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HomeMy WebLinkAbout2007/07/24-Minutes-Fort Worth Housing Finance Corporation (FWHFC) CITY OF FORT WORTH, TEXAS FORT WORTH HOUSING FINANCE CORPORATION CALLED—SPECIAL SESSION TUESDAY, JULY 24, 2007 Present: President Kathleen Hicks Vice President Danny Scarth Treasurer Jungus Jordan (arrived at 12:15 p.m.) Director Mike Moncrief Director Salvador Espino Director Chuck Silcox Director Frank Moss Director Carter Burdette Director Wendy Davis City staff: Dale Fisseler, Assistant City Manager Vicki Ganske, Senior Assistant City Attorney Jerome C. Walker, Director of Housing Marty Hendrix, City Secretary Other staff in attendance: Charles Boswell, City Manager Karen Montgomery, Assistant City Manager/Chief Financial Officer Marcia Wise, Deputy City Attorney Jay Chapa, Assistant Director of Economic and Community Development Cynthia Garcia, Community Development Manager in the Economic and Community Development Department Vanessa Boling, Director Community Relations Diedra Emerson, Assistant Director, Housing Department Donald Cager, Program Manager, Housing Department Carl Smart, Director of Code Compliance Call to Order (Agenda Item I) With a quorum present, President Hicks called the meeting to order for the Board of Directors of the Fort Worth Housing Finance Corporation (FWHFC) at 12:13 p.m. on Tuesday, July 24, 2007, in the Pre-Council Chamber of the Fort Worth Municipal Building, 1000 Throckmorton, Fort Worth. Texas. CITY OF FORT WORTH, TEXAS FORT WORTH HOUSING FINANCE CORPORATION CALLED—SPECIAL SESSION TUESDAY, JULY 24,2007 Page 2 Approval of Minutes of the August 15, 2006 Meeting (Agenda Item II) President Hicks opened the floor for a motion on the approval of the minutes of the Tuesday, August 15, 2006 meeting. MOTION: Upon a motion made by Director Moncrief and seconded by Director Espino, the Board of Directors voted eight (8) "ayes" and zero (0) "nays", with Treasurer Jordan temporarily absent, to approve the Tuesday, August 15, 2006, minutes of the Fort Worth Housing Finance Corporation as presented. The motion carried. Election of Secretary to Replace Former Director Donavan Wheatfall (Agenda Item III-A) MOTION: Upon a motion made by Director Davis and seconded by Director Silcox, the Board of Directors voted eight "ayes" and zero (0) "nays", with Treasurer Jordan temporarily absent, to appoint Director Frank Moss as the Secretary of the Housing Finance Corporation. The motion carried. Treasurer Jordan arrived at the meeting. Review of Bylaws (Agenda Item III-B) Assistant City Manager Dale Fisseler explained to the Board that at the meeting held on August 15, 2006, there were questions on the organization of this corporation board. He advised that he had requested Senior Assistant City Attorney Ganske provide the paperwork on the corporation. He referenced the materials in the agenda packet that contained the Certificate of Incorporation of the Fort Worth Housing Finance Corporation, which was dated December 27, 1979, along with the Articles of Incorporation; a resolution approving the formation of the Fort Worth Housing Finance Corporation, Certificate of Amendment, dated July 28, 1982, along with Articles of Amendment to the Articles of Incorporation, a resolution approving the amendments to the Articles of Incorporation and appointing and ratifying the appointment of members to the Corporation Board. Also included were the By-Laws of the corporation. Mr. Fisseler advised that some of the other paperwork included the subsidiary limited liability corporations, i.e., the FW City Construction Company, LLC., and the Villas of Eastwood Terrace, LLC. Assistant City Manager Fisseler explained that the referenced documents had been provided as a matter of information and the City staff would respond to any questions posed by the Board Members. He added that at some point in the future, the City staff was going to come CITY OF FORT WORTH, TEXAS FORT WORTH HOUSING FINANCE CORPORATION CALLED—SPECIAL SESSION TUESDAY,JULY 24,2007 Page 3 Review of Bylaws (cont'd) (Agenda Item III-B) back with proposed changes. President Hicks pointed out that some of those changes needed would be the FWHFC meeting occurring on a monthly basis and the Executive Committee also meeting on a more frequent basis and keeping the Board informed on what is occurring with the projects. Assistant City Attorney Vicki Ganske interjected that this would entail amendments to the Corporation's By-Laws and Incorporation Charter. She pointed out that those documents had been amended before; however, the City staff wanted to inform the Board Members of the work going forward and provide the corporation documents. Assistant City Manager Fisseler explained that he has determined that this Corporation and the Fort Worth Local Development Corporation needed an administrator to oversee both corporations due to their complexities. He added that he had requested that Cynthia Garcia, Community Development Manager in the Economic and Community Development Department, oversee this project and provide information to the Board on the status of all of their projects. President Hicks stated that Manager Garcia was an attorney and was working within the Central City on economic development issues, so she felt this appointment of Manager Garcia for this project was appropriate. There was no further discussion on this item. Fort Worth Housing Finance Corporation Financial Report (Agenda Item III-C) Assistant City Manager/Chief Financial Officer Karen Montgomery stated that Juan Guerra, Accounting Manager in the Finance Department, was to provide this report; however, he was not present at this time. Ms. Montgomery requested that this item be passed over until his arrival. President Hicks moved to the next item on the agenda. CITY OF FORT WORTH, TEXAS FORT WORTH HOUSING FINANCE CORPORATION CALLED—SPECIAL SESSION TUESDAY,JULY 24, 2007 Page 4 Discuss and Consider a Resolution to Nullify the Resolution Adopted on November 30, 2004, Regarding an Agreement and Grant of $350,000 in Funds from the Endowment Fund with Sierra Vista, L.P., for Redevelopment of 42.5 Acres (Agenda Item III-D) Jerome C. Walker, Director of Housing Department, spoke before the Board on the Sierra Vista Development Update. Mr. Walker presented a PowerPoint Presentation and advised that the purpose of the presentation was to update the Board on the Sierra Vista project and request the de-obligation of unused funds. Mr. Walker provided the background information on this project. He stated that the site was formerly Trinity 1 & 2 Apartments and Jamestown Townhouses. It was located off of East Berry Street and Riverside Drive. He stated that the project included the demolition of 1,014 multi-family dilapidated apartment units. The project partners are: Vertex Investments (Owner/Developer) and the History Maker Homes (Builder). Mr. Walker provided an aerial view of the project site prior to development. He stated that the demolition began in December of 2005. The single-family development consisted of 42.45 acres, with a density of 5.9. The project was 232 single-family homes, with 1,290 sq. ft. to 2,300 sq. ft. The price range was from $80,000 to $120,000. The estimated home construction cost was $20 million. There were currently 43 units under construction. Mr. Walker then advised of the expenditures through the site development as follows: Private Investment Land Acquisition $1,139,700 Demolition $1,132,708 Site Improvements $1,247,853 Total Private Investment $3,520,261 City Investment $3,358,135 Mr. Walker reviewed the budgeted City funds as follows: Enhanced CFA and Bond Funds $3,432,575.00 Contingency (Enhanced CFA) $427.467.00 FW FW11FC Endowment Fund $350.000.00 CITY OF FORT WORTH, TEXAS FORT WORTH HOUSING FINANCE CORPORATION CALLED—SPECIAL SESSION TUESDAY,JULY 24,2007 Page 5 Discuss and Consider a Resolution to Nullify the Resolution Adopted on November 30, 2004, Regarding an Agreement and Grant of $350,000 in Funds from the Endowment Fund with Sierra Vista, L.P., for Redevelopment of 42.5 Acres (cont'd) (Agenda Item III-D) Total: $4,210,042.00 Mr. Walker continued his presentation with a review of the actual development costs for the City that were shown in a chart format. The chart showed the costs for water, sewer, storm drains, paving, engineering, testing, Department of Engineering and Transportation and Public Works. The total amount shown was $3,358,135. Mr. Walker pointed out that the budgeted amount was $4,210,042; the actual amount spent was $3,358,135 and the resulting savings on the project was $851,907. Mr. Walker advised that the savings by funding source was ECFA Savings, which amounted to $74,440; the contingency (ECFA) was $427,467 and the FWHFC allocation was $350,000. The total unused funds were $851,907. Mr. Walker explained that the action being requested of the Corporation Board was to de- obligate the unused FWHFC funds for future use. Director Moncrief stated that it was important to see what was happening with this item. He stated that it was a good quality development. He commended the staff and President Hicks for the work on this project. He also talked about the eye sore that used to exist on this property of the 1,000+ apartment units and the replacement of that with these new homes, which was exceptional. Director Moncrief talked about using the tools in the tool kit to accomplish projects like this one and that if this success worked in this location, it could work in other locations. President Hicks indicated her appreciation to the other Directors and Director Moncrief for his support for this project. She talked about the success that they have had in selling the homes and advised that the developer was a year ahead of their schedule. She added that this development has also served as a domino affect for redevelopment of this area. MOTION: Upon a motion made by Director Moncrief and seconded by Director Espino, the Board voted nine (9) "ayes" and zero (0) "nays" to approve the de-obligation of the unused FWFWHFC funds in the amount of $350.000 for future use and to adopt the proposed resolution. The motion carried. CITY OF FORT WORTH, TEXAS FORT WORTH HOUSING FINANCE CORPORATION CALLED— SPECIAL SESSION TUESDAY,JULY 24, 2007 Page 6 President Hicks returned to Agenda Item III-C. Fort Worth Housing Finance Corporation Financial Report (Agenda Item III-C) Juan Guerra, Accounting Manager in the Finance Department, spoke before the Board on the financial reports that had been provided to them, which included the financial statements for the year 2006 and period ending May 31, 2007. He referenced the memorandum from Lena H. Ellis, Finance Director, which stated that the reports were prepared with a collaborative effort by City departments of Housing and Finance. Manager Guerra reviewed the Table of Contents and indicated that it was broken down into four sections. Those sections were the Introduction, Fort Worth Housing Finance Corporation, the FW City Construction Company, LLC and the Villas of Eastwood Terrace, LLC. Manager Guerra continued his presentation with a review of the FW City Construction Company, LLC. He referenced page 15 of the financial statements. He advised that page provided the history of this Limited Liability Corporation, as well as the purpose, the source of the funds and the fiscal policies. He referenced page 16 that showed their Balance Sheet as of December 31, 2006 (unaudited). He reviewed the assets, which consisted of cash and cash equivalents and investments (cash at Bank — Guaranty Bank) in the amount of$2,494; the other assets, which were a work in progress in the amount of $597,506, for a total asset amount of $600,000. He then advised of the liabilities and equity. The figure for liabilities was zero. The figure representing the equity was $600,000, which was capital, introduced by FWHFC. The total equity and liabilities was $600,000. Manager Guerra then reviewed page 17 showing the income total in the amount of $597,506 and the list of expenditures for that same amount. He reviewed page 18 which showed the Balance Sheet for five months period ending May 31, 2007 (unaudited). For this period, the assets were a total of$582,976, with the total equity and liabilities as $582,976. He pointed out that the difference in this report was the amount of cash in hand, which was $578,066. He explained that this was from the construction and sale of homes. Manager Guerra reviewed page 19 of the report which showed the income from home sales in the amount of$599,112, with the offsetting figure of $597,506 for work in progress. The expenditures shown amounted to $18,631. These figures resulted in a loss on operations carried forward to the balance sheet of -$17,024. He advised that there is a negative balance due to the fact that houses have been built and they are waiting for the houses to be sold. CITY OF FORT WORTH, TEXAS FORT WORTH HOUSING FINANCE CORPORATION CALLED—SPECIAL SESSION TUESDAY,JULY 24,2007 Page 7 Fort Worth Housing Finance Corporation Financial Report(cont'd) (Agenda Item III-C) In discussion on the FW City Construction Company, LLC, Director Moncrief requested clarification on the number of houses that have been built and the number of houses that have been sold. Manager Guerra stated that six (6) houses were built and two (2) were sold and there is one house with a sale pending. President Hicks also requested clarification on who built the houses that were located around the corner from the subject houses. Mr. Walker indicated that they were developed by the FWHFC; however, private contractors were used for the construction. He pointed out that those homes maxed out at a price of $80,000 to $85,000. He stated that those houses were a different product than the houses built by the City Construction Company. President Hicks requested clarification on the price range of the houses built by the City Construction Company. Mr. Walker explained that the price range was from $118,000 to $130,000. He pointed out that they were an upgrade for the area. Director Scarth requested clarification on what was included in that housing construction. Mr. Walker stated that the houses were about 1,800 square feet, with three bedrooms, two baths, and two car garage. He pointed out that one of the homes was a two-story structure, with 1,900 square feet and a wrap around front porch. He advised of the other amenities that are included in these houses. Director Jordan requested further clarification on the cost differential from the houses that are for sale and the houses that have already sold. He asked if the quality had improved to make the cost higher or if it was costing the FW CCC more to build the same house. Mr. Walker pointed out that the houses that were referenced were two totally different products. He stated that the products that were in question right next door would be a total of 29 units planned. He stated that they were called East Crest I and East Crest IL He stated that East Crest I included 13 homes and they ranged in size from about 1,250 to 1,500 square feet. He stated that they have smaller space. He advised that they were constructed when the prices were lower and material costs were lower as well. He pointed out that there was a difference in the amenities and the size of the product. He reiterated that there was a difference in the cost to build the product. He also pointed out that those houses were built by private builders so there was the factor also of the profit margin, which was added in. Therefore, they had to minimize the product while trying to control the price. CITY OF FORT WORTH, TEXAS FORT WORTH HOUSING FINANCE CORPORATION CALLED—SPECIAL SESSION TUESDAY,JULY 24,2007 Page 8 Fort Worth Housing Finance Corporation Financial Report(cont'd) (Agenda Item III-C) Based upon Mr. Walker's comments, Director Jordan questioned Mr. Walker on whether he was still recommending that the FW CCC still continue to build the houses. He added that what he was researching for was the assessment of the FW CCC continuing to build 26 houses, or whatever the figure was that the FWHFC agreed to, if the FWHFC was having trouble selling them once they are completed. Mr. Walker advised that there are four (4) more lots remaining. He stated that it would be the City staff s recommendation that the four lots be completed at the subject location. He added that they would also recommend not building products that are as large as what exists there now. He stated that those products would be driven by the market. He stated that in other neighborhoods, they have re-evaluated the type of products that will be offered. He stated that they would probably offer a scaled-down product that would range between 1,300 and 1,600 or 1,700 square feet. He felt that this product would be more in keeping with the market demand that can be generated in other areas. He stated that the development program for the balance of 2007 and into 2008 would be presented in an upcoming meeting. He stated that the plan would contain information on the identified neighborhoods, the types of product designs and the projected costs. Mr. Walker indicated that the cost per square footage for the new products would be $65.00 per square foot versus the $78.00 per square foot for the cost of the current product. Director Jordan questioned whether any assessment criteria to measure the viability of continuing the City Construction Company versus contracting with private sector builders had been developed. Mr. Walker stated that they have saved money even in the cost of the products that have been presented, i.e., those built in East Crest. He added that there would be a savings and a benefit to continue the City Construction Company. He added this was primarily due to the challenging markets that they would be dealing with and they would have to maintain and control the costs as much as they could in order for those products to sell. Director Jordan asked Mr. Walker if this information was going to be presented at a later date. Mr. Walker indicated that the City staff hoped to have the information ready to present in a couple of weeks. Director Davis indicated that she felt Director Jordan was asking a lot of good and appropriate questions. She added that one of her concerns was making sure that the CCC had the expertise to be building a marketable product. There was further clarification with Mr. Walker on the number built and the number sold. Director Davis indicated that she was not sure how that compares with the relative housing market. She stated that it was always a concern to her when the FWHFC ventures into areas that are typically conducted in a private arena. She added CITY OF FORT WORTH, TEXAS FORT WORTH HOUSING FINANCE CORPORATION CALLED—SPECIAL SESSION TUESDAY,JULY 24,2007 Page 9 Fort Worth Housing Finance Corporation Financial Report (cont'd) (Agenda Item III-C) that she felt that the FWHFC opens itself up to getting into areas where it does not have expertise in the site selection, marketing, construction quality, size of the home, amenities in the home, etc. She stated it was in all of the areas where the private sector have learned lessons the hard way and have come to an understanding of how to put something on the ground for which they can make a profit. She stated that she understood here there was another overriding concern that certainly was not shared by the private market and that was the redevelopment of some challenging areas of Central City. Director Davis stated that was an important objective and she certainly supports that the FWHFC is trying to accommodate that objective. She added that she is still concerned that a municipality was in the home building business and assuring that it can be done in such as way that it was fiscally responsible for the tax paying community. Director Espino indicated that he understood the concerns raised by Director Davis and others. He pointed out that frankly the private sector had not shown any interest in some of the areas of the City. He stated that as long as there are safeguards in place, which Mr. Walker will present later in the meeting, he is willing to continue to give the CCC an opportunity to build infill housing in certain areas of the City. He stated that there was always talk about the free market and the private sector, but the fact of the matter was that they are just not coming into certain areas of the City. Director Espino pointed out the areas and lots on the north side located in Council District 2. He felt that if the CCC built a good product there then many families would purchase them and the same thing exists in southeast Fort Worth. He stated that while there have been issues with some of the housing in some parts of the City; he wanted to continue this program as long as there was oversight. He stated that he was pleased to hear what the controls were going to be on the housing construction. He talked about the Housing Trust Fund and that the Board would also see that there will be sufficient safeguards. In further discussion, Director Espino put a challenge out to the homebuilding community that instead of focusing on the sub prime markets, he asked them to come to the Central City where there was a need for new construction of single-family homes and the rehabbing of the older homes. He pointed out that this was the number one need identified by the Mayor's Quality Affordable Housing Task Force. He added that until he saw that happening, he is going to continue to support the pilot program of home building in the challenged areas of the City. He talked about the prices of the homes and that the prices may need to be in the lower price range of$80,000 to $100,000 price range so that the City was not priced out of the market in certain areas of the City. He talked about the Central City still being a viable market and added that if quality affordable housing is built with good design, he felt it would sell. CITY OF FORT WORTH, TEXAS FORT WORTH HOUSING FINANCE CORPORATION CALLED—SPECIAL SESSION TUESDAY,JULY 24, 2007 Page 10 Fort Worth Housing Finance Corporation Financial Report(cont'd) (Agenda Item III-C) Director Moss referenced the first group of houses that were built in that area. He stated that there was nothing really to compare those homes with as to market. He stated that when he was on the City Council previously, they were fighting to establish comparable sales in that area. He pointed out that the houses were built and sold at a loss. He confirmed that statement with Mr. Walker and reiterated that it was due to the cost to build the house as compared to the selling price of the house. He stated that the actual construction cost by the FWHFC was subsidized with other funding. Director Moss pointed out that he felt the other homes that have been constructed with a more customized approach have affected the market sales. He stated that there was another 50 acres that was immediately adjacent to the site where they built those properties and it has been held up for a considerably period of time as far as development. Director Moss advised that the cost for new construction of homes within a portion of that 50 acre tract would be homes starting at $150,000. He pointed out that what he felt was important with the properties that the City built was to develop some housing standards that the City would base on the development of the other 50 acres. He felt that the development was coming and he referenced the work that was being done in the Sunrise Addition. He stated that area was slated with homes in the same price range. He reiterated his thoughts on the need for the housing standards for the homes to be built. He talked about the private developer in the Sunrise Addition and that there will be some different elements and amenities than what the City's product will offer. He did feel that the City's product has established a standard and that was within the $100,000 range, which he felt a new developer was going to meet and exceed what the City has developed. He referenced a cul-de-sac area and pointed out he felt it was important to set housing standards in that area as it sets a standard for what other people can do in order to make the overall process work. Director Moncrief stated that what he felt everyone was looking for was a balance. He reiterated to Mr. Walker the concerns expressed about competing with the private sector. He also felt that Directors Espino and Moss had made good points about areas where there was no private sector interest or engagement to build. He pointed out that he felt that was what the CCC tool was for and it was not for the City to go out in the market to build or compete with the private sector for a better product. He added that it was to provide an in-fill product where they are needed and to jump start when necessary when no interest has been shown. Director Moncrief stated that as long it is used for that purpose, he did not feel that there would be any issues. He stated that it is when the City goes beyond that purpose or starts competing with the private sector, or try to out do them or out think them that it becomes a problem. He did not feel that this tool in the City's tool box was designed for that purpose. He felt it did play a role. CITY OF FORT WORTH, TEXAS FORT WORTH HOUSING FINANCE CORPORATION CALLED—SPECIAL SESSION TUESDAY,JULY 24, 2007 Page 11 Fort Worth Housing Finance Corporation Financial Report(cont'd) (Agenda Item III-C) President Hicks stated she appreciated Director Moncrief s comments. She added that she has stated many times that she hoped that there would not be a need for the CCC and that the City has the private players coming in. She stated that she felt that everyone sometimes took for granted the development that they are seeing in southeast Fort Worth. She referenced the time in early 2000 when there was no interest in that area of the City. She pointed out that there was very little interest in an area called Berry Hill and the one active resident in the neighborhood association had passed away. She stated that there are situations where the City had to come in. She emphasized that she felt that the City had to build for the neighborhood. She pointed out that the price point at Sierra Vista was an example of what would work and was being realistic. President Hicks also wanted to ensure in a very real way that the City does not gentrify the community. She added that this can be seen all across the country in areas such as those. She stated it was important that the City was building a quality product but not pushing private sector out. Director Jordan stated that what he was pushing for was some means of measurement. He stated that there were two agendas. One agenda was bringing a quality product to neighborhoods where they were needed. He stated that the other part of this that needed to be measured was whether the construction efficiency was equivalent to the private sector. He stated that he did not believe that the City could compete with Sierra Vista in building a home. He stated that the question was whether the CCC can build a product or was it cheaper to contract with the private sector builder to build the same product. He stated that it was an issue of efficiency, not the need. He stated that there was the difference in a developer coming into the City to develop an area versus a builder coming in to do work by contract. Assistant City Manager Fisseler requested clarification from the Board Members on the information that they needed. He stated that what he was hearing was that these particular projects were built for a specific purpose. He stated that the FWHFC recognized at that time there were going to be challenges in doing so. He added the FWHFC felt like it was important in order to set the standard for the area. He stated that since that time there have been successful projects with private contractors and what he was hearing from the Board was that they wanted to see come back were alternatives with the recommendation, along with efficiency models so that the Board would be looking at more than just what was done in the past; what had changed in the program since it was started; and what would been seen as the program goes forward. CITY OF FORT WORTH, TEXAS FORT WORTH HOUSING FINANCE CORPORATION CALLED—SPECIAL SESSION TUESDAY,JULY 24, 2007 Page 12 Fort Worth Housing Finance Corporation Financial Report (cont'd) (Agenda Item III-C) Director Espino indicated that he wanted to make sure that this program was still a tool in the FWHFC tool box. He reiterated his previous statements that he felt there were always going to be parts of the City where even the private sector was not willing to go in for whatever reason. He pointed out the areas where there are only one or two lots on a certain block. He referenced the surplus properties and tax foreclosed properties and emphasized that he wanted to keep this option open. He talked about the housing designs that Mr. Walker had presented in the past and he felt that they were beautiful. He added that he had toured some of the homes. He spoke about the discussions on establishing residential design standards in the Central City and he felt through the CCC those have been established. He reiterated again that he wanted to keep this option viable. Director Scarth indicated that what he heard Director Jordan state was not that the housing projects would no longer be built but instead of employing workers for the CCC, the FWHFC would contract with the private sector to build the product, with FWHFC providing the financial and the lot. He emphasized that the private sector builder would not have to take on the risk. Mr. Walker clarified that the CCC was not out hiring employees and building houses. He stated the CCC was using private subcontractors. He emphasized that these private subcontractors have experience in the business. He stated that the CCC only serves as the construction superintendent in coordinating the schedule of subcontractors to do the work. He added that they also order the materials based on the subcontractors' orders and needs. He pointed out that they are in some cases able to provide savings due to the tax exempt status. Mr. Walker explained that they also use professional staff in the marketing of the housing products. He stated that they are not in the marketing business and they leave that to the professionals. He stated that they list the properties that they have right now with brokers and with brokers who have the experience in those neighborhoods and are the ones marketing those properties. Mr. Walker indicated that he just wanted to clarify with the Board that the CCC was just the manager of the process and was not taking on all of the responsibilities of a construction company. Director Moss referred to the comments made by Director Espino which he felt were important. He stated that in the past when he was previously serving on the City Council, Mr. Walker was continually approached about what the expectations and desires of the buying public within the community was in their opinions for the purchasing of houses. He stated that they also talked about the minimum standards that needed to be met in order to achieve the housing goals. lie stated that many of the newer housing products that the CCC was building were CITY OF FORT WORTH, TEXAS FORT WORTH HOUSING FINANCE CORPORATION CALLED—SPECIAL SESSION TUESDAY,JULY 24, 2007 Page 13 Fort Worth Housing Finance Corporation Financial Report(cont'd) (Agenda Item III-C) addressing that issues that were of concern in the past. Director Moss continued to explain that at that time the private developers were not providing the things that the home buyers in those areas wanted and he pointed out that in some cases it was just the simple things. He talked about the resale of the properties in the past were not occurring and today they were happening. Director Moss talked again about setting the standards and minimum expectations and that those are communicated to the private sector developers and they can then go and look at the properties. He talked about while the sales of the houses might be slow; at least it was giving credence to private sector development in putting properties up in areas that are selling. Director Jordan stated that he did not want to be misunderstood, as he completely agreed with the need in the community and how it was being addressed. He stated that he wanted to make sure in the mechanics that are set up was that the CCC was a general contractor and the FWHFC was the developer and the realtor. He stated that it now appeared from an accounting perspective that the CCC spent $600,000 and they got $600,000 back. He continued to explain his view point. He pointed out that from the FWHFC side focus was necessary regarding measuring the efficiency of the CCC at some point to determine if it was more efficient for the CCC to build the houses rather than the private sector builder. His example was that the CCC built six (6) houses for $600,000 and in comparison perhaps the FWHFC could have gone to the private sector who could have built eight (8) houses for $600,000. He pointed out that this was the type of efficiency measures that he was talking about and the type of information that needed to come forward to Board for their information. He pointed out that the information could go the other way to show that the CCC is more efficient than the private sector. He reiterated that if this was not being measured then the Board will never know. President Hicks provided additional remarks on what had been said and pointed out the number of vacant lots in her district, the amount of substandard housing that has to be demolished, and her concern for the private sector developers that do not have the best interest of the community at heart and just want the fast buck. She felt those types of developers were really abusing the home buyer. She added that she felt with more oversight these issues could be addressed. She emphasized that the market for certain areas of the city must be known and that the FWHFC has an important role that must continue. Manager Guerra continued his presentation with a review of the section on the Villas of Eastwood Terrace, LLC. He referenced page 20 of the financial report. Mr. Guerra pointed out that page contained the information on the history. purpose and source of the funds. He referred to page 21 that showed the balance sheet as of December 31. 2006 (audited). This page CITY OF FORT WORTH, TEXAS FORT WORTH HOUSING FINANCE CORPORATION CALLED— SPECIAL SESSION TUESDAY,JULY 24,2007 Page 14 Fort Worth Housing Finance Corporation Financial Report (cont'd) (Agenda Item III-C) contained information on the assets, which totaled $8,593,827 and the liabilities and net assets (deficit), which reflected that same figure of$8,593,827. Mr. Guerra reference page 22 which showed the apartment rental activity in revenues and expenses. Mr. Guerra pointed out that these pages reflected audited figures by the firm of Ankeney & Singer, LLP. Mr. Guerra continued his review with page 23, which was the balance sheet for five months ending May 31, 2007 (unaudited). This page showed again the assets and liabilities and net assets. Mr. Guerra reviewed page 24, which showed the revenues and expenditures for five months period ending May 31, 2007 (unaudited). He presented the revenues, expenses, change in net assets and the total net asses at the end of the period. Mr. Guerra concluded his presentation. President Hicks advised that she was aware that she and several of the Board Members recently received background information on the Villas of Eastwood Terrace. She pointed out that she and other Board Members were not on the Board when this development was created. She pointed out that this was the next agenda item for consideration. She indicated that it would be helpful to go back and provide more background on the reason the FWHFC decided to go into this type of senior living development. Director Burdette requested to go back to page 22 of the financial reports. He referenced the revenues and expenditures for the apartment rental activity and that it appeared to be at a break even basis until the depreciation if the project was taken into account, which was a figure of $359,186. This figure contributed to the change in net assets for a deficit of $310,859. Director Burdette pointed out that it appears that there was not enough revenue being taken in to cover the depreciation, which in the long term means that this project would not be sustainable. He questioned whether this project was intended to be a stand alone project that was suppose to be self-sustaining once it was up and running so that the revenues covered the expenses as well as the depreciation. President Hicks referenced the location of the project in southeast Fort Worth on Berry towards IH20. She stated that there was not that type of development in that area in early 2000 and the development in that area now was a different ball game. She thought that the idea was that the FWHFC would get it off the ground and then sell it to a private sector company. Mr. Walker indicated that he could begin his presentation for the next agenda item. CITY OF FORT WORTH, TEXAS FORT WORTH HOUSING FINANCE CORPORATION CALLED—SPECIAL SESSION TUESDAY,JULY 24,2007 Page 15 Fort Worth Housing Finance Corporation Financial Report (cont'd) (Agenda Item III-C) President Hicks opened the floor for any further questions or discussion on the financial reports. Director Moss requested clarification on a figure shown on page 21 of the financial reports relating to "advances from owner" in the amount of$284,516. Mr. Guerra indicated that amount represented temporary transfers from the FWHFC to business for operations. Mr. Walker indicated that the explanation for that figure as well as the other contributions would be part of his next presentation. President Hicks requested to know the number of units and the occupancy rate. Mr. Walker advised that there were 160 units and the occupancy was at 90%. Assistant City Manager Fisseler pointed out on page 20 a transfer amount of$615,000 to Villas of Eastwood Terrace, LLC, by the FWHFC. He indicated that same figure was shown on page 21 and he requested clarification on that figure. Mr. Guerra stated there were two transfers, one was the $615,000 to address increases in interest rates and for design enhancements requested by the FWHFC Board and the other was the $284,516 for operations. He stated that they were separated on the financials in order to tell the story. The review and discussion was concluded on this agenda item. The item was provided as a matter of information and there was no formal action taken on the agenda item. Mr. Walker advised President Hicks that there was another portion of the financial report that was not reviewed and it was the FWHFC financial reports. He requested to return to that review once the next item is completed. Report on Villas of Eastwood Terrace, LLC, and Consider a Resolution to Provide Financial Assistance (Agenda Item III-E) Mr. Walker spoke before the Board on the Villas of Eastwood Terrace, LLC. He stated that this presentation was in response to some of the concerns that had been presented at the City Council meeting by some of the tenants on July 10, 2007. He referenced that there was also an article in the Fort Worth Star-Telegram the next day regarding some of the issues that were raised. He advised that the purpose of the presentation was as follows: CITY OF FORT WORTH, TEXAS FORT WORTH HOUSING FINANCE CORPORATION CALLED—SPECIAL SESSION TUESDAY, JULY 24, 2007 Page 16 Report on Villas of Eastwood Terrace, LLC, and Consider a Resolution to Provide Financial Assistance (cont'd) (Agenda Item III-E) ■ Provide the Board with background on the project's development. ■ Respond to concerns expressed by the tenants. ■ Provide an update on the project's current operating status. Mr. Walker provided background information as follows: • The Villas of Eastwood Terrace was a 160-unit market rate senior housing community located at 4700 E. Berry Street in Council District 5. • Project site was 14.7 acres with density of 10.88 units per acre. • Bedroom mix—64—one bedroom units, 96 two bedroom units. • Project amenities: 0 4,000 sq. ft. clubhouse/leasing office. o Theatre room, craft room, kitchen, library. o Exercise room, beauty salon. o Swimming pool, laundry room, washer/dryer connections in each unit. Mr. Walker advised that the project was developed by the Fort Worth Housing Finance Corporation with consultant services provided by Hearthside Development. First Southwest served as the Financial Advisor. He pointed out that the project was owned by the Villas of Eastwood Terrace Limited Liability Corporation (LLC) which was created by the Fort Worth Housing Finance Corporation. The Board of Managers included Ralph McCloud, Joe Paniagua and Jerome Walker. Mr. Walker presented the development cost and financing as follows: • Development and lease-up cost - $10.6 million • Method of financing: $9.7 million tax exempt bonds issued by the FWFWHFC in concert with Federal Housing Administration (FHA) mortgage insurance. • Currently $9.5 million in bonds remains outstanding. • The City of Fort Worth also provided a deferred payback loan of $615,000. • The FWFWHFC provided $284,000 through 2003. (negative arbitrage refund and deferred fees) CITY OF FORT WORTH, TEXAS FORT WORTH HOUSING FINANCE CORPORATION CALLED— SPECIAL SESSION TUESDAY, JULY 24, 2007 Page 17 Report on Villas of Eastwood Terrace, LLC, and Consider a Resolution to Provide Financial Assistance (cont'd) (Agenda Item III-E) He presented the Neighborhood Revitalization Plan as follows: • Construction of new senior housing community. • Construction of 29 single family homes directly across the street (25 completed) • Rehabilitation of a 60-unit multifamily project immediately east of the project. • Plans for a mixed use development by Mount Tabor Baptist Church one- half block east at the corner of Berry and Village Creek. • Planned neighborhood retail immediately west of the project on Berry Street. Mr. Walker provided an aerial photograph of the location and reviewed the location with the Board Members. He stated that the final closing on the project occurred in August, 2003. The property was managed under contract by Quest Asset Management, an affiliate of Hearthside Development. He advised that there was an on-site resident manager, assistant manager (leasing agent), maintenance person and a porter (grounds person). He introduced those individuals that were present in the audience. Mr. Walker presented the responses to tenant concerns regarding the Code Compliance violations as follows: • Property was inspected by Code Compliance on April 5, 2007 • The property passed inspection with a score of 122 out of 125. • Violations were minor, outside storage of furniture, no pool certification from Health Department • All addressed within 10-day period • Two non-functional security lights reported on July 5, 2007. As of this report all lights have been replaced. • Property also underwent inspection by federal government (HUD) on April 27. 2007. CITY OF FORT WORTH, TEXAS FORT WORTH HOUSING FINANCE CORPORATION CALLED— SPECIAL SESSION TUESDAY,JULY 24, 2007 Page 18 Report on Villas of Eastwood Terrace, LLC, and Consider a Resolution to Provide Financial Assistance (cont'd) (Agenda Item III-E) • Three buildings had missing electric outlet covers on exterior; corrected immediately. • Water leaks • Management staff reported problems with water coming under door of several units during hard rain. • Determined this to be a design problem that has been resolved by the general contractor and management company. • Treatment of tenants by City staff • City staff is not engaged in the daily operations of the property. • Staff only has casual contact with tenants when visiting site. • Charges for services such as hanging pictures, unlocking doors, etc. • The management company prohibits staff from charging for such services and was not aware of such practices. • Additionally, there was no record of any charges of this type being made in the past. • Entirely new staff on site since March 2007 • Appears the tenants are generally satisfied with staff that is in place. • The tenants have protested the removal of current staff as recent as July 5, 2007. • Discontinuation of activities in community room • There continues to be a variety of activities offered including: • Bingo • Bible study • Movies o Exercise classes o Pot luck dinner • Screen doors for units • This matter will be reviewed further with the management company and brought back to the Board. Mr. Walker stated that he wanted to stop his presentation in order to allow Vanessa Boling. the Community Relations Department Director. to speak to the Board Members. Ile stated that members of the Dort Worth Human Relations Commission. along with stafi'members CITY OF FORT WORTH, TEXAS FORT WORTH HOUSING FINANCE CORPORATION CALLED— SPECIAL SESSION TUESDAY, JULY 24, 2007 Page 19 Report on Villas of Eastwood Terrace, LLC, and Consider a Resolution to Provide Financial Assistance (cont'd) (Agenda Item III-E) of the Community Relations Department, toured the facility yesterday and visited with the residents. Director Boling provided an update on the individuals from the various City departments as well as members of the Human Relations Commission that had visited the location and talked with the residents. She stated that it was a fact finding mission to gather the facts from generalizations. She indicated that there were 50 issues that they received and they divided them up into maintenance issues, long-term access issues, water issues and security issues. She indicated that the issues would be forwarded to the management company, and Director Moss had also requested a copy, and they would begin to work on them step by step. She stated that they agreed to meet again with the residents in two weeks to provide the progress being made. Director Boling stated that one thing that was clear was the tenants indicated that they were satisfied with the management company and that they wanted them to continue. She added another issue was clear was the lack of a method for adequate communication to the management company regarding issues. She used as an example the issue that certain tenants wanted repairs; however, they had not asked for the repairs. She indicated that they were going to make sure that channel of communication was cleared up. She advised of visiting of several of the homes and that they were well maintained and cared for and that the residents were proud of their homes and comfortable showing the things that needed to be corrected. Director Boling stated that they will visit the property again in two weeks and provided a report back to the Board. Director Moss indicated that the residents were satisfied with the management staff that is there now handling the operation. He felt it was important to disguise that the management staff was different than the management company. Director Moncrief talked about being at the ribbon cutting for this facility and that certain promises were made to this community and certain commitments made about the quality of life that residents of that product were going to be able to enjoy. He talked about security, independence, alternative to long-term care, etc. He indicated that he felt it was a commitment that needed to be kept. He added that the Board and staff had expectations for this community. Director Moncrief indicated that he continued to look forward to on-going dialogue and progress in address these issues. He added that there were expectations that this was a quality product and he expected there to be quality services as well. CITY OF FORT WORTH, TEXAS FORT WORTH HOUSING FINANCE CORPORATION CALLED—SPECIAL SESSION TUESDAY, JULY 24, 2007 Page 20 Report on Villas of Eastwood Terrace, LLC, and Consider a Resolution to Provide Financial Assistance (cont'd) (Agenda Item III-E) President Hicks requested to get clarification on the current board of managers and the reason there was not a current Board Member on there. She also pointed out that it made sense to have Assistant City Manager Fisseler as the staff person on the board of managers. She pointed out that she felt Director Moss should be appointed. Assistant City Manager Fisseler indicated that the staff had planned to bring that back with recommendations. Director Espino stated that this project was done with the best of intentions to provide quality affordable housing to seniors in District 5. He recommended that the Board needed to look long term and partner with the Fort Worth Housing Authority for these types of ventures. He pointed out that there are tax credits available with the Texas Department of Housing and Community Affairs. He suggested that a workshop be scheduled with the Housing Authority to determine how the FWHFC's resources could be leveraged with theirs as well as tax credits and bonds available in Austin to promote more of the quality affordable senior housing developments in various areas throughout the City. He pointed out that the Fort Worth Housing Authority was treated just like any other developer when they presented a project; they were not given any particular preference. He talked about the biggest thing that had been seen at the Mayor's Quality Affordable Housing Task Force was the people that live at 30% of the average medium income. He indicated that these were the labor workers and poorer residences. He reiterated his recommendation to create a partnership and leverage all types of funds in order to address quality affordable housing for that group of residents. Director Jordan indicated that as the Treasurer of the FWHFC, he was looking at the numbers. He pointed out that the quality of the development and services needed to be maintained to the community as set forth. He stated that as it stands right now, the FWHFC is loosing about $30,000 per month by his calculations in operations. He indicated that as the FWHFC Board a decision needed to be made about whether to subsidize the operation costs through the FWHFC or address the operation costs. He added that the Board had fiduciary responsibilities. In further discussion, Assistant City Manager Fisseler indicated that Mr. Walker would addressed that issue. CITY OF FORT WORTH, TEXAS FORT WORTH HOUSING FINANCE CORPORATION CALLED— SPECIAL SESSION TUESDAY, JULY 24, 2007 Page 21 Report on Villas of Eastwood Terrace, LLC, and Consider a Resolution to Provide Financial Assistance (cont'd) (Agenda Item III-E) Director Moss felt it was important to go back and look at when this project was done and that the Fort Worth Housing Authority was dealing with certain issues. He pointed out that there was one development called Villas by the Lake which was developed about 10 years ago that was market rate. He added there was no housing product within the City that dealt with low income seniors. He stated that this project was one of the first and only with the City moving in and developing a product as a demonstration. Director Moss indicated that with this product in place, it can be viewed as to whether it was successful and if it was not successful, then what were the drawbacks. He stated then the FWHFC can determine what they need to do to develop similar products, and then bring the Housing Authority in on the process. Director Walker then provided the current project status in the following summary: • The project maintained an average occupancy of 97.8% in 2006 compared to the average market occupancy of 88% • The current occupancy is 90% • Project has experienced a shortfall in achievable rents when compared to the projections made during the planning and underwriting stages. Mr. Walker reviewed information on the operating deficit. The estimated cumulative operating deficit before reaching break even was $350,000 and included amounts currently due to Quest of approximately $100,000 and advances made by the FWHFC for 2007 totaling $29,000. The break even was projected for 2013. He then presented the issue of the inability to attract a higher income tenant. He stated that the City has made significant infrastructure and housing improvements in the immediate area. The Police Department has addressed many of the crime issues. However, the area immediately surrounding the property remains depressed economically and safety was still a concern for the seniors. Mr. Walker spoke about the loss to lease. He stated that the annual operating deficit was primarily attributable to rental income shortfall on Section 8 leases. He added that was caused by Section 8 payment standards being less than the project's schedule rents. In the several years since the project was approved. Section 8 funding has been reduced by federal policy changes. This has forced local housing authorities to reduce their payment standards in order to stretch funding. CITY OF FORT WORTH, TEXAS FORT WORTH HOUSING FINANCE CORPORATION CALLED— SPECIAL SESSION TUESDAY,JULY 24, 2007 Page 22 Report on Villas of Eastwood Terrace, LLC, and Consider a Resolution to Provide Financial Assistance (cont'd) (Agenda Item III-E) He presented the plans for increasing project income. He stated it was to gradually replace some of the voucher holders with market rate residents. Also to implement modest increases on market rate leases. Mr. Walker then presented a chart showing the projected use of funds from the year 2006 to the year 2013. There was a note on the chart that $29,000 of the amount shown had been advanced by the FWHFC for 2007 expenses. The total funding for that period of years was shown to be $350,000. Mr. Walker concluded his presentation and advised that the recommendation was: • Approve a capital contribution in the amount of $350,000, which is required to assist the Villas until it reaches break even which is projected for year 2013. • The unrestricted FWHFC Fund Balance was $2,461,193. Mr. Walker indicated that there were other legal issues that needed to be delayed and discussed during the Executive Session. Director Davis indicated that she had several questions. She pointed out that from the beginning of this project; it was envisioned as a market rate project. She indicated that a decision was made to allow for the individuals with Section 8 vouchers when it was indicated that the project was going to be left with empty units or units that were being rented considerably below the market rate. She added that when the Board anticipated the financial projections for the project they did not anticipate that they would be in that particular situation. She questioned how there could be a move to remove some of the subsidized housing units and return them to market units. She questioned how that was going to happen. She stated that as the project continues to age, she wondered how they were going to get there as it becomes more challenging as the project ages. Mr. Walker indicated that they have not been as aggressive in moving out the Section 8 voucher holders as they intend to do in the future. He pointed out that in some cases the voucher holders are in two bedroom units and use the second bedroom for a study or a caretaker unit. He indicated that they can no longer continue to allow that use. He stated that CITY OF FORT WORTH, TEXAS FORT WORTH HOUSING FINANCE CORPORATION CALLED—SPECIAL SESSION TUESDAY, JULY 24,2007 Page 23 Report on Villas of Eastwood Terrace, LLC, and Consider a Resolution to Provide Financial Assistance (cont'd) (Agenda Item III-E) they needed to start charging the two bedroom rent. He stated that this was going to be a gradual move and will take several years. He pointed out that it was going to be painful, unless the Housing Authority is able to raise the payment standards for the residents. Mr. Walker indicated that there were 16 vacancies, with 61 Section 8 residents as opposed to the 70 or 71 that they had as the high number. Mr. Walker advised of the various ways that residents leave the property. He reiterated that as those residents move out of the units there will be an attempt to return the units to the market rate. Mr. Walker talked about the pace of improvement in the neighborhood. He pointed out that unfortunately it was hard to predict when a turnover of the area is going to take place and move at a faster pace. He reiterated the plans for getting back to the market rates for the units. Director Davis pointed out that the FWHFC had two goals that it was trying to achieve. She stated that one was this area and the challenges that this area has had to bring market rate housing. She pointed out Director Moss's approach in working toward mixed use developments, with affordable housing along with market rate housing in various areas of his district where one or the other did not exist. She added that she commended him on this approach. She emphasized that in this project the FWHFC was not able to achieve the market that it wanted to. She pointed out that the result was a loss that the FWHFC now had to deal with. Director Davis indicated that from a broader perspective, she hoped that the Quality Affordable Housing Task Force could start looking at this question. She added that she felt the goals were on point, but she felt that the FWHFC was not doing the right thing to get there. She questioned whether it was better for FWHFC to be in this business or would it be better to find a market partner and subsidize the market partner through other means that have been used in the past. She also suggested that it might be better to work with the private senior housing affordable developers who are receiving the housing tax credits at the state level and are able to do this. Director Davis indicated that another goal was to put market on the ground. She pointed out that all of the goals are important and she applauded the Housing Department for working to try to fulfill the goals. She added that each time this is done, it is an opportunity to learn for the future. She hoped that the FWHFC takes the experiences here and determines whether the policies for the future might better guided. Director Moss stated that Mr. Walker had mentioned one lesson that had been learned in the overall process was that the project was started with 64 one bedroom units and 96 two bedroom units because the FWHFC had assumed that there would be a bigger demand for the CITY OF FORT WORTH, TEXAS FORT WORTH HOUSING FINANCE CORPORATION CALLED—SPECIAL SESSION TUESDAY,JULY 24, 2007 Page 24 Report on Villas of Eastwood Terrace, LLC, and Consider a Resolution to Provide Financial Assistance (cont'd) (Agenda Item III-E) two bedroom units, but the demand is for the one-bedroom units. He pointed out that the majority of the one-bedroom units are leased. He pointed out that the two-bedroom units' leasewas $125.00 more. He provided reasons that the one-bedroom units are more popular than the two-bedroom units. Director Moss added that there are signs of things that are happening that will increase the cash flow. He advised of the change in the people that are moving into the complex. He indicated that initially the age range was 65 and over and now the age range appears to be in the 55 year old range. Mr. Walker explained that permission had to be obtained from HUD to allow the 55-year old range into the complex as the original age minimum was 62. He stated that the third thing that was happening with this project was that it filled a need in the community. He stated that there were a large number of residents that had to move out of their residences because they were substandard or they were afraid to stay in their homes due to the crimes in the area. Director Moss advised of moving his parents to this location as it was just not safe at their residence. He indicated that most of the homes have been torn down or sold. He pointed out that a transition was taking place in the community. He added that he hopes to see and is currently seeing new building taking place on the vacant lots. He felt there were going to be more changes in the future, but it has met one major goal and that was providing a safe community for people to move into that was not previously safe. Director Moss pointed out that in the future regarding the types of units that the issue of two-bedrooms, two baths and three- bedrooms needs to be considered when building the senior housing for the higher income individuals for a real market rate product. He indicated that was not applicable to this particular complex. Director Burdette stated that he agreed that it was a good product for the seniors and that the issues there are being addressed. He stated that what he felt the FWHFC needed to keep in mind was the use of public monies to address some of these needs. He added that he felt the FWHFC was taking the risk that the private sector did not want to take. He stated that one risk was seeing how this was going to work out. He talked about the deficits for this project and his hope that it does turn around in the future. He indicated that within the next several years there could be a deficit of several million dollars and then the question to the Board would be whether it should be spending public money to pay for market rate self sustainable residences or use those funds as a subsidy to provide the needed housing. He felt there would be a lot of sole searching on this question. President Hicks advised that the legal matters pertaining to this agenda item would be discussed during the Executive Session and no action would be taken at this time. CITY OF FORT WORTH, TEXAS FORT WORTH HOUSING FINANCE CORPORATION CALLED—SPECIAL SESSION TUESDAY,JULY 24, 2007 Page 25 At this time, President Hicks called upon Mr. Guerra to go back to the financial reports to review the section on the Fort Worth Housing Finance Corporation. Fort Worth Housing Finance Corporation Financial Report (cont'd) (Agenda Item III-C) Mr. Guerra referenced page 1 of the financial reports that contained information on the FWHFC with the history, background, and source of funds. He then referenced page 3, which contained the information on the balance sheet as of September 30, 2006 (unaudited). The sheet showed the assets and liabilities and fund balance and he reviewed this information for the Board. He referenced page 5 that showed more details related to the financial information. The total assets figure was $12,027,405. The total liabilities and fund balance also represented that figure. Mr. Guerra reviewed page 4 of the report that showed the revenues, expenditures and information on other financing sources (uses). It also showed the reconciliation of fund balance to balance sheet. Mr. Guerra presented the information shown on page 5 of the report. That page contained the details of loan receivables and escrow accounts of September 30, 2006. He continued his review of pages 6 to 8, which contained the information on the details of the properties held for sale as of September 30, 2006. Mr. Guerra then reviewed the information found on pages 9 through 14, which contained the same information as previously reviewed except for the period of eight months ending May 31, 2007. Mr. Guerra concluded his presentation. Director Jordan expressed appreciation for the financial reports and commended Mr. Guerra on his presentation. He requested that on the future reports he would like to address the liquidity in some way in order to show the real property as opposed to cash, or liquid assets. He stated that the real property was going to fluctuate in value and he wanted to identify that separately. Mr. Guerra expressed appreciation to the Housing staff for their work in this endeavor. This concluded the presentation and discussion on this agenda item and it was received as a matter of information. There was no formal action taken on this agenda item. CITY OF FORT WORTH, TEXAS FORT WORTH HOUSING FINANCE CORPORATION CALLED—SPECIAL SESSION TUESDAY, JULY 24,2007 Page 26 Discuss and Consider a Resolution to Establish the Fort Worth Housing Trust Fund and Provide Administrative Oversight on Behalf of the City of Fort Worth (Agenda Item III-F) Jerome Walker, Director of Housing Department, spoke before the Board on the appropriations briefing for the Fort Worth Housing Trust Fund. He advised that the purpose of the briefing was to seek the Board's input on the proposed policies and program guidelines for the Fort Worth Housing Trust Fund (FWHTF). It was also to determine the Board's interest in allocating funds to establish the FWHTF. He explained that these recommendations were coming forward from the Mayor's Quality Affordable Housing Task Force. He pointed out the members of the Task Force. Mr. Walker presented the policy and guidelines for the FWHTF. The Resources Allocation Guidelines included the following: • Projects in the City of Fort Worth, its Central City, and target areas • Housing for households at or below 120% area median income ($76,100 family of four) • Funds distributed through loans, loan guarantees, and grants He then reviewed the fund distribution, which identified that the resources were directed to achieve housing priorities recommended by the Task Force. The distribution was as follows: • No less than 40%to preserve owner-occupied housing • No more than 23% to construct or rehabilitate multi-family units affordable to households earning<60%AMI • No more than 17% for single-family new construction • No less than 13% for preservation, rehabilitation, or construction of permanent supportive or transitional housing • No more than 10% for administration Mr. Walker presented the FWHTF sources and uses in a chart that showed the corpus as follows: FWHFC Endowment $4,000,000 Corpus Subtotal $4,000,000 CITY OF FORT WORTH, TEXAS FORT WORTH HOUSING FINANCE CORPORATION CALLED—SPECIAL SESSION TUESDAY, JULY 24,2007 Page 27 Discuss and Consider a Resolution to Establish the Fort Worth Housing Trust Fund and Provide Administrative Oversight on Behalf of the City of Fort Worth (cont'd) (Agenda Item III-F) Revolving Fund General Fund $2,000,000 HOME $1,750,000 CDBG $650,000 Corpus Interest 0 Loan Interest 0 RLF Subtotal $4,400,000 The Fund Total $8,400,000 Mr. Walker advised of the proposed fund uses as follows: Rehabilitation—owner occupied Home improvement and home repair Purchase/Rehabilitation Rehabilitation—multi-family Acquisition Site Preparation Construction and development soft costs New construction—single family infill New construction—multi-family Transitional or permanent housing for special needs population Mr. Walker presented a pie chart showing the FWHTF allocation for year 1 as follows: 7% Administration 13% Permanent housing for special needs/transition 17% Single family infill/new construction 23% Multi-family new/rehab 40% Owner rehab Mr. Walker reviewed the next chart showing the allocation and number of units for year 1 as follows: CITY OF FORT WORTH, TEXAS FORT WORTH HOUSING FINANCE CORPORATION CALLED—SPECIAL SESSION TUESDAY,JULY 24, 2007 Page 28 Discuss and Consider a Resolution to Establish the Fort Worth Housing Trust Fund and Provide Administrative Oversight on Behalf of the City of Fort Worth (cont'd) (Agenda Item III-F) Year 1 Allocation # Units REHABILITATION Owner Rehab to 120% AMI $1,756,710 40 Rental Rehab gap finance to 80% AMI $560,000 17 NEW CONSTRUCTION Single Family Infill to 120% AMI $741,500 12 Multi-family gap finance <60% AMI $448,734 9 HOMELESS HOUSING $585,000 9 Administration $308,056 - Mr. Walker continued his presentation with a review of the program features of the Homeowner Rehabilitation Loans. He presented the following chart that showed the loans for homeowners earning up to 80% of AMI: • Loan Amount: Minimum $2,000 to Maximum $40,000 • Loan Term: 10 years • Affordability Period: 10 years • Interest Rate: 0%, fixed for term of loan • Repayment Household Median Loan Repayment Deferred Payment Loan Income 0% to 40% AMI 0% 100% 41% to 60% AMI 30% 70% 61% to 80% AMI 70% 30% Mr. Walker talked about the loans for homeowners earning 81 to 120% of AMI: • Loan Amount: maximum up to $50,000 • Loan Term: up to 15 }ears CITY OF FORT WORTH, TEXAS FORT WORTH HOUSING FINANCE CORPORATION CALLED—SPECIAL SESSION TUESDAY, JULY 24, 2007 Page 29 Discuss and Consider a Resolution to Establish the Fort Worth Housing Trust Fund and Provide Administrative Oversight on Behalf of the City of Fort Worth (cont'd) (Agenda Item III-F) • Interest Rate: fixed for term of loan; Federal Fund Rate based on Wall Street Journal Consumer Money Rate at time of loan. • Repayment: 100% of loan • Affordability Period: Five year resale restriction Mr. Walker presented the information on the fund oversight and administration as follows: Governing Body—FW Housing Finance Corporation • Determines policies and manages activities of the FWHTF including allocation of funds and administration of policy. Advisory Board — Central City Revitalization and Economic Development Committee (CCREDC) Administration—Housing Department with support from the Finance Department and the Law Department • Outreach, education • Loan processing • Loan servicing • Legal and accounting • Planning Staffing—Housing Department • Short Term —Existing Housing Department Staff • Intermediate Term —Additional I —2 staff to support FWHTF production Mr. Walker presented the annual plan. He stated prior to the commencement of the fiscal year, the Housing Department will submit an annual plan with the following: • Description of programs to be funded • Specify beneficiaries of the program • ldentifv source of funds • Identih use of'funds CITY OF FORT WORTH, TEXAS FORT WORTH HOUSING FINANCE CORPORATION CALLED— SPECIAL SESSION TUESDAY,JULY 24, 2007 Page 30 Discuss and Consider a Resolution to Establish the Fort Worth Housing Trust Fund and Provide Administrative Oversight on Behalf of the City of Fort Worth (cont'd) (Agenda Item III-F) He presented the accountability points: • Annual and Quarterly Reports • Number and types of loans • Geographic and demographic data • Leveraging outcomes o Fund status Mr. Walker advised of the next steps: • City Council authorization for the allocation of funds to the Fort Worth Housing Finance Corporation to establish the Fort Worth Housing Trust Fund. (FWHTF) • City Council authorization for the City Manager to execute a contract with the FWHFC to allocate, invest, administer, and expend the funds consistent with the policies, guidelines, and purpose of the FWHTF. • Return to FWHFC Board seeking allocation of endowment funds ($4 million) and approval to execute a contract with the City. • Implementation of FWHTF activities. Mr. Walker concluded his presentation. President Hicks stated that a lot of the focus of the discussions held today had been on various areas of the City. She pointed out that this funding was to address issues throughout the entire City. She advised of areas that are seeing rehabilitation and residences that want to join in the process. She reiterated the funding is for the entire City. Director Espino indicated that this agenda item was the result of a process that began during the budget discussions held the previous year for funding of the Housing Trust Fund. He talked about the action of the City Council to identify $2.000.000 from the City's General Fund. He indicated that this was a modest beginning and that Fort Worth �N-as unique among cities in CITY OF FORT WORTH, TEXAS FORT WORTH HOUSING FINANCE CORPORATION CALLED—SPECIAL SESSION TUESDAY,JULY 24, 2007 Page 31 Discuss and Consider a Resolution to Establish the Fort Worth Housing Trust Fund and Provide Administrative Oversight on Behalf of the City of Fort Worth (cont'd) (Agenda Item III-F) that it had established the Housing Trust Fund. He reviewed all of the details of their discussions at the Mayor's Quality Affordable Housing Task Force to reach the recommendations that had been presented. He stated that he wanted to support the funding of the Housing Trust Fund every year. He added that one of the charges to the Task Force was finding additional sources for this funding, i.e., the revenue stream. He stated that they are still looking for the model for the gap financing. He referred to Director Davis's comments on how could the private sector be engaged in providing or the gap financing. He talked about the upcoming successful quality developments being done in the City that have the quality affordable housing component. He then talked about the oversight function and accountability and he supposed therecommendations presented by the staff. He added that there is to be an annual report. Director Espino indicated that he was hopeful that the FWHFC can leverage the funds in the FWHTF with other opportunities that are out there, even on a national level. He encouraged the Board Members to move forward and approve the recommendations made by the staff. Director Jordan commended Director Espino for his leadership role on the Quality Affordable Task Force. He pointed out that he and Director Burdette have both expressed concerns for the accountability of the funds, not about the need in the community. He stated that as the Treasurer of the Board, he felt that the Board was ready to move forward and the mechanics were now in place to account for the funding. He felt that measurement was necessary. Director Jordan talked about this issue as part of the City's legislative plan and that the City had not offered up a bill to change this process at the state level yet, but perhaps it was time to do so. He added that he felt it was time for Michael Gerber to visit Fort Worth and meet with the FWHFC to hear what the plan was for the City's development approach and the use of mixed income within the plan. He stated that this was the beginning and the FWHFC has the opportunity to account for every penny. Director Moncrief spoke about this being valuable tool in the FWHFC tool kit. He added it was one that a number of Board members had concerns about. He talked about Director Espino bringing this issue forward and pushing for it support. He felt that the concerns that have been raised over the accountability and oversight have been addressed. He indicated that he would also support additional funds from the next year's budget for this funding. He added that as the City gets older so do the homes and there will be the need for more funding to rehabilitate the older homes. He pointed out that this fund needed to be grown in order to serve the entire ('itv. CITY OF FORT WORTH, TEXAS FORT WORTH HOUSING FINANCE CORPORATION CALLED—SPECIAL SESSION TUESDAY, JULY 24,2007 Page 32 Discuss and Consider a Resolution to Establish the Fort Worth Housing Trust Fund and Provide Administrative Oversight on Behalf of the City of Fort Worth (cont'd) (Agenda Item III-F) Director Burdette questioned the reason that the FWHFC was placing funds into a Housing Trust Fund as it appeared to him that more money is just being identified to carry out programs or goals that have already been identified and carried out by the FWHFC. He questioned again the reason that a Housing Trust Fund was being established. President Hicks indicated that there was a billion dollar need in the City for affordable housing and a real need for housing rehabilitation. She pointed out that every day she has to turn people away as the FWHFC does not have those dollars. She added that she felt it was easy to focus on the new areas of the City. She pointed out that there were a lot of residences that need the rehabbing. Director Burdette clarified his question was not about providing the funds, but the reason that another vehicle for those funds needed to be established. He questioned the reason that the funding could not be placed in the vehicles that are already available. He asked the reason that the funding just could not be placed with the FWHFC. Director Espino provided an explanation for the need for the Housing Trust Fund. He advised that most of the funding in the Housing Department comes from federal funds. He spoke about the political issues that can occur with those funds on the national level. He talked about the National Housing Trust Fund and that priority would be given to cities that can leverage those types of funds. He stated that by creating a Housing Trust Fund there will not be all of the red tape that can be experienced with the federal funds. He pointed out that the only funding available within the City for rehabbing of houses was through the model block grant funding, which is a limited source of funding. He stated that those are some of the policy reasons that have been used to move forward with the creation of the Housing Trust Fund. He pointed out that other funds, i.e., HOME, CDBG, etc., are all funding sources from the federal government. The Housing Trust Fund would be locally supported by the City of Fort Worth. President Hicks reiterated her comments about the needs throughout the City and that there are just not sufficient dollars to cover all areas. CITY OF FORT WORTH, TEXAS FORT WORTH HOUSING FINANCE CORPORATION CALLED—SPECIAL SESSION TUESDAY,JULY 24,2007 Page 33 Discuss and Consider a Resolution to Establish the Fort Worth Housing Trust Fund and Provide Administrative Oversight on Behalf of the City of Fort Worth (cont'd) (Agenda Item III-F) Assistant City Manager Fisseler stated that there was also the question of liability that makes it a good vehicle to use to put the Housing Trust Fund dollars into. He pointed out that with the creation of the other vehicles; the City went to great lengths to protect the General Fund liability. Director Burdette stated that he understood the funds and the use of the funds. He stated that the funds were going to be managed by the Housing Department, just like the other funds. He added that what he was hearing was that there needed to be a separate pot of funds simply for the purpose of isolating it from the other funds in terms of accounting. He reiterated the statements he made about the funds being managed by the Housing Department, putting dollars on the ground and managed like the other funds in the FWHFC. He requested clarification if that was a correct analysis. Director Jordan indicated that it was his preference that the Housing Department functions under the authority of the Housing Finance Corporation. He added that he wanted the FWHFC to set the goals and to set the plan. He added the Housing Department would implement the plan. He stated that then the FWHFC would be the ultimate approval authority for how the funds are used. President Hicks concurred with Director Jordan's statement. She stated that she was surprised that the Quality Affordable Housing Task Force was not shown in the recommendation. She stated that while she realized that was suppose to be a temporary function; there was interest shown that they at least meet quarterly to have that outside input from everyone on the task force (development community, realtors, league of neighborhoods, etc.). She reiterated that she felt they should be part of the process so that they can provide input on where they feel that FWHFC is going. She added that she also concurs with Director Jordan that the FWHFC must meet more regularly and also at the next meeting the Board will be talking about the Executive Committee so that there will be continued involvement. President Hicks posed the question to Mr. Walker about the inclusion of the Quality Affordable Task Force in this process and continuing on and meeting at least on a quarterly basis. Mr. Walker indicated that it had been discussed and that the Task Force needed to make a request to the City Council. Ile stated that there was also discussion on establishing a permanent CITY OF FORT WORTH, TEXAS FORT WORTH HOUSING FINANCE CORPORATION CALLED—SPECIAL SESSION TUESDAY, JULY 24,2007 Page 34 Discuss and Consider a Resolution to Establish the Fort Worth Housing Trust Fund and Provide Administrative Oversight on Behalf of the City of Fort Worth (cont'd) (Agenda Item III-F) advisory body to the City on housing matters. He added that the Chairman of the Task Force should make that request to the City Council for adoption. Mr. Walker provided further explanation to Director Burdette's question on the reason for the FWHTF. He stated that the FWHTF would also consolidate most of the fund sources that are available under one program, for separate administration. He provided further explanation on this approach. MOTION: Upon a motion made by Director Espino and seconded by Director Moss, the Board of Directors voted eight (8) "ayes" and one (1) "nay", with Director Silcox casting the negative vote, to approve the resolution to establish the Fort Worth Housing Trust Fund and provide administrative oversight on behalf of the City of Fort Worth. The motion carried. President Hicks commended Director Espino on all of his work in this process and that she looked forward to moving on with the Housing Trust Fund. Report on Settlement of Claims and Lawsuit Entitled J.P. Morgan Chase Bank v. Fort Worth Housing Finance Corporation, NB Homes, LTD and Marcus Buckley Pending in the 348th District Court of Tarrant County, Texas, Cause No. 348-218883-06 (Agenda Item III-G) Senior Assistant City Attorney Vicki Ganske provided a report to the Board Members on the settlement of the claims and lawsuit at no cost to the FWHFC. She added the case was dismissed and there would be no action necessary. CITY OF FORT WORTH, TEXAS FORT WORTH HOUSING FINANCE CORPORATION CALLED—SPECIAL SESSION TUESDAY,JULY 24,2007 Page 35 Ratify the Execution of the First Modification to Loan and Security Agreement dated December 26, 2006, Extending the $2,000,000 Credit Facility from Fannie Mae to the Fort Worth Housing Finance Corporation (Agenda Item III-H) Senior Assistant City Attorney Vicki Ganske spoke before the Board on this ratification. She advised that the term needed to be extended on the Loan and Security Agreement that was dated December 26, 2006, which extended the $2,000,000 credit facility from Fannie Mae to the Fort Worth Housing Finance Corporation. She pointed out that this pertained to the Oak Timbers project that was located in District 8. This agenda item was just ratifying action that had previously taken place. President Hicks advised that this was the senior housing project in District 8 in the Fort Worth south area near Main behind the Baker Funeral Home. She advised that this project would be open in the next month or so. She stated that this was an example of working with the private developer and getting the tax credits to do the quality affordable senior housing. MOTION: Upon a motion made by Director Moss and seconded by Director Espino, the Board of Directors voted eight (8) "ayes" and zero (0) "nays", with Director Silcox temporarily absent, to ratify the execution of the First Modification to Loan and Security Agreement dated December 26, 2006, extending the $2,000,000 Credit Facility from Fannie Mae to the Fort Worth Housing Finance Corporation. The motion carried. President Hicks adjourned the called—special session of the Fort Worth Housing Finance Corporation into Executive Session at 2:26 p.m. Executive Session (Agenda Item IV) In accordance with the Texas Open Meeting Act, Section 551, the Fort Worth Housing Finance Corporation convened into Executive Session at 2:26 p.m. p.m. in order to discuss: A. Seek the advice of its attorneys concerning the following pending or contemplated litigation or other matters that are exempt from public disclosure under Article X, Section 9 of the Texas State Bar Rules, as authorized by Section 551.071 of the Texas Government Code: CITY OF FORT WORTH, TEXAS FORT WORTH HOUSING FINANCE CORPORATION CALLED—SPECIAL SESSION TUESDAY,JULY 24, 2007 Page 36 Executive Session (cont'd) (Agenda Item IV) 1. Legal issues concerning any item listed on today's Fort Worth Housing Finance Corporation meeting agenda; B. Deliberate the purchase, sale, lease or value of real property, as authorized by Section 551.072 of the Texas Government Code. Deliberation in an open meeting would have a detrimental effect on the position of the Corporation in negotiations with a third party; and C. Deliberate concerning economic development negotiations, as authorized by Section 551.087 of the Texas Government Code. The Executive Session was adjourned at 2:40 p.m. President Hicks reconvened the called — special session of the Fort Worth Housing Finance Corporation at 2:40 p.m. on Tuesday, July 24, 2006. President Hicks returned to Agenda Item III-E. Report on Villas of Eastwood Terrace, LLC, and Consider a Resolution to Provide (Agenda Item III-E) Financial Assistance (cont'd) MOTION: Upon a motion made by Director Moss and Seconded by Director Davis, the Board voted eight (8) "ayes" and zero (0) "nays, with Director Silcox temporarily absent, to approve the resolution approving the capital contribution in the amount of$350,000, which was required to assist the Villas of Eastwood Terrace, LLC. The motion carried. President Hicks stated that the issues will continue to be addressed. Request for Future Agenda Items and/or Reports (Agenda Item V) Director Espino pointed out that HUD also has a homeownership rehab program. He felt that in the future HUD should come back and discuss with FWHFC the rehab of single-family homes. CITY OF FORT WORTH, TEXAS FORT WORTH HOUSING FINANCE CORPORATION CALLED—SPECIAL SESSION TUESDAY, JULY 24,2007 Page 38 Prepared and respectfully submitted by: CN-111\ 6'�� Marty Hendrix City Secretary CITY OF FORT WORTH, TEXAS FORT WORTH HOUSING FINANCE CORPORATION CALLED—SPECIAL SESSION TUESDAY, JULY 24,2007 Page 37 Request for Future Agenda Items and/or Reports (cont'd) (Agenda Item V) Director Moss pointed out that one of the big problems out in the community was the issue of land acquisition. He stated that the funds that are received from the federal government cannot be used for that purpose. He stated that this was something that really needed to be looked at. He was aware that this was a problem the Housing Department had in the past. President Hicks talked about the foreclosures of single-family homes that are occurring. She stated that if HUD was able to meet with FWHFC then the Board can talk about some of the things that are in place for addressing the foreclosure issues. Adjourn (Agenda Item VI) With no further discussion, President Hicks adjourned the called — special session of the Fort Worth Housing Finance Corporation Board at 2:44 p.m. on Tuesday, July 24, 2007. These minutes approved by the Fort Worth Housing Finance Corporation Board of Directors on the 3rd day of June, 2008. APPROVED: _X Kathleen Hicks President ATTEST: Frank Moss Secretary