HOUSING SUCCESSOR TO THE REDEVELOPMENT AGENCY ANNUAL REPORT
REGARDING THE
LOW AND MODERATE INCOME HOUSING ASSET FUND
FOR FISCAL YEAR 2020-21
PURSUANT TO
CALIFORNIA HEALTH AND SAFETY CODE SECTION 34176.1(f)
FOR THE
CITY OF EAST PALO ALTO
This Housing Successor Annual Report (Report) regarding the Successor Housing 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 March 15, 2022.
This Report sets forth certain details of the housing activities of the City of East Palo Alto, successor to the former Redevelopment Agency of the City of East Palo Alto during Fiscal Year 2020-21. 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. Further, this Report conforms with and is organized into sections I. through XI., inclusive, pursuant to Section 34176.1(f) of the Dissolution Law:
I. Loan Repayments: The amount the city, county or city and county received pursuant to subparagraph (A) of paragraph (3) of subdivision (b) of Section 34191.4.
II. 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.
III. 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.
IV. 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.
V. 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.
VI. 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.
VII. 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.
VIII. 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.
IX. 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.
X. 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.
XI. Senior Housing Test: This section provides the percentage of units of deedrestricted 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 deedrestricted 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, 2007 to January 1, 2017.
XII. 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.
XIII. Homeownership Units: 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 protects the former redevelopment agency’s investment of moneys from the Low and Moderate Income Housing Fund pursuant to subdivision (f) of Section 33334.3. This inventory shall include all of the following information:
(A) The number of those units.
(B) The number of the units lost to the portfolio in the last fiscal year and the reason for those losses.
(C)Any funds returned to the housing successor as part of an adopted program that protects the former redevelopment agency’s investment of moneys from the Low and Moderate Income Housing Fund.
(D)Whether the housing successor has contracted with any outside entity for the management of the units and, if so, the identity of the entity.
I. LOAN REPAYMENT
The Housing Successor received $72,837 of loan repayments pursuant to subparagraph (A) of paragraph (3) of subdivision (b) of Section 34191.4.
II. AMOUNT DEPOSITED INTO LMIHAF
A total of $557,734 of program income was deposited into the LMIHAF during the Fiscal Year consisting $463,954 in Sponsoring Entity loan repayments (73%) from ROPS, and $93,780 interest and minor program income.
III. ENDING BALANCE OF LMIHAF
At the close of the Fiscal Year, the ending balance in the LMIHAF was $11,299,418.
IV. DESCRIPTION OF EXPENDITURES FROM LMIHAF
The following is a description of expenditures from the LMIHAF by category:
Expenditure Amount
Administrative and Legal Fees $206,150
Homeless Prevention and Rapid Rehousing
Services $291,666
Housing Development
Extremely -Low Income Units (0-30% AMI) $0
Very-Low Income Units (31-50% AMI) $0
Low Income Units (51-60% AMI) $0
Unrestricted Units (Manager's units) $0
Expenditures of Acquisition and
Predevelopment $0
Total LMIHAF Expenditures in Fiscal Year 20-
21 $497,816
California Health and Safety Code Section 34176.1 allows for 5% of the total $11,683,119 gross value of Housing Successor assets, or $584,156 to be used on monitoring and administrative expenditures. The Housing Successor continues to monitor expenditures from the LMIHAF.
V. 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(f), 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 book value of assets owned by the Housing Successor.
Asset Description As of End of Fiscal
Year
Statutory Value of Real Property Owned by Housing Successor $2,603,735 Value of Loans and Grants Receivable $6,571,314
Total Value of Housing Successor Assets $11,683,119
VI. 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.
VII. PROJECT DESCRIPTIONS
The Housing Successor does not receive or hold property tax revenue pursuant to the ROPS.
VIII. 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 projects 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 Finance Department approved the property as a housing asset in the LMIHAF; thus, as to real property acquired by the former redevelopment agency 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.
Property Address Date of Acquisition Status of Housing Successor Activity 965 Weeks Street July 15, 2009 In July of 2018, the City issued a Request for Proposal (RFP) to identify
an affordable housing developer to
develop 965 Weeks Street (the
Property). In September and October
2018, the City, with consultation from a
team of knowledgeable professionals
reviewed, interviewed, and further
deliberated on which developer to select
on the City’s behalf to develop the
Property into a thriving affordable
housing community. In November 2018,
the City Council selected Mid Peninsula
Housing as the entity to develop the
affordable housing project. The City
entered into an Exclusive Negotiation
Agreement (ENA) with MidPen Housing
in June 2019, and in December 2019,
the project received its entitlements. The
Disposition, Development, and Loan
Agreement (DDLA), which included a
loan commitment in the minimum
amount of approximately $715,000 from
the City’s LMIHAF, was executed
December 15, 2020.
IX. DESCRIPTION OF OUTSTANDING OBLIGATIONS PURSUANT TO SECTION 33413 Replacement Housing.
No Section 33413(a) replacement housing obligations were transferred to the Housing Successor during the Fiscal Year.
Inclusionary/Production Housing.
No Section 33413(b) inclusionary/production housing obligations were transferred to the Housing Successor in the fiscal year.
X. 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.
Staff anticipates making a financial contribution using Housing Successor funds for the 965 Weeks affordable housing project in 2023. The City intends to abide by the requirements of Section 34176.1.
XI. 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 Housing Successor has not funded any senior housing units in the previous 10 years.
XII. 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:
FY 17-18 FY 18-19 FY 19-20 FY 20-21 Total
Beginning Balance $10,383,625 $10,670,775 $10,987,755 $11,239,500 $10,383,625 Add: Deposits $288,006 $366,220 $588,082 $557,734 $1,800,042 (Less)
Expenditures $(856) $(49,240) $(336,337) $(497,816) $(884,249) (Less)
Encumbrances $(9,755,770) $(10,008,34
5)
$(9,352,876) $(9,177,279) $(9,177,279)
Unencumbered
Balance $915,005 $979,410 $1,886,624 $2,122,139 $2,122,139 The LMIHAF has incurred an Excess Surplus for the first time in FY 2019-20. The aggregate amount deposited into the account during the four Fiscal Years is $1,800,042.
The unencumbered amount of $2,122,139 exceeds the maximum amount allowed by the amount of $322,097. In FY 2021-22, approximately $715,000 was adopted and committed by the City Council in connection with project financing of the 965 Weeks Street property held by the Housing Successor.
XIII. HOMEOWNERSHIP UNITS
The Housing Successor is to provide 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 protects the former redevelopment agency’s investment of moneys from the Low and Moderate Income Housing Fund pursuant to subdivision (f) of Section 33334.3.
A. Number of Homeownership Units as of 6/30/18: 83
B. Homeownership Units lost after February 1, 2012: 0
C. $0 single family loan funds were returned to the housing successor since February 2012 as part of an adopted program that protects the former redevelopment agency’s investment of moneys from the Low and Moderate Income Housing Fund.
The Housing Successor recently contracted with an outside entity to manage the City’s Below Market Rate (BMR) program. The newly contracted organization continues to conduct a comprehensive analysis of the City’s BMR portfolio to ensure all of the 83 units referenced above are being occupied in accordance with the City’s deed restrictions. This report is expected to be presented to the City Council on or after April 5, 2022.