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AGENDA REPORT
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| | | | | | | | DATE:
| September 7, 2021
| TO:
| Fairfield Housing Authority Chair and Commissioners
| FROM:
| Stefan T. Chatwin, Executive Director 
| | SUBJECT: | Resolution HA2021-10 of the Fairfield Housing Authority Authorizing the Executive Director or His Designee to Enter into and Execute Formation Documents to Enable the Formation of a Nonprofit Public Benefit Corporation to be Known as Fairfield Housing and Community Development Corporation (FHCDC) and Updating the Fiscal Year 2021-2022 Budget |
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| | | | | | | | | RECOMMENDED ACTION | | Adopt resolution. |
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| | | | | | | | | STATEMENT OF ISSUE | | The proposed resolution authorizes the executive director or his designee to execute formation documents to establish Fairfield Housing and Community Development Corporation (the “FHCDC”), a nonprofit public benefit corporation, to support the activities of the Fairfield Housing Authority (the “FHA”) including but not limited to providing affordable housing, promoting community development initiatives, and participating in entities such as limited liability companies and limited partnerships to facilitate the construction and operation of affordable housing. |
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| | | | | | | | | DISCUSSION | The FHA desires to increase its role in developing affordable housing in the city of Fairfield. Housing Authorities throughout California have employed a variety of approaches to increase their involvement in development projects. One such approach is through the formation of an affiliated entity that is controlled by a public entity but nimbler and more flexible to accommodate varying needs. The key is to make the entity separate so that the public entity can fulfill desired goals and at the same time remain shielded from liability associated with projects pursued by the newly formed entity.
The proposal here is to form a California Nonprofit Public Benefit Corporation, which is organized and operated to further charitable purposes under California law. The specific purpose of the FHCDC is to support the activities of the FHA in the provision of affordable housing and community development. This purpose is outlined in the Articles of Incorporation of the FHCDC attached to this report.
There are no members of the FHCDC, but it will have a board of directors and officers. By forming a separate corporation, the FHA is protected from general liability from any third parties in connection with activities performed by the FHCDC, provided that a separate corporate identity is maintained. In addition to the FHCDC undertaking activities on its own, the FHCDC may also become the sole member of limited liability companies (LLCs), further shielding the FHA from liability but also allowing the FHCDC to participate in development partnerships and be eligible for certain affordable housing financing, such as low-income housing tax credits.
The Articles of Incorporation of the FHCDC will be filed with the California Secretary of State and will establish the FHCDC as a separate legal entity. The board of the FHCDC will then adopt bylaws. The Bylaws of the FHCDC (the “Bylaws”), as attached hereto, set forth the internal operating procedures of the Corporation and explain how it is governed. The Bylaws also explain how the Corporation's directors and officers are appointed, the length of their term, and the qualifications necessary to become a director. The Bylaws further set out a method for establishing the timing of meetings through resolution, notice and quorum requirements, and duties and responsibilities of directors and officers.
Under the attached Bylaws, the deputy director of the FHA would automatically serve on the board as a full voting director through an ex officio position. The remaining board directors are designated by the executive director of the FHA. Directors are selected from city, county, and FHA staff with one director position set aside for community representation.
Once the Corporation is formed, it will seek an income tax exemption from the IRS as a 501(c)(3) entity. It will also seek a state income tax exemption from the California Franchise Tax Board. Finally, the Corporation will seek a property tax exemption from the State Board of Equalization. These tax exemptions will allow the Corporation to direct more of its funding into the development and operation of affordable housing and community development.
Environmental Review
The FHA’s action authorizing the executive director or his designee to sign formation documents to form the proposed nonprofit public benefit corporation are statutorily exempt from environmental review pursuant to California Environmental Quality Act (CEQA) Guidelines Section 15061, which exempts activities that propose no significant effect on the environment.
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| | | | | | | | | FINANCIAL IMPACT | | The FHA will access resources from Housing Authority Fund 023 to establish a banking account and complete financial requirements associated with the formation of FHCDC. Initial funding commitments will not exceed $50,000. A budget adjustment in the amount of $50,000 is required to fund the FHCDC. |
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| | | | | | | | | PUBLIC CONTACT/ADVISORY BODY RECOMMENDATION | None.
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| | | | | | | | | ALTERNATIVE ACTION | The FHA could decide not to authorize the executive director to execute the formation documents, however, the action would prevent the FHA from maximizing its flexibility to develop and finance affordable housing and community development initiatives.
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| | | | | | | | | STAFF CONTACT | LaTanna Jones, Director of Housing Services
(707) 428-7647
ljones@fairfield.ca.gov
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| | | | | | | | | COORDINATED WITH | City Attorney's Office, Finance Department
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| REVIEWERS: | | Reviewer | Action | Date | | Alexander, Amber | Approved | 8/25/2021 - 1:07 PM |
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