Redevelopment Successor
Agency Report
City Council Meeting: December 17, 2024
Agenda Item: 5.X
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To: Redevelopment Successor Agency
From: Heather Averick, Director, Housing and Human Services Department Subject: Annual Report on Low-Mod Income Housing Asset Fund Recommended Action
Staff recommends that the Redevelopment Successor Agency:
1. Receive the Annual Report on the Low- and Moderate-Income Housing Asset Fund for Fiscal Year 2023-24 and authorize the City Manager to post the report on the City's website by December 31, 2024; and
2. Direct the City Manager to present the independent audit of the Low- and Moderate-Income Housing Asset Fund to the City Council upon completion of the independent audit of the City’s Annual Comprehensive Financial Report (ACFR) and authorize the City Manager to post the results of the audit on the City's website after presentation to City Council.
Summary
The City provides financial assistance to support the acquisition, rehabilitation, and new construction of housing affordable to lower income households, a local strategy that supports the City Council’s priorities of Addressing Homelessness and Cultivate Economic Recovery & Expand Community & Cultural Offerings. City funding to support the investments comes from a variety of sources (e.g., voter-approved Measure GSH funds, loan repayments, and development impact fees), and is accounted for in various funds. The Low- and Moderate-Income Housing Asset Fund (Fund) specifically accounts for the housing assets of the former Santa Monica Redevelopment Agency (RDA). State law requires the City to report annually on the Fund of the former RDA and requires an independent audit of the Fund, which will be completed as part of the City’s annual audit process.
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Discussion
The City as Housing Successor assumed the housing functions of the former RDA on January 10, 2012. The transfer of the functions included the transfer of formerly designated RDA low- and moderate-income housing assets together with any funds generated by former RDA housing assets. The funds must be maintained by the City in a separate Fund and expended in accordance with California Health and Safety Code Section 34176.1. Allowable expenditures include the development of affordable housing, monitoring and preservation of housing subject to affordability restrictions and covenants, and homeless prevention and rapid rehousing services for homeless individuals.
Senate Bill 341, which is codified in Section 34176.1 of the California Health and Safety Code and became effective on January 1, 2014, requires each housing successor that assumed the housing functions of a former redevelopment agency to post a report on its website that contains information regarding the Fund for the previous fiscal year. In this case, the City, as the Housing Successor, is required to prepare and post the report (Attachment A), after the City Council's review and receipt.
The report includes the following information:
• The balance in the Fund as of the close of the Fiscal Year 2023-24 was $13,899,006 with $499,022 in deposits from interest income and residual receipts, and $180,575 in expenditures for the development of affordable housing. The balance is currently set aside as part of the adopted Housing Element strategy to focus the City’s affordable housing efforts towards City-owned sites.
o The use of City-owned land for affordable housing provides multiple benefits including maximizing the value of the City’s Housing Trust Funds (HTF) as most of the HTF’s loaned to affordable housing organizations are used to acquire land. By contributing land it already owns, the direct cost of acquiring land is eliminated and the City can stretch its resources further to increase the supply of affordable housing.
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o The balance in the Fund may be needed by affordable housing predevelopment costs and/or closing the construction gap for affordable housing developments on City-owned sites.
o Based on the six most recent new construction housing developments the City funded, the average City subsidy for pre-development costs and closing the construction gap was $106,768 per affordable residence and an average City subsidy for land acquisition was $156,145 per affordable residence. Given this average subsidy, the balance in the Fund could provide subsidy to approximately 130 affordable residences on Cityowned sites while it would support only 53 homes if private land must be purchased.
• $0 of the balance in the Fund has been encumbered by loan commitments to non-profit affordable housing organizations for the production and preservation of affordable housing.
• The former RDA’s replacement housing and inclusionary housing obligations have been satisfied.
• Obligations related to development or disposition of real property acquired by the former RDA prior to February 1, 2012 have been met
• The senior housing test has been met, with 30 percent of assisted residences deed-restricted to seniors within the previous 10 years • Currently there are excessive accumulated funds in the amount of $2,087,704 (often called “excess surplus”) that need to be encumbered within three fiscal years. These funds will be utilized for affordable housing developments on Cityowned sites within this timeframe.
Additionally, to ensure monies in the Fund are spent in accordance with the law, Section 34176.1(f) requires an independent financial audit of the Fund within six months of the end of the fiscal year. The independent audit of the Fund is conducted as part of the year-end audit by the City’s independent auditor and is included as part of the City’s Annual Comprehensive Financial Report (ACFR). Staff is working to complete the ACFR during the required six month timeframe. Staff will post the results of the 4 of 4
independent audit of the Fund on its website after the ACFR is presented to the City Council.
Financial Impacts and Budget Actions
There is no immediate financial impact or budget action necessary as a result of the recommended action.
Prepared By: Natalie Verlinich, Housing Manager
Approved Forwarded to Council
Attachments:
A. Attachment A-Annual Summary Report-LMIHAF 23-24