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Operating Summary <br />The operating expenses would remain approximately the same as last year with an <br />increase of 3.05%. Increased water usage to meet the needs of irrigating the <br />development's new landscaping will continue to result in increased water usage fees <br />(+$2,483); however, staff anticipates this usage will stabilize after this year. The cost of <br />employee health benefits is also anticipated to increase significantly (+$5,091). Overall <br />inflationary factors are also impacting general operating costs items related to <br />maintenance and services. <br />After experiencing major increases in utility costs over the past several years, most <br />utility expenses are forecast to increase in the coming year but at a lesser rate than in <br />previous years. The estimates shown in the draft budget are based on the most current <br />information available and on management's analysis of costs over the past few months. <br />Utility costs are projected to increase by an average of 5%. <br />The budget for line item 3692 (Cable TV income) reflects the maximum of the <br />discounted rate based on 72% of the normal residential rate, which is the actual cost for <br />cable service paid by the complex (therefore, effective several years ago, residents are <br />no longer subsidized in the budget beyond the discounted rate already paid by the <br />project). Staff is currently in negotiations with Comcast to explore options for reducing <br />resident costs for television service. However, it has not yet identified solutions to this <br />increase. <br />HUD Capital Funds <br />The Housing Authority receives approximately $50,000 to $60,000 per year through the <br />Capital Grant Program (CGP). These funds are drawn down funds throughout the year <br />based on a plan filed annually with HUD through the Annual Agency Plan. The budget <br />forecasts an additional estimated allocation of $50,000 in CGP funds for FY 2008/09. <br />These funds, combined with carry-over funds from prior year grants, will be allocated <br />toward various "extraordinary maintenance" activities such as exterior and interior <br />replacements and non-recurring replacement and maintenance items (appliances, <br />plumbing, HVAC, and interior replacements, and a related portion of maintenance <br />salaries). <br />Page 3 of 5 <br />