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HomeMy WebLinkAboutHousing & Redevelopment Authority Minutes 07-26-2012APPROVED MINUTES PLYMOUTH HOUSING AND REDEVELOPMENT AUTHORITY July 26, 2012 PRESENT: Chairman Jeff Kulaszewicz, Commissioners Bob Stein, Carl Runck and Jim Willis ABSENT: Commissioner Paul Caryotakis STAFF PRESENT: Housing Program Manager Jim Barnes, HRA Executive Director Steve Juetten, Support Services Manager Denise Whalen, HRA Specialist Kip Berglund and Office Support Specialist Laurie Lokken OTHERS PRESENT: Grace Management Representative Jody Boedigheimer 1. CALL TO ORDER Chair Kulaszewicz called the Plymouth Housing and Redevelopment Authority meeting to order at 7:03 p.m. 2. CONSENT AGENDA A. Approve HRA Meeting Minutes from May 24, 2012. B. Plymouth Towne Square. Accept Monthly Housing Reports. C. Vicksburg Crossing. Accept Monthly Housing/Marketing Reports. D. Community Development Block Grant (CDBG). Accept Consolidated Annual Performance and Evaluation Report (CAPER) and Notice of Annual Citizens' Participation Meetings. MOTION by Commissioner Willis, seconded by Commissioner Stein, to approve the consent agenda. Vote. 4 Ayes. MOTION approved. 3. NEW BUSINESS HRA Executive Director Juetten requested item 3. C. to be placed ahead of item 3. A. on the agenda. C. Discuss Inquiry About Interest In Vicksburg Crossing. HRA Executive Director Juetten gave an overview of the staff report. Approved Plymouth Housing and Redevelopment Authority July 26, 2012 Page 2 Grace Management Representative Boedigheimer stated that Holiday Retirement is a middle market company. She said that they have live-in managers, usually two couples that are onsite 24/7. She said it's a tough job and they have a lot of turn over in that position in their communities. She said that one of their clients is affiliated with Holiday and the Holiday model. She questioned whether Holiday understood that Vicksburg Crossing does not have a commercial kitchen. She said that their interest in Vicksburg Crossing seems odd and this is probably the last company she would have ever expected to approach the HRA for this property. She said they have three meals a day all inclusive in their rent. She said they have a travel program throughout all of their communities where you can go to a Holiday in another state and stay in its guest room if it's available. HRA Executive Director Juetten asked if this is the typical size for a Holiday community. Grace Management Representative Boedigheimer responded their footprint is 100 to 120 and they have expanded it a little bit in some of their later developments but they don't typically like to go over 120. She stated their units are typically larger than most retirement communities. Commissioner Stein asked if this could have been a shotgun letter that they sent out to various apartment buildings to see what responses they get. Executive HRA Director Juetten responded it sounds like they have gotten some investment money and they are in the acquisition mode. He said they have one building in White Bear Lake so they are looking to expand in the Twin Cities market. Commissioner Runck stated that current cap rates are pretty low in apartment acquisitions and looking at the Net Operating Income (NOI) on this building, about $300,000 a year is 6 caps that is a $55,000 unit cost. He said they might be thinking of adding a commercial kitchen or doing something if they budget for that. He said it would be interesting to know what the mission of the HRA is with this property and what the real valuation is that could be attached to that property today. He said it's a lot lower than would be for any other building at that low of an NOI. He said replacement cost is over $100,000 unit. Executive HRA Director Juetten replied that staff could look into that if the Board wanted to go in that direction. Chairman Kulaszewicz stated our mission is to provide housing for our residents and would a building like that still provide housing for our residents. He stated that it was not our intent, when either Vicksburg Crossing or Plymouth Towne Square was built, to hold them long enough to turn for profit and then sell. Commissioner Stein stated that he doesn't assume that they have any subsidized units. Grace Management Representative Boedigheimer responded negatively and added that their average rents would double. Housing Program Manager Barnes stated that Holiday's website indicates they are charging about $2,600 per month, flat fee for everything that they include. He said that would be an increase in rent for our current residents based on Vicksburg Crossing current rents and average living expenses. Approved Plymouth Housing and Redevelopment Authority July 26, 2012 Page 3 Commissioner Runck stated that if he were in their shoes, he would see a value at buying this for 50,000 unit and put $10,000 into it and then charge more rent. He said that he would be interested to hear their full proposal but it doesn't sound like it's in line with the mission of the HRA. Chairman Kulaszewicz stated that there are other ancillary issues, like bonds. He said when someone buys municipal bonds, they expect the bonds to remain in place until they mature. Housing Program Manager Barnes responded that there would be some work to do to be able to do that. He said he did not know what that would mean for the HRA or the city with regards to future bond issues. Housing Program Manager Barnes stated that the HRA mission is to provide a wide range of housing options in the city and to work with the city and the City Council to provide those options within our community. He said these buildings serve that purpose. Commissioner Stein stated that by selling Vicksburg Crossing, we wouldn't be meeting our mission unless we made enough money off the sale and doubled the number of units we are providing. He stated that he wouldn't be interested in selling. Chairman Kulaszewicz stated he wouldn't be interested in pursuing this and wasting their time or staff's time. He said if we were in the business and our mission was to develop properties and turn a profit would be one thing but that's not the HRA's mission. Commissioner Willis stated that he didn't disagree. MOTION by Chairman Kulaszewicz, seconded by Commissioner Runck, requesting HRA staff to respond to Holiday Retirement that the HRA is not interested in selling Vicksburg Crossing. Vote. 4 Ayes. Motion approved. A. Housing Choice Voucher Program (Section 8) Study. Commissioner Willis stated that administrative reimbursement continues to fall and it's not likely to be increased. He said the issue is to talk about what to do to cover deficit of the administrative expenses from this point forward. HRA Executive Director Juetten stated the unrestricted net assets are the money that we built up over time and we can use that money to offset a deficit on an annual basis. He said that assumptions were made in these calculations with no increase from HUD and a 2-1/2% increase per year on our expenses. He said 2020-2021 would be when we would be in the negative and that would be when we would have to start taking money from either an HRA levy or something else to help fund it. Approved Plymouth Housing and Redevelopment Authority July 26, 2012 Page 4 HRA Executive Director Juetten went over the four options outlined in the staff report. He added this is a lot of historical data that we did not have in one place before and since staff spent a lot of time on this, it is a good document to have. Chairman Kulaszewicz stated that he found it to be very interesting, informational and the time was well spent. Commissioner Willis stated that he recommends continuing as currently doing and monitoring it. He said other HRAs are going to be pushed to the same point and let's find out what others come up with, as they may come up with something unique. He said if we can ultimately have the same housing results for Section 8 run by somebody else, there may be a time when that may be the best thing for us to do because of cost factors. He said that given the reserves that we have, it is not necessary to make that decision today. Commissioner Willis added that he is not interested in running the reserves down to zero because then you don't have flexibility for anything else. HRA Executive Director Juetten responded that if we want to get out of the program, we would have to find somebody that wants our program. He agreed with Commissioner Willis that it would be hard to sell to somebody else with a zero reserve balance. Commissioner Stein stated that he assumed every HRA is facing the same shortfall so why would anybody want to take it over. Commissioner Willis stated that Metropolitan Council would because they would levy it. HRA Executive Director Juetten stated that certain ones have different ways of doing it. Chairman Kulaszewicz asked that if we did turn it over wouldn't that cause cuts in staff. HRA Executive Director Juetten responded affirmatively. He said there would definitely be two people that we would eliminate immediately. Chairman Kulaszewicz asked if the intent, when it was taken over in the first place, was to have more local control. Commissioner Stein stated it was a good idea. HRA Executive Director Juetten responded absolutely and there are some real good, solid benefits of us operating the program. He said the question is just when to decide that we may have to look at using local dollars to subsidize the program. Commissioner Stein asked if we make money with port ins. HRA Executive Director Juetten responded that we get money, we don't make money. Commissioner Stein asked if we ever lose money on a port in. Support Services Manager Whalen replied that we get 80% of the administrative fee on a port in and for being a small housing authority, we do very well with our port ins. She said that is what has sustained us the last few years. Commissioner Stein stated that if we had more port ins, we could almost make up the deficit and he asked if there is a way to attract that. Support Services Manager Whalen responded that one of the issues is that the rental market is very tight right now and if owners opt out or don't accept Approved Plymouth Housing and Redevelopment Authority July 26, 2012 Page 5 Section 8, it hurt us. She said that Westview Estates has helped us because we had, not only our project -based vouchers there, ten others that ported in from other housing authorities. She said having a good affordable housing project like that helps us because then people want to come here. HRA Executive Director Juetten added that Park Place Apartments only has one Section 8 client left and they are leaving soon. He said Park Place is not looking for any more. He said they are raising their rents and putting improvements into the buildings. He said the amount of rent is capped and if it's over, Section 8 people have to pay the difference and they can't afford to pay a whole lot. Commissioner Runck stated that with all the construction going on, vacancies are going to crawl back up in the next few years and that will help us out. HRA Executive Director Juetten agreed and stated this is probably a couple -year blip that will probably correct itself in the next few years. MOTION by Commissioner Willis, seconded by Chairman Kulaszewicz, to continue on the current Housing Choice Voucher Program course, monitor the program and update the spreadsheet on an annual basis. Vote. 4 Ayes. MOTION approved. B. Emergency Repair Assessment/Loan Program. HRA Specialist Berglund gave an overview of the staff report on the Emergency Repair Assessment Program. Commissioner Willis asked if it would be limited to water utility or if it could include sanitary sewer or connection to the sanitary sewer if their septic system failed and they haven't previously connected to the city sewer. HRA Specialist Berglund responded that could also be an assessment. Housing Program Manager Barnes added that staff could look at those items. He said that we are restricted by statute for what's assessable. He said that staff would add sewer to the Emergency Repair Assessment Program. He said that staff had considered putting in trees, as well, if they were damaged in storms or diseased. He said that in talking with the Park staff, they all ready have the ability to assess residents if needed and they didn't want to wrap that in with this program at this time. Commissioner Willis asked if it is strictly limited to sewer and water. Housing Program Manager Barnes responded that there are other items listed in the statute but a lot of them, such as sidewalk and street repairs, are all ready being assessed through a normal process. He said staff felt we would deal with things that come up more in an emergency situation, such as a water service breaking on the owner's side of the property. Commissioner Willis asked what assurance staff has that the water fund is going to be amendable through becoming a piggy bank for this program. Housing Program Manager Barnes replied that staff has talked with Public Works Director Cote and he was comfortable with this. Approved Plymouth Housing and Redevelopment Authority July 26, 2012 Page 6 He said we would be doing the same thing that Public Works has been doing in the past when emergencies have come up, with the exception that we are bringing in HRA staff to have a review of their income and make sure that they meet a certain test before it comes before the City Council for an assessment. He said it is an extra set of requirements so that the Council knows that there are guidelines in place. HRA Executive Director Juetten added that the idea of this policy and the policy itself would have to go in front of the City Council, too. He stated that the idea is that the HRA staff has the technical expertise to analyze whether or not somebody needs assistance or not but the city has the authority to assess, the HRA does not. He said even if there was a program set up with HRA dollars, some how it would have to still get back to the City Council so that they could approve the assessment. He said that rather than do it that way, staff discussed that the money would come from a non -HRA fund (a city fund) but the HRA staff would help Engineering and Public Works determine eligibility. Commissioner Runck asked if there is a program like this for seniors already. HRA Executive Director Juetten responded that there is through the HRA. Housing Program Manager Barnes added that there is an emergency repair grant program for individuals who are 55 years of age or older. He said that what we are proposing doesn't have any age restrictions and the income limit is a little higher than the CDBG program. He said it would potentially help out a broader spectrum of individuals. Commissioner Willis stated that when it goes to the City Council, he would be looking for what the limitations are in terms of what kinds of things are going to be subject to getting a grant and what kind of work is going to be authorized, such as water service or sanitary sewer. Housing Program Manager Barnes stated there is not a huge need for this. He said Public Works Director Cote has said that he has 35 to 40 breaks in a year that are on the homeowner's side. He said of those 35 to 40, it is literally two or maybe three a year where the homeowner is in a financial situation where they can't pay for the costs immediately. He said it is a very small amount but the reason staff proposed this is because it was a more secure way for the city to protect the funds. Housing Program Manager Barnes stated that assessments do not go away; whereas, loans could be lost through a foreclosure. Commissioner Willis stated that if you don't talk about sanitary sewer somebody will bring it up because if a sewer line collapses or gets plugged up, from a health standpoint, that's probably more severe of a problem. He asked HRA staff to discuss adding it to the policy with Public Works Director Cote. Chairman Kulaszewicz stated that he is also in favor of adding sanitary sewer to the policy. Commissioner Willis stated that he thought there should be a cap. Housing Program Manager Barnes responded that staff borrowed this language from the city's policy on assessments. Approved Plymouth Housing and Redevelopment Authority July 26, 2012 Page 7 Commissioner Willis stated it would be how much you would be willing to spend if a sewer or water line goes out and he doesn't know how much they cost. HRA Specialist Berglund replied that the estimates are around $2,000 to $3,000. Commissioner Willis asked if that was from the street valve on the property line to the home meter. HRA Executive Director Juetten replied affirmatively. He added that they don't always have to go all the way back to the house. Housing Program Manager Barnes stated that a cap could be included. He said septic systems could get costly. He said if they are not hooked up to city services, we would be looking at abandoning the septic system and trying to get that house connected to the city service. Housing Programs Manager Barnes said staff thought the maximum eligible income for this program would be capped at $83,900 for household income, using the median income for a four - person household. Commissioner Willis asked if the cap is defined by an annual adjustment. Housing Program Manger Barnes responded that it would be looked at and adjusted annually. Chairman Kulaszewicz added it would be adjusted to whatever the median income is. HRA Specialist Berglund gave an overview of the staff report on the Emergency Repair Loan Program. Commissioner Willis asked if this loan program includes windows. HRA Specialist Berglund responded that this would not include windows because that would not be viewed as an emergency type repair. He said that would be more suited for either our rehabilitation loan program or we would direct the resident to the Minnesota Housing Finance Agency's Fix -Up Fund. Housing Program Manager Barnes added that it could be used for windows if it were just a single window that presented an emergency situation. Commissioner Willis asked how the loan would be collected or how default would be avoided if it is capped at $5,000. Housing Program Manager Barnes responded that we would become a lender, just like any bank, and there would be terms in our document about defaults; such as, what would be a default, how to cure those defaults and what the repercussions would be. Chairman Kulaszewicz asked if it would be a second mortgage. Housing Program Manager Barnes replied affirmatively and that we would be in a second or maybe even a in a third position, depending the number of loans each homeowner has. He said this is an emergency situation where something comes up. He said our CDBG program is a grant program for seniors. He added that there will be more risk in a loan program. Commissioner Stein asked if the program would start out with $50,000. Housing Program Manager Barnes confirmed that amount and added that staff's thought is to make this a pilot program and see if it is successful. Approved Plymouth Housing and Redevelopment Authority July 26, 2012 Page 8 Commissioner Runck asked if the funds would be utilized too quickly. Housing Program Manager Barnes responded that it has to be an emergency. He said it is not designed to address just an old furnace, water heater, etc. He said there would have to be an emergency situation or the furnace would have to be "red tagged" by the utility company. Commissioner Stein asked if staff has received calls from people that their furnace is broken and needs to be replaced but then they are not eligible so you can't help them. Housing Program Manager Barnes responded affirmatively. He said that staff fields about 10 calls per year. HRA Executive Director Juetten asked if it is typically seniors that just have more income from investments. Housing Program Manager Barnes replied that there is a wide variety, as some are under the age limit or over the income limit. Commissioner Stein asked if $50,000 was the total for the program or if that would be the amount going into the program each year. Housing Program Manager Barnes responded that staff proposes to initially fund the program at $50,000 and evaluate the program, either within a year or as those funds are depleting. He said staff would report back to the Board on the progress of the program. He said if the program is successful, it would ultimately be funded for a number of years and eventually it would become self sustaining. Commissioner Willis asked if these programs have an administrative fee to cover staff time. Housing Program Manager Barnes replied that we have not proposed any administrative fee for this but we could. Commissioner Willis stated that he is not suggesting we add a fee at this time. Chairman Kulaszewicz stated that we put in $50,000 and it is a one time deal. He said we look at it again in a year or when $50,000 is depleted, whichever comes first. Housing Program Manager Barnes stated that at a minimum, staff would bring it back in a year even if there were still funds remaining to keep the Board informed. Commissioner Willis stated that there is not going to be a deluge of applicants. Chairman Kulaszewicz stated that he would assume staff will put it out on the city's website and let residents know the program exists. Housing Program Manager Barnes responded affirmatively. He said the more you market and advertise programs, the more they get used. He said we are always cautious when we have limited funds. Commissioner Stein asked how quickly someone's eligibility can be determined. Housing Program Manager Barnes replied it depends on how quick they can get us the required information. He said they are asked to bring in a couple years of tax returns, two months of their most recent pay stubs and documentation on their current mortgage. Commissioner Stein asked what happens if the emergency occurs on weekends or holidays. Housing Program Manager Barnes responded that we do not have anything set up for weekends or holidays but we certainly could look into it. He said most people understand government and that we are not open on weekends and certain holidays. Commissioner Stein asked if Public Approved Plymouth Housing and Redevelopment Authority July 26, 2012 Page 9 Works responds. HRA Executive Director Juetten replied that they respond immediately for water breaks. Chairman Kulaszewicz stated that he was in favor of both of these programs. MOTION by Commissioner Stein, seconded by Commissioner Runck, to approve the Emergency Repair Assessment Program and Emergency Repair Loan Program policies with HRA Board recommendations to be submitted to the City Council for review and approval. Vote. 4 Ayes. Motion approved. 6. ADJOURNMENT MOTION by Chair Kulaszewicz, without objection, to adjourn the meeting at 7:50 p.m.