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Meeting Packet - Housing - 12/19/2011 BOULDER HOUSING PARTNERS REGULAR MEETING OF THE BOARD OF COMMISSIONERS DECEMBER 19,20112:30 PM BHP OFFICE 4800 N. BROADWAY, BOULDER COLORADO Our primary mission is to provide duality affordable housing that is developed and managed with respect for the dignity of all involved. We also seek to create a sense of community strength and spirit that supports resident efforts to realize success in their lives. REGULAR AGENDA 1. Call to order II. Determination of Quorum III. Public Participation" IV. Board Announcements- 1. Call for Executive Session per Colorado Statute C.R.S. 24-6-402(4)(a) to discuss Real Estate matters V. Board Development- New Markets Tax Credits, 2011 Highlights VI. Committee Reports 1. Governance 2. Finance/Audit 3. Resident Representative Council 4. Boulder Housing Partners Foundation 5. Development VII. Approval of the Agenda VIII. Consent Agenda 1. Minutes from November 14, 2011 2. 2011 BHP Employee Handbook Changes IX. Action and Discussion Agenda Director's Report 1. 2012 Board Goals for City Council 2. Year in Review 3. Proposed 2012 Meeting Dates Management Report 1. Resolution #16: Approval of the combined operating and capital budget 2. October 2011 Financial Summary 3. Midtown Development Report 1. Lee Hill Housing: 2. High Mar 3. Boulder Transit Village 4. Resolution #17: Authorization to Expand Private Activity Bond X. Executive Session per Colorado Statute C.R.S. 24-6-402(4)(a): Real Estate Matters XI. Adjourn Any member of the public is invited to address the Board on any topic that is on, or not on, the agenda during Public Participation. Anyone wishing to speak will have the floor for a maximum of 3 minutes. BOULDER HOUSING PARTNERS REGULAR MEETING OF THE BOARD OF COMMISSIONERS DECEMBER 19,20112:30 PM BHP OFFICE 4800 N. BROADWAY, BOULDER COLORADO Our primary mission is to provide quality affordable housing that is developed and managed with respect for the dignity of all involved. We also seek to create a sense of community strength and spirit that supports resident efforts to realize success in their lives. REGULAR AGENDA 1. Call to order II. Determination of Quorum III. Public Participation" IV. Board Announcements- V. Board Development- New Markets Tax Credits VI. Committee Reports 1. Governance 2. Finance/Audit 3. Resident Representative Council 4. Boulder Housing Partners Foundation 5. Development VII. Approval of the Agenda VIII. Consent Agenda 1. Minutes from November 14, 2011 2. 2011 BHP Employee Handbook Changes IX. Action and Discussion Agenda Director's Report 1. 2012 Board Goals for City Council 2. Year in Review 3. Proposed 2012 Meeting Dates Management Report 1. Resolution #16: Approval of the combined operating and capital budget 2. Financial Summary 3. Midtown 4. October 2011 Financial Summary Development Report 1. Lee Hill Housing: 2. High Mar 3. Red Oak Park 4. Resolution #17: Authorization to Expand Private Activity Bond X. Adjourn Any member of the public is invited to address the Board on any topic that is on, or not on, the agenda during Public Participation. Anyone wishing to speak will have the floor for a maximum of 3 minutes. BOULDER HOUSING PARTNERS REGULAR MEETING OF THE BOARD OF COMMISSIONERS NOVEMBER 14,2011,2:30 PM 4800 BROADWAY, BOULDER COLORADO Commissioner Topping Betsey Martens Public: Commissioner Eckert Jim Koczela Tom Haggerty Commissioner McCormick Tim Beal Commissioner Ageton(absent) Willa Johnson Commissioner Holton Liz Wolfert Commissioner Klerman Karen Kreutzberg Commissioner Hempel Anna Kay Johnson Commissioner Lawrence Kevin Knapp Commissioner Mitchell Shannon Cox-Baker Penny Hannegan 1. Call to order Commissioner McCormick called the regular meeting of the Board of Commissioners to order at 2:33 pm. II. Determination of Quorum A quorum was declared. III. Public Participation There was no public participation IV. Board Committee Reports Governance Commissioner Lawrence, reporting for the Governance Committee, stated that the committee has been working to identify potential Board candidates with the skills identified in the board matrix as essential to the Board's composition. The committee encourages those interested in serving as a Commissioner to attend a Board meeting prior to applying. 1 Finance The Finance Committee met to review the first draft of the 2012 budget on November 7t'. Changes were incorporated into the draft presented at today's meeting. RRC Commissioner Hempel reported for the Resident Representative Council. He stated that the composition of the RRC will change with BHP's MtW status and will be able to include membership from non-public housing communities. Foundation Commissioner Holton, reporting for the Foundation Board, shared the Foundation budget and 2011 expenditures with the Board. He stated that the Board is currently involved in a fundraising campaign. He will provide monthly budget and expenditure updates in the fixture. Development Commissioner Lawrence, reporting for the Development Committee, provided an update on several potential acquisitions. VI. Approval of the Agenda Consent agenda items: 1. Minutes from October 10, 2011 2. Resolution #13: 2012 Payment Standards for Section 8 Voucher Program COMMISSIONER TOPPING MOVED TO APPROVE THE CONSENT AGENDA AS AMENDED. COMMISSIONER KLERMAN SECONDED THE MOTION. The motion passed unanimously. VII. Action and Discussion Agenda Director's Report 2 The December Commissioners meeting has been moved to December 19tH The Finance and Development Committees will meet on December 14th. The Board congratulated Betsey for her successful candidacy and election as President of NAHRO, the National Association of Housing and Redevelopment Officials. Management Report 2012 Budget and Work Plan Jim K. presented the first draft of the budget and 2012 work plan and answered questions from the Commissioners. The final budget will be presented for adoption at the December 19th Board meeting. September 2011 Financial Summary Jim K. presented the September financials and answered questions from the Board. There was a request from Commissioner Lawrence for additional clarification about the energy savings resulting from the Energy Performance Contract work by Johnson Controls. It was suggested that a recap of the investment and results be a Board development topic in 2012. North Haven COMMISSIONER KLERMAN MADE A MOTION TO SUBMIT NOTICE OF OUR INTENT TO OPT OUT OF THE CURRENT HAP CONTRACT WITH CHFA AFTER NOVEMBER 30, 2012. COMMISSIONER TOPPING SECONDED THE MOTION. The motion passed unanimously. Development Report Public Housing Conversion: Resolution #14: Authorizing the Disposition of 337 Public Housing Units Betsey and Liz W. presented a revised Resolution #14. COMMISSIONER TOPPING MOVED TO APPROVE THE AMENDED RESOLUTION #14. COMMISSIONER HOLTON SECONDED THE MOTIOIN. The motion passed unanimously. 3 1175 Lee Hill Shannon gave an update to the Board about the neighborhood outreach effort for 1175 Lee Hill. The Board reiterated the importance of communicating that Lee Hill will provide important housing for homeless vets. COMMISSIONER TOPPING MADE A MOTION TO APPROVE RESOLUTION #15 EXPRESSING ITS INTEN'T' TO DELAY SUBMISSION OF AN APPLICATION UNTIL THE LAND USE REGULATIONS GOVERNING HOUSING FIRST COMMUNITIES ARE EITHER AFFIRMED OR CHANGED. COMMISSIONER KLERMAN SECONDED THE MOTION. The motion passed unanimously. The Board will reassess this matter after the City Council study session scheduled on December 13, 2011. COMMISSIONER KLERMAN MADE A MOTION TO RECESS INTO EXECUTIVE SESSION AS PER COLORADO STATUTE CRS-24-6- 402 4(A) TO DISCUSS REAL ESTATE MATTERS. COMMISSIONER KLERMAN SECONDED THE MOTION. The motion passed unanimously. VIII. Adjourn COMMISSIONER TOPPING MADE A MOTION TO ADJOURN THE REGULAR MEETING OF THE BOARD OF COMMISSIONERS. COMMISSIONER LAWRENCE SECONDED THE MOTION. The motion passed unanimously. The regular session of the Board of Commissioners adjourned at 6:00 pm SEAL DATE: 11/14/11 ANGELA MCCORMICK,CHAIR Boulder Housing Partners 4 BETSEY MARTENS Executive Director PENNY HANNEGAN Recording Secretary 5 MEMORANDUM To: Board of Commissioners From: Betsey Martens, Executive Director Subject: Director's Report Date: This month's Director's report includes: Consent: 2011 BHP Employee Handbook Changes Action: 2012 Board Goals for City Council Year in Review Proposed 2012 Meeting Dates Updates: Board Development - New Markets Tax Credits NAHRO update and Federal Issues Attachments: 2011 BHP Employee Handbook (by email) 2011 Council Goals Calendar of Proposed 2012 Meeting Dates City Issues affecting Affordable Housing Overview of the Meeting: This Board meeting has one consent item (below) regarding your annual approval of changes to our employee personnel manual. We also have the adoption of the 2012 Budget and Work Plan. Based on your comments last month and discovery in the interim, there are very few changes to the final document. Also in management, we have an update about our thinking about Midtown based on conversation last month and a comprehensive report on capital improvements and restructuring in the Resident Services department. In development discussion, Lee Hill is top of the agenda because we rescheduled this Board meeting in order to debrief the Council study session. The anticipated timing of Lee Hill has an impact on High Mar and other projects. Consent: 2011 BHP Employee Handbook Changes The BHP Employee Handbook's major focus is to describe the legal relationship between BHP and the BHP employee. The main basis for its content is City, State and Federal employment law, thereby making it a permanent document with changes mainly dictated by changes in the law. All major changes to this handbook are reviewed by our employment attorney. 1 A second BHP document, the Personnel Practices Manual, represents the day-to-day practices of BHP and is subject to more frequent changes. While this manual is reviewed by legal counsel, it does not attempt to implement the law verbatim; rather it represents the policy and the practice of the law in daily BHP operations. The Commissioners approved the original BHP Employee Handbook in February 2009. The Board doesn't approve the Practices Manual. The Handbook is being sent via electronic mail given its size. Changes to the Employee Handbook for your approval include several clarifications and two new policies. The two new policies consist of: 1. Timing of insurance coverage for terminating employees (p.12), and 2. Company cell phone use (p.26) Employees leaving BHP used to have to work until the 15th of the month to get insurance coverage for their terminating month. Moving the date to the first of the month is a business standard and is consistent with the City of Boulder's policy and COBRA coverage. The cell phone policy was developed to clarify for employees that all information contained in their company cell phone is subject to discovery by BHP and therefore subject to disclosure or seizure by BHP. We wanted to convey that employees should have no expectation that any communications transmitted using their business or personal cell phone would be private or confidential. Both of these policies have been discussed and agreed upon by leadership staff and have had legal counsel review and approval. We request a motion by consent adopting these two changes. Action: 2012 Board Goals for City Council Per the request of the City Council, all Boards and Commissions are asked to prepare a list of their top 3 goals for which they would like Council's help next year. They have requested our list by December 28th. We've attached the goals we submitted last year as reference and suggest that most of them could be carried forward into 2012: 1. Continued request for support with developing High Mar and Lee Hill; 2. Continued request for support in reducing regulatory costs and speeding the development review process; and 3. Request to keep the recommendations of the Affordable Housing Task Force alive in the discussion, particularly the recommendation about Community Benefit Ordinance. 2011 - Year in Review It is our practice to provide a recap of the year at our February meeting when we have final numbers and final reports. Given that this is the last meeting in the year, it seemed 2 important to note that we have had a very successful 2011. There are a number of things competing for top billing. We: Applied for, and received, MTW status Restructured many of our operations under the MTW vision Refinanced the mortgage at Bridgewalk to allow us to initiate Phases Il and III at the site. The site is an already transformed and beautiful asset. Completed more than $11 million in capital improvement work, Completed the Energy Performance Contract project and made good progress on energy baselines for careful analysis. Restructured the Resident Services program, consistent with the MTW vision. Helped the BHP Foundation gain significant capacity and raise $59,000 in grants and donations. Fully leased all of the units at Red Oak Park Completed the entitlement process for High Mar, applied for tax credits and analyzed alternate financing options Initiated the entitlement process for Lee Hill and then managed an engaged community process Sold Bluff, closing out the planned asset sales. There is no doubt that this list, written prior to our traditional all-staff review, might omit some key accomplishments. Taken as a snapshot, however, it was a great year. Calendar of proposed 2012 meeting dates The 2012 Board and Committee calendar is attached for your review. We have kept the summer recess in August since it seemed to better accommodate family and staff vacations. We have also kept the Board Retreat on a Friday afternoon later in September to maximize attendance. Please let us know during, or before, the meeting if the proposed calendar fits your schedule. Updates: Board Development: The Board focus this month is the New Markets Tax Credit (NMTC) program. We have considered use of NMTC several times, most recently in the context of the proposed Boulder Transit Village project. While we are not recommending pursuit of that project, we wanted the tool to be familiar to you for the next time it comes up. NAHRO Update and Federal Issues affecting Affordable Housing 3 I was in Washington, D.C. last week for a series of productive meetings about the impact of the FY2012 appropriations on our programs. The key reductions in our programs are summarized belowl: 201.1 2012 % PH Operating Subsidy 4,617 3,962 -14.19% PH Capital funds 2,040 1,875 -8.09% S8 HAP 16,699 17,242 3.25% S8 Admin Fees 1,397 1,300 -6.94% CDBG 3,501 3,308 -5.51% HOME 1,607 1,000 -37.77% The large public housing operating subsidy reduction is proposed to be offset by a request to PHAs to use their reserves if reserve balances exceed 4 months of operating subsidy. When HUD factors in the use of excess reserves they expect the net reduction in funding to be no more than 5%. BHP's reserves are less than the minimum calculation so we expect to be "fully" funded. It won't surprise you to hear that many PHAs in the country objected strongly to the reserve offset proposal and apparently hundreds have already filed an appeal of HUD's calculation. The status of the appeal will affect the final pro-ration, meaning that if many appeals are successful the reduction in appropriated funds will be larger. With respect to communicating appropriations impact, I met with staff from both Senators' offices (Udall and Bennett) and staff from Congressman Polis and Perlmutter's office. I also met with staff to the Senate Banking Committee. As a solution to the significant reductions in funding, NAHRO is pressing for a strong deregulation agenda (including a legislative proposal NAHRO drafted called Small Housing Agency Regulation Proposal - SHARP); and strongly advocating for deregulation and reform as described in a bill known as the Section Eight Savings Act (SESA), as well as a bill to expand the number of MTW agencies. I also met with the Assistant Secretary of HUD on a series of reform requests that NAHRO and its colleagues have been promoting. The meeting held some strong promise for non- MTW agencies desperately looking for some relief. City Issues affecting Affordable Housing Summary: There were several issues that staff identified for Board review that are currently under consideration by the City of Boulder; a summary is included in the attachments. r Numbers are in the millions. 4 Boulder Mousing 4800 N. Broadway, Boulder, CO 80304 Partners Phone: (720) 564 -4610 Fax: (343) 939-9569 A Hotisbig Authority Shice 1966 www.boulderho-usingpartners.org To: City Council From: BHP Board of Commissioners Re: Request for Council support in 2011 Date: January 5, 2011 1. Support for new senior citizens housing at the former High Mar Swim Club site and new supportive housing for the chronically homeless Senior Housing at High Mar: The largest source of equity (grant fiords) for affordable housing development comes in the form of low income housing tax credit investments (LIHTC). The LIHTC program has become ever more competitive as the economy has flattened. Applicants could wait several years to receive an allocation of credits. At the same time, we've learned that two things help expedite an application: political support from the local community and strong financial support from the local community. Our Red Oak Park application had waited what has become an average length of time, but was certainly helped when the Mayor and Council participated directly in the process by contacting the allocating authority. The City's assurance of financial support in awards from its federal grant allocation, and political support in the form of letters, phone calls and even a Resolution will help insure the swift completion of this needed project. Supportive Housing at Lee Hill: We expect to be going through the development review process next year for a 31-unit project providing a permanent and supportive home for people who are chronically homeless. We would appreciate Council's active support for this project as we begin to work with the north Boulder neighbors next year. As above, the City's assurance of financial support in awards from its federal grant allocation, and political support in the form of letters, phone calls and even a Resolution will help insure the swift completion of this needed project. 2. Explore what the city can do to reduce risk, cut regulatory costs and speed the development review process to reduce development costs overall. At our study session in August, we talked extensively about doing a comprehensive review of the ways in which city codes, requirements and processes add to the cost of building or buying affordable housing. Your support for the adoption of a Community Benefit policy in the Boulder Valley Comprehensive Plan will help ensure that this conversation continues for both affordable housing and other needed community facilities and services. 3. Revisions to the Community Housing Assistance Program (CHAP) EQUALHO sine oPPoftT NITY The resources that come to BHP, and others, from the CHAP, the Affordable Housing Fund, and CDBG/ HOME programs have been key to the progress we've made toward the City's 10% goal and for helping to build an innovative and successful affordable housing sector in Boulder. City staff have planned a series of discussions about possible changes to the funding approach. We look forward to working with your staff and the other affordable housing providers in the community to review program implementation to assure that it is the most effective and efficient as possible. We hope that the public process doesn't compromise the long-standing commitment, and the original intent of the program, which was to create predevelopment or early dollars for projects as an incentive to help leverage other sources of private investment to help meet the City's 10% goal. This will help assure the timely completion of the review process before the competitive fund round starts in July 2011. OPP9RTUNiTV ATTACHMENT Summary of Current City Issues Affecting Affordable Housing City Funding Allocated to Community Partners & Other Community Organizations At the end of November, grant recipients were announced for both the City's Youth Opportunity Program funds and the Human Services Fund. Recommendations for Youth Opportunity Program Funds are made by the Youth Opportunities Advisory Board (YOAB), comprised of 16 Boulder resident high school students. All awardees provide "cultural, recreational or educational activities for middle and high school age city resident youth," that satisfies a community need for youth opportunities identified by the City. The total funding award equaled about $196,000. A technical review committee for the Human Services Fund awarded about $2.2 million in grants to 54 programs serving the Boulder community that provide human services safety net and prevention/early intervention services. We are pleased to report that several of our community partners were on the list of awardees as well as other community organizations that serve the needs of our community. Their continued funding by the City affirms the important work that each organization does for the Boulder community. Some organizations of note for these funds include: the I Have a Dream Foundation of Boulder County, Growing Gardens/Cultiva Project, the YWCA of Boulder County, Intercambio, Mental Health Partners, Clinica, Dental Aid, Safehouse Progressive Alliance for Nonviolence, Community Food Share, Boulder Shelter for the Homeless and Boulder Outreach for Homeless Overflow, Bridge House (formerly the Carriage House), Center for People with Disabilities, Care Connect, Meals on Wheels, Special Transit, and Emergency Family Assistance Association. Upon request, we can provide the Board with a complete list of awardees and description of programs the grants will support. Update on Relocation Efforts by the Bridge House (formerly the Carriage House) The Carriage House, now known as the Bridge House, and currently located in a historic carriage house at 1120 %2 Pine Street, has been working for two years to find a new location. The Bridge House offers a place for those who are experiencing homelessness or living in poverty to access resources that will enable them to become self-sufficient, such as case management, internet access, connection to health and mental health professionals and support groups, employment services, meals, and community support. The current small carriage house facility is too small to adequately accommodate the number of people who come for day services. It is also not large enough for sufficient private staff work space or space for group gatherings. For the past two years, the Bridge House has been working to identify a larger facility in an appropriate location for their services. The Bridge House has recruited representatives from the City, County, the research and business community, and members of the CU School of Architecture and Planning to assist in identifying and evaluating potential sites. To date, 36 potential sites have been identified and evaluated by the committee, including sites near Broadway and Arapahoe, Broadway and Balsam, and in the Diagonal Plaza area. The Bridge House conducted neighborhood outreach meetings regarding the two sites along Broadway and were met with adamant objection. There are no sites currently under consideration by the Bridge House. We will update the Board as new information becomes available. Summary from 2011 Food Tax Rebate Program Since its inception in 1967, the Food Tax Rebate Program has offered Boulder's low income families, seniors and disabled individuals the opportunity to receive a flat yearly rebate to compensate for sales tax paid on food. Applications for the Food Tax Rebate are accepted from March-June each year through the City's Housing and Human Services Department. This is one of the many community services available to our qualifying residents. In 2011, the rebate equaled $71 for individuals and $217 for families. This year, rebates were distributed to 780 applicants. Of these: • 475 rebates were issued to senior (age 62 individuals 60% • 155 rebates were issued to families 20% 150 were issued to disabled individuals 20% Twenty-one fewer applications were received in 2011 than in 2010. At the same time, the City is reporting that an increasing proportion of seniors have applied for this rebate since 2007. 8 City Supports Two New Early Childhood Education Centers Boulder will soon have two new affordable early childhood education and child care centers thanks to action taken by the City. Over the summer, the unused historic Mapleton School (at 9"' and Mapleton) was given $3.5 million in Education Excise Tax to be renovated for use as an early childhood education center. This effort was undertaken in conjunction with the Boulder Valley School District (BVSD), who owns the school and who will provide the programming. It is the goal of BVSD that the Mapleton School and its program support children from low-income families. The funds will also help preserve the historic school. On October 4, the City Council authorized a loan of about $960,000 of Education Excise Tax to the Acorn School to support their plans to acquire and construct a comprehensive early childhood center, called the Wilderness Place Project, in east Boulder. The Wilderness Place center will provide affordable high quality early childhood care and education and will partner with other community service partners to deliver these services. Early childhood education is often identified as a critical component of a child's later success at school and as adults. Quality affordable childcare outside of the home also plays an important role in a child's parents' ability to work or take advantage of educational opportunities. Increasing the number of affordable quality preschool and childcare opportunities within the city will increase the options available to lower-income families. 2012 BHP Commissioner's Calendar Board Meeting Finance Development Purpose: Board Date: Committee Committee Activity/Report ' Mon. Feb 6 Mon. Jan 30 Mon. Jan 30 Board Meeting Quarterly Report 2:30 pm 4:00 pm 5:00 m Mon. March 12 Mon. March 5 Mon. March 5 Board Meeting Partnership award 2:30 m 4:00 pm 5:00 m Mon. April 9 Mon. April 2 Mon. April 2 Board Meeting Quarterly Report 2:30 pm 4:00 pm 5:00 pm held at Walnut Place 1940 Walnut Mon. May 14 Mon. May 7 Mon. May 7 Board Meeting BHP 2:30 pm 4:00 pm 5:00 pm Mon. June 11 Mon. June 4 Mon. June 4 Board Meeting Partnership award 2:30 m 4:00 m 5:00 pm Monday, July 9 Tues. July 2 Tues. July 2 Board Meeting Quarterly Report 4:00 pm 5:00 pm a~4ug Mon. ~ Men. Aug Summer Break Summer Break 4:00 pm 5:00 pm Mon. Sept. 10 Tues. Sept 4 Tues. Sept 4 Annual Meeting Election of Officers 2:30 pm 4:00 pm 5:00 pm Annual Dinner after Board meeting Mon. Oct. 8 Mon. Oct. 1 Mon. Oct. 1 Board Meeting Quarterly Report 2:30 pm 4:00 pm 5:00 pm Partnership award Mon. Nov. 12 Mon. Nov 5 Mon. Nov 5 Board Meeting 2013 Budget-1St 2:30 pm 4:00 pm 5:00 pm reading Mon. Dec. 10 Mon. Dec. 3 Mon. Dec. 3 Board Meeting Final 2013 Budget 2:30 pm 4:00 pin 5:00 pm review Personnel and Governance committees meet as needed Board Retreat Date: Friday, September 212-5 pm /d MEMORANDUM To: Board of Commissioners From: Management Staff Subject: Report of Activity Date: This month's Management report includes: Consent: None Action: Resolution #16: Approval of the combined operating and capital budget Financial Summary Midtown Updates: Occupancy and NOI Capital Improvements Program Resident Services Attachments: Resolution #16: Approval of the 2012 combined operating and capital budget 2012 Final Budget and Budget Narrative Financials CONSENT ITEMS: None at this time ACTION ITEMS: Resolution 1416: Approval of the 2012 combined operating and capital budget We will be presenting the proposed 2012 budget at this meeting for final adoption. Included with the budget narrative is the financial summary, a five year capital plan and a budget summary for the tax credit limited partnerships. October 2011 Financial Summary October 2011 Boulder Housing Partners year-to-date revenues of $16,892,041 expenses of $14,783,052 and gains from disposition of property and extraordinary items of $962,417 results in net 1 ~f income of $3,071,407 versus a budgeted income of $2,045,372. The positive variance of $1,026,034 is explained as follows: Statement of Activities Tenant Dwelling Rental Income of $3,861,996 is unfavorable to budget by $121,997 (A) primarily due to the increased vacancies and concessions at Bridgewalk resulting from the rehabilitation work on the property. Rental Write-offs are unfavorable to budget by $17,912 (B) as a result of a cleanup of the outstanding receivables list and changing our accounting to establish a reserve for Bad Debt during the remainder of 2011. Development Fees are favorable to budget by $184,973 (C 1) as a result of the recognition of $92,000 from Red Oak Park Solar Installation that was added to the project in 2011 and $124,838 related to grant management fees on Capital Grant projects. These management fees are directly offset by the negative variance of $124,838 (C2) in Capital Improvement Grant Management Fee expense. These two offsetting variances (C l & 2) result from an accounting change for both development fees earned from capital grants to accommodate HUD reporting. These items will be eliminated in the year end consolidated financial statements. Federal Capital Grants unfavorable variance of $350,247 (D) is a timing difference between budget and actual spending on capital projects. A portion of the 2011 allocation of Capital Funds for Public Housing is now being targeted to MTW use in 2012 so the variance is expected. Interest Income positive variance of $91,348 (E) relates to additional interest on the new Sage Court note 1 and to the interest subsidy received from the Federal Government for the Qualified Energy Conservation Bonds (QECB) and Build America Bonds (BAB) that were used to finance the Energy Performance Contract. The Treasury refunds 70% of the interest charged on the QECB and 35% of the interest on the BAB resulting in significantly lower effective interest rates. Our auditors have confirmed that we are required to classify this subsidy as income rather than reducing the interest expense. The Miscellaneous Revenue positive variance of $275,366 (F) includes a rebate of $161,000 from Xcel Energy for the solar system installed on Walnut Place. This cash was used to complete the Northport Solar system. In addition, we have received unbudgeted income from Section 8 fraud recoveries and FSS forfeitures totaling $57,000. Of this amount only $21,000 is available for Section 8 administrative expenses. The remainder is restricted to future HAP. Extraordinary Maintenance of $203,700 (G) includes expenditures for siding repairs at Kalmia; electrical work at Madison, Manhattan and Hayden Pl.; hazardous materials testing across all sites; unexpected rental license inspection fees; and $76,000 for bedbug work across the portfolio. Beginning in 2012 rental license fees and bedbugs will be budgeted and recorded in ordinary expense. 1 As a reminder, the 2011 budget assumed Thistle would pay the Sage Court note in full at maturity. In fact, we refinanced the note and rolled the unpaid accrued interest into the principal amount. We will be earning $1,570/month on the new note. 2 Selling expenses of $20,096 (H) relate to the sale of the property on Bluff Street which was completed in June. Amortization expense unfavorable variance of $166,377 (I) includes the write-off of $116,000 resulting from the correction of errors in the original set-up of amortization schedules for several loans. The amortization expense was recorded based on the amortization period rather than to loan maturity. Additionally, in July we expensed the remaining $28,255 of costs of the Mercy Loan for Bridgewalk which was paid off prior to maturity. Depreciation favorable variance of $99,912 (J) results from the delay vs. budget expectations in delivery of various construction projects such as the EPC and Bridgewalk. HCV-HAP Expense positive variance of $261,033 (K) relates to the slower than budgeted lease up of the 100 new vouchers for non-elderly disabled individuals. These vouchers are now fully leased so this variance should not continue to grow. Gain on Disposition of Property of $545,516 (L) includes $480,400 from the sale of the Bluff Street property and $58,000 from the reversal of predevelopment expenses for Red Oak Park. We were able to reimburse BHP for these expenses from the savings achieved in the construction of Red Oak Park. Extraordinary Income of $416,901 (M) includes the recognition of the forgiveness of debt by the City of Boulder in the amount of $326,901 (principal and interest) relating to Woodlands and the insurance settlement of $90,000 we received for the roof damage at Walnut Place. Balance Sheet The year-to-date increase in unrestricted cash of $504,716 (N) is more fully explained on the monthly cash report however the major items contributing to the increase are the receipt of $92,700 of developer fees for Red Oak Park Solar, $277,000 from the sale of Bluff, $268,000 in developer fees from Broadway West, Walnut Place insurance settlement of $90,000 and the release from restriction of $186,000 that was previously set aside for Red Oak Park construction contingency. These are partially offset by the reduction in Accounts Payable. The decrease in Accounts Receivable $1,029,672 (O1) and increase in Accounts Receivable - Tax Credits of $1,211,070 (02) results from a reclassification of developer fees receivable previously recorded in Accounts Receivable. Moving the developer fee receivable to Accounts Receivable -Tax Credits conforms our internal reporting to the audit report presentation. The AR Tax Credits now reflects all amounts due from related parties. Restricted Cash - Other declined by $1,300,401 (P) as we spent money borrowed to complete the work at Public Housing sites for the Energy Performance Contract. Capital Assets increase of $3,774,591 (Q) relates to the EPC at the Public Housing sites, Canyon Pointe Green Retro Fit work and ongoing improvements at Bridgewalk. Accounts Payable declined by $868,558 (R) as we paid invoices on our construction projects that were accrued at year end 2010. 3 /3 The large decline of Current Portion of Long Term Debt of $5,120,622 (S1) reflects the entire balance due of $5,048,000 on the Bridgewalk Loans that were paid off in July. This decline is offset by the increase in Mortgages Payable of $7,103,057 (S2) as the refinanced loan is classified long term. The amount of Long term Mortgages will continue to increase as the funds are drawn for the Bridgewalk property improvements. Statement of Cash Flows The Statement of Cash Flows provides detail on the overall year-to-date increase in Cash and Cash equivalents of $504,716 (T). The significant items in October are the decrease in cash from additions to Construction in Progress (U) only partially offset by the amount borrowed for the improvements at Bridgewalk (V). Additions to CIP not funded by the Bridgewalk loan relate to Lee Hill and High Mar. Portfolio Analysis Report Overall performance of the portfolio remains strong with BHP debt service coverage at a combined 1.53 and the Tax Credit entities at 1.44. Canyon Pointe at 1.19 is covering the additional debt load from the reallocation from Midtown, Glen Willow and North Haven. The 4 properties that support the single loan at First Bank are in green and separate from the rest of the Workforce properties. The subtotal represents the combined Debt Service Coverage Ratio of .92 for the loan. Arapahoe East has been affected by the unit rehab process resulting in increased vacancy at the property. Sanitas Place is operating in accordance with budget. Improvements are not expected until the rehabilitation is completed in 2012. Twin Pines was affected by several unit turns the last 2 months. Whittier Apartments has seen 5 of 10 units turn in the last three months significantly reducing income and increasing expenses. We met with First National Bank earlier this month to explain the decline in performance at Whittier and plans for property improvements in 2012. Midtown At the November meeting, the Board asked that we provide an update on the Midtown property, and a chance for the Board to provide feedback on our future plans. Midtown is 13 units located at 837 20th Street. It is unique in our portfolio due to its location on The Hill. The property was built in 1950 and purchased by BHP in 1995. All of the units have a permanent City of Boulder covenant restricting them to 50% AMI. Current property status The property is collateral in a bundled loan that also covers Canyon Pointe, North Haven, and Glen Willow. The property had been overleveraged and operated below a break-even debt service coverage until last year, when we reallocated debt burden to Canyon Pointe. In 2011, the property has experienced 3% vacancy and produced a cash flow of $53,000. Three units are master leased at the site - one to EFAA and two to SPAN. While PUPA has been high for the portfolio in recent years, it is very much in line with our LITHC and workforce properties at $4,600 year to date. The property is stable, but ranks relatively poorly on our qualitative analysis, attached. This fall, we applied for and received $330,000 in City of Boulder CHAP/CDBG funds to complete capital improvements in 2012. These funds are planned to complete kitchen and 4 bath renovations (seven units where done in 2008), replace the roof, replace the concrete, update all common areas, complete flooring and paint in the unit interiors and fund a replacement reserve of $52,000. Past initiatives In 2008, BHP convened a working session with a number of local real estate experts to review our portfolio and make recommendations about how we might best put our assets to use. One recommendation that came out of this working group was to look at converting the property to student housing or master leasing it to CU. Director of Property Management, Tim Beal, had several meetings with CU staff about the prospect of a master lease, but they ultimately took no action. We have discussed a sale of the property as multifamily or condominium, but our major stumbling block has been where to relocate the 13 covenants. CU MBA student Ellen McGready also did an in-depth study of the site in 2009, and concluded that given the restrictions on the site the best use was to increase the financial performance by raising rents and lowering expenses. We have been largely successful in that initiative, as the rents were previously too low compared to covenant, and maintenance and leasing staff were able to bring more focused attention to expense reduction, particularly on unit turns. Recommendation Our staff recommendation is to keep Midtown as a workforce rental, complete the proposed 2012 renovations, and review again in five years or if and when we identify a good landing place for the 13 covenants. Rationale While the property does not rank as a top performer in our qualitative scoring, it is financially and physically stable. It provides a quality housing choice close to both CU and transit service for residents with incomes at 50% or below. The City has made a number of investments to support the original purchase and capital needs over the years; we would be hard pressed to re-coup those investments by selling the property with the covenants attached. By completing the renovations proposed in 2012 the property will be better positioned for BHP or a future owner. Furthermore, the master leases with EFAA and SPAN are important partnerships in direct support of our mission. UPDATES: Occupancy Status and Net Rental Income The combined net rental income for all of BHP properties through October was $4,933,873 compared to a budgeted net rental income of $5,028,008 which is a negative variance to budget of $94,135 (-1.8 The combined net rental income for all of the Tax Credit Properties through October was $1,932,938 compared to a budgeted net rental income of $1,879,070 which is a positive variance to budget of $53,868. (+2.86%) Several of BHP's property groups were showing negative net rental income at the end of the October. The variances in Section 8 Project Based Properties are improving but still behind budget due to slightly lower revenue at Canyon Pointe and higher than normal vacancy at North Haven. The variance in the Workforce portfolio income is the result of a large number of vacancies at Bridgewalk, Arapahoe East, Hayden Place and Sanitas Place related to renovation. Staff has deliberately held units out of the rental pool for substantial rehabilitation at these four properties. This trend will continue through March 2012 as we continue taking approximately 20 units per month off line at Bridgewalk for additional rehab work. When all portfolios are rolled up, NOI is negative to budget. However, with the refinance of Bridgewalk in August, we are not currently paying debt service. We anticipate finishing the year in a positive cash position. The BHP year-to-date occupancy through October was 95.85%, compared to a budgeted occupancy rate of 97%. The combined physical occupancy rate for the Tax Credit portfolio year-to-date through August was 98.66%, compared to a budgeted occupancy of 97%. Red Oak Park update - Red Oak Park was fully leased as of August 2, 2011. Net rental income for the property through October is ahead of budget ($278,480 compared to a budgeted net rental income of $263,416). Occupancy for October is 100%. We anticipate the property will meet or exceed our standard property occupancy goal of 97% from here forward. Staff will add the Red Oak information to the monthly combined Occupancy Status and Net Rental Income report starting in January of 2012. The chart below shows physical occupancy by property type. These property designations mirror the way the budget is organized. Public Housing has been divided into two groups of less than 250 units each, to comply with HUD Project Based Accounting requirements. Public Housing I is comprised of all the family sites and Public Housing II is comprised of the two senior sites, Public Housing I properties - Arapahoe, Diagonal, Iris/Hawthorne, Kalmia, Madison and Manhattan. -187 units Public Housing II properties - Northport and Walnut Place -145 Units Project Based Section 8 Properties - Canyon Point, Glen Willow & North Haven - 124 Work Force - 101 Pearl, Arapahoe East, Bridgewalk, Dakota Ridge, Hayden Place, Midtown, Orchard House, Sanitas Place, Twin Pines, Whittier and Woodlands- 270 Tax Credit properties - Broadway East, Broadway West, Foothills Community, Holiday Neighborhood, and Red Oak Park, Vistoso - 267 units Total units combined - 993 October 2011 Net Rental Net Rental Net Rental Physical Physical Variance Income - Income - Income - Oce Oce to YTD Budget Variance YTD Budget Budget Public $933,073 $923,300 $9,773 98.51% 97% 1,51% Housing - I Public $619,173 $587,520 $23,653 97.86% 97% 0.86% Housing - II 6 `~p PB Sec. 8 $1,037,475 $1,048,180 properties ($10,705) 98.39°I° 97°l0 1.39°!0 Work Force $2,351,071 $2,467,968 ($116,897) 91.71%fl 97%0 -5.29% BHP portfolio $4,933,873 $5,028,008 ($94,135) 95.85% 97% -1.15% combined Broadway $438,856 $417,227 $21,629 98.08% 97% 1.08% East Broadway $214,759 $209,209 $5,550 98.67%0 97%0 1.67% West Foothills $769,547 $748,473 $21,074 99.22% 97% 2.22% Holiday $391,968 $388,297 $3,671 98.65% 97% 1.65% Vistoso $117,808 $115,864 $1,944 97.73% 97% 0.75% TC portfolio $1,932,938 $1,879,070 $53,868 98.66% 97% 1.66% combined C1P Accomplishments 2011 We have had a very big year in the capital improvements program. Over the past three years, we have been working to get all capital grants spent within twelve months of award. We are now meeting that target. We have also shifted the program to comprehensively address the needs of each property, rather than a piecemeal approach. We were recently awarded "high performer" status from HUD with regards to our Capital Fund dollars. Here is the year end wrap up in table and narrative form. 2011 CIP Projects - Total Spent or Under Contract Site Name Amount Spent Funding Source Status Bridgewalk Paving $ 1;200,000 Refinance Complete Bridgewalk Phase 3 $ 4,500,000 Refinance Under Construction CP GRP $ 1,200,000 HUD ARRA Complete JCI EPC $ 2,200,000 QECB and BAB Complete WP Solar $ 420,000 HUD ARRA Complete NP Solar $ 135,000 HUD ARRA Complete AE Interiors $ 120,000 City of Boulder 75% Complete Manhattan Reno $ 300,000 HUD Capital Fund Complete Hayden Place Reno $ 430,000 City of Boulder Complete Woodlands Windows $ 79,000 Project reserves Complete Foothills Paint $ 72,000 Project reserves Complete Sanitas Place Reno $ 430,000 City of Boulder Under Construction TOTAL $ 11,086,000 17 Bridgewalk Phase 2: In 2011 we completed all of the paving on site, new site grading and structural improvements, and landscaping that includes a beautiful new playground. Cost of this phase was $1.2M and the work was completed in early September. Phase 3: We have also started the final phase of renovation at Bridgewalk. We are doing full exterior and interior renovations including new siding, new roofs, new furnaces and central AC, new kitchens, new bathrooms, new wood flooring, new paint, new windows, sliding glass doors and solar. The work will be 50% complete by the end of the year with completion to happen in April 2012. The total cost of the work will be approximately $4.5M. Canyon Pointe In March 2011, we completed the Green Retrofit Program at Canyon Pointe. The scope of work included a complete greening of the property including new windows, new sliding doors, new siding, solar, new kitchen cabinets, new bathrooms, new community room carpet. Total cost of the project was $1.2M. Energy Performance Contract In early 2011, we completed the Energy Performance Contract for the public housing portfolio. The work included many energy saving measures such as water and irrigation improvements, lighting upgrades, new furnaces, new roofs, insulation, and new boilers. The total cost of this project was $2.2M. Walnut Place Solar The new solar installation at Walnut Place is 75.6 kW. Total cost of this project after rebates was $420,000. Northport Solar The Northport solar installation is 33.37 kW. Total cost of this project after rebates was $130,000. Arapahoe East In 2011, we completed interior renovations on 8 of the 11 apartments at Arapahoe East. These units were improved upon vacancy. The apartments received new kitchens, new bathrooms, new flooring and new paint. Cost per unit is approximately $20,000. Manhattan In early September, BHP completed the exterior renovations at Manhattan Place including new energy efficient windows, siding, landscaping for the entire site. The senior units, specifically each received through the wall air conditioning units. The total cost of this work was $300,000. Hayden Place This fall, the residents at Hayden Place received new energy efficient windows and sliding glass doors. We also updated the interior of the units with new flooring, paint, and appliances, furnished new counters in the bathroom and kitchen, and refurbished the tub and the in the bathroom. The cost to renovate each unit was around $18,000. 8 lcQ Woodlands The multifamily units, the community center and the day care center at Woodlands all received new energy efficient windows. This work took place during the month of October, and the total cost for this project was $79,000. Foothills The Foothills Community received a fresh coat of paint; many of the buildings at the site had badly faded over the past decade in the Colorado elements. The sagging doors, bent hinges and damaged siding on the trash enclosures were also repaired and given a fresh coat of paint. The project finished in just about 2 months. The total cost to paint each unit was around $920, with the entire contract coming in tinder $72,000. Sanitas Place Construction started at Sanitas Place in late November 2011. We are underway to renovate all interiors with new kitchens, new bathrooms, new flooring, new paint, and air- conditioning. The building exterior and the site will also be fully renovated to provide a much more aesthetically pleasing and livable complex. This work will complete in early January and will cost approximately $420,000. Resident Services Our Resident Services focus this month is a staffing update. As the year draws to a close, it feels timely to provide an update on the number of shifts we have made to position the department for our 2012 work plan. Current 1(P r2P~t~ 4,#~ sup rvis- ion ~ y { t Z+S xiaW'"u ~r 5 t;: ky ~red+'r b, rc""wcwwi~~^,✓...av "'"■'°.+~-.fH i" r i 5 9 Proposed Willa supervision PS Manager ~laell~ ,r lCaat~ Anne gad Salle Back in July of this year, Anna Kay Johnson switched jobs from Resident Services Manager to Family Self Sufficiency and Service Coordinator 111. She very graciously continued on with a number of the manager position duties on an interim basis, including supporting the Foundation, administering grants, and supervising two staff members. We hope to have relief for her soon with the hiring of a new Resident Services Manager. We've received numerous resumes and are midway through the interview process. Another significant shift is that Shelly Miezwa (who has been the Senior Site Resident Services Coordinator for 19 years!) has accepted a new position within BHP, and begun her duties as the Lease Compliance Manager, strengthening both processes and systems and supporting staff and residents in our most difficult lease compliance challenges. We see her focused attention on this arena as a significant investment in our first service goal: keep residents housed appropriately. To backf ll the void that Ms. Miezwa leaves at Walnut Place, Northport and Canyon Pointe, Richard Butler and Sally Miller will be stepping into additional Senior Site Service Coordination work. Funding for Richard Butler's previous work as Volunteer and Intern Coordinator ended in 2011. He will be funded by a new grant to support 20 hours/week at the senior sites, and BHP will fund an additional 10 hours/week to keep the core functions of the volunteer coordinator job intact. 10 00 Our other resident services staff member is Karin Stayton, who will continue her work with the Public Housing Family sites, hopefiilly with additional support from the new Resident Services Manager soon. The staffing of the Resident Services department is predominately funded through a resident services fee charged to the properties that receive services, and two federal grants (PH FSS and SC ROSS). Which staff are covered by which funding source is described in this table: Staff Position Funding Gaia Hours/Week Karin Stayton SC for PH Family sites PH FSS Grant 20 Anna Kay Johnson FSS PH FSS Grant 20 Anna Kay Johnson SC for BWE, GW, ROP BHP 20 Richard Butler Volunteer Coord BHP 10 Richard Butler Senior SC PH SC Grant 20 Sally Miller Senior SC BHP 20 TBD Res Services Manager BHP 20 TBD Manager SC work PH SC Grant 20 Total 150 I.. How o we pay for Resident Services? T I1 ~f BHP Statement of Activities October 31, 2011 YTD YTD Ref Actual Budget Variance $ % Var REVENUE Operations Revenue Tenant Dwelling Rental A $ 3,861,996 $ 3,983,993 $ (121,997) -3.1% Non Dwelling Rental Income 9,079 8,915 164 1.8% Rental Write-offs B (40,152) (22,240) (17,912) 80.5% HUD-Operating Subsidy 460,097 409,900 50,197 12.2% HAP Project Based Assistance 642,852 647,440 (4,588) -0.7% Total Operations Revenue 4,933,871 5,028,008 (94,137) -1.9% Fee Revenue Asset Fee Revenue 72,720 72,800 (80) -0.1% Property Mgmt & Bkkpg Fee 467,444 467,670 (226) 0.0% Development Fees C1 1,299,696 1,114, 723 184,973 16.6% Mgmt Fees - Tax Credits & S8 291,180 293,816 (2,636) -0.9% Res Svc Income 256,185 182,447 73,738 40.4% Total Fee Revenue 2,387,225 2,131,456 255,769 12.0% Grants and Subsidies HCV-HAP Revenue 5,746,922 5,788,780 (41,858) -0.7% Non Federal Grants and Donations (1) 941,539 860,000 81,539 9.5°% Federal Capital Grants D 703,560 1,053,807 (350,247) -33.2% Federal Service Grants 302,696 365,945 (63,249) -17.3% Total Grants and Subsidies 7,694,717 8,068,532 (373,815) -4.6% Other Revenue Tenant Late Fees 17,144 14,430 2,714 18.8% Tenant Work Order Charges 12,525 11,050 1,475 13.3% Tenant Reim - Utilities 51,113 38,500 12,613 32.8% Interest Income E 574,772 483,423 91,348 18.9% Laundry 52,219 56,850 (4,631) -8.1% Community Center Revenue 3,000 4,790 (1,790) -37.4% Maint Charges to Prop 871,135 912,500 (41,366) -4.5% Miscellaneous Revenue F 294,321 18,955 275,366 1452.7% Total Other Revenue 1,876,228 1,540,498 335,730 21.81/6 Total Revenue 16,892,041 16,768,494 123,547 0.70/6 EXPENSES Salaries and Benefits Total Salaries 3,061,503 3,136,710 75,207 2.4% Total Salaries and Benefits 3,061,503 3,136,710 75,207 2.4% Property Costs Capital Improvement Grant Mgmt. Fees C2 124,838 0 (124,838) -100.0% Management Fees 156,727 165,133 8,406 5.1% Maintenance Materials 188,925 208,860 19,935 9.5% Contract Labor & Repairs 641,171 681,000 39,830 5.8% BHP Contract Labor 684,717 719,500 34,783 4.8% Extraordinary Maintenance G 203,700 94,500 (109,200) -115.6% Garbage and Trash Removal 112,733 95,650 (17,083) -17.9% Water and Sewer 179,413 235,984 56,570 24.0% Electricity 155,433 154,900 (533) -0.3% Gas 138,866 159,348 20,482 12.9% PILOT 90,648 82,600 (8,048) -9.7% HOA Fees 4,940 3,875 (1,065) -27.5% Selling Expenses H 20,096 0 (20,096) -100.0% 1 of 2 1219/20118:45 AM Z~ BHP Statement of Activities October 31, 2011 YTD YTD Ref Actual Budget Variance $ % Var Total Property Costs 2,702,206 2,601,350 (100,857) -3.9% Operating Expenses Amortization Expense 1 191,827 25,450 (166,377) -653.7% Asset Management Fee 72,720 72,800 80 0.1% Audit Fees 39,791 39,790 (1) 0.0% Background Checks 9,322 7,502 (1,820) -24.3% Bank Fees 5,374 5,300 (74) -1.4% Board Expense 5,736 7,710 1,974 25.6% Community Center Exp 1,100 1,100 0 0.0% Consultants 6,190 47,298 41,108 86.9% Depreciation J 1,272,692 1,372,604 99,912 7.3% Dues and Fees 32,260 40,151 7,891 19.7% Expendable Equipment 61,652 70,380 8,728 12.4% HCV-HAP Expense K 5,010,217 5,271,250 261,033 5.0% Insurance Expense 155,601 169,081 13,480 8.0% Interest Expense 2,973 7,000 4,027 57.5% Legal Expense 26,083 13,470 (12,613) -93.6% Mileage 7,865 9,390 1,525 16.2% Miscellaneous - Expense 26,822 20,595 (6,227) -30.2% Mortgage Interest Expense 862,448 917,766 55,318 6.0% Non-Salaried Personnel 34,835 38,000 3,165 8.3% Advertising/Marketing 19,126 10,020 (9,106) -90.9% Office Supplies 31,000 27,050 (3,950) -14.6% Phone Expense 45,742 51,060 5,318 10.4% Postage Expense 14,301 11,800 (2,501) -212% Printing Expense 29,456 27,400 (2,056) -7.5% Property Mgmt & Bkkpg Fee Exp 467,444 467,720 276 0.1% Publications - 480 480 100.0% Resident Relocation 1,865 - (1,865) -100.0% Res Svc/Strategic Planning Fee Exp 170,488 170,880 392 0.2% Staff Training 43,220 70,463 27,243 38.7% Service Grant Expense 315,258 281,482 (33,775) -12.0% Vehicle Expense 51,435 50,050 (1,385) -2.8% RRC Allocation 4,498 6,920 2,422 35.0% Total Operating Costs 9,019,342 9,311,963 292,621 3.1% Total Expenses 14,783,052 15,050,022 266,971 1.8% Net Income before Other Items 2,108,989 1,718,471 390,518 22.7% Gain (Loss) on Disposition of Property L 545,516 - 545,516 100.0% Extraordinary Income (Expense) M 416,901 326,901 90,000 0.0% TOTAL NET INCOME (LOSS) $ 3,071,407 $ 2,045,372 $ 1,026,034 50.2% Note: Full year budget was adjusted by moving $715,000 from Federal Capital Grants to Non Federal Grants and Donations to reflect City of Boulder money designated from CHAP rather than CDBG as anticipated. No net effect on budget. z3 2 of 2 1219120118:45 AM BHP Balance Sheet October 31, 2011 and December 31, 2010 Actual Actual Net Change Ref October»11 December-10 YTD ASSETS Current Assets Unrestricted Cash and Cash Equivalents N $ 2,573,072 $ 2,068,356 $ 504,716 Reserved Cash - Replacements 606,277 731,270 (124,993) Accounts Receivable 01 241,037 1,270,709 (1,029,672) Accounts Receivable-Tax Credits 02 1,319,257 108,187 1,211,070 Prepaid Expenses 123,896 71,121 52,775 Supplies-Inventory 22,164 24,331 (2,167) Total Current Assets 4,885,703 4,273,974 611,729 Restricted Cash Restricted Cash - Other P 491,323 1,791,724 (1,300,401) Restricted Cash - Section 8 1,011,761 721,195 290,566 Restricted Cash - Tenant Security Deposits 391,551 388,795 2,756 Total Restricted Cash 1,894,635 2,901,714 (1,007,079) Capital Assets Construction in Progress 2,682,205 4,493,040 (1,810,835) Furniture Fixtures and Equipment 547,484 465,941 81,543 Real Estate Assets-Land and Buildings 57,628,582 51,042,321 6,586,261 Less: Accum Depreciation Real Estate Assets (29,416,442) (28,334,063) (1,082,379) Total Capital Assets Q 31,441,830 27,667,239 3,774,591 Other Assets Notes Receivable 10,125,767 9,757,205 368,562 Interest Receivable Notes 3,228,040 3,222,076 5,964 Partnership Investments 432,625 432,625 (0) Net Amortized Costs 649,745 853,683 (203,9381 Total Other Assets 14,436,176 14,265,589 170,587 TOTAL ASSETS $ 52,658,344 $ 49,108,516 $ 3,549,828 LIABILITIES & EQUITY LIABILITIES Current Liabilities Accounts Payable R $ 165,388 $ 1,033,946 $ 868,558 Accrued Payroll 157,797 66,922 (90,875) Accrued Payroll Taxes Payable (16,348) 26,626 42,974 Accrued Compensated Absences 269,584 254,754 (14,830) Other Accrued Expenses 239,011 346,383 107,372 Deferred Revenue 6,577 283,665 277,088 Current Portion of Long Term Debt S1 285,649 5,406,271 5,120,622 Prepaid Rent 23,643 12,683 (10,960) Security Deposits 381,367 389,365 7,998 Total Current Liabilities 1,512,667 7,820,615 6,307,948 Long-Term Liabilities Notes Payable 93,338 351,171 257,833 Accrued Interest Payable 30,910 80,070 49,160 Mortgages Payable S2 21,087,125 13,984,068 (7,103,057) Bonds Payable 1,554,733 1,564,386 9,653 Total Long-Term Liabilities 22,766,106 15,979,695 _ (6,786,411) TOTAL LIABILITIES 24,278,773 23,800,310 (478,463) EQUITY Total Equity 28,379,571 25,308,206 (3,071,365) TOTAL LIABILITIES AND EQUITY $ 52,658,344 $ 49,108,516 $ (3,549,828} 1 of 1 1219120118:47 AM BHP Statement of Cash Flows for the Month and Year to Date Ending October 31, 2011 Ref Month to Date Year to Date Reconciliation of Net Income to Net Cash Provided (Used) by Operating Activities Net Income (Deficit) $ (4,591) $ 3,071,407 Adjustments to Reconcile Net Income to Net Cash Provided (Used) by Operating Activities Increase (Decrease) Accum Deprec/Amort 165,494 1,286,317 (increase) Decrease in Accounts Receivable 2,799 (181,399) (Increase) Decrease in Prepaid Expenses (22,326) (52,775) Increase (Decrease) in Prepaid Rent and Security Deposits (13,128) 2,962 (Increase) Decrease in Supplies/Inventory 609 2,167 (Increase) Decrease in Reserved Cash 41,086 124,993 (Increase) Decrease in Restricted Cash 44,100 1,007,079 Increase (Decrease) in Payables and Accrued Expenses (38,590) (913,200) Increase (Decrease) in Deferred Revenue (9,787) (277,088) Total Adjustments 170,257 999,057 Net Cash Provided (Used) by Operating Activities 165,666 4,070,463 Cash Flows from Investing Activities (increase) Decrease in Construction in Progress U (873,470) 1,810,835 (Increase) Decrease in Furniture Fixtures and Equipment (5,890) (81,543) (Increase) Decrease in Real Estate Assets (5,484) (6,586,261) (Increase) Decrease in Notes and Interest Receivable (50,296) (374,526) Net Cash Provided (Used) by Investing Activities (935,139) (5,231,495) Cash Flows from Financing Activities Increase (Decrease) in Current Portion of Long Term Debt 0 (5,120,622) Increase (Decrease) in Notes Payable 0 (257,833) Increase (Decrease) in Mortgages and Bonds Payable V 682,673 7,044,245 Net Cash Provided (Used) by Financing Activities 682,673 1,665,789 Net Increase (Decrease) in Cash and Cash Equivalents Net Increase (Decrease) in Cash and Cash Equivalents T (86,841) 504,716 Unrestricted Cash and Cash Equivalents - Beginning 2,659,913 2,068,356 Unrestricted Cash and Cash Equivalents - Ending $ 2,573,072 $ 2,573,072 2.6- 1 of 1 1219120118:48 AM Boiitder.Iltttlsin P.,artsleis;:>Por nlioArzaT 'szs 2011 Months in 10 Annualized Adjusted R4'- PAPA PUPA PUPA PUPA Adjusted Praperhj Address Unifs DSCR EGI OPEx NOI Debt YTD Arapahoe Court 951,953 Arapahoe 14 $ 5,759 $ (7,080) $ (1,321) $ - Diagonal Court 3265-3273 30th St. 30 $ 6,335 $ (5,262) $ 1,073 $ - - Iris Hawthorne 1650-1690 Iris Ave. 14 $ 6,864 $ (5,974) $ 891 $ - - Kaimia 3500 Nottingham 53 $ 6,968 $ (6,467) $ 501 $ - - Madison 1130-1190 35th St. 33 $ 6,112 $ (5,940) $ 172 $ - - Manhattan 1660-690 Manhattan 43 $ 5,769 $ (6,121) $ 352 $ - - Public Housing 1 Sub Total: 187 $ 6,342 $ 6,1110) $ 231 Northport 1133 Portland Place 50 $ 5,404 $ (5,445) $ (42) $ - Walnut Place 11940 Walnut Place 95 $ 7,452 $ 5,043 $ 2,409 $ Public Housing 11 Sub Total. 145 $ 6,746 $ 5,182 $ 1,564 Canyon Pointe 700 Walnut 82 $ 9,731 $ (5,089) $ 4,642 $ 3,915 1.19 Glen Willow 301-333 Pearl St. 34 $ 10,959 $ (7,226) $ 3,733 $ - - North Haven 12550 9th St. 8 $ 12,165 $ 7,705 $ 4,460 $ - - Project Based Sub Total: 124 $ 10,225 $ (6,844) $ 4,381 $ 2,589 1.69 Arapahoe East 4610Arapahoe $ 8,006 $ (6,54Q) $ 1,466 $ 3,631 0.40 TL' Dakota Ridge 4900 10th Sf 13 $ 13,996 $ (4,439) $ 9,557 $ 7,643 1.25 TL Sanitas Place 3640 Broadway 12 ! $ 8,257 $ (5,561) $ 2,696 $ 4,498 Q.60 TL s; Twin Pines 1700 22nd St. 22 $ 8,340 (4,787) $ 3,553 3,635 0.98, TL . ` TL. Sub Total 58 $ 9,527 $ 5,202 $ 4,326 $ 4,711 0.92 101 Pearl 101 Pearl 6 $ 13,292 $ (5,466) $ 7,826 $ - - Bridgewalk 602-698 Walden Circle 123 $ 11,320 $ (4,723) $ 6,598 $ 5,321 1.24 Hayden Place 34th & Hayden Place 24 $ 8,268 $ (6,247) $ 2,021 $ 3,873 0.52 HP Midtown 837 20th St. 13 $ 9,523 $ (4,599) $ 4,924 $ - - Orchard House 1 $ 2,956 $ (4,876) $ (1,920) $ - - Whittier 1946 Walnut St. 10 $ 9,097 $ (7,552) $ 1,545 $ 3,113 0.50 Woodlands 2600 Block of Mapleton 35 $ 13,823 $ (6,986) $ 6,837 $ 3,405 2.01 Workforce Sub Total: 269 $ 10,861 $ (5,372) $ 5,489 $ 4,353 1.26 Portfolio Totals: 725 $ 8,764 $ (5,605) $ 3,158 $ 2,058 1.63 2011 TaTCre roprfxes a~ PUPA r;-Pi7PA PUPA Pt Adjusted Address _ EGI ? Ee NOI Debt DSCR Broadway East 3160 Broadway 44 $ 12,484 $ (5,292) $ 7,191 $ 3,178 2.26 Red Oak Park* 27th & Valmont 59 $ 10,157 $ (4,956) $ 5,201 $ 3,857 1.46 Foothills 4500 block of 7th/8th 74 $ 12,673 $ (4,982) $ 7,690 $ 6,385 1.20 Holiday 1500 Lee Hill 49 $ 9,825 $ (4,573) $ 5,252 $ 3,629 1.45 Vistoso 4500 Baseline 15 $ 9,799 $ (5,980) $ 3,819 $ 2,768 1.38 Broadway West 3120 Broadway 26 $ 10,383 $ (4,869) $ 5,514 $ 3,232 1.71 Tax Credit Sub Total: 267 $ 11,179 $ (4,997) $ 6,181 $ 4,282 1.44 'Red Oak Park numbers annualized as of July 2011 when full lease-up Properties ~iuT'ranAlfiri, Address occurred and operations where stabilized Index of terms BMMIValmont 27th & Valmont PUPA - Per Unit Per Annum Orchard House 1603 Orchard St. EGI - Effective Gross income = (Total Revenue - Grant Revenue) Op Ex - Operating Expenses = (Total Expenses-Capital Expenses-Extraordinary Maintenance and Non-Op Ex) NOI - Net Operating Income = (Net Income + Non OpEx) DSCR - Debt Service Coverage Ratio = NOIlDebt ADJUSTED - For Capital Grants, Capital Exp. and Extrodinary Malnt. Boulder Housing Partners Cash Report October 31, 2011 CASH NEEDED FOR OPERATIONS AND RESERVES Oct-11 Sept'11 Change Cash Needed for Day-to-Day Operations $ 750,000.00 $ 750,000.00 $ Development Working Capital $ 250,000.00 $ 250,000.00 $ - Restricted Cash BMM Loan $ 174,257.60 $ 163,515.07 $ 10,742.53 Reserve for Capital Replacements - Woodlands $ 600,000.00 $ 600,000.00 $ - Reserve for Capital Replacements - General $ 600,000.00 $ 600,000.00 $ 4800 Broadway Reserve $ 70,000.00 $ 70,000.00 $ - Landscaping Escrow - Set Aside $ 72,863.79 $ 72,860.69 $ 3.10 Total cash needed $ 2,517,121.39 $ 2,506,365.48 $ 10,745.63 Total Unrestricted Cash Available for Operations $ 1,377,144.89 $ 1,563,415.49 $ (186,270.60) Restricted Cash for FH and BMM $ 174,257.60 $ 163,515.07 $ 10,742.53 Unrestricted Cash Targeted for Woodlands Rehab $ 449,838.22 $ 495,463.88 $ (45,625.66) Unrestricted Cash Avail. for Replacements - Proj. Based only $ - $ - $ - Unrestricted Cash Available for Replacements $ 177,439.06 $ 172,897.58 $ 4,541.48 Development Funds Set Aside (Landscaping Escrow) $ 72,863.79 $ 72,860.69 $ 3.10 Total Cash available for Operations, Replacement and Set Asides $ 2,251,543.56 $ 2,468,152.71 $ (216,609.15) Overage (Shortage) $ (265,577.83) $ (28,223.05) $ (227,354.78) IMPACT: We continue to run short of the Board designated targets for operations and reserves. We have a cash shortfall of $86.000 budgeted for Nov and Dec of 2011. The impact is that rehabilitation projects may be delayed and that BHP does not have the ability to fund development projects or to take advantage of acquisition opportunities with cash reserves. CASH NEEDED FOR PUBLIC HOUSING AND PROJECT BASED PROPERTIES Oct-11 Sept'11 Change Restricted Cash - Public Housing & Project Based - Target $ 650,000.00 $ 650,000.00 $ - Restricted FSS Escrow $ 8,037.71 $ 7,540.71 $ 497.00 Restricted Cash - Public Housing & Project Based - Actual $ 990,314.63 $ 879,985.28 $ 110,329.35 Total PH and Project Based Cash $ 998,352.34 $ 887,525.99 $ 110,826.35_ Overage (Shortage) $ 348,332.34 $ 237,525.99 $ 110,329.35 IMPACT: The unrestricted Public Housing and Project Based money cannot be borrowed for COCC Operations and has therefore been split from the Unrestricted Operating Cash. This money is available to fund operations for PH and PB portfolios. CASH NEEDED FOR SECTION 8 Oct-11 Sept'11 Change Cash Needed for 1 month of HAP and Admin - Target $ 525,000.00 $ 525,000.00 $ - Restricted Cash Available for Section 8 Operations - Actual $ 348,824.15 $ 353,835.36 $ (5,011.21) Restricted Funds Available for Use on HAP and FSS escrow $ 1,053,060.66 $ 1,122,957.39 $ (69,896.73)_ Total Section 8 Cash $ 1,401,884.81 $ 1,476,792.75 $ (74,907.94) Overage (Shortage) $ 876,884.81 $ 951,792.75 $ (74,907.94) IMPACT: Currently reserve is funded - If HUD were to slow down their payments, BHP would have funds to cover the shortfall for one month - This will stop building now that the 100 NED vouchers are fully leased. This will be drawn down in 2012. ZT RESOLUTION # 16 SERIES OF 2011 APPROVAL OF THE 2012 COMBINED OPERATING AND CAPITAL BUDGETS FOR BOULDER HOUSING PARTNERS. WHEREAS, the Executive Director has submitted an Operating and Capital Budget for the fiscal year ending December 31, 2012; and WHEREAS, the Board has determined that the proposed expenditures are necessary for the efficient and economical operation of the Housing Authority for the propose of serving low income family households, and WHEREAS, the Board has approved a list of approved uses of Capital funds; and WHEREAS, the Board has determined that adequate resources are available to cover the proposed expenditures reflected in the proposed budget; and WHEREAS, all proposed rental charges and expenditures will be consistent with current provision of law and comply with the terms of the Annual Contributions Contract. NOW, THEREFORE, be it resolved that the Board of Commissioners does hereby approve the Operating and Capital Budgets as presented on December 14th, 2012 and also adopts the following reserve targets for the fiscal year ending December 31, 2012: Operations Cash Reserve Balance $ 750,000 Development Reserve Balance $ 250,000 Replacement Reserve funding - 2012 $ 236,800 Adopted this 19th day of December, 2011 (SEAL) Angela McCormick, Chair, Board of Commissioners Boulder Housing Partners ATTEST: BETSEY MARTENS Executive Secretary Boulder Housing Partners A HousingAuftrity Since 3966 4800 N. Broadway, Boulder, CO 80304 Phone: (720) 564 - 4610 Fax: (303) 939-9569 To: Board of Commissioners From: Betsey Martens, Jim Koczela Subject: 2012 BHP Budget Narrative Date: December 1, 2010 2012 Final Budget Summary We present our 2012 budget for final adoption. This budget produces an overall operating net loss of ($83,231) and a positive impact to BHP cash reserves of $1,305,049. Supplemental information is provided "below the line" to provide the Board and management with a more complete real estate/cash presentation. We understand this is a complicated topic and welcome any and all questions you may have. The only significant changes from the draft presented in November are as follows: November Draft Net Income: ($70,998) Additional Insurance Cost ($12,000) Miscellaneous Other ($233) Final Budget ($83,231) Our 2012 budget presents the following: BHP Consolidated Total Revenue 19,435,889 Total Expenses (19,5191120) Other - Extraordinary Income - (83,231) NLT INCOME Adjustments for Cash Basis Plus: Amortization & Deprec~ation 2,428,360 Development Fees 1,042,458 Bridgewalk Loan Proceeds for Interest Exp. 462,913 Contribution from Section 8 Hap Reserves 396,000 Contribution from Section 8 Admin Reserves 167,621 Les s D ^ ebt Frmc~al.. (60,319) Capital Acquisitions (1,974,375) Replacement Reserves Funding (404,640 Interest on GP notes net of payments (369,738) Net Increase (Decrease) to BHP Cash 1,305,049 I ~g 2012 Work Plan Goals The 2012 budget is designed to provide resources necessary to accomplish the 2012 work plan. A copy of the 2012 work plan is attached. The highlights of the plan include: Goal 1: Maintain and enhance what we have • Plan and implement Phase 1 of the public housing conversion • Plan and build capacity for Phases 2 and 3 of public housing conversion • Complete Phase 3 of Bridgewalk renovation • Pursue "site specific" capital improvement work at Whittier, Dakota Ridge, Twin Pines and Midtown • Exploration of options for North Haven and 101 Pearl • Removal of debt from 4800 Goal 2: Add to the inventory • Close out development phase of Red Oak Park • Options, and decision, about financing for High Mar • Continue the planning process for 1175 Lee Hill supportive housing project • Pursue acquisition and new development opportunities • Apply for any incremental vouchers that become available Goal 3: Provide service-enriched housing • Stabilize the Resident Services department under a new organizational structure • Focus the program on four key goals: a. Keeping residents housed appropriately b. Helping families achieve economic success c. Provide service coordination to elderly residents and people with disabilities d. Promote academic success among our kids • Implement MTW resident services initiatives and continue to analyze sustainable funding structures • Seek partnerships to move residents along a self-sufficiency continuum • Review of the structure and function of the RRC and promote formation of family site resident councils and increase resident participation Goal 4: Improve internal operations and community image • Continue effort to increase BHP's visibility as a housing provider in the community • Ensure consistent messaging, and increased visibility in the community • Continue process improvement work to reduce overhead and increase staff capacity • Target the HCV program for process improvement analysis • Staff training focus on diversity and customer service 2 0119 2012 Budget Design New in this year's budget is the implementation of Moving to Work (MTW), This creates additional complexity to the budget presentation. HUD requires us to account for all MTW programs and related net assets separately from Non MTW HUD programs and BHP Programs. Please refer to the attached BHP Budget Summary Spreadsheets. The columns with gold headings represent MTW Programs, Non-MTW HUD Programs are columns with blue headings. BHP owned properties and cost centers are in columns with green headings and the total BHP Budget is in yellow. The following chart provides the details of what is included in each program using the same color coordination! BII'Owried>srope>E`fie5 00W~M: WOW" Program Units/Vouchers Program Units/Vouchers Property Units Departments Public Housing 1 Project Based Contracts Workforce Administration Arapahoe Court 14 Canyon Pointe .............82 101 Pearl ..............6 Asset Management Diagonal Court- 30 Glen Willow. 34 Arapahoe East 11 Finance/HR . , Iris I3awthorne. 14 North Plaven 8 Bridgewalk 123 Maintenance Kalmta 53 Total PB Units 124 Dakota Ridge 13 Property M anao ment Madison 33 Section 8 HCVP Hayden PI, 24 Development Administration Manhattan. 43 NED Increment 81 Midtown 13 Development Projects Public Housing 2 NED increment 100 Orchard House 1 Northport50 Main Stream 50 Sanitas Place I2 Walnut Place. 95 Housing First. 26 Twin Pines:. 22 Total PH Units, 332 Total Vouchers 257 Whittier Apts 10 Section 8 HCVP Woodlands 35 HCVP 600 Total WF Units 270 The 2012 budget includes: • Detail budgets for each HUD program segregated into Moving to Work (MTW) programS2 and Non- MTW programs • Detail budgets for each BHP owned property Y Central Office Cost Center budget including administration, asset management, property management, maintenance, development projects and development administration. • Resident Services budget. • A five year capital spending plan. A summary of the 2012 Work Plan. 6 Tax Credit Budgets (not included in the BHP consolidated budget). The Board's approval of the 2012 Budget will adopt all documents by reference. t The Tax Credit Properties - Broadway East, Broadway West, Foothills, Holiday, Red Oak Park and Vistoso - are not included in the BHP budget since they are separate legal entities. Budgets for these properties are provided on a separate schedule attached hereto. 2 The question of which vouchers are included in MTW is still being clarified by HUD. A change to our assumption will only affect the budget grouping and will not affect net income or our cash position. We have assumed that the 81 Non Elderly Disabled and the 100 Non Elderly Disabled increments as well as the 50 Main Stream vouchers are excluded from MTW. 3 .3n 2012 Budget Assumptions: Moving to Work will include all Public Housing and 600 Housing Choice Vouchers. •,e Fungibility of excess cash between MTW operations (PH 1, P112 and the MTW vouchers), but not to Non MTW or BHP properties Public Housing will not be converted to vouchers until 2013 4- Operating Subsidy for public housing is based upon 95% proration of the calculated 2012 Subsidy amount 3 + Section 8 Housing Assistance Payments (HAP) funding at HUD 2011 published rates Section 8 Administrative fees at 75% proration of 2011 rates.4 HUD Capital Grant Fund income from CFP2011. We have not included any proceeds from an allocation of HUD Capital Grant Funds for 2012. We expect the 2011 Capital Funds to be sufficient for 2012 predevelopment expenses for the Public Housing Conversion. While we expect to receive an increment of CFP for 2012, we would not expect to draw any of the 2012 CFP funds until 2013. No gain on sale of assets. The potential sale of Public Housing to Tax Credit Entities is not projected to occur until 2013. Resident services fees of $52 per unit month from the senior public housing sites and $20 per unit month from the 6 family public housing sites „Non-MTW=HU11 ❖ On average, tenant rents will remain constant from 2011 per HUD Contract. ❖ Vacancy loss at 2% for Canyon pointe and Glen Willow. North Haven is budgeted for 8% vacancy to account for the potential of opting out of the HUD contract for this property in December 2012. Resident services fees of $52 per unit month from Canyon Pointe, Glen Willow. The same reduction in Section 8 administrative fees applies to the non-MTW vouchers. BAP'Uwned.i'roperti es + On average, tenant rents will increase 3% at lease renewal. Specific adjustments have been made to Bridgewalk to account for higher rent increases to market rates resulting from the significant remodeling of the units. ❖ Vacancy loss generally at 3%. ❖ Whittier Apts., Twin Pines, Midtown and Dakota Ridge each have two months at 25% vacancy to accommodate the remodeling planned at these properties. 3 The 95% pro-ration number is consistent with final appropriations action. BHP reserves are below the threshold for recapture, meaning that we'll get "full" funding. However, there is an appeal process and if many PHAs are successful in their appeals, especially New York City, the pro-ratio will be greater. 4 The final appropriation bill reduced admin fees by 85%, so this number is very conservative. 4 ? ❖ $1,640,000 of capital grant revenue from the City of Boulder for capital expenses at Midtown, Twin Pines, Dakota Ridge and Whittier Apts. in 2012. Of this amount only $40,000 is available to cover BHP expenses of managing these large projects. ❖ Given that the Board will not be addressing the future of 101 Pearl until early in 2012, we have taken the most conservative route and assumed 100% vacancy related to renovation beginning June 1, 2012. ❖ Property and operating costs as a whole remain steady with the following exceptions o Insurance expense increasing 5% at renewal, September 2012. o Utility costs increasing on average 5% from 2011 costs.5 ❖ Property management fee $55.95 per eligible unit month (HUD Standard increased from $52.81 in 2011) ❖ Bookkeeping fee $7.50 per eligible unit month ❖ Asset management fee $10 per unit month Cersral Q'ffc~'CaslCenter ❖ Continuation of the fee-for-service approach to maintenance billing resulting in 100% recapture of Maintenance Department costs from the properties. ❖ Employee benefit split 70/30; the same split as 2011 ❖ Employee benefit costs using the rates provided by the City of Boulder for 2012. ❖ Staff increases by 1.25 FTE - Lease Compliance Coordinator, responsible for our lease compliance policies and practices, and working to support property managers around residents' lease compliance issues and a partial increase in staff for Resident Services. No gain on sale of assets We also project a sustained push by leasing staff to increase tenant rents appropriately at lease turnover, maintenance staff s continued focus on cost cutting and improving the percentage of their time that is charged to properties through work orders, improving understanding and monitoring of budget line items and a renewed effort by staff to monitor all administrative cost line items. Net Income (Loss) and Cash Contributions per Program: (Note: Letter references in the narrative relate to the rows in the tables below for MTW and Non-MTW.) 1s~'lore g> fl ± ..,d?t ..s In the table below you can see that MTW is composed of our family sites (Public Housing 1 (PHI)), and our senior sites (Public Housing 2 (PH2)), 600 Section 8 Vouchers, the capital fund program and administrative costs of MTW. These will all continue to be funded separately by HUD but once we receive the funds they can be spent on any of the MTW programs. Contributions from MTW reserves are included to bring the net cash flow to zero for each program. PHI and PH2 require contributions from MTW reserves of $81,340 and $32,257 (A) respectively to cure losses. These properties continue to be a challenge under the current funding 5 This represents a reduction of approximately 10% from 2010 actual reflecting the savings measures implemented across the portfolio. s 3 Z structure. The MTW Section 8 program requires a contribution from MTW reserves of $33,236 (A). This results from the expected 17% reduction from 2011 in appropriated administrative fees for the program. As we proceed with MTW activities we expect to be able to achieve efficiencies to bring this program back to break even. The CFP and Admin program includes HUD capital grant funding which will be used for MTW activities and certain direct cost allocations to MTW. We have accumulated sufficient reserves to cover all projected 2012 shortfall for these programs. 6 CF,',.-Ad= M I W S8 hITSU %ITW` Total S10IT G TO WORTC ['xocfzAati1.S PHI - N -12 Ref Total Revenue 1,270,530 879,209 5,169,365 3891000 7,708,104 TotalFapenses 1,647,620 1,054,368 5,202,601 115,640 8,020229 Net income (Lass), (377,090) (175,159) (33,236) 273,360 (312,125) Adjustments for Cash Basis Plus: Amortization & Depreciation 347,850 179,850, 0 0 526,700 (A) Contribution fromPH & S9 Adtnin Rcserves 81,340 35,257 33,236, 3,640 153,473 Less: Debt Principal (52,100) (38,948) 0.._. 0 (91,048) Capital Acquisitions -Predevelopment Work PH Conversion 0 0 0 (277,000 277,000 Net Increase (Decrease) to Cash 0 0 0 0 0 a N11►1 In the table below for the Non-MTW HUD Programs, the Non-MTW Section 8 Program consists of the 26 Housing First vouchers, 50 Main Stream vouchers and two increments of 81 and 100 Non Elderly Disabled (NED) vouchers which are not expected to roll into MTW funding. Funding for these vouchers is provided separately and HUD requires we report on these increments separately from the MTW program. During 2011 BHP received significant excess fiends for the new 100 NED vouchers which were in the lease-up process. HUD funds these at 100% in the first year. In subsequent years they fund based on the average lease-up in the prior year. We are therefore projecting a shortfall of $396,000 (B) in 2012 that will be covered from existing reserves for that program. An additional contribution of administrative fee reserves of $14,148 (C) is included to cover the 2012 shortfall resulting from the reduction in HUD Administrative fees to 75% of the 2011 funding level. Project Based properties are contributing to replacement reserves (D), cash reserves (E) and to Net Income (F) and as a group continue to outperform the rest of the BHP portfolio. 6 Reserves for each program: are detailed in the Five-Year Capital Plan 6 33 Non-MTW,', Erj3ascd HIED NON-MOVING TO WORK RLD PROGRAMS Section 8 : Contracts Totals Totals Ref. - Total Revenue 1,896,334 1,272,173 3,168,507 10,876,611 TatalExpenses 2,306,482 1,196,036 3,502,518 11,522,747 (646,136) (F). Net Income (Loss) (410,148} 76,137 (334,011) Adjustments for Cash Basis Plus: Amortization & Depreciation 0 190,196 190,196 716,896 (B) Contribution from Section 8IIap Reserves 396,000 0 396,000 396,000 (C) Contribution fromPH& S 8Admin Reserves 14,148 0 14,148 167,621 Less: Debt Principal 0 (106,850) (106,850) (197,898) Capital Acquisitions - Predevelopment Work PH Conversion 0 0 0 (277,000) {D} Requued Replacement Resen es Funding 0` (70,800) (70,800) (70,800) (ENet Increase (Decrease} to Cash 0 88,683 88,683 88,683 SHP Qwnetl;Properfies The Workforce Portfolio has many moving parts in 2012. The portfolio is showing net income of $949,458 (G) and a positive cash contribution of $867,617(H). Income includes $1,898,000 of capital funding for property rehabilitation projects. Income is also affected by the increased vacancies at properties undergoing renovation (Bridgewalk, Dakota Ridge, Midtown, Twin Pines and Whittier). The cash provided includes proceeds from the Bridgewalk loan in the amount of $462,913 (1) which will cover the interest payments not capitalized during the construction process. We continue to have three remaining troubled properties: Hayden Place, Sanitas Place and Whittier. We expect Whittier to improve following its 2012 capital improvement project. Hayden Place and Sanitas Place are expected to continue to have difficulties. Hayden Place is budgeted with debt service coverage of .95. This improvement from 2011 is based on rent increases following the rehabilitation of the property. We expect breakeven or better in 2013. Sanitas Place is budgeted with debt service coverage of .75. We will explore opportunities to refinance both of these properties to take advantage of current low interest rates in 2012. Celtral Office Cast: Genter; The COCC shows a net loss of ($445,279) (C) and positive cash of $290,023(D) resulting from zero Developer Fee income budgeted in 2012 and expected receipt of $1,042,458 (F) in developer fees for Red Oak Park. Resident Serv+Ges Resident Services shows net income and positive cash position of $70,966 (C) (D) primarily resulting from increased grant income fiona HUD which will no longer be available once we completely dispose of Public Housing. 7 ~y Total' 11111' Owned Properties and Central Office Cost Center Workforce CoCC Res Sves Totals Budget Ref Total Revenue 4,883,506 3,273,836 396,936 8,559,278 19,435,889 Total Expenses 3,939,048 3,731.355 325,970 7,996,373 19,519,120 (G) Net Income (Loss),.. 949458 (457,519) . 70,966... 562,905 (83,231) Adjustments for Cash Basis Plus: Amortization & Depreciation 1,544,061 167,403 0 1,711,464 2,428,360 Development Fees 0 1,042,458 0 1,042,458 1,042,458 (n Bridgewalk Loan Proceeds for Interest Exp. 462,913 0 0 462,913 462,913 Contribution from Section 8I-Iap Reserves 0 0 0 0 396,000 Contribution from PH & S 8 Admin Reserves 0 0 0 0 167,621 Less: Debt Principal (151,600) (10,821) 0 (162,421) (360,319) CapitalAcquisitions ( 697,375) 0 0 (1,697,375) (1,974,375) lr.. . Required Replacement Reserves Funding (239,840) (94,000) 0 (333,840) (404,640) Interest on GP notes net of payments 0 (369,738) 0 (369,738) (369,738) (11) Net Increase (Decrease) to Cash 867,617 277,783 70,966 1,216,366 1,305,049 2012 Budget Strategic Considerations Five Year Capital Plan In December 2008, the Board approved a Five Year Capital Budget designed to: • allocate capital to assets that need attention; • replenish reserves that have been depleted over time; and • reposition assets in the portfolio that are not performing. The plan anticipated the sale of 14 assets, including all the scattered site condos, the Bluff duplex, and 101 Pearl. The plan anticipated $2.9 million in net sales proceeds, and outlined priority uses for those fiends. The plan also set target goals for BHP cash reserves. The adoption of a capital plan marked a significant shift for BHP. It signaled the beginning of our strong commitment to asset management, and acknowledged that the long tenure of insufficient public housing subsidy had taken a significant toll on our balance sheet. The first three years of implementation of the plan has gone remarkably well, given the condition of the real estate market. We were fortunate to offer product to the first-time homebuyer market at the same time that the homebuyer tax credit was available. In 2010 we completed the sale of our condos with the disposition of one unit each at Two Mile Creek and Stratford Park. 2011 marked the completion of planned asset sales when we disposed of Bluff. We will be bringing you data for your consideration early in 2012 related to options for the unique property at 101 Pearl. These asset sales have BHP positioned for the first time with fully funded operating reserves. We are still short of the planned replacement reserve targets. We are continuing to fund the reserves at a steady pace. 8 New in 2012 will be the recording and tracking of Moving to Work Reserves. These are fungible within MTW, but not available for the COCC or other properties. These will be accounted for separately so that we can determine how much is available for MTW activities and promised new units from the proceeds of the sale of the Public Housing sites. Our working assumption is that proceeds from the sale of the Public Housing Sites and addition funds received fiom Asset Repositioning Fees and Replacement Housing Factor funds will be used for development of new units and funding of resident services staffing. The 2012 budget includes contributions to replacement reserves of $404,640. This includes $167,840 of assistance from the City of Boulder for three properties undergoing extensive renovation in 2012. This will provide emergency reserves until operations stabilize and reserves can be self-funded. We reviewed the remainder of the current portfolio capital needs and have determined that the only property with significant renovation needs that will be funded from our reserves is Woodlands. We expect to renovate the interiors in 2014-2015. The attached model includes $1,000,000 set aside for this project. Other properties with potential for significant renovation include Glen Willow, North Haven and 101 Pearl. If renovations were to occur at these properties, we would expect to finance the improvements with debt rather than our reserves. Operating reserves will be bolstered in 2012 by the receipt of cash from the Red Oak Park development fee. The current budget includes a cash surplus of $1,317,289. Managing the use of these funds will be important given the competing priorities. We have enclosed a spreadsheet showing the current status of our reserves in three areas; MTW Operating Reserves, BHP Replacement Reserves, and Operating Reserves. We are proposing to use our current cash reserves to retire the existing debt on the BHP office building at 4800 Broadway. The current balance on this loan is approximately $487,600. By retiring this debt BHP will own the building as a debt free asset that we propose to pledged as collateral for a revolving line of credit. This line will be available to draw on primarily in the event of a development opportunity which needs quick access to gap fiinding. Paying off this loan will save the organization approximately $22,000 per year in interest expense. This savings will be offset by the cost of the LOC. Additions to Operating reserves from the Budget surplus in 2012 will be targeted for a development equity reserve. We will consider opportunities for gap financing for new development opportunities. These will to the extent possible, be loans to projects (land acquisitions, pre development funding etc.) with planned repayment over less than five years. An update to the five year plan is included as an attachment to this memo for your consideration. Compensation and Benefits Our compensation philosophy calls for us to align compensation with the market. We continue to purchase our health benefits through the City at full cost. As part of this larger pool, we receive a substantial reduction from what an organization our size would pay independently. Even so, the cost of medical benefits has increased an average of 17% for 2012. 9 We continuously review our comp/benefit program. In 2011 we completed a review of our salary ranges to allow us to remain confident that our salaries are consistent with the market. The review resulted in no proposed changes to salary ranges for 2012. Our overall benefit program is expensive, as is the fact that we have a less-than-average turnover in our staff. The existing budget assumes we continue sharing the cost of medical benefits with our employees with BHP paying 70% of the cost and the employee paying 30%. Overall our salary and benefits have increased by 10% over the 2011 budget. We have included an increase of 1.25 FTB for Resident Services, a part time intern for Asset Management projects, merit increases of on average 3% and a substantial increase in the cost of benefits. Fee for Service Approach In 2009 we changed to a method of allocating maintenance salaries based on actual work charged via work orders. The first two years involved some learning for the maintenance staff on how to appropriately track and bill time spent on work orders and for maintenance and finance on how to properly use Yardi to account for time and materials. The 2011 budget assumed a break even budget for the maintenance department based on a detailed analysis of maintenance time available for billing adjusted for sick and vacation time and revised market rates for skilled and unskilled labor. This process has proven to be fairly accurate with the YTD maintenance budget showing a slightly positive bottom line. We have once again assumed a break even budget for maintenance in 2012. We will be conducting our annual market study of maintenance rates in December but we anticipate no changes to the current rates for 2012. Cost of Property Management The per-unit-per-annum (PUPA) for BHP's portfolio is constantly under study by BHP's asset management team. We will schedule a full discussion of our PUPA analysis with the Board in March. Given the MTW conversion planned for 2012 and its hoped-for impact on PUPA, we thought it best to hold the discussion and analysis until we get further into the conversion. Risks and Risk Management MTW transition We are pleased to report that we have a signed MTW contract in hand and we are officially an MTW agency. January 1, 2012 marks the beginning of what we've been calling Year 1 for MTW. There are some unknowns ahead of us as we transition to an MTW agency. The most important risk to manage is the impact of changes on our residents and customers. Our elderly and disabled customers will be the first to be impacted as they experience a new approach to rent calculation. We have approximately 192 elderly or disabled customers impacted by these changes housed in public housing, and 553 elderly or disabled customers housed through the voucher program. While the overwhelming majority of feedback is positive and most customers The current annual calculation of 30% of income adjusted by a variety of deductions will move to a triennial calculation without any deductions at 26.5% of income. 10 37 are celebrating the simplicity of the rent approach, it's still change and change is stressful. The voucher program now has 857 customers including families and the 26 housing first participants. In 2012, we will start talking to our family residents mid-year about the changes they can expect in their rent in 2013. Family customers will move away from a rent-as a percentage of-income. Their rent will be "flat" based on the income tier in which they fall. We are working on creating rent tiers that will hold residents harmless through the transition, and will incentivize their moving to greater work opportunities. We included this activity in our MTW plan because we believe it increases the incentive to work, and begins to build a more logical bridge from deeply subsidized housing to workforce and market rate rental structures. This change will take some getting used to. Our management approach to both of these customer groups is to be sure that we have enough capacity to be available to talk to people and answer questions throughout the process. The 2012 work plan re-organizes staff responsibilities so that Karen Kreutzberg has sufficient time to manage the MTW changes. We will also rely on our successful and experienced cross- disciplinary site teams to help manage the transition with our customers. We will also be underway in the conversion of our public housing. As mentioned above, we will assume that 2012 is about disposition approval, replacement vouchers, needs assessment, design and entitlements and tax credit partnership formation. We expect to operate in a new voucher- based environment in 2013. Everything on the HUD side of the equation could go much quicker, or slower, than expected. The timing is much less of a risk than an unknown and we anticipate keeping the Board abreast of changes in timing and managing through those without too much upset. Related to the discussion about changing family rent, we have often described the anticipated impact on our families with mixed citizens when we convert the public housing portfolio to a voucher-based subsidy. Out of 135 families housed in public housing, 112 (83%) of them have mixed citizen eligibility. When we substitute voucher subsidy for operating subsidy, the value of the subsidy increases and the amount that families pay in rent will increase. We are working on strategies to mitigate this disproportionate impact. While MTW status affords significant simplicity associated with regulations and customer service, it appears that it adds complication in the back office. As evidenced in the budget descriptions above, the accounting staff will have to reorganize the accounting information to allow for internal tracking and HUD reporting of MTW funding and reserves. Certain costs previously associated with the Section S voucher program will now be allocated across multiple increments of vouchers. We believe the tools Yardi provides will assist us in this process however comparable year over year information will be difficult to interpret through the transition period. Impact of work plan on residents In addition to the impacts described above for our MTW customers, we are very aware that we are creating impact in other areas: • continued implementation of the no-smoking policy • final phases of the Bridgewalk renovation 11 40 • planned improvements to Sanitas Place, Whittier, Twin Pines, Dakota Ridge and Midtown, all of which will require short-term resident relocation • proposed sale of North Haven which will require permanent relocation of residents with vouchers Again, we have had careful discussions about adequate staffing to manage the changes with sufficient attention to our customers. We are confident that our staffing changes and additions will assure excellent customer service. Vacancies at CIP Properties Related to the discussion about customer impacts is our approach to capital improvements. Over the past two years we have learned a great deal about best management practices for renovation projects. To the extent feasible we are planning to keep the period of time residents are required to relocate as short as possible. Rent abatement is an essential tool, which we have captured in our vacancy rate projections. We will also hold units vacant at turn-over in order to offer displaced residents housing within our portfolio, to the extent that they need to be out of their unit for more than 1-2 weeks. Bridgewalk rents With the completion of Phase 3 improvements we are planning rent increases in the range of 15 - 20%. All current residents have received a month's rent abatement for the inconvenience of extensive relocation and construction. All current residents are being held harmless on rent increases until May 2012, regardless of their lease renewal date. We will continue to maintain 10% of the units at affordable rents. With new customers, however, we will begin to test our assumption that the level of improvements planned will warrant the higher rents scheduled to repay the cost of improvements. We have done repeated and careful analysis of the proposed rents compared to market comparables and are comfortable that our rents are aligned with our product and the market. So far, we have been very successful in leasing units at the new rents and we expect this to continue. Uncertainty of development projects The 2012 budget reflects no income from development projects (yet recognizes more than $1 million in payment of cash for Red Oak Park). High Mar and Lee Hill have been delayed by circumstances out of our control and we have voluntarily scheduled PH conversion in 2013. We always anticipate periods when we don't have income-producing projects, and our reserves will see us through this period as well. We project strong cash related to development activity through 2017. Continued reduced funding from HUD We were very disappointed to have to report to you that MTW no longer offers the promise of contractual appropriations. As of five years ago Congress required that MTW agencies be subject to the same annual appropriations as all other housing authorities. HUD's budget has been substantially reduced two years in a row. Because the SuperCornmittee failed to reach resolution, 12 the law requires that the sequestration action be implemented beginning January 1, 2012. If no interim solution is reached, all domestic budgets will be reduced by another 7.8%. Items with significant impact on financial position While we have been able to present to you a budget with a net loss of ($83,231), we want to point out that this includes revenues of $1,640,000 in capital grant funds from the City. We would not expect this level of annual funding to continue. The significant difference in budgeted income levels from $2,212,439 in 2011 to ($83,231) in 2012 relates to: m $1.2 Million of Developer Fees from Red Oak Park recognized in 2011 • An increase over 2011 of $747,000 in depreciation and amortization related to the recently completed capital projects. BHP recognizes capital grant revenue in the year we spend the funds. In the case of Bridgewalk, we have borrowed the funds needed for the property improvements. The improvements are added to our balance sheet and depreciated over the useful life of the improvement. BHP utilizes a 10 year depreciable life for project improvements. This depreciation and amortization line item will increase by another $160,000 in 2013 as we complete the capital improvement projects scheduled for 2012. This accounting method is required yet creates a significant increase in expense that is not offset by current revenues. This will make it extremely difficult to achieve breakeven results in future years even though we expect to achieve a positive cash flow from our operations. • Section 8 has historically always been budgeted at a net zero income and cash position. In 2011 we expect to record a positive net income from Section 8 of over $400,000. In 2012 we have budgeted a loss of $443,000 from our voucher program. The majority of this loss is related to the new 100 NED voucher increment we received in October of 2010. Proper accounting for these vouchers required us to report income in 2011 when we received cash from HUD for the housing assistance payments. In 2012 we will incur expense related to fully leased vouchers and use the reserve established in 2011 to cover the shortfall. This additional $443,000 of loss in 2012 should not recur. As we look forward to 2013 and the conversion of the public housing units it is important to acknowledge the changes this will bring to the BHP balance sheet. We are requesting that HUD approve the disposition of these assets into Tax Credit entities. The result of that transaction will be recognition of significant cash proceeds in the range of $6-9 million and the removal of approximately $6 million of net fixed assets from BHPs books. We will be presenting a projection of the balance sheet to you once we have a reasonable projection for the tinning of the sale and reasonable estimate of the sale price. Summaiy All in all, this budget will meet our needs in 2012. The work ahead is to continue to manage expenses, increase revenue and continue to reposition assets to be able to sustain our mission over the long term. 13 Attachments: BHP Summary Budget Five Year Capital Budget Tax Credit budget slunmary 2012 Work Plan 14 1l o Vl m O 0 2) x (D CD .r trop N at N Q} N 7 7 7 R E rt 3 C m - - - m 0 0) N M f d 0 ro A+ _ a CAcn~ 0~: ~ v ~ (D 03 W ~ m va a a~m ~N co ~ m ~ro 1 CD 0 iD m M3m (D Om 0 5m~ i1 Ai 0m C m M co Irn 1 j (D c+7 cD W (D N e i i ~D ~ i e m CD < (D i C~ m CD 0 CD co 0 y C CD 0. 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N O N3 00 0) l s , N 4 .a• co a o w w n 40h N w iv o 0 00 3 0°00°0 rnoc~o I 00 m x i L Li d s MEMORANDUM TO: Board of Commissioners FROM: Betsey Martens, Executive Director Stuart Grogan, Director of Development Shannon Cox Baker, Project Manager Kevin Knapp, Project Manager Liz Wolfert, Project Assistant SUBJECT: Development Report DATE: December 14, 2011 This month's development report includes: Consent: None at this time Action/Discussion: Lee Hill High Mar Boulder Transit Village Additional Private Activity Bond Authority: Resolution #17: Updates: Public Housing Conversion Red Oak Park Attachments: High Mar: 4%/PAB Financial Model Resolution # 17: Private Activity Bonds Project Tracking Sheet CONSENT ITEMS None at this time ACTION/ DISCUSSION ITEMS LEE HILL HOUSING Previous Board Meeting: At the last meeting, we provided the following information: • An update on the neighborhood outreach process; and • An overview of the December 13, 2011 City Council study session agenda. Progress since Previous Board Meeting: Neighborhood Outreach - Homeless Impacts: Shannon Cox Baker and Greg Harms, Executive Director of the Boulder Shelter for the Homeless, met with representatives from 14 homeowners associations over the last two months to discuss the proposed Housing First community and to answer questions. One of three primary concerns we continue to hear from neighbors is how the homeless population currently residing in north Boulder is negatively affecting public safety, security, and neighborhood character. Greg Harms and members of the Shelter Board have reached out to the neighborhood to assess the extent and severity of the primary complaints about the homeless population in north Boulder: loitering under the Rosewood underpass, sleeping/camping in the Holiday and Dakota Ridge neighborhoods and adjacent open space, panhandling on street corners, inappropriate behavior on the Skip bus and at the bus stop, as well as excessive trash and defacing of signage in the Dakota Ridge neighborhood. Greg has met on several occasions with the property manager for the Dakota Ridge master homeowners' association (HOA) and its board members to discuss their concerns. We are currently working with the Shelter to organize a meeting with the Dakota Ridge representatives, the City police, and the County Sherriff to discuss opportunities for addressing these concerns. Additionally, two Shelter board members canvassed 10 local businesses to hear their concerns about homeless individuals in north Boulder. Most of the people they spoke with had no complaints about the Shelter and were supportive of its mission. Addressing these issues is a top priority for the Shelter. An ad hoc Board committee is currently assembling the feedback and information they have gathered into an action plan for addressing the concerns. They anticipate finalizing the plan with the assistance of the surrounding neighborhoods, by the end of the year and will begin implementation soon thereafter. Neighborhood Outreach - North Boulder Redevelopment: In addition to concerns expressed about the impact of homeless individuals in north Boulder, we also continue to hear neighbors express concern with the notion of saturation of affordable housing in north Boulder at the expense of other uses, and the potential of affordable housing in the area to negatively impact the neighborhood character, property values, etc. Furthermore, some neighbors have specifically requested that BHP take a leadership role in addressing this concern. To that end, we have met with a small group of neighbors to brainstorm ideas and to determine how best to contribute. One idea under consideration is to collaborate with the Colorado Chapter of the Urban Land Institute (ULI) on a Technical Assistance Panel (TAP). Some neighbors have also asked BHP to facilitate a meeting with Housing and Human Services (HHS) staff to discuss the impact of the City's inclusionary housing policies prior to Council's February study session on this topic. We will continue to work with the neighbors and relevant City staff to help create a meaningful opportunity to engage with our North Boulder neighbors in a dialogue about the future development of north Boulder. Next steps: • Stay up to date with the Shelter's efforts to address neighborhood concerns about homeless individuals in north Boulder; • Work with the City Manager's office to arrange a tour of Housing First Communities in Denver in early 2102; • Organize a meeting between members of City Council and the neighbors to discuss the future of north Boulder's redevelopment; and • Facilitate a meeting with HHS staff and neighbors to discuss the impact of the City's Inclusionary Housing Ordinance (IHO) policies on the area. HIGH MAR REDEVELOPMENT At the last meeting, we provided the following information: • Continuation of financial due diligence in an attempt to close the $4 million funding gap, which is equivalent to the decrease in low income housing tax credits (LIHTC) equity available between a 9% and a 4% deal. Progress since Previous Board Meeting: During the past month, we have continued to evaluate options to fill the approximate $4 million gap that remains in the project budget if we were to develop the project with 4% LIHTCs instead of 9% LIHTCs. Whether or not we proceed with our 4% LIHTC due diligence is largely dependent on the City's stance on 1175 Lee Hill's program and location, and the project's ability to pursue an allocation of 9% LIHTC in 2012. On December 13, 2011, the City Council will hold a study session about the City's policy on addressing homelessness, including a discussion of Lee Hill. If Lee Hill is able to move forward in 2012, we may be competitive for 9%'s in 2012 with zoning approval and be more likely for additional funding for High Mar so as not to compete with Lee Hill. During the past month, we net with staff from Housing and Human Services (HHS) who has indicated that they would like to see these units delivered sooner rather than later given their current investment. Alternatively, if Lee Hill will be delayed, it may be more appropriate to wait for 9% funding for High Mar late in 2012 or early 2013. Ir / Attached is a summary pro forma, which closes the $4 million gap, for your review. In order to close the gap, we explored several avenues. We reviewed over $1 million in value engineering options and approved several measures, which reduced construction costs by $157,000. We have reviewed and would support the allocation of 16 project-based Section 8 vouchers to the project. We will continue to explore the potential for investing BHP equity into the project. The updated proforma includes the following assumptions: • Assume a 4.5% interest rate over 35 years; • Increase operating income by allocating Section 8 vouchers to the sixteen 30% AMI units (endorsed by BHP staff); • Increase the State Division of Housing's investment by an additional $1,500/unit for a total of $10,000/unit which has been endorsed by State staff, • Increase the City's investment to $62,000/unit; • Reduce hard costs by $157,000 through material substitution; and • Deferring 35% (or $400,000) of the developer fee. We will provide a brief update to this memo detailing next steps at the Board meeting following City Council's December 13, 2012 study session. Next steps: • Develop a tax credit application and financing strategy for approval and direction at the first Board meeting in 2012. BOULDER TRANSIT VILLAGE Previous Board Meeting: At the last meeting, we provided the following information: Staff reported earlier in the year that Pedersen Development Corporation (PDC) was awarded the opportunity to develop the Depot Square project. BHP was a member of PDC's team during the competitive process as a partner who would acquire the 71 unit permanently affordable residential building to be built on this site. Progress since Previous Board Meeting: Since PDC was awarded the opportunity to develop the Boulder Junction site, we worked in collaboration with PDC to gain a full understanding of the project and to contemplate financing sources for a potential acquisition to make an informed recommendation to the Board on whether to pursue this opportunity. Having; now completed a lengthy due diligence process, we do not recommend proceeding with this acquisition. Despite the opportunity to grow our portfolio and the attraction of acquiring transit-oriented affordable units, we identified multiple risk points that we think will have a serious impact on our ability to lease the units. Included in these are: • Noise impacts to our residents from the adjacent rail line and below-grade bus terminal; • Exterior and interior design concerns impacting marketability; • Concerns with being a part of a complex governance structure with as many as five other owners including RTD which will own the land; and • Absorption concerns with the significant amount of rental supply to be created in this area in the coming years. Next steps • PDC is aware of our recommendation to the Board and we will communicate any comments or guidance from the Board as appropriate. PRIVATE ACTIVITY BONDS Previous Board Meeting: This item is being introduced to the Board at this meeting. Project Summary: Every year, local jurisdictions and the State are allocated the authority to issue Private Activity Bonds (PAB) to support the private sector implementation of governmental programs and goals such as affordable housing and community development. Further, local governments who do not use their individual allocation can allow their allocations to revert to the State. Any bond cap not assigned by the State at the end of the year will expire. The State cannot, unlike the City, reserve or assign its allocation in order for it to remain viable for three years. The State currently has excess bond cap which will expire on December 31, 2011. In order to assure implementation of the public housing conversion project and facilitate several other projects that BHP is considering, we desire to submit an application to the State of Colorado for an allocation of $45 million of additional PAB authority for the following: • Kalmia Northport $ 7,000,000 $ 8,500,000 • Madison 4600 Broadway $ 5,600,000 $ 4,000,000 • Manhattan High Mar development $ 10,000,000 $10,000,000 This allocation is above the $10 million in PAB authority authorized by the Board in August. Ila Use of the PABs by a private sector sponsor like a LIHTC partnership allows that entity to borrow money at tax exempt rates that are often 1-2% below market. The bonds can be issued to finance acquisitions or certain other affordable housing projects. In the past, we have combined PABs with 4% non-competitive, LIHTC for the rehabilitation of the Broadway project. For the Broadway project, the bonds were issued by BHP on behalf of the LIHTC partnership which has the sole responsibility for paying the principal and interest on the debt. There is no recourse to BHP or to other entities. These bonds are not long term obligations of the State or its tax payers. We recommend that the Board approve the attached Resolution #17 which authorizes BHP to induce, or begin, the bond issuance process. This resolution is a required part of the application process to the State of Colorado for a portion of the available bond cap. Next Steps • Submit and track state application form; • Provide certification stating that we will proceed with diligence to insure the issuance of the bonds; and • Submit a preliminary opinion from bond counsel that the carry forward purpose qualifies for carry forward treatment under the code. UPDATE ITEMS PUBLIC HOUSING CONVERSION Previous Board Meeting: At the last meeting, we provided the following information: • A recommendation for the Board to approve Resolution 414 authorizing us to prepare and submit the Disposition Application to HUD; and • An update about the immediacy of the timing to prepare and submit the Disposition Application for the public housing sites. Progress since Previous Board Meeting: We have learned that many housing authorities have submitted or will be submitting Disposition Applications to HUD during the end of 2011 and that the number of Tenant Protection Vouchers will be limited. This information reinforces the critical need to complete a strong disposition application and to submit it to HUD as soon as possible. We have prepared several iterative drafts of the Disposition Application for our public housing portfolio. Rod Solomon, our HUD attorney, has reviewed these draft applications and provided critical guidance on crafting a successful application. With Rod's guidance, we have clarified several aspects of our application: 16-d • Proceeds derived from the sale of the eight sites into one or more future LIHTC partnerships must be used for purposes associated with the Section 8 or public housing programs and/or the residents in these programs. We have proposed the following: - To pay outstanding debt on the sites, closing costs, and resident relocation that takes place due to disposition rather than rehabilitation; To finance the rehabilitation of the public housing sites (as soft debt); To endow a resident services fund equal to or greater than the equivalent of $600 per household per year for a 15-year period that will serve the future residents of our public housing sites; - To provide gap financing to the Lee Hill development; and - To finance the creation of more project-based Section 8 housing or to create a non- traditional Housing Choice Voucher fiend. We will use Asset Repositioning Funds, Replacement Housing Funds or other fungible Moving to Work (MTW) fiends to finance the acquisition or development of non-HUD housing as described in our MTW plan. • We emphasized the inadequacy of existing public housing Capital Funds to finance a level of rehabilitation at these sites to make them viable long term. We have also emphasized the role that our plans for public housing disposition, conversion and rehabilitation of our public housing portfolio played in our MTW application. • We described a preliminary relocation plan that includes financial support and counseling. • We presented a schedule as follows: - Disposition approval in July 2012; - Application for Tenant Protection Vouchers in July, 2012 - Transition to a BHP, solely own Limited Liability Corporation (LLC), January 1, 2013; and - Conversion to project-based voucher structure in January, 2013. We are currently on-track to submit our disposition application by the end of the month. RED OAK PARK Previous Board Meeting: At the last meeting, we provided the following information: • Approval of Red Oak Park's 16t" draw request by the bank in October and anticipation of one remaining requisition prior to the loan conversion; • Completion of the cost certification; and • Submission of the Placed in Service application had been submitted to Colorado Housing Finance Authority (CHFA) to allow for the Land Use Restriction Agreement (LURA) to be recorded. .mil Progress since the Previous Board Meeting: Budget Update: The Red Oak Park project team is in the process of submitting the remaining invoices with our final draw request. After all invoices are approved and paid, the project will have been developed $100,000 under budget. We are working with our lender to determine options for the excess funds. Loan Conversion: We are preparing for the January conversion of our loan from a construction loan to permanent mortgage. At that point, we will receive almost $7,000,000 in equity from our investor which will pay off the construction portion of the loan and leave a $3,000,000 mortgage that will be supported with project revenues for the remainder of the 15-year partnership period. Solar Update: In late November, we received the initial equity payment of $136,000 from our solar tax credit investor. Since we were able to deliver more energy tax credits than we originally anticipated, we expect to receive an additional $100,000 to be received from our investor in the first quarter of next year. Next steps: • Submit final draw request to the bank; and • Work with our lender and investor partners for the loan conversion process. PROJECT TRACKING The following Development Division tracking tool, which is updated monthly, is attached to this memo: • Development Tracking Sheet 57 Project Summary Project Name: High Mar Program: Independent Senior Living 1 BR (39) 2 SR (20) Date: 6-Dec-11 Spreadsheet Version: 4% Scenario with PAB AMI Mix: Units 30% 16 40% 17 50% 16 60% 10 Bedroom Mix: 1 BR1BA (39) 2 BR1BA (18) 2BR2BA (2) Rent Discount: 30% (0%) 40% (0%) 50% (3%) 60% (5%) PROGRAM Total Units 59 Percent Affordable 100% SOURCES AND USES SUMMARY Sources Permanent Loan $ 4,141,023 LTV 35% 4% LIHTC $ 3,063,091 Grants Land Acq. City of Boulder $ 430,000 2009 City of Boulder (I H) $ 715,500 Additional City subsidy $ 2,508,690 City's per unit subsidy $ 61,935 CO Div of Hsg (HOME) $ 590,000 DOH's per unit subsidy $ 10,000 Other grants $ 25,000 Deferred Developer Fee $ 409,500 percent of total dev fee deferred 35% Total Sources $ 11,882,804 Uses Land $ 430,000 Site Work $ 764,708 Construction Hard Costs $ 7,433,369 Professional Fees and Soft Costs $ 839,498 Permanent Financing and Syndication Costs $ 793,980 Project Reserves $ 451,250 percent of hard costs 6% Development Fee $ 1,170,000 percent of eligible casts 12% Total Uses $ 11,882,804 Sources less Uses (gap) $ ASSUMPTIONS AND MULTIPLIERS Effective Gross Income $ 561,832 Expenses $ (271,400) PUPA, w/o RR $ 4,600 Operating Expense Ratio 48% NO[ $ 290,432 Total Cash Flow (Yr 1) $ 509,890 DCR after reserve withdrawal (Yr 1) 1.15 Total Cash Flow (Yr 10) $ 539,589 DCR (Yr 10) 1.28 Annual Expense Multiplier 3.0% Vacancy Rate 7.0% Perm Loan Interest Rate 4.50% Perm Loan Term (years) 35 4% LIHTC Price per Credit $0.94 Construction hard cost, per unit $ 138,950 (includes site work) Soft cost, per unit $ 27,686 (excludes project reserves and dev fee) Total Dev Cost, per unit $ 204,072 (all-in, includes land) ,53 t v~D<T~A Q Q M 0 Op x. O r- _ 0 0 a p fi fl 3 Q m Q -00 ^ rz ® C tD r > D ~ fp F ppm . a ca ° C _ m w Q~ o' c4 z si (Ei o m F c4 F 3 v W = ~ C c to (D S 2 a~-~ < ~ MMM C4 eerN~ s m ° (D tt3 RESOLUTION # 17 SERIES 2011 A RESOLUTION DECLARING THE INTENT OF THE HOUSING AUTHORITY OF THE CITY OF BOULDER, COLORADO D/B/A BOULDER HOUSING PARTNERS TO ISSUE PRIVATE ACTIVITY BONDS; PRESCRIBING CERTAIN TERMS AND CONDITIONS OF SUCH BONDS; AND CONTAINING OTHER PROVISIONS RELATING TO THE PROPOSED ISSUANCE OF SUCH BONDS WHEREAS, The Housing Authority of the City of Boulder, Colorado d/b/a Boulder Housing Partners (the "Authority"), is organized pursuant to Article 4, Part 2, Title 29, of Colorado Revised Statutes, as amended (the "Act"); and WHEREAS, the Act authorizes the Authority to borrow money upon its bonds, notes debentures or other evidences of indebtedness for the purposes specified in the Act and to secure the same by pledges of its revenues and mortgages upon property held or to be held by the Authority as provided in the Act; and WHEREAS, the Authority intends to issue and sell up to $45,000,000 in principal amount of its private activity bonds (the "Bonds") pursuant to the Act and other applicable laws of the State of Colorado (the "State") to finance a portion of the costs related to several multifamily rehabilitation projects as part of the Authority's Moving to Work initiative and the acquisition or development of several new multifamily projects (collectively, the "Project"); and WHEREAS, the Project will be located within the City of Boulder, Colorado (the "City"); and WHEREAS, the Authority wishes to declare its intention to authorize and issue the Bonds for the purpose of financing the Project; and WHEREAS, the Authority desires to apply to the State's Department of Local Affairs ("DOLA") for $45,000,000 of private activity bond volume cap allocation from the statewide balance pursuant to the provisions of the Colorado Private Activity Bond Ceiling Allocation Act, Part 17 of Article 32 of Title 24, Colorado Revised Statutes, as amended (the "Allocation Act"); and NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF COMMISSIONERS OF THE HOUSING AUTHORITY OF THE CITY OF BOULDER, COLORADO D/B/A BOULDER HOUSING PARTNERS: Section 1. The Authority does hereby declare its intention to authorize the issuance and sale of the Bonds, subject to the unqualified approving opinion of Kutak Rock LLP, Bond Counsel, under and in accordance with the Act, in an amount necessary to pay a portion of the cost of the Project, presently estimated to be not in excess of $45,000,000, and upon such terms and conditions as shall be set forth in a resolution of the Authority authorizing the issuance and sale of the Bonds at meetings to be held for such purpose. Section 2. A portion of the cost of financing the Project will be paid out of the proceeds of the Bonds. The Bonds and the interest thereon shall never constitute a multiple-fiscal year direct or indirect debt or other financial obligation whatsoever of the Authority or the debt or indebtedness of the Authority within the meaning of any provision or limitation of the constitution or statutes of the State and shall never constitute or give rise to a pecuniary liability of the Authority or a charge against its general credit. Section 3. The Chair of the Authority or the Executive Director of the Authority is hereby authorized to file an application to DOLA for $45,000,000 of private activity bond volume cap allocation from the statewide balance. The Chair of the Authority or the Executive Director of the Authority are also hereby authorized to take all other actions as may be necessary to implement the intent and purpose of this Resolution and to take all other actions as may be necessary to comply with the Allocation Act and the Internal Revenue Code of 1986, as amended (the "Code"). Section 4. The appropriate officers and employees of the Authority are authorized and directed to take all action necessary or desirable to implement the provisions of this Resolution, including without limitation, the execution and delivery of all agreements, documents and certificates relating to filing the application to DOLA for $45,000,000 of private activity bond volume cap allocation from the statewide balance, issuance of the Bonds and compliance with the Allocation Act and the Code. Section 5. The Project is intended to promote the creation and/or the preservation of affordable housing within the City. Section 6. Nothing contained in this Resolution shall be construed as requiring the Authority to issue the Bonds, and the decision to issue the Bonds shall be in the complete discretion of the Authority. Section 7. This Resolution shall become effective upon its adoption by the Board of Commissioners and all prior resolutions or portions thereof inconsistent herewith are hereby repealed. PASSED, ADOPTED AND APPROVED this December 19, 2011. [SEAL] HOUSING AUTHORITY OF THE CITY OF BOULDER, COLORADO, a Colorado housing authority, d/b/a BOULDER HOUSING PARTNERS By Angela McCormick Chair, Board of Directors Attest: Betsey Martens Executive Director