Minutes of a Regular Meeting

MINUTES OF A REGULAR MEETING

OF THE BOARD OF COMMISSIONERS

OF THE HOUSING AUTHORITY

OF THE CITY OF EL PASO, TEXAS

WEDNESDAY, JUNE 24, 2015

Item # 1. Call to Order. The Chairperson called the meeting to order at 5:33 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; Commissioners Eileen Karlsruher, Lupita

Licerio, and Anna L. Perez. The Chairperson declared a quorum with four Commissioners present. Commissioner Francisco Ortega was absent.

ALSO PRESENT: Gerald Cichon, Chief Executive Officer; Bob Blumenfeld, HACEP Attorney;

Arthur Provenghi, Corporate Attorney; Satish Bhaskar, Chief Financial Officer; Hector

Montoya, HAC General Manager; William Zeigler, Chief Human Resources Officer; Daniel

Cantu, Chief Information Technology Officer; Richard Seges, Chief Real Estate Officer; Frank

Cota, RAD Project Team Lead; Huu Dang, Director of Finance; Juan Pulido, Procurement Manager; Glo Dore, Executive Secretary to the CFO; Sergio Enriquez, Public Information

Officer; Berenice Yoder, HAC Asset Manager Supervisor; Martha Gomez, Due Diligence

Analyst; Patricia Quintanilla and Aracely Saenz, Executive Secretaries.

Item # 5. Recognition by Robin Roberts of the Sustainable Energy Advisory Committee of

Partners That Helped Making the Paisano Green Community Residents’ Gardens Project a Reality. Mr. Cichon said that Ms. Roberts is one of the most constant dedicated volunteers that you will find. She step forward on this project to help our seniors at the Paisano Green

Community. She worked with the Juvenile Probation Department for about two years to make this a reality. Ms. Roberts has a great resume which includes working with Governor Ann

Richards as a community college dean. Mr. Cichon said that it was his pleasure to introduce

Robin Roberts and to recognize her for all her work.

Robin Roberts said that she is just one of over 100 people that made this happened. This started about 2 ½ years ago when a group of individuals from the advisory committee of Senator

Rodriguez on renewable energy visited the Paisano Green Community. They were very proud to hear that Paisano Green Community is the only LEED platinum certified public housing in the

United States and that we are a leader in environmental and energy efficiency design. When they left they decided they wanted to do something to enhance the community. They saw the garden space and decided to look for something that was available year round that could fit with the green living that is already there. It was decided that a compost garden was the best option.

They wanted it to be low cost and low maintenance because it was to be owned and operated by the residents. They created a partnership by reaching out to about 21 organization with

2 knowledge on design, build, sustain, and people that could teach the residents how to cook with all these vegetables that they are going to yield. It was decided that a keyhole garden, which was developed in Africa would be perfect for an arid environment because it loses very little water.

Keyhole gardens use readily available resources that are carved and based. There is no need to use any type of chemicals or fertilizers because it will be constantly regenerating by putting in kitchen scraps. It is not only earth friendly, but elderly friendly since it is waist high. Ms.

Roberts said that they started with the layout in the area that was originally designed for a garden. They collected all of the compostable materials, which were free. They also enabled every volunteer to attend a keyhole garden training presented by a national expert and provided by El Paso Water Utilities prior to the building phase. The garden building was done in several weekends and the real hard work was done with organizations like the Probation Department and

Western Tech. The Probation Department used this as a project under the Global Youth Service and the youth were very proud to be a part of it. Each garden is layered with paper, dried grass and plants, cardboard, and fresh plant and grass clippings. All of the cardboard will eventually become part of the garden. Ms. Roberts said that the garden meets ADA requirements allowing for wheelchairs to navigate the garden. The planting of five donated fruit trees was done by the volunteers throughout the property. They are going to be yielding fruits in future years adding to the beautiful scenery. She said that the garden is tended by a Council of Residents. It does not require any extra work from staff. Since April, when the garden started, the residents have been enjoying an abundance of fruits and vegetables. The estimates from one planting season for these six gardens is expected to be about 6,000 pounds of produce; if we plant twice it will be

12,000 pound. Ms. Roberts said that they want to help us sustain the garden; they have a lot of expertise. They want to give classes on how to care for the garden and how to cook with the

3 fresh produce that the residents are going to yield. They also have volunteers to do the hard work to keep the garden going. Ms. Roberts added that no project could be done if it wasn’t for leadership of people like Dave Davis. He is a Master Gardener and volunteered the most hours in planning, building, planting/seeding, and tending the garden. When extra materials were needed he bought them as donations. He also instructs how to grow and use herbs. Finally, they would like to ask that we harvest the rainwater to make this a premier garden. We don’t have a lot of rainwater, but if we would harvest and collected it, we could have a pump that would push it back into the garden and save money in our water utility. She said that if we do a partnership, they could help us as volunteers and raise funds. It would be their continual commitment to the garden. She thanked the Housing Authority for being a leader in green living and for the opportunity to work with the community. She offered to answer any questions.

Mr. Cichon said that he has visited the community and the residents are very excited about it.

Chairman Blacksher said that we could study the possibility of establishing a farmers market.

Item # 6. Resident Association Presidents to be Heard. None.

Item # 7. Citizens to be Heard. None.

Item # 8. Approval of Minutes of a Regular Board Meeting That Took Place on May 27,

2015. Commissioner Licerio made a motion to approve item # 7. It was seconded by

Commissioner Perez. Motion carried unanimously.

4 Consent Agenda:

Item # 9. Purchasing and Construction Contract and Purchase Order Awards:

A. Request that the Contracting Officer be Authorized to Sign Recommendation for

Contract Award for Building Materials Contract # WH 15-B-0012. This is for

One-Year with Two One-Year Options to Renew. This Contract was Procured

Through the Invitation for Bids (IFB) Process. The Recommendation is as

follows:

Department: Warehouse Award to: Wholesale Building Materials $87,415 est.

Chaparral Materials $4,382 est.

Hardware Specialties $7,400 est.

Funding Source: COCC Procurement Type: Invitation for Bid (IFB) Contract Term: New

B. Request that the Contracting Officer be Authorized to Sign Contract Modification

for Legal Services. This is the Second Renewal of Four One-Year Options. This

Contract was Procured Through the Request for Proposal (RFP) Process. The

Recommendation is as Follows:

Department: Executive Award to: Mendel Blumenfeld LLP Contract No. EX 14-C-0002

Kemp Smith LLP Contract No. EX 14-C-0003

5 McKamie, Krueger & Knight LLP Contract No. EX 14-C-0005

Coats Rose, PC Contract No. EX 14-C-0006

Gordon, Davis, Johnson & Shane, PPC Contract No. EX 14-C-0007

Hawkins, Delafield & Wood LLP Contract No. EX 14-C-0008

Combined Total Award: $500,000 est.

Funding Source: COCC Procurement Type: Request for Proposal (RFP) Contract Term: Renewal

C. Request That the Contracting Officer be Authorized to Sign Contract

Modification for Professional Auditing Services Contract # FS 15-C-0001. This

is the First Renewal of Four One-Year Options. This Contract was Procured

Through the Request for Proposal (RFP) Process. The Recommendation is as

Follows:

Department: Finance Award to: Fallon Larsen LLP $84,950 est.

Funding Source: COCC Procurement Type: Request for Proposal (RFP) Contract Term: Renewal

D. Request That the Contracting Officer be Authorized to Sign Recommendation for

Contract Award for RAD Physical Condition Assessment Contract No. RAD 15-

6 R-0019. This is for a One Year with Two One Year Options. This Contract was

Procured Through the Request for Proposal (RFP) Process. The

Department: RAD Award to: AEI Consultants $98,484 est.

Funding Source: RAD Procurement Type: Request for Proposal (RFP) Contract Term: New

E. Request That the Contracting Officer be Authorized to Sign Modification to

Contract for RAD Project Management Services Contract # RAD 15-C-0013.

This is the First Renewal of Four One-Year Options. This Contract was Procured

Through the Request for Proposal (RFP) Process. The Recommendation is as

Follows:

Department: RAD Award to: ECM International $100,000 est.

Funding Source: RAD Procurement Type: Request for Proposal (RFP) Contract Term: Renewal

F. Request That the Contracting Officer be Authorized to Sign Recommendation for

Contract Award for Renovation of Multiple Housing Communities Contract #

RAD 15-Q-0005. This is for One-Year with Four One-Year Options to Renew.

This Contract was Procured Through the Request for Qualification (RFQ)

Process. The Recommendation is as Follows:

Department: RAD Award to: Wright & Dalbin Architects, Inc. $3,220,000 est.

7 Funding Source: RAD Procurement Type: Request for Qualifications (RFQ) Contract Term: New

G. Request That the Contracting Officer be Authorized to Sign Recommendation for

Contract Award for Renovation of Multiple Hi-Rise Housing Communities

Contract # RAD 15-Q-0006. This is for One-Year with Four One-Year Options

to Renew. This Contract was Procured Through the Request for Qualifications

(RFQ) Process. The Recommendation is as Follows:

Department: RAD Award to: Wright & Dalbin Architects, Inc. $1,260.000 est.

Funding Source: RAD Procurement Type: Request for Qualifications (RFQ) Contract Term: New

Mr. Cichon reviewed the proposed items under the consent agenda and offered to answer any questions.

Commissioner Perez made a motion to approve consent agenda items # 9 A - G. It was seconded by Commissioner Licerio. Motion carried unanimously.

Jeffrey Wright of Wright & Dalbin Architects thanked the Board for the confidence in selecting them for the RAD renovation work. It will be a lot of work, but they will do their best to provide the best services that they can for the Housing Authority. Thank you.

8 Regular Agenda:

Item # 10. Recommendation That the Contracting Officer be Authorized to Sign Purchase

Order Award for Postage for HACEP’S Print Shop. This is a Single Source Purchase. The

Department: Procurement Award to: Purchase Power (Pitney Bowes) $68,276

Funding Source: COCC Procurement Type: Single Source Contract Term: Purchase

Satish Bhaskar, Chief Financial Officer, said that we use a postage machine called Pitney Bowes.

We own the equipment and in order to use the equipment we have to go to them to buy the postage. That is the reason that this is a single source, not necessarily a sole source.

Commissioner Karlsruher made a motion to approve item # 10. It was seconded by

Commissioner Perez. Motion carried unanimously.

Item # 11. Presentation, Discussion, and Action on Budgets for the Housing Authority of the City of El Paso, Texas for Fiscal Year Ending June 30, 2016.

(a) Resolution Approving Budgets for the Public Housing Operating AMPs and

9 (b) Resolution Approving Budgets for the Housing Choice Voucher Operating

Program, Tio Cooper (Farm Labor Program), Chai Manor, Siesta Gardens

(Shelter Plus Program, and Other Activities.

(c) Resolution Approving Budget for the Section 8 New Construction Program.

Satish Bhaskar, Chief Financial Officer, said that page 111 has the main consolidated financial statements for the agency. It provides the comparison between 2015 and 2016 budgets. On

April 7, 2015, we closed 1,590 units of public housing into RAD. Based upon the information we have, we had to remove those units from our budget for next year. They will be reported like tax-credits as an independent entity that runs on a calendar year basis. For this reason, we are showing a revenue drop from $82 million to $71 million. That does not mean that the revenue is not there; it will be in a different bucket. Similarly, our expenses dropped from $70 million to

$63 million. Those $6 million translates to what we are doing in RAD I. The only increase that we have in our budget is a 3% increase on salaries. Even with the reduced transaction, we are showing a surplus of $7.7 million agency-wide. On the lower section we are showing non- operational transactions, which are basically payments that we have to make for debt services, transfers of funds to pay for programs that do not support themselves, and any other reserves for replacement requirements. Public housing agencies are not required to have reserves for replacement, but under RAD we are required to do it; that is a new line item for HACEP. The last line shows that our ending reserves dropped from $72 million to $56 million. The difference is what we invested in RAD for construction. On page 112 we are showing a little bit more details and we broke the agency’s budget by major components which include the Section 8

10 Program, Public Housing, Internal Services, Section 8 New Construction, two Central Office components, Tio Cooper, Siesta Gardens, Non-Dwelling units, and Business Activities. Mr.

Bhaskar pointed out that Section 8 is showing a red number, which is a negative number. He explained that a few years ago HUD established a rate that housing authorities needed to manage the Section 8 Program, but with sequestration they decided that they had to reduce the money and are paying us .79¢ to the dollar. The funding is not sufficient to run our program, but we made a decision that we would support the program. That is the reason for the negative number; the Central Office is supporting that deficit. Another big deficit is in Central Office Cost Center.

The only source of revenue for the Central Office is the management fee that we are allowed to charge prescribed by HUD for property management, asset management, and bookkeeping services. Technically, we have to live within that revenue stream, but we made a decision to put resources behind our RAD program for the next four to five years. We have a team of 25 staff members working in the RAD initiative. We are investing about $2.5 million annually for it, and may continue to do so for the next three to four years, but the agency has about $11.5 million in

Central Office reserves, which is what we will be utilizing to offset that deficit. The last red number that you see is for Non-Dwelling properties. We have four properties including the

Central Office, which is about 100,000 square feet, and the revenues from the other non-dwelling properties can offset the cost that we have for this property here. One way to look at it is that for

$25 thousand we are getting a $100 thousand property. If we were renting it would cost a lot more than that. At the end of the year, we are still strong and showing that as an agency we have

$56 million in reserves. Each year, as we do each RAD group that number will be reducing and it will be moved to utilize for construction and RAD. We need to keep in mind that in four or

11 five years we will have less than 500 public housing units, all of the other 5,600 units will be removed from our books reducing our budgets substantially.

Chairman Blacksher said that in reference to the Cost Center, the explanation given showing ending reserves close to $6 million show that the negative cash flow for next fiscal year is $5.6 million. He asked that if that repeats again next year does it mean that we will be done to $300 thousand.

Mr. Bhaskar said that we have money coming from developer’s fees and other activities from

RAD I closing. Those funds will be coming in to supplant this money that we are losing.

Chairman Blacksher asked if he has an estimated amount.

Mr. Bhaskar responded that for Tranche I we will be getting $18 million in developer fee, but it is not coming all at once. We have projected our cash flow needs out to 2030 because one other thing that we have to be cognizance of is that a lot of these funds are not fluid; we cannot take from one to pay for the other. We are trying to do all kinds of forecasting to make sure that we are on the right track. As we go into RAD, we are required to keep the property base accounting, but since we have been doing that the transitioning is a little bit smoother for us. Mr. Bhaskar offered to answer any questions.

Mr. Cichon said that he had questions about the PHAS scores for 2011.

12 Mr. Bhaskar said that we have two PHAS scores charts for 2011 because that is the year that the government changed the calculation on the PHAS scores. We included the numbers for the old system and the new system. We wanted to be transparent and show which way the numbers would go depending on the way the government finally took. He added that we will make the change on the unemployment rate and on another typo.

Mr. Bhaskar said that this item includes three Resolutions one of which is a HUD form and mandatory anytime we get federal money. With this Resolution, the Chairperson of the public housing authority is required to attest to the fact that: (1) as an agency the staff has done the due diligence that they are required to do. These are things that we do every day. It means that all statutory and regulatory requirements have been met to include procurement rules, policies and procedures, ACOP, Administrative Plan, Section 3 requirements, Davis Bacon, Investment

Policy, Civil Rights Act and 504. Those are the things that we normally work with on a routine basis. Contracts have to comply with the same things. It is not just focused on HACEP, it includes contractors and entities that we do business with; (2) that the Housing Authority has sufficient operating reserves to meet the working capital needs. HACEP’s operating reserves is projected at $56 million; (3) that the proposed budget expenditure are necessary in the efficient and economical operation of the housing for the purpose of serving low-income residents. Mr.

Bhaskar said that when we do our budgets we try to make sure that we can live within the budget, and we make sure that we can provide a safe and sanitary environment for all of our residents. The quality of life of the residents is very important when we do these budgets; (4) the budget indicates a source of funds adequate to cover all proposed expenditures. The revenue sources include subsidy, rental income, management fee, and interest giving us a $7 million

13 surplus; (5) the PHA will comply with the wage rate requirement under 24 CFR 968.110(c) and

(f). Mr. Bhaskar said that HUD publishes prevailing rates for labor, in most cases the prevailing rate provided by HUD is lower than what we are paying so we have no issues in applying that;

(6) the PHA will comply with the requirements for access to records and audits under 24 CFR

968.110(i). Any time the auditors come we provide them with the documents. We have not had any audit issues for at least four years. They also want to know about other compliance requirements to include non-discrimination and equal opportunity, environmental clearance, flood insurance, technical wage, Davis Bacon, and lead base paint. These are some of the other requirements, which are inbuilt in the requirements that we have to follow.

Chairman Blacksher said that as he was reviewing the package he noticed that at the bottom of the Resolution there was a warning regarding making false claims and statements with the possibility of criminal and civil penalties. Since he was the one signing the Resolution he was questioning not all the items, but item # 1 about the statutory and regulatory requirements. He had an opportunity to meet with Mr. Cichon, Mr. Provenghi, and Mr. Blumenfeld earlier today and it was clarified that this relates only to the budgets. He commended Mr. Bhaskar and the staff on the quality of the budget reports. He has no doubt that we are complying with all the requirements. He asked if there were any questions regarding the budgets.

Commissioner Perez said that she met earlier today with Mr. Bhaskar, got all of her questions answered, and feels very comfortable.

14 Bob Blumenfeld, HACEP Legal Counsel, said that we created a cover Resolution to go with the form. The purpose is to clarify that the staff, through Mr. Cichon and Mr. Bhaskar, were certifying that points 1 – 6 were being met and that they would make any effort to make sure that they were met. Because the Chairman signs this form if there was some kind of penalty it would be against him, we added a provision that if he is acting in good faith and in the scope of his duties as Commissioner he would be indemnified to the extent permitted by Texas law to be protected from any claims, penalties, fees, or costs that he might incur defending some kind of claim related to him signing this certification.

Mr. Cichon asked if he is confident that we are meeting the requirements of the Open Meetings

Act with the posting of this item.

Mr. Blumenfeld responded that he is because the posting is for the approval of the budget and this is part of that approval.

Commissioner Perez made a motion to approve Resolution No. 2028 under item # 11. It was seconded by Commissioner Karlsruher. Motion carried unanimously.

Commissioner Perez made a motion to approve Resolution No. 2028-A under item # 11. It was seconded by Commissioner Karlsruher. Commissioners Perez, Karlsruher, and Licerio voted in favor; Chairman Blacksher abstained. Motion carried.

15 Commissioner Perez made a motion to approve Resolution No. 2029 under item # 11. It was seconded by Commissioner Karlsruher. Motion carried unanimously.

Commissioner Karlsruher made a motion to approve Resolution No. 2030 under item # 11. It was seconded by Commissioner Licerio. Motion carried unanimously.

Item # 12. Secretary’s Report.

 RAD Update. Mr. Cichon asked Mr. Cota to provide an updated report including ongoing construction and residents’ moves.

Frank Cota, RAD Project Team Lead, said that we typically move between 5 and 18 families per day depending on the community size. He showed some pictures of the moves and commended the vendors for their professionalism and for their outstanding job. As he mentioned previously, the RAD Relocation team is in the field along with the Logistics team to ensure quality assurance and quality control of every move. He showed some pictures of a tour by the JWRC to the

Eisenhower community that was recently held. The JWRC leadership were accompanied by Mr.

Cichon and Ms. Clarke. They walked through some of the ongoing gutting of the units as well as the frame work that was being installed. He showed additional pictures of the initial stages of construction at Eisenhower and Kennedy. Mr. Cota said that we have been very fortunate for the support received not only from the agency, but also from the residents. The Communication team has done an outstanding job in relaying the RAD project and process to get a better understanding of what is happening and when is happening. The moves to date include 57 from

16 Kennedy Brothers; 51 from Eisenhower; 79 from Marmolejo; and 31 from Ochoa. The Ochoa moves were all elderly requiring a lot more time and care with the residents. Mr. Cota said that our next moves include 51 from Alvarez between July 6 and 10; 44 from Johnson between

August 3 – 7; and 25 from Woodrow Bean scheduled for August 27 – 28 for a total of 120 moves. Mr. Cota offered to answer any questions.

Chairman Blacksher said that he is very impressed with the work. He suggested to take the photos and put them in a time lapse to have it as a video and be able to show the moves, the new construction, and the return of the residents to the renovated units.

Beatriz Lozano, JWRC Treasurer, said that they are providing support visiting the communities.

She was very pleased to see how Mr. Cichon was personally verifying the work done. The work that is taking place is very professional because you have a good architect, good staff, and they are focusing on the needs of each family and each community. She is very proud of being an active participant. Ms. Lozano thanked the Board for their attention.

Chief Financial Officer Reports.

 Statement of Revenues/Expenses for April 2015. No discussion.

 Statement of Changes in Net Assets for April 2015. No discussion.

17 HACEP News Articles/Events. Sergio Enriquez, Public Information Officer, provided a recap with respect to our communication department. He said that we are actively going into the community to inform the public of our work. Recently, Mr. Cichon provided a presentation on the Paisano Green Community and RAD to Leadership El Paso; we had about 40 participants.

He provided pictures of the visit by JWRC members to the Eisenhower community. Mr.

Enriquez thanked Commissioner Perez for participating as the keynote speaker during the first week graduation of our HOT Summer Program. He provided a rundown of the media coverage during last month. Mr. Enriquez offered to answer any questions.

Mr. Cichon said that we did received one negative coverage regarding bed bugs. Unfortunately, we were not able to recapture it through our service. We contacted TV channel 26 for a copy, but have not receive it. Bed bugs are a problem and a big challenge in our units.

Commissioner Perez asked for additional details on this matter.

Sergio Enriquez said that one of our residents had an issue with bed bugs. We had been proactive in fumigating her unit as well as the adjacent units. The problem is not isolated to one resident, so we have to fumigate the area with respect to that, which we were actively doing.

There is a need for four sessions of fumigation, but our resident could not understand the length of time required for the treatments and reached out to the media. We have been working with her and the other residents to address the issue.

18 Mr. Cichon added that we contracted Hirby Pest Control and have been providing the services, but it takes numerous applications. We had been treating that apartment for four weeks and based on the concerns and the presence of the bed bugs we have now began a second application to that unit and the surrounding units. We talked to the press and asked them to provide a follow-up on our efforts to resolve the matter.

Mr. Cichon said that Richard Seges came from San Diego to join our team. He had been working with Civic San Diego to rebuild all parts of San Diego in different aspects. He is going to be the person in charge of our development efforts. He asked Mr. Seges to introduce himself.

Richard Seges, Chief Real Estate Officer, said that he is delighted to be here. It takes a lot to take him away from the ocean, so that says a lot about how excited he is to be here and to be working with this organization. After three days he is not only excited about the mission, but the projects that are going forward; he is simply delighted to be here. His background is in all source of real estate all over the country and the world. He is looking forward to working with everyone in the agency and the entire city.

Chairman Blacksher said that what he can say as a relative new Commissioner is that he is very impressed with the quality of the staff that was put together for this monumental project and he will be an outstanding addition to the team. Welcome to El Paso!

Commissioner Karlsruher made a motion to go into recess. It was seconded by Commissioner

Licerio. The Board went into recess at 6:38 p.m.

19 Commissioner Licerio made a motion to come out of recess. It was seconded by Commissioner

Karlsruher. Motion carried unanimously. The Board reconvened at 7:14 p.m.

Item # 15. The Board of Commissioners May Retire Into Executive Session at Any Time

Upon the Motion of Any Commissioner Pursuant to the Texas Government Code, Section

551.071-551.076 to Discuss Any of the Following:

Section 551.071 Consultation with attorney.

Section 551.072 Deliberations about real property.

Section 551.073 Deliberations about gifts and donations.

Section 551.074 Personnel matter.

Section 551.076 Deliberations about security devices.

Discussion on the Following:

(a) Discussion and Update by Legal Counsel on Pending Litigation Matters. (Section

551.071)

Commissioner Licerio made a motion to go into executive session. It was seconded by

Commissioner Karlsruher. Motion carried unanimously. The Board went into executive session at 7:14 p.m.

20 Commissioner Karlsruher made a motion to come out of executive session. It was seconded by

Commissioner Perez. Motion carried unanimously. The Board reconvened at 7:48p.m.

Item # 16. Adjournment.

There being no further business to be discussed before the Board, Commissioner Licerio made a motion to adjourn. It was seconded by Commissioner Perez. Motion carried unanimously.

The meeting was adjourned at 7:48 p.m.

ATTEST:

______Gerald Cichon Burt Blacksher