Loading...
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 Approved Plymouth Housing and Redevelopment Authority January 26, 2012 Page 2 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 Approved Plymouth Housing and Redevelopment Authority January 26, 2012 Page 3 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. Approved Plymouth Housing and Redevelopment Authority January 26, 2012 Page 4 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. Approved Plymouth Housing and Redevelopment Authority January 26, 2012 Page 5 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. Approved Plymouth Housing and Redevelopment Authority January 26, 2012 Page 6 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 Approved Plymouth Housing and Redevelopment Authority January 26, 2012 Page 7 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. Approved Plymouth Housing and Redevelopment Authority January 26, 2012 Page 8 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.