Agenda

Return

C.4

To:	Contra Costa County Housing Authority Board of Commissioners
From:	Joseph Villarreal, Housing Authority
Date:	May 22, 2018

Contra

Costa

County

Subject:

FY 2017-2018 4th QUARTER BUDGET REPORT

Action of Board On: 05/22/2018

APPROVED AS RECOMMENDED

OTHER

Clerks Notes:

VOTE OF SUPERVISORS

AYE:

John Gioia, Commissioner
Candace Andersen, Commissioner
Diane Burgis, Commissioner
Karen Mitchoff, Commissioner
Federal D. Glover, Commissioner
Jannel George-Oden, Commissioner

Contact:

925-957-8028

I hereby certify that this is a true and correct copy of an action taken and entered on the minutes of the Board of Supervisors on the date shown.
ATTESTED: May 22, 2018
,

BY:	, Deputy

RECOMMENDATIONS

ACCEPT the 4th Quarter (Unaudited) Budget Report for the period ending March 31, 2018.

BACKGROUND

This report is intended to provide the Board of Commissioners with an overview of the financial position of the Housing Authority of the County of Contra Costa (HACCC) for the 4th quarter period ending 3/31/2018. The report begins with a summary of HACCC’s overall fiscal standing at the end of the quarter. The overall numbers are then broken down by individual funds. Each fund overview includes a brief program summary and an explanation of the variance between budgeted and actual performance.


AGENCY OVERVIEW: Budget Report

BACKGROUND (CONT'D)

HACCC's overall budget position for the quarter ending 3/31/18 is shown in the chart below. Activity in Section 8 Voucher and Housing Certificate programs had the most significant impact on HACCC's budget.

The revenue increases of $20,276,644 is a result of federal funding being received at a greater level than budgeted.

The expenditure increases of $15,626,070 is a result of HUD raising the payment standards in the Section 8 Voucher and Housing Certificate programs for Northern California. This increase was necessary to assisted the authority to fully utilize the program, and families to find units in the market of rapidly rising rents.

HACC Agency Summary	Annual Budget	4th Quarter Actual 3/31/18	Remaining FY Estimate	Annual Total	Variance
Revenue	$ 114,267,871	$ 134,544,514	$ -0-	$ 134,544,514	$ 20,276,644
Expenditures	$ 116,685,046	$ 132,311,117	$ -0-	$ 132,311,116	$(15,626,070)
	$ (2,417,175)	$ 2,233,397	$ -0-	$ 2,233,398

The net change to reserve totals for the end of this fiscal year was a gain of $2,233,397. The net reduction to restricted reserves in the amount of $105,671 and net gain to unrestricted reserves of $2,339,068 is shown in the summary below.

Analysis of Agency Reserves	Beginning Balance 4/1/17 (Unaudited)	4th Quarter ending 3/31/18 (Unaudited)	Reserve Balance period ending 3/31/18 (Unaudited)
Total Reserves	$ 9,104,937	$ 2,233,397	$ 11,338,334

Restricted Reserves
Housing Choice Vouchers	$ -0-	$ -0-	$ -0-
Public Housing & Cap. Funds	$ -0-	$ -0-	$ -0-
State & Local Programs	$ 2,045,492	$ (105,671)	$ 1,939,821
Housing Certificates Programs	$ -0-	$ -0-	$ -0-
Total Restricted Reserves	$ 2,045,492	$ (105,671)	$ 1,939,821

Unrestricted Reserves
Housing Choice Vouchers	$ 3,908,751	$ 776,919	$ 4,685,670
Public Housing & Cap. Funds	$ 1,205,014	$ 1,142,849	$ 2,347,863
State & Local Programs	$ 1,945,680	$ 419,300	$ 2,364,980*
Housing Certificates Programs	$ -0- .	$ -0- .	$ -0- .
Total Unrestricted Reserves	$ 7,059,445	$ 2,339,068	$ 9,398,513

* Does not include unfunded pension & OPEB liability of roughly $15.9 million.

As a reminder, almost all reserves are restricted for use within each program. The designation of restricted or unrestricted reserves merely indicates that the funds are obligated for special use within the program (restricted) or that they can be used for any purpose tied to the program (unrestricted). The only reserves that can be used freely are unrestricted reserves within the State and Local Programs that are not tied to the tax credit properties. These reserves can be used to support any of HACCC’s programs.

FUNDS OVERVIEW:
Housing Choice Vouchers

Program Summary - The HCV program provides assistance to families in the private rental market. HACCC qualifies families for the program based on income. These families find a home in the private rental market and HACCC provides them with a subsidy via a HAP contract with the property owner. HAP is paid by HACCC directly to the owner. Through its HCV program, HACCC is authorized to provide affordable housing assistance to a maximum of 6,910 families. However, funding constraints limited program utilization to approximately 6,300 families.

Summary of Difference Between Budgeted and Annual Estimate:

Revenue – The revenue increase of $18,198,872 is a result of greater federal funding being received than budgeted.

Expenditures- The projected increase in expenditures of $18,199,323 was a result of increases in rental costs in the County. These rental cost increases were confirmed by HUD after an appeal by housing agencies in Alameda and Contra Costa counties. As a result of the new study funded by local agencies, HUD approved an increase of up to 33% in the FMR for the two counties. This increase was not properly projected in the HUD funding allocation for the 2017 annual funding, leading the Authority to become in a shortfall status. HUD has currently funded all short falls.

Housing Choice Vouchers	Annual Budget	4th Quarter Actual 3/31/18 (Unaudited)	Remaining FY Estimate	Annual Total	Variance
Revenue	$ 92,564,347	$ 110,763,219	$ -0-	$ 110,763,219	$ 18,198,872
Expenditures	$ 91,786,977	$ 109,986,300	$ -0-	$ 109,986,300	$(18,199,323)
	$ 777,370	$ 776,919	$ -0-	$ 776,919

Analysis of Program Reserves:

Housing Choice Vouchers	Beginning Balance 4/1/17 (Unaudited)	4th Quarter 3/31/18 (Unaudited)	Reserve Balance period ending 3/31/18 (Unaudited)

Restricted Reserves	$ -0-	$ -0-	$ -0-
Unrestricted Reserves	$ 3,908,751	$ 776,919	$ 776,919
Total Reserves	$ 3,908,751	$ 776,919	$ 4,685,670

Public Housing Operating and Capital Funds

Program Summary - HACCC owns and manages 1,179 public housing units at 16 different sites throughout the County. Operating funds for these properties come from tenant rents as well as an operating subsidy received from HUD that is designed to cover the gap between rents collected from the low-income tenants and annual operating expenses. HUD allocates the Capital Fund annually via formula to approximately 3,200 housing authorities. Capital Fund grants may be used for development, financing, modernization, and management improvements within public housing.

Summary of Difference Between Budgeted and Annual Estimate:

Revenue – The increase in revenue of $1,083,837 is a result of increased HUD funding over the annual budgeted amount for Capital Fund in the amount of $791,673 and an increase in HUD operating subsidy of $292,164.

Expenditures - The decrease in expenditures of $2,345,324 is a result of primary items, 1) Implementing GASB (General Accounting Standards Board) -75 Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions resulting in a prior period credit of $1,150,702 and 2) reduced capitalized projects completed in fiscal year in the amount of $1,194,622.

Public Housing Operating and Capital Fund	Annual Budget	4th Quarter Actual 3/31/18 (Unaudited)	Remaining FY Estimate	Annual Total	Variance
Revenue	$ 11,053,573	$ 12,137,410	$ -0-	$ 12,137,410	$ 1,083,837
Expenditures	$ 13,339,885	$ 10,994,561	$ -0-	$ 10,994,561	$ 2,345,324
	$ (2,286,312)	$ 1,142,849	$ -0-	$ 1,142,849

Analysis of Program Reserves:

Public Housing & Capital Fund	Beginning Balance 4/1/17 (Unaudited)	4th Quarter 3/31/18 (Unaudited)	Reserve Balance period ending 3/31/18 (Unaudited)

Restricted Reserves	$ -0-	$ -0-	$ -0-
Unrestricted Reserves	$ 1,205,014	$ 1,142,849	$ 2,347,863
Total Reserves	$ 1,205,014	$ 1,142,849	$ 2,347,863

State and Local Programs

Program Summary - HACCC administers a variety of programs and activities that are either not funded by HUD or that involve non-restricted HUD funds. Currently, HACCC is the managing general partner for two tax credit projects (DeAnza Gardens & Casa Del Rio) and also has a contract with the City of Antioch to run their rental rehabilitation program. HACCC receives management fees for administering the Public Housing and HCV programs under HUD’s asset-management model. In addition, the State and Local Program manages the employee pension and OPEB benefit program.

Summary of Difference between Budgeted and Annual Year-End Estimate:

Revenue –The projected decrease in revenue of $291,141 was related to rental loss in the tax credit programs.

Expenditures - The projected $1,550,311 reduction in expenditures is related to two primary factors, 1) tax credit properties accounted for $967,057 in saving due to timing difference in accounting periods. 2) implementing GASB (General Accounting Standards Board) -75 Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions in the amount of $583,254

State & Local Programs	Annual Budget	4th Quarter Actual 3/31/18 (Unaudited)	Remaining FY Estimate	Annual Total	Variance
Revenue	$ 6,231,322	$ 5,940,181	$ -0-	$ 5,940,181	$ (291,141)
Expenditures	$ 7,176,863	$ 5,626,552	$ -0-	$ 5,626,552	$ 1,550,311
	$ (945,541)	$ 313,629	$ -0-	$ 313,629

Analysis of Reserves:

State & Local Programs	Beginning Balance 4/1/17 (Unaudited)	4th Quarter 3/31/18 (Unaudited)	Reserve Balance Period ending 3/31/18 (Unaudited)

Restricted Reserves	$ 2,045,492	$ (105,671)	$ 1,939,821
Unrestricted Reserves	$ 1,945,680	$ 419,300	$ 2,364,980*
Total Reserves	$ 3,991,172	$ 313,629	$ 4,304,801

* does not include the unfunded pension & OPEB liability of roughly 15.9 million.


Housing Certificate Programs

Program Summary - HACCC administers two separate Housing Certificate Programs; Shelter Plus Care and Moderate Rehabilitation (Mod Rehab). The Shelter-Plus Care Program provides rental assistance for hard-to-serve homeless persons with disabilities in connection with supportive services funded from sources outside the program. HACCC assists approximately 311 clients under this program. The Mod Rehab program was designed in 1978 as an expansion of the rental certificate program. Mod Rehab was designed to provide low-cost loans for the rehabilitation of rental units in an effort to upgrade and preserve the nation's housing stock. In return, the owner agreed to provide long-term affordable housing for low income families. The program was repealed in 1991 and no new projects are authorized for development. HACCC administers 28 Mod Rehab units. It should be noted that effective December 1, 2017 the Mod Rehab. program has been merged into the Housing Choice Vouchers program.

Summary of Difference Between Budgeted and Annual Year-End Estimate:

Revenue & Expenditure -The projected increase of $1,285,076 in revenue is tied to the increase of $1,322,354 in HAP expenses. HUD increases revenue (to a budget cap) to reimburse HACCC for added rental costs.

Housing Certificate Programs	Annual Budget	4th Quarter Actual 3/31/18 (Unaudited)	Remaining FY Estimate	Annual Total	Variance
Revenue	$ 4,418,628	$ 5,703,704	$ -0-	$ 5,703,704	$ 1,285,076
Expenditures	$ 4,381,350	$ 5,703,704	$ -0-	$ 5,703,704	$ (1,322,354)
	$ 37,278	$ -0-	$ -0-	$ -0-

Analysis of Reserves:

Housing Certificate Programs	Beginning Balance 4/1/17 (Unaudited)	4th Quarter 3/31/18 (Unaudited)	Reserve Balance period ending 3/31/18 (Unaudited)

Restricted Reserves	$ -0-	$ -0-	$ -0-
Unrestricted Reserves	$ -0-	$ -0-	$ -0-
Total Reserves	$ -0-	$ -0-	$ -0-

VOTE OF SUPERVISORS

RECOMMENDATIONS

BACKGROUND

BACKGROUND (CONT'D)

FISCAL IMPACT

CONSEQUENCE OF NEGATIVE ACTION

CLERK'S ADDENDUM