GMHA Board Applies for Conversion of Units to HUD
Section 8 Program - Rental Assistance Demonstration (RAD)
Geauga Metropolitan Housing Authority (GMHA) - 10/15/2024
Meeting Info: Regular Meeting on October 15, 2024 at 4:00 pm (EST) in the GMHA Conference Room at Murray Manor, 385 Center St., Chardon, OH, 44024. This meeting is in-person only.
Agenda: An agenda was provided at the meeting. It is not available online. The documented proceedings below follow the agenda and are presented sequentially.
Proceedings:
1. Call to Order - 4:00 pm
2. Attendance: Richard Depenbrok, Board Chair, and Board Members Jeff Markley, Walter Claypool, Susan Kemerrer and Michael Petruziello.
Staff Present: Dawn Ferrell, Executive Director; Carrie Carlson, Chief Financial Officer and Todd Petersen, Legal Counsel.
Others Present: Michael Andrews, Housing and Urban Development (HUD) Representative; Skip Sipos, Medina Metropolitan Housing Authority Director, and four members of the general public, including this observer. Reviewer Note: Mr. Andrews' Linked In profile (available here) states that he is the Principal/Founder of Structure Development Advisors and does not list any history of working for HUD directly, though he does have experience as a "developer of affordable housing and community development projects.”
3. Pledge of Allegiance - Recited
4. Discussion/Approval of Minutes - September 2024 Meeting
The minutes from the September 17, 2024 meeting were accepted. Everyone confirmed receiving them, and there were no questions or comments. The minutes were approved with no abstentions. Observer Note: Minutes are not available online. Executive Director Farrell indicated to this observer by email that minutes are available through a written request after they have been approved by the Board.
5. Financial Statement and Writeoffs
Corrections were made to the financial statement concerning how capital improvements were being recorded. Observer Note: Please reference the September 2024 LWVG GMHA Observer Report for more information.
Ms. Carlson mentioned that public housing was at 65.93% of expenses against the budgeted 75%.
There was one small write-off of $77.33 for October, which was much lower than previous months. The write-offs were accepted with no opposition.
The motion to receive the financial statements for public housing, Section 8 and non-federal funds for October 2024 was approved.
6. RAD Consultant Presentation
The RAD (Rental Assistance Demonstration) consultant, Mike Andrews, provided a detailed presentation on the potential conversion of public housing units into project-based rental assistance under the RAD program. His presentation highlighted the benefits of the RAD program, including increased financial stability for the housing authority, but it also sparked a division among the board members. Below is a breakdown of the key points and the Board's evolving decisions:
Key Points from the RAD Presentation:
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Increased Revenue:
Mr. Andrews explained that the RAD conversion would bring in over $1 million more annually to the GMHA, while maintaining tenant rents at their current levels. Tenants would continue to pay 30% of their adjusted income, but the housing authority would receive higher revenues based on a market-based model. He explained:
“You would have the ability to seek outside capital to make improvements if necessary in those buildings. You would alleviate yourself from some of the administrative burden that comes with public housing and your revenue would go up by over a million dollars.”
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Current Financial Challenges:
The public housing model provides inconsistent funding because it is tied to congressional appropriations. Mr. Andrews highlighted that GMHA was only receiving 87.44% of its total HUD eligibility as this was the level of appropriations set by the federal government for this term.
“Your total eligibility is $764,000…. Every housing authority in the country got 87.44% of what their eligibility is. So, for you guys, that number is $668,000.”
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Resident Impact:
The RAD conversion would not affect tenant costs, as residents would still pay 30% of their income. Mr. Andrews emphasized the program’s focus on improving the housing authority’s financial position without negatively impacting tenants:
“So, as a business, you’d be serving the same households, your customers… but you as the owner would get over a million dollars more a year.”
Initial Concerns and Debate:
Despite the benefits outlined by Mr. Andrews, the Board was initially divided on the issue, with several members expressing skepticism about the potential risks:
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Responsibility Shift:
Some board members worried that by converting to RAD, the authority would take on additional financial responsibilities, particularly in maintaining properties without access to HUD’s capital improvement grants. Mr. Claypool voiced concerns about losing access to these funds:
“We have capital improvement grants we can apply for, which that goes away then at that point, right?”
In response, the RAD consultant explained that while the capital improvement grants go away, the increased revenue from the RAD conversion would allow the housing authority to fund necessary improvements in other ways, such as through private financing or replacement reserves, and they would have more flexibility in managing their portfolio.
“It’s like that goofy money, the COVID dollars... this sounds a little bit like that. We’re going to be taking... more taxpayer dollars at risk in order to give ourselves more income.”
Mr. Skip Sipos, a housing authority director who had successfully transitioned his housing authority to RAD in Medina, Ohio, spoke up in support of the program, sharing his positive experience and encouraging the Board to consider the long-term benefits. He noted that RAD allowed his authority to operate more efficiently and generate surplus resources for other mission-driven activities:
“You are less connected to [HUD]... if you can operate more efficiently... you’re going to spend less dollars.” He added: “Our revenue has increased each of the last three years.”
The Initial Vote (2 Yes, 3 No):
The director made a motion “Seeking a resolution authorizing the director to sign and submit an application to HUD for the RAD conversion process.” The Board remained divided, and the initial vote on whether to approve the submission of the RAD application resulted in 2 votes in favor (Mr. Depenbrok and Mr. Markley) and 3 votes against (Mr. Petruziello, Mr. Claypool, and Ms. Kemerrer). The motion to submit the application was rejected.
Revisiting the Decision – Motion to Rescind:
A discussion ensued regarding the rejected motion that centered around several key points:
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Clarification on Commitment:
Some board members initially voted against submitting the application because they feared that doing so would obligate them to proceed with the RAD conversion, locking them into a long-term financial commitment. The pivotal clarification came from Mr. Depenbrok, who emphasized that submitting the application did not bind the Board to follow through with the conversion. He explained that they could back out at a later stage. Mr. Depenbrok’s comments appeared to ease concerns about being locked into the RAD process too early.
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Due Diligence Process:
Mr. Markley then stressed the importance of using the application process as a part of the due diligence phase, giving the Board up to 18 months to assess the full implications of the RAD conversion. He reassured the Board that this timeline would allow them to explore whether or not the conversion was ultimately beneficial:
“We have 18 months to do due diligence…. We’re going to go through a 12 to 18-month due diligence period where we can ask those questions and then figure out if it makes sense even at that point.”
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Securing Potential Benefits:
Another important factor was the recognition that submitting the application would lock in more favorable RAD rental rates, which were expected to decrease in the future. This created urgency to at least secure the option for better rates while retaining the flexibility to back out later if necessary.
After further discussion, the board revisited the decision, and a motion was made to rescind the initial vote. The motion to rescind passed unanimously, with all members agreeing to reopen the discussion and reconsider the application.
Final Motion and Vote to Submit Application (Approved Unanimously):
The Board agreed to update the verbiage of the motion to reflect their concerns. The updated motion read as follows:
“To authorize the director to sign and submit an application to HUD for the RAD conversion process, contingent upon review and confirmation of the terms and conditions of withdrawal.”
With the contingency in place, the final vote to submit the application passed unanimously, signaling that the board was comfortable moving forward with the RAD application as long as they retained the option to withdraw if needed.
This final decision reflected a compromise that allowed the Board to explore the potential benefits of RAD without making an irreversible commitment upfront.
7. Commissioner’s Report - NONE
8. The Report of Counsel - NONE
Mr. Petersen indicated there was nothing to report or discuss.
9. Report of Director
A. September Programs Report
The Director did not provide commentary on the report.
B. OHAC and NAHRO ConferencesThe Director attended conferences hosted by the Ohio Housing Authorities Conference (OHAC) and the National Association of Housing and Redevelopment Officials (NAHRO). These conferences were focused heavily on the RAD program, which became a significant topic of the meeting. The Director brought back insights and information regarding RAD, which helped inform the Board’s debate on whether to apply for the program.
C. FSS (Family Self-Sufficiency) Grant
The Director informed the Board that the paperwork for the Family Self-Sufficiency (FSS) grant had been successfully submitted. The FSS program helps families who are receiving housing assistance increase their earned income and reduce their dependence on welfare programs. No issues were raised regarding the grant submission process, and the Director expected further updates on the grant's status.
D. Operating Subsidy
A significant portion of the Director’s report focused on the operating subsidy, with the Director notifying the Board of potential reductions in the amount the authority would receive. The Director had spoken with the HUD fiscal officer, who indicated that most housing authorities were seeing decreases, except for one AMP (Asset Management Project) at a different agency. The reductions could be attributed in part to stabilized utility costs, but the exact reasons for the decreases were still unclear. The Director was waiting for further clarification from HUD and advised the board that the authority might need to adjust its operating expectations.
The Director commented on the potential financial impact:
“There's a possibility that we're going to see a pretty substantial reduction in the amount of that operating subsidy.”
E. Small Area Fair Market Rent (SAFMR)
The Director reported that the final Small Area Fair Market Rents (SAFMR) had been received and would take effect on January 1, 2025, in line with HUD regulations. These rates, which are based on ZIP codes rather than broader geographic areas, help better align voucher payments with market conditions in specific neighborhoods. The Director had successfully submitted a waiver to raise some of the rents to 120% of the SAFMR in order to maximize voucher utilization, especially in areas where fair market rents were inadequate for tenant needs.
F. HCV (Housing Choice Voucher) Program
The Director noted the challenges in meeting the HUD metrics for voucher utilization or budget utilization under the Section 8 Housing Choice Voucher (HCV) Program. The housing authority was classified as "standard" rather than "high performer" due to not meeting these metrics, particularly Indicator 13, which is related to the voucher or budget utilization rate. In response, the Director submitted a corrective action plan to HUD to address these concerns and ensure improved voucher utilization moving forward.
G. Housing Needs
Housing needs in the community were a growing concern, especially with increasing numbers of seniors and low-income residents requiring affordable housing options. The Director cited statistics from local organizations such as 211 (an emergency assistance hotline) to underscore the point, noting that a significant portion (~25%) of the community's calls for help were related to housing and shelter. The Director also raised concerns about the ongoing impact of the local tornadoes, which had left many homes in disrepair and some residents unable to afford necessary repairs. The Director commented:
“We're seeing this growing thing [housing needs].… There’s a lot of folks out there that haven’t even been able to do full repairs to their homes since that storm.”
OLD BUSINESS
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Murray Manor Window Payment
Ms. Carlson indicated that work was still ongoing to repair/replace windows and this topic could be tabled until next month’s board meeting. This was agreed to by the Board.
NEW BUSINESS
A. OHAC Director’s Retreat
The Director requested approval to attend the OHAC Directors Retreat, contingent upon the approval of the RAD application. The Board agreed.
B. Operating Budget
The operating budget was submitted for approval. The Board reviewed the budget and expressed concerns over potential reductions in operating subsidies, as previously discussed in the Director’s report. Adjustments would likely be needed if further cuts were confirmed by HUD. The budget was approved after a brief further consideration.
C. Capital Assets
The Chief Financial Officer proposed updating the authority’s capitalization policy, increasing the threshold for capitalizing assets from $1,500 to $5,000. This update would reflect inflationary changes and streamline the accounting process for smaller purchases. The Board approved the recommendation.
D. Amendment to R-30-19
A minor correction was made to a resolution from a previous board meeting. The typo in resolution R-30-19, which had originally referenced a “demolition or disposition,” was corrected to clarify “demolition and disposition.” This was an administrative correction, and the Board approved the amendment without opposition.
E. Public Hearing
The public hearing on the five-year plan submission was delayed due to a notice issue. The required public notice had not gone out in time, so the Director proposed scheduling a special meeting on November 6 to hold the hearing and meet the submission deadline. The Board agreed to the special meeting, which will be November 6, 2024 at 2:00 pm in the Murray Manor Board Room.
F. Plan Submission
Related to the public hearing, the Director sought board approval to submit the updated five-year plan to HUD following the special meeting to be held on November 6, 2024. The five-year plan outlines long-term goals for the housing authority, including funding allocations, development projects, and policies aimed at addressing community housing needs.
10. Hearing of the Public
During the hearing of the public, a community member asked whether rents would increase as a result of the RAD conversion and where the increased revenue would come from. The Director clarified that tenant rents would remain the same (calculated at 30% of their adjusted income), and the additional revenue would come from federal subsidies, not from increased tenant payments.
11. Executive Session - None
12. Further Business
The Director brought up the resignation of two maintenance employees and the urgent need to find snow removal services for the winter season. With no candidates applying for the open positions, the Director sought approval to sign a contract for snow removal and salting services for Murray Manor and Harris House. The Board approved the request with a budget not to exceed $27,490.
Observer Note: More information regarding RAD can be found here on the Housing and Urban Development (HUD) government website.
Next Meeting: The next meeting will be on November 6, 2024 at 2:00 pm at Murray Manor. This will be a special meeting to fully address items under NEW BUSINESS E. and F. as noted earlier in this report.
More information about the Geauga Metropolitan Housing Authority can be found here.
Observer Note: The Executive Director indicated they were recording the audio of the meeting.
Observer: David Lewis
Editor: Anne Ondrey
Reviewer: Carol Benton
Date Submitted: 10/20/2024
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