FISCAL IRRESPONSIBILITY WITH TAXPAYERS MONEY!!!
“At least 120 municipalities spent a combined $700 million in housing funds from 2000 to 2008 without constructing a single new unit, [an LA] Times analysis of state data shows. Nor did most of them add to the housing stock by rehabilitating existing units.”
Santa Ana, CA (and some of the mismanagement is also featured)
1) CLICK HERE FOR COMPLETE LA TIMES article.
2) CLICK HERE FOR DESCRIPTION OF SANTA ANA’s NSPs (Neighborhood Stabilization Programs).
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We need to hold public officials both Federal, County, City and other governmental agencies accountable for the proper use of Taxpayer funds, or used as intended.
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Disclosure Note: I serve on the Board of OC-Community Housing Corporation, and as the Chairman of the Audit Committee – Allen Baldwin is the Executive Director. (The Board members are all volunteers and serve with ZERO compensation and have no economic interests – see the 2009 IRS Form 990 for OC-CHC page 7).
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I completely agree that our public agencies should be held as accountable to taxpayers as private corporations are to their shareholders and that the situation in Bell has made everyone question public agency accountability. Unfortunately this blog, and the LA Times story that it is based on, make no suggestions as to solutions. Its easy to complain about problems, yet another thing to fix them. That is particularly difficult here where the problem is the law itself. Cities are ordered to spend a set percentage of their property tax “income” on low and moderate housing when private property values and use are determined by market forces. You cannot waive a government wand over property and say “this will be affordable.” If the market wants it to be affordable it will be, if not it won’t. There are successful subsidy programs where all houses sell for market price and then the local city reimburses the developer back a significant percentage of the purchase price so that the “buyer” is left with an affordable mortgage that reflects only a small part of the purchase price. Needless to say, these programs are rife with abuse as many “poor or moderate” income individuals buy these properties with largely government funds only to “flip” the houses back at market price with significant profit. While this practice is theoretically prohibited by law, audits are awkward and difficult and violations generally are undiscovered and unpunished.
The real solution is to take government out of the marketplace. Left unfettered, we will waste less taxes, have less costly oversight and not have the monumental waste of taxpayer money documented in the above post. These efficiencies will produce lower taxes and consequently more affordable housing prices for everyone INCLUDING those of low or moderate income.
@ Geoff W:
1) At OC-CHC affordable housing not-for-profit that I serve as a volunteer Board member on, it has qualified for NPS (Neighborhood Stabilization Program) Funds that are under $700,000. How will they be tapped.
a) OC-CHC will RENOVATE the distressed property, and will be REIMBURSED for the renovation at the point of sale of the property….but OC-CHC must come up with the funds first…OC-CHC has set a small reserve aside from its own operations to do this.
b) NSP funds will be used to provide about $50k for DOWNPAYMENT so the new home-owner can get into an affordable home.
c) Being a not-for-profit, OC-CHC will earn a VERY SMALL FEE for facilitating the transaction…basically OC-CHC breaks-even for its time/expertise incurred.
2) OC-CHC also built 3 homes (I believe 4-BR and 5-BR) in the Logan neighborhood in Santa Ana last year. Taller San Jose (an organization that teaches home building) built the homes. OC-CHC borrowed funds to build the home and qualified the buyers. Homes were sold at a SIGNIFICANT DISCOUNT to allow the homeowner to move in.
for example…if the home’s market cost is $600K…the homeowner has TWO Loans:
a) homeowner must pay the FIRST LOAN for about 40 years…usually around $175K.
b) The SECOND LOAN is for the difference about $425K….since the intent is to transition families into affordable dignified housing, if the homeowner wants to profit and sell the home early, the homeowner is on the hook for the SECOND LOAN.
SOME SOLUTIONS:
3) So one solution is to only release funds as homes are rehabilitated/renovated.
4) Also, release funds as homes are being built (funds can be released for expected progress i.e. release funds quarterly). If no homes are being built, then no funds are released.
5) If funds are unused/unspent, then there has to be a justification made…but if no funds were used, then also the agency that was created for this purpose SHOULD BE DISBANDED.
Why have people on the government payroll that are NOT accomplishing anything.
6) Government officials need to be held to Precise metrics and outcomes. If not met, then again put them in a very aggressive probationary period, and if there is non-performance, then terminate the agency and the people.
7) At the LOCAL level, the elected officials (for example, City Mayors and City Councils) should also be held accountable for allowing the abuse of taxpayers funds or mismanagement, as in the example above.
8.) At the STATE/FEDERAL level, elected officials also need to be held accountable.
Francisco “Paco Barragan
My opinions only and not those of any group
Orange County, CA
The city councils and county supervisors being the board members of the housing funds and redeveloped agencies are a major conflict of interest.
Currently these funds are used to buy favors from special interest and developers. They are used as the local governments slush funds.
They should be stand alone agencies, with checks and balances, and arms length separation from the funding local governments.
Are you reading comrade Vern Nelson?
This are your Progressive Liberals who care for the homeless and needy.
It always happens like this unless the money come from the pockets of the filthy rich people.
Only the rich people know how to handle the money…. that is why they are rich!
So remember that comrade Vern when you ask me for more tax money to support your hungry children.
ACCOUNTABILITY:
QUESTION:
In a personal email, I was asked “who should be held accountable in the City of Santa Ana?”
ANSWER: The Mayor and the City Council govern and control the various funds that deal with Housing and Community ReDevelopment Agency (CRDA) Funds.
If there is sound management or mismanagement, they are accountable, or should be accountable – OR IS THIS ANOTHER ELECTION YEAR OF BUSINESS AS USUAL?
QUESTION:
How do you determine there is proper Fiscal Management or Mismanagement and whether the Housing/Community ReDevelopment Agency Funds are being used as intended?
ANSWER:
You look at the Financial Statements/Fiscal Funds. I provide a quick breakdown below, on a separate posting.
But first see a description of the Fiscal Accounts and what they accomplish, and where they can be found.
Per page 59 of Foot Notes to the Financials:
http://www.santa-ana.org/finance/cafr/documents/2009_cafr.pdf#page=18
1) Community Redevelopment Agency of the City of Santa Ana
The Redevelopment Agency (RDA) was originally established in 1973 to eliminate blighted areas
through the redevelopment of six project areas under provisions of the California Community
Development Law. Effective September 1, 2004, the RDA amended its project area plans to
create one merged project area within the City. The City’s Council members serve as the
Agency’s Directors, designate management, and have full accountability for the RDA’s fiscal
matters. The RDA’s financial data and transactions are included within the Debt Service Funds
and Capital Projects Funds. The RDA prepares a separate Component Unit Financial Report
(CUFR) and a copy can be obtained from the City’s Finance and Management Services Agency.
Housing Authority of the City of Santa Ana
2) The Housing Authority (the “Authority”) was established in 1972 pursuant to Housing Authority
Laws of California to provide rental assistance programs to low-income families and senior
citizens, and to operate a Housing Rehabilitation Loan Program. The Authority is governed by a
commission of seven members comprised of the City Council, which designates management and
has full accountability for the Authority’s fiscal affairs. The Authority’s financial data and
transactions are included within the Special Revenue Funds. There is no separate Component
Unit Financial Report (CUFR) prepared for the Housing Authority.
3) The Santa Ana Financing Authority (Financing Authority or SAFA) was organized in August
1993, for the primary purpose of assisting in the financing and refinancing of certain
redevelopment activities of the RDA and certain public programs and projects of the City. The
Financing Authority is administered by a board whose members shall be, at all times, the Mayor
of the City and the members of the City Council. The Financing Authority’s board has full
accountability for the Financing Authority’s fiscal affairs. The Financing Authority’s financial
data and transactions are included with the Debt Service Funds and the Water Enterprise Fund.
There is no separate Component Unit Financial Report (CUFR) prepared for the Santa Ana
Per page 61 of F/Notes.
NOTE: There are several accounts i.e.:
GF – General Fund (generally unrestricted and used for general operations)
(SRF)- Special Revenue Funds
(CPF) – Capital Projects Funds
(DSF) – Debt Service Funds
http://www.santa-ana.org/finance/cafr/documents/2009_cafr.pdf#page=18
Housing Authority Fund (SRF). This fund accounts for the receipt and disbursement
of funds received from the U.S. Department of Housing and Urban Development to provide rental
assistance under Section 8 of the Federal Housing Act as amended. The City has elected to treat
this fund as a major governmental fund.
Community Redevelopment Agency (CPF). This fund accounts for the receipts and
expenditures relating to the City’s merged redevelopment project area in accordance with the
California Health and Safety Code.
Community Redevelopment Agency (DSF). This fund accounts for the receipt of tax
increment revenues which by State of California Law regulating redevelopment Agencies, must
be used for the payment of debt.
Santa Ana (SA) Financing Authority (DSF). This fund accounts for the receipt of
revenues and payment of debt service related to the Police Administration and Holding Facility
Lease Revenue and the 1998 Refunding Revenue Bonds.
At the risk-of-over-simplification, simple guidance steps as to determine the Fiscal Status of the Housing and Community Redevelopment Agency Funds for City of Santa, and whether they are being used or not.
First, there are THREE WAYS OF LOOKING AT THE FISCAL STATUS OF SANTA ANA’s accounts (we already know that the Mayor and City Council are the ones that govern these entities.)
1) Since the Audited Financials for July 1, 2009-June 30th, 2010 (year that just ended) are NOT out Until December 2010, Look at PAST Audited Financial for 2008-2009,
As of end of June 30th, 2009:
Community Redevelopment Agency Funds (in CPF – Cap Proj Funds) had a NET ASSETS/SURPLUS of $103 million (Total Assets of $139 million less about $35 million of liabilities). (page 41)
Housing Agency Fund (in SRF – Special Revenue Funds) had a NET ASSETS/SURPLUS of $5.1 million (Total Assets of $5.7 million less about $600K of liabilities). (page 40)
[SEE Actual CAFR (Audited Comprehensive Annual Financial Report):
http://www.santa-ana.org/finance/cafr/documents/2009_cafr.pdf#page=18
Past Audited Financials for July 1, 2008 – June 30th 2009:
Table of Contents
http://www.santa-ana.org/finance/cafr/cafr_08-09.asp
2) Look at the BUDGET for 2010-2011
http://www.ci.santa-ana.ca.us/finance/budget/1011/index.asp
3) Look at the Revenues and Expenditures for these programs.
OCR article – “Santa Ana and state at odds over redevelopment” dated May 21, 2012 – UPDATED.
http://www.ocregister.com/news/-354957–.html
OCR article – UPDATE:
“Merchants, Santa Ana in court over redevelopment funds” dated June 8, 2012 – see my comments there.
http://www.ocregister.com/news/city-358116-south-main.html
Paco Barragán
http://www.linkedin.com/in/franciscobarragancpacia