||PUBLIC NOTICE OF A SPECIAL HACEP BOARD MEETING - Minutes
||5300 EAST PAISANO, EL PASO, TEXAS
PUBLIC NOTICE OF A SPECIAL BOARD MEETING
TAKE NOTICE THAT A SPECIAL MEETING
OF THE BOARD OF COMMISSIONERS OF THE
HOUSING AUTHORITY OF THE CITY OF EL PASO, TEXAS
WILL BE HELD AT
5300 EAST PAISANO, EL PASO, TEXAS
THURSDAY, FEBRUARY 24, 2011
COMMENCING AT 12:00 NOON
TO CONSIDER AND POSSIBLY ACT ON THE FOLLOWING:
1. CALL TO ORDER.
2. ESTABLISHMENT OF A QUORUM.
3. DISCUSSION AND POSSIBLE ACTION REGARDING STRATEGIC PLAN FOR THE HOUSING AUTHORITYAS IT RELATES TO CURRENT BUDGET ENVIRONMENT.
4. THE BOARD OF COMMISSIONERS MAY RETIRE INTO EXECUTIVE SESSION AT ANY TIME UPON THE MOTION OF ANY COMMISSIONER PURSUANT TO THE TEXAS GOVERNMENT CODE, SECTION 551.071-551.076 TO DISCUSS ANY OF THE FOLLOWING:
SECTION 551.071 CONSULTATION WITH ATTORNEY
SECTION 551.072 DELIBERATIONS ABOUT REAL PROPERTY
SECTION 551.073 DELIBERATIONS ABOUT GIFTS AND DONATIONS
SECTION 551.074 PERSONNEL MATTERS
SECTION 551.076 DELIBERATIONS ABOUT SECURITY DEVICES
DISCUSSION ON THE FOLLOWING:
(a) DISCUSSION AND UPDATE BY LEGAL COUNSEL ON PENDING LITIGATION MATTERS. (SECTION 551.071)
Housing Authority of the City of El Paso, Texas
February 24, 2011 Ė page two
THIS NOTICE HAS BEEN POSTED AT THE CENTRAL OFFICES OF THE HOUSING AUTHORITY, 5300 EAST PAISANO DRIVE, AND NOTICE HAS BEEN PROVIDED TO THE EL PASO COUNTY CLERK MORE THAN 72 HOURS IN ADVANCE OF THE ABOVE MEETING, AS REQUIRED BY CHAPTER 551 OF THE TEXAS GOVERNMENT CODE.
UPON REQUEST THE HOUSING AUTHORITY WILL PROVIDE AUXILIARY AIDS AND SERVICES SUCH AS INTERPRETERS FOR THE HEARING IMPAIRED, READERS, LARGE PRINT OR BRAILLE DOCUMENTS. THOSE REQUESTING AUXILIARY AIDS OR SERVICES MAY NOTIFY SERGIO VASQUEZ, EQUAL OPPORTUNITY COORDINATOR, AT (915) 849-3820, OR SVASQUEZ@HACEP.ORG AT LEAST 48 HOURS PRIOR TO THE MEETING.
SIMULTANEOUS ENGLISH/SPANISH TRANSLATION IS PROVIDED AT ALL REGULAR MEETINGS OF THE BOARD OF COMMISSIONERS OF THE HOUSING AUTHORITY
|| MINUTES OF A SPECIAL MEETING
OF THE BOARD OF COMMISSIONERS
OF THE HOUSING AUTHORITY
OF THE CITY OF EL PASO, TEXAS
THURSDAY, FEBRUARY 24, 2011
Item # 1. Call To Order. The meeting was called to order at 12:35 p.m.
Item # 2. Establishment of a Quorum.
PRESENT: Joe Fernandez, Presiding; Commissioners Lupita Licerio, and Lynn Coyle. The Chairperson declared a quorum with three Commissioners present. Commissioner Sue Pratt joined the meeting at 1:15 p.m. Commissioner Kevin Quinn was absent.
ALSO PRESENT: Gerald Cichon, Chief Executive Officer; Bob Blumenfeld, HACEP Attorney; Michael Spurlock, Corporate Attorney; Satish Bhaskar, Chief Financial Officer; Yolanda Dion, Director of Budgets; Juan Olvera, Director of Development and Capital Projects; Lorena Rivera Director of Section 8 Program; Roman Velasquez, Director of Public Housing; Gary Knudsen, Director of IT; Karen McCluskey, Director of Procurement Administration; Patrick Ortega, Director of Human Resources; Fred Baca, Director of Finance, and Aracely Saenz, Executive Secretary.
Item # 3. Discussion and Possible Action Regarding Strategic Plan for the Housing Authority as it Relates to Current Budget Environment. Mr. Cichon thanked the Commissioners for taking time off their busy schedule to attend this meeting. He said that about three weeks ago we heard that HUD was talking about decreasing operating subsidy by the same amount of money that the housing authorities had in reserves. The reserves are funds that housing authorities have in the bank. In response, we started looking for options so that the money would not be decreased from our operating subsidy. At this time, we donít know how much money they are talking about because the federal government has not told us at what point in time they are going to draw the delineation of reserves. If they were to use 2010 numbers, the Housing Authority has approximately $25 million in reserves; for 2011 it would be about $33 million; and about $14 million for 2009. Mr. Cichon said that, in his opinion, the federal government does not have a right to take the money away from our bank account.
Commissioner Coyle asked if the $25 million is all federal money.
Mr. Cichon said it is all federal money and only for public housing; it does not affect Section 8. It is restricted for public housing and even restricted for what you can use it for in public housing. It is money that you can build new units with but you cannot modernize old units. Since the federal government canít just take the money, their plan is to reduce operating funds by the same amount that is in your bank. The plan is to leave housing authorities with four or six months in reserves in case of an unforeseen expense. Mr. Cichon said that getting a definition as to what we can do with the money has been difficult. For example, we can fix the roof but we cannot replace the roof; we may be able to fix a kitchen cabinet but we cannot buy new cabinets; we can also build new units as long as we borrow money to do so. Mr. Cichon provided a copy of a letter from Sandra Henriquez, HUD Assistant Secretary. In her letter, Ms. Henriquez is saying that there is about $3.6 billion in unspent money in reserves across the United States, and their belief is that they are just going to use that to try to balance the budget. That is about the total amount that HUD gives annually to public housing authorities for operating subsidies. So, everybody is looking at ways to obligate those dollars. We have been challenged with putting together a plan that can address this. We donít know at what point in time they are going to say that this is the point that we are going to say we are decreasing the operating subsidy. We must realize that the first true news that we received from the federal government is the letter from Ms. Henriquez that was received yesterday. Officially, they have taken no action other than to warn us about spending down reserves. They have put us on a big quandary because we are going to have REAC coming up and we have all those things that we are spending money on to maintain our high performer status. We also have things we are not spending on because we were going to build new units so that we would not keep dumping good money into bad units. Mr. Cichon said that in conjunction with our consultants we have come up with a plan. Our goal is to identify projects that can be performed with reserves and with CFP funds. Mr. Cichon said that the federal government has allowed other housing authorities to obligate operating subsidies by borrowing against it and obligating it under a note. So, we were talking to PBS about the possibility of buying some of their land and doing new developments; we could land bank the money. So, we had conversations with banks and they would lend money one-for-one and obligate it. There is a note that you can do and then you put an option on a property and even if you chose not to buy it you donít lose the money because the money is officially obligated. We could run an option contract on 1,000 acres from PSB with a cash secure loan. Mr. Cichon said that the problem is that to buy land we need HUDís approval. We also have the parcels on the east and west side of town. Both of them are about 70 single family home lots. If we do duplexes, it would be about 300 homes. The lot on the east side is ready to be developed. Mr. Cichon said that according to TDHCA numbers, the cost for this area is $175 thousand per unit. If we say that we are going to build those 300 units, we could obligate all that money. If we can build cheaper than that, we could restructure the money at a later time. We could also leverage those dollars with a 4% into a bond and then build additional Non-ACC units like our tax-credits or Villa Alegre. We could do market rates or reduce rent for the tax-credit units and then have more affordable housing for El Paso. The first three units would be public housing and it would be pretty much like our down payment and then the rest would be like a conventional mortgage, or 4%, or bonds, or whatever we need to do to build the rest of the units. It would be a fixed finance deal where we are building new public housing and at the same time we are creating additional tax-credits. We would also be creating additional revenue to the Housing Authority. The catch is that again HUD has to approve it, but we do have the need for public housing and it is only 300 units. Those are initial thoughts of things that we can do to obligate our funds.
Chairperson Fernandez said that it looks to him like we only have three options, one is warehousing land, and we have to get their approval and that may or may not work. The other option is the development of units on the east side, and the third option is a cash secured loan.
Mr. Cichon said the cash secured loan is the land. The third option is work that we will be doing to some degree like asbestos abatement and site improvements.
Chairperson Fernandez said that the problem with that is that we would have no way to retrieve the money.
Mr. Cichon said that is correct, but what it does is that it decreases our current cost of operations. The problem is that we may be forced to put money into old units that are outdated at a cost of $50 Ė 60 thousand per unit rather than building brand new units. Financially it does not make any sense. Mr. Cichon said that there are other options that we are exploring. We are looking for an Energy Performance Contract (EPC). With an EPC you green up your units by replacing the doors, windows, air conditioners, heaters, toilets, refrigerators, and stoves making units much more efficient and the savings in the utilities pays for the loan. Big companies like SEMANS and Johnson Controls guarantee you that what they put in will pay for it and if it doesnít they will pay it out of their own pocket costing us zero dollars. The Housing Authority is up for a possible $30 million for greening our units. They say that they would do it at 5% interest rate, and any savings over and above that 5% comes back to the Housing Authority. Interestingly, if you do an EPC contract and instead of only doing what Johnson Controls does you put additional money into it and do modern insulation to create an envelope that truly is energy efficient all the savings over and above that 5% note to Johnson Controls would come back to the Housing Authority. The problem with this option is that the EPC contract would not get through by July 1.
Commissioner Coyle said that the bottom line is that other than improvements to the units all of the other options would require HUD approval.
Mr. Cichon said that the other option available is construction. We have more than enough asbestos abatement to use the $33 million that will be in reserves by the end of this day.
Chairperson Fernandez said that the problem with that is that it is not going to save us in maintenance.
Mr. Cichon said that it will. He added that all of our duct work for our swamp coolers is rotten especially directly under the unit itself. This is in two-story units and there is no way to get to it without going through the ceilings or the walls which are all covered. The asbestos itself is not in the dry wall, it is in the spackling and in the tape. It is in the acoustical popcorn on the ceilings. So, really to get rid of it you have to tear all the walls and ceilings in order to get to it. So, doing this would address a lot of the maintenance issues. Right now we are running water pipes on the outside of the walls to keep the air conditioners going because it costs too much to put the pipe into the wall. You have a lot of maintenance issues that come through all the time, like the cost that we are incurring due to the recent water damage. So with the abatement, the maintenance would change significantly. Mr. Cichon said that the way we can structure something like this would be to obligate the money to a subsidiary. This does not require HUD approval. The lawyers have been working on this very diligently to make sure that whatever we do we do correctly. What we would so is that we would obligate the money to them to do all this work without losing any of those dollars. That would truly be investment directly into the infrastructure and into the needs of the agency on what we currently have.
Mr. Cichon stated for the record that Commissioner Sue Pratt has joined the meeting. He provided a brief summary of the options presented to the Board to use the $25 million that the federal government is threatening to recapture. Mr. Cichon said that just for REAC alone, we have $5 million in erosion problems. We have the ADA obligation that we have with the Voluntary Compliance Agreement were we must do about $5 million in upgrades to units to make them disabled compliance. We have IT investments. We have all those things that can be obligated to this subsidiary or instrumentality to avoid recapture of funds.
Chairperson Fernandez said that none of those options really give us a sure way of protecting that money.
Mr. Cichon said the best option is the construction one by putting it into the subsidiary.
Commissioner Coyle pointed out that they have never met as Affordable Housing Enterprises.
Attorney Blumenfeld said that the entity was created in 1994 at a time that the Housing Authority was acquiring some Non-ACC properties. It has been an existing non-profit Texas company that supports this organization. It is in good standing and we would need to have a meeting to approve the other side of the agreement.
Chairperson Fernandez asked Mr. Cichon to address the proposed budget cuts.
Mr. Cichon said that when the budget comes down, the President hands down his budget of which Congress can agree, disagree, or change. Right now we have a Republican Congress that obviously wants to make more cuts than the President wants to make. He provided a copy of a letter received from CLPHA with the bill that was passed yesterday on the House side. If you look at the Presidentís budget, it decreases public housing by 17%. If you look at the Republicansí budget, it decreases public housing by 3% but then slashes the capital funds by 50%, and slices the administrative fee from Section 8 by 24%. What they are doing is that they are just kind of moving the money around from respective departments. They also talked about eliminating the VASH vouchers, the HOPE VI, the CDBG blocked grants, Housing Choice Neighborhoods, Brownfields Redevelopment, Energy Innovation Fund, FHA Mortgage Insurance, HOME fund, Housing Counseling Assistance, Office of Lead and Healthy Homes, Native American Housing Block Grants, Project Based Rental Assistance, Section 202 funds, Section 811 funds, Sustainable Communities Initiative, and Transformation Initiative. At this time, we donít know what the final outcome is going to be. He asked legal counsel to talk to the legality of using the subsidiary to obligate the funds.
Attorney Blumenfeld said that the discussion can be in executive session if the Board desires. He asked Mr. Spurlock to talk about a concept of a contract between the Housing Authority and Affordable Housing Enterprises.
Michael Spurlock, Corporate Attorney, said they have drafted a contract between the Housing Authority and Affordable Housing Enterprises to obligate the funds that the Housing Authority currently has. The purpose of Affordable Housing Enterprises would then be to carry out any of the proposals that have been made or that may be available to ensure that it is on hand for the Housing Authority. This would be a way to show HUD that we donít have these funds to off set against future operating expenses because we have committed them; we have obligated them to carry out other projects.
Mr. Cichon said that another thing that we have to be cognizant of is that officially, if HUD approves our annual and five-year plan the work listed under those plans are already approved.
There was further discussion on types of actions needing HUD approval and those that we could do without further approval based on the fact that our annual and five-year plan received their approval.
Attorney Spurlock said that the idea of HUD approval is incorporated into this contract. Those uses would have to be approved. For instance the financing, if we were to borrow money so that we could use operating funds for debt repayment HUD would have to approve that.
Juan Olvera, Director of Development and Capital Projects, said that every year we do an update to our PHA Plan and we can move projects back and forth. He said that ARRA follows the same principles, and that is why last year when we got the $12.7 million we used the projects listed in our plan to move into ARRA. In the five-year plan we cover all the different developments and we do it in a way that we meet the HUD requirements but it is done on a very global level. For example, we say that we are going to do site improvements, work on dwelling structures. What kind of work we are going to do is up to us. So, the asbestos work is an improvement on the dwelling structures. We have that in the plan. What we are going to do now is further elaborate and say that we are going to do improvement in dwelling structures by doing abatement. It is structured by major budget line items like dwelling structures, site improvements, A & E fees, equipment, and appliances. Those are the main categories that HUD looks into.
Commissioner Coyle said that she understand the issue with the five-year plan, her question was more about the contract for the transfer of funds between the Housing Authority and the subsidiary whether that needs approval. Not the specific way in which the funds are going to be obligated.
Attorney Blumenfeld said that the way it is structured is that it would not need HUD approval at this time but it might need it before the money is spend.
Attorney Spurlock said that it would not be a transfer of funds upon execution of the contract, all of the possible projects are included in the proposed contract and it would be decided at sometime later which ones would be done and then other agreements would be made to transfer the funds. With this agreement, we would not write a check to Affordable Housing Enterprises, we would only obligate the funds.
Commissioner Coyle asked what the authority that he is seeking today is.
Mr. Cichon said that he is requesting the approval of a contract between the Housing Authority and our subsidiary for $32 million to do all the necessary improvements at our sites. So we are obligating the money under a contract to our subsidiary to do capital improvements.
Attorney Blumenfeld added that we are going to hire a company to do every possible thing that Mr. Cichon has proposed today. And this is just an added layer of potential obligation of the funds. He said that the concept of a housing authority moving money to its affiliates and using them as an extension of the Housing Authority or to benefit the Housing Authority is a very common arrangement.
Mr. Cichon said that he would like for the agreement to be approved today and we can always modify it if we need to.
Attorney Blumenfeld described the contract as an agreement between the Housing Authority of the City of El Paso and Affordable Housing Enterprises (AHE), which is a Texas non-profit corporation, where AHE would provide services to the Housing Authority and those services would be basically everything that was described today for developing affordable housing in El Paso that would be dedicated to low-income individuals, promoting the development of low-income and affordable housing, acquiring or financing or building new affordable housing. There are some specifics in the agreement that talk about the possibility of developing 280 new dwelling units, which is one of the concepts that was discussed today, both at the Medano property on the west side and on the east side property, repairing and improving properties for the REAC inspections, doing abatement and modification to current public housing units, and the land bank concept. The Housing Authority in return would provide assistance as necessary and as requested by the subsidiary in terms of accounting services, office space, and procurement. The term of the contract is open ended but it is cancelable by either party upon 30-days notice. It is designed as an arms length transaction; it has typical provisions that this is the entire agreement; it is governed by Texas Law, and the notices would go to 5300 Paisano for both parties. There is a provision also saying that the parties will keep all of their records and are subject to audit by each other.
Commissioner Coyle asked about the dollar amount.
Mr. Spurlock said that they way he had written it said that funding would not exceed $32 million for any of these projects. If we have more than $32 million, we amend the contract.
Commissioner Pratt made a motion to approve entering into an MOU with Affordable Housing Enterprises to provide the services previously described. It was seconded by Commissioner Coyle. Motion carried unanimously.
Item # 4. The Board of Commissioners May Retire Into Executive Session Upon the Motion of Any Commissioner Pursuant to the Texas Government Code, Section 551.071-551.076 to Discuss Any of the Following:
Section 551.071 Consultation With Attorney
Section 551.072 Deliberations About Real Property
Section 551.073 Deliberations About Gifts and Donations
Section 551.074 Personnel Matter
Section 551.076 Deliberations About Security Devices
Discussion on the Following:
(a) Discussion and Update by Legal Counsel on Pending Litigation Matters. (Section 551.071)
Item # 5. Adjournment.
There being no further business to be discussed before the Board, Commissioner Coyle made a motion to adjourn. It was seconded by Commissioner Pratt. Motion carried unanimously.
The meeting was adjourned at 2:06 p.m.
Gerald Cichon Joe Fernandez
Secretary Chairperson of the Board