MINUTES OF A REGULAR MEETING

OF THE BOARD OF COMMISSIONERS

OF THE HOUSING AUTHORITY

OF THE CITY OF EL PASO, TEXAS

WEDNESDAY, JANUARY 27, 2016

Item # 1. Call to Order. The Chairperson called the meeting to order at 5:35 p.m.

Item # 2. Pledge of Allegiance. Recited Pledge of Allegiance.

Item # 3. Invocation/Moment of Silence. Moment of silence.

Item # 4. Establishment of a Quorum.

PRESENT: Chairperson Burt Blacksher, Presiding; Commissioner Eileen Karlsruher, Commissioner Francisco Ortega, and Commissioner Anna Perez. The Chairperson declared a quorum with four Commissioners present. Commissioner Lupita Licerio was absent.

ALSO PRESENT: Gerald Cichon, Chief Executive Officer; Bob Blumenfeld, HACEP Attorney; Arthur Provenghi, Corporate Attorney; Donna Clarke, Chief Operations Officer; William Zeigler, Chief Human Resources Officer; Daniel Cantu, Chief Information Technology Officer; Lorena Rivera, Director of Housing Choice Voucher; Ed Gill, Director of Construction; Roman Velasquez, Director of Housing Programs; Frank Cota, RAD Project Team Lead; Juan Pulido, Procurement Manager; Dale Goerner, Assistant Director of Construction; Oscar Arriaga, Public Information Specialist; Patricia Quintanilla and Aracely Saenz, Executive Secretaries.

Item # 5. Resident Association Presidents to be Heard. None.

Item # 6. Citizens to be Heard. None.

Item # 7. Approval of Minutes of a Regular Board Meeting That Took Place on December 15, 2015. Commissioner Karlsruher made a motion to approve item # 7. It was seconded by Commissioner Ortega. Motion carried unanimously.

Consent Agenda:

Item # 8. Purchasing and Construction Contract and Purchase Order Awards:

A.  Request that the Contracting Officer be Authorized to Sign Recommendation for Contract Award for Historic Tax Credit Consultant Contract # TCP 16-R-0007. The Contract Term is One Year With Three (3) One-Year Options. This Contract was Procured Through the Request for Proposal (RFP) Process. The Recommendation is as Follows:

Department: / Development
Award to: / Quimby McCoy Preservation
Architecture, LLP / $100,000
Estimated
Funding Source: / LIHTC
Procurement Type: / Request for Proposal (RFP)
Contract Term: / New

Mr. Cichon discussed the proposed item under the consent agenda and offered to answer any questions.

Commissioner Perez made a motion to approve consent agenda item # 8 A. It was seconded by Commissioner Karlsruher. Motion carried unanimously.

REGULAR AGENDA

Item # 9. Discussion and Action Regarding Resolution Accepting the Audited Financial Statements and Related Reports of the Housing Authority of the City of El Paso, Texas for Fiscal Year Ending June 30, 2015. Satish Bhaskar, Chief Financial Officer, said that this audit report was reviewed at the last Finance Committee meeting. He introduced Richard Larsen, CPA from Fallon & Larsen to provide the presentation.

Richard Larsen said that the audit consist of three reports that have been signed by his firm. The first report is on page one and it is the Independent Auditor’s report. On that report they are giving the authority on unmodified opinion on our financial statements, which is the highest level of assurance that an auditor can give. They are saying that our financial statements present fairly the financial position of the agency. The second report is on page 51 and that is the Independent Auditor’s Report in accordance with Government Auditing Standards, which is a requirement of every government entity. There are two part to that report, the first part is where they, as the auditors, will document and test our internal control over financial reporting. Mr. Larsen said that they did not identify any deficiencies in internal control processes that need to be reported. The second part of this report is on page 52 where they look at the agency’s compliance with certain provisions of laws, regulations, contracts, and grant agreements. The result of their tests disclosed no instances of noncompliance. The last report is on page 53 and that is an independent auditors report in accordance with requirements described in OMB Circular A-133; this is a significant report. This is where they give an opinion on compliance with the provisions of our major programs. This year they reviewed the Public Housing Program, the Capital Fund Program, and the Section 8 New Construction Program as the major programs. Those three programs constitute 50% of our federal expenditures. On page 54 they are giving an unmodified opinion on the agency’s compliance. Mr. Larsen said that this is a fantastic outcome; they have no findings, which is really an exception for agencies this size. He discussed and praised the level of cooperation and competence from the staff involved in the audit. Mr. Larsen made reference to the financial statements on page 15, which is our statement of net position. He pointed out that this year it is a different presentation because of RAD. He said that the RAD assets are listed in the Discretely Presented Component Unit column. The Housing Authority has dozens of component units, but they have always been an intricate part of the operations of the authority. At this time, because of financial accountability, they are considered a component unit, but they are not part of our operations. The Primary Government is the Housing Authority operations and the RAD assets are listed in the Discretely Presented Component Unit. Mr. Larsen said that the most important thing when looking at a statement of net position is to make sure that we are maintaining liquidity; the agency’s liquidity improved from last year. He added that the way HUD measures liquidity is by looking at our current assets less our current liabilities. At this time we have about $73 million in liquidity. On page 16 they can find our statement of revenues and expenses; this is the agency’s P & L. Mr. Larsen said that an amount of $16 million is listed under operating gain, but $8 million are a one-time developer’s fees. Under gain or loss there is an amount of $61 million on disposition of fixed assets; that is not a cash transaction. On page 54, they can find the auditor’s report on compliance with requirements applicable to each major program and internal control over compliance. The report states that they did not identify any deficiencies in internal control over compliance to be considered material weaknesses or significant deficiencies, no findings, and nothing that needs to be reported to HUD. Mr. Larsen offered to answer any questions.

Mr. Cichon recognized Mr. Bhaskar and his team for their work.

Commissioner Karlsruher made a motion to approve Resolution 2070 under item # 9. It was seconded by Commissioner Ortega. Motion carried unanimously.

Item # 10. Discussion and Action to Amend Section 7.12 of the Employee Policy Manual Regarding Handguns and Deadly Weapons in the Workplace to Comply With Changes in Texas Law. Art Provenghi, Corporate Attorney, said that the proposed changes to the current employee policy manual, as it relates to concealed handguns and deadly weapons in the workplace, were part of the meeting documents provided to the Board. He offered to answer any questions.

Commissioner Perez made a motion to approve Resolution 2071 under item # 10. It was seconded by Commissioner Karlsruher. Motion carried unanimously.

Item # 11. Discussion and Update Regarding the Section 8 Management Assessment Program (SEMAP) Certification for Fiscal Year Ending June 30, 2015. Lorena Rivera, Director of HCV Program, provided a presentation with the final SEMAP score received by HUD for fiscal year ending June 30, 2015. She said that she is happy to inform the Board that HUD concurred with our self-certification and we were awarded a score of 90 points for fiscal year 2015. This is the sixth consecutive year that we are a high performer in the HCV Program. She said that this is our sixth year because HUD has granted our appeal for fiscal year 2014 and certified that we were a high performer for that year. She offered to answer any questions.

Chairman Blacksher commended Ms. Rivera and the staff for their great work.

Item # 12. Discussion and Update Regarding the Public Housing Assessment System (PHAS) Management Operations Certification for Fiscal Year Ending June 30, 2015. Roman Velasquez, Director of Housing Programs, said that he is happy to report that our PHAS score for fiscal year ending June 30, 2015 is 98 making us a high performer. He provided a presentation which included a background on PHAS and its four basic indicators: physical, financial, management, and CFP. He discussed the purpose of each indicator and said that each of those indicators has its own point value. Mr. Velasquez explained the differences between the previous PHAS and the interim rule, which mainly affects the point system. He said that we have been operating under the interim rule since 2011. Mr. Velasquez provided information on our PHAS score for the last four years and offered to answer any questions.

Mr. Cichon asked him to explain the relevancy of RAD and what we expect the score will be in the next four months.

Mr. Velasquez said that during our Compliance Committee meeting it was explained that with the transition to RAD we are moving from one program to another. With PBRA, we are no longer under the PHAS umbrella and we expect to lose the high performer status next fiscal year. Part of the rating of the authority is our ability to keep our units occupied. At this time, we are creating vacancies to work with the RAD relocation and that is going to have a very direct impact on our scoring and where we stand. HUD has not released any more guidance on this issue. We are waiting to see how they are going to treat public housing agencies undergoing RAD transition. We know we are losing 16 points in occupancy and 5 points under CFP making it very difficult. He added that although we will not be under the PHAS umbrella as we transition to PBRA we are still going to be subject to UPS inspections.

Chairman Blacksher thanked Mr. Vasquez for his presentation and work.

Item # 13. Discussion and Action to Approve Performance Metrics to Finalize the Five-Year Strategic Plan. Mr. Cichon said that the whole team has been working to align evaluations with goals and strategic plans. It was not easy, but it is the right thing for the agency. Goal # 1 is to use RAD as a strategic vehicle to upgrade the assets and use economically sound decisions to maximize the revenue through the RAD conversion. The metric that we are looking at is that by the end of 2018 RAD is successfully completed. We are proposing to report to the Board on a quarterly basis the number of units in the planning stage, the number of units under application, the number of units under construction, and the number of units delivered to date. Goal # 2 is to define and implement a new property management model which will allow us to maintain financial sustainability. This is really recreating what public housing is. We propose to report on a quarterly basis the number of units converted to EP HOME, which is our non-profit that is managing all of the units. The transition of employees from the Housing Authority to EP HOME, and to run it efficiently. Right now, our cost per door is different based upon the size of the community. The current cost is approximately $4,500 per door/year. The proposal is to reduce the cost per door to $3,700 for large properties and $3,200 for small properties. Goal # 3 is to develop a highly efficient organization. Mr. Cichon said that one of our biggest cost is the Central Office. We are proposing to reduce the overall agency operating budget by 20% and the administrative costs of the HCV Program by 40%. We are not sure how we are going to accomplish these goals, but we are working with IT for a solution hoping to have software that will decrease the need for people and increase the efficiency and customer service. We will be providing quarterly reports to include the progress on reducing cost for management of HCV Program and progress on selected initiatives to accomplish reductions in the overall agency budget. Goal # 4 is to implement communications strategy. We want to ensure that the benefits of RAD and the transition of the Housing Authority are understood by our residents, employees, elected officials, El Paso community, and media. We believe that we need to bring a third party to figure out how much saturation we have and how effective we are in our communication plan to make this a reality. Goal # 5 is to support and develop self-sufficiency initiatives. We are trying to increase the number of participant in current and new self-sufficiency initiatives by 10% every year. On this goal, we are proposing to provide a progress report every six months. Goal # 6 is to create flexibility within housing programs. One thing that we can do is to move to less than 250 public housing units and also the MTW status if it remains viable with the changes made recently. It is not MTW as we know it, it is a new MTW, but we need to figure out if it something that we would like to move forward on. The proposal is to provide a progress report on identification of new options and on the development of approved options on a semi-annual basis. Mr. Cichon offered to answer any questions that the Board may have on the proposed metrics or any others that the Board may want to add.

Commissioner Perez said that in reference to goal # 4 the suggestion is to provide a semi-annual report, she asked if maybe an annual report would be sufficient.