STAFF REPORT - CITY COUNCIL/SUCCESSOR AGENCY/PUBLIC FINANCE AUTHORITY

Financial Services Director recommends the City Council receive and file the Housing Successor Agency Annual Report for Fiscal Year 2019-20.

Financial Services Director is presenting the attached Housing Successor Agency Annual Report for Fiscal Year 2019-20 to the City Council, serving as the Housing Successor Agency of the former Coalinga Redevelopment Agency.  The annual report is required by State law and details compliance with various expenditure, production, and property disposition requirements. 

The City of Coalinga (“City”) is the Housing Successor Agency (“Housing Successor”) to the former Coalinga Redevelopment Agency (“Agency”). Health and Safety Code (“HSC”) Section 34176.1 (enacted by Senate Bill 341 and related legislation) requires the Housing Successor to prepare an annual report documenting compliance with expenditure proportionality and other requirements pertaining to its Low- and Moderate-Income Housing Asset Fund (“Housing Asset Fund”). It reports on the activities of the Housing Successor over the prior year while also measuring compliance with certain statutory limits within a five-year period. The first five-year period ended with the Fiscal Year (“FY”) 2018-19 report. The report is due to the California Department of Housing and Community Development (“HCD”) by April 1st annually, and the City met this deadline. The report must also be presented to City Council and posted on the City’s website.

All California redevelopment agencies were dissolved by State law on February 1, 2012. The former Agency’s affordable housing rights, powers, assets, liabilities, duties, and obligations, excluding any amounts in the Agency’s Housing Asset Fund, were transferred to the City as the Housing Successor Agency.  Housing assets and liabilities were transferred to the City through a Housing Asset Transfer Form (“HAT”) approved by the Department of Finance (“DOF”) on December 15, 2012.

Housing Successor staff and consultants have prepared the Housing Successor Agency Annual Report for FY 2019-20 to comply with reporting requirements.  The report is being presented to City Council to receive and file.  Staff has already submitted the report to HCD prior to the April 1^st deadline.  Following is a summary of compliance with HSC 34176.1 as of FY 2019-20.

Low- and Moderate-Income Housing Asset Fund Activity

The Housing Asset Fund includes all assets that were transferred from the former Agency to the Housing Successor upon redevelopment dissolution.  The assets included:

•        Real properties, and

•        Loan/grants receivable

As of June 30, 2020, the Housing Asset Fund balance was $2,655,233, including a cash balance of $1,228,964. 

The Housing Successor received $127,485 in deposits in FY 2019-20. The source of the deposits was loan repayments and interest. The Housing Successor also spent $25,188 on administrative items in FY 2019-20. The law sets an annual limit on administrative expenses of $200,000 per year, adjusted annually for inflation.  Coalinga has spent well below the annual limit every year.

Property Disposition

The Agency transferred three real properties to the Housing Successor. The Housing Successor is developing a strategy for each property’s disposition or development, taking several factors into consideration, including whether it is more beneficial to develop properties to provide housing, or to receive sales proceeds to spend on affordable housing activities within the expenditure limitations set by the HSC. As of the FY 2019-20 report, one of three properties is slated to receive funding for an affordable housing project, and one is listed for sale. All properties remain vacant.

Properties must be developed with affordable housing or sold within five years of DOF approving the Housing Asset Transfer form. If more time is needed state law allows a five-year extension to be enacted by the City Council.  A resolution was adopted last year enabling this extension to December 15, 2022.

Outstanding Inclusionary and Replacement Housing Obligations

The Agency did not have any outstanding inclusionary or replacement housing obligations at the time of dissolution. There are no outstanding inclusionary or replacement housing obligations to be fulfilled by the Housing Successor.

Income & Age Proportionality

If housing successors expend money on projects, State law requires at least 30% to be spent on extremely low-income rental housing in a five-year period, among other restrictions. The first five-year compliance period began January 1, 2014 and ended on June 30, 2019.  During this period, the Housing Successor did not spend Housing Asset Fund monies on income-contingent housing projects.

State law also sets a limit of 50% on the portion of deed-restricted rental housing that may be restricted to seniors if assisted by the City or former Agency in the prior ten years.  The City and former Agency did not assist the construction of any senior rental units in the prior ten years; therefore, the Agency is in compliance.

Excess Surplus

Senate Bill 341 reinstated a requirement to prevent housing successors from accumulating an excess surplus, which is generally defined as unencumbered cash that exceeds the greater of $1 million or the aggregate amount deposited into the Housing Asset Fund in the preceding four years. 

State law requires the Housing Successor to spend or encumber any future excess surplus within three fiscal years of acquiring the surplus. If the surplus is not spent within the allotted timeframe, all remaining surplus funds will be remitted to HCD for statewide housing projects.

The Housing Asset Fund had an unencumbered cash balance of $427,104 (based on a beginning cash balance of $1,127,104, less $700,000 encumbered for a senior housing project). The Housing Successor therefore has no excess surplus because the unencumbered cash balance is less than $1 million.

Homeownership Unit Inventory

State law requires the annual report to contain an inventory of any homeownership units assisted by the Housing Successor that require restrictions, covenants, or an adopted program that protects Housing Asset Fund monies. The Housing Successor inventory includes 26 assisted homeownership units with affordability restrictions.

The City Council does not receive and file the Housing Successor Agency Annual Report for FY 2019-20.