SR-407-04-01
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City council: 8/26/86
Santa Monica, California
TO: Mayor and City council
FROM: city staff
SUBJECT: Recommendation to Appropriate New Fiscal Year 1986-87
HUD Rental Rehabilitation Program Funds to be Allocated
to the Citywide Rental Rehabilitation Account
INTRODUCTION
This report recommends the appropriation of a new U.s. Department
of Housing and Urban Development (HUD) Rental Rehabilitation
Program grant and its allocation to the citywide Rental
Rehabilitation account.
BACKGROUND
In 1984 HUD began awarding Rental Rehabilitation Program grants
to cities and states on an entitlement basis.
In the last two
fiscal years the City has received a total of $222,750 under the
Rental Rehabilitation Program. HUD has recently awarded new Fis-
cal Year 1986-87 funds to localities, and has concurrently given
notice that cities must use these funds quickly to avoid their
recapture.
DISCUSSION
During the preparation of the Fiscal Year 1986-87 budget, staff
estimated that the City would receive a Rental Rehabilitation
Program allocation of approximately $132,800, or 90% of its past
annual allocations.
However, due to federal uncertainty as to
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whether the program would be funded at all this fiscal year,
. staff did not program the projected revenue for use in the
FY1986-87 budget.
After the FY1986-1987 budget was adopted by the City council, BUD
published a Notice of Fund Availability for the Rental
Rehabilitation Program stating that all entitlements were being
reduced by 50%. The City of Santa Monica was allocated $71,000.
The city I s application for these funds was approved by HOD on
August 12, 1986, and $71,000 has been obligated for the City.
staff therefore recommends that the revenue estimated for FY86-87
from the Rental Rehabilitation program, in revenue account number
20-932-367-000-000, be reduced by $61,800 to $71/000.
Currently, $100,000 in Rental Rehabilitation funds are allocated
4It to a Citywide Rental Rehabilitation account for use as supplemen-
tal funding for pico Neighborhood Housing Trust Fund and City-
wide Housing Acquisition and Rehabilitation Program projects.
The remainder is allocated directly to the pico Neighborhood
Housing Trust Fund. To date, $45,000 has been committed from the
Cityw'ide account for the rehabilitation of six rental units at
2302 5th street by the Community Corporation of Santa Monica.
Hun has notified city staff that at least another $70,000 of Pro-
gram funds must be committed by August 30, 1986 in order to avoid
recapture. Additional potential projects have been identified
outside the Pico Neighborhood, in the Ocean Park and Mid-cities
areas/ which would require a total of $126/000. However, as only
. $55/000 remains in the Citywide Rental Rehabilitation account,
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further funds must be made available before these projects can be
. funded.
Therefore, staff recommends that the new Rental Rehabilitation
Program funds be allocated to the Citywide Rental Rehabilitation
account.
These funds will be used for proj ects meeting the
criteria approved by the city Council on May 13, 1986, and will
be provided in the form of deferred payment loans secured by
promissory Notes and Deeds of Trust.
The funds will be used
where possible in the Pico Neighborhood, and proj ects that are
_ ready to proceed with rehabilitation and can utilize Rental
Rehabilitation funds in a timely manner will be given first
priority.
FINANCIAL/BUDGETARY IMPACTS
.
The recommended actions in this report will result in a decrease
of $61,800 in the city budget in revenue account #20-932-367-000-
000 and the appropriation of the new HUD Rental Rehabilitation
Program allocation of $71,000 to the Citywide Rental Rehabilita-
tion account number 20-720-264-134-955.
RECOMMENDATIONS
It is recommended that the City Council decrease the Fiscal Year
~986-87 revenue estimate at revenue account 20-932-367-000-000 by
$61,800 and appropriate $71,000 for the the Citywide Rental
Rehabilitation account number 20-720-264-134-955.
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Prepared by: Jack Gardner, Housing Program Analyst
Ann Sewill, Housing Program Manager
Department of Community and Economic Development
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