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REDWOOD CITY FAIR AND AFFORDABLE HOUSING ORDINANCE <br /> <br />Economic & Planning Systems, Inc. 37 Affordable Housing Impacts <br />Reserve Funding <br />The replacement reserve contribution target reflects the level of annual funding <br />needed to maintain building systems and support long-term capital needs over the <br />40-year projection period. The analysis assumes an initial replacement reserve <br />contribution target of $500 per unit, which escalates by 3.5 percent annually to <br />reflect rising capital repair, maintenance, and replacement costs over time. For <br />example, the Year 2 reserve contribution target would increase to $517.50 per unit. <br />As shown in Figure 3, the baseline and post-1995 scenarios can fully fund the <br />replacement reserve target throughout the projection period. In Scenario 3, <br />however, the pre-1995 project begins to experience pressure on reserve funding <br />around Year 18. Reserve funding then declines rapidly and is fully depleted by <br />approximately Year 24. This indicates that, after residual receipts have been <br />reduced, the project must begin reducing above-the-line reserve contributions to <br />preserve required debt service coverage. <br />Figure 3. Replacement Reserve Funding Capacity by Scenario <br /> <br />Funding for Resident Services <br />Figure 4 shows the next stage of impact in the operating waterfall: resident <br />service funding. The analysis assumes an initial resident services funding target of <br />$1,000 per unit annually, which escalates by 3.5 percent each year to reflect <br />rising service delivery costs. This funding is intended to support services available <br />to all residents, while also accounting for more intensive service needs among <br />higher-need units or resident populations. The baseline and post-1995 scenarios <br />can maintain targeted service funding throughout the projection period. In <br />Scenario 3, service funding remains fully funded for several years after reserve <br />funding begins to decline but then begins to fall around Year 24 and is fully <br />depleted by approximately Year 35. This sequencing reflects the model’s <br />0% <br />10% <br />20% <br />30% <br />40% <br />50% <br />60% <br />70% <br />80% <br />90% <br />100% <br />1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 <br />Scenario 1: Baseline <br />Scenario 2: Post-1995 <br />Scenario 3: Pre-1995 <br />8.A. - Page 96 of 168 <br />106