Director: Finances are in order

by Shelton on August 15th, 2012

filed under Finances

In the wake of failed low-income housing provider Lompoc Housing and Community Development Corp., Fred Lamont, executive director of the Housing Authority of Santa Barbara County, assured the community this week that his organization’s finances are in order.

Since LHCDC started unloading its properties, more people are paying attention to affordable housing — including recent question raised by a Lompoc Record columnist regarding the Housing Authority’s working relationship with nonprofit low-income housing developer Surf Development Company.

Lompoc Record columnist Ron Fink has referred to Surf Development in columns as a “shell corporation” created primarily for the Housing Authority to apply for funding sources that the organization is prohibited from receiving. Fink has also raised questions about the autonomy of the two organizations, including where Surf’s developer fees go and salary issues related to Housing Authority members.

Mayor John Linn recently made Surf Development a City Council agenda item and submitted three pages of questions about the nonprofit.

Lamont said he went before the Rotary Club of Lompoc on Wednesday evening to clear up any confusion about Surf Development.

Lamont told the Rotary that Surf Development has a seven-member board that manages its affairs separately from the Housing Authority.

Surf Development has no employees, instead relying on the Housing Authority for staffing, but he said that the Surf Development board chooses to go along with this arrangement and can end the partnership at any time.

“It can’t be a shell company because there are two completely separate boards,” Lamont said Thursday. “It’s a legally constituted organization that can stand on its own.”

The Housing Agency, which is autonomous from county government, currently oversees a combined agency-wide budget of

$45 million and serves 4,557 households. It also is involved in the construction of two prominent multimillion dollar projects on Ocean Avenue — the Cypress Court Project and the Santa Rita Village Project.

The projects will be managed by the Housing Authority and funded through federal tax credits allocated by the state to private firms.

Surf Development works closely with the Housing Authority to build affordable housing for low-income families throughout Santa Barbara County.

“(The Housing Authority and Surf Development) are cooperating entities working toward a common goal and toward making more affordable housing,” Lamont said.

Lamont also said that the Housing Authority’s finances are audited by multiple agencies, including the state, IRS, HUD and private organizations.

In response to a Rotarian who asked about the distribution of low-income housing in Santa Barbara County, Lamont said Lompoc has slightly more low-income units than other cities, but not significantly more than that of other cities in North Santa Barbara County.

Lamont also said that once Cypress Court and Santa Rita Village have been completed there will no more low-income projects in Lompoc for some time.

“We feel at Lompoc we are where we need to be,” Lamont said.

He said the Housing Authority is aware that some community members have stated there are too many low-income homes in Lompoc.

“Our shareholders are the general public, so we need to be sensitive to the mandate from the general public,” he said.

Asked about the high cost of low-income affordable housing, Lamont said that there are additional costs associated with building low-income homes.

The structures have to be able to serve for 55 years, Lamont said, and there are large legal fees because of the complex financial structure and the need to work with the federal government.

These complexes also need to provide services, such as a laundry room and community facilities for the residents.

Rotary member George Bedford asked Lamont to explain the differences between the Housing Authority from LHCDC.

Lamont stated that the Housing Authority has never defaulted on a loan, has never made a late payment, has never “absconded” with a tenant’s deposit payment and has received high marks from the federal Department of Housing and Urban Development.

Postal Service Finances: Yes, It Can Get Worse

by Shelton on August 15th, 2012

filed under Finances

It is becoming hard to keep the billions of dollars in missed payments and recorded losses by the US Postal Service (USPS) straight. Today, tack another multibillion-dollar chunk of change onto the list: The USPS reported a third-quarter net loss of $5.2 billion, bringing year-to-date losses to $11.6 billion.

But increasingly, the focus of concern is when the USPS will run out of cash. With less than $500 million on hand, that day may come as early as October.

In a conference call today, postal management downplayed the cash-flow problem–pointing out that they may be able to delay a payment due to the Labor Department for worker’s compensation costs–and held out hope that election-year mailings will give them a boost. At any rate, they said that priority will be given to payroll obligations and suppliers in the event the tiller is emptied.

Most likely, the postal officials are right: Some way to fudge the shortfall will be found, pushing the day of reckoning into next year–assuming that Americans send Christmas cards liberally. But it’s never a good sign when a firm has to talk about making deals with creditors and prioritizing debts. It’s just more evidence that the USPS needs to change; if it doesn’t, it will die.

Postal officials, to their credit, recognize this. “This is no way to run a business,” said USPS CFO Joe Corbett, pointing out the need for swift action to address the problem.

Exactly. And that action needs to come from Congress, which has hamstrung USPS’s ability to make the restructuring and cutbacks that will be needed to give it a fighting chance at survival. But so far, Congress seems more interested in adopting “reforms” that simply give the USPS temporary infusions of cash while continuing or tightening statutory restrictions on real change. Real reform–such as that being pushed by Representative Darrel Issa (R-CA) and others–is a castor oil that Members don’t want to swallow.

No way to run a business, indeed.