STAFF REPORT TO THE CITY COUNCIL
DATE: Regular Meeting of April 8, 2025
TO: Mayor and Members of the City Council
VIA: Dante Hall, City Manager
SUBMITTED BY: Edwin Gato, Director of Finance
SUBJECT: Redevelopment Housing Successor Catch-Up Annual Reports for Fiscal Years 2013-14 through 2023-24 RECOMMENDED ACTION:
Staff recommends that the City Council receive and approve the filing of the Housing Successor Agency Annual Report for Fiscal Years 2013-14 through 2023-24.
DISCUSSION:
In February 2024, the City of Hercules (“City”) elected to become the Housing Successor Agency (“Housing Successor”) to the former 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. This cumulative report covers the activities of the Housing Successor since the time of dissolution, from Fiscal Year 2013-14 through Fiscal Year 2023-24. The intent of this report is to get Hercules up to date with Annual Report requirements.
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 Years 2013-14 through 2023-24 was submitted to HCD by April 1, 2025. It is being presented to the City Council to receive and file.
The Housing Successor is meeting all compliance requirements of HSC Section 34176.1 through Fiscal Year 2023-24. Progress on major requirements is summarized below.
Housing Asset Fund Activity
As of June 30, 2024, the Housing Asset Fund balance was approximately $12.6 million ($5.9 million of which was cash). The Housing Asset Fund received nearly $6.0 million in revenues between Fiscal Years 2013-14 and Fiscal Year 2023-24. The largest revenue source was homeowner loan repayments ($5.9 million). Other revenue sources were miscellaneous sources such as interest.
The Housing Successor spent $59,624 in Housing Asset Funds between Fiscal Year 2013-14 and Fiscal Year 2023-24 on administrative items. There were no expenditures for housing development projects since the City did not become Housing Successor until February 2024. The City also made a $216,592 expense in Fiscal Year 2016-17 to remit a due diligence review payment to the County Auditor-Controller as part of the redevelopment dissolution process; this is not considered a Housing Asset Fund administrative or project expense.
Real Property Assets and Loans Receivable
The former Redevelopment Agency did not have any properties to transfer to the City upon dissolution.
As of June 30, 2024, the Housing Successor oversees approximately $7.0 million in loans receivable. Two loans were made to affordable housing developers (Bridge Housing and Eden Housing) prior to dissolution with an outstanding balance of $2.6 million. There are also 42 outstanding homeowner loans with a balance of $4.4 million as of June 30, 2024. This does not account for non-collectible loans written off by City Council in July 2024, which will be reflected in next year’s annual report.
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 $352,103 in Fiscal Year 2023-24.
If Housing Asset Funds are spent on housing projects and programs, within each five-year compliance period:
At least 30% must be spent on extremely low-income households (earning up to 30% of the Area Median Income); No more than 20% may be spent on low-income households (earning 60-80% of the Area Median Income); and 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 expenses were below the annual limits. Due to the City electing to become the Housing Successor in February 2024, the Housing Successor, City, and former Agency did not assist any projects through Fiscal Year 2023-24 and thereby meets the development expenditure and senior limits by default.
Excess Surplus
Housing successors are subject to the same excess surplus requirement as former redevelopment agencies. A successor has an excess surplus if its unencumbered cash balance exceeds the greater of $1 million or 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.
The City established the Housing Successor Agency in February 2024. The Housing Successor had an excess surplus of $2.7 million as of Fiscal Year 2023-24. The City will ensure funds are spent or encumbered (committed in an executed agreement) within three fiscal years, or June 30, 2027.
FISCAL IMPACT:
The submission of the Housing Successor Annual Report will have no fiscal impact.
ATTACHMENTS:
Hercules Housing Successor Agency Annual Report for Fiscal Years 2013-14 through 2023-24.