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HomeMy WebLinkAboutMINUTES - 03182008 - D.1 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA TO: BOARD OF COMMISSIONERS FROM: Joseph Villarreal, Executive Director DATE: March 18, 2008 SUBJECT: 2008-2009 ANNUAL AGENCY BUDGET SPECIFIC REQUEST(S) OR RECOMMENDATION(S) & BACKGROUND AND JUSTIFICATION I. RECOMMENDED ACTION: APPROVE the 2008-2009 Annual Agency Budget and HUD-52574 PHA Board Resolution. II. FINANCIAL IMPACT: This Annual Budget proposes a decrease in the overall Agency reserve in the amount of $5,452,231. III. REASONS FOR RECOMMENDATION/BACKGROUND: BUDGET OVERVIEW AND RECOMMENDATIONS To derive the Authority's annual funding allocations for the public housing and Section 8 programs, HUD considers the Housing Authority of the County of Contra Costa's (HACCC) annualized rental income and utility consumption data for the public housing program and quarterly utilization reports for the housing choice voucher (HCV, also known as Section 8) program. Congressional appropriations will also impact the Authority's budget as HUD will be forced to prorate the amount of funding a housing authority receives if enough funds are not appropriated for the programs at the federal level. Congress has not yet appropriated money for this calendar year. Therefore, it is possible that the Authority may face significant, retroactive changes to its budget. This has occurred in the recent past to housing authorities. A small portion of the Authority's funding is also generated from non-HUD related programs. The Authority's overall proposed budget is shown below in comparison to last year's approved budget. A breakdown of reserves and a brief explanation of major changes are also provided. Following the overview, the budget is broken out for each of the Authority's four major program areas: Housing Choice Vouchers, Public Housing, State and Local programs and Certificate Programs. A more detailed budget overview is attached and a complete copy of the budget is available for viewing at either the County Clerk's office or the Housing Authority's central office. CONTINUED ON ATTACHMENT: X YES SIGNATURE Joseph Villarreal,Executive Director RECOMMENDATION OF EXECUTIVE DIRECTOR RECOMMENDATION OF BOARD COMMITTEE APPROVE OTHER SIGNATURE(S): ACTION OF BOARD ON I �© APPROVED AS RECOMMENDED �Kl OTHER VOTE OF COMMISSIONERS I HEREBY CERTIFY THAT THIS IS A UNANIMOUS (ABSENT1P� J�/� ) TRUE AND CORRECT COPY OF AN AYES: NOES: ACTION TAKEN AND ENTERED ON THE ABSENT: ) �f� ABSTAIN: MINUTES OF THE BOARD OF COMMISSIONERSONON THE DATE SHOWN. S / ATTESTED © I g/6 2 JOSEPH IiILLARREAL,CLERK OF THE BOARD OF COMMISSIONERS AND EXECUTIVE DIRECTOR BY DEPUTY HABoard Orders\March 08\130-Budget 08-09.doc 2008-2009 ANNUAL AGENCY BUDGET March 18, 2008 Page 2 Agency Overview: HACCC provided housing assistance to over 8,000 families in its various programs last year and has a current staff of 103. HACC expects to increase the number of families it assists over the coming year. HACCC Agency Summary 2008-2009 Budget 2007-2008 Prior Yr Change Revenue $ 89,619,425 $ 96,746,307 $ 7,126,882 Expenditures $ 19,140,103 $ 18,344,813 $ 795,290 Program Costs, Debt Services & Other Capital Improvements $ 75,931,554 $ 77,804,410 $(1,872,856) To Reserves $ 5,452,231 $ 597,084 $ 6,049,316 Explanation of Change: The budget projects a significant recapture of Housing Assistance Payments (HAP) reserve funds. This recapture is mandated by HUD beginning calendar year 2008. HUD has advised housing authorities that any agency with reserves greater than 7% of their 2007 funding level will have monies above that amount recaptured. Based on this formula, HACCC's Section 8 HAP reserves will be capped at $4,964,580. The reserves will not be physically recaptured. Instead, HUD will reduce its HAP payments to an agency which it has deemed to have excess reserves until that agency is at or below its capped reserve level. In this way, HUD can reduce its appropriations request to Congress or it can offset any losses due to prorated appropriations. This change will not have any immediate adverse impact upon HACCC because these reserves are restricted to use for increased rental assistance costs. However, it will cause the Authority to recognize an operating loss for this financial period. Analysis of Overall Reserves: HACCC Consolidated Reserves Restricted Reserve Bal. Unrestricted Reserve Bal.E Reserve Balances Projected 3/31/08 $15,123,761 $1,976,357 $17,100,118 Budgeted 08109 $(5,402,688) $( 49,543) $(5,452,231 Projected to 3/31/08 $ 9,721,073 $1,926,814 $11,647,887 As a reminder, almost all reserves are restricted for use within each program. The designation of restricted or unrestricted reserves merely indicates that the funds are obligated for special use within the program (restricted) or that they can be used for any purpose tied to the program (unrestricted). The only exception to this rule is unrestricted funds within the State and Local Fund. These can be used in any of HACCC's programs. Housing Choice Voucher Overview: The HCV program (Section 8) provides rental assistance to families in the private rental market. HACCC qualifies families for the program based on income. These families find a home in the private rental market and HACCC provides them with a subsidy via a Housing Assistance Payments (HAP) contract with the property owner. The HAP is paid by the Authority directly to the owner. Through its HCV program, HACCC is able to provide affordable housing assistance to 6,781 families. HCV Summary 2008-2009 Budget 2007-2008 Prior Yr Change Revenue $ 71,447,690 $ 76,266,548 $ 4,818,858 Expenditures $ 6,155,926 $ 5,447,789 $ 708,137 Program Costs, Debt Services & Other $ 70,898,103 $ 70,725,079 $ 173,024 Capital Improvements To Reserves $ 5,606,338 $ 93,680 $ 5,700,018 Explanation of Change: The reduction in revenue for this fiscal year is entirely due to the federal recapture of HAP reserves. HUD will reduce HAP funding to HACCC until the reserve cap is reached. The Authority will use existing reserves to pay HAP on behalf of Section 8 clients to property owners. The Authority will see a small increase in administrative fees and Family Self-sufficiency funding. 2008-2009 ANNUAL AGENCY BUDGET March 18, 2008 Page 3 The projected $708,137 increase in expenditures is due to expected growth in salaries, post retirement benefits, and operating expenditures. The increase of $173,024 in program costs is projected because HACCC will have an increase in vouchers under contract after the wait list is opened. Analysis of HCV Program Reserves: HCV Reserves Restricted Reserve Bal. Unrestricted Reserve Bal. Reserve Balances Projected 3/31/08 $ 10,612,027 $ 802,373 $ 11,414,400 This Budget $ (5,647,447) $ 41,109 $ (5,606,338) Projected to 3/31/09 $ 4,964,580 $ 843,482 $ 5,808,062 HACCC will have to expend over half of its reserves in response to HUD's new limit on what a housing authority may retain. The Authority initially began accumulating these reserves in order to ensure that project-based vouchers could be fully funded. Additional reserves were accumulated over the past couple of years as the number of vouchers under lease has declined. Public Housing & Capital Fund Overview: HACCC owns and manages 1,168 public housing units at 16 different sites throughout the County. Operating funds for these properties comes from rents collected from tenants as well as an operating subsidy received from HUD that is designed to cover the gap between rents collected from the low- income tenants and annual operating expenses. HUD allocates the Capital Fund annually via a formula to approximately housing authorities. Capital Fund grants may be used for development, financing, modernization, and management improvements within public housing. Public Housing Summary 2008-2009 Budget 2007-2008 Prior Yr Chan e Revenue $ 11,110,570 $ 11,950,014 $ 839,444 Expenditures $ 9,775,786 $ 9,327,222 $ 448,564 Program Costs, Debt Services & Other $ 1,301,125 $ 2,331,665 $ (1,030,540) -Capital Improvements To Reserves $ 33,659 $ 291,127 $ 257,468 Explanation of Change: The budget anticipates a revenue reduction due to HUD proration. Every year since 2000, the public housing program has been underfunded relative to the amount entitled based on HUD's formula. Last year the program was funded at only 83.7% of the entitlement level. Congress has not yet completed appropriations for this year. The Authority's projections are based on HUD's projection that the public housing program will be funded at only 84% of the amount needed. The $451,564 projected increase in expenditures is due to expected growth in costs for salaries, post retirement benefits, and operating expenditures. The decrease of $1,086,130 in program costs is due to the scheduled completion to of several projects funded with capital fund that are scheduled for completion this fiscal year. This money will still be available to the Authority and will be used for future projects. It is not expected that HUD will reduce the amount of capital funding provided to the Authority this fiscal year. Analysis of PH Program Reserves: Public Housing Reserves Restricted Reserve Bal. Unrestricted Reserve Bal. Reserve Balances Projected 3/31/08 $ 2,667,396 $ 803,606 $ 3,471,002 This Budget $ -0- $ 33,659 $ 33,659 Projected to 3/31/09 $ 2,667,396 $ 837,265 $ 3,504,661 Housing Certificate Programs Overview: HACCC administers three separate Housing Certificate Programs; Shelter Plus Care, Moderate Rehabilitation (Mod Rehab) and Project-based Contract Administration. The Shelter Plus Care Program provides rental assistance for hard-to-serve homeless persons with disabilities in connection with 2008-2009 ANNUAL AGENCY BUDGET March 18, 2008 Page 4 supportive services funded from sources outside the program. HACCC assists approximately 285 clients under this program. The Mod Rehab program was designed in 1978 as an expansion of the rental certificate program. Mod Rehab was designed to provide low-cost loans for the rehabilitation of rental units in an effort to upgrade and preserve the nation's housing stock. In return, the owner agreed to provide long-term affordable housing for low income families. The program was repealed in 1991 and no new projects are authorized for development. HACCC administers 28 Mod Rehab units. Under the project-based contract administration program, the Authority contracts with the federal government to perform HUD's oversight duties. There are approximately 50,000 to 60,000 units of privately owned project-based Section 8 throughout Northern California that were directly awarded by HUD and are not part of the local housing authority's program. HUD used to provide oversight of these properties as it provides oversight of housing authorities. A number of years ago, HUD contracted these duties out to local housing authorities, paying them a fee to perform some of HUD's oversight duties. HACCC contacts with HUD to administer 5 project-based contract administration units. Certificate Programs Summary 2008-2009 Budget 2007-2008 Prior Yr Change Revenue $ 3,188,816 $ 3,308,860 $ 120,044 Expenditures $ 236,409 $ 413,764 $ 177,355 Program Costs, Debt Services & Other Capital Improvements $ 2,957,678 $ 2,810,337 $ 147,341 To Reserves $ 5,270 $ 84,762 $ 90,032 Explanation of Change: The projected reduction in revenue of $120,044 is based on projected HUD funding cutbacks and current utilization rates. Excess revenue in this category can be moved to the HCV program to bolster operating subsidies. HUD permits this because both categories are part of the overall Section 8 program. Because reduced revenues are projected, transfers to HCV are also projected to decrease. A small increase in the number of participants is expected in these programs. Therefore, program costs are projected to increase. Analysis of Certificate Programs Reserves: Certificate Programs Reserves Restricted Reserve Bal. Unrestricted Reserve Bal. Reserve Balances Projected 3/31/08 $ 21,190 $ 52,480 $ 73,670 This Budget $ -0- (5,270) $ 5,270 Projected to 3/31/09 $ 21,190 $ 47,210 $ 68,400 State and Local Overview: HACCC administers a variety of programs and activities that are either not HUD funded or that involve non-restricted HUD funds. Currently, HACCC is the managing general partner for two tax credit projects (DeAnza Gardens & Casa Del Rio) and contracts with the County and the City of Antioch to run their rental rehabilitation programs. The Authority will also begin to realize revenue and expenditures in this category as the switch to asset-based management begins. State & Local Summa 2008-2009 Budget 2007-2008 Prior Yr Change Revenue $ 3,872,349 $ 5,220,885 $ 1,348,536 Expenditures $ 2,971,982 $ 3,156,038 $ 184,056 Program Costs, Debt Services & Other Capital Improvements $ 774,649 $ 1,937,329 $ 1,162,680 To Reserves $ 125,718 $ 127,518 $ 1,800 Explanation of Change: The decrease of $1,348,536 in revenue is primarily due to the fact that HACCC is currently absorbing all incoming vouchers from other housing authorities into our HCV program. This is because the Authority 2008-2009 ANNUAL AGENCY BUDGET March 18, 2008 Page 5 has available vouchers. When a housing authority is using all of its available vouchers, it will not absorb incoming families into its program. Instead, the originating housing authority is "billed" and both agencies share a portion of the administrative fee attached to the voucher. Since HACCC is currently absorbing all incoming vouchers, these fees are lost in this category. Also, due to recent changes in HUD regulations, housing authorities will no longer be allowed to show revenue from incoming vouchers in this category. In the future, if HACCC bills another housing authority for incoming portables the revenue and expenses must be shown within the HCV program. The decrease of $184,056 in expenditures is primarily due to the absorption of incoming vouchers. As with revenues, the cost of administering the incoming vouchers will be realized within the HCV category. Likewise, the decrease in Program Costs in the amount of $1,162,680 is due to the payment of HAP subsidies on behalf of incoming vouchers. This will be realized within the HCV program as long as HACCC is absorbing incoming voucher clients into its program. Analysis of Program Reserves: State & Local Reserves Restricted Reserve Bal. Unrestricted Reserve Bal. Reserve Balances Projected 3/31/08 $ 1,823,148 $ 317,898 $ 2,141,046 This Budget $ 244,758 (119,040) $ 125,718 Projected to 3/31/09 $ 2,067,906 $ 198,858 $ 2,266,764 IV. CONSEQUENCES OF NEGATIVE ACTION: Should the Board not adopt Resolution No. 5099 approving the Authority's budget for fiscal year 2008-2009, HACCC will not be in compliance with HUD regulations. 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This information is required by Section 6(c)(4)of the U.S. Housing Act of 1937. The information is the operating budget for the low-income public housing program and provides a summary of the proposed/budgeted receipts and expenditures, approval of budgeted receipts and expenditures, and justification of certain specified amounts. HUD reviews the information to determine if the operating plan adopted by the public housing agency(PHA)and the amounts are reasonable, and that the PHA is in compliance with procedures prescribed by HUD. Responses are required to obtain benefits. This information does not lend itself to confidentiality. PHA Name: Contra Costa Housing Authority PHA Code: CA-011 PHA Fiscal Year Beginning: April 1, 2008 Board Resolution Number: 5099 Acting on behalf of the Board of Commissioners of the above-named PHA as its Chairperson, I make the following certifications and agreement to the Department of Housing and Urban Development (HUD) regarding the Board's approval of(check one or more as applicable): DATE ❑Q Operating Budget approved by Board resolution on: 03/18/2008 ❑ Operating Budget submitted to HUD, if applicable,on: ❑ Operating Budget revision approved by Board resolution on: ❑ Operating Budget revision submitted to HUD, if applicable, on: I certify on behalf of the above-named PHA that: 1. All statutory and regulatory requirements have been met; 2. The PHA has sufficient operating reserves to meet the working capital needs of its developments; 3. Proposed budget expenditure are necessary in the efficient and economical operation of the housing for the purpose of serving low-income residents; 4. The budget indicates a source of funds adequate to cover all proposed expenditures; 5. The PHA will comply with the wage rate requirement under 24 CFR 968.110(c)and(f); and 6. The PHA will comply with the requirements for access to records and audits under 24 CFR 968.110(1). I hereby certify that all the information stated within, as well as any information provided in the accompaniment herewith, if applicable, is true and accurate. Warning: HUD will prosecute false claims and statements. Conviction may result in criminal and/or civil penalties. (18 U.S.C. 1001, 1010, 1012.31, U.S.C. 3729 and 3802) E Chairperson's Name: re: Date: over —/ 91�� Previous editions are obsolete form HUD-52574(08/2005)