Table VIIIA on the following page, which provides additional information on completed developments, shows that a) the average cost per unit for 232new units was $209,052, b) the average cost per unit for 166rehabilitated units was $25,314, and c) the average cost per bed for facilities with 170rehabilitated beds was $15,503.

Table VIIIA
Units and Beds Developed and Costs per Unit or Bed

Project Name	Original Total Budget	Final Total Expenditures	Total Proposition A Funding	No. Units	No. Beds	Cost per Unit6	Cost per Bed7
New Units
8th St. Community Re-source Opportunities	$18,159,296	$18,068,672	$7,997,539	48		$376,431
John W. King Senior Center	14,681,655	14,584,654	3,655,534	91		160,271
Presentation Senior Community	15,970,700	15,846,871	4,463,234	93		170,396
Subtotal- New Units	$48,811,651	$48,500,197	$16,116,307	232		$209,052
Rehabilitated Units
Veterans Academy	2,296,295	2,236,920	2,171,295	100		$22,369
Catholic Charities TIHDI Phase 1	900,381	900,381	900,381	30		30,013
Catholic Charities TIHDI Phase 2	1,121,753	1,064,745	1,121,753	36		29,576
Subtotal - Rehabilitated Units	$4,318,429	$4,202,046	$4,193,429	166		$25,314
Rehabilitated Bed Facilities
Rites of Passage Program	934,857	934,8578	733,500		12		$77,905
TIHDI - Haight Ashbury Free Clinic	550,228	550,228	429,264		50		11,004
Swords to Plow-shares TIHDI	716,586	716,968	426,586		56		12,803
TIHDI - Walden House	433,511	433,511	221,301		52		8,367
Subtotal-Rehabili-tated Bed Facilities	$2,635,182	$2,635,564	$1,810,651		170		$15,503
Totals	$55,765,262	$55,337,807	$22,120,387

Question 5: For each completed project and each project under construction, what building, planning, and other fees and taxes due to the City and County were paid and/or waived?

Answer: Based on the Department of Building Inspection"s Permit Tracking System and the Planning Department"s Parcel Information Database, $696,446 in building permit fees has been paid for 57 building permits, $484,616 in planning fees has been paid for the processing of 24 land use applications, such as variances and condition uses, as shown in Table IX, below.

Table IX
Fees Paid and Fees Deferred Development Projects

	Fees Paid	Fees Deferred
Department of Building Inspection	$696,446	$22,900
Planning Department	483,616	0
Total	$1,180,062	$22,900

At the request of the Mayor"s Office of Housing, the Department of Building Inspection has deferred applicable fees for most of the Treasure Island development projects, in the amount of $18,264 of the $22,900 shown in Table IX, until such time as their non-profit status is changed. Gastinell"s Supportive Housing Program, located at 538 Holloway Avenue, was allowed deferred permit fees in the amount of $4,636.

Question 6: For each completed project and each project under construction, how much revenue in property tax is each project delivering to the City and County?

Answer: Tax payments made by the development projects for fiscal year 2001-2002, as reported by the Tax Collector, were $68,677, as shown in Table X. Development projects located on Treasure Island or the Presidio do not pay property taxes. One development project, Presentation Senior Community Center, has paid taxes of only $1,663, although the tax record shows the assessed value of the property as $9,563,640. The reason is that the Assessor, following examination of Presentation Senior Community Center"s exempt status application, which includes approvals for both Federal and State income tax exemption, has granted Presentation Senior Community a property tax exemption. The $1,663 collected by the Tax Collector for FY 2001-2002 is for a Unified School District budanalyst ($934) and an apartment license fee ($729).

According to the Assessor"s Office, new and rehabilitated development projects are assessed at the full value allowed by law.⁹ The Assessor"s Office also reports that properties used exclusively by non-profit religious, charitable, and other organizations may be eligible for exemption from payment of property taxes. The exemption is not automatic and any agency that may qualify must contact the Assessor-Recorder and file the appropriate exemption claim form. According to the Office of the Tax Collector, 8^th & Howard Street Associates has one delinquent property tax payment outstanding in the amount of $1,528.28 and a supplemental payment due by July 1, 2002, in the amount of $321.65.

Table X

Property Taxes Paid in FY 2001-02 Completed Projects and Projects In Construction

Project Name	Borrower	Address	Project Status	Assessed Value	Taxes Paid
8th Street Community Resource Opportunities	Episcopal Community Services	165 8th Street	Completed	$4,403,723	$49,594
John W. King Senior Center	John W. King Community	500 Raymond	Completed	Not yet assessed	0
Presentation Senior Community	MERCY HOUSING	301 Ellis Street	Completed	9,563,640	1,663
Rites of Passage	Jelani House II, Inc.	1638 Kirkwood	Completed	339,201	3,845
8th & Howard Family Housing	8th & Howard Street Assoc.	1166 Howard	Construction In Progress	4,344,800	0
Ambassador Hotel	TNDC	55 Mason St.	Construction in Progress	Not yet assessed	0
San Francisco Housing Development Corporation	Third Street Associates	4445 3rd Street	Construction in Progress	1,207, 732	13,575
Total				$19,859,096	$68,677

Question 7: Of the loans made with Proposition A funds for the development of rental housing, how much of the loans have been repaid, how much of the loans have been forgiven, how much of the loans remain outstanding, and what is the repayment timetable for those loans to be repaid?

Answer: Although the City"s Financial Accounting and Management Information System provides an accurate total sum of Affordable Housing "Development Account" disbursements for loans and grants, the apportionment between loans and grants is not reflected accurately. Thus, Attachment I, provided by MOH, shows a total of $13,372,393 in grants for Affordable Housing Developments. However, Table I of the report shows a total of $4,694,391 in grant disbursements from the Affordable Housing "Development Account," as reflected in the City"s Financial Accounting and Management Information System. According to MOH"s Finance Director, this condition exists because loan and grant transactions have not always been correctly coded. Because of this condition, the Budget Analyst was not able to independently verify the loan and grant disbursement figures and the amount that has been repaid on loans made for the development of rental housing.

According to financial records maintained by the MOH, a total of $96,901 has been repaid to MOH of $34,728,106 loaned for the development of rental housing from Proposition A funds. The development projects comprising the total loan sum of $34,728,106 are shown in Attachment I.

According to MOH, none of the loans has been forgiven. Attachment I shows that repayment of $5,426,807 is expected in the next 12 months, and that an additional $9,736,201 in repayments is expected within the next 15 years. The Budget Analyst notes that the repayment schedules are not structured in accordance with conventional amortization tables, such as most mortgages, but instead require specific re-payments tailored to the specific development project.

Section 43.3.3 of the Affordable Housing and Home Ownership Bond Program requires that "Repayments of loans made from the "Housing Account" shall be applied first to finance development of affordable rental housing and downpayment assistance ... and then may be used for any other lawful purpose under this program...."

The Budget Analyst recommends that MOH perform a complete review of its FAMIS accounting for the Affordable Housing and Home Ownership Bond Program. That review should include representatives of MOH Program staff to insure that the accounting records are in accordance with Program transactions. Further, the Budget Analyst recommends that the Director of MOH report to the Board of Supervisors when all of the FAMIS records have been corrected and FAMIS reflects the transactions that have occurred within the Program so that the Controller can accurately track future disbursements.

Question 8: What is the turnover rate for residents in the completed rental housing developments? Of the original tenants in each completed development, how many remain in their units?

Answer: Turnover rates vary significantly dependent on whether the development project is part of a program designed to support permanent residents, such as is Presentation Senior Community, or is designed as a transitional facility to assist clients in transitioning to a permanent living situation, such as Rites of Passage and some of the Treasure Island projects. For each completed development project, the turnover rates and the number of original tenants remaining are shown in Table XI of the audit report. The turnover rates for projects opened for at least one-year range from one percent at the Presentation Senior Community to 200 percent at the Haight Ashbury Free Clinics" program at Treasure Island. The original tenants remaining in the completed developments range from none of 50 beds at the Haight Ashbury Free Clinics to 92 of 93 units at the Presentation Senior Community.

Table XI

Turnover Rates and Numbers of Original Clients Remaining

Conclusion and Recommendations

The Budget Analyst has identified various deficiencies in MOH"s administration of the Affordable Housing and Home Ownership Bond Program. Those deficiencies indicate the need for management emphasis on attention to detail in administering the Program, and should be corrected as quickly as possible. Without commenting on the efficiency of the Affordable Housing and Home Ownership Bond Program in producing affordable housing, which is beyond the scope of this limited review, in the professional judgment of the Budget Analyst, correcting the above-noted deficiencies noted will enable MOH to further the objectives of the Affordable Housing and Home Ownership Bond Program.

The Budget Analyst has included in this audit report the following recommendations to correct the deficiencies cited in this report:

1. The City"s Financial Accounting and Management Information System (FAMIS) contains errors concerning financial transactions that have occurred in the Affordable Housing and Home Ownership Bond Program. Those errors have resulted in FAMIS summary reports that do not reflect the overall financial position of the Program with respect to the amounts of loans and grants that have been disbursed. The Budget Analyst recommends that MOH work with the Controller and perform a complete review of its FAMIS accounting for the Affordable Housing and Home Ownership Bond Program. That review should include representatives of MOH Program staff to insure that the accounting records are in accordance with Program transactions. Further, the Budget Analyst recommends that the Controller report to the Board of Supervisors when all of the FAMIS records have been corrected and the City"s Financial Accounting System reflects the transactions that have occurred within the Program.

2. Each Downpayment Assistance Loan Program (DALP) application requires a nonrefundable application fee of $300 or one percent of the downpayment loan assistance amount, whichever is less. According to the Regulations, such fees are to be deposited in the Housing Program Fees Fund, which was established in Section 10.117-100 of the Administrative Code, "to pay the costs of the Mayor"s Office of Housing for administering housing programs for which administrative funding is not otherwise available from the City"s General Fund, federal or state grants, or other sources of administrative funding."

When asked to provide confirmation that the application fees were being applied to the Housing Program Fees Fund, MOH replied that they were unaware of the foregoing provision and that the application fees, which total $64,810 according to the FAMIS report, had been deposited into the DALP account.

The Budget Analyst recommends that the Finance Director of MOH insure that DALP application fees are transferred from the "DALP Account" to the Housing Program Fees Fund.

3. MOH has published an annual report each year in compliance with Chapter 43 of the Administrative Code, which established the Affordable Housing and Home Ownership Bond Program. However, to date, MOH has published each Annual Report prior to the end of the fiscal year covered by the Report. For example, the Annual Report covering the fiscal year ended June 30, 2001, has a publication date of April 27, 2001, and contains estimates concerning Program activity for the remainder of the fiscal year, rather than actual year-end data.

The Budget Analyst recommends that MOH delay publishing its Annual Report for FY 2001-02 until after June 30, 2002, and include in that Annual Report information included in the compliance reports submitted by sponsors of funded development projects. Further, the Budget Analyst recommends that each Annual Report be published subsequent to the completion of each fiscal year so that complete data for the fiscal year can be included.

4. The Board of Supervisors approved regulations implementing the "Affordable Housing and Home Ownership Bond Program" in October of 1997, imposing additional conditions on the provisions proposed by the MOH. The Regulations presented by MOH were amended to include the following provisions:

(a)The Director of the Mayor"s Office of Housing"s annual report provide information on the populations served by programs funded with the Development Account, including family size, economic status and minority representation;

(b) The Mayor"s Office of Housing shall report to the Finance Committee of the Board of Supervisors on projects that have been selected for funding through the NOFA process and through the "opportunity fund" process, and

(c) The Budget Analyst of the Board of Supervisors shall review and report to the Finance Committee on the projects selected with sufficient information regarding project plans and actual construction, administrative and other relevant project cost analysis.

In the professional opinion of the Budget Analyst, item (b), concerning reports to the Finance Committee of the Board of Supervisors, has not been complied with: such reports have never been submitted. According to Mr. LaTorre of MOH, MOH incorporated the required information into its Annual Reports in order to fulfill this requirement. However, the Budget Analyst"s interpretation of the amended legislation is that MOH is required to submit detailed, periodic reports on development projects selected for funding, to the Finance Committee of the Board of Supervisors.

Therefore, the Budget Analyst recommends that MOH commence submitting reports to the Finance Committee of the Board of Supervisors, as required by the approved legislation.

5. The Downpayment Assistance Loan Program (DALP) database is used for recording information on all of the significant characteristics of a DALP loan, including the recipient"s income, the purchase price and location of the residence, and the gender and ethnicity of the recipient. The information contained in the DALP database is used by MOH for analyzing Program outcomes and also for compiling reports, such as the Annual Report to the Mayor and to the Board of Supervisors. Therefore, it is incumbent upon MOH to insure that the DALP database contains accurate data.

The Budget Analyst found errors in the DALP database. However, the Budget Analyst did not find inaccuracies in the manual, master loan files that are used to process DALP loans. None of the errors noted resulted in an ineligible household receiving a loan or a loan greater than what the recipient was eligible for.

The Budget Analyst recommends that MOH accomplish a 100 percent review and correction of the data contained in its DALP database, and that MOH develop procedures for entering new data that include safeguards against faulty recording.

The Salaries and Mandatory Fringe Benefit costs are associated with bond issuance costs incurred by MOH and the Mayor"s Office of Public Finance. The City Attorney and Controller costs are also associated with bond issuance costs.

The "Other Professional Services - Grants" line item records funds provided for housing developments in the form of grants rather than loans.

2001C and 2001 D are so designated to differentiate between the two bond issuances of $17 million and $23 million, respectively, in 2001.

Notice of Funding Availability (NOFA)

A commitment of funds means that the Housing Committee has reviewed an application and has recommended approval to the Mayor, subject to certain conditions, but the loan or grant has not been executed. Pending commitments pertain to funding applications that have been reviewed by MOH staff and deemed to be eligible for funding, but have not been approved by the Housing Committee.

Equals "Final Total Expenditures" divided by "No. Units."

Equals "Final Total Expenditures" divided by "No. Beds."

Includes acquisition costs of $733,500, which was provided by Proposition A funding.

Assessed values are legally limited by restrictions, such as rent limitations, contained in agreements between governmental units and the development projects.