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SUBJECT:

Budget Modification Number 26 to Appropriate
$38,750 in Funds from BMR Code Violation Revenues for Expenditures Related to BMR Purchase Program Audit Costs.

REPORT IN BRIEF

Approval is requested for Budget Modification No. 26 to recognize revenues and appropriate them for expenditures related to the audit of the Below Market Rate (BMR) Purchase Program. The Status Report presented to City Council on March 5, 2002 did not include formal appropriation of these funds in the City’s budget. Therefore, as the services of an independent investigative firm are underway and other related ongoing audit costs are incurring, it is now necessary to approve a budget modification appropriating BMR code violation revenues as a special project for costs associated with the BMR audit.

BACKGROUND

On March 5, 2002, a Status Report on the ongoing Audit of the BMR Purchase Program was presented to the City Council (RTC 02-076). This report provided Council with information on a recent audit certifying the occupancy of 133 out of 181 housing units in the BMR Purchase program. The restrictions under the BMR Program require that each owner continuously occupy the unit as their principal residence. Through this audit, three occurrences of breaches in occupancy restrictions were discovered. The actions taken that resolved these cases included the forced sale of each unit and the payment of penalties in the amount of $38,750 to the City for all monies received as rent by the owner. Based on the results of the audit at this time, there are six (6) properties where forced sales are in process. Additional supportive documentation and additional investigation will be required for the remaining units.

EXISTING POLICY

GOAL C2: Ensure ownership and rental housing options in terms of style, size, and density that are appropriate and contribute positively to the surrounding area.

GOAL C: Promote and maintain a diversity in tenure, type, size, location and cost-of-housing to permit a range of individual choice for all current residents and those expected to become city residents as a result of normal growth processes and employment opportunities.

DISCUSSION

In order to complete any forthcoming financial transactions related to the BMR audit, staff is recommending Council approve Budget Modification No. 26 to appropriate necessary funds for expenditures from the revenues generated through BMR violations.

FISCAL IMPACT

Approval of Budget Modification Number 26 would recognize $38,750 in BMR code violation revenue and appropriate it to a special project for expenditures related to ongoing audit costs. There is no fiscal impact to the General Fund.

Current

(Decrease)

Revised

Housing Fund

Expenditures:

New Project-BMR audit costs

$ 0

$ 38,750

$ 38,750

Revenue:

Misc. Revenue (BMR Code Violation)

$ 0

$ 38,750

$ 38,750

PUBLIC CONTACT

Public contact was made through posting of the Council agenda on the City’s official notice bulletin board, posting of the agenda and report on the City’s web page, and the availability of the report in the Library and the City Clerk’s Office.

ALTERNATIVES

RECOMMENDATION

Staff recommends Alternative 1- Approve a budget modification of $38,750 appropriating funds out of the Housing Fund for audit costs for the Housing Division’s BMR Purchase Program.

Prepared by:
Katrina L. Ardina
Housing Loans Specialist

Reviewed by:
Annabel Yurutucu
Housing Officer

Robert Paternoster
Director, Community Development

Mary J. Bradley
Director of Finance

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