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HomeMy WebLinkAbout1989-11-15 EHA MINUTES' • I . I I • • III. • 9. B ENGLEWOOD HOUSING AUTHORITY Board of Commissioners Special Meeting The Special Meeting of the Englewood Housing Authority Board of Commissioners was called to order at 6:00 p.m. on Wednesday, November 15, 1989, at Simon Center, 3333 South Lincoln Street, Englewood, Colorado, 80110, by Chairman Thomas J. Burns. Members Present: Members Absent: Also Present: DISCUSSION ITEMS Thomas J. Burns, Chairman R. J. Berlin, Vice Chairman Roger Koltay, City Council Rep. Norleen Norden, Commissioner Bradley L. Zieg, Commissioner None James F. Wagenlander, Esq., EHA Legal Counsel Paul Malihowski, Executive Director Mary A. Ryan, Recording Secretary A. Review of Project-Based Assistance Program with James F. Wagenlander, Esq., EHA Legal Counsel. At the Regular Meeting of the EHA Board of Commissioners held October 25, 1989, the Commissioners reviewed the current status of utilizing project-based certificates for the WAND rental units. This led to several issues that the Commissioners felt should be reviewed by EHA legal counsel, Jim Wagenlander. Mr. Wagenlander stated that it was difficult to know what HUD's standards in this matter were because no standards have been developed. He stated that in the past the EHDC had not been very independent, but that it was becoming independent now; and in order to be able to withstand any criticism from HUD and any disapproval of the units being used for PBA, the EHA must be very sure at every step that the EHDC is independent from the EHA . EHA BOC Special Meeting 11/15/89 Chai ,-man Burns asked Mr. Wagenlander if it was ccoJ-n,~• that the EHA need not cease appointing members to the EHDC's board but the removal or replacement of members of the EHDC's board should not be done by the EHA. Mr. Wagenlander answered that was correct. The E x ecutive Director said that the way the Selection Policy for the PBA program was now could be viewed as ve,-y limiting. L~gal Counsel felt that the EHA should develop a new selection policy that would use criteria and procedures that are open enough to insure that units other than EHDC-owned WAND units have an opportunity to be cc,nsidered. The Executive Director said that Legal Counsel had suggested the EHA run the public notice advertisement two times in local newspapers to spell out what the minimum qualifications are and that a list of other preferences can be obtained from the Executive Di rector. It was the suggestion of Legal Counsel that the E >:ecutive Director mail a cc,py c,f the legal not·· advertising for participants in the Project Ba Assistance Program to known housing-orient non-profits to see if they would want to apply. This would demonstrate that the EHA is within the spirit of the law and trying to reach out to other owners. Commissioner Norden informed the Board that the regulations concerning the one-thousand-dollar minimum worth of rehab cannot be for "cosmetic" purposes, but must be for a major operating system or to bring the unit up to Housing Quality Standards (HQS). She suggested the proposed revised Selection Policy be amended to reference HQS. Commissioner Norden asked if the criteria were to be weighted. Legal Counsel responded that as long as the EHA is careful during the process to document how the process was done weighting criteria would not be necessary. The Chairman asked if there were any more questions concerning the Selection Policy for Project-Based Designation. The Selection Policy is made a part of these minutes as Attachment A. -2-• EHA BOC Special Meeting 11/15/89 • IT WAS MOVED BY COUNCIL REPRESENTATIVE ROGER KOLTAY TO SELECTION POLICY FOR PROJECT BASED DESIGNATION AS AMENDED. R. J. BERLIN SECONDED THE MOTION. ACCEPT THE COMMISSIONER Ayes: Nays: Abstained: Absent: • • Burns, Berlin, Koltay, Norden, Zieg None None None The Chairman declared the motion passed. The second item Legal Counsel addressed was the negotiation between the EHA and the EHDC of -a written option agreement on the sale and transfer of the WAND units. Legal Counsel felt it was important that this be done before the EHA begins the process of selecting units for its PBA program. Legal Counsel further recommended that this negotiation and written option agreement be done before the proposal for PBA is submitted by the EHDC to the EHA, but not necessarily before the EHA advertises the availability of PBA. Legal Counsel said it was important that the EHDC be able to evidence ownership and control over those units and that it was his understanding that the EHA had not yet negotiated with the EHDC on whether the EHA is going to sell EHDC the properties or whether the EHA is going to grant the properties. Chairman Burns asked Legal Counsel if the EHA could write an option for EHDC to purchase these WAND properties and then actually select another entity to receive the PBA and have the EHDC get the properties anyway. Legal Counsel responded that this would be the best situation from the view of showing that the EHDC has control. It was agreed that the option to purchase by EHDC would not be contingent upon the EHDC being selected by the EHA to receive PBA. Legal Counsel added that the EHA could put into the option agreement the requirement that the deed will contain a reverter clause that the property must be used for low-income housing purposes. Then, if EHDC does not qualify for PBA and finds some other independent financing, the EHDC will still have to use the units for low-income housing purposes . -3- EHA BOC Special Meeting 11/15/89 Vic2 Chairman Berlin felt that if the EHA makes t. option agreement too conditional, the arm's-length relationship would be ruined. The EHA would still be viewed as having control over the EHDC. Legal Counsel stated he could not imagine anyone saying that the reverter clause in the deed would evidence control. Commissioner Zieg questioned if the reverter clause would be too restrictive from the viewpoint of a lender other than CHAFA. Legal Counsel stated that if the EHDC did obtain a mortgage from a lender other than CHAFA to purchase these units from the EHA, and the EHDC defaults on that mortgage, the lender would want to take that property and market it. If there is a restrietion stating that the units will be used for only low and moderate income housing purposes, the lender might shy away from placing financing on the property. Legal Counsel stated that he a~so felt, though, that the reverter clause does not guarantee that the EHDC could not find other financing for the property. Executive Director Malinowski stated that he did not feel this would be a particular problem because the financing is to be from CHAFA Ltnder its 501(c)(3) bo-1 program, so CHAFA is only financing 501(c)(3) 's a therefore requiring that the units be low and modera income housing. Discussion ensued regarding at what amount the properties would be sold to the EHDC. Will it be granted to the EHDC, sold at fair-market value, or sold for some amount less than fair-market value? Commissioner Zieg asked if by virtue of CHAFA using 501(c)(3) bond funds for the mortgage loan to the EHDC, and the 501(c)(3) bonds requiring their usage be for low to moderate income housing, that the reverter clause would not be necessary in the deeds transferring the properties from EHA to EHDC. The Executive Director answered that the EHDC could prepay the mortgage after seven years. Commissioner Zieg said the EHA wanted to be sure the units were used for low to moderate income housing beyond that period, and thus felt it was necessary to leave the reverter clause in the deeds. -4-• EHA BOC Special Meeting 11/15/89 • • • Legal Counsel said that if the EHA is concerned about twenty or tn1 r ty years from now this property being limited to low and moderate income housing purposes, then the EHA is going to be interested in a r everter clause. If the EHA is talking only about short-term, then the EHA's needs will probably be satisfied through CHAFA financing. Council Representative Koltay asked if these units were being developed for sale in the future by the EHDC. The Executive Director responded that he was not aware of this ever being discussed, but it could certainly be an option. Commissioner Norden stated that P8A is good only for the term of the Annual Contributions Contract, which is five years unless the contract is renewed. Legal period, clause stated Counsel said that after any restricted prepayment the EHA could waive its right to the reverter at that time. Council Represehtative Koltay he would not want to burden the EHDC with a reverter clause containing no time limits due to which may occur in the future. felt that he would want the reverter as he could see into the future. He EHDC came to the EHA in the future economic changes Commissioner Zieg clause for as long felt that if the with a would, clause. reasonable suggestion it was possible the EHA at that time, consider releasing the reverter Negotiation between EHA and EHDC for these properties was discussed as to who would participate. Discussion ensued regarding whether EHA's legal counsel, Jim Wagenlander, could represent the EHA and the EHDC without a conflict of interest occurring. Mr. Wagenlander stated that if he was requested to represent both parties, he would be required to disclose to the EHA and EHDC the potential conflict but it was not uncommon or unethical. Mr. Wagenlander stated that one thing that needed to be done now was for the EHA to sit down with the EHDC and negotiate these issues, having someone from each side sitting at the table figuring out what each side wants to do. He encouraged the use of board members from each side in these discussions . -5- EHA BOC Special Meeting 11/15/89 Executive Direc ~or Ma l inows kl stated he felt that Board needed to resolve at this meeting whether the wanted to sell the EHDC the properties or grant the EHDC the properties. Chairman Burns said that the EHA had a great deal of debt incurred to obtain these properties, and he was concerned how the EHA would transfer the properties to EHDC without having some kind of mortgage on them. He felt the EHA was not in a financial position to grant the properties. Cc,mmissioner Zieg said the EHA coul,j just "eat" the debt, but he felt strong l y that an income stream could be developed in order for the EHDC to get appropriate financing from CHAFA. Thus the EHA could set an appropriate sale price for the units based o" the amount of mortgage available from CHAFA. The Executive Director suggested that the sale price be the loan balance on these units, so that when the EHDC receives their financing, that would release the certificate of deposit which is now collateralizing the WAND loan at First Int2rstate Bank. Mr. Wagenlander asked what the value of the loan was presently. The Executive Director responded that it was fair market value because it was based on sale price when the properties were purchased and the al located price c,f each prc,per; (11 parce.!.s). Commissioner Norden asked if fair market rent woul make the units cash flow. The Executive Director said that various scenarios had been done and the EHA has committed to putting in whatever income is necessary to make the project cash flow. He stated this was done by motion at the January 25, 1989, meeting of the EHA Board. Jim Wagenlander stated that he had not been aware of the cash flow shortfall pledge on behalf of the EHA to the EHDC and felt that this needed to be looked at in regards to what control it exerts on the EHDC. He asked if this policy put the EHDC under some kind of perceived threat especially if the EHDC needs the additional income pledged by the EHA in order to function. Legal Counsel stated he could foresee someone looking at this issue as a control of the EHA c,ver the EHDC. -s-• EHA BOC Special Meeting 11/15/89 • • • Discussion ensued regarding the three WAND units of the eleven previcusly quit-claim deeded to the EHDC by the EHA. The Executive Director s t ated that in effect there were three properties gifted to the EHDC. Discussion centered around how the EHA could financially make up for these properties that were gifted to the EHDC. The Executive Director stated that the amount of the loan at FIB was based on the price of all 11 units purchased in December~ 1987. Commissioner L1eg stated that the sale price could be reduced to make the mortgage payments workable for the EHDC without any additional commitment of funds by the EHA. Mr. Wagenlander said that a possible solution to the control issue was the reduction of the sale p~ice to EHDC for these properties thus eliminating the need for the ongoing contribution to the EHDC by the EHA. The properties would then support themselves with their own income; and even though the EHA would gi v e up some money in the short term~ in the long term the EHA would hopefully save money by not making the contributions. The E::ecutive Director asked what if the mortgage amount from CHAFA was less than the EHA's loan balance <which it probably would be)? The Board concurred that the EHA would absorb the loss • Legal Counsel warned that CHAFA's acceptance of the EHA contributing to the EHDC in order to make the WAND rental units cash flow and CHAFA 's subsequent stipulation that firm commitment of the mortgage funds required that CHAFA become a cosigner on the collateralizing CD intertwined the EHA with the EHDC ·so much that HUD might have legitimate objections to the EHDC under those terms participating in the PBA program. He stressed that the EHA would want to satisfy anybody looking at this situation that there was an arm's-length relationship between the EHA and the EHDC. Discussion ensued regarding going back to CHAFA and informing them that the EHA is withdrawing its motion to commit financial contributions in order to make the WAND rental units cash flow, and asking CHAFA to refigure the debt service available and then make that amount the sale price of the units to the EHDC. The Executive Director stated he was sure that the intent all along was that the proceeds from the CHAFA permanent loan on the three units previously deeded to the EHDC would go to pay down that portion of the CD attributable to those properties . -7- EHA BOC Special Meeting 11/15/89 DiscL1Ssion ensL1ed rega1-ding deeding the thn~e WA. units quit-claim deeded earlier from the EHA to the EHDC back to the EHA. The reason for this was because when the three units were originally deeded to the EHDC, there was no sale price attached to the units. If EHDC deeds the units back to the EHA, then the EHA can deed the units back to the EHDC with a sale price attached. The Executive Director stated that he would meet with the Vice President of the EHDC, Thomas A. Dinkel, the ne x t day and broach the idea of negotiations between the EHA and EHDC on the WAND properties. Brad Zieg volunteered to be a member of the negotiation team. Discussion ensued regarding the EHDC Bylaws which now state the EHA has the ability to r~move EHDC Board Members. It was agreed by all Commissioner~ present that the EHA no longer has any interest in having the authority to remove EHDC Board Members. All Commissioners present at this meeting agreed they wanted to ask the EHDC Board to look at their Bylaws with an amendment in mind that would remove that authority from the EHA and place that authority with the EHDC Bc,ard. Legal Counsel broached the subject of the considering granting or loaning additional money to the EHDC to complete the rehabbing of the WAND units which would not be taken care of by the CHAFA loan or through the CD~G Program. It was Counsel's opinion that a grant would be the best method to use if the EHA wishes to minimize concerns over control. Counsel was also of the opinion that it would be possible to draft a conventional loan agreement that would not give the EHA undue control over the EHDC. Counsel felt it was very important if a conventional loan agreement was used, that it be done through a written agreement with ordinary terms which would be routine and appropriate to the transaction. Counsel stated that the EHA administered the Rehab Loan Program, but the loans are in the name of the EHA. He expressed concern over the Rehab loans being in the EHA's name and not in the name of the City of Englewood. He stated it would be best for the EHA not to be a lender in any way to the WAND rental properties. • -8- EHA BOC Special Meeting 11/15/89 • • • Executive Director Malinowski stated that according to the City's Community Development Director, the Rehab Loan Program was set up that way in the 1970s becausa the City of Englewood could not lend money to third parties. The CD Director asked the Executive Director of the EHA to write a memo to him requesting a new legal opinion on whether or not the notes should be in the name of the EHA or the City of Englewood. The Executive Director recently did that, but has not received a response. Commissioner Norden asked about two members of the Rehab Loan Committee also serving on the EHDC Board. The Executive Director felt that.issue was taken care of at the EHA Board Meeting held August 30, 1989, whereby a separate Rehab Loan Committee was designated to handle EHDC Rehab Loans using members who are not on the EHDC Board. The Executive Director recalled that at the January 25, 1989, EHA Board Meeting a commitment was made by the EHA Board to cover any deficit in Rehab costs on the WAND units in the event CDBG funds for this purpose were insufficient. The EHA Board further committed at the January 25, 1989, meeting to fund the total rehab costs in an amount not to exceed $250,000 on the WAND rental units in the event no CDBG funds had been awarded. Executive Director Malinowski stated that there apparently was precedent set for a loan to the .EHDC when the EHA previously loaned the EHDC money at a zero-percent, deferred payment loan which is what the EHA always gives low-income owners. The EHA would be in a second-mortgage position, thereby not affecting CHAFA. Legal Counsel reiterated that it would be best for the EHA not to be in a lending position with the EHDC, but if the EHA Board wanted to lend the funds to the EHDC, it would be better if the lending arrangement was conventional and one that could not be construed as an abnormal relationship having abnormal control over the properties. Legal Counsel said it would then be rather remote that someone would question control on this issue. Counsel stated that the uncertainty here is that the EHA does not know how HUD would look at this issue • -9- EHA BOC Special Meeting 11/15/89 Legal Counsel asked if it was the feeling of the E. Board to go with the deferred repayment of the loan to the EHDC. Commissioner Zieg stated he felt that this type of loan would have very few elements of control and also had a history with the EHA. Executive Director Malinowski stated that this would actually be decided by the Rehab Loan Committee which reviews loan conditions under the Housing Rehab Program. Chairman Burns asked what the EHA could do differently if the decision was made to not loan the EHDC the rehab funds. E~ecutive Director Malinowski stated the specifications on the rehab work could be rewritten to do less rehab work, or the EHDC could look for another source · of funding, e.g. the McCauley Foundation and ask for the additional amount. Commissioner Zieg stated he had no objection at this time to reversing the EHA's position on the loan funding issue. Legal Counsel asked how much the rehab loans were need~d. The Executive Director answered that about $60~000 above he CDBG amount was needed to bring the units up to at least minimum housing quality standards. Chairman Burns stated it had always been the EHA's position to do a very good job on rehab work and that the EHA Board would nc,t feel cc,mfortable with doing a semi-cc,mple.t~ job because funding fell short --that was not t standard the EHA adhered to. · The Executive Director suggested that the EHA could make the loan to the EHDC contingent upon the EHDC applying to at least two other sources for the funds first, thus making the EHA the lender of last resort. The Commissioners present felt this was a good idea and would always keep the relationship more at an arm's length. Executive Director Malinowski then re-read the two motions passed at the January 25, 1989, Regular Meeting of the EHA Board. Discussion ensued regarding whether these motions constituted an irrevocable commitment on the part of the EHA to the EHDC for these funds. Legal Counsel stated that he felt that these motions did not in any way constitute an irrevocable offer. He said these motions only stated what the EHA planned to do. Legal Counsel felt that the action proposed at this Special Meeting showed a good adjustment on behalf of the EHA to a healthy, arm's-length relationship desirable with the EHDC. • -10- EHA BOC Special Meeting 11/15/89 • 11QI!.QN IT WAS MOVED BY COMMISSIONER BRADLEY L. ZIEG TO AMEND THE TWO MOTIONS PASSED AT THE JANUARY 25, 1989, REGULAR MEETING OF THE ENGLEWOOD HOUSING AUTHORITY BOARD OF COMMISSIONERS WHICH STATE: " MOVED BY COMMISSIONER NORDEN TO SEEK COMMUNITY DEVELOPMENT BLOCK GRANT FUNDS FOR THE REHAB OF WAND RENTAL UNITS; AND IN THE EVENT CDBG IS INSUFFICIENT TO COVER ALL REHAB COSTS FOR THE WAND RENTAL UNITS~ THE EHA WILL COMMIT TO FUNDING THE BALANCE IN AN AMOUNT NOT TO EXCEED $250,000. SECONDED BY VICE CHAIRMAN BERLIN" AND 11 ••• MOVED BY VICE CHAIRMAN BERLIN THAT IF NO COMMUNITY DEVELOPMENT BLOCK GRANT FUNDS ARE AWARDED FOR REHAB OF WAND RENTAL UNITS, THE EHA WILL COMMIT TO FUNDING -OF THE TOTAL REHAB COSTS IN AN AMOUNT NOT TO EXCEED $250,000. SECONDED BY COMMISSIONER NORDEN." TO SUGGEST TO THE ENGLEWOOD HOUSING DEVELOPMENT CORPORATION THAT THEY SEEK FUNDING FROM TWO DIFFERENT SOURCES FIRST BEFORE THE EHA WILL CONSIDER LOANING THEM THE ADDITIONAL FUNDS NECESSARY TO COMPLETE THE REHAB WORK ON THE WAND RENTAL UNITS. COMMISSIONER NORLEEN NORDEN SECONDED THE MOTION. Ayes: Nays: Abstained: .• bsent: • Burns, Berlin, Koltay, Norden, Zieg None None None The Chairman declared the motion carried. Executive Director Malinowski stated a by-product of this motion would ~ea delay in the timing of doing the rehab work on the WAND rental units. He stated that the Colorado Division of Housing would also be a potential source of the funds. The Executive Director recapped for the Commissioners the issues being discussed at this Special Meeting and it was determined that the matters of removal of EHDC Board Members, the question of dissolution ~f EHDC assets, the question of control of EHDC by the EHA, the matter of the Management Agreement between EHA and EHDC, and the matter of negotiating with the EHDC on the reverter clause still needed attention. The Executive Director asked the Commissioners if there was a consensus that the EHA maintain the power to appoint members to the EHDC. There was indeed a consensus to maintain that power since Legal Counsel advised that this would not indicate a controlling interest in the EHDC by the EHA . -11- EHA BOC Special Meeting 11/15/89 The E >:ecutive Dii-ectoi-then asked the Commissic,ners 1. there was a consensus th~t the EHA ask the EHDC change their Bylaws to reflect that only the EHDC will remove its members; and that the EHA be absolved of the.t power. !!QI!.Q~ IT WAS MOVED BY COMMISSIONER BRADLEY L. ZIEG THAT THE ENGLEWOOD HOUSING AUTHORITY ASK THE EHDC TO AMEND THEIR BYLAWS TO REFLECT THAT THE ENGLEWOOD HOUSING AUTHORITY WILL NOT HAVE THE POWER TO REMOVE EHDC BOARD MEMBERS. COMMISSIONER NORLEEN NORDEN SECONDED THE MOTION. Ayes: Nays: Abstained: Absent: Burns, Berlin, Koltay, Norden, Zieg None None Nc,ne The Chairman declar~d the motion carried. The Executive Director stated that the next question needing resolution was the matter of dissolution of EHDC assets. He stated that the First Amendment to the Articles of Incorporation of the EHDC, which EHDC passed on April 29, 1987, changed the method of dissolution of the corpc,ration. Amended Article X - the EHDC Articles of Incc,rporation states: " . after the payment of all debts and obligations oft Corporation (the assets) shall be distributed exclusively to the Englewood Housing Authority''. The Executive Director stated he anticipated at some point HUD or someone else questioning this tie between the EHA and EHDC. He added that the original Articles of Incorporation stated that the dissolved assets had to go to another 501(c)(3) organization which would use the assets for the same purposes. He suggested that the dissolution of assets should address the purpose for which the assets should be used rather than the specific agency which would receive the assets. Counsel felt it was important that the EHA be on record pointing out to the EHDC that this provision was in their Articles of Incorporation and suggest that they change it, even if the EHDC does not go ahead and change this it. • -12- EHA BOC Special Meeting 11/15/89 • MQilQN IT WAS MOVED BY COMMISSIONER BRADLEY L. ZIEG TO ASK THE EHDC TO TAKE A LOOK AT AMENDED ARTICLE X OF THEIR ARTICLES OF INCORPORATION FOR THE PURPOSES OF AMENDING IT SO AS TO REMOVE ANY QUESTIONS OF CONTROL BY THE EHA. VICE CHAIRMAN R. J. BERLIN SECONDED THE MOTION. Ayes: Nays: Abstained: Absent: • Burns~ Berlin~ Koltay, Norden, Zieg None None None The Chairman declared the motion carried. The Executive Director asked for another motion regarding the Management Agreement between the EHA and EHDC. He stated he had received two comments from HUD regarding this agreement. One comment is that the term of the agreement is for two years, and by regulation it may be for only one year. The second comment was that by regulation the management fee must be a fixed fee not a percentage of gross receipts collected. He also stated that Legal Counsel had pointed out that any net proceeds should be returned to the EHDC whereas the current Management Agreement states this section (Section 4.3) is not applicable. ti Q I 1 Q ~ IT WAS MOVED BY COMMISSIONER BRADLEY L. ZIEG TO MODIFY THE MANAGEMENT AGREEMENT BETWEEN THE EHA AND THE EHDC TO MAKE THE CURRENT CONTRACT A ONE-YEAR TERM. IT WAS FURTHER MOVED TO SET THE REMUNERATION RATE AT $30.00 PER MONTH PER UNIT. IT WAS FURTHER MOVED TO ALTER THE NET PROCEEDS PROVISION OF THE CONTRACT SO THAT THE NET PROCEEDS OF THE RENTS COLLECTED BE DISTRIBUTED TO THE EHDC ON A MONTHLY BASIS. VICE CHAIRMAN R. J. BERLIN SECONDED THE MOTION. Ayes: Nays: Abstained: Absent: • Burns, Berlin, Koltay, Norden, Zieg None None Nc,ne The Chairman declared the motion carried. Discussion ensued regarding the Reverter Clause. Executive Director Malinowski stated he assumed Legal Counsel would draw up any legal documents necessary . -13- EHA BOC Special Meeting 11/15/89 Cc,mmissic•ner Zieg · asked for specific directic,n from t. Board regarding the negotiations. Chairman Bur~ stated the reverter clause should contain language that the housing is to be used for low and moderate income persons, and if the EHDC does not use the housing for this purpose the units revert to the EHA. IT WAS MOVED BY COMMISSIONER BRADLEY L. ZIEG THAT THE ENGLEWOOD HOUSING AUTHORITY ENTER INTO NEGOTIATIONS WITH THE EHDC FOR THE PURPOSE OF OBTAINING THE REVERTER CLAUSE IN THE DEED WHICH WOULD CAUSE THE PROPERTIES TO REVERT TO THE EHA IF EVER NOT USED FOR LOW AND MODERATE INCOME HOUSING PURPOSES. COUNCIL REPRESENTATIVE KOLTAY SECONDED THE MOTION. Ayes: Nays: Abstained: Absent: Burns, Berlin, Koltay, Norden, Zieg None None None The Chairman declared the motion carried. B. Review and adoption of FY 1990 consolidated Agen~ Budget. • The Executive Director gave a brief overview of what the Commissioners received in their budget packet: ~!.l:!~[.!.lJ.°t of E;,:cellence: The Executive Director explained that this is a self-standing document that was developed by the entire staff as a conceptual framework for the agency's entrance into the 1990's. Broad goals were established for the staff and agency with no set timetables. Although this document was not a part of the 1990 budget, it helped give the 1990 work plans and budget figures a frame of reference. Work Plans: These are narrative goals and objectives prepared by each division within the agency setting forth the work the staff will be performing in 1990. They are the "measuring stick" upon which staff members are evaluated. The Work Plans cite specific dates for accomplishment of each objective as well as a Measurement Standard that explains how it is known that the objective has been met. • -14- EHA BOC Special Meeting 11/15/89 • • The Mission Statement of the Englewood Housing Authority was discussed as to the fact that one did not exist. The Executive Director stated the EHA needed one which stated the main purpose for the existence of the EHA. He stated he would like to see the Board develop one. The Executive Director discussed the Work Plan regarding the Occupancy Division as to an identified goal to improve the level of satisfaction of the EHDC with the reporting the EHA does on EHDC properties as its Management Agent. He stated the EHA recognizes that they need to provide much better reporting to the EHDC. The goal of the EHA to improve internal controls was discussed. The development · of a written policies and procedures manual by the end of FY '90 was discussed. The Executive Directof stated another goal of his for 1990 was the collection of relevant data and information on the EHA, i.e., to develop a detailed data base of the Authority's programs and clients. Commissioner Director that the EHA was a Zieg agreed with the Executive the development of a data base on worthy gc,al. Better cash management of EHA funds was a goal mentioned and discussed by the Executive Director, in particular the investment of reserve funds. The Executive Director stated he would be implementing a calendar to monitor the goals and objectives outlined in the Work Plan. He encouraged the Commissioners to review these work plans. !!ldQ.q~! Assu'!!E_tions: These are the underlying c1-iteria used in developing the actual budget figures • • -15- EHA BOC Special Meeting 11/15/89 • !.D.Q.!.1:.~£.t <;;.Q:~t Allocation E!.~n= This is a dc1 cL1ment in the form of a resolution that sets forth methods for allocating indirect costs as defined in the resolution. This Plan is generally required of agencies administering more than one federal grant yet has never been put in writing in Englewood. The Executive Director gave a brief explanation of indirect cost allocation stating that whenever an expense is attributable to two or more EHA programs, there must be a method of allocating the appropriate cost for such expense to the program. This plan details how such costs as employee salaries, travel and training, office supplies, telephone expenses, legal costs, etc. for all programs are allocated. The Executive Director explained that since there had never been an indirect cost allocation plan written for the agency, this document was a pioneer. It should be equitable, reasonable, and affordable. He stated that HUD had no set way that costs should be allocated, but 0MB has a circular which addresses indirect cc,sts_ but do. not dictate how it should be done. ~ The Executive Director pointed out that the Resolution stipulated that the proportion cited therein shall be reviewed each time the agency's budget is revised, new programs are added, or units are added or deleted within an existing program. The Chairman suggested a few minor word changes which did not change the meaning of the resolution but deleted unnecessary words. Consolidated ~1.1g.9_g_!: A summary sheet of all programs of the EHA by line item for quick comparison . • -16- EHA BOC Special Meeting 11/15i89 • • • Commissioner Zieg questioned the consolidated budget concerning "total ,-evenue" and "cas.h flc,w". E:<ecutive Directc,1-Malinc,wski e }:plained that the "cash flc,w" figures below the line were other expenditures but not expenses, and the other cash in was not technically revenue or income, but fund transfers. He e~plained that the net operating income is revenue minus expenses. He further explained that on HAP payments from HUD on Section 8 Existing Certificates and Vc,uchers, the EHA acted c,nl y as a "pass-thrc,ugh" on these funds, that they were not actually revenue to the EHA. However, since the EHA is the owner of Simon Center, the HAP payment for that project was actually revenue. Attachment 2, the Salary Schedule for EHA employees was discussed. The Executive Director informed the Commissioners that two currently-vacant positions will not be filled in FY '90. The position of part-time housing specialist will not be filled for financial considerations, and the third Maintenance Worker position will be taken care of by contracting out the work this position would have performed. The amounts shown for EHA employees' salaries are the current salaries paid to each individual plus the anticipated step increases for applicable employees plus an anticipated cost of living increase up to three percent. Individual E.t_Q.qt..~'!!. ~l:!.Q.qgt~: These documents give an expanded amount of information over the consolidated summary sheet. The Executive Director explain~d that each line item shown for the individual program budgets was exactly the same as shown on the consolidated budget but with more information, including the FY '90 budget figure, FY'89 budget figures for comparison purposes, the September 30, 1989, actual received or spent figures, and projected December 31, 1989 figures. Narratives: There is a narrative section for each individual program budget that details how many of the line items were arrived at. The line item for telephone expense was discussed. The Executive Director explained that telephone expense has direct and indirect costs, i.e., there is a phone line in Simon Center which is e x clusively for Simon Center (direct expenses>; and as an agency, the EHA makes phone calls and leases equipment the expense of which is allocated over several programs per the indirect cost allocation plan. The Executive Di r ector stated that the budgets for FY '91 would contain an attachment detailing indir~ct costs allocation. -17- EHA BOC Special Meeting 11/15/89 NOTE: Commissioner Norden left the Special Meeting of t~- Englewood Housing Authority Board of Commissioners h~ November 15, 1989, at 9:00 p.m. Public Housing was discussed as to ways to bolster the dwindling reserve. The Executive Director stated he had determined that the reserves would be at about two percent at the end of FY '90, and he stated the EHA needs to seriously look at options to rebuild this reserve. The Executive Director explained that one of the reasons Public Housing was in a minus situation on operating reserves for FY '90 is because fifty-seven units thdt have not been repainted in seven years plus hallways and r~sident lounges need to be repainted. This work would put the proqram at a seriously low level of operating reserves. Options discussed were: 1. Explore development funds (e.g., reimbursement for the elastomeric paint applied to the north side of Orchard Place). 2. Explore "emergency CIAP (Comprehensive Improvement and Assistance Prc,gram)" funds. 3. E:-:plore be used the ACC>. CIAP (more of a modernization program only one time in the forty-year period 4. Explore brbad range of income. 5. Request operatjng subsidy. The Executive Director stated he was a litt l e reticent to use this because of the volume of paper work required when a PHA receives an operating subsidy. This would also mean that the EHA would have to agree to maintain the terms of its ACC for an additional ten years either beyond the last year the EHA would receive an operating subsidy or the fortieth year of the ACC (for 50 years) whichever comes first. 6. Request a waiver of the PILOT payment to the City of Englewood. 7. Simon Center share the expense of the PILOT payment to the City of Englewood. 8. Defer capital improvements, e.g., defer purchasing the windows for the fourth and fifth floor hallways at Orchard Place needed to make the swamp coolers work more efficiently. Defer repainting of Public Hcusing units. • 9. -18- EHA BOC Special Meeting 11/15/89 • • 10. Add two units to the seventh floor of Orchard Place with Simon Center funds. It was determined that a cost analysis should be done to find out how much the addition of the two units would cost versus how much income would be realized from them. 11. Insurance op i nic,n, p1-ojected It is nc,t 1990. subsidy (per Legal Counsel's legal these funds were reflected in the revenues for Public Housing in FY '89). known if HUD will fund such a subsidy in 12. Outright Simon Center donation. The Executive Director briefly pointed out that he had added in to FY '90 expenses a contract with Stephen Stranger as consulting accountant to act as a check-and-balance system via phone modem reviewi~g the EHA's financial work. Discussion ensued regarding showing expense on the EHA's office building. Director stated he would check with accountant on this matter • depreciatic,n The Executive the consulting Also presented and discussed briefly was an attachment detailing the EHA's insurance coverage. Resolution: A proposed resolution adopting the agency FY 1990 consolidated budget attached for review and subsequent adoption. The Executive Director briefly explained the EHA's reserve accounts; he presented an analysis of the reserves, where the EHA was at the end of FY '88 in each program, a projection of how much the reserves will increase or decrease in FY '89; and where the reserves are projected to be by the end 6f FY '90. tl Q I !. Q t! IT WAS MOVED BY COUNCIL REPRESENTATIVE ROGER KOLTAY TO ADOPT RESOLUTION NO. 9, SERIES OF 1989, ADOPTING AN AGENCY INDIRECT COST ALLOCATION PLAN. BRADLEY L. ZIEG SECONDED THE MOTION. Ayes: Nays: Abstained: Absent: • Burns, Berlin, Koltay, Zieg None None Norden The Chairman declared the motion carried. -19- EHA BOC Special Meeting 11/15/89 IT WAS MOVED BY ROGER APPROVING THE ENGLEWOOD FOR FISCAL YEAR ENDING SECONDED THE MOTION. . . ~ MQI!.Q~ • KOLTAY TO PASS RESOLUTION NO. 10, SERIES OF 1989, HOUSING AUTHORITY CONSOLIDATED OPERATING BUDGET DECEMBER 31, 1990. VICE CHAIRMAN R. J. BERLIN Ayes: Nays: Burns, Berlin, Koltay, Zieg Nc,ne Abstained: Absent: The Chairman declared the motion carried. Chairman Thomas J. Burns· stated that the Executive Director was to be congratulated on the tremendous, thorough job done on the Authority's budget for FY '90. The Executi~e Director stated that he had received a great deal of support and help from all EHA staff in compiling the budget for the upcoming fiscal year. IV. ADJOURNMENT 11QI!.Q~ - IT WAS MOVED BY COUNCIL REPRESENTATIVE ROGER KOLTAY TO ADJOURN THE SPEC!~ MEETING OF THE ENGLEWOOD HOUSING AUTHORITY BOARD OF COMMISSIONERS HELD NOVEMBER 15, 1989. -~(ly!_~--~ J.~ Chairman --~!I _d _ _/~o~ ----------- Mary~. ~yan, Rec6rding Secretary • -20-