HOUSING OPPORTUNITIES COMMISSION OF MONTGOMERY COUNTY

                                                             10400 Detrick Avenue

                                                       Kensington, Maryland  20895

                                                                  (240) 773-9025

 

                                                                   M I N U T E S

                                                                November 6, 2002

                                                                        02 - 19

 

A regular meeting of the Housing Opportunities Commission of Montgomery County was conducted on Wednesday, November 6, 2002 at 10400 Detrick Avenue, Kensington, Maryland beginning at 7:05 p.m.  Those in attendance were:

 

Present

Warren Lasko, Chairman

Richard Y. Nelson, Jr., Vice Chair

Norman Cohen, Chair Pro-tem

Y. Monroe Galloway

Michael J. Kator

 

Absent

Ralph D. Bennett, Jr.

Marjorie M. Harris

 

Also Attending

Scott Minton, Executive Director                                                          Ken Tecler

Annie Alston                                                                                         Bill Murphy                 

Lillian Durham                                                                          Stuart Raynor              

Lembit Jogi                                                                                           Earl DeMaris   

Zachary Smith                                                                                      Andrew Oxendine

Harold Kramer                                                                         Scott Ewart

Jim Atwell                                                                                            Vivian Benjamin

Tom DeBrine                                                                                        Kayrine Brown

Dana Miller, Special Assistant to the Commission                     

 

 

Guests

Yvonne Chaney-Harrison, Resident Advisory Board

Sylvia Fowlkes, Resident Advisory Board

Cesar Baretto, Resident Advisory Board

Tanya Maddox, Resident Advisory Board

Tad Baldwin, Action In Montgomery

Tom Cowley, Action In Montgomery

Sue Buckler, Action In Montgomery

 

Cathleen Becskehazz, Action In Montgomery

Patricia Kaczmarski, Action In Montgomery

Carl Schmitt, Action In Montgomery

Barbara Geifer, Action In Montgomery

Susan Kirk, Action In Montgomery

 

 

Chairman Lasko called the meeting to order at 7:05 p.m.  He then called for consideration of the Consent Calendar, which he noted consisted of only the minutes from the previous meeting.  Vice-Chairman Nelson moved, seconded by Commissioner Galloway, for adoption.  Affirmative votes were cast by Commissioners Cohen, Lasko, Galloway and Nelson. Commissioner Kator was not present for the vote and did not participate. Commissioners Harris and Bennett were necessarily absent and also did not participate in the vote.

 

 

I.          CONSENT CALENDAR

 

A.                 Approval of Minutes of October 16, 2002 – The minutes were approved as written.

 

 

II.        INFORMATION EXCHANGE

 

A.        Executive Director's Report - Mr. Minton added the following items to his written report:

 

1)         Mr. Minton reported that he and Vice-Chairman Nelson attended the NAHRO Conference.  Mr. Minton stated that he gave a presentation on mixed-income housing.  He pointed out that the feedback from his presentation indicated the widespread interest of housing authority directors to move into mixed-income housing or a more entrepreneurial business.

 

2)                  Mr. Minton stated he received notification from the County that the self-insurance fund which includes workman’s compensation, liability and property insurance, automobile, and general claims administration will have increased premiums.  The premium increase for this year will be $322,000.  This represents an increase of 137%.  He explained that the largest portions of the increase were in workman’s compensation and property and liability.  He further explained that the increase in the self-insurance fund is in addition to the recent $400,000 increase in health benefits. 

 

                                    In response to a question by Chairman Lasko, Mr. Minton explained that

the increase is HOC’s portion of the total increase for County government and other County Agencies.    

 

            3)         Mr. Minton directed the Commission’s attention to pictures of the new playgrounds at Emory Grove and Washington Square.  He explained that staff has been working to replace the playgrounds during the last year.  He added that new playgrounds were needed improvement.

                           

                        4)         Mr. Minton reminded the Commission that the Metropolitan Council of Governments will be holding an affordable housing conference on November 22nd.  He        stated that he and Bill Murphy will attend the conference.

 

5)                  The MAHRA winter conference will be held December 4th through 6th.  Mr. Minton directed the Commission’s attention to registration forms at their desks.

 

6)         Mr. Minton directed the Commission’s attention to a change in the status report regarding the single family mortgage revenue bond issue.  He explained that bonds must be issued in December so that the bonds can be rolled over on January 1, 2003.

 

            7)         Mr. Minton directed the Commissioners’ attention to articles which appeared in that day’s Gazette newspapers.  Mr. Minton state that HOC received a full page of coverage on both the Econolodge and the Parent Resource Centers.

 

           

Public Housing Waiting List 

 

                                Stuart Raynor, Director of Housing Management, explained that maps were distributed which show where applicants currently reside throughout the Country.  He stated that there were approximately 5,200 applications received for the waiting list.  Mr. Raynor pointed out that the number of elderly applicants did not increase since the last waiting list opening.  There are 400 elderly applicants.

 

                        Mr. Raynor stated that, due to the large number of applicants and the fact that approximately 1,000 families have been called up from the current waiting list, the Commission should consider the necessity of re-opening the waiting list in 2003.  In response to a question by Chairman Lasko, Mr. Ewart stated that staff will review the current applications and determine how many families re-applied from the current waiting list.

 

                        Mr. Ewart explained that, as of this date, there are 5,225 applicants.  However, staff has not completed entering the applications that were mailed in.  Mr. Ewart explained that there were 966 on-line applications.  He stated that over 4,000 current Montgomery County residents applied for Public Housing.  There were approximately 700 applicants from Prince George’s County and approximately 300 applications from Washington, D.C.  Mr. Ewart explained that he provided a map of the Country to show that applications from as far away as Oregon were received.

                       

                                    With regard to the Public Housing waiting list presentation, Vice-Chairman Nelson asked Mr. Raynor for clarification of the number of families called-up from the last year’s waiting list.  Mr. Raynor stated that the total number is just over 1,000.  He explained that he may have misspoken when he stated that that was a year-to-date total.  There was a brief discussion and Mr. Raynor stated that he would verify the totals and present a full report to the Commission at the next meeting.

 

            B.        COMMISSIONER EXCHANGE

                       

            Vice-Chairman Nelson stated that the NAHRO Annual Conference was held in Seattle, Washington.  He stated that he moderated a session on Commissioners of entrepreneurial housing agencies.  He attributed his participation to HOC’s reputation as one of the entrepreneurial agencies of the Country.  He explained that there was considerable interest in the kinds of things that HOC is undertaking that are outside the normal bounds of a public housing agency.

 

            Vice-Chairman Nelson stated that HOC received an Agency Award of Excellence for Program Innovation – Community Revitalization for the efforts HOC and the County have made to preserve affordable housing in the County, particularly those that were opting out and on the verge of going market.  Vice-Chairman Nelson stated that the award shows the recognition of the work that the staff and the agency are doing.  He added that it always makes him feel good to represent HOC at those events.

 

            Mr. Minton stated that Vice-Chairman Nelson was honored with a lifetime achievement award for his work with NAHRO and affordable housing.  Vice-Chairman Nelson was congratulated by his fellow Commissioners. 

 

            Commissioner Galloway stated that she attended the grand opening of the Clopper Mill Parent Resource Center on Wednesday, October 30th.   She stated that Lillian Durham and Jerry Matthews of the Resident Services division were in attendance along with Councilmember Nancy Dacek.  Commissioner Galloway added that it was a wonderful occasion to see parents and young children making use of the Center.

 

            In response to a question by Chairman Lasko, Mr. Minton reported on the Vehicles For Change (VFC) kick-off event held on October 23rd.  Mr. Minton stated that it was a moving event.  He explained that VFC, through HOC Community Partners, sold three automobiles to FSS clients as a start-up for the program.   He explained that it is planned that three vehicles per month will be sold to FSS families over the next year. 

 

            Mr. Minton stated that it was particularly moving to hear the recipients explain how having a vehicle was going to change each of their lives.  He spoke of one woman who has had to get up at 3:30 each morning to ride several buses to work. 

 

            The event was covered by television news channels 7 and 8.  Mr. Minton stated that DHCA and HHS participated in the event.  He explained that Precision Certipro co-sponsored the program and donates warranty work for the automobiles.

 

            Chairman Lasko reported on the quarterly meeting with the County Executive on October 17th.  He stated that Commissioner Cohen, Mr. Minton and Zachary Smith attended the meeting.  He explained that the meeting took place during the sniper incidents.  He credited County Executive Duncan for attending the meeting.  He noted that Elizabeth Davison was also present at the meeting.

 

            Chairman Lasko stated that he and staff provided Mr. Duncan with an update that highlighted recent HOC activities such as the Gramax building, work on the Econolodge, the Housing Choice Voucher Initiative and the Public Housing waiting list opening.   He noted that those were all topics that Mr. Duncan is aware of and has shown support for in the past.  Additionally, Mr. Duncan was also made aware of the possibility of master leasing at Avalon Bay.

 

            Chairman Lasko stated that the Dry Cleaning Institute was mentioned during the meeting and Mr. Duncan stated that he wants to see that project done. 

 

            Chairman Lasko stated that it was a good meeting.  He added that everyone commended County Executive Duncan and Chief Moose on the work they were doing to catch the snipers.

 

            With regard to the Vehicles For Change program, Chairman Pro Tem Cohen stated that many HOC residents do not have cars and HOC should be cognizant of that whenever the Agency acquires or builds.  He stated that location of properties and access to public transportation is very important.

 

            There was a brief discussion regarding donation of vehicles.  Mr. Minton explained that donations may be made directly to Vehicles For Change.

 

 

C.       COMMUNITY FORUM

 

Yvonne Chaney-Harrison, President of the Resident Advisory Board (RAB), introduced new members of the Board: Cesar Baretto, Sylvia Fowlkes, and Tanya Maddox.  She stated that all of new members are participants in the Housing Choice Voucher Program.

 

            Ms. Harrison explained that letters of introduction were sent to all Housing Choice Voucher Program participants.  She stated that 87 qualified applications were received.  A committee of the RAB reviewed applications and selected eight applicants for interviews.  She stated that the RAB is pleased and confident that the new members will make considerable contributions not only to the RAB but also to HOC.

 

            Ms. Harrison explained that after previous efforts to have both a Resident Advisory Board and a Section 8 Advisory Board, it has been decided to combine the boards.  She stated that the combined board will allow for a broader perspective and increased coordination of the services.

 

Chairman Lasko thanked Ms. Harrison and the other RAB members.  He stated that the Commission appreciates the time that the RAB volunteers and explained that reports from the RAB are taken seriously and affect the plans of the Commission.  He congratulated the new members and thanked them again.

 

 

III.       COMMITTEE REPORTS

                       

            Development and Finance Committee –   Mr. Minton provided the report on behalf of Commissioner Bennett.  He stated that a meeting was held with Sally Roman and Mr. Matthews of the Maryland National-Capital Park and Planning Commission (MNCPPC),  Doug Ryan, Doug Lohmeyer, Commissioner Bennett and himself.   The meeting was held to discuss a recent report which Mr. Lohemeyer recently delivered to the Commission.  

 

            Mr. Minton explained that the Development Committee is seeking input from MNCPPC on the validity of the report and the interpretation of the findings.  He stated that Ms. Roman agreed with the report –there is a linkage of units between the Master Plan and the various planning processes.  She recommended that HOC staff attend the Development Review Committee (DRC) meetings to participate in the review of site plans with staff.  Commissioner Bennett attended a recent DRC meeting at which many other agencies were present.  However, he felt that most of the issues had already been settled. 

 

Mr. Minton stated that Commissioner Bennett stated that HOC needs to get involved early in the Master Planning process and continue to be involved in the earliest stages of subsequent planning processes.

 

Chairman Lasko stated that he recently read the monthly newsletter of the Audubon Naturalist Society.  He noticed that a full-page was dedicated to the County’s planning process.  He explained that this particular interest group is very organized and involved in the planning process.  He encouraged HOC to move rapidly to get a staff member or a consultant involved in the planning process.

 

 

IV.       DELIBERATION / ACTION CALENDAR

 

A.                 Adoption of a Resolution Authorizing the Issuance of Variable Rate Bonds for Fairfax Court Apartments, Spring Garden Apartments, Chevy Chase Lake Apartments, and Pooks Hill Apartments

            Vivian Benjamin, Senior Multifamily Underwriter, introduced Kayrine Brown, Multifamily Loan Coordinator and Lembit Jogi, Acting Director of Real Estate Development, and Stuart Raynor, Director of Housing Management.  She provided information components each person was prepared to discuss for the Commission.

            Ms. Benjamin explained that staff is seeking adoption of a resolution to issue variable rate bonds also referred to as “lower floaters” for Fairfax Court Apartments, Spring Garden Apartments, Chevy Chase Lake Apartments, and Pooks Hill Apartments.   She explained that the properties were financed in 1989 and 1992.  These bonds have passed their initial 10-year call date.  Ms. Benjamin explained that the Commission has a policy which allows pre-payment on properties that have reached this milestone.  In conjunction with pre-payment, the policy also allows for refunding of the bonds.

            Ms. Benjamin explained that staff supports refunding the bonds.  She stated that several of the properties require renovation and rehabilitation work.  She explained, however, that without a clear understanding of the level of work required, staff does not recommend issuing long-term or fixed-rate bonds for these properties.  While an assessment of the required work is being done, staff recommends refunding the bonds as variable rate bonds.  She stated that this method would allow the Commission to attain substantial savings in debt-service.  Ms. Benjamin stated that under this recommendation, the bonds would remain variable rate bonds until a fixed rate can be attained on the transactions.  Staff anticipates issuing fixed-rate bonds in 2004 for Fairfax Court, Spring Garden and Chevy Chase Lake Apartments along with a fixed-rate financing for the Barclay apartments.  Ms. Benjamin pointed out that, if interest rates begin to rise, staff is prepared to issue fixed-rate bonds for the properties as early as the Spring of 2003, when staff anticipates issuing fixed-rate bonds for Montgomery Arms and the Gramax property.

            Ms. Benjamin stated that, due to the development decisions surrounding the rehabilitation plans for Pooks Hill, staff believes that a variable rate structure will be held for a longer period than the bonds for Fairfax Court, Spring Garden and Chevy Chase Lake.  She then stated that the timing of the bond issue for all of the properties is dependent on the scheduling of the Development Division.  She went on to explain that the structure of the transaction is an issuance of variable-rate bonds, with an interest rate according to the 5-year BMA index.  She referred the Commission to materials provided which list the 5-year BMA at 3.08%.  Added to the rate are costs of the bond insurance, a liquidity fee, a trustee fee and the cost of a bond cap.  She stated that all of the costs add up to approximately 50 basis points which will be added to the rate. 

            Ms. Benjamin stated that it is anticipated that a 3-year bond cap will be purchased at a maximum of 6%.  She explained that, if interest rates rise above 6% over the term of the cap, the provider of the rate cap will be obligated to pay the extra cost.

            Ms. Benjamin referred to a chart which shows the potential savings and the payback period.  She stated that staff projects a savings of $70,000 per month (at the 5-year BMA rate).   She stated that the savings would be more substantial if the rates remain close to the current level.  Ms. Benjamin stated that staff would close this bond issue in December.  The bonds would be issued under the Commission’s multiple purpose bond indenture.

            Chairman Pro Tem Cohen pointed out that the current rate structure is at its lowest in 40 years with potential for even further decline.  He asked why the Commission should not try to get a fixed rate at this time to lock in at the current low rates.  Ms. Benjamin stated that all of the properties require some level of rehabilitation.  She noted that Spring Garden may be the exception, however, the property is too small to issue bonds on alone.  She noted that the outstanding bonds must be redeemed within a 90-day period.  Because the properties require some rehabilitation work, staff is not prepared to issue enough bonds to do the work and payoff the outstanding debt. 

            There was a brief discussion of recent bond issuances.  Chairman Pro Tem Cohen pointed out that it may be cheaper to lock in the rates today and invest the money to offset the costs.  Ms. Benjamin stated that staff does not have an accurate assessment of how much money and time will be needed for the renovations.

            Chairman Lasko stated that a plan for renovation is needed to enter into the long-term bond market.  Ms. Benjamin also noted that to enter the market with fixed-rate bonds, mortgage insurance would be needed as well.  The mortgage insurer would also need to know the amount being borrowed.  Ms. Benjamin stated that the amount is not yet known.

            Commissioner Kator asked how much 42 basis points equates to.  Ms. Brown stated that it would be approximately a little more than $50,000.  There was a brief discussion of how projected savings are calculated.  Ms. Benjamin stated that, according to today’s rates, the savings would be approximately $91,000.

            Mr. Minton stated that the cap is to protect Pooks Hill from interest rates rising above 6% over the course of the next five years. 

            Chairman Lasko referred to a chart which shows a long-term re-development assessment for Pooks Hill.  He stated that his impression was that major work would be necessary at the property before 2005.  He stated that the chart shows an assessment process continuing through the middle of 2005.  Chairman Lasko stated that he did not want to give the impression that the Commission is in agreement with not doing any major work on the property until 2005.  Mr. Jogi stated that over the next 12 months, staff expects to complete all life and safety work for the property.  He explained that over the next two years, staff has several options.  One option would be to perform complete rehabilitation of the property, which Mr. Lembit estimated at approximately $50,000 to $60,000 per unit.  He stated that it may, however, be more prudent to pursue re-zoning of the property to increase the density to get better utility from the property.  He explained that the re-zoning process will take a good deal of time. 

            Chairman Lasko stated that he was surprised that the long-term assessment would take two to three years.  He stated that, given the condition of the property, he was not sure that the property could wait that long or that the residents would be that patient.

            Chairman Pro Tem Cohen moved, seconded by Commissioner Kator, to adopt the resolution.  Affirmative votes were cast by Commissioners Galloway, Nelson, Kator, Lasko and Cohen.  Commissioners Bennett and Harris were necessarily absent and did not participate in the vote.         

 

 

RESOLUTION:  02 – 94                                                       RE:     Authorization to Issue                                                                                                                        Variable Rate Bonds for                               Fairfax Court Apartments,                                                                                         Spring Garden                                                                                                                                    Apartments, Chevy Chase                            Lake Apartments, and                                                                                             Pooks Hill Apartments.

 

Due to its length, the text of the Resolution is not included in the minutes.  A complete copy of the Resolution is on file in the Office of the Commission.

 

 

B.                 Approval to Project Base Selected Units

            Bill Murphy, Director of Rental Assistance, introduced Tad Baldwin, Director of Action In Montgomery (AIM) and Stuart Raynor, Director of Housing Management.

            He explained that staff is seeking approval of four separate actions: 1) the increase in the number of project-based voucher units from 300 to 560, 2) approval of additional project-based units owned by private owners, 3) approval of project based units owned by HOC, and 4) approval of submission to the HUD DC Field Office for their approval of the HOC-owned project-based vouchers.

            Mr. Murphy stated that in January of this year, the Commission approved a 300-unit project basing program.  In June 2002, the Commission approved the first 121 units.  He referred to charts which breakdown the proposed HOC-owned and privately owned units.  He noted that Action In Montgomery has a proposal for 50 scattered-site units in conjunction with Montgomery Housing Partnership, DHCA and HHS.

            Mr. Murphy explained that the proposed 289 units for HOC-owned project-basing are in various properties and partnerships that HOC controls.  He stated that 65 of those units are in Silver Spring, 117 are in Bethesda, 26 are in Wheaton, and 67 MPDUs are scattered site units throughout the County.  He added that the units are spread throughout the portfolio fairly well.   He reviewed the list of privately owned units, which totals 141 units.

            Mr. Baldwin thanked the Commission for considering AIM’s application.  He stated that the process began approximately eight years ago.  He explained that their proposal represents a partnership with HOC providing the Housing Choice Vouchers, HHS providing the services and funding for services, and DHCA providing some of the administrative costs.  He stated that the resulting structure doesn’t require AIM to wait for HUD SuperNOFAs for housing with services.  He explained that AIM is urging member congregations that own housing to involve themselves as landlords.

            Mr. Balwin stated that AIM is looking forward to an interesting program.  He noted that the application was made via the Montgomery Housing Partnership because AIM’s staff is made up of volunteers.  He stated Mr. Murphy has been very helpful.  He expressed that he and members of AIM look forward to working on this program in 2003 and he again thanked the Commission.

            Vice-Chairman Nelson asked if the Agency is locked into the numbers provided in the proposal.  He also pointed out that Wheaton Metro and a down County PLQ are identified as sources for potential project-based units.  However, he noted, that neither project has reached a stage to anticipate construction or occupancy.  Mr. Murphy stated that those units, along with the Foulger Pratt and Gramax development, were identified so that the opportunity is not lost.  He explained that, due to the competitive nature of the process for approval, the decision was made by staff to set aside any developments with a foreseen need.

            There was a brief discussion regarding interim usage of the units during the construction of properties identified.

            Chairman Pro Tem Cohen asked about negative effects of increasing the number of project based units.  Mr. Murphy explained that any family housed in a project-based unit has a right to request a tenant-based voucher after 12-months.  He stated that the Agency is required to issue the tenant-based voucher, before any other families, if the Agency has funding.  Mr. Murphy confirmed that once a family moves from a project-based to a tenant-based subsidy, the unit still remains a project-based unit.

            Mr. Murphy stated that the positive effect of project-basing the units is that it creates a housing stock (spread across the County) for voucher-eligible families only.

            There was a brief discussion in which Vice-Chairman Nelson stated that project-basing the units ensures that some of the lower-income families have a means of obtaining housing in some of the newer developments.  He also noted that the owners will have an assured stream of income for units and it helps to develop partnerships.  Chairman Pro Tem Cohen agreed with Vice-Chairman Nelson. 

            Chairman Lasko asked if AIM owns the 50 units identified in their proposal.  Mr. Baldwin stated that they do not own the units.  He explained that Montgomery Housing Partnership is offering AIM five of the units it obtained in the previous 64 unit submission.  He further explained that a coordinating non-profit, such as Coalition for the Homeless, will ultimately run the program for AIM.  Non-profit services providers will also assist families in locating units.  Mr. Baldwin stated that the 50 units will be a combination of apartments and scattered site homes.

            Chairman Lasko inquired about the feasibility of project-basing units without knowing where the units are located.  Mr. Murphy stated that a Housing Assistance Payments contract will require identification of the units.  He explained that as units are acquired, HOC will inspect and approve the units and then add them to the master contract.  He stated that AIM and other organizations cannot get units unless they have a subsidy.  He stated that this action will begin the process of acquiring units.

            In response to a question by Chairman Lasko, Mr. Murphy confirmed that the other private owners have submitted applications for the number of units identified in the proposal.  Chairman Lasko inquired about the allocation of units in HOC-owned properties.  Mr. Murphy explained that each property was considered based on the number of available units in the property that meet the rental rates which meet the program requirements as well as the number of families (eligible for rental assistance) currently residing in those properties.  He pointed out that newer properties have higher rents and families with higher incomes reside there. 

            Mr. Raynor explained that in properties such as The Metropolitan and Strathmore Court, there are tiers of assisted rent (25% and 35% composites). He stated that the highest tier was selected because they would qualify for project basing.  With regard to the 30 units at Barclay, Mr. Murphy stated that staff is proposing project basing 30 of the 45 mod-rehab units (converting them from mod-rehab to project-based units).  He explained that the benefit of the mod-rehab program is gone because market rents and Fair Market Rents exceed the rent allowed in mod-rehab units.  He explained that HUD funds mod-rehab conversions with a corresponding voucher, which essentially expands the Voucher program.  However, the agency is restricted from converting all of the mod-rehab units in the property.

            Vice-Chairman Nelson asked how the families are selected for project-basing.  Mr. Murphy stated that at the Barclay, the mod-rehab units were contracted in four phases.  In each phase, the units were identified by the address.  Staff has selected units so that only one phase of mod-rehab units will remain in the property.  Mr. Raynor explained that, at the other properties, the selection will be based on rent burden.  The families with the greatest rent burden will be selected for project-basing.

            Vice-Chairman Nelson inquired about the Fair Housing regulations.  He expressed his concerns about staff selecting families for project-basing.  Mr. Murphy stated that project-basing Fair Housing regulations do not involve the same issues as tenant-based subsidies.  Vice-Chairman Nelson pointed to the potential problem of staff selecting a particular number of families from a pool of other qualified families.  He cautioned staff to be certain that the selection methods will not cause problems in the future.  Mr. Murphy stated that staff will look into the issue and make certain that the Agency is protected.

            Vice-Chairman Nelson moved, seconded by Chairman Pro Tem Cohen, to adopt the resolution.  Affirmative votes were cast by Commissioners Lakso, Galloway, Kator, Nelson and Cohen.  Commissioners Bennett and Harris were necessarily absent and did not participate in the vote.

 

RESOLUTION:  02 – 95                                           RE:     Approval to Project Base                                          Selected Units

 

WHEREAS, the Housing Opportunities Commission of Montgomery County administers a Housing Choice Voucher Program; and

 

WHEREAS, the Housing Opportunities Commission approved the use of funding for project based vouchers on January 23, 2002; and

 

WHEREAS, the Housing Opportunities Commission approved the selection of 121 units for project based voucher funding for private landlords on April 17, 2002; and

 

WHEREAS, the Housing Opportunities Commission continuously works to expand housing opportunities for residents of Montgomery County and approval of additional project based units will guarantee the availability of units to extremely low income families.

 

NOW, THEREFORE, BE IT RESOLVED by the Housing Opportunities Commission of Montgomery County that it approves an increase in the project based voucher program up to 560 units (as described in the November 6, 2002 memorandum titled “Selection of Project Based Units) and authorizes the Executive Director to perform the following actions on its behalf:

 

1.      Execute contracts for project based funding with Montgomery County (Jesup Blair - 10 units), Foulger-Pratt Company (Silver Spring Metro Phase V - 10 units), Montgomery County Coalition for Homeless (Econo Lodge -11 units). Action in Montgomery Partnership (scattered sites - 50 units), Homes for America (Randolph Village - 13 units, Croydon Village - 10 units, and Oaks at Old Towne - 7 units), Bethesda Interfaith Housing Coalition (scattered sites - 10 units), RST Management Company (Gramax Building - 20 units); and

 

2.      Approve the submission of an application to HUD for project based voucher funding in HOC-owned units and execute contracts for funding with HOC or HOC controlled entities (Wheaton Metro site - 18 units, Down County PLQ site - 20 units, Avalon Bay at Rock Spring - 23 units, scattered sites for new MPDUs - 30 units, Sligo Hills - 8 units, Tanglewood - 13 units, Manchester Manor - 22 units, Montgomery Arms - 22 units, Pooks Hill Tower - 36 units, The Barclay - 30 units, The Metropolitan - 8 units, Strathmore Court - 5 units, Holiday Park  - 4 units, Pomander Court - 4 units, Pond Ridge - 4 units, Greenhills - 5 units, Tax Credit Partnerships I & II - 12 units,  Tax Credit Partnerships III-IX – 13 units, Formerly State Connected – 12 units).

 

C.                 Approval to Master Lease Rental MPDUs

            Harold Kramer, of the Real Estate Division, stated that staff is seeking authorization enter into a master lease for 23 MPDU rental units with Avalon Bay at a new development named Rockspring.  The development is located in north Bethesda near Old Georgetown Road and Democracy Boulevard.

            Mr. Kramer stated that HOC has had the right to rent units in rental apartment complexes since the beginning of the MPDU Program.  However, he stated that the Agency has never been able to generate the resources necessary to enter into a long-term lease on behalf of the residents.  Mr. Kramer stated that through the Housing Choice Voucher Program, project-basing provides a narrow widow of opportunity to make master leasing possible. 

            Mr. Kramer stated that after a tedious process, Avalon Bay is willing to enter into a master lease with HOC.  He explained that a ten-year master lease would qualify the units for project-basing.  He stated that a meeting with HUD personnel is scheduled for the following week to discuss the proposal. 

            Mr. Kramer stated that the first units will be delivered in mid-December.  Therefore, authorization is needed to enter into an agreement with Avalon Bay.  He explained that Avalon Bay has had experiences with Section 8 residents in the past, in which property damages were an issue.  He explained that upon discussing options for paying damage claims with DHCA, it was learned that the DHCA will enter into an agreement with HOC to reimburse HOC for documented damage claims.

            Mr. Kramer explained that there are a small number of internal processes to be worked out.  However, the major issues have been addressed and staff, therefore, seeks the Commission’s approval to enter into a master lease and an agreement with DHCA for reimbursement of damage claim losses.

            Chairman Pro Tem Cohen stated that the idea of the master lease is interesting.  He inquired about setting precedents where damage claims are concerned.  He asked if DHCA’s reimbursement to HOC would encourage private landlords to demand the same protection for their property from HOC.  Mr. Kramer stated that staff has not looked beyond HOC’s involvement with these units.   Mr. Kramer stated that perhaps DHCA would be willing to enter into similar agreements with private landlords.  He stated that DHCA reported a $5,000 loss last year.  Mr. Murphy pointed out that any precedent would be set by DHCA not HOC.  Mr. Murphy made several other comments regarding the opportunity to acquire units for residents in this location which is ideal. 

            Mr. Murphy credited Mr. Kramer for this innovative approach which could potentially prove appealing to other landlords.  Ken Tecler, General Counsel, stated that the precedent of damage recovery is attached to project based vouchers in the property.  He stated that other developers who seek reimbursement for damage claims may be more inclined to allow project-basing in their properties.

            Chairman Pro Tem Cohen stated that it is a terrific plan.  Mr. Kramer pointed out that the October 2002 Housing Choice Voucher payment standard provides money above the rents (approximately $100 per unit per month).  He explained that it creates approximately $29,000 of additional income to HOC.  He further explained that HOC will be required to pay the full rent to the landlord.  The Agency will collect the tenant’s portion.  The additional funds will be go to those efforts and to other costs such as Resident Services Division involvement.  Chairman Pro Tem Cohen pointed out that there will also be vacancy periods which the funds will cover.

            Mr. Kramer stated that the MPDU rent for a one-bedroom unit is $815.  The market rent for the same unit is $1,450.  For a two-bedroom, the MPDU rent is $980; the market rent for the same unit is $1,685. 

            Vice-Chairman Nelson asked for an explanation on the additional funds HOC will receive.  Mr. Murphy explained that the payment standard for the program are “reasonable rents”.  He stated that HOC can charge the maximum allowable amount under the payment standard, even though the rent charged by Rockspring is less than that amount.  The excess funds will go to HOC’s costs as identified earlier.  Mr. Murphy further explained that staff will make that proposal to HUD.

            Mr. Kramer stated that for a market rent of $1,480, the payment standard will allow $1,082.  He explained that staff is hopeful that HUD would agree to the maximum under the payment standard.  If the approval is received from HUD, HOC would indeed receive approximately $100 per unit, per month.

            Commissioner Kator inquired about increases in rent over the life of the ten-year lease.  Mr. Tecler indicated that MPDU rents adjust occasionally under certain market conditions.  Mr. Murphy stated that the HAP contract with the owner would provide for rent increases.  Although a cap has not been discussed, he stated that the discussions have revolved around tying the rent increases to the County MPDU rent increases.  He stated that there is the risk of the gap between the actual rent and the payment standard decreasing. 

            Mr. Kramer stated that the tenants will only have a one-year lease.  He explained that the owners realize that the program is subject to annual funding by Congress.  He went on to say that the owners also realize that HOC may have to drop out of the program at some point in time.

            Vice-Chairman Nelson moved, seconded by Commissioner Galloway, to adopt the resolution.  Affirmative votes were cast by Commissioners Cohen, Kator, Galloway, Nelson and Lasko.  Commissioners Bennett and Harris were necessarily absent and did not participate in the vote.

RESOLUTION:  02 – 96                                           RE:     Approval to Master Lease                                        Rental MPDUs

 

 

WHEREAS, the Housing Opportunities Commission of Montgomery County has the opportunity to rent 23 MPDUs at a new rental development in the Rockspring community in North Bethesda and is currently negotiating a Master Lease with the developer, Avalon Bay utilizing Project-Based Housing Choice Vouchers (HCV); and