Defining the standard since 1940

FY2016BUDGET IN BRIEF

• PURPOSE OF BUDGET IN BRIEF 1

• GOAL AND VALUES 2

• MESSAGE FROM CHIEF EXECUTIVE DIRECTOR 3

• INTRODUCTION 5

• BOARD OF COMMISSIONERS 6

• OPERATING BUDGET HIGHLIGHTS 7

• RESOURCES AND EXPENDITURES 8

• HOUSING PROGRAMS 9

• DEVELOPMENT PROGRAMS 11

• OTHER PROGRAMS 13

• CENTRAL OFFICE COST CENTER (COCC) 15

Table of Contents

Defining the standard since 1940

FY2016BUDGET IN BRIEF

Purpose Of Budget In BriefThe Authority must submit a proposed budget to the Board of Commissioners for their approval. The Budget In Brief is a tool which provides the reader a synopsis of the detailed spending plan of the Authority.

Proposed Fiscal Year (FY2016) Consolidated Annual Operating and Capital Budget reaffirms NRHA’s:

• Strengthened commitment to fiscal responsibility.• Prudent objectives to ensure affordable housing, promote homeownership, and provide community development opportunities to the citizens of Norfolk.

A fiscal year differs from calendar year by encompassing the 12-month period during which the annual operating budget applies (in this case, beginning July 1, 2015, and ending June 30, 2016).

Online

The proposed budget is available on NRHA’s website at the following URL: http://www.nrha.us/nrha/aboutnrha/budget

The intent of this document is to provide information about Norfolk Redevelopment and Housing Authority’s (NRHA’s) spending intentions, and the wider fiscal and economic picture.

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Goals

GOALS

VALUES

ACCOUNTABILITY EXCELLENCE

INNOVATION TEAMWORK

CUSTOMER SERVICE

“ACE IT”

Quality Housing Opportunities for All - NRHA is committed to providing a continuum of housing options for households of all incomes seeking housing.

Sustainable Mixed-Income Communities - There is a need for a new housing model to create a healthy physical and social environment that would appeal to a wider range of incomes.

Strategic Business Approach - To meet changing re-quirements and to make the best use of our resources, we are developing a new approach for the delivery of products and services.

Community Support - Recognizing the interrelated na-ture of our mission, NRHA resolves to work to become a trust-ed partner that works collaboratively with key stakeholders and partners.

Budget in Brief | 2

It is very humbling to step into the shoes of recently retired Executive Director Shurl Montgomery. When I joined NRHA almost 15 years ago I knew there was no better organization in Norfolk to join in order to make a significant difference in the lives of our citizens. The epitome of choosing a

career in public service is the choice that we make to come to work every day to improve the opportunities available to the people we serve. As NRHA celebrates its 75th anniversary I believe that this is the same inspiration that continues to drive all of us today. While respecting our history, this is a critical time for NRHA and our industry to replace obsolete housing policies and practices with more sustainable models that access private capital to supplement the steady decline in federal subsidies. In this regard our Board of Commissioners recently took a major step on May 14 by authorizing NRHA to participate in the HUD Rental Assistance Demonstration (RAD) program. This is a huge opportunity for the Authority to utilize new financing tools to renovate and redevelop our public housing communities so that we can provide better housing choices to low income households in Norfolk.

Message from the Executive Director

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In addition to continued reductions in federal funding, NRHA is challenged with adapting to a shift in the City’s direction for the Community Development Block Grant (CDBG) program. The City of Norfolk has elected to focus the use of CDBG funding on small business lending rather than the provision of assistance to homeowners in their efforts to revitalize neighborhoods. While the Authority will continue to receive CDBG funding for its HomeNet program in FY-2016, NRHA will not receive CDBG funding for neighborhood revitalization activities for the first time since the inception of the program in 1975. Despite the lack of new CDBG funding in FY-2016, NRHA has continuing obligations to implement prior year funding activities and this budget includes funding to allow the Authority to meet those responsibilities.

While funding from federal and local sources has remained uncertain for the past several years, NRHA employees at all levels have worked together to maintain the Authority in very sound financial condition and we project continued fiscal health going forward. It is essential that we continue to retain our internal capacity to face the challenges in the provision of housing assistance and the redevelopment of our neighborhoods and housing communities. A critical tool in maintaining capacity is to reinstitute performance-based pay increases for NRHA employees in accordance with the compensation plan that was placed in effect in 2010. The proposed budget includes funding to award performance-based salary adjustments effective as of July 1, 2015. The budget does not contemplate layoffs in personnel during FY-2016, but I want to emphasize that I will be calling on us all to examine personnel vacancies as they occur to determine whether it is possible and efficient to hold off on hiring, either temporarily or permanently.

For 75 years, NRHA has been in the forefront of the effort to redevelop significant portions of Norfolk, including the virtual rebuilding of the downtown area and the successful revitalization of over 40 redevelopment and conservation project areas from the Southside to Ocean View. During FY-2016, the Authority will continue to lead the City’s neighborhood and housing revitalization efforts, utilizing new programs such as RAD and other innovative tools to join with community partners in realizing the vision of “Quality housing where you want to live,” and the mission of “Providing quality housing opportunities that foster sustainable mixed income communities.”

John KownackExecutive Director, NRHA

Budget in Brief | 4

Goals

QUALITY HOUSING CHOICES HOUSING CHOICES IN

NEIGHBORHOODS WHERE YOU WANT TO LIVE

TO PROVIDE QUALITY HOUSING OPPORTUNITIES

THAT FOSTER SUSTAINABLE, MIXED-INCOME COMMUNITIES

Mission Statement

Introduction

Vision Statement

Norfolk Redevelopment and Housing Authority (The Authority), was created by the City of Norfolk (The City) on July 30, 1940 under the provisions of the United States Housing Act of 1937. As a chartered political subdivision of the Commonwealth of Virginia, The Authority provides subsidized public housing, rental assistance, and administers redevelopment and conservation projects within the City in accordance with state and federal legislation.

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The Board elected Barbara Hamm Lee as Chairman and Donald Musaccio as Vice Chairman in September, 2014. Norfolk City Council appointed Michael B. Burnette to replace F. Nash Bilisoly in September 2014.

B O A R D O F COMMISSIONERS

NRHA is headed by a board of seven commissioners, appointed by Norfolk City Council, who are responsible for determining policy and direction. NRHA Commissioners are residents of Norfolk and serve staggered four-year terms. The board elects a Chairman and Vice Chairman, as well as selects an Executive Director who is responsible for NRHA’s activities and operations. To contact a Commissioner, call 314-1679

Budget in Brief | 6

Pictured from left to right: Richard Wells Gresham, Rose M. Arrington, Michael Burnette, Barbara Hamm Lee, Robert J.

Soble, Donald J. Musacchio and Alphonso Albert.

The Consolidated Annual Operating and Capital Budget set forth revenue and expenditures.

Operating Budget Highlights

85% HOUSING Provides an ongoing stream of funding that makes up the gap between what low-income tenants can afford to pay in rent and the cost of operating housing and resident services programs; partner with structured finance programs to redevelop housing properties.

11% DEVELOPMENT Partners with communities to pursue new housing development; develop the existing land inventory; and continue to create a homeowner assistance capacity to include rehabilitation products, homebuyer subsidy, credit repair and counseling.

4% OTHERIncludes cost to support internal and external initiatives that are otherwise underfunded or ineligible under federal programs and/or projects that do not exclusively benefit a specific division.

The Proposed Fiscal Year 2016 (FY2016) Consolidated Annual Operating and Capital Budget sets forth both revenue and expenditures for the Authority. It delineates operating and program budgets for specific initiatives within con-servation neighborhoods and public housing communities. The Authority pro-poses FY2016 Budget expenditures of $83,164,192 which represents a net of $1,387,187; a 1.64 percent decrease over FY2015’s budget of $84,551,379. NRHA believes the proposed budget addresses all of our fiscal needs, while also putting us on the path to greater future accomplishments.

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Projected Expenditures Total Housing Development OtherFY 2016 ($) 83,164,192$ 70,951,542$ 9,026,259$ 3,186,391$

FY 2015 ($) 84,551,379 66,864,287 14,037,716 3,649,376

$ Change $ (1,387,187) $ 4,087,255 $ (5,011,457) $ (462,985)

% Change (FY15 to FY16) -1.64% 6.11% -35.70% -12.69%

% of FY2016 Budget 100.00% 85.32% 10.85% 3.83%

Year to Year Expenditure Budget Comparison

Labor $13,883,543

17% Employee Benefits

$5,599,832 6%

Other Administration

$2,963,421 4%

Program Costs (Annual)

$26,289,373 32%

Operation Cost $17,503,327

21%

Capital $171,909

1%

Capital & Multiyear Programs

$15,224,500 18%

Total FY2016 Budget

WHERE DOES THE MONEY GO TO?

WHERE DOES THE MONEY COME FROM?

Projected Revenue Total Housing Development OtherFY 2016 ($) 83,164,192$ 70,951,542$ 9,026,259$ 3,186,391$

FY 2015 ($) 86,856,881 69,169,789 14,037,716 3,649,376

$ Change $ (3,692,689) $ 1,781,753 $ (5,011,457) $ (462,985)

% Change (FY15 to FY16) -4.25% 2.58% -35.70% -12.69%% of FY2016 Budget 100.00% 85.32% 10.85% 3.83%

Year to Year Revenue Budget Comparison

HUD Grants $56,654,929

68%

City Grants $5,207,626

6%

Tenant Income $17,596,814

21%

Other Income $996,333

2%

Appropriations from a Program's

Reserves $2,708,490

3%

Proposed Resources FY2016

Budget in Brief | 8

SUMMARY— Housing Division revenues total $69,229,282 and are derived from HUD operating subsidies, grants, tenant income, and other income. The Operational shortfalls are projected in FY2016 for the Federally Aided Program ($642,563) and Housing Choice Voucher Program ($647,809) and Job/Access Reverse Grant ($431,888).

Expenditures for the Division ($70,951,542) focus on efforts to manage and maintain3,237 assisted rental units as well as 2,850 Housing Choice Vouchers for participantsin two major programs. The budget also includes expenditures of $10.3 million underthe Capital Fund program for capital im-provements to maintain aging stock and in-frastructure of the public housing properties. NRHA must constantly replace roofing,heating systems, windows, doors, flooring and other items in the federally assistedpublic housing communities.

NRHA owns three apartment complexes that serve moderate income households(Merrimack, Oakmont and Park Terrace). These communities are privately-managedby third party entities with NRHA oversight. Property management fees and operatingexpenses are covered through tenant rents. These properties produce net operatingrevenue annually that can be used for other NRHA programs. We anticipate $2.2 millionin earnings during the 2016 fiscal year.

Other housing programs consist of several miscellaneous grants that provide servicesto our residents which include Job Access Grants, ROSS Service Coordinator and Fam-ily Self Sufficiency grants, and the Housing Opportunity (Homeownership) Program.

Resident Services initiatives are included in the FY2016 budget and are comprehensiveand designed to empower household self-sufficiency focusing on education andemployment.

Goals:

• Prepare revitalization plans for communities based on com-prehensive physical and capital needs assessment

• Ensure consistency of RFP for HUD Green Physical Needs As-sessment with above efforts.

• Exceed previous high performer scores for LIPH & HCV program

• Developed improved customer satisfaction survey methodology for residents, HCV participants and landlords

• Complete Grandy Village Phase VI

• Complete rehabilitation of Diggstown Recreation Center

• Retain consultant to perform competitive analysis of shop rates

• Develop effective outreach events for HCV landlords

• Submit Five Year and Annual Plan for Assisted Rental & HCV that addresses RAD and related community revitalization plans

• Commence renovations and site improvements for Merrimack Landing, Oakmont North and Broad Creek

• Develop repositioning plan for Park Terrace

HOUSING OPERATIONS

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HOUSING PROGRAMSProjected Revenue and Expenditures

Proposed Revenue Fiscal Year 2016Amount %

Housing Division RevenuesHousing Choice Voucher - HUD PHA Grants (for HAP) 25,233,555$ 35.56%Federally Aided Communities - HUD PHA Grants * 14,809,937 20.87%Operating Receipts - Federally Aided Housing 9,751,451 13.74%Operating Receipts - Cottage Bridge 57,414 0.08%Capital Grant Program - HUD PHA Grants 10,945,475 15.43%Operating Receipts - Merrimack Landing 3,581,566 5.05%Operating Receipts - Oakmont North 3,871,620 5.46%Housing Choice Voucher - HUD PHA Grants (Adm) 1,699,716 2.40%Cottage Bridge - HUD PHA Grants (for HAP) 227,593 0.32%Park Terrace - HUD PHA Grants 316,965 0.45%Housing Choice Voucher SRO - HUD PHA Grants 350,569 0.49%Ross Grant Service Coordinator 294,463 0.42%Operating Receipts - Park Terrace 220,263 0.31%Housing Opportunity (Homeownership) Program Reserves 182,833 0.26%Park Terrace - Program Reserves 50,040 0.07%Other Revenue- External Sources 147,556 0.21%ROSS (PH and HCV Family Self Sufficiency Grant) 328,757 0.46%Privately Managed Reserves 431,888 0.61%Earning Transferred to Other Programs from Merrimack and Oakmont Operating Receipts (1,550,119) -2.18%

Total Proposed Revenues 70,951,542$ 100.00%

Proposed ExpendituresAmount %

Housing Division ExpendituresFederally Aided Housing Programs 21,923,814$ 30.90%Grandy Village Revitalization 2,180,460 3.07%Franklin Arms 500,277 0.71%Broad Creek Renaissance (TCB) 740,829 1.04%Cottage Bridge 285,007 0.40%Housing Choice Voucher (HAP) 25,233,555 35.56%Capital Fund Program 10,302,912 14.52%Merrimack Landing Property Management 2,040,749 2.88%Oakmont North Property Management 3,214,509 4.53%Housing Choice Voucher Program (Administration) 2,326,150 3.28%Park Terrace Property Management 587,268 0.83%Job Access/Reverse Commute Grant 431,888 0.61%Housing Choice Voucher SRO 378,071 0.53%ROSS Service Coordinator Grant 294,463 0.42%Housing Opportunity (Homeownership) Program 182,833 0.26%ROSS Grant PH and HCV Family Self Sufficiency Grant 328,757 0.46% Total Proposed Expenditures 70,951,542$ 100.00%

* Grandy Revitalization, Franklin Arms, and BroadCreek Renaissance Subsidies are included

Housing ProgramsProjected Revenue and Expenditures

Budget in Brief | 10

SUMMARY— Revenues for the Community

Development Division total $9,026,259 and

are derived from a blend of various funding

streams. There is a $454,237 operational

shortfall projected in FY2016. This resulted

from the City of Norfolk’s allocation of

Community Development Block Grant

traditionally funded through NRHA for the

Rehabilitation Loan and Rehabilitation Home

Repair programs being transitioned to the

Department of Neighborhood Development

for FY2016. The CDBG money identified

in this budget represents the remaining

balances from older program years. It is

anticipated that the rehabilitation program

money should be spent and work completed

by May 2016.

The Division’s focus in FY2016 will be on the

development of new quality mixed-income

housing city-wide (with special emphasis in

Broad Creek, Fairmount Park, Ocean View,

Wards Corner and expanded St. Paul’s area),

repositioning of privately-managed apart-

ment complexes as well as redevelopment

component of assisted-rental properties

selected for HUD Rental Assistance Demon-

stration (RAD) program.

Further Development will continue programs

that move first-time homebuyers to clos-ing

and acquisition of blighted properties based

on negotiations with willing sellers.

Goals:• Prepare and submit to HUD RAD

applications for Diggstown and Young Terrace

• Various redevelopment initia-tives throughout NRHA’s rede-velopment and conservation areas, as well as City of Norfolk neighborhood plan areas. New home development will be em-phasized as well as the provision of blight removal tools including acquisition, demolition and the installation of public infrastruc-ture supporting redevelopment.

• Homeownership assistance through first-time homebuyer subsidy and homebuyer credit repair and counseling.

• Providing a broader range of quality housing choices the revitalization of Norfolk’s public housing communities through the HUD Rental Assistance Demonstration (RAD) program. This will involve collaboration with new and existing partners.

• Complete new assisted apart-ments in Broad Creek, new apartment development and master planning in Grandy Village as well as repositioning of Merrimack Landing and Park Terrace apartments.

COMMUNITYDEVELOPMENT

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Development ProgramsProposed Revenues and ExpendituresDevelopment ProgramsProposed Revenues and Expenditures

Proposed Revenues Fiscal Year 2016 %

City of Norfolk General Fund 2,707,626$ 30.00%

Capital Improvement Neighborhood Program 2,500,000 27.70%Community Development Block Grant (Close Out) 1,681,293 18.63%HOME Program 655,499 7.26%Privately Managed Reserves 410,247 4.55%Rehabilitation Reserve Account 291,466 3.23%Local Development Fund 302,500 3.35%HomeNet HUD / City Grants 134,427 1.49%Empowerment 2010 133,177 1.48%East Beach Land Sale Proceeds 80,000 0.89%Privately Managed Earnings 75,353 0.83%Other Development Reserves 54,671 0.61%Total Revenues 9,026,259$ 100.00%

Proposed Expenditures Amount %

Redevelopment & Conservation Projects (See Next Page) 2,698,293$ 29.89%Program Management 1,654,515 18.33%Economic Development Initiatives Grants 1,516,064 16.80%Administrative Support 1,152,001 12.76%City Wide Homebuyer Assistance - NRHA 490,720 5.44%Disposition Program 350,000 3.88%CDBG Dispositon 210,000 2.33%Former John T. West School Site Development 140,000 1.55%HomeNet 134,427 1.49%Low Mod Housing Planning Initiative 133,177 1.48%Governor's School 101,617 1.13%City Wide Home Repair Program 272,000 3.01%201 Granby City Rent Supplement 89,945 1.00%East Beach Initiatives 35,000 0.39%Local Rehabilitation Initiatives 27,500 0.30%Chesterfield Academy and Oakmont North Open Space Grass Maint. 21,000 0.23%

Total Expenditures 9,026,259$ 100.00%

Budget in Brief | 12

Other Programs

SUMMARY - Projected FY2016 expenditure needs for Other Programs total $3.2 million and is comprised of eleven unique programs which are not contained in either of the Authority’s two programmatic divisions. The revenue sources supporting these activities are derived from a program’s own reserves, earnings from privately managed properties or fee for service agreements. Other programs projected expenditures include the following projects:

Programs Amount %3rd Party Management Fee $ 5,447 0.17%Broad Creek /HOPE VI Closeout 75,000 2.35%Broad Creek Village 50,000 1.57%COCC 134,460 4.22%CEO Contingency Fund 209,600 6.58%Core Business Service 465,615 14.61%Communications and Government Relations 450,867 14.15%Hampton Roads Ventures 55,105 1.73%Project Development Financing 872,352 27.38%Specialized Maintenance 569,261 17.87%Tax Credit Residential 298,684 9.37%Total $ 3,186,391 100%

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Program Description - Other Programs

3rd Party Managed ProjectAsset management and bookkeeping fees received for services rendered for privately managed properties.

Broad Creek/HOPE VI Closeoutincludes the coordination efforts to close out the original HOPE VI grant approved in 2000.

Broad Creek VillageIncludes the former sites of the Moton and Roberts Village public housing communities that have been cleared and are awaiting development.

COCCReserves from Central Office account used to offset shortfalls from charging management fees as a target reduction measure in select programs.

Core Business ServiceA project to expense certain services (IT, Parking, Employee Assistance Program and Telephone Lines) determined to be an administrative burden to equitably distribute to the programs.

Executive Director Contingency FundFunds activities that support internal and external initiatives that are otherwise ineligible under federal programs.

Government RelationsThe department oversees development, planning, implementation and integration of all communications and marketing strategies in support of NRHA’s initiatives and coordinates liaison activities for legislative matters.

Hampton Roads VenturesNRHA provides management and services to Hampton Roads Ventures, L.L.C. (HRV), including oversight management for loan servicing, asset management, compliance and reporting.

Project Development Financing Dedicated to developing financial strategies and coordinating efforts to provide mixed-financing initiatives in the renovation, redevelopment or construction of housing.

Specialized MaintenanceA collective group of specialized trades that perform maintenance services primarily to the public housing communities.

Tax Credit ResidentialSupportive services provided to Grandy Revitalization and Franklin Arms residents, above and beyond the tax credit agreement.

Budget in Brief | 14

Proposed Revenue Fiscal Year 2016Amount %

Central Office Cost CenterCity Grant 89,945$ 0.6%Management Fee (Inter-project) 6,179,061 42.8%Other Fees for Service (Inter-project) 6,825,825 47.3%Other Fees for Service (External Sources) 55,805 0.4%Other Revenue (External Sources) 126,758 0.9%Appropriation of (this) Project Reserves 709,369 4.9%Appropriation of Program Reserves 450,867 3.1%Total Proposed Revenues 14,437,630$ 100.00%

Proposed ExpendituresAmount %

Labor 6,209,590$ 43.5%Employee Benefits 2,447,818 17.1%Management Fee Expense 805,777 5.6%Other Administration 576,132 4.0%Capital & Multiyear Programs 125,000 0.9%Copiers 43,090 0.3%Depreciation - 0.0%Equipment 233,500 1.6%Fee for Service - 0.0%General Expense 3,400 0.0%Homebuyers' Assistance - 0.0%Information Services 42,494 0.3%Insurance - Liability 3,328 0.0%Insurance - Property 99,866 0.7%Interest Expense 21,697 0.2%Maintenance 2,118,887 14.8%Principal Payment on Debt 205,515 1.4%Protective Services 60,000 0.4%Rent 910 Building 346,346 2.4%Rent Granby Office Building 402,080 2.8%Telephone 15,480 0.1%Training and Travel 110,535 0.8%Utilities 341,500 2.4%Vehicle 77,500 0.5%

Total Proposed Expenditures 14,289,535$ 100.00%

Excess/Deficit 148,095$

Central Office Cost Center

SUMMARY-The Central Office Cost Center (COCC) refers to the collective group of business units of the Authority which provide corporate oversight, specialized services, or professional support which benefit all or multiple projects or pro-grams of NRHA, but whose services may not be readily identifiable to a particular program. The FY2016 proposed expenditure budget is $14,289,535. This funds the Executive Office, Administration Division and Housing Oversight Function.

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Common to all COCC functions this year will be the task of reassessing selected functions to improve

efficiency and effectiveness.

EXECUTIVE & ADMINISTRATIVE OFFICES FUNCTIONAL AREA:

Budget and ComplianceGovernmental Relations

Executive OfficeFinance

Human ResourcesInformation Services

OTHER FUNCTIONAL AREAS:

Capital Fund an Energy ManagementGranby Office

Housing Division OversightSpecialized Maintenance

Goals:

5 Functional Areas of COCC:

Executive & Administrative

Offices $4,930,921

35%

Granby Office Building $924,242

6% Housing Division

Oversight $1,334,924

9%

Specialized Maintenance $6,567,039

46%

Capital Fund & Enery Management

$532,209 4%

Total $14,289,535