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HomeMy WebLinkAboutHousing Catalyst - Minutes - 06/07/1977go • CITY OF FORT COLLINS M E M O R A N D U M DATE: July 7, 1977 TO: Fort Collins Housing Authority FROM: Mary Ann Kennaugh, Secretary RE: Minutes of the June 7, 1977 Special Meeting I. The meeting was called to order at 4:00 p.m. by consensus. II. Roll Call Members Present: Staff: Charlie Muenzberg John McGraw, Exec. Director Mary Klopfenstein Wayne Taylor, Asst. for Housing Management Al Kruchten Mary Ann Kennaugh, Secretary Guests Mark Corbe, Attorney III. First item of business discussed was First Pennco Securities Inc. proposal. (Letter and associated correspondence attached.) Following were points of discussion: - Commission Member Klopfenstein expressed negative feelings toward the proposal in terms of: 1. Association of the Housing Authority with Santana, 2. Setting a precedent for local developers, and 3. Whether or not the proposal is something in which the Housing Authority should be involved. - Muenzberg; The proposal would not help Santana at al.l. - McGraw: We are dealing with the status of the Housing Authority right now: (Referencing the following items) 1) Original calculations for utility costs were based on static figures and there has been no increase in return from tenants to correspond with rising utility costs. (The Housing Authority will be losing approximately $600/month in this respect.) 2) $6,500 for insurance Fort Collins Housing AlPhority • Minutes of the June 7, 1977 Special Meeting Page Two under 41-1 was paid with Section 8 monies (to cover a three-year premium) and must be repaid. (HUD feels that the Housing Authority should liquidate repayment to Section,8 and should apply for operation subsidies to cover the costs.) Housing Authority earnings from the "pass through" would cover the above -stated liabilities and would assure sufficient management, maintenance, and social services, all of which are currently in tenuous funding status under Section 8 preliminary funding or CETA funding, HUD performance funding is subject to untimely delays and it allows minimum funding, which may disallow social work. - Kruchten: HUD puts you in the position of having to apply for operational subsidies. With only 50 units of public housing, no matter how you do it, you are not going to remain independent. I am not concerned with the method and machinations involved. - McGraw: We must either locate additional revenue to maintain our current operations, or cut back and face the resulting impacts on meeting our goal. - Muenzberg: (Addressing the question whether or noithis proposal is something in which the Housing Authority should be involved) 6[ At first, my reaction to the Housing Authority's involvement was negative. However, it would mean a large sum of money flowing into the Housing Authority with future long- term benefits (e,g., property acquisition). - Kruchten: As soon as HUD knows that we have the money, then what happens? (McGraw: As long as the funds are spent by the Housing Authority on operations, property acquisition, or other activities within the scope of statutorily designated functions of a housing authority, I don't believe HUD has any concern, However, this is a question which requires further clarification from HUD, Klopfenstein; I don't like the idea of a public body, i.e., the Housing Authority, lending its name so that someone can get a tax break, (Muenzberg: The proposal would be of some benefit to the investor; the main benefit, however, would be to the Housing Authority, with approximately $37,000 income. Is the "Santana" name a problem?) Yes, I think so. (McGraw: The "pass through" makes the investment attractive to the investor,and the investment or purchase of Santana by the investor frees GNMA funds for other housing development, including Section $, Promoting and developing additional low- income housing is the purpose of housing authorities, The "tax write-off" is the basic motivator for private investment in such housing; without the "tax write-off", private investment is not attractive. Without private investment, most of HUD's housing programs won't work,) That is pretty far removed from what the general public sees. Muenzberg: I would like to remove the bad impression of Santana, What we need to decide is if the money involved is worth the risk. I am willing to go along with the proposal as long as there is no financial liability. McGraw: There are two issues involved in Santana: Fort Collins Housing A ority Minutes of the June 7, 77 Special Meeting Page Three 1. The public's reaction, and 2. The Housing Authority's reaction, - Klopfenstein: If we had some control over Santana (i.e., management), I would feel better. - Muenzberg: I have no ill feeling toward Santana; it appears to be good housing in Fort Collins. I would recommend that we instruct First Pennco Securities to bid at option only for the loan (as outlined in his memo), and to get to the next step (the 90-day option period), all based on legal counsel's opinion on the tax-exempt status of Housing Authority issued bonds. - Kruchten: Can the Housing Authority do this in the normal course of business? Can we sell bonds for re -investment? These type of questions are what we need to have answered by legal counsel. - Muenzbergt We don't want Pennco to go ahead and bid, be successful, come back to the Housing Adthority, and then have the Housing Authority say "no", it's against our philosophy "i.e,, the question of philosophy must be resolved now. The other questions can be answered during the 90 days." Commission Member Muenzberg moved approval to pursue the option as presented (fully qualified, i.e., based on legal counsel's bond opinion), - Kruchten: I don't know enough about the issue to second the motion, Commission Member Klopfenstein indicated she would not second the motion either, and motion died for lack of a second. Commission Member Muenzberg indicated he would notify First Pennco Securities Inc. of the Housing Authority's action. John McGraw indicated he would proceed with other options mentioned earlier (i.e,, operating subsidies) to cover expenses. IV. Adoption of Resolution Approving Modernization Fund Amendment to Colo. 41-1. ACC. (The Housing Authority has previously indicated approval of application for modernization funds, and is now requested to approve the necessary ACC amend- ment.) Commission Member Klopfenstein moved adoption of the resolution making the necessary amendments to the ACC, Commission Member Kruchten seconded, and motion passed with the following vote (3-0): Ayes: Commissionmembers Klop- fenstein, Kruchten, and Muenzberg. Nays: None, V. Contract for Accounting Services for Section 8 Existing Rent John McGraw indicated that the proposed contract is essentially a duplication of the 41,1 contract. A recent conference with HUD representatives, Ron Wood (City Finance Director), and John McGraw indicates: 1) HUD has full confidence in the Housing Authority's accounting firm (the Housing Authority is in fact solvent, and has no problems in terms of its financial status, and 2) reference Fort Collins Housin uthority Minutes of the June 1977 Special Meeting Page Four to the lack of access to the accountant is typical and much of the problem is related to HUD's specific account procedures and the limited number of account, ing firms familiar with them, - Kruchten: Is the account serviced monthly or quarterly? (McGraw: Quarterly.) Do they come here? (McGraw: No.) For $36 (the accountant's monthly fee), it is highly unlikely that an accountant even looks at the reports; they are most likely prepared by clerks. - McGraw: HUD offices in Washington D.C, check the accounting, and they indicate it is OK, - Kruchten: If accounting doesn't make sense, it's not good accounting. Commission Member Kruchten requested that John McGraw get in touch with Ron Wood, and see if he wants to do the accounting for the Housing Authority; if not, the Housing Authority will go ahead with the contract with Lindell, Sylvester, and Lindell. Kruchten further urged that the Housing Authority get an audit underway.. VI. Meeting adjourned at 5:30 p.m.