CONTRA COSTA COUNTY - File #: 26-911

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To: Contra Costa County Housing Authority Board of Commissioners

From: Joseph Villarreal, Executive Director

Report Title: ANNUAL AGENCY BUDGET

☐Recommendation of the County Administrator ☐ Recommendation of Board Committee

RECOMMENDATIONS:

1. APPROVE the Housing Authority’s Annual Agency Budget for Fiscal Year Ending 3/31/27; and

2. ADOPT PHA Board Resolution No. 5275 Approving the Annual Agency Budget on HUD Form 52574.

BACKGROUND:

In compliance with the U. S. Department of Housing and Urban Development's (HUD) regulations, the Housing Authority of the County of Contra Costa (HACCC) has prepared its proposed budget for fiscal year ending March 31^st, 2027.

Funding for HACCC’s programs is generally provided for by the federal budget. The federal fiscal year (FFY) 2026 budget provides HUD with program funding for CY 2026. HUD then allocates funds to HACCC based on eligibility criteria specific to each program. However, due to limited congressional appropriations per program, HUD then prorates funding nationally, reducing the funded amount to below 100% of eligibility. The national proration rates for each program are continuously estimated and adjusted throughout the calendar year, and only finalized once the calendar year is completed.

If Congressional approval of the Federal Budget is delayed, continuing resolutions usually authorize HUD to advance funding to HACCC at an interim level using conservative estimates. Upon approval, HUD spends a month or two determining proper program funding. Last year, Congress approved the Federal Budget in March 2025.

Three primary factors impact the funding of a housing authority’s public housing and housing choice voucher (HCV) programs. These factors are the amount of funding allocated to HUD by Congress, the national utilization rate (number of families housed nationally) and the local utilization rate (number of families housed locally).

Congressional funding of HUD sets baseline funding for the Department's programs. For well over a decade HUD has not been fully funded by Congress. As a result, housing authority programs are almost always funded at less than 100% of need.

Once Congressional funding is known, HUD adjusts the funding provided to housing authorities based on the national utilization rate of each program. Utilization is the number of families under contract at a given time or period. At the national level, if utilization has increased past HUD's budget projections because more families are being housed, then HUD will reduce the money available to each housing authority. If fewer families are being housed nationally, then the money available to each housing authority is increased.

At the individual housing authority level proration works in reverse. Within the parameters set by Congressional funding and national utilization, funding for an individual housing authority will rise when local utilization increases and will fall when the number of families housed drops.

HACCC's proposed budget is based on calculating current program funding eligibility and applying an estimate of the national proration rate. Staff monitors HACCC's budget to actual on a monthly basis and reports any significant changes that occur.

Over the past ten years, public housing proration levels have been as follows:

2026 86.00% (not final)

2025 102.58%

2024 96.97%

2023 93.02%

2022 104.93%

2021 96.85%

2020 112.11%

2019 97.77%

2018 94.74%

2017 93.10%

2016 90.21%

During the same period, HCV administrative fee proration levels have been as follows:

2026 88.00% (not final)

2025 88.19% (not final)

2024 92.83%

2023 97.17%

2022 89.39%

2021 85.80%

2020 81.05%

2019 81.10%

2018 80.62%

2017 77.99%

2016 83.86%

In developing HACCC’s proposed budget, staff has analyzed all categories of revenue and expense and applied the most appropriate methods of projection for each category. Large costs, such as housing assistance payments, payroll, benefits, temporary staffing, software systems, insurance, debt service, etc. have been specifically projected using detailed spreadsheets or supporting schedules. Wherever possible, projections are based on foreknowledge of the future data. For all other costs, projections are based on historical trends for time periods between three to twelve months, depending on trends and the recency of operational changes. Finally, all results have been reviewed against current and prior periods for quality control.

Key revenue assumptions are:

1. Public Housing Program Operating Subsidy will be prorated at 86%

2. Housing Voucher Program Administrative Fees will be prorated at 88%

Key expense assumptions are:

1. Costs will generally increase by the most recent year over year CPI inflation rate of 2.7%

2. Housing Voucher Program will expend approximately $1,500,000 developing a field office in Antioch

HACCC’s proposed overall budget is shown below in comparison to last year’s approved budget, along with the projected change in reserve levels. This overview is followed by a breakdown of HACCC’s four major program areas, HCV, Public Housing, State and Local programs and Continuum of Care programs. Each section provides a brief program overview, the projected budget, last year’s approved budget, the projected change in reserve levels and an explanation of the change from prior year. A more detailed budget is available for viewing at HACCC’s administrative office.

Agency Summary

Agency Budget	2026-2027 Budget	2025-2026 Budget	Change
Operating Revenue	$ 43,280,078	$ 42,661,348	$ 618,730
Operating Expense	$ 46,149,720	$ 43,753,691	$ 2,396,029
Net Operating	$ -2,869,642	$ -1,092,343	$ -1,777,299
Non-Operating Revenue	$ 239,861,377	$ 223,672,017	$ 16,189,360
Non-Operating Expense	$ 242,256,147	$ 226,299,852	$ 15,956,295
Net to Reserves	$ -5,264,412	$ -3,720,178	$ -1,544,234

Agency Reserves	Unrestricted Reserves	Actuarial Reserves *	Restricted Reserves	Net Invested in Capital Assets
Projected 3/31/2026	$ 26,955,526	$ -11,886,806	$ 2,793,015	$ 21,817,304
FY Budget Impact	$ -5,335,413	$ 0	$ 71,001	$ 4,806,553
Projected 3/31/2027	$ 21,620,113	$ -11,886,806	$ 2,864,016	$ 26,623,857

*Actuarial reserves are unfunded Pension and Other Post-Employment Benefits (OPEB) liabilities.

As a reminder, program reserves are restricted for use within each program. The designation of restricted or unrestricted reserves merely indicates that the funds are obligated for special use within the program (restricted) or that they can be used for any purpose eligible under the program (unrestricted).

MAJOR PROGRAM AREAS:

Housing Choice Voucher Programs

Program Description - Housing Choice Voucher (HCV) programs provide housing assistance to families in the private rental market. HACCC qualifies families for the program based on income. These families find a home in the private rental market and HACCC provides them with a subsidy via a housing assistance payment (HAP) contract with the property owner. HAP is paid by HACCC directly to the owner. Through its HCV programs, HACCC provides affordable housing assistance to 9,300 households. 8,937 households are assisted by the Housing Voucher Program, 201 by the Mainstream Voucher Program, and 162 by the Emergency Housing Voucher Program. Of the HCV program households, 207 are also enrolled in the Family Self-Sufficiency Program.

Budget Summary:

Housing Choice Voucher Budget	2026-2027 Budget	2025-2026 Budget	Change
Operating Revenue	$ 15,891,334	$ 15,708,415	$ 182,919
Operating Expense	$ 17,094,411	$ 16,938,360	$ 156,051
Net Operating	$ -1,203,077	$ -1,229,945	$ 26,868
Non-Operating Revenue	$ 231,201,444	$ 214,024,904	$ 17,176,540
Non-Operating Expense	$ 232,701,444	$ 215,918,769	$ 16,782,675
Net to Reserves	$ -2,703,077	$ -3,123,810	$ 420,733

Housing Choice Voucher Reserves	Unrestricted Reserves	Actuarial Reserves *	Restricted Reserves	Net Invested in Capital Assets
Projected 3/31/2026	$ 10,370,678	$ -6,077,244	$ -182,561	$ 3,868,994
FY Budget Impact	$ -2,703,077	$ 0	$ 0	$ 1,500,000
Projected 3/31/2027	$ 7,667,601	$ -6,077,244	$ -182,561	$ 5,368,994

*Actuarial reserves are unfunded Pension and Other Post-Employment Benefits (OPEB) liabilities.

Explanation of Change:

The increase in revenue is based on HUD’s preliminary funding projections of program utilization combined with changes in market rents, prorated based on HUD’s projections of federal funding availability. The increase in operating expense is a result of increased program size, increased staffing, and general inflationary increases across the program. The increase in Non-Operating Expense is due to the increase in housing assistance subsidies provided to participants and development of a field office in Antioch.

Public Housing Operating and Capital Funds

Program Description - HACCC owns and manages 963 public housing units at 12 different sites throughout the County. The Operating funds for all properties come from tenant rents as well as an operating subsidy received from HUD that is designed to cover the gap between rents collected from the low-income tenants and annual operating expenses. HUD allocates the Capital Fund annually via formula to approximately 3,200 housing authorities. Capital Fund grants may be used for development, financing, modernization, and management improvements within public housing.

Budget Summary:

Public Housing Budget	2026-2027 Budget	2025-2026 Budget	Change
Operating Revenue	$ 14,117,911	$ 14,205,373	$ -87,462
Operating Expense	$ 17,521,098	$ 16,094,414	$ 1,426,684
Net Operating	$ -3,403,186	$ -1,889,041	$ -1,514,145
Non-Operating Revenue	$ 2,411,783	$ 2,346,893	$ 64,890
Non-Operating Expense	$ 2,411,783	$ 2,346,893	$ 64,890
Net to Reserves	$ -3,403,186	$ -1,889,041	$ -1,514,145

Public Housing Reserves	Unrestricted Reserves	Actuarial Reserves *	Restricted Reserves	Net Invested in Capital Assets
Projected 3/31/2026	$ 4,933,564	$ -3,500,118	$ 0	$ 14,727,225
FY Budget Impact	$ -3,403,186	$ 0	$ 0	$ 2,411,783
Projected 3/31/2027	$ 1,530,378	$ -3,500,118	$ 0	$ 17,139,008

*Actuarial reserves are unfunded Pension and Other Post-Employment Benefits (OPEB) liabilities.

Explanation of Change:

The decrease in revenue is based on HUD’s preliminary funding projections of program lease up combined with changes in project expense levels and prorated based on HUD’s projections of federal funding availability. The increase in expense is driven by improved maintenance staffing and general inflationary increases across the program.

State and Local Programs

Program Description - HACCC administers a variety of programs and activities that are either not funded by HUD or that involve non-restricted HUD funds. Currently, HACCC is the managing general partner for two tax credit projects (DeAnza Gardens & Casa Del Rio). HACCC receives management fees for administering the Public Housing and HCV programs under HUD’s asset-management model.

Budget Summary:

State & Local Budget	2026-2027 Budget	2025-2026 Budget	Change
Operating Revenue	$ 12,337,074	$ 11,912,038	$ 425,036
Operating Expense	$ 10,600,453	$ 9,885,394	$ 715,059
Net Operating	$ 1,736,621	$ 2,026,644	$ -290,023
Non-Operating Revenue	$ 0	$ 0	$ 0
Non-Operating Expense	$ 894,770	$ 733,970	$ 160,800
Net to Reserves	$ 841,851	$ 1,292,674	$ -450,823

State & Local Reserves	Unrestricted Reserves	Actuarial Reserves *	Restricted Reserves	Net Invested in Capital Assets
Projected 3/31/2026	$ 11,651,283	$ -2,309,444	$ 2,975,576	$ 3,221,086
FY Budget Impact	$ 770,850	$ 0	$ 71,001	$ 894,770
Projected 3/31/2027	$ 12,422,133	$ -2,309,444	$ 3,046,577	$ 4,115,856

*Actuarial reserves are unfunded Pension and Other Post-Employment Benefits (OPEB) liabilities.

Explanation of Change:

The projected change in revenue is primarily a result of increased participation of DeAnza Gardens tax credit property in the Project Based Voucher program. The increase in expense is primarily due to necessary operational and capital improvements at the DeAnza Gardens tax credit property.

Housing Certificate Programs

Program Description - HACCC administers a Housing Certificate Program tied to the Continuum of Care Program (formerly known as Shelter Plus Care). The Continuum of Care Program provides rental assistance for hard-to-serve homeless persons with disabilities in connection with supportive services funded from sources outside the program. HACCC assists approximately 241 households under this program.

Budget Summary:

Housing Certificate Budget	2026-2027 Budget	2025-2026 Budget	Change
Operating Revenue	$ 933,759	$ 835,523	$ 98,236
Operating Expense	$ 933,759	$ 835,523	$ 98,236
Net Operating	$ 0	$ 0	$ 0
Non-Operating Revenue	$ 6,248,149	$ 7,300,221	$ -1,052,072
Non-Operating Expense	$ 6,248,149	$ 7,300,221	$ -1,052,072
Net to Reserves	$ 0	$ 0	$ 0

Housing Certificate Reserves	Unrestricted Reserves	Actuarial Reserves *	Restricted Reserves	Net Invested in Capital Assets
Projected 3/31/2026	$ 0	$ 0	$ 0	$ 0
FY Budget Impact	$ 0	$ 0	$ 0	$ 0
Projected 3/31/2027	$ 0	$ 0	$ 0	$ 0

*Actuarial reserves are unfunded Pension and Other Post-Employment Benefits (OPEB) liabilities.

Explanation of Change:

The increase in operating revenue and expense is due to general inflationary increases operating the program. The decrease in non-operating revenue and expense is due to expectations of reduced program funding.

FISCAL IMPACT:

CONSEQUENCE OF NEGATIVE ACTION:

Should the Board of Commissioners choose not to adopt Resolution No. 5275 approving HACCC’s budget for the fiscal year 2026-2027, HACCC will not be in compliance with HUD regulations. Further, HACCC will not be in compliance in fulfilling its financial and programmatic obligations to program participants and property owners, as well as HACCC employees, contractors, and vendors.