FY 2020 Proposed Budget
WWW.NRHA.US
FY2020 BUDGET IN BRIEF
TABLE OF CONTENTS •
PURPOSE OF BUDGET IN BRIEF
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GOALS AND VALUES
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MESSAGE FROM THE EXECUTIVE DIRECTOR
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VISION, MISSION AND INTRODUCTION
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BOARD OF COMMISSIONERS
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OPERATING BUDGET HIGHLIGHTS
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RESOURCES AND EXPENDITURES
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HOUSING PROGRAMS
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DEVELOPMENT PROGRAMS
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OTHER PROGRAMS
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CENTRAL OFFICE COST CENTER (COCC)
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The intent of this document is to provide information about Norfolk Redevelopment and Housing Authority’s (NRHA) spending intentions, and the wider fiscal and economic picture.
PURPOSE OF BUDGET IN BRIEF Each year Norfolk Redevelopment and Housing Authority must submit a proposed budget to its 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 (FY2020) 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, 2019, and ending June 30, 2020).
ONLINE The proposed budget is available on NRHA’s website at the following URL: http://www.nrha.us/nrha/aboutnrha/budget
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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
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a proposed capital and operating spending plan of $111 million for fiscal year 2019-20 (FY2020), reflecting a $6 million or 5.51 percent decrease from fiscal year 2018-19 (FY2019). While the proposed budget provides for the continued pursuit of critical housing assistance and neighborhood revitalization services in Norfolk, the new spending plan reflects the short-term service and labor demands resulting from the planned transformation of rental assistance programs from a predominance of Low Income Public Housing (LIPH) apartments to Housing Choice and Project-Based (Section 8) Vouchers. NRHA remains largely dependent on federal funding and local support, but these traditional sources are no longer sufficient to meet community demands and expectations. To continue the level of services needed in our communities, as it has in recent years, the proposed budget relies on revenue and reserves from NRHA’s own income-producing assets. am pleased to present
The next year will be full of significant initiatives that involve both physical activities and transformative human services. On May 13, 2019, the U.S. Department of Housing and Urban Development (HUD) announced the award of a $30 million Choice Neighborhoods Initiative (CNI) implementation grant for the redevelopment of Norfolk’s Tidewater Gardens community. During the next five years, the 65-year old community will be replaced by a new mixed-use development that will provide quality housing choices, employment opportunities, commercial attractions and public amenities that will serve a diverse Norfolk population. The CNI grant that moves the redevelopment of Tidewater Gardens forward is the first phase of long-term comprehensive efforts to transform the 200-acre St. Paul’s area, which includes Young Terrace (746 units) and Calvert Square (310 units) as well as Tidewater Gardens (618 units). 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 (continued on following page...)
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partners from the public and private sectors, including for-profit, non-profit and governmental organizations. The St. Paul’s area initiative, as well as general trends in federal, state and local funding, is anticipated to create additional challenges in sustaining a balance between recurring revenue and expenditures. Throughout the next several years, many budget decisions will be affected by the need to leverage other public and private dollars to continue NRHA’s mission. 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 continue to receive 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 elsewhere. NRHA’s Board of Commissioners remains committed 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;
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Honoring the housing choices of families affected by the redevelopment of their communities shall be the highest priority;
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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;
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Economic development benefits can mitigate costs but not outweigh family-focused decision making;
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Revitalization strategies shall strive to have positive impacts on surrounding neighborhoods; and
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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. The additional key projects that will be pursued during the coming year include: •
The phased renovation of the Diggs Town community;
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Completion of 70 new apartments in the Grandy Village community;
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“Families First” initiatives for community engagement programming in public housing communities that deliver documented outcomes in crime reduction and other quality of life indicators;
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New for-sale home development throughout Norfolk and in redevelopment and conservation areas including the Homes at Bay Oaks Park in East Ocean View and the former Moton Circle site in Broad Creek;
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Development of Housing Choice Voucher (HCV) program innovations to attract greater landlord participation and provide education and outreach support to HCV participants; and
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Expansion of economic opportunities for Norfolk residents and businesses to complement the City’s inclusionary economic development goals.
The long-term effort to improve housing choices for disadvantaged families in Norfolk will result in a housing assistance system that will take on a very different form and force changes in NRHA’s organizational structure. NRHA will need “all hands on deck” to face the service demands in the coming year and I am pleased to present a budget that provides for performancebased wage increases for the fifth consecutive year. Still, the continued reliance on NRHA reserves to balance our budget has resulted in a need to identify personnel cost savings throughout the next year in order to arrive at a sustainable budget plan for fiscal year 2021 (July 1, 2020, through June 30, 2021). As a result, all levels of the organization are being invited to think of ways to defer or eliminate the filling of positions as they become vacant. As the need to fill vacant positions is reviewed, consideration will be given to share the savings achieved with staff who take on additional work as positions are eliminated or restructured. It is emphasized that efforts to reduce personnel costs will focus on vacant positions. No elimination of filled regular full-time positions is being contemplated. With support from the Board of Commissioners and approval of this F Y2020 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 Executive Director
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
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FY2020 OPERATING BUDGET HIGHLIGHTS THE CONSOLIDATED ANNUAL OPERATING AND CAPITAL BUDGET SET FORTH REVENUE AND EXPENDITURES
TOTAL FY2020 BUDGET - $111,743,182 Other Programs $6,447,284 | 6%
Housing $69,253,738 | 62%
THE DEVELOPMENT of
Development $36,042,160 | 32%
the FY2020 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 FY2020 Budget includes FY2018 actuals, as displayed on audited Financial Statements ending June 30, 2018, FY2019 Projected Actuals based on February Financial Statements and input from program staff.
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FY2020 TOTAL BUDGET WHERE DOES THE MONEY COME FROM? City Grants $15,312,863 | 14%
Tenant Revenues $27,003,398 24% HUD Grants 59,781,682 | 53%
Other Income $4,364,412 | 4% Program Reserves $5,280,827 | 5%
WHERE DOES THE MONEY GO?
Capital $1,469,380 | 1.31%
Distribution of Admin Costs $5,085,012 | 4.55%
Program Costs 32,707,167 29.27%
Other Admin $5,533,414 | 4.95%
Capital and Multi Year 25,052,634 22.42%
Operation Cost $26,681,343 23.88%
*Distribution of Administrative Costs- Departmental share of agencywide costs that are allocated to the programs and projects which benefit from the services. Approximately 82% of Distributed Administrative Costs are Labor and Fringe Benefits.
Employee Benefits $3,580,526 | 3.2%
General Expense $1,977,640 | 1.77% Labor (Authority Direct) 9,656,066 | 8.64%
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SUMMARY— Housing Division revenue and expenditures total $69,253,738 and are derived from HUD operating subsidies, grants, tenant income and other income. The operational shortfall of $1.74 million projected in FY2020 for the Federally Aided Program is recommended to be funded from Federally Aided program reserves as well as other program reserves. The Housing Choice Voucher Administration shortfall of $378,415 is recommended to be funded from privately managed reserves. In FY2020, NRHA’s expenditure projections will fluctuate as NRHA continues to convert properties to the Rental Assistance Demonstration (RAD) program, as additional grant funding is awarded, and as funding changes are considered in federally aided program in regards to Safety and Security Programs. At the same time, NRHA’s focus will be on efforts to manage and maintain 3,250 assisted rental units as well as an average of 3,563 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. The Community Engagement Office within the Housing Division encompasses three areas: Client Services, Safety and Security Programs, and Housing Program.
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HOUSING PROGRAMS GOALS • Increase the availability of decent, safe and affordable housing. • Improve the quality the overall Housing Choice Voucher Program. • Improve the quality of public housing programs using various strategies for renovations. • Improve community quality of life and economic vitality. • Promote family and individual self-sufficiency and asset development. • Develop community engagement initiatives for public housing communities to promote safety, prevention, intervention and enforcement. • Expand the Workforce Development Program to focus on pre-employment assessment, training and placement of both public housing residents and HCV participants. • Increase community partnerships to foster direct access to employment and training opportunities. • Engage more youth residents in organized programs and activities in an effort to provide alternatives to truancy and undesirable behavior.
HOUSING PROGRAMS PROPOSED REVENUE AND EXPENDITURES
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SUMMARY— Revenue for the Development Division totals $36,042,160 which is derived from a blend of various funding sources. There is a $214,195 shortfall projected in FY2020 for HomeNet, project advances and goodwill repairs. These shortfalls are recommended to be covered from reserves. Expenditures for the Division will focus on completing the 40 new single-family Homes at Bay Oaks Park located at 5th-7th Bay Streets in Ocean View as well as managing the redevelopment component of assisted-rental properties selected for the HUD Rental Assistance Demonstration program. The Development Division will continue programs that move first-time homebuyers to closing and target acquisition of blighted properties based on negotiations with willing sellers. The Capital Fund, which is a tool to improve aging public housing stock and infrastructure, has a budget of $8,252,314 to continue dwelling and community upgrades including lighting, porches, windows, site upgrades and appliance replacement. 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 $2,861,531 in earnings to fund shortfalls of other Authority programs.
DEVELOPMENT PROGRAMS GOALS • Continue renovation efforts in the Diggs Town and Grandy Village communities • Continue new infill single-family home construction throughout NRHA’s redevelopment and conservation areas and designated City of Norfolk neighborhood plan areas. • Continue working with the City of Norfolk on the development of the GEM Lot Disposition Pilot Program. • Continue to provide homeownership assistance through first-time homebuyer subsidies as well as homebuyer credit repair, education and counseling. • Provide a broader range of quality housing choices via the revitalization of Norfolk’s public housing communities through the HUD Rental Assistance Demonstration program which will involve collaboration with new and existing partners. • Complete development plans for Moton Circle single -family homes. • Examine repositioning options for Oakmont North and Park Terrace. • Continue rehabilitation work planned for 555 East Main Street as we continue to lease available office space.
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DEVELOPMENT PROGRAMS PROPOSED REVENUES AND EXPENDITURES
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OTHER PROGRAMS SUMMARY - FY2020 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 NRHA Rent Project — Receives and disburses office rent payments from NRHA projects for space leased at 555 E. Main Street. Supports NRHA specific maintenance and janitorial services. 555 E Main Street Operations — Funds the operating costs and debt service of 555 E. Main Street. Broad Creek Village — Includes the former sites of the Moton and Roberts Village public housing communities that have been cleared and are awaiting development. COCC Administration — Reserves from the Central Office account are used to offset shortfalls from charging management fees as a target reduction measure in select programs. 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 that are determined to be an administrative burden to be equitably distributed to the programs including information technology, parking, the employee assistance program and telephone lines.
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. Disposition Support — NRHA provides maintenance of cleared land and temporary operations support to properties purchased and owned by NRHA. Executive Director Contingency Fund — Funds activities that support internal and external initiatives that are otherwise ineligible under federal programs. Hampton Roads Ventures — NRHA provides management and services to Hampton Roads Ventures, LLC, including oversight management for loan servicing, asset management, compliance and reporting. Project Development Financing — Dedicated to developing financial strategies and coordinating efforts to provide mixed-financing initiatives in the renovation, redevelopment or construction of housing.
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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. FY2020 funding totals $15 million. The chart on the next page depicts the four classifications.
CENTRAL OFFICE 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: • 555 E. Main Street • Housing Division Oversight • Specialized Maintenance
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Budget in Brief | 18
PRODUCED BY THE BUDGE T AND COMPLIANCE DEPARTMENT
AND THE COMMUNICATIONS AND GOVERNMENT REL ATIONS DEPARTMENT