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sr-012412-3uCity Council Meeting: January 24, 2012 Agenda Item: To: Mayor and City Council Housing Authority Chair and Board From: Andy Agle, Director of Housing and Economic Development Subject: Agreement to Perform Affordable Housing Operations Recommended Action Staff recommends that the City Council authorize the City Manager to negotiate and execute an agreement with the Housing Authority to: 1. Assign responsibility and funding for affordable housing compliance monitoring, inspections, waiting list management, enrollment, reporting, and related activities from the City to the Housing Authority; 2. Assign responsibility and funding for affordable housing production and preservation activities from the City to the Housing Authority; 3. Assign responsibility and funding for implementation and continuing oversight of the Senior Homeless Prevention and Rental Assistance Program from the City to the Housing Authority; 4. Assign the stream of payments associated with Cooperation Agreement No. 8180, an amount not to exceed $20,282,771 and future payments pursuant to Cooperation Agreement No. 9267, and available housing set -aside funds from the City to the Housing Authority (collectively, the Housing Obligation Funds); and, 5. Assign responsibility to perform the affordable housing administrative responsibilities and funding functions to the Housing Authority using proceeds from the Housing Obligation Funds. Staff recommends that the Housing Authority authorize the Housing Authority Board Chair to execute an agreement with the City of Santa Monica to: 1. Accept responsibility and funding for affordable housing monitoring activities from the City; 2. Accept responsibility and funding for affordable housing production and preservation activities from the City; 3. Accept responsibility and funding for the Senior Homeless Prevention and Rental Assistance Program from the City; 4. Accept the assignment from the City of the stream of payments associated with Cooperation Agreement No. 8180, an amount not to exceed $20,282,771 and future payments pursuant to Cooperation Agreement No. 9267, and available housing set -aside funds from the City to the Housing Authority (the Housing Obligation Funds); and, 5. Accept responsibility to perform the affordable housing administrative 1 responsibilities and funding functions using proceeds from the Housing Obligation Funds. Executive Summary On December 29, 2011, a decision from the California Supreme Court called for the dissolution of all redevelopment agencies in California by February 1, 2012. It is critical that affordable housing production and preservation activities, as well as housing assistance programs, continue in Santa Monica. The proposed agreement (Agreement) would assign responsibility and funding for affordable housing monitoring, affordable housing production and the senior homeless assistance program to the Housing Authority to help ensure the continuation of such activities. Background For several decades, the City of Santa Monica and the Santa Monica Redevelopment Agency have conducted an aggressive affordable housing program that has resulted in the production and preservation of over 2,900 apartments that are affordable to very low, low and moderate - income families. The primary funding source for Santa Monica's affordable housing programs has been redevelopment tax - increment funds. Historically, Council has prioritized redevelopment funds for the purpose of increasing, improving and preserving the City's supply of low and moderate housing. On January 9, 2003, Council authorized Cooperation Agreement No. 8180 and adopted Resolution No. 9827 (CCS) to assist the City in achieving its affordable housing goals. Additionally, given extensive community input received during the preparation of the Agency's Five -Year Implementation Plan, Council, on August 10, 2010, approved Cooperation Agreement No. 9267 (CCS /RAS) and adopted Resolutions 10519 (CCS) and 527 (RAS) to ensure timely implementation and completion of redevelopment priority projects, including affordable housing. In addition to the production and preservation of affordable housing, redevelopment funds have supported a Senior Homelessness Prevention and Rental Assistance Program, approved by the City Council on November 14, 2006. The program currently provides rental housing vouchers to 82 very low- income, formerly homeless seniors. On December 29, 2011, the California Supreme Court issued a final decision in the case of California Redevelopment Association v. Matosantos, issuing a decision to 2 uphold AB 26 which dissolves redevelopment agencies by February 1. 2012. On January 10. 2012, in accordance with Section 34176 of Part 1.85 of the Health and Safety Code (Section 34176), the City Council approved the transfer of the Agency's housing assets and functions to the City. Staff recommends that the City enter into an Agreement with the Authority so that the Authority may implement the City's obligations under Section 34176 and assume the City's obligations under the Cooperation Agreements and Implementing Agreements, pertaining to affordable housing production, preservation and assistance activities, and managing all housing assets transferred to the City. Affordable housing programs in Santa Monica are of local and regional significance. At the local level, Santa Monica voters have consistently confirmed that the preservation and promotion of a diverse local community is of paramount importance through voter adoption of rent control, extended affordable housing production authority, and flexible requirements to create opportunities for affordable housing as part of the requirement for market -rate housing. Council has adopted many policies and plans to support a diverse local community, ranging from the Housing, Land Use, and Circulation Elements of the General Plan to the Affordable Housing Production Program Ordinance. At the regional level, Santa Monica is an important job center and visitor destination. The provision of housing for families with a range of incomes helps address the needs of low- income families in the region and supports regional jobs and housing goals, thereby reducing commuting pressures throughout the region. As a regional leader in combatting homelessness, Santa Monica's housing programs and "housing first" approach is critical to reducing homelessness. Discussion Given the local and regional importance of continuing affordable housing production and preservation programs, as well as housing assistance programs in Santa Monica, staff recommends that the City and Housing Authority enter into an agreement assigning proceeds from the Housing Obligation Funds to the Housing Authority so that it can ensure that these critical programs continue to support low- income families. Staff 3 recommends that the agreement address three critical elements of Santa Monica's efforts. Housing Loan Monitoring and Custodial Services Santa Monica has loaned over $303 million for the production and preservation of over 2,900 affordable apartments. Ongoing custodial responsibilities provided by staff include: monitoring affordability covenants, reviewing affordable housing operations for compliance with loan agreements, determining eligibility, maintaining a waiting list, and providing technical assistance. Pursuant to the funding committed to the City under the terms of Cooperation Agreements with the Agency, staff recommends that these responsibilities and associated funding be transferred and committed to the Housing Authority. Housing Production and Preservation The Cooperation Agreements between the Agency and City provide funding for the City to implement affordable housing production and preservation activities, including new housing for seniors, families, and people with special needs, as well as the acquisition, rehabilitation, and deed restriction of 1,219 existing apartments for low and moderate - income households. To help ensure that these activities can continue pursuant to the Cooperation Agreements, staff recommends that these responsibilities and associated funding be transferred and committed to the Housing Authority. Senior Homelessness Prevention and Rental Assistance Program Currently, 82 very low- income, formerly homeless seniors receive monthly rental assistance pursuant to this program. In order to ensure that this extremely vulnerable population does not lose its housing, staff recommends that the these responsibilities and associated funding be transferred and committed to the Housing Authority. Under the recommended terms of the proposed agreement with the Housing Authority, the City agrees to provide the Housing Authority with proceeds from the Housing Obligation Funds for administration and implementation of these three affordable 0 housing efforts. The Housing Obligation Funds would come from housing set - aside, existing bond and loan proceeds, as well as fund balances, available to the City as a result of the Agency's payment of funds pursuant to the Cooperation Agreements. Financial Impacts & Budget Actions Assigning the affordable housing responsibilities and funding functions to the Housing Authority helps ensure that the critical programs to support low and moderate - income families will continue. To implement the transfer, staff is requesting the following budget appropriations and changes: Account Name Transfer from RDA Transfer to Housing Fund Decrease Low /Mod Housing Fund accounts Affordable Housing Operations Account Amount 12695.570290 - $20,282,711 01695.570290 $20,282,711 Various - $20,282,711 R125005.589000 ' $20,282,711 Prepared by: Barbara Collins, Housing Manager 5 Forwarded to Council: Rod Gould City Manager Reference Contract No. 9542 (CCS /HAS).