SR-HA-2 (10)
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Housing Authority Meeting: 3/26/91 Santa Monica, California
TO: Housing Authority
FROM: City staff
SUBJECT: Resolution Creating Housing Authority Policy on
section 8 Operating Reserve Expenditures.
INTRODUCTION
The Santa Monica Housing Authority earns administrative fees for
each of the units it leases under the Federally-funded section 8
program. There are currently over 700 units on the section 8
program. Earned administrative fees have to date exceeded
administrative costs so that the Santa Monica Housing Authority
has an operating reserve of approximately $300,000.
These earned reserves can be used for the direct administration of
the section 8 program. These reserves must be monitored to ensure
that the administrative fees of the section 8 program wlll cover
expenses throughout the term of the Annual contributions Contract.
These earned reserves can be used for other housing related
activities only if they are not required for projected
administrative expenses throughout this contract term.
DISCUSSION
HUD requires that the PHA Board of Commissioners set a threshold
for the amount of expenditures which may be made from the operating
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reserves without prior approval of the board. The operating
reserve for expenses other than direct administration of the
Section 8 program may not be used for the following costs:
1. Chief elected official expenses;
2. Contributions and donations unless in direct connection with
the provision of housing or housing related services;
3. Fines or penalties resulting from violations of, or failure to
comply with Federal, State and local laws and regulations
except when incurred as a result of compliance with specific
written instructions from HUD;
4. Costs that are not for a housing purpose.
The HUD field office may prohibit a PHA's use of all or part of its
operating reserve for other housing purposes if it determines that
the PHA is not adequately administering the Sectlon 8 program.
The Santa Monica Housing Authority has yet to spend any of its
operating reserves. The strategy is to accumulate at least two
month's housing assistance payments in reserves. At the current
program levels, the targeted reserve amount is $560,000.
This level of reserves will buffer the Housing Authority from any
delays in HUD funding. The Housing Authority currently has
numerous contracts with HUD that will be expiring in the next few
years. HUD's policy has been to renew these contracts but there
are frequent delays in this funding being received. In order to
keep the Section 8 program viable and its reputatlon intact,
participating property owners must get paid on a timely basis.
These reserve levels will be sufficient to acconunodate these
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potential problems.
The direct administration by the City of the Section 8 program is
relatively new having only been operational since January, 1989.
Prior to this date the program was administered by the Los Angeles
County Housing Authority. These reserves are further necessary to
protect the Authority from having to cut back on services if there
is a decrease in current levels of earned administrative fees.
Earned fees can be decreased if HUD lowers the Fair Market Rents,
which has been done in some areas, or if Santa Monica applicants
find units outside Santa Monica. In this latter case, the Housing
Authority must pay other agencies for accepting our clients.
The only foreseeable reason to use operating reserves for reasons
other than the direct administration of the program would be the
creation of a new housing program or a specific housing project at
which time Board approval must be requested.
RECOMMENDATION
It is respectfully recommended that the Housing Authority adopt the
attached resolution establishing the policy that Board approval
must be received for any operating reserve expense for housing
related activity other than the direct administration of the
Section 8 program.
Prepared by: Nancy West, Housing Program Manager
steven Wagner, Housing Coordinator
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RESOLUTION NO. 43 (HAS)
(Housing Authority Series)
A RESOLUTION OF THE HOUSING AUTHORITY OF THE CITY OF SANTA MONICA
REQUIRING BOARD OF COMMISSIONERS APPROVAL FOR ANY SECTION 8
OPERATING RESERVES EXPENDED FOR OTHER HOUSING RELATED ACTIVITIES
OTHER THAN DIRECT ADMINISTRATION OF THE SECTION 8 PROGRAM
w~EREAS, the united states Department of Housing and Urban
Development (HUD) requires that the Housing Author~ty board set
a threshold for any expenditures from the section 8 operat~ng
reserves for housing related expenses other than the direct
admlnistration of the Section B program; and
WHEREAS, HUD requlres that the Santa Monica Housing Authority
reVlse its ad~inistrative plan to reflect this threshold,
NOW, THEREFORE, THE HOUSING A~THORITY OF THE CITY OF SANTA MONICA
RESOLVES AS FOLLOWS:
Section 1. The Housing Authority will not expend any funds for
housing related actlvities other than the dlrect admlnistratlon of
the Section 8 program without prior approval of any and all
expenses by the Houslng Authorlty Board of Commissioners.
Section 2. The Housing Authorlty Secretary shall certify to the
adoption of this Resolution, and thenceforth and thereafter the
same shall be in full force and effect.
APPROVED AS TO FO~~:
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ROBERT M. MYERS ~
Clty Attorney
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ADOPTED AND APPROVED this 26th day of March, 1991
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Chairman
I hereby certify that the foregoing resolution was duly
adopted by the Housing Authority of the City of Santa Monica at a
meeting thereof held on the 26th day of March, 1991, by the
following vote of the Authority:
AYES: Commissioner: Genser, Holbrook, Katz, Olsen,
Vazquez, Zane, Abdo
NOES: Commissioner: None
ABSENT: Co1't\l\\issioner: None
ATTEST:
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