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Minutes 09-02-98 MINUTES OF CITY COMMISSION WORKSHOP MEETING HELD IN COMMISSION CHAMBERS, CITY HALL, BOYNTON BEACH, FLORIDA ON WEDNESDAY, SEPTEMBER 2, 1998 AT 6:30 P.M. PRESENT Gerald "Jerry" Taylor, Mayor Shirley Jaskiewicz, Vice Mayor Henderson Tillman, Mayor Pro Tem Commissioner Jamie Titcomb Commissioner Nellie Denahan OPENING REMARKS Kerry Willis, City Manager Jim Cherof, City Attorney Wilfred Hawkins, Support Services Mgr. Sue Kruse, City Clerk Hank Ackermann, Neighborhood Project Specialist Mayor Taylor called the meeting to order at 6:37 p.m. and thanked everyone for being present this evening. Mayor Taylor stated this was a special workshop meeting to address the BOYNTON TERRACE ISSUES and that Mr. Wilfred Hawkins will be facilitating tonight's meeting Mr. Hawkins took the podium and stated that tonight's Agenda will.be adhered to and that he will be presenting an overview of the issues. Mr. HaWkins reminded the audience that the meeting tonight was a workshop and will be informational in nature. Mr. Hawkins acknowledged the presence in the audience of a contingency of management personnel from Heritage Management Company, which is the management company of the Boynton Terrace Apartments. A staff report from the City project team will be presented. That team is comprised of Mr. Ackermann, Police Chief Marshall Gage and myself. Mr. Hawkins made note that there has been excellent cooperation from the staff of Heritage Management and Reliance Management. Also, visuals will be provided to the Commission for reference. Mr. Hawkins stated that Heritage Management would be presenting their proposal this evening. After the Heritage Management presentation, there will be discussion on what the City's support for the project could be, based on staff's recommendation. Mr. Hawkins requested from Mayor Taylor that questions from the audience be withheld until the conclusion of the presentation, to which Mayor Taylor agreed. Mr. Ackermann was introduced and took the podium to give a brief update of the Boynton Terrace issues. Mr. Ackermann referred the Commission to the Amended Boynton Terrace Apartments Plan of Action, which evolved from a series of meetings that were held after the July 12th incident. MEETING MINUTES CITY COMMISSION WORKSHOP BOYNTON BEACH, FLORIDA SEPTEMBER 2, 1998 Some of the goals set were- · to hold the owners of the property responsible for improving overall conditions; · strict enforcement of building codes and nuisance abatement ordinances to assure better quality of life for the residents; · strengthening of communication between residents and the City; and · establish a better understanding and enhance communication between the residents and the Police Department. Mr. Ackermann stated that Police Officer Brian Anderson has been assigned full-time duty at the Boynton Terrace Apartments. Officer Anderson has earned the respect and cooperation of the residents of Boynton Terrace. With regard to long range action goals, some of the goals have been moved up and will be addressed this evening. The Commission was also referred to the Progress Report on Boynton Terrace Plan of Action included in their packets. Mr. Ackermann stated that many areas of concern contained in the progress report have been resolved after the first meeting and their progress will be reported on as well. Mr. Hawkins introduced Mr. Don Pace, the Vice President of Heritage/Reliance. Mr. Pace took the podium and stated he was Vice President of Planning and Development for Heritage Rural Housing and introduced his staff that was present in the audience. Mr. Pace introduced Mr. Michael Hartman, CEO of Heritage Rural Housing who would be making Heritage's presentation this evening. Michael Hartman, Chief Operating Officer for the Heritage Companies took the podium and thanked the Mayor and the Commission for the opportunity to make their presentation this evening for the Boynton Terrace Apartments. Mr. Hartman stated that Mr. Pace, as Vice President of Acquisitions, would be in charge of the Boynton Terrace Apartments from the outset to the finish. Mr. Hartman stated that Heritage Company is the current manager of the property. Heritage is not the owner and does not have any ownership interest in Boynton Terrace. Chris Mathieson, Social Service Director for Heritage and Suzette Smith, Regional Manager are also present and will be speaking to the Commission. Mr. Hartman stated that Boynton Terrace was in great need of up-grading and major renovations. This would include the following - MEETING MINUTES CITY COMMISSION WORKSHOP BOYNTON BEACH, FLORIDA SEPTEMBER 2, 199_R 2. 3. 4. Complete rehabilitation of the units. Security--Residents need to feel they are safe. Amenities are needed--currently none. Social services need to be provided to residents. How will these four items be accomplished and can money be borrowed to accomplish these goals? Mr. Hartman said that based upon rents and operating expenses, the property could not support any more debt. The next step considered was a purchase of the property and to apply for long-term housing tax credits from the State. Mr. Hartman referred the Commission to the first page of the presentation, which explained how tax credits work. Tax credits are a federal program under the Internal Revenue Code (IRC) which permits the property owner through a credit on their federal income taxes to recover 70% of the cost of the property over a ten-year period. Tax credits are purchased at discount by large corporations, typically 68¢ to 75¢ on the dollar, which is offset on their federal income taxes. Mr. Hartman read the list of some major corporations that purchase tax credits. What this means is that the corporations are providing unsecured subordinated financing for their tax credits. This is considered a major risk, as they hold no mortgage on the property and the only way they get their money back is through the tax credits over a ten-year period. If the property had to be foreclosed upon any time in the future, the tax credit would be lost and their investment in the property could not be recovered. Mr. Hartman stated the process for obtaining tax credits is competitive via an application process through the State. The Florida Housing Finance Corporation (FHFC) will issue a notice of funds availability and in January all the applications are reviewed and judged on a competitive scale. A complicated point system of meeting 650 points is in place and there is a great deal of competition. The one most important item differentiating applications is local contribution. Local contribution does not necessarily mean money nor does it have to be from the city. It can come from the city or county, or both, in forms of abatements or grants from other sources. Boynton Beach was considered because of its "large county" status. Sixty-fix percent of the State's total tax credit allocations will be given to large counties. Mr. Hartman referred the Commission to the brochure setting forth Heritage's qualifications for the project. Since the inception of tax credits in 1987, Heritage has been in the tax credit business since 1988. Commissioners were referred to the list of all Heritage properties in the brochure. Mr. Hartman indicated that photographs of some of their properties are also included in the brochure for review. With regard to the tax credit applications the final allocations will be made next Friday. Of the 103 applications that were made statewide, only 10 were approved for tax. MEETING MINUTES CITY COMMISSION WORKSHOP BOYNTON BEACH, FLORIDA SEPTEMBER 2, 1991:1 credits. One application was Heritage's. Mr. Hartman stated that as managers of the property they had to work within the budget given by the owners and tried to do what they could for the residents. If Heritage were successful in obtaining the tax credits, $6,000,000 in rehabilitation will be done to the property. If unsuccessful in their tax credit application, it would not be possible to do this amount of rehabilitation. Mr. Pace asked the Commission to turn to the section called "Bristol Place" and stated that the name of Boynton Terrace will be changed to Bristol Place. Mr. Pace indicated this name was used earlier when application for funds to renovate the units was made to the County. Heritage was not successful, as the County felt that too much money was being spent to upgrade the units. Mr. Pace reviewed with the Commissioners all the work proposed to rehabilitate Boynton Terrace. Also, Mr. Pace pointed out on the drawing that a security fence will be installed which will be a 6' high concrete block wall and at 20' intervals wrought iron will be placed. A guardhouse will be built and there will be 24-hour security. A clubhouse and swimming pool will be added, together with a basketball court and tot lots. On the other side of the street, a pavilion with grills for barbecuing will be added. Pointing to the drawings, Mr. Pace described how the entrances and roads would be closed off to make the area very secure. Vice Mayor Jaskiewicz inquired if there was sufficient property to accomplish all of the foregoing renovations and additions or is land acquisition necessary? Mr. Pace stated that additional land acquisition would be necessary. Mr. Pace stated this would be discussed further under the City's contribution during the presentation. Mr. Pace indicated on the drawing to the location of the proposed 2,500' clubhouse. The clubhouse would contain male and female restrooms, a vending area, and 24-hour laundry and community room. There will be offices for social services and residents will be able to rent the offices for various social functions. Computers will be offered for both children and adults. An exercise room will be included. The clubhouse would be placed on the newly purchased land. The Commission was referred to the Estimate Sheets in the brochure, which list total amenities costing $267,000. To perform all of rehabilitation the total cost would be $3,435,426.00. This breaks down to $38,600 per unit, which Mr. Pace referred to as "hard cost". Moving to the next page, Mr. Pace reviewed the Acquisition and Development costs and stated total cost of the project would be $11,729,680. The cost of purchasing the land totals $6,395,000. Mr. Pace stated that the outstanding debt on the property is $4,939,288. Also, the present owners will need $1,400,000 to recapture taxes in addition to the outstanding debt figure. This equates to $7'1,000 per unit, which is extremely high. Through the tax credit route, Heritage will 4 MEETING MINUTES CITY COMMISSION WORKSHOP BOYNTON BEACH, FLORIDA SEPTEMBER 2, 1998 receive approximately $5,800,000 in tax credits, therefore total cost is approximately $5,800,000. Mr. Pace also stated that the site plan and the clubhouse were also included in the brochure. Mr. Pace introduced Chris Mathieson to give an overview on proposed social services that will be offered. Ms. Mathieson informed the Commission that she was in charge of resident services for all Heritage properties. Ms. Mathieson explained how she introduces social services to the residents after determining what the residents would like offered and what the residents need. Ms. Mathieson requested that the Commission review all of the services that are offered by Reliance Management. Currently, there is a tenant association that meets monthly at Boynton Terrace and a crime watch is being formed. Ms. Mathieson indicated that programs need to be in place for the youth and it is anticipated that a computer lab will be added as an after school program. The computers will also be offered to adults for training in the evening. Ms. Mathieson reviewed the proposed resident services with the Commission. Vice Mayor Jaskiewicz asked how many residents attended the monthly meetings? Ms. Mathieson stated that on the average approximately 20 residents attend the meetings. Mayor Taylor inquired how many computers would be purchased? Ms. Mathieson stated that initially there would be four to six computers, which would include basic software. Suzette Smith took the podium and informed the Commission that she was present at the first tenants association meeting. Some of the concerns that have been addressed were adequate lighting and replacement of non-working lighting. The parking lot is being striped. Three lots have been completed and there are two remaining. Also, decals have been ordered and numbers will be assigned. Residents will have their own parking space. Statewide background checks will now be performed as opposed to City only checks. This arrangement has been provided for at a cost of $15.00 per check. Vice Mayor Jaskiewicz asked about the background checks. Ms. Smith said that Boynton Beach Police background checks were done in the past, but now statewide checks will be implemented. Vice Mayor Jaskiewicz inquired how many evictions have taken place as a result of drug dealing on the property and was informed that none have taken place. Vice Mayor Jaskiewicz stated this was an amazing statistic in light of all the drug problems that are taking place daily at Boynton Terrace. 5 MEETING MINUTES CITY COMMISSION WORKSHOP BOYNTON BEACH, FLORIDA SEPTEMBER 2, 1998 Mayor Taylor inquired if any applicants for an apartment have been denied as the result of a background check? Ms. Smith indicated she did not have the number, but there have been denials for an apartment as the result of background checks. Mr. Hartman informed the Commission that it is Heritage's policy that a background check for ten years is done which allows for one misdemeanor and no felonies. Mr. Hartman stated that most of the problems come onto the property from offsite and there are many fine residents on the property. By increasing the security, this should greatly decrease many of the current problems. Mayor Taylor inquired if there was a policy in place dealing with trouble tenants and if after a certain amount of offenses or warnings, the tenant is asked to move out. Mr. Hartman said he would check to see if there is a current policy and get back to the Mayor on this. Commissioner Titcomb asked what Heritage's interaction was with the owner of the property and what is the owner's position on this project. Mr. Hartman stated that the owner changed two years ago and the general partner withdrew and the limited partner took over, who is the tax credit buyer. Mr. Hartman stated that the current owners try to keep the property in good repair and informed the Commission that the State under the tax credit program inspects the property yearly. Mr. Hartman stated due to the large debt on the property, the owner is unable to do anything further with the property and is trying to work with Heritage on this project. The owners are located in California and are called National Partners Investment Corporation (NPICO). Mayor Pro Tem Tillman inquired if the current owners are aware of Heritage's proposal and Mr. Hartman stated they have signed a letter of intent with the owners to purchase the property, which is contingent upon the successful award of the tax credits. Mayor Pro Tem Tillman asked how the yearly inspection took place. Mr. Hartman stated that the Florida Housing Finance Corporation, which requires a yearly inspection, ascertains that all tenants qualify under the income guidelines and FHFC performs a physical inspection of 100% of the exterior of the property and a random number of units of the interior. If there are violations and they are not timely corrected, the FHFC issues an IRS form 8823. The form is sent to the IRS and the tax credits are suspended until the property is brought back into compliance. Mayor Pro Tem Tillman inquired what happens when a complaint is issued? Mr. Hartman stated if there is a violation found it has to be corrected. Mayor Pro Tem Tillman inquired if there were any violations found through past inspections? Mr. Hartman stated that the current owners are not in the tax credit program and therefore this does not apply. However, Mr. Hartman stated the property is inspected by HUD 6 MEETING MINUTES CITY COMMISSION WORKSHOP BOYNTON BEACH, FLORIDA SEPTEMBER 2, 1998 because of the rental contract. Mr. Hartman stated he did not know of any violations under that program. Mayor Taylor inquired if the manager lives on site and was informed she did. Mayor Taylor asked where the other Heritage representatives resided and was informed that the representatives present this evening reside in the Cape Canaveral area, Mayor Taylor asked what the operating budget was for the property? Mr. Hartman stated that in a typical rehabilitated or new property the cost is routinely $350 per unit, per year for maintenance. Mr. Hartman stated this property, which is in need of rehabilitation, costs over $1,000 per unit, per year for maintenance. Therefore all of the money available is used for upkeep. Discussion about the cost of security was raised. It was noted that Ms. Smith stated that there has always been security at the property, which was provided by a private security company, but was not on a 24-hour basis. Vice Mayor Jaskiewicz inquired how much subsidiary is received from the government? Mr. Hartman stated that the monthly subsidiary is approximately $90,000.00. Vice Mayor Jaskiewicz inquired how long Reliance Management has been affiliated with the property and Mr. Hartman stated about three years. Mayor Pro Tem Tillman inquired what the total cost was on the property each year? Mr. Hartman stated that the total operating costs per year is $5,500 per unit, which includes taxes and insurance. Mr. Hartman stated that the monthly mortgage payments are approximately $46,000 per month. Mayor Taylor asked if current management ever discussed the conditions of Boynton Terrace with the owners and were the owners informed that they were not providing adequate funds to keep the property up? Mayor Taylor stated that for three years as the management company the property went downhill on a steady basis, but Heritage now wants to become owners of the property, and as owners will turn the property around. Therefore, Mayor Taylor questioned why the City would pick this particular company over any other company due to the management of the past three years? Mr. Hartman stated his company has no control over the amount of money that can be spent. However, when Heritage becomes the owner of the property, Heritage can set the budget and referred the Commission to other properties that are owned by Heritage. Mayor Taylor inquired what commitment was needed from the City? Mr. Pace referred the Commission to the Options listed in their brochure. MEETING MINUTES CITY COMMISSION WORKSHOP BOYNTON BEACH, FLORIDA SEPTEMBER 2, 199R · Option#I: The City would purchase the property and would be 100% owner of the property. City could manage the property. Heritage would be the consultant to the property and would file the tax credit application on behalf of the City. Heritage would do all the due diligence and make sure everything is in place. The only thing remaining is that the City would have to assist with the $1,000,000 contribution. The value to the City is that the City would have the cash flow and the residuals. However, the City as owner, will have liability. Mr. Pace does not recommend this option. Option #2: The City would become joint venturer with Heritage and would have no liability, except in the event of a law suit, the City would probably be made a party, since the City is 49% owner of the general partnership. The City would receive 49% of any residuals that the general partner receives. The $1,000,000 contribution would still be required. Heritage would be the manager and general partner which would own 51% and the City would own 49%. Option #3: The City would have 0% ownership and would have no liability. The City must still assist in securing the $1,000,000 in contributions. The City would assist in the purchase of the three parcels of land and close off 7th Street behind the church parking. There are other non-cash contributions that will be covered later in the meeting. The City would receive no cash flow, but the City would become a consultant to the project and there could be fees paid through the tax credit program to consultants. Mr. Pace stated that the only way this project could work in his opinion was through the tax credit program. Mr. Pace stated that once all of the rehabilitation has taken place, the maintenance should be zero, except for normal wear and tear. Mr. Pace stated the only projects that Heritage is involved in are tax credit projects and thanked the Commission for giving him the opportunity to make Heritage's presentation. Ms. Denahan inquired if Heritage has ever been involved in a project of such a deteriorated state as Boynton Terrace? Also, Commissioner Denahan inquired if the property is renovated, would it continue to be subsidized housing. Mr. Hartman stated that under the tax credit program, there is a land use restriction, which is recorded against the property that states the property must remain Iow income housing for a minimum of 50 years. Mr. Hartman stated that their project at Augusta Hills was a project of the same type as Boynton Terrace. Mr. Hartman also spoke about other properties that his company has rehabilitated. Mr. Hartman stated that their properties MEETING MINUTES CITY COMMISSION WORKSHOP BOYNTON BEACH, FLORIDA SEPTEMBER 2, 1998 have a turnover rate of 35%, whereas the national average is 50% turnover, which points to satisfied residents. There were no other questions and Mr. Hartman thanked the Commission for their consideration. Mr. Hawkins presented the options that staff is recommending, based upon preliminary review of the information furnished. Mr. Hawkins stated that staff has not had an opportunity to review current cash flow on the property and Mr. Hawkins stated that the City would want to review these figures before any final decision is made. Ms. Reese presented a chart setting forth what the City's $1 million contribution could be towards this project, which would represent "governmental participation". Mr. Hawkins explained the different types of contributions allowed under the tax credit applications, which could be considered "governmental participation". Mr. Hawkins stated that the grant dollars and Tlr dollars would be used as the funding source. Mr. Hawkins continued to point out the different areas that the City can contribute to the project, which could be impact fees, permit fees, and utility fees that would be required for renovation. Mr. Hawkins noted that the City would in fact have to pay the utility fees and stated that these fees would be paid by CRA funds. Mr. Hawkins also suggested that the City could provide landscaping. The City could also purchase all the necessary parcels of property required for the project and donate the land to Heritage. Mr. Hawkins stated that all figures presented this evening are preliminary. Therefore taking all these factors into consideration the City's total contribution would be $196,119 or rounded off to $200,000. This would be applied to the $1 million and for the remainder of the funds; the City would partner with Heritage and apply for those remaining funds from Palm Beach County for CBG funds. Mr. Hawkins referred the Commissioners to the figures on the screen and pointed out where the funds would be available from. (Attached to the minutes as Staff Recommendation, Option #3 From Proposal for reference.) Mr. Hawkins pointed out the CRA funds that are available and the categories in which the funds are being used. Mr. Hawkins pointed out that the CRA funds have been slated for projects already determined, but it was possible they could be utilized for other purposes within the CRA area. Mayor Taylor inquired if the County would still be open to contributing additional CBDG funds at this time? Mr. Hawkins stated that Heritage has received a preliminary letter from the County indicating that Heritage should move forward with their application. Mr. Hawkins pointed out that in the past the County was managing this property under the MEETING MINUTES CITY COMMISSION WORKSHOP BOYNTON BEACH, FLORIDA SEPTEMBER 2, 199R Housing Authority and staff is recommending that the City move forward with Option 3. Vice Mayor Jaskiewicz inquired since the owner of the property receives $90,000 in monthly subsidies, what would the City receive for its share of the City's cost in the project? Mr. Hawkins stated that since the property is not tax exempt, the City would not receive any revenue from the project, other than the ad valorem taxes currently paid on the property, but the value of the property would increase when the renovation is completed. Commissioner Titcomb inquired how much of the police budget was spent on this property, due to the high incidence of calls to the property? Chief Marshal Gage stated he did not have any figures, but noted the calls were twenty times higher to this area than other comparable areas in the City. Mayor Taylor noted that there are three options presented this evening, but barring that, nothing is going to change on the property. Mr. Hawkins stated that if the property were not sold to Heritage, the City would have to exercise its authority and require that certain improvements be made to the property. However, the current owners have given no indication that they would voluntarily make any improvements to the property and in fact, there has been no conversations held with the current owners. Mayor Taylor noted that Mark Raymond, the City's Bond Counsel was present and asked Mr. Raymond if he had any comments he would like to make to the Commission. Mr. Raymond indicated he did not think the City would be issuing bonds in this project. Mr. Raymond questioned the statement that the City would "receive a consultant fee" if the City made a contribution of land or cash to the project and asked if this were permissible under the Florida Housing Finance Corporation Rules, as well as under the IRC. If this was permissible, Mr. Raymond asked what the percentage of any fee would be of the City's initial contribution? Mr. Hartman stated that this would be determined under city law and would have to be addressed by the City Attorneys. The FHFC allows a developer fee to be paid out of the project to the people who make the project happen and that fee could be paid to consultants, which is a limited percentage. Mr. Hartman stated there was nothing in the rules that he was aware of that would prohibit a governmental entity from receiving a fee. Mayor Pro Tem Tillman asked how the County would view the actions that the City has already initiated in this project? Mr. Hawkins stated that the County would have to acknowledge that the City is doing the maximum possible based upon the financial sitUation of the complex. Also, Mr. Hawkins stated the City is a new entitlement city and will be using CRA funds for its contribution in demonstrating its support. Mr. Hawkins 10 MEETING MINUTES CITY COMMISSION WORKSHOP BOYNTON BEACH, FLORIDA SEPTEMBER 2, 1998 felt the City is making a tremendous commitment and the County has a history with the property for management, as well as with the original financing. City Manager Willis noted that in the line item for revenue, reference was made to 1998/99 under the SHIP Program that there is estimated $300,000 in annual revenue and is under the line item "infill construction". City Manager Willis asked if those dollars were specifically committed under the Program? Also, City Manager Willis inquired if these funds could be used for multi-family purposes? Mr. Hawkins stated that it has been City policy not to grant these funds for multi-family development and that current SHIP funds are allocated toward renovation and infill, and applications are currently being processed. Also, Mr. Hawkins stated these funds would be used for down- payment assistance, acquisition of properties for renovation and potential infill programs. City Manager Willis stated that this project would be an appropriate infill use and even though the current project is multi-family, it should not bias the use of the funds for land acquisition and that one of the City's goals is to eventually facilitate single family home ownership. Therefore, City Manager Willis stated that land acquisition would not violate the City's policy in any way. Mr. Hawkins stated it was important that a precedent for other multi-family homes not be set. Mayor Pro Tem Tillman stated that we currently have a viable, infill program in place and would not want to see it altered and that something should be put in place in terms of transitional housing. Mr. Hawkins stated that 65% of the SHIP funds must go to single family home construction, which is set forth in the State Statutes. Mayor Taylor inquired how the $1 million contribution would be attained. Mr. Hawkins stated that based upon the current proposal, the City would contribute 20% and the County would contribute 80%. Mayor Taylor inquired if the Commission agreed to Option #3 and all the necessary steps were taken and approved what would the time frame be to accomplish the project? Mr. Hartman stated the application would be submitted by January 7, 1999; the State would formally award the credits in May; within sixty/ninety days a construction loan agreement could close. Therefore the money should be in place by August 1999 to begin rehabilitation. However, Mr. Hartman stated it would be known by March whether or not they have been awarded the tax credits, and there are numerous companies that buy tax credits. These companies would advance money for the · project. Therefore, permitting applications could begin in March. The tax credits do not 11 MEETING MINUTES CITY COMMISSION WORKSHOP BOYNTON BEACH, FLORIDA SEPTEMBER 2, 1998 begin until the rehabilitation is completed. It is estimated the project could be completed in 14 months. Mayor Taylor asked if staff had pursued any other firms that might be interested in this type of project. Mr. Hawkins stated they have not. Mr. Hawkins stated that there are other companies in Palm Beach County that do rehabilitation and could be approached with this project. Vice Mayor Jaskiewicz inquired due to the cost of rehabilitating this property, was it ever considered to raze part of the property and rebuild new? Mr. Hartman stated they have not looked at razing the property, since there is a mortgage holder owed $4.9 million on the property. Mr. Hartman stated it would be easier to rehabilitate, rather than recreate the entire infrastructure. Also, Mr. Hartman was not sure if legally, under the bond structure, if the property could be razed and that option has not been looked at. Vice Mayor Jaskiewicz raised the question of who actually owns the property since one of the forms states the property has been owned since 1982 by one particular party, and this evening you indicated there were new owners? Mr. Hartman stated there was a change in the general partner and the old general partner was replaced in 1996. Commissioner Denahan inquired what Heritage's history was as far as maintaining ownership once the property has been renovated? According to Mr. Hartman, under Hedtage's general partnership agreement, they are the general partners responsible for up keeping the property for 15 years. Commissioner Titcomb inquired who the major mortgagor on the property was? Mr. Hartman stated he did look at the documents, but does not know the name of the lender. Mr, Hartman stated in all probability they would be bondholders and a trustee holds the mortgage. Commissioner Titcomb inquired if there was default on the property, would the property be foreclosed upon in the same manner as other properties and Mr. Hartman stated it would be the same. Commissioner Titcomb inquired of staff what the impact of a foreclosure could have upon the residents? Also, Commissioner Titcomb stated that other companies in the area should be looked at as well. Commissioner Titcomb stated his allegiance was to the residents of the property and to the City and how the problem can be solved, rather than which company performs the work. Commissioner Titcomb inquired what would happen if the property were in fact foreclosed upon? Mr. Hawkins pointed out that HUD always financed the property and there are 14 years remaining on the HUD contract, but 22 years remain on the bond refinancing. The 12 MEETING MINUTES CITY COMMISSION WORKSHOP BOYNTON BEACH, FLORIDA SEPTEMBER 2, 1998 federal government has the responsibility to the tenants who reside at the property and HUD maintains its original intent for the property which is to provide and maintain affordable, Iow income housing. Therefore, HUD has to continue their involvement with the property, as it would also be HUD's responsibility to relocate the residents in the event something happens to the property. Mayor Pro Tem Tillman stated that HUD currently pays $90,000 per month in subsidiaries and shouldn't HUD be notified of the current conditions of the property and ask them to step in and rectify the living conditions. Mr. Hawkins stated that this should be addressed also and that HUD should be approached to determine how much of this situation they are aware of. Mr. Hawkins stated that the West Palm Beach Housing Authority is the contract administrator for HUD on this property. Mayor Pro Tem Tillman stated that HUD should know where their money is going and that they are giving money to an owner who does not want to own up to his responsibilities. This is something HUD should become aware of. Mr. Hawkins inquired if there were HUD inspection documents available and Mr. Hartman stated they were available. Mr. Hawkins stated they should be looked at. Mayor Taylor raised concerns that nothing could take place for at least a year and another year for construction to begin. Mayor Taylor stated that HUD should be informed immediately that the living conditions at Boynton Terrace are unacceptable. Vice Mayor Jaskiewicz inquired if a representative from HUD could again act as an. intermediary as was done in the past? Mr. Hawkins stated this issue will be brought to the table and that assurances from HUD should be obtained that HUD will hold the owners accountable for their actions. Vice Mayor Jaskiewicz indicated she would like the plan presented to HUD for their recommendations. Commissioner Titcomb inquired from a financial point, if it would be better to relocate the tenants, raze the buildings and build brand new affordable housing. Mr. Hawkins stated this avenue could be explored and that there is a possibility of locating two or three partners for this type of project. Mr. Pace noted that if it was determined to relocate the 89 households at Boynton Terrace, the people would not be able to pay rent anywhere else, since their rent is totally subsidized. Mark Raymond stated he felt speaking to HUD could be counterproductive and might cause the contract to be terminated. Mr. Raymond stated that the HALF Contract provides great leverage and is the source of payment of debt se~ice on the bonds. Mr. Raymond stated that the owner of the project should be contacted in order that more money can be redirected to the project, rather than the out- 13 MEETING MINUTES CITY COMMISSION WORKSHOP BOYNTON BEACH, FLORIDA SEPTEMBER 2, 1998 of-state partners. If the HALF Contract is terminated, the bondholder will not be paid back. if this happens, the bondholder may not be able to cause the money to come back to the project. Mr. Raymond stated these types of situations have occurred elsewhere in Dade County and this could cause the project to be shut down. Mayor Taylor inquired if there were any more questions. There being none, the meeting properly adjourned at 8:40 p.m. CITY OF BOYNTON BEACH 7 ATTEST; Cit~'Clerk Recording Secretary (three tapes) Mayor Pro T_em___.__.~ Commissioner 14 STAFF RECOMMENDATION OPTION #3 FROM PROPOSAL. CITY TO PROVIDE LIMITED CASH CONTRIBUTIONS TOWARD THE $1 MILLION DOLLARS THAT IS REQUESTED. [ HERITAGE DEVELOPMENT PROPOSED COMMUNITY CONTRIBUTION CHECKLIST COST Waiver of zoning fees N/A Waiver of building permit fees ~ $ 44,144 Waiver of impact fees N/A Waiver of tipping fees at landfill $ 25,500 Donation of dumpster during rehab $ 10,625 Waiver of water deposit fee N/A Waiver of construction meter fee $ 250 .¥aiver of extension of water/sewer lines from meter to Community Center $ 500 Waiver of inspection fees N/A* Donation of landscaping materials for site** $ 50,000 Purchase of property $ 65,000. TOTAL $ 196,019 *Unless special inspections are requested **Estimate only as no specifics have been given as to type of landscaping. CITY OF BOYNTON BEACH POTENTIAL FUNDING SOURCES 1997/98 CDBG SHIP CRA Anticipated Re'venues $ 569,000 $ 300,000 $ 606,793 Adopted Expenses: Administrative Cost 113,800 30,000 32,660 Purchase Sr. Center 275,200 Land Acquisition (Parks) 50,000 Job Training Program 25,000 Economic Opportunity Program 25,000 Summer Camp Scholarships 30,000 Family Development Services 50,000 Housing Program Agency 25,000 Home Improvements 140,000 Infill Housing Construction 180,000 60,000 -Land Acquisition (Housing) 90,000 Improvements -Land/Bldgs. 274,133 Paint up/Fix up Program 75,000 '$ 569,000 $ 300,000 $ 606,793 1998~99 CDBG SHIP CRA Anticipated Revenues $ 569,000 $ 300,000 $ 587,150 Proposed Expenses: Administrative Cost 113,800 30,000 30,834 Purchase Sr. Center 245,200 Park development - 50,000 Improvements- Land/Bldgs. 121,316 Family Development Services 65,000 New Business Technical Support 25,000 Transitional Assistance Welfare to Work 25,000 Camp Scholarships 15,000 Paint up/Fix up Program 75,000 Infill Construction 30,000 270,000 60,000 Home Improvements 190,000 Housing Program Agency 25,000 Land Acquisition 85,000 $ 569,000 $ 300,000 $ 587,150 CURRENT APPROVED FUNDING THAT HAS BEEN SUBMITTED AND APPROVED BY HUD. FUNDS THAT CAN BE REAPPROPRIATED. HOWEVER ANY REAPPROPRIATION WILL REDUCE MONIES AVAILABLE TO SPEND IN TH E DOWNTOWN AREA.