OFFICE OF THE CITY AUDITOR
Roland E. Smith, CPA
City Auditor

February 3, 2004

TO: President De La Fuente and Members of the City Council

SUBJECT: A REDEVELOPMENT AGENCY RESOLUTION TERMINATING FUNDING FOR THE OAKLAND CITY-WIDE COMMUNITY LAND TRUST PROGRAM ESTABLISHED BY RESOLUTION NO. 02-79 C.M.S.

PURPOSE AND SCOPE

In accordance with the Measure H Charter Amendment, which was passed by the voters at the General election of November 5, 1996, we have made an impartial financial analysis of the accompanying Council Agenda Report and Proposed Resolution. In making our analysis we obtained a copy of Resolution No. 02-79, and discussed various matters with Redevelopment Agency staff. We also obtained a copy of the Articles of Incorporation and Bylaws of the Oakland City-wide Community Land Trust.

Since the Measure H Charter Amendment specifies that our impartial financial analysis is for informational purposes only, we did not apply Generally Accepted Government Auditing Standards as issued by the Comptroller General of the United States. Moreover, the scope of our analysis was impaired by Administrative Instruction Number 137, effective May 21, 1997, which provides only one (1) week for us to plan, perform and report on our analysis.

SUMMARY

This purpose of this Proposed Resolution is to request that the Redevelopment Agency (1) suspend funding for the Oakland City-Wide Community Land Trust (OCCLT), and (2) utilize the utilize the unspent funds of $4,950,000 for other affordable housing development projects.

On October 22, the Oakland Redevelopment Agency approved Resolution No. 02-79 C.M.S, which authorized the implementation of the Oakland Community Land Trust Program in order
to increase the supply of low and moderate income housing available in the City of Oakland. The Resolution also authorized the Agency Director to make loans under this program, and the Agency had already appropriated $5 million for the program from Redevelopment Agency Affordable Housing Bond funds as part of the Agency's FY 2001-2003 budget.

The Oakland City-wide Community Land Trust (OCCLT), a nonprofit corporation, had been formed to provide and operate community land trust units, and an independent committee had selected a nine-member interim Board of Directors in September 2002. However, due to difficulties in raising additional funds and the high cost of development, the Board has come to the conclusion that the program is not feasible without substantial additional operating subsidies, and suspended operations as of early December 2003.

FISCAL IMPACT

As of December 17, 2003, $50,000 of the original $5 million authorized for the program by Agency Resolution 02-79 has been spent to cover costs incurred by the OCCLT board in hiring their consultant staff and issuing a request for proposals (RFP) for development projects. This funding is not recoverable. Discontinuing funding for OCCLT returns the remaining $4,950,000 to the Agency to fund other affordable housing developments, and is expected to curtail additional losses.

CONCLUSION

The Proposed Resolution appears to be reasonable.

Prepared by:

Jack McGinity, CPA

Issued by:

Roland E. Smith, CPA, CFS
City Auditor


Report completion date:
January 12, 2004