HOUSING OPPORTUNITIES COMMISSION OF MONTGOMERY COUNTY

HOUSING OPPORTUNITIES COMMISSION OF MONTGOMERY COUNTY

10400 Detrick Avenue

Kensington, Maryland 20895

(240) 773-9025

M I N U T E S

November 5, 2003

03 - 13

A regular meeting of the Housing Opportunities Commission of Montgomery County was conducted on Wednesday, November 5, 2003 at 10400 Detrick Avenue, Kensington, Maryland beginning at 8:05 p.m. Those in attendance were:

Present

Richard Y. Nelson, Jr., Chair

Norman Cohen, Vice Chair

Y. Monroe Galloway, Chair Pro Tem

Ralph D. Bennett, Jr.

LaKeyia L. Thompson

Michael J. Kator

Roberto Piñero

Also Attending

Scott Minton, Executive Director Ken Tecler

Bill Murphy Lillian Durham

Stuart Raynor Peter Engel

Earl DeMaris Harold Kramer

Susan Yancy Lembit Jogi

Gail Willison Steve Lukaczer

Jack Berg William Anderson

Vivian Benjamin Kelly Gorman

Kayrine Brown John Rossbach

Jane Harrah

Dana Miller, Special Assistant to the Commission

Guests

Kathleen Albertson

Steve Singal

Chair Nelson called the meeting to order at 8:05 p.m. Chair Nelson apologized to staff and guests for the late start of the meeting. He explained that an Executive Session was conducted prior to the meeting. He then advised Commissioners to adjust the agenda to allow for Community Forum to be the first order of business.

I. COMMUNITY FORUM –

Ms. Kathleen Albertson of 11121 Stillwater Avenue, Kensington expressed concerns about a property in her neighborhood. Ms. Albertson stated that the house (11122 Stillwater) directly across the street from her is currently occupied by a Housing Choice Voucher Program participant family. Ms. Albertson informed the Commission of several concerns she has about the physical condition of the property, the number of children in the home, the behavior of the children and trash on the property.

Ms. Albertson explained that she not only lives across the street from the house, but she also owns the house next door to the property. Ms. Albertson stated that she has written a letter to HOC and has spoken with Joy Flood, Assistant Director of Rental Assistance, on several occasions. Ms. Albertson stated that she has “a problem with subsidizing a slum lord”. She stated that she has done everything to bring the matter to the attention of the Commission.

Chair Nelson explained that HOC does not own the property and because of that the landlord has responsibilities which must be met. He informed Ms. Albertson that staff would investigate the issues she raised. Mr. Minton confirmed that staff would investigate the matter and report back to the Commission. He stated that Bill Murphy, Director of Rental Assistance, would report back to Ms. Albertson.

The next person to address the Commission was Steve Singal who identified himself as a landlord and a practicing attorney in Maryland. He resides in Gaithersburg. Mr. Singal presented the Commission with a written copy of his statement.

Mr. Singal expressed his concerns about rent abatement policies at HOC. He stated that sometimes rent abatement can occur due to very minor complications. He stated that any HOC actions to abate rent should be done with a great deal of consideration for the hardship it places on the landlords. He stated that, as an attorney, the rent abatement procedures lead him to question whether due process is being afforded to the landlords.

Mr. Singal stated that he met with Bill Murphy and Winnie Thomas, Lead Inspector. Despite that, Mr. Singal stated that he continues to have problems with the inspection process. As and example, he stated that all of the letters which the inspectors send to landlords are unsigned. He questioned staff’s accountability with such a procedure. He stated that Mr. Murphy told him that providing signed letters to landlords would create an undue burden on his staff. Secondly, Mr. Singal stated that the letters should provide information to the landlords to explain the process for disputing items in the inspection. Mr. Singal then stated, that inspectors should be required to use a standardized list for all inspections. He explained that under the current procedures, the inspectors are given too much discretion.

Mr. Singal stated that he continues to have concerns about the lack of responsiveness on the part of HOC staff. He stated that his request for information under the Freedom of Information Act (FOIA) went without response for two months until he threatened to attend a Commission meeting to alert the Commission.

Lastly, Mr. Singal, informed the Commission that he has applied for a volunteer position with the Agency.

Chair Nelson thanked Mr. Singal for his remarks. He pointed out that his FOIA request went unanswered due to an error on the part of the staff. He stated that he did not believe that such requests are routinely handled in similar fashion. He informed Mr. Singal that staff would respond to the Commission regarding the other issues he raised. The Commission would, in turn, provide a response to him. Chair Nelson went on to explain that HOC is committed to creating good ongoing working relationships with landlords in its programs. He stated that the commission is interested in issues that landlords raise and would like to amicably resolve those issues.

Mr. Singal informed the Commission that a group of landlords have formed an organization called: “HOC Landlords”. He stated that he is the spokesperson for the group and he will be forwarding information to the Commission.

With regard to the discretion of inspectors, Chair Nelson pointed out that even HOC is subject to HUD inspections and the discretion of the inspectors. He explained that it is his hope that staff would be able to speak with the affected landlords and indicate the basis for the decisions which are questionable to the landlords.

II. CONSENT CALENDAR

Chair Nelson then called for consideration of the Consent Calendar. Kenneth Tecler, General Counsel, explained that Consent Item B had been modified. He provided written revisions to the proposed Plan and explained that the FSS Action Plan had been modified to clarify procedures for filing grievances.

Vice-Chair Cohen moved to adopt the Consent Calendar. Commissioner Bennett seconded the motion. Affirmative votes were cast by Commissioners Galloway, Thompson, Kator, Piñero, Nelson, Bennett and Cohen.

A. Approval of Minutes of October 1, 2003 - The minutes were approved as written.

B. Authorization to Include Waverly House in DHCD Capital Funds Securitization Bond Issue - The following Resolution was adopted:

RESOLUTION: 03-109 RE: Authorization to Include

Waverly House in DHCD

Capital Funds

Securitization Bond Issue

WHEREAS, Waverly House is a 158-unit public housing development that was constructed in 1970 in Bethesda, Maryland to serve the elderly whose incomes are in the lowest strata of the area’s median income limits; and

WHEREAS, in August 2003, the decorative brick panels along the building parapet failed, requiring the services of a structural engineering firm to determine the status of the building and provide a recommendation for repairs and who estimated cost of the repairs between $700,000 and $1 million; and

WHEREAS, the DHCD Capital Fund Securitization Bond Issue has not yet closed and DHCD allowed HOC to include the $1 million request for the repairs at Waverly House, adding to the $2.5 million in construction cost for Middlebrook Square; and

WHEREAS, by adding Waverly House, the estimated HOC loan from the DHCD bond proceeds is $3,977,500 (including financing costs) at 5.5% over 20 years, reflecting an increase of $1,093,500 over the original request for Middlebrook Square ($2,884,000); and

WHEREAS, participation in the DHCD bond issue obligates $328,300 of capital fund appropriation annually for 20 years, an increase of $93,300 over the original request for Middlebrook Square; and

WHEREAS, there are no risks to the Commission, but the benefits include raising funds for immediate public housing needs and availing the other HOC funds for use where alternative sources of capital do not exist.

NOW, THEREFORE, BE IT RESOLVED by the Housing Opportunities Commission of Montgomery County, that it hereby authorizes the staff to proceed with the review and processing of the necessary documents that allows it to raise approximately $1,093,500 for repairs and related financing costs for Waverly House and authorizes the Executive Director to execute all documents directly related to the transaction.

C. Authorization to Submit Revised FSS Action Plan to HUD - The following Resolution was adopted:

RESOLUTION: 03-110 RE: Authorization to Submit

Revised FSS Action Plan to HUD

WHEREAS, The Housing Opportunities Commission has operated the Family Self Sufficiency Program (FSS) since 1993, assisting Housing Choice Voucher and Public Housing residents to achieve economic independence; and

WHEREAS, HOC has been operating its FSS Program under an FSS Action Plan initially approved in 1993 and a HUD approved waiver from its stipulated participant level of more than 1,000 families to 441 (366 HCV and 75 public housing), based on the lack of available resources in the form of case management, child care, transportation, skills and academic training, tuition and books; and

WHEREAS, The Housing Opportunities Commission has developed a revised FSS Action Plan which refines and formalizes several programmatic procedures and enhancements which have been instituted over the intervening years, including refinements related to participant eligibility, recruitment, selection, termination/grievances and procedures for withholding services. Other items addressed in the Plan include the identification and availability of social service resources, partnerships with other agencies, information regarding the management and implementation of escrow accounts as well as procedures for escrow withdrawals upon graduation and interim withdrawals; and

WHEREAS, The Housing Opportunities Commission has sought and received endorsements of the revised FSS Action Plan from the Montgomery County Collaboration Council for Children, Youth, and Families (serving as the required FSS Program Coordinating Committee, PCC), the Resident Advisory Board (RAB), and the Montgomery County Department of Health and Human Services, DHHS.

NOW, THEREFORE BE IT RESOLVED that the Housing Opportunities Commission of Montgomery County approves and authorizes the submission of the revised FSS Action Plan to HUD for its approval and that a statement regarding the Revised FSS Plan be incorporated into HOC Annual Plan and the Housing Choice Voucher Administrative Plan.

III. INFORMATION EXCHANGE

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

1) New rates for health insurance for FY05 have been received. He explained that health, dental and vision has increased from $1.9 million to $2.2 million (12% increase). The County self-insurance fund premium increased from $556,370 in FY04 to $757,180 in FY05 (36% increase). There was a brief discussion about future increases and the feasibility of continuing to utilize the self-insurance fund. It was pointed out by Mr. Tecler that the 236 properties and the tax credit properties are not covered under the County’s Self-Insurance Fund.

2) Mr. Minton, Earl DeMaris, CFO, and Gail Willison, Budget Officer, attended a joint MFP / PHED Committee meeting on November 4^th to discuss the future of the Closing Cost Assistance Program. Councilmember Subin has advocated renewing the program and target police officers, nurses, firefighters, and teachers. Mr. Minton explained that such program is allowable under the law. As a funding source, proponents are suggesting the Housing Initiative Fund (HIF).

3) Action In Montgomery (AIM) has asked HOC to participate in a housing panel on November 16^th. Mr. Minton stated that Commissioner Piñero will participate in the event. He noted that the event will be done in Spanish to bring information to the Latino community. This is the first in a series of sessions.

4) HOC was well represented at the Governor’s Housing Conference. He noted that Tom DeBrine, Manager of Single Family Programs, was a presenter and several staff attended.

5) Mr. Minton appeared on Channel 4’s viewpoint program along with County Councilmember Subin and Rob Goldman of Montgomery Housing Partnership (MHP). The program aired on Sunday, November 2^nd. Mr. Minton stated that Councilmember Subin was very generous with his praise of HOC.

6) Chief of Staff, Annie Alston is not at the meeting because she is on vacation in Greece.

7) The first units on the master lease program at Avalon Bay have been occupied.

8) Mr. Minton reminded the Commission of a worksession on November 19^th. The worksesssion will cover resident demographics and an update on the Resident Services programs.

9) Mr. Minton reminded Commissioners that the January meeting will be on January 14^th.

10) Mr. Minton referenced an article from the Joint Center for Housing Studies. He noted that one of the co-authors is Ms. Lucille Harrigan. Ms. Harrigan has joined the County’s Committee Evaluation and Review Board (CERB).

Ms. Harrigan stated that she is a new replacement to the CERB. She explained that the Board is established every 10 years to study the boards, commissions and committees of the County. She noted that the CERB has sent out its interim report. After the CERB has finished its evaluations, it will make recommendations to the County Executive. Ms. Harrigan stated that she will be in touch with Mr. Minton and will make herself available to Commissioners as well. There was a brief discussion of upcoming articles which the Commission would like to review.

11) Mr. Minton informed the Commission that the FSS 10^th anniversary celebration was held on October 22^nd. Lillian Durham, Director of Resident Services, stated that 36 graduates of 2003 were honored at the event. She went on to state that many local, state and federal legislators were on hand for the 10^th anniversary. She presented the Commission with several proclamations and resolutions which were presented. Additionally, she presented a statement from Senator Paul Sarbanes which appeared in the Congressional Record.

12) Chair Nelson and Commissioner Bennett congratulated Ms. Durham and her staff for the many accomplishments over the 10 years.

Report on Feasibility of Regular HCVP / Landlord Meetings

Bill Murphy, Director of Rental Assistance, reported that staff is currently working on landlord outreach issues. He advised that he has a meeting scheduled for the following week with representatives of large and small landlords. He commented that Mr. Singal has expressed a desire for HOC to develop a training program for landlords who wish to participate in the program. Mr. Murphy stated that he gained insight and ideas from the recent NAHRO conference which he believes will be helpful in addressing the landlords’ concerns. He noted that it would take a long time to fully implement the programs. He stated that he and his staff are taking into consideration the comments and suggestions of landlords in the program.

B. COMMISSIONER EXCHANGE

Commissioner Bennett informed the Commission that he had a good time at the Waverly House 25^th anniversary event on Sunday, October 19^th. He stated that he also attended the Elizabeth House Senior Source groundbreaking ceremony. He stated that he is particularly impressed with Holy Cross Hospital’s willingness to be involved with the senior center.

Commissioner Bennett stated that he conducted a session on NIMBYism at the Governor’s Housing Conference. He spoke briefly about the session and the panelists.

Mr. Minton stated that the final session of the day was an introduction to the members of the Governor’s Commission on Housing Policy. Mr. Minton stated that the subcommittee volunteer members will be finalized at a meeting on November 19^th. Commissioner Bennett stated that he was invited to participate on the Land Use subcommittee. Although, he was unable to attend the first meeting, he submitted a written statement. Commissioner Bennett read the following statement:

I have noted the Mission, Goals and Outcome statement and want to go on record with a couple of positions which I would state, were I able to attend.

1.   If housing construction is limited, affordable housing construction will be limited; growth is inevitable - managed growth is essential and achievable.

2.   I do not believe that growth management regulation is necessarily restrictive to affordable housing. On the contrary, it can facilitate affordable housing by raising densities in selected locations and by allowing new combinations of land use. Other forms of land use regulation which restrict development without offering alternatives are much more inhibitive of producing affordable housing, as research has shown and I believe.

3.   State policies including allocation of tax credits, apportionment of benefits from DHCD programs and location of capital facilities can be enormously beneficial to the climate for housing affordability.

Mr. Murphy stated that the MAHRA board met earlier that day and spoke about the Governor’s Commission. He stated that two of the MAHRA board members are on the Commission. He explained that the Affordable Housing subcommittee is accepting remarks until March for a report which should be delivered to the Governor by next September.

Chair Nelson stated that he, Mr. Minton and Peter Engel, Director of Real Estate, had lunch Mr. Rick Edson who is a member of the Governor’s Commission. He stated that HOC needs to develop Montgomery county agenda with DHCA to present to the Commission. He explained that Mr. Edson indicated a willingness to present Montgomery County’s interests to the Commission.

Commissioner Bennett stated that he is a member of the Art Review Panel for the Park and Planning Commission. He explained that the Panel reviews art projects under the optional method of development. At a recent meeting, three multi-family projects were presented. He listed the developments as: Silver Spring Gateway project on East-West Highway, Bradley View in Bethesda, and Woodmont Corner in Bethesda. He pointed out that there will be opportunities associated with these developments for MPDUs and other affordable housing.

Chair Nelson stated that the quarterly meeting with the County Executive was held the previous week. He stated that it was a very good meeting in which the exchange of information and dialogue continued.

IV. COMMITTEE REPORTS

A. Budget, Finance and Audit Committee –

Vice-Chair Cohen reported that the Committee met on October 17^th to discuss five items.

1. Approval of Mechanics and Policies of Property Reserves and Reserves for Replacement and Guidelines for Use of Excess Cash Flow From Properties

Earl DeMaris, Chief Financial Officer, stated that the report focused on the properties which are directly owned by HOC. He informed the Commission that a report will be done on Section 236 properties and the tax credit properties. He stated that the Agency has sufficient reserves for replacement for the anticipated move that is included in the portfolio.

Kayrine Brown, Assistant Director of Mortgage Finance, stated that the proposed policy would allow staff to determine the annual reserves for each property and project the short and long-term capital needs. Further, it would provide a mechanism to move reserves from the general fund property reserves to properties as needed for capital improvements. Finally, the policy would allow the Agency to move excess cash from the properties to the general fund property reserves as needed.

Ms. Brown explained that a 10-year physical needs assessment for each property will be conducted by staff every five years. Annual interim updates will also be conducted to ensure that the replacement reserves for each property are adequately funded. She stated that 1.5 months worth of working capital will be allocated annually. Excess cash flow (after all expenses, debt service, replacement reserves and Agency overhead are funded) will be moved into the general fund property reserves.

Ms. Brown stated that staff has been working to develop a quantitative method for establishing the minimum annual deposits for each property. The data collected over the next three to five years will be analyzed to test the method which has been devised.

In response to a question to Chair Pro Tem Galloway, Ms. Brown explained that the Finance, Mortgage Finance and Management divisions have worked to establish an appropriate funding level for a property. The final decision was that 1.5 months of working capital would be adequate to fund ongoing operations at a property. There was a brief discussion.

Commissioner Bennett move to adopt the resolution. Chair Pro Tem Galloway seconded the motion. A unanimous affirmative vote was cast by Commissioners Nelson, Piñero, Kator, Thompson, Galloway, Cohen and Bennett.

RESOLUTION: 03-111 RE: Approval of Mechanics

and Policies of Property

Reserves and Reserves for

Replacement and

Guidelines for Use of

Excess Cash Flow From

Properties

WHEREAS, on June 12, 2002 the Commission requested that staff develop a policy on property reserves and reserves for replacement and report on the mechanics by which the policy is to be implemented and on April 9, 2003, the Commission also requested that staff develop and present guidelines for use of excess cash flow from properties; and

WHEREAS, two interim reports were presented to the Budget Finance and Audit Committee in November 2002 and February 2003, reporting on the available property reserves and the ten-year capital needs of the Commission’s properties; and

WHEREAS, a final report was made to the same Committee in October 2003, incorporating the guidelines for use of excess cash flow from properties; and

WHEREAS, the reserves policy is intended to determine annual property reserves, project capital needs for each property and allocate cash flow from the General Fund Property Reserve to the replacement reserve account for each property to fund two years of projected capital needs; and

WHEREAS, the mechanics for implementing the policy includes conducting a five-year engineering study with annual updates for all properties, funding a working capital account of 1.5 months of operating cash, funding the replacement reserves accounts, and allocating funds to meet the two-year requirement for each property; and

WHEREAS, excess cash flow after operating expenses, debt service, fees, replacement reserve deposits, allocation for HOC overhead, and 1.5 months of working capital will be deposited into the General Fund Property Reserve account for use at the Commission’s discretion.

NOW, THEREFORE, BE IT RESOLVED by the Housing Opportunities Commission of Montgomery County, that it hereby approves the policy on property reserves and reserves for replacement, the mechanics for implementing the policy, and the guidelines for use of excess cash flow from properties as described in the foregoing memorandum.

2. Approval of First Quarter FY04 First Quarter Budget Amendment

Gail Willison, Budget Officer, stated that staff is seeking approval of a budget

amendment which includes $357,330 in new revenues for the Agency. She explained that $232,760 will be restricted to an operating reserve. Also included is a request for 3.5 new work years which will be funded from identified new revenues or from the Capital Fund Program. Ms. Willison pointed out that no policy changes are associated with the amendment.

In response to a question by Commissioner Bennett, Ms. Willison explained that the breakdown of work years is: two accountants (2 work years), a part-time Welfare-To-Work program assistant (.5 work years), and a project manager (1 work year) to work with Housing Management and Modernization divisions for the large amount of upcoming rehabilitation work at Agency-owned properties.

Vice Chair Cohen moved to adopt the resolution. Commissioner Thompson seconded the motion. The resolution was adopted by a unanimous vote from Commissioners Kator, Piñero, Bennett, Nelson, Galloway, Thompson and Cohen.

RESOLUTION: 03-112 RE: Approval of First Quarter

FY04 First Quarter Budget

Amendment

WHEREAS, the Housing Opportunities Commission adopted a budget for FY’04 on June 4, 2003; and

WHEREAS, the Commission’s budget policy allows for amendments to the budget; and

WHEREAS, the Commission has reviewed several proposed budget amendments to the FY’04 Budget.

NOW, THEREFORE, BE IT RESOLVED by the Housing Opportunities Commission of Montgomery County, that it hereby amends the FY’04 Operating Budget by increasing total revenues and expenses for the Agency from $177.8 million to $178.1 million.

BE IT ALSO RESOLVED that the Housing Opportunities Commission of Montgomery County hereby amends the FY’04 Capital Budget by decreasing revenues and expenses in the Public Fund by $35,000 for a total Capital Budget of $35,822,520.

Approval of CY04 Tax Credit Partnership Budgets

Ms. Willison stated that staff was seeking ratification of the budgets which were submitted to the limited partners on November 1, 2003 after approval by the Budget, Finance and Audit Committee on October 17, 2003. She stated that the 15 Tax Credit Budgets are projected to show a cash flow, before distributions, of $834,750. She stated that this year, HOC will distribute $610,380 in ground rent to the Agency. Three partnerships are projected to have a negative cash flow. As managing cash partner, HOC is required to fund any cash deficits that occur in the operation of the tax credit projects. Therefore, HOC will advance cash loans totaling $45,250 to the partnerships. Ms. Willison pointed out that The Metropolitan and Strathmore court are not included in the budgets because these partnerships provide for a fiscal year that is concurrent with the Agency’s annual fiscal budget.

Chair Nelson explained that the information was submitted to the limited partners prior to Commission approval to avoid a special meeting of the Commission. He further explained that the Budget, Finance and Audit Committee reviewed the budgets prior to submission to the partners. Ms. Willison explained that the limited partners were also informed of the process.

Commissioner Bennett moved to adopt the resolution. Vice-Chair Cohen seconded the motion. The resolution was adopted by a unanimous vote from Commissioners Kator, Piñero, Thompson, Nelson, Galloway, Bennett and Cohen.

RESOLUTION: 03-113 RE: Approval of CY04 Tax

Credit Partnership Budgets

WHEREAS, the Housing Opportunities Commission of Montgomery County is the General Partner who manages the business and is liable for the debts of 15 tax credit partnerships; and

WHEREAS, the limited partners in these 15 tax credit partnerships have contributed money and share in profits, but who take no part in running the business and incur no liability with respect to the partnership beyond their contributions; and

WHEREAS, the tax credit partnerships are unique within the Housing Opportunities Commission’s property portfolio since they are not HOC entities but managed properties and have no separate Boards; and

WHEREAS, since the Housing Opportunities Commission has a financial obligation to cover all debts, it has an interest in the successful performance of these partnerships and as such should review their performances and approve their budgets.

NOW, THEREFORE, BE IT RESOLVED by the