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REDWOOD CITY FAIR AND AFFORDABLE HOUSING ORDINANCE <br /> <br />Economic & Planning Systems, Inc. 38 Affordable Housing Impacts <br />assumption that resident services are reduced only after other sources of <br />flexibility, including residual receipts and replacement reserve contributions, have <br />already been reduced. <br />Figure 4. Resident Service Funding Capacity by Scenario <br /> <br />Conclusions from Cash-flow Analysis <br />Overall, the case study suggests that even when a project begins with relatively <br />healthy financial metrics, new fees and slower rent growth can materially affect a <br />building’s financial stability over time. For post-1995 affordable housing (Scenario <br />2), the modeled impact is limited to new ordinance administration fees, and the <br />project can maintain reserve and service funding throughout the projection <br />period. Primary impacts are likely to be payments of residual receipts to “soft <br />lenders” such as the City or County. <br />For pre-1995 affordable housing, the impact is larger because the project is also <br />subject to rent stabilization. For these older buildings, the analysis suggests <br />operators will first cut residual receipts, followed by cuts to the replacement <br />reserve account, then reduce resident services, before ultimately falling below the <br />minimum debt service coverage threshold. This distinction is important because <br />older affordable housing properties are often smaller, have greater rehabilitation <br />needs, and may have less financial capacity to absorb new costs without <br />additional subsidy, restructuring, or reductions in operating support. <br /> <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 97 of 168 <br />107