Fiscal Year 2013-2015 Special Budget Meeting

HONORABLE MAYOR AND CITY COUNCIL Subject: Affordable Housing in the Mayor's FY 2013-15 Proposed Policy Budget Date: June 11,2013 Page 3 As the result of the dissolution of redevelopment agency and federal budget sequestration, there will be a related reduction in services: there will be no new units built next year in comparison to 154 units for FY 12-13; 185 units for FY 1 M 2; and 433 units for FY 10-11. If the affordable' housing program does not have the stable staff and some level of program funding, it would also impact the First Time Homebuyers program and result in the potential loss of 50 new homebuyers per fiscal year. Any Oakland projects competing for State Tax Credits would not be competitive given the small amount of local contribution to the projects. The City will also lose its ability to leverage private financing due to the small amount of local contribution to.the projects. The Mayor proposed (I) to use City claim of the "triple flip" administrative fee overpayment fund for the housing staff for year 2; (2) to adopt a policy to allocate 20%-25% of the on-going boomerang funds for the affordable housing program; and (3) to allocate 20%-25% of one-time boomerang funds for the affordable housing program. In summary, if City Council approves the Mayor's proposal as part of the FY 2013-15 Policy Budget, it will stabilize the housing staff for two years only. If the City Council also adopts the policy to allocate 20% to 25% boomerang funds for the housing program, there will be on-going funds for affordable housing staff and projects in addition to the HOME funds to contribute to the NOFA which will allow the city to increase its affordable housing stock. If the City Council fiirther adopts the policy to allocate 20% to 25% of one-time boomerang funds for the affordable housing program, there will be additional funds for the program. Of note, if the proposed policy is enacted in FY 2015-16, there will be approximately $3 million to $4 million available to support this policy priority, depending on the property revenue level, each year of the General Purpose Fund commitment earmarked for the Affordable Housing program. If the proposed policy is enacted in FY 2013-14, the amount required to be set aside for Affordable Housing will have to come from current proposed budget, which will create a funding gap, and the calculation is indicated below. • 20% of the "boomerang" fund for Y! is $13M x 20% = $2.6M; 25% is $3.25M; a difference of $$650K; and, • 20% of the "boomerang" fund for Y2 is $17M x 20% - $3.4M; 25% is $4.25M; a difference of $850K. Respectfully submitted, AL DONNA HOM Budget Director