||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
WEDNESDAY MAY 4, 2011
COMMENCING AT 5:30 P.M.
TO CONSIDER AND POSSIBLY ACT ON THE FOLLOWING:
1. CALL TO ORDER.
2. ESTABLISHMENT OF A QUORUM.
3. DISCUSSION AND ACTION REGARDING DEVELOPMENT PLAN AND STRATEGIC GOALS FOR THE HOUSING AUTHORITY OF THE CITY OF EL PASO, TEXAS.
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
May 4, 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
WEDNESDAY, MAY 4, 2011
Item # 1. Call To Order. The meeting was called to order at 5:35 p.m.
Item # 2. Establishment of a Quorum.
PRESENT: Joe Fernandez, Presiding; Commissioners Lynn Coyle, Sue Pratt, and Lupita Licerio. The Chairperson declared a quorum with four Commissioners present. Commissioner Kevin Quinn joined the meeting at 5:55 p.m.
ALSO PRESENT: Gerald Cichon, Chief Executive Officer; Bob Blumenfeld, HACEP Attorney; Michael Spurlock, Corporate Attorney; Satish Bhaskar, Chief Financial Officer; Maria del Rayo Rodriguez and Aracely Saenz, Executive Secretaries.
Item # 3. Discussion and Action Regarding Development Plan and Strategic Goals for the Housing Authority of the City of El Paso, Texas. Mr. Cichon said that the reason for this meeting is to continue discussing our options as it relates to the recapture of funds. There have been some developments and some information received from the federal government in regards to the possibility of recapture. With the budget coming down, we have got to see the dollars that the feds are now putting in place and what they think they are going to use. The problem is that we have no surety as to what is going to really happen. The Board is in possession of the letter that we received from Deputy Secretary Henriquez. Of the approximately $4 billion dollars that is in reserves across the United States for public housing, the budget only goes into utilizing $1 billion of it. So, the question is if there is going to be a complete recapture of all the money, or are they going to recapture part of it going back to the 2009 numbers. There is debate as to how they want to do it. Mr. Cichon said that his thinking is that they will take everything and put it in their own bank account to use in subsequent years, or take the money to the different parts of the budget that the President wants. Mr. Bhaskar thinks that they will recapture a percentage of it, about 25%, and take the rest in subsequent years if the money is still there. There was additional guidance from HUD talking about an OFF key purchase. In that document, they talk about the approval process in 2012 budget. If that is the case, it means that if they utilize a recapture it may only be for some of this year and not 2012. But we donít have any true information. We are getting bits and pieces of information from different groups. And we are trying to put it together to get an understanding of what is going to happen. Mr. Cichon said that he heard, and this is hearsay that we canít rely on, where Sandra Henriquez was at a meeting in Kentucky and her comment was ďdonít worry about the reserves,Ē which truly contradicts her letter to us. Our position is that of conventional wisdom, and it tells us that it is still going to occur. Mr. Cichon asked Mr. Bhaskar to address the amount of money that we had in 2009, 2010, and 2011, as well as our draw downs. This will help the Board understand what we are dealing with here at the Housing Authority.
Satish Bhaskar, Chief Financial Officer, said that we turned into asset based management about three years ago. That is when we started de-rating revenue. After our audit, we do an annual submission to HUD knows as FDS; that is where they get our numbers. Our last submission was done on June 30, 2010. Our number as of June 30 was about $24 million for the six AMPs combined. Nationally, this number is $3 billion but it is held by very few housing authorities. This is the money they are inclining to use to fill the shortfall if the federal budget goes down. In another words, instead of giving us next yearís subsidy they will say you have some money you can keep it. Also they are giving us a cover to keep up to four months worth of cash for work in progress. For us it translates into $8 million for all the AMPs combined. So we know that we have $8 million that they will not touch leaving us with $16 million that we donít know what they are going to do. Every year HUD gives a percentage of the subsidy allocation. Last year we were gainers and ended up getting more money. For this fiscal yearís budget, we were initially projecting a surplus of $10 million. That amount was substantially reduced by the budget revision done two months ago to do the work related to REAC. In addition, there are certain restrictions for the use of this money. It has to be for regular routine maintenance. It cannot be capital improvements or development unless you borrow money to do it and, of course, you would need HUDís approval. So, there is a risk in asking HUDís approval because they may have other plans for the money. The truth is that nobody knows how much is at risk until HUD makes an official announcement.
Mr. Cichon said that there is still a lot of discussion about the cut-off date. Nobody really knows if it is 2010 or 2011. If you look at the 2009 number, it was $16 million minus the $8 million for our four-month, it would leave us with $8 million at risk. In talking to our experts, they think that they are going to go with June 30, 2011, which is about 60 days from today. Those numbers are closer to the $24 million because we spent a lot of money doing the REAC wok. So you are talking approximately $24 million with the same $8 million for the four-month leaving $16 million at risk. Mr. Cichon said that we should also consider the risk mentioned by Deputy Secretary Henriquez in her letter that if we spend the money we would not have anything to work with. That is their threat. He said that we can look at it this other way. Our annual subsidy for public housing is approximately $22 million. If they use 2010 numbers and reduce the complete subsidy because they see that we have $24 million in the bank, we need to realize that even then with the reduction of the $22 million, we were a net gainer. The reason is that when HUD shifted to asset management we were actually banking about $8 million a year. Now, we are banking $4 million a year. So we really need $18 million to run our day-to-day operations for the next year. They are going to allow us to keep $8 million in reserves, which leaves approximately $10 million. If we spend everything and the federal government decreases our subsidy by the $22 million, our shortfall for running our operations for public housing is $10 million. That is our outside risk. The money that we think of spending is something that would be in excess of the $10 million.
Commissioner Coyle asked for clarification. She said the $22 million is our annual subsidy; the $4 million is what we generate outside the subsidy.
Mr. Cichon said that the $4 million is money that we are not spending and goes into reserves. Right now, we are only using $18 million a year to run public housing.
Commissioner Coyle asked if the $8 million equals the four months of reserves, the $10 million isÖ.
Mr. Cichon said that the $10 million is what we would truly be short of to run public housing for the next year. Right now we have $24 million in the bank, if the federal government knocks out the $22 million subsidy; it would leave us with a shortage of $10 million.
Commissioner Coyle said that one solution would be that if we spend the $24 million we spend it on something that we could later liquidate if we needed the money.
Mr. Cichon said we could do land banking. But if we are going to make some capital investments, like buying land, the federal government is going to have to approve those purchases. HUD just changed all the regulations and now we have to go all the way to DC for those approvals. If we decide to invest in our properties, like paint, roofs, sidewalks, and these types of things, we donít need their approval because it is in our Five-Year Plan.
Chairperson Fernandez said that the exception is that we cannot recapture.
Mr. Cichon said that we cannot recapture but, at that point, we are doing an investment into our own properties raising their value. And it also helps us with the REAC scores. It is not as if we were getting nothing out of it.
Mr. Bhaskar said that he wanted to point out two things: 1) the reason that they go to DC for the approvals is because the language says that if you are getting permission for OFFP the approval has to come from the Secretaryís office, and 2) the $8 million that we are talking about is supposed to be a revolving line of credit. If we use it, we could have a problem in the future years because we have exhausted our reserves. That money is really a working cash flow.
Commissioner Coyle asked what our bottom line is.
Mr. Cichon said that he wished there was an easy answer but not knowing what the feds will be doing it is hard to say. He added that he has been having discussions with Fort Bliss and with other entities regarding land purchases. He will go into details in executive session. But he needs to know if the Board wants him to keep pushing for that in light of the timeframe that we are facing.
Chairperson Fernandez asked what the timeframe that we are talking about is.
Mr. Cichon responded 45 to 60 days. He added that he spent part of the afternoon on the phase with the federal government regarding this. There are some legal issues that we may be able to address to alleviate that timeframe. He added that he will go into more details in executive session. But, he really believes that July 1 is going to be that date.
Chairperson Fernandez asked what happened to the thought about a CD secure type credit facility using our own cash.
Mr. Cichon said that he discussed the idea with Rod and Rod does not think that it would not be sufficient to stop that type of recapture.
Chairperson Fernandez added that it would be too easy to recapture.
Mr. Cichon said that the expenditure is not enough to get us there. He added that he is not saying that it may not be the only avenue that we have available at the end 45-days, but right it is probably not our best vehicle.
Attorney Blumenfeld said that there may be legal restrictions on the way the Housing Authority can structure that kind of loan.
Commissioner Coyle asked if what he is trying to figure out or asking the Board is to consider whether we should spend a good chuck of this money. She added that we are already spending a lot of money on getting the properties on shape for REAC.
Mr. Cichon said that what he is saying is that he does not want to do anything without the Board being completely informed of the risks we are facing.
Chairperson Fernandez said that those expenses are maintenance related; the question is what to do with the rest of the money.
Mr. Bhaskar said that the feds already put us on notice. They send a letter telling us not to spend the money because they do not know how much subsidy we are going to get for the next fiscal year.
Commissioner Coyle said that if we do nothing and they recapture the funds then we are going to be left with $8 million. If we spend as much money as we can on things that are in the Five-Year Plan and they donít recapture it would not be lost because we invested in our units. But, if we spend the money and they recapture using 2010 numbers they would only be able to recapture the money that is left.
Chairperson Fernandez said that the way it works is that they will see what our cash position is at whatever time and slash that.
Mr. Cichon said that there are four possible outcomes: 1) we donít spend the money and they donít recapture, which is a very small possibility; 2) we donít spend the money and they do recapture, which means we are out $16 million; 3) we spend the money and they use 2011 numbers of which there is nothing so we spent the money and it is saved money; or 4) we spend the money and they use 2010 numbers meaning that we are out the $22 million, not get subsidy for next fiscal year, and we have a $10 million shortfall in public housing.
Chairperson Fernandez said that the only option that we really have is to spend it and to spend it on something that we can warehouse and retrieve later. In his opinion, we should go with the land acquisition.
Commissioner Coyle said that the problem is that we need HUDís approval and we are not going to get such approval in time.
Mr. Cichon said that the other option is to start doing capital improvements. We could buy 6000 refrigerated air units and install them over the next three years. It would decrease the amount of work in doing changeovers from heating to cooling. We are trying to come up with the logical sustainable investment into our stock. And again it has to be done by July 1.
Mr. Bhaskar clarified that the expense has to hit the books by July 1.
Mr. Cichon said this is different than issuing a contract and obligating funds because with the contract the money is not out of our accounts. It is still there for recapture.
Commissioner Coyle asked if there is anything that we can do in this timeframe.
Mr. Bhaskar said there are two types of expenses, regular maintenance and development. Anything other than regular maintenance needs HUDís approval. But the risk is always there because they can say that we used the money and that we are not entitled to get subsidy next year.
Commissioner Coyle said that would only make sense if they use the 2010 cutoff because if they use 2011 the money is not there for recapture. She asked if what he was saying is that there may be a risk even if they use 2011 arguing that our spending in the last 45-days was reckless.
Mr. Bhaskar added that they can say that we were told not to spend it
Commissioner Coyle said that we are not going to get approval for a land deal in 45-days.
Mr. Cichon said that is not necessarily so. He added that he has been working closely with the Department of the Army. He will go into details in executive session.
Chairperson Fernandez said that the question with that is how quickly it could be re-absorbed if we need to cash out of it.
Mr. Cichon said that he will go into details about that too in executive session.
Commissioner Coyle said that then she does not want to spend time talking about something that is not going to materialize. She does not know how we are going to actually spent $24 million or $16 million.
Mr. Cichon said that it could be done with a land deal. Also, the nice thing about having the co-ops and all these other types of purchasing agreements that we have with the City and other governmental entities is that you can bring contracts into a lot of things. For example painting buildings, it would expand the lifetime of our buildings and it also helps with REAC. We can also shift over dollars. Those vehicles that we have were purchased by the Housing Authority Central Office and they were going to be leased to public housing. We can shift those dollars saving about $500,000. There several things that we could do with the CFP money. Our 1410 and 1406 funds come to about $3.5 million. It appears as if those funds are not going to be affected by the recapture. He added that it does not look like they are going to go after the unrestricted asses either. So, if we shift CFP expenditures onto the OPP it then reduces this $16 million and allows us more time to spent the CFP dollars in a different way.
Mr. Bhaskar said that we get $10 million for CFP per year. Ten percent of that goes into the operating budget, which is the 1406 money. Another ten percent goes into unrestricted funds. Protective services are also charged to CFP; that could be an operating expense. So instead of putting it in the CFP budget we put in the operating budget it draws all the money in operating and releases the money in CFP allowing us to use it within the next two years.
Commissioner Coyle said that in her opinion what we need is a multi-pro approach.
Mr. Cichon said that is what he has been trying to do. Initially, we were trying to do the transfer of money into HAC, unfortunately that was not sufficient. We talked about asbestos abatement. We talked about an EPC loan but we canít do it because we are not MTW. The $7.3 million that we are spending in the REAC and everything else that is going on right now will reduce the 2011 obligation not the 2010 numbers. So we are doing a multi-pro approach.
Commissioner Coyle said that she knows what the other ideas were and she knows that there is an obvious problem with moving money. But just on this issue, it sounds like there are three avenues for doing something with the money: 1) the land deal, 2) spent as much as we can on maintenance, which if it is in our Five-Year Plan it requires no delay, and 3) the accounting re-directing of funds.
Mr. Cichon said we are doing both. What we would do first is the accounting deal because it decreases the money that you need to spend in capital improvements.
Commissioner Pratt asked if they could postpone some of the discussion and move into executive session.
Michael Spurlock, Corporate Attorney, said that they could discuss specific land sale in executive session because that could affect the price of the land but the discussion going on right now does not have an exception to discuss in executive session.
Attorney Blumenfeld said that the Board is entitled to legal advice.
Commissioner Coyle said that she does not have any problem with that but she feels like the maintenance issue is going to just eliminate the maintenance issue.
Mr. Cichon responded that it will not. He said suggested to go into executive session and come back here to continue with this discussion. He believes that the information that he will share in executive session will help them to have a better overview and will help them to further discuss this.
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)
Commissioner Pratt made a motion to go into executive session. It was seconded by Commissioner Coyle. Motion carried unanimously. The Board went into executive session at 6:08 p.m.
Commissioner Coyle made a motion to come out of executive session. It was seconded by Commissioner Pratt. Motion carried unanimously. The Board reconvened at 7:12 p.m.
Item # 3. Discussion and Action Regarding Development Plan and Strategic Goals for the Housing Authority of the City of El Paso, Texas. Commissioner Coyle said they were talking about spending cash on things that are included in the Five-Year Plan to meet our obligation.
Mr. Cichon said the easiest thing we can do is to look at CFP dollars and transfer to OFP because CFP will give us the latitude to do other things that we cannot do with OFP monies. We will start with that and that will take care of approximately $3.5 million. The rest goes into the land purchase. We are also going to look at possible ideas contained here but due to the very short period of time before the end of our fiscal year, which we believe is the deadline for the recapture for 2011, most of the capital will be retained for the attempted land purchase. That will allow us to address the needs of the military and other needs that we find within El Paso, which the Board is saying is a better direction not only for the Housing Authority but for the El Paso community as a whole.
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 Licerio. Motion carried unanimously.
The meeting was adjourned at 7:13 p.m.
Gerald Cichon Joe Fernandez
Secretary Chairperson of the Board