RECOMMENDATION/BACKGROUND
This report is intended to provide the Board of Commissioners with both an overview of the federal
process for funding the Authority's programs and an update on the current funding levels of the Authority's two
primary programs, housing choice vouchers (HCV) (a.k.a. Section 8) and public housing.
The Authority receives funding for the Section 8 and public housing programs from the U.S. Department
of Housing and Urban Development (HUD). As part of the overall federal budget, HUD's budget is appropriated
by Congress annually from October 1 through September 30. HUD, in turn, allocates funding to housing
authorities on a calendar year basis (January 1 — December 31).
A federal agency may not spend any money until it has been appropriated for a given purpose. Because
of this requirement, Congress must pass separate spending bills every year. If Congress fails to pass such a
bill, or the President fails to sign it into law, non-essential functions of the government will cease as agencies
are no longer allowed by law to spend money. In order to prevent the interruption of government services,
Congress will usually pass a continuing resolution. This authorizes government agencies to be funded at either
the current or a reduced level of funding until the resolution expires or an appropriations bill is passed. A
continuing resolution must be passed by both houses of Congress and signed into law by the President.
Continuing resolutions are generally passed for a two to three month period.
CONTINUED ON ATTACHMENT: X_YES SIGNATURE
oseph Villarreal,Executive Director
RECOMMENDATION OF EXECUTIVE, DIRECTOR RECOMMENDATION OF BOARD COMMITTEE
APPROVE OTHER
SIGNATURE(S):
ACTION OF BOARD ON APPROVED AS RECOMMENDED_��OR
VOTE OF COMMISSIONERS
I HEREBY CERTIFY THAT"PHIS IS A
UNANIMOUS (ABSENT ) "TRUE AND CORRECT COPY OF AN
AYES: NOES: ACTION TAKEN AND ENTERED ON THE
ABSENT: ABSTAIN: MINUTES OF THE BOARD OF
COMMISSIONERS ON THE DATE SHOWN.
A'T'TESTED
J04PH VILLARREAL, SECRETARY
O THE BOARD OF COMMISSIONERS
AND EXECUTIVE DIRECTOR
BY
Ii:UudyHayes\MSOI-f ICE\WINWORDU30ARD\130-Federal Funding Update for 2008.doc
Once a final budget has been approved, HUD (along with other federal agencies) receives its funding.
This funding is adjusted retroactively to reflect the approved budget minus the money that has already been
spent by the agency. Before HUD can allocate moneys directly to housing authorities, it must analyze the
approved appropriations bill and also develop funding policies and procedures in areas where it has discretion.
These additional processes can take several months to complete.
Funding for the Section 8 program is further complicated by the fact that HUD allocates moneys to
housing authorities on a quarterly basis and, depending on several variables, this funding can change from
quarter to quarter. The first variable is the amount of money that has been allocated to the program by
Congress. If the program is not fully funded, then allocations to housing authorities will be reduced. The
second variable is the local utilization rate. HUD will adjust an individual agency's funding up (to that agency's
maximum spending authority) and down based on how many vouchers it has under contract in previous
quarters. The third variable is the national utilization rate. HUD bases its budget request for the voucher
program to Congress on an anticipated national utilization rate. If that rate is higher than anticipated then HUD
will be forced to reduce funding to housing authorities.
President Bush signed H.R. 2764, the Consolidated Appropriations Act of 2008, on December 26, 2007.
H.R. 2764 provided funding for most federal programs, including HUD's. The delay in the current budget was
primarily due to a disagreement between Congress and the President on the level of overall (top-line) domestic
spending. The President wanted to reduce discretionary domestic spending levels from those approved by the
House and Senate. Ultimately, Congress agreed to reduce overall domestic spending in H.R. 2764 consistent
with the President's proposed top-line spending limits.
As a result of this compromise, several HUD programs were reduced compared to the funding levels
agreed to between the House and Senate. Further, the Section 8 portion of the omnibus bill added new
language that will reduce budget authority for agencies that have restricted reserves (used for housing
assistance payments) greater than 7% of their 2007 budget authority. This offset resulted in a credit to the
overall federal budget and an effective loss to the Section 8 program nationally of$723 million.
Although the President signed the Appropriations bill in December 2007 for this federal fiscal year,
housing authorities are just now being told their actual funding levels for the current calendar year.
Furthermore, HUD has only provided housing authorities with part of their funding levels. Final funding levels in
both programs will not be known for several months at the earliest.
CURRENT FUNDING LEVELS OF AUTHORITY'S HCV AND PUBLIC HOUSING PROGRAMS:
HCV Program:
At this time it does not appear.the Authority will be impacted by any funding shortfalls to.its housing
assistance payments (HAP) allocation. HAP is used to pay the Authority's portion of the rent. The Authority
had approximately 6.99% of its 2007 budget authority in reserves, so HUD has not decreased payments to the
Authority and forced the agency to use those dollars to pay for HAP. If the Authority's reserves increase (which
is likely), this may change in future quarters. As for the overall proration, if any, this will not be known until
approximately February of 2009 since HUD can not calculate this number until after the calendar year is
complete and the national utilization rate is known. At this time HUD has not indicated that it believes it will not
have enough money to fully fund housing authorities based on current utilization rates. In fact, housing
authorities received a slight increase in HAP in February 2008 because the utilization rate nationally in 2007
was slightly lower than HUD projected.
On the administrative funding side, the Authority will take a significant hit although the exact amount lost
for the year is not yet known. Through July 2008, HUD has provided housing authorities with administrative
funding at the amount provided in December 2007 under the 2007 appropriations act. On July 7, 2008 HUD
Headquarters notified all housing authorities administering the HCV program of their ongoing administrative
fees based on their utilization rates for January through March 2008. However, HUD has not yet made any
changes in financial distributions of ongoing administrative fees to housing authorities and has not indicated
when the revised funding will begin and how retroactive increases or decreases will be handled.
HUD's July 7 letter indicated that housing authorities across the nation will be funded at 90.876% of the
amount for which they are eligible. Without proration, the Authority was eligible to receive $1,735,361 in
administrative funding for this period. With the proration, the Authority will receive only $1,577,027 for the first
quarter, an annualized loss of $633',336. HUD has indicated that actual funding for the recently completed
quarter, April thru June 2008, will likely not be known until sometime in early September. Despite the severe
cuts, the Authority budgeted conservatively at $1,499,137 per quarter, or 86.387% of what we should receive
under HUD guidelines, so we will not be impacted further for the past quarter due to HUD's funding cuts. If
housing authorities across the country achieve higher utilization rates for the second through fourth quarters,
the Authority will lose even more funding to proration. If this occurs, this will have a negative impact on either
staffing or reserves, if not both.
s8admin
Public Housing:
The Public Housing Operating Fund provides subsidies to housing authorities to fund a portion of the
administrative, operational and maintenance expenses associated with the upkeep of their public housing units.
These costs are also paid for from tenant rents and reserves. HUD provides for significant rehabilitation or
reconstruction costs through a separate allocation, the Capital Fund.
As with the HCV program, HUD has not told housing authorities the exact funding amount that will be
provided for calendar year 2008. For the first two quarters of 2008, HUD obligated 84% of each agency's
operating fund eligibility. On June 18th, HUD notified housing authorities that this would be reduced
retroactively to 82% of eligibility due to increased subsidy eligibility of agencies nationally. For each of the past
four years housing authorities have received less than 90% of their required operating funding.
To compound the Authority's funding woes, we have only been funded by HUD at 77% of eligibility
(which annualizes to $4,776,524) thus far this calendar year. The Authority's budgeted amount is $5,241,419
which was estimated by projecting 84% of the received.2007 funding. This further shortfall is primarily due to
the absorption of the San Pablo Housing Authority by HACCC. Staff is working with HUD to correct this
problem. HUD has restored over $400,000 of funding that was erroneously held back. Regardless, this
ongoing and severe funding shortfall is creating a serious cash flow problem for the Authority.
HUD has stated that it will provide housing authorities with the final public housing proration rate in late
September 2008. Staff will provide the Board with an update after the final number is received.
IV. CONSEQUENCES OF NEGATIVE ACTION:
None. Informational only.
s8admin