HOUSING AUTHORITY BOARD OF DIRECTORS

Expenses Administration/Services The administrative expenses are projected to increase by approximately 23% as compared to last year. The increase is due primarily to a proposed increase in the management fee (which would increase from $25,200 to $34,200, or from $42 to $57 PUPM / per unit per month) as well as normal minor cost variations associated with the various administrative categories. Barcelon has traditionally charged a below-market management fee for Kottinger but would like to increase the fee closer to market standards given that the increase can be supported by the budget for the coming year. The proposed management fee is consistent with HUD's published fee schedule of management fees. On-site staff would receive a 2% salary increase (for cost of living and based on performance). A portion of the manager's salary will be covered by the CFP (Administration) as in prior years. The budget also reflects the addition of a small amount of funding to account for additional work performed for Kottinger throughout the year (as needed) by Barcelon support staff such as the Occupancy Specialist. 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 22 hours per month (approximately the same as the current year) with a 2% hourly rate increase. Utilities After experiencing major increases several years ago, utility costs have remained relatively stable and are forecast to decrease slightly by 6.8% from last year's budget based on 2013-14 actual figures annualized with an assumed 10% rate increase. The higher increases observed several years ago were offset by savings in gas costs realized through rate cuts and a change in supplier. In addition, energy efficient windows and appliances were recently installed in many of the units. The estimates shown in the draft budget are based on the most current information available and on management's analysis of costs over the past few months. The availability of OFND funds continues to help alleviate the impact to the budget of incremental increases in utility costs. Maintenance Maintenance expenses (both ordinary and extraordinary) are projected to increase slightly as compared to last year. This is due to a general reduction in repair and contract costs for several smaller line items. As in the past, a small percentage of the salary for the maintenance technician will be covered through CFP funds. As in prior years, some of the activities normally associated with facility maintenance will also be addressed as part of projects funded with CFP funds. As discussed above, the Housing Authority receives approximately $45,000 to $50,000 per year through the Capital Fund Program (CFP). These funds are drawn down throughout the year based on a plan filed annually with HUD through the Annual Agency Plan. While not included in the Operating Budget, staff forecasts a similar level of CFP funding for FY 2013/14 (the allocation for calendar year 2014 is $50,668). These funds, combined with carry-over funds from prior year grants, will be allocated toward various "extraordinary maintenance" activities such as exterior and interior replacements and non-recurring replacement and maintenance items (appliances, plumbing, HVAC, and interior replacements, and a related portion of maintenance salaries). Page - 3 -