(10)AR 031511 Colton Housing Authority

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Staff Report to the Mayor and City Council Colton Housing Authority March 15, 2011 Page 2 agencies. The budget proposal estimates that the successor agency will operate for approximately 20 years in order to meet all of the current obligations. Information regarding the budget is fragmentary and developing over time. The current budget proposal is not fully articulated and there are many unanswered questions which will be dealt with in a legislative process and will unfold over time. Therefore, the following comments relative to our understanding of the proposed budget should be considered in that light. Under the Governor's proposal to phase out redevelopment agencies, the state would receive $1.7 billion in relief for the General Fund FY 2011-12. The remainder of the redevelopment tax increment would be provided to the successor agency to address outstanding bond obligations. Beginning in FY 2012-13 and beyond, the incremental funds would be distributed to local governments according to existing property tax allocations and would be intended to pay for additional services that are realigned to local governments as well as for other functions of local governments such as education, police and fire protection. Additionally, a portion of the tax increment would be provided to the successor agency in order to continue to service the debt contracted by the former redevelopment agencies. The Governor's proposal to end redevelopment as we know it will have a devastating effect on the City in general and the Agency in particular. Every possible effort needs to be made to avoid that outcome. However, at the same time it is prudent to take any available steps to retain local control over local resources. This report is consistent with that approach. It should be noted that the Governor's proposal primarily affects non -housing redevelopment funds. With respect to housing funds, the Governor has proposed that LMI Housing Fund responsibilities be transferred to a local housing authority. The Governor's budget assumes that the local housing authority will use the LMI Housing Funds for activities that would otherwise have been eligible for funding from redevelopment agencies. Given the foregoing and in an effort to continue to achieve the goals established the City's redevelopment agency and other housing policies established by the Housing Element of the general plan, it is recommended that the City Council consider the establishment of a housing authority pursuant to the California Housing Authority Law. Exhibit "A"- describes the purpose and governance, activation procedure, powers and duties of a housing authority. The intent of the recommendation to create a housing authority is to maintain, to the extent feasible, local control over what are now Agency housing responsibilities and the financial resources that are related thereto. Once established, the Agency could enter into a contract with the Housing Authority wherein all or a portion of the Agency's LMI Housing Funds could be transferred to the Housing Authority to manage the Agency's existing and proposed affordable housing programs. If the Agency decides to transfer all or a portion of its LMI Housing Funds to the Housing Authority, then the transferred money, if any, would no longer be an asset of the Agency and instead would become an asset of the Housing Authority.