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Housing Successor Agency Annual Report for Fiscal Year 2019-20. (Deanna Talavera, Management Analyst II and Mark Sawicki, RSG)
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RECOMMENDATION
Recommendation
Staff recommends that the City Council receive the Housing Successor Agency Annual Report for Fiscal Year 2019-20 for filing with the state Department of Housing and Community Development .
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BACKGROUND
The City of South San Francisco (“City”) is the Housing Successor Agency (“Housing Successor”) to the former South San Francisco Redevelopment Agency (“Agency”), which was dissolved on February 1, 2012. Each housing successor agency is required to prepare an annual report on how it is meeting requirements imposed by Health and Safety Code (“HSC”) Section 34176.1.
The report is due to the California Department of Housing and Community Development (“HCD”) by April 1st each year and must be posted on the City’s website. The report for Fiscal Year 2019-20 is attached to this staff report as Attachment 1, and is planning to be submitted to HCD by April 1, 2021. It is being presented to the City Council to receive and file.
DISCUSSION
The Housing Successor is meeting all compliance requirements of HSC Section 34176.1 for Fiscal Year 2019-20. Progress on major requirements are summarized below.
Housing Asset Fund Activity
As of June 30, 2020, the Housing Asset Fund balance was approximately $6 million ($5 million of which was cash). The Housing Asset Fund received $310,800 in revenues. The largest revenue source were rents from Housing Successor affordable rental properties ($95,755). Other revenue sources included interest income, loan repayments, and unrealized gains from investments.
The Housing Successor spent a total of $555,395 in Housing Asset Funds in Fiscal Year 2019-20. The expenditures consisted of both administrative items ($311,395) and rapid rehousing expenses ($244,000), in the form of Emergency Rental Assistance.
Real Property Assets and Loans Receivable
As the Housing Successor, the City owns four properties with a statutory value of $6.8 million:
• 339-341 Commercial contains two duplexes operated as affordable housing. The properties were originally purchased by the former Agency to mitigate a blighted property and create affordable housing.
• 714-718 Linden contains a triplex operated as affordable housing. The former Agency purchased the property in 2005 to preserve the affordability of the units after the original affordability covenants expired.
• 630 Baden contains the Magnolia Senior Apartments, a 125-unit affordable multifamily development. The Housing Successor owns 95,309-square feet of land under the building.
• 636 El Camino contains an affordable multifamily housing complex developed by MidPen Housing. The Housing Successor owns 87,121-square feet of land under the building.
All properties transferred from the former Agency to the Housing Successor were required to be developed with affordable housing or sold by August 31, 2017. The City meets this requirement because all properties transferred from the former Agency are operated as affordable housing or have been sold.
The Housing Successor also oversees over $21 million in loans receivable from First-Time Homebuyer Loans and Developer Loans issued by the former Agency. However, it is important to note that the majority of the loans receivable balance has been recorded as “uncollectible”, which is an accounting method used to show only the amounts we expect to be paid, in the Housing Asset Fund balance sheet. This is because many of the loans are not payable unless a property is sold or other conditions are met. Any loan repayments would be deposited into the Housing Asset Fund.
Expenditure Proportionality Requirements
Expenditures from the Housing Asset Fund must meet specific proportionality requirements by income level and age. In general:
• Administrative and monitoring expenses are capped at five percent of the value of Housing Successor properties and loans receivable on an annual basis. The cap was $1.4 million in Fiscal Year 2019-20.
• Up to $250,000 may be spent annually on rapid rehousing solutions for homelessness.
• If Housing Asset Funds are spent on housing projects and programs, within each five-year compliance period:
o At least 30% must be spent on extremely low income households (earning up to 30% of the Area Median Income);
o No more than 20% may be spent on low income households (earning 60-80% of the Area Median Income); and
o No monies may be spent on moderate or above moderate income households (earning more than 80% of the Area Median Income).
• No more than 50% of rental housing units assisted by the City or the former Redevelopment Agency in the prior 10 years may be restricted to seniors.
The Housing Successor meets the expenditure requirements because administrative and rapid rehousing expenses were below the annual limits, and there were no other housing development project and program expenditures. The Housing Successor also meets the senior housing requirement: of the 189 rental units assisted by the Redevelopment Agency or City within the last 10 years, 81 (43%) are restricted to seniors. Staff will ensure these requirements continue to be met with future expenditures.
Excess Surplus
Housing successors are subject to the same excess surplus requirement as former redevelopment agencies. An agency has an excess surplus if its cash balance is greater than $1 million, and it exceeds the sum of deposits in the prior four years. Housing successors must spend or encumber excess surplus within three fiscal years or transfer its excess surplus to HCD to spend on statewide housing programs.
South San Francisco's Housing Successor does not have an excess surplus as of June 30, 2020. Although the Housing Asset Fund’s beginning cash balance ($5.1 million) is greater than the sum of deposits in the prior four years ($2.7 million), the City has committed $2.45 million of Housing Asset Funds to the development of affordable housing at 201 Grand Avenue and 418 Linden Avenue.
FISCAL IMPACT
There are no implications of receiving and filing this annual report on the City’s activities as the housing successor agency to the former Agency.
CONCLUSION
Staff recommends that the City Council receive and file the Housing Successor Agency Annual Report for Fiscal Year 2019-20.
ATTACHMENT:
1. South San Francisco Housing Successor Agency Annual Report for Fiscal Year 2019-20