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2020/10/01 Mobile Home Park Rent Appeals Board Agenda Packet City of Rohnert Park Mobile Home Parks Rent Appeals Board A G E N D A Thursday, October 1, 2020 -- 6:00 P.M. * COVID-19 NOTICE * Consistent with Executive Orders No. N-25-20 and No. N-29-20 from the Executive Department of the State of California and the Sonoma County Health Official’s March 17, 2020 and March 31, 2020 Shelter in Place Orders, the Mobile Home Parks Rent Appeals Board Meeting will not be physically open to the public and Board Members will be teleconferencing into the meeting via Zoom Video Communications software. How to observe the Meeting: To maximize public safety while still maintaining transparency and public access, members of the public can observe the meeting by visiting meeting central on our website https://www.rpcity.org/city_hall/city_council/meeting_central How to submit Public Comment: Members of the public may provide public comment by sending comments to the Recording Secretary by email at rab@rpcity.org. Comments are requested by 3:00 p.m. on the day of the meeting, but can be emailed until the close of the Agenda Item for which the comment is submitted. Email comments must identify the Agenda Item Number in the subject line of the email and should be a maximum of 350 words, which corresponds to approximately 3 minutes of speaking time. The comments will be read for the record, with a maximum allowance of 30 minutes of total public comments, subject to the Chair’s discretion. If a comment is received after the agenda item is heard but before the close of the meeting, the comment will still be included as a part of the record of the meeting but will not be read for the record or considered in connection with the agenda item. 1. CALL TO ORDER 2. PLEDGE OF ALLEGIANCE 3. ROLL CALL (Engelhart___ Finnigan___ Kirby___ Reymond___ Waterman___) 4. ACKNOWLEDGEMENT OF POSTING OF AGENDA. Agenda posted in a minimum of three public places: Community Center, Public Safety Building & City Hall. 5. PUBLIC COMMENT (Items not on Agenda). Persons who wish to speak to the Board regarding an item that is not on the agenda may do so at this time. 6. CONSENT CALENDAR – APPROVAL OF MINUTES 6.1 Approval of the Draft Minutes of the Mobile Home Parks Rent Appeals Board meeting of November 7, 2019. 6.2 Approval of the Draft Minutes of the Mobile Home Parks Rent Appeals Board meeting of December 5, 2019. 6.3 Approval of the Draft Minutes of the Mobile Home Parks Rent Appeals Board meeting of September 3, 2020. 7. AGENDA ITEMS 7.1 Determine the Annual General Adjustment to the Maximum Allowable Space Rent 7.2 Consider Adopting a Resolution to Change Accounting Period from Calendar Year to Fiscal Year and To Calculate the Annual Registration Fees Based on the Previous Fiscal Year’s Actual Expenses 7.3 Consider Adoption of 2021 Budget and Accounts Receivable Write-off of Outstanding Balance of 2014 Rancho Verde Mobile Home Park Petition 8. ELECTION OF OFFICERS 9. ITEMS FROM THE BOARD 10. ITEMS FROM THE STAFF 11. SECOND PUBLIC COMMENT PERIOD (Items not on Agenda) 12. NEXT REGULARLY SCHEDULED MEETING 13. ADJOURNMENT City of Rohnert Park Mobile Home Parks Rent Appeals Board Minutes Thursday, November 7, 2019 -- 6:00 P.M. 130 Avram Avenue, Rohnert Park 1. CALL TO ORDER Chair Engelhart called the meeting to order at 6:12 P.M. 2. PLEDGE OF ALLEGIANCE Chair Engelhart led the Board, staff, and meeting attendees in the pledge of allegiance. 3. ROLL CALL Chair Engelhart requested that staff person Garcia take roll call. Engelhart, Finnigan, Kirby, and Reymond present. Waterman had an excused absence. 4. ACKNOWLEDGEMENT OF POSTING OF AGENDA Chair Engelhart asked if the Agenda had been posted in a minimum of three public places. Staff person Garcia confirmed. 5. PUBLIC COMMENT (Items not on Agenda). Mr. David Cronan at Rancho Grande received a letter from the owners of the mobile home park, outlining costs, which included rent control fee. He asked for a clear explanation of the original intent of the rent control fee. Garcia responded that the registration fee portion supplies the budget for the Board. The rent control fee portion is also set by the Board, using a calculation from the Bureau of Labor. Chair Engelhart inquired if this answered Mr. Cronan’s question and he confirmed that it did. 6. CONSENT CALENDAR 6.1 Approval of the Draft Minutes of the Mobile Home Parks Rent Appeals Board meeting of September 5, 2019. ACTION: Chair Engelhart commented that his name was misspelled throughout the document. Moved/seconded (Reymond /Kirby) to approve the Minutes of September 5, 2019. Motion carried by the following unanimous 4-0-1 vote: AYES: Engelhart, Finnegan, Kirby, and Reym ond; NOES: None; ABSTAIN: None; ABSENT: Waterman 6.2 Approval of the Draft Minutes of the Mobile Home Parks Rent Appeals Board meeting of October 3, 2019. ACTION: Chair Engelhart commented that his name was misspelled throughout in this document as well. Finnegan stated she was not at the meeting. Moved/seconded (Reymond /Kirby) to approve the Minutes of October 3, 2019. Motion carried by the following unanimous 3-1-1 vote: AYES: Engelhart, Kirby, and Reymond; NOES: None; ABSTAIN: Finnegan; ABSENT: Waterman 7. AGENDA ITEMS 7.1 Consider Process for Election of Officers Chair Engelhart introducted the item. Garcia presented the staff report that reviewed the process for future election of officers. Garcia reviewed the process which is based on the bylaws and mirrors the City Council process. Option One is to keep the process the same, which is recommended by staff. Because this year isn’t an election year for Council, staff recommends placing this on the December agenda and becoming effective in January. Reymond asked what would happen if a meeting didn’t occur in December. Garcia stated it would be placed on the next agenda this would then be placed at the first meeting of the year. Chair Engelhart requested the item be placed on the December agenda and that the Chair and Vice Chair be voted together, and the new potions would become effective at the beginning of the year. Reymond requested clarity on the way the roation would work, for example, he would be last in line in the roation since he just completed the position of the chair. This was confirmed. Chair Engelhart suggested that Finnegan and Kirby would become Chair and Vice Chair with this process. Staff Garcia presented Option Two, which would mirror City Councilmembers; whomever was Mayor that year would dictate that their delegate Chair the Board. This comes with challenges so staff does not recommend this. Chair Engelhart suggested that the new officers take their positions at the at the same meeting as the election. Assistant City Attorney Rudin stated that this would not require an amendment to the bylaws. Reymond suggested wait until the new year for the new positions to take effect. Kirby and Finnegan agreed. By consensus the Board requested that staff add the Election of Officer to the first meeting of the year. 7.2 Consider Adoption of Amendments to the Rohnert Park Rent Appeals Board’s Rules and Regulations Chair Engelhart introducted the item. Garcia presented the staff report. Garcia presented the history of the amendments, that they started in 1995 and have been admended eight times. At the August meeting the Board requested revisions be made and shared with the public. The amendments are now being brought back to the Board for their consideration at this time. Garcia ensured that full packets would be provided to the Board during petitions and that this is covered in the bylaws. Public notification plans include that the revisions were sent to Council, Boardmembers, owners, managers and interested parties of the public. Staff requested that the managers share the revisions with the tenants. No written comments have been received other than confirmation that the revisions were received. Goals of revisions were to streamline the CIPT process, ensure the Board can recover costs from landlord petitions, increase deposits for resident petitions, reduce paperwork and mailings, ensure due process, reorganize for clarity and ease of use, and eliminate duplicate and old provisions that don’t apply. Main revisions were in chapters 1, 5, 7 and 8. The other chapters had minor revisions that were insubstitive. Main revisions included the following: forms that were created in past decades were removed; the section to streamline petitions revised the process so that staff directs them to a hearing examiner and the Board assists with appeals; staff is required to provide the board with all petitions; addressing conflicts of interest that apply to either hearing examiners or Boardmembers, consistent with the Political Reform Act; and, establishing a required meeting between landlord and residents at least 14 days prior to start of a CIPT project, that minutes must be provided to tenants, that the landlord must provide proof of the meeting, and that this doesn’t give tenants the ability to reject a project. Assistant City Attorney Rudin stated that the effective date could be imposed for new projects not yet started and recommended that the adoption happens two weeks after the adoption of the amendments. Finnegan clarified that all existing projects would be grandfathered in. Chair Engelhart preferred to let owners know in advance. Garcia stated that she will prepare this notice. Staff Beiswenger stated that the effective date is flexible to 30 days, or other time period and doesn’t have to be 14 days. Kirby stated her preferred to have it be 14 days from the day the amendments were adopted. Reymond stated this would prevent owners from rushing. Garcia noted that 14 days from today would make staff rush due to the upcoming holidays versus making it 30 days to accommodate. By consensus the Board requested that change the date of effectiveness to 30 days from the date of adoption of the amendments. Rudin stated that he is able to guide the revisions to assist this. Garcia continued her presentation with the main amendments, including: the hearing procedures in Chapter 7 to give staff more time to respond to petitions, to mail petitions to all residents, and overall streamlining the appeals process. Kirby stated there are trade offs with this new procedure and that the petitioner would receive their money later. Finnegan clarified that the trade offs can actually benefit the petitioners overall due to saving costs with minimizing staff time. Garcia continued stating that the amendements in Chapter 8 will be set by a separate resolution to be brought to the Board in December, which sets a minimum of $5,000 in the despoit account for landlord petitions. Garcia stated that the fees for resident petition will be amended from $15 to $50. Garcia stated that staff is recommending Resolution 2019-03 to adopt Amendments to the Rohnert Park Rent Appeals Board’s Rules and Regulations. Chair Engelhart stated he had comments on page three regarding the Bylaws, Article II, and that there were typos to be corrected. Garcia stated that the Bylaws were an attachment to item 7.1. An unidentified member of the audience commented that she had read the staff report and supported the proposed amendments to the Rules and Regulations. ACTION: Moved/seconded (Reymond /Finnegan) to adopt Amendments to the Rohnert Park Rent Appeals Board’s Rules and Regulations with an amendment to Exhibit A of Section 5.02 to create an effective date of 30 days. Motion carried by the following unanimous 4-0-1 vote: AYES: Engelhart, Finnegan, Kirby, and Reym ond; NOES: None; ABSTAIN: None; ABSENT: Waterman 8. ITEMS FROM THE BOARD None. 9. ITEMS FROM THE STAFF None. 10. SECOND PUBLIC COMMENT PERIOD (Items not on Agenda). None. 11. NEXT REGULARLY SCHEDULED MEETING December 5, 2019. 12. ADJOURNMENT Meeting was adjourned at 6:58 PM. City of Rohnert Park Mobile Home Parks Rent Appeals Board Minutes Thursday, December 5, 2019 -- 6:00 P.M. 130 Avram Avenue, Rohnert Park 1. CALL TO ORDER Chair Englehart called the meeting to order at 6:02 P.M. 2. PLEDGE OF ALLEGIANCE Chair Englehart led the Board, staff, and meeting attendees in the pledge of allegiance. 3. ROLL CALL Chair Englehart requested that staff person Garcia take roll call. Englehart, Finnigan, Kirby, Reymond and Waterman present. 4. ACKNOWLEDGEMENT OF POSTING OF AGENDA Chair Englehart asked if the Agenda had been posted in a minimum of three public places. Staff person Garcia confirmed. 5. PUBLIC COMMENT (Items not on Agenda). None. 6. CONSENT CALENDAR None. 7. AGENDA ITEMS 7.1 Consider Adoption of Resolution Setting Landlord Petition Deposit Amount Chair Englehart introduced the item. Garcia presented the staff report on setting a landlord petition deposit amount. Staff recommended setting the deposit amount at $20,000. The Board asked if staff puts a hard stop on the petition process if the deposit dips below $5,000 and Garcia said yes. The Board asked how staff ensure that invoices are paid on time. Garcia said that she didn’t know the specific mechanisms used, but that there are city staff who are dedicated to ensuring cost recovery invoices are paid in a timely manner – and that staff stop providing services if it dips below the minimum deposit amount. No public comments. ACTION: Reymond moved and Finnigan seconded to adopt Resolution 2019- 04. Motion carried by the following unanimous 5-0-0 vote: AYES: Englehart, Finnigan, Kirby, Reymond, and Waterman; NOES: None; ABSTAIN: None; ABSENT: None. 8. ITEMS FROM THE BOARD None. 9. ITEMS FROM THE STAFF Garcia informed the Board that, per their direction at the previous meeting, she sent letters to all mobile home park owners about the mandatory meetings which must take place prior to starting a capital improvement project. Garcia also told the Board that the January meeting has been cancelled but the Board will hold elections at the February meeting. The Board discussed the chair rotation process they agreed upon at the November meeting. 10. SECOND PUBLIC COMMENT PERIOD (Items not on Agenda). None. 11. NEXT REGULARLY SCHEDULED MEETING February 6, 2019 since the January meeting has been cancelled.. 12. ADJOURNMENT Meeting was adjourned at 6:18 P.M. City of Rohnert Park Mobile Home Parks Rent Appeals Board Minutes Thursday, September 3, 2020 -- 6:00 P.M. 130 Avram Avenue, Rohnert Park 1. CALL TO ORDER Chair Engelhart called the meeting to order at 6:00 PM. 2. PLEDGE OF ALLEGIANCE Chair Engelhart led the Board, staff, and meeting attendees in the pledge of allegiance. 3. ROLL CALL Chair Engelhart requested that staff person Garcia take roll call. Engelhart, Finnegan, Kirby, and Reymond present. Waterman was absent at roll call and joined the meeting at 7:12 PM. Staff attending via Zoom: Planning Manager Jeff Beiswenger, Housing Specialist Jenna Garcia, Manuel Orozco, Supervising Accountant, Katie Edgar, Accountant, and Jennifer Sedna, Recording Secretary. Council Chambers: Mike Son, IT Specialist. 4. ACKNOWLEDGEMENT OF POSTING OF AGENDA Chair Engelhart asked if the Agenda had been posted in a minimum of three public places. Staff person Garcia confirmed. 5. PUBLIC COMMENT (Items not on Agenda) None. 6. CONSENT CALENDAR None. 7. AGENDA ITEMS 7.1 Accounts Receivable Write-off of Outstanding Balance of 2014 Rancho Verde Mobile Home Park Petition Chair Engelhart introduced the item. Staffpersons Garcia and Orozco presented the item. Garcia provided the background of Rancho Verde’s CIPT submittal in 2014. Rancho Verde paid for a portion of the fees, and left $89,033.99 unpaid. There were multiple attempts to collect this fee that were unsuccessful. The City Attorney had informed the City that only way to attempt collection would be to file a lawsuit and that the cost of the lawsuit would likely be more than the fees that were due. Garcia summarized the reasons the overdraw occurred, including the lack of a formal reimbursement agreement being in place and the inability to cease work on overdrawn accounts. As such, the Board was required to continue work on the petition. To address this, in 2017, the Board updated the rules to require reimbursement that included a formal reimbursement agreement. In 2019, the Board updated the rules to set a $5,000 minimum account balance threshold, such that the Board can stop work on the petition if the account goes below this minimum. Garcia stated that the other major Rules amendment made by the Board was that a meeting was required prior to the beginning of any CIPT work to ensure tenants’ rights were taken into account. Orozco provided the background and stated that the City’s auditors directed the City to accrue the $89,033.99 for consistency. This situation created an artificially inflated fund balance. Were the receivable to be excluded, the actual cash fund balance would be $214,757. Staff recommends that the Board approves the write- off of the 2014 petition costs since it’s no longer feasible to collect the balance. Garcia concluded the staff report and stated that direction is being requested for next month’s meeting. Finnegan asked what would remain in the funds after the fee was removed, and if there were other anticipated expenses expected for emergencies or legal fees to come out of the account. Orozco confirmed the $214,757 balance and that no other expenses outside of the normal operating expenses were anticipated. Reymond had no questions or comments. Kirby had to recuse herself from the discussion and vote as she is a resident of Rancho Verde Mobile Home Park. Chair Engelhart stated it was a reasonable option and that there were no alternatives that existed. Garcia requested if the Board was comfortable approving the item for the next meeting, and they confirmed 3-1-1 (Engelhart, Finnegan & Reymond; Abstain: Kirby; Absent: Waterman). No public comments. 7.2 Study Session on Changing Accounting Period from Calendar Year to Fiscal Year Chair Engelhart introduced the item. Staffpersons Garcia and Edgar presented the item. Garcia provided the background: the Board approves the annual adjustment and registration fees. Currently, the Board passes its budget in October and the budget runs on a calendar year. All other City funds run on a fiscal year. This situation creates challenges and potential for errors. This item was brought before the Board as a study session in September 2019 and the Board requested and additional option be investigated by staff and brought back for their consideration. Garcia covered the challenges with the calendar year budget, including: the City’s financial software only tracks on the fiscal year based on best practices, and, that the City is auditing on a fiscal year. Both of these facts require finance staff to extract the data and manually enter into another spreadsheet which is time- intensive and creates opportunity for errors. The current process is that the budget is passed in October, along with the annual growth adjustment. Registration fees are also approved at the October meeting and are based on a projected budget, not actual expenses incurred. There is currently no formal reserves account, however, the Board has been putting aside funds for an informal reserves in their budget every year. A formal reserves account is monies put aside for specific purposes that the Board has to sign off on in a resolution. Staff will recommend that a formal reserves account is created. Edgar covered the recommendation to change the budget to a fiscal year cycle. The registration fees would remain as they were, being adopted in October and collected in February. The budget study session would be moved from September to April, with the new budget being adopted in April. The registration fees would be set based on the previous year’s actual costs, rather than projected budget. This change would require no amendments to the ordinance or Rules and would reduce the variances in what is collected and what is spent. This covers the main budget timeline changes, as the annual adjustment fees and registration would stay the same. Edgar went over the budget and expense variances which have been significant in the past four years. Edgar gave an example: in 2016, the Board collected more than $37,000 more in registration fees than what was expended that year. Moving to a fiscal year budget could alleviate these discrepancies and save the tenants money. Edgar then outlined the structure of the funds, including the Reserve Funds account which covers money set aside for petitions and unanticipated operational expenses. To use these reserves, a resolution would need to be passed to use these monies. After the Operational and Reserve Funds are covered, this leaves the General Fund Balance. Edgar stated that the Board’s General Fund Balance is currently very healthy. Edgar then addressed how registration fees are set with more detail. She stated that setting the fees based on actual expenses allows the Board to better manage its funds and avoid potentially over-collecting. With this new fund structure, there will be a cushion in the fund balance to always ensure enough funds to cover operational expenses while at the same time having reserve funds for tenant petitions and other unanticipated expenses. Edgar went over the transition of registration fees from calendar to the fiscal year. This would require the Board to pass a 6-month budget to cover the period of January 1, 2021 through June 30, 2021, after which the Board would begin approving budgets on a fiscal year basis, starting with the fiscal year of July 2021- June 2022. In the transition period, the registration fees would have already been collected and can then offer a relief to the tenants for their fees. The tenants, who are struggling, will have the ability to defer their fees until February 2022 to allow the transition to occur. If the Board approves this action, it will have to pass a 6- month budget in October 2020. In April, the Board would have to pass a 12- month budget to run from July 1, 2021 to June 30, 2022. The annual growth adjustment and registration fees would be approved in October, based on actuals. Garcia covered Option 2, which is not recommended by staff. Staff is presenting this option at the Board’s direction. In this option, the Board’s budget would be moved to a fiscal year along with the registration fees, due to concern about running in the red. Option 1 would also prevent the budget from running into the red. Garcia covered the challenges with implementing Option 2, including the staff and attorney time required; amendment of the Rules and Regulations that would be required; and, that it could not go into effect until 2022. The registration fees would continue to be set on projected budget, rather than the previous year’s actual expenses. Garcia stated that another challenge is that the due dates would not match the annual growth adjustment, and that staff would have to send two letters to landlords every year, which could require tenants to have more than one increase for year. Garcia reiterated again that Option 1 is what staff is recommending and that prior concerns with this have been addressed. Garcia again covered the benefits of this option including: no amendments to the Ordinace or Rules would be required; could go into effect on January 1, 2021; that there are sufficient funds to cover expected and unanticipated expenses; that the registration fees would be set on actual expenses rather than than the projected budget; and that the Board’s budget would match the City’s fiscal year cycle. Chair Engelhart stated that he would oppose the decision to move to a fiscal year budget because: presentation and report indicate that the Board is mismanaging the homeowners’ funds by staying on a calendar year cycle; and that the Board can reimburse the City for the expense to extract the data to continue working on a calendar year cycle. Finnegan stated that there are different tools and technology that the City uses to currently report out and that they could increase their efficiencies by changing to a fiscal year and that it would save staff time. Finnegan stated this is an opportunity to realign to a fiscal year cycle to better report and allocate and define what the funds are. Finnegan requested to see what the cost of the annual registration fees would have been per resident based on the previous year’s actual expenses, rather than the projected budget, at the next presentation. Garcia shared the comparison requested per the Chair’s approval. Garcia showed the expended versus the actuals going back to 2016. Garcia also clarified that the Board was cautious and careful with the funds in the past, managing it well to provide sufficient reserves. Garcia stated that the Board has been a good steward within the system that existed. Finnegan requested again to see the comparison of the fees by annual resident cost. Reymond stated that he is in favor of Option 1 and that the Board costs the residents by looking at the reserve funds, which kept growing. Reymond wanted clarification if the Board would defer residents’ registration fees for this coming year. Garcia confirmed that staff is recommending in Option 1 that no registration fees be collected in 2021. Reymond then asked if the funds were not necessary in future fiscal years, would the Board still require residents to pay registration fees for each year. Garcia clarified that under Option 1, residents would not have to pay on the coming year, and that the following year, the Board would recoup the costs incurred in that fiscal year. Garcia stated that there would be enough funds to cover this time period and that, in February 2022 the registration fees would be collected based on the prior year’s actual expenses. Reymond confirmed that the registration fees would be brought back to the Board to be set every year. Chair Engelhart stated that the waiver should be offered as part of budgeting process. Garcia clarified that it’s called a waiver for an easy way to talk about it and that many low income residents have been hard hit by COVID-19, and would benefit from this waiver. The Board will not be setting this as a precedent and can offer it now to benefit the tenants, and then base fees on actual expenses from the year prior when moving to a fiscal year cycle. Chair Engelhart stated that he would like to see a cost benefit study to see what it costs the City versus the Board to manage the funds. Garcia stated that the City has been managing the funds. Chair Engelhart disagreed, stating that the Board has been managing the funds, and wanted to know what the costs were to stay on a calendar budget versus fiscal year budget. Garcia stated that it would not cost the City money to change to a fiscal year. Staff person Beiswenger joined the meeting to note that calendar year budget costs the City extra expense compared to manage the fiscal year due to staff time. Orozco stated that two years ago there were issues with reconciliation, that the Board did not have appropriations, and that the offset between the calendar and fiscal year created a situation where the budget was misrepresented. Orozco stated that this resulted in an audit finding, with overspent appropriations. Because the Board runs on a calendar year, staff has to make predictions. Working on a fiscal year provides a cushion to make it easier to manage funds and make predictions. Orozco clarified that there was not fund mismanagement, however, having the Board on calendar year cycle creates challenges since it requires predictions. Chair Engelhart asked the Boardmembers what their position is. Kirby stated that she can take a position and is not abstaining, and that her position is Option 1. Kirby stated this preference because money had to be taken out of the budget due to the issue Orozco described. Kirby clarified that she does not think Staff stated that there was any mismanagement. Kirby added that it would be easier in the long term and that waiving funds will help tenants. Reymond stated he would choose Option 1. Finnegan stated she would select Option 1. Chair Engelhart instructed staff to write the resolution to Option 1. No public comment. 7.3 Study Session on 2021 Budget Chair Engelhart introduced the item. Staffpersons Garcia and Edgar presented the item. Garcia covered the background information including: every September a budget study session is held and that October the budget is adopted and registration fees are adopted. If the Board switches to a fiscal year budget, then a 6-month budget would need to be passed. The study session offers both 6- and 12- month budget scenarios. The 6-year budget would be a bridge to when the full 12- month fiscal year budget would start in July 1, 2021. Garcia covered special projects next, stating that no major amendments to the Rules were anticipated, and staff is still recommending providing some funds for this in case of anything unexpected. Staff is requesting funds for the records retention project which involves converting all of the Board files into digital files which will take up less space, and when requested for information are submitted, it is a more efficient process. This would require staff to go through boxes and sort items for scanning. Garcia then introduced the recommended budget, which is based on the average past four years, and the alternate budget, which mirrors the current budget. Edgar continued, stating that the 6-month budget is the 12-month budget is cut in half. Edgar covered the 6-month budget for operations, reserves and the fund balance. Edgar then compared the recommended budget items, compared to the alternate budget items. Edgar then presented the 12-month budget for operations, reserves and the fund balance, followed by the 12-month recommended budget items, compared to the alternate budget items. Edgar stated that the next steps would be to bring the budget recommended by the Board to the next meeting. Kirby asked if can you borrow from different budgets or other categories to come out with net funds. Edgar confirmed that this could occur as long as the bottom line balances out, and that this is why there is a reserve set aside. Kirby clarified that other lines could be borrowed from rather than the reserves and Edgar confirmed that reserves would only be used if all other categories were tapped out. Finnegan and Reymond stated that they had no comments or questions. Garcia asked if the Board was okay being presented with the 6-month budget. Finnegan asked if the Board is voting on the budget at the next meeting and that she is comfortable with Option 1, and to proceed with a 6-month budget. Chair Engelhart clarified if the Board will vote on the budget year cycle and then vote on the budget. Kirby and Reymond said they had already selected Option 1. Garcia clarified that a vote would still need to be held for the budget cycle, and that a budget will be passed in October and will also need to be approved with a resolution at the next meeting. Chair Engelhart asked for a consensus if the budget year cycle and budget should be on the same or different resolutions. By consensus, the Board selected two resolutions to be presented for the budget cycle and to pass the next budget. No public comment. Waterman joined the meeting at 7:12 PM, and stated that she would vote for Option 1. 8. ITEMS FROM THE BOARD Chair Engelhart recognized staff person Garcia for her hard work, and Kirby and Reymond agreed. 9. ITEMS FROM THE STAFF Staff person Beiswenger noted that Boardmember Waterman joined the meeting and had emailed him with technological challenges. 10. SECOND PUBLIC COMMENT PERIOD (Items not on Agenda). None. 11. NEXT REGULARLY SCHEDULED MEETING October 1, 2020. 12. ADJOURNMENT Meeting was adjourned at 7:23 PM. 1 DATE: October 1, 2020 TO: Rent Appeals Board FROM: Jenna Garcia, Housing Administrator SUBJECT: Item 7.1: Determine the Annual General Adjustment to the Maximum Allowable Space Rent RECOMMENDED ACTION: Consider and announce an Annual General Adjustment (“AGA”) in mobile home space rents. DISCUSSION: The Mobile Home Ordinance and Rules & Regulations obligate the Rent Appeals Board to consider and announce an Annual General Adjustment (“AGA”) in mobile home space rents prior to November 1st of each year. The AGA is based on the change in the National Consumer Price Index (“CPI”), Urban Wage Earners and Clerical Workers, U.S. City average. The Bureau of Labor Statistics publishes the CPI statistics every month and the latest statistics are available for August 2020. Table 1: History of Annual General Adjustments (AGAs) Date CPI Index Net Index Change Percent Change Rounded to the Nearest 1/10 of 1%2 Effective Date On or After Actual Annual General Adjustment August 2011 223.326 9.121 4.258% 4.3% 2/1/2012 3.8% August 2012 227.056 3.730 1.670% 1.7% 2/1/2013 1.2% August 2013 230.359 3.303 1.454% 1.5% 2/1/2014 1.0% August 2014 234.030 3.671 1.594% 1.6% 2/1/2015 1.1% August 2015 233.366 -0.664 -0.284% -0.3% 2/1/2016 0.0% August 2016 234.904 1.423 0.609% 0.6% 2/1/2017 0.1% August 2017 239.448 4.544 1.898% 2.0% 2/1/2018 1.5% August 2018 246.336 6.888 2.796% 2.8% 2/1/2019 2.3% August 2019 250.112 3.776 1.510% 1.5% 2/1/2020 1.0% August 2020 253.597 3.485 1.393% 1.40% 2/1/2021 0.90% The net change in the CPI from August 2019 to August 2020 is 3.485; the percentage change is 1.4% (rounded). The Mobile Home Ordinance provides that the AGA should be one-half of one percent (.5%) less than the percentage change in the CPI; and per Section 9.70.050 of the Mobile CITY OF ROHNERT PARK Mobile Home Rent Appeals Board 2 Home Ordinance, the Annual General Adjustment shall not exceed four percent (4%). Given that the index has increased 1.4% over the last 12 months, there shall be an annual general adjustment of 0.9%. For reference, past AGAs are listed in Table 1. STAFF RECOMMENDATION: Staff recommends the Board adopt resolution 2020-01 to determine the annual general adjustment of the maximum allowable space rent in effective on or after February 1, 2021 based on the Annual General Adjustment. Planning Manager Approval Date: 9/25/2020 Attachments (list in packet assembly order): 1. Resolution No. 2020-01 RESOLUTION NO. 2020-01 A RESOLUTION OF THE ROHNERT PARK RENT APPEALS BOARD DETERMINING THE ANNUAL GENERAL ADJUSTMENT OF THE MAXIMUM ALLOWABLE SPACE RENT EFFECTIVE ON OR AFTER FEBRUARY 1, 2021 WHEREAS, Section 9.70.050 of the Rohnert Park Municipal Code and Section 4.01 of the Rules and Regulations provides that the Rohnert Park Rent Appeals Board shall determine and announce the Annual General Adjustment of the Maximum Allowable Rent for a mobile home space on or before November 1st of each year; and WHEREAS, the Section 9.70.050 of the Rohnert Park Municipal Code provides that the Annual General Adjustment shall be one half of one percent (0.5%) less than one hundred percent (100%) of the percent change in the Consumer Price Index, Urban Wage Earners and Clerical Workers in the United States (CPI), rounded to the nearest one-tenth of one percent, not to exceed four percent (4%); and WHEREAS, the Bureau of Labor Statistics publishes the CPI and has reported the CPI for the month of August. The CPI was 253.597 in August 2020, compared to a CPI of 250.112 in August 2019, an increase of 3.485 points or a 1.4 percent (rounded); and WHEREAS, pursuant to Section 9.70.050 of the Rohnert Park Municipal Code, the Annual General Adjustment shall be 0.9% percent; and WHEREAS, the anniversary date, upon which all properly noticed individual and annual general rent adjustments may become effective, for Rancho Feliz Mobile Home Park and for Rancho Grande Mobile Home Park is February 1; the anniversary date for Las Casitas Mobile Home Park is March 1; the anniversary date for Rancho Verde Mobile Home Park and for Valley Village Mobile Home Park is April 1. NOW, THEREFORE, BE IT RESOLVED by the Rohnert Park Rent Appeals Board that mobile home park owners in Rohnert Park are authorized to increase the space rental amount on their park’s anniversary date in 2021. BE IT FURTHER RESOLVED, by the Rohnert Park Rent Appeals Board that the Annual General Adjustment of the maximum allowable space rent effective on or after February 1, 2021, is 0.9 percent (0.9%). DULY AND REGULARLY ADOPTED by the Rohnert Park Rent Appeals Board this 1st day of October, 2020. ROHNERT PARK MOBILE HOME PARKS RENT APPEALS BOARD ______________________________________ ATTEST: Chair _______________________________ Secretary AYES: ____ NOES: ____ ABSENT: ____ ABSTAIN: ____ Page | 1 DATE: October 1, 2020 TO: Rent Appeals Board (RAB) FROM: Manuel Orozco, Accounting Supervisor, Katie Edgar, Accountant, Yosselyn Valencia, Accountant & Jenna Garcia, Housing Administrator SUBJECT: Item 7.2 – Consider Adopting a Resolution to Change Accounting Period from Calendar Year to Fiscal Year and To Calculate the Annual Registration Fees Based on the Previous Fiscal Year’s Actual Expenses RECOMMENDED ACTION: Consider adopting a resolution to change the accounting period of the Rent Appeals Board from a Calendar Year budget that runs January 1-December 31 to a Fiscal Year period that runs July 1 -June 30 and to calculate the annual registration fees based on the previous fiscal year’s actual expenses. BACKGROUND: Since its establishment, the Rent Appeals Board (“Board”) has operated under established Rules and Regulations adopted to interpret Ordinance No. 494. Each October, the Board adopts its budget and establishes registration fees to finance its expenses. While all other City programs are now on a fiscal year budget cycle, which operates from July 1st to June 30th, the Board has remained on a calendar year budget cycle, operating from January 1st to December 31st. This has created challenges for tracking and managing the budget and expenses. The Mobile Home Park Rent Appeals Board Ordinance and the Board’s Rules and Regulation do not require the Board to operate on a calendar year budget cycle. The City’s financial software system only tracks budgets and expenses within the fiscal year budgeting cycle, and the City is audited on a fiscal year basis. In order to prepare budget documents for the Board, staff must extract each month’s expenses from the system and manually enter it into an external spreadsheet. This is time-intensive and creates opportunity for errors. Additionally, because the budget cycle doesn’t match the system, there is the potential for timing issues – where an expense may fall within the “wrong year” because of when it was invoiced. On September 5, 2019, the Board conducted a study session to consider changing its budget cycle to a fiscal year. The Board considered this option and directed staff to look into an additional option of changing the budget cycle to fiscal year and changing the due date of the registration fees that fund the Board’s budget to July, instead of February. On September 3, 2020, the Board conducted another study session on this topic and considered both options. After consideration, the Board indicated support for moving its budget cycle to a fiscal year while maintaining the February due date of the registration fees. The Board directed CITY OF ROHNERT PARK Mobile Home Rent Appeals Board Page | 2 staff to bring back a resolution in support of this action to this meeting and requested staff provide some additional information. DISCUSSION: The option selected by the Board was to move the budget cycle to fiscal year, but keep registration fees due in February. This moves the Board’s budget study session from October to April and means that the Board would set registration fees based on previous year’s actual costs rather than projected costs. This change requires no amendments to the Ordinance or Rules and Regulations. See the current and proposed timelines in Table 1 below. Table 1: Current and Proposed Budget Timeline Month Current Proposed January New budget year starts February Registration fees due Registration fees due April Approve fiscal year budget July New budget year starts September Study session for budget October Set the annual general adjustment Approve calendar year Budget Set registration fees based on projected expenses for coming year Set the annual general adjustment Set registration fees based on previous year’s actual expenses At its September 3, 2020 meeting, the Board requested that staff share a graph showing how setting registration fees based on actual expenses from the previous year would have looked like in past years. Table 2 below includes the following information sorted by Calendar Years 2016 through 2020: 1. Budgeted: The amount budgeted for each calendar year, as approved by the Board; 2. Expended: The amount expended for each calendar year; 3. Actual Annual Fee Charged: The annual fee actually charged to each tenant living in a rent-controlled space, calculated by taking the total amount budgeted for that year (Column 1) and dividing it by the total number of rent-controlled spaces in the City; 4. Annual Fee per “New System”: What the annual fee would have looked like under the proposed “new system,” calculated by taking the total amount expended for the previous year (Column 2) and dividing it by the total number of rent-controlled spaces in the City; 5. Difference: The annual fee per “new system” (Column 4) minus the actual annual fee charged (Column 3) – a negative number means that each tenant would have paid this much less in their annual fee, a positive number means that each tenant would have paid this much more. Page | 3 Table 2: Actual Annual Fee Charged Versus Annual Fee Per “New System”* Year 1. Budgeted 2. Expended 3. Actual Annual Fee Charged Based on Projected Budget 4. Annual Fee per "New System" Based on PY's Expenses 5. Difference 2016 $87,900.00 $50,601.44 $74.18 $54.24 -$19.94 2017 $99,100.00 $94,986.42 $84.56 $43.18 -$41.38 2018 $87,900.00 $78,900.07 $74.24 $80.23 $5.99 2019 $82,900.00 $52,486.30 $70.92 $67.49 -$3.42 2020 $84,730.00 $8,798.96* $71.99 $44.59 -$27.39 TOTAL $442,530.00 $285,773.19 $375.89 $289.73 -$86.16 * This includes only funds expended year-to-date through June 30, 2020. For each of the five years reported above, there would have been only one year (2018) in which tenants would have paid more under the “new system.” Applying the “new system” to past years, tenants would have paid $86.16 less over the course of the past five years. It is important to keep in mind that the Board has been prioritizing building up their Reserves fund over the past five years and these collected fees are essential to maintaining a healthy fund balance and Reserves fund. However, since the Reserves and fund balance are now healthy and adequate, staff sees no reason for the Board need to continue increasing its fund balance at this time. Also at its September 3, 2020 meeting, the Board requested that staff show a “Cost/Benefits Analysis” with total amount of time and cost associated with finance staff preparing and processing expense reports for the Board under a calendar year budget cycle versus a fiscal year budget cycle. This information is provided in Table 3 below. Table 3: Cost/Benefits Analysis of Time Spent Processing Expense Reports Budget Year Type Staff Hours per Month to Process Fully Burdened Finance Staff Rate Total Cost Incurred Per Month Calendar Year (CY) 8 hrs accountant time 2 hrs supervisor review $67.04/hr $74.64/hr $685.60 Fiscal Year (FY) 1 hr accountant time 1 hr supervisor review $67.04/hr $74.64/hr $141.68 Difference (CY-FY) 8 hours NA $543.92 As you can see, Finance estimates that it currently takes them a total of 10 hours per month to process and provide expense reports to the Board. The reason for this is that the City’s financial system tracks budget and expenses in a fiscal year. In order to provide this information in a calendar year format, staff must extract each month’s expense data from the system and Page | 4 manually enter it into the Board’s preferred spreadsheet. Including reviewing for errors, this takes a City accountant a full day’s worth of work plus two hours of supervisor review, which is the cost equivalent of $685.60 per month. In a fiscal year budget cycle, this process only takes 2 hours to complete because the data is already inputted in a fiscal year format. To provide this information in a fiscal year format, staff only needs to run a report and then export into the Board’s preferred spreadsheet. Thus, aligning the Board’s accounting cycle with the City’s fiscal year accounting software system will result in a reduction of 8 hours per month of finance staff time and a cost savings of $543.92 a month. It should be noted that the Board has not historically been directly charged for these costs because finance staff time is included in the cost allocation plan line item of the budget. The cost allocation plan is a flat amount in the Board’s budget which covers: (1) the cost of using the Council Chambers facilities for meetings (or the City’s Zoom account for virtual meetings); IT staff time to set up, livestream and record Board meetings; Finance staff time to process invoices, input data into the finance software system, and prepare staff reports, budgets and expense reports; Finance and auditor time involved with the annual auditing of the Board’s budget; and any staff time from the City Clerk’s office (usually related to file identification and management.) The cost allocation plan amount budgeted for Calendar Year 2020 is $2,830, and was $2,000 for the prior two years’ budgets. Using a cost allocation model, instead of having finance staff bill their time directly to the Board, has likely saved the Board quite a bit of money. However, because of the amount of time involved in processing and providing expense reports to the Board under the calendar year accounting budget cycle, Finance has not had the bandwidth to provide these on a monthly basis for the past few years. If the Board approves the resolution to move its accounting cycle to a fiscal year cycle, Finance would commit to providing expense reports monthly – whether or not the Board holds a meeting. If the Board approves the resolution to move from a calendar year budget cycle to a fiscal year budget cycle today, the next step would be to pass a six-month budget, which would cover the period of January 2, 2021 through June 30, 2021. (The budget is the next item on today’s agenda.) Then, in April 2021, the Board would pass a twelve-month budget based on the fiscal year. In subsequent years, the annual general adjustment and registration fees would continue to be approved in the October meeting, but the budget would be approved in the April meeting. OPTIONS CONSIDERED: 1. Adopt a Resolution to Change Accounting Period from Calendar Year to Fiscal Year (recommended). This is consistent with the Board’s direction at its September 3, 2020 meeting. Changing to a Fiscal Year budget cycle would eliminate additional work to provide basic financial reports, reduce opportunities for errors and appropriation challenges, and align with the rest of the City’s funds. This would also align the tenant registration fees with the actual expenses. 2. Do not Adopt a Resolution to Change Accounting Period from Calendar Year to Fiscal Year (not recommended). This is inconsistent with the Board’s direction at its September 3, 2020 meeting. Page | 5 FISCAL IMPACT/FUNDING SOURCE: There is no direct fiscal impact to the Board associated with the recommended action. However, significant labor cost savings are anticipated due to reduced staff time related to the fiscal year budget cycle. Planning Manager Approval Date: 9/25/2020 Attachments (list in packet assembly order): 1. Resolution No. 2020-02 RESOLUTION NO. 2020-02 A RESOLUTION OF THE ROHNERT PARK RENT APPEALS BOARD TO CHANGE THE ACCOUNTING PERIOD OF THE RENT APPEALS BOARD FROM A CALENDAR YEAR BUDGET THAT RUNS JANUARY 1-DECEMBER 31 TO A FISCAL YEAR BUDGET THAT RUNS JULY 1-JUNE 30 AND TO CALCULATE ANNUAL REGISTRATION FEES BASED ON THE PREVIOUS FISCAL YEAR’S ACTUAL EXPENSES WHEREAS, paragraph N of Section 9.70.030 of the Rohnert Park Municipal Code (“The Rohnert Park Rent Appeals Board Ordinance”) authorizes the Rohnert Park Rent Appeals Board (“Board”) to finance its reasonable and necessary expenses by charging mobile home park owners an annual registration fee which may be passed through to residents on rent control in the form of rent increases prorated over the year; and WHEREAS, the Board has historically adopted its budget and established registration fees at its October meeting and has operated on a Calendar Year accounting cycle; and WHEREAS, neither Section 9.70.030 of the Rohnert Park Municipal Code (“The Rohnert Park Rent Appeals Board Ordinance”) nor the Rohnert Park Rent Appeals Board Rules & Regulations require the Board to operate on a Calendar Year accounting cycle; and WHEREAS, all other funds managed by City of Rohnert Park Finance Department (“Finance”) operate on a Fiscal Year accounting cycle running from July 1 through June 30; and WHEREAS, consistent with generally accepted accounting principles (GAAP), Finance tracks all budgets and expenses, and conducts annual audits within a Fiscal Year accounting cycle, which can create challenges for managing the Board’s budget and expenses; and WHEREAS, at its September 5, 2019 meeting, the Board conducted a study session to consider changing its accounting cycle to a fiscal year and directed staff to hold another study session and provide additional information; and WHEREAS, at its September 3, 2020 meeting, the Board conducted another study session to consider changing its accounting cycle to a fiscal year and calculating its registration fees based on the previous fiscal year’s actual expenses rather than the coming fiscal year’s projected budget, and directed staff to return to the October 2020 meeting with a resolution approving these changes. NOW, THEREFORE, BE IT RESOLVED by the Rohnert Park Rent Appeals Board that the Board agrees to operate its budget on a Fiscal Year accounting cycle, running from July 1 to June 30, starting July 1, 2021. BE IT FURTHER RESOLVED, by the Rohnert Park Rent Appeals Board that a six-month budget to cover the transition period of January 1, 2021 through June 30, 2021 will be passed by the Board at their October 2020 meeting. BE IT FURTHER RESOLVED, by the Rohnert Park Rent Appeals Board that annual registration fees shall here forth be set based on the previous fiscal year’s actual expenses. DULY AND REGULARLY ADOPTED by the Rohnert Park Rent Appeals Board this 1st day of October, 2020. ROHNERT PARK MOBILE HOME PARKS RENT APPEALS BOARD ______________________________________ ATTEST: Chair _______________________________ Secretary AYES: ____ NOES: ____ ABSENT: ____ ABSTAIN: ____ 1 DATE: October 1, 2020 TO: Rent Appeals Board FROM: Manuel Orozco, Accounting Supervisor, Yosselyn Valencia, Accountant, Katie Edgar, Accountant & Jenna Garcia, Housing Administrator SUBJECT: Item 7.3: Consider Adoption of 2021 Budget and Accounts Receivable Write- off of Outstanding Balance of 2014 Rancho Verde Mobile Home Park Petition RECOMMENDED ACTION: Adopt Resolution No. 2020-03, approving and adopting a six-month budget for January 1, 2021 through June 30, 2021 and Resolution No. 2020-04 authorizing the write-off the outstanding accounts receivable balance for the 2014 petition costs of the Rancho Verde Mobile Home Park in the amount of $89,033.99. BACKGROUND: The Rohnert Park Mobile Home Ordinance (“Ordinance”) was adopted pursuant to a vote of the people at a special election held on December 8, 1987. The Ordinance was established to prevent unreasonable rent increases while still assuring mobile home park owners a reasonable rate of return on their investment. The Ordinance established a rent appeals board (“Board”) consisting of five (5) appointed commissioners who serve four-year terms. The Board is empowered to set the rent ceiling for controlled rental spaces, issue orders, rules and regulations, conduct hearings, and charge fees (“Registration Fees”) to finance its reasonable and necessary expenses. Each October, the Board adopts its budget and establishes registration fees. The Board announces the estimated annual registration fee per rent-controlled mobile home space on or before November 1st of each year. Annual Registration Fees are paid by each of the five (5) mobile home parks (collectively, “Parks”) on or before February 1st of each year. At its September 3, 2020 meeting, the Board directed staff to bring a resolution to this meeting to change the Board’s budget cycle from a calendar year to fiscal year and to calculate the annual registration fees based on the previous fiscal year’s actual expenses. (Item 7.2 of the October 1, 2020 meeting agenda.) As discussed in the September meeting, switching to a fiscal year budget changes the timing of certain budgeting activities. If the Board approves the resolution to change to a fiscal year budget, the Board would need to adopt a six-month budget at today’s meeting, which would cover the period of January 1 through June 30, 2021. Then, in April 2021, the Board would need to pass a twelve-month budget based on the fiscal year. In subsequent years, the annual general adjustment and registration fees would continue to be approved in the October meeting, but the budget would be approved in the April meeting. A resolution approving a six- month budget is attached as Resolution 2020-03. CITY OF ROHNERT PARK Mobile Home Rent Appeals Board 2 Landlords are permitted to pass through registration fees on a monthly basis to all residents not on long-term leases. The monthly pass-through amount starts on each park’s anniversary date. At its September 3, 2020 meeting, the Board considered the option of waiving registration fees for the coming year. Due to the economic impacts of COVID-19, many people today are struggling to make ends meet. Most people living in mobile home parks are low income, which makes them disproportionately affected. Because of the Board’s high fund balance and low funds expended in the current year, staff believes that the Board can offer tenants COVID relief by providing a registration fee waiver for the coming year. There will still be a cost for operating the Board, but fees would be deferred to the following year. This would also give the Board time to adjust to new its budget cycle. The Board indicated support for this proposal, and for that reason, staff has not included registration fees in this year’s resolution. Also at its September 3, 2020 meeting, the Board directed staff to bring back a resolution to this meeting to write-off the outstanding accounts receivable balance for the 2014 Petition Costs of the Rancho Verde Mobile Home Park in the amount of $89,033.99. This is attached as Resolution 2020-04. DISCUSSION: Each year, the Board requests that each mobile home park provide the number of mobile home spaces that are subject to rent control. The annual fee for each space is determined by the total number of spaces in Rohnert Park subject to rent control. Although the Board directed staff not to collect registration fees for the coming year, staff still gathered the total number of rent controlled spaces in 2021 for the Board’s records. The total is expected to be 1,176 with the following in each park: • Rancho Verde: 300 spaces • Valley Village: 285 spaces • Rancho Feliz: 296 spaces • Rancho Grande: 170 spaces • Las Casitas: 126 spaces Due largely to the impacts of COVID-19, expenses in 2020 have been extremely low. To date, the Board has only held one meeting and has had no petitions filed. As a safety measure, staff have been primarily working remotely, and for that reason, has not made progress on the Rent Appeals Board digital file organization project. Included as Attachment 2 to this item is the Current Calendar Year Expense Report with details through June 2020. Six-Month Budget Attached as Exhibit A to Resolution 2020-03 (Attachment 1) is the proposed six-month budget with a recommended budget and an alternate budget. The recommended budget is based on average expenses from the past five years for all categories except Project Expenses and the Cost Allocation Plan. Project Expenses are based on projections for special projects in the coming year and the Cost Allocation Plan amount is set by Finance. The alternate budget mirrors the current year’s budget. Both budgets are cut in half to cover the Board’s expenses through June 30, 2021. For the Board’s reference, we have attached the actual expense detail for 2015 to 2019, see Attachment 3. 3 The recommended budget would assign $100,000 to Reserves, $39,831 Operational Funds for expenses incurred during January 2021 through June 2021. The remaining $75,287 would rest in fund balance, and would be utilized for the Fiscal Year 2021/22 operational budget, which would start July 1, 2021. Table 1: Fund Structure – Six Month Budget Fund Type Definition Amount Operational Funds Covers normal operational budgeted expenses $39,831 Fund Balance Funds remaining in the fund after operations and reserves are covered $74,926 Reserves Money set aside for specific purposes, would cover tenant petitions and unanticipated operational expenses $100,000 The table below shows the amount recommended for each category in the budget and a brief description of the cost. See Exhibit A of Resolution 2020-03 for the full proposed budget detail. Table 2: Recommended Budget by Expense Category Category Amount Description Total Staff $17,500 Includes costs of development services staff and the City Attorney in supporting the regular operations of the Board. Total Petitions $11,000 Includes costs associated with tenant petitions, including duplication, postage, legal support and hearings. (Landlord petitions are paid for by the landlords.) Total Other $188 Includes cost of supplies, postage and publications to support the regular operations of the Board. Total Project $10,500 Includes some funds set aside for the Rules and Regulations Update Project, in case the Board needs to make minor amendments to the Rules. The majority of project funds are set aside for the Records Retention Project, which will allow the Board to sort, purge and scan the Board’s physical files to be converted into an electronic format. 4 Table 2: Recommended Budget by Expense Category (cont.) Category Amount Description Total Miscellaneous $643 Includes cost allocation plan which is a flat amount in the Board’s budget that covers: (1) the cost of using the Council Chambers facilities for meetings (or the City’s Zoom account for virtual meetings); IT staff time to set up, livestream and record Board meetings; Finance staff time to process invoices, input data into the finance software system, and prepare staff reports, budgets and expense reports; Finance and auditor time involved with the annual auditing of the Board’s budget; and any staff time from the City Clerk’s office (usually related to file identification and management.) TOTAL $39,831 Total recommended budget for January 1 – June 30, 2021 FINANCIAL IMPACT: Adoption of Resolution 2020-04 to write-off the outstanding accounts receivable balance for the 2014 Petition Costs of the Rancho Verde Mobile Home Park would result in a fund balance reduction of $89,033.99 due to the write-off of the receivable and the reversal of prior year revenue. After this reduction, the fund balance would be $214,757, which are sufficient funds for the Board’s budget and reserves in the coming year. Adoption of Resolution 2020-03 would approve a six-month budget in the amount of $39,831, which would leave $74,926 in fund balance and $100,000 in reserves. OPTIONS CONSIDERED: 1. Adopt Resolution No. 2020-03, approving a six-month budget for January 1 through June 30, 2021 and waiving registration fees for 2021, and Resolution No. 2020-04 authorizing the write-off the outstanding accounts receivable balance for the 2014 Petition Costs of the Rancho Verde Mobile Home Park in the amount of $89,033.99 (recommended.) This is consistent with the Board’s prior direction. 2. Amend Resolution No. 2020-03, to approve and adopt a twelve-month budget for Calendar Year 2021 and adopt Resolution No. 2020-04 authorizing the write-off the outstanding accounts receivable balance for the 2014 Petition Costs of the Rancho Verde Mobile Home Park in the amount of $89,033.99 (not recommended.) If the Board chooses not to change from a calendar year budget cycle to a fiscal year budget cycle, the Board may choose to amend resolution No. 2020-03 to adopt a twelve-month budget. While this option is not recommended by staff, the Board must pass a budget at today’s meeting. 5 Planning Manager Approval Date: 9/25/2020 Attachments (list in packet assembly order): 1. Resolution No. 2020-03 a. Exhibit A: 2021 Six-month Budget Worksheet b. Exhibit B: 2021 Twelve-month Budget Worksheet 2. Current Calendar Year Expense Report with details through June 2020 3. Actual Expense Detail for 2015 to 2019 4. Resolution No. 2020-04 RESOLUTION NO. 2020-03 A RESOLUTION OF THE ROHNERT PARK RENT APPEALS BOARD APPROVING AND ADOPTING A BUDGET AND ESTABLISHING REGISTRATION FEES FOR MOBILE HOME SPACES FOR 2021 WHEREAS, paragraph N of Section 9.70.030 of the Rohnert Park Municipal Code authorizes the Rohnert Park Rent Appeals Board (“Board”) to finance its reasonable and necessary expenses by charging mobile home park owners an annual registration fee which may be passed through to residents on rent control in the form of rent increases prorated over the year; and WHEREAS, the Board received and reviewed two (2) worksheets to administer mobile home rent control in accordance with the City of Rohnert Park Mobile Home Ordinance: one budget worksheet is for a six-month budget covering the period of January 1, 2021 through June 30, 2021 (Exhibit A) and one budget worksheet is for a twelve-month budget covering the period of January 1, 2021 through December 31, 2021 (Exhibit B); and WHEREAS, in Agenda Item 7.2 of the Board’s October 1, 2020 meeting, the Board considered approving Resolution No. 2020-02 which would change the Board’s accounting period from a Calendar Year to a Fiscal Year; and WHEREAS, if Resolution No. 2020-02 is approved at the October 1, 2020 meeting, this would necessitate the passing of a six-month budget to cover the transition period of January 1, 2021 through June 30, 2021; and WHEREAS, if Resolution No. 2020-02 is not approved at the October 1, 2020 meeting, the Board must approve a twelve-month budget for Calendar Year 2021; and WHEREAS, the Board received and reviewed the six-month budget worksheet covering the period of January 1, 2021 through June 30, 2021 (Exhibit A) to administer mobile home rent control in accordance with the City of Rohnert Park Mobile Home Ordinance in the amounts of $39,831 (Recommended), and $41,593 (Alternate); and WHEREAS, the Board adopted $39,831 (Recommended) for its proposed six-month budget covering the period of January 1, 2021 through June 30, 2021, which will allow for the adequate implementation of the Mobile Home Ordinance according to the adopted Board rules; and WHEREAS, it has been determined that there will be approximately 1,176 rent controlled mobile home spaces within the five mobile home parks in 2021; and WHEREAS, the Board has agreed to defer registration fees for 2021, granting mobile home owners some relief from the economic impacts of COVID-19; and WHEREAS, the anniversary date, upon which all properly noticed individual and annual general rent adjustments may become effective, for Rancho Feliz Mobile Home Park and for Rancho Grande Mobile Home Park is February 1; the anniversary date for Las Casitas de Sonoma Mobile Home Park is March 1; the anniversary date for Rancho Verde Mobile Home Park and for Valley Village Mobile Home Park is April 1. NOW, THEREFORE, BE IT RESOLVED, by the Rohnert Park Rent Appeals Board that it does hereby approve and adopt the recommended Six-Month 2021 Budget, a copy of which is attached hereto and is made a part of this Resolution. BE IT FURTHER RESOLVED, that the Board defers registration fees due for 2021, granting mobile home owners some relief from the economic impacts of COVID-19. DULY AND REGULARLY ADOPTED by the Rohnert Park Rent Appeals Board this 1st day of October, 2020. ROHNERT PARK MOBILE HOME PARKS RENT APPEALS BOARD ______________________________________ ATTEST: Chair _______________________________ Secretary AYES: ____ NOES: ____ ABSENT: ____ ABSTAIN: ____ Exhibit A to Resolution No 2020-03 2021 SIX-MONTH FISCAL YEAR BUDGET WORKSHEET 2018 2019 2020 Adopted Budget Adopted Budget Adopted Budget Recommended Alternate Staffing Costs: 6110 City Attorney $15,000.00 $15,000.00 $15,000.00 $4,250.00 $7,500.00 6108 Development Services $15,000.00 $15,000.00 $15,000.00 $13,250.00 $7,500.00 Total Staff Expenses $30,000.00 $30,000.00 $30,000.00 $17,500.00 $15,000.00 Petitions: 5100 Duplication $100.00 $100.00 $100.00 $375.00 $50.00 5130 Postage $200.00 $200.00 $200.00 $125.00 $100.00 6110 Other Legal-Hearings $25,000.00 $25,000.00 $25,000.00 $10,500.00 $12,500.00 Total Petitions Expenses $25,300.00 $25,300.00 $25,300.00 $11,000.00 $12,650.00 Other Expenses: 5100 Supplies $100.00 $100.00 $100.00 $75.00 $50.00 5130 Postage $300.00 $300.00 $300.00 $63.00 $150.00 5200 Publications $100.00 $100.00 $100.00 $50.00 $50.00 Total Other Expense $500.00 $500.00 $500.00 $188.00 $250.00 Rules and Regulations Update Project: Development Services Staffing Costs $18,000.00 $10,000.00 $8,000.00 $2,000.00 $4,000.00 City Attorney Costs $12,000.00 $5,000.00 $3,000.00 $1,000.00 $1,500.00 Records Retention Project n/a n/a $15,000.00 $7,500.00 $7,500.00 Total Project Expenses $30,000.00 $15,000.00 $26,000.00 $10,500.00 $13,000.00 Miscellaneous Expenses: 6425 Cost Allocation Plan $2,000.00 $2,000.00 $2,830.00 $643.00 $643.00 6600 Travel/Meetings $100.00 $100.00 $100.00 $0.00 $50.00 Add to Reserves $10,000.00 $0.00 $0.00 Total Miscellaneous Expenses $2,100.00 $12,100.00 $2,930.00 $643.00 $693.00 Total Expenses $87,900.00 $82,900.00 $84,730.00 $39,831.00 $41,593.00 Estimated Rent Control Spaces 1,184 1,169 1,177 1,176 1,176 Annual Registration Fee/Space $74.24 $70.92 $71.99 N/A N/A Monthly Fee/Space $6.19 $5.91 $6.00 N/A N/A Reserve Balance N/A N/A N/A $100,000.00 $100,000.00 January - June 2021 Budget Options Exhibit B to Resolution No 2020-03 2021 TWELVE-MONTH FISCAL YEAR BUDGET WORKSHEET 2018 2019 2020 Adopted Budget Adopted Budget Adopted Budget Recommended Alternate Staffing Costs: 6110 City Attorney $15,000.00 $15,000.00 $15,000.00 $8,500.00 $15,000.00 6108 Development Services $15,000.00 $15,000.00 $15,000.00 $26,500.00 $15,000.00 Total Staff Expenses $30,000.00 $30,000.00 $30,000.00 $35,000.00 $30,000.00 Petitions: 5100 Duplication $100.00 $100.00 $100.00 $750.00 $100.00 5130 Postage $200.00 $200.00 $200.00 $250.00 $200.00 6110 Other Legal-Hearings $25,000.00 $25,000.00 $25,000.00 $21,000.00 $25,000.00 Total Petitions Expenses $25,300.00 $25,300.00 $25,300.00 $22,000.00 $25,300.00 Other Expenses: 5100 Supplies $100.00 $100.00 $100.00 $150.00 $100.00 5130 Postage $300.00 $300.00 $300.00 $125.00 $300.00 5200 Publications $100.00 $100.00 $100.00 $100.00 $100.00 Total Other Expense $500.00 $500.00 $500.00 $375.00 $500.00 Rules and Regulations Update Project: Development Services Staffing Costs $18,000.00 $10,000.00 $8,000.00 $4,000.00 $8,000.00 City Attorney Costs $12,000.00 $5,000.00 $3,000.00 $2,000.00 $3,000.00 Records Retention Project n/a n/a $15,000.00 $15,000.00 $15,000.00 Total Project Expenses $30,000.00 $15,000.00 $26,000.00 $21,000.00 $26,000.00 Miscellaneous Expenses: 6425 Cost Allocation Plan $2,000.00 $2,000.00 $2,830.00 $1,285.00 $1,285.00 6600 Travel/Meetings $100.00 $100.00 $100.00 $0.00 $100.00 Add to Reserves $10,000.00 $0.00 $0.00 Total Miscellaneous Expenses $2,100.00 $12,100.00 $2,930.00 $1,285.00 $1,385.00 Total Expenses $87,900.00 $82,900.00 $84,730.00 $79,660.00 $83,185.00 Estimated Rent Control Spaces 1,184 1,169 1,177 1,176 1,176 Annual Registration Fee/Space $74.24 $70.92 $71.99 N/A N/A Monthly Fee/Space $6.19 $5.91 $6.00 N/A N/A Reserve Balance N/A N/A N/A $100,000.00 $100,000.00 2021 Budget Options MOBILE HOME SPACES -- RENT APPEALS BOARD -- EXPENSE REPORT Prepared by: Supervising Accountant Manuel Orozco January 1, 2020 - December 31, 2020 Rohnert Park Finance Dept. Cash Basis Year To Date Budget to Actual Detail The source of these amounts is Springbrook fund # 190 Approved OPERATING ACTIVITIES: Revenues: 3621 Registration Fees 84,730 42,114 30,380 10,439 - - - - - - - - - 82,932 General Fund Loan Proceeds - - - - - - - - - - - - - Interest Income - Quarterly - - - - 2,128 - 880 - - - - - - 3,008 Total Operating Revenues 84,730 42,114 30,380 10,439 2,128 - 880 - - - - - - 85,941 (3,041) 103.7% Staffing Costs: 6108 City Services-Direct staff time 15,000 2,150 780 - - - 1,170 - - - - - - 4,100 6425 Cost Allocation Plan -Indirect Exp 2,830 - - - - - 1,415 - - - - - - 1,415 4950 Wkrs Comp Allocation*- - - - - - - - - - - - - - 6423 Liability Premium Allocation*- - - - - - - - - - - - - - Total Staffing Costs 17,830 2,150 780 - - - 2,585 - - - - - - 5,515 12,316 30.9% Other Expenses: 5100 Duplication & Supplies 100 - - - - - - - - - - - - - 5130 Postage 300 - - - - - - - - - - - - - 5240 Publications 100 - - - - - - - - - - - - - Total Other Expense 500 - - - - - - - - - - - - - 500 0.0% Miscellaneous Expenses: 6110 City Attorney 15,000 - - - - - - - - - - - - - 5100 Office Supplies - - - - - - - - - - - - - - 6600 Travel and Meetings 100 Add to Reserves - - - - - - - - - - - - - - Repayment of General Fund Loan - - Total Miscellaneous Expenses 15,100 - - - - - - - - - - - - - 15,000 0.0% Rules & Regulations Update Project : 6109 Development Services Staffing Costs 8,000 1,272 26 - - - 94 - - - - - - 1,391 6109 City Attorney Costs 3,000 1,893 - - - - - - - - - - - 1,893 6109 Records Retention Project 15,000 Total Rules & Regulations Proj. Expense 26,000 3,165 26 - - - 94 - - - - - - 3,284 7,716 29.9% Total Operating Expenses 59,430 5,314 806 - - - 2,679 - - - - - - 8,799 35,531 19.8% NET OPERATING INCOME (LOSS) 25,300 36,800 29,574 10,439 2,128 - (1,799) - - - - - - 77,142 PETITION ACTIVITIES: Petition Revenues: 3622 Petition Revenue - - - - - - - - - - - - - - Total Petition Revenue - - - - - - - - - - - - - - - N/A Petition Expenditures: 5211 City Service Direct Staff Time - - - - - - - - - - - - - - 5211 Duplication & Supplies 100 - - - - - - - - - - - - - 5211 Postage 200 - - - - - - - - - - - - - 5211 - Other Legal-Hearings 25,000 - - - - - - - - - - - - - Total Petition Expense 25,300 - - - - - - - - - - - - - 25,300 0.0% Total Rent Appeals Board Revenue 84,730 42,114 30,380 10,439 2,128 - 880 - - - - - - 85,941 Total Rent Appeals Board Expense 84,730 5,314 806 - - - 2,679 - - - - - - 8,799 Monthly NET INCOME (LOSS) - 36,800 29,574 10,439 2,128 - (1,799) - - - - - - 77,142 Current Fund Balance by Month 303,791 340,591 370,165 380,604 382,732 382,732 380,933 380,933 380,933 380,933 380,933 380,933 380,933 OctCalendar Year 2020 2019 Budget Jan Feb Mar Apr May Jun Jul Aug Sep Nov Dec YTD Actual YTD Remaining Budget YTD % R:\RAB Reports & Spreadsheets\RAB 2020\RAB by Month P&L 2020 Assets Cash in Bank $292,707.67 Due from Petitioner 89,033.99 Total Assets $381,741.66 Liabilities & Fund Balance Liabilities Due to Other Funds Accounts Payable 68.64 Petitioner Deposit 740.16 Total Liabilities 808.80 Fund Balance Unrestricted as of December 31, 2019 303,790.94 Current Year Income (Loss) 77,141.92 Total Fund Balance as of June 30, 2020 380,932.86$ Total Liabilities and Fund Balance $381,741.66 City of Rohnert Park Rent Appeals Board Balance Sheet As of June 30, 2020 For Management Purposes Only Prepared by City Finance Department 2020 Budget Year to Date Actual Budget to Actual Variance Income Annual Rent Control Fee Income 84,730.00$ 82,932.48$ 1,797.52$ Interest Income - 3,008.40 (3,008.40) Petition Revenue - - - Total Income 84,730.00$ 85,940.88$ (1,210.88)$ Expenses City Staff Costs 15,000.00$ 4,099.50$ 10,900.50$ Petition Expenses 25,300.00 - 25,300.00 City Attorney Expenses - RAB 15,000.00 - 15,000.00 City Overhead Costs from Cost Allocation Plan*2,830.00 1,415.00 1,415.00 Rules Update Project 26,000.00 3,284.46 22,715.54 Postage and Shipping 300.00 - 300.00 Office Supplies/Duplication 100.00 - 100.00 Liability Insurance - - - Meetings and Travel 100.00 - 100.00 Advertising- Sonoma Media 100.00 - 100.00 Contract Services -Language People - - - Add to Reserves - - Total Expenses 84,730.00$ 8,798.96$ 75,931.04$ Net Income(Loss)-$ 77,141.92$ (77,141.92)$ Fund Balance, December 31, 2019 303,790.94 Fund Balance, June 30, 2020 380,932.86$ *Allocated costs of shared City services from the City Manager, Finance and Human Resource Departments. Prepared by City Finance Department City of Rohnert Park Rent Appeals Board Income Statement For the Year Ended June 30, 2020 For Management Purposes Only ACTUAL EXPENSE DETAIL FOR RENT APPEALS BOARD: 2015 TO 2019 2015 2015 2016 2016 2017 2017 2018 2018 2019 2019 5 Year Average Adopted Budget Actuals Adopted Budget Actuals Adopted Budget Actuals Adopted Budget Actuals Adopted Budget Actuals Actuals Staffing Costs: 6110 City Attorney $15,000.00 $0.00 $15,000.00 $20,831.13 $15,000.00 $20,203.97 $15,000.00 $822.92 $15,000.00 $0.00 $8,371.60 6108 Development Services $25,768.00 $22,442.72 $27,000.00 $17,310.70 $27,000.00 $51,506.99 $15,000.00 $28,092.14 $15,000.00 $13,637.60 $26,598.03 Total Staff Expenses $40,768.00 $22,442.72 $42,000.00 $38,141.83 $42,000.00 $71,710.96 $30,000.00 $28,915.06 $30,000.00 $13,637.60 $34,969.63 Petitions: 5100 Duplication $25.00 $0.00 $100.00 $197.01 $100.00 $3,667.30 $100.00 $0.00 $100.00 $0.00 $772.86 5130 Postage $75.00 $0.00 $200.00 $0.00 $200.00 $1,306.25 $200.00 $0.00 $200.00 $0.00 $261.25 6110 Other Legal-Hearings $25,000.00 $40,646.97 $25,000.00 $6,319.96 $25,000.00 $15,765.52 $25,000.00 $42,738.01 $25,000.00 $0.00 $21,094.09 Total Petitions Expenses $25,100.00 $40,646.97 $25,300.00 $6,516.97 $25,300.00 $20,739.07 $25,300.00 $42,738.01 $25,300.00 $0.00 $22,128.20 Other Expenses: 5100 Supplies $100.00 $635.80 $100.00 $91.20 $100.00 $63.90 $100.00 $0.00 $100.00 $0.00 $158.18 5130 Postage $300.00 $347.48 $300.00 $120.96 $300.00 $129.48 $300.00 $0.00 $300.00 $42.25 $128.03 5200 Publications $100.00 $0.00 $100.00 $0.00 $100.00 $439.00 $100.00 $0.00 $100.00 $0.00 $87.80 Total Other Expense $500.00 $983.28 $500.00 $212.16 $500.00 $632.38 $500.00 $0.00 $500.00 $42.25 $374.01 Rules and Regulations Update Project: Development Services Staffing Costs n/a n/a n/a n/a n/a n/a $18,000.00 $3,540.00 $10,000.00 $17,456.00 $10,498.00 City Attorney Costs n/a n/a n/a n/a n/a n/a $12,000.00 $0.00 $5,000.00 $19,304.95 $9,652.48 Records Retention Project n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a Total Project Expenses n/a n/a n/a n/a n/a n/a $30,000.00 $3,540.00 $15,000.00 $36,760.95 $20,150.48 Miscellaneous Expenses: 6425 Cost Allocation Plan $0.00 $0.00 $0.00 $5,491.00 $1,200.00 $1,557.50 $2,000.00 $3,707.00 $2,000.00 $2,045.50 $2,560.20 6600 Travel/Meetings $100.00 $0.00 $100.00 $100.00 $100.00 $0.00 $100.00 $0.00 $0.00 Liability Insurance n/a $200.93 n/a $239.48 n/a $140.63 n/a n/a n/a n/a $193.68 6101 Contract Services n/a n/a n/a n/a n/a $205.88 n/a n/a n/a n/a $205.88 Add to Reserves $20,000.00 $63,260.44 $20,000.00 $43,333.19 $30,000.00 $8,675.33 $0.00 $31,829.21 $10,000.00 $24,069.50 $34,233.53 Total Miscellaneous Expenses $20,100.00 $200.93 $20,100.00 $5,730.48 $31,300.00 $1,904.01 $2,100.00 $3,707.00 $12,100.00 $2,045.50 $2,717.58 Total Expenses $86,468.00 $64,273.90 $87,900.00 $50,601.44 $99,100.00 $94,986.42 $87,900.00 $78,900.07 $82,900.00 $52,486.30 $68,249.63 RESOLUTION NO. 2020-04 A RESOLUTION OF THE ROHNERT PARK RENT APPEALS BOARD APPROVING THE WRITE-OFF OF $89,033.99 IN UNPAID PROCESSING EXPENSES RELATING TO CAPITAL IMPROVEMENT PASS-THROUGH 2014-01 SUBMITTED BY RVP ROHNERT PARK LP WHEREAS, RVP Rohnert Park LP (“RVP”), the current owner of the Rancho Verde Mobile Home Park, submitted Petition for Capital Improvement Pass Through No. 2014-01 (“Petition”) to the Rohnert Park Rent Appeals Board (“Board”) on or about April 14, 2014; and WHEREAS, as required by Section 8.01(B) of the Board’s Rules and Regulations (“Rules”), RVP submitted a $5,000 deposit to the Board on or about April 21, 2014; and WHEREAS, on or about May 27, 2014, RVP submitted an “Acknowledgment of Reimbursement Obligation for Payment of Full Cost Recovery Fees for Application Processing and Inspections Services” (“Reimbursement Agreement”) executed by its attorney, Thomas W. Casparian, agreeing to reimburse the Board for the actual costs the Board incurred to process the Petition; and WHEREAS, on or about August 26, 2014, the Board received a check from RVP for an additional $35,000 to reimburse the Board for its actual cost of processing the Petition; and WHEREAS, by letter dated February 2, 2015, the Board asked RVP to submit an additional deposit of $50,000 to reimburse the Board for its actual cost of processing the Petition; and WHEREAS, by letter dated February 27, 2015, RVP refused the Board’s request for an additional $50,000 deposit; and WHEREAS, on or about December 17, 2015, the Board issued a final Notice of Decision on the Petition; and WHEREAS, staff determined that the Board’s actual cost of processing the Petition was $129,033.99. RVP remitted $40,000 to the Board, however a balance of $89,033.99 remains outstanding; and WHEREAS, in letters dated August 10, 2016, September 12, 2016, and November 16, 2016, staff requested that RVP immediately reimburse the Board for the actual cost of processing the Petition; and WHEREAS, at its January 5, 2017 meeting, the Board approved a resolution ordering RVP to immediately remit $89,033.99 to reimburse the Board for the actual costs it incurred to process the Petition; and WHEREAS, to date, RVP has refused and failed to remit the remaining $89,033.99 outstanding balance necessary to reimburse the Board for the actual costs it incurred to process the Petition; and WHEREAS, the option available to the Board to collect this outstanding balance is to take legal action against RVP, which would likely cost more than the $89,033.99 the Board is attempting to collect from RVP. For this reason, the Board has not pursued this option; and WHEREAS, at its September 3, 2020 meeting, the Board considered the option of writing- off the $89,033.99 outstanding balance owed by RVP for Petition 2014-01 and directed staff to return to its October 1, 2020 meeting with a resolution to approve this write-off. NOW, THEREFORE, BE IT RESOLVED by the Rohnert Park Mobile Home Rent Appeals Board that the Board does hereby approve to write-off the 2014 Petition Costs of the Rancho Verde Mobile Home Park that was recorded as a receivable for $89,033.99. DULY AND REGULARLY ADOPTED by the Rohnert Park Rent Appeals Board this 1st day of October, 2020. ROHNERT PARK MOBILE HOME PARKS RENT APPEALS BOARD ______________________________________ ATTEST: Chair _______________________________ Secretary AYES: ____ NOES: ____ ABSENT: ____ ABSTAIN: ____ MEMO TO RENT APPEALS BOARD MEMBERS Conflict of Interest in Accounting Practices Conflict of interest occurs between Board Calendar Year Cash accounting practices and City Fiscal Year Accrual accounting practices. Cash funds: if Mobile Home Owners funds are in any way involved in City budgeting a conflict of interest exists. Either the Homeowners funds should be maintained as a Special Revenue Fund independent of the City, or the funds should be placed in a commercial bank account. Accounting: a conflict of interest occurs between City fiscal/accrual accounting and Board calendar/cash accounting. The Board budget is smaller than many household budgets. Fiscal/accrual accounting is too cumbersome and confusing for Board purpose. Several inexpensive cash/calendar year accounting packages are available. Board should ask City to purchase a simple inexpensive standalone accounting package for Board use. L. Kurt Engelhart Rent Appeals Board Member Supplementary Item 10/1/20 RAB Meeting STATEMENT FROM THE CHAIR ROHNERT PARK RENT APPEALS BOARD 1 October 2020 The Chair brings a Point of Order regarding consideration of Resolutions 2020-02 and 2020-04 on the current agenda. Neither of these Resolutions comes to the Board as a requirement of the Ordinance Section 9.70.030 of the Rohnert Park Municipal Code. Without a requirement under the Ordinance the Rent Appeals Board has no authority to Rule on them. The Chair of the Rent Appeals Board rules that Resolutions 2020-02 and 2020-04 are Out of Order. Also, in the case of : “RESOLUTION NO. 2020-03 A RESOLUTION OF THE ROHNERT PARK RENT APPEALS BOARD APPROVING AND ADOPTING A BUDGET AND ESTABLISHING REGISTRATION FEES FOR MOBILE H OME SPACES FOR 2021” The question to be decided : NOW, THEREFORE, BE IT RESOLVED, by the Rohnert Park Rent Appeals Board that it does hereby approve and adopt the recommended Six-Month 2021 Budget, a copy of which is attached hereto and is made a part of this Resolution. Is neither within the context stated for the resolution, nor is it in order considering other resolutions ruled Out of Order. Resolution No. 2020-03 is ruled by the Chair Out of Order. Also, reflected in the: Minutes - Thursday, September 3, 2020 “Garcia stated that the City has been managing the funds. Chair Engelhart disagreed, stating that the Board has been managing the funds…” Describes a misunderstanding of roles and responsibilities as assigned by the Ordinance. The Ordinance holds the Board responsible for proper management of the Home Owners’ funds, and empowers the Board to use City resources to accomplish this. (Ordinance Sect 9.70.030 para F.) Mobile Home Parks Rent Appeals Board October 1, 2020 1 Determine the Annual General Adjustment Mobile Home Parks, Rent Appeals Board October 1, 2020 Jenna Garcia, Housing Administrator 2 Annual General Adjustment (AGA) Applies on February 1, 2021 Based on CPI in August, 2020 RAB establishes AGA every October This year’s calculation: Date CPI Index Net Index Change Percent Change Rounded to the Nearest 1/10 of 1%2 Effective Date On or After Actual Annual General Adjustment August 2019 250.112 3.776 1.510%1.5%2/1/2020 1.0% August 2020 253.597 3.485 1.393%1.4%2/1/2020 0.9% 3 Staff Recommendation Adopt Resolution 2020-01 to determine an annual general adjustment of the maximum allowable space rent effective on or after February 1, 2021 4 Comments/Questions? 5 Change Accounting Year Period and Calculate Registration Fees Based on Previous Year’s Expenses Mobile Home Parks, Rent Appeals Board October 1, 2020 Manuel Orozco, Accounting Supervisor Katie Edgar, Accountant Jenna Garcia, Housing Administrator 6 Background Board approves AGA and registration fees in October of each year Board currently passes budget in October, which runs on calendar year All City funds except the Rent Appeals Board follow fiscal year budget cycle 7 Background In September 2019, the Board conducted a study session and asked staff to investigate options further and bring back to the Board In September 2020, the Board conducted another study session, expressed support for proposed change and directed staff to return to this meeting with a resolution 8 Challenges with Calendar Year City financial software only tracks within fiscal year City is audited on a fiscal year basis In order to prepare budget documents for Board, staff must extract then manually enter data into spreadsheet ◦This is time intensive and creates more opportunity for error Potential for “timing issues” 9 Proposed Change (“Option 1”) Would move the Board’s budget cycle to a fiscal year, but would not change when registration fees are due Budget study session would be in April Registration fees would be set based on previous year’s actual costs rather than upcoming projected costs No amendments needed to Ordinance or Rules 10 Budget Timeline Month Current Proposed Jan New budget year starts Feb Registration fees due Registration fees due Apr Approve fiscal year budget Jul New budget year starts Sep Study session for budget Oct Set the annual general adjustment Approve calendar year Budget Set registration fees based on projected expenses for coming year Set the annual general adjustment Set registration fees based on previous year’s actual expenses 11 Actual Annual Fee Charged Versus Annual Fee Per “New System” Year 1. Budgeted 2. Expended 3. Actual Annual Fee Charged Based on Projected Budget 4. Annual Fee per "New System" Based on PY's Expenses 5. Differ- ence 2016 $87,900.00 $50,601.44 $74.18 $54.24 -$19.94 2017 $99,100.00 $94,986.42 $84.56 $43.18 -$41.38 2018 $87,900.00 $78,900.07 $74.24 $80.23 $5.99 2019 $82,900.00 $52,486.30 $70.92 $67.49 -$3.42 2020 $84,730.00 $8,798.96* $71.99 $44.59 -$27.39 TO - TAL $442,530.00 $285,773.19 $375.89 $289.73 -$86.16 12 Actual Annual Fee Charged Versus Annual Fee Per “New System” Applying the “new system” to past years, tenants would have paid $86.16 less over the course of the past five years The Board has been prioritizing building up their Reserves fund over the past five years These collected fees have been essential to maintaining a healthy fund balance and Reserves fund 13 Cost/Benefits Analysis of Time Spent Processing Expense Reports Budget Year Type Staff Hours per Month to Process Fully Burdened Finance Staff Rate Total Cost Incurred Per Month Calendar Year (CY) 8 hrs accountant time 2 hrs supervisor review $67.04/hr $74.64/hr $685.60 Fiscal Year (FY) 1 hr accountant time 1 hr supervisor review $67.04/hr $74.64/hr $141.68 Difference (CY-FY) 8 hours NA $543.92 14 Cost/Benefits Analysis of Time Spent Processing Expense Reports The Board has not been directly charged for these costs due to Cost Allocation Plan Cost Allocation Plan is flat amount in Board’s budget which covers: ◦Meeting Facilities (or Zoom) ◦IT Staff Time ◦Finance Staff Time for processing invoices, budgeting, auditing, etc. ◦City Clerk Staff Time 15 Next Steps If Board approves Resolution 2020-03 today, will need to pass a 6-month budget Then in April, would pass a 12-month budget which would run July 1, 2021 – June 30, 2022 Annual general adjustment and registration fees would continue to be approved in October 16 Why Change? Budget would match City’s fiscal year City could provide accurate real-time expense data Set registration fees on previous year’s actual expenses = better fund management Does not require amendments to Ordinance or Rules Could go into effect starting January 1 Sufficient funds to cover coming year’s expenses plus unexpected expenses Staff Recommendation Adopt a Resolution to change Accounting Period from Calendar Year to Fiscal Year and to calculate the Annual Registration Fees based on the previous fiscal year’s actual expenses ◦This is consistent with the Board’s direction at its September 2020 meeting 18 Comments/Questions? 19 2021 Budget & RVP Accounts Receivable Write-Off Mobile Home Parks, Rent Appeals Board October 1, 2020 Manuel Orozco, Accounting Supervisor Katie Edgar, Accountant Jenna Garcia, Housing Administrator 20 Background Each October, Board adopts budget and establishes registration fees In September, the Board conducted a study sessions on changing the accounting cycle to fiscal year (item 7.2), 2021 budget and AR Write-off of old Rancho Verde Petition 21 Background (cont.) Board directed staff to bring resolutions: ◦Changing accounting cycle to fiscal year (item 7.2) ◦Adopting a 6-month budget to transition from calendar year to fiscal year ◦Writing off the RVP accounts receivable balance If Board approves Resolution 2020-02, will need to adopt a 6 month budget 22 Budget Balance (July 1, 2020): $214,757 ◦Does not include $89,033.99 in RVP accounts receivable balance ◦From Jan.1 to June 30: $8,799 expended Recommended budget is based on average expended over the past five years (except for special projects and cost allocation plan) 23 Registration Fees for 2021 Due to COVID-19, many low-income people are struggling financially Could offer relief via registration fee waiver for 2021 ◦Fees would be deferred until Feb 2022 This would also allow Board time to adjust to new budget cycle 24 6-Month Recommended Budget Fund Type Definition Amount Operational Funds Covers normal operational budgeted expenses $39,831 Fund Balance Funds remaining in the fund after operations and reserves are covered $74,926 Reserves Money set aside for specific purposes, would cover tenant petitions and unanticipated operational expenses $100,000 25 Cost Allocation Plan (CAP) Flat amount covers cost of: ◦Council Chambers facilities (or Zoom) ◦IT staff time to livestream and record meetings ◦Finance staff time to process invoices, input data into the finance software system, and prepare staff reports, budgets and expense reports ◦Finance and auditor time involved with the annual auditing of the Board’s budget ◦Any staff time from the City Clerk’s office 26 Special Projects Rules Update: ◦Not anticipating major update, recommend some funding here in event of minor amendments Digitization project: ◦Need to digitalize Board records ◦About 20 boxes worth of records in storage now 27 2021 6-Month Budget Item Recommended Alternate Total Staff Expenses $17,500 $15,000 Total Petitions Expenses $11,000 $12,650 Total Other Expenses $188 $250 Total Project Expenses $10,500 $13,000 Total Misc.Expenses $643 $693 TOTAL EXPENSES $39,831 $41,593 Reserve Balance $100,000 $100,000 28 Staff Recommendation Adopt Resolution 2020-03 approving a 6- month budget and waiving registration fees for 2021 ◦This is consistent with the Board’s direction at its September 2020 meeting 29 Comments/Questions on Resolution 2020-03? 30 Staff Recommendation Adopt Resolution 2020-04 to approve $89,033.99 write-off of the 2014 petition costs of RVP ◦This is consistent with the Board’s direction at its September 2020 meeting 31 Comments/Questions on Resolution 2020-04? 32 Election of Officers Mobile Home Parks, Rent Appeals Board October 1, 2020 33 Background At November 7, 2019 meeting, Board provided direction to set rotational process similar to City Council’s for officer elections Planned to hold election at first meeting of this year, due to COVID-19 did not hold meeting until September Kurt Englehart has been serving as Chair and Sarah Finnigan as Vice Chair since Feb 2018 34 Rent Appeals Board Members At November 7, 2019 meeting, Board provided direction to hold officer elections annually Board set rotational process similar to City Council’s Planned to hold election at first meeting of this year, due to COVID-19 did not hold meeting until September 35 Name First Appt Last Appt Term Expires Appointed by Sarah M. Finnigan 8/2015 1/2019 12/2022 Pam Stafford Janeen Kirby 6/2016 1/2019 12/2022 Susan H. Adams L. Kurt Engelhart 7/1995 11/2016 12/2020 Jake Mackenzie Patrick Reymond 10/2009 11/2017 12/2020 Gina Belforte Sandra Waterman 11/2013 11/2017 12/2020 Joseph T. Callinan Proposed Officer Rotation 36 Name Current Role Proposed New Role Sarah M. Finnigan Vice Chair Chair Janeen Kirby Board Member Vice Chair Sandra Waterman Board Member Board Member Patrick Reymond Board Member Board Member L. Kurt Engelhart Chair Board Member Staff Recommendation Vote for new Chair and Vice Chair, make effective through December 2021 37