2009-04-22 (Report)
WOUSING AUTHORITY OF THE
:
CITY OF ENCINITAS
AGENDA REPORT
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N1eeting Date: Apri1 22, 2009
ti.._,....
TO: Chairperson and Housing Authority: Board
VIA: Phil Cotton, Executive DirectorN41-
, ~ FROM: ,Atrick Murphy, Planning & Building Director:
Diane Langager, Principa( Planner
;
Ron Barefield, Housing Administrator
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SUBJECT: Housing Aufhority of the'City of Encinitas sing Authority) Informational
Report Related to the 'Section 8 Housing Choice Voucher Program and Housing
Authority Owned Units
BACKGROUND: In 1994; the Gity Council established the Housing Authority of the City
of Encinitas `(Housing Authority) as a public housing agency (PHA). I PHA's are entities
that may operate independently from local jurisdictions with its own governing board or
choose to operate as a separate entity but with local jurisdictional governance. The
Housing Authority'sBoard is comprised of'the fivemembers of the City Council and two '
. tenant commissioners.
PHAs typically operate to provide two basic endeavors for lower income households:
administering rental assistance programs and, acquiring and/or developing affordable
housing. The Housing Authority provides rental assistance through 'the federal Section
8 Housing Choice Voucher Program (HCV) and also owns sixteen condorninium units:
Federal oversight and funding for the HCV program is through the Department of
Housing and Urban Development (HUD). Over several years, the Housing Authority
was able to obtain HUD approval to assist up to 136 households through the HCV
program. In 2003,the Housing Authority acquired sixteen "units in the Pacific Pines
condominium complex located at 1720 South EI Camino Real.
, ANALYSIS: This report provides a summary of actions taken by staff recently in the
operation of the Housing Authority's HCV program and owned: units. '
Section 8 Housin Choice Voucher LHCY) Program ~
Each year since federal Fiscal Year (FFY) 2003, Congress has passed an appropriation
act that has changed the manner in which PHA's HCV program funding has been
allocated. Sbme years have seen substantial changes from the previous year and
other years have seen relatively minor changes from the previous year. Three of the
most significant changes in the last five years are; that PHA's receive funding'for the
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current Calendar Year (CY), regardless of a PHA's Fiscal Year (FY); estabfishing a '
revised baseline for housing assistance payments (HAP) (referred to as "re-
benchmarking") based on reporting data over a HUD selected period of time; and,lhe
reduction of HAP reserves (referred to as "net restricted assets"). Prior to the imposed
revisions, HUD would fully fund the cost of each PHA's voucher_ As a result of the
revisions, HUD now only funds at a program level, which may not fully fund all the
PHA's vouchers and the next year's funds are based on the HAP expenditures of the
previous year, which results in a dawnward spiral of the funding IeveL
When confronted with these HUD program revisions, PHAs had a forced choice of
reducing the number of assisted household (i.e., not using the maximum number of
vouchers) or reducing the HAP to sustain the number of assisted households. The
Encinitas Housing Authority staff chose to maximize the number of households assisted
by reducing the HAP. The HAP reduction was accomplished through two procedures:
1) reduction of the payment standard; and, 2) imposing a more restrictive occupancy
standard.
The HAP is the amount of rent that the Housing Authority pays to the landlord on behalf
of the participant. Typically, the participant pays approximately 30 percent of their
income towards the rent and the Housing Authority pays the difference up to the
established payment standard. The Payment Standard is the maximum possible
subsidy a household under the HCV program will receive. A PHA may establish a
payment standard between 90 percent and 110 percent of the fair market rent based on
the number of bedrooms. The Fair Market Rent (FMR) is established annually by HUD.
The Occupancy Standard establishes the number of household members per bedroom
and unit.
Housing Authority staff reviewed the five other housing authorities within San Diego
County related to payment standards and ocupancy standards and found that the
Housing Awthority did not have equivalent standards for the region. As the Housing
Authority's standards were substandard compared to the region, it makes it difficult for
participants to find compliant housing and also limits the number of participating
landlords. The Housing Authority's payment standard was at 90 percent of FMR and. its
occupancy standard required finro persons per bedroom, which could result in a single
parent being required to share a bedroom with an adolesent child of different gender.
To address this issue, the Housing Authority's payment standard, related to the FMR,
was increased to: 100 percent for zero and one bedroom units; 97 percent for a two-
bedroom unit; 90 percent for three-bedroom and four-bedroom units; and, 95 percent
for a mobilehome. These payment standards were determined based on market
availability and participant need. The revised Housing Authority's occupancy standard
allows a head of household or head of household and spouse to occupy one bedroom
and thereafter two persons per bedroom.
These actions address HUD's recent requirements; however they may result in the lack
of ability to fully fund all 136 vouchers (i.e., not assisting 136 households based on
current funding levels). However, the current federal Administration and Congress ~
have engaged in discussions that might lead to increased funding that could fully fund
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the Housing Authority's HCV program in future years and the City Council is considering !
the funding of a tenant-based rental assistance program based on the Housing ~
Authority's HCV program that could increase the number of households assisted with ~
their rents.
Pacific Pines Condominiums
As noted, the Housing Authority owns sixteen units, which have been rented to HCV
program participants. The HAP and the participant payment for those units results in
rental income revenue for the Housing Authority. Beyond the operating costs of the
units, the Housing Authority must also debt service a conventional mortgage on the
units. Currently, there is a positive cash flow for the owned units. The units are
managed by a private, locally based property manager (Hunter Properties) through an
annual contract. These units are not "public housing", since no public housing funds
were used in the acquisition or operation of the units_ However, federal Community
Deve{opment Block Grant (CDBG) :program and HOME Investment Partnership
(HOME) program funds were used in the acquisition of the units and occupants and
rents are subjecf to the funding regulations, in addition to the HCV program regulations.
The Housing Authority can not require HCV program participants to lease these units
when vacancies occur. Housing Authority staff can only list the property for a
participant's consideration just as other properties are provided to the participants for
their leasing consideration. Therefore, vacancies can :occur in the Housing Authority units that will not be occupied by HCV participants.
Staff has directed the Housing Authority's property manager to list and lease any vacant
units subject to CDBG and HOME regulations, which requires occupancy by lower
income households. This approach will expedite the lease-up of any vacant units and
provide for continued rental income revenue.
Other Information
Additionally, staff had engaged the services of a consultant (Nan McKay and
Associates, Inc.) to review the Housing Autharity's financial management system and
verify the accuracy of its data submissions. Although the review indicated #hat the
Housing Authority's financial management system for the HCV program is sufficient,
some recommended enhancements resulted in increased detail in the general ledger,
which makes HUD reporting easier and more accurate, and some previously submitted
data was corrected.
Finally, HUD has relieved a smaller PHA (i.e., less than 550 combined HCV and Public
Housing units) of processing an annual PHA Plan. A PHA Plan is smiliar to a
jurisdiction's requirement for receiving federal housing and community development
funds to annually file an Action Plan. Therefore, staff will nof need to prepare a
Housing Authority PHA Plan, which eliminates the need for a public review and
: comment period, a Housing Authority Board approval, and submittal to HUD for
approval this year and in future years. However, the revised regulations still require the
processing of a Five-Year PHA Plan and Annual Plan. So, a Five-Year PHA Plan for
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FY2010-15 with an Annual Plan for FY2010-11 will be prepared and processed in early
2010.
FISCAL AND STAFF IMPACT: ,
There are no fiscal or staff impacts related to this action.
RECOMMENDATION:
Receive the report. `
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