Potrero Terrace public housing project. (Mike Koozmin/2011 S.F. Examiner)

Vote set for plan to close $30M housing authority shortfall

The San Francisco Housing Authority Commission will hold a special meeting Tuesday to vote on a plan to close an approximate $30 million shortfall in a rental subsidy program to keep tenants housed.

The commission is scheduled to vote to put $7.1 million in reserve funds toward the shortfall recently discovered in the agency’s funding for housing assistance payments. The shortfall was identified in spending planned for the next three months, requiring the immediate action.

The remainder of funding to close the shortfall is expected to come through the Mayor’s Office of Housing. The so-called Citywide Affordable Housing Loan Committee committed on Oct. 19 to loaning the agency up to $20 million, contingent upon the commission’s vote Tuesday. Also, the US Department of Housing and Urban Development may provide the agency with “at least $3 million,” according to a report to the commission from Dariush Kayhan, the Housing Authority’s deputy executive director.

HUD’s “shortfall prevention team” first notified the agency on Sept. 6 that it “was likely to have a shortfall in their Housing Assistance Payment (HAP) funding by the end of the year” and “immediately began implementing HUD’s required actions to mitigate the shortfall,” the report said. The agency ceased granting new housing vouchers on Sept. 6.

An initial Oct. 12 audit of the agency’s financials by HUD’s Quality Assurance Division first pegged the shortfall at about $19 million but after more scrutiny, including by the agency’s new financial consultant BDO, the shortfall ballooned to $30 million.

“[Housing Assistance Payment] provides rental subsidies for individual tenants in the Housing Choice Voucher (HCV) program and rental subsidies for multiple units in large projects in the form of Project-Based Vouchers (PBVs) contracts,” the report says.

The shortfall comes after the agency expanded housing assistance to benefit 4,641 additional households during the past five years. Agency officials blame the shortfall on poor financial management and a reliance on faulty data. Housing assistance payments have ranged from $17.7 million to $24.4 million per month this year.

The commission will also be briefed on longer-term strategies.

“The City and SFHA are fully committed to ensuring that all HCV tenants and projects are protected over the long-term,” the report said. The report identifies several “actions in progress to stabilize SFHA functions and prevent further shortfall crises.”

BDO is going over the agency’s 2019 projections “in order to plan for additional funding gaps.” The City is also planning to step in and “bring City oversight to SFHA functions and eliminate financial operational deficiencies.”

To limit cost increases, the agency plans to negotiate with building owners under contract to receive public housing assistance “to forego rent increases where possible.”

The City’s $20 million loan to the agency comes from money the Board of Supervisors previously voted to borrow in 2016 for public housing revitalization.

The San Francisco Housing Authority Commission meets at 4 pm Tuesday in Room 421 at City Hall.

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