June 20, 2023
Richmond Housing Authority (RHA)
& City of Richmond
Economic Development
DATE: June 20, 2023
TO: Housing Authority Board of Commissioners and
Members of the City Council
FROM:
Shasa Curl, City Manager
Nickie Mastay, Deputy City Manager
Mubeen Qader, Deputy Director of Finance
Nannette Beacham, Economic Development Director
Gabino Arredondo, RHA, Interim Executive Director
Rita Martinez, Senior Accountant
Subject:
Proposed Richmond Housing Authority Budget for Fiscal
Year (FY) 2023-2024
FINANCIAL IMPACT: This action approves the Richmond Housing Authority (RHA) proposed FY 2023-2024 operating budget, with
estimated revenues of $4,302,306, and total proposed
expenditures of $5,563,388. 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 $5,563,388 in estimated revenues and $5,563,388 in
expenditures.
PREVIOUS COUNCIL
ACTION:
N/A
STATEMENT OF THE
ISSUE:
Staff is requesting that the RHA Board of Commissioners and members of the City Council review and approve the
RHA FY 2023-2024 proposed operating budget.
JOINT MEETING
AGENDA REPORT
June 20, 2023
RECOMMENDED ACTION:
ADOPT a joint resolution approving the proposed Fiscal
Year (FY) 2023-2024 Richmond Housing Authority (RHA)
budget, with total estimated revenues of $4,302,306 and total estimated expenditures of $5,563,388; 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 $5,563,388
in estimated revenues and $5,563,388 in expenditures –
Richmond Housing Authority/Finance (Gabino
Arredondo/Rita Martinez 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 one property occupied by residents (Nystrom Village) with approximately 100 units. There are an additional 393 units associated with RHA entities (Richmond Village, Triangle Court, Friendship Manor), 148 units recently rehabilitated and occupied at Hacienda Heights, and 142 units currently being renovated by EAH Housing (Nevin Plaza) for a total of 783 units. Funding for the RHA budget is largely dependent on funding from U.S. Department of Housing and Urban Development (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.
RHA is proposing $5,563,388 in expenditures during FY 2023-2024 to manage the public housing program. These expenditures include personnel costs (currently at 6.0 Full Time Equivalents (FTE)), funds to cover utilities, contracts for property maintenance and unit turn over activities at Nystrom Village, professional services for asset repositioning, and addressing outstanding financial liabilities such as completing financial audits and addressing Internal Revenue Services penalties outlined in the State Audit report, and an operating subsidy pass through for Richmond Village.
Estimated revenue of $4,302,306 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
June 20, 2023
$4,302,306 in revenues and $5,563,388 in expenditures, with a proposed City of Richmond subsidy amount of $1,261,082. The most significant revenue and expenditure changes are listed below:
Revenue - $4,302,306
HUD Operating Subsidy - $1,635,391: The HUD operating subsidy includes $1,034,392 for Nevin and Nystrom, and $600,999 for the Richmond Village I, II, III pass through.
Capital Fund Subsidy - $1,458,433: The Capital Fund provided by HUD funds, annually, Public Housing Agencies (PHAs) for the development, financing, and improvements of public housing developments and for management improvements.
Tenant Rental Income - $250,000: There are units at Nystrom Village that need substantial repair, and some that are unable to be brought back online. RHA will be focusing on evaluating the units that can be brought back online and implementing improvements.
Operating Transfer In - $895,282: A percentage from the Capital Fund is allowed to be transferred for operations (25 percent) to the Asset Management Projects (AMPs) Nystrom and Central Office Cost Center (COCC) $465,395. Operating Subsidy for Nevin Plaza will continue to be available and will reduce every year $429,887.
Hacienda Asset Repositioning - $57,000: RHA is now responsible for the maintenance of the split parcel at the Hacienda site. Funds for maintenance and upkeep are available from Hacienda asset repositioning funds.
Repayment Agreements and Other Revenue - $6,200: Agreements are between residents and RHA to pay owed rent.
Expenditures: $5,563,388
Personnel - $1,133,657 (Salaries & Wages - $612,807 and Fringe Benefits - $520,850): The current budget includes 6.0 FTEs which is a reduction of 1.0 FTE from last FY (Attachment 3).
June 20, 2023
Operating Expenses - $283,895: $20,000 Tenant Relocation, $159,895 Unit Rehabilitation, $5,000 Fencing, $10,000 Rent Program Fees, $14,000 Truck Rental, $75,000 HD Supply
Professional & Administrative Services - $1,588,080: $11,450 Background Checks and BDO Operating Subsidy Calculation, $75,000 Legal Services Lease Enforcement, $17,000 Yardi Software Property Management, $60,000 Temporary Staffing, $55,000 Continued Audits, $11,560 Staff Training, $10,000 Hacienda Lot Repositioning, $69,750 Building Assessment, $139,500 Asset Repositioning Financial Consulting. The most significant cost in this area is $1,138,820 to address the approximate $1 million or more in IRS taxes and penalties reported to the RHA Board in June 2022 and set forth in the State Audit report.
Equipment & Contractual Services - $329,748: $75,308 Appliances and Playground Equipment, $75,000 Remediation and Light Poles, $6,000 Lights, $30,000 Tree Removal and Planting, $12,100 HVAC and Carpet, $44,260 Landscaping, $6,680 Restoration & Remediation Company and Alarm, $57,000 DAWGS Security Barriers, $4,000 Electrician, $10,000 Pest Control, $9,400 Plumbing.
Grant Expenditures - $918,510: Expenditures for Administrative and Auditing Services from the Capital Fund $328,480 and the Richmond Village Pass- through Payments for $590,030.
Property Insurance - $35,860.
Utilities - $206,600: Utilities costs include expenditures for telephone, electricity, water, sewer, gas, and refuse services.
Cost Pool - $46,756 per the HUD approved Title 2 Code of Federal Regulations 200 (2 CFR Part 200) compliant Cost Allocation Plan (CAP).
Capital Outlay - $125,000: The main expenditure proposed includes unit turnover and rehab activities.
Operating Transfer Out - $895,282: A percentage from the Capital Fund is allowed to be transferred for operations (up to 25 percent) to the Asset Management Projects (AMPs) Nystrom and for administrative services (up to 10%) to the Central Office Cost Center (COCC) $465,395. Operating Subsidy for Nevin Plaza will continue to be available and will reduce every year $429,887.
June 20, 2023
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, included moving forward on asset repositioning activities outlined in the 2019 Public Housing Authority Recovery and Sustainability (PHARS) agreement between HUD, City of Richmond, and RHA. RHA, in collaboration with City of Richmond staff, continues 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 construction and explaining the temporary relocation process as units are being rehabilitated. EAH submitted applications for tax- exempt bond financing and 4% Low Income Housing Tax Credits and applications were approved for funding. The funding allowed for a significant accomplishment for the asset repositioning process of Nevin Plaza which involved the sale to EAH Housing. The successful closing occurred on March 17, 2023, and construction began in late April 2023. Maintenance and day-to-day operations improved, however there was a heating repair that impacted the distribution of heat in the building. The repair to the heating pumps was completed in late May 2023.
Regarding Nystrom Village, on September 13, 2022, the RHA Board of Commissioners approved and Exclusive Right to Negotiate Agreement (ERNA) for the redevelopment and operation of Nystrom Village with McCormack Baron Salazar (MBS) and Richmond Neighborhood Housing Services. On February 10, 2023, the ERNA period expired, without a mutually agreed upon Master Development Agreement (MDA). The final MDA has not been completed according to the developer due to the impact of changing economic conditions and access to funding for predevelopment costs. The developer continues to express interest in reaching an agreement and requested more time for negotiations. The RHA continues to meet weekly with the developer and plans to bring to the Board an item to consider the ERNA extension in late June 2023. There is still a high vacancy at Nystrom 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 had to be 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 was an eyesore to the community.
Construction has been completed. One hundred percent of the residential units will remain as affordable housing, restricted to seniors (two of the units are unrestricted managers units). The leasing of all the units has been completed.
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
June 20, 2023
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. The completion of the application has recently been delayed due to contracting challenges by HUD to the technical service provider assigned to RHA.
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 submitted and approved by the RHA Board. 2017 Audit – Financials are finalized and issued. Financial Data Schedule (FDS) submission (HUD requirement) was submitted and reviewed by HUD. 2018 Audit - Financials are finalized and issued. FDS data has been entered into the HUD system and reviewed by auditors. Management letter to be signed and submitted to auditor.
2019 Audit - Financial data has been submitted to auditors for review.
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 will continue to address all financial liabilities, work to reduce the RHA budget deficit, and 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 - FY 2023-2024 Budget
Attachment 3 - Staffing