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THE CITY OF Housing Commission <br />Staff Report <br />tlllAn', <br />111 <br />PLEASANTON. November 21, 2019 <br />Item 06 <br />SUBJECT APPROVAL OF THE ANNUAL OPERATING BUDGET FOR RIDGEVIEW COMMONS <br />FOR 2020 <br />RECOMMENDATION <br />Adopt the Annual Operating Budget for 2020. <br />ATTACHMENTS <br />1) Proposed 2020 Projected Operating Budget <br />2) Replacement Reserve Balance Projection <br />3) Expenditure Projections <br />4) Rent Projections by Category for 2020 <br />DISCUSSION <br />Attached for the Commission's review is the proposed operating budget for Ridgeview Commons <br />(RVC) for the Fiscal Year 2020, which will begin on January 1, 2020. The proposed operating budget <br />has been prepared by Barcelon Associates and reviewed by staff and Eden Housing. <br />As indicated in the attached budget, overall operating expenditures (including taxes, insurance, reserve <br />expenditures, and facility maintenance replacements) are estimated at $1,279,136. Project revenue is <br />estimated to be $2,174,057. After debt service payments and Reserve Impounds, the budget projects <br />an ending year net cash flow balance of $693,391. <br />A new procedure for annual rent increase was approved by the Housing Commission in 2003 and has <br />been followed since that time in order to address increasing project costs and maintain a positive <br />fiscal condition. As the commission may recall, a specific action was taken in the 2011 budget to <br />forego any rent increase in recognition of general economic conditions, with the understanding that a <br />modest rent increase would be resumed for 2012 (which it was). The practice of 1-2% annual rental <br />increases has continued since 2012. This has left RVC rents $200 to $300 below the maximum <br />TCAC rents. <br />This year RVC is proposing a 2% rental increase to all tenant rents. This increase will raise tenant <br />rents by $10-20 per month. The increase is proposed in order to ensure RVC's long term financial <br />stability for the new upcoming Debt Service. Over the past 3 years, RVC has undertaken the task <br />of installing LED lights in tenant apartments, and upcoming rehabilitation will include energy-saving <br />upgrades to the tenant's windows and appliances. Please note that this year there will not be debt <br />service after the existing loan is paid off. New debt service will commence sometime in 2021 after <br />the completion of the rehabilitation. <br />Page - 1 - <br />