SR-12-15-2015-3B
City Council
Report
City Council Special Meeting: December 15, 2015
Agenda Item: 3.B
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To: Mayor and City Council
From: Andy Agle, Director, Housing Division, Housing and Economic Development
Gigi Decavalles-Hughes, Director
Subject: Annual Report on Housing Asset Fund
Recommended Action
Staff recommends that the City Council:
1. Receive the attached Annual Report on the Low- and Moderate-Income Housing
Asset Fund for Fiscal Year 2014-15 and direct City staff to post the report on the
City's website by December 31, 2015; and
2. Direct staff to present the independent audit of the Low- and Moderate-Income
Housing Asset Fund to City Council upon completion of the independent audit of
the City’s Comprehensive Annual Financial Report (CAFR) and post the results
of the audit on the City's website after presentation to Council.
Executive Summary
State law requires the City to prepare an annual report regarding the low- and
moderate-income housing asset fund of the former Santa Monica
Redevelopment Agency. The law also requires the completion of an independent audit
of the fund. The annual report is attached and the audit is being completed as part of
the City’s annual audit process.
Background
Senate Bill 341 (SB 341), which is codified in Health and Safety Code Section 34176.1
and became effective on January 1, 2014, requires each housing successor that
assumed the housing functions of a former redevelopment agency to post a report on its
website that contains information regarding the low- and moderate-income housing
asset fund (Fund) of the former redevelopment agency fo r the previous fiscal year.
In this case, the City, as the housing successor (Housing Successor), is required to
prepare and post the report on its website.
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In addition, the Housing Successor is required to conduct and provide to the Council an
independent financial audit (Audit) of the Fund within six months of the end of the
fiscal year. The Audit may be included as part of the City’s independent financial audit.
Discussion
The City as Housing Successor assumed the housing functions of the former Santa
Monica Redevelopment Agency (RDA) on January 10, 2012 (Attachment B Weblink).
The transfer of the functions included the transfer of formerly designated RDA low- and
moderate-income housing funds together with any funds generated by former RDA
housing assets. The funds must be maintained by the City in the separate Fund and
expended in accordance with Health and Safety Code section 34176.1
(Section 34176.1).
To ensure that the monies in the Fund are expended in accordance with the law,
Section 34176.1(f) requires an independent financial audit of the Fund within six months
of the end of the fiscal year. The independent audit of the City’s Fund will be included
as part of the City’s comprehensive annual financial report (CAFR) prepared by Macias
Gini & O’Connell LLP, the City’s independent auditor. Staff is working to complete the
CAFR during the required six-month timeframe. Staff will post the results of the
independent audit of the Fund on its website after the CAFR is presented to City
Council.
SB 341 also requires annual reporting and posting of fiscal year 2014-2015 activities
related to the Fund. The Report includes the following information:
The Fund balance for the fiscal year ending June 30, 2015 is $2,527,363, with
$2,283,642 of deposits from interest and residual receipts, and $603,958 of
expenditures during the period;
The former RDA’s replacement housing obligations are satisfied;
The former RDA’s inclusionary housing obligation was satisfied as of June 30,
2009;
Approximately 11.4 percent of the affordable housing assisted by the former RDA
is restricted to seniors; and
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There is “excess surplus” (unencumbered funds of more than one million dollars)
in the Fund, with a plan to encumber these funds within the next three fiscal
years.
The Annual Report is attached as Attachment A and is required to be posted on the
City's website after Council's review and receipt.
Financial Impacts and Budget Actions
There is no immediate financial impact or budget action necessary as a result o f the
recommended action.
Prepared By: Tina Rodriguez, Successor Agency Administrator
Approved
Forwarded to Council
Attachments:
A. Attachment A-Annual Report
B. January 12, 2012 Staff Report (Weblink)
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Attachment A
ANNUAL REPORT
REGARDING THE
LOW AND MODERATE INCOME HOUSING ASSET FUND FOR FISCAL YEAR 2014-2015
PURSUANT TO
CALIFORNIA HEALTH AND SAFETY CODE SECTION 34176.1(f) FOR THE
SANTA MONICA HOUSING SUCCESSOR
This Housing Successor Annual Report (Report) regarding the Low and Moderate Income
Housing Asset Fund (LMIHAF) has been prepared pursuant to California Health and Safety
Code Section 34176.1(f). This Report sets forth certain details of the Santa Monica Housing
Successor (Housing Successor) activities during fiscal year 2014-2015 (fiscal year).
The purpose of this Report is to provide the governing body of the Housing Successor an
annual report on the housing assets and activities of the Housing Successor under Part 1.85,
Division 24 of the California Health and Safety Code, in particular sections 34176 and
34176.1 (Dissolution Law).
This Report conforms with and is organized into sections I. through XI., inclusive, pursuant to
Section 34176.1(f) of the Dissolution Law:
I. Amount Deposited into LMIHAF: This section provides the total amount of funds
deposited into the LMIHAF during the fiscal year.
A total of $2,283,642 was deposited into the LMIHAF during the Fiscal Year 2014-15. This
accounted for payments made by borrowers in the form of residual receipt payments on
existing Housing Successor loans.
II. Ending Balance of LMIHAF: This section provides a statement of the balance in the
LMIHAF as of the close of the fiscal year.
At the close of the fiscal year, the ending balance in the LMIHAF was $2,527,363. The
remaining balance in the LMIHAF will be spent in accordance with SB341 allowable
housing uses as follows:
1) administration and monitoring expenses (with a cap based on Housing Successor
loan and grant receivables);
2) up to $250,000 per fiscal year on homelessness prevention and rapid rehousing
services (provided Housing Successor has fulfilled all replacement, affordable
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housing production, and monitoring, database compilation and web site publication
requirements); and
3) all other funds in the Housing Asset Fund can be used to develop, acquire,
rehabilitate, acquire long term affordability covenants for, or preserve lower income
housing, affordable to households earning 80 percent of median income or less.
The use of all other Housing Asset Fund category has the following expenditure
requirements:
a. 30% to Extremely Low income households;
b. no more than 20% on Households between 60-80% median income;
c. these requirements must be met over a 5-yr period.
III. Description of Expenditures from LMIHAF: This section provides a description of the
expenditures made from the LMIHAF during the Fiscal Year. The expenditures are to be
categorized.
Expenditures from the LMIHAF totaled $603,958 during this fiscal year on the Step Up on
Second property consisting of thirty-six units.
Housing Development Expenditures:
Expenditures on Low Income Units $ 18,119
Expenditures on Very Very Low Units $585,839
Total Housing Development Expenditures $603,958
IV. Statutory Value of Assets Ow ned by Housing Successor: This section provides the
statutory value of real property owned by the Housing Successor, the value of loans and grants
receivables, and the sum of these two amounts.
Under the Dissolution Law and for purposes of this Report, the “statutory value of real property”
means the value of properties formerly held by the former redevelopment agency as listed on the
housing asset transfer schedule approved by the Department of Finance under Section
34176(a)(2), the value of the properties transferred to the Housing Successor pursuant to
Section 34181(f), and the purchase price of property purchased by the Housing Successor.
Further, the value of loans and grants receivable is included in the reported assets held in the
LMIHAF.
The following provides the statutory value of assets owned by the Housing Successor.
Statutory Value of Real Property $ 11,635,000
Value of Loans and Grants Receivable $ 152,736,889
Total Value of Housing Successor Assets $ 164,371,889
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V. Description of Transfers: This section describes transfers, if any, to another housing
successor agency made in previous fiscal year(s), including whether the funds are
unencumbered and the status of projects, if any, for which the transferred LMIHAF will be used.
The sole purpose of the transfers must be for the development of transit priority projects,
permanent supportive housing, housing for agricultural employees or special needs housing.
The Housing Successor did not make any LMIHAF transfers to other Housing Successor(s)
under Section 34176.1(c) (2) during the fiscal year.
VI. Project Descriptions: This section describes any project for which the Housing
Successor receives or holds property tax revenue pursuant to the ROPS and the status of that
project.
The Housing Successor does not receive or hold property tax revenue pursuant to the
ROPS.
VII. Status of Compliance w ith Section 33334.16: This section provides a status update
on compliance with Section 33334.16 for interests in real property acquired by the former
redevelopment agency prior to February 1, 2012.
With respect to interests in real property acquired by the former redevelopment agency prior to
February 1, 2012, the time periods described in Section 33334.16 shall be deemed to have
commenced on the date that the Department of Finance approved the property as a housing
asset in the LMIHAF; thus, as to real property acquired by the former redevelopment agency
now held by the Housing Successor in the LMIHAF, the Housing Successor must initiate
activities consistent with the development of the real property for the purpose for which it was
acquired within five years of the date the DOF approved such property as a housing asset.
The following provides a status update on the real property or properties housing
asset(s) that were acquired prior to February 1, 2012 and compliance with five-year
period for initiating development activities:
Address of
Property
Date of
Acquisition
Deadline to
Initiate
Development
Activity
Status of Housing Successor
Activity
1725 Ocean
Avenue
April 11, 2000 October 2,
2018
The Agency transferred title to the
City on March 9, 2011, and DOF
approved it as a housing asset of the
Housing Successor on October 2,
2013.
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The property has been developed and
completed on March 17, 2014, with
160 affordable apartments.
1751
Cloverfield
Blvd
October 3, 2003 October 2,
2018
The Agency transferred title to the
City on March 9, 2011, and DOF
approved it as a housing asset of the
Housing Successor on October 2,
2013.
The property was developed and
completed on January 28, 2007
as a congregate housing and
emergency shelter, providing 55 beds
affordable to persons at or below
very-low income.
2018 19th
Street
June 26, 2009 October 2,
2019
The Agency transferred title to the
City on March 9, 2011, and DOF
approved it as a housing asset of the
Housing Successor on October 2,
2014.
On May 12, 2015 City Council adopted
Resolution 10878, declaring property
as surplus property and to commence
the process for inviting proposal for
the sale of the property. The sales
proceeds will be deposited in the
LMIHAF.
VIII. Description of Outstanding Obligations under Section 33413: This section
describes the outstanding inclusionary and replacement housing obligations, if any, under
Section 33413 that remained outstanding prior to dissolution of the former redevelopment
agency as of February 1, 2012 along with the Housing Successor’s progress in meeting those
prior obligations, if any, of the former redevelopment agency and how the Housing Successor’s
plans to meet unmet obligations, if any.
Replacement Housing: The former Redevelopment Agency had one replacement
housing obligation that it transferred to the Housing Successor. The outstanding
520 Colorado Avenue replacement housing obligation includes the replacement of
the 16 units which were removed. The replacement housing obligation was fulfilled
with the construction of 32 new apartments as part of the new housing development
at 520 Colorado Avenue, completed in October 21, 2015.
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Inclusionary/Production Housing: According to the Implementation Plan for the former
redevelopment agency, no Section 33413(b) inclusionary/production housing
obligations were transferred to the Housing Successor. The former redevelopment
Agency exceeded its total affordable housing production obligation for the ten-year
compliance period (fiscal year 2004-05 through fiscal year 2013-14) where 703 units
were affordable to very low, low or moderate income households, of which 302 were
affordable to very low income households. The former redevelopment agency’s
Implementation Plans are posted on the City’s website at:
http://www.smgov.net/Departments/HED/Housing_and_Redevelopment/RDA/Redevelop
ment_Documents.aspx.
IX. Income Test: This section provides the inf ormation required by Section 34176.1(a)(3)(B),
or a description of expenditures by income restriction for a five year period, with the period
beginning January 1, 2014 and whether the statutory thresholds have been met. However,
reporting of the Income Test is not required until 2019.
There is nothing to report at this time.
X. Senior Housing Test: This section provides the percentage units of deed-restricted
rental housing restricted to seniors and assisted individually or jointly by the Housing Successor,
its former Redevelopment Agency, and its host jurisdiction within the previous ten years in
relation to the aggregate number of units of deed-restricted rental housing assisted individually or
jointly by the Housing Successor, its former Redevelopment Agency and its host jurisdiction
within the same time period. For this Report, the ten-year period reviewed is July 1, 2005
through July 1, 2015.
The following provides the Housing Successor’s Senior Housing Test- Reporting
requirements for Implementation Plans pursuant to CRL Section 33490 (a)(2)(C)(iv):
68 Assisted Senior Rental Units 11.4% Senior Housing
597 Total Assisted Rental Units
XI. Excess Surplus Test: This section provides the amount of Excess Surplus
(unencumbered funds) in the LMIHAF, exceeding one million or the aggregate amount
deposited in the fund over the preceding four fiscal years if any, and the length of time that
the Housing Successor has had excess surplus, and the Housing Successor’s plan for
eliminating the excess surplus.
At the end of fiscal year 2014-2015 the LMIHAF had $2,527,363 in unencumbered funds.
Per SB 341, unencumbered funds over one million are defined as “Excess Surplus”. The
Housing Successor plans on encumbering these Excess Surplus funds within the three
fiscal years (required time frame, per SB341) to encumber these funds.