City of Highland Park Housing Commission Met April 7.
Here is the minutes provided by the commission:
CALL TO ORDER
At 6:33 p.m., Chairman Berkun called a meeting via remote access of the Highland Park Housing Commission, Peers Housing Association, Ravinia Housing Association, Walnut Housing Association, and the Sunset Woods Association to order. Each of the Commissioners also serves as Directors of each of the Housing Associations. Staff read an introduction for remote meeting procedures and noted public comments may be emailed to city@hpil.com or phoned into at 847.432.0867. The City web site is www.cityhpil.com. Staff was asked to call the roll.
ROLL CALL
Commissioners Remotely: Chairman Berkun; Commissioners Abreu, Bernstein, Dennison, Fernandez Sykes, & Tapia
Councilwoman Remotely: Holleman
Student Reps Absent: Fishman & Keyser
Staff: Fontane, Later, Coleman
Others Remotely: Kevin Beard/ERES, Hart Passman/Elrod Friedman
BUSINESS FROM THE PUBLIC
There is no Business from the Public.
APPROVAL OF MINUTES
Remote Access Meeting of the Housing Commission – March 3, 2021
Commissioner Dennison moved to approve the regular (remote access) meeting minutes of March 3, 2021, as presented. Commissioner Bernstein seconded the motion.
On a roll call vote
Voting Yea: Chairman Berkun; Commissioners Abreu, Bernstein, Dennison, Fernandez Sykes, & Tapia
Voting Nay: None
Chairman Berkun declared the motion passed unanimously.
Senior Planner Later introduced Zubin Coleman, new Planner II, who will be working with the HC 50% of his time. Mr. Coleman said he looks forward to working with everyone.
Ms. Later introduced Hart Passman with Elrod Friedman who will provide the Open Meetings Act and Housing Commissioner Training later this evening.
Senior Planner Later advised Kevin Beard with ERES will present during Old Business about the Potential Refinance of Ravinia and Peers.
She said an email was sent from Dave Wigodner, former HC Chair, which will be read later in the meeting.
SCHEDULED BUSINESS
1. Items for Omnibus Vote Consideration
• Payment of Invoices
• Ratification of Payments
Senior Planner Later advised nothing is outstanding.
2. Peers, Walnut, Ravinia, and Sunset Woods Associations and Housing Trust Fund
• Consideration of ERES Management Reports and Financials
o Peers
Commissioner Dennison referred to Page 9 of the Evergreen memo and noted a maintenance staff member is being sought. Senior Planner Later shared feedback from Evergreen. Director Fontane said as Evergreen is the contractor, they manage the staff that manage the City’s properties; the employees are ERES employees.
Commissioner Abreu asked if there is a cost effect. Director Fontane said this could be reviewed.
Councilwoman Holleman reminded it was previously stated the temporary worker costs more. Maintenance staff is hired by Evergreen. She expressed concern that the temporary maintenance staff was not union. Senior Planner Later expounded and will follow up with the questions.
Commissioner Bernstein asked why Peers is $14,000 over budget for Miscellaneous. Senior Planner Later she will follow up.
Commissioner Dennison asked if there is a plan to slowly restart events, etc. as he would like to see activity. Senior Planner Later will discuss with Evergreen and Lake County Health Department staff. She advised the common areas were closed per HC recommendation. Councilwoman Holleman reminded it was closed due to capacity restrictions. Senior Planner Later will place this on the agenda for the next meeting after receiving direction and recommendations from the Lake County Health Department.
o Ravinia
Commissioner Bernstein asked about the Consulting Study cost. Senior Planner Later advised this was from the EBI Report.
Commissioner Dennison identified Rainbow Restoration Insurance charges under Miscellaneous Operating Income. Senior Planner Later stated this is for leaks.
Chairman Berkun asked if we are self-insured. Senior Planner Later said there is property insurance; a deductible and claim come into play.
• Housing Trust Fund Financials
Nothing is outstanding.
• Sunset Woods’ Financials
Nothing is outstanding.
• Other Association Business
Nothing is outstanding.
Senior Planner Later asked that Old Business, where Kevin Beard with ERES is speaking, be moved up on the agenda. Everyone concurred.
OLD BUSINESS
1. Potential Refinance of Ravinia and Peers – Kevin Bears, ERES
Senior Planner Later read Mr. Wigonder’s email. Chairman Berkun shared he met with Mr. Wigonder and finds him very knowledgeable.
Director Fontane advised Staff is requesting from the HC, which path it wishes to take – refinance or low-income housing tax credit. Staff will then take to the City Council for their approval and comment.
Mr. Beard thanked everyone. He reminded he presented two months ago and is here to answer questions and not advocate for any path forward. Answers will be provided to questions from the HC:
• What scope of work could be included in the LITHC scope?
o Anything to modernize Peers and Ravinia could be done. A financial model would be developed. In a LITHC rehabilitation, more is included (electrical, plumbing, upgrade to modern finishes, etc.).
Commissioner Dennison asked about a minimum of an average of $40,000. Mr. Beard concurred. He asked if this includes refinancing. Mr. Beard said the $40,000 hard cost (including windows, cabinets) would not pay off the mortgage or include soft costs, fees.
Mr. Beard reviewed John Noonan’s 10-year plan (including capital reserves) against EBI reports. The EBI report for Peers calls for significant improvements to units.
With a refinance of LITHC, an estimated cost of $800,000 is low (and does not include soft costs). He explained drawing reserves down (at Ravinia, there is a lot less cash flow).
Commissioner Dennison asked, based on Mr. Wigonder’s email, what the total spend per unit is vs. what LITHC requires us to spend (i.e. bang for the buck, etc.). Mr. Beard replied this is just under $1 million for capital needs, specifically $560-600,000 for Peers and $328-352,000 for Ravinia. This generates $5 million in LITHC equity – equities a LITHC investor would contribute.
Senior Planner Later reminded there are 68 units at Peers and 17 units at Ravinia. She stated $85,000 is the highest amount that could be spent per unit without negatively affecting the current debt service.
Director Fontane reminded the minimum is $40,000 for hard costs. He noted, following a detailed plan by an architect, it would be in between $40,000 and $85,000.
Chairman Berkun asked about the cost of mortgages. Mr. Beard stated interest rates at Peers are 5.81% with a debt service of $315,000. Ravinia’s first note is 3.18% but the second note takes 75% of surplus cash.
Mr. Beard said the decision is not driven by needs but rather goals and opportunities. He noted the HC has done an excellent job with its properties. He expounded on options. Director Fontane said Staff’s recommendations are to either refinance or take a LITHC deal.
Chairman Berkun asked if Mr. Beard would offer an opinion on the HC’s options. Mr. Beard said the HC could:
• do a pure refinance and lower interest rate and omit the second note on Ravinia
• take on additional debt to invest more in the properties
• do a larger capital investment through LIHTC
Mr. Beard noted there may be some work to be done not yet identified. He expounded and offered examples. He suggested that if a bigger project is desired, the most efficient is utilizing a LITHC transaction. Increased rent revenues on the buildings could be obtained if units were improved (without tenants paying more).
Senior Planner Later stated even if the identified needs in the EBI reports were addressed, unforeseen issues could arise. She said ERES reported that unexpected costs for plumbing emergency work over the last three years was just over $140,000. Chairman Berkun said he looks at the EBI capital plan as the minimum necessary. Commissioner Tapia concurs that things happen. Regarding freed-up equity for improvements and repairs, this could pay for breakdowns.
Mr. Beard said there could be concerns about taking unneeded equity and paying interest on it. He said the most attractive financing option is to lock in a low fixed-rate product.
Commissioner Tapia stated, as Chairman Berkun mentioned, until we know the enhancements and unexpected items, it would be difficult to determine.
Director Fontane reminded we do have the needs per the EBI report. He noted tonight’s meeting is not to designate a figure. The issue is to decide on whether to further investigate refinancing or a LITHC deal.
Mr. Beard noted if all of the Peers’ units are upgraded, spending $40,000 would not be difficult at all. Director Fontane reminded about common areas; Senior Planner Later noted building systems.
Mr. Beard stated a market study comparing other apartments (finishes, etc.) would be conducted. An architect would be hired to develop the scope of work. The rents for these buildings are low due to modest, dated finishes.
Chairman Berkun asked about a time frame. Mr. Beard said the timeframe to close a LITHC transaction would take one year. He noted once the HC closes on the financing, the work begins and that could take a year or less.
Commissioner Abreu asked what the risks and drawbacks are. Mr. Beard replied, from a policy perspective, by entering in a LITHC program, this is a 15-year affordability program; a big deal in the affordability market but not for a not for profit affordable housing owner such as the HC. He shared there is added complexity (a layer of compliance is required) and Staff would have to input same. Deleting the second note from Ravinia that takes 75% of cash is a motivating factor. It is a lot of work. Investors require a guarantee and tax benefit. Evergreen would make the guarantees.
Director Fontane asked if Hart Passman has any input. Mr. Passman said a refinance deal is pretty straightforward. A LITHC deal is more complicated. A new entity would need to be formed.
Commissioner Dennison asked if the HC is obligated to send out an RFP. Mr. Passman said no. However, City Council has the right to approve everything.
Director Fontane said direction is being sought from the HC.
Commissioner Bernstein asked, regarding LITHC, if the funds are restricted. Mr. Beard said the LITHC funds are an investment in the new partnership. There is a way to take unrestricted cash out. He expounded.
Chairman Berkun suggested there could be deed issues. Senior Planner Later said the City owns the land under Peers; has a ground lease until 2075. Commissioner Dennison said if it’s a ground lease, the HC doesn’t own the land. Senior Planner Later said staff would have to review the lease as part of due diligence.
Mr. Beard shared there are other documents that restrict what is and can be done. Commissioner Dennison asked for an informal vote for a LITHC approach.
Commissioner Bernstein asked Staff about all the extra work (including management reports). Chairman Berkun said the Mark-to-Market has a burden too. There is regulation. He asked the HC not to get bogged down with Staff time.
Commissioner Bernstein reminded Ravinia has not been discussed. Senior Planner Later said there are major repairs to be done as well in the townhomes and the two single family homes.
Commissioner Dennison moved to authorize Staff to go to the City Council with a recommendation to further investigate a LITHC partnership to refinance and rehab the Peers and Ravinia properties. Commissioner Tapia seconded the motion.
On a roll call vote
Voting Yea: Chairman Berkun; Commissioners Abreu, Bernstein, Dennison, Fernandez Sykes, & Tapia
Voting Nay: None
Chairman Berkun declared that the motion passed unanimously. He stated this speaks well of the HC’s charter and thanked everyone. Director Fontane thanked the HC for direction and said this would go to the next COTW meeting for their approval.
NEW BUSINESS
There is no New Business.
STAFF REPORT
There is no Staff Report.
SCHEDULED BUSINESS
3. Open Meeting Act and Housing Commissioner Training – Hart Passman, Elrod Friedman
Mr. Passman offered a presentation:
• Statutory & Legal Authority
o IL Housing Authorities Act
o City Code
• City Code Provisions
• City Council Oversight
• Procedure – Open Meetings Act
ADJOURNMENT
Commissioner Dennison moved to adjourn the meeting at 9:08 p.m. Commissioner Abreu seconded the motion.
On a roll call vote
Voting Yea: Chairman Berkun; Commissioners Abreu, Bernstein, Dennison, Fernandez Sykes, & Tapia
Voting Nay: None
Chairman Berkun declared that the motion passed unanimously.
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