REPORT TO CITY COUNCIL
To:Honorable Mayor and Members of the City Council
From:Jason Simpson, City Manager
Prepared by:Shannon Buckley, Assistant City Manager
Date:June 10, 2025
Subject:Housing Successor Annual Report for Fiscal Years 2013-14 Through 2023- 24 Regarding the Low- and Moderate-Income Housing Asset Fund Report Pursuant to Senate Bill 341
Recommendation
Receive and file the Housing Successor Annual Report for Fiscal Years 2013-14 Through 2023-
24. Background
Following the dissolution of redevelopment in 2012, all former redevelopment agencies in California were required to designate a housing successor agency to receive all existing housing assets and assume any ongoing housing responsibilities of the former agency related to its mandated 20% set aside of revenue for affordable housing. The City of Lake Elsinore (“City”) established itself as the Housing Successor Agency (“Housing Successor”) to the former Lake Elsinore Redevelopment Agency (“Agency”) with the adoption of Resolution No. 2012-001 dated January 10, 2012.
The Housing Successor SB 341 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. The purpose of this Report is to provide the governing body of the Housing Successor with an annual report on the housing assets and activities of the Housing Successor under the Dissolution Law. This cumulative report covers the activities of the City as the Housing Successor from Fiscal Year (“FY”) 2013-14 through FY 2023-24.
The Report includes information on the deposits to, ending balance of, and expenditures from the LMIHAF. A description of the Housing Successor’s assets and any transfers of assets to other housing successor agencies are also addressed. The report discusses the Housing Successor’s current projects, acquisitions of any real property since February 1, 2012, and any outstanding obligations.
Housing Successor Annual Report for Fiscal Years 2013-14 Through 2023-24
Discussion
Legal Requirements for Housing Successors
1. HSC Section 34176.1 imposes three separate tests on the Housing Successor, which the Report addresses: Expenditures and housing production are subject to income targets (income proportionality test).
2. Expenditures and housing production are subject to age targets (senior housing test).
3. Housing successors may not accumulate an “excess surplus,” or a high unencumbered cash balance based on certain thresholds (excess surplus test).
Income Proportionality Test
Section 10 of the Lake Elsinore Successor Annual Report provides the required breakdown of expenditures within the LMIHAF by income category to determine whether the statutory thresholds have been met. Due to non-compliance in the first period, the Housing Successor became subject to more stringent income proportionality restrictions that require 50 percent of all housing development expenditures to be allocated to units for extremely low-income households.
Table 4.1
Source: Lake Elsinore Successor Annual Report
For the second five-year compliance period, from FY 2019-20 through FY 2023-24, the Housing Successor has spent a total of approximately $5.7 million on development activities. Of that total, $2,735,487 (48%) has been allocated to extremely low-income households, including an upcoming project known as the Riley Senior Apartments, while $2,880,904 (51%) has been allocated to very low-income units at the Cottages at Mission Trail, and $59,576 (1%) has been allocated to low-income households. Unlike the first five-year period, the Housing Successor has complied with LMIHAF expenditure limits for the second five-year period.
Ext.LowOtherExt.LowVeryLowLowRentalUnitsUnits<30%AMI30-60%AMI60-80%AMIFY2013-14 $0$0$0$0$0FY2014-15 $0$0$0$0$0FY2015-16 $0$0$0$0$0FY2016-17 $0$80,725$0$80,725$0FY2017-18 $0$8,234,210$0$8,234,210$0FY2018-19 $0$3,674,987$0$3,655,459$19,528TotalExpenditures$0$11,989,921$0$11,970,393$19,528SB341Limitation>30%<70%>30%N/A<20%Five-YearPeriodProportion0%100%0%99.8%0.2%Compliant(Yes/No) NoNoNoN/AYes FirstFive-YearPeriod(FY2013-14throughFY2018-19)
Housing Successor Annual Report for Fiscal Years 2013-14 Through 2023-24
Table 4.3
Source: Lake Elsinore Successor Annual Report
The City has made important steps towards overall compliance in recent years and is currently developing two more qualifying housing projects.
Senior Housing Test
This section provides the percentage of units of deed-restricted rental housing restricted to seniors and assisted within the previous 10 years in relation to the aggregate number of units of deed-restricted rental housing. The Housing Successor complies with the limit, allowing no more than 50 percent of the total aggregate number of rental units produced within the preceding ten years to be restricted to seniors. The Housing Successor, City, and former Agency have assisted four projects in the past ten years, of which one 16-unit project is restricted to seniors. Of the total units assisted in the rolling ten-year period, only 4 percent have been restricted to seniors. Due to the nature of the ten-year rolling compliance period, Table 6 below only reports on the current ten-year period, which is FY 2014-15 through FY 2023-24.
Table 6
Source: Lake Elsinore Successor Annual Report
Excess Surplus Test
The LMIHAF may not accumulate an “excess surplus,” or an unencumbered amount that exceeds the greater of $1 million or the sum of deposits in the prior four fiscal years. This requirement ensures that housing successors are actively spending available LMIHAF on affordable housing.
Ext.LowOtherExt.LowVeryLowLowRentalUnitsUnits<30%AMI30-60%AMI60-80%AMIFY2019-20$2,255,171$468,841$2,255,171$458,131$10,710FY2020-21 $0$849,3080819,30830,000FY2021-22$395,133$825,658395,133807,61018,048FY2022-23 $23,096$795,855$23,096$795,855$0FY2023-24 $62,087$818$62,087$0$818TotalExpenditures$2,735,487$2,940,480$2,735,487$2,880,904$59,576SB341Limitation>30%<70%>30%N/A<20%48%52%48%51%1%Compliant(Yes/No) YesYesYesN/AYesSource:CityofLakeElsinore SecondFive-YearPeriod(FY2019-20throughFY2023-24)
Housing Successor Annual Report for Fiscal Years 2013-14 Through 2023-24
Up until the most recent Fiscal Year, the Housing Successor always had an unencumbered cash balance less than the surplus limit and had not accumulated an excess surplus in any fiscal year since FY 2013-14.
In the most recent fiscal year, the Housing Successor accumulated an excess surplus of $2,041,832, which must be spent or encumbered by fiscal year 2026-27.
Fiscal Impact
No fiscal impact.
Attachments
Attachment 1 - Housing Successor Annual Report for Fiscal Years 2013-14 Through 2023-24 City Manager's Office
FY2013-14FY2014-15FY2015-16FY2016-17FY2017-18FY2018-19UnencumberedBalanceCalculationCashBeginningBalance5,545,6295,130,9995,923,3466,564,7486,199,5024,635,471Encumbrances---12,594,27612,594,2764,425,066UnencumberedAmount5,545,629$5,130,999$5,923,346$-$-$210,405$SurplusLimitCalculationCurrentYearDeposits3,952,0971,053,644186,8295,281479,7815,797,576PreceedingFourYearsofDeposits5,636,2899,588,38610,642,03010,828,8585,197,8501,725,534$1,000,0001,000,0001,000,0001,000,0001,000,0001,000,0001,000,000GreaterNumber5,636,289$9,588,386$10,642,030$10,828,858$5,197,850$1,725,534$ExcessSurplusCalculationUnencumberedlessGreaterNumber(90,660)(4,457,387)(4,718,684)(10,828,858)(5,197,850)(1,515,129)ExcessSurplusNoneNoneNoneNoneNoneNone