Item 13 - Planning and Administrative Charges for Affordable Housing Program
FROM:
Honorable Mayor and Members of the City Council
Honorable Chairman and Members of the Redevelopment Agency
James L. Bowersox, City Manager/Executive Dir~
Deborah Johnson, Director of it:ment Servicesl
Assistant Executive Directo
Tracey Bohlen, Senior Manage nalYS~
March 1, 2005
AGENDA REPORT SUMMARY
TO:
INITIATED BY:
DATE:
SUBJECT:
Planning and Administrative Charges for Affordable Housing Program
FY 2003-2004
ABSTRACT
California Health and Safety Code [Sections 33334.3(d) and (e)] authorize Redevelopment Agencies
to charge the actual cost of planning for and administering affordable housing programs to their Low-
and Moderate-Housing Funds. Costs must be directly related to specific affordable housing activities
and not be "disproportionate" to direct costs. It is required that the Agency annually approve the
planning and administrative expenses and determine that the charges are necessary for the
production, improvement, or preservation of low- and moderate-income housing. The accounts are
analyzed and the appropriate charges are posted at the end of each fiscal year. The findings are
presented in this report for approval.
ENVIRONMENTAL REVIEW
This action is not subject to CEaA review.
FISCAL IMPACT
None.
PUBLIC NOTIFICATION AND CORRESPONDENCE
None.
RECOMMENDATION
It is recommended that the City Council/Redevelopment Agency adopt the attached resolutions that
approve the expenditure of $611,815.99 in Low- and Moderate-Housing Funds for planning and
administration of the Agency's affordable housing program in FY 2003-2004, and make the requisite
benefit finding regarding the use of Low- and Moderate-Housing Funds for activities outside the
Proiect Area.
ACTION
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March 1, 2005 Item # 13
CITY OF POWAY
AGENDA REPORT
This report is included on the Consent Calendar. There will be no separate discussion of the report prior to approval by the City Council unless
members of the Council, staff or public request it to be removed from the Consent Calendar and discussed separately. If you wish to have this
report pulled tor discussion, please fill out a slip indicating the report number and give it to the City Clerk prior to the beginning of the City Council
meeting.
TO:
FROM:
Honorable Mayor and Members of the City Council
Honorable Chairman and Members of the Redevelopment Agency
James L. Bowersox, City Manager/Executive Dire~
Deborah Johnson, Director of R~Rt!' opment. Services/
Assistant Executive DirectoAt~ t..
Tracey Bohlen, Senior Managem t Analy~v",:.Y
\'-....../.
INITIATED BY:
DATE:
SUBJECT:
March 1, 2005
Planning and Administrative Charges for Affordable Housing Program
FY 2003-2004
BACKGROUND
Califomia Health and Safety Code [Sections 33334.3(d) and (e)] authorize Redevelopment
Agencies to charge the actual cost of planning for and administering affordable housing
programs to their Housing Funds. Costs must be directly related to specific affordable
housing activities and not be "disproportionate" to direct costs. It is required that the
Agency annually approve the planning and administrative expenses and determine that the
charges are necessary for the production, improvement, or preservation of low- and
moderate-income housing. The accounts are analyzed and the appropriate charges are
posted at the end of each fiscal year. The findings are presented in this report for
approval.
FINDINGS
The first cost component involves City and Agency staff time devoted to the Agency's
affordable housing program. These staff costs are directly associated with those eligible
projects and programs listed on Attachment C. Staff time is tracked on biweekly time
sheets submitted to and reviewed by Agency staff during the year. Staff costs are
calculated by taking the actual number of hours worked by each employee then multiplying
this number by the fully weighted hourly cost of that employee. The result of this
calculation is the identification of staff costs totaling $421,055.10.
The second cost component is for legal expenses directly related to the Agency's
affordable housing program. These legal services were provided by Agency General
Counsel (McDougal, Love, Eckis, Smith & Boehmer) and Agency Special Counsel
(Stradling, Yocca, Carlson & Rauth), and totaled $24,900.76 during FY2003-D4. Thethird
cost component is for assistance provided by the Agency's affordable housing consultant,
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Planning and Administrative Charges for Affordable Housing Program FY 2003-2004
March 1, 2005
Page 2
David Paul Rosen & Associates (ORA), which totaled $47,324.40. The cost of the annual
independent audit of the Agency's Housing Fund was $6,672.55. The final category of
expenses includes other consultants, training, membership dues, travel and meetings, and
postage expenses directly associated with the Agency's affordable housing program, which
totaled $111,863.18. Table 1 below summarizes the Agency's planning and administration
costs charged to the Housing Fund during FY 2003-04.
Table 1
Staff Costs
Legal Expenses
Housing Consultant and Studies
Other Consultants, dues, postage,
training, meetings
Audit
Total
$421,055.10
$24,900.76
$47,324.40
$111,863.18
$6,672.55
$611,815.99
Table 2 below illustrates the relationship between direct costs and planning/administration
costs for the Agency's Housing Fund over the past five years.
Table 2
FY 1999-00 $4,809,530 $459,665 9.6%
FY 2000-01 $7,490,213 $501,406 6.7%
FY 2001-02 $4,238,410 $489,627 11.6%
FY 2002-03 $4,353,092 $519,039 11.9%
FY 2003-04 $5,929,911 $611,816 10.3%
Totals $26,821,156 $2,581,553 9.6%
Average $5,364,231 $516,311 9.6%
Staff confirmed that charges for planning and administration are proportional to the actual
direct cost of producing, improving, or preserving the community's supply of affordable
housing. Consistent with the methodology approved in 1993, staff averaged the
administration costs incurred over the past five years to confirm that costs are reasonable
and proportionate. This "rolling average" method was recommended by the Agency's
Special Legal Counsel as the best approach for confirming the proportionality of planning
and administration expenses over time. Planning costs are usually high in the early,
preconstruction phases of project development and prior to incurring the majority of direct
costs.
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March 1, 2005 Item # t 3
Planning and Administrative Charges for Affordable Housing Program FY 2003-2004
March 1, 2005
Page 3
The average percentage of planning/administration costs in relation to direct costs is 9.6%,
as illustrated in Table 2. The use of 9.6% of the total Low- and Moderate-Fund
expenditure for planning and administration is a reasonable amount and not
disproportionate to the cost incurred for projects and programs managed by the Housing
Division.
The attached City/Agency resolutions (Attachments A & B) make the requisite findings of
necessity for planning and administrative costs charged to the Housing Fund in FY 2003-
2004. The City Council resolution also confirms the benefit of expenses incurred for
affordable housing activities outside the boundaries of the Redevelopment Project Area.
ENVIRONMENTAL REVIEW
This item is not subject to CEQA review.
FISCAL IMPACT
None.
ADDITIONAL PUBLIC NOTIFICATION AND CORRESPONDENCE
None.
RECOMMENDATION
It is recommended that the City Council/Redevelopment Agency adopt the attached
resolutions that approve the expenditure of $611,815.99 in Low- and Moderate-Housing
Funds for planning and administration ofthe Agency's affordable housing program in FY
2003-2004, and make the requisite benefit finding regarding the use of Low- and
Moderate-Housing Funds for activities outside the Project Area.
Attachments:
A.
B.
C.
City Council Resolution
Redevelopment Agency Resolution
Affordable Housing Projects and Programs
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March 1, 2005 Item # J 3
RESOLUTION NO. 05-
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF POWAY, CALIFORNIA
FINDING THAT HOUSING FUND MONIES USED OUTSIDE THE PROJECT AREA
FOR PLANNING AND ADMINISTRATIVE COSTS IN FY 2003-04
WERE OF BENEFIT TO THE PROJECT AREA
WHEREAS, Section 33334.2 of the California Health and Safety Code requires that
not less than 20 percent of taxes which are allocated to the Redevelopment Agency be
used for the purpose of increasing, improving, and preserving the community's supply of
housing available at an affordable housing cost to households with low and moderate
incomes; and
WHEREAS, the 2005 to 2009 Redevelopment and Housing Implementation Plan,
approved by the Redevelopment Agency Board on December 21, 2004, and outlines
projects and programs that will increase, improve and preserve the supply of housing
available at an affordable housing cost to households with low and moderate incomes; and
WHEREAS, Section 33334.3(e) provides that the Redevelopment Agency may
charge its Low- and Moderate-Housing Fund for planning and administrative costs which
directly relate to qualified low- and moderate-income housing projects and programs; and
WHEREAS, Section 33334.3(d) of the California Health and Safety Code provides
that the Redevelopment Agency must determine annually that the planning and
administrative expenses paid by the Low- and Moderate-Housing Fund are necessary for
the production, improvement or preservation of low- and moderate-income housing; and
WHEREAS, the Redevelopment Agency may expend monies from its Low- and
Moderate-Income Housing Fund for affordable housing projects and programs outside the
Project Area upon a finding by the Legislative Body that said expenditures are of benefit to
the Project Area; and
WHEREAS, in 1993 the Redevelopment Agency approved a detailed method for
calculating the actual cost of planning and administering the Agency's affordable housing
projects and programs; and
WHEREAS, Redevelopment Agency staff have completed a thorough analysis to
calculate the actual costs directly associated with the planning and administration of
affordable housing projects and programs that were charged to the Low- and Moderate-
Housing Fund during FY 2003-04.
ATTACHMENT A
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March 1, 2005 Item # 13
Resolution No. 05-
Page 2
NOW THEREFORE, BE IT RESOLVED by the City Council of the City of Poway as
follows:
Section 1. The expenditure of monies from the Redevelopment Agency's Low-
and Moderate-Income Housing Fund in FY 2003-04 to cover costs associated with
planning and administering its affordable housing program was necessary for the Agency
to meet its obligation to increase, improve, and preserve the supply of affordable housing
available within the City of Poway.
Section 2. The expenditure of $611,815.99 from the Redevelopment Agency's
Low- and Moderate-Income Housing Fund in FY 2003-04 was necessary to cover actual
costs incurred by the Agency in its efforts to increase, improve and preserve the
community's supply of housing available at an affordable housing cost to households with
low and moderate incomes.
Section 3. The amount of $611,815.99 represents the actual cost of planning for
and administering the affordable housing program, and said cost is not disproportional to
the Housing Fund monies expended to produce, improve or preserve said affordable
housing.
Section 4. Housing Fund monies that were expended during FY 2003-04 for
planning and administering the affordable housing program, some activities of which were
outside the Paguay Redevelopment Project Area, benefit the Project Area.
PASSED, ADOPTED, AND APPROVED by the City Council of the City of Poway,
California, at a regular meeting this 1 st day of March 2005.
Michael P. Cafagna, Mayor
ATTEST:
L. Diane Shea, City Clerk
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March 1, 2005 Item # J 3
Resolution No. 05-
Page 3
STATE OF CALIFORNIA )
. )SS
COUNTY OF SAN DIEGO )
I, L. Diane Shea, City Clerk of the City of Poway, do hereby certify under penalty of
perjury that the foregoing Resolution No. 05- was duly adopted by the City Council
at a meeting of said City Council held on this 1 st day of March 2005, and that it was so
adopted by the following vote:
AYES:
NOES:
DISQUALIFIED:
ABSENT:
L. Diane Shea, City Clerk
City of Poway
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March 1, 2005 Item # 13
RESOLUTION NO. R-05-
A RESOLUTION OF THE POWAY REDEVELOPMENT AGENCY
FINDING THAT PLANNING AND ADMINISTRATIVE COSTS CHARGED
TO THE HOUSING FUND IN FY 2003-04 WERE NECESSARY TO
INCREASE, IMPROVE AND PRESERVE THE SUPPLY
OF LOW- AND MODERATE-INCOME HOUSING
WHEREAS, Section 33334.2 of the California Health and Safety Code requires that
not less than 20 percent of taxes which are allocated to the Redevelopment Agency be
used for the purpose of increasing, improving, and preserving the community's supply of
housing available at an affordable housing cost to households with low and moderate
incomes; and
WHEREAS, the Redevelopment and Housing Implementation Plan, approved by the
Redevelopment Agency Board on June 29, 1999, and Redevelopment and the 2005 to
2009 Redevelopment and Housing Implementation Plan approved by the Redevelopment
Agency Board on December 21, 2004, outlines projects and programs that will increase,
improve and preserve the supply of housing available at an affordable housing cost to
households with low and moderate incomes; and
WHEREAS, Section 33334.3(e) provides that the Redevelopment Agency may
charge its Low- and Moderate-Housing Fund for planning and administrative costs which
directly relate to qualified low- and moderate-income housing projects and programs; and
WHEREAS, Section 33334.3(d) of the California Health and Safety Code provides
that the Redevelopment Agency must determine annually that the planning and
administrative expenses paid by the Housing Fund are necessary for the production,
improvement or preservation of low- and moderate-income housing; and
WHEREAS, in 1993 the Redevelopment Agency approved a detailed method for
calculating the actual cost of planning and administering the Agency's affordable housing
projects and programs; and
WHEREAS, Redevelopment Agency staff have, in accordance with the approved
methodology, completed an analysis to calculate the actual costs directly associated with
the planning and administration of the affordable housing program that were incurred and
charged to the Housing Fund during FY 2003-04.
NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Poway
Redevelopment Agency as follows:
ATTACHMENT B
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March 1, 2005 Item #~
Resolution No. R-05-
Page 2
Section 1. The expenditure of monies from the Redevelopment Agency's Low-
and Moderate-Income Housing Fund in FY 2003-04 to cover costs associated with
planning and administering its affordable housing program was necessary for the Agency
to meet its obligation to increase, improve, and preserve the supply of affordable housing
available within the City of Poway.
Section 2. The expenditure of $611,815.99 from the Redevelopment Agency's
Low- and Moderate-Income Housing Fund in FY 2003-04 was necessary to cover actual
costs incurred by the City and Agency in their efforts to increase, improve and preserve the
communitys supply of housing available at an affordable housing cost to households with
low- and moderate-incomes.
Section 3. The amountof$611 ,815.99 represents the actual cost of planning for
and administering the affordable housing programs, and said cost is not disproportional to
the Housing Fund monies expended to produce, improve or preserve said affordable
housing.
Section 4. Housing Fund monies that were expended during FY 2003-04 for
planning and administering the affordable housing program, some activities of which were
outside the Paguay Redevelopment Project Area, benefit the Project Area.
PASSED, ADOPTED, AND APPROVED by the Board of Directors of the Poway
Redevelopment Agency at a regular meeting this 1 st day of March 2005.
Michael P. Cafagna, Chairman
ATTEST:
L. Diane Shea, Secretary
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March 1, 2005 Item # 13
Resolution No. R-05
Page 3
STATE OF CALIFORNIA )
)SS
COUNTY OF SAN DIEGO )
I, L. Diane Shea, Secretary ofthe poway Redevelopment Agency, do hereby certify
under penalty of perjury that the foregoing Resolution No. R-OS was duly adopted
by the Board of Directors at a meeting of said Board held on this 1 st day of March 2005,
and that it was so adopted by the following vote:
AYES:
NOES:
DISQUALIFIED:
ABSENT:
L. Diane Shea, Secretary
Poway Redevelopment Agency
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March 1, 2005 Item # 13
Affordable Housing Projects and Programs
FY 2003-04
1. Affordable Housing Assistance and Referral Program
2. Brighton Avenue
3. Brookview Village
4. Community Road
5. Evanston Affordable Ownership Site
6. Haley Ranch Estates
7. Hillside Village
8. Homeownership Program Development
9. Los Arcos
10. Mixed-Use Poway Road Site
11. Monte Vista
12. Multifamily Rehabilitation Strategy
13. Nonprofit Capacity Building Program
14. Oak Knoll Revitalization Area
15. Park and Ride Site
16. Park View Terrace
17. Redevelopment and Housing Advisory Committee (Housing Only)
18. Residential Rehabilitation Loan Program
19. Special Friends Foundation
20. Redevelopment Agency Administration - Annual Report, Annual
Newsletter, Budget
21. York Avenue Affordable Ownership Site
ATTACHMENT C
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March 1, 2005 Item # 13