June 21, 2022
HOUSING AUTHORITY AND
CITY OF RICHMOND
Economic Development
DATE: June 21, 2022
TO: RHA Board of Commissioners and Members of the City
Council
FROM:
Shasa Curl, City Manager
Nannette J. Beacham, RHA, Executive Director
Delmy Cuellar, Finance Director
Rita Martinez, Senior Accountant
Gabino Arredondo, Project Manager
Thomas Omolo, Senior Management Analyst
Subject:
Proposed Richmond Housing Authority Budget for Fiscal
Year (FY) 2022-2023
FINANCIAL IMPACT: This action approves the Richmond Housing Authority (RHA) proposed FY 2022-2023 operating budget, with
estimated revenues of $3,618,962, and total proposed
expenditures of $4,880,044. If the proposed General
Fund subsidy of $1,261,082 is approved by the City of
Richmond, it will balance the RHA FY 2022-2023 budget
to $4,880,044 in estimated revenues and $4,880,044 in
expenditures.
PREVIOUS COUNCIL
ACTION:
N/A
STATEMENT OF THE
ISSUE:
Staff members are requesting that the Richmond
Housing Authority (RHA) Board of Commissioners and
members of the City Council review and approve the
RHA Fiscal Year 2022-2023 Proposed Operating Budget.
JOINT MEETING
AGENDA REPORT
June 21, 2022
RECOMMENDED ACTION: ADOPT a joint resolution approving the proposed Fiscal Year (FY) 2022-2023 Richmond Housing Authority (RHA)
budget, with estimated revenues of $3,618,962 and total expenditures of $4,880,044; and APPROVE an RHA
subsidy from the City of Richmond General Fund in the
amount of $1,261,082, which will provide sufficient
revenue to match anticipated expenditures and balance
the RHA budget to $4,880,044 in estimated revenues
and $4,880,044 in expenditures – Richmond Housing
Authority (Nannette J. Beacham 621-1300).
DISCUSSION:
Background
The Richmond Housing Authority (RHA) provides affordable housing for low and very low-income Richmond residents through the U.S. Department of Housing and Urban Development (HUD) federally funded housing programs. RHA owns multiple public housing properties and manages two (2) properties occupied by residents (Nevin Plaza and Nystrom Village) with approximately 242 units. There are an additional 393 units associated with RHA entities (Richmond Village, Triangle Court, Friendship Manor) and 150 units in construction (Hacienda) for a total of 783 units. Funding for the RHA budget is largely dependent on funding from HUD, and thus subject to congressional appropriations. HUD continues the trend of inadequate funding for public housing authorities nationwide, and therefore, it is increasingly difficult for RHA to ensure that adequate services are provided and that its facilities meet the needs of its residents.
RHA is proposing $4,880,044 in expenditures to manage the public housing program, which includes personnel costs (currently at 7.0 FTEs), funds to cover utilities and contracts for property maintenance and security for Nevin Plaza and Nystrom Village, and an operating subsidy pass through for Richmond Village. Estimated revenue of $3,618,962 is comprised of operating subsidies from HUD, capital funds, and tenant and Administration Building rents.
FY 2022-2023 Budget
Staff recommends that the RHA Board of Commissioners and City Council adopt a resolution approving RHA's FY 2022-2023 operating budget in the amount of $3,618,962 in revenues and $4,880,044 in expenditures, with a proposed City of Richmond subsidy amount of $1,261,082 (Attachments 1 & 2). The most significant revenue and expenditure changes are listed below:
June 21, 2022
Revenue - $3,618,962
HUD Operating Subsidy - $1,569,286: The HUD operating subsidy includes $1,051,872 for Nevin and Nystrom, and $517,414 for the Richmond Village I, II, III pass through.
Capital Fund Subsidy - $1,110,141: The Capital Fund provided by HUD funds, annually, Public Housing Agencies (PHAs) for the development, financing, and modernization of public housing developments and for management improvements.
Tenant Rental Income - $650,000: It is important to note that RHA continues to rehabilitate units at Nevin Plaza to bring them back on-line for tenant leasing.
However, many of the units at Nystrom Village are unable to be brought back on- line. This has reduced the number of available units and revenue. Therefore, RHA tenant rent budget line items include $400,000 at Nevin Plaza and $250,000 at Nystrom Village.
Operating Transfer In - $277,535: A certain percentage from the Capital Fund is allowed to be transferred for operations (25%) to the Asset Management Projects (AMPs) Nevin and Nystrom.
Repayment Agreements and Other Miscellaneous - $12,000: Agreements are between residents and RHA to pay owed rent. Other Miscellaneous revenue includes vending and washing machine generated income.
Expenditures: $4,880,044
Personnel - $1,154,895 (Salaries & Wages - $617,230 and Fringe Benefits - $537,665): The current budget includes 7.0 FTEs (Attachment 3). For most of FY 2021-2022, RHA operated with only an Executive Director and one Resident Housing Manager, with the assistance of outside consultants and staffing from temporary staffing agencies. In FY 2022-2023, having appropriate staffing levels will allow RHA to reduce its dependence on consultants, temporary staff, and staff members.
Cost Allocation Admin Charges - $140,435
Operating Expenses - $151,075: $72,000 for Building Maintenance Supplies, $23,500 for Rent Board Fees, $8,000 for Tools, $7,700 for Equipment Rental (RICOH Copiers, Shredding), $3,000 for Janitorial Supplies, $6,000 for Office Supplies, $20,000 for Tenant Relocation, $5,000 for Tenant Recreation, $3,155 for Housing Commission, and additional cost totaling $2,720 for uniforms, postage and mailing, printing and binding, training, membership and dues, and storage.
June 21, 2022
Professional & Admin Services - $768,636: The most significant services in this category include $460,000 for Security Services (24-hour security service and two security personnel at Nevin Plaza), $21,170 for Asset Repositioning Consulting, Tenant Background Review, and Translation Services, $58,100 for Auditing Services, $133,000 for Temporary Staffing (unit turnovers and maintenance), $66,456 for Legal Services, $26,000 for Computer Hardware and Software, $3,700 Training & Memberships, and $210 for Storage.
Contractual & Equipment Services - $208,700: The most significant services in this category include, $60,450 for Landscape Maintenance at Nevin and Nystrom, $57,000 for steel security sets for vacancies at Nystrom, $17,600 for Contract Services (Heating Systems/Boiler maintenance and repair, backup generator maintenance), $18,600 for Other Contract Services (Alarm System, Restoration services, Fire Alarm), $17,000 for Pest Control, $18,800 for Plumbing,$10,000 for Elevator Maintenance, $8,000 for Electrical, and an additional cost of $1,250 for Vehicle Maintenance.
Grant Expenditures - $985,394: Expenditures for Administrative and Auditing Services from the Capital Fund for the Richmond Village Pass-through payments.
Property Insurance - $63,540: RHA property insurance includes coverage for commercial property (Administrative Offices, Nevin Plaza, Nystrom Village), equipment breakdown, and terrorism.
Utilities - $725,208: Utilities costs include expenditures for telephone, electricity, water, sewar, gas, and refuse services.
Capital Outlay - $404,626 The main expenditure proposed include unit turnover and rehab activities, lead and mold abatement, and vehicle replacement.
Operating Transfer Out - $277,535: Expenditure from the Capital Fund, twenty- five percent (25%) of the Capital Fund applied to Asset Management Projects (AMPs) (Nevin and Nystrom).
It is essential that the Board of Commissioners and the Richmond City Council understand the financial needs of RHA to fulfill its primary goal of meeting the needs of its residents. The proposed increased investment will continue to address many of the City of Richmond's housing and health equity goals, including maintaining affordable housing units, upgrading affordable housing units, and adding units to the affordable housing stock in the City of Richmond.
June 21, 2022
FY 2021-2022 RHA and COR Accomplishments
In addition to the management of the public housing program, RHA's main goals and objectives, included continuing to move forward with asset repositioning activities outlined in the 2019 Public Housing Authority Recovery and Sustainability (PHARS) agreement between HUD, City of Richmond (COR), and RHA. RHA, in collaboration with COR staff, continues to improve its operations and address outstanding tasks outlined in the PHARS.
RHA's accomplishments at Nevin Plaza include working collaboratively with EAH Housing (EAH) through the entitlement process for Nevin Plaza. Currently, the project has successfully completed the Design Review process and is currently awaiting financing for the project. RHA and EAH successfully submitted 4% Low-Income Housing Tax Credits (LIHTCs) and Private Activity Bonds (PABs) to the Tax Credit Allocation Committee (TCAC) in March of 2022. RHA anticipates Nevin Plaza to be well-positioned to receive a funding award. TCAC funding should be announced before the end of June 2022, with a preliminary recommendation during the June 15, 2022, allocation meeting. Once the financing for the project is in place, RHA and EAH will move expeditiously to close the financing, convey ownership, and start construction of Phase I.
On September 21, 2021, the RHA Board of Commissioners designated McCormack Baron Salazar and Richmond Neighborhood Housing Services as the preferred development team for the redevelopment and operation of Nystrom Village. RHA is currently negotiating an Exclusive Right to Negotiate Agreement (ERNA) for the redevelopment and operation of Nystrom Village. The negotiations for a mutually agreed upon ERNA are in the final stage. Final meetings are planned for the end of June 2022 to agree on two outstanding discrepancies and anticipated adoption in July 2022. Once the ERNA is signed and executed, RHA and MBS will work on completing the HUD submissions for Section 19, Disposition Application for Nystrom. There are still many challenges at the site due to illegal dumping, high vacancy, and squatting. RHA and City staff have worked collaboratively to conduct multiple clean-up activities at the site. Additional units have had to be secured with the Vacant Property Security (VPS) systems to minimize break-ins.
For several years, the RHA Board of Commissioners and City Council have worked towards the revival and renovation of 150 units of affordable housing at the Hacienda site. The building was vacant for over five years and was an eyesore to the community.
Construction of the extensive renovation has begun which will seismically retrofit the existing building, install all new mechanical, electrical, and plumbing systems, create all- new units with new kitchens and bathrooms, improve accessibility and energy efficiency, and create new service and amenity spaces, amongst many other improvements. RHA and Mercy Housing have begun to conduct regular meetings to discuss the lease-up of the Hacienda project. The site-based waiting list for the project will open in June 2022 for a two-week "online-only" application period and will be advertised to over 600 community-based organizations and non-profits. RHA and Mercy
June 21, 2022
Housing anticipate the project is on target for completion and will be ready for occupancy by October 2022.
Richmond Village I (RV I) and Richmond Village II (RV II) are nearing the end of the 15- year federal tax credit compliance period. The original investment limited partners (ILP) are entities affiliated with AIG and SunAmerica. RHA's goal is to restructure ownership of the property (preferably combining RV I and RV II into one partnership/financial transaction), identify a new investor limited partner that can contribute additional equity, ensure the long-term financial viability of the property, and oversee subsequent renovations. RHA has an Option to Purchase the improvements through December 2022. RHA was recently informed that the ILP has agreed to sell its limited partnership interests to McCormack Baron Salazar (MBS) for a nominal amount. RHA sent MBS a draft Memorandum of Understanding (MOU) and term sheet on December 6, 2021. The terms of an agreement with MBS have been reached and documented. When the MOU is finalized, it will provide a commitment for RHA to continue working with MBS on resyndication. The terms describe the exit of the limited investor partner and the future distributions of cash flow to RHA. Work towards submitting a Rental Assistance Demonstration (RAD) application to HUD for Richmond Village is continuing. RHA will seek board approval to submit the application at an upcoming meeting.
RHA has submitted final documents for the transfer of the RHA Administration Building to the City of Richmond for the continued use by the Richmond Build Program. The building is anticipated to transfer by June 2022.
Regarding financial matters, the Finance Department has made significant progress on the HUD funded CVR Associates report and recommendations. RHA and Finance staff participated in the HUD-supported financial training. RHA and City Finance staff continue to work with Maze & Associates (auditors) to complete the FY 2018 and FY 2019 audits, as well as working with NBS Consultants to complete a Cost Allocation plan in accordance with HUD requirements to the Title 2 CFR, Part 200 Compliant Version. Upon completion of this report and approval from HUD, RHA will contribute towards the City's Cost Allocation plan. Updates on financial audits:
2017 Audit - Audit completed. Financial Data needs to be finalized in HUD REAC.
2018 Audit - Final Legal and Managerial Letters are being prepared. Upon completion and approval, Financials will be finalized.
2019 Audit - All requested information provided to Auditors. Upon completion of 2018 Audit COR and RHA will review and update the Trial Balance. COR and RHA worked with NBS to complete a Cost Allocation plan for FY21-22 and FY22-23 in compliance with the Federal Guidelines, Title 2 CFR Part 200. A final report of the FY22-23 Cost Plan will be forwarded to HUD for review and approval.
Cares Act Funding reimbursement funds for Nystrom and Nevin were received.
June 21, 2022
Next Steps
A considerable amount of City resources has been allocated to assist RHA in meeting obligations to program participants and HUD, significantly impacting other City operations. RHA and City staff members have worked to significantly reduce the RHA budget deficit for FY 2022-2023 from previous fiscal years and will continue to diligently oversee and monitor RHA's budget to maintain financial integrity and the health and safety of RHA's residents.
DOCUMENTS ATTACHED:
Attachment 1 - Resolution
Attachment 2 - Budget Summary
Attachment 3 - Position Control