HomeMy WebLinkAboutHousing & Redevelopment Authority Minutes 01-26-2012APPROVED MINUTES
PLYMOUTH HOUSING AND REDEVELOPMENT AUTHORITY
January 26, 2012
PRESENT: Chairman Jeff Kulaszewicz, Commissioners Bob Stein and Jim Willis
ABSENT: Commissioners Paul Caryotakis and David Miller
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 7:05 p.m.
Housing Program Manager Barnes announced the additions of agenda Item 3. B. for Vicksburg
Crossing call for the sale of refunding bonds and Item 3. C. at Chairman Kulaszewicz's request
to review a letter to the HRA received from HUD.
2. CONSENT AGENDA
A. Approve HRA Meeting Minutes from November 17, 2011.
B. Plymouth Towne Square. Accept Monthly Housing Reports For November &
December 2011.
C. Vicksburg Crossing. Accept Monthly Housing Reports For November & December
2011 And Monthly Marketing Reports For December 2011 & January 2012.
MOTION by Commissioner Willis, seconded by Commissioner Stein, to approve the consent
agenda.
Commissioner Stein asked if this was the first year that the Vicksburg Crossing year-end
financials reflected a positive cash flow with a net operating income before depreciation.
Housing Program Manager Barnes responded that our bond payments are reported differently in
both 2010 and 2011 so we are negative in that one month on a cash basis. He said in January
2011, we had a loss of $140,242. Commissioner Willis added that was because of the debt
service payment.
Housing Program Manager Barnes said that we made it up through the ensuing eleven months so
Vicksburg Crossing ended the year, unaudited, at $32,709 positive on a cash basis. He added
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that Plymouth Towne Square ended the year $14,000 positive on a cash basis without
amortization, depreciation, etc.
Vote. 3 Ayes. MOTION approved.
3. NEW BUSINESS
A. Potential Redevelopment. Ryerson Site (1605 State Highway 169) And Adjacent
Properties.
Commissioner Stein stated that this agenda item had been tabled from the October 27, 2011
HRA meeting. He said this site is identified as a potential redevelopment site in the 2010
Comprehensive Plan. He said staff has talked with United Properties to see if they were
interested in or if it is feasible for redevelopment and they did not express any interest. He said
staff has approached Ehler's and Associates to look at it to see if it's feasible for redevelopment
or to declare it a blighted area and be eligible for TIF financing. He said in light of all the
development that has been going on along 169, this may be an opportune time to see if
something can be done with this site. He said $2,000 to $5,000 to research this isn't that much
money.
Commissioner Willis stated that he didn't like to approach doing something with somebody
else's property unless they are aware of it but we needed to find what the boundaries are we
would be looking at. Housing Program Manager Barnes confirmed the seven parcels being
considered.
Commissioner Willis stated that he viewed it as some day being an A-1 piece of property for a
high-rise apartment project because of the views of the lake and the access to Minneapolis. He
said that it could be a mixed use but the circulation of traffic would be a real challenge. He said
the amount of money, up to $5,000, would at least get us something to start thinking about. He
said that it may or may not happen. He said the letter from United Properties was not
encouraging and he could understand that because the valuations are not likely to be the land and
building values the owners would describe if they were in a sale mode for a tax position. He said
that he wouldn't be opposed to proceeding with a modest study to determine whether or not there
is any feasibility. He said economically, we are looking for a redevelopment district so we've
got time to see if it would qualify.
Chairman Kulaszewicz asked what properties are there now and who the owners are.
Commissioner Stein responded that United Properties, Ryerson and Medicine Lake properties
are there. He said one parcel is vacant but they are trying to rent it out and another parcel is just
a large, old warehouse that is broken up into individual small businesses.
Chairman Kulaszewicz stated that we recently had talked about Ryerson and the other warehouse
building. He said that even at these land values and if you try to purchase an ongoing business,
you may end up paying more than market rate. Commissioner Stein responded that he would
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envision that if a developer went in and thought that this was a good deal, they would find them
new locations to move to and that would be part of the deal. Housing Program Manager Barnes
stated that a study by Ehler's would show a few options of what might be redeveloped and the
potential TIF revenue that could be generated. He said if we went further than this we would
need to determine if the buildings meet the "blight" test. He said with multiple scenarios we
would be able to talk to other developers to see if they are interested. He said he does not
envision the HRA buying these properties up front and then make it available to a developer. He
said we would most likely be a partner in the redevelopment.
Chairman Kulaszewicz stated if a developer would approach both of those ongoing businesses
and make them some kind of offer, that would entice them to move their ongoing business to a
new location. Commissioner Stein said that is what he believes would occur. He also stated we
are not going to go in and condemn the property or force them to move.
Chairman Kulaszewicz stated that this would not be the government deciding one business is
better than another business, as he would not be a part of that. Housing Program Manager
Barnes responded we would be a secondary partner in this, as we are with all other developments
that the city participates financially in. He said we are a little bit ahead in looking at this one so
if it got to the point that somebody was interested in it; they would take the lead on the project.
He said we would be in the background and work with them as we do on other projects.
Commissioner Willis stated that given the markets in the interim, it's not going to be feasible but
the question is, when do we start looking. He said this is the beginning and if somebody comes
forward in the future, at least we have the base line data from this point in time.
Commissioner Stein stated that the businesses there are not the best and highest use of that
property.
Chairman Kulaszewicz asked what specifically the study would accomplish. Housing Program
Manager Barnes responded we would have Ehler's evaluate the properties for the potential
creation of a TIF district to see if it would be eligible. He said if it were eligible, there could be
three or four different scenarios (of different types of uses on the properties) that we could put
numbers in; such as, if it went all residential, it would generate this amount of TIF revenue; if it
went all retail or retail/commercial, it would generate this amount; if it was mixed use, it would
generate this amount.
Chairman Kulaszewicz stated if this land was vacant, we would generate four or five different
scenarios to see a base line of potential value in terms of what a developer would spend in order
to entice people. Housing Program Manager Barnes added the developers are going to look at it
from a perspective of what's their highest and best use and what's going on in the market right
now or what they see happening in the market.
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Chairman Kulaszewicz asked where that money would then come from. Housing Program
Manager Barnes responded the money would come from our HRA reserves. Chairman
Kulaszewicz said he would be okay with that.
MOTION by Commissioner Willis, seconded by Commissioner Stein, to direct staff to engage
Ehler's, with a total cost not to exceed $5,000, to evaluate potential redevelopment of Ryerson
site and adjacent properties for property located at 1601 State Highway 169. Vote. 3 Ayes.
MOTION approved.
B. Vicksburg Crossing. Call For The Sale Of Refunding Bonds.
Housing Program Manager Barnes gave an overview of the staff report.
Housing Program Manager Barnes confirmed for Commissioner Willis that there is no call until
2015. He said this would be a crossover refunding, which is what you did with Plymouth Towne
Square in 2010-2011. He said we would be selling the bonds and putting money into an escrow
account to pay off the old bonds in 2015. He said the only thing that is different from Plymouth
Towne Square is we would not be refunding in 2016 the bonds that mature that year because that
would put us over the $10 million cap, which means the bonds could no longer be bank
qualified.
Commissioner Willis stated if we were to wait two or three years to do this, the risk there is the
change in the market. He quoted the federal reserves as saying they are not going to do anything
with the interest rates until at least 2014. Housing Program Manager Barnes said it is a decision
and it's a risk either way. He said it's about three weeks difference in the sale date if we
expedited this issue based on our calendar. He said who's to say that the rates are going to be
better on February 23rd as opposed to March 13d'
or worse as that's the way the market works.
He said when we refunded Plymouth Towne Square, Ehler's told us the rates were at historical
lows and we should act. He said these are now lower than what they were for Plymouth Towne
Square and in between those two periods of time, they have fluctuated as the markets have.
Housing Program Manager Barnes confirmed for Commissioner Stein that the money would be
put in escrow and we will be paying interest on the new bonds. Commissioner Stein asked
where that money comes from. Housing Program Manager Barnes responded it would come
from this bond sale.
Commissioner Willis asked if the debt service schedule is on the new issue so in February 2013
there would be an interest payment of $207,000, which comes out of proceeds of the bond sale.
Housing Program Manager Barnes confirmed affirmatively.
Housing Program Manager Barnes confirmed for Commissioner Willis that until the crossover
financing date of February 2015, there will be almost $460,000 of interest that will have been
paid.
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Chairman Kulaszewicz stated you are paying $460,000 on top and are still saving a million.
Commissioner Willis agreed and said you are trading interest. Housing Program Manager
Barnes said our average interest rate on the current bonds is 5 percent.
Commissioner Stein stated if we waited until 2015 and the interest rates stayed the same, we
would have an actual savings of roughly half a million dollars. Chairman Kulaszewicz said for
those two years we would have to pay double the interest. Housing Program Manager Barnes
responded that we would continue to pay on the old bonds. Commissioner Stein stated the
interest on the new bonds comes out of the proceeds of the sale. Housing Program Manager
Barnes said that's why, when you look at the first few years, there is no savings. He said as soon
as the bonds are refunded in 2015, we begin seeing savings between $73,000 and $78,000 for the
life of the new bonds. Chairman Kulaszewicz said that is a million and a half dollars net.
Housing Program Manager Barnes said that's gross because we have got other things that come
out of it so it's just over a million dollars in total savings.
Commissioner Willis asked that the current debt service goes out until when. Housing Program
Manager Barnes responded 2035 and we are not extending the maturities on the refunded bonds.
He said our finance department and Ehler's are recommending this.
Commissioner Willis asked what fees would be involved in this estimated cost of the sale by
Ehler's. Housing Program Manager Barnes responded the cost of issuance is $79,000.
Chairman Kulaszewicz asked if the issuance cost and the underwriters discount are true costs.
Housing Program Manager Barnes said they are estimates at this point and we will not know the
actual costs until the sale.
Commissioner Willis asked who the bond attorneys are in this transaction. Housing Program
Manager Barnes responded that Dorsey and Whitney are the consultants that the city has in
place.
Commissioner Willis stated there is nothing wrong with that and he has the highest respect for
them. He said that sometime the city, if not the HRA, ought to look at bond counsel and get
proposals from more than Dorsey. Chairman Kulaszewicz asked if this Board would have the
authority to deviate and use someone different than the city is using. Commissioner Willis said
we could but he is not suggesting we need to change but believes it would be good to explore the
idea.
Housing Program Manager Barnes said the city is going to be considering three other revenue
bonds for refunding and due to various timing, they are going to try to move their time period so
we would still be able to sell on February 23rd and then they would sell on March
13th.
Chairman Kulaszewicz asked if the rates of the existing bonds are similar. Commissioner Willis
said relatively speaking, the revenue bonds would be lower and the TIF bonds would be higher.
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Housing Program Manager Barnes said for crossover refunding, there's a state minimum test that
you have to meet for savings of at least 3 percent.
Commissioner Stein said it would get rid of the subsidy every year. Housing Program Manager
Barnes said the subsidy is $24,000 and it is always a goal of ours to get rid of that subsidy as it
was never intended to be there. Commissioner Willis said the good news is, it is a sizeable
savings over time and we can expect that if we do it now or another time. Chairman
Kulaszewicz asked if that would be in the next budget then to get rid of that subsidy.
Commissioner Willis said that you won't get the savings for three years and that won't start
happening until original bond issues is called to be retired in 2015. Housing Program Manager
Barnes said every year we look at our budgets to determine whether we need a subsidy or not.
He said we actually didn't subsidize Vicksburg Crossing in 2011 because we had a positive
32,000 in cash and we only budgeted $24,000 in subsidy. He said we did collect the tax levy
and that money does stay with our reserve account and can be used for other items or to reduce
the levy in future years.
Housing Program Manager Barnes confirmed for Chairman Kulaszewicz that this is a savings of
about 10 percent. Commissioner Stein stated it could go lower but we don't know how much
lower and he thinks they're going to go up.
Commissioner Stein stated the money is in the bank and one day the economy is going to turn
around and hopefully, the interest rates will go up.
Commissioner Willis stated he would support this because this is just authorizing the sale and we
can pull out before awarding any bids.
MOTION by Commissioner Stein, seconded by Commissioner Willis, to adopt the resolution
calling for the sale of refunding bonds for Vicksburg Crossing and to ask the City Council to
reaffirm their G.O. pledge of the bonds. Vote. 3 Ayes. MOTION approved.
C. HUD Letter. 2012 HRA Budget — Section 8.
Chairman Kulaszewicz stated we approved the 2012 HRA budgets at our October 2011 meeting.
He said the city and HRA Board have received a letter from HUD and while he did not have the
letter with him, he believed it was in regards to some changes to our administrative fees for
Section 8.
Housing Program Manager Barnes stated that Denise Whalen, Support Services Manager
overseeing our Section 8 program, had mentioned during the budget meeting that HUD may cut
funding of administrative fees from 83% down to as low as 60%. He said one of the main
reasons HUD was trying to do this is that they want to get housing authorities to start drawing
down reserves below what they had traditionally allowed. He said they lowered the
administrative fee coming through for 2012 so that housing authorities can now take from their
unrestricted reserves and start using that money. He said that we are okay for 2012 as we have
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sufficient reserves in place and staff will be analyzing the Section 8 program internally this year
to determine the long term impact of these changes.
Commissioner Stein asked if HUD sets the amount of the reserves. Housing Program Manager
Barnes responded that they do. He said we have two reserve accounts for Section 8: one is a
restricted reserve account, which is only for housing assistance payments and has a minimum of
two months on hand, then there's the unrestricted reserve account that can be used to cover
administrative expenses.
Commissioner Stein asked if HUD has some formula (a percent or an amount) that they use.
Housing Program Manager Barnes responded that he believes they do but he does not know the
exact formula.
Commissioner Willis stated that the reserves are available to pick up the deficit on the
administrative costs over a period of time. He asked that at the time that the reserve is depleted,
what happens to fill the funding gap. Housing Program Manager Barnes responded if nothing
changes at the federal level on how they fund the program and it stays like this, we will run out
of reserve funds eventually. He said there would be a few options that staff would bring before
the Board. He said they could look at staff reductions, they could look at funding it from tax
levy to make up the difference or they could consider giving it back to the Metro HRA. He said
all of the options have pros and cons to them.
Commissioner Stein asked if any metro cities do not have their own HRA. Housing Program
Manager Barnes replied that if a city does not have a housing authority, or chooses not to
administer the Section 8 program locally, the administration of the Section 8 program for that
city goes to the Metro HRA and they administer the program for them. He said he did not have
an exact count of how many cities in the metro area are administered by Metro HRA.
Commissioner Stein asked why Plymouth has their own HRA and Section 8 program. Housing
Program Manager Barnes responded that we chose to years ago because it gives the city greater
oversight and control. Commissioner Willis added that as a city, we did it because the
Metropolitan Council would have been the default and we didn't think they would serve the
customers in the suburbs as well as they would the inner cities and would leave the needs of
Plymouth out. Housing Program Manager Barnes stated this also gets our inspectors into more
of the rental properties. Housing Program Manager Barnes will provide the Board with a list
from Metropolitan Council on which metro cities have HRAs and who administers their Section
8 programs for them as requested by Commissioner Willis.
Commissioner Stein asked if there are any tax levies involved in administering and running the
Section 8 program or if it is all federal government funding. Housing Program Manager Barnes
responded that it is totally funded by the federal government. Commissioner Willis stated that he
doesn't sense the government will be putting much money into anything.
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Commissioner Stein asked if another option would be to shrink our Section 8 program by not
allocating as many vouchers and if that would also reduce staff time. Housing Program Manager
Barnes replied he didn't know if it would necessarily cut down on the costs. Commissioner
Willis stated it would cut down on the revenue.
Commissioner Stein asked who sets the number of vouchers we have and asked how many do we
have. Housing Program Manager Barnes responded that HUD sets the number of vouchers and
we have 225 of our own vouchers. Commissioner Willis asked if that number included port -ins.
Housing Program Manager Barnes replied it did not include the total number of port -ins and he
would provide the Board with the exact numbers. Housing Program Manager Barnes confirmed
for Commissioner Stein that we get administrative fees for the port -ins.
Commissioner Stein stated it is important to be able to get in and inspect properties.
4. ADJOURNMENT
MOTION by Commissioner Willis, seconded by Commissioner Stein to adjourn the meeting at
7:53 p.m. MOTION approved.