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Council Agenda - City of BurbankTuesday, March 13, 2007Agenda Item - 1 |
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Council Agenda - City of BurbankTuesday, March 13, 2007Agenda Item - 1 |
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PURPOSE:
The purpose of this report is to provide the information necessary for the Housing Authority Board to consider: 1) the Public Housing Agency Annual Plan for FY 2007-2008; 2) amend the Section 8 program payment standard; and 3) authorize the Executive Director to execute the certifications that are required by the U. S. Department of Housing and Urban Development (HUD).
BACKGROUND:
The Section 8 Rental Assistance Program is funded by the U.S. Department of Housing and Urban Development (HUD) for the purpose of providing rent subsidies on behalf of very low income tenants throughout the City of Burbank. The Burbank Housing Authority has been administering the Section 8 program since 1975 and has an annual budget of $7,300,000 to assist 1,014 households. The current waiting list consists of 6,524 names, of which, 291 are Burbank residents, and the balance are non-residents.
Section 511 of the Quality Housing and Work Responsibility Act of 1998 requires that all Housing Authorities submit a Public Housing Agency Plan. Each year the Housing Authority submits an Annual Plan to HUD to describe how the Section 8 program will operate in the upcoming year. This Plan covers the time period from July 1, 2007 through June 30, 2008 (Exhibit A). The comprehensive Five Year Public Housing Agency Plan that covers the time period from July 1, 2005 to June 30, 2009 was approved by the Housing Authority Board on March 22, 2005. The Five-Year Plan describes the mission of the Housing Authority and the long range goals for achieving its mission over the next five years.
In an effort to implement an efficient and nationally-consistent process for the preparation, submission, and review of the document, HUD created a template to be followed. The same template is to be used by both Housing Authorities that own public housing projects, and those that administer the Section 8 Rental Assistance Program. Due to the fact that the Burbank Housing Authority does not own any public housing units, many of the sections of the report do not apply. HUD has mandated that the template stay intact.
The Section 8 Program Administrative Plan is a policy and procedure manual that the Burbank Housing Authority staff uses to ensure that all applicants and participants are treated in a fair and equitable manner. Each chapter deals with different aspects of implementation. For the most part, federal regulations dictate the way the Section 8 Program will be implemented.
The HUD regulations give certain parameters that must be followed in establishing the amount of subsidy that the Housing Authority must pay to ensure that the tenant portion of rent is affordable. Chapter 7 of the Administrative Plan describes the methodology used to determine Burbank�s payment standard and establishes the local framework (within the HUD guidelines) for determining how much rental assistance each household will receive.
In accordance with HUD guidelines, Section 24 CFR 5.613 and Public and Indian Housing Notice 2006-32 (Cost-Savings Initiatives in the Housing Choice Voucher Program), the local rent subsidy is defined and calculated as the difference between the fair market rent and the amount a particular household can afford to pay for rent. The calculation formula for establishing this amount considers several factors including: household size; household income; medical allowance; and utility allowance.
The current Burbank HUD subsidy is based on the average housing assistance paid in May, June and July 2004. For example, the average monthly housing assistance payment during that three month time period was $569.47, therefore, HUD calculated the budget authority for 2005 based on the three month snap shot from 2004 ($569.47 x 1,014 x 12 = $6,929,310.46 in budget authority). As a result, the Housing Authority Board voted to adjust the subsidy standard from 110% of the fair market rent to 90% of the fair market rent in order to fund all 1,014 vouchers. At that time, the Housing Authority spent approximately $104,000 more each month, than our average HUD-allotted monthly budget in order to keep the higher payment standard and utilize all 1,014 vouchers.
ANALYSIS:
HUD issued Public and Indian Housing Notice 2006-32 to provide additional guidance on prudent financial management of the Section 8 program. The Housing Authority is provided a fixed allocation of budget authority for the calendar year. In addition, during the calendar year the Housing Authority may not lease more than its contracted units. In the case of Burbank, the maximum units leased can be no more than 1,014 per month. Conversely, underutilization is an issue because less than the maximum number of families will receive assistance. The Housing Authority must spend at least 95% of it�s budget authority to remain in compliance with this notice, as well as, ensure that the tenant�s portion of rent remain affordable. HUD unexpectedly upwardly adjusted our local allocation for the calendar year of 2006, providing Burbank with an additional $350,466 for rental assistance.
In order to comply with HUD�s recent mandate, staff is recommending a new funding allocation formula. Federal regulations allow Housing Authorities to establish the subsidy standard amount at any level between 90% and 110% of the published fair market rent while staying within the budget authority. This is referred to as the basic range. In an effort to avoid underutilization of funds, staff is recommending a program administration amendment to set the subsidy standard within 90% and 110% of the published fair market rent. The immediate result of this action will allow the increase of housing assistance from our current 90% to 100%, which translates into an average of $127 more monthly assistance for those tenants with the greatest need and avoid underutilization of program funds.
If the payment standard is increased from 90% to 100% of the fair market rent for FY 2007-2008 the total Housing subsidy amount would be $7,883,064. This amount is $588,887 over the proposed funding allocation for FY 2007-2008. HUD�s recent change in funding requirements allow the Housing Authority to keep unutilized rental assistance funds from FY 2006-2007 in the undesignated fund account to assist families up to the number of units (1,014) under contract.
The Housing Authority has approximately $726,559 in the undesignated fund account as of December 31, 2006, which would be sufficient to cover the subsidy increase for FY 2007-2008 without impacting the Housing Authority reserve funds. If HUD conditions remain static for FY 2008-2009, the Housing Authority has the ability to utilize a portion of its reserve funds to create a balanced FY 2008-2009 budget. Assuming there are no significant HUD budget reductions, the Burbank Housing Authority is expected to balance by FY 09-10 without reliance on program reserves.
Last year the Housing Authority Board voted to amend the debt recovery policy to include a variety of collection methods to recover outstanding debts, including, but not limited to:
Staff is pleased to report that as a result of the policy amendment the Housing Authority collected $26,438 from July 2006 through January 2007 from repayment agreements and received judgments from the civil court in the amount of $7,153 from previous program participants who refused to pay their debt obligations. Federal regulations state that the Housing Authority can retain 50% of all funds collected and claim all reasonable and necessary costs related to the collection. The balance is returned to HUD.
Currently there are 291 Burbank residents on the Section 8 waiting list. In order to avoid exhausting our resident quota due to Burbank�s voucher turnover rate (100 per year) and comply with the Housing Authority policy of opening the Section 8 waiting list, staff anticipates opening the waiting list for new applications in late spring/early summer.
When the applicant waiting list is open, the Housing Authority will advertise through public notices in local newspapers and minority publications, including The Burbank Leader, The Daily News, La Opinion, The Sentinel, and The Asbarez. The notice that is published will contain the following information:
Additional community outreach will occur through the Joslyn Center, local non-profit service providers, and other community based organizations, just to name a few.
COMMUNITY OUTREACH
In accordance with HUD guidelines, Section 24 CFR, the Resident Advisory Board (comprised of 12 Section 8 participants) reviewed the proposed Annual Plan at a Public meeting held on January 25, 2007. The Resident Advisory Board discussed the proposed changes and were supportive of the proposed increase in assistance. The Housing Authority meets annually with the Resident Advisory Board. Also, in accordance with HUD guidelines, Section 24 CFR, the required public notice was posted within the required timeframe, in the Daily News, and the draft Plan has been available for public review at the Housing Authority office for eight weeks.
SUMMARY
HUD approved the current Section 8 funding allocation through December 31, 2006. Staff has been notified that the calendar year budget for 2007 will be $7,294,177. Although this budget amount may change due to HUD�s recent changes to funding requirements and proposed change in funding allocation for 2007. Staff recommends the payment standard be set at any level between 90% and 110% of the published fair market rents. Each year when the fair market rent limits are published, the payment standards can be adjusted accordingly and reviewed annually in conjunction with Board approval of the Annual Plan. For the FY 2007-2008 period staff recommends an increase from 90% to 100% of the published fair market rent.
FISCAL IMPACT
Adequate funds are available to fund the proposed increase in housing assistance and funds are available in the Housing Authority Fund 117.
RECOMMENDATION
Staff recommends that the Housing Authority Board approve the proposed resolution, which: 1) approves the Burbank Public Housing Agency Annual Plan; 2) amend the Section 8 Program Administrative Plan payment standard; and 3) authorize the Executive Director to execute HUD required certifications.
LIST OF EXHIBITS
EXHIBIT A - PHA Annual Plan EXHIBIT B � HUD required Certifications EXHIBIT C � PHA Administrative Plan Chapter 7
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