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HomeMy WebLinkAboutMINUTES - 07102012 - HA C.08RECOMMENDATIONS ACCEPT a report on the status of the U.S. Department of Housing and Urban Development’s (HUD) Public Housing Agency Recovery and Sustainability (PHARS) Team’s On-Site Assessment of the Authority. BACKGROUND HUD annually evaluates a public housing authority’s (PHA) management of its public housing program using four tools, referred to collectively as the Public Housing Assessment System (PHAS). The four indicators that comprise PHAS are physical condition, financial condition, management operations, and resident service and satisfaction. Each indicator is evaluated and scored separately. Physical condition, financial condition, and management operations are worth 30 points each, and resident service and satisfaction is worth 10 points for an overall score of 100 points. A PHA that receives a score of less than 60% overall, or in one area, is designated as troubled. A PHA that is designated as troubled must enter into a Memorandum of Agreement with HUD for the purpose of improving the agency’s score to 60% or above. The Housing Authority of the County of Contra Costa (HACCC) received Action of Board On: 07/10/2012 APPROVED AS RECOMMENDED OTHER Clerks Notes: VOTE OF COMMISSIONERS AYE:John Gioia, District I Commissioner Candace Andersen, District II Commissioner Mary N. Piepho, District III Commissioner Karen Mitchoff, District IV Commissioner Federal D. Glover, District V Commissioner Geneva Green, Tenant Seat Commissioner Contact: 925-957-8028 I hereby certify that this is a true and correct copy of an action taken and entered on the minutes of the Board of Supervisors on the date shown. ATTESTED: July 10, 2012 Joseph Villarreal, Executive Director By: June McHuen, Deputy cc: C. 8 To:Contra Costa County Housing Authority Board of Commissioners From:Joseph Villarreal, Executive Director Date:July 10, 2012 Contra Costa County Subject:PHARS Update 7-10-12 BACKGROUND (CONT'D) a PHAS score of 76 for Fiscal Year 2009-2010. Normally, this score would qualify HACCC as a standard performer. However, HACCC failed two components of the financial condition indicator. Specifically, HACCC did not receive any points for “Tenant Receivable Outstanding” and “Net Income or Loss”. HACCC’s financially troubled rating resulted from the loss of points in these two components. The “Tenant Receivable Outstanding” component of the financial condition indicator measures HACCC’s rent collection ability. HACCC scored poorly in this Indicator in part due to a glitch in a computer conversion that duplicated data in the system. This inflated the number of tenants that appeared to owe HACCC money and made it difficult to completely erase debts that had been written off. HACCC also scored poorly in this Indicator due to past rent collection practices that were not as aggressive as they should have been. The amount of outstanding rent has been cut by more than half and improvements continue to be made in this area. The “Net Income or Loss” component of the financial condition indicator measures how the results of the operations affect the PHA’s viability. It compares a PHA’s adjusted net income to the net available (unrestricted) current resources. It indicates whether the housing authority is adequately managing its income and expenses to maintain a balanced budget. It includes not only public housing data, but also data for the voucher program and an additional variety of smaller programs operated by PHAs. HACCC failed this Indicator primarily due to a shortfall in voucher funding in fiscal year end 2010. Voucher funding is the single largest component of the rating formula. HUD has come under increasing pressure from Congress to reduce costs in the public housing and voucher programs. HUD’s programs are often not fully funded by Congress and thus HUD must pro-rate the program funding provided to housing authorities. In order to minimize funding pro-rations in any given year, or to respond to Congressional requests to free up more money, HUD has limited the amount of reserves held by housing authorities. Such was the case in fiscal year 2009-2010 when HUD limited amount of voucher reserves a PHA could hold to 7% of that agency’s annual voucher subsidy costs (a reserve level of less than one month). If a PHA had more than that amount in reserve, HUD decreased its funding, which forced the agency to spend reserves to fund the program. HACCC began fiscal year 2009-2010 with reserves of $13.6 million, an amount that was over the 7% threshold. As a result, HUD did not fully fund HACCC’s voucher subsidy, forcing HACCC to spend approximately $11.5 million from reserves to fund rent subsidies. This had the dual affect of radically decreasing HACCC’s net income for the year and reducing voucher reserves to $2.1 million. Due to HACCC’s financially troubled rating, HUD assigned a Public Housing Agency Recovery and Sustainability (PHARS) team to identify the causes of HACCC's substandard financial performance, and to work with HACCC to develop a Recovery Action Plan designed to move HACCC from a troubled status to a sustainably good or high performer status. The PHARS team conducted an assessment of HACCC’s financial condition, governance and management practices between September 7, 2011 and December 1, 2011 and issued a letter on February 15, 2012 conveying the results of the assessment. As required by HUD, HACCC and the PHARS Team are currently working on a draft Recovery Action Plan which will list the tasks designed to improve HACCC’s financial position and the target dates by which the tasks will be completed. Staff submitted a first draft of the Recovery Action Plan to HUD on March 16, 2012. The PHARS Team is currently reviewing the draft plan and has indicated to staff that they expect to provide a revised draft to HACCC by early August. After HUD's draft is received, HACCC will work with HUD to create a final version. Once the draft Recovery Action Plan is finalized, HACCC and HUD will execute the Recovery Action Plan and a Recovery Agreement. Staff continue to move forward on improving HACCC’s standing with HUD. Based on the unaudited financials for the fiscal year ended March 31, 2012, HACCC should no longer be considered financially troubled after the next PHAS rating. This status will not be verified after until the financial data has been audited and HUD has approved the audit. HACCC anticipates receiving HUD's approval by early 2013 and HACCC's improved PHAS rating should follow within two months. Under the recently changed PHAS rating system, HACCC must now maintain an occupancy rate of 95% or greater in public housing in order to score well overall. At present, all of HACCC’s thirteen properties are currently above 95% leased except for El Pueblo in Pittsburg, Bayo Vista in Rodeo and Las Deltas in North Richmond. However, because these three properties comprise nearly half of HACCC's total public housing units, they are having a significant downward effect on HACCC's overall occupancy rate which is currently below 95% due to leasing difficulties at these properties. El Pueblo should reach the 95% occupancy rate by early fall. Occupancy levels have continued to improve at Bayo Vista. A fifth phase of interior modernization has just begun at that property and should be completed by mid-fall. The Bayo Vista modernization will focus on twenty-seven units that were not rehabbed during previous modernization phases. Apart from the units that need to be modernized, only five units are currently not leased and one other is in the late eviction process at Bayo Vista. Las Deltas continues to be our most difficult property to lease and it is not expected to surpass 95% occupancy in its current state. Staff will continue to modernize units at Las Deltas as resources permit. Also, recently approved lease-up policies offer more incentives to clients coming from the wait list to lease at Las Deltas. These two factors should help improve the occupancy rate at the property. However, because of the long-term challenges in funding, location and crime faced by the property, staff will continue to pursue the removal of units at Las Deltas. FISCAL IMPACT No immediate impact. CONSEQUENCE OF NEGATIVE ACTION None. Information item only.