TITLE
Recommendation to amend the Agreement for Services between the City of Long Beach and The Long Beach Housing Development Company; and authorize City Manager to encumber approximately $138,500,000 in current and future redevelopment housing set-aside to support affordable housing activities through Fiscal Year 21. (Citywide)
DISCUSSION
The Long Beach Housing Development Company (LBHDC) was reestablished by the City Council in January 1988 in order to plan, perform and assist in meeting the housing needs of the low- and moderate-income residents and to meet the specialized housing needs of senior citizens and disabled persons in the City of Long Beach. The LBHDC implements the affordable housing goals, policies and objectives of the City's Housing Element. The City is the only member of the LBHDC.
On November 15, 1989, the City and the LBHDC entered into an Agreement for Services whereby the City agreed to provide services and funding to the LBHDC in order for the LBHDC to carry out its mission. Specifically, the City agreed to provide all necessary City employees, facilities and other services of the City that the LBHDC needs. The City also agreed to fund the LBHDC's activities based on a request of the LBHDC's President of the estimated cost to support LBHDC's activities. In the past, the funding request came to the City as part of the annual budget process and the City Council approved the LBHDC's total annual budget.
Redevelopment housing set-aside is the main source of revenue in the City's Housing Development Fund, which funds the LBHDC's projects and required City support services.
As such, the LBHDC is the entity that accomplishes the Long Beach Redevelopment Agency's affordable housing production goals laid out in the State-mandated Affordable Housing Compliance Plan Five-Year Implementation Plan, the most recent of which is for the period October 1, 2010 to September 30, 2014. Because of this responsibility, the LBHDC has been active in negotiating and partnering with affordable housing developers in the construction of new units or rehabilitation of existing units, a process that could take from three to five years from conception to completion. Due to the nature of the development process, the LBHDC currently has several projects in various stages of development, as shown in Exhibit A.
If Governor Jerry Brown's recently proposed budget is passed, the City's ability to receive housing set-aside from the Redevelopment Agency may be severely limited. Unless the City has a contractual obligation for the use of housing set-aside, its ability to fund the LBHDC's activities and support services will be in jeopardy. In order to safeguard the City's ability to receive housing set-aside and allow the LBHDC to complete its projects, staff recommends that the City encumber approximately $138,500,000 in redevelopment housing set-aside to support affordable housing activities through FY 21 and pledge this amount to the LBHDC.
This letter was reviewed by Assistant City Attorney Heather Mahood on January 16, 2011 and Budget and Performance Management Bureau Manager Lou Palmer on January 16, 2011.
TIMING CONSIDERATIONS
City Council action is requested on January 18, 2011 in order to encumber the funds needed by the LBHDC to complete and manage ongoing and proposed projects.
FISCAL IMPACT
The funds to be encumbered are from redevelopment housing set-aside to be deposited by the Redevelopment Agency into the City's Housing Development Fund (SR 135) between now and September 30, 2016. The funds will be appropriated in the Housing Development Fund through the annual budget process. There will be no impact to the General Fund. Approval of the proposed recommendation will result in a large number of construction jobs, but the number cannot be estimated at this time.
SUGGESTED ACTION
Approve recommendation.
Respectfully Submitted,
AMY J. BODEK,
DIRECTOR OF DEVELOPMENT SERVICES
APPROVED:
PATRICK H. WEST
CITY MANAGER