AGENDA #4e

MEMORANDUM

 

TO:                  Mayor and Town Council

 

FROM:            W. Calvin Horton, Town Manager

 

SUBJECT:       Flat Rents for the Public Housing Program

 

DATE:             August 27, 2001

 

INTRODUCTION

 

The purpose of this memorandum is to present proposed flat rents for the public housing program.  The proposed flat rents have been established based on the reasonable market value of the public housing apartments as required by the U.S. Department of Housing and Urban Development.

 

The attached resolution would approve flat rents for the public housing program.

 

BACKGROUND

 

In accordance with the Quality Housing and Work Responsibility Act of 1998 (the 1998 Act) of the U.S. Department of Housing and Urban Development, public housing agencies are required to establish flat rents for each of their public housing units.  Flat rents are to be established based on the reasonable market value of the public housing units.  In establishing reasonable market value, public housing agencies are required to survey the rents of comparable rental developments in the community.  Flat rents must be comparable to rent charged for similar apartments on the private market.

 

The U.S. Department of Housing and Urban Development requires that public housing agencies document its means for determining reasonable market value and establishing flat rents for public housing apartments.  Under the 1998 Act, public housing agencies must give public housing families options for paying rent.  Families must be given a choice of either paying an income-based rent or a flat rent.

 

Currently, rents of Chapel Hill’s public housing program are based on 30% of the adjusted household income.  Under the 1998 Act, public housing residents are given a choice of continuing to pay rent based on income or to pay rent based on the reasonable market value of their public housing apartment.  Public housing residents may choose annually between paying an income-based rent or a flat rent.

 

The intent of flat rents is to provide create an incentive that would encourage increases in incomes of public housing families and economic independence.  However, residents who choose a flat rent but are unable to make monthly payments because of financial difficulties must be switched back to an income-based rent.

DISCUSSION

 

In December 2000, we engaged a consultant to conduct the study necessary to recommend flat rents for Chapel Hill’s public housing apartments.  The flat rent analysis prepared by the consultant is attached  (please see attachment 1).

 

In preparing the flat rent analysis, the consultant reviewed data on our public housing apartments and surveyed the public housing neighborhoods to obtain the following information.

 

·        Security deposit requirements

·        Agency paid utilities

·        Amenities

·        Services provided

·        Condition of buildings and grounds

 

Next, private market rental developments were surveyed to obtain the above information and rent amounts.  Some of the developments surveyed because of comparability to the Town’s public housing apartments and proximity to public housing neighborhoods are:

 

                             Development                                        Location 

 

   Abbey Court                                     Hwy 54 Carrboro

 

   Chase Park                                       15-501 Bypass, Chapel Hill

 

   Dobbins Hill                                      Dobbins Drive, Chapel Hill

 

   Elliott Woods                                    Elliott Road, Chapel Hill

 

   Estes Park Apartments                      Estes Drive, Chapel Hill

 

Below is a schedule of proposed flat rents for the public housing program based on the analysis prepared by the consultant.

 

Public Housing Neighborhood

 
BEDROOM

SIZE

 

 

1

2

3

4

5

Craig/Gomains-Lindsay Street

$389

$457

$571

$640

$736

North Columbia Street

$363

$427

 

 

 

Trinity Court

 

$457

$571

 

 

South Estes Drive

 

$457

$571

$640

$736

Airport Gardens-S. Roberson-Pritchard Pk

$389

$457

$571

$640

 

Colony Woods West

 

$427

$533

$667

 

Eastwood-Church Street

$389

$457

$571

 

 

Oakwood

 

$427

$533

 

 

Rainbow Heights

 

 

$762

 

 

 

In addition to providing an incentive that would encourage increases in incomes, the intent of flat rents is also to increase the number of working public housing families who would be positive role models for other public housing residents.

 

Currently, there are about 5 public housing families who are paying monthly rents that are almost comparable to market values and would be eligible for the proposed flat rents.  If these 5 families chose the flat rents, the rental income for the public housing program would be reduced by $4,620.

 

Below is a chart that shows the effect the flat rent would have on the income for the public housing program.

                                                                                                                        Yearly Difference

Current Rent                            Flat Rent                Monthly Difference             Monthly x 12

$494

$457

$37

$444

$504

$457

$47

$564

$637

$571

$66

$792

$721

$640

$81

$972

$794

$640

$154

$1848

Total  $3,150

$2,765

$385

$4,620

 

Review by Residents of Public Housing

 

As required by federal regulations, public housing residents were given an opportunity to review and comment on the proposed flat rents.  The proposed flat rents were distributed to all public housing residences on March 9, 2001.

 

Questions received from residents of public housing were primarily about the reasons for flat rents and when would flat rents become effective.  Housing staff responded by summarizing the requirements of the 1998 Act and explaining that the flat rents would become effective upon approval by the Council.

 

Comments from the Chapel Hill-Carrboro Residents’ Council:  Representatives of the Residents’ Council met with Housing staff on April 24, 2001 regarding flat rent regulations and the formula used to establish the proposed flat rents.  The Residents’ Council stated that as a result of that meeting they gained a cleaner understanding of HUD regulations regarding flat rents and the formula used to establish the proposed flat rents is attached. (please see attachment 3)

 

The Residents’ Council would like the Town Council to consider the following flat rents:

 

·    2 Bedrooms          -              $300

·    3 Bedrooms          -              $400

·    4 Bedrooms          -              $500

·    5 Bedrooms          -              $600

 

The following chart shows a comparison of the rents recommended by the Residents’ Council and the proposed flat rents.  It also shows the effect each would have on rental income.

 

Current Rent

Proposed Flat Rent

Monthly Difference

Yearly Difference

 

Consultant

Residents’

Council

Consultant

Residents’  Council

Consultant

Residents’ Council

$494 – 2 bedroom

$457

$300

$37

$194

$444

$2,328

$504 – 2 bedroom

$457

$300

$47

$204

$564

$2,448

$637 – 3 bedroom

$571

$400

$66

$234

$792

$2,808

$721 – 4 bedroom

$640

$500

$81

$221

$972

$2,652

$794- 4 bedroom

$640

$500

$154

$294

$1,848

$3,528

TOTAL $3,150

$2,765

$2,000

$385

$1,147

$4,620

$13,764

 

(Chart does not include flat rent rates for 1 and 5 bedroom units because there are currently no eligible families in these units.)

 

The Residents’ Council believes these rates would be more manageable for public housing families with incomes of about $10,000.

 

Staff Comments:  The proposed flat rents have been prepared in accordance with the Housing Act of 1998.  The consultant has completed the detailed survey and analysis that we are required to perform in order to establish the reasonable market value of the public housing apartments.  We recommend adoption of the proposed flat rents recommended by the consultant.

 

CONCLUSION

 

We believe the proposed flat rents as prepared by the consultant are reasonable.  The proposed flat rents for the public housing program have been established in accordance with federal regulations and includes a detailed survey analysis.  Therefore, we believe the proposed flat rent would be approved by HUD.  We recommend that the Council adopt the proposed flat rents.

 

Following consideration by the Council, the flat rent policy would become effective on September 1, 2001 and would become an option for leases renewed after that date.

 

HUD requires that the flat rents be reviewed and updated annually.  We would begin the process to update the flat rents for the public housing programs in January, 2002.  We propose to involve and seek input from the Residents’ Council beginning with the initial stages of the process and continuing until completion.

 

RECOMMENDATIONS

 

Housing and Community Development Advisory Board’s Recommendation:  The Housing and Community Development Advisory Board reviewed the proposed flat rents for the public housing program on April 3, 2001.  The members of the Board in attendance voted 2 to 0 to recommend that the proposed flat rents be approved.

 

Manager’s Recommendation:  That the Council adopt the attached resolution approving flat rents for the public housing program.

 

ATTACHMENTS

 

1.         Flat Rent Analysis For Chapel Hill Department of Housing (p.7).

 

2.         Federal Register Vol. 64 Rents in Public Housing (24 CFR 5.614) Section 523 of the    1998 Act Amending Section 3 (a) of the 1937 Act (p. 20).

 

3.         May 31, 2001 letter from the Residents’ Council (p. 22).

 

 

A RESOLUTION APPROVING FLAT RENTS FOR THE PUBLIC HOUSING PROGRAM (2001-08-27/R-3)

 

WHEREAS, the U.S. Department of Housing and Urban Development requires that flat rents be established for public housing apartments in accordance with the Quality Housing and Work Responsibility Act of 1998; and

 

WHEREAS, the Quality Housing and Work Responsibility Act of 1998 requires that public housing residents be given a choice of either paying an income-based rent or a flat rent;

 

NOW, THEREFORE, BE IT RESOLVED by the Council of the Town of Chapel Hill that the Council hereby approves the following flat rents for the public housing program. 

 

 

Public Housing Neighborhood

 
BEDROOM

SIZE

 

 

1

2

3

4

5

Craig/Gomains-Lindsay Street

$389

$457

$571

$640

$736

North Columbia Street

$363

$427

 

 

 

Trinity Court

 

$457

$571

 

 

South Estes Drive

 

$457

$571

$640

$736

Airport Gardens-S. Roberson-Pritchard Pk

$389

$457

$571

$640

 

Colony Woods West

 

$427

$533

$667

 

Eastwood-Church Street

$389

$457

$571

 

 

Oakwood

 

$427

$533

 

 

Rainbow Heights

 

 

$762

 

 

 

 

BE IT FURTHER RESOLVED that the Council hereby authorizes the Town Manager to review the flat rents annually and make necessary revisions based on changes in reasonable market values.

 

This the 27th day of August, 2001.