AGENDA #11

MEMORANDUM

TO:                  Mayor and Town Council

FROM:            W. Calvin Horton, Town Manager

SUBJECT:       Proposed 2000-2001 Budget for the Public Housing Program

DATE:             March 6, 2000

The purpose of this memorandum is to provide information on the proposed 2000-2001 operating budget for the public housing program.  A proposed budget is required to be submitted to the U.S. Department of Housing and Urban Development (HUD) by April 1, 2000.

The attached resolution would approve a 2000-2001 operating budget for the public housing program and calculation of operating subsidy.  The resolution is in a federally required format.

SUMMARY

·        The proposed budget for 2000-2001 totals $1,403,385, a $2,230 decrease from the 1999-2000 budget.

·        The proposed budget has been developed based on expected rental income and subsidy from HUD.

·        The proposed budget would maintain current services, maintenance programs, and provide for needed capital items.

·        Operating reserves would be $394,630, which is within current federal guidelines.  HUD guidelines require a minimum operating reserve equal to 20% of the total routine operating expenses, or $263,600.

BACKGROUND

The proposed budget shows estimated revenues and expenditures for the management and maintenance of the Town’s 336 public housing apartments.

The U.S. Department of Housing and Urban Development requires that public housing operating budgets be submitted 90 days before the beginning of the fiscal year.  Our 2000-2001 fiscal year begins on July 1, 2000; therefore, our budget is due to HUD by April 1, 2000.

THE PROPOSED BUDGET

The proposed 2000-2001 budget would continue the basic operation of the public housing program as in 1999-2000.  We propose to continue the current level of maintenance services including:  responding to residents’ requests for routine repairs, carrying out preventive maintenance and safety inspections, and making weekend and after-hour emergency repairs.  We also propose to continue programs and services that would help residents achieve economic independence.

The proposed budget for 2000-2001 totals $1,403,390, which is a reduction of $2,230 from the current year’s budget of $1,405,620.  The reduction is due primarily to current year capital costs of $178,775 that are not required in 2000-2001.

Based on the proposed budget, we would use $19,330 of the fund balance, primarily for capital expenditures, to cover total proposed expenditures.  The remaining fund balance would be $394,680, which is within federal guidelines.  In accordance with federal guidelines, the fund balance should not be less than 20% of the routine expenditures, or $263,600.

Revenues and Expenditures

The proposed budget has been developed based on expected rental income and subsidy from HUD (please see Attachment 2).  Under federal law, the U.S. Government subsidizes most of the difference between public housing rental revenues and operating costs.  The annual subsidy amount is determined as follows:

1.      Estimate the amount of eligible operating costs.

2.      Estimate the amount of rental income and other revenues.

3.      If revenues are greater than costs, the subsidy is zero.

4.      If revenues are less than the costs, the difference is funded primarily by subsidy from HUD.

HUD has notified us that in 2000-2001, the subsidy will be 98.5% of the difference between expected revenues and costs, or $872,490.  The level of funding from HUD may change each year, however, we believe that expected revenues would be sufficient to maintain the current level of operations in future years.

The estimated revenues and expenditures for the public housing program for 2000-2001 are:

Revenues

Revenues include funding from HUD, rent payments from residents, payments from residents for repair services and interest income.

            Subsidy from HUD                                                       $   872,490

            Rental Income                                                              $   465,870

            Other Income                                                               $     45,700

            Appropriation from Fund Balance                                 $     19,330

                                                                     TOTAL               $1,403,390

Costs

Costs include personnel, operations, and capital expenditures.

            Administration                                                              $   322,330

            Resident Services                                                         $   136,110

            Maintenance                                                                 $   859,540

            Capital Outlay                                                              $     85,400

                                                                      TOTAL              $1,403,380

Maintenance and Related Services

The proposed budget would provide funding at a level whereby the 336 public housing apartments would be maintained as safe places to live.  Proposed maintenance and related services are discussed below.

Preventive Maintenance and Safety Program                                        

The proposed budget would continue the preventive maintenance and safety program at an estimated cost of $52,000.  We would continue to inspect all 336 apartments quarterly.  Repairs needed to ensure safety are made immediately; non-safety and non-emergency preventive maintenance repairs are carried out on a regular work schedule.

Vacant Unit Preparation                                                          

We propose to continue contracting out vacant unit repairs at a cost of about $65,000.  By contracting out vacant unit repair work, the maintenance staff can continue to concentrate on the refurbishing program and maintaining the occupied apartments.  This is a $10,000 decrease from the current budget.  The decrease is due to an expected decrease in contract costs because of the improved condition of apartments at time of vacancy.  Based on our experience in past years, we estimate that 50 vacant apartments will be refurbished in 2000-2001 at a cost of about $1,300 per apartment.

Pest Control Services

We propose to continue the integrated pest management program to control pests in the public housing apartments using minimal chemical pesticides.  We also propose to continue termite inspection and warranty guarantees on all 336 apartments.  The estimated cost is $27,000.

Capital Requests

The proposed 2000-2001 budget includes the following capital expenditures:

Storage Building:  We propose to purchase a 280 sq. ft. metal building to provide additional storage space for maintenance materials and supplies.  Current storage space is filled to capacity and poses a safety hazard for employees because of the congestion.  The estimated cost is $4,300.

Computer Equipment and Computer Maintenance:  We propose to replace one computer and one printer.  The computer and the printer are too slow and require frequent repairs.  We also propose to provide funds for the maintenance of all computers and printers, and to provide for needed upgrades.  The estimated cost is $10,500.

Playground Equipment:  We propose to make $6,000 available to the Public Works Department to maintain playground equipment.  The funds will be used to maintain equipment in all of the public housing neighborhoods.

Five-Year Refurbishing Program

We propose to continue the five-year refurbishing program at a cost of about $102,000.  We estimate that Housing staff will complete refurbishing work in a minimum of 38 apartments by June 30, 2001.  We propose to use funds appropriated under the Community Development Block Grant program to pay for the refurbishing work.  In addition, we propose to refurbish about 50 vacant apartments by contract.

Under the refurbishing program, all 336 public housing apartments would be refurbished every five years.  The objective of the program is that all public housing families live in apartments that have been refurbished within the past five years. 

Review by Residents for Public Housing

A meeting was held on February 9, 2000 with residents of public housing to receive comments on the proposed 2000-2001 budget.  Notification of the meeting was distributed to all public housing households on February 3^rd. Three residents attended the meeting on February 9^th.  No comments were received at that time.

RECOMMENDATIONS

The Housing and Community Development Advisory Board’s Recommendation:  The Housing and Community Development Advisory Board reviewed the proposed 2000-2001 budget on February 22, 2000.  The Board voted 4 to 0 to recommend that the Council approve the 2000-2001 operating budget for the public housing program as proposed.

Manager’s Recommendation: That the Council adopt the attached resolution approving the operating budget for the public housing program to be submitted to HUD for final review and approval.

ATTACHMENTS

1.      A Resolution Approving an Operating Budget and Calculation of Performance Funding System Operating Subsidy (p.6).

2.      Proposed Public Housing Operating Budget (p.7).

3.      Summary of Proposed Public Housing Operating Budget (p. 10).

ATTACHMENT 3

SUMMARY OF PROPOSED 2000-2001 PUBLIC HOUSING

 OPERATION BUDGET