HC 4-25-2024 Written CommunicationsHousing Commission
Meeting
April 25, 2024
Written
Communications
From:Rhoda Fry
To:HousingCommission; Alec Vybiral
Subject:Request to add agenda item to 4/25/2024 meeting: Use of BMR Funds
Date:Monday, March 25, 2024 1:34:44 PM
Attachments:BMR fund summary.pdf
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Dear Housing Commission,
I am requesting that you add an agenda item to 4/25/2024 meeting: Use of BMR Funds.
If not for this meeting, then for a subsequent meeting.
The below and attached was sent this morning to the City Council and I think that it would be
of interest to the Housing Commission.
If this item is not added for the 4/25/2024 meeting, then please put this information in Oral
Communications.
Regards,
Rhoda Fry
From: Rhoda Fry <fryhouse@earthlink.net>
Sent: Monday, March 25, 2024 11:07 AM
To: 'City Clerk' <CityClerk@cupertino.org>; 'citycouncil@cupertino.org' <citycouncil@cupertino.org>
Subject: Oral Communications 4/3/2024 Use of BMR Funds
From: Rhoda Fry on March 25, 2024
RE: Misallocation of BMR Program Funds
Dear City Council,
As you know, on February 15, 2024, I reported to the City Attorney that our BMR Program
Funds had been improperly used to pay for $15K in stipulated judgements from the frivolous
Housing Element lawsuit by YIMBY and California Housing Defense Fund. Then I
discovered that the cost of litigation from the firm retained by the City, Goldfarb & Lipman,
had also been misallocated along with other questionable expenses. On February 19, I wrote
City Council requesting that the Accounts Payable agenda item #6 be removed from the City
Council Consent Calendar for the February 21 meeting. Neither the City Manager nor the City
Attorney wanted this item to be discussed in a public forum.
I am asking you to please schedule a study session in order to restore some public trust in
the City’s accounting system and use of BMR funds. Not only for the BMR funds but also
for other special funds that are regulated under AB1600.
Below is a description of the BMR Program Rules and attached is a summary the BMR
portion of Development Impact Fee Reports, which are found here:
https://www.cupertino.org/our-city/departments/finance/budget-reports Reviewing the fund’s
use over the past decade creates a number of questions about whether the BMR fund has
maximized public benefits. Lately, the fund has been used for homeless, which is not an intent
of the fund. The cost of administration and studies also raises concerns.
BMR Program Rules Restrict Fees to affordable housing (RESOLUTION NO. 20.055 page 4)
2.2.2 Permitted Use of Fees
A. Affordable housing mitigation fees deposited into the BMR AHF shall
only be used for the provision of affordable housing in Cupertino.
B. The options for use of the fee revenue include, but are not limited to
the following:
1. BMR Program Administration
2. Land Acquisition
3. New Construction
4. Acquisition and/or rehabilitation of buildings for permanent affordability
5. Preserving “at-risk” BMR Units
6. Substantial Rehabilitation
7. Rental Operating Subsidies
8. Down Payment Assistance
9. Direct gap financing
10. Fair Housing
C. A portion of the BMR AHF will be targeted to benefit the following
groups, to the extent that these target populations are found, to be
consistent with the needs identified in the nexus study:
1. Extremely low-income households and
2. Persons with special needs (such as the elderly, victims of
domestic violence, and the disabled, including persons with
developmental disabilities).
Virus-free.www.avg.com
The data below was copied from Development Impact Fee Reports from 2014 to 2023
These reports can be found here: https://www.cupertino.org/our-city/departments/finance/budget-reports
As there might be copying errors, please consult the source documents to confirm data
Observations:
1. funds have been used for homeless, which is not an approved category for this fund
2. Interest on these accounts has varied widely
3. 2021 - 2023 staff and admin cost has been disproportionately high as compared with services rendered
4. A significant amount of money has been used for the Housing Element, Studies, Plans, Strategies, and Surveys
USE OF BMR FUNDS 2023 - 2014 as reported in Development Impact Fee Reports
Year 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014
Balance 5,462,532 6,111,827 6,551,494 6,759,440 6,902,773 10,867,642 11,336,550 11,323,869 7,699,889 699,046
Fees Collected 172,698 39,211 204,931 41,957 159,179 165,324 39,000 299,586 4,051,266 7,229,545
Interest 79,323 70,915 19,651 269,174 134,016 46,912 94,339 97,840 45,016 10,828
Staff & Admin 378,741 329,346 206,461 90,119 61,276 57,266 39,941 53,908 49,686 25,721
Legal 57,476 29,367 68,170 174,249 69,201 144,028 235,878 96,279 41,276
Placement 265,554 264,296 259,957 190,986 190,294 137,018 123,301 125,818 71,407 127,955
Mediation 50,000 50,000 50,000 50,229 35,771 44,528 203,187 108,740 193,442
Legal + Mediation 69,995
Housing Element 15,879
Loan 3,672,000
Renovation 79,986 122,265
Study 13,495 83,200
Plan 33,291
Strategies 7,146 44,955
De Anza 25,000
Survey 9,706
Homeless 13,787 71,224
Habitat Humanity 3,571 8,043
Subtotal 769,123 759,421 664,249 519,078 436,528 4,177,105 602,307 384,745 472,302 239,550
End Balance 4,945,424 5,462,532 6,111,827 6,551,494 6,759,440 6,902,773 7,195,642 7,664,550 11,323,869 7,699,889
From:Rhoda Fry
To:HousingCommission
Subject:Housing Commission Oral Communications - use of BMR/Affordable Housing Fund
Date:Friday, April 19, 2024 9:43:57 AM
Attachments:BMR fund summary 2.pdf
Attachment A_ Annual Report on Development Impact Fees FY 2021 pages 6 8 9.pdf
CAUTION: This email originated from outside of the organization. Do not click links or open attachments unless you
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Dear Housing Committee,
I am writing because I am concerned about the use of the BMR/Affordable Housing Fund.
This fund is funded through mitigation fees paid by developers to help make up for the need
for affordable housing created by a development project. The money in this fund is precious –
according to a study paid for by the City, mitigation fees don’t fully pay for the problem
they’re intended to fix. That’s another reason we need to use these funds wisely.
You may have already read that money in this fund was mis-used to pay for litigation fees and
settlements of the YIMBY lawsuit, https://sanjosespotlight.com/cupertino-spent-affordable-
housing-funds-on-lawsuit/ but there’s more.
In the past 3 years, the fund has been shockingly inefficient. About half of the funds
expenditures have been use on City-staff/administration. And if you take into account the
overhead included in the contracts that the City pays out, more than half of the money goes to
administrative costs. What are we getting for our money? Is it possible that some of the
Cupertino staff/admin cost should have been allocated elsewhere? Other information shows
that the fund has been used for airfare, hotels, mercury news subscriptions, and membership
dues to organizations that are not exclusively oriented for bmr/affordable housing. Money has
also gone to homeless services, a worthy investment, but not an appropriate use of the
narrowly-defined fund.
Attached you’ll find a table that I put together using 10 years of data pulled from the City’s
annual mitigation fee report which is published annually under AB1600 (to assure proper use
of developer mitigation fees). There you can glean some trends of the fund’s use – and I added
a chart showing how city-staff/admin compares with the rest of expenses – a worrying trend.
Also attached, please find a report on the use of Palo Alto’s BMR/Affordable Housing fund
and you’ll see that their admin costs are about a 10th of ours!
Can you please put the use of this fund on your workplan?
Can you consider reviewing the information to be put in the annual AB1600 report
before it goes to Council and make any appropriate adjustments?
I also think that the AB1600 report should include the rules of the fund in order to
prevent errors in its use (see below).
I’d like to see our City get the most out of our public’s money and ensure that the money that
was put in our hands in good-faith by developers is used appropriately and wisely.
Thanks, Rhoda Fry (408) 529-3560
265 BMR Housing Fund Definition (FY 2023-24 Adopted Budget page 100)
• Accounts for activities related to the Below Market Rate (BMR) Housing Program.
• Revenues include BMR Housing Mitigation Fees collected from developers to mitigate
the impact of housing needs.
• Monies in this fund are governed by the program's rules.
BMR Program Rules Restrict Fees to affordable housing (RESOLUTION NO. 20.055
page 4)
2.2.2 Permitted Use of Fees
A. Affordable housing mitigation fees deposited into the BMR AHF shall
only be used for the provision of affordable housing in Cupertino.
B. The options for use of the fee revenue include, but are not limited to
the following:
1. BMR Program Administration
2. Land Acquisition
3. New Construction
4. Acquisition and/or rehabilitation of buildings for permanent affordability
5. Preserving “at-risk” BMR Units
6. Substantial Rehabilitation
7. Rental Operating Subsidies
8. Down Payment Assistance
9. Direct gap financing
10. Fair Housing
C. A portion of the BMR AHF will be targeted to benefit the following
groups, to the extent that these target populations are found, to be
consistent with the needs identified in the nexus study:
1. Extremely low-income households and
2. Persons with special needs (such as the elderly, victims of
domestic violence, and the disabled, including persons with
developmental disabilities).
Virus-free.www.avg.com
The data below was copied from Development Impact Fee Reports from 2014 to 2023
These reports can be found here: https://www.cupertino.org/our-city/departments/finance/budget-reports
As there might be copying errors, please consult the source documents to confirm data
Observations 1. funds have been used for homeless, which is not an approved category for this fund. 2. Interest on these accounts varies.
Why? Interest from loan or Chandler? 3. 2021 - 2023 staff and admin cost has been disproportionately high as compared with services rendered
4. A significant amount of money has been used for the Housing Element, Studies, Plans, Strategies, and Surveys
USE OF BMR FUNDS 2023 - 2014 as reported in Development Impact Fee Report s
Year 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014
Balance 5,462,532 6,111,827 6,551,494 6,759,440 6,902,773 10,867,642 11,336,550 11,323,869 7,699,889 699,046
Fees Collected 172,698 39,211 204,931 41,957 159,179 165,324 39,000 299,586 4,051,266 7,229,545
Interest 79,323 70,915 19,651 269,174 134,016 46,912 94,339 97,840 45,016 10,828
Staff & Admin 378,741 329,346 206,461 90,119 61,276 57,266 39,941 53,908 49,686 25,721
Legal 57,476 29,367 68,170 174,249 69,201 144,028 235,878 96,279 41,276
Placement 265,554 264,296 259,957 190,986 190,294 137,018 123,301 125,818 71,407 127,955
Mediation 50,000 50,000 50,000 50,229 35,771 44,528 203,187 108,740 193,442
Legal + Mediation 69,995
Housing Element 15,879
Loan 3,672,000
Renovation 79,986 122,265
Study 13,495 83,200
Plan 33,291
Strategies 7,146 44,955
De Anza 25,000
Survey 9,706
Homeless 13,787 71,224
Habitat for Humanity 3,571 8,043
Subtotal 769,123 759,421 664,249 519,078 436,528 4,177,105 602,307 384,745 472,302 239,550
End Balance 4,945,424 5,462,532 6,111,827 6,551,494 6,759,440 6,902,773 7,195,642 7,664,550 11,323,869 7,699,889
Subtotal 769,123 759,421 664,249 519,078 436,528
Year 2,023 2022 2021 2020 2019
Staff & Admin 378,741 329,346 206,461 90,119 61,276
Other Expenses 390,382 430,075 457,788 428,959 375,252
0
100,000
200,000
300,000
400,000
500,000
2,023 2022 2021 2020 2019
Compare Staff/ADMIN Expenses vs Other
from BMR & Affordable Housing Fund
Staff & Admin Other Expenses
Attachment A
City of Palo Alto
Annual Report on Development Impact Fees
for Period Ending June 30, 2021
Commercial Housing University Avenue Parking
FUND Impact Fee Fund In-Lieu Fund
Purpose and Authority
Fees imposed on commercial and
industrial Fees collected from non-residential
for Collection development to offset the demand that development within the University Ave.
new jobs create for low and moderate-Parking Assessment District in lieu of
income housing in the City providing the required number of
parking spaces.
PAMC Ch.16.65 PAMC Ch 16.57
Amount of the Fee
Hotel / Retail / Other Non Residential:
$22.40 per sq. ft.
Office/R&D: $38.48 per sq. ft. $111,861.77 per space
Fund Balance July 1, 2020 $25,428,649 $6,384,494
Activity in 2020-21
Revenues
Fees Collected 606,996 -
Interest Earnings 159,746 109,638
Unrealized Gain/(Loss) Investments (206,429)(69,521)
-------------------------------------------------------- -----------------------------------------------------------
Total Revenues 560,313 40,117
Expenditures
Salaries and Benefit (21,122)
Liability Insurance (621)
-------------------------------------------------------- -----------------------------------------------------------
Total Expenditures (21,743) -
-------------------------------------------------------- -----------------------------------------------------------
Ending Balance June 30, 2021 $25,967,219 $6,424,611
Other Commitments/Appropriations
Reserve for Notes Receivable include:$1,290,000
for 2811 Alma, and $4,137,254 for 801 Alma,
$7,700,000 for Bueva Vista Mobile Home Park.
$10,502,309 Wilton Court (23,629,563)
Reserve for Reappropriations (1,167,061)
Reserve for unrealized gain on investments (108,891)(94,763)
-------------------------------------------------------- -----------------------------------------------------------
Net Funds Available $1,061,704 $6,329,848
USE OF FEES: USE OF FEES:
Expenditures in Fiscal Year 2021 are
$21K for salaries and benefits. Reserve
for Reappropriaton is for Affordable
Housing Loan Agreement: 3705 El
Camino Real (Wilton Court).
No expenditures have been made from this
fund in Fiscal Year 2021.
FUTURE USE OF FEES:
$5.5M programmed in FY 2023 for New
Downtown Parking Garage Project (PE-
15007) as part of the 2022-2026 Capital
Improvement Plan (CIP).
Page 2 of 10
Attachment A
City of Palo Alto
Annual Report on Development Impact Fees
for Period Ending June 30, 2021
Residential & Non-Residential Residential Housing
Community Facilities In-Lieu Fund
FUND Libraries
Purpose and Authority
for Collection
Fees imposed on new residential and non-
residentual development approved after
January 28, 2002 for Libraries.
Fees collected from ownership residential
developments of three or more units
(including mixed used with ownership in
housing) in-lieu of providing the required
below-market rate units(s) to low and
moderate income households.
PAMC Ch. 16.58 PAMC Chapter 16.65
Amount of the Fee Residential: Single family $1,187 per
residence (or $1,766 per residence larger
than 3,000 sq ft); Multi-family $710 per
unit (or $390 per unit smaller than or
equal to 900 sq ft)
Single family $82.46 per sq. ft. Single family
detached; $54.97 per sq. ft. single family
attached. Multi Family $54.97 per sq. ft.
condos.
Nonresidential: Commercial/industrial
$299 per 1,000 sq ft or fraction thereof;
Hotel/Motel $126 per 1,000 sq ft or
fraction thereof.
Fund Balance July 1, 2020 $1,248,514 $24,981,378
Activity in 2020-21
Revenues
Fees Collected 29,138 4,939,497
Interest Earnings 18,746 147,730
Unrealized Gain/(Loss) Investments (15,095)(130,549)
-------------------------------------------------------- -----------------------------------------------------------
Total Revenues $32,789 $4,956,678
Expenditures
Salaries and Benefits (21,122)
Contract Services (177,888)
Liability Insurance (621)
Operating Transfer to Capital Projects Fund (310,000)
-------------------------------------------------------- -----------------------------------------------------------
Total Expenditures (310,000)(199,631)
-------------------------------------------------------- -----------------------------------------------------------
Ending Balance June 30, 2021 $971,303 $29,738,425
Other Commitments/Appropriations
Reserve for Encumbrances (21,973)
Reserve for unrealized gain on investments (16,435)(113,952)
Reserve for Notes Receivable include $375,000
for 3053 Emerson, $3,504,850 for Tree House
Apts, $747,734 for Sheridan Apts., $2,285,026 for
801 Alma, $901,201 for Palo Alto Housing
Project, $600,000 for 2811-2825 Alma St.,
$203,561 for Colorado Park Housing, $149,968
for El Dorado Palace, and $6,800,000 for Buena
Vista Mobile Home Park, $8,249,601 for Wilton Ct.
(23,816,941)
-------------------------------------------------------- -----------------------------------------------------------
Net Funds Available $954,868 $5,785,559
Page 4 of 10
Attachment A
City of Palo Alto
Annual Report on Development Impact Fees
for Period Ending June 30, 2021
Residential & Non-Residential Residential Housing
Community Facilities In-Lieu Fund
FUND Libraries
USE OF FEES:USE OF FEES:
Budget transfer $310K in FY 2021 was
made to Capital Improvement Fund
Project for Library Auto Material Handling
(LB-21000).
FUTURE USE OF FEES:
$540K is programmed in FY 2022-2023
for LB-21000 as part of the 2022-2026
CIP. $300K has been recommended to
fund the City archives at the Roth Building
(CMR 12307).
Expenditures in Fiscal Year 2021 were $21K
for salaries and benefit, $178K for Palo Alto
Housing Corp for BMR admin fees and for
consultancy fees.
Page 5 of 10