SR 12-05-2017 3B
City Council Report
City Council Meeting: December 5, 2017
Agenda Item: 3.B
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To: Mayor and City Council
From: Andy Agle, Director, Housing and Economic Development
Subject: Annual Report on Low- and Moderate-Income Housing Asset Fund
Recommended Action
Staff recommends that the City Council:
1. Receive the Annual Report on the Low- and Moderate-Income Housing Asset
Fund for Fiscal Year 2016-17 and authorize staff to post the report on the City's
website by December 31, 2017; and
2. Direct staff to present the independent audit of the Low- and Moderate-Income
Housing Asset Fund to the Council upon completion of the independent audit of
the City’s Comprehensive Annual Financial Report (CAFR) and authorize staff to
post the results of the audit on the City's website after presentation to City
Council.
Executive Summary
State law requires the City to report annually on the low- and moderate-income housing
asset fund (Fund) of the former Santa Monica Redevelopment Agency. For fiscal year
2016-17, the Fund included approximately $6.7 million to fund the production and
preservation of affordable housing within the next three years. In addition, the former
Agency’s inclusionary and replacement housing obligations have been satisfied.
The law also requires an independent audit of the Fund, which will be completed as part
of the City’s annual audit process.
Background
The low- and moderate-income housing asset fund (Fund) was established in the wake
of the dissolution of the redevelopment agency in early 2012. At that time, the City
assumed the housing functions of the former Santa Monica Redevelopment Agency
(RDA) and retained all housing assets as the housing successor (Housing Successor)
agency. The Housing Successor furthers the City’s strategic goal of “maintaining an
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inclusive and diverse community” by funding loans for the acquisition and rehabilitation
of existing housing and for the construction of new affordable housing. The Fund
receives revenues primarily from three sources: (1) twenty percent of City-Agency loan
repayments, (2) repayments made by low-income-housing agencies on loans initiated
by the former RDA, and (3) interest earned on cash balances. All moneys in the Fund
will be used for affordable housing initiatives. This is one of five Housing Trust Funds
that is used to fund loans to affordable housing developers for the acquisition,
rehabilitation, and new construction of properties to preserve and increase affordable
rental housing opportunities for lower income households.
Discussion
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 Fund of the former redevelopment
agency for the previous fiscal year. In this case, the City, as the Housing Successor, is
required to prepare and post the report (Attachment A.)
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.
The City as Housing Successor assumed the housing functions of the former RDA on
January 10, 2012. The transfer of the functions included the transfer of formerly
designated RDA low- and moderate-income housing assets 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"). Allowable expenditures include the development of
affordable housing, monitoring and preservation of housing subject to affordability
restrictions and covenants, and homeless prevention and rapid rehousing services for
homeless individuals.
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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
Lance, Soll and Lunghard (LSL), 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 website posting of information related to the
Fund for fiscal year 2016-2017. The Report includes the following information:
The Fund’s balance for the fiscal year ending June 30, 2017 is $6,733,228, with
$2,240,988 of deposits from City-Agency loan repayments, interest income, and
residual receipts, and zero 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 9.8 percent of the affordable housing assisted by the former RDA
and the Housing Successor is restricted to seniors; and
a plan to encumber “excess surplus” (the aggregate of unencumbered funds
deposited into the Fund during the preceding four fiscal years) in the Fund 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 & Budget Actions
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There is no immediate financial impact or budget action necessary as a result of the
recommended action.
Prepared By: Steven Hull, Principal Administrative Analyst
Approved
Forwarded to Council
Attachments:
A. Annual Summary Report-LMIHAF 16.17
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Attachment A
ANNUAL REPORT
REGARDING THE
LOW AND MODERATE INCOME HOUSING ASSET FUND FOR FISCAL YEAR 2016-2017
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 2016-2017 (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 the City received from City-Agency loans: This section provides the total amount
of funds received from repayment of City-Agency loans during the fiscal year pursuant to
Section 34191.4(b)(3)(A).
The City received $4,041,500 pursuant to 34191.4(b)(3)(A) from the repayment of City-
Agency loans during the Fiscal Year 2016-17.
II. Amounts Deposited into LMIHAF: This section provides the total amount of funds
deposited into the LMIHAF during the fiscal year, distinguishing between amounts deposited
pursuant to 34191.4(b)(3)(B) and 34191.4(b)(3)(C), amounts deposited for other items listed
on the Recognized Obligation Payment Schedule (ROPS), and other amounts deposited.
A total of $808,300 was deposited into the LMIHAF pursuant to 34191.4(b)(3)(B) and
34191.4(b)(3)(C) during the fiscal year 2016-17. Of the total funds deposited into the
LMIHAF, a total of $ 0.00 was held for items listed on the ROPS. Other amounts deposited
into the LMIHAF during fiscal year 2016-17 were $1,432,688 from residual receipts, return of
excess loan funds, and interest income.
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III. Ending Balance of LMIHAF: This section provides a statement of the balance in the
LMIHAF as of the close of the fiscal year. Any amounts deposited for items listed on the ROPS
must be distinguished from the other amounts deposited.
At the close of the fiscal year, the ending balance in the LMIHAF was $6,733,228 of which
$0 was held for items listed on the ROPS.
IV. 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.
There were no expenditures from the LMIHAF during this fiscal year.
V. Statutory Value of Assets Owned 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 as listed in such schedule
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 $ 152,693,850
Total Value of Housing Successor Assets $ 164,328,850
VI. 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.
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VII. 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.
VIII. Status of Compliance with 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.
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
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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.
The City is the process of considering
a sale of the property to another City
Department through an internal
transfer. Due diligence has
commenced during the fiscal year. All
sales proceeds will be deposited in
the LMIHAF.
IX. 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.
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/uploadedFiles/Departments/HED/Housing_and_Redevelopment/R
DA/Attach%20A%202009%205%20Yr%20Implementation%20Plan%20-%20FINAL.pdf
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X. Income Test: This section provides the information 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.
The Housing Successor expenditures by income restriction for the reporting period
thus far are on target to meet the statutory thresholds as required by HSC
34176.1(a)(3)(B).
Fiscal Year 2013-14 2014-15 2015-16 2016-17 Aggregate
Total Units 0 12 0 0 12
Extremely Low < or = 30% of AMI 0 226,484 0 0 37.5%
Very Low < or 50% of AMI 0 377,474 0 0 62.5%
Low < or = 80% of AMI 0 0 0 0 0.0%
Moderate < or = 120% AMI 0 0 0 0 0.0%
Total Expenditures 0 $ 603,958 0 0
XI. 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, 2007 through July 1, 2017.
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
697 Total Assisted Rental Units
9.8% Senior Housing Percentage
XII. Excess Surplus Test: This section provides the amount of Excess Surplus
(unencumbered funds) in the LMIHAF, defined as funds exceeding one million or the
aggregate amount deposited in the fund over the preceding three fiscal years, whichever is
greater, 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 2016-2017 the LMIHAF had $6,733,228 in unencumbered funds.
The Housing Successor held $4,492,240 for more than one fiscal year, with the balance of
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$2,240,988 held less than one fiscal year. Per SB 341, unencumbered funds over one
million or the aggregate amount deposited into the account during the housing
successor’s preceding three fiscal years, whichever is greater, are defined as “Excess
Surplus”. The Housing Successor plans on encumbering Excess Surplus of $2,527,363
within the current fiscal year as referenced in the forthcoming Housing Trust Fund
Guidelines’ Initial Plan. The Housing Successor also plans on encumbering Excess
Surplus of $1,964,877 within the next two fiscal years, and the balance of Excess Surplus
of $2,240,988 within the next three fiscal years, the required time frame per SB341 to
encumber these funds.
XIII. Inventory of homeownership units: This section provides an inventory of
homeownership units that were assisted by the former Redevelopment Agency or Housing
Successor that are subject to covenants or restrictions or to an adopted program that protects
the investment of moneys from the LMIHF pursuant to Section 33334.3(f) and includes any
losses of units to the portfolio, funds returned to the Housing Successor, and whether an
outside entity has been contracted to manage these units.
The Housing Successor does not have any homeownership units that were assisted by the
former Redevelopment Agency or the Housing Successor.