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Background
Falkenberg, Gilliam and Associates, Inc. (FGA) has been the property management
company for the Morgan and Kimball Towers since 1995. Each year, an operating
budget for each building is prepared by the management company and is reviewed
and approved by the Community Development Commission (CDC). On June 5,
2012, all CDC housing functions and assets were transferred to the Community
Development Commission Housing Authority of the City of National City (CDC -HA).
As a result, the fiscal year 2012-13 Morgan Tower and Kimball Towers will be
considered for approval by the CDC -HA.
Kimball Tower
Kimball Tower is a 151 unit complex located at 1317 D Avenue owned free and clear
by the Community Development Commission. Of the 151 total units, two (2) are
reserved for property management staff and 149 are rented to qualified households.
Of the 149 rental units, 141 units receive rental subsidies from the U.S. Department
of Housing and Urban Development (HUD) through the City of National City's
Section 8 program. Eight units are market (unsubsidized) rate and do not receive
HUD rental subsidies.
For the fiscal year ending June 30, 2013, the projected annual income is $1,080,129
and -the -total eest-of-operations-total-$993;596 -Alt lough--tl is presents -an -income -of
$86,533, the property management company is required by the CDC -HA to place
$84,000 in the replacement reserve account ($7,000 per month). Replacement
reserves are funds that are restricted for the replacement of appliances, carpeting,
or other unbudgeted building maintenance charges. As of April 30, 2012, the
balance of the replacement reserve fund is $1,203,059. After funding the reserve
account with the additional $84,000, the net income of the Kimball Tower is
estimated to be $2,533.
Attached to the operating budget is a FY 2013 capital improvement budget for
Kimball Tower that includes:
• Replacement of Kimball Tower boilers with a projected estimate of $205,000.
• Up -grade Kimball Tower hot water supply piping with a projected estimate of
$35,000.
• Modernize Kimball Tower elevators with a projected estimate of $225,000.
All capital improvements will be paid from the Kimball Tower replacement reserve
account.
Due to overall increases in projected expenditures, FGA is recommending an
increase of $13 (2.22%) per month/per unit from $585 to $598. Households
receiving a Section 8 subsidy will not feel the impact of this rental increase, since the
proposed rental increase will be covered by the rent subsidy. The eight market rate
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units will receive an increase to their rent payment, unless the rent increase causes
their housing costs to exceed 30% of the household's monthly income. In this case,
the City's Section 8 program staff may evaluate the household's eligibility to receive
Section 8 rental assistance.
Highlights of Kimball Tower Budget are:
• Rent increase (GL#5120) of thirteen dollars (2.22%) per month from $585 to
$598. Federal rent subsidies will pick up rent increase for those families
being subsidized.
• Capital Improvement Budget, totaling $465,000, to replace boilers, hot water
supply lines, and elevators.
Morgan Tower
Morgan Tower is a 152-unit complex located at 1415 D Avenue. Of the 152- units,
one unit is reserved for property management staff and 151 are rented to qualified
households. Of the 151 rental units, 150 receive Section 231 rental assistance from
HUD. One unit is market (unsubsidized) rate and does not receive a rental subsidy.
For the fiscal year ending June 30, 2013, the projected annual income is $1,287,574
and total cost of operations total $1,200,320 which includes loan principal payments
of $233,124. After a HUD required deposit of $85,524 into a replacement reserve
fund, the net income of Morgan Tower is estimated to be $1,730. No rent increase
is proposed for Morgan Tower for FY 2012-2013.
This building has a mortgage balance of approximately $2;0587000 with a mortgage
maturity date of August 1, 2019.
As of April 30, 2012, the balance of the replacement reserve fund is $369,330.
Attached to the operating budget is a FY 2013 capital improvement budget for
Morgan Tower that includes:
• Replacement of the Morgan Tower roof with a projected estimate of
$150,000..
• Replacement of the Morgan Tower roof -top ventilation units with a projected
estimate of $75,000.
All capital improvements ($225,000) will be paid from the Morgan Tower
replacement reserve account.
Notable items of the Morgan Tower budget are:
• No rent increased proposed for FY 2012-1013.
• Capital Improvement Budget, totaling $225,000, includes the removal and
replacement of roof and ventilation units to be paid from replacement
reserves.
Staff recommends adopting the Morgan Tower and Kimball Tower budgets for the
FY 2012-2013.
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