Board of Selectmen Eno Farms Sub-Committee - Minutes of Special Meeting - October 9, 2013 APPROVED

SIMSBURY BOARD OF SELECTMEN

ENO FARMS SUB-COMMITTEE

Special Meeting – Wednesday, October 9, 2013 at 6:00 PM

Main Meeting Room – Simsbury Town Hall – 933 Hopmeadow Street

Minutes of Meeting

CALL TO ORDER

The meeting was called to order at 6:05 PM.  Sub-Committee members Lisa Heavner and Sean Askham were in attendance.  Thomas Cooke, Director of Administrative Services and Robert DeCrescenzo, Town Counsel, were also in attendance.

PUBLIC AUDIENCE

The Sub-Committee extended the opportunity for public audience.  There were no speakers.

ACTION

Approval of Minutes from June 28, 2013

Mr. Askham moved the approval of the draft Minutes of the June 28, 2013 meeting and Ms. Heavner seconded the motion.  There were no changes to the minutes and the motion passed unanimously.

Review of information provided by CHFA, discussion and possible action with respect to assignment of ground lease

At the request of the Sub-Committee, Mr. Cooke and Mr. DeCrescenzo reviewed the steps taken to obtain information from the Connecticut Housing Finance Authority (“CHFA”) and to explore the elements of a possible lease assignment agreement with Equity Management as the potential purchaser of CHFA’s lease interest in Eno Farms.  They discussed the scope of the Sub-Committee’s function which is solely to make a recommendation to the full Board of Selectmen with respect to whether an assignment is appropriate and if so, what the terms of the assignment should be.  The Sub-Committee reaffirmed that its priorities with respect to this function are to make sure that Eno Farms is providing low income housing in Simsbury; to identify clear standards to ensure that low income housing is being provided and that there is a way of monitoring the new lessee’s compliance with those standards; and that the legitimate interests of current residents at Eno Farms are protected.

Mr. Cooke recommended that the “Income Limits Documentation System” prepared by Housing and Urban Development (“HUD”) and updated by HUD on an annual basis be used to determine income limits for “low” and “very low” income residents in accordance with the Ground Lease.  The Sub-Committee agreed and discussion ensued concerning the actual application of the standard.  While the HUD documentation sets forth maximum income levels based on family size, CHFA and Equity Management appear to take the position that the income limit is a flat rate:  families at or below 50% of the Town of Simsbury’s Area Median Income (“AMI”) are considered “very low” income and qualify to live at Eno Farms.  Similarly, families at or below 80% of AMI are considered “low” income and qualify to live at Eno Farms.  Family size does not appear to be a factor in the calculations used by either CHFA in their management of Eno Farms or by Equity Management in their proposed management of the property.

Mr. Cooke next recommended that CHFA’s “Taxable Bond Financing Income/Rent Limits” table, which is based on the HUD chart discussed previously and which similarly is updated on an annual basis, be used as the basis of a chart to determine rents based on the number of bedrooms.  He noted that Eno Farms has nineteen two-bedroom units, twenty-six three-bedroom units and five four-bedroom units.  He also noted that, based on the information provided by CHFA, the average family size at Eno Farms is three persons.  Reviewing the CHFA chart, the Sub-Committee noted that the maximum rates were calculated using an industry standard that rents should not exceed thirty percent (30%) of income.  Mr. Cooke and Mr. DeCrescenzo noted that maximum rates based on unit size in CHFA’s chart were higher than the maximum rates previously proposed by Equity Management through its attorney.

The Sub-Committee turned its consideration to the Equity Management letter dated September 29, 2012.  The Sub-Committee discussed the letter’s analysis of CHFA’s current rents, which are based on unit size, the letter’s calculation of the minimum income required to pay the rental amount (at 30% of income), and the letter’s application of a fixed maximum income based on 80% of AMI.  The Sub-Committee noted that Equity Management’s letter proposed initial rents lower than the maximum rents shown on the CHFA chart.

In reviewing the CHFA chart and Equity Management’s letter, the Sub-Committee noted that using an approach based on a fixed maximum income regardless of family size created anomalies at both ends of the income spectrum.  Ms. Heavner pointed out that under this approach, an individual making $60,000 would be considered low income.  Mr. Askham similarly noted that a family of eight making $80,000 would not be qualified to live at Eno Farms even though such a family would be considered low income according to the HUD chart.  Discussion ensued concerning how to balance the need for a sufficient pool of tenants with the HUD maximum income limitations.  In this context the Sub-Committee noted that historically, prior to the expiration of tax subsidies, Eno Farms had the option of renting a certain number of units at market rate which provided the opportunity to help fund low income housing with higher rent rates.

The Sub-Committee directed Mr. Cooke and Mr. DeCrescenzo to attempt to develop a rent chart based on unit size that would provide Equity Management with a sufficiently large pool of tenants and address the anomalies they had identified.  They noted that the CHFA chart should be the basis for rent chart and pointed out again that the maximum rents set forth on the CHFA chart were higher than the rent levels previously proposed by Equity Management.  They also directed Mr. Cooke and Mr. DeCrescenzo to review the proposed chart with Equity Management once completed.

The Sub-Committee then reviewed its other recommendations for assignment conditions, which include:

• a requirement that at least 20% of the units be rented to “very low” income families;
• a 5% cap on rent increases;
• a provision that lease agreements be renewed for existing tenants who remain in compliance with the terms of their leases and who remain within the appropriate income levels;
• a provision that a three year average be used to determine whether or not a tenant’s income exceeds established maximum income levels to protect tenants from unusual fluctuations in income or unusual fluctuations in area median income determinations;
• a reserve established by the Lessee in the amount of $1,500 to ensure appropriate funds for maintenance of the property; and
• an annual meeting between Town Staff and the Lessee to review projected budget for capital improvements, information on repairs and property maintenance; evidence of annual tenant income certifications; and a summary of rentals charged for Eno Farms units.

ADJOURN

Mr. Askham moved the adjournment of the meeting and Ms. Heavner seconded the motion.  The motion passed unanimously and the meeting adjourned at 7:30 PM.