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HomeMy WebLinkAboutHousing & Redevelopment Authority Minutes 10-27-2011APPROVED MINUTES PLYMOUTH HOUSING AND REDEVELOPMENT AUTHORITY October 27, 2011 PRESENT: Chairman Jeff Kulaszewicz, Commissioners Paul Caryotakis, David Miller and Bob Stein ABSENT: Commissioner Jim Willis STAFF PRESENT: Housing Program Manager Jim Barnes, Executive HRA Director Steve Juetten, Support Service Manager Denise Whalen, and Office Support Representative Janice Bergstrom OTHERS PRESENT: Grace Management Representative Jody Boedigheimer 1. CALL TO ORDER Chairman Kulaszewicz called the Plymouth Housing and Redevelopment Authority meeting to order at 7:02 p.m. 2. CONSENT AGENDA A. Approve HRA Meeting Minutes from August 25, 2011. B. Plymouth Towne Square. Accept August and September housing reports. C. Vicksburg Crossing. Accept August and September housing reports. MOTION by Commissioner Caryotakis, seconded by Commissioner Miller, to approve the consent agenda. Vote. 4 Ayes. MOTION approved. 3. NEW BUSINESS A. Vicksburg Crossing Marketing Reports for August and September. Grace Management Representative Bodigheimer said full occupancy was reached in September, but there is now one vacancy which she expects to be filled quickly from the affordable waiting list. Grace Management Representative Bodigheimer said they have spent approximately $4,500 of the $9,000 which was budgeted for marketing; she said they keep the ads running but have not had big promotional parties. B. Plymouth Towne Square. Review and approve 2012 Operating Budget. Housing Program Manager Barnes gave an overview of the staff report. Approved Plymouth Housing and Redevelopment Authority October 27, 2011 Page 2 Housing Program Manager Barnes explained on the revenue side of the 2012 budget for Plymouth Towne Square we are anticipating 97% occupancy and staff is proposing a 2% increase in rental revenue. He said overall revenues are projected to decrease by I%. Chairman Kulaszewicz asked if the 2% increase is across the board, including minimum rents. Housing Program Manager Barnes answered affirmatively and said the rent increase is proposed to lessen the taxpayer subsidy, which is projected to be $216,000 for 2012 as opposed to 240,000 in 2011. Chairman Kulaszewicz said there has been discussion on base minimum rents, and there were years where the base was raised but the other rents did not necessarily increase at the same percentage. He asked if that occurred in 2011. Housing Program Manager Barnes said that occurred in the past and explained that last year the new rent structure policy set everyone at a base amount. Existing tenants start at what their rent was for that year and would be readjusted if an income change of 20% or more occurred. Housing Program Manager Barnes said new tenants would start at 38% of their income and that is their base. Chairman Kulaszewicz asked how our base rents compare to other HRA base rents for similar facilities. Housing Program Manager Barnes said they are very similar. He said Dakota County often uses Section 42 guidelines and their one bedroom rent is around $550 compared to our $380. Housing Program Manager Barnes said the average rent for Plymouth Towne Square is $530 per month which is very competitive in the affordable housing market. He said the Section 8 minimum rent for a one bedroom is $790. Housing Program Manager Barnes added we are significantly lower than what Section 8 allows under their program, and added we give an incredible deal to the residents. Chairman Kulaszewicz recalled historically our minimum rents were significantly below other minimums, and we spent several years moving them up. He said last year we felt our minimum rents were at a sufficient level to be comparative with other HRA's in the community and asked if we would raise rents at a percentage across the board from this point forward. Housing Program Manager Barnes answered affirmatively and said we are trying to create equity among everyone. Commissioner Miller asked if all the tenants are clear on the base rent issue so we don't have a situation like we had two years ago. Housing Program Manager Barnes said there have been some additional meetings to explain the base rent policy and how a rent increase affects their amount of rent. Approved Plymouth Housing and Redevelopment Authority October 27, 2011 Page 3 Commissioner Stein asked if tenants are aware of this proposal. Housing Program Manager Barnes said they are aware as any other resident in the city. They know the HRA meetings are open to the public. Chairman Kulaszewicz asked what the overall percent rent increase has been in the metro area in the last year. Grace Management Representative Bodigheimer said the no service apartment communities have gone up 2-3%. She said there are indicators projecting the market will increase next year. Grace Management Representative Bodigheimer said in Grace Management's portfolio they are pushing as high as 3-4% increases in full service properties for 2012. Grace Management Representative Bodigheimer said in Vicksburg Crossing we are closer to the top of the rent structure in competitive properties. She said Plymouth Towne Square is harder for comparisons; she added these increases are fair and tenants should expect an increase every year as there are increased costs every year. Commissioner Stein asked about the replacement reserve. Housing Program Manager Barnes said ten boilers are at the end of their life and are being replaced with three more economical and efficient new boilers at a cost of $126,000. He said other expenditures will be for furniture in the community room, 90 window replacements, miscellaneous exterior repairs, and a carpet cleaning machine to split between Vicksburg Crossing and Plymouth Towne Square. Grace Management Representative Bodigheimer said through July there were nine unit turnovers which required complete turns. The average costs skyrocketed as many were long term tenants and needed paint, flooring replacement, cupboard doors, etc. Grace Management Representative Bodigheimer said they budget for 16 turns in a year which has been historically a good number. Chairman Kulaszewicz asked about the length of contract with Grace Management. Grace Management Representative Bodigheimer said the contract is annual. Chairman Kulaszewicz asked how the management fee is calculated. Grace Management Representative Bodigheimer said it is a fixed fee for these properties. She said they are completing their 10th year at Plymouth Towne Square and fees stayed the same for seven years. She said the Vicksburg Crossing fee is the same as when it was first proposed five years ago which was $4,000 a month. Housing Manager Barnes said 6-7 management companies submitted bids in 2001, and Grace Management is still below the second lowest bid that was submitted. Housing Program Manager Barnes said the Board is happy and staff is pleased from both financial and community development perspectives. Approved Plymouth Housing and Redevelopment Authority October 27, 2011 Page 4 Chairman Kulaszewicz concurred and said he is pleased with Grace Management's service, but we would be remiss if we didn't have this conversation about where they sit in the marketplace. Chairman Kulaszewicz asked about the health insurance reduction. Grace Management Representative Bodigheimer said in the past the managers salaries and benefits were split 50150 between the two buildings. This year the costs were separated as the manager at Plymouth Towne Square does not take health care benefits. MOTION by Commissioner Miller, seconded by Commissioner Caryotakis, to approve the proposed 2012 budget for Plymouth Towne Square. Vote. 4 Ayes. MOTION approved. C. Vicksburg Crossing. Review and approve 2012 Operating Budget. Housing Program Manager Barnes gave an overview of the staff report. Commissioner Stein asked if the damage deposit held on a unit can be used for unit turnover. Grace Management Representative Bodigheimer said damage deposits are used, but it is not sufficient all of the time. Commissioner Stein asked if damage deposits would be increased. Housing Program Manager Barnes said we are talking about low income clientele and it is hard to collect $1,000 versus the $500 now collected. He said consideration is being given to asking for $500 up front, and then collect the additional $500 over a few months with the understanding that it is all refundable if the unit is maintained properly showing only normal wear and tear. Grace Management Representative Bodigheimer said they will be cleaning the carpets every three years to help maintain the life of the carpet. Housing Program Manager Barnes stated that in 2022 Vicksburg Crossing will start going negative in the replacement reserve fund if we continue adding $60,000 a year. He added that Plymouth Towne Square bonds will be paid off in 2023 which will free up income generated from Plymouth Towne Square to use for affordable housing projects. He said $400,000 will be coming in annually to assist Vicksburg Crossing and the Board can look at other projects within the affordable housing program. MOTION by Commissioner Miller, seconded by Commissioner Caryotakis, to approve the proposed 2012 Vicksburg Crossing budget. Vote. 4 Ayes. MOTION approved. D. HRA Budgets. Review and approve 2012 HRA Budgets. Housing Manager Barnes gave an overview of the staff report. Approved Plymouth Housing and Redevelopment Authority October 27, 2011 Page 5 Chairman Kulaszewicz asked about the $9,422 risk management allocation. Support Service Manager Whalen explained there was a risk management line before which has been moved to a different line item and the cost adjusted. She said her Section 8 budget was changed from $7,800 to $9,400. Support Services Manager Whalen said the Section 8 revenues and expenditures were adjusted based on the current trend of tenants porting in and out. She said we are funded at 83% for the administration fees but don't know what the funding will be for next year. It could be the same, or lowered to 60%. Commissioner Miller asked why the fees might be lowered. Executive HRA Director Juetten said there is no rational reason, other than HUD arbitrarily saying possibly we don't need that much money. Commissioner Stein asked if the funding went down to 60% would we lose money or would we get out of administering this program. Support Service Manager Whalen said if the funding went to 60% we would be okay next year but there would be concern. Executive HRA Director Juetten added that if funding went down to 60% we would be $70-80,000 short and we have approximately $300,000 in Section 8 reserves. He said one positive of having the program in house is we have a knowledge of the clients and we can work better with various departments. If Metro HRA administered the program, that contact goes away. Executive HRA Director Juetten said a complete analysis would be done if the funding went to 60%, the positives and negatives of keeping the program, and would it be advantageous to put in additional HRA levy to keep it in house. Commissioner Stein clarified that having the program in house, we know who is here and where they are. Support Services Manager Whalen added that we have our housing inspectors out in the units, and when there are problems we work hand in hand with the police, which is a huge benefit. Commissioner Stein asked if there was some way Metro HRA could communicate to us who is living here. Support Services Manager Whalen stated this is confidential information. Executive HRA Director Juetten said we may be able to get some inspection reports, but it is helpful for maintenance of facilities to have the extra inspections. He said we do annual inspections of 15% of our rental buildings, but the Section 8 annual inspections get us into more units. He said determining if we have access to Metro's inspection reports could be looked at. Approved Plymouth Housing and Redevelopment Authority October 27, 2011 Page 6 Chairman Kulaszewicz asked if there has been discussion on what minimum to keep the Section 8 reserve at. Support Services Manager Whalen said it is mandated that we keep two months of reserve for our rent payments. She said there is a net reserve and an unrestricted reserve which is our administrative fee reserve account which has $550,000. Support Service Manager Whalen said this reserve has never been used except for $80,000 for the house that was built at Fernbrook Lane and Co. Rd. 9. Chairman Kulaszewicz noted that half million has been reserved for a long time. Commissioner Stein asked if this is excess money that was never used. Executive HRA Director Juetten said this was good management of our money. Housing Program Manager Barnes said the HRA general fund budget relies on the levy and we had set aside $320,484 for subsidies but will only need $240,000. That leaves $80,484 available in the HRA budget which could reduce the tax levy by an amount up to $80,484, or the excess funds could be put into Vicksburg Crossing reserve replacement account or the HRA general fund reserve account. Commissioner Stein said he supports putting the excess in the HRA general fund reserves and not reduce the levy as we will need the money eventually for Vicksburg Crossing. Commissioner Caryotakis said if it is in the HRA general fund, it can be reallocated where we need it. Chairman Kulaszewicz said his inclination would be to put half the money toward reducing the levy and half to the HRA reserve fund account. Chairman Kulaszewicz said he is not in favor of a budget that is always at the same point, and if there is an opportunity to reduce it by some amount he is of the opinion we should do that. Commissioner Stein said the city budget was slated to go up 1 % in the last year and now will stay flat. He said for the last 3-4 years, the budget went down .6%, so overall we have been doing a good job for these economic times keeping the levies flat. Commissioner Stein said we are going to need this money at some time, so rather than try to come back in later years and collect the money, he said he prefers to keep the budget flat and put the money in reserves. Chairman Kulaszewicz cited an example of Hennepin County buying a $25 million property for office space but the money was not in the budget anywhere. Then in a week's time they found the money in other budgets. Chairman Kulaszewicz said he has a problem with that. Chairman Kulaszewicz said he is not equating our situation to Hennepin County's, but his personal philosophy is if there is a chance to reduce a little, he would support that. Approved Plymouth Housing and Redevelopment Authority October 27, 2011 Page 7 Commissioner Caryotakis said in looking at long term goals of the HRA, we are right to minimize the demand on the community but want to sustain funding available for long term goals. He said if an opportunity develops in the future and we need these funds, raising the levy may not be welcome at that point. Commissioner Miller said he would love to give money back; it is a tough sell to go back and raise it again. He said he supports putting all of it in the HRA general fund reserve. Commissioner Stein said we have done a good job in managing the building and in theory we reduced the HRA levy for Vicksburg Crossing. He said we have squeezed ever nickel we can out of the budgets, have pushed occupancy up, and we are on sound footing with the buildings now. Commissioner Stein said he supports putting it in the building reserve. Chairman Kulaszewicz said he is okay with adopting staff's recommendation to not reduce the tax levy and put it in the Vicksburg Crossing replacement account. He said he is hearing the commissioners preference to put the funds in the HRA general fund reserve account which gives more flexibility, and said he would support that. MOTION by Commissioner Stein, seconded by Commissioner Miller, to place the $80,484 into the HRA general fund reserve account. Vote. 4 Ayes. MOTION approved. MOTION by Commissioner Miller, seconded by Commissioner Stein, to approve the HRA budgets. Vote. 4 Ayes. MOTION approved. E. Potential Redevelopment. Ryerson site at 1605 State Highway 169 and adjacent properties. Commissioner Stein asked to table this item until Commissioner Willis is present. Commissioner Stein said the 2010 Comprehensive Plan identified this property as a potential redevelopment site as a mixed use property. Commissioner Stein said staff has talked to one developer who said it would be expensive to redevelop it and did not express interest in it. Commissioner Stein suggested our financial advisor look at it to see if it would be feasible to do a tax increment financing to entice developers. Commissioner Caryotakis asked if the motivation is to realize more economic value and a more appealing use of the property. Commissioner Stein answered affirmatively, and said this is a highly visible piece of property on the lake which is taken up by warehouses. He said there could be a much higher, greater use for the property for the city to see this site developed. Commissioner Stein said this 38 -acre could have a higher density with townhouses, mixed use development, or small commercial resulting in more property taxes, and if it were eligible for tax increment financing he said he believes it would pay for itself. Approved Plymouth Housing and Redevelopment Authority October 27, 2011 Page 8 Chairman Kulaszewicz asked if Ryerson is interested in selling. Commissioner Stein said there is no point in talking until we decide if it would be economically feasible. Chairman Kulaszewicz asked if there are any other sites that could be considered for redevelopment. Housing Manager Barnes said there is the water tower site near Co. Rd. 101. He said the Engineering Department is doing a survey on another site the city owns to ensure it would a buildable size. Housing Program Manager Barnes said this would be a great opportunity to partner with a housing non-profit, or Habitat for Humanity and do a for sale product. He said we control the land and could provide some financing and they would take on the risk. Housing Program Manager Barnes said the community college has approached us in the last two years where they would supply labor and material, but the timing has not worked out. Chairman Kulaszewicz said one of our mandates as an HRA is to provide more affordable housing, and we seem to have our current projects under control. He said demographics will make a difference. Chairman Kulaszewicz said with land values where they are now and the city's good credit rating, he would be interested in taking a look at another development. Housing Manager Barnes noted that if the CDBG rehab program continues to grow, we will be out of money in a couple months. He said the Board may want to consider putting some reserve funds in to the owner occupied rehab fund as a way to maintain housing. Commissioner Stein mentioned there are two houses for sale on Kilmer Lane and St. Hwy. 169 which have been on the market for a long time. Housing Program Manager Barnes said he would look into those. 4. ADJOURNMENT MOTION by Commissioner Caryotakis, seconded by Commissioner Miller to adjourn the meeting at 8:17 p.m. MOTION approved.