SHA October 28, 2024 Board of Commissioners Meeting Minutes

MINUTES
REGULAR MEETING OF THE
BOARD OF COMMISSIONERS OF THE
SANFORD HOUSING AUTHORITY
MONDAY, OCTOBER 28, 2024, AT 6:00 P.M.
317 CHATHAM STREET SANFORD, NC 27330

A meeting of the Board of Commissioners for Sanford Housing Authority was held on Monday, October 28, 2024, at 6:00 p.m. at the SHA Central Office, 317 Chatham Street, Sanford, NC 27330. Notice of this meeting was duly posted.

Ms. White called the meeting to order at 6:00 pm.

1. Attendance

Present

Commissioner White
Commissioner Sinnamon
Commissioner Dalrymple
Commissioner Aeschliman
Commissioner Britton
Commissioner Wicker (Present via speakerphone)

Absent

Commissioner Newby

2. Adoption of Minutes
Ms. Britton made a motion to approve the September 23rd board minutes. Ms. Aeschliman seconded the
motion; all were in favor. The motion passed unanimously.

3. Financials
Ms. Dalrymple asked if we are getting tent income even if the property is not being rented?

Jeff explained that grants are being used across all projects, even though we are not getting rental income for it.

He said we can remove them once they come offline. HUD will grant funds if units are under construction or under modernization. Ms. Dalrymple asked how we can receive the funding if no construction or modernization is going on. Jeff referred to Ms. White or Mr. Goodson for a response. Ms. White said that we can get the money for a certain number of units when the units offline are HUD approved. She said that some units have been offline since she first got on the board because of plumbing issues on the first floor. She said that she did not know the number and Sherri said that 50 are offline and 49 are online. Ms. White said that HUD allowed us to put them offline and still receive the money, but we must have a plan in place to continue to receive the money. Mr. Goodson said that when units are approved to be offline through HUD, you don't get penalized for the vacancies; however, an offline unit can only be offline for a certain period. As an example, he stated that units at Stewart Manor have been offline for so long that the next step is an executed development agreement and once this is in place, you can submit it to HUD, and they will give you more time because they know that you are moving along with the reconstruction of the units. When there is an absence of the agreement, the units go back online whether we want them to go back online or not and we will start to be penalized which is why the development agreement that we will be discussing at the next board meeting when Michael should be here.

Ms. White asked who the developer for the agreement. Mr. Goodson said that it was the Galvin team, Mr. Goodson said that we should hold off until Dr. Threatt can be on the call to solidify the agreement. He does not want to move too far forward without his input. Ms. White asked who voted on the developer. Mr. Goodson said that the first time, we got a couple of developers and then we went back out to get additional developers, and we got one additional one. He said that one was from Florida that he has worked with in Florida, he said that he did not think that they were the best developer for SHA. Ms. White said that she remembers the names being presented, but does not remember the pricing, seeing a portfolio, or a vote. Mr. Goodson said that the pricing and developer split are things that we are working to determine it. Mr. Goodson said that usually, the RFP, portfolio, staff reviews, votes are done and then the vendor is chosen. Ms. White said that she does not remember the selection taking place. Mr. Goodson said that he did not get the staff involved this time, but he did present the prospective firms to the board. He said that he presented each firms' qualifications or RFQ to the board. He will get the qualifications to the board when he comes back to NC tomorrow and resend it. Ms. White said that she would go back in her information and find it.

Jeffrey said that the housing authority is broken down by amps and each one has a budget:

Amp 1: Linden, Utley, Foushee
Amp 2: Stewart Manor
Amp 3: Harris Court

He said that the revenues and expenses are broken things down by site. He said that there are certain bills that we must group by site and must break up the expense by site to become a line item. He said that the top sheet gives a bird's eye view of all the amps and departments within the organization. He said that this document will change because some of the income and expenses may change. He was not able to go in and get into LOCCS, but now he is approved to go in. He said since Friday, he has been able to go in and look for specific things within the Capital Fund Project funding; it is broken down by years 1-5, you must exhaust one year first, before you can go to the next year. 2024 is not open yet. In LOCCS, we have funding available for the year 2023, which still has half a million dollars in it; the funds that must be obligated and expended through general capital expenditures, like dwelling equipment. He said that we are no way near to going into the CFP for 2025 because we are no way finished with 2023's funding; therefore, he had to change the document that was passed out. Ms. White asked if there was enough funding in COCC to pay the CEO and the COO. She asked where else do we pull money from to pay the CEO and COO. Jeff replied that we can pull money from the administrative line item of the CFP. Sherri said, it is only a percentage. Jeff said that the CEO's allocation is paid for from multiple funding sources. Ms. White said that she was just checking because she knows that the CFP funds are restricted funds and Jeff said, yes, but there is a small percentage that can be used for the CEO's salary.

Jeff gave out CFP information that includes operations like IT and the day-to-day and training. Ms. White said that the board used to have their own separate line item for things like travel, training, and legal fees, but Jeff said that he was not familiar with that. Jeff said that the line item is probably line1408. Mr. Goodson said that for the board is usually included in the line item for travel and training. Ms. White said that they used to have it separately. Ms. White said that she thinks that the two should be separate but asked for the other board members' opinions. Jeff said that if you have some changes to line items within a threshold can be allowed; however, over a certain amount, the board will have to approve it. Ms. White said that she thinks that for Mr. Goodson, it is $10,000 without board approval, but anything over requires board approval. Jeff said that he thinks that that is correct and for the CFO, it is $5,000, and for other positions it is up to $2000. Ms. White said that it is fluid and can change but any big changes would have to come through the board. Jeff said that he looked back to 2019 to see who else is paid out of COCC. Ms. White said that there were some other positions paid out of COCC and Sherri said that Anesha may be paid out of COCC and Jeff said, yes, but they also are paid out of other funds, for example, the administrative funds that HCV receives monthly, some is allocated for administrative salaries. Ms. White asked if there were any additional questions, there were none.

Jeff said that we only owe for August and September for the City of Sanford, totaling $77,000. Ms. White asked if we had started charging people for the water. Sheri said that we cannot charge people for the water because none of them are individually metered, but we have started billing Foushee and Harris for gas and electric bills and are now working on MGG. Jeff said that he can see why there was a problem with the previous person entering individual invoices because you must invoice each individual invoice and their usage; however, we are working with the city to mass bill.

Public Housing Occupancy Rates

Linden: 95%
Utley: 96%
Foushee Heights: 95%

We have about 6 units under rehab right now, we are using Capital funds for it. We are fixing the units that people should not have been living in, new cabinets, drywall, and new floors. Ms. White asked if these are contractors that we are using or maintenance staff and Sherri said contractors, but we can use Capital Funds because some of these units have been sitting there for 2-4 units. We had contractors that came in to tell us that the pipes within the walls were not good and would continue to cause problems, but they could not determine this until the floors and other parts were taken apart. She said that the units are done, and the contractors are waiting on us because we are still waiting on cabinets and appliances; we already have tenants to move in.

Harris Court: There are 2 units still under MOD Remediation and offline. We recently relocated a tenant because there was mold in her unit, so she was relocated to another property. Once the unit is remediated, we must bring another company in to test the unit for mold. She said, once we get a clean test, we can rent the unit out.

Ms. White asked how the visit went at Linden and Sherri said that we had Mr. Flowers, the Assistant Secretary of the Department of Commerce, come and tour the property; she said that the property looked great, and one tenant displayed her unit. Sherri shared pictures of the visit and the three people with him were impressed. Sherri said that she met with representatives at Lowe's who she is trying to get them to donate picnic tables and grills on behalf of their foundation at the beginning of the year to sponsor some of our backyards at the properties. Mr. Goodson added that it was a great visit, he said that he and Kenny Flowers are almost family, but he did not know that he was in Sanford. Mr. Goodson said that Kenny said that with the governor election coming up, that if SHA needed some assistance to let him know; Mr. Goodson said that he would also pass this information on to Michael.

Occupancy Rates for MGG

Matthews Court -88%
Garden-Gilmore-79%
Overall occupancy-84%

Ms. White asked how it was going with the files. Sherri said, as slow as it can possibly go, Ms. White said that they would discuss this further during closed session.

HCV
Sherri reported that the most important item on the report is the utilization rate, which is at 121%. We got an email from HUD that stated that it congratulated us for using all our funds up but told us not to lease any more for November, December, and probably January 2025 because we also still have vouchers out on the street; with an average attrition rate of 8 per month, we should be fine, but we are guaranteed to get 100% of our funding. Ms. White asked, so does that mean that others who applied would not get vouchers, and Sherri replied, no we have been issuing about 35 vouchers per month; we had 1500 people on the list and are now down to close to the 1200's; we issue vouchers daily and because we did such a good job in the Section 8 department, we will receive an additional $90,000 added to our budget. Sherri said this is why we do this so that we can get everything that we need and then we scale back at the end. Also, our SEMAP book is our self-test documentation that we must turn into the auditors along with supporting documentation; therefore, we cannot take shortcuts in reporting. She said that this will be the first time over the last couple of years that we scored 100 and Ms. White said that she does not believe it. Sherri said that we have already gone through it line by line and if HUD sees what we see, they will score us at 100, but now we are waiting for the actual score. Ms. Aeschliman asked what the average score is from the past and Sherri said around 80; Ms. White said that is why she does not believe it is a 100 and that we should have the score in a week or two.

Sherri said that she has worked hard with Section 8, and they continue to meet monthly on annual recertifications, occupancy, inspections, etc. We have a third-party inspection company that we use that we are under scrutiny of because we have an abatement period and with a third party, we can get delayed information from them. She said that at times if she did not like the results or the responses she was getting, she would do a 5% quality control inspection if they were not done appropriately because she did not want to wait until the end to improve. She thinks that we have done a great job to get the things done that need to be done. Ms. White said that she said what she said because when we are audited, there are always things missing out of the file or the math is always off. Ms. Aeschliman said that even though we prepare though, we still may not get the 100. Sherri said that she could be correct based on the files that HUD tells us to pick, not all files will be audited. She said that we will have to scan all files picked to the auditors in the next couple of months. Sherri said that she would love to see Section 8 be a high performer. Ms. Aeschliman said that we may not need to get our hopes up too high.

Mr. Goodson said that it is important that the board has confidence in the scores whether good or bad. If they are bad, they should keep the same confidence when they are good. He said that we were moving towards having a third-party agency come in and audit Section 8 files, but it was halted, possibly due to concerns about the ability to pay; however, as Jeff confirmed, we are almost caught up with the City of Sanford water bills. Mr. Goodson said that having a third party come in would help the board not question the high score. Ms. Britton said that we should see what the scores come back as and go from there. Sherri said that there are some forms that are mandated on the checklist and that there are two checklists that the specialist has to do to self-audits and sign them before they submit their files. Also, HUD has deleted some of the additional forms and required them to be collected less often.

Resident Services
Mr. Goodson said that Dr. Threatt should work with Resident Services as far as outreach goes. He said that he is not happy where we are with the program, but we should have a better working relationship with the community to help them. He said, losing the ROSS grant did not help, but the new application is up and running so maybe the new administration can come in and possibly hire someone for the ROSS program. Ms. White asked if there were any more questions, there were no additional questions.

Development
Mr. Goodson reported that he had a call last week with the Banks Law firm regarding the development agreement with Galvin. He said that the negotiations have gone back and forth multiple times. He said that he thinks that we should get the new CEO involved in the negotiations because he should have input and things he wants to see in the agreement. There are a few things in the agreement that Banks has flagged in the agreement because they were not favorable towards the housing authority. Mr. Goodson said that he would schedule a meeting later on in the week with Dr. Threatt on the call so that there can be more of a concrete conclusion in November.

4. New Business
Mr. Goodson said that he wants to mention to the board that he got the report back from Stogner regarding 1000 Carthage St. and the projected cost to bring the building back to be occupied on both levels came in at 3.8 million dollars; to build the building brand new, it would cost 7.6 million dollars. Mr. Goodson said that if it takes about 8 million dollars to rebuild, it is still prime real estate, but the conversation should be had with the new CEO. He said that the mortgage would be really high unless you have a bottom level tenant. Mr. Goodson said that he would send the board the breakdown of all repairs. He said that a big part of the cost will be remediation of mold and mildew.

Ms. White asked Jeff how much of a payment would be for 3.8-million-dollar mortgage and Mr. Goodson said at least about $19,000 per month; Jeff said $20,000 per month. Ms. White asked how much we pay per month on the current temporary administrative building and Mr. Goodson said a little over 5,000 dollars per month. He also said that we need to speak about the renewal of the lease for the current building. Ms. White asked Jeff if we could find 18,000 dollars a month from somewhere to get the old building redone. Ms. White said that we could discuss this on another date. She said that if we only renovated the top part and just took out a loan for 3.8 million dollars because we own the building. Mr. Goodson said that the top part is about 3 million dollars, but there is 800,000 dollars that you have to do downstairs as well.

Mr. Goodson said that one thing that we can talk about when we start talking numbers on Stewart Manor, we can start trying to use the tax credit of Stewart Manor as part of the renovation. Ms. White said that she does not want to renew the lease on 317 Chatham St is not as nice and it is not a look that she wants to have though it is functional. Mr. Goodson said that he agrees, but you have to find a real solid reputable tenant to go into a long term lease for downstairs for 7 or 8 years at $10,000 per month. Ms. Britton suggested that we should secure a tenant like this before we take out a loan. Sherri said that we would need more security because downstairs only has 1 access. Mr. Goodson said that we could easily fix that. Sherri also said that there are no windows downstairs. Ms. White said that the hospital used to rent it. Ms. Britton said that she could ask her husband Ken, who is on the hospital board, if the hospital is interested in renting it and Ms. White replied that we could check on that when Dr. Threatt starts.

Mr. Goodson asked if there is a number that the board would produce to sell 1000 Carthage St., Ms. White said that her vote would be no to selling it considering the current and future state of the real estate market.

5. New Business
Ms. White said that she does not like the Third-Party property management idea, but she is one vote. Mr. Goodson said that he allowed it to be on the agenda because of the conversations that he and Sherri have had with the North Carolina Housing Finance Agency regarding the management of the property. Ms. White gave historical background about MGG, she said we have an investor that renovated the property, and they receive a tax credit; the authority receives a management fee. The investors are the owners, and we own 1%, but the agency gets to buy it back for $1 after 15 years. The investors as the owners put rules in place that we as the management company have to abide by. For example, they have to upload files. There was a lot of turnover at MGG, people were being overworked and sometimes not knowing what to do. She spoke with the property manager who expressed that she was overworked and needed some help so Ms. White asked if we could get her some help because she had to lease up the properties, train her assistant, and upload the files. Ms. White asked Sherri how the uploads were coming previously, Ms. White said that this would be discussed during closed session. Ms. White expressed that she does not like the fact that we are looking to give up our management rights because we will not get the money. Ms. Britton asked if we would lose the right to buy it back for $1 and Sherri said no.

Ms. White had a concern that if the two people are no longer managing the property, what they would do, and would we get anything out of this? Sherri said that because of our inability to manage these properties, we have been removed from NCHFA's list of property management companies and therefore, cannot manage properties in the future. She said since she has been here not one report has been on time, accurate, inspections have been horrible, and our file management has been bad. She said that when she got here, the files were being done by the Section 8 department, which she has never heard of being done, but now it is back with the property management. She said that the files need to be managed by people who manage the properties. She said that because this was being handled like this, the property management staff would tell people that they need to go to the Section 8 Manager, instead of handling the person.

Also starting November 1, 2024, the rental payments will be taken at the management offices. She said that we have monthly, quarterly, and annual reports that you have to turn in, they give you the template, but we are always 3-6 months behind. She said that our report card was not good, so they gave us a warning. Ms. White asked why we did not put the help in the places where the NCHFA sited that we need help. Sherri said that there is no less help in this area than any other property management team, the public housing team takes their own rents, do their own recertifications and conducts their own inspections. Sherri said that both management teams have 2 employees and that there is only a 4-unit difference between public housing and tax credit. She said that the work that the public housing staff is doing is almost identical to what the tax credit staff has to do with the exception of the file uploads; however, the problem is that they are not doing the uploads when the action occurs, but it doesn't get done.

Sherri said she and Mr. Goodson had a meeting with the manager about what needs to get done, NCHFA emailed and said that nothing has been done. The question was raised as to why don't we fire the person instead of getting a third-party management company. Sherri said that typically housing authorities should not manage tax credit properties. She said that tax credit is much more intricate. Ms. White said that we had someone here who was certified in tax credit, but she left with the previous administration. Sherri said that the current employee has the highest certifications to run a tax credit, but you have to do the work. Sherri said that professional tax credit companies are equipped to upload and manage the process when they occur. Mr. Goodson said that most tax credit investors will not do a deal where they are taking the risks without a third-party tax credit management company running the property. Mr. Goodson said that typically, the third party comes in and absorbs the staff for a year unless it does not work. He also said that since he has been here, he has had 2 managers that did not turn it around we brought Danielle back, but we've struggled with her and her two assistants as well.

Ms. Britton asked is there a reason these developers allowed us to manage them.
Mr. Goodson said that the high vacancy rate that continues at MGG is hurting the housing authority because of cash flow. MGG has mortgages to pay monthly and other bills that are taxing on the agency; therefore, the lease up rate needs to be 95% or higher each month. We are losing tons of cash on vacant units. Sherri said that we have a healthy waitlist for MGG. Sherri said that the third party will put in a percentage to manage, due to the lease ups; they have the expertise to do this position. Ms. White said that she feels like we have done the blame game but asked if we have provided the tools to get MGG where it needs to be. Sherri said that is where your anonymous people come from because she audits their files, but then when people do not like the outcome, that's when you get complaints. Ms. Britton suggested that we ask for the RFQs be sent to Banks law firm so that the verbiage is correctly put in. Sherri said when she spoke with our representative in Raleigh, she said that we may want to look
at giving it up because the investors are not happy and there may come a point where they take the management rights from us. Ms. White said that we cleaned up the City of Sanford past due amounts and cleaned out Stewart Manor with all hands-on deck but wanted to know why since Sherri and Mr. Goodson had tax credit credentials, this did not happen. Sherri said that she did, she hired a housing manager, and he worked the first couple of the months at MGG to help them get caught up 100%, but they did not keep it like that. Ms. White asked why we did not keep him in that area and Sherri said that public housing is just as crucial and needed a lot of help as well because we could lose subsidy. Sherri said that we have an approved third-party management company. Mr. Goodson said that we change the motion to advertise the RFQ. Ms. Britton made the suggested motion to approve the amended resolution to allow the SHA staff to publish an RFP for third-party property management services. Ms. Aeschliman seconded; all were in favor. The motion passed unanimously.

6. Commissioners' Comments
There were no additional comments.

7. Public Comments
There were no public comments.

8. Closed Session
Ms. Britton made the motion to go into a closed session; Ms. Sinnamon seconded. All were in favor; the motion passed unanimously.

9. Adjournment
The meeting was adjourned at 8:10 pm.

Dr. Michael C. Threatt