HomeMy WebLinkAbout2024-01-11; Housing Commission; ; Fiscal Year 2023 Housing Trust Fund Annual ReportMeeting Date: Jan. 11, 2024
To: Housing Commission
From: Mandy Mills, Housing & Homeless Services Director
Staff Contact: Mandy Mills, Housing & Homeless Services Director
mandy.mills@carlsbadca.gov, 442-339-2907
Subject: Fiscal Year 2023 Housing Trust Fund Annual Report
District: All
Recommended Action
Adopt a resolution that the City Council approve the Fiscal Year 2023 Housing Trust Fund
Annual Report.
Executive Summary
City Council Policy No. 90 outlines the policies for Housing Trust Fund administration, requiring
an Annual Report that shall be reviewed by the Housing Commission. The Fiscal Year 2022-23
Housing Trust Fund Annual Report is attached for review.
Explanation & Analysis
The Housing Commission was established to advise and make recommendations to the
Community Development Commission (the governing body of the Carlsbad Housing Authority)
and/or the City Council on issues related to affordable housing.
Fiscal Year 2023 Housing Trust Fund Annual Report
Pursuant to Carlsbad Municipal Code (CMC) Sections 21.85.110(D) and 21.85.120, all fees
collected under the Inclusionary Housing Ordinance shall be deposited into a Housing Trust
Fund and expended for the affordable housing needs of lower-income households. On Dec. 12,
2020, the City Council adopted City Council Policy No. 90 which outlines the priorities,
expectations and policies for Housing Trust Fund administration. On Dec. 12, 2020, the City
Council adopted City Council Policy No. 90 which outlines the priorities, expectations and
policies for Housing Trust Fund administration. The Policy calls for an Annual Report that shall
be reviewed by the city’s Housing Policy Team and the Housing Commission. A report
summarizing activity of the Housing Trust Fund for FY 2022-23 is provided as Exhibit 1 -
Attachment A.
HOUSING COMMISSION
Jan. 11, 2024 Item #2 Page 1 of 16
Fiscal Analysis
There is no direct fiscal impact associated with approving the annual report.
Next Steps
After the Commission's review and acceptance, the Fiscal Year 2023 Housing Trust Fund Annual
Report will be forwarded to the City Council for their review and approval.
Environmental Evaluation
Pursuant to Public Resources Code Section 21065, this action does not constitute a “project”
within the meaning of the California Environmental Quality Act (CEQA) in that it has no
potential to cause either a direct physical change in the environment, or a reasonably
foreseeable indirect physical change in the environment, and therefore does not require
environmental review.
Exhibit
1.Housing Commission resolution
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Housing Trust Fund
FY 2022-23 Annual Report
Background
The city’s Inclusionary Housing Ordinance was established in April 1993 and requires that all
residential developments greater than six units restrict 15 percent of the total number of
homes in a project as affordable to low-income households. Some developments have the
option to satisfy a portion of or all of their affordable housing obligation through payment of
inclusionary housing in-lieu fees or affordable housing credit purchases. For the city to receive
and use these fee payments, the Housing Trust Fund was established to confirm that fees
collected were applied only towards the affordable housing needs of lower-income households.
The Housing Trust Fund receives revenue from a variety of sources, including interest from
loans, housing credit purchases, housing impact fees, and interest earned on the fund balance.
The Fund is intended to aid in the production, acquisition, rehabilitation and preservation of
housing affordable to extremely low-, very low- and low-income households, and those
experiencing homelessness. Reasonable costs of administration of the fund, programs and
projects are allowed.
The Housing Trust Fund significantly contributes to the success of the city’s inclusionary housing
program. The Housing Trust Fund has been an indispensable tool to attract other funding
sources to affordable housing projects, leveraging the city’s investment up to five times with
outside funding sources. With its diversity of revenue sources, the Housing Trust Fund has
provided sustained support for the inclusionary housing program, resulting in approximately
2,300 affordable homes in Carlsbad.
On Dec. 12, 2020 the City Council adopted City Council Policy No. 90 which outlines the
priorities, expectations and policies for HTF administration. The Policy calls for an Annual
Report that shall be reviewed by the city’s Housing Policy Team, composed of representatives
from Finance, Community Development, Housing Services and the City Attorney’s office, and
the Housing Commission.
Jan. 11, 2024 Item #2 Page 4 of 16
Attachment A
Summary of use of funds
The Housing Trust Fund has been used successfully to assist an array of new housing
construction, land acquisition, first-time homebuyer loans and low income and homeless
services. During FY 2022-23 there were the following project or program expenditures and
commitments:
Category Expenditures Encumbrances
(Prior Year
Commitments
already removed
from Fund Balance)
New Loan
Commitments
Construction of new affordable housing $4,087,226 $2,480,438 $1,535,621
Tyler Court $84,002
Preservation of affordable housing $20,647
Homeless Services $55,990
Administration $155,723
Other Housing Administrative support $100,000
TOTAL $4,503,588 $2,480,438 $1,535,621
Below are the descriptions of HTF uses by category for FY 22-23.
Construction of new affordable housing-$4,087,226
Historically, the Housing Trust Fund is predominantly used to subsidize the construction of new
affordable housing in Carlsbad. Money from the Housing Trust Fund is often leveraged by other
local and non-local sources of subsidy: Community Development Block Grants, the HOME
federal funding program, the city Low and Moderate Income Housing Fund; federal and state
low income housing tax credits and others.
Financial assistance from the Housing Trust Fund is typically made in the form of long-term
loans of 30 to 55 years at an interest rate of generally not more than three percent. Loan
repayment requirements will vary by type of assistance. For example, repayment of principal
and interest of first-time homebuyer loans are usually deferred for 15 or even 30 years, unless
the home is sold. Repayments on loans to multi-family rental projects are amortized over the
loan term, and are usually made on a surplus cash basis, that is, annual gross revenue minus
annual operating expenses. At the end of the loan term or upon sale or transfer of the property,
any remaining principal and accrued interest becomes due and payable at that time.
Windsor Pointe
In 2017 and 2020 the City Council approved
financing for the Windsor Pointe affordable
housing project. Project completion occurred
during the 2022-23 fiscal year with city
expenditures of $1,317,664. The project,
developed by Affirmed Housing, offers
permanent supportive housing project for
Jan. 11, 2024 Item #2 Page 5 of 16
homeless household with serve mental illness and affordable housing for other low-income
households with a veteran preference. The project is 48 units located on two non-contiguous
sites in the Barrio neighborhood, at 965 Oak Ave. and 3606 Harding St.
Aviara Apartments
Aviara East Apartments is a 70-unit affordable housing project
located on Aviara Parkway south of Palomar Airport Road and
north of Laurel Tree Lane. The overall Aviara Apartment
project is required to provide 79 units affordable to lower-
income households. According to City Council Policy Statement
No. 90, money from Housing Trust Fund is not to be used to
satisfy a development's requirement to provide affordable
housing in accordance with the city’s Inclusionary Housing Ordinance, but may be used to assist
in exceeding the requirement. The City Council approved a $3,100,000 loan from the city’s
Housing Trust Fund in 2021, to deepen the affordability of 7 units to serve very low income
households. Construction commenced during fiscal year 2022-23 with city expenditures of
$2,769,562. The remaining $330,438 will be expended during final phases of construction.
Tyler Court-$84,002
In 1999, the Redevelopment Agency of the City of Carlsbad
purchased the 75-unit Tyler Court Senior Apartment complex for
the purpose of providing permanent affordable housing for very
low-income senior residents. The day-to-day management is
provided by a contract with a private property management
company that oversees ongoing maintenance, repairs and capital
improvements using reserve funds out of the Tyler Court
Apartment Fund held by the City of Carlsbad. Based on the limited
rental revenue, not all repair and maintenance projects can be done when identified. Each year
city staff works with property management staff to estimate a dollar amount for repair and
capital needs and then funds are appropriated in the budget for the following fiscal year. During
FY23, the city transferred $60,000 from the Housing Trust Fund toward the Tyler Court
Apartment Fund to cover net operating costs. There were also costs of $24,002 awaiting
reimbursement from additional federal grant revenue.
Preservation of affordable housing-$20,647
As part of the city’s affordable housing efforts, the city has
purchased affordable housing units with the intent to resell
them to eligible lower-income buyers, thereby preserving,
extending and enhancing the existing affordable housing stock
in Carlsbad. Most of the units utilized Community Development
Block Grant (CDBG) funding, but one unit was purchased and
rehabilitated with HTF. Some of the costs (improvements and
homeowner association fees) were incurred in FY 2022-23.
When it was resold, proceeds were returned to the HTF.
Jan. 11, 2024 Item #2 Page 6 of 16
Homeless Services-$55,990
The Housing Trust Fund has also been used to support a variety of services for low income and
homeless individuals and families. For example, the Housing Trust Fund has provided funding
each year for the Carlsbad Service Center, which provides temporary day labor employment
services, employment training and readiness, access to benefits, basic needs, rental assistance
and case management. The Housing Trust Fund also supports a Housing Navigation program
and the year-round Bridge-to-Housing network coordinated by the Alliance for Regional
Solutions.
Administration-$155,723
Housing Trust Fund dollars are used to cover administrative costs that are necessary to
administer the fund. These include personnel expenses and maintenance and operational (not
used for travel and training) expenses that are specifically related to the administration of the
HTF. Total administrative expenses may not exceed 5% of the available housing trust fund
balance as of the end of the prior fiscal year. The following administrative category would be
added toward total administration against the cap.
Other Housing Administrative support- $100,000
Funds may also be used to supplement administrative and operational support for other
housing programs. There is a dollar amount set aside annually to ensure administration of the
Housing Choice Voucher Program (rental assistance) is fully covered. Funds for administration
of that program come from the U.S. Department of Housing & Urban Development. It is
expected that funds will cover the administrative costs, but there have been instances when
the timing of funds from HUD are received after the costs are incurred. It is essential to keep
this program operational, so this budget allocation allows the city to maintain program
administration without falling into a funding deficit. If the funds are not needed to balance at
fiscal year end, they can be returned to the HTF.
Summary of new projects
In addition to the expenditures outlined in the section above, the City Council also approved
new loan commitments from the HTF in the amount of $1.5 million during FY 22-23. The
projects for these loan commitments are described below.
La Posada Shelter
La Posada is the city’s only homeless shelter and is
operated by Catholic Charities. It currently provides 100
beds, of which 50 are reserved for farmworkers. The City
Council expressed support for Catholic Charities to expand
the capacity of the La Posada shelter to serve more
individuals experiencing homelessness, including space for
women and families. The total project cost is currently
estimated at $10 to $12 million, depending on the inclusion of a third story to include more bed
space to serve more individuals. The project is anticipated to start construction in 2024 if
enough capital for construction can be raised by Catholic Charities.
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City staff have been actively seeking outside funding alternatives to reduce the amount of
capital needed to be raised so that project construction can start. The City Council approved
documents at the Feb. 7, 2023, City Council meeting to accept $2 million in funds from the
County of San Diego and, in turn, grant the funds to Catholic Charities towards the expansion.
On May 16, 2023, the City Council approved $729,379 in Permanent Local Housing Allocation
funds and $1,470,621 from the HTF towards the project.
Marja Acres Senior Apartments
The Marja Acres Apartments project is a 47-unit, 100% affordable
senior housing project located on the west side of El Camino Real,
just south of Kelly Drive being developed by USA Properties. As
an approved density bonus project, Marja Acres is required to
provide 46 senior apartments affordable to lower-income
seniors. The City Council approved a $650,000 loan from the
city’s Housing Trust Fund on Oct. 12, 2021 to deepen the
affordability of five of the units to extremely low-income levels. On Oct. 11, 2022, the City
Council approved an additional $65,000 to the loan amount for a total of $715,000. Due to a
funding gap that has increased since the time the original city HTF loan was awarded due to
rising construction costs, utility operating costs and interest rates. The project site is currently
being graded, and construction is anticipated to begin by 2024.
Financial Status of the HTF
Revenue sources
Fund receipts vary from year to year, but generally average between $1-2 million annually.
Revenues come primarily from residential development activity, loan repayments and interest
income. No General Fund money is deposited to the Housing Trust Fund.
Beginning Available Fund Balance $10,680,198
New Loan Receivable 4,087,226
Fee Revenue 297,855
Interest Revenue 274,019
(int + prin) Loan Payments 670,420
Resale of Aff. Units. 174,356
Total Increase in Fund Balance $5,503,876
Reduction in Fund Balance (Loans Issued) (4,087,226)
Affordable Housing Expenditures/Contributions (76,637)
Transfer to Section 8 Admin (100,000)
Tyler Ct. Transfer (84,002)
Administrative Expenses (155,723)
Total Decrease in Fund Balance ($4,503,588)
New Loan Commitments ($1,535,621)
Ending Available Fund Balance1 $10,144,865
1.Total fund balance is presented net of previously committed but not yet funded
developer loans of $4,016,059.
Jan. 11, 2024 Item #2 Page 8 of 16
Summary of administrative and non-project expenses
The funding activities of the Housing Trust Fund require administrative support. The table
below shows actual administrative support expenditures for the last two fiscal years and the
current fiscal year administrative support budget paid by the Housing Trust Fund. The FY23
administrative costs of $255,723 are 2.4% of the approximate $10.7 million FYE 22 Fund Balance.
Total administrative expenses may not exceed 5% of the available housing trust fund balance as
of the end of the prior fiscal year. The maximum administrative cap for 22/23 was $534,010.
Housing Trust Fund
Administration
2021/22
(Actual)
2022/23
(Actual)
2023/24
(Budget)
Personnel[1] 41,585 43,438 143,140
Maintenance & Operations 75,175 112,285 115,390
Transfer to Section 8 Admin 50,000 100,000 300,000
Total administration $166,760 $255,723 $558,530
[1]Excludes personnel expense for the Housing Navigation program in Homeless Services.
Review of prior year funding priorities
The City Council approved the HTF priorities via City Council Policy No. 90 in Dec. 2020.
Priorities are in the following order:
1.Construction of new affordable housing
2. Preservation of housing at-risk of conversion to market rate
3. Acquisition/rehabilitation of distressed/at-risk affordable housing
4.Rental assistance and homelessness programs
5.Land acquisition for future affordable units
6. Conversion of market rate units to affordable housing
Upcoming funding priorities
There has been no change to the funding priorities.
Summary of pending assistance requests
There are no pending requests.
Summary of denied assistance requests
There were no requests denied in FY 22-23.
YTD Summary
As of the beginning of FY 2022-23, the Housing Trust Fund has an available cash balance of
$10.68 million. The HTF made new loan commitments in the amount of $1.5 million during the
fiscal year, but also received almost $1.5 million in revenue. In summary, the HTF continues to
be a valuable source of funding to help create a diverse affordable housing stock.
Jan. 11, 2024 Item #2 Page 9 of 16
FY 2023 Housing Trust Fund Annual Report
Mandy Mills, Director
Housing & Homeless Services
January 11, 2024
1Jan. 11, 2024 Item #2 Page 10 of 16
•Carlsbad Municipal Code establishes the Housing
Trust Fund
•City Council Policy requires an Annual Report
•Reviewed by internal Housing Policy Team
and Housing Commission
Housing Trust Fund Report
2Jan. 11, 2024 Item #2 Page 11 of 16
Housing Trust Fund Report
3
Beginning Available Fund Balance $10,680,198
New Loan Receivable 4,087,226
Fee Revenue 297,855
Interest Revenue 274,019
(int + prin) Loan Payments 670,420
Resale of Aff. Units.174,356
Total Increase in Fund Balance $5,503,876
Reduction in Fund Balance (Loans Issued)(4,087,226)
Affordable Housing Expenditures/Contributions (76,637)
Transfer to Section 8 Admin (100,000)
Tyler Ct. Transfer (84,002)
Administrative Expenses (155,723)
Total Decrease in Fund Balance ($4,503,588)
New Loan Commitments ($1,535,621)
Ending Available Fund Balance1 $10,144,865
Jan. 11, 2024 Item #2 Page 12 of 16
Total fund balance is presented net of
previously committed but not yet funded
developer loans of $4,016,059.
•Marja Acres $715,000
•Remaining Aviara Apts. $330,438
•West Oaks $1,500,000
•La Posada $1,470,621
Housing Trust Fund Report
4Jan. 11, 2024 Item #2 Page 13 of 16
Fund Priorities
Housing Trust Fund Report
The City Council approved the HTF priorities via City Council Policy No. 90 in
Dec. 2020. Priorities are in the following order:
1. Construction of new affordable housing
2. Preservation of housing at-risk of conversion to market rate
3. Acquisition/rehabilitation of distressed/at-risk affordable housing
4. Rental assistance and homelessness programs
5. Land acquisition for future affordable units
6. Conversion of market rate units to affordable housing
5Jan. 11, 2024 Item #2 Page 14 of 16
Next Steps
Housing Trust Fund Report
•Present Housing Trust Fund Annual
Report to City Council for approval
6Jan. 11, 2024 Item #2 Page 15 of 16
Staff recommendation
•Accept the FY 2023 Housing Trust Fund
Annual Report
•Recommend that the City Council approve
the FY 2023 Housing Trust Fund Annual
Report
Housing Trust Fund Report
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