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2014-04-09 VHC MinutesMINUTES OF THE SPECIAL VERNON HOUSING COMMISSION MEETING HELD WEDNESDAY APRIL 9, 2014, IN THE COUNCIL CHAMBER OF THE CITY HALL LOCATED AT 4305 SANTA FE AVENUE, VERNON, CALIFORNIA MEMBERS PRESENT: Michael Hughes, Michael McCormick, Henry Haskell, Eric Gustafson, Hector Garcia, John Kriste, and Melissa Ybarra MEMBERS ABSENT: None The meeting was called to order at 6:00 p.m. by Chairperson Hughes. Vice Chairperson McCormick led the flag salute. Chairperson Hughes confirmed that there are no changes to the agenda. PUBLIC COMMENT Chairperson Hughes announced that this was the time allotted for public comment and inquired whether anyone in the audience wished to address the Commission. Elba Romo, Pro Properties Owner, reported on Pro Properties submittal last year when the Commission was first soliciting proposals for a property management firm. Since then, Pro Properties has been following and tracking the issues in regards to the housing stock. Pro Properties can offer an alternative, as it can provide management and consulting services as needed. Romo reported on her analysis of seven issues that have been observed and proposed Pro Properties solutions. She thanked the Commission for their consideration. Resident Susie Ybarra reminded the Commission of their duties as part of the reform efforts. As staff presents its proposals, she is confident the Commission will ask the right questions. Ybarra recalled that the maintenance component in the Solari Enterprises Inc. (“Solari”) contract was not addressed. She inquired as to who is responsible for maintenance. Ybarra encouraged the Commission to consider the maintenance component in its consideration as there are issues. Vernon Housing Commission Meeting Minutes April 9, 2014 Page 2 of 14 Ybarra opined that the survey issued to the residents was generic and does not provide an accurate picture of the resident’s concerns. As the Commission reviews the proposed items, she reminded the Commission to continue moving forward and to not back-track by bringing responsibilities back in-house. MINUTES 1. Minutes of the Regular Vernon Housing Commission Meeting held March 12, 2014, to be received and filed. It was moved by Garcia and seconded by Gustafson to approve the March 12, 2014, Minutes. Motion carried, 6-0-1, with McCormick abstaining. NEW BUSINESS 1. Adoption of Revised Lease-Up Procedures for New Tenants for Units Located Within the City of Vernon and Separate Lease-Up Procedures for New Tenants for Units Located Outside the City of Vernon. Recommendation: (1) Find that adoption of the proposed procedures are exempt under the California Environmental Quality Act (“CEQA”) in accordance with Section 15061(b)(3), the general rule that CEQA only applies to projects that may have an effect on the environment; and (2) Adopt revised Lease-Up Procedures for New Tenants for Units Located Within the City of Vernon; and (3) Adopt new Lease-Up Procedures for New Tenants for Units Located Outside the City of Vernon; and Legal Counsel Stuart Leviton reminded the Commission that the item was previously introduced and postponed to this meeting to allow for further review and revision by staff. Staff is proposing two different procedures to differentiate between units within Vernon and those located in Huntington Park. Leviton noted that no substantial changes to the Vernon unit procedures have been made; those made were to clarify that the procedures apply to Vernon units only. The established procedures have been working well, no further revisions are being recommended. Vernon Housing Commission Meeting Minutes April 9, 2014 Page 3 of 14 The proposed procedure for the Huntington Park units was presented. Leviton reported that a “Guiding Principle” section was added. Modifications to the advertisement/marketing procedures were made for the purpose of expediting the leasing process. Market rate and market conditions were applied. Leviton explained that it is the right balance for the leasing agent because it allows for flexibility, while still preserving the reform efforts. It was moved by Kriste and seconded by Ybarra to adopt the revised lease-up procedures for new tenants for units located in Vernon and separate lease-up procedures for new tenants for units located outside the City. Motion carried, 7-0. 2. Recommendations Regarding Property Management of the City- Owned Rental Housing Stock, including those related to the Third Party Residential Property Management Services Contract with Solari Enterprises, Inc. Recommendation: (1) Find that approval of the proposed actions are exempt under the California Environmental Quality Act (“CEQA”) in accordance with Section 15061(b)(3), the general rule that CEQA only applies to projects that may have an effect on the environment; and (2) Direct the Commission Director to not renew or extend the current contract with Solari Enterprises, Inc. and instead take the actions outlined in recommendations 3 and 4 below; and (3) Authorize the Commission Director to reassign the day- to-day residential property management duties, including general administrative functions, leasing operations, rent collection, and repair/maintenance services, to appropriate City staff. This will entail proposed staffing changes outlined in the staff report that are subject to City Administrator and/or City Council approval and authorization, and/or meet and confer requirements with labor representatives; and (4) Authorize the Commission Director to negotiate a new contract with Solari Enterprises, Inc. for consulting and advisory services, on an as-needed, task-specific or project-specific basis, for a term not to exceed two years, at a cost not to exceed $10,000 per year. If authorized, consistent with Vernon Municipal Code Vernon Housing Commission Meeting Minutes April 9, 2014 Page 4 of 14 Section 2.126(c), staff intends to seek City Council approval for said contract. Legal Counsel Stuart Leviton reported on Staff’s recommendations. Staff recognizes the value in having Solari Enterprises Inc.’s (“Solari”) expertise and availability as a neutral third party and therefore is proposing to negotiate a new contract for consulting and advisory services, on an as- needed basis. Leviton explained that the City is in a different state than it was prior to the reforms. Whereas before, there was a need for a third party property manager (“third party”), the Commission has since addressed many of the original concerns through the approval of various procedures and the implementation of the lottery system to fill vacant units. Leviton reported on the results of the survey sent to the residents regarding Solari’s performance. Of the 26 units, only 11 responded. Those that did respond had service complaints. Additionally, staff has heard some informal complaints. Leviton explained that part of the issue is tenant expectations. To clarify, he advised that the current process is guided by industry standards and best practices; historically, responses to maintenance calls have been immediate, but best practice dictates that a 24-hour response is appropriate. It will take time to manage expectations regardless of who is performing the duties. Staff believes it can perform the duties as effectively and efficiently as a third party. Leviton reported that City staff is involved in all expenditure of funds coordinated through Solari. Under staff’s aforementioned proposal to resume the day-to-day management duties, the policies and procedures established by the Commission will remain unchanged, and only a change in the staffing is recommended. It was concluded that the City could perform these functions more effectively and efficiently in-house using best practices and implementing the procedures established by the Commission without any potential back-sliding as a result of the third party involvement with these tasks. Leviton explained that the Community Services and Water Department would undertake the repairs and maintenance component. The Department of Finance would conduct the day-to- day management and lease-up procedures. Although additional Vernon Housing Commission Meeting Minutes April 9, 2014 Page 5 of 14 City staff may be necessary, the cost is anticipated to be no more than the current cost for a third party property management firm. Leviton explained that staff did not anticipate the authority restrictions and inefficiencies experienced with Solari. However, Solari does offer expertise that staff is proposing to utilize as needed and when it is appropriate. By adjusting this balance, it will provide for more efficient management of the housing units without the concerns and challenges of the past. Chairperson Hughes noted that there are concerns with the timely response to service calls and inquired who the contact at the City would be. In response, Finance Director William Fox advised that for the administrative portion, there will be a point of contact; emergency contact information will be provided for afterhours. The important thing will be to provide service in a timely manner. A letter to the residents will include all the contact information; additionally, the information will be available on the City’s website. Leviton clarified that part-time personnel is proposed in order to coordinate activities and be available to respond to the residents. The contact will be available 24/7 for emergency situations, but in managing expectations, a 24-hour response time is best practice for non-emergencies. Fox reported that a call log system will be implemented to track all the incidents, including the nature of the call and resolution. The information will be made available to the Commission. Commissioner Haskell inquired why this service could not be provided by Solari. In response, Fox advised that there is no reason why it could not; however, Solari has not implemented this process. Fox reported on his experience in property management. He believes that he could perform the tasks more efficiently and control the costs. He noted that management cannot be separated from the maintenance component as it creates inefficiencies. Leviton explained the restriction on providing third parties spending authority. As a result, performance is affected as it creates delays. Vernon Housing Commission Meeting Minutes April 9, 2014 Page 6 of 14 Commissioner Ybarra questioned why there could not be a separation of management from maintenance. She recalled the amendment to the Solari agreement to address this specific component. In response, Leviton explained that Solari can provide the different maintenance services, but ultimately the City’s authorization is required. When outsourced by Solari, the process can be further delayed. Leviton advised that the Commission can deviate from staff’s proposal and try different alternatives. For example, a fee schedule for various services such as background check can be developed and contracted with Solari. Commission Director Mark Whitworth noted that Fox has experience with property management; additionally, he has heard complaints from residents who would much rather pay their bills and rent at City Hall. Whitworth advised that he previously instructed staff and legal counsel to find a potential solution for these deficiencies. Commissioner Gustafson sought data and information on the total cost for Solari services. He explained his concern and desire to understand the costs such as expenses to date, and forecasted costs under the proposed. He requested a comparison of the two in order to understand the fiscal impact. He does not want to add costs to the City if it is not necessary. Commissioner Haskell opined that it is more complex than costs. For example, the Commission heard a resident’s concerns during public comment. It is the appearance of the recommendation that it is a step backwards. Appearance is everything. Haskell advised that all concerns could be resolved with procedural reorganization with Solari. To illustrate, he advised that the Public Work’s Department could still continue to perform the maintenance work; however, Solari can log the calls and pass on the information. The report indicated that there was much objection to Solari, but there is always a rough start when implementing a new process. Staff and the Commission acknowledged that the original Solari contract was not perfect and that it would need to be revisited. He opined that the recommendation is premature. Solari or any other third party can easily pay for themselves. Haskell does not want to see the core responsibilities of the process revert back to the City. Vernon Housing Commission Meeting Minutes April 9, 2014 Page 7 of 14 Leviton reported that staff spent a substantial amount of time discussing the issue of appearance. If the sole reason for a third party is appearance, then that is not a sufficient reason, as the authority over the housing units is not with the City but with the Commission. Access to City housing, for example, is controlled by the random lottery selection and market rental rates have been established by the Commission. Leviton reported on deficiencies, such as the need for City staff to edit communications issued by Solari to the residents. Although Solari has made progress, on the day-to-day tasks, the value of the third party is not as significant as it once was. If there are real issues, the Commission can address these and ensure that back-sliding does not occur. Commissioner Haskell reasoned that although the Commission has the responsibility, it does not have the resources to oversee the execution. The Commission has no basis to discover any wrong doings. He would prefer to see a third party executing policy and the City overseeing that it is done properly. He argued that all the issues can be resolved through procedure. Leviton advised that under a new contract Solari can still perform the background and credit checks and lease-up agreements if the Commission so desires. Commissioner Haskell advised that he would prefer for Solari to handle everything as they should improve with time. Commissioner Garcia noted that third parties do not have authority. Before Solari, everything was going through Assistant to the City Administrator Kristen Enomoto, and it was bottlenecking. Now, staff is proposing that it be managed by the Department of Finance. Solari would still be providing their expertise. He opined that the City could be more effective and efficient in the process. Vice Chairperson McCormick is in support of staff’s recommendations. He opined that Fox has the expertise and experience to manage the housing stock. He advised that the experience with Solari has not been good. He recommends that Solari be contracted to provide specific services such as background checks and other various tasks. Commissioner Ybarra inquired on the time Solari spends managing lease-ups, rent and finding new tenants. Once all the units Vernon Housing Commission Meeting Minutes April 9, 2014 Page 8 of 14 have been filled, she questioned whether a part-time employee, working 20 hours a week, would be necessary. In response, Fox reported that the time varies from month to month depending on the issues. The Public Housing Property Coordinator would also be required to perform light maintenance work. He argued that the management and maintenance components cannot be separated; the new hire would need to be able to assess a problem and repair it or coordinate with someone that can. Fox advised that the Commission has established the framework through its adoption of policies and procedures. Now it needs to be executed. He believes the City can do this in-house quickly and efficiently. This will allow the City to see some cost savings. Fox reported that he volunteered to take on the responsibility because he believes he can make it better. He encouraged the Commission to allow staff the opportunity and if they are not happy with the results, changes can be made. Commissioner Ybarra inquired on the proposed two (2) part-time City positions. In response, Fox explained that the first is the Public Housing Property Coordinator which will be under his supervision in the Finance Department. The second will be in the Community Services and Water Department to address some of the housing maintenance needs. In further response to Commissioner Ybarra, Director of Community Services and Water Kevin Wilson advised that the proposed part-time employee in his department will assist staff in performing the maintenance work. The proposed part-time Public Housing Property Coordinator will conduct the initial evaluation and perform minor maintenance work. Wilson recalled that in review of invoices for certain maintenance services, he noted that City staff could perform the service at a lower rate and with a quicker response. Because the maintenance calls were first vetted through Solari, there was a delay in service, as they first evaluated the problem, obtained the bid, and then submitted it to the City for review and approval. In response to Commissioner Gustafson’s request for a total cost comparison, Fox explained that it will be difficult to provide a total cost comparison as some of the costs are being absorbed by existing staff who will merely be taking on additional duties, such as billing and rent collection. He noted that the recommendation to hire part-time employees is a low-cost Vernon Housing Commission Meeting Minutes April 9, 2014 Page 9 of 14 alternative. This will allow for a more competitive rate against contractors if the service is conducted in-house. The ultimate goal is to be responsive to the tenants. When delayed, small issues can become big problems. Commissioner Haskell questioned why concerns could not be resolved by implementing procedures with Solari or another third-party. In response, Fox reported that the survey results indicate a high level of dissatisfaction with Solari. Chairperson Hughes emphasized that the concern is the appearance of the proposed. Hughes reasoned that under the third party, if there is an error, it is the third party’s competence that is questioned. However, under the proposed in-house management, if there is an issue, then someone could accuse the City of favoritism or malicious intent. Commissioner Gustafson agreed. No one is questioning the City’s ability to perform the functions. It is the misperception that could potentially be created that is concerning, as they are not just tenants they are voters. Leviton explained that Solari did not take any action without the City’s approval. If there is an accountability issue, and the City is performing the duties, there is no barrier; it is known who is responsible. Leviton understands the Commission’s concerns on appearance and perception, but reasoned that a third party is not the most efficient solution. The Commission’s concerns can be addressed. A year ago, staff advocated for a third party because it was thought to be effective and in agreement with the reforms. At that time, the Commission was resistant to hiring a third party. Since then, staff and the Commission have essentially changed positions. Staff’s position has changed because the need for a third party has changed. Staff could continue to work with Solari on specific functions. It would be appropriate to revisit the Solari agreement in June with a more comprehensive plan. Commissioner Gustafson advised that if Solari is the issue, then the Commission could look at other third parties, and not just rely on Solari. Vernon Housing Commission Meeting Minutes April 9, 2014 Page 10 of 14 In response Leviton explained that it was understood that this would be a transitional period. Solari is not the problem; they are an appropriate vendor and do have expertise. Without the need for a new request for proposals, staff is recommending to continue contracting services with Solari, but as a consultant. In response to Commissioner Ybarra’s inquiry on whether the management and maintenance components can be separated, Leviton explained that they could, but as Fox noted, it is inefficient. The work was delegated to a third party and yet staff was still very involved. Commissioner Ybarra sought clarification on staff’s involvement. To explain, Leviton reported that every communication issued by Solari was reviewed by staff, and changes were made to the tone and style. Vernon has a unique housing stock; it has residents that require a more personal approach. The end product took a fair amount of work. It is not Solari’s fault as they did not know. Since much of the initial work has been completed, Leviton anticipates that other than the occasional background check, there will not be much need for a third party. Vice Chairperson McCormick reasoned that a third party would not prevent a disgruntled tenant from going to the media and accusing the City of wrong doing. Leviton explained that it is not an issue of whether Solari did a bad job; it is an issue of managing expectations and sensitivity. It’s about the relationship. Commissioner Gustafson opined that a solution will not be reached this day, there needs to be a solution that all can agree on. Commissioner Haskell inquired whether Solari representatives wished to speak on the matter. Leviton advised that staff did meet with Solari; they are in agreement with staff’s proposals. The new consulting and advisory contract was also discussed. He recommended that the new Solari agreement be proposed at the June 11, 2014, meeting, in order to allow time to explore costs and other items. Vernon Housing Commission Meeting Minutes April 9, 2014 Page 11 of 14 Solari representative Diane Wehmeyer reported that Giana Solari did meet with the City; however, she was not given authority to speak on the issues. Commissioner Garcia reasoned that although the City contracted with Solari, the responsibility was still with the City. Fox’s proposed reporting procedures addresses the accountability and appearance concerns. Commissioner Gustafson clarified that the concern over appearance was the issue of misperception. In response, Fox explained that Vernon is not unlike other Housing Authorities in other jurisdictions which are managed by the city. The difference is that Vernon is a small city. Regardless of the process, the City is still accountable for the results; additionally, as part of the annual financial audit, the City’s financial auditors would review information. To address the appearance concern, Leviton suggested a “hot line,” where issues that have been inappropriately handled can be reported. Commissioner Haskell advised that there would be a lack of oversight, and he is not fond of the idea of the City reporting on itself. In response, Leviton explained that City staff reports on itself all the time. Additionally, Solari is not reporting on City staff. The Commission relies on staff to do their job. Residents can come to the Commission if they feel that they are being treated unfairly. Fox further reported on the hot line suggestion and advised that this was recommended during the financial audit in order to increase accountability. Wehmeyer reported that she has been one of the main contacts during the transition. Solari manages thousands of units; however, its approach is different than that of the City’s. The City has rewritten Solari communications to better suit its residents. In response to Commissioner Garcia, Wehmeyer reported that all repairs have to be approved by the City. She is not aware of any management issues. In response to Vice Chairperson Vernon Housing Commission Meeting Minutes April 9, 2014 Page 12 of 14 McCormick, Wehmeyer advised that to her knowledge, issues at the apartment units were addressed. Vice Chairperson McCormick motioned for the approval of staff’s recommendation with a new Solari agreement to be considered in June incorporating the Commissions’ comments/concerns. It was seconded by Kriste. In response to Vice Chairperson McCormick’s inquiry, Leviton clarified that an extension to the current agreement is not being recommended. Staff would proceed as outlined in the recommendations and propose a new Solari agreement in June. Discussions with Solari need to occur to develop a fee schedule and establish the consulting services. If staff encounters any concerns, a Special meeting can be called. The Commission voted to approve staff’s recommendations, and to bring back the new Solari Enterprise Inc. agreement at the next Commission meeting for consideration, incorporating the concerns expressed by the Commission. Motion carried, 7-0. Commissioner Garcia inquired whether a subcommittee would assist in the process. In response Leviton, suggested allowing an opportunity for staff to prepare the proposal first. If issues are encountered, staff could advise the Chairperson and a subcommittee could be appointed at that time. ORAL REPORTS & COMMENTS FROM STAFF AND COMMISSION MEMBERS 1. Brief reports, announcements, or directives to staff from the Commissioners and Commission Officers. Chairperson Hughes recalled that during the last meeting, the Commission discussed the budget and potential capital expenditures. Nine units that are in need of remodeling were identified. He requested a capital improvement budget on the remodeling costs to address said units. In response, Assistant to City Administrator Kristen Enomoto reported that this is one of the deliverables in the current Solari agreement; a five-year capital improvement plan is to be provided. The commission can expect the report in June. Finance Director William Fox reported on his intent to conduct an assessment and provide a timeline for repairs using reserve Vernon Housing Commission Meeting Minutes April 9, 2014 Page 13 of 14 funds. As part of the City’s overall budget process, a 5-year capital improvement plan is being developed. Commission Director Mark Whitworth advised that the level of standards needs to be established. Director of Community Services and Water Kevin Wilson further added that he intends to maintain the same level of standards as with previous remodels. It is estimated that the cost for remodeling is approximately $100,000 for each unit. Staff can provide the list of improvements, and scope of work at the next meeting. Wilson noted that the displacement of the tenants will need to be considered as temporary housing would need to be provided. SECOND PUBLIC COMMENT Chairperson Hughes announced that this was the time allotted for public comment and inquired whether anyone in the audience wished to address the Commission. Resident William Davis reported on his experience with Solari, noting one incident where one issue was never addressed, and another call where the City ended up performing the services instead. He advised that Solari failed to return calls or follow up on his issues. Elba Romo, Pro Properties Owner, commented on the recommendations and discussion. Main discussion points revolved around the separation of management and maintenance; as previously explained Pro Properties specializes in niche markets. Services can be customized to administer the management of the units. Romo agrees that 24-hour response to service calls is best practice. Pro Properties is locally located and is attuned to the community. Romo cautioned when hiring the part-time Public Housing Property Coordinator, as it requires a level of expertise. Resident Susie Ybarra reiterated her concerns on transparency. She cautioned against the practice of multiple titles for City employees as the Finance Director will now be undertaking housing elements. Ybarra stated that if the Solari Enterprises Inc. (“Solari”) agreement is not renewed, then the City won. She argued that Vernon Housing Commission Meeting Minutes April 9, 2014 Page 14 of 14 the issues presented can be resolved through procedure and process. Before Solari, rent payments for certain units were behind approximately 6 months. Additionally, the Director of Community Services and Water stated that the turn-over repairs on housing units were last on the department’s priority list. The process with Solari can be improved. The approved recommendation does not change the process, just the people. She questioned why the City did not try working with Solari on the issues, and opined that not enough effort was made. A major concern for the community is that the City adheres to the reforms. With no further business, at 8:03 p.m., it was moved by McCormick and seconded by Haskell to adjourn the meeting. Motion carried, 7-0. ________________________ Michael Hughes Chairperson ATTEST: _________________________ Ana Barcia Deputy Secretary