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HomeMy WebLinkAboutHousing & Redevelopment Authority Packet 07-16-1998PLYMOUTH HRA STAFF REPORTS JULY. 1998 AGENDA. PL EWOV7N XOWNW AND REDEVELOPMENTAV7NOR1TY JWylt% 1998'et 7:0®P.IK MedkhwLoire ComLfamaeRoo^ P/yerWAO CVVHell . 1. Cell to Order 2. Approval of the Minutes of the June 18,1998 Meeting 3. Plymouth Towne Square Monthly Report 4. Resolution Recommending Purchase of Outlet D, Bass Lake Heights Addition S. Applications for HUD Section 8 Programs 6. Clarification of Hud's Recapture of Section 8 Project Account Reserves 7.. Resolution Authorizing Agreements with the Minnesota Department of Trade and Economic Development and The Rottiund Company, Inc. to Implement the Contamination Investigation and RAP Development Grant for the Village At Bassett Creek Development 8. 1997 Financial and Program Audits 9. Other Business 10. Adjournment K A meeting of the Plymouth Housing and Redevelopment Authority was called to order by Chair Crain on June 18, 1998 at 7:05 p.m. MOTION by Chair Crain, seconded by Commissioner Brown, to recommend approval of the May 21,1998 minutes. Chair Crain requested that staff provide additional information regarding HUD's recapture of 355,689 in Section 8 project account reserves. Supervisor Goldsmith indicated that a report will be prepared for the Board. Six PTS residents have died since December and five apartments have huned-0ver since thea. PTS Manager Burnham has been in contact with Bob Pemberton regarding the insurance coverage for the fire damaged apartment. The tenant's insurance company is claiming no respdasibility for the apartment damage. We may have to pay the $5000 deductible but will leave the negotiating up to the insurance companies. Information was passed ant regarding the pet ordinance at Plymouth Towne Square. It was discussed at the Resident Council Meeting and the all of those at the meeting do not want dogs allowed in the building. Chair Crain indicated a concern with prohibiting dogs. Supervisor Goldsmith suggestedthat perhap3 we should consider tightening the enforcement of the pet rules. Housing Supervisor Goldsmith brought up an unusual case regarding the possibility of renting the guest room to a pregnant Section 8 tenant whose apartment has mold and will nod to be sprayed with a chemical that could be haanrdous to the health of her unborn child. She will need to be out of the apartment for 5-10 days and her existing landlord does not have a vacant apartment to put her into at this time. Chair Crain had some concerns about doing this because it would art a precedent. He would rather see them in a hotel with the cost absorbed by the HRA. Commissioner Brown was in favor of using the guest room if it did not conflict with PTS tenant guest rental. Commissioax HOW= thought it should be everyone's responsibility and the cost should be shared between the tenant, apartment owner, and HRA. After much discussion the final decision was the$ we would use the PTS guest room if it is available. [The tenant was able to find another aoartmeet and moved Chair Crain questioned why the amount for housekeeping expense is less then budgeted. The cost for window washing has not yet be:•i paid and the cost for carpet cleaning has been less than expected. Plymouth Housing and redevelopment Authority June is, 1998 Page # 49 Commissioner Broom asked why the number of applicants on the waiting list has dropped. Melody stated that names have been taken off mainly due to deaths and nursing home admissions. 4. ADMINISTRATIVE PLAN FOR THE SECTION 8 HOUSING ASSISTANCE PROGRAM Housing Supervisor Goldsmith explained two changes, which are taking place within this program. Plymouth currently implements exception rents of 120% of the HUD designated Fav Market Rent FMR) for the metropolitan area HUD is now allowing `over -FMR tenancies" within this program. With over -FMR tenancies. Section 8 clients can rent units above the FMR or exception rent, if they pay the difference between the HUD allowed rent and the actual rent for the unit. HUD allows the HRA to approve 10% of our Section 8 certificate holders to use the over -FMR tenancy, which would be 8 units for Plymouth. HUD also requires Shat the HRA must make over -FMR tenancies available for persons with disabilities, if available within the 10% limit. Because of the small number of available over -FMR units, staff a recommending that the HRA limit these certificates to disabled Climb. The second change expands the types of lousing that can be assisted to include single room occupancy, congregate housing, group homes, shared housing, and cooperatives. Commissioner Helmken asked if Hammer has any Section 8 tenants. Not in their facilities because they are county or state funded. [But they do have 3 clients who live independently on the Section 8 Program.) MOTION by Commissioner Helmken, seconded by Commissioner Brown, to adopt Resolution 98.13 revising the local policies for the Section 8 program in Plymouth, in accordance with applicable HUD regulations. Roll Call Vote. 3 Ayes. Resolution No. 98-13 adopted unanimously. S. RESOLUTION APPROVING THE T.R.A.I.L.S. FAMILY SELF-SUFFICIENCY PROGRAM BUDGET AND EXTENSION OF THE PROGRAM AGREEMENT MOTION by Chair Crain, seconded by Commissioner Helmken, to adopt Resolution 98-14 approving the budget and extension of the program agreement for the T.R.A.I.L.S. Family Self - Sufficiency Program. Roll Call Vote. 3 Ayes. Resolution No. 98-14 adopted unanimously. 6. REQUEST FOR ASSISTANCE FROM FORMER FIRST TIME HOMEBUYER - INFORMATION REPORT The report was received by the Board with no comments at this time. Other Business A tax -forfeited parcel of land is available and the City or HRA may be able to purchase the property at a low cost. We would use the land for development of affordable single family homes on 3 or 4 lots. This property is currently zoned RSF-1. The property north of it is RSF-2. Trees buffer the property. There was discussion whether low income housing would 6t into an area that includes some more expensive homes. Meedeg adjourned at 8:10 p.m. W MEMO CITY OF PLYMOUTH 3400 POVOUTH BOULEVARD, PLYM10Q % MN . 55447 DATE: July 3, 1998 foAH&i rrHousing and Redevelopment Authority Mating of July 16,1998 TO: Anne Executive Director, FROM: Milt Ding Specialist through Edward GuldsmrI Supervisor SUBJECT: Resolution Recommending Purchase of Outlot D, Bass Lake Heights Addition It recently came to the HRA staWs attention that a 2.5 acre parcel of vacant land on the west side of Pineview Lane south of Se Avenue North is scheduled to be auctioned as tax delinquent land by the County. The parcel has been an oudot intended to be maintained by a homeowners association as open space for the Bass Lake Heights plat since the plat's development in the early 1980's. According to the County, the homeowners association was never formed and thus the parol has gone tax forfeit. Assessments totaling $4,000 are owed on the property. In 1995, the City Council had requested that the County sell the property to the adjacent property owners. However, the County recently advised the City that the parcel would be offered for public auction, because it did not mat the state requirements for exclusive sale to adjacent property owners. State statute requires that tax forfeited property must be undevelopable under local land use regulations for it to be offered exclusively to the adjacent property owners. This is not the case with this parcel. However, under state statute, the HRA could purchase the property before it is publicly offered for sale. If the HRA acquired the parcel, staff would recommend that an unbuildable portion of the parcel, that was to have been a trail, should be conveyed to the adjacent existing property owners. Staff has discussed with County staff the possibility of the HRA purchasing the property for development of affordable housing. County staff has offered to consider a proposal from the HRA, before they finalize their plans for the public auction. Staff believes that three single family homes could be developed on the property under the existing RSF-1 zoning or four single family homes, if it were rezoned to RSF-2. The property immediately to the north of this parcel is zoned RSF-2, other adjacent property is RSF-1. The attached map indicates how four homes might be located on the site. As the Board is aware, there is very little available vacant land convenient to City sewer and water at affordable prices. Funds from the HRA Affordable Housing Account or the Community Development Block Omni (CDBG) Program could be used to acquire the property. Jay Nelson, President of the Plymouth Housing Alliance has indicated that this non-profit group would be very willing to develop the property with affordable housing. Other non-profit developers would also be interested in developing homes on this property. Since the cost of land J often amounts to up to one-third of the total lousing cost foi conventional single family homes, a low purchase price for this parcel would significantly reduce the subsidies needed to keen the homes affordable. It would be our intention for development, at a minimum, to meet the Metropolitan Council's definition of affordable ownership housing, which for 1998 is $128,000. Existing homes immediately adjacent to this site have assessed values of $126,000 to $264,000. Any 'comes developed at this site under the sponsorship of the HRA would have to be aestimicAly compatible with the existing homes in the neighborhood. Development of this site for affordable homes would contribute significantly to mating the City's grill of 21% of new ownership bousing being affordable at 80% of area median income. In 1997, only I of 221 single -family homes (0.45%) built in the city met the City's goal. Of a total of 320 ownership units of all types built in 1997, only 19 (5.Wo) met the affordability criteria. For 1997, production of affordable ownership units was 48 units .short of the City's goal. Staff proposes to offer to acquire the parcel through the County for the amount of the outstanding assessments and if necessary pay the County's costs related to the transaction. Any offer would be contingent upon Boal HRA Board approval. The County has requested that before it considers the sale of the parcel to the HRA that the City Council give its formal approval for such a sale. I recommend that the Board adopt the attached Re oludon No. 98-15, requesting City C,-)mWil approval of the HRA's purchase of Oudot D, Bass Lske Heights Addition, from Hennepin County for the development of affordable single famiy bona and authorising staff to Initiate discussions with Hennepin County for the purchase of this parcel, upon City Council approval. I also recommend that the Board authorize the Euendve Director or her designee to make appropriate contacts with Hennepin County Commissioner to facilitate County approval of the MRA's proposal, U approved by the City Council AaaehmeW: 1. site Map 2. Drab HRA Resohaim SITE P OAft LMS H75. ovT1.oT p 2s a • ce) -a I 2) ,, 3 = (52 O. y..':i4: f3• : r,•: .. r:...: 7'{: >r;; :r: ;++r;- t i7 r •:(,eft}, ::!j..::i•: 5:+> ................... s' • rf{• :;:1 •' 1:i f :• .iii' f • r: . , f US til ::lr::.... Of 400L Atuul Ul 151 1 .::.r ::i. r. to 9460 cavi 31) i is st I u Mto32) t' r• 35) • a ar.as 1 a HRA RESOLUTION 98-15 REQUESTING CITY COUNCIL APPROVAL FOR THE HRA TO PURCHASE TAX FORFEITED LAND DESIGNATED AS OUTLOT D, BASS LAKE HEIGHTS ADDITION WHEREAS, demand for af%rdable single family lousing in Plymouth far exceeds tie supply due partly to the high cost of land in the City; and, WHEREAS, the opportunity exists for the HRA to purchase through Hennepin County a vacant buildable tax forfeited property of almost 2.5 acres; and, WHEREAS, the Plymouth Housing and Redevelopment Authority (HRA) has funding available to purchase such property and make it available for development of three to four affordable single family homes; and, WHEREAS, the City Council's approval of the purchase of the property by the HRA has been requested by Hennepin County as a condition for considering such sale. NOW THEREFORE, BE IT RESOLVED BY THE HOUSING AND REDEVOPMENT AUTHORITY IN AND FOR THE CITY OF PLYMOUTH, MINNESOTA, that it request the Plymouth City Council's approval for the Housing and Redevelopment Authority to purchase through Hennepin County the tax forfeited proiperty designated as Oudot D. Bass Lake 116ghts Addition (Tax Identification No. 03-11d-2241-0045), for the development of affordable single family homes; and _ BE IT FURTHER RESOLVED that the HRA Executive Director or her designee is hereby authorized to initiate discussions with Hennepin County for the purchase of said property, upon the aforesaid approval of the City Council, subject to approval of the terms of the purchase by the HRA Board. Adopted by the Plymouth Housing and Redevelopment Authority on July 16.1998. W DATE: July 8, 1998 for Housing and Redevelopment Authority Mating of July 16,1998 MW TO: Anne Hurlbut% Executive Director FROM: Edward Goldsmith, HRA Supervisor SUBJF.M Applications for HUD Section 8 Programs The U. S. Department of Housing and Urban Development (HUD) recently accepted applications for two programs under the Section 8 Tenant -Based Assistance Program. One program is the Mainstream Program that provides Section 8 certificates for use by persons with disabilities. The other is the Family Self -Sufficiency Program Coordinator funding program In response HRA stall' have submitted applications for fifieen Section 8 certificates under the Mainstream Program and $14,133 for one year of funding for the HRA's T.R.A.I.L.S. Family Self -Sufficiency Program. The HRA's Section 8 waiting list currently includes 164 applicants, approximately 20 of these applicants would qualify for the Mainstream Program's Section 8 certificates. The Mainstream Program requires that the HRA be able to absorb than units into its program within the first year. Staff has applied for fifteen units based upon the anticipated availability of the units and the HRA's ability to absorb the additional units. If fimded, the application for the Family Self -Sufficiency Program Coordinator would provide approximately 70% of the annual funding for the HRA's T.R.A.I.L.S. Program. The HRA would also be able to apply for subsequent anneal funding from HUD. The HRA currently funds the T.R.A.I.L.S. Program with a combination of Section 8 Reserves and Community Dmkq mm Block Grant (CDBG) funding. Award of the HUD Program Coordinator funding would allow the HRA and City to allocate the Section 8 and CDBG funds to other activities. I recommend that the Board approve the stairs action in applying for HUD fending for the Section 8 Mainstream Program for Persons with Disabilities and the Family Self. SeSteieacy Program Coordinator feeding Program, So MEMO CITY OF PLYMOUTH 3400 PLYMOUTH BOULEVARD, PLYMOUTH, MN 53447 DATE: July 8, I "S for Housing and Redevelopment Authority Meeting of July 16,1998 TO: Anne W.Aurlb ut, Executive Director FROM: Melissa Camice#AHousing Technician through Edward OoldsnLHRA Supervisor SUBJECT: CLARIFICATION OF HUD'S RECAPTURE OF PROJECT ACCOUNT RESERVES At the June HRA meeting, a clarification and explanation of the recapture by HUD of part of our project account reserves was requested. According to HUD Notice PIH 98-3, HUD recaptured excess Section 8 project reserves to be used for funding disaster relief activities and to establish a fund for future Section 8 contract renewals. HUD recaptured $335,689 from our project account reserves; leaving $245,136. The project account reserve is money that has bulk up over the 22 years that the HRA has been administering the Section 8 program. At the end of each fiscal year, any Annual Contributions Contract (ACC) fending from HUD that we did not use to pay housing assistance payments nor earn as administrative fees is transferred into the project account reserves. For example, at the end of the fiscal year ending June 30, 1996, from the $563,653 committed by HUD we did not use $513, which was then placed in our project account reserves. The funds in the project account reserve are not accessible to the HRA but are used by HUD to extend expired ACC increments. The amount the HRA is spending on housing assistance payments, utility allowance reimbursements, and FSS escrow contributions is closely monitored by staff on a monthly basis to en mm we are spending as close to the maximum amount possible without exceeding the amount c rumnitted by HUD through our ACC. However, as our clients have more diffulity in finding units to rent in Plymouth, more of our allocation can go unused each year. It is inevitable; however, that we will contribute some amount to the project account reserves each year. This funding recapture does not affect the money in our operating reserve account (earned administrative fees that exceed our administrative costs). We can continue to use funds from our operating reserves for other housing effoms such as the FSS program. The funding recapture will affect how we are funded in the future. Since there is less money in our project account reserves, HUD will be renewing any expiring ACC increment With a new funding increment rather than extending the increment with project account reserves. I recommend that the Board receive and file this flap otional a *our WME-ift he to) MEMO c1Tsr old I,YMovlrl 3400,PLYMOLT BOULEVARD. n-XMOUTIA MN S$T- o DATE: July 8, 1998 for Housing and Redevelopment Authority Meeting of July 16,1998 TO: Anne Hudburt, Executive Director FROM: Edward Goldsmith, HRA Supervisor • Z SUBJECT: Resolution Authoring Execution of Agreements with de Minnesota Department of Trade and Economic Development (DTED) and The Rotdund Company, Inc. to Implement DTED's Contaminsdon Investigation and RAP Development Grant for the Village At Bassett Creek Development On May 21, 1998, the HRA authorized submission of an application to DTED for its Contamination Investigation and RAP Development Grant Program to assist The Rottlund Company in :developing Phase 2 of the proposed Village At Bassett Creek development. On June 290", DIED announced the award of $26,808 in response to the MRA's application. The Rottlund Company will utilize this assistance to develop the Response Action Plan (RAP) to be submitted to the Minnesota Pollution Control Agency (MPGA) as a requirement to apply for contamination clear-up funds from DTED and the Metropolitan Council for the Phase 2 property. In order to accept this grant the HRA will need to execute a grant agreement with DIED governing the receipt and expenditure of the grant funds. The HRA will also need to enter into a grant agreement with The Rottlund Company governing the use of the grant fimds towards a portion of the cost of developing the Response Action Plan (RAP) for clean-up of the Phase 2 portion of the proposed Village At Bassett Creek development. All costs for the contamination investigation and development of the RAP in excess of the grant funds, including the required 25% local match, will be the responsibility of The Rottlund Company. The HRA will not be responsible for any additional costs. 1 recommend that the BRA adopt the attached Resolution 98.16 authorizing e:ecutloo of agreements with the Minnesota Department of Trade and Economic Development (DTED) and The Rotdund Company, Inc. to implement DTED's Contamination Investigation and RAP Development Grant for the Village At Bassett Creek development. ATTACHMENTS: 1. Draft HRA Resolution v.,......w..,n........r.. HRA Resolution 98.16 AUTHORIZING EXECUTION OF AGREEMENTS WITH THE MINNESOTA DEPARTMENT OF TRADE AND ECONOMIC DEVELOPMENT AND THE ROITLUND COMPANY, INC. TO IMPLEMENT DTED'S CONTAMINATION INVESTIGATION AND RAP DEVELOPMENT GRANT FOR THE VILLAGE AT BASSETT CREEK DEVELOPMENT. WHEREAS, on May 21, 1998, the Housing and Redevelopment Authority In and For the City of Plymouth, Minnesota (the "HRA") adopted HRA Resolution No. 98.12, a thorift submission of an application to the Minnesota Department of Trade and Economic Development's Contamination Investigation and RAP Development Grant Program for the proposed Village At Bassett creek development; and WHEREAS, on June 29,1998, the Department of Trade sad Economic Development announced the award of $26,808 to the HRA in response to its application; and WHEREAS, the HRA wishes to accept the award of funds to provide assistance to The Roulund Company, Inc. in its development of its Village At Bassett Creek proposal in accordance with all applicable state requirements; NOW THEREFORE BE IT RESOLVED by the Horsing and Redevd%....r_t Authority In and For the City of Plymouth, Minnesota that the HRA's Executive Director is hereby authorized to execute agreements on behalf of the HRA with the Minnesota Department of Trade and Economic Development and The Rottlund Company, Inc. implementing the Contamination Investigation and RAP Development Grant for the Village At Bassett Creels Development in accordance with applicable state requirements. BE IT FURTHER RESOLVED that the Plymouth HRA has the legal authority to apply for fmsncial assistance, and the institutional, managerial, and financial capability to ensme adequate project administration. Adopted by the Plymouth Housing and Redevelopment Authority on July 16, 1998. DATE: July 8. l "Sgt for Housing and Redevelopment Authority Meeting of July 16,1998 TO: Anne HuArt, Executive Director FROM: Edward Goldsmith, HRA Supervisor SUBJF. T: 1997 Financial and Program Audits Annually, the HRA's programs are audited as part of the City of Plymouth's annual audit in accordance with applicable state and federal requirements. Although the HRA is a separate legal entity with an independent bard appointed by the City Council, government accounting standards classify the HRA as a "component unit of City govenmient". As a component unit, certain financial information of the HRA is reported in the City's Comprehensive Annual Financial Report. In addition, as a cost saving measure the HRA's audit is done as part of the City audit. The independent Certified Public Accounting firm of Delgitte & Touche, LLP has performed this audit for the past four years. The financial audits of the City and the HRA are conducted in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. In addition to expressing an opinion on the general purpose financial statements of the City and HRA in conformity with generally accepted accounting principles, the auditor also Issues reports required by Government Auditing Standards regarding the City and HRA's intimal control over financial reporting and tests of the City ar HRA's compliance with certain provisions of laws, regulations, contracts and grants. The new Office of Management and Budget (OMB) Circular A-133, which applies to the federal programs, places an increased emphasis on testing intemal control procedures. These new requirements increased and changed the type of audit procedures performed on federally funded program. Revisions to the compliance supplement testing regtnrpnents, issued by OMB and the Depaetnnent of Housing rand Urban Development (HUD). required mom detailed testing of the Section 8 and the CDBO Programs program compliance documentation for the current year. For 1997, to compensate for reductions in the federal government's oversight staff for these programs, and changes in the compliance testing requirements provided by OMB and HUD, the auditors performed additional internal control and management reviews that have not previously been required. As a result, the Management Letter includes additional commentary ths4 in the past, would have been part of a uWm management review conducted by federal staff. ri - T:m conducting these audits of HRA programs, the auditors found the City and HRA to be in material compliance with all applicable state and federal requirements. However, in a separate management leper the auditors did note some issues of concern that while not requiring formal audit findings did warrant s'aWs attention. View items plus staffs respommses aro noted in the Responses to Mamgement Letter Comments that aro attached along with applicable excerpts from the Gty audit. I recommend that the Board accept and file the attached excerpts fires the City's 1997 audit reports applicable to the HRA programs. Attachments: HRA Excerpts from City Audit Reports NOW Touche up O 400 One Financial Placa Telephone: (612) 387.4000 120 South Sixth Street Facsimile: (612) 387-4450 Minneapolis, Minnesota 55402.1844 INDEPENDENT AUDITORS' REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED UPON! THE AUDIT PERFORMED IN ACCORDANCE WITH GOVERNMENTA!SM110 STANDARDS The Honorable Mayor and Members of the City Council of the City of Plymouth, Minnesota We have audited the general purpose financial statements of City of Plymouth, Minnesota (the City) as of and for the year ended December 31. 1997, and have issued our report thereon dated April 17, 1998. We conducted our audit in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Gowen nrent Auditing Stmrda ds, issued by the Comptroller General of the United States; and the provisions of the Legal Compliance Audit Gufde jbr Local Gowmatent promulgated by the Legal Compliance Task Force pursuant to Minnesota Statutes Section 6.65. Those standards and provisions require that we pian and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are frce of material Dnisstatement. As part of obtaining reasonable assurance about whether the City's general purpose financial statements aro free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts. and grants, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was no an objective of our audit and, accordingly, we do no express such an opinion. The Minnesota Legal Campliance Audit Guile for Local Government covers five main categories of compliance to be tested: contracting and biddin& deposits and investments, conflicts of interest, public indebtedness, and claims end disbursements. Our study included all of the listed categories. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards or under the provisions of the Minnesota Legal Compliance Audit Guide. In planning and performing our audit, we considered the City's internal control over fraancial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control over financial reporting. Our onsideration of the into is ' control over financial reporting would not necessarily disclose all matter inJ OdMTIIM T0111111ft the internal control that might be reportable conditions said, accordingly, would not necessarily disclose all reportable conditions that aro also considered to be material wesltneesses. A material weakness is a condition in which the design or operation of one or mom of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the futancial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control ovc: financial reporting and its operation that we consider to be material weaknesses. However, we noted mom involving the internal oa rd over financial mportins that we have reported to management of the City in a separate hater dated April 17,199S. This report is intended for the infontsdon of the City Council members, management, federal awarding agencies, and pass-through entities. However, this report is a matter of public recoM, said its distribution is not limited. April 17, 1995 Deloitte& Tovehe up Q 400 One Financial Plaza Telephone: 4612) 397-4000 120 South Sixth Street Facsimile: (612)397-4450 Minneapolis, Minnesota 55402-1804 INDEPENDENT AUDITORS' REPORT ON COMPLIANCE AND INTERNAL CONTROL OVER COMPLIANCE APPLICABLE TO EACH MAJOR FEDERAL AWARD PROGRAM AND ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS The Honorable Mayor and Members of the City Council of the City of Plymouth, Minnesota Compliance We have audited the compliance of City of Plymouth, Minnesota (the City) with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that aro applicable to each of its major federal programs for the year ended December 31, 1997. The City's major federal programs are identified in the summary of auditor's results seslion of the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts, and grMs applicable to each of its major federal programs is the responsibility of the City's management. Our responsibility is to express an opinion on the City's acompliance based on our audit. We conducted our audit of compliance in accordance with generally accepted auditing standards; the standards applicable to financial audits contained in Government Auditing Mallards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of tate, Loco! Governments, ad Non-Profti Organisations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on the City's compliance with those requirements. In our opinion, the City complied, in all material respects, with the requirements referred to above that are applicable to each of its major federal programs for the year ended December 31, 1997. The management of the City is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to federal programs. In planning and performing our audit, we considered the City's internal control over compliance with requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133. BdMTOIM T11IdIllllg Our consideration of the internal control over compliance would not necessarily disclose all matters in the internal control that might be material weaknesses. A material weakness is a condition in which the design or operation of ane or mom of the internal control componems does not reduce to a relatively low level the risk that noncompliance with applicable requirements of laws, regulations, commega and grams that would be material in relation to a major federal program being audited may occur and not be detected within a timely period by amployees in the normal course of performing their assigned functions. We noted no matters involving the internal control over conpiwom and its operation that we consider to be materiel weduresses. Schedule of Expenditures of Federal Awards We have audited the general purpose fmsociel statements of the City as of and for the year ended December 31, 1997, and have issued our report thereon dated April 17,1998. Our audit was performed for the purpose of forming an opinion on the general purpose financial statement, taken as a wbe.'e. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by OMB Circular A-133 and is not a required part of the genaml purpose financial statements. Such information has been subjected to the auditing procedures applied in the audit of the general purpose financial stetennem and, in our opinion, is fairly stated, in ell material respects when considered in relation to the general purpose financial statements taken as a whole. This report is intended for the information of dna City Council members, management, federal awarding agencies, and pass-through entities. However, this report is a matter of public record and its distribution is not limited. April 17,1998 It It Deloitte & Touds u' Q 400 One Financial Plaza Telephone: 1612) 397-4000 120 South Sixth Street Facsimile: (612) 397-4450 Minneapolis, Minnesota 55402-1844 INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH SPECIFIC REQUIREMENTS APPLICABLE TO HUD -ASSISTED PROGRAMS Honorable Mayor and Members of the City Council City of Plymouth, Minnesota We have audited the general purpose financial statements of the City of Plymouth, Minnesota (the City) as of and for the year ended December 31, 1997, and have issued our report thereon doled April 17, 199S. We have also audited the City's compliance with the specific program requirements governing eligibility; reporting; special tests and provisions related to review contract rent, rent adjustments, inspections, occupancy, rental assistance; and claims for advances and reimbursements that aro applicable to its major HUD -assisted program for the year ended December 31. 1997. The management of the City is responsible for the complianme with those requirements. Our responsibility is to express an opinion on compliance with those requirements based on our audit. We conducted our audit of compliance in accordance with generally accepted auditing sty:r-_ -ds and Government Auditing Standards, issued by the Cor aptroller General of the United Stat• . of Management and Budget Circular A-133, Audits q'States. Local Governments and Kor . Organizations; and the provisions of the Public an d hdian Housing Compliance S.y pi;.a i July 26,1996,. issued by the Department of Housicg and Urban Development (HUD). Tho -:,adards and provisions and OMB Circular A-133 require that we plan end perform the audit to obtain rens,. able assurance about whether material noncompliance t vith the requirements referred to above occurred. err audit includes examining, on a test basis, evidence about the City's compliance with those requimin m[s. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the City complied, in all material wspects with the requirements described above that are applicable to its HUD -assisted program for the year ended December 31, 1997. This report is intended for the information of the City Council members, management, the U.S. Department of Housing and Urban Development, ;and other federal audit agencies. However, this report is s matter of public record and its distribution is riot limited. April 17, 1998 BlIftTaft Toblift CITY OF PLYMOUTH, MINNESOTA SCHEDULE OF EXPENDRURES OF FEDERAL AWARDSDECEMBER31.18!'! ftdWFilda Iib CPU ,ss7KWMANO. Ezxvaedlwtrn U.S. DVARTMEf OF NDUSDID AND u"M DEVELpphlM. D1RECfPROGRAMptrWC&Vr= el: L~ 40 -W Arshom Froprm (Srako Q 14357 wA S 1.142.79! Comms Derelapo" RIO& (Lmm Flow= UB. Dgw0 0f" mrnp rd.Utbat DerekpoW, , 11215 WATom FEDERAL. EMERGENCY MANAGENW AGENCY: IA dNdrlkSarkr- YNau emAm FtOa'm 0.534 armr 7,000 FEDERAL TRANSIT ADM94nZATION- 2000.1766 Prssrd throujh hllmaspe of Tswpastuion: Elderly rd rasom of DkMky ptoSmm 20.500 arms 27,615 MN -164)026 A r U.S. DEPARTMENT of IUSTICE: 76M IJhsa Psaprrn: Abed Gant pmthr o the Stas of Moneran Depanaem Of Jobs rod TrmWkW 16.726 NIA 24.998 City Send Semim Division: Jurerile Jmtke and DdinWnay pieremion p oVm 16.540 Gnmr TOW U.S. Dspaboem oflunice 7 10,677 TOW FedumAwmds 7 67 f 1.53UH J 6 11 CITY OF PLYMOUTH. MINNESOTA ' NOTE' TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED DECEMBER 31.1SY7 1. BASIS OF ACCOUNTMO Tie Schedule of Expandipoes of Federal Awards a prepared on the modified manuil. basis of accenting. Acmdmgly. federal revenues aro recorded in tie yew in which tie routed upenditum aro incurred. CITY OF PLYMOUTH, MINNESOTA SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED DECEMBER 31, 112107 Pad I - Summary of Auditors Results I. The independent sceamtaot's report on the f nancisl statements acpressed an mhquslifred opinion. 2. No boom of noneompli %i me considered material to the fnsucial statements was disclosed by the mdit. 3. The independent accountant's report on compliance with requirements applicable to major federal award programs expressed an unqualified opinion. 4. The..dit disclosed no findings required to be reported by OMB Circular A-133. S. The City's major programs were: Name of Federal Program or Cluster CFDA Number Community Development Block Grants/ 14.218 Entitlement Program Lower Income Housing Assistance Program 14.857 n Section 8) 6. , A threshold of $300,000 was used to distinguish between Type A and Type B programs as those terms are defined in OMB Circular A-133. 7. The Organization did not quality as a low-risk suditee as that term is defined in OMB Circular A-133. Pad II'- Financial Statements Findings Section No matters were reportable matters. Pad III - Federal Award Findings and Questioned Cost -Section No matters were reportable matters. J 8 HOUSING AND REDEVELOPMENT AUTHORITY OF PLYMOUTH COMBINED BALANCE SHEET - ALL FUND TYPES December 31, 1997 with comparative totals for December 31, 1996) Totals Oovemmentsl Fund Tye Proprietary (Memorandum Only) upecun General. Revenue Enterprise 1997 1996 ASSETS Cash, cash equivalents, and Investments Receivables Takes: Unremilted Delinquent Accounts Notes Accrued interest Due from primary govemment Prepaid Items Restricted assets: Cash, cash equivalents, and Investments Accrued interest opeAy. plan and equipment J-1 5443,724 9142,107 62.497 1847,928 1831,331 3,535 TOTAL ASSETS 9471,600 3,535 171 1,322 87,285,372 1,322 1,960 1,181 1;181 11159 18,000 18,000 5,297 8,919 2,015 3,370 8,934 38,874 42,294 Accrued salaries and wages $1,330 688 318 3,701 5,511 5,511 1,568 31,550 859,880 859,880 888,862 13,407 13,407 5,815,000 Net of aceum. deer. where applicable) 6,747A20 5.747,420 5,956.770 TOTAL ASSETS 9471,600 9144,122 98,889,478 7,305,098 87,285,372 LIABILITIES AND.EQUITY Llabllitiee: , A000unts payable 3,370 35,604 38,874 42,294 Accrued salaries and wages $1,330 688 1,805 3,701 11,789 Deposits payable 12,900 31,550 44A50 29,884 Advance from primary government 5,525,000 5,526,000 5,815,000 Due to primary government 2,447 Deferred revenue 17,322 17,322 1;980 . Current liabilities payable frons restricted asseb - Interost 78,732 78,732 80,014 Tole) Ba UN"T8$3'F Equity. Contributed capital Retained saminp: Reserved for debt ntlrement Fund Balance: Reserved for affordable horsing Unreserved Designated for housing and redevelopmentprojects J Total equity TOTAL LIASILITIES AND EQUITY 1,000,000 1,000,000 1,000,000 18,885 18,885 31865 77.363 77,383 375.485 127,286 602,771 498,539 as _TBOVIr $ 144,122 98,889,478 87,365,098 97,285;372 81 J-2 HOUSING AND REDEVELOPMENT AUTHORITY OF PLYMOUTH COMBINED STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES ALL GOVERNMENTAL FUND TYPES Year Ended December 31, 1997 wrkb comparative totals for year ended December 31, 111116) 1.01 . 82 Governmental Fund Types Totals SWIM Memorandum Only) General Revenue 1987 1996 REVENUES: Taxes 359,540 359,540 350,022 Inte Wemmental 24,585 81,142,799 1,167,364 1,068,624 Contributions 30,000 1,040 31,040 45,000 Interest on investments 20,385 5,213 25,598 11,758 Total revenues 434;510 11, 941,052,052 1,583,582 1,495304 EXPENDITURES: Public service 363,908 1,138,059 1,501,967 1,403,705 Total expenditures 363,908 1,138,059 1,501,967 1,403,705 EXCESS OF REVENUES OVER EXPENDITURES 70,802 10,993 81,595 91,599 FUND BALANCE AT BEGINNING OF YEAR 382,246 118,293 498,539 406,940 FUND BALANCES AT END OF YEAR 127,286— 8® 98,539 1.01 . 82 HOUSING AND REDEVELOPMENT AUTHORITY OF PLYMOUTH STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN RETAINED EARNINGS - ALL PROPRIETARY FUND TYPES Veer Ended December 31, 1997 and 1996 J 83 J4 Enterprise P mouth Towne Suesre 1997 1998 OPERATING REVENUES: OpeWnp revenue 779.060 772;285 TOTAL OPERATING REVENUES 779,060 772,265 OPERATING EXPENSES: Pereonalservices 57,173 66,/;11 Materials and supplies 18,875 12,749 Contractual services 191,668 209,613 TOTAL OPERATING EXPENSES 265,716 279,053 OPERATING INCOME BEFORE DEPRECIATION 513,344 493,212 DEPRECIATION AND AMORTIZATION 222,260 221,786 OPERATING INCOME 291,094 271,427 DER REVENUES (EXPENSES): Interest lneorne 41,782 22,187 Interest Expense 319,878) 323,689) TOTAL OTHER REVENUES EXPENSES) 277,894) 301,502) NET INCOME (LOSS) 13,200 30,076) RETAINED EARNINGS AT BEGINNING OF YEAR 3,665 33,780 RETAINED EARNINGS AT END OF YEAR x,885 J 83 J4 J-4 HOUSING AND REDEVELOPMENT AUTHORITY OF PLYMOUTH STATEMENT OF CASH FLOWS PROPRIETARY FUND TYPES Year Ended December 31, 1997 and 1996 Enterprise Plymouth Towne Sauaro 1987 1998 CASH FLOWS FROM OPERATING ACTIVITIES: AdAmbbnaft to reconelle 291.004 271, 427 brooms (bw,,) to net cash provided by operating activities: DePreciatlon and amortization Changes In assets and Iiabilift: 222,250 221,785 Accounts receivable 22 ) 1,111PrepaidItems Accounts payable 3,9 ) 1,219219 Contracts payable 1272) 4, 675 Accrued salaries payable Security deposits 4,701 ) 270) 1,509) Total ad)ustments 1, 701 83) 214.218— 226,1128 Net cash provided by operating aaUvilies 605.3!L 498255 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Acquisition and consbuotion of capitalassets P an advance from primary government 12,900) 18,833) Interest peld on debt 90.000) 85,000) 32p,9g8) 324,9W) Net cash used by capital and ralaEed Mancing activities 42 8S6)(429, 533 CASH FLOWS FROM INVESTING ACTIVITIES. Interest on Immunents 28,375 x,187 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 108,827 90.909 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 81 6p 721,241 CASH AND CASH EQUIVALENTS AT END OF YEAR 84 HOUSING AND REDEVELOPMENT AUTHORITY OF PLYMOUTH GENERALFUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE -.BUDGET AND ACTUAL Year Ended December 31,1987 Wnh compendia actual amounts for year ended December 31,1998) General p opertlr taxes Intergovernmental Contributions Interest on Invesbrrents TOTAL REVENUES Personal services Materials and supplies Conbactual service Housing assistance Housing bans Oliver. TOTAL EXPENDITURES CESS OF REVENUES OVER EXPENDITURES 1997 VARIANCE FAVORABLE BUDGET ACTUAL 1988 Actual J4 358,142 359,540 3,398 350,022 24,585 24,585 21,953 30,000 30,000 45,000 2,100 20,385 18,285 7,883 382,827 434,510 51,8E3 424,888 89,130 91,482 2,332) 85,249 400 302 98 558 270,000 241,735 28,215 252,522 18,000 18,000) 23,297 14,359 8,93C 20,834 382,827 383,908 18,919 339,183 70,802 70,802 85,705 BALANCE AT BEGINNING OF YEAR 382948 382,248 298,541 BALANCE AT END OF YEAR $382,248 $452,848 570,802 5382,248 85 J4 HOUSING AND REDEVELOPMENT AUTHORITY OF PLYMOUTH SECTION 8 HOUSING ASSISTANCE SPECIAL REVENUE FUND gTATEMEt;+Y OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Year Ended December 31,1887 with comparative actual amounts for year ended Doeember 31,1888) REVENUES: Intergovernmental Contributions Interest on investments TOTAL REVENUES EXPENDITURES: Personal services Material and supplies Contractual services Housing assistance Other Capital outlay TOTAL EXPENDITURES 1887 VARIANCE FAVORABLE 1896 BUDGET ACTUAL (UNFAVORABLE] ACTUAL 51,11000 81,142,799 28,399 811088,681 1,040 1,040 600 5,213 4,713 3,876 1,114,900 1,149,052 34,152 1,0700138 681008 57,062 8,944 43,506 620 551 69 4,785 965,500 1,050.802 85,102) 887,534 37,054 28,644 8,410 48,792 1,200 1,200 1,925 1,070,380 1,138,059 67,879) 1,064,542 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES 44,520 10,993 33,527 51894 FUND BALANCE AT BEGINNING OF YEAR 118,293 118,293 110,399 FUND BALANCE AT END OF YEAR $160,813$127,266$33,527 5118 2 io S8 M Responses to Management Letter Continents Page 3 Section II - Federal Awards Comments Lower-income Assistance Program (Section 8) - File Compliance Auditors Recommendation - The HRA should improve documentation contained in tenant files and identify current procedures and policies that need to be revised to ensure compliance with the federal regulations elated to the program. The HRA should implement the ongoing use of case notes for tenant film, obtain complete information from all landlords, obtain and retain documentation of all tenants' social security numbers. The HRA should make nix necessary adjustments to repay the tenant that was overcharged rent. Additionally. the HRA should consider the development of a checklist of required information in case files and a checklist to document the review process. Manages Response - The recommendations have been reviewed and procedures have been adopted to ensure compliance with the federal program compliance requirements in the future. The following changes that have been adopted: A procedures manual is being developed to ensure all procedures and tenant cases are handled consistently. All copies of social security cards will be placed on a colored piece of paper so that it is easily found in the file and also for a visual confirmation that the social security numbers have been verified and correctly input in the software database. Staff will more careliilly review all forms during certification and eligibility meetings to ensure all forms are dated properly -and information provided by the client if complete anti accurate. Confirmation of this review will be documented with a checklist to be kept in the tenant file. Responses to Management Letter Comments Page 4 A more strict review of all Request for Lease Approval forms will take place. If all information is not provided properly, the form will be returned to the landlord for completion. Staff will continue to use "client file notes" on a more consistent basis to document any discrepancies, verbal information, and any other necessary .information. LowerIncome Assistance Program (Section 8) - HUD 5OD58 Forms Submission Auditors Recommendation - The HRA should maintain hardcopies of confirmation and error reports received from HUD pertaining to the MICS file submissions. Management Response - The electronic software used to submit the forms to HUD provides electronic confirmation of the date that the forms have been sent. If there are no errors, no report is generated by the software to document the date of transmission. Procedures have been established to capture a screen print of the electronic confirmation of the date of the submission for items that were transmitted with no errors. This procedures has been put in place. Community Development Block Gram (CDBt.1'- Federal Cash Transaction Report (Form 272) Auditors Recommendation - The City should request filing extensions for reports when needed to ensure compliance with federal regulations. Mangpment Response - The Finance Department will develop procedures to monitor more closely the due dates for filing the quarterly Federal Cash Transaction Report (Form 272) with the local HUD office. If required, a request for extension to file will be requested from the local HUD offence and retained. In the past, the local office has given verbal approval for the timing of the filing of the form. The report is required to be filed before any additional CDBG draws can be electronically requested from HUD. Communtry Development Block Grant (CDBG) - File Compliance Auditors Recommendation - HRA personnel should initial or sign and date all applications reviewed and approved to ensure wompliance with federal regulations. The HRA should consider revising the Request for Information form to specifically request child support information on all applicants. Responses to Management Letter Comments Page 5 The HRA should consider the use of an income calculation worksheet to document the calculations made and the use of case notes should be considered to document unusual circumstances and the resolution of any conflicting information in the files. The HRA should consider developing and implementing an independent review process of the files, on a test basis, for completion and accuracy. Additionally, the HRA should consider tracking the types of errors noted to identify potential areas for ongoing training• Management Response - City staff will initial and date all applications reviewed and approved to ensure compliance with federal regulations. A new request for information form verifying child support information has been drafted for those divorced or separated applicants. An inco>t!e calculation worksheet has been drafted to document income calculations while case notes will be used to document unusual circumstances and resolution of any conflicting information in the client files. The HRA staff will review the feasibility of developing and implementing an independent review process for the files. Any recipients of housing rehabilitation loans will be notified by mail upon completion of all work the total dollar amount of the loan with a copy of the letter to the Hennepin County Registrar of Titles for their information. Community Development Block Grant (CDBG) - Monitoring of SubrecWients Auditors Reconiendation - The City should continue to improve their monitoring processes. The City should review corttracta/agreements to identify any missing required information. The City should work with the local HUD office in the determination of the relationships with agencies that receive CDBG funds from the City to identify vendors vs. subrecipients. The HRA should develop and implement a checklist for monitoring eligibility requirements of subrecipients with the responsibility of determining eligibility for CDBG funds/services. The City should document all procedures performed including the names and titles of the person and the date the procedures were performed. City vuba have reviewed the monitoring procedures and created the monitoring checklist ind"wA above. Stasi Is currently reviewing the status of the agencies receiving CDBG assistance as either vendors or subrecipients. The checklist will also be used for determining if applicants qualify for CDBG assistance at the time that they apply. Documentation of procedures performed including names and title of persons and dates J procedures were performed are part of the checklist. The City will review more carefully contracts and agreements to identify any missing required information. Rmmee «pmOMmmSemem n.emr Rcgo PF RECTION III - UAUM OF MOR -YEAR COMMENTS Single AudftAcr Chimrps. Observation: Effective for fiscal year 1997, there were significant changes related to the administration and reporday,: offederalfimding. Current -Year Update: The Client has reviewed the changes and implemented procedures to address these changes for fiscal yearcodedDecember31, 1997. Plymwh TOWN Some. Observation: Plymouth Town Square (PTS) is operating at a loss for fiscal year 19%. Cunent-Year Update: We noted PTS operations resulted in net bwmc for fiscal year 1997. 9 DATE: July 9,1998 for housing and Redevelopment Autborky Meeting of July 16,1998 TO: Andflurlburt, Executive Director FROM: Edward Goldsmith, HRA Supervisor SUBJECT: Establish Earlier Meeting Time For August 20,1998 HRA Meeting The Plymouth City Council will be holding a 1999 budget study session at 70M on August 20, 1998, the scheduled time for the HRA's August meeting. ' Since two of the HRA Commissioners and you will need to beat the Council study session, I recommend that the HRA change its mating time to S:OOpm for the August 20a meeting. This will allow ns to establish an actual start asydm after StOpm, based upon the length of the agenda for the August meeting. I M11 try to keep the agenda a short as possible to allow for a low actual mating time. We will probably be bringing the staWs final HRA 1999 budget proposals to the Board at the August mating. If Commissioners have any issues or questions that they would like to discuss with the Council regarding the budget proposals, they would be able to attend the Council meeting following the HRA meeting. I recommend that the Board adopt a motion establishing the meeting time for the August 20,1998 regular monthly Board meeting as S:OOpm.