CDC - Item 4A - Transfer $105,000 From the Low and Moderate Income Housing Fund to the Rosemead Housing Development Corporation FundROSEMEAD COMMUNITY
DEVELOPMENT COMMISSION
TO: THE HONORABLE CHAIRMAN AND COMMISSIONERS
FROM: JEFF ALLRED, EXECUTIVE DIRECTOR 'A
DATE: JUNE 28, 2011
SUBJECT: TRANSFER $105,000 FROM THE LOW AND MODERATE INCOME
HOUSING FUND TO THE ROSEMEAD HOUSING DEVELOPMENT
CORPORATION FUND
SUMMARY
Under the Health and Safety Code, redevelopment agencies are required to assist in
the production, improvement or availability of affordable housing. To accomplish this,
redevelopment agencies are required to transfer 20% of their gross tax increment
revenue to a Low and Moderate Income Housing fund. To assist in the availability of
affordable housing the Commission created the Rosemead Housing Development
Corporation (RHDC) which constructed two apartment complexes for low income senior
citizens; the operations of the apartments are subsidized with contributions from the
Low and Moderate Income Housing Fund.
However, both apartments needed substantial repairs this fiscal year and these costs,
along with very low rental rates (rental rates have never been raised at either complex),
have left RHDC unable to meet its financial obligations. Therefore, staff is requesting
that the Commission authorize a cash transfer from the Low and Moderate Income
Housing Fund to RHDC so it can meet its financial obligations.
Staff Recommendation
Staff recommends that the Commission direct staff to transfer $105,000 from the Low
and Moderate Income Housing Fund to the RHDC fund.
ANALYSIS
Due to needed repairs and insufficient rental revenue the RHDC fund has fallen into a
deficit of $105,000. In the 16 and 11 year history of the two complexes, rental rates
have never been increased; however, due to normal inflationary pressures, operating
costs continue to rise. Historically, prior year surpluses have been used make up the
difference in operating losses but those surpluses are now depleted. Additionally,
repairs costing $40,000, in addition to normal maintenance, added to the cost of
operations.
APPROVED FOR CITY COUNCIL AGENDA: ITEM NUMBER:
RHDC Meeting
June 28, 2011
Page 2 of 2
Consistent with the legal intent of redevelopment law, the Low and Moderate Income
Housing Fund has always subsidized RHDC operating losses and $250,000 is again
budgeted for this year. However, with extra repair costs and insufficient rental revenue,
a $105,000 transfer is necessary to offset operating losses. After the transfer the Low
and Moderate Income Housing Fund will have an estimated cash balance of $1.7 million
and the FY 2011 -12 budget is projecting a $219,400 cash increase in the fund.
PUBLIC NOTICE PROCESS
This item has been noticed through the regular agenda notification process.
Submitted by:
Steve Brisco
Director of Finance
RESOLUTION NO. 2011 -23
A RESOLUTION OF THE ROSEMEAD COMMUNITY
DEVELOPMENT COMMISSION APPROVING THE
TRANSFER OF $105,000 FROM THE LOW AND
MODERATE INCOME HOUSING FUND TO THE
ROSEMEAD HOUSING DEVELOPMENT CORPORATION
(RHDC) FUND AND ENTERING INTO AN AGREEMENT
MEMORIALIZING SUCH TRANSFER WITH THE RHDC
WHEREAS, The City Council of the City ( "City Council ") has adopted Redevelopment
Plans (each individually, a "Redevelopment Plan'; and collectively, the "Redevelopment Plans ")
for the for the No. 1 and No. 2 Project Areas (each individually, a `Project Area'; and
collectively, the `Project Areas");and
WHEREAS, pursuant to the California Community Redevelopment Law (California
Health and Safety Code Section 33000; et s�Mc.) ( "Redevelopment Law "), the Rosemead
Community Development Commission ("CDC") is undertaking a program to redevelop the
Project Areas; and
WHEREAS, the CDC created the Rosemead Housing Development Corporation
( "RHDC ") as a separate legal corporation to assist in the development of affordable housing
within the community; and
WHEREAS, the RHDC constructed 2 apartment complexes that have had recorded
against them covenants that restrict residency in the complexes to senior citizens who qualify as
low- income residents or low- income households; and
WHEREAS, both apartment complexes required substantial repairs during the 2010/2011
fiscal year and the costs of repairs, combined with the low rental rates (which rates have not been
raised at any time since completion of construction on each complex) have left RHDC unable to
meet its financial obligations; and
WHEREAS, the CDC has annually subsidized the activities of the RHDC and this
transfer of funds will merely offset the extra repair costs incurred by the RHDC in fiscal year
2010/2011 to keep the RHDC at the same operating level that it would be had the repairs not
been required in this fiscal year; and
NOW, THEREFORE, THE ROSEMEAD COMMUNITY DEVELOPMENT
COMMISSION DOES HEREBY RESOLVE AS FOLLOWS:
Section 1. The CDC hereby finds that the transfer of funds from the CDC's Low and
Moderate Income Housing Fund to the RHDC will further the purposes of redevelopment within
the community by allowing the RHDC to preserve the two apartment complexes as affordable
units in the community within the meaning of California Health and Safety Code Section
33334.2.
Section 2. The CDC hereby approves the transfer of $105,000 to the RHDC and
authorizes the Chair of the CDC to execute an agreement on behalf of the CDC with the RHDC
for the proper use of the funds and direct the Executive Director or his designee do any and all
things and to execute and deliver, and if _appropriate, record, any and all documents which they
may deem necessary or advisable in order to effectuate the purposes of this Resolution, and any
such actions previously taken by such officers are hereby ratified and confirmed.
APPROVED AND ADOPTED this 28th day of June, 2011, by the following vote
Steven Ly, Chair
ATTEST:
Gloria Molleda, Secretary
.-":.• _ b M • x:11
Rachel H. Richman, CDC General Counsel