COUNTY OF SAN MATEO

Inter-Departmental Correspondence

Department of Housing

 

DATE:

May 31, 2006

BOARD MEETING DATE:

June 20, 2006

SPECIAL NOTICE/HEARING:

None

VOTE REQUIRED:

Majority

 

TO:

Honorable Board of Supervisors (Sitting as the Board of Commissioners of the Housing Authority)

FROM:

Duane Bay, Director

SUBJECT:

Resolution 628-C Approving the Inter-Fund Transfer in the Amount of $850,000 from the Half Moon Bay Village Cash and Operating Reserve to the Moving to Work Cash and Operating Reserve.

 

RECOMMENDATION:

Adopt Resolution 628-C approving the inter-fund transfer in the amount of $850,000 (either by a direct transfer or by a loan) from the Half Moon Bay Village Cash and Operating Reserve to the Moving to Work Cash and Operating Reserve.

 

VISION ALIGNMENT:

Commitment: Offering a full range of housing choices.

Goal(s): #9. Housing exists for people of all income levels and for all generations of families.

 

BACKGROUND:

In FY 2004 and 2005 Single Audit, the Housing Authority was cited for using Moving to Work (MTW) restricted tenant escrow funds (totaling $813,000) to cover MTW costs. To prevent such use in the future, a separate account has been set up for the tenant funds. However, no funds have been transferred or deposited into this new account because the MTW Program has no reserve funds available for use to replenish the tenant escrow funds. By contrast, Half Moon Bay Village has $3.7 million in Cash and Operating Reserve, which amount is equivalent to 85% of its annual operating budget. Half Moon Bay Village will continue to accrue significant reserves for future building repairs and improvements at the estimated rate of $15,000 per month. Transferring the sum of $850,000 from the Half Moon Bay Village Cash and Operating Reserve should not negatively impact the day to day or long term financial position of Half Moon Bay Village or its ability to respond to any particular financial need it may have. If MTW were to receive $850,000 for deposit into its Cash and Operating Reserve, MTW would then have the resources to replenish immediately the full balance of MTW tenant escrow account, and the goal of having the appropriate balance of restricted tenant escrow funds would be achieved.

 

DISCUSSION:

In prior years, the Moving to Work Program over-utilized vouchers (i.e. more funds were disbursed than were actually available). While over-utilization made the benefits of the MTW Program available to more households, it also led to program deficits from which the program has not yet recovered. To address this over-utilization problem the Housing Authority has allowed the current voucher utilization to fall through natural attrition to a level at which the program is beginning to show a positive net operating income. To address the tenant escrow fund shortfall, the Housing Authority is seeking to make the inter-fund transfer of $850,000 from the Half Moon Bay Village Cash and Operating Reserve to the MTW Cash and Operating Reserve. Once the funds are in the MTW Cash and Operating Reserve, they will be used to replenish and restore the tenant escrow account. Any MTW Program operating surpluses may then be used for other purposes, including the repayment of other inter-program transfers or loans necessitated by the previous operating deficit. This proposed transfer from the Half Moon Bay Village account will take form of either a direct transfer or a loan to the MTW Cash and Operating Reserve – we are still waiting to receive final approval from HUD with regard to the precise form of the transfer. If a loan is used, it would be interest free and repayment would begin July 1, 2009. The loan would be repaid by applying 30% of MTW’s annual surplus to such repayment. Such loan terms would be consistent with all applicable regulations and restrictions and it is estimated that such a loan would be fully repaid in ten years.

County Counsel has reviewed and approved the Resolution as to form.

 

FISCAL IMPACT:

There is no Net County Cost associated with this action. All funds requested come from the cash and operating reserve from Half Moon Bay Village.