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2009-05-12PLEASE TURN OFF CELL PHONES & PAGERS IN COUNCIL CHAMBERS. AGENDA ~,i~ c~Q~-i ~! 1VI~OLTND HGDIT~ING &REDEVELOPMENT-AUTHORITY .RE~GU~,AR MEETING ~I TUESDAY, MAY 12, 2009, 6:30 P.M. J'-~~ITND CITY COUNCIL CHAMBERS Page 1. Open meeting 2. Action approving agenda, with any amendments 3. Action approving minutes for April 28, 2009 regular meeting • 4. Action approving claims 5. Review/discussion -Indian Knoll Manor public housing facility management/operations 1 2-5 6-21 6. Adjourn • MOUND HOUSING AND REDEVELOPMENT AUTHORITY APRIL 28, 2009 The Housing and Redevelopment Authority in and for the City of Mound, Minnesota met in regular session on Tuesday, April 28, 2009 at 7:20 p.m. in the council chambers of city hall Member present: Chair Mark Hanus; Commissioners David Osmek, Ray Salazar, Heidi Gesch, and Greg Skinner Others present: Executive Director Kandis Hanson, City Clerk Bonnie Ritter, Community Development Director'Sarah Smith, Finance Director Catherine Pausche, Ken Perbix, City Engineer Dan Faulkner, Public Works Director Carlton Moore 1. Open meeting Acting Chair Osmek called the meeting to order at 7:22 p.m. 2. Approve agenda MOTION by Osmek, seconded by Gesch to approve the agenda. All voted in favor. Motion carried. 3. Approve minutes MOTION by Gesch, seconded by Salazar to approve the minutes of the April 14, 2009 meeting. All voted in favor. Motion carried. • 4. Approve claims MOTION by Osmek, seconded by Salazar to approve the claims in the amount of $5,894.29. All voted in favor. Motion carried. Hanus, Skinner and Hanson arrived at this point in the meeting. Hanus presided over the rest of the meeting. 5. Reviewldiscussion on Indian Knoll Manor management/operations Smith reviewed some of the information gathered to date and stated that this will be brought forward in detail at the May 12th meeting at 6:45 p.m., and suggested a workshop setting for this meeting. 6. Ad'ourn MOTION by Osmek, seconded by Gesch to adjourn at 7:26 p.m. All voted in favor. Motion carried. Chair Mark Hanus Attest: Bonnie Ritter, City Clerk -1- MAY 12, 2009 H.R.A. CLAIMS REPORT_ 051209SUE $6,358.37 MAY ~ TOTAL 6 358.37 -2- ', • CITY OF MOUND Batch Name 051209HRA Payments CI'h/ Of MOUnCI 05/06/09 3:03 PM Page 1 Payments Current Period: May 2009 User Dollar Amt $6,358.37 Computer Dollar Amt $6,358.37 $0.00 In Balance Refer 51209 BORDER STATES ELECTRIC SUP _ Cash Payment E 680-49800-210 Operating Supplies LIGHT BULBS $39.93 Invoice 99273742 5/12/2009 Transaction Date 5/5/2009 Wells Fargo HRA 10120 Total $39.93 Refer 51209 CENTERPOINT ENERGY (Ml a.R.. {~ _ ~ n., ~. -.- Cash Payment E 680-49800-381 Electric Utilities 03-17-09 THRU 04-15-09 #5746120-4 $1,311.00 Invoice 051209 5/12/2009 Cash Payment E 680-49800-381 Electric Utilities 03-17-09 THRU 04-15-09 #5732031-9 $173.00 Invoice 051209 5/12/2009 Transaction Date 4/28/2009 Wells Fargo HRA 10120 Total $1,484.00 Refer 51209 COVERALL CLEANING CONCEPTS _ ~ ~ ~~~~ ~~ ~ ~~' - ~,n_ ~ _ ~ ~ .. . ~ ~_~x , . ,~a Cash Payment E 680-49800-460 Janitorial Services 04-22.09 #108, #216, #304, #407, MOVE OUT $404.70 Invoice 7070141872 5/12/2009 Cash Payment E 680-49800-460 Janitorial Services 05-09 CLEANING SERVICE $594.27 Invoice 7070142296 5/12/2009 Transaction Date 5/5/2009 Wells Fargo HRA 10120 Total $998.97 • Refer 51209 FULLERTON BUILDING CENTER _ Cash Payment E 680-49800-220 Repair/Maint Supply STONE OPERATOR $167.67 Invoice 2125819 5/12/2009 Transaction Date 5/5/2009 Wells Fargo HRA 10120 Total $167.67 Refer 51209 IKON FINANCIAL SERVICES _ ., _ _ :.~.. ~ ~Trvv Cash Payment E 680-49800-202 Duplicating and copying 03-23-09 THRU 04-22-09 MAINTENANCE $153.01 Invoice 79315843 5/12/2009 Transaction Date 5/5/2009 Wells Fargo HRA 10120 Total $153.01 Refer 51209 JOHNSTONE SUPPLY _ Cash Payment E 680-49800-220 Repair/Maint Supply MISC SUPPLIES $43.47 Invoice 01-016985-001 5/12/2009 Cash Payment E 680-49800-220 Repair/Maint Supply THERMOSTAT, KIT, ASSEMBLY $395.67 Invoice 017419 5/12/2009 Transaction Date 5/5/2009 Wells Fargo HRA 10120 Total $439.14 Refer 51209 LAWSON PRODUCTS, INC _ Cash Payment E 680-49800-220 Repair/Maint Supply NONCONTACT VOLTAGE DE $60.11 Invoice 7995425 5/12/2009 Transaction Date 5/5/2009 ~ ,, ~1 , r ,. Wells Fargo HRA 10120 ., ., , Total $60.11 ~~ ,, ,. a.aT. . > .....~, Refer 51209 MANKATO, CITY OF , ~, W,,..~.~M . .~ - _., ,_ Cash Payment E 680-49800-434 Conference & Training 06-17-09 CRIME FREE MULTI-HOUSING $50.00 TRAINING, WOCKEN Invoice 051209 5/12/2009 Cash Payment E 680-49800-434 Conference & Training 06-17-09 CRIME FREE MULTI-HOUSING $25.00 • TRAINING, ROBERTS Invoice 051209 5/12/2009 Transaction Date 5/6/2009 ~~~, , .~~..~„ ..,~ P,~ .,~ Wells Fargo HRA 10120 ,,. ~ , , . ~. _ . ~ ~ Total $75.00 , Refer 51209 MINNEAPOLIS PUBLIC HOUSING A _ , ~_ 7 , . ~ .. ..~ ~- -3- I, .. CITY OF MOUND City of Mound Payments Current Period: May 2009 05/06/09 3:03 PM Page 2 Cash Payment E 680-49800-430 Miscellaneous 03-01-09 THUR 08-31-09 FISCAL AGENT FEE $25.53 Invoice 051209 5/12/2009 Transaction Date 4/28/2009 Wells Fargo HRA 10120 Total $25.53 Refer 51209 MINNESOTA LABOR INDUSTRY (1) _ ~ ~~ ~~ ~ ~ ~~~ Cash Payment E 680-49800-438 Licenses and Taxes 04-27-09 BFTHW1 $30.00 Invoice 642351 R1578581 5/12/2009 Transaction Date 5/5/2009 Wells Fargo HRA 10120 Total $30.00 ~~~.. ..,...u,~~3.,~,~ ~„r.~~m_.~.a, ~~,~ ~A~„ ~ _ , Refer 51209 NABER, C. AND ASSOCIATES _ Cash Payment E 680-49800-301 Auditing and Acct'g Servi 04-09 ACCOUNTING SERVICES $103.00 Invoice 46334 5/12/2009 Transaction Date 5/5/2009 Wells Fargo HRA 10120 Total $103.00 Refer 51209 PAUSCHE, CATHERINE Cash Payment E 680-49800-430 Miscellaneous #309 FLOOR FAN REPLACEMENT $31.00 Invoice 051209 5/12/2009 Transaction Date 5/4/2009 Wells Fargo HRA 10120 Total $31.00 Refer 51209 PROGRAMMED MANAGEMENT CO Cash Payment E 680-49800-301 Auditing and Acct'g Servi ADVANTAGE LICENSE $213.00 Invoice 05012009400251 5/12/2009 Transaction Date 5/5/2009 Wells Fargo HRA 10120 Total $213.00 Refer 51209 RHR INFORMATION SERVICES, IN _ Cash Payment E 680-49800-440 Other Contractual Servic 04-09 BACKGROUND VERIFICATIONS $175.00 Invoice 0420091737A 5/12/2009 Transaction Date 5/5/2009 Welts Fargo HRA 10120 Total $175.00 Refer 51209 ROTO ROOTER Cash Payment E 680-49800-401 Building Repairs #309 CLEAR BATHROOM TRAP $184.00 Invoice 04815018251 5/12/2009 Transaction Date 5/5/2009 Wells Fargo HRA 10120 Total $184.00 Refer 51209 TRUE VALUE, MOUND Cash Payment E 680-49800-220 Repair/Maint Supply #216 BATHROOM REPAIRS $32.25 Invoice 057673 5/12/2009 Cash Payment E 680-49800-220 Repair/Maint Supply #206, #216 BATHROOM REPAIRS $22.14 Invoice 057695 5/12/2009 Cash Payment E 680-49800-220 Repair/Maint Supply #206 BATHROOM REPAIRS $17.48 Invoice 057702 5/12/2009 Cash Payment E 680-49800-220 Repair/Maint Supply #206 BATHROOM SHOWER HEAD $7.49 Invoice 057715 5/12/2009 Cash Payment E 680-49800-220 Repair/Maim Supply EXTENSION CORDS $73.98 Invoice 057736 5/12/2009 Cash Payment E 680-49800-220 Repair/Maint Supply GLOBE BULB $6.58 Invoice 057941 5/12/2009 Cash Payment E 680-49800-220 Repair/Maim Supply LUBRICANT, STRAINER, ETC $16.15 Invoice 058134 5/12/2009 Cash Payment E 680-49800-220 Repair/Maint Supply ADHESIVE BIRCH LINER. $4.29 Invoice 058135 5/12/2009 Cash Payment E 680-49800-220 Repair/Maint Supply #407 INSECT KILLER $12.99 Invoice 058197 5/12/2009 -4- City of Mound 05/06/09 3:03 PM ~~ Pa9e 3 • Payments CITY OF MOUND Current Period: May 2009 Cash Payment E 680-49800-220 Repair/Maint Supply CONTRACTOR SOLVENT, PUTTY KNIFE, ETC $69.56 Invoice 058387 5/12/2009 Cash Payment E 680-49800-220 Repair/Maint Supply FLOURSCENT BULBS, PADLOCKS $55.25 Invoice 058407 5/12/2009 Cash Payment E 680-49800-220 Repair/Maint Supply PLATE, ETC $7.16 Invoice 058649 5/12/2009 Cash Payment E 680-49800-220 Repair/Maint Supply CREDIT-RETURN MERCHANDISE -$1.49 Invoice 057673 5/12/2009 Transaction Date 5!5/2009 Wells Fargo HRA 10120 Total $323.83 Refer 51209 WASTE TECHNOLOGY, INCORPO Cash Payment E 680-49800-384 Refuse/Garbage Dispos 094-09 WASTE AND RECYCLING SERVICE $284.05 Invoice 137884 5/12/2009 Transaction Date 5/5/2009 Wells Fargo HRA 10120 Total $284.05 Refer 51209 XCEL ENERGY 04-09 #51-6383341-8 $1,571.13 Cash Payment E 680-49800-381 Electric Utilities Invoice 269965718 5/12/2009 Transaction Date 5!5/2009 Fund Summary Wells Fargo HRA 10120 Total $1,571.13 10120 Wells Fargo HRA 680 HRA PUBLIC HOUSING $6,358.37 $6,358.37 Pre-Written Check $0.00 Checks to be Generated by the Compute $6,358.37 Total $6,358.37 -5- 5341 Maywood Road Mound, MN 55364 (952) 472-0604 MEMORANDUM To: Mound HRA Board Chair and Commissioners From: Sarah Smith, Community Development Director /Finance Director Catherine Pausche / Carlton Moore, Public Works Director Date: 5/7/2009 Re: Indian Knoll Public Housing Operations and Management Research Project Report HRA Workshop Meeting. The HRA will meet in a workshop session on Tuesday, May 12, 2009, at 6:30 PM, to discuss the Indian Knoll Manor public housing facility. Background. As requested by the HRA, an interdepartmental review of the Indian Knoll public housing complex was undertaken with regard to present and future operations, management and ownership. Provided below is a summary and overview of the current operations including activities which have been done and/or are presently underway as well as a summary of the research which has been completed. Operations and Management Overview. • Indian Knoll is a public housing facility owned by the Mound HRA (commonly referred to as a Public Housing Authority, or "PHA" in HUD documents) for eligible, age-restricted individuals (seniors 62+) and handicapped or disabled persons. • From 2001 through January 2009, management services at Indian Knoll were contracted out. For many years prior to that, management of Indian Knoll was done in-house by the HRA. Mound Staff assumed overall management of Indian Knoll effective February 2009. Staffing is being cooperatively provided to Indian Knoll by several departments including Administration (Executive Director), Finance Department (staffing office 9:OOam -11:OOam weekdays, bookkeeping and management), Parks Department (Grounds) and the Public Works Department (Maintenance). Indian Knoll is billed a $2,500 monthly management fee, and time and materials for the Housing Coordinator and maintenance services (all credited to the General Fund). -6- • Indian Knoll is Mound's only. approved "Crime Free Housing" facility. • • There are 50 units at Indian Knoll (15 studios, (34)1-bedrooms, and (1) 2- bedroom caretaker unit). At present, (46) are occupied. Units are approximately 375-400 square feet in size. HUD's maximum size for affordable. housing is 540 square. feet. • An analysis of the mechanical systems is being undertaken by MnSpect; a report(s) will be forthcoming. • Enhanced marketing and advertising efforts for Indian Knoll are underway to promote the facility. As of Febnaary 1, 2009, there were six vacancies. We have moved 5 tenants in and 3 vacated since that time. There has been a positive response to the advertisement in the City Newsletter. Historical vacancy rates averaged 2 units, and we expect to be full by July 1St, with vacancy rates stabilizing after that time. • Several of the units were updated (i.e. new flooring, carpeting, painting, etc.) in preparation of the February HUD REAC inspection as well as to get them ready to lease. All locks were rekeyed to simplify and increase security. • Staff is currently evaluating its admissions, lease and management policies . including the need for updating and/or revisions. Research Summary. • Conducted HUD research re: disposition of public housing. Refer to attachment. • The HUD project number for Indian Knoll is MN074001; the date of the Annual Contribution Contract with HUD is 6/3/70. A copy of the Annual Contributions Contract was not located in City ofFces and was not located at Hennepin County as part of a title search of the property. Therefore, a copy has been requested from HUD. • Staff met with Ms. Cheri Pugh-Sullivan, who is a Mound resident, regarding her background and experience working in public housing. Ms. Pugh-Sullivan has been invited to attend the 5/12 work session with the HRA as a housing resource. • Staff contacted Ms. Lucy Beckwell who is a Public Housing Revitalization Specialist for HUD in the Minneapolis office: - Indian Knoll has a 40-year public housing contract under HUD regulations; the specific "effective date" has not yet been determined and is likely included the original Annual Contributions Contract previously referenced. • Page 2 -7- -Any proposed occupancy change (example, senior only) requires approval of an amendment to the Designated Housing Plan by HUD. - HRA could pursue an "administrative amendment"to transfer the asset to another qualified and eligible agency /organization. Ms. Beckwell did not believe there was any issue if the accepting agency was located. outside of the City or County limits. - Staff will further comment and provided details regarding the Designated Housing Plan and administrative amendment processes at the meeting. • Staff contacted Julie Frick, Carver County Community Development Authority Executive Director; Carver County CDA: - Carver County CDA assumed management and was also transferred ownership of the Spruce Apartments from the City of Waconia / HRA. - Carver County CDA manages over 500 units. - Ms. Frick commented on the importance of a good lease and well-written policies. Additionally, she further stressed the importance of a having an on-site caretaker, if possible. Ms. Frick has provided copies of their current lease and policy document(s) which will be provided to members of the HRA upon request. - Carver County CDA has utilized a joint powers agreement for similar related projects. - Ms. Frick has been invited to attend the 5/12 HRA work session as a housing resource. • Staff met with representatives of CommonBond Communities on 5/5: - CommonBond currently manages and owns approximately 5,000 housing units in and around the Twin Cities metropolitan area including the Westonka Estates Apartments in Mound. - CommonBond undertook a $62M renovation of a number of their facilities in 2006 which included Westonka Estates. The per unit renovation cost was approximately $25K. • Page 3 -$- • - CommonBond has never assumed a property from an HRA, but was told our project would have to be converted from public housing to Section 8 housing, therefore losing the tax advantages and federal capital subsidies provided by projects run by HRA/PHAs. Discussion.. • The HRA may wish to discuss the occupancy use(s) of Indian Knoll as provided in the HUD agreement. • HUD has specific guidelines and processes related to the demolition and disposal of public housing including regulations how gross proceeds, if realized, are to be used. The ability for the HRA to realize any substantial profit (unrestricted) appears unlikely. • In addition to the 40-year clause referenced above, there are also further restrictions regarding disposition of Indian Knoll for an additional period(s) following acceptance of capital (20 years) or operations (10 years) funds from HUD by the HRA. • Members are advised that the most recent Capital Fund Program (CFP) Amendment to the Annual Contributions Contract was signed in March 2009 for a capital grant in the amount of $65,558. Copy attached. • • Several individuals Staff spoke with discussed that there is benefit of having public housing facilities managed and operated locally. • Based on research undertaken by Mound HRA Attorney John Dean, there is nothing in state statute which would prevent the HRA from disposing and/or selling the facility. There are, however, provisions and restrictions within the HRA's agreement(s) with HUD for Indian Knoll which affect what options may be available. Analysis Summary. Without intending to limit discussion, Staffs review has raised three (3) basic options for Indian Knoll which are ident~ed as follows: 1. Discontinue public housing ownership and sell the land to a private party for some other use which would be subject to all required HUD regulations and approvals. 2. Disposition of the facility to a public entity or to a private organization to continue the public housing activity. 3. Continued operation by Mound HRA with or without any occupancy change. • Page 4 -9- Based on the research which has been completed, Staffs position is that management, operations and ownership of Indian Knoll should continue to be done locally by the Mound HRA. Next Steps. Mound Staff will be present at the May 12, 2009 HRA meeting to share the aforementioned. information regarding Indian_Knoll and looks forward. to review and. discussion with the HRA Board.. In the event there are any questions, HRA Members are encouraged to contact Staff at their convenience. Please do so in advance of the meeting ff you feel there is information that is lacking that would be pertinent to the discussion. • Page 5 -10- • Demolition and Disposition -HUD Public and Indian Housing •i About PIFi ®Speciai Applications Center ^ DemolitiahJ disposition ® Designated housing ^ Eminent domain . Homeownership ^ Section 202 conversion ^ Conversion ® Works in progress ^ About the sAC HUD news Homes Resources Communities Working with HUD Tools W ebcasta Mailing lists RSS Feeds Help ``~s~.~ Demolition/Disposition Guidance The demolition and disposition of public housing is authorized under Section 18 of the Housing Act of 1937 (the Act), as amended. HUD has promulgated a regulation, 24 CFR 9~7Q, detailing the administrative steps required to perform demolition/disposition activity in accordance with the Act. A revision ~4 CFR 970 was published in the Federal Register on October 24, 2006, and took effect on November 24, 2006. A correction to the revised 24 CFR 9,_7Q was published in the Federal Register on January 23, 2008. This webpage reflects the revised processing criteria. Although demolition/disposition activity has always been permitted, HUD and its business partners have begun to actively pursue it as a management strategy option in the last ten years. This is due to the realization that some developments have difficulties associated not only with physical deterioration, but also with the overall deterioration of the surrounding community. It is also true that a large portion of the housing now being proposed for demolition/disposition was built in the late 19405 and early 19505, and was built to a standard that is no longer acceptable for the general public. Developments meeting that description have very often become the housing of last resort within their communities. Potential Reasons for Demolition/Disposition Public Housing Agencies (PHAs) may decide to demolish or dispose of an entire development, or a portion of a development, for a variety of reasons, including: Demolition For the demolition of an entire development, the development is obsolete as to physical condition, location, or other factors, making it unsuitable for housing purposes, and no reasonable program of modifications is cost-effective to return the public housing project or portion of the project to its useful life. .InfRrm.st_ion y Statg EfisaRi~n~ sn~ieRt!fiei Print versioo >' ]ump to... - Guidance - Potential reasons for ~~J.gliti_2DL+iifP_+a~iSt.9n - Disoositiani~insupp_oi~af 1•IQ.fASi O Qfi41tW1.SLR5~~.Dld[£U~tIC_tS2 2~SPR 941 (Subpart F) - I,flitse Disoositi4nTe - Resident co0sultetion/offer of sale - Replacement Housing Plan fRMP1 - Resident Relocation - Method of Sale/Future Use Information - Preeerty Anorovod far Vgjyp-FutPre Use of Property - Sl~vf.P.rflseeds - 1?_lt111st1(ti4nlDisoosition tgp nicdi i71tSL4taitS.a.~kaae - Phased Demolition AooliS~ions - Local approvals - S,pplLGation review and approval - submission requirement!, What's New ilse of Proceeds: Exoianations and Frequently Asked Questions (MS-Word) Correction to 24 CFR 970 - On October 24, 2006, HUD published a final rule revising the agency's regulations on demolition or disposition of public housing protects under 24 CFR 970. The Federal Register document published on January 23, 2008 as FR-4598-C-03 wrrecks certain typographical and other non- substantive errors that occurred in the final rule. A_smotili~rn_tot;an 9scidanSal. Loss Applications went electronic on February 2, 2004, per Notice 2003-33. This notice has been revised and extended. 9gg (Adobe PDF, s pages) Demolition Dispositioi Manual for PIC Demoi Ie1fR9~lti9~+ e_Rd=M.l4r~E For the demolition of a portion of a development, that portion of the development is obsolete as to physical condition, location, or other factors, making it unsuitable for housing purposes, and no reasonable program of modifications is cost-effective to return that portion to its useful life, and the demolition will allow the remaining portions of the development to be the partial demolition will ensure the viability of the remaining portion of the development by reducing density to permit better access by emergency, fire, or rescue services, or improving the marketability by reducing density to that of the neighborhood or other developments in the PHA's inventory. http://www.hud.gov/offices/pih/centers/sac/demi- ~ ~ ylo/ Page 1 of 8 4/13/2009 Demolition and Disposition -HUD HUD TDC Guidance To evidence obsolescence, PHAs must show that the necessary modlFlcatlon and/or rehabilitation to the property is not cost-effective. HUD generally considers modiRwtlons not to be cost-effective If costs exceed 62.5% of total development costs (TDC) for elevator structures and 57.14% for other types of structures. The TDC Notice for 2007 Is pIH_7,QQ7-19(1~Bj and the TDC Notice for 2006 is PIH-2008-47fHA1. These Notices and all future year TDC Notices can be found at iiU~ p_itl_lL4titeg, Rules, and ReoulatiQOf w i Disposition: . Due to a change in the neighborhood, the location of the development is no longer conducive to residential use. . The land on which the development was built is sufficiently valuable that the PHA can replace the existing development with an improved development at no cost to HUD. . Leasing the development to another entity, or transferring the title of the development via a sales contract, may be determined to be more cost- effective or efficient way for the development to be used for low-income or mixed-income housing, because that party will have access to funds not available to the PHA. (Note that a lease of more than one year is considered to be a disposition by HUD.) . The development includes vacant land or non-dwelling structures that exceeds the need of the development (after Date of Full Availability--DOFA). . The development includes vacant land or non-dwelling structures that are. incidental to, or do not interfere with, the continued operation of the remaining portion of the development. . The PHA has otherwise determined that the disposition is appropriate for reasons that are consistent with its goals of the PHA and its PHA Plan and that are otherwise consistent with the U.S. Housing Act of 1937. Dispositions in support of Housing developed pursuant to 24 CFR 941 (Subpart F) The revision to 24 CFR 970 that was published on October 24, 2006, and took ~" effect November 24, 2006, included a new provision at 24 CFR 970.3(12) which •" ~ provides that dispositions for mixed-finance housing developed in accordance with ,, 24 CFR 941 (Subpart F) are NOT subject to 24 CFR 970. However, these dispositions are still subject to Section 18 of the Housing Act of 1937 (the °Act"). Accordingly., the SAC intends to process these disposition applications under a "streamlined" review process to verify the PHA is in compliance with the requirements of Section 18 of the Act. While the SAC is not providing an exact turn-around time for these Subpart F disposition requests, the reduced submission requirements for PHAs will greatly expedite the SAC's review process The submission requirements dispositions of public housing in support of housing development pursuant to Part 941 can be found in the new HUD-52860 (10/2007). Because the SAC need only verify that the PHA is in compliance with the Section 18 of the Act and not 24 CFR 970, the submission requirements for these dispositions are considerably less than those required for other dispositions. Thus, the SAC intends to process these disposition applications under a "streamlined" review process. While the SAC is not providing an exact turn-around time for these disposition requests, the reduced submission requirements for PHAs will greatly expedite the SAC's review process. - Frequently~Olsked Qylestions• 24 CFR 941 Subpart F dispositions (MS-Word, 40 KB) Lease Dispositions HUD considers a disposition of public housing property to include both sales of fee title and ground leases longer than 1 year. Therefore, a PHA may apply and receive a Section 18 disposition approval from the SAC for a ground lease of public Page 2 of 8 http://www.hud.gov/offices/pih/centers/sac/demo ~.2 ~ ~o/ 4/13/2009 Demolition and Disposition -HUD housing property for any duration between 1 year and 99+ years. If a ground lease terminates or expires prior to the length of time in which the PHA would have been required to operate the property as public housing as indicated in the • chart below, the PHA must record a new Declaration of Trust (DOT) or use restriction on the property in favor of HUD. Acq ion or Property acquired or developed with funds from the U.S. Development ou g o mus a op Ic o~s9_for a' Funds ~ 40-y~'dT-~T9oTt~ ems on the date on whlch the project be auai able for occupancy, _as-determined v HUD This_ 40-year'erlo is extended if PHA receives otherfunding, such as ap to Funds or Operatino Funds. Capital Fund Property modernized or receiving assistance of Capital Funds from the U.S. Housing Act of 1937 must be operated and maintained as public housing fora 20-year period that begins on the latest date on which modernization is complete or assistance is provided with Capital Funds covered by the Capital Fund ACC Amendment. The 20-year requirement may extend the use of the property as public housing beyond the original 40-year ACC requirement or beyond- any requirement incurred as a result of receiving Operating Funds. Operating Property that receives Operating Funds from the U.S. Housing Fund Act of 1937 must be operated as public housing fora 10-year period beginning upon the conclusion of the fiscal year for which such amounts were provided. The 10-year requirement may extend the use of the property as public housing beyond the original 40-year ACC requirement or beyond any requirement _ incurred as a result of receiving Capital Funds. __ Upon expiration/termination of a ground lease approved by HUD under Section 18, the PHA should contact its HUD Field Office to discuss the following: • • the PHA's plans for the future use of the property (e.g. ACC units, other low- income housing units); and • the correct form of DOT/use restriction that the PHA should record against the property. HUD may require that aDOT/use restriction contain certain use provisions. and/or provisions which prohibit the PHA from selling or otherwise encumbering the property without HUD approval. Resident Consultation/Offer of Sale Resident consultation is required both at the development level, at the Housing Authority-wide level and with the Resident Advisory Board (RAB) for all applications. A description of the manner in which resident consultation was accomplished must be included with the application. Copies of any written comments received, as well as the responses to those comments, must also be included with the application. For some proposed disposition activities, the Housing Authority must offer the development, or the portion of the development affected by the proposed disposition activities, to: • The resident organization in place for that development. • Any group representing the residents of the development that has expressed a previous interest in the development. Replacement Housing Plan (RHP) Except for disposition of developments based on the value of the property, replacement housing plans are no longer required as part of an application for Demolition/Disposition. Resident Relocation • The Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended (Uniform Act or URA) often does not apply to Section 18 actions. However, there still are requirements for the relocation of residents as well as record keeping duties an HA must perform to demonstrate due diligence. The Office Of Community Planning and Development (CPD) relocation staff have Page 3 of 8 http://www.hud.gov/offices/pih/centers/sac/demc-13 -~o/ 4/13/2009 Demolition and Disposition -HUD assisted SAC by preparing the guidance materials below, to meet these needs. This guidance should be used by HA's to formulate their relocation plans, as well as by Field Offices in their monitoring of an HA's Section 18 implementation. section 18 TA & Recordkeeping Polity (This document is currently under revision. Thank you for your patience) Method of Sale/Future Use Information If a PHA ~pi~posing to dispose_of public housing-property-in order to allow for the development"of other housing, the PHA should provide detailed information to the SAC about that future housing development (i.e. name of acquiring entity, number of ACC units, number of low-income housing units, number of market-rate units, etc.). An example of the chart that will be included in SAC's approval documents is as follows: Development Name, Development Number Building/s: xx, Units: xx, Acres: xx Total Units to be Redeveloped: xxx Low-Income Less than 80% of AMI ACC Rental Xx Sale Xx Acquiring Entity Method of Sale Sale Price or Lease Price Purpose ~ Download the SAC Aonroval Chart Non-ACC Market Rate Xx Xx Xx Xx ABC Development, LLC Negotiated Sale at less than FMV, Ground Lease for XX Years etc. $250,000, Donation, Nominal,;xx per year etc. Development of Housing Development pursuant to 24 CFR 941(F), LIHTC Units, Day Care Center, etc. Property Approved for Disposition at Below Fair Market Value-Future Use of Property If the SAC's disposition approval is for an amount at less than FMV, the SAC approval documents will specify the approved future use of the property. The PHA is responsible for ensuring that the approved future use is complied with for the length of time in which the PHA would have been required to operate the property as public housing as indicated in the chart below: Acquisition or Property acquired or developed with funds from the U.S. Development Housing Act of 1937 must be operated as public housing for a Funds 40-year period that begins on the date on which the project becomes available for occupancy, as determined by HUD. This 40-year period is extended if PHA receives other funding, such as Capital Funds or Operating Funds. Capital Fund Property modernized or receiving assistance of Capital Funds from the U.S. Housing Act of 1937 must be operated and maintained as public housing fora 20-year period that begins on the latest date on which modernization is complete or assistance is provided with Capital Funds covered by the Capital Fund ACC Amendment. The 20-year requirement may extend the use of the property as public housing beyond the original 40-year ACC requirement or beyond any requirement incurred as a result of receiving Operating Funds. Operating Property that receives Operating Funds from the U.S. Housing Fund Act of 1937 must be operated as public housing fora 10-year period beginning upon the conclusion of the fiscal year for which such amounts were provided. The 10-year requirement may extend the use of the properly as public housing beyond the original 40-year ACC requirement or beyond any requirement incurred as a result of receiving Capital Funds. Page 4 of 8 http://www.hud.gov/offices/pih/centers/sac/demo _14-~0/ 4/13/2009 Demolition and Disposition -HUD If a PHA's plans change and the PHA no longer wants the property to be used as approved by the SAC, the PHA must apply to the SAC for an amendment to the disposition approval. _ HUD Field Offices are not authorized to approve an amendment of the use of the property. However, HUD Field Offices may monitor the term of the future use for compliance with the disposition approval documents. If HUD finds that the property is not being used according to the approved use, it may take any actions it deems to be appropriate, including actions related to the PHA's enforcement of any reversion/termination provisions in the disposition documents. If the property does revert to PHA ownership, the PHA must record a new Declaration of Trust (DOT) on the property for the duration for which the PHA was required to operate the property as public housing had the property not been disposed. Use of Proceeds Sales Proceeds from Section 18 Dispositions PHAs may realize gross proceeds from a disposition action. With HUD approval, PHAs are permitted to use proceeds to pay the reasonable costs of the disposition, including costs associated with relocation of displaced residents and remediation costs. Pursuant to Section 18(a)(5)(A) and unless waived by HUD (24 CFR 970.9 (b) and 5.110), PHAs must use any remaining net proceeds to retire outstanding debt used to finance the original development. The SAC automatically assumes that PHAs wish to request a waiver to repay outstanding obligations issued to finance the original development and will begin the process of obtaining any necessary waivers from HUD's Assistant Secretary of Public and Indian Housing (PIH) upon receipt of a disposition application from a PHA. If any net proceeds remain after the disposition costs and debt (if applicable) have been paid, with written HUD-approval, the PHA may use net proceeds for any eligible purpose listed under Section 18(a)(5) of the Act, which provides that proceeds may be used for: (i) the provision of low-income housing or to benefit the residents of the PHA; or (ii) leveraging amounts for securing commercial • enterprises, on-site in public housing projects of the PHA, that are appropriate to serve the needs of the residents. The Act defines low-income housing as decent, safe, and sanitary dwellings assisted under the Act. Accordingly, the provision of low-income housing under Section 18(a)(5) of the Act is limited to public housing units under an ACC or housing assisted by the Housing Choice Voucher Program. PHAs anticipating net proceeds from a disposition should include a narrative description of how they intend to use the net proceeds in their disposition applications. The SAC will review the use specified by the PHA and, if it complies with the Act, approve the use. Once HUD approves a disposition application and the PHA's stated intended use for net proceeds, the PHA cannot change its use of those proceeds without the prior written consent of HUD. PHAs are also advised that pursuant to 24 CFR 970.35, they must report the use of net proceeds to their HUD Field Office by providing a financial statement showing how the funds were expended by item and dollar amount. A non-exhaustive list of some of the acceptable uses of sale proceeds from a Section 18 disposition include: (1) repair or rehabilitation of existing ACC units; (2) development and/or acquisition of new ACC units; (3) provision of social services for PHA residents; (4) implementation of a preventative and routine maintenance strategy for specific single-family scattered-site ACC units; (5) modernization of a portion of a residential building in the PHA's inventory to develop a recreation room, laundry room, or day-care facility for PHA residents; and (6) funding of aHUD-approved homeownership program authorized under Section 32, 9, 24 or any other Section of the Act, for assistance to purchasers, for reasonable planning and implementation costs, and for acquisition and/or development of homeownership units; (7) leveraging of proceeds in order to partner with a private entity for the purpose of developing mixed-finance housing (that will include ACC units) under 24 CFR 941 (Subpart F). If a PHA is proposing to use net proceeds for the acquisition or development of new ACC units, it should indicate the approximate number of units it plans to • develop. If a PHA is proposing to rehabilitate existing ACC units in its inventory, it should include the development number(s) of those units, the number of units to be rehabilitated, a budget, and a statement of work. If the PHA is proposing to provide social services or other benefits to its residents, the PHA should include Page 5 of 8 http://www.hud.gov/offices/pih/centers/sac/dem< _15 _ o/ 4/13/2009 Demolition. and Disposition -HUD information on the number of families it will service and what services it will provide. Sales at Less than Fair Market Value: Requirement of Reverter Clause Although HUD normally requires PHAs to dispose of public housing property for not less than fair market value (FMV), HUD may approve a sale at less than FMV if a PHA is able to demonstrate to HUD that the disposition will result in a commensurate public benefit and will be in the best interest of the PHA or the federal government. However, as part of its approval of such a negotiated sale at less thah FMV, HUD will require that the disposition documents (e.g. deed, ground lease, etc.) contain a reverter clause to ensure that the property will be used for the purposes outlined in the disposition application for the period that the Declaration of Trust (DOT) on the property would have remained but for the disposition. The reverter clause will provide that if the property is not used for the intended purposes for this period, it shall revert to the PHA. If a PHA has preferred reverter language that it would like to use in its disposition documents, it is encouraged to submit that reverter language to the SAC as part of its disposition application. If a PHA is proposing to dispose of public housing property at FMV, HUD will not require a reverter clause. Sale Proceeds and Asset Management (Section 18 Disposition) In its written approval letter, the SAC will restrict the use of any proceeds that a PHA may realize from a Section 18 disposition to a specific low-income housing purpose (e.g. ACC, Section 32, or Section 8). Accordingly, under asset management, proceeds from Section 18 dispositions will always be restricted program assets and will always maintain their federalized identity. When a PHA realizes net proceeds from a Section 18 disposition, it should recognize any gain or loss on sale on the income statement associated with the balance sheet where that asset is recorded. If approval has been obtained to use the sales proceeds for activities outside the original AMP, the PHA should then, when the time is appropriate, transfer those proceeds to the other project or program where the use has been permitted. For example, if the SAC approves the use of Section 18 proceeds for the modernization of a certain AMP, the PHA should, first, recognize the gain on the income statement of the original project but then transfer the funds to the project where the modernization work will occur. Any retained sales proceeds should be reflected as a ~~restricted" asset on the balance sheet (restricted for the uses specifically approved by the SAC). A PHA must use-net proceeds in accordance with the spending and financial reporting requirements under the revised 24 CFR Part 990. Please consult a HUD financial manager for additional guidance and/or clarification of these reporting requirements. Demolition/Disposition Technical Assistance Package Technical assistance, in the form of a Demolition/Disposition Technical Assistance Package for application preparation, is available and can be downloaded from this site. Please note that Form HUD-52680 is included in the package. Technical Assistance is also available from Special Applications Centgr fNan~ement. Go to the ~-amsrlisi ienl~isRaaiti4nS~.chair„aL~ssiatsAS.s._P~,~i~~. Page. Loca! Approvals PHA Board Resolution: Applications must receive formal approval from the Housing Authority's Board of Commissioners in the form of a resolution. The resolution must be .dated after the date of the last resident meeting, after the date of all letters of support from appropriate local government officials, and after the offer of sale, if applicable. Local Government Consultation: The PHA must obtain a letter from each appropriate local government official with jurisdiction over the affected development that the local government supports the proposed demolition/disposition action. In addition, the PHA must include in its application to the SAC a description of the process of its consultation with local government Page 6 of 8 http://www.hud.gov/offices/pih/centers/sac/demc _16 -.o/ 4/13/2009 Demolition and Disposition -HUD Page 7 of 8 officials which summarizes the dates, meetings, and issues raised by the local government officials, and the PHA's responses to those issues. Phased Demolition Applications Due to the potential impact on a PHA's asset-repositioning fee (or phase out of operating subsidy) based on the relocation date in the PHA's demolition or disposition application, a PHA may wish to demolish (or dispose of) different buildings in one development in multiple phases (e.g. a PHA has three high-rise buildings or scattered-site. units in one development that it wishes.#o_demolish pursuant to a staggered timeline). Rather than submitting an application for a partial demolition or partial disposition (which may trigger additional statutory or regulatory requirements), a PHA may do this by breaking down the submission of ONE demolition and/or disposition application into multiple application numbers in PIC (e.g. so that each phase of the demolition and/or disposition will have a different DDA number). However, if the same supporting documentation applies to all application (DDA) numbers, the PHA need only submit supporting documentation (e.g. board resolution, government consultation, etc.) with only one application. By creating a separate application number for each phase, the PHA will be able to designate a separate relocation date(s) for the buildings/units for each phase. HUD will approve the removal for all of the units in a development at the same time and up-front, even though a PHA will be able to implement the removal (and relocation) in stages. A PHA can also request that a HOPE VI demolition be broken down into multiple application numbers. In HUD's approval documents for such a removal, the different relocation dates will be referred to by application number. An example is as follows: Number of days after HUD approval that the PHA will begin relocation of residents Application Number (for Phase of Application) Number of Days DDA0001111 90 DDA0001112 180 DDA0001113 270 • Application Review and Approval SAC will accept only electronic submissions made via the PIC Inventory Removals module. For those applications, which cannot be made electronically, they may be sent to the SAC for review. For any applications or attachments sent as paper to SAC applicants should also send copies of the application to their focal HUD field office. Field Office Input Since the SAC is working for the local Field office, it will be asking their opinion of the application. The Field also has the responsibility to sign-off on any environmental reviews conducted in connection with the application. SAC will be documenting its review file by asking the field to provide the information in a document similar to the one below: Field Office Certlfication_Demo=Dispo (MS-word, s1KS) Submission requirements The Executive Director's signature on the certification page may be FAXed or scanned and attached electronically to the rest of the application. Note: When attaching supporting documents to the application, PIC users can attach documents with filenames with spaces provided filenames are no longer than 25 characters (including file type ending, e.g., ".doc"), and as long as filenames conform to Windows Explorer file naming rules: filenames with spaces must be enclosed in quotation marks. Example: • Filename as shown in MS Word: PIC FAQ Ideas.doc Filename to attach to PIC application: °PIC FAQ Ideas.doc" For hard copy applications, applicants should submit one original of the application to the Special Applications Center in Chicago for review and a copy of the http://www.hud.gov/offices/pih/centers/sac/demo-17 --o/ 4/13/2009. Demolition and Disposition -HUD application to their local Public Housing servicing office. The address for the SAC is listed below: Special Applications Center US Department of Housing and Urban Development 77 West Jackson Boulevard Room 2401 Chicago, IL 60604-3507 Telephone: (312) 886-9754 Fax: (312) 886-6413 Content current as of 7 January 2009 Back to top FOIA privscv Web Policies and Important Links ~ /~y ~~"'s+ U.S. Department of Housing and Urban Development 1 ~ ~ ~~ h~~I 451 7th Street S.W., Washington, DC 20410 ~a Telephone: (202) 708-1112 TTY: (202) 708-1455 Find the address of a HUD office near you Page 8 of 8 http://www.hud.gov/offices/pih/centers/sac/dem( _18 _io/ 4/13/2009 American Recovery and Reinivestment Act (:ARRA) Fbrn~tuia Grtnt Capital fund Pt~gram u.s. tae~erime~,t at wausing ~~p) ~Am~ndment and urban t~evelv~-ment To Tf'te Cortsafidated Annual. Contributigns Office pf Public and Indian Housing Contract form HUD~53012) Whereas,lPublic Housing Authority).: HRA of tfaQ Gityt7f.M . Mfttnasgta tMN07414hecetn called the PHA"} artd the United States of Rmerica, Secretary of Housing end C-rban ~e~elOpment (h9rtrie+ called."HIDD~) entered into Consolidat~d~~Rnnual Contributdort5 Contractis) AGC{s} Numbers} C~8S8 dated: 611 ~Wh~as, HUD has agreed tq provide American Recovery afld ~tefnves;t~`ient Act (ARRA} assistanae, upon execution of this Arzterttiment, to the PHA in the amaun4 to be specified below for the purpose of assisting the PHA in carrying out capital and managw3~rttani activities at p~ibtio he+usSng devetolxnents in accortfance rvtih the requirements of the ARRA including Titt© XYI genorat prctvis'wns t~f the ARRA, in order to ensute that sa.ach d>3v®fopmeMs condn€~ to be available to serve low-income families- 558 for Fiscal Year ~~ to be relerrC3d to under Capital Fund Greet Number trttVgr~074501(?9 PHA Tax fdentificatian Number 4TIN). Fit Whereas, HUD and the PHA are entering iota the CFf?' Amendment Number ~, ~->` Now Thereigre, the ACC(sJ is {are) amended as folfarnrs; f, ts'grant iscanditioned on tht~ acaoptance of the PHAto comply wif~r i. The ACC(s) is {are) amended to provide CFPassistance in the' the rEtportiog requirements of the ARRA and the following requirements: amount. specified above fxar capital and management activities afPHA a. Funds cannot be transferred to operations or used for rental assistanpa dsvelopmants. This arsrendmentis ~parf of the ACC(s}. activities. 2. Thacapital and management activities 5hatl be carried gut in aGOOrdance with aU HUD regulations and other requirements appticabi~a to the Capital Fund Program and ARRAand it acoordance with the PHA"s current 5-year Capital Fund Plan. 3. Subject to the provisions of the ACC(s} and to assist in Uas capital and management activities, HUL3 agrees to dlsb~rrseto the PHA,~r the designated trustee from time to time as needed up to the amount of the fur[di .assistance specified herei _ 7 §:~ +4. "f'he P s a ao inue to operate each development as taw-income housing in oompilance with the ACG{s), as amended, the Aciand alt HUD regulations far a period o1 iwenIy years after the last disbursement of CPPlARRA assistance for modernization activities and for a period of forty years afterthc~Iasi distribution of CFP/ARRA assistance for development activ'~ti©s. Provided further that, fora perrod of ten years following fna ids payment of assistance from the~C~perating Fund to the PHA, no disposition of any development covered by iftis amendment shall occur unless approved b HUD. ~,~x~+ " -: ~f~~does not'compiy with any of its obligations under ihis~ ~~ Amendment, HUD shall impose such penattiesortake such rernediar action as provided by law, i-IUD may direct ihq PHA 1o termirt8t+a all vF!aric; in such case, the PHA shall only incur additional c~osiswith HEJ~ approval. 6. By execution oithls am©ndmaCti all PHAsthat are PHAS troubled acknawlodge acrd agree to additional monitoring and oversight t3y Hi1Q and its agentsleani~actors as deemed appropriate and necessary in order to. ensure the pra{~er use of the funds received by thss amendment. b. The PHA must obligate 100"1 of thegrantwithin one year ofths effective date. At the one year date any unatriipated funds wilt be recaptured. c. The PHA must expand at least ti(?% of the grant withintwc years of the ~affoctive date. At the two year date if lass than b0°la is expended any :unexpended funds will be reoaptured. ti, The PHA must expend 1D0°/ of the grant within 3 years of the effective date. Ai the three year date any unexpended tunas wilt be recaptured. e. Extensions to the obligation and expenditure dates are not permitter!. i. The PHA must submit an annual statement and board resolution no dater than 2f calendar days from the effective date. g. The PHA shall give priority tocapital projects that can award contracts based on bids within '120 from theeffective date. h. The PHA shall givepriarityoonsideraiion to the whebiiitation of vacant rental units. i. The PHA shall prioritize capital projects thalare already underway qt` included in the 5-year Capital Fund Plan. j. The~'PHA must use the funds provided in this grant to supplement expenditures not supplant expendituresfrpm other Federai,State, or-jai -s0urees or tunas indopendontiy generated by the grantoa. ~k.~Tfie PHA wilt provide a physical .needs assessment, as specified by HUf.3, using funds from this grant or other Capital Funds. I. f~er}uiroments relatingto the procurement of goads and services arising Lander state and Local laws and reputations shall [tot apply to the CFP assistance provided by this agreement. ~8;~ The PHA ackno~viadges iC& responsibility for ~tdher~ce totl7is amendment. 7fte parties have executed this Agreement, and fi will be ettectiv0 on 317 &;'2009 ~ Tkfis is the'%~e ttrt. Krrhich CFP assisianeebaromas available to thePHA tar obligation.,... U, ant Of M t ban t3ev I ctrl ~ / AHA EXeCUtt~ Rtrs¢tor c ~';. ~.'' ~ Date: ~-=1 ~..~ .< ~ ~.~~=~--~-~~ ~ ~ ._ S ~ I ~~~ versions obsolet$- -19- ~.. ~` ~° form HUI3-52840•A (13,rp4i2003 I N I • ~g 'o ~ ~' ~s `z~ y~ w N "~+ ~' 'J O N ~ ~a o ~' Q. 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