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Home My WebLink About80A - HOUSING SUCCESSOR ANNUAL REPORTREQUEST FOR COUNCIL/ HOUSING AUTHORITY � ACTION CITY COUNCIL MEETING DATE: DECEMBER 17, 2019 TITLE RECEIVE AND FILE HOUSING SUCCESSOR ANNUAL REPORT FOR FY 2018-19 — LOW AND MODERATE INCOME HOUSING ASSETFUND {STRATEGIC PLAN NO. 5, 11 /s/Kristine Ridge /s/Steven Mendoza CITY MANAGER EXECUTIVE DIRECTOR RECOMMENDED ACTION CITY COUNCIL ACTION Receive and file. HOUSING AUTHORITY ACTION Receive and file. CLERK OF COUNCIL USE ONLY: APPROVED ❑ As Recommended ❑ As Amended ❑ Ordinance on 111 Reading ❑ Ordinance on 2i1 Reading ❑ Implementing Resolution ❑ Set Public Hearing For CONTINUED TO FILE NUMBER DISCUSSION Pursuant to the Dissolution Act, on January 9, 2012 the City Council designated the Housing Authority as the Successor Housing Agency to the dissolved Community Redevelopment Agency of the City of Santa Ana (RDA). Effective February 1, 2012, the Housing Authority retained the housing assets, duties, functions and obligations of the former RDA and continued to complete the housing development projects encumbered prior to the dissolution of the RDA. Senate Bill (SB) 341, signed by the Governor on October 1, 2013, amended the Health & Safety Code (HSC) Section 34176 and addresses functions to be performed by the housing successor agencies. This bill, effective January 2014, required all housing successor agencies to provide an annual report to its governing body within six months after the end of the fiscal year, starting with FY 2013-14. Among the requirements is an independent financial audit of the Low and Moderate Income Housing Asset Fund (LMIHAF), and information regarding specific housing financial data and activities. The independent financial audit of the LMIHAF is included in the City's Comprehensive Annual Financial Report (CAFR) for Fiscal Year (FY) 2018-19, as prepared by the Finance and Management Services Agency, and is posted on the City's website at https://www.santa-ana.org/finance/comprehensive-annual-financial-reports-cafr-and-other- financial-reports. Assembly Bill (AB) 1793, signed by the Governor on September 27, 2014, further amended HSC Section 34176.1 to require housing successor agencies to include additional information on homeownership units assisted by the former RDA or housing successor that are subject to covenants or restrictions. The FY 2017-18 annual report included this additional information and E:1�1hw Housing Successor Annual Report FY 2018-19 December 17, 2019 Page 2 any changes that occurred in the last fiscal year are identified in the FY 2018-19 annual report (Exhibit 1). STRATEGIC PLAN ALIGNMENT Approval of this item supports the City's efforts to meet Goal #5 — Community Health, Livability, Engagement & Sustainability, Objective #1 (Establish a comprehensive community engagement initiative to expand access to information and create opportunities for stakeholders to play an active role in discussing public policy and setting priorities). FISCAL IMPACT There is no fiscal impact associated with this action. Steven A. Mendoza Executive Director Community Development Agency Exhibit: 1. Housing Successor Annual Report FY 2018-19 80A-2 HOUSING SUCCESSOR ANNUAL REPORT REGARDING THE LOW AND MODERATE INCOME HOUSING ASSET FUND FOR FISCAL YEAR 2018-2019 PURSUANT TO CALIFORNIA HEALTH AND SAFETY CODE SECTION 34176.1(f) FOR THE HOUSING AUTHORITY OF THE CITY OF SANTA ANA 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) and is dated as of December 17, 2019. This Report sets forth certain details of the Housing Authority of the City of Santa Ana (Housing Successor) activities during Fiscal Year 2018-2019 (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). The following Report is based upon information prepared by Housing Successor staff and information contained within the independent financial audit of the Low and Moderate Income Housing Asset Fund, as incorporated in the City of Santa Ana Comprehensive Annual Financial Report for Fiscal Year 2018-2019 (Fiscal Year) as prepared by White Nelson Diehl Evans LLP (Audit), which Audit is separate from this annual summary Report; further, this Report conforms with and is organized into sections I. through XII., inclusive, pursuant to Section 34176.1(f) of the Dissolution Law: I. Amount Deposited into LMIHAF: This section provides the total amount of funds deposited into the LMIHAF during the Fiscal Year. Any amounts deposited for items listed on the Recognized Obligation Payment Schedule (ROPS) must be distinguished from the other amounts deposited. II. 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. III. 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. IV. 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. HOUSING AUTHORITY OF THE CITY OF SANTA 8/19 Page 1 V. 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. VI. 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. VI 1. 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. For interests in real property acquired on or after February 1, 2012, provide a status update on the project. Vill. 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. IX. Income Test: This section provides the information required by Section 34176.1(a)(3)(B), or a description of expenditures by income restriction for five year period, with the time period beginning January 1, 2014 and whether the statutory thresholds have been met. Information is provided covering the period of January 1, 2014 — June 30, 2019. X. Senior Housing Test: This section provides the percentage of 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 10 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 January 1, 2009 to December 31, 2018. XI. Excess Surplus Test: This section provides the amount of excess surplus in the LMIHAF, if any, and the length of time that the Housing Successor has had excess surplus, and the Housing Successor's plan for eliminating the excess surplus. XI I. Inventory of Homeownership Units: This section provides an inventory of homeownership units assisted by the former redevelopment agency or the Housing Successor that are subject to covenants or restrictions or to an adopted program that HOUSING AUTHORITY OF THE CITY OF SANTA 8/19 Page 2 protects the former redevelopment agency's investment of moneys from the Low and Moderate Income Housing Fund pursuant to Section 33334.3(f). This Report is to be provided to the Housing Successor's governing body by December 31, 2019. In addition, this Report and the former redevelopment agency's pre -dissolution Implementation Plans are to be made available to the public on the City's website (https://www.santa-ana.org/cd/oversight-board.) I. AMOUNT DEPOSITED INTO LMIHAF A total of $786,125 was deposited into the LMIHAF during the Fiscal Year. Of the total funds deposited into the LMIHAF, a total of $0 was held for items listed on the ROPS. II. ENDING BALANCE OF LMIHAF At the close of the Fiscal Year, the ending balance in the LMIHAF was $1,628,993 of which $0 is held for items listed on the ROPS. III. DESCRIPTION OF EXPENDITURES FROM LMIHAF The following is a description of expenditures from the LMIHAF by category: Monitoring & Administration Expenditures $ 247,165 1 Homeless Prevention and Rapid Rehousing Services Expenditures $ 0 Housing Development Expenditures ➢ Expenditures on Moderate Income Units $ 150,827 ➢ Expenditures on Low Income Units $2,921,302 ➢ Expenditures on Very -Low Income Units $ 471,213 ➢ Expenditures on Extremely -Low Income Units $1,411,963 ➢ Total Housing Development Expenditures $4,955,305 Total LMIHAF Expenditures in Fiscal Year $5,202,470 2 The independent financial audit of the LMIHAF includes an additional $3,400,295 for bad debt expenses for loans receivable, for a total expenditure of $3,647,460. 2 Including the additional item from footnote 1 above, the total LMIHAF per the audit is $3,902,765. However, this total does not reflect $4,700,000 in loans for the development of 51 affordable housing units. HOUSING AUTHORITY OF THE CITY OF SANTA 8/19 Page 3 IV. STATUTORY VALUE OF ASSETS OWNED BY HOUSING SUCCESSOR IN LMIHAF 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(0, and the purchase price of property(ies) purchased by the Housing Successor. Further, the value of loans and grants receivable is included in these reported assets held in the LMIHAF. The following provides the statutory value of assets owned by the Housing Successor. V. DESCRIPTION OF TRANSFERS The Housing Successor did not make any LMIHAF transfers to other Housing Successor(s) under Section 34176.1(c)(2) during the Fiscal Year. VI. PROJECT DESCRIPTIONS The following is a description of project(s) for which the Housing Successor receives or holds property tax revenue pursuant to the ROPS as well as the status of the project(s): N/A All former projects on the ROPS have been VI 1. STATUS OF COMPLIANCE WITH SECTION 33334.16 Section 34176.1 provides that Section 33334.16 does not apply to interests in real property acquired by the Housing Successor on or after February 1, 2012; however, this Report presents a status update on the project related to such real property. 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 HOUSING AUTHORITY OF THE CITY OF SANTA 8/19 Page 4 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: The following provides a status update on the project(s) for property or properties that have been acquired by the Housing Successor using LMIHAF on or after February 1, 2012: Vill. DESCRIPTION OF OUTSTANDING OBLIGATIONS PURSUANT TO SECTION 33413 Replacement Housing: According to the FY 2010 — FY 2015 Implementation Plan for the former redevelopment agency, the following replacement housing obligations were transferred to the Housing Successor: One (1) very -low income five -bedroom unit was removed in 2005. The replacement housing obligation transferred to the Housing Successor was fulfilled in a previous fiscal year with the WBBB project that accommodated a five -bedroom unit within the site. At the end of Fiscal Year 2018-2019, the Housing Successor has met all replacement housing obligations transferred from the former redevelopment agency. HOUSING AUTHORITY OF THE CITY OF SANTA 2 18/19 Page 5 Inclusionary/Production Housing. According to the FY 2010 — FY 2015 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's Implementation Plans are posted on the City's website at hftps://www.santa- ana.org/cd/oversight-board. IX. EXTREMELY -LOW INCOME TEST Section 34176.1(a)(3)(B) requires that the Housing Successor must require at least 30% of the LMIHAF to be expended for development of rental housing affordable to and occupied by households earning 30% or less of the AMI. If the Housing Successor fails to comply with the Extremely -Low Income requirement in any five-year report, then the Housing Successor must ensure that at least 50% of the funds remaining in the LMIHAF be expended in each fiscal year following the latest fiscal year following the report on households earning 30% or less of the AMI until the Housing Successor demonstrates compliance with the Extremely -Low Income requirement. This information below is for the period of January 1, 2014 — June 30, 2019: AMI 01/01/14 — 06/30/14 FY 2014-15 FY 2015/16 FY 2016/17 FY 2017/18' FY 2018/19 Totals 80%- 120% $624,636 $642,409 $445,032 $34,847 $0 $150,827 $1,897,751 50%-80% $58,832 $40,956 $300,376 $98,746 $1,624,510 $2,921,302 $5,044,722 30%-50% $19,365 $0 $0 $0 $2,606,004 $471,213 $3,096,582 0%-30% $8,853 $0 $0 $0 $4,219,469 $1,411,963 $5,640,285 Totals $711,686 $683,365 $745,408 $133,593 $8,449,983 $4,955,305 $15,679,340 % of Funds Expended on 30% or Less of AMI 1.24% 0% 0% 0% 49.93% 28.49% 35.97% ' Expenditures reflected corrected totals as compared to original FY 2017-18 report. $8,437,513 in loans for the development of 69 affordable housing units were not included. X. SENIOR HOUSING TEST The Housing Successor is to calculate the percentage of units of deed -restricted rental housing restricted to seniors and assisted by the Housing Successor, the former redevelopment agency and/or the City within the previous 10 years in relation to the aggregate number of units of deed -restricted rental housing assisted by the Housing Successor, the former redevelopment agency and/or City within the same time period. If this percentage exceeds 50%, then the Housing Successor cannot expend future funds in the LMIHAF to assist additional senior housing units until the Housing Successor or City assists and construction has commenced on a number of restricted rental units that is equal to 50% of the total amount of deed -restricted rental units. The following provides the Housing Successor's Senior Housing Test for the 10 year period of January 1, 2009 to December 31, 2018: HOUSING AUTHORITY OF THE CITY OF SANTA 8/19 Page 6 # of Assisted Senior Rental Units 0 # of Total Assisted Rental Units 541 Senior Housina Percentaae 0% XI. EXCESS SURPLUS TEST Excess Surplus is defined in Section 34176.1(d) as 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 provides the Excess Surplus test for the preceding four Fiscal Years: 3 The FY 2015/16 beginning balance is restated due to the reclassification of the long-term loans receivable from deferred inflows of resources, unavailable revenue, to an allowance for uncollectible accounts. HOUSING AUTHORITY OF THE CITY OF SANTA 8/19 Page 7 The LMIHAF does not have an Excess Surplus. (Refer to calculation below.) Fund Balance — June 30, 2019 $33,014,290 Less Unavailable Amounts Loans and notes ( 28,624,000) Land held for resale ( 2,855,050) Restricted cash and investments with fiscal agent ( 5,898) Liabilities —Accounts payables & deposits ( 97,972) Deferred inflows of revenues ( 3,020) Project Commitments and Monitoring ( 1,336,506) Available Low Income Housing Funds 91,844 Limitation (Greater of $1,000,000 or Four Years Deposits): Aggregate amounts deposited for preceding four fiscal years 2015 — 2016 312,836 2016 — 2017 138,585 2017 — 2018 540,960 2018 — 2019 786,125 Total deposits for the preceding four fiscal years 1,778,506 Base limitation 1,000,000 Greater Amount 1,778,506 Computed Excess Surplus — June 30, 2019 $ XI I. INVENTORY OF HOMEOWNERSHIP UNITS (A) As of June 30, 2019, there was a total of 60 homeownership units and 796 rental units subject to covenants or restrictions. Of this total, all 856 units had affordability restrictions. (B) During FY 2018-19, one (1) single family unit was lost to the portfolio as the borrower paid off the loan earlier than the original maturity date. (C) There were no funds returned to the Housing Successor as part of an adopted program that protects the former redevelopment agency's investment of moneys from the former Low and Moderate Income Housing Fund in FY 2018-19. (D) The Housing Authority of the City of Santa Ana has not contracted with any outside entity for the management of the units. HOUSING AUTHORITY OF THE CITY OF SANTA 1 1 Y /19 Page 8