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Agenda Item 8.

City Council Meeting

Meeting Date:	03/06/2018
FROM:	Bill Gallardo

Subject:

Senior Subsidy Program Update

RECOMMENDATION

Consider options for the Senior Rental Subsidy Program and determine additional information from staff necessary to provide policy direction.

BACKGROUND/DISCUSSION

In 1989, the City of Brea received grant funding to begin a rental subsidy program to assist with rent for very low income senior citizens residing in Brea. When the grant funding ended, the City decided to continue the program with Redevelopment Agency 20% housing funds.

Over the years, hundreds of seniors have been helped by this unique program. Rental subsidies are paid directly to the landlord on behalf of the participant. The subsidy amount has gradually increased over the years from $100 to $254 per month per qualified participant.

When the State ended Redevelopment in 2012, staff stopped filling vacancies and accepting new applications in anticipation of the loss of redevelopment funding. Fortunately, staff was able to negotiate with the Department of Finance (DOF) to fund the program through tax increment revenues until the end of 2019.

At the time of the redevelopment dissolution, there were 116 participants in the program. Within the last five years, 89 participants have left the program due to various reasons. Currently, there are 27 participants in the program. At this level, the annual cost of the program is $82,296 in direct subsidies, plus minimal staff time to administer. Based on the average percentage of participants leaving the program each year, staff anticipates that by the time the current funding source is no longer available (December 30, 2019), there will be an estimated 18 participants in the program, which would mean the annual program cost beginning in 2020 would be approximately $54,864 or less if there are fewer participants 2020.

Per the agreement with DOF, funding for the program will end in December 2019. Council is asked to consider options for continuing or terminating the program when the tax increment funding ends. If the program continues beyond 2019, the Affordable Housing Trust Fund 270 could be used.

The current Fund 270 balance is $2,200,000.

The following table outlines three options:

	Option	Pros	Cons
1	Use Fund 270 to wind down through attrition until zero participants	Continue meeting a need to very low-income Brea Seniors	Reduces the Housing Fund by $54,864/year (will likely decrease each year)
2	End the program on December 30, 2019	No fiscal impact to Fund 270	Impacts approximately 22 participants
3	Incremental decrease of subsidy to each senior by 25% per year for 4 years with funding from Fund 270, commencing in 2020.	Less fiscal impact to Fund 270	Reduces Fund 270 each year Increased staff time to administer changes

If the program were to be terminated once the current funding ends, staff recommends that participants be notified as soon as possible with at least one year notice to prepare for the transition.

FISCAL IMPACT/SUMMARY

To estimate the fiscal impacts of the program, based on experience, staff calculated the attrition rate at 20% per year. Staff then used that rate to project the number of remaining participants each year and calculated the projected costs for those participants. See Exhibit A for the participant attrition projection and current age ranges.

If the program were to be continued beyond December 2019 utilizing the City’s Housing Trust Fund 270, there would be a potential annual impact of $54,864 per year. The annual amount would decrease as participants leave the program. The current Fund 270 balance is approximately $2,200,000. The main purpose of Fund 270 is to construct and/or acquire new affordable units. There is no impact to the General Fund.

Council is asked to provide staff direction on additional information necessary to provide policy direction which will impact approximately 22 Brea Seniors, with funding either through the City’s Affordable Housing Trust Fund 270 or to discontinue the program when the tax increment funding ends in December 2019.

RESPECTFULLY SUBMITTED:

William Gallardo, City Manager
David Crabtree, Community Development Director
Prepared by: Denise Chang, Administrative Clerk II
Concurrence: Kathie DeRobbio, Economic Development Manager

Attachments
Exhibit A