AGENDA #7
MEMORANDUM
TO: Mayor and Town Council
FROM: W. Calvin Horton, Town Manager
SUBJECT: Proposed 2002-2003 Operating Budget for the Public Housing Program
DATE: March 4, 2002
The purpose of this memorandum is to provide information on the proposed 2002-2003 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, 2002. The attached resolution would approve the calculation of operating subsidy we expect to receive from HUD in 2002-2003.
SUMMARY
· The proposed 2002-2003 budget totals $1,614,000, a $143,200 increase from the 2001- 2002 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.
· Estimated operating reserves would be $389,600 which is within current federal guidelines. HUD guidelines require a minimum operating reserve equal to 20% of total routine operating expenses, or $289,000.
BACKGROUND
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 2002-2003 fiscal year begins on July 1, 2002; therefore, our budget is due to HUD by April 1, 2002.
The proposed budget shows estimated revenues and expenditures for the management and maintenance of the Town’s 336 public housing apartments. The estimated revenues include rental income and operating subsidy we expect to receive from HUD under the federal Performance Funding System. Under the Performance Funding System, HUD subsidizes most of the difference between rental income and operating costs (please see attachment 4 for additional information about the public housing program).
The proposed 2002-2003 budget would continue the basic operation of the public housing program as in 2001-2002. 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 some residents achieve economic independence and make the transition to private housing.
The proposed 2002-2003 budget totals $1,614,000, which is an increase of $143,200 from the current year’s budget of $1,465,500. The increase is due primarily to proposed capital costs.
Based on the proposed budget, we would use $163,000 of the fund balance, primarily for capital expenditures, to cover total proposed expenditures. The remaining fund balance would be $389,600, which is within federal guidelines. In accordance with federal guidelines, the fund balance should not be less than 20% of the total routine operating expenditures, or $289,000.
The proposed budget has been developed based on expected rental income and subsidy from HUD (please see Attachment 1). 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.
We believe the amount of federal subsidy will be about 96% of the difference between expected revenues and costs, or $1,080,600. The level of funding from HUD may change; however, we believe expected revenues would be sufficient to maintain the current level of operations in 2002-2003 and in future years.
Revenues
Revenues include funding from HUD, rent payments from residents, payments from residents for repair services and interest income. The estimated revenues for 2002-2003 are:
Subsidy from HUD $ 1,080,600
Rental Income $ 329,800
Other Income $ 40,500
Appropriation from Fund Balance $ 163,000
TOTAL $1,613,900
Expenditures
Expenditures include cost for personnel, operations, and capital items. The estimated expenditures for 2002-2003 are:
Administration $ 375,300
Resident Services $ 153,500
Maintenance $ 909,600
Capital Outlay $ 175,500
TOTAL $1,613,900
The proposed budget would provide funding at a level whereby the 336 public housing apartments would be maintained as decent and 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 $50,400. 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.
We propose to continue contracting out vacant unit repairs at a cost of about $58,500. Refurbishment work includes interior painting and basic repair work, and replacement of items that cannot be repaired. This is a $6,500 decrease from the current budget. The decrease is due to an expected decrease in contract costs because of the improved condition of apartments at the time of vacancy. The improved condition of the apartments is due to our cycle of refurbishment of every apartment every five years. Based on our experience in past years, we estimate that 53 vacant apartments will be refurbished in 2002-2003 at a cost of about $1,100 per apartment.
By contracting out vacant unit repair work, the maintenance staff can continue to concentrate on the refurbishing program and maintaining occupied apartments.
The proposed 2002-2003 budgets includes the following capital expenditures:
We propose to continue to make $6,000 available to the Public Works Department to maintain playground equipment. The funds will be used to maintain (and replace as needed) equipment in
all the public housing neighborhoods.
We propose to purchase a ½ ton truck, and a van, to replace the oldest vehicles (over 10 years old) in the maintenance vehicle pool. These vehicles are being replaced in accordance with the Town’s vehicle replacement schedule. However, these vehicles are not included in the Town’s equipment replacement fund because they are funded by HUD. The estimated cost is $45,500.
Grounds Maintenance
We propose to make $30,500 (a $20,500 increase) available to the Public Works Department for public housing grounds maintenance.
Grounds maintenance services provided by the Public Works Department include mowing grass, horticultural work, mulching, leaf collection, and miscellaneous grounds maintenance activities. The Public Works Department estimates that the cost for public housing grounds maintenance is about $175,000.
Computer Equipment, Technology, Communication
We propose to replace two computers and two printers. The purchase of computers is consistent with the Town’s computer replacement schedule. We also propose to provide funds for the maintenance of all computers and printers, and to provide for needed upgrades. Funds would also be provided for maintenance of the copier, fax machine, and typewriters. The estimated cost is $19,000.
We propose to continue the five-year refurbishing program. Refurbishment work includes interior painting and basic repair work, and replacement of items that cannot be repaired. We estimate that Housing staff will complete refurbishing work in a minimum of 38 apartments by June 30, 2003. We propose to use funds appropriated under the Community Development Block Grant Program to help pay for the refurbishing work. About $83,000 of Community Development Funds would be used to purchase materials for the refurbishing work.
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
Housing staff reviewed the proposed 2002-2003 budget with members of the Residents’ Council
on February 13, 2002 to receive questions and comments. A letter from the Residents’ Council
is attached (please see attachment 2).
RECOMMENDATIONS
The Housing and Community Development Advisory Board’s Recommendation: The Housing and Community Advisory Board reviewed the proposed 2002-2003 budget on February 26, 2002. The Board voted 5 to 0 to recommend that the Council approve the 2002-2003 operating budget for the public housing program as proposed.
Manager’s Recommendation: That the Council adopt the attached resolution approving the Calculation of Performance Funding System Operating Subsidy for the public housing program.
1. Calculation of Operating Subsidy. (p. 6).
2. Letter from the Residents’ Council (p. 10).
3. Summary of Proposed Public Housing Operating Budget. (p. 11).
4. Public Housing Fact Sheet (p.12).
ATTACHMENT 3
SUMMARY OF PROPOSED 2002-2003 PUBLIC HOUSING
OPERATION BUDGET
REVENUES |
2001-2002 |
2002-2003 |
|
Dwelling Rents |
463,886 |
329,858 |
|
Other Income |
49,829 |
40,529 |
|
Appropriated Fund Balance |
16,808 |
163,031 |
|
HUD Contrib. Conv. |
935,028 |
1,080,654 |
|
Dept. Total Revenues |
1,465,551 |
1,614,072 |
EXPENDITURES |
|
|
|
Administration |
|
|
|
Personnel |
192,478 |
185,053 |
|
Operations |
145,974 |
157,870 |
|
Capital |
29,070 |
35,985 |
|
Appropriation for pay increase |
- |
32,382 |
|
Total |
367,522 |
411,290 |
|
Resident Services |
|
|
|
Personnel |
123,275 |
130,700 |
|
Operation |
11,690 |
14,870 |
|
Appropriation for pay increase |
- |
7,996 |
|
Total |
134,965 |
153,566 |
Maintenance |
|
|
|
Personnel |
522,837 |
522,837 |
|
Operations |
366,327 |
336,092 |
|
Capital |
73,900 |
139,600 |
Appropriation for pay increase |
- |
50,687 |
Total |
963,064 |
1,049,216 |
|
Grand Total |
1,465,551 |
1,614,072 |
ATTACHMENT 4
FACT SHEET
CHAPEL HILL PUBLIC HOUSING PROGRAM
· The Town of Chapel Hill owns and manages 336 public housing apartments located in 13 neighborhoods. 306 of the public housing apartments are located in Chapel Hill, 30 are located in Carrboro.
· The Town of Chapel Hill has been managing the public housing program since July 13, 1987. The program was previously managed by the Chapel Hill Housing Authority.
· Prior to July 13, 1987, the official governing body for the public housing program was the Chapel Hill Housing Authority Board of Commissioners. The current official governing body for the public housing program is the Chapel Hill Town Council.
· The oldest public housing apartments were built in 1967, the newest apartments were built in 1994.
· Under the Performance Funding System, HUD subsides most of the difference between public housing rental revenues and operating costs.
· The largest public housing neighborhood has 44 apartments, the smallest neighborhood has 9 apartments.
· The amount of assistance the public housing program receives from the U.S. Department of Housing and Urban Development (HUD) is determined through the federal Performance Funding System.
· To be eligible for public housing an applicant’s household income cannot exceed 80% of the area median, 43,000 for a family of 4.
· Admission preference is given to applicants who live and work in Orange County.
· Public housing rents are based on 30% of adjusted household income or the reasonable market value of the of the apartment.
· The household income and composition of public housing families is reviewed every 12 months.