City to provide $440k subsidy to Richmond Rent Program to cover cost pool allocation
The City of Richmond will provide a $150,000 subsidy this year and a $290,390 subsidy next year to the Richmond Rent Program to cover services to the program provided by the city.
The city allocates a portion of charges for liability insurance and administration charges for services provided through IT, finance, and human resources to all city departments, referred to as cost pool charges.
The Richmond Rent Program’s current cost pool allocation is $150,000. The allocation jumps to $290,000 in the fiscal year 2024–25 budget.
The Rent Program recently reported a possible deficit due to a growing number of delinquent rental unit fees and overhead charges levied by the City of Richmond.
Soren Hemmila
According to Andrea Miller, Director of Finance for the City of Richmond, city staff came up with an understanding that the rent program would be charged for the cost pool charges but would also receive a subsidy.
“We would not zero it out because we have to show full cost accounting. The full cost of the city expenses would be offset with a subsidy similar to the current year’s budget,” Miller said at the May 15 Rent Board meeting. “We’ve done the same in next year’s budget. For the cost pool charge just over $290,000 in the fiscal year 2024–25 budget, we have a 100 percent offset for those charges.”
Miller said the subsidy is not a loan and does not bear interest but is a transfer to the rent program fund to offset the cost pool charges.
“We’re willing to take back to our city council at our upcoming council meeting to propose an additional subsidy for the current fiscal year, but it is important that we include the full cost of services in our budget to meet our generally accepted accounting principles,” Miller said.
Richmond Rent Program Deputy Director Fred Tran said the cost pool charges are a significant line item in the program’s budget.
“With the latest information and discussions with the city, we expect to be charged $56,315 for Civic Center rent allocation. The general liability we budgeted is $99,980,” Tran said at the last meeting. “No amount has been budgeted for the administrative charges, which are also referred to as indirect costs.”
Tran said the rent program anticipates expending approximately $3 million through the end of the fiscal year and has a collection of roughly $2.8 million in revenue.
“It may increase depending on how our collection efforts are in the next six weeks,” Tran said. “Depending on the collection efforts the program potentially may have a fiscal year net deficit.”
Richmond Rent Boardmember Elaine Dockens was looking for ways for ways the rent program could offset cost pool charges with the resources it provides to the city.
“When the city of Richmond came to us and asked us for our help, do we have an assigned value for our helping the city?” Dockens asked. “We have valuable resources within our program, and the city comes to us for help and assistance.”
Charles Oshinuga, staff attorney for the Rent Program, said the program’s services are subject to ongoing negotiations with the city.
“We are trying to assign value to our services as part of the negotiations to see where we can agree on what value is,” Oshinuga said at the meeting.
A revised proposed budget and rental housing fee for the fiscal year 2024-25, to be presented at Friday’s Rent Rent Board Meeting meeting, would authorize $3,299,011 in expenses and $3,399,011 in revenue.
The proposed rental housing fee for the 2024-25 fiscal year is $239 for fully covered rental units and $136 for partially covered units. These amounts are down from the previously proposed $261 for fully covered units and $148 for partially covered units.
According to an applicable unit count, the rent program listed 18,342 units, with 7,857 fully covered by rent control and just cause eviction protections. Another 6,046 units are partially covered by the just cause provision of the ordinance. Government-subsidized units make up the remaining 4,439 units.
According to data provided by the City of Richmond, there are 2,672 active rental business licenses as of last month. Some entities have multiple business licenses, while others represent hundreds of units. The number of unique listings is around 2,140.
The Rent Program still has not provided requested information about the rent program, including the number of units in compliance with the ordinance and how many landlords own these properties. Grandview has filed a public records request for this information. The Rent Program wrote they expect to have the records prepared by Friday, June 21, 2024.
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