Meeting called to order, a minute or two after noon. Minutes approved, no Mario to give an update. No Bill Clingan to give an update. Hmmm . . . . bad start. Highlights and surprises are bolded.
Sparer says Mario sent information around by email, not available to the public. Mario walks in the door, with Clingan right behind. There was a variety of a emails shared among committee members, also not available to public. They say amendment 575 is the same as 700 on this issue. Mario says Mayor was personally involved in the lobbying. Thanks Schumacher in helping with the League of Municipalities position. Says as a result of combined efforts, the Joint Finance Committee passed the “vetoed” language, exemption for low income housing providers, there is safe harbor language and resolves the rent use issue. Retroactive to January 1, 2009. Overall, the big problem is resolved with this language. He says there is every expectation that the language will be passed and signed into law. “So, yesterday, was a really good day.”
Sparer wants to make it explicit that the Governor will not veto. Mario confirms. Says it is a deal between Governor and both houses leadership.
Mario says, as he did in the email, they heard how active the Third Sector Housing group had been while visiting legislative offices. Also says Berceau was a champion and thanks Pocan and Miller as well.
Sparer asks about list of uses for rent use that are permitted, but he read it otherwise, that these is no list. Mario explains that it is true for senior housing, but not low income housing. Sparer looks confused and seems to disagree.
When will we see the final draft? He says some legislators didn’t have it, but that he’d be surprised if there are any changes.
Schumacher says thanks for the kind words. Glad they didn’t have to fight it out at the city level and around the state. He asks what this means now, practically speaking. Mario says all of third sector housing should maintain their tax exemption going forward. For the few that were involved in litigation, any claims that related to Jan 1, 2009 are moot. So, those who did pay would get reimbursed? He says yes for those who paid as of January 1. Schumacher clarifies that Turners are not covered. Assessor clarifies that the claims discussed at the council are not affected as they are from 2008. They clarified that the retroactive date doesn’t cover those two.
Schumacher says that while he wasn’t in favor of violating state statute, he’s interested in looking at the 2008 cases that were before the council in retrospect if the law passes, even if they aren’t included. He might not vote to deny their claim at this point.
The Council will be discussing this on Tuesday, because Attorney May won’t be here when the referral back June 16th happens. Says Michael May will issue a report on that question. So they will discuss again on Tuesday at the Council.
Sparer asks when it is expected to be final. Mario says Joint Finance is done (as of 5:30 this am) and now the full legislature, starting with the assembly. Right now, seeing how the Joint Finance Committee finished in May, its not unreasonable that they will get this done by June 30.
Sparer asks about the tweaks – none of them in there, right? Yes says Mario. Rosenberg reads memo from Tim Radelet, that was in my blog this morning. Rosenberg explains that there are some issues still out there.
– He explains some non-profits will bump up against the 30 acre rule, if not now, soon. Schumacher clarifies that there might be a way to structure to create the firewalls? i.e. not have the same boards. Everyone agrees.
– Mixed income projects, market rate units will be taxed.
– 60%, versus 80% which units funded with HOME dollars will be impacted. Each unit has to qualify. Schumacher says the lawyers will figure it out. [I briefly consider going back into the legal field as it appears to be quite lucrative! :)]
– Additional reporting requirements
– Non-residential properties not addressed.
Rosenberg says that elderly housing, there are no income restrictions, no reporting requirements.
Retroactive date this year, elderly next year. Says much was addressed, but not everything. This is what we got, should be happy, but we need to be mindful that there are still issues.
Mario says this is a huge change. Thinks that the Plan B discussion shouldn’t have as much promininence as before the legislation. So, not surprised if not much more effort goes into the review the Assessors office was making and so they are not going to continue to charge forward.
Sparer asks assessors office, if had any thought on how to deal with the reporting for this year since the deadline has passed, but reports already due. Kurth says that they haven’t decided anything, but thinks they would require the reporting requirements to start in 2010. New exemptions for 2009 would be logical to get the reporting requirements for them. There is alot of paperwork to process and that its alot of work on the retirement side because of the formula, and they have to wait for Dept of Revenue to get them information. They aren’t certain yet. Kurth is confirming with the boss as he’s shooting from the hip.
Sparer asks about multi-income projects, any sense of what % of units will fall into that? Sparer says he assumes it will be a wild guess. Wilcox says its kinda standard that 20% are market rate and would be taxed. Assessor has no clue. Wilcox explains how it works, MDC and Commonwealth might be affected. [Mario seemed to think all the Third Sector folks were ok, but we’re finding out that isn’t true.]
Schumacher tries to figure out how this works if there are multiple buildings with multiple incomes. Everyone is guessing how that’s going to work. It’s clearly complicated on how to value them. Kurth says they will use income method to assess the values of the market rate units. Kurth explains that a percentage of the expenses will be used based on a market rate complex (not low income).
Hanson says that very close to getting values determined for those still exempt and that they are on hold until the legislation is signed. Kurth says once the law is passed the non-preofits should get some letters clarifying their status. Some denials will be recinded, some will get letters explaining what happened, non-residential properties will move forward.
Schumacher, asks if there is any benefit to sharing the data that they collected, since it is collected after alot of effort. Kurth says that he has learned alot about the programs. But the data isn’t likely to be useful. Schumacher digs deeper, asking if the info isn’t useful to the city, but could it be useful to the non-profits. Kurth says the data is there, won’t be shredded, so if someone wants it, it should be there.
Schumacher talks about getting wife a shredder for paper with sensitive information and calls it a Cheney moment – Kurth says that he has those when he goes hunting, his brother walks behind him. [Wacky moment.]
They thank Mario and he leaves.
Bill Clingan called up to talk about Plan B. Wilcox says we still need a plan B. Rosenberg says its still and issue and we have to deal with 2008 cases, so Clingan goes back up to the table.
Clingan says that he can give them the “terrain”. Not sure if he will report to the council on the 16th or if its necessary. Says its not useful to throw out explosive hypotheticals if we aren’t going to go there. Some debate about if it might make us look good to show how bad it could have been. Clingan says the scope of the problem [He sort of randomly lists off some items]:
– 1700 affordable housing units
– Low income providers need to raise more money to pay the taxes
– Rent caps?
– Raise rents?
– Downsides of increased expenses for taxes are that they have to cut costs including services, maintenance, etc, hard to estimate that cost
– Potential that they might not pay taxes, run afoul of lenders and what would city do?
– What if the non-profits get out of the market?
– Biggest costs, what happens to people who would not be sheltered, shelter system, police calls, etc
– Sub-population for high risk people who likely can’t be housed in other kinds of ways
– What do we do with HOME funds and properties ($26M of funds) Says they talked with HUD and who knows what they would do officially, but he was hoping that they would relax how they look at those things, but they would expect that to be paid back out of tax levy. [i.e. if this didn’t get resolved and non-profits couldn’t pay, the City would have to pay back $26M to the feds.]
Schumacher clarifies this is all hypothetical, but what would be the financial impact. Bill says that there were several numbers, an appeal process and it can drag out. So, they were not sure. They said that we would have to pay the money back. But everyone acknowledges
Solutions:
Operating costs. Doable but not easy.
Issue with if you put money in operating costs, you have less funds for housing units being produced. How to calculate the operating costs would be an issue, per provider? per unit? Go forward or backward when calculate. What if the amount we have on operating costs don’t cover the tax. And then brings up the legal boogie man and the connection between the operating costs and the taxes.
Schumacher asks if we are talking all the taxes, or just the city portion. Clingan added the county as a potential funding stream. Says he doubts that MATC and Schools could contribute. Clingan says that if can’t get hte money out of the entitites then maybe we have a pure policy position but the non-profit still has the problem and therefore so does the city.
Talks about legal issues again.
Talks about rent assistance program. He says procedurally doable. Not helpful to some of the providers because there is a rent cap and can’t get money to them. Talks about legal issues again. How do you calculate it? He talks about a potential formula. He talks about mechanics, would CDA be in charge of this, what staff costs and administrative costs would there be? Wilcox says there is admin money with HOME
CDA role? initial indication from Olinger and Shimanski was there not keen interest in this [go figure], would CDA be in position, have capacity, have the money to take over properties? Or, could properties be turned over to CDA and then turned back for property management to the affordable housing provider?
Funding Sources:
HOME funds – says we get $1.6 – 1.9M per year in allocations.
Affordable Houinsg trust fund – need language change. Has $4M. If use it for this purpose can’t do it without changes for how money is spent.
City Levy – Council and Mayor makes those decisions.
County – School District and MATC but not sure how that might happen.
That’s the framework he is working in. He will have to take his cues from folks on how much further to push this. He says that Mario seems to think its a done deal, but not signed yet.
Schumacher says we need to be prudent and cautious and not raise expectations so that this doesn’t become expected that the non-profits will get operating money. Schumacher asks if there is something that he has learned that may help us in the future?
Clingan says not around tax policy. What he says he has known but more convinced that city has a very key role in affordable housing, but much of the heavy lifting is done outwide these walls by housing providers and that we are attached at the hip. What we do affects them. And then, he says that bottom line is that low income individuals and families and we have to look at how they get housing in the community. If we don’t keep the alignment with service providers, housing people and the city – these folks need the partnership to be strong and vital and the risk of this drove that home.
Wilcox says that Clingan still needs to look into Tim’s analysis of the market rate rents. What resources will be there for those who are left out? Also wants to look at agencies that lease to non-profits.
Rosenberg says we aren’t looking at Plan B, but remaining issues. 30 acre units, common control piece, who’s at risk and what are the alternatives? 2008 property taxes? That doesn’t reflect public policy at this point. The market rate issue. MDC can’t raise the market rate units $150 and where will that be made up. The people affected will be 61 – 80% income.
Schumacher asks Bill to research this. If law is passed and has market rates and under 60% and if we give them quid pro quo money are we out of the legal issue. Can give money to people who are tax exempt. Funding is for tax exempt units, not the exempt ones.
Rosenberg says the last item is the annual application for all these properties and have to make sure it isn’t too onerous and could be intrusive into indivisuals. Needs to reasonable meet the needs of the assessors office but not intrusive. Wilcox suggests using existing reporting for HOME dollars. It would be ideal to turn in reports they are already doing.
Sparer asks if anything else? Now labeling it Plan C.
Moved to adjourn. Rosenberg says wait, next meeting in July? If things look like they are going badly, they should meet sooner. Schumacher says housing diversity committee won’t meet til end of August. (So much for the July 1 report and making this a priority!) This kind of work ought to also be information for that committee, so they don’t have to start from scratch. They talk about joint meetings.
Now, they are adjourned.
[Sorry, only took about 15 minutes to clean up my typing, many typos likely in here!!]
