City gets out of affordable housing biz

Rocklin transfers housing function to state
By: Jon Brines, Placer Herald Correspondent
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The city of Rocklin is getting out of the business of maintaining affordable housing. “There is really no upside to staying in this business and having this function,” Rocklin City Manager Rick Horst told city council members at their Jan. 24 meeting. Council members voted unanimously to approve a resolution transferring the affordable housing function of the former Rocklin Redevelopment Agency to the California Department of Housing and Community Development. Even though there were no new housing projects in the works, the city did maintaine a First Time Home Buyers Program and assisted housing complexes for low- and moderateincome residents with upgrades associated with the Americans with Disabilities Act and other funding needs. “The state wanted it. They can have it,” council member Peter Hill said. “It bothers me a lot — that the ability of our community to provide housing opportunities to a broad segment of the population is being damaged by this.” In many cases, people who took out loans through the city’s housing programs will now have their loans serviced by the state, according to city officials. Horst said the city was backed into a corner when the legislature abolished redevelopment Aagencies and redirected property taxes associated with the city’s housing programs to help cover the state’s budget gap. “It is our opinion as staff that it is not financially prudent for us to do this. We put the city’s general fund at risk,” Horst said. The new law has created a lot of uncertainty within city governments. Based on the assumption that receivables may be retained by the city to off set administrative costs, anticipated revenues through 2027 will be insufficient and will require a general fund subsidy, city documents show. The city is facing more than a $500,000 budget shortfall of its own this fiscal year. Uncertainty makes the financial numbers look even worse for the long term. Beyond 2027, if projected receipts of $174,000 are realized, administrative costs may or may not be covered. Even with the affordable housing transfer to the state, the city remains on the hook for millions of dollars in debt associated with past affordable housing upgrades and work. Rocklin’s loan on Villa Serena Apartments on Park Dr is $1.1 million; Whitney Ranch Apartments on Wildcat Boulevard is $1.73 million, and subsidized $500,000 of low income housing to Whitney Rocklin LP for Whitney Ranch Apartments. Those loans must be paid back over the next three decades. “While the city would get any receivables, you will see that the numbers are pretty minuscule,” Horst said. “Should there be any defaults along the way, there may not be any (receivables).” To make matters worse, the city is now in default on a line of credit with Bank of America. That line is associated with nearly $3.4 million in affordable housing upgrades. The redevelopment agency legislation prohibits the city from refinancing the debt into municipal bonds. Bank of America had issued extensions for the last six months, but the last deadline on Jan. 15 was not extended, according to Horst. “We are in a wait-and-see holding pattern,” Horst said. “B of A officials are considering a term-out approach meaning that they change the terms of our current agreement to pay out the balance over five years.” It’s unclear where that money will come from, but city council members will be expected to make that decision. The debt included $650,000 for College Manor Apartments on Racetrack Road, $500,000 for Shannon Bay Apartments off Springview Drive and $575,000 for Sunset Apartments on Sunset Boulevard. Norton Shirley, a spokesperson for Bank of America, issued a short statement on the city’s loan status. “We continue to work with the c-City to resolve the matter. Because of customer confidentiality, (we) cannot comment further,” Shirley said. Hill said the new legislation was a bad decision. “I wish we could get our state legislators in front of us so we could throw spit wads at them,” Hill said. Mayor Brett Storey, who shared Hill’s frustration, is wary of further tampering by the legislature. “I tend to believe within two years that they’ll be right back with a new housing program and they will force us to try to take this back,” Storey said. Horst said the state should be careful what they wish for. “If they come to us wanting us to bail them out, we’re going to say write us a check first,” Horst said. The legislation to allow local governments to keep using redevelopment funds earmarked for affordable housing projects cleared the state Senate on Tuesday by a majority vote. Even if the bill passes the Assembly and is signed by the Governor, however, it would not take effect until 2013. ________ Rocklin’s Affordable Housing Debt Villa Serena Apts. on Park Drive:$1.1 million Whitney Ranch Apts. on Wildcat Boulevard: $1.73 million Whitney Rocklin LP (for Whitney Ranch Apts.): $500,000 College Manor Apts. on Racetrack Road: $650,000 Shannon Bay off Springview Drive: $500,000 Sunset Apts. on Sunset Boulevard: $575,000 Source: City of Rocklin