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SR 12-15-2020 3M Redevelopment Successor Agency Report City Council Meeting: December 15, 2020 Agenda Item: 3.M 1 of 3 To: Redevelopment Successor Agency From: David Martin, Director, Administration Andy Agle, Director, Community Services Department Subject: Authorization to Post on City's Website the Annual Report on the 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 2019-20 and authorize staff to post the report on the City's website by December 31, 2020; 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. Summary The City provides financial assistance to support the acquisition, rehabilitation, and new construction of housing affordable to lower-income households, a primary local strategy that supports economic diversity and equity within Santa Monica. City funding to support the investments comes from a variety of sources (including voter-approved Measure GSH funds, loan repayments, and development impact fees), and is accounted for in various funds. The Low- and Moderate-Income Housing Asset Fund specifically accounts for the housing assets of the former Redevelopment Agency. 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 (RDA) and requires an independent audit of the Fund, which will be completed as part of the City’s annual audit process. 3.M Packet Pg. 735 2 of 3 Discussion 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. 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. Senate Bill 341, which is codified in 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 for the previous fiscal year. In this case, the City, as the Housing Successor, is required to prepare and post the report (Attachment A), after Council's review and receipt. The report includes the following information: • the balance in the Fund as of the close of the fiscal year was $11,486,172 with $5,487,696 in deposits from City-Agency loan repayments, interest income, residual receipts, and proceeds from the sale of property, and $1,235,246 in expenditures for the development of affordable housing; • $2,404,735 of the balance in the Fund has been encumbered by loan commitments to non-profit affordable housing organizations for the production and preservation of affordable housing; • the former RDA’s replacement housing and inclusionary housing obligations have been satisfied; • the obligations related to development or disposition of real property acquired by the former RDA prior to February 1, 2012 have been met; 3.M Packet Pg. 736 3 of 3 • the senior housing test has been met, with 29 percent of assisted units deed- restricted to seniors within the previous ten years; and • there are currently no excess accumulated funds (often called “excess surplus”) that need to be encumbered. Additionally, to ensure that the monies in the Fund are spent 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 Fund is conducted as part of the yearend audit by the City’s independent auditor and is included as part of the City’s Comprehensive Annual Financial Report (CAFR). Staff is working to complete the CAFR and will post the results of the independent audit of the Fund on its website after the CAFR is presented to Council. Financial Impacts and Budget Actions There is no immediate financial impact or budget action necessary as a result of the recommended action. Prepared By: Melissa Lindley, Principal Administrative Analyst Approved Forwarded to Council Attachments: A. Annual Summary Report-LMIHAF 19.20 3.M Packet Pg. 737 Santa Monica Housing Successor    Page | 1  Attachment A  ANNUAL REPORT  REGARDING THE LOW AND MODERATE INCOME HOUSING ASSET FUND  FOR FISCAL YEAR 2019‐2020  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 2019‐2020 (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 $15,240,600 pursuant to 34191.4(b)(3)(A) from the repayment of City‐Agency loans during  the Fiscal Year.   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 $3,048,120 was deposited into the LMIHAF pursuant to 34191.4(b)(3)(B) and 34191.4(b)(3)(C)  during the Fiscal Year. Of the total funds deposited into the LMIHAF, $0 was deposited for held for items  listed on the ROPS. Other amounts deposited into the LMIHAF during Fiscal Year were $2,439,576 from  residual receipts, interest income, and proceed from the sale of property.  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 $11,486,172 of which $0 was held for  items listed on the ROPS.  3.M.a Packet Pg. 738 Attachment: Annual Summary Report-LMIHAF 19.20 [Revision 1] (4310 : Annual Report on the Low- and Moderate-Income Housing Asset Fund) Santa Monica Housing Successor    Page | 2  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.  The following table provides the description of expenditures from the LMIHAF by category.  Expenditure Description  Amount  Monitoring and preserving the long‐term affordability of units subject to  affordability restrictions or covenants entered into by the redevelopment  agency or housing successor. Includes expenditures for administration of  affordable housing activities. (Negative amount due to refund of bank fees)  $  ‐2  Homeless Prevention and rapid rehousing services  $  0  Development of affordable housing pursuant to 34176.1(a)(3)(A) $  1,235,248  Total LMIHAF Expenditures  $  1,235,246  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 table provides the statutory value of assets owned by the Housing Successor.  Description  Amount  Statutory Value of Real Property  $  11,060,000  Value of Loans and Grants Receivable  $  152,632,983  Total Value of Housing Successor Assets $ 163,692,983  VI. Description of Transfers  This section describes transfers, if any, to another housing successor agency made in previous fiscal years,  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.     3.M.a Packet Pg. 739 Attachment: Annual Summary Report-LMIHAF 19.20 [Revision 1] (4310 : Annual Report on the Low- and Moderate-Income Housing Asset Fund) Santa Monica Housing Successor    Page | 3  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 table provides a status update on the real property acquired by the former redevelopment  agency prior to February 1, 2012 and transferred to the Housing Successor.   Property Address  Date  Acquired  DOF Approved  Transfer Date  Status as of June 30, 2020  1725 Ocean Avenue  4/11/2000  10/2/2013  The property was developed with 160  affordable apartments.  1751 Cloverfield  Bld.  10/3/2003  10/2/2013  The property was developed as congregate  housing and emergency shelter providing 55  affordable beds.  2018 19th Street  6/26/2009  10/2/2014  The property was sold. All sales proceeds  were 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 plans to meet unmet obligations, if any.  There are no outstanding inclusionary or replacement housing obligations pursuant to Section 33413. The  former Redevelopment Agency’s Implementation Plan is posted on the City’s website at:  http://www.smgov.net/uploadedFiles/Departments/HED/Housing_and_Redevelopment/RDA/Attach%20A %202009%205%20Yr%20Implementation%20Plan%20‐%20FINAL.pdf     3.M.a Packet Pg. 740 Attachment: Annual Summary Report-LMIHAF 19.20 [Revision 1] (4310 : Annual Report on the Low- and Moderate-Income Housing Asset Fund) Santa Monica Housing Successor    Page | 4  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 the period beginning January 1, 2014 and whether the statutory thresholds have  been met for 2019, and every five years thereafter, from January 1, 2014, through the end of the latest  fiscal year covered in the report.    This information is next required to be reported in the Fiscal Year 2023‐24.  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.    The following table provides the Housing Successor’s Senior Housing Test for the ten‐year period from July  1, 2010 through June 30, 2020.  Description  Amount  Number of Assisted Senior Rental Units  145  Number of Total Assisted Rental Units  501  Senior Housing Percentage  29%  XII. Excess Surplus Test  This  section  provides  the  amount  of  Excess  Surplus  in  the  LMIHAF  (defined  as  unencumbered  funds  exceeding one million or the aggregate amount deposited in the fund over the preceding four fiscal years,  whichever is greater), the length of time that the Housing Successor has had excess surplus, and the Housing  Successor’s plan for eliminating the excess surplus within three fiscal years.  This report calculates the excess surplus per the Health and Safety Code definition, which states that “the  ‘excess surplus’ shall mean an unencumbered amount in the account that exceeds the greater of one million  dollars ($1,000,000) or the aggregate amount deposited into the account during the housing successor’s  preceding four fiscal years, whichever is greater”.  The following table provides the calculation of the Excess  Surplus test.  Description    Amount  LMIHAF Balance  $  11,486,172 Less Encumbrances  $  (2,404,735) Unencumbered balance  $  9,081,437 Less the greater of $1,000,000 or the aggregate amount deposited into the account  during the housing successor’s preceding four fiscal years, whichever is greater  $  (13,210,740) Excess Surplus  $  0      3.M.a Packet Pg. 741 Attachment: Annual Summary Report-LMIHAF 19.20 [Revision 1] (4310 : Annual Report on the Low- and Moderate-Income Housing Asset Fund) Santa Monica Housing Successor    Page | 5  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.   3.M.a Packet Pg. 742 Attachment: Annual Summary Report-LMIHAF 19.20 [Revision 1] (4310 : Annual Report on the Low- and Moderate-Income Housing Asset Fund)