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HomeMy WebLinkAboutMINUTES - 04142015 - HA D.3RECOMMENDATIONS CONSIDER report on the proposed strategies to improve the physical condition of the Housing Authority's public housing units in response to chronic federal funding shortfalls and provide direction to staff as necessary. BACKGROUND This item continues the Board's discussion at the February 10, 2015 meeting. The presentation has been updated to include information on HUD's disposition and Rental Assistance Demonstration options as well as selected State funding sources. Additionally, attachments have been added for each of HACCC's properties. These sheets give an overview for each property that includes location, number and type of units and current modernization needs based on HACCC's 2011 physical needs assessment. As presented at the May 2014 Board of Commissioners meeting, HACCC has spent over $7 million (including ARRA funds) during the past five years to rehabilitate vacant public housing units and bring them back online. This effort has paid off as occupancy rates at all properties except North Richmond have climbed from 75% - 80% in some cases, to rates that are consistently between 97% - 100%. Now that there are few vacant units due to physical conditions and occupancy rates have improved, HACCC must shift its focus to the viability and long term physical health of its properties. Staff have been working on a long-term plan to rehabilitate and preserve as many of HACCC's 1,177 public housing units as possible. HACCC's portfolio of 13 public housing properties is aging; 132 units were developed in 1942 Action of Board On: 04/14/2015 APPROVED AS RECOMMENDED OTHER Clerks Notes: VOTE OF COMMISSIONERS AYE:John Gioia, Commissioner Candace Andersen, Commissioner Mary N. Piepho, Commissioner Karen Mitchoff, Commissioner ABSENT:Federal D. Glover, Commissioner Fay Nathaniel, Commissioner Aqueela Bowie, 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: April 14, 2015 Joseph Villarreal, Executive Director By: June McHuen, Deputy cc: D.3 To:Contra Costa County Housing Authority Board of Commissioners From:Joseph Villarreal, Housing Authority Date:April 14, 2015 Contra Costa County Subject:Report on the Proposed Strategies to Improve the Physical Condition of the Housing Authority's Public Housing Units BACKGROUND (CONT'D) and 1943, 352 units in 1952, another 593 throughout the 1960s and 100 units in 1982. The outstanding physical needs of these properties reflect their age. A 2011 physical needs assessment showed that HACCC's properties had $8 million in immediate capital needs at that time, with an average annual growth rate of $2.5 million. To address these needs, HACCC received just $1.7 million in capital funds from the U.S. Department of Housing and Urban Development (HUD) this year, only about half of which will be used to directly address capital needs. CSG Advisors assisted HACCC in developing the proposed strategies. CSG is an independent financial advisor to state and local governments, public agencies, non-profit corporations, financial institutions and development firms. CSG specializes in bond financing, development negotiations and financial strategies and programs. CSG consistently ranks among the top financial advisors in the nation in terms of volume and number of transactions and has completed more than $50 billion of financings. CSG has become a national leader in advising public housing authorities over the past fifteen years. Their work with public housing authorities has included innovative and nationally recognized approaches to strategic planning and portfolio review, public housing redevelopment and finance, affordable housing development finance, and Capital Fund borrowings. Their public housing clients have included the housing authorities of New York, San Francisco, Puerto Rico, New Orleans, Dallas, Seattle, Los Angeles, Washington, D.C., Indianapolis, Portland, Oakland and Sacramento among many others. The purpose of CSG's work with HACCC has been to determine for each public housing property whether a financing option(s) exists that would permit HACCC to fully fund all needed capital repairs and generate enough revenue going forward to operate successfully. The presentation today is designed to give the Board an overview of the scale of the underfunding challenge faced by HACCC and the proposed solutions to these challenges. The presentation is also designed to solicit feedback from the Board on these proposed solutions. Attached are the presentation slides that will be used at the meeting and the property profiles. FISCAL IMPACT No immediate impact. However, the strategies chosen will largely dictate the use of the Housing Authority's (HACCC) capital fund for the next 15-20 years and will also ultimately impact the ownership structure and future viability of the existing public housing portfolio. CONSEQUENCE OF NEGATIVE ACTION None; information item only. CLERK'S ADDENDUM ATTACHMENTS Long Term Planning Presentation Alhambra Terrace Bridgemont, Antioch Los Nogales, Brentwood El Pueblo, Pittsburg Las Deltas, North Richmond Las Deltas North Richmond Las Deltas, North Richmond Los Arboles, Oakley Bayo Vista, Rodeo Attachment 2 Page 1 Alhambra Terrace – Dwelling Unit Characteristics CA011001 Structural composition Conventional wood framing ; concrete slab foundation; concrete raised foundation Roofing Composition shingle roofing Exterior siding Stucco; brick veneer; wood trim Interior finishes Textured/painted drywall; VCT; sheet vinyl. Utilities Natural gas wall heaters, water heaters, stoves, dryer connections; electrical lighting, refrigerator, outlets Windows Dual glazed aluminum frames Other amenities Rear yard fencing, patios, and storage sheds Built 1942 One Bedroom Units 14 Handicapped Units 3 Two Bedroom Units 24 Units NOT on Demand Rent Schedule 2 Three Bedroom Units 12 TOTAL Amount of Units for Leasing 50 Status Based on the Replacement Reserves Report of the 2011 Physical Needs Assessment, this property will require $1,532,588 in repairs and replacements over the next 20 years. As of 2015, the immediate physical needs are valued at $386,275. Planned Action HACCC plans to comprehensively rehabilitate the existing property over the next 10-15 years. The current plan calls for financing the work with 4% tax credits, supportable debt, and other sources as necessary. HACCC SITE INFORMATION 03/31/15 Alhambra Terrace CA011001 3133 Estudillo St. Martinez, CA 94553 APN 376-010-010 Site Area 19.65 Acres Zoning R – 3.5 Bldgs w/apt. 25 Bldgs for other uses 1 14 One Bedroom Units at 544 SF 7,616 SF 24 Two Bedroom Units at 684 SF 16,416 SF 12 Three Bedroom Units at 891 SF 10,692 SF 50 Units Available 34,724 SF Walkways 3,120 SF Parking and Driveways 7,200 SF Rear Patios 20,300 SF EIOP 09/30/1942 Non Dwelling Buildings Name Size Bldg Type Community Building 1,310 sq. ft. V - N Attachment 2 Page 2 Bridgemont – Dwelling Unit Characteristics CA011003 Structural composition Conventional wood framing; concrete slab foundation; concrete raised foundation Roofing Composition shingle roofing Exterior siding Stucco; wood trim Interior finishes Textured/painted drywall; VCT; sheet vinyl. Utilities Natural gas wall heaters, water heaters, stoves, dryer connections; electrical lighting, refrigerator, outlets Windows Dual glazed aluminum frames Other amenities Rear yard fencing, patios, and storage sheds Built 1942 One Bedroom Units 12 Handicapped Units 2 Two Bedroom Units 16 Units NOT on Demand Rent Schedule 0 Three Bedroom Units 8 TOTAL Amount of Units for Leasing 36 Status Based on the Replacement Reserves Report of the 2011 Physical Needs Assessment, this property will require $1,538,850 in repairs and replacements over the next 20 years. As of 2015, the immediate physical needs are valued at $325,154. Planned Action HACCC plans to comprehensively rehabilitate the existing property over the next 10-15 years. The current plan calls for financing the work with 4% tax credits, supportable debt, and other sources as necessary. HACCC SITE INFORMATION 03/31/15 Bridgemont CA011003 801 J St. Antioch, CA 94509 APN 066-212-014-6 Site Area 3.79 Acres Zoning N/A Buildings with apartments 17 Buildings with other uses 2 36 Units Originally 4 One Bedroom Units at 564 SF 2,256 SF 8 One Bedroom Units at 544 SF 4,352 SF 16 Two Bedroom Units at 684 SF 10,944 SF 8 Three Bedroom Units at 890 SF 7,120 SF Walkways 11,200 SF Parking and Driveways 23,500 SF Rear Patios 18,800 SF EIOP 09/30/1942 Non Dwelling Buildings Name Size Bldg Type Section 8 Administration Office 935 sq. ft. V - N Section 8 Administration Annex 1,411 sq. ft. V - N Attachment 2 Page 4 El Pueblo – Dwelling Unit Characteristics CA011005 Structural composition Conventional wood framing ; concrete slab foundation Roofing Standing seam metal roofing; built-up roofing Exterior siding Stucco; wood shingles; wood trim Interior finishes Textured/painted drywall; VCT; sheet vinyl. Utilities Natural gas wall heaters, water heaters, stoves, dryer connections; electrical lighting, refrigerator, outlets Windows Single glazed aluminum frames Other amenities Rear yard fencing, patios, and storage sheds Status Based on the Replacement Reserves Report of the 2011 Physical Needs Assessment, this property will require $8,781,073 in repairs and replacements over the next 20 years. As of 2015, the immediate physical needs are valued at $3,885,733. Planned Action HACCC plans to demolish the existing buildings and rebuild new affordable units on the original property. the current plan calls for financing the work with 9% tax credits and other sources, depending on developer interest and financial feasibility. HACCC SITE INFORMATION 03/31/15 El Pueblo CA011005 875 El Pueblo Ave. Pittsburg, CA 94565 APN 073-150-003-9 Site Area 16.38 Acres Zoning N/A Buildings with apartments 56 Buildings with other uses 3 28 One Bedroom Units at 550 SF 15,400 SF 38 Two Bedroom Units at 772 SF 29,336 SF 51 Two Bedroom Units at 746 SF 38,046 SF 49 Three Bedroom Units at 850 SF 41,650 SF 10 Four Bedroom Units at 1,152 SF 11,520 SF 176 Originally built units 135,952 SF Walkways 32,629 SF Parking and Driveways 24,222 SF Rear Patios 47,900 SF EIOP 12/31/1952 Built 1952 One Bedroom Units 28 Handicapped Units 8 Two Bedroom Units 89 Units NOT on Demand Rent Schedule 5 Three Bedroom Units 49 Four Bedroom Units 10 TOTAL Amount of Units for Leasing 171 Non Dwelling Buildings Name Size Bldg Type Administration Office & Maint. 3,642 sq. ft. V - N Maintenance Storage 3,058 sq. ft. Community Building 1,080 sq. ft. V - N Attachment 2 Page 5 Las Deltas – Dwelling Unit Characteristics CA011006 Structural composition Conventional wood framing; concrete slab foundation Roofing Standing seam metal roofing Exterior siding Stucco; brick veneer; wood trim Interior finishes Textured/painted drywall; VCT; sheet vinyl. Utilities Natural gas wall heaters, water heaters, stoves, electrical lighting, refrigerator, outlets Windows Single glazed aluminum frames Other amenities Rear yard fencing, patios, and storage sheds Built 1952 One Bedroom Units 13 Handicapped Units 5 Two Bedroom Units 42 Units NOT on Demand Rent Schedule 5 Three Bedroom Units 13 Four Bedroom Units 8 TOTAL Amount of Units for Leasing 71 Status Based on the Replacement Reserves Report of the 2011 Physical Needs Assessment, this property will require $3,716,640 in repairs and replacements over the next 20 years. As of 2015, the immediate physical needs are valued at $1,385,203. Planned Action HACCC plans to demolish the existing buildings and rebuild new affordable units on portions of the original property. The current plan calls for financing the work with 9% tax credits and other sources, depending on developer interest and financial feasibility. HACCC SITE INFORMATION 03/31/15 Las Deltas CA011006 1601 N Jade St. Richmond, CA 94801 APN 409-210-022-3 409-210-023-1 409-210-024-9 Site Area 7.273 Acres Zoning N/A Buildings with apartments 26 Buildings with other uses 5 16 One Bedroom Units at 571 SF 9,136 SF 36 Two Bedroom Units at 774 SF 27,864 SF 16 Three Bedroom Units at 860 SF 13,760 SF 8 Four Bedroom Units at 1,080 SF 8,640 SF 76 Originally built units 59,400 SF Walkways 51,700 SF Parking and Driveways 69,300 SF Rear Patios 26,600 SF EIOP 12/31/1952 Non Dwelling Buildings Name Size Bldg Type Administration Office & Maint. 3,735 sq. ft. V - N Maintenance Storage 1,025 sq. ft. Project Pride 3,182 sq. ft. V - N Head Start 3,950 sq. ft. V - N Y.E.A.C. 2,160 sq. ft. V - N Attachment 2 Page 6 Los Arboles – Dwelling Unit Characteristics CA011008 Structural composition Conventional wood framing ; concrete slab foundation Roofing Composition shingle roofing Exterior siding Stucco; wood trim Interior finishes Textured/painted drywall; VCT; sheet vinyl. Utilities Natural gas wall heaters, water heaters, stoves, dryer connections; electrical lighting, refrigerator, outlets Windows Dual glazed aluminum frames Other amenities Rear yard fencing, patios, and storage sheds Built 1961 One Bedroom Units 0 Handicapped Units 2 Two Bedroom Units 14 Units NOT on Demand Rent Schedule 0 Three Bedroom Units 12 Four Bedroom Units 4 TOTAL Amount of Units for Leasing 30 Status Based on the Replacement Reserves Report of the 2011 Physical Needs Assessment, this property will require $874,427 in repairs and replacements over the next 20 years. As of 2015, the immediate physical needs are valued at $375,529. Planned Action HACCC plans to comprehensively rehabilitate the existing property over the next 10-15 years. The current plan calls for financing the work with 4% tax credits, supportable debt, and other sources as necessary. HACCC SITE INFORMATION 03/31/15 Los Arboles CA011008 240 Las Dunas Ave. Oakley, CA 94561 APN 035-300-016-9 Site Area 2.75 Acres Zoning N/A Buildings with apartments 15 Buildings with other uses 2 No One Bedroom Units 14 Two Bedroom Units at 770 SF 10,780 SF 12 Three Bedroom Units at 935 SF 11,220 SF 4 Four Bedroom Units at 1,155 SF 4,620 SF 30 Originally built units 26,6200 SF Walkways 13,200 SF Parking and Driveways 9,700 SF Rear Patios 9,800 SF EIOP 06/30/1961 Non Dwelling Buildings Name Size Bldg Type Head Start 3,635 sq. ft. V - N Maintenance 2,525 sq. ft. V - N Attachment 2 Page 7 Las Deltas – Dwelling Unit Characteristics CA011009A Structural composition Conventional wood framing; concrete slab foundation Roofing Built-up roofing Exterior siding Stucco; wood trim Interior finishes Textured/painted drywall; VCT; sheet vinyl. Utilities Natural gas wall heaters, water heaters, stoves, dryer connections; electrical lighting, refrigerator, outlets Windows Single glazed aluminum frames Other amenities Rear yard fencing, patios, and storage sheds Built 1961 One Bedroom Units 18 Handicapped Units 8 Two Bedroom Units 18 Three Bedroom Units 36 Four Bedroom Units 12 TOTAL Amount of Units for Leasing 84 Status Based on the Replacement Reserves Report of the 2011 Physical Needs Assessment, this property will require $3,635,440 in repairs and replacements over the next 20 years. As of 2015, the immediate physical needs are valued at $1,607,956. Planned Action HACCC plans to demolish the existing buildings and rebuild new affordable units on a portion of the original property. The current plan calls for financing the work with 9% tax credits and other sources, depending on developer interest and financial feasibility. HACCC SITE INFORMATION 03/31/15 Las Deltas CA011009A 1601 N Jade St. Richmond, CA 94801 APN 409-052-003-4 409-070-002-4 409-142-005-1 409-151-005-9 409-151-011-7 409-152-007-4 409-161-001-6 409-162-006-4 409-191-009-3 409-191-013-5 409-200-016-7 409-210-002-5 409-210-011-6 409-210-020-7 409-210-021-5 409-210-025-6 409-251-007-4 409-291-009-2 409-052-009-1 Site Area Varies per parcel Zoning N/A Buildings with apartments 48 18 One Bedroom Units at 578 SF 10,404 SF 18 Two Bedroom Units at 770 SF 13,860 SF 36 Three Bedroom Units at 935 SF 33,660 SF 12 Four Bedroom Units at 1,155 SF 13,860 SF 84 Current Units Total 71,784 SF Walkways 12,040 SF Parking and Driveways 52,460 SF EIOP 12/31/1960 Attachment 2 Page 8 Las Deltas – Dwelling Unit Characteristics CA011009B Structural composition Conventional wood framing; concrete slab foundation Roofing Built-up roofing Exterior siding Stucco; wood trim Interior finishes Textured/painted drywall; VCT; sheet vinyl. Utilities Natural gas wall heaters, water htrs., stoves, dryer connections; electrical lighting, refrigerator, outlets Windows Single glazed aluminum frames Other amenities Rear yard fencing, patios, and storage sheds Built 1961 One Bedroom Units 0 Handicapped Units 0 Two Bedroom Units 0 Three Bedroom Units 46 Four Bedroom Units 10 TOTAL Amount of Units for Leasing 56 Status Based on the Replacement Reserves Report of the 2011 Physical Needs Assessment, this property will require $2,913,843 in repairs and replacements over the next 20 years. As of 2015, the immediate physical needs are valued at $1,268,876. Planned Action HACCC plans to demolish the existing buildings and rebuild new affordable units in another location. The current plan calls for financing the work with 9% tax credits and other sources, depending on developer interest and financial feasibility. HACCC SITE INFORMATION 03/31/15 Las Deltas CA011009B 1601 N Jade St. Richmond, CA 94801 APN 409-052-001-8 409-060-009-1 409-060-018-2 409-080-015-4 409-100-004-4 409-110-007-5 409-120-005-7 409-131-003-9 409-141-006-0 409-161-008-1 409-171-015-4 409-191-001-0 409-191-012-7 409-182-002-9 409-252-003-2 409-261-002-3 409-272-001-2 409-281-001-1 409-282-005-1 409-282-009-3 409-292-001-8 409-160-016-7 Site Area Varies per parcel Zoning N/A No One Bedroom Units No Two Bedroom Units 46 Three Bedroom Units at 935 SF 43,010 SF 10 Four Bedroom Units at 1,155 SF 11,550 SF 56 Current Units Total 54,560 SF Walkways 8,400 SF Parking and Driveways 36,600 SF Rear Walks 9,400 SF EIOP 12/31/1961 Attachment 2 Page 9 Bayo Vista – Dwelling Unit Characteristics CA011010 Structural composition Conventional wood framing; reinforced CMU/wood framing; concrete slab foundations Roofing Built-up roofing Exterior siding Stucco; T-111 plywood; CMU; painted wood trim Interior finishes Textured/painted drywall; VCT; sheet vinyl. Utilities Natural gas wall heaters, water heaters, stoves, dryer connections; electrical lighting, refrigerator, outlets Windows Single glazed aluminum frames; dual glazed aluminum frames Other amenities Rear yard fencing, patios, and storage sheds Built 1963 One Bedroom Units 30 Handicapped Units 8 Two Bedroom Units 63 Units NOT on Demand Rent Schedule 2 Three Bedroom Units 115 Four Bedroom Units 30 Five Bedroom Units 6 TOTAL Amount of Units for Leasing 244 Status Based on the Replacement Reserves Report of the 2011 Physical Needs Assessment, this property will require $15,353,514 in repairs and replacements over the next 20 years. As of 2015, the immediate physical needs are valued at $5,633,281. Planned Action HACCC plans to seek HUD approval to dispose of this property. The current plan calls for the relocation of existing residents by acquiring off- site replacement units or by using Section 8 vouchers. HACCC SITE INFORMATION 08/04/09 Bayo Vista CA011010 2 California St. Rodeo, CA 94572 APN 357-352-001-6 357-353-001-5 357-361-001-5 357-362-001-4 357-363-001-3 357-340-001-1 357-351-001-7 Site Area 32.5 Acres Zoning N/A Buildings with apartments 61 Buildings with other uses 3 30 One Bedroom Units at 576 SF 17,280 SF 63 Two Bedroom Units at 868 SF 54,684 SF 115 Three Bedroom Units at 1,084 SF 124,660 SF 30 Four Bedroom Units at 1,176 SF 35,280 SF 6 Five Bedroom Units at 1,736 SF 10,416 SF 244 Originally built units 242,320 SF Walkways 3,500 SF Parking and Driveways 139,700 SF Rear Patios 35,900 SF EIOP 09/30/1963 Non Dwelling Buildings Name Size Bldg Type Administration Office Maintenance & Head Start 11,181 sq. ft. V - N YMCA 756 sq. ft. V - N Maintenance Storage 758 sq. ft. V - N Attachment 2 Page 3 Los Nogales – Dwelling Unit Characteristics CA011004 Structural composition Conventional wood framing ; concrete slab foundation; concrete raised foundation Roofing Composition shingle roofing Exterior siding Stucco; wood trim Interior finishes Textured/painted drywall; VCT; sheet vinyl. Utilities Natural gas wall heaters, water heaters, stoves, dryer connections; electrical lighting, refrigerator, outlets Windows Dual glazed aluminum frames Other amenities Rear yard fencing, patios, and storage sheds Built 1942 One Bedroom Units 10 Handicapped Units 6 Two Bedroom Units 24 Units NOT on Demand Rent Schedule 0 Three Bedroom Units 10 TOTAL Amount of Units for Leasing 44 Status Based on the Replacement Reserves Report of the 2011 Physical Needs Assessment, this property will require $1,872,687 in repairs and replacements over the next 20 years. As of 2015, the immediate physical needs are valued at $431,382. Planned Action HACCC plans to comprehensively rehabilitate the existing property over the next 10-15 years. The current plan calls for financing the work with 4% tax credits, supportable debt, and other sources as necessary. HACCC SITE INFORMATION 03/31/15 Los Nogales CA011004 Walnut Blvd. & McClarren Rd. Brentwood, CA 94513 APN 012-142-017-0 Site Area 7.3 Acres Zoning N/A Buildings with apartments 22 Buildings with other uses 4 44 Units Originally 10 One Bedroom Units at 544 SF 5,440 SF 24 Two Bedroom Units at 697 SF 16,728 SF 10 Three Bedroom Units at 880 SF 8,800 SF Walkways 6,120 SF Parking and Driveways 26,400 SF EIOP 12/31/1942 Non Dwelling Buildings Name Size Bldg Type A Place of Learning 1,178 sq. ft. V - N Head Start Building A 960 sq. ft. Modular Head Start Building B 1,365 sq. ft. Modular Head Start Building C 1,365 sq. ft. Modular ! ! ! ! Long Term Planning! for Public Housing Portfolio! ! ! ! ! January 30, 2015 with revisions April 8, 2015! 1! Agenda! Ÿ Underfunding Challenge! Ÿ Potential Solutions to Address Portfolio Needs! Ÿ Recommendations! Ÿ Next Steps! 2! Underfunding Challenge: National View! Ÿ For the past 15 years, Congress has been chronically underfunding the capital needs of public housing! – Total HUD capital funding has dropped from approximately $3.8 billion per year in 2000 to $1.9 billion in 2015! ! Ÿ The backlog of capital needs in public housing is large and growing! ! – HUD estimated a capital needs backlog of $25.6 billion in 2010, plus $3.4 billion of annual needs! – Recent funding levels of less than $2 billion per year are insufficient to maintain the portfolio or address the backlog! $0   $1   $2   $3   $4   00  01  02  03  04  05  06  07  08  09  10  11  12  13  14  15   HUD  Capital  Fund  Budget  by  Year  ($  billions)     3! Underfunding Challenge: HACCC View! Ÿ HUD’s underfunding of Contra Costa’s public housing mirrors the national trend! – 2014 Capital Fund grant was 
 $1.7 million, down 44% from the $3.0 million received in 2000! Ÿ Contra Costa’s public housing has large and growing capital needs! – $8 million of immediate capital needs estimated in 2011 (part of $55 million total over 20 years)! – $2.5 million in new capital needs every year, on average! Ÿ Even the best management of capital spending can’t keep pace with the needs of an aging housing stock given persistently meager federal funding! 4! Many Demands on HACCC’s Scarce Capital Funds! Of $1.7 million in HUD Capital Funds received for 2014:! ! – $339,000 (20%) transferred to Operations! – $169,000 (10%) transferred to Central Office Cost Center! – $237,000 (15%) transferred to Resident Services! – $85,000 (5%) needed for emergency repairs! ! – Approximately $864,000 available to fund $2.5 million in average annual capital needs! 5! Unmet Capital Needs Grow as the HACCC Portfolio Ages! $55 million of projected capital needs for 1,177 public housing units over the next 20 years vs. $17 million of projected net capital funds at $864,000 per year! ! 6! Agenda! Ÿ Underfunding Challenge! Ÿ Potential Solutions to Address Portfolio Needs! Ÿ Recommendations! Ÿ Next Steps! 7! Potential Solutions to Address Portfolio Needs: 
 What Are the Options?! Ÿ Continue rehab with existing funds using “triage” approach! – Not able to address all needs! – Negative impacts on residents and neighborhoods! Ÿ Dispose of non-viable properties! – Must meet restrictive HUD criteria! – Potential loss of subsidized units! – Might generate sales proceeds! – Could help HACCC focus efforts on preserving remaining properties! Ÿ Redevelop/rebuild properties! – High construction and other costs, including tenant relocation! – Typically very large financing gaps! Ÿ Convert operating subsidy from public housing to Section 8! – Potentially larger HUD subsidies! – Could help facilitate borrowing! – Existing tenants can usually stay! – HUD is encouraging conversions through new Rental Assistance Demonstration “RAD” program, but it gives no additional subsidy! Ÿ Find external funding! – Local governments (less likely now that redevelopment agencies are gone)! – State programs! – Federal low income housing tax credits! Various options exist; a combination of approaches is often required! 8! Disposition of Non-Viable Properties by Section 18! ! Ÿ HUD generally tries to prohibit the loss of public housing units! Ÿ For housing authorities seeking to dispose of or demolish public housing, there are strict requirements and a formal application process! – Process is governed under Section 18 of the Housing Act of 1937! – HUD occasionally updates the regulations, and a revision is pending! – Specific criteria must be met! • Obsolescence is one possibility, but it requires a specific financial threshold that is typically hard to meet! • Local conditions adversely affecting the health and safety of residents is another possibility! • Operating shortfalls and capital needs are generally ***not*** acceptable justifications! – Resident consultation is required, as are relocation benefits! – Timeline for HUD review is highly uncertain; 6+ month is not uncommon! Ÿ A major benefit of Section 18 HUD approval is that it usually triggers eligibility for new Tenant Protection Vouchers from HUD, although this is not guaranteed! Ÿ HUD wants housing authorities to use RAD rather than Section 18! 9! HUD’s Rental Assistance Demonstration Program! ! Ÿ New HUD program to help preserve public housing stock! – Launched in 2012 with first conversions starting about a year ago! – “Demonstration” status – refinements likely! – HUD recently got authorization to expand from 60,000 to 185,000 units (of approximately 1.1 million total public housing units)! Ÿ Switches the federal funding platform from public housing to Section 8! – No change in subsidy level for a project – same amount, different label! – But future funding levels are expected to be more stable – congressional budgets have been favoring Section 8 over public housing! – Change makes it easier to raise private financing to address repair needs! Ÿ Protections for residents! – Residents continue to pay 30% of income towards rent and they maintain the same basic rights as they possess in the public housing program! – If temporary relocation needed for rehab, right of return and URA benefits! – “Choice mobility” after 1-2 years with tenants eligible for portable vouchers! ! Ÿ Approved application for a portion of Las Deltas / North Richmond allows Contra Costa to sell long-term vacant units and move the subsidies elsewhere rather than giving those funds back to HUD! 10! Potential Solutions to Address Portfolio Needs: 
 Overview of Low Income Housing Tax Credits! ! Ÿ Since its start in 1987, the low income housing tax credit program has been the nation’s primary source of funding for affordable housing production! Ÿ Tax credits can be used to help fund new construction or rehabilitation! Ÿ Funding is provided by private investors seeking tax credits, and their funding does not need to be repaid! Ÿ Two main types of tax credits! – “9% credits” can typically fund 60-90% of project costs, but it is very hard to win an allocation in the highly competitive process run by the state! – “4% credits” are less valuable, typically funding just 20-50% of project costs, but unlike 9% credits it is easy to get an allocation! Ÿ Tax credit financing is complex and has relatively high transaction costs! 11 ! Potential Solutions to Address Portfolio Needs: 
 Tax Credit Structuring! ! Ÿ Property needs to be owned by a partnership or limited liability company rather than HACCC directly! – HACCC, an affiliate, or a third- party developer it hires can serve as general partner! – Investor serves as limited partner! Ÿ HACCC can retain a right to buy out the investor limited partner in approximately 15 years! Ÿ HACCC can continue owning the land and ground lease it to partnership! Ÿ Property can continue to receive HUD operating subsidies! Partnership / LLC! Property! Investor Limited Partner / Member! 99.99%! General Partner /
 Managing Member
 .01%! TYPICAL TAX CREDIT 
 PARTNERSHIP STRUCTURE! 12! Potential Solutions to Address Portfolio Needs: 
 Sample Budget for Redevelopment Using Tax Credits! 13! Selected California State Funding Sources! 14! Agenda! Ÿ Underfunding Challenge! Ÿ Potential Solutions to Address Portfolio Needs! Ÿ Recommendations! Ÿ Next Steps! 15! Recommendations:
 Summary of Proposed Approaches by Property! Rehabilitation. HACCC would comprehensively rehabilitate the existing properties over the next 10-15 years, financing the work with 4% tax credits, supportable debt, and other sources as necessary! ! ! ! ! Redevelopment. HACCC would demolish the existing buildings and rebuild new affordable units on the original property, financing the work with 9% tax credits and other sources! ! ! Disposition with Offsite Replacement or Relocation without Replacement. HACCC would seek HUD approval to dispose of these properties and would relocate the existing residents by acquiring off-site replacement units or by using Section 8 vouchers! Alhambra Terrace (Martinez)!Kidd Manor (San Pablo)! Bridgemont (Antioch)!Los Arboles (Oakley)! Casa de Mañana (Oakley)!Los Nogales (Brentwood)! Casa de Serena (Bay Point)!Vista del Camino (San Pablo)! Elder Winds (Antioch)!El Pueblo (Pittsburg)! Hacienda (Martinez)! (if can’t win 9% credit awards)! El Pueblo (Pittsburg), potentially (to extent it can win 9% credit awards)! Portions of Las Deltas (North Richmond), potentially (depending on developer interest and financial feasibility)! Portions of Las Deltas (North Richmond)! Bayo Vista (Rodeo)! 16! Recommendations: 
 Prioritize Rehab Based on Financing Potential and Need! ! Ÿ Phase 1 - Initial Portfolio. Plan an initial 4% tax credit transaction for rehab of Casa de Mañana, Elder Winds, Hacienda and Kidd Manor! – These properties have the best potential to raise external financing and may not require significant HACCC funds up front! – Combining multiple properties into a single financing could provide economies of scale to limit transaction costs! – Transaction could generate developer fees to HACCC to help pay for staff and potentially allow reinvestment in future phases! Ÿ Phase 2 – Years 5-9. Rehab Bridgemont, Casa de Serena, El Pueblo (to the extent it can’t be redeveloped using 9% credits), and Los Nogales as a second phase after the first phase is completed! – These properties are considered high priority for capital improvements! – Waiting until first phase is complete could allow HACCC to reinvest proceeds from the initial phase, boosting financial feasibility! Ÿ Phase 3 – Years 10-13. Begin rehab for Alhambra Terrace, Los Arboles, and Vista del Camino as additional funding becomes available! – These properties have less urgent capital needs than phases 1 and 2! 17! Recommendations: 
 Potential Schedule of Rehabilitation Properties! ! 18! Recommendations:
 El Pueblo (Pittsburg, 171 units)! ! Ÿ Good candidate for redevelopment! – Existing buildings are over 60 years old and have high projected 20-year capital needs of $8.8 million (over $50,000 per unit)! – Strong neighborhood characteristics mean good potential for developer interest and external funding! – Low density of existing property may provide opportunity to rebuild with additional units and serve a wider range of income levels! ! Ÿ Financial feasibility of redevelopment hinges on availability of 9% tax credits! – Would require 2-3 allocations, stretching over multiple years! – Highly competitive statewide allocation process, and the state can change its rules and funding priorities from year to year! – Without 9% tax credits, funding gap for redevelopment would be too large and HACCC would need to revert to a rehabilitation strategy! Ÿ Recommendation: ! – Seek input from multiple developers to refine plan! – Anticipate a long-term process with multiple phases! – Identify an initial phase and competitively select a developer! – Retain flexibility to adjust future phases depending on funding availability and other factors! 19! Recommendations: 
 Las Deltas (North Richmond, 211 units)! ! Ÿ Better candidate for disposition or redevelopment than rehabilitation! – Existing buildings are at least 55 years old and have high projected 20- year capital needs of $10.3 million (nearly $50,000 per unit)! – Chronic vacancy and turnover issues! Ÿ 90 of the 211 units already have contingent HUD approval for Section 8 project-based voucher conversion under Rental Assistance Demonstration! – Represents a major success in addressing long-term vacant units while preserving access to HUD subsidies! – HACCC is exploring ways to replace units on-site or off-site! Ÿ HACCC expects to refine approaches over next year! – Input from potential developers is critical! – Financial feasibility of development options is a key question! – Disposition proceeds could potentially provide funding for replacement of some existing units! – Need to be wary of spending disproportionate share of HACCC resources! 20! Recommendations:
 Bayo Vista (Rodeo, 244 units)! ! Ÿ Advancing age of the property and location next to refinery raise questions of whether the property is suitable for continued residential use! – 52-year old property with projected 20-year capital needs of $15.4 million (over $60,000 per unit)! – Immediately adjacent to oil refinery! – Preliminary draft of NEPA study suggests proximity hazards for at least a portion of the property! Ÿ HUD may support disposition given environmental considerations! Ÿ If HUD would approve a disposition, it would also likely provide new Section 8 Tenant Protection Vouchers to facilitate relocation of existing residents to more suitable residential developments! – Would represent an increase of HUD subsidy given that tenant protection vouchers would be based on HUD Fair Market Rents rather than existing subsidy level (unlike RAD vouchers)! ! Ÿ Recommendation: ! – Initiate discussions with HUD on potential for disposition approval and tenant protection vouchers! 21! Recommendations:
 Concerns and Risks Related to Proposed Approaches! ! Ÿ HUD Requirements and Resident Concerns! – Any approach must meet HUD requirements and be responsive to the needs of existing residents! Ÿ Use of Section 8 Project-Basing Capacity! – HACCC would need to use its limited project-basing capacity on up to 500 Section 8 vouchers to make the proposed approaches financially feasible (HACCC’s currently remaining project-basing capacity is approximately 884 units)! ! Ÿ Potential Net Loss of Affordable Units! – Dispositions without replacement or conversions to Section 8 using HACCC’s existing vouchers could result in fewer total affordable housing units available! Ÿ Development and Financing Risks! – Whether HACCC serves as its own developer or hires a third-party developer to implement approaches, there are significant risks associated with real estate development and financing, especially with external lenders and tax credit investors involved! Ÿ Time and resource constraints! – Rehabilitation and redevelopment activities take a long time and require significant staff time and agency resources! 22! Agenda! Ÿ Underfunding Challenge! Ÿ Potential Solutions to Address Portfolio Needs! Ÿ Recommendations! Ÿ Next Steps! 23! Next Steps! ! Ÿ Refine approach based on input from Board! Ÿ Discuss Bayo Vista with HUD to assess likelihood of disposition approval and tenant protection vouchers! Ÿ Discuss El Pueblo and Las Deltas with developers to explore options and feasibility! ! Ÿ Consult with other stakeholders, including residents, local agencies, and HUD! ! Ÿ Prepare detailed feasibility analyses and schedules for initial phase(s)! – Get appraisals and capital needs assessments of initial rehabilitation properties (Casa de Mañana, Elder Winds, Hacienda, and Kidd Manor) ! – Identify all potential external funding sources! – Determine HACCC resource availability, including funding and staffing! ! Ÿ Present specific transactions to Board for consideration! Ÿ Competitively procure any needed assistance for each project, including architects and engineers, legal and financial advisors, developers, tax credit investors, etc.!