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CITY COUNCIL AGENDA ITEM NO. 14

Meeting Date: June 22, 2004

Subject/Title: Approve a Resolution Amending the Fiscal Year 2004/05 Budget to include the Affordable Housing and Housing Enterprise Fund

Prepared by: Ellen Bonneville, Housing Manager

Submitted by: Howard Sword, Director of Economic Development

RECOMMENDATION
Approve a Resolution Amending the Fiscal Year 2004/05 Budget to include the Affordable Housing and Housing Enterprise Fund.

PREVIOUS ACTION
Ordinance 756 was adopted by the City Council on September 9, 2003 creating the City of Brentwood Affordable Housing Program.

On March 23, 2004, the City Council approved resolution number 2004-65 amending the 2003/04 Operations Budget to include $45,000 for the newly established City Housing Program.

BACKGROUND
The Affordable Housing program was implemented after the adoption of the 2003/04-2004/05 Final Budget on June 10, 2003. The funding to support the Housing Division staff, hired on February 9, 2004, was received from the Redevelopment Housing Low/Mod Fund. The City Council approved funding in the amount of $45,000 from the Affordable Housing In-Lieu fees for the fiscal year 2003/04 program expenses on March 23, 2004.

Included in this fiscal year 2004/05 budget request is additional staffing of a Housing Secretary, Housing Analyst and a portion of a Building Inspector. All additional staff will be phased in over the next year. A survey of City Housing Activities conducted by the Economic Development Department demonstrates that a three-person staff for the Housing Division is still far below the staffing levels of cities performing comparable housing activities.

One-time consultant and legal costs for review of Ordinance 756, as directed by Council on May 25, 2004, are also included in this budget. As part of its contract, the consultant will conduct an in-depth analysis of the rental income over the life of the Housing Division.

The financial statuses of the City of Brentwood Housing Funds are sound. A staff analysis of revenues and expenditures for the division demonstrates that the division will sustain itself over the long term without any impact to the General Fund.

The Division’s financial structure is comprised of three major funds:

The Housing Enterprise Fund is used to account for the administrative and operational expenses for the Housing Division and the City’s Housing rental stock. This fund receives 20% of the Housing in-lieu fees paid. Total revenue for the Housing Enterprise Fund is estimated at $1,013,581 while total appropriations will not exceed $619,286. Fiscal year 2004/05 fund balance is expected to be $760,295. The Division is self-supporting without subsidy from the General Fund because the Ordinance allows for 20% of the in-lieu fees to be used towards administrative costs. Our current conservative forecast is that the Division will need the 20% contribution from the in-lieu fees for the near term, but that need will decrease annually for the next 12 years when the Division will be fully funded from the revenue stream from City rentals. Staff does not ever anticipate a subsidy of the Division from the General Fund. The changes to the Ordinance that staff are now crafting anticipates reducing that stand-alone date for the Division from 12 years out to less than 10 years.

The Affordable Housing Fund receives 80% of the payments of in-lieu fees from residential developers to meet their affordable housing obligations. The total appropriation for the Affordable Housing Fund would be to purchase one of the KB Orchard homes at a cost of approximately $215,000 while revenues are expected to be $3,954,323; fund balance is projected to be $5,307,323 as of June 30, 2005 which will be available for future affordable housing projects.

The Housing Project Fund will receive transfers from the Affordable Housing Fund to pay for all project-related expenses. Projects may include but are not limited to construction of new affordable housing opportunities, land purchases or funding for a First Time Homebuyer Program. Future funding for the Division will also be received from the Redevelopment Agency Low/Mod Fund. Staff will return to Council to approve appropriations after projects have been identified.

FISCAL IMPACT
In all of the analysis performed, staff has overestimated expenditures and underestimated revenues to maintain a conservative approach to the Housing Division budget. The Housing Division will generate sufficient revenues to fund its expenses for Fiscal Year 2004/05 and in all future years’ expenses without any funding from the City’s General Fund.

Attachments-
Resolution

RESOLUTION NO.

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BRENTWOOD AMENDING THE 2004/05 HOUSING DIVISION BUDGET TO INCLDUE THE AFFORDABLE HOUSING AND HOUSING ENTERPRISE FUNDRECOMMENDED BUDGET ADJUSTMENTS

WHEREAS, on June 10, 2003, the City Council approved resolution number 2893 adopting the 2003/04-2004/05 Final Budget for the City of Brentwood; and

WHEREAS, on January 13, 2004, the City Council approved resolution number 2004-12 amending the 2003/04 Budget for the City of Brentwood; and

WHEREAS, on September 9, 2003, the City Council adopted Ordinance 756, an Ordinance of the City Council of the City of Brentwood approving an amendment to the Municipal Code adding Chapter 17.725 that establishes an Affordable Housing Program; and

WHEREAS, on March 23 2004, the City Council approved resolution number 2004-65 amending the 2003/04 Operations Budget to include $45,000 for the newly established City Housing Program; and

WHEREAS, adequate resources are available to fund the requested appropriations while assuring that operating revenues fully cover operating expenditures; and

WHEREAS, total revenue for the Housing Enterprise Fund is estimated at $1,013,581 while total appropriations will not exceed $619,286. Fiscal year 2004/05 fund balance is expected to be $760,295; and

WHEREAS, the total appropriation for the Affordable Housing Fund would be to purchase one of the KB Orchard homes at a cost of approximately $215,000 while revenues are expected to be $3,954,323, fund balance is projected to be $5,307,323 as of June 30, 2005 which will be available for future affordable housing projects; and

WHEREAS, it is projected that the Division’s Fund Balance will be $5,624,262 on June 30, 2005. For FY 2004/05, total expenditures will not exceed $851,549; and

WHEREAS, the City Council has reviewed these adjustments to the 2004/05 Budget.

NOW, THEREFORE BE IT RESOLVED that the City Council of the City of Brentwood hereby adopts the appropriations and revenue adjustments to the proposed 2004/05 Budget for the City of Brentwood Housing Division.

PASSED, APPROVED AND ADOPTED by the City Council of the City of Brentwood at a regular meeting held on the 22nd day of June, 2004 by the following vote:

AYES:
NOES:
ABSENT:
ABSTAIN :
_______________________ Brian Swisher
Mayor

ATTEST:

__________________________________
Karen Diaz, CMC
City Clerk/Director of Administrative Services
 

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