March 28, 2023
Richmond Housing Authority
& City of Richmond
Finance Department
DATE: March 28, 2023
TO: Housing Authority Board of Commissioners and
Members of the City Council
FROM: Shasa Curl, City Manager
Nannette Beacham, Director of Economic Development
Delmy Cuellar, Director of Finance
Gabino Arredondo, RHA, Interim Executive Director for
the Richmond Housing Authority
Rita Martinez, Senior Accountant
Subject:
Fiscal Year (FY) 2022-23 Amended Budget Adjustments
FINANCIAL IMPACT: The fiscal year (FY) 2022-2023 mid-year adjustments includes an increase of Capital Fund revenue of
$111,014, a decrease of $187,136 in rental revenue at
Nevin Plaza, and an increase of $15,000 in Professional Services. The adjusted mid-year budget would consist of $4,803,922 in estimated revenues and $4,895,044 in
expenditures, thereby increasing the FY 2022-23 General Fund subsidy by $91,122 from $1,261,082 to $1,352,204.
If the proposed General Fund subsidy increase of
$91,122 is approved by the City of Richmond, it will
balance the RHA FY 2022-2023 budget to $4,895,044 in
estimated revenues and $4,895,044 in expenditures.
PREVIOUS COUNCIL
ACTION:
June 21, 2022
STATEMENT OF THE
ISSUE:
Richmond Housing Authority (RHA) staff is requesting
that the RHA Board of Commissioners and members of
the City Council review and approve the RHA Fiscal Year 2022-2023 amended operating budget and approve the
recommended budget adjustments.
JOINT MEETING
AGENDA REPORT
March 28, 2023
RECOMMENDED ACTION:
ADOPT a joint resolution approving the proposed Fiscal
Year (FY) 2022-2023 Richmond Housing Authority (RHA)
amended budget adjustments with revised estimated
revenues of $4,803,922 and total expenditures of
$4,895,044; and APPROVE an increase in the RHA
Fiscal Year 2022-2023 General Fund subsidy amount by
$91,122 from $1,261,082 to $1,352,204 which will
provide sufficient revenue to match anticipated
expenditures and balance the RHA budget to $4,895,044
in estimated revenues and $4,895,044 in estimated
expenditures – Richmond Housing Authority/Finance
Department (Gabino Arredondo/Rita Martinez 510-621-
1300).
DISCUSSION:
Background
The 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 Nystrom Village with approximately 100 units. There are an additional approximate 535 units associated with RHA entities (Richmond Village, Triangle Court, Friendship Manor, and Nevin Plaza) and 150 units recently rehabilitated (Hacienda) for a total of 785 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 operate without a general fund subsidy.
Original Approved RHA Budget – June 21, 2022
On June 21, 2022, RHA Board of Commissioners and Richmond City Council approved the FY 2022-2023 budget of $4,880,044 in expenditures to manage the public housing program which includes personnel costs (currently at seven FTE’s), funds to cover utilities and contracts for property maintenance and security for Nevin Plaza, and Nystrom Village and operating subsidy pass through for Richmond Village. Estimated revenue of $3,618,962 million is comprised of operating subsidies from HUD, capital funds, and tenant rents. An RHA subsidy from the City of Richmond General Fund in the amount of $1,261,082 was approved to 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.
March 28, 2023
Approved RHA FY 2022-23 Budget
Revenues $ 3,618,962
Expenditures $ 4,880,044
Subsidy $ 1,261,082
Surplus/(Deficit) ($ 0)
FY 2022-2023 Amended Budget
The FY 2022-2023 mid-year adjustments include a decrease of $187,136 in rental revenues at Nevin Plaza due to transfer of Nevin Plaza operations to begin the asset repositioning process to rehabilitate the building. EAH Housing has taken over the operations and management of the Nevin Plaza as of March 17, 2023, and future rental income will be collected by EAH Housing. The reduction in revenue will require a request to increase the general fund subsidy to have a balanced budget. The total of the FY 2022-2023 adjusted budget would consist of $4,803,922 in revenues and $4,895,044 in expenditures: thereby, increasing the FY 2022-2023 General Fund (GF) subsidy by $91,122, for a total amount increasing from $1,261,082 to $ 1,352,204.
RHA FY 22-23
Budget with
GF Subsidy
Revenue and
Expenditure
Adjustments
RHA FY 22-23
Budget Mid-Year
Adjustments
Revenues $4,880,044 Decrease $76,122 $4,803,922
Expenditures $4,880,044 Increase $15,000 $4,895,044
GF Subsidy Increase $91,122
Amended RHA
FY 22-23 Budget with
GF Subsidy
$ 4,895,044
$ 4,895,044
The revenue and expenditure changes are listed below:
Revenue Changes:
$111,014 Increase in Revenue:
o Increase in Capital Fund revenue for Central Office Cost Center (COCC) Administration transfer in.
$187,136 Decrease in Revenue:
o Reduction in rental revenue projections mainly attributed to the transfer of Nevin Plaza to EAH Housing. Now that the transfer has taken place, all
March 28, 2023
rental revenue will be collected by EAH Housing. In addition, there is still a trend of lower rental payments being collected mainly due to ongoing COVID-19 impacts.
Expenditure Changes:
$15,000 Increase in Professional Services:
o Increase of legal fees at Nystrom Village for lease enforcement. COVID- 19 impacts on hearing cases has extended the terms of the cases increasing costs.
FY 2022-2023 RHA and COR Accomplishments
RHA’s main goals and objectives for FY 2022-2023, in addition to the management of the public housing program, includes moving forward on asset repositioning activities outlined in the 2019 Public Housing Authority Recovery and Sustainability (PHARS) agreement between the HUD, City of Richmond, and RHA. RHA in collaboration with City of Richmond staff, continue to make progress in improving its operations and addressing outstanding tasks outlined in the PHARS.
RHA’s accomplishments at Nevin Plaza include continued meetings between EAH Housing (EAH) and residents to discuss interior and exterior design and the interviewing of residents by the relocation specialist to explain the relocation process as units are being rehabilitated. The art master plan for the project was completed. EAH submitted applications for tax-exempt bond financing, and four percent (4%) Low Income Housing Tax Credits and applications were approved for funding. The allocation of tax credits and bonds were received and EAH closed on March 17, 2023. Construction will begin in April 2023. The maintenance and day-to-day operations have improved; however, there is an ongoing heating repair that has impacted the distribution of heat in the building.
Regarding Nystrom Village, on September 13, 2022, the RHA Board of Commissioners approved an Exclusive Right to Negotiate Agreement (ERNA) for the redevelopment and operation of Nystrom Village with McCormack Baron Salazar (MBS) and Richmond Neighborhood Housing Services. The final master development agreement has not been completed according to MBS due to the impact of changing economic conditions and access to funding for predevelopment costs. The RHA will be bringing an update to the Board regarding this matter in April 2023. There are still many challenges at the Nystrom Village including a high vacancy rate due to units being in disrepair. RHA and City staff have worked collaboratively to conduct multiple cleanup activities at the site.
Fortunately, illegal dumping has decreased. Additional units have been secured with the 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 an eyesore to the community.
Construction has been completed. One hundred percent (100%) of the residential units
March 28, 2023
will remain as affordable housing, restricted to seniors (two of the units are unrestricted managers units). The leasing of units to be occupied has been completed, 150 units have been occupied.
Richmond Village I (RV I) and Richmond Village II (RV II) reached the end of the 15- year federal tax credit compliance period. The original investment limited partners (ILP) are entities affiliated with AIG and SunAmerica. The ILP has agreed to sell its limited partnership interests to MBS for a nominal amount. RHA successfully negotiated a new Memorandum of Understanding (MOU) with MBS. The MOU provides a commitment for RHA to continue working with MBS on resyndication. Under the MOU, RHA will continue to work with MBS on asset repositioning activities which includes the conversion of public housing units to the Section 8 platform. The next step is to submit a Section 18/RAD application to HUD, which is anticipated to be completed in June 2023.
RHA has successfully transferred the RHA Administration Building to the City of Richmond for the continued use by the Richmond Build Program.
Regarding financial matters, the Finance Department has made significant progress.
RHA and City Finance staff continue to work with Maze & Associates (auditors) to complete audits, as well as working with NBS Consultants to complete a Cost Allocation plan in accordance with HUD requirements set forth in the Title 2 CFR, Part 200 Compliant Version. The Cost Allocation Plan has been completed and will be brought to the Board for approval in April 2023. Updates on financial audits:
2017 Audit – Financials are finalized and issued. Financial Data Schedule (FDS) submission (HUD requirement) has gone through final review and submitted.
2018 Audit - Financials are finalized and issued. FDS data has been compiled and being entered into HUD system for auditor review.
2019 Audit - Financial data needs to be reviewed and analyzed by RHA and City staff. Requested items need to be provided to auditors. Bank reconciliations need to be analyzed and provided to auditors. 2021 Capital Fund has been obligated and drawdowns have begun for reimbursements to the City.
Next Steps
A considerable amount of City resources have 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 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 - Amended Budget
March 28, 2023
Attachment 3 - Position Control