SR 12-13-2022 5H
City Council
Report
City Council Meeting: December 13, 2022
Agenda Item: 5.H
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To: Mayor and City Council
From: Andy Agle, Director, Community Services Department, Housing and Human
Services
Subject: Annual Report on Low-Mod Housing Income Asset Fund
Recommended Action
Staff recommends that the Redevelopment Successor Agency:
1. Receive the Annual Report on the Low- and Moderate-Income Housing Asset
Fund for Fiscal Year 2021-22 and authorize the City Manager to post the report
on the City's website by December 31, 2022; and
2. Direct the City Manager 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 Annual Comprehensive Financial Report (ACFR)
and authorize the City Manager 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 local strategy that
supports the Council’s priorities of Addressing Homelessness and Equitable and
Inclusive Economic Recovery. City funding to support the investments comes from a
variety of sources (e.g., 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 Santa Monica 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.
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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
a 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 of the California Health and Safety
Code and which became effective on January 1, 2014, requires the City, as the Housing
Successor, to prepare and post the report on its website that contains information
regarding the Fund for the previous fiscal year (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 2021-22 was
$13,553,164 with $439,409 in deposits from City-Agency loan repayments,
interest income, residual receipts, and $946,815 in expenditures for the
development of affordable housing. The balance is currently set aside as part of
the adopted Housing Element strategy to focus the City’s affordable housing
efforts towards City-owned sites.
The use of City-owned land for affordable housing provides multiple benefits
including maximizing the value of the City’s Housing Trust Funds as most of the
City’s Housing Trust Funds loaned to affordable housing organizations are used
to acquire land. By contributing land that it already owns, the direct cost of
acquiring land is eliminated and the City can stretch its Housing Trust Funds
further to increase the supply of affordable housing. The balance in the Fund
may be needed by affordable housing organizations for pre-development costs
and/or closing the construction gap for affordable housing developments on City-
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owned sites, such as the former site of Parking Structure 3 or the forthcoming
Request for Proposals for the City-owned sites near Wilshire Boulevard and 14th
Street. Based on the six most recent new construction housing developments
that the City funds, the average City subsidy for pre-development costs and
closing the construction gap was $106,768 per affordable residence and an
average City subsidy for land acquisition was $156,145 per affordable residence.
Given this average subsidy, the balance in the Fund could provide subsidy to
approximately 127 affordable residences on City-owned sites while it would
support only 52 homes if private land must be purchased;
• $121,748 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;
• obligations related to development or disposition of real property acquired by the
former RDA prior to February 1, 2012 have been met;
• the senior housing test has been met, with 25 percent of assisted residences
deed-restricted to seniors within the previous 10 years; and
• currently there are no excessive 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
Annual Comprehensive Financial Report (ACFR). Staff is working to complete the
ACFR and will post the results of the independent audit of the Fund on the City’s
website upon issuance of the financial statements.
Environmental Review
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The adoption of the annual report is not a project within the meaning of the California
Environmental Quality Act (CEQA)(Public Resources Code section 21000 et seq.)
because the report will not cause either a direct physical change in the environment, or
a reasonably foreseeable indirect physical change in the environment.
Financial Impacts and Budget Actions
There is no immediate financial impact or budget action necessary as a result of the
recommended action.
Prepared By: Natalie Verlinich, Senior Development Analyst
Approved
Forwarded to Council
Attachments:
A. Attachment A - 2021-22 LMIHAF Annual Summary Report
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Santa Monica Housing Successor Page | 1
Attachment A
ANNUAL REPORT
REGARDING THE LOW AND MODERATE INCOME HOUSING ASSET FUND
FOR FISCAL YEAR 2021-2022
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 2021-2022 (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).
Fiscal Year 2020-2021 was the final year that the City received payment pursuant to 34191.4(b)(3)(A) from
the repayment of City-Agency loans.
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.
Pursuant to 34191.4(b)(3)(B) and 34191.4(b)(3)(C) $0 was deposited into the LMIHAF during the Fiscal Year,
of which none of the funds deposited into the LMIHAF were held for items listed on the ROPS. Other
amounts deposited into the LMIHAF during Fiscal Year were $439,409 from residual receipts (affordable
housing loan repayments) and interest income.
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 $13,553,164 of which $0 was held for
items listed on the ROPS.
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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.
$ 362,857
Homeless Prevention and rapid rehousing services $ 0
Development of affordable housing pursuant to 34176.1(a)(3)(A) $ 583,958
Total LMIHAF Expenditures $ 946,815
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 $ 140,404,014
Total Value of Housing Successor Assets $ 151,464,014
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.
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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 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, 2021
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
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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 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, 2012 through June 30, 2022.
Description Amount
Number of Assisted Senior Rental Units 126
Number of Total Assisted Rental Units 514
Senior Housing Percentage 25%
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 $ 13,553,164
Less Encumbrances $ (121,748)
Unencumbered balance $ 13,431,416
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
$ (16,500,171)
Excess Surplus $ None
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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.
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