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HomeMy WebLinkAboutHousing & Redevelopment Authority Minutes 08-26-2010APPROVED MINUTES PLYMOUTH HOUSING AND REDEVELOPMENT AUTHORITY AUGUST 26, 2010 PRESENT: Chairman Jeff Kulaszewicz, Commissioners Steve Ludovissie, David Miller and Bob Stein ABSENT: Commissioner Paul Caryotakis STAFF PRESENT: Housing Program Manager Jim Barnes and Office Support Specialist Laurie Lokken OTHERS PRESENT: None 1. CALL TO ORDER Chairman Kulaszewicz called the Plymouth Housing and Redevelopment Authority meeting to order at 7:00 P.M. 2. CONSENT AGENDA A. Approve HRA Meeting Minutes from July 22, 2010. B. Plymouth Towne Square. Accept July 2010 housing report. C. Vicksburg Crossing. Accept July 2010 housing report. MOTION by Commissioner Miller, seconded by Commissioner Stein, to approve the consent agenda. Vote. 4 Ayes. MOTION approved unanimously. 3. NEW BUSINESS A. Vicksburg Crossing. July 2010 Marketing Report. Housing Program Manager Barnes reported that there is one unit left to rent. He said that they are also creating a small waiting list for specific unit types. He said that there are no costs associated anymore with the website we created, unless we make major changes to it. He said that we did not receive any inquires from our web page last month. He said he was not sure if search engines were placing the search high enough up when people looked for senior housing in Plymouth. Commissioner Miller asked if anyone has run a search on Google to see where it pops up. Housing Program Manager Barnes replied that he had not run a search recently but would do so and report back to the Board on the results. He said that there are additional fees you can pay to get your search moved higher up on search engines such as Google or Bing. He said that he did Approved Plymouth Housing and Redevelopment Authority August 26, 2010 Page 2 not think that it was necessary at this point to do that. He said that we still field a few inquiries to the city's website and pass them along to the property managers. Housing Program Manager Barnes reported that things are going well at Vicksburg Crossing. He said that there is still a wish list of improvements that have been discussed over the past couple of years but we are not looking at anything seriously with respect to improvements or upgrades to the building yet. He said that we want to see where we are at financially at the end of the year and make sure we can hold the occupancy rate. He said that was the biggest thing with senior housing, especially at this level of services, as we could lose occupants very quickly. Chairman Kulaszewicz asked if advertising in the Lakeshore Weekly News and Sun Sailor is still being alternated monthly and whether we have ever been able to determine whether that advertising brings results. Housing Program Manager Barnes responded that advertising is alternated monthly and that it does bring results. He said that the open houses are also advertised in the papers and it is a good, economical way to market the building compared to running an advertisement in the Star Tribune or one of the magazines that are distributed locally. B. Vicksburg Crossing. Long Term Financial Projections. Housing Program Manager Barnes gave an overview of the staff report. Board members discussed the debt service. Commissioner Ludovissie asked why our reserve was jumping from $60,000 to $120,000 and is that a requirement under the bonds. Housing Program Manager Barnes replied that it is not. He said that we would like to be up to about $120,000 annually in reserves. He said that in each of the previous three years, we have reduced the reserves so we don't have to have more subsidy. He said that we are shorting our reserves early on and hope to make that up as we go forward. Commissioner Ludovissie said that income and expenses will typically correspond more directly. He said that your expenses during a deflation period will run lower but during an inflationary period, your expenses may be fine but your income could be up too. He said you could be able to charge higher rents in an inflationary period. Housing Program Manager Barnes said that we used three and five percent as escalators because it is a standard within the realm of multifamily underwriting for affordable housing. Commissioner Ludovissie said that it is premature to know what amount of subsidy will be needed, at least for another year or two. He said that there are so many things that could impact us. He said that this Board is going to have to concentrate on the expenses. Housing Program Manager Barnes agreed. Commissioner Stein asked if the salaries for maintenance are included in the repair and maintenance line item or what that includes. Housing Program Manager Barnes responded that salaries are under property administration. He said that building and grounds items, such as Approved Plymouth Housing and Redevelopment Authority August 26, 2010 Page 3 cable television and utilities (electric, gas, water, sewer, water softening services, common area repairs and maintenance) and all of those various areas get included in the repairs and maintenance line item. Commissioner Stein asked that when this project was initiated, did it get projected out as to when there would be a positive cash flow. Housing Program Manager Barnes replied that based on what was going on in 2006, that by year four, we would be cash flowing. He said that a number of things changed that, such as the building was opened late, it opened at a bad time of the year and then the economic change has caused us to not raise rents as projected in the initial pro forma. Commissioner Ludovissie asked why we show a cash flow in 2011. Housing Program Manager Barnes responded that we are including the $100,000 subsidy that we didn't have in the original pro forma. He said that it was the hope that the building could make it without any subsidy. Commissioner Ludovissie said that it was premature to conclude what that subsidy amount is going to be. He said that we ran into some issues where we have to correct some mistakes from the construction and instead of coming out of the original bond amount, we are ending up paying for it out of operating. Chairman Kulaszewicz questioned the 2010 subsidy amount. Housing Program Manager Barnes responded that the subsidy for Plymouth Towne Square was reduced. He said that we did not raise the overall building subsidies from 2009 to 2010, we simply allocated them differently. Chairman Kulaszewicz asked if there have been significantly higher refurbishing costs when we lose a tenant. Housing Program Manager Barnes responded that we have been very fortunate on turning units at a very reasonable cost with the exception of units at Vicksburg that have had tenants that smoked. Chairman Kulaszewicz asked if we shorted the public service funds. Housing Program Manager replied that those are different funds. He said that the subsidy for the buildings comes from the HRA general fund and the funds for public services come from the CBDG program. Housing Program Manager Barnes stated that the 2011 HRA general fund budget proposes that we maintain a status quo on our entire budget. He said that we are only asking for the same amount of tax levy this year as we did last year. Commissioner Stein said that he would like to see a proposed budget that would reflect cutting expenses or raising revenue to get to a positive cash flow. He said not that we would have to adopt it but would like to see what we would have to do to eliminate or decrease the subsidy. Housing Program Manager Barnes received confirmation from Board members that they would like to see $100,000 cut from the budget. Approved Plymouth Housing and Redevelopment Authority August 26, 2010 Page 4 Commissioner Ludovissie said that he felt that a pro forma like this should do better with the reduced property tax that we have. He said that another thing in our favor is the fact that occupancy has improved and should be reflected. Chairman Kulaszewicz asked what the occupancy rate is for 2011 and how many open units that would be. Housing Program Manager Barnes responded that the occupancy rate is 95%, starting in 2010, and that we have 94 leasable units. He said that would be four open units. Commissioner Stein asked if the bonds were the original bonds for the building. Housing Program Manager Barnes confirmed that these are the original bonds on Vicksburg Crossing. He said that we could not consider a refunding until 2016. 4. OLD BUSINESS A. Plymouth Towne Square. Review Information Provided By Residents. Housing Program Manager Barnes gave an overview of the staff report. He added that the attached letter states "respectfully, we see this as a violation of the rule not to raise the rent above 35% of income for tenants of PTS (the condition on which PTS was built as we understand it)". He said that the policy for charging 35% is not how the building was originally designed and operated. He said that the policy was changed in 2002. He said that the original policy for determining rents was very convoluted. He said that there were 17 or 18 people paying over 55% of their income, so we changed it to the current policy to make it a little more equitable for everybody. Housing Program Manager Barnes said that within our Operations and Occupancy Guide, it states that "all residents shall pay at least the minimum monthly rent for their units or 35% of their adjusted monthly income for their rent and utilities, whichever is greater, up to the full market rent". He said that they don't see the first part of that and that confuses them. He said that they simply see 35% of their adjusted monthly income for their rent and utilities up to the full market rent. He said that staff is working on a change in how we determine rents and will present it to the Board in October. Chairman Kulaszewicz said that his inclination is to accept staff's recommendation and not make any changes to the adopted 2010 minimum rents. He said that the citizens of Plymouth, with their $240,000 contribution to this particular project, provide ample assistance at this point in time. Commissioner Ludovissie asked why we are running behind on rental income and is it due to turnover. Housing Program Manager Barnes replied that it is due to turnover and also the newer residents coming into the building have less income than the ones that they are replacing. He said that has been a trend for the past few years, so we are seeing a lot more people paying the minimum rents now than we have in the past. Approved Plymouth Housing and Redevelopment Authority August 26, 2010 Page 5 Commissioner Ludovissie said that is a concern and how we strive to achieve a building that operates as well as possible without subsidy and at the same time deal with a prospective tenant base in these economic times with lower incomes, which suggests a review of percentages of income. He said that he understands why they are upset. He said that's the direction that he thinks we will end up going and it will be controversial. He said that it is one that is going to have to be hit directly because if we don't, then we are redistributing the burden on to others. He said that the intent was for the building to operate as independently as it could and at the same time, still serve as many low and middle income families as they could. Chairman Kulaszewicz said that this building was meant to be subsidized at $240,000. He said that it must have been anticipated to have a certain amount of subsidy from the beginning. He said that we need to decide to what extent we are willing to allow that subsidy to grow, if in fact the trend is that we are seeing lower rents. Housing Program Manager Barnes said that the range of subsidy for this building has been between $240,000 and $300,000 over the life of the building. Commissioner Ludovissie added that the $300,000 was probably related to the fact that for many years, there were no increases or adjustments in rents. Chairman Kulaszewicz said that as a Board, it is one of our mandates, on behalf of the citizens of Plymouth, to decide what that subsidy should be and to strike a balance between what the residents pay and what the citizens of Plymouth provide in the form of the subsidy. Commissioner Stein requested that a letter be sent back to the residents that the Board received their letter, discussed it and will take it under advisement while looking at the 2011 budget. 5. ADJOURNMENT MOTION by Chairman Kulaszewicz to adjourn the meeting at 7:39 p.m.