In 2012, upon the dissolution of redevelopment agencies, the Garden Grove Housing Authority assumed the housing assets and functions of the former Garden Grove Agency for Community Development ("Former Agency"). As a result, the Housing Authority as Housing Successor ("Housing Successor") is responsible for housing monitoring, administration, and certain housing production requirements. In 2014, the Governor signed into law SB 341 requiring Housing Successors to conduct an annual report of their housing activities associated with their assumed assets and functions of the Former Agency.

The attached report includes all of the sections required by the statute. Additionally, the report was provided via email on December 20, 2023 thereby satisfying the requirement that the information be provided to the City Council and Housing Authority, acting in its capacity of Housing Successor, prior to December 31, 2023.

A detailed description of the Housing Successor activities undertaken during FY 22-23, as well as the state of the Low and Moderate Income Housing Asset Fund (LMIHAF) are detailed in the attached report, with a brief summary provided below:

•  Receipt of $1,000,000.00 into the LMIHAF in repayment of Former Agency loans.
•  Total deposits into the LMIHAF of $1,240,775.25, which includes $1,000,000.00 in Educational Revenue Augmentation Fund (ERAF) and Supplemental Educational Revenue Augmentation Fund (SERAF) repayments, $133,830.67 in accrued interest, and $106,944.58 in miscellaneous revenue, bringing the total ending balance of the LMIHAF to $6,081,842.33.
• Total expenditures and encumbrances from the LMIHAF of $10,538,348.19, which include $84,196.12 for monitoring and administration; $81,152.07 to provide rapid rehousing and homelessness prevention services; $3,000,000 for land acquisition for the development of affordable housing; $5,550,000 encumbrance for land acquisition for the development of affordable housing; and $1,823,000 encumbrance for rehabilitation and reset of affordable housing units.
•  Total statutory value of housing assets owned by the Housing Successor of $13,749,413.22, which includes $2,066,624.53 in real property and $11,682,788.69 in loans and grants receivable.

As part of the annual reporting process, the Housing Successor must perform three tests to ensure compliance with the statue. These tests include the Extremely Low Income Test, the Senior Housing Test, and the Excess Surplus Test.

Extremely Low Income Test

The Housing Successor is required to expend at least 30% of funds in the LMIHAF on the development of rental housing affordable to and occupied by households earning 30% or less of the Area Median Income (AMI). The Extremely Low Income Test calculates all expenditures on the development of housing over a five (5) year period (2020-2025) to ensure at least 30% of said funds were expended on units for households at or below 30% AMI. The Housing Authority’s expenditures and monies encumbered as Housing Successor, sourced from LMIHAF for development of housing will meet the required income categories and thresholds during the 5-year period.  During FY 2022-23, the Housing Authority as Housing Successor entered into a Purchase and Sale Agreement to acquire the Civic Center parcel for future development of affordable housing ($8,550,000). Additionally, the Housing Authority approved a preliminary Award Letter encumbering $1,823,000 of LMIHAF to rehabilitate and reset affordable housing covenants for the Orchard Grove Project.

Senior Housing Test

The Housing Successor is limited in the number of rental units it develops for occupancy by senior citizens. This test requires the Housing Successor to compare the total number of housing units assisted by the City, Housing Successor, and/or Former Agency to the number of housing units assisted by the same entities for occupancy by senior citizens over the prior 10-year period. The percentage of housing units for senior may not exceed 50% of the total number of assisted units.

Between July 1, 2013 and June 30, 2023, the City, Housing Successor, and Former Agency assisted a total of 133 housing units, with 16 of those developed for occupancy by senior citizens. The Housing Successor’s percentage of senior housing over the past 10 years is 12%, which falls below the 50% threshold.

Excess Surplus Test

An “excess surplus” is defined as an unencumbered amount of funds in the LMIHAF that exceeds the greater of $1,000,000 or the aggregate amount deposited into the account during the Housing Successor’s preceding four Fiscal Years ($8,634,350.00), whichever is greater. The ending balance of the LMIHAF is $6,081,842, and there is no surplus of funds exceeding the designated threshold.

Inventory of Homeownership Units

The Former Agency assisted 55 Garden Grove homeowners with down payment assistance loans. Of the 55 original loans, the Former Agency has lost a total of 35 housing units due to loans being repaid and affordability covenants expiring. The Housing Successor has received a total of $323,087.50 in loan repayments since February 1, 2012, with $98,600.45 being repaid during FY 22-23.

Housing Choice Voucher Program

The Garden Grove Housing Authority provides rental assistance to up to 2554 families per month, with 2362 Section 8 Housing Choice Vouchers (aka Section 8), 117 Emergency Vouchers and 75 Mainstream Vouchers. The lease-up rate by month for FY 2022-23 was as follows:

It is recommended that the City Council and Housing Authority, acting in its capacity of Housing Successor, receive and file the Housing Authority Annual Report for Fiscal Year 2022-2023.

By:    Monica Covarrubias, Sr. Project Manager