Housing and Community Development Funding ParntershipMasterpiece on the Mississippi
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Housing Assistance Payment Fund Balance
DATE: March 14, 2013
Dubuque
kital
All- America City
II 111!
2012
Beginning in 2005, The U.S. Department of Housing and Urban Development
implemented budget -based funding which requires Public Housing Agencies to be
responsible for maintaining any excess Housing Assistance Payments in their Net
Restricted Assets account for use only for future Housing Assistance Payment needs.
HUD does not allow Housing Assistance Payment funds to be used for administrative
expenses. Whenever there are excess /unused Housing Assistance Payment funds,
HUD offsets the Public Housing Agencies' payments to reflect that additional funds are
available for Housing Assistance Payments, resulting in reduced City revenues.
Each month, the City must report the cash /investments as of the last day of the month
for the Housing Choice Voucher (HCV) program. At the end of the fiscal year, the City
must submit an annual report through the Real Estate Assessment Center (REAC) by
August 31 of each year. HUD reviews the report and either accepts the report or rejects
it. By rejecting the report, HUD requests that any findings /problems are corrected.
HUD has rejected the financial assessment report submitted through REAC for FY
2012. HUD has directed the City to verify that the City has $846,776.72 in cash for the
Housing Choice Voucher Housing Assistance Payment fund. HUD has also advised the
City that failure to make corrections will result in further action and could result in
payments being discontinued. The City has been providing this report to HUD each
year, believing the use of funds to pay administrative expense was appropriate, and
HUD has not rejected a report until this year.
Housing and Community Development Department Director Alvin Nash and Budget
Director Jennifer Larson recommend that $499,181 be deposited into the Housing
Assistance Program fund from identified savings in the general fund.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
Michael C. Van Milligen
MCVM:jh
Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
Teri Goodmann, Assistant City Manager
Jennifer Larson, Budget Director
Alvin Nash, Housing & Community Development Department Director
Ken TeKippe, Finance Director
2
Masterpiece on the Mississippi
To: Michael Van Milligen, City Manager
From: Alvin Nash, Housing & Community Development Director
Subject: Housing Assistance Payment Fund Balance
Date: March 13, 2013
Dubuque
All- America City
1
2012
Beginning in 2005, HUD implemented budget -based funding which requires Public Housing
Agencies (PHA) to be responsible for maintaining any excess Housing Assistance Payments
(HAP) in their Net Restricted Assets (NRA) account for use only for future HAP needs. HUD
does not allow HAP funds to be used for administrative expenses. Whenever there are
excess /unused HAP funds, HUD offsets the PHA's payments to reflect that additional funds are
available for Housing Assistance Payments, resulting in reduced City revenues.
Each month, the City PHA must report the cash /investments as of the last day of the month for
the Housing Choice Voucher (HCV) program. At the end of the fiscal year, the City must submit
an annual report through the Real Estate Assessment Center (REAC) by August 31st. Once
HUD receives the first submission (unaudited version), they review it and either accept the
report or reject it. By rejecting the report, HUD requests that any findings /problems are
corrected.
In January 2013, HUD rejected the financial assessment report submitted for FY 2012. HUD has
directed the City to verify that the City has $846,776.72 in cash in the Housing Choice Voucher
Housing Assistance Payment fund. HUD has also advised the City that failure to make
corrections will result in further action and could result in payments being discontinued. The City
has been providing the report to HUD annually, and HUD has not rejected a report until this
year.
Assisted Housing Supervisor Janet Walker and Community Development Specialist Aggie
Tauke have verified the City Section 8 fund balance by defining the HUD required administrative
costs beginning in FY 2007 as shown below in Table 1:
Table 1
FY 2012 Section 8 Cash
Balance _une30, 2012
HUD FY 12
HUD FY11
HUD FY10
HUD FY09
HUD FY08
HUD FY07
HCVAdmin
(499,181)
(369,729)
(250,968)
(184,126)
(34,586)
35,854
HCV HAP
846,777
1,383,855
398,630
767,945
978,721
1,048,306
Mod Rehab
174,443
172,696
171,101
163,814
183,584
229,020
HUD Subtotal
522,039
1,186,822
318,763
747,633
1,127,720
1,313,180
HCV FSS (Restricted Sec 8)
25,217
18,396
27,422
17,966
18,919
31,400
Total HUD Cash
547,256
1,205,218
346,185
765,599
1,146,639
1,344,580
City Cash Balance
547,255
1,205,217
346,185
765,599
1,146,639
1,344,579
The Section 8 cash balance has been tied to the City cash balance in the general ledger for
each year. The Section 8 cash fund shows $846,777 in HAP funds as of June 30, 2012 but the
Housing Choice Voucher administrative costs are negative ($499,181), reducing the HAP fund
balance to $347,596. HUD is requiring that the City's balance reflect the true HAP fund balance.
The $204,635 in general funds transferred to the Section 8 fund in FY11 and FY12 are reflected
in the above balance. This budgeted transfer from the general fund to the Section 8 fund was
based on the estimated loss of administrative fees from reducing vouchers.
There are several reasons for shortfalls.
1. In June 2007 HUD required reporting to reflect Housing Assistance Payments (HAP)
separate from the HCV administrative fees, beginning in FY2007.
2. HUD pro -rates the administrative fees the City earns, so we receive less than the full
costs for delivering services. The FY13 per unit administrative cost of $58.51 is pro -rated
to $46.81 per unit, which is 80% of the allocated administrative fees. See Table 2.
3. The City began reducing the number of available vouchers in January 2010, resulting in
decreased administrative fees beginning in FY 2011. See Table 2.
4. Revenue for special fees is no longer being paid by HUD. Special fees cover hard to
house families and dust wipes being performed. This resulted in decreased revenues of
about $20,000 per year beginning in FY 2009.
5. The police investigator position was funded with $279,600 in Section 8 funds from
FY2008 to FY2011. The position is now being funded with general funds.
6. Coding of HAP and the administrative costs were coded to the same activity, resulting in
difficulty in identifying them in the City finance system. This has been corrected by
establishing a separate activity code for Section 8 administration costs.
7. Issuance of Vouchers on a one -to -one basis has hindered lease up goals since only
about 65% of vouchers issued actually result in a leased unit.
Table 2: Loss in Administrative Revenue
FY12
Average
Annual
Vouchers
Average
HUD
Admin
Fee /mon
th /unit
Total Fee
Earned
HUD
Prorati
on
Rate
Admin
Fees
Received
Amount
Toss due
to
Proration
Total
Annual
Admin
Fees Loss
Actual
860
58
610,611
82%
435,754
HUD Units
1,063
58
748,008
Loss
(203)
(137,397)
(174,857)
(312,254)
FY11
Actual
828
57
578,377
88%
574,651
HUD Units
1,063
57
734,787
Loss
(235)
(156,410)
(3,726)
(160,136)
FY10
Actual
1,086
55
720,403
91%
688,014
HUD Units
1,063
55
Loss
23
720,403
(32,389)
(32,389)
FY09
Actual
971
53
619,801
91%
555,867
HUD Units
1,063
53
675,708
Loss
(92)
(55,907)
(63,934)
(119,841)
FY08
Actual
1,005
52
586,462
91%
608,704
HUD Units
1,063
52
608,704
Loss
(58)
(22,242)
22,242
Until we can reach the maximum 1,063 housing choice vouchers, there will be administrative
funding shortfalls. However, we have put measures in place that will allow us to track the
funding process so we can reconcile the balances earlier and we are researching ways to
reduce our costs.
I recommend that the City deposit $499,181 in the Housing Assistance Payments account,
thereby balancing the FY12 HAP fund.
Cc: Janet Walker
Aggie Tauke
F:IUSERSVATAUKE \Section 8 Balance\Section 8 Final Balance\Section 8 Deficit Memo MVM.doc
Masterpiece on the Mississippi
TO: Michael C. Van Milligen, City Manager
FROM: Jennifer Larson, Budget Director
SUBJECT: Housing Section 8 Administrative Fund Deficit
DATE: March 13, 2013
Dubuque
kital
All- America City
II 111!
2012
INTRODUCTION
The purpose of this memorandum is to provide information on proposed funding for the
Housing Department's Section 8 Administrative Fund deficit of $499,181.
DISCUSSION
Due to the issues outlined by Housing & Community Development Director Alvin Nash's
memo dated March 13, 2013, the Section 8 Administrative Fund has a deficit balance of
$499,181 which HUD is requiring to be rectified before the Real Estate Assessment
Center (REAC) financial submission for FY 2012 will be accepted.
In the Fiscal Year 2013 budget there is an improvement package in the Transit Division
for the Nightrider and Midtown Loop. This improvement package included $456,611 in
additional maintenance cost which was already included in the maintenance budget.
The grant request to ICAAP for these routes used an hourly rate for bus operations
which included all transit operating expenses. The ICAAP grant is reimbursing
expenses that Transit would have regardless if the Nightrider and Midtown Loop
existed. Therefore, motor vehicle maintenance in the Transit Division is over budgeted
by $456,611 in Fiscal Year 2013. The City will set aside $82,016 of the additional
maintenance budgeted in case the ICAAP grant for the Shopping Circulator grant is not
funded in Fiscal Year 2014 so that the route will be able to continue.
The City also received a refund from Iowa Communities Assurance Pool (ICAP) that
was not budgeted in FY 2013 in the amount of $52,241.
The Police Department has $10,556 more revenue from vehicle sales and the Public
Works Department has $16,907 more street sign sales than budgeted in Fiscal Year
2013.
In addition, the Engineering department has $11,351 more revenue from excavation
permits, $4,110 more in sidewalk permits and $33,233 more in subdivision inspection
fees than budgeted in Fiscal Year 2013.
ACTION
I respectfully recommend amending the Fiscal Year 2013 budget to fund the Housing
Department's Section 8 Administrative Fund deficit of $499,181 with the following
sources:
• $374,595 in Transit motor vehicle maintenance related to the Nightrider and
Midtown Loop funded by an ICAAP grant and was over budgeted in FY13;
• $52,241 from the Iowa Communities Assurance Pool (ICAP) refund that was not
budgeted in FY13;
• $10,556 in Police Department vehicle sales received over budget;
• $16,907 in Public Works street sign sales received over budget;
• $33,233 in Engineering Department subdivision inspection fees received over
budget;
• $11,351 in Engineering Department excavation permit fees received over budget;
and
• $298 in Engineering Department sidewalk permits received over budget.
JML
2
THE CITY OF
Dui
Masterpiece on the Mississippi
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
Dubuque
kital
All- America City
II 111!
2012
SUBJECT: Funding Partnership between Community Housing Initiatives (CHI),
Dubuque Bank and Trust (DB &T) and the City of Dubuque's Housing
Department
DATE: March 12, 2013
Housing and Community Development Department Director Alvin Nash is providing
information on a proposed partnership to restore about 18 units in the Washington
Neighborhood. This is a partnership between the Community Housing Initiatives (CHI),
Dubuque Bank and Trust (DB &T) and the City Housing Department. In order to fund
the project, each partner proposes to commit the following funds to address the impact
planned to be made on the neighborhood.
Community Housing Initiative
Dubuque Bank and Trust
City of Dubuque
$ 800,000
$ 500,000
$ 500, 000
$1, 800,000
CHI and DB &T have confirmed their funds and are ready to sign a memorandum of
understanding and proceed.
Alvin Nash recommends using $250,000 of the Washington Neighborhood Incentive
funds and $250,000 of the Residential Rehab Program funds for the City's $500,000
commitment to this project.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
hrit44
Michael C. Van Milligen
MCVM:jh
Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
Teri Goodmann, Assistant City Manager
Alvin Nash, Housing and Community Development Department Director
2
THE CITY OF
Dui
Masterpiece on the Mississippi
To: Mike Van Milligen, City Manager
From: Alvin Nash, Housing and Community Development Director
Dubuque
All- America city
1111'
2012
Subject: Funding Partnership between Community Housing Initiatives (CHI),
Dubuque Bank and Trust (DB &T) and the City of Dubuque's Housing
Department
Date: March 11, 2013
This is a proposed partnership to restore about 18 units in the Washington
Neighborhood; this partnership is between the Community Housing Initiatives (CHI),
Dubuque Bank and Trust (DB &T) and the City Housing Department. In order to fund
the project each partner needs to commit an amount of funds to address the impact
we want to make on the neighborhood.
Community Housing Initiative
Dubuque Bank and Trust
City of Dubuque
$ 800,000
$ 500,000
$ 500,000
$1,800,000
CHI and DB &T have confirmed their funds and are ready to sign a memorandum of
understanding and proceed.
Recommendation of funds to cover the City's contribution:
1. General fund Washington Neighborhood Incentives:
1011595 -62675 $257,357 DRA General fund
1011595 - 62764, $ 3,000 DRA General fund
1021595 - 62765, $ 70,000 General fund targeted
$330,357
Funds are for persons over 80% of medium Income, use for rehab loans
and down payment assistance.
2. Residential Rehab Program (RRP) income funds from a HUD program
that has closed out.
2701065 -73210 $392,140
Fund must be used for Community Development Block Grant (CDBG)
eligible activities.
Target projects:
10 Vacant residential houses
2 Vacant commercial units
4 Owner occupied residential units
2 Rental units that are in need of repair
Use of funds:
Bank Funds: Purchase of properties (bank gets 3.5% interest on their
investment on each unit)
CHI Funds: loss purchase fund, marketing, rehab costs, title search, legal,
development fees, Lead and asbestos abatement.
City Funds: rehab costs, loss sale fund
We have confirmed that the funds are in the City budget and amounts are correct.
I recommend using $250,000 of the Washington Neighborhood Incentive funds and
$250,000 of the RRP funds to secure the City's $500,000 to the project. If you
concur with the recommendation, we will proceed immediately to finish developing
the partnership proposal with DB &T and CHI.
cc: Jenny Larson, Budget Director
Kris Neyen, Rehabilitation Programs Supervisor
Aggie Tauke, Community Development Specialist
Ken TeKippe, Finance Director