The URL can be used to link to this page

2011 10 18 HA5 OF'r4�'94, HOUSING AUTHORITY AGENDA CITY COUNCIL CHAMBERS 78-495 Calle Tampico La Quinta, California 92253 Regular Meeting TUESDAY, OCTOBER 18, 2011 AT 4:00 P.M. Beginning Resolution No. HA 2011-006 CALL TO ORDER Roll Call: Board Members: Adolph, Evans, Henderson, Sniff, and Chairperson Franklin PUBLIC COMMENT At this time members of the public may address the Housing Authority on any matter not listed on the agenda. Please complete a "request to speak" form and limit your comments to three minutes. CONFIRMATION OF AGENDA APPROVAL OF MINUTES 1 . APPROVAL OF MINUTES OF SEPTEMBER 20, 2011 CONSENT CALENDAR NOTE: Consent Calendar items are considered to be routine in nature and will be approved by one motion. 1. APPROVAL OF DEMAND REGISTER DATED OCTOBER 18, 2011 HOUSING AUTHORITY AGENDA 1 OCTOBER 18, 2011 2. RECEIVE AND FILE TREASURER'S REPORT DATED AUGUST 31, 2011 3. RECEIVE AND FILE REVENUE AND EXPENDITURE REPORT DATED AUGUST 31, 2011 AND INVESTMENT SUMMARY REPORT FOR THE QUARTER ENDING SEPTEMBER 30, 2011 4. RATIFICATION OF THE LA QUINTA HOUSING AUTHORITY FISCAL YEAR 2010-2011 ANNUAL REPORT TO THE CALIFORNIA DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT 5. APPROVAL OF THE LA QUINTA HOUSING AUTHORITY FINANCIAL STATEMENTS CONTAINED WITHIN THE COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2011 6. APPROVAL OF FINANCIAL AND COMPLIANCE REPORTS FOR WASHINGTON STREET APARTMENTS FOR THE YEARS ENDED JUNE 30, 2011 AND 2010 BUSINESS SESSION - NONE STUDY SESSION DISCUSSION REGARDING WASHINGTON STREET APARTMENTS REPORTS AND INFORMATIONAL ITEMS 1. HOUSING COMMISSION MINUTES OF APRIL 27, 2011 CHAIR AND BOARD MEMBERS' ITEMS - NONE PUBLIC HEARINGS - NONE ADJOURNMENT The next regular meeting of the Housing Authority will be held on November 15, 2011 at 4:00 p.m. in the City Council Chambers, 78-495 Calle Tampico, La Quinta, CA 92253. HOUSING AUTHORITY AGENDA 2 .,..0 002 OCTOBER 18, 2011 DECLARATION OF POSTING I, Veronica Montecino, City Clerk of the City of La Quinta, do hereby declare that the foregoing agenda for the La Quinta Housing Authority meeting of October 18, 2011, was posted on the outside entry to the Council Chamber at 78-495 Calle Tampico and on the bulletin boards at 51-321 Avenida Bermudas and 78-630 Highway 111, on October 14, 2011. DATED V tHUNIG, City of La October 18, 2011 Public Notice VTECINO, City Clerk California Any writings or documents provided to a majority of the Housing Authority regarding any item on this agenda will be made available for public inspection at the City Clerk counter at City Hall located at 78-495 Calle Tampico, La Quinta, California, 92253, during normal business hours. �.e,�.. 003 HOUSING AUTHORITY AGENDA 3 OCTOBER 18, 2011 HOUSING AUTHORITY MEETING DATE: October 18, 2011 ITEM TITLE: Approval of Demand Register Dated October 18, 2011 RECOMMENDATION: It is recommended the Housing Authority Board: Receive and File the Demand Register Dated October 18, 2011 of which $8,420.00 represents Housing Authority Expenditures. AGENDA CATEGORY: BUSINESS SESSION CONSENT CALENDAR I STUDY SESSION PUBLIC HEARING PLEASE SEE CONSENT CALENDAR ITEM NUMBER 1 ON CITY COUNCIL AGENDA �� 004 OF AGENDA CATEGORY: COUNCIL/RDA MEETING DATE: October 18, 2011 BUSINESS SESSION: ITEM TITLE: Receive and File Transmittal of CONSENT CALENDAR: Z Treasurer's Report as of August 31, 2011 STUDY SESSION: PUBLIC HEARING: RECOMMENDATION: It is recommended the La Quinta Housing Authority: Receive and File the Treasurer's Report dated August 31, 2011. PLEASE SEE BUSINESS SESSION ITEM ON CITY COUNCIL AGENDA 4 005 ceity/ 4 XP 49"1 AGENDA CATEGORY: COUNCIL/RDA MEETING DATE: October 18, 2011 BUSINESS SESSION: ITEM TITLE: Receive and File Transmittal of Revenue CONSENT CALENDAR: and Expenditure Report dated August 31, 2011 and STUDY SESSION: Investment Summary Report for the Quarter Ending _ September 30, 2011 PUBLIC HEARING: RECOMMENDATION: Receive and File. FISCAL IMPLICATIONS: None. CHARTER CITY IMPLICATIONS: None. BACKGROUND AND OVERVIEW: Receive and File Transmittal of the August 31, 2011 Statement of Revenue and Expenditures for the La Quinta Housing Authority and Investment Summary Report for the Quarter Ending September 30, 2011. Respectfully submitted, l' John M. Falconer, Finance Director s OGG;, Approved for submission by: Thomas P. Genovese, Executive Director Attachments: 1. Revenue and Expenditures Report, August 31, 2011 2. Investment Summary Report for the Quarter Ending September 30, 201 1 007 LA QUINTA HOUSING AUTHORITY REVENUE SUMMARY 07/01/2011 - OW31/2011 ADJUSTED BUDGET RECEIVED A 1 1 AVI u�l �s� • s REMAINING % BUDGET RECEIVED PROJECT AREA NO i HOUSING AUTHORITY Proceeds From Sale Allocated Interest Income Rental Income Transfer to TOTAL LQ HOUSING AUTHORITY PA 1 125, 000.00 123,148.76 3,800.00 (931,22) 240,000.00 45,079.23 0.00 0,00 1,851.24 98.520% 4,731.22-24.510% 194,920.77 18,780% 0.00 0.000% 368,800.00 167,2%77 201,503.23 45.360% PROJECT AREA NO 2 HOUSING AUTHORITY WSA Fed Govt Assistance Pymts 451400.00 74,063A0 377,337,00 16410% WSA Fed GoA Interest Rate Subsidy 46,800,W 0.00 4 Sw0 00 0.000% WSA Interest Income 0.00 0.00 0,00 0.000% WSA Non Allocoted Interest Income 1,090.00 205.51 884,49 18,850% WSA Rental Income 163,3W.00 29,599.00 133,701,00 18,130% WSA Other Revenues 3,7W.00 785,20 2,914.80 21.220% Transfer In 0.00 0.00 0.00 0.000% TOTAL LQ HOUSING AUTHORITY PA 2 666,290.00 104.651,71 561,637.29 15110% 1 ` 1 LA OUINTA HOUSING AUTHORITY ADJUSTED 08/21/11 REMAINING EXPENDITURE SUMMARY BUDGET EXPENDITURES ENCUMBERED BUDGET PROJECT AREA NO 1 HOUSING AUTHORITY SERVICES 18, 112.W 175,00 17,937 W HOUSING DEVELOPMENT PROGRAM 350,WOM 21,95569 328.044.31 TRANSFER OUT 0.00 0.00 TOTAL PROJECT AREA NO 1 HOUSING AUTHORITY 358,112 W,1 PROJECTAREA NO 2 HOUSING AUTHORITY SERVICES 22,512.00 725.00 21, 767.00 WASH ST APTS EXPENSES 362,710.00 47,227.56 315p A4 WSA PRIN/PROVIDENT LOAN 29,917,00 4,814.62 25,102,38 WSA PRIN/USDA LOAN 12,915.00 2,064.19 10,850.81 WSA INTEREST/PROVIDENT LOAN 124,558.00 20,931A2 103,626.88 WSA INTEREST/USDA LOAN 72367.00 4330.85 68,038.15 TOTAL PROJECT AREA NO 2 HOUSING AUTHORITY TOTAL HOUSING AUTHORITY cot A 1 1 Alif71Virlm 1 G n m n M N a d 0 00 E E N p Y UI O O nUY U y y a mt cvv 0 N L E m O X y C � O P'm ac E - c x m E cy Je > £ E wE m Q c Y1U i y 0 T >c U O y - E E c o m o 0 t o U E 0 c E m O n U � c 0 d J :s 0 2 d-;E d a �a°1ioo `o E 'm O GI O U amm O t0a m > > U c T F E d c y > O O Q � J �.p �. 010 AGENDA CATEGORY: COUNCIL/RDA MEETING DATE: October 18, 2011 BUSINESS SESSION: ITEM TITLE: Ratification of the La Quinta Housing If Authority Fiscal Year 2010/201 1 Annual Report to the CONSENT CALENDAR: California Department of Housing and Community STUDY SESSION: Development PUBLIC HEARING: RECOMMENDATION: Ratify the La Quinta Housing Authority Fiscal Year 2010/201 1 Annual Report to the California Department of Housing and Community Development. FISCAL IMPLICATIONS: None. BACKGROUND AND OVERVIEW: California Health and Safety Code ("HSC") Section 34328 states that by October 1 s` of each year: "a (housing) authority shall file with the clerk of the respective city or county and with the Department of Housing and Community Development an annual report of its activities for the preceding year." RSG and Housing Authority staff prepared the La Quinta Housing Authority Annual Report for Fiscal Year 2010/201 1 . However, because the due date was October 151 the report has already been submitted to the California Department of Housing and Community Development. A copy is also on file in the City Clerk's office. The Annual Report for the City of La Quinta Housing Authority (Attachment 1) covers all the activities that have occurred during the 2010/201 1 Fiscal Year, including housing unit compliance with affordability requirements, activities concerning existing debt obligations, as well as land transactions and development. s.*"Oil FINDINGS AND ALTERNATIVES: The alternatives available to the Housing Authority Board include: 1. Ratify the La Quinta Housing Authority Fiscal Year 2010/201 1 Annual Report to the California Department of Housing and Community Development; or 2. Do not ratify the La Quinta Housing Auth Irity Fiscal Year 2010/2011 Annual Report to the California Department of Housing and Community Development; or 3. Provide staff with alternative direction. Respectfully submitted, Debbie Powell Economic Development/Housing Manager Approved for submission by: 'Thomas P. Genovese, Executive Director Attachmen t: 1. La Quinta Housing Authority Annual Report for Fiscal Year 2010-11 012 ATTACHMENT ANNUAL REPORT CITY OF LA QUINTA HOUSING AUTHORITY FY 2010-2011 .. •.•'' 013 INTRODUCTION About This Annual Report SUMMARY g California Health and Safety Code ("HSC") Section 34328 states Housing Authority that "at least once a year, an authority shall file with the clerk of € Highlights, the respective city or county and with the Department of Housing and Community Development ("HCD") a report of its activities for .,Local jurisdictions are the preceding year"("Annual Report"). This Annual Report for the i afforded the opportunity City of La Quinta Housing Authority ("Authority") covers all the t to participate in one or activities that have occurred during the 2010-11 Fiscal Year more of the Public Housing ("FY"), including housing unit compliance with affordability programs offered by HUD. requirements, activities concerning existing debt obligations, as well as land transactions and development. . Housing Authorities can LEGAL AUTHORITY own and operate housing developments, alleviating It is the intent of the State legislature that housing authorities the need to find owners or function as local entities with the primary responsibility of operators for units created. providing housing for very low and low income households. As such, housing authorities are distinct, autonomous, legal entities . A city housing authority's that derive their powers from State statute. The HSC, beginning I area of operation includes ! with Section 34200, provides for the functioning of a local housing i the entire city and the area authority through a resolution of the local governing body. In the within five miles of,its case of the City of La Quinta ("City'), the City Council of the City territorial boundaries:_ of La Quinta ("City Council") resolved that the Authority could exercise its powers. The resolution adopted by the City Council must be accompanied by a finding that either of the following is Ig NEW true: (1) unsanitary or unsafe housing exists in the city or (2) there is a shortage of safe or sanitary housing available to persons of low income. On September 15, 2009, the City Council adopted Resolution No. 2009-005, confirming that both aforementioned findings have been met to establish a housing authority in accordance with the California Housing Authorities Law (Health and Safety Code Section 34200, et. seq.). The Authority adopted Bylaws and Rules of Procedure on October 6, 2009 by Resolution HA 2009-001, which was amended by the Authority on March 15, 2011. OBJECTIVES OF THE HOUSING AUTHORITY The Authority was established to own rental properties in the City of La Quinta that were scheduled for substantial rehabilitation, and to hold title to vacant properties that will be developed with single and multi -family housing. Tables la, 11b and 1c identify the Authority's real property assets. The Authority contracts with private entities to manage the occupied properties. The Authority's future objectives are: • To provide safe and sanitary housing opportunities for La Quinta residents; To rehabilitate properties that exhibit unsafe or unhealthy characteristics, and To increase, improve, and preserve the community's affordable housing stock. 1 014 CONTENTS OF THE HOUSING AUTHORITY'S ANNUAL REPORT This Annual Report has been developed to: • To summarize the Authority's activities during FY 2010-11, including any bond issuances, and loan or finance agreements that the Authority has entered into; • To show compliance with requirements of HSC Section 34312.3 such as the minimum amount of housing units affordable to lower income in projects assisted by the Authority, and document established base rents and/or maximum rental payments for lower income households; and • To document any domestic violence tenancy or Section 8 voucher termination as required by HSC Section 34328.1. HOUSING AUTHORITY DEBT OBLIGATIONS Pursuant to HSC Section 34328.1, the Authority must provide a complete report of all bond, loan and financing agreement transactions during the prior fiscal year. Authority activities permitted by HSC Section 34312.3 include issuing bonds, loans and financing agreements for multi -family rental housing projects. The Authority has not issued any bonds or entered into any loans agreements related in FY 2010-11. The Authority did, however, enter into a funding agreement with the City and the La Quinta Redevelopment Agency ("Agency") on January 18, 2011 to fund future affordable housing and associated public improvements n the community. The Agency pledged $589,886,674 of future redevelopment tax increment to fund these affordable housing activities. There is no obligation for the Authority to repay these funds, provided that the Authority develops affordable housing. LAND TRANSACTIONS AND DEVELOPMENT HSC Section 34312.3 permits housing authorities to undertake activities related to: • the development, rehabilitation, or financing of housing projects; • the purchase, sale, lease, ownership, operation, or management of housing projects assisted by the Authority; conveyance of surplus lands to a developer for permitted purposes; and • establish a special trust fund or account funded with bond proceeds or developer funds. On February 15, 2011, the Agency transferred certain real property to the Authority. These include the Dune Palms property, the Washington Street Apartments, Cove rental homes, foreclosed homes the Agency had purchased, and several parcels of vacant land. Subsequently, related assets and obligations were transferred from the Agency to the Authority on March 1 and March 15, 2011. This includes rental property investment income, bank accounts, loans, contracts, and rent subsidy and expenditure obligations. A detailed inventory of Authority properties is presented in Tables 1a, 1b, and 1 c. On April 5, 2011, the Authority approved an appropriation of proceeds of the 2011 La Quinta Financing Authority and 2011 Agency bond issues for capital projects related to affordable housing development by the Authority. Capital projects include the Washington Street Apartments, an adjacent vacant parcel, and the Dune Palm at Westward Ho Apartments. On May 17, 2011, the Authority authorized the Executive Director to take all necessary actions to sell foreclosed homes as part of the Home Foreclosure Purchase Program. The program was initiated by the Agency in May 2009 and allows for the purchase, rehabilitation, and sale or rental of foreclosed homes to increase the City's affordable housing stock. The Agency transferred ownership of properties 2 - 015 in this program to the Authority in March 2011, and the Authority will continue to rehabilitate and sell or rent the homes with affordability covenants. Future land transactions and development activity will be reported in subsequent Annual Reports. HOUSING UNIT COMPLIANCE As set forth by HSC Sections 34328 and 34328.1, housing authorities are required to: • Show compliance with requirements of HSC Section 34312.3 such as the minimum amount of housing units affordable to lower income in projects assisted by the Authority, and document established base rents and/or maximum rental payments for lower income households; and • Document any domestic violence tenancy or Section 8 voucher termination as required by HSC Section 34328.1. The following subsections provide a summary of the Authority's progress toward the requirements listed above. Housing Affordability Requirement Pursuant to HSC Section 34312.3, not less than 20 percent of the units assisted by the Authority, or 15 percent in targeted areas, must be affordable to persons of low income. A targeted area is defined by Section 103(b) (12) (A) of Title 26 of the United States Code as either "a qualified census tract in which 70 percent or more of families have income which is 80 percent or less of the statewide median family income" or an area of "chronic economic distress." HSC Section 34312.3(2)(A) also states that not less than one-half of the 20 or 15 percent required units must be available to persons of very -low income, if the housing development is financed by Authority bonds. Development projects must also be approved by the local governing body and the local school district prior to construction or ownership. Nevertheless, the power to finance, own, build, and/or operate a housing development allows the Authority to take on a more active role in the creation and maintenance of housing for low income families. Tables 1a — 1c provide an inventory of the real property assets owned or managed by the Authority, and include a breakdown of the current and anticipated income levels at each property where applicable. The Authority, having only recently obtained ownership of the properties in Tables 1a — 1c, is undergoing an in-depth compliance monitoring process to ensure that current and future housing units assisted by the Authority meet the requirements of HSC Section 34312.3. Rut . kN 0 O m, N M m m m m m N o p' `p r r r r r 0 de � O N C Y A a A y u O m N � � C a M O a tMp N J o� O � a r O N N N > �1 T j C C T C E O c o aE o.E c o m y= 2 oa p oa o 0 O p p 4 9 « N «> •V O >v A C C U A L T O O � C � C L L L w O w2 r O L c c c>> c E o N a 5 c N c N N N (n ii L O Z O O O N O N O O O O O O O O O r N M U 6 O O O O r O6,6 N N N a O O O N O r r r r so o coo N r r r r r m d m c fn Yi U m rn o O C N N O Gc 'c a o N U c > i m o O U Z a a E h a N D o O « C J J J J Z r A a m J J J a m a u r O >a > > o >In m m > m > r O J '.0 n 01.7 m Q7 N N O O n M N V M W n O r V fD M V r M V 1!) r M C 0 0 0 0 999 A 0 99 0 0 0 0 0 0 99999 0 0 0 0 0< m m tM0 C N N t00 aD � r r r n r n r r n n r n r n r n n r n r n r r r r r J r r r n r r r r r r n n n n n n r n r n n r r r r r r > > N d> O O O N- N N " N 2 N O C d O N O i 0 N. N W N 0 m o m '� m £> U> U m o » 0 0 0 2 Z> Q= Z 2 N N tU tU O l0 O N l0 O @ N N N N N (0 N 10 N l0 t0 l0 l0 N N Y "O 'O 'O L "O L "O E E = N > > > N.> N > > > > > > > > > > > > > > > > > > m U ¢ ¢ ¢ w ¢ w ¢ ¢ w ¢ ¢ ¢ ¢ ¢ ¢ ¢ ¢ ¢ ¢ ¢ ¢ ¢ ¢ ¢ ¢ O] Q) O N N M (O O] CO M O O �O r O n f0 N V N l0 r O] C9 O cc M W N V 0 r r CO N N Y] N Y) N h CN A N C) N tN4 N N N h N N Yl N N U o 3 O f o2 24 0 Z a I N E -•..e.n 019 Base & Maximum Rents HSC Section 34312.3 establishes guidelines to determine base and maximum rents that a housing authority can charge for units reserved for lower income households. According to HSC Section 34312.3, if a housing authority establishes base rents, they shall be adjusted for household size pursuant to Section 8 of the United States Housing Act of 1937 (42 U.S.C. Sec. 1437f) ("Section 8"). Additionally, HSC Section 34312.3 states that rental payments for lower income households living in projects financed by any bonds issued after 1986 shall not exceed the amounts calculated pursuant to Section 8. Table 2 provides a calculation of the maximum rental payments that the Authority can charge for lower income households units. Affordable Rental Housing cos[ LmH15 Riverside County - 2011 Very Low -Income Low -Income Moderate -Income Number of Qualifying I Max. Rent Qualifying a Maximum Rent Ran Qualifying I Maximum Rent Range Persons Betlrooms Income Limit 30%X 50% Income Limit 30%X60% 30%X80% Income Limit 30%X 110% 30%X 120% H&S Code 50052.5.(h) H8S Code 50053.(b)(2) H8S Code 50053(b)(3) - H8S Code 50053.(b)(4) $1.203,13 $1,312,50 One Studio $23,350 $546,88 $37,350 $656.25 $933.75 $1,067.50 $52,500 $60.000 $1,375.00 $1,500.00 Two One Two $26,700 $30,050 $625.00 $703.13 $42,700 $48,050 $750,00 $843.75 $1,201.25 $67,500 $1,546.88 $1,687.50 Three Four Three $33,350 $781.25 $53,350 $937,50 $1,33375 $75.000 $1,718.75 $1,875.00 Five Four $36,050 $B43,75 $57,650 $1,012,50 $1,441.25 $81000 $1856.25 $2,025.00 Six Five $38,700 $906,25 $61,900 $1,087.50 $1,547.50 $87,000 $1,993,75 $2,175.00 Note: Maximum Rent reflects gross rent amount before deduction for utility allowance The Authority, having only recently obtained ownership of its housing properties, is currently in the process of analyzing rental payments and will make any necessary adjustments to bring properties into compliance with HSC Section 34312.3. Domestic Violence State law requires that a housing authority annually disclose data related to domestic violence incidents in units owned or operated by the housing authority. Specifically, the data must include: • Data on termination of tenancies and/or Section 8 vouchers of victims of domestic violence in housing authority units. • Summary of steps taken by the housing authority to address any termination of tenancies and/or Section 8 vouchers of victims of domestic violence. In Fiscal Year 2010-11, there were no terminations of tenancies or Section 8 vouchers of victims of domestic violence in units owned or operated by the Authority. In the future, information on any terminations of victims of domestic violence will be presented under separate cover to protect the privacy of the parties involved. AUTHORITY BUDGET Table 3 presents the Authority's estimated expenditures for FY 2010-11 as well as the estimated budget for FY 2011-12. Estimated Budget Table 3 La Quinta Housing Authority FY 10/11 FY 11/12 Estimated Requested Actual Budget PERSONNEL $1,100 $3,000 Salaries -Permanent Full Time $0 $0 Commissions and Boards $1,100 $3,000 Benefits $0 $0 SUPPLIES & SERVICES $6,600 $39,100 Contract Services $6,000 $35,500 Printing $300 $600 Training $0 $2,000 Legal advertising for Housing Commission $100 $500 Membership Dues $50 $100 Office Supplies $150 $400 HOUSING DEVELOPMENT PROGRAM $352,000 $352,000 La Quinta Rental Program $352,000 $352,000 TOTAL $369,700 $394,100 021 Rix �cF'y OF TNE� COUNCILIRDA MEETING DATE: October 18, 2011 ITEM TITLE: Approval of the La Quinta Housing Authority Financial Statements Contained Within the Comprehensive Annual Financial Report for the Year Ended June 30, 2011 RECOMMENDATION: AGENDA CATEGORY: BUSINESS SESSION: _r CONSENT CALENDAR: J STUDY SESSION: PUBLIC HEARING: Approve, receive and file the La Quinta Housing Authority Financial Statements contained within the Comprehensive Annual Financial Report (CAFR) for the Year Ended June 30, 2011. FISCAL IMPLICATIONS: During the year the housing properties of the Redevelopment Agency were transferred to the Housing Authority, as well, as the Washington Street Apartments and the La Quinta Real Estate property management activities. BACKGROUND AND OVERVIEW: The financial activities of the La Quinta Housing Authority are contained in the CAFR and are reported as a Special Revenue Fund type. In addition to the CAFR, the financial activities of the La Quinta Housing Authority have also been included in the La Quinta Redevelopment Agency Financial Statements as a Special Revenue Fund to report our housing efforts. FINDINGS AND ALTERNATIVES: The alternatives available to the La Quinta Housing Authority include: 1. Approve, receive and file the La Quinta Housing Authority Financial Statements contained within the Comprehensive Annual Financial Report for the Year Ended June 30, 2011, or 022 2. Do not approve, receive and file the La Quinta Housing Authority Financial Statements contained within the Comprehensive Annual Financial Report for the Year Ended June 30, 201 1; or 3. Provide staff with alternative direction Respectfully submitted, John M. Falconer,/Finance Director Approved for submission by: Thomas P. Genovese, Executive Director ..4 " 023 Tay�444" AGENDA CATEGORY: COUNCIL/RDA MEETING DATE: October 18, 2011 BUSINESS SESSION: ITEM TITLE: Approval of Financial and Compliance CONSENT CALENDAR: �P Reports for Washington Street Apartments for the Year Ended June 30, 2011 and 2010 STUDY SESSION: PUBLIC HEARING: Approve and file the Financial and Compliance Reports for Washington Street Apartments for the year ended June 30, 2011 and 2010. FISCAL IMPLICATIONS: Page 23 of the Audit contains a summary of Audit Results. No significant items were noted. CHARTER CITY IMPLICATIONS: None BACKGROUND AND OVERVIEW: In October 2008, the La Quinta Redevelopment Agency acquired a 73 unit low- income apartment complex, Washington Street Apartments which was subsequently transferred into joint ownership with the La Quinta Housing Authority in 2011. The apartment complex is managed by Hyder & Company and the audit was performed by Joyce Rethmeier, CPA. The audit (Attachment1) was required since the United States Department of Agriculture (USDA) Rural Development provides Federal funding. #APo 024 FINDINGS AND ALTERNATIVES: The alternatives available to the Housing Authority Board'include: 1. Approve and file the Financial and Compliance Reports for the Washington Street Apartments for the year ending June 30, 2011 and 2010; or 2. Do not approve and file Financial and Compliance Reports for the Washington Street Apartments for the year ending June 30, 2011 and 2010; or 3. Provide staff with alternative direction. Respectfully submitted, John M. Falconer, Finance Director Approved for submission by: Thomas P. Genovese, Executive Director Attachment: 1. Washington Street Apartments Financial and Compliance Report for the year ending June 30, 2011 and 2010 .+ii!) 025 ..i ATTACHMENT i� x ri .i WASHINGTON STREET APARTMENTS FINANCIAL AND COMPLIANCE REPORTS ii JUNE 30, 2011 AND 2010 ti i_ r5 , i _4 It �e t' it LY FY ii L� E I •,. 026 is Li e CONTENTS PAGE Independent Auditors' Report 34 Financial Statements Statement of Financial Position 5-6 Statement of Activities 7 Statement of Cash Flows 8-9 Notes to the Financial Statements 10-13 Supplemental Information 15-17 Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 18-19 Audit Findings on Compliance 20 Report on Compliance with Requirements that Could Have a Direct and Material Effect on the Federal Program and onlntemal Control over Compliance in Accordance with OMB Circular A-133 21-22 Schedule of Findings and Questioned Costs 23 Schedules of Expenditures of Federal Awards 24 Accompanying Multiple Family Housing Borrower Balance Sheet — Form RD 3560-10 25-26 Accompanying Multiple Family Housing Project Budget — Form RD 3560-7 27-32 027 t I JOYCE E. RETHMEIER CERTIFIED PUBLIC ACCOUNTANT Independent Auditors' Report To La Quinta Housing Authority/ La Quinta Redevelopment Agency USDA Rural Development Washington Street Apartments Moreno Valley Office (An elderly housing development owned by Moreno Valley, CA La Quinta Housing Authority/La Quinta Redevelopment Agency) . La Quinta, CA I have audited the accompanying statements of financial position of Washington Street Apartments (An elderly housing development owned by La Quinta Housing Authority/La Quinta Redevelopment Agency), Case No. 04- 033-953740431, as of June 30, 2011 and 2010, and the related statements of activities and cash flows for the years then ended. These financial statements are the responsibility of the Project's management. My responsibility is to express an opinion on these financial statements based on my audits. I conducted my audits in accordance with auditing standards generally accepted in the United States of America, the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that I plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, the evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audits provide a reasonable basis for my opinion. -= In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Washington Street Apartments, as of June 30, 2011 and 2010, and changes in its net assets and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, I have also issued a report dated August 31, 2011, on my consideration of Washington Street Apartment's internal control over financial reporting and my tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of my testing of internal control over financial reporting and compliance and the results of that testing and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of my audit. 235 West Fifth Avenue, Suite G, Escondido, CA 92025 Tel (760) 233-2244 Fax (760) 233-2166 Member of American Institute of Certified Public Accountants L� n e� O California Society of Certified Public Accountants V C V My audits were conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying supplementary information shown on page 15-17 and 25-32 is presented for purposes of additional analysis and is not a required part of the basic financial statements of Washington Street Apartments. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non -Profit Organizations, and is also not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statement and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In my opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. Joyce E. Rethmeier Certified Public Accountant August 31, 2011 .•.� * 029 WASHINGTON STREET APARTMENTS ( An elderly housing development owned by j La Quinta Housing Authority/ La Quinta Redevelopment Agency) CASE NO.04-033-953740431 STATEMENTS OF FINANCIAL POSITION JUNE 30, I ASSETS Current Assets Cash Rental assistance receivable Tenant receivable Prepaid expenses Receivable - other Total Current Assets Restricted Deposits and Funded Reserves Cash restricted for tenant security deposits Real estate tax and insurance reserve Replacement reserve Rental Property Land Buildings & Improvements Less: Accumulated Depreciation Other Assets Permanent loan fees, net of accumulated amortization of $3,702 and $2,314 in 2011 and 2010 Deposits 2011 2010 $ 95,855 $ 89,087 33,789 34,784 3,293 5,061 10,563 823 - 8,300 143,500 138,055 26,344 26,249 13,914 46,320 461,652 331,043 501,910 403,612 3,447,094 3,447,094 2,748,477 2,748,477 6,195,571 6,195,571 (244,857) (152,830) 5,950,714 6,042,741 14,232 15,620 6,000 6,400 20,232 22,020 Total Assets $ 6,616,356 $ 6,606,428 The accompanying notes are an integral part of these financial statements. O"Q.0 030 5 WASHINGTON STREET APARTMENTS ( An elderly housing development owned by La Quinta Housing Authority/ La Quinta Redevelopment Agency) CASE NO. 04-033-953740431 STATEMENTS OF FINANCIAL POSITION (continued) JUNE 30, LIABILITIES AND NET ASSETS 2011 2010 Current Liabilities Current portion of mortgage note payable $ 42,832 $ 39,408 Accounts payable 97 30 Accrued expenses 12,978 21,185 Total Current Liabilities 55,907 60,623 Deposits and Prepaid Liabilities Tenants' security deposits 26,160 26,105 Tenants' prepaid rents 113 2,301 26,273 28,406 Long -Term Liabilities Mortgage note payable, net of current portion 2,190,081 2,232,706 Total Liabilities 2,272,261 2,321,735 Commitments Net Assets 4,344,095 4,284,693 Total Liabilities and Net Assets $ 6,616,356 $ 6,606,428 The accompanying notes are an integral part of these financial statements. ',v jj . 031 -6- , r WASHINGTON STREET APARTMENTS (An elderly housing development owned by La Quinta Housing Authority/ La Quinta Redevelopment Agency) CASE NO.04-033-953740431 STATEMENTS OF ACTIVITIES FOR THE YEARS ENDED JUNE 30, l 2011 2010 - Rental Income Apartments $ 180,075 $ 172,276 i Less: Overage - - Tenant Utility Allowance - - Tenant Assistance Payments 446,272 445,396 Potential Rental Income 626,347 617,672 Less: Vacancies (4,851) (1,707) Total Rental Income 621,496 615,965 Other Income Laundry & Vending 1,908 4,917 Interest Income 1,046 2,188 Tenant Charges 1,277 2,746 Other Income - 142 Total Other Income 4,231 9,993 Total Income 625,727 625,958 - Expenses • Operating & Maintenance Expenses 218,905 235,715 Utilities Expenses 61,757 55,412 Taxes & Insurance 27,810 32,143 Bad Debts 2,758 - Interest on Mortgage Payable 154,180 169,618 Total Expenses 465,410 492,888 Income/(Loss) from Operations 160,317 133,070 • Non -Operating (Income) & Expense Interest Subsidy Income (46,912) (46,912) Interest Subsidy Expense' 46,912 46,912 Asset Management Fee 7,500 11,250 Depreciation & Amortization 93,415 93,415 Total Non -Operating Income & Expense (100,915) (104,665) Change in Net Assets 59,402 28,405 Net Assets - Beginning of Year 4,284,693 4,256,288 Net Assets - End of Year . $ 4,344,095 $ 4,284,693 The accompanying notes are an integral pan of these financial statements. -7- i .a.0 - 3 2 WASHINGTON STREET APARTMENTS f (An elderly housing development owned by La Quinta Housing Authority/ La Quinta Redevelopment Agency) i CASE NO.04-033-953740431 STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED JUNE 305 2011 2010 Operating Activities Rental receipts $ 172,046 $ 168,375 Rental subsidy 447,267 451,018 Interest receipts 1,046 2,188 Other receipts 3,185 7,805 Net tenant security deposits (paid) received (40) (178) - Net deposits received 400 (1,860) Payroll (43,803) (53,844) Administrative (74,414) (71,411) Professional fees (8,915) (7,000) Management fee (7,500) (11,250) Utilities (61,757) (58,241) Maintenance (84,634) (111,735) Insurance and taxes (44,529) (8,389) Interest on mortgage note payable (154,180) (158,952) Net Cash From Operating Activities 144,172 146,526 Investing Activities Reserve for Taxes & Insurance 32,406 (21,842) Reserve for Replacement (130,609) (58,674) " Purchase/Disposal of Rental Property - (12,350) Net Cash From Investing Activities (98,203) (92,866) Financing Activities Mortgage Principal Payments (39,201) (33,892) Net Cash From Financing Activities (39,201) (33,892) Net IncreaW(Decrease)in Cash 6,768 19,768 Cash at Beginning of Period 89,087 69,319 Cash at End of Period $ 95,855 $ 89,087 The accompanying notes are an integral part of these financial statements. ., ,*.0 „ 013 t WASHINGTON STREET APARTMENTS (An elderly housing development owned by La Quinta Housing Authority/ La Quinta Redevelopment Agency) CASE NO.04-033-953740431 STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED NNE 309 Operating Activities Increase in net assets Adjustments to Reconcile Increase/(Decrease) in Net Assets to Net Cash From Operating Activities Depreciation & Amortization Decrease (Increase) in Assets: Rental Assistance Receivable Tenant Receivables Receivable - Other Prepaid Expenses Cash restricted for tenant security deposits Deposits Increase (Decrease) in Liabilities: Accounts Payable Accrued Expenses Security Deposits - Liability Prepaid Rents Net Cash From Operating Activities Supplemental Disclosures Interest Subsidy 2011 $ 59,402 $ 93,415 995 1,768 8,300 (9,740) (95) 400 2010 28,405 93,415 5,622 (2,860) (8,204) 16,775 (15) (1,860) 67 (4,016) (8,207) 18,857 55 (163) (2,188) 570 $ 144,172 $ 146,526 $ 46,912 $ 46,912 The accompanying notes are an integral part of these financial statements. y,en 034 -9- WASHINGTON STREET APARTMENTS (An elderly housing development owned by La Quinta Housing Authority/ La Quinta Redevelopment Agency) Case No. 04-033-953740431 NOTES TO THE FINANCIAL STATEMENTS Year Ended June 30, 2011 1i A. Or Washington Street Apartments ("the Project") is an elderly housing development owned by La Quinta Housing Authority/La Quinta Redevelopment Agency (herein referred to as the Project). The Project operates a 73 unit elderly housing development for low-income seniors, as defined in Section 521 of the Housing Act of 1949, The Project commenced rental operations in November 2008. Legal title to the Project is held by La Quinta Housing Authority/La Quinta Redevelopment Agency, a government agency. The accompanying financial statements are those of the Project and do not represent the financial statements of La Quinta Housing Authority /La Quinta Redevelopment Agency. The Project operates as an enterprise fund and, as such, follows governmental accounting standards and uses the accrual basis of accounting. Under the accrual basis of accounting, revenues are recorded in the accounting period in which they are earned and become measurable. Expenses are recorded in the period incurred, if measurable. B. Significant Accoundng Policies A summary of the Project's significant accounting policies consistently applied in the preparation of the accompanying financial statements are as follows: Basis of Accounting The Project utilized the accrual basis of accounting, whereby income is recognized as earned and expenses are recognized as obligations are incurred. Cash and Cash Equivalents Cash and cash equivalents consist of short-term investments with an original maturity of three months or less, cash on deposit, money market funds and certificates of deposit. Tenant Receivable and Bad Debt Policy Tenant rent charges for the current month are due on the first of the month. Tenants who are evicted or move - out are charged with damages or cleaning fees, if applicable. Tenant receivable consists of amounts due for rental income, security deposit or the charges for damages and cleaning fees. The Project does not accrue interest on the tenant receivable balances. The Project has not established an allowance for doubtful accounts and does not use the reserve method for recognizing bad debts. Bad debts are treated as direct write-offs in the period management determines that collection is not probable. There was $2,758 of bad debts for the year ended June 30, 2011. There was no bad debt for the year ended June 30, 2010. ,,s.0 035 -to- WASHINGTON STREET APARTMENTS (An elderly housing development owned by La Quinta Housing Authority/ La Quinta Redevelopment Agency) Case No. 04-033-953740431 NOTES TO THE FINANCIAL STATEMENTS Year Ended June 30, 2011 B. Significant Accounting Policies —(Continued) Rental Property Rental property is recorded at cost. Improvements are capitalized, while expenditures for maintenance and repairs are expensed as incurred. Upon disposal of depreciable property, the appropriate property accounts are reduced by the related costs and accumulated depreciation. The resulting gains and losses are reflected in the statements of operations. The rental property is depreciated over estimated service lives as follows: Buildings & Improvements 30 years straight-line Land Improvements 15 years accelerated Furnishings & Equipment 5-7 years accelerated The Project reviews its investment in real estate for impairment whenever events or changes in circumstances indicate that the carrying value of such property may not be recoverable. Recoverability is measured by a comparison of the carrying amount of the real estate to the future net undiscounted cash flow expected to be generated by the rental property and any estimated proceeds from the eventual disposition of the real estate. If the real estate is considered to be impaired, the impairment to be recognized is measured at the amount by which the carrying amount of the real estate exceeds the fair value of such property. There were no impairment losses recognized in 2011 and 2010. Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Advertising Advertising costs are expensed when incurred. During 2011 there was $574 in advertising expense. During 2010, there was $371 in advertising expense. Date of Management's Review Subsequent events were evaluated through August 31, 2011, which is the date the financial statements were available to be issued. =.e. 036 11 - WASHINGTON STREET APARTMENTS r 1 (An elderly housing development owned by La Quinta Housing Authority/ La Quinta Redevelopment Agency) Case No. 04-033-953740431 NOTES TO THE FINANCIAL STATEMENTS { Year Ended June 30, 2011 C. Mort_oage Payable Rural Development The mortgage note was assumed by the Project and is payable to Rural Development in monthly installments of $7,107, at an interest rate of 10% and a term of 30 years, maturing in the year 2036. As part of the Loan Agreement, the Partnership entered into an Interest Credit and Rental Assistance Agreement that reduces the monthly mortgage payment to $3,198, which effectively lowers the interest rate to approximately 1% over the term of the loan. The mortgage liability of the Partnership is limited to the underlying value of the real estate collateral pledged. Under the loan agreement, the Project is required to make monthly escrow deposits for real estate, taxes and insurance premiums, and is subject to operating and return to owner restrictions. The Project's real and personal property are pledged as collateral for the trust deed note. Maturities of the mortgage notes in each of the next five years are approximated as follows: 2012 $ 12,915 2013 14,267 2014 15,760 2015 17,412 2016 19,235 Thereafter 649,890, $ 729,480 There has been no significant change in interest rates available to the Project. Therefore, the fair value of the mortgage notes approximate the book value. Provident Savings Bank, FSB The Project is financed under a deed of trust with Provident Savings Bank, FSB, dated October 31, 2008 in the original amount of $1,572,031. Monthly installments are $12,873 through October, 2038. The interest rate on the note is 8.36%. Maturities of the Permanent Loan in each of the next five years are approximated as follows: ��x., 037 -12- WASHINGTON STREET APARTMENTS (An elderly housing development owned by La Quinta Housing Authority/ ! La Quinta Redevelopment Agency) Case No. 04-033-953740431 NOTES TO THE FINANCIAL STATEMENTS Year Ended June 30, 2011 C. Mortgage Payable (continued) Year ending June 30, 2012 2013 2014 2015 2016 Thereafter D. Commitments and Contingencies Rental Assistance Agreement $ 29,917 32,516 35,341 38,411 41,748 1,325,500 $ 1,503,433 The Project has entered into a Rental Assistance Agreement with Rural Development commencing April 2011, providing rental assistance for 72 units. The agreement provides for a maximum rental assistance commitment of $392,256. The agreement expires May 1, 2012, but is then renewable under contract with Rural Development pending congressional approval of budget authority. E. Current Vulnerability Due to Certain Concentrations The Project's sole asset is Washington Street Apartments. The Project's operations are concentrated in the affordable housing real estate market. hi addition, the Project operates in a heavily regulated environment. The operations of the Project are subject to the administrative directives, rules and regulations of federal, state and local regulatory agencies, including, but not limited to, Rural Development and the State Housing Agency. Such administrative directives, rules and regulations are subject to change by an act of Congress or an administrative change mandated by Rural Development or the State Housing Agency. Such changes may occur with little notice or inadequate funding to pay for the related cost, including the additional administrative burden, to comply with a change. F. Concentration of Credit Risk The Project maintains its cash in financial institutions insured by Federal Deposit Insurance Corporation (FDIC). Deposit accounts, at times, may exceed federally insured limits. As of June 30, 2011 the cash balance exceeded those limits by $37,458. As of June 30, 2010, the cash balance did not exceed those limits. The Project has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents. �A 038 -13 - SUPPLEMENTAL INFORMATION WASHINGTON STREET APARTMENTS ( An elderly housing development owned by La Quinta Housing Authority/La Qunita Redevelopment Agency) CASE NO.04-033-953740431 REPLACEMENT RESERVE RECONCILIATION FOR THE YEAR ENDED JUNE 30, 2011 Reserve requirement 6/30/10 (Per Rural Development area office) Required annual reserve deposit (From loan agreement and any subsequent amendments) Actual reserve account deposit Total all authorized reeular reserve withdrawals Total all authorized excess reserve withdrawals Total all unauthorized reserve withdrawals Required reserve balance 06/30/11 (1)+(2)-(3)=(5) Verified Balance 06/30/11 Amount account over (+) under (-) funded * Detail of all reserve withdrawals during the fiscal year Regular Excess Puroose Date Reserve Reserve Authorized Sidewalk repair 12/29/10 4,500 yes CarpetB4 & J4 01/13/11 1,206 yes Furniture 05/19/11 1,143 yes Subtotal 5,643 1,206 See independent auditor's report on additional information. (1) 329,783 (2) 64,800 137,458 (3) 5,643 1,206 (5) 388,940 461,652 72,712 i WASHINGTON STREET APARTMENTS (An elderly housing development owned by La Quinta Housing Authority/ La Quinta Redevelopment Agency) Case No. 04-033-953740431 NOTES TO THE FINANCIAL STATEMENTS Year Ended June 30, 2011 1. Management Fee Calculation The management fee is based on a fee per unit occupied by tenants during the month. Total Qualified Units (73 * 12 months) 876 Less: Rent Free Unit (12) Vacancies (2) Total Occupied Units 862 Fee Per Unit (Effective July 1, 2009) $56 Management Fee Expense $ 48,272 2. Insurance Disclosure The Project maintains Insurance coverage as follows: Deductible Coverage Building Insurance $5,000 $500,000,000 blanket coverage Comprehensive Business Liability No Deductible $2,000,000 per occurrence Fidelity / Employee Dishonesty $5,000 $500,000 Earthquake Insurance $25,006 $53,348,000 3. Return to Owner In accordance with the Loan Agreement, the annual return to owner is as follows: Asset Management Fee $ 7,500 { i See Independent Auditors' Report. -46- 9.6 041 WASHINGTON STREET APARTMENTS (An elderly housing development owned by La Quinta Housing Authority/ La Quinta Redevelopment Agency) Case No. 04-033-953740431 NOTES TO THE FINANCIAL STATEMENTS Year Ended June 30, 2011 4. Proiect Accounts Account Tvae Account Title Account Financial Interest Balance Number Institution Rate Checking Operating Account 2120367221 California Bank & Trust - 65,129 Savings Operating Savings 2110112028 Union Bank .35% 30,426 Checking Tax & Insurance 2120367491 California Bank & Trust - 13,914 Checking Security Deposit 2120276859 California Bank & Trust 0.15% 26,344 Checking Replacement Reserve 2120277909 California Bank & Trust 0.30% 261,114 Savings Replacement Reserve 2110153387 Union Bank 0.10% 200,538 5. Changes to Owner Entity The La Quinta Housing Authority has been added to the title of the property. A request for approval of this transfer of title has been submitted to Rural Development. There has been a verbal approval but a written approval has not been received to the date of this report. Both La Quinta Housing Authority and La Quinta Redevelopment Agency are part of the City of La Quinta. See Independent Auditors' Report. -17- 1, 042 JOYCE E. RETHMEEIER CERTIFIED PUBLIC ACCOUNTANT Independent Auditors' Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in I Accordance with Government Auditing Standards To La Quinta Housing Authority/ La Quinta Redevelopment Agency USDA Rural Development Washington Street Apartments Moreno Valley Office (An elderly housing development owned by Moreno Valley, CA La Quinta Housing Authority/La Quinta Redevelopment Agency) La Quinta, CA I have audited the financial statements of Washington Street Apartments (An elderly housing development owned by La Quinta Housing Authority/La Quinta Redevelopment Agency), RD Case No. 04-033-953740431, as of and for the year ended June 30, 2011, and have issued my report thereon dated August 31, 2011. 1 conducted my audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. ' ' Internal Control over Financial Reuortina Management of Washington Street Apartments is responsible for establishing and maintaining effective internal control over financial reporting. In planning and performing my audit, I considered Washington Street Apartments internal control over financial reporting as a basis for designing my auditing procedures for the purpose of expressing my opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Washington Street Apartments internal control over financial reporting. Accordingly, I do not express an opinion on the effectiveness of the Project's internal control over financial reporting. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the financial statements will not be prevented, or detected and corrected on a timely basis. My consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control significant deficiencies or material weaknesses. I did not identify any deficiencies in internal control over financial reporting that I consider to be material weaknesses, as defined above. 235 West Fifth Avenue, Suite G, Escondido, CA 92025 Tel (760) 233-2244 Fax (760) 233-2166 043 Member of American Institute of Certified Public Accountants �••4. California Society of Certified Public Accountants Compliance and Other Matters it As part of obtaining reasonable assurance about whether Washington Street Apartments financial statements are free of material misstatement, I performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statements amounts. However, providing an opinion on compliance with those provisions was not an objective of my audit, and accordingly, I do not express such an opinion. The results of my tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. This report is intended solely for the information of the La Quinta Housing Authority/La Quinta Redevelopment Agency, management, others within the organization and the U.S. Department of Agriculture Rural Development and is not intended to be and should not be used by anyone other than these specified parties. Joyce E. Rethmeier Certified Public Accountant August 31, 2011 o 044 WASHINGTON STREET APARTMENTS (An elderly housing development owned by La Quinta Housing Authority/ La Quinta Redevelopment Agency) Case No. 04-033-953740431 NOTES TO THE FINANCIAL STATEMENTS Year Ended June 30, 2011 Reportable Conditions of Non Compliance There were no findings in 2011. Auditee's Comments on Prior Audit Resolution Matters Related to United States Department of Agriculture Rural Development Programs. There were no findings in 2010. •-".� 045 JOYCE E. RETH EIER CERTIFIED PUBLIC ACCOUNTANT REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DRECT AND MATERIAL EFFECT ON THE FEDERAL PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 To La Quinta Housing Authority/ La Quinta Redevelopment Agency Washington Street Apartments Compliance I have audited Washington Street Apartments (An elderly housing development owned by La Quinta Housing Authority/La Quinta Redevelopment Agency), RD Case No. 04-033-953740431, compliance with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that could have a direct and material effect on Washington Street Apartment's major federal program for the year ended June 30, 2011. Washington Street Apartment's major federal program is identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to its major federal program is the responsibility of Washington Street Apartment's management. My responsibility is to express an opinion on Washington Street Apartment's compliance based on my audit. I conducted my audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133. Those standards and OMB Circular A-133 require that I plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about Washington Street Apartment's compliance with those requirements and performing such other procedures as I considered necessary in the circumstances. I believe that my audit provides a reasonable basis for my opinion. My audit does not provide a legal determination on the Washington Street Apartments compliance with those requirements. In my opinion, Washington Street Apartments complied, in all material respects, with the compliance requirements referred to above that could have direct and material effect on its major federal program for the year ended June 30, 2011. Internal Control Over Compliance Management of Washington Street Apartments is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to federal programs. In planning and performing my audit, I considered Washington Street Apartments internal control over compliance with requirements that could have a direct and material effect on a major federal program to determine the auditing procedures for the purpose of expressing my opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, I do not express an opinion on the effectiveness of Washington Street Apartments internal control over compliance. 235 West Fifth Avenue, Suite G, Escondido, CA 92025 Tel (760) 233-2244 Fax (760) 233-2166 Member of American Institute of Certified Public Accountants California Society of Certified Public Accountants 046 A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a i federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. My consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be deficiencies, significant deficiencies, or material weaknesses. I did not identify any deficiencies in internal control over compliance that I consider to be material weaknesses, as defined above. This report is intended solely for the information and use of management, the La Quinta Housing Authority/ La Quinta Redevelopment Agency, others within the organization and the U.S. Department of Agriculture, Rural Development and is not intended to be and should not be used by anyone other than these specified parties. Joyce E. Rethmeier Certified Public Accountant August 31, 2011 0.9 " 047 t 1 WASHINGTON STREET APARTMENTS (An elderly housing development owned by ' La Quinta Housing Authority/ La Quinta Redevelopment Agency) Case No. 04-033-953740431 SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEARS ENDED JUNE 30, 2011 AND JUNE 30, 2010 SUMMARY OF AUDIT RESULTS 1. The auditor's report expresses an unqualified opinion on the financial statements of Washington Street Apartments. 2. No material weaknesses were identified during the audit of the financial statements 3. No instances of noncompliance material to the financial statement of Washington Street Apartments were disclosed during the audit. 4. No material weaknesses were identified during the audit of the major federal award programs. 5. The auditor's report on compliance for the major federal award programs for Washington Street Apartments expresses an unqualified opinion. 6. There were no audit findings that are required to be reported in accordance with Section 510(a) of OMB Circular A-133. 7. The programs tested as major programs included: CFDA #Z Farmers Home Administration pursuant to Section 521 of the Housing Act of 1949, Sec. 515 Rural Rental Housing Loans 10.415 Rental Assistance 8. The threshold for distinguishing Types A and B programs was $300,000. 9. Washington Street Apartments qualifies as a low -risk auditee. FINDINGS None 10.427 See independent auditor's report on additional information. ._ -23- . 048 WASHINGTON STREET APARTMENTS (An elderly housing development owned by La Quinta Housing Authority/ La Quinta Redevelopment Agency) Case No. 04-033-953740431 SCHEDULE OF EXPENDITURES AND FEDERAL AWARDS FOR THE YEARS ENDED JUNE 30, 2011 AND JUNE 30, 2010 Federal Grantor/Pass-through CFDA Federal Expenditures Grantor/Program Title Number 2011 2010 U.S. Department of Agriculture Rural Development Farmers Home Administration pursuant to Section 521 of the Housing Act of 1949, Sec. 515 Rural Rental Housing Loans 10.415 $ 729,480 $741,156 Rental Assistance 10.427 446,272 445,396 Total $ 1,175,752 $1,186,552 NOTES TO SCHEDULES OF EXPENDITURES OF FEDERAL AWARDS NOTE A -BASIS OF PRESENTATION The accompanying schedule of expenditures of federal awards includes the federal grant activity of Washington Street Apartments (An elderly housing development owned by La Quinta Housing Authority/La Quinta Redevelopment Agency), RD Case No. 04-033-953740431, and is presented on the accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of OMB Circular A-133, Audits of States, Local Governments, and Non -Profit Organizations. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the basic financial statements. See independent auditor's report on additional information. 049 -24- ' Form RD 3560-10 (02-05) :T :I MULTI -FAMILY HOUSING BORROWER BALANCE SHEET PART I - BALANCE SHEET BEGINNING DATE: ASSETS ENDING DATE CURRENT ASSETS 1. GENERAL OPERATING ACCOUNT .......................... 2. R.E. TAX & INSURANCE ACCOUNT ......................... 3. RESERVE ACCOUNT ............................................. 4. SECURITY DEPOSIT ACCOUNT ............................. 5. OTHER CASH (identify) Petty Cash ............................ 6. OTHER................................................................ 7. TOTAL ACCOUNTS RECEIVABLE (Attach list) ............ ACCTS RCVBLE 0-30 DAYS $ ACCTS RCVBLE 30-60 DAYS $ ACCTS RCVBLE 60-90 DAYS $ ACCTS RCVBLE OVER 90 DAYS $ 8. LESS: ALLOWANCE FOR DOUBTFUL ACCOUNTS. 9. INVENTORIES (supplies) ......................................... 10. PREPAYMENTS.................................................... 11. 12. TOTAL CURRENT ASSETS (Add 1 thru 11). FIXED ASSETS 13. LAND........................................................... 14. BUILDINGS ................................................... 15. LESS: ACCUMULATED DEPRECIATION ........... 16. FURNITURE & EQUIPMENT ............................. 17. LESS: ACCUMULATED DEPRECIATION ........... 18. DEFERRED FINANCING COSTS 19. TOTAL FIXED ASSETS (Add 13 thru 16)........ OTHER ASSETS 20. DEPOSITS 21. TOTAL ASSETS (Add 12, 19, and 20)............ 07-01-10) (7-01-I t6 -30 -11 l ( FORM APPROVED OMB NO. 0575-0189 3,447,094 3,447,094 2,748,477 2,748,477 (244,857) (152.830) 14,232 15,620 5,964,9461 6,058,361 6,0001 6,400 ....... 1 6,616,3561 6,606,428 LIABILITIES AND OWNERS EQUITY CURRENT LIABILITIES 22. TOTAL ACCOUNTS PAYABLE (Attach list) .................. ACCTS PAYABLE 0-30 DAYS $ ACCTS PAYABLE 30-60 DAYS $ ACCTS PAYABLE 60-90 DAYS $ ACCTS PAYABLE OVER 90 DAYS $ 23. NOTES PAYABLE (Attach list)ACCRUED EXPENSES...... 24. SECURITY DEPOSITS ............................................ 25. TOTAL CURRENT LIABILITIES (Add 22 thru 24) ..... - According to the Paperwork Reduction Act ot 1995, an agency may not conduct or sponsor, and a person is not required To respond o a co a wn o information unless it displays a valid OMB control number. The valid OMB control number for this information collection is 0575-0189. The time required to complete this information collection is estimated to average 2 hours per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. See independent auditor's report on additional information. LONG TERM LIABILITIES 26. NOTES PAYABLE RURAL DEVELOPMENT 27. OTHER (Identity) Tenants'oreoaid rents 28. TOTAL LONG-TERM LIABILITIES (Add 26 and 27)..... 29. TOTAL LIABILITIES (Add 25 and 28) .................. 2,272,261 2,321,735 30. OWNER'S EQUITY (Net Worth) (21 minus 29) ............. 4,344,095 4,284,693 31. TOTAL LIABILITIES AND OWNER'S EQUITY 1 6,616,3561 6,606,428 (Add 29 and 30), Section 1001 of Title 18, United States Code provides: "Whoever, in any matter within the jurisdiction. of any department or agency of the United States knowingly and willfully falsifies, conceals or covers up by any trick, scheme, or device a material fact, or makes any false, fictitious or fraudulent statements or representations, or makes or uses any false writing or document knowing the same to contain any false, fictitious or fraudulent statement or entry, shall be fined under this title or imprisoned not more than five years, or both. I HAVE READ THE ABOVE WARNING STATEMENT AND I HEREBY CERTIFY THE FOREGOING INFORMATION IS COMPLETE AND ACCURATE TO THE BEST OF MY KNOWLEDGE. (Date) (Signature or Borrower or Borrower's Representative) (Title) PART II -THIRD PARTY VERIFICATION OF REVIEW I/We have reviewed the borrower's records. The accompanying balance sheet, and statement of actual budget and income on Form RD 3560-7, is a fair presentation of the borrower's records. IIWe certify that no identity of interest exists between me/us and any individual or organization doing business with the project or borrower. (Date) (Signature) .(Name and Title) (Address) ❑ In lieu of the above verification and signature, a review completed, dated and signed by a person or firm qualified by license or certification is attached. See independent auditor's report on additional information. 051 -26- Form RD 3560-7 (05-06) MULTIPLE FAMILY HOUSING PROJECT BUDGET FORM APPROVED OMB NO.0575-0199 PROJECT NAME "BORROWER NAME WASHINGTON STREET APARTMENTS LA QUINTA REDEVELOPMENT AGENCY BORROWER ID AND PROJECT NO. "033-953740431 Reporting Period Budget Type Project Rental Type Project Type Borrower Type Plan Code X❑A.a ❑naw ❑Family ❑ JFURnofil ❑IrMividual ❑Qmnaly Ditegular Report X❑Emaly ❑'LommitNfit ❑Corporation ❑'A..fFemoo" Borrower Arsomring ❑ Monthly ❑Rmu Chmree ❑Coo". %❑ jNor,Ymfit ❑Emrnm Parma Orgof Farm Malnd ❑$MR ❑Gaup- R❑00m ❑ 1Wohmx ❑GheeSensing ❑Mud ❑m ❑ IG.w P. ❑cse, DAcrxA ❑ Ilvvowe BEGINNING DATES> ENDING DATES, OPERATIONAL CASH SOURCES 1. Rental I............................................................... 2. RHS Rental Assistance Received ...................................... 3. Occupancy Surcharges Received ...................................... 4. laundry and Vending............................................................ 5. Interest Income ............................................................ 6. Tenant Charges............................................................ 7. Other - Project Sources......................................................... 8. Less (V.coney and Cmw.genry Allouanre) ........................ 9. Less(Agem, Approved lnceonve Aflonance) ........................ 10. SUB-TOTAL/(/rhru7)-(8&9)1.....................••.•...•.•...•..• NON -OPERATIONAL CASH SOURCES 11. Cash-NorProject ................ 12. Authorized Loan (Non-RHS) 13. Transfer From Reserve ............. t 14. SUB -TOTAL (11 rhru 13) .......... 15. T0TAL CASH SOURCES (10+14) OPERATIONAL CASH USES 16. Total O&M Expenses (From Pan 11) ..:................................ 17. RHS Debt Payment......................................................... 18, RHS Payment (overage) ...................................................... 19. RHS Payment (Late Fee) ................................................ 20. RHS Payment (Ocmpsn Surcharge) ................................... 21. Tenant Utility Payments...................................................... 22. Tmnsfer to Reserve.......................................................... 23. Return to Owner Asset M.ugrmrm F.................................. 24. SUB -TOTAL (16 rhru 23)................................................... NON -OPERATIONAL CASH USES [ 25. Authorized Debt Payment (Non-RHS)....................................... 26. Annual Capital Budget (Fmm Pan 111, Lines 4-6y ........................ 27. Miscellaneous............................................................ ` 28. SUB -TOTAL (25 thru 17) 29. TOTAL CASH USES (24+28) 30. NET CASH (DEFICIT) (15-19) ............ CURRENT ACTUAL I PROPOSED COMMENTS BUDGET BUDGET or(YTD) (07/01/10) (07101110) 627,264 618.739 3,000 1,908 1,427 1,046 375 1,277 12,545 ff t Now 619,521 622,969 673,971 1 629,816 353,222 301,623 38370 38,370 64,900 137,458 7,500 7,500 463,892 484,951 672,816 646,274 1,155 16,456 CASH BALANCE 31. Beginning Cash Balance ...................................................... 109,757 135,407 See independent auditor's report on additional information. O -27- t i PART 11-OPERA is 1. Maintenance and Repairs Payroll _................... _.._..... 2. Maintenance and Repairs Supply ..................... _......... 3. Maintenance and Repair Contract ........ .............. 4. Painting and Decorating __..._._...._.............. 5. Snow Removal ......... ...._..._... _.............. ._.._... __. 6. Elevator MaintenancelContract _._..__..................... 7. Grounds ......... .............. ._............ ......__.__.... 8. Services ...... ........ ._.................... ... _.._.___.. 9. Annual Capital Budget (From Part V - Operating) 10. Other Operating Expenses I ....... �...-.__..... 11. SUB -TOTAL MAINT. & OPERATING (I thru la) .............. 12. Electricity ..... ...... _.... _. _....._.. 13. Water .._...._.,... .... ........................ _.......... 14. Sewer ........._..... ....... 15. Fuel(OWCoYGa) ............ _........_........ 16. Garbage & Trash Removal .... _.... _..................... 17. Other Utilities ...... ... ................... ......._:.... _.... 18. SUB -TOTAL UTILITIES (12 thru 17) ........................... 19. Site Management Payroll ....... 20. Management Fee ...........:.._.................... _.................. 21. Project Auditing Expense ................ 22. Project Bookkeeping/Accounting ._... _.... .............._.... .. 23. Legal Expenses _...._......._...._....._.. _......._..___._.. 24. Advertising ......_......__...__.._ .............. 25. Telephone& Answering Service ........_........ 26. Office Supplies _. _....._.... _............. _. _..................... 27. Office Furniture & Equipment ... _.......... .._._.......... _ 28. Training Expense........................................................ 29. Health Ins.& Other Emp. Benefits ...._._.. _.............. _... 30. Payroll Taxes ............ ........................................... 31. Workmans Compensation ....... .................. 32. Other Administrative Expenses .......... 33. SUB -TOTAL ADMINISTRATIVE(19thru 32) .............. 34. Real Estate Taxes......................................................... 35. Special Assessments ......... 36. Other Taxes, Licenses & Permits ................................ 37. Property& Liability Insurance ...._._.............. _...... 38. Fidelity Coverage Insurance ......... ...................... 39. Other Insurance ........_.i....................... ....... ............. 40. SUB -TOTAL TAXES & INSURANCE (34 thru 39) .............. CURRENT PROPOSED I COMMENTS 30,160 18,374 16,085 10,863 25,700 12,473 5,000 1,039 39,700 23,419 4,810 4,158 10,140 28,847 3,300 5,285 134,895 104,458 12,000 6,448 19,000 22,157 23,175 24,066 1,600 1,490 7,775 7,596 63,550 61,757 27,880 24,055 48,384 48,272 7,000 7,000 2,000 1,915 600 574 2,740 2,555 6,750 3,274 I'000 325 7,789 4,315 5,056 3 904 5340 4,571 5,846 6,838 120,385 107,598 10,182 10,701 62 36 24,150 17,073 34,394 27,810 41. TOTAL O&M EXPENSES (11+18+33+40) ............... 353,224 301,623 i See independent auditor's report on additional information. ��o 053 -28- ' BUDGET I ACTUAL I BUDGET I or(YTD) RESERVE ACCOUNT: 1 BEGINNING BALANCE.... _... ............ 2 TRANSFER TO RESERVE .......................... TRANSFER FROM RESERVE... ............... 3 OPERATING DEFICIT.. _...... _ _... _.... _.... _.. 4 ANNUAL CAPITAL BUDGET (Part V - Reservr 5 EQUIPMENT REPAIR & REPLACEMENT...... 6 OTHER NON -OPERATING EXPENSES.... _.... 7 TOTAL(3 thou 6)............ ......... ............._. 8 ENDING BALANCE [(1+2)-7]..................... GENERAL OPERATING ACCOUNT:* BEGINNING BALANCE.. .. .. .._ 89087 ENDING BALANCE..._ 1 95,855 REAL ESTATE TAX AND INSURANCE ESCROW ACCOUNT:* BEGINNING BALANCE .... .. ._. 46,320 ENDING BALANCE..... ..... .. .. 13914,.,".i TENANT SECURITY DEPOSIT ACCOUNT:' BEGINNING BALANCE ........ ...... 26,249 ENDING BALANCE..._ ..... .. _.. M344 •(Complete vyon rabminion oJacmal evensesJ . NUMBER OFAPPLICANTS ON WAITING LIST RESERVE ACCT. REQ. I�BALANCE.... NUER OF APPLICANTS NEEDING RA AMOUNT AHEAD/BEHIND .......... See independent auditors report on additional infmroation. ,.* 054 29 PART IV — RENT SCHEDULE AND UTILITY ALLOWANCE A CnRRrN7 APrRnvrn RENT MI ITV AI IOWANCV- UNIT DESCRIPTION RENTAL RATES POTENTIAL INCOME FROM EACH RATE BR SIZE UNIT TYPE NUMBER BASIC NOTE RATE HUD BASIC NOTE RATE HUD UTILITY ALLOWANCE 1'..' M.: 72..1 S . R6 E'.- 861 5.: -`- S 627,2&1 S 743,904 S I_. M .. 1. S -.5 , _ E'(.. -_ E E - S 'S si, z= s - S - E - S S :E E.'.. - s S - S - E f 'S - -5. r - S - S - E - E s, - S' E S. S S - f_:. - Sc - S - S - S S S - S - i Ee CURRENT RENT TOTALSI S 627,264 1 S 743,904 I S BASIC NOTE HUD NrC _ Cttew:o. n.r.I / Nn •6nnun UNIT DESCRIPTION RENTAL RATES POTENTIAL INCOME FROM EACH BR SIZE UNIT TYPE NUMBER BASIC NOTE RATE BUD BASIC NOTE RATE HUD I "..: M '. 72 ! S - ' 726 S '861 Is - S 627,264 E 743.9W S - S - E S - S f`:S S- S - E S E 5,,:. - 5 - E - E - 5 E 5' L.. - E - E - 5 IE - Ere S..- - i - E - E 3 S3: $--' - i - E - S CURRENT RENT TOTALS S 627,264 1 S 743,904 S BASIC NOIL HUD C. PROPOSED UTILITY ALLOWANCE - Effective Date: / / MONTRIM MHLAR ALLOWANCES BR SIZE UNIT TYPE NUMBER ELECTRIC GAS WATER SEWER TRASH OTHER TOTAL 1 M 72 56 17 73 1 Z 1 I... ^ 055 See independent auditor's report on additional information. -30- I Appliances Range Refrigerator Range Hood Washers & Dryers Carpet & Vinyl: 1 Br. 2 Br. 3 Br. 4 Br. Other Cabinets: Kitchens Bathroom Other Doors: Exterior Interior Window Coverings: List: Heating & Air Conditioning: Heating Air Conditioning Plumbing: Water Heater Bath Sinks Kitchen Sinks Faucets Toilets Major Electrical: List: Structures: Windows Screens Wails Roofing Siding Exterior Painting Community Room Paving: Asphalt Concrete Seal & Stripe Landscape & Grounds: Landscaping Lawn Equipment Fencing Recreating Area Signs . Accessibility Features: List: Automation Equipment: Site Management Common Area Other: List: List: List Proposed Proposed Actual Proposed Actual Actual Total Po Po P Number of from from from from Total Actual Units/Items I Reserve I Reserve Operating Operating Cost Units/Itel - 12 3,150 2,250 5,400 5,400 12 12 3,850 2,750 7,443 7,443 12 10 rr 4,200 110,315 8 TOTAL CAPITAL EXPENSES 1 55 1 54,450 1 6,849 J 10,1401 281847 1 35,696 1 43 See independent auditors report on additional information. y��,1 0,56 -31- :j r r PART VI -SIGNATURES, DATES AND COMMENTS Section 1001 of Title 18, United States Code provides: "Whoever, in any matter within the jurisdiction of any department or agency of the United States knowingly and willfully falsifies, conceals, or covers up by any trick, scheme, or device a material fact, or makes any false, fictitious or fraudulent statements or representations, or makes or uses any false writing or document knowing the same to contain any false, fictitious or fraudulent statement or entry shall be fined under this title or imprisoned not more than five I HAVE READ THE ABOVE WARNING STATEMENT AND I HEREBY CERTIFY THAT THE FOREGOING INFORMATION IS COMPLETE AND ACCURATE TO THE BEST OF MY KNOWLEDGE. (DATE) (Signature of Borrower or Borrower's Representative) (Title) AGENCY APPROVAL (Rural Development Approval Official) �►�,� 057 See independent auditor's report on additional information. -32- u 5 Twit 4 C£`y OY COUNCIL/RDA/HA MEETING DATE: October 18, 2011 ITEM TITLE: Discussion Regarding Washington Street Apartments AGENDA CATEGORY: BUSINESS SESSION: CONSENT CALENDAR: STUDY SESSION: PUBLIC HEARING: Please refer to Redevelopment Agency Staff Report Agenda entitled Discussion Regarding Washington Street Apartments. WA REPORTS/INFORMATION ITEM NO._ MINUTES HOUSING COMMISSION MEETING A Special Meeting Held in the Study Session Room at the La Quinta City Hall 78-495 Calle Tampico, La Quinta, CA April 27, 2011 This meeting of the Housing Commission was called to order at 6:06 p.m. by Chairperson LaRocca. I. CALL TO ORDER A. Pledge of Allegiance B. Roll Call Present: Commissioners Dorsey, Leider and Chairperson LaRocca Absent: Commissioner Jamison and Polanco It was moved by Commissioner Leidner and seconded by Commissioner Dorsey to excuse Commissioner Jamison Commissioner Polanco was dismissed from the Housing Commission due to absences Staff Present: Douglas R. Evans, Assistant City Manager, Development Services, Debbie Powell, Economic Development Project Manager, Karen Frane, Management Assistant and Lori Lafond, Executive Assistant IL PUBLIC COMMENT: None. III, CONFIRMATION OF AGENDA: Confirmed. III. CONSENT CALENDAR: 1 . Approval of the Minutes for the Special Meeting on January 25, 2011 It was moved by Commissioner Leidner and seconded by Commissioner Dorsey to approve the minutes as submitted. -.a 059 Housing Commission April 27, 2011 IV. BUSINESS ITEMS: 1. Consideration of Housing Commission Work Plan for Fiscal Year 2011- 2012. It was moved by Commissioner Dorsey and seconded by Chairperson LaRocca to approve work plan as submitted. 2. Consideration to Sell Foreclosed Homes to Income -Qualified Buyers. Staff updated the Commission on the foreclosed homes program. Chairperson LaRocca asked whether the second trust deed is repaid at any time or is it forgiven and if it is a 30 year covenant. Staff indicated that the second trust deed is forgiven and the covenants are for 45 years for single family homes. Staff further explained that if the family lived in the home for 45 years or it stayed affordable for 45 years, the second trust deed goes away and the buyer owns the house. Staff indicated that the City is very thorough when explaining the program to prospective buyers regarding the terms and conditions of the program and to make sure they understand they cannot sell the property for profit. This program was designed as a way for people to live in a house, have home- ownership pride but not have to pay full market value. Staff updated the Commission on the status of some of the foreclosed homes purchased by the Redevelopment Agency ("Agency"). Currently, three sales have just been completed, one house is in escrow, and three houses are currently for sale. The Agency is in the process of rehabilitating three houses and offers on two houses are pending. Commissioner Leidner asked if the Agency accepts offers before the rehabilitation of the property is finished. Staff indicated that the Agency wants to be completely finished with rehabilitation before offering the properties for sale. Chairperson LaRocca asked whether or not the Agency maintains a list of qualified families. If not, how does the Agency find buyers? Staff indicated that the Agency does snot have a list of prospective buyers and that the buyers are chosen through real estate networking. '.° . 060 2 Housing Commission April 27, 2011 It was moved by Commissioner Leider and seconded by Commissioner Dorsey that the Executive Director is given the authority to take all necessary actions to sell the homes currently owned by the Housing Authority, and homes purchased or acquired in the future by or for the Housing Authority to income - qualified buyers. Motion carried unanimously. VII. STAFF UPDATES: 1. Staff presented staff report regarding an Update on the La Quinta Redevelopment Agency and Housing Authority. The Commission had many concerns regarding the State's initiative to abolish redevelopment agencies state-wide. Staff explained that the Governor just wants to get rid of redevelopment agencies and take the money but the California Redevelopment Association ("CRA") as well as the League of California Cities ("League") have banded together in a very coordinated effort to oppose the State's initiative. They drafted a proposal for reform and are now going through trying to cinch it up into proposed legislation and that would provide some ability for cities to voluntarily give money to the state & school districts since the Constitution prohibits the State from taking the money. The CRA & League are trying to come up with a way the agencies can help the State with its budget and benefits so that redevelopment plans could last longer and the money could eventually be recouped. Staff further indicated that the State is considering selling Agency assets and forming a new committee that would evaluate all payment obligations. The State's idea is to close down redevelopment agencies as fast as possible. 2. Staff presented staff report regarding Status Report on the Washington Street Apartments. VIII. CORRESPONDENCE AND WRITTEN MATERIAL: None. •0 '0 61 3 Housing Commission April 27, 2011 IX. ADJOURNMENT: There being no further business, it was moved by Commissioner Dorsey and seconded by Commissioner Leidner to adjourn this meeting of the Housing Commission. This meeting of the Housing Commission was adjourned on April 27, 2011, at 7:01 p.m. AYES: 3; NOES: None. ABSENT: Commissioner Jamison. ABSTAIN: None. Submitted by 60-k Lori Lafond Executive Assistant 062 4