FY2019 BUDGET IN BRIEF
TABLE OF CONTENTS •
PURPOSE OF BUDGET IN BRIEF
2
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GOALS AND VALUES
3
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MESSAGE FROM CHIEF EXECUTIVE DIRECTOR
4
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VISION, MISSION, INTRODUCTION
7
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BOARD OF COMMISSIONERS
8
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OPERATING BUDGET HIGHLIGHTS
9
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RESOURCES AND EXPENDITURES
10
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HOUSING PROGRAMS
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DEVELOPMENT PROGRAMS
13
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OTHER PROGRAMS
15
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CENTRAL OFFICE COST CENTER (COCC)
17
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The intent of this document is to provide information about Norfolk Redevelopment and Housing Authority’s (NRHA’s) spending intentions, and the wider fiscal and economic picture.
PURPOSE OF BUDGET IN BRIEF Each year Norfolk Redevelopment and Housing Authority (NRHA) must submit a proposed budget to the Board of Commissioners (BOC). The Budget In Brief is a tool which provides the reader a synopsis of the detailed spending plan of the Authority. Proposed Fiscal Year (FY2019) Consolidated Annual Operating and Capital Budget reaffirms NRHA’s: • Fiscal responsibility with limited resources while providing quality housing services, and • Commitment to ensuring affordable housing and the promotion of housing A fiscal year differs from calendar year by encompassing the 12-month period during which the annual operating budget applies (in this case, beginning July 1, 2018, and ending June 30, 2019).
ONLINE The proposed budget is available on NRHA’s website at the following URL: http://www.nrha.us/nrha/aboutnrha/budget
Budget in Brief | 2
AUTHORITY GOALS Quality Housing Opportunities for All
NRHA is committed to providing a continuum of housing options for households of all incomes seeking housing.
Sustainable Mixed-Income Communities
There is a need for a new housing model to create a healthy physical and social environment that would appeal to a wider range of incomes.
Strategic Business Approach
To meet changing requirements and to make the best use of our resources, we are developing a new approach for the delivery of products and services.
Community Support
Recognizing the interrelated nature of our mission, NRHA resolves to work to become a trusted partner that works collaboratively with key stakeholders and partners.
AUTHORITY VALUES “A C E I T �
CUSTOMER SERVICE
ACCOUNTABILITY
INNOVATION
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EXCELLENCE
TEAMWORK
MESSAGE FROM THE
EXECUTIVE DIRECTOR I
am pleased to present a proposed capital and operating spending plan of $112 million for fiscal year 2018-19 (FY2019), reflecting a $20 million or 15% decrease from fiscal year 2017-18 (FY2018). The proposed budget provides for the continued pursuit of critical housing assistance and neighborhood revitalization services in Norfolk. While NRHA remains largely dependent on federal funding and local support, these traditional sources are not sufficient. To continue the level of services expected in our communities, as it has in recent years, the proposed budget relies on revenue and reserves from NRHA’s own income-producing assets. FY2019 will likely be one of the most invigorating and challenging in NRHA’s 78 years. On January 23, 2018, the City Council voted to embark on the 200-acre St. Paul’s area transformation initiative, destined to be this century’s largest redevelopment project in Norfolk. The St. Paul’s area includes three of NRHA’s oldest public housing communities – Tidewater Gardens, Young Terrace and Calvert Square. While directly affecting the 1,700 households, 2,200 children and 4,200 individuals who live in these communities, the project will also have impacts throughout the City and Hampton Roads. NRHA will collaborate with the City of Norfolk in playing a key leadership role in the St. Paul’s effort. Still, an initiative of this scope and significance will require the contribution of skills and expertise from varied local, state and national partners from the public and private sectors, including for-profit, non-profit and governmental organizations. On April 5, 2018, we were happy to co-host HUD Secretary Dr. Ben Carson for a tour of the St. Paul’s area, our successful Broad Creek revitalization effort and the Grandy Village Learning Center. Dr. Carson was impressed with the City’s “People First” capacity building commitment to St. Paul’s residents to provide opportunities for life enhancement outcomes through improved housing choices, education, training and employment assistance, as well as health and wellness services. The visit by Dr. Carson, along with several collaborative efforts taking place with HUD officials in Richmond, Philadelphia and Washington D.C., continue to demonstrate NRHA’s successful partnership with HUD. The importance of our relationship with HUD was pointed out in a July 23, 2017 Virginian Pilot editorial: “Public housing has been far more successful than perception might suggest, especially in recent years thanks to tweaks in federal programs and deft administration on the local level. And while Norfolk has experienced the problems seen elsewhere, the city’s Redevelopment and Housing Authority also receives high
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marks from HUD. That inspires confidence in the St. Paul’s redevelopment plan, since it reflects a cooperative effort between the authority and city departments.” While the transformation of the St. Paul’s area is anticipated to provide greater housing opportunities to all area residents, there is legitimate concern and outright fear that some disadvantaged families and individuals may be harmed or left without suitable housing. We have also received input from neighborhoods throughout Norfolk who want to ensure that the effort to deconcentrate poverty in one area of the City will not result in new concentrated poverty somewhere else. The City has benefited greatly from its Mayor’s and City Council members’ willingness to engage residents, businesses and religious institutions in the St. Paul’s area and to commit to a transformation plan that meets the following guiding principles: • Community redevelopment decisions shall be family-focused and family priorities will be paramount in service delivery and relocation decisions; • Honoring the housing choices of families affected by the redevelopment of their communities shall be the highest priority; • Collaborative partnerships shall be pursued to implement a human development plan that will include high quality supportive services in the areas of employment, education, public safety, housing services and health; • Economic development benefits can mitigate costs but not outweigh familyfocused decision making; • Revitalization strategies shall strive to have positive impacts on surrounding neighborhoods; and • Decision making will reflect continuous input, transparency and feedback from residents and all other stakeholders. The effort to transform the St. Paul’s area as well as achieve systematic improvement in housing choices throughout Norfolk call for the use of all of NRHA’s tools for neighborhood revitalization. We take on the work toward fulfilling NRHA’s mission while adjusting to the void left by the retirement of three senior executive leaders: Chief Development Officer Jim Hollomon, Chief Housing Officer Phyllis Armistead and Chief Financial Officer Clara Graves. These dedicated public servants, having completed careers with NRHA ranging from 27 years to over 40 years, will be missed but also appreciated for their generous management style that has built the considerable capacity of department heads, managers, supervisors and line workers to step up and maintain the Authority’s high performance culture. I am confident that we will maintain the best possible new generation of leadership and attract new talented staff to undertake the St. Paul’s area transformation and to pursue other key projects including: • Completion of $23 million in renovations to the Merrimack Landing apartments; • Phased renovation of the Diggs Town community totaling in excess of $55 million, utilizing Low Income Housing Tax Credit equity, private debt and the HUD Rental Assistance Demonstration (RAD) program, set to be underway this summer; • Completion of 70 new apartments in the Grandy Village community and public improvements totaling $20 million; 5 | www.nrha.us
• “Families First” initiatives for community engagement programming in public housing communities that deliver documented outcomes in crime reduction and other quality of life indicators; • Near term upgrades and longer term planning for NRHA’s office building at 555 East Main Street; • New for-sale home development throughout Norfolk and in redevelopment and conservation areas, including the 5th to 7th Bay Streets area in East Ocean View. • Pursuit of a renewed partnership with the City of Norfolk to provide home renovation and repair assistance to low and moderate income homeowners; • Development of Housing Choice Voucher (HCV) program innovations to attract greater landlord participation and provide education and outreach support to HCV participants and in response to quality standards inquiries received from neighborhood leadership; and • Expansion of economic opportunities for Norfolk residents and businesses owned by or employing residents to complement the City’s inclusionary economic development goals. Despite the uncertainty of future Federal funding, NRHA and the City are working together on a clear path to improve housing choices for disadvantaged families in Norfolk. This effort will take a decade or more to complete. When we reach the conclusion, housing assistance in Norfolk will take on a very different form and NRHA will have a much different and smaller structure. For now, the work in our communities requires the continued diligent efforts of all of our employees. I am pleased to present a budget that provides for performancebased wage increases for the fourth consecutive year. We recognize the importance of appropriately compensating our high performing staff. At the same time, we acknowledge the need to implement a careful vacancy management plan to move toward staff reductions over time. With the Board of Commissioner’ support and approval of this FY2019 budget plan, we look forward to working with our valued public and private partners to serve the City of Norfolk and its citizens. Sincerely,
John Kownack
Budget in Brief | 6
VISION STATEMENT QUALITY HOUSING CHOICES IN NEIGHBORHOODS WHERE YOU WANT TO LIVE
MISSION STATEMENT TO PROVIDE QUALITY HOUSING OPPORTUNITIES THAT FOSTER SUSTAINABLE, MIXED-INCOME COMMUNITIES
INTRODUCTION Norfolk Redevelopment and Housing Authority (The Authority), was created by the City of Norfolk (The City) on July 30, 1940 under the provisions of the United States Housing Act of 1937. As a chartered political subdivision of the Commonwealth of Virginia, The Authority provides subsidized public housing, rental assistance, and administers redevelopment and conservation projects within the City in accordance with state and federal legislation.
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BOARD OF COMMISSIONERS
Don Musacchio Chairman
Alphonso Albert Vice Chairman
Joe Dillard, Jr.
Rose Arrington
Richard Gresham
Ken Benassi
Suzanne Puryear
NRHA is headed by a board of seven commissioners, appointed by Norfolk City Council, who are responsible for determining policy and direction. NRHA Commissioners are residents of Norfolk and serve staggered four-year terms. The board elects a Chairman and Vice Chairman, as well as selects an Executive Director who is responsible for NRHA’s activities and operations.
To contact a Commissioner, call 757.314.1679
Budget in Brief | 8
FY2019 OPERATING BUDGET HIGHLIGHTS THE CONSOLIDATED ANNUAL OPERATING AND CAPITAL BUDGET SET FORTH REVENUE AND EXPENDITURES:
TOTAL FY2018 BUDGET - $112,062,640 Other Programs $9,058,379 | 8%
Development $40,309,448 | 36%
Housing 62,694,813 | 56%
THE DEVELOPMENT of
the FY2019 Budget was an agency-wide effort and
included input from the Executive Team, Directors, Managers, and Program Staff. During the process, historical funding and expenditure patterns were analyzed along with seasonality and grant awards. The FY2019 Budget includes FY2017 actuals, as displayed on audited Financial Statements ending June 30, 2017, FY2018 Projected Actuals based on February Financial Statements and input from program staff. The Proposed Budget is comprised of all FY2018 amendments approved prior to May 10, 2018 and incorporates all known staffing and program changes as of May 4, 2018. All subsequent changes will be approved as Budget Amendments in FY2019.
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FY2019 TOTAL BUDGET WHERE DOES THE MONEY COME FROM? City Grants $10,953,661 | 10%
Tenant Revenues $23,279,189 21%
HUD Grants 58,590,901 | 52%
Other Income $13,406,562 | 12% Program Reserves $5,832,327 | 5%
WHERE DOES THE MONEY GO? Capital $216,959 | 0% General Expense $1,648,828 | 2% Employee Benefits $5,953,650 | 5%
Labor $15,911,302 14%
Capital & Multi Year $27,965,532 25%
Program Costs $30,604,515 27%
Operation Costs $24,656,411 22%
Other Admin $5,105,443 | 5%
Budget in Brief | 10
SUMMARY— Housing Division revenues and expenditures total $62,694,812 and are derived from HUD operating subsidies, grants, tenant income and other income. The operational shortfall projected in FY2019 for the Federally Aided Program ($1.88 million) is recommended to be funded from Federally Aided program reserves as well as other program reserves. The Housing Choice Voucher Administration shortfall ($659,290) is recommended to be funded from privately managed earnings. The Housing Choice Voucher Program shortfall ($323,087) is recommended to be funded from the program’s own reserves. In FY2019 our expenditure projections will fluctuate as we continue to convert properties to the Rental Assistance Demonstration (RAD) program. At the same time, our focus will be on efforts to manage and maintain 3,250 assisted rental units as well as 3,252 Housing Choice Vouchers for participants in two major programs. Capital Funds, under the umbrella of the Design and Construction Management Department, continues to provide funding for necessary capital improvements to the aging stock and infrastructure of public housing properties. NRHA must constantly replace roofing, heating systems, windows, doors, flooring and other items in the federally assisted public housing communities.
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HOUSING PROGRAMS GOALS: •
Increase assisted housing choices by providing project based vouchers for developers.
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Improve the quality of low income public housing programs using various strategies for renovation.
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Improve the quality of the HCV program by applying for available NOFA’s , getting additional vouchers and broadening landlord participation.
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Improve community quality of life and economic vitality.
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Promote family and individual selfsufficiency and asset development.
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Develop community engagement initiatives for public housing communities to promote safety, prevention, intervention and enforcement.
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Expand the Workforce Development Program to focus on pre-employment assessment, training and placement of both public housing residents and HCV participants.
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Increase community partnerships to foster direct access to employment and training opportunities.
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Engage more youth residents in organized programs and activities in an effort to provide an alternative to truancy and undesirable behavior..
HOUSING PROGRAMS PROPOSED REVENUE AND EXPENDITURES
Budget in Brief | 12
SUMMARY— Revenue for the Development Division totals $40,309,448 and is derived from a blend of various funding sources. There is a $325,675 operational shortfall projected in FY2019. Operational shortfalls are projected in Capital Fund Administration, Development Administration and HomeNet. These shortfalls are recommended to be covered from earnings ($50,773), Capital Fund Administration Reserves ($53,470), Housing Opportunity Reserves ($43,545) and Discretionary Reserves ($177,887). Expenditures for the Division will focus on the 5th-7th Bay Street Development in Ocean View (40 single family homes), completing the renovation of Merrimack Landing apartments and managing the redevelopment component of assistedrental properties selected for the HUD Rental Assistance Demonstration (RAD) program. Development will continue programs that move first-time homebuyers to closing and target acquisition of blighted properties based on negotiations with willing sellers. Capital Fund, which is a tool to improve aging public housing stock and infrastructure, has a budget of $11,249,198 to continue dwelling and community upgrades including lighting, porches, windows, site upgrades and appliance replacement. The privately-managed communities are managed by third party entities with NRHA oversight. Property management fees and operating expenses are covered through tenant rents. These properties produce net annual operating revenue that can be used for other NRHA programs. We anticipate using $1,843,127 in earnings to fund shortfalls of other Authority programs.
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DEVELOPMENT PROGRAMS GOALS: •
Prepare and submit financing plans to support improvements for the Diggs Town, Grandy Village and Young Terrace communities.
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Continue redevelopment initiatives including new infill single‐family homes throughout NRHA’s redevelopment and conservation areas as well as designated City of Norfolk neighborhood plan areas.
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Enter into disposition agreements to build 40 new homes on 5th to 7th Bay Streets in Ocean View.
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Continue to provide homeownership assistance through first‐time homebuyer subsidy and homebuyer credit repair, education and counseling.
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Provide a broader range of quality housing choices via the revitalization of Norfolk’s public housing communities through the HUD Rental Assistance Demonstration (RAD) program. This will involve collaboration with new and existing partners.
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Complete new assisted rental apartments in Broad Creek, a new apartment development and master planning in Grandy Village as well as the repositioning of Merrimack Landing, Oakmont North and Park Terrace apartments.
DEVELOPMENT PROGRAMS PROPOSED REVENUES AND EXPENDITURES
Budget in Brief | 14
OTHER PROGRAMS SUMMARY - FY2019 expenditure needs for “Other Programs” total $9,058,378 and are comprised of twelve unique programs which are not contained in either of the Authority’s two programmatic divisions. The revenue sources supporting these activities are derived from a program’s own reserves, earnings from privately managed properties or fee for service agreements. Expenditures and funding gaps included in “Other Programs” are displayed below:
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PROGRAM DESCRIPTION - OTHER PROGRAMS Project Development Financing — Dedicated to developing financial strategies and coordinating efforts to provide mixedfinancing initiatives in the renovation, redevelopment or construction of housing. COCC Specialized Maintenance — A collective group of specialized trades that perform maintenance services primarily to the public housing communities. Core Business Service — A project to expense certain services including information technology, parking, employee assistance program and telephone lines, determined to be an administrative burden to be equitably distributed to the programs. COCC Administration — Reserves from the Central Office account used to offset shortfalls from charging management fees as a target reduction measure in select programs. Communications and Government Relations — The department oversees development, planning, implementation and integration of all communications and marketing strategies in support of NRHA’s initiatives and coordinates liaison activities for legislative matters.
Executive Director Contingency Fund — Funds activities that support internal and external initiatives that are otherwise ineligible under federal programs. Broad Creek Village — Includes the former sites of the Moton and Roberts Village public housing communities that have been cleared and are awaiting development 555 E Main Street Repairs & Capital Improvements — Funds the repair and capital improvement needs of 555 E Main Street. 555 E Main Street Operations — Funds the operating costs and debt service of 555 E Main Street. Disposition Support — NRHA provides maintenance of cleared land and temporary operations support to properties purchased and owned by NRHA. Hampton Roads Ventures — NRHA provides management and services to Hampton Roads Ventures, LLC, including oversight management for loan servicing, asset management, compliance and reporting.
Executive Transformation — Funds activities that support agency goals including project and program implementation, best practices, and business change.
Budget in Brief | 16
CENTRAL OFFICE SUMMARY - Funding of the Central Office Cost Center (COCC) is derived from NRHA programs’ management fees, bookkeeping fees, asset management fees, and any program reserves and appropriations. FY2019 funding totals $15 million. The chart below depicts the four classifications.
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GOALS: Common to all COCC functions this year will be the task of reassessing selected functions to improve efficiency and effectiveness.
EXECUTIVE & ADMINISTRATIVE OFFICE FUNCTIONAL AREA: ADMINISTRATIVE SERVICES BUDGET AND COMPLIANCE COMMUNICATIONS AND GOVERNMENT RELATIONS EXECUTIVE OFFICE FINANCE HUMAN RESOURCES INFORMATION TECHNOLOGY
OTHER FUNCTIONAL AREAS: Capital Fund an Energy Management 555 E. Main Street Housing Division Oversight Specialized Maintenance
5 FUNCTIONAL AREAS OF COCC: 555 E. Main Street $693,405 | 5% Executive and Administrative Offices $5,535,587 | 36%
Specialized Maintenance $6,746,020 | 44%
Housing Division Oversight $1,715,175 | 11%
Capital Fund & Energy Management $597,243 | 4%
Budget in Brief | 18
PRODUCED BY THE BUDGE T AND COMPLIANCE DEPARTMENT
AND THE COMMUNICATIONS AND GOVERNMENT REL ATIONS DEPARTMENT