SPECIAL MEETING PLEASANTON HOUSING AUTHORITY

BACKGROUND As part of the budget preparation process, staff works closely with Barc:elon Associates which is contracted to provide project management for Kottinger Place and the Housing Authority. Further, staff is in close contact with HUD regarding funding or operational requirements that may impact revenues or expenditures in the upcoming year. As part of the overall approval process, the budget was reviewed by the Housing Commission which acts as the Housing Authority's Board of Commissioners. To assist it with its review, staff includes a summary of income and expenditures ("Budget Footnotes") which is attached to the budget. The budget also includes columns detailing line item expenses for the current fiscal year. DISCUSSION Staff is projecting that the annual operating expenses at Kottinger Place will be $276,227 which represents a decrease of 4.2% over FY 2012/13 annualized expenses of $292,200. This modest decrease is due to minor reductions in administrative and maintenance costs. The Operating Budget includes $120,000 in anticipated HUD grant revenue through the Operating Subsidy (OFND) program which has been a significant positive factor in supporting staffing and administration at desired levels deemed appropriate for a complex of this size and age. The Operating Budget does not reflect the additional availability of HUD Capital Fund Program (CFP) funding which has been approximately $42,000 per year over the past two years. However, HUD has approved the Housing Authority's annual plan and therefore, staff anticipates funding will be awarded in a similar amount. This funding has been used to offset maintenance services and significant project improvements such as installation of dual pane energy efficient windows in a number of units. Note that the FY 2011/12 budget included $131,400 (Acct. 5990) which represents a drawdown of HUD capital grants awarded over a number of years to make project improvements such as dual pane windows. Approximately 60% of the $276,227 in operating costs will be met through tenant rents, which are forecast to remain relatively stable at approximately $163,189 however, because rents are set based on tenant income, vacancies or loss of income could result in fluctuations in rental revenue. The administrative expenses are projected to decrease by approximately 5% as compared to last year. The decrease is due to normal minor cost variations associated with the various administrative categories. A portion of the salary for the on-site manager has been transferred to the CFP (Administration) as in prior years. The budget for tenant services (i.e., recreation supplies) was increased several years ago to promote a continued enhanced level of resident activities in conjunction with the new management. The service coordinator has been budgeted for five hours per week (the same as the current year) with a 2% hourly rate increase. The budget includes a projected surplus of $5,462 which is small but an improvement from last year. Because of limited income and generally fixed expenditures, the Operating Budget for Kottinger Place is generally always "tight," with either a small Page 2 of 4