JOINT MEETING OF THE FRESNO REVITALIZATION CORPORATION AND CITY OF FRESNO IN ITS CAPACITY AS HOUSING SUCCESSOR TO THE REDEVELOPMENT AGENCY.
FROM: MARLENE MURPHEY, Executive Director
SUBJECT
Title
Receive Annual Report and Approve FY 25/26 Program Income Budget for the City of Fresno in its capacity as Housing Successor to the Redevelopment Agency of the City of Fresno
Body
RECOMMENDATION
Staff recommends that the City acting in its capacity as Housing Successor to the Redevelopment Agency of the City of Fresno (FHS) and the Fresno Revitalization Corporation (FRC) receive the Annual Report and approve the attached FHS FY 25/26 Program Income Budget.
BACKGROUND
Pursuant to redevelopment dissolution law (HSW Sections 32176 and 3176.1), the Low- and Moderate-Income Housing Asset Fund (LMIHF) was established by FHS to hold and administer affordable housing assets transferred from the former RDA and subsequent program income. Dissolution law related to affordable housing assets includes requirements for preparation of an annual report of fund activity and requirements for program income budget expenditures described in the following.
Annual Report
The Annual Report for the current reporting period of FY 23/24 is attached and posted on the Agency’s web site.
In accordance with HSC Section 34176.1(f), the 23/24 Report contains thirteen elements: loan repayments; amount deposited into LMIHAF; ending balance of LMIHAF; description of expenditures from the LMIHAF; statutory value of assets owned by the housing successor; description of transfers; project descriptions; status of compliance with Section 33334.16; description of outstanding obligations under Section 33413; income test; senior housing test; excess surplus test; and homeownership units.
The primary purpose of the Report is to ensure compliance with the extremely low affordability test and the excess funds surplus test. The FHS is in full compliance with requirements relating to both affordability and excess funds. In FY 23/24 the Agency’s unencumbered balance of $3,903,246.81 was well below the excess surplus threshold of $5,277,112.30.
Program Income Budget Expenditure Requirements
The Housing Successor budget is driven by program income expenditure requirements and the need to develop FHS-owned property for affordable housing. Following the administrative allocation the remaining program income must be spent as follows: (i) at least 30% of the funds must be spent for the development of rental housing affordable to and occupied by extremely low income households earning 30% or less of the area median income; (ii) no more than 20% of the funds may be spent for the development of housing affordable to and occupied by households earning between 60% and 80% of the area median income; and, (iii) 50% of the funds may be spent for the development of housing affordable to and occupied by households earning 60% or less of the area median income. Failure to comply with the 30% of net program income for the 30% of AMI requirement will result in an increase to 50% of net program income for the 30% AMI requirement until the extremely low-income targeting requirement is met. Additionally, to the extent that the Housing Successor fails to comply with an excess surplus test (i.e. unencumbered funds that exceed the greater of $1,000,000 or the total amount of net program income deposits over the previous four years), the excess surplus must be transferred to the Department of Housing and Community Development if not spent within a period of three years.
To meet expenditure requirements primary consideration is given to ensure that over multiple fiscal years, net program income funds are: (1) expended for housing units affordable to specific household income levels; and (2) allocated to income levels in accordance with defined net program income percentage requirements. The income targets and allocations for FY 25/26 are shown in the attached Program Income Budget.
Administration, Operations and Maintenance
Under Section 34176.1(a)(1), the Housing Successor, is allowed 5% of the statutory value of real property, loans and grants receivables for an administrative operation and maintenance allowance of $1,441,618 for the purpose of: monitoring and preserving the long term affordability of units subject to affordability restrictions or covenants entered into by the former redevelopment agency and the housing successor; for the development of affordable housing pursuant to income limits; and, for the purpose of administering the housing successor’s activities. The Agency’s FY 25/26 budgeted amount of $525,000 is well below the annual allowance and represents 8.8% of the FY 25/26 program income budget.
Program Income Budget FY 25/26
The FY 25/26 Program Income Budget has been prepared in accordance with applicable requirements and plan objectives.
In FY 25/26 the Budget total of $5,982,931.36 includes a carryover balance of $5,669,935.56 and estimates program income of $262,995.80 from the annual City/Agency loan repayment (HSC Section 34191.4); and $50,000 from single and multi-family loan repayments. Net of $1,718,669.00 encumbered for approved projects, and $525,000 for personnel, operations and maintenance, the available program fund for FY 25/26 is $3,739,262.54. In accordance with requirements for targeted income limits and for the development of real property acquired by FHS for affordable housing purposes, the budget provides for affordable residential development on FHS owned property in Chinatown, Downtown and Southwest Fresno. Based on current expended and encumbered allocations and to comply with program income expenditure requirements the Program Income Targets for FY 25/26 are: $1,189,263 and $2,550,000 to construct units targeted for extremely low and very low income households respectively.
Housing Asset Fund Transfer
In February 2014 the Sacramento Superior Court approved the transfer and encumbrance of housing assets to carry out enforceable obligations and provide for affordable housing related activity. The schedule for those approved obligations and related expenditures are included in the Housing Asset Transfer attachment.
Affordable Housing Overview
The attached chart provides an overview of affordable housing development by the FHS since dissolution of the former redevelopment agency. The first table “Affordable Housing Development Expenditures by Income Target Requirements” provides the percentage of Program Income Funds spent and/or encumbered per income category and illustrates that at present, 36.4%, 37.2% and 26.5% of Program Income has been allocated to households at 30%; 30-60% and 60-80% of AMI respectively for approved and or completed projects. The second table illustrates the number of units occupied by AMI level and includes mixed income developments that together provide 558 affordable and 155 market rate units with a combined total of 713 units. The last table shows the expenditure per unit that generally reflects the importance of FHS dollars that leverage private equity or other public funding sources.
CONCLUSION
Staff recommends that the Housing Successor to the Redevelopment Agency of the City of Fresno and the Fresno Revitalization Corporation approve the FY 25/26 Fresno Housing Successor Budget.
Attachments:
1. FHS Annual Report for the Fiscal Year 23/24
2. FHS FY 25/26 Program Income Budget
3. Housing Asset Transfer
4. Overview-Affordable Housing