COUNTY OF SAN MATEO

Inter-Departmental Correspondence

DATE:

March 28, 2007

BOARD MEETING DATE:

April 10, 2007

SPECIAL NOTICE/HEARING:

None

VOTE REQUIRED:

Majority

TO:

Honorable Board of Supervisors

FROM:

Supervisor Mark Church and Supervisor Adrienne Tissier

Audit Committee

SUBJECT:

Management Review – Department of Housing

RECOMMENDATION:

Accept the report on the management review of the Department of Housing.

VISION ALIGNMENT:

Commitment: Responsible, effective and collaborative government.

Goal: County employees understand, support and integrate the County vision and goals into their delivery of services.

The performance audits/management reviews contribute to this commitment and goal by enhancing performance and increasing efficiency, providing skill-building opportunities for staff as part of the County’s succession planning activities, and enhancing collaboration, teamwork and communication among staff in the County departments involved in the reviews.

BACKGROUND:

The Performance Audit/Management Review Initiative was launched in late 2005 by the Board of Supervisors, with the principal objective of enhancing performance and increasing efficiency, including but not limited to the development of operational improvements and the generation of additional revenue and/or cost savings for the County. Two additional objectives of the Initiative are to provide skill-building opportunities for staff as part of the County’s succession planning activities, and to enhance collaboration, teamwork and communication among staff in the County departments involved in the reviews.

In December 2004, the Board of Supervisors accepted a report from the Board Housing Committee recommending the creation of a Department of Housing. The former Office of Housing, a division within the Human Services Agency (HSA), would be absorbed into the new department, except for the Center on Homelessness, which would remain in HSA. The County formally established the Department of Housing in January 2005, which began its first fiscal year of operation as a separate department in July 2005. In August 2005, a new Director of Housing was appointed. The Director requested a baseline business system evaluation and volunteered Housing to be the pilot department for the County’s Performance Audit/Management Review initiative. The Housing Department has a budget of $79 million with 66 positions in three major functions: the Housing Authority, Housing and Community Development (HCD), and Finance and Administration.

DISCUSSION:

A County Review Team led by the County Manager’s Office, with representatives from Housing, Human Resources, Information Services Department, and Internal Audit/Controller’s Office, conducted the management review with guidance from Management Partners, the firm that conducted the County’s organizational review.

The attached report provides an overview of the Department Housing; reports themes and review areas identified during management interviews and employee focus groups; summarizes benchmarking and best practice research results; analyzes what’s working and where improvements can be made; and makes recommendations for change and improvement in three key review areas:

(1) General Management

(2) Business Systems

(3) Communications

The success of any newly created organization depends highly on its management’s ability to lead its employees and other stakeholders toward a shared vision, mission, goals and objectives. While the new department is charged with overseeing the County’s affordable housing efforts, including the Housing Authority and HCD, the Authority continues to operate independently in terms of its own management and support systems, personnel and fiscal policies and procedures.

The differences in operating the Authority have resulted in a great deal of management inefficiencies. The lack of integration also creates barriers to collaboration and teamwork among Housing staff, limiting opportunities to cross-train and implement succession planning efforts to address staff turnover and retirements. The lack of integration ultimately impedes the Department’s ability to operate efficiently and to maximize economies of scale and other opportunities to allocate limited resources toward one of the top priorities of county residents.

Integration Issues and Benefits

The Findings and Recommendations sections of the report provide specific issues and recommendations regarding the need for Housing Authority integration with County systems. While there are significant legal and personnel issues and costs associated with integration, which need more in-depth study and analysis, the major benefits of integration include:

• Increased opportunities to optimize the use of federal Housing and Urban Development (HUD) funding to address specific housing needs of county residents through collective efforts of Housing Authority and HCD staff

• Management’s ability to operate efficiently without duplicative systems, policies and procedures

• Succession planning through increased cross-training and promotional opportunities for staff

• Economies of scale through use of County agreements with support departments, vendors and suppliers

FISCAL IMPACT:

A summary of recommendations, estimated completion dates and additional costs can be found in Attachment E of the report. The Department will use existing staff resources, augmented with support from other County departments, to implement the recommendations. One-time costs of $820,000 have been identified, the majority of which are related to integration efforts, including consolidating all employees in one location, upgrading technology infrastructure and website, and exploring the migration of Housing Authority employees and management systems to the County.

The Department can utilize its Reserves for most of the costs, but requires one-time General Fund support of $350,000 for some office consolidation costs and feasibility studies related to Housing Authority integration. This amount will be included in the FY 2007-08 recommended budget for Housing. Ongoing costs and funding considerations related to integration will be identified once the feasibility studies have been completed.