2
TABLE OF CONTENTS Mayor’s Message
2
Chairman’s Message
3
CEO’S message
4
HACEP Leadership
5
Financial Statements
6-7
Paisano Housing Redevelopment
8
HACEP Acquisition Corporation
9
Community Partners
10
Corporation
11
Providing a Hand Up
12
1
MAYOR’S MESSAGE It has been my privilege to see the Housing Authority of the City of El Paso develop and mature into one of the country’s most innovative and financially strong public housing authorities in the country. Under the guidance of a committed, policy-oriented Board of Commissioners, and the bold leadership of HACEP’s administration and dedicated employees, HACEP has raised the standards of expectation within the affordable housing industry. When we look back 75 years ago to the time when City Council incorporated the Housing Authority of the City of El Paso on February 17, 1938, times were different. El Paso’s population at that time was 89,000 people, World War II was just about to begin, and the country was still recovering from the Great Depression and a severe drought. Fortunately, President Franklin Roosevelt’s New Deal kicked in under the auspices of the Public Works Association and then later with the U.S. Housing Authority. By this time, HACEP was just wrapping up the final touches of the Alamito Community in El Segundo Barrio, the first public housing community in El Paso. Featuring more than 350 units spread over 7 acres, Alamito was the first of what would become dozens of affordable housing communities sprinkled throughout El Paso at a rate that reflected the City’s expansion over the next seven and a half decades. Throughout this time, federal, state, and local regulations changed. Subsequently, the look, amenities, demographics, and funding mechanisms of HACEP’s properties and programs changed. Despite the apparent changes to these outward reflections, what has not changed throughout all of this time is the unwavering commitment of the staff to help others in need. Now the 40,000 children, elderly, disabled, and working-poor who call HACEP home represent 6 percent of the City’s population. Thanks to the HACEP staff and their community partners, formerly homeless veterans, 160 families in all, now have a place to live through the HUD-VASH and Veteran’s Lodge Program. In partnership with the City of El Paso, HACEP constructed 603 new affordable housing units in just the past five years alone through the Alamito, Elvin Estates, Paisano Green, and the soon-to-be constructed Eastside Crossings. Additional HACEP partnerships provide 50 units to domestic farm laborers through the U.S. Department of Agriculture provide and 22 units to chronically homeless disabled civilians with Emergence Health Network. Homeownership among HACEP’s residents continue to increase, educational opportunities for the youth abound, and its $73 million in operating expenses and housing assistance programs play an important role in keeping our local economy strong. Now that HACEP has 75 years under its belt, I am confident that our local housing authority will be successful in its next 75 years to create additional affordable options for our most needy citizens. As El Paso continues a three-year trend as the safest large city in the U.S., we must not lose sight that there are more than 14,000 families on HACEP’s waiting lists patiently waiting for a hand up back to economic self sufficiency. It has been said that the character of a community can best be judged by how it cares for its most vulnerable residents. The City of El Paso reaffirms the value of services provided by HACEP and looks forward to our continuing partnership in making El Paso a place we are all proud to call home. Sincerely,
Oscar Leeser Mayor of the City of El Paso
2
CHAIRMAN’S MESSAGE On February 17, 1938, the City Council of the City of El Paso, together with Mayor M. A. Harlan, held a Council meeting that would ultimately impact the lives of hundreds of thousands of people over the next seven and a half decades. After determining that insanitary and unsafe dwelling accommodations existed, that there was a shortage of safe units affordable to local families with limited incomes, Council unanimously passed the following resolution: A resolution finding and declaring that there exists a need for the Housing Authority of the City of El Paso, Texas, to function.
During this same meeting, Council gave the Mayor of El Paso the authority to appoint the first HACEP Commissioners and to designate the first Chairman. Not wasting a moment’s notice, Mayor Harlan appointed the following community leaders to serve as the first Board of Commissioners for HACEP: Frank B. Fletcher - Chair George Chadeayne George Webber Modesto Gomez Mrs. Otto Nordwald The first Board of Commissioners went right to work and approved the construction of the Alamito Community – the first public housing community in El Paso. Alamito was built in 1941 in south central El Paso on the skirts of El Segundo Barrio, a vibrant, but economically-disadvantaged part of town where many immigrants from Mexico made their start in the United States. With units to support 350 families, Alamito embodied the ideals of President Roosevelt’s New Deal - to create jobs, improve real estate, and help the working-poor get on their feet. Now, 75 years later, Alamito stands today with bright new buildings, energy star homes, and with families of all demographics living near each other. While the look of HACEP’s communities has changed, HACEP’s unwavering commitment to help others in need has not. Day after day, year after year, decade after decade, HACEP continuously fulfills the mandates of its mission thanks to the hard work and dedication of its talented employees. Now, the 40,000 children, elderly, disabled, formerly homeless, and working-poor residents who call HACEP home represent 6 percent of the City’s population. Whether they live in one of our 6,600 public housing units, use one of the 5,600 housing choice vouchers, or live in one of our 1,300 affordable housing units, HACEP has helped hundreds of thousands of people over the past 75 years. Serving on the HACEP Board of Commissioners since 2007 has been one of the most fulfilling experiences of my life. Together with my fellow Commissioners Lynn Coyle, Lupita Licerio, Sue Pratt, and Kevin Quinn, we are honored to follow in the fine footsteps of our past leaders. The accomplishments we’ve achieved and the recognition we’ve received as a consistent high performer, clean financial audits, and timely contractual expenditures make us confident that HACEP will meet the challenges of the future to continue to serve the economically disadvantaged families of El Paso for the next 75 years. Sincerely,
Joe Fernandez Chair of the HACEP Board of Commissioners
3
CEO’S MESSAGE The face of affordable housing in El Paso has changed. Construction of the Paisano Green Community is complete and fully occupied by 73 families of very-low income seniors, some of whom are paying as little as $8 per year on their home energy bills. Our initiative to become a paperless agency continues on track, and our commitment to customer service has reached new levels of improvement. We have certainly come a long way over these past few years and I must commend the very hard working staff, administration, and the Board of Commissioners for their vision, hard work, and unwavering dedication. We take great pride in knowing that the Sun City is again ranked the safest city in the United States for the third year in a row. This three-peat of success is mirrored in a way by HACEP’s success of “three-peating” as a High Performer in the Housing Choice Voucher (Section 8) Program. Despite budget cuts, increased regulations, and pressure to perform, the HCV staff has stepped up once again in a big way to get the job done for a program that supports more than 16,000 low-income El Pasoans. While we’re on the topic of success, the Public Housing Program is also projected to earn High Performance status from HUD for 2012. Meanwhile, HACEP’s finance team has been extra busy ensuring that all records and reporting requirements are complete, accurate, and timely. For their diligent efforts, HACEP received an unqualified audit with no findings for the second consecutive year. This is the highest financial rating a public housing authority can receive, which means that all dollars are being spent in the most efficient and effective manner as possible. The year 2012 was also one of the most challenging years for the public housing industry. HUD recaptured reserves of housing authorities across the nation, including $4 million from HACEP, in an effort to balance its books. The loss of these funds threatens to destabilize the credit ratings of public housing authorities across the country and undermines our ability to strategically plan for the future. That future is certain to include additional cuts to domestic “discretionary” and “entitlement” programs. That future is also certain to see the closure of additional public housing authorities who cannot afford to stay in the red. As the 20th largest housing authority in the United States, and one of the most fiscally sound, HACEP will withstand the challenges of the future, just as we have done for the past 75 years. Like the leaders of the past who first set HACEP’s history in motion back on February 17, 1938, the leaders of today will continue to ensure we fulfill the mandates of our mission to provide safe, decent, and affordable housing to those in our society who need it the most. Our promise to you is that we streamline our operations by eliminating the waste of bureaucratic and often self-imposed processes, employ systematic preventative maintenance on our properties, triple our focus on customer service, and strengthen our relationships with our community partners. This is a new age for HACEP as we transform ourselves into one of the country’s leading public housing authorities. These accomplishments reflect the tremendous work of all HACEP employees and the cooperation and support of our residents to keep our units maintained, invest our funds in a timely manner, lease up our units and vouchers to the greatest degree possible, and keep our operations fiscally sound. As you glance through this anniversary report, I hope that you gain renewed insight into an organization that has been and will always be committed to its mission by serving other in need with compassion while taking great pride in our recognition as one of the largest and highest performing public housing authorities in the United States. Sincerely,
Gerald W. Cichon Chief Executive Officer
4
HACEP’S LEADERSHIP Board of Commissioners
Left to right: Sue Pratt, Vice Chair • Lynn Coyle • Lupita Licerio • Kevin Quinn
Executive Staff
Top to bottom, left to right: •Satish Bhaskar, Chief Financial Officer • Stan Waterhouse, Chief Operating Officer • William Zeigler, Chief Human Resources Officer • Yolanda Dion, Director of Budget & Grant Compliance • Shane Griffith, Public Information & Government Relations Officer • Hector Montoya, Director of Finance • Gary Knudsen, Director of Information Technology • Karen McCluskey, Director of Procurement & Contract Compliance • Juan Olvera, Director of Development & Capital Projects • Lorena Rivera, Director of the Housing Choice Voucher Program • Michael Spurlock, Corporate Attorney • Roman Velasquez, Director of Public Housing
55
FINANCIAL STATEMENTS Statements of Revenue, Expenses and Changes in Net Assets Year Ended June 30,
(in thousands) 2012
2011
2010
$17,800 50,375 8,896
$15,754 59,096 4,681
$15,662 58,531 1,412
77,071
79,531
75,605
Operating Expenses Depreciation Expense Housing Assistance Payments
42,422 7,961 30,767
38,388 7,203 28,244
40,708 7,614 27,072
TOTAL EXPENSES
81,150
73,835
75,394
Operating Profit (Loss)
(4,079)
5,696
211
220
(1,886)
$7,890
Net Income (Loss) before Transfers, Adjustments and Capital Grants
(3,859)
3,810
8,101
Transfers and Adjustments Capital Grants
11,871
(2,535) 20,993
1,709 9,314
Increase in Net Assets Net Assets, Beginning of Year
8,012 199,106
22,268 176,838
19,124 157,714
$207,118
$199,106
$176,838
OPERATING REVENUE Dwelling Rental Federal, State & Local Grants Other Revenues TOTAL OPERATING REVENUE EXPENSES
NON-OPERATING REVENUE (EXPENSES), NET
NET ASSETS, END OF YEAR
6
Statements of Cash Flows Year Ended June 30,
(in thousands) 2012
2011
2010
Cash Flows Provided by Operating Activities
$3,716
$27,832
$13,528
Cash Flows used by Capital & Related Financing Activities
(3,588)
(6,068)
(5,128)
160
(2,640)
482
288
19,124
8,882
65,241
46,117
37,235
$65,529
$65,241
$46,117
$31,151 302,251 13,425 16,823
$31,139 273,000 12,623 30,729
$28,676 267,551 11,293 15.407
363,650
347,491
322,927
(237,546)
(229,730)
(222,612)
$126,104
$117,761
$100,315
Cash Flows and Cash Equivalent, Beginning of Year Net Increase in Cash Cash and Cash Equivalent, Beginning of Year CASH AND CASH EQUIVALENT, END OF YEAR
Capital Assets Land Building and Improvement Furniture and Equipment Construction in Progress TOTAL CAPITAL ASSETS Less Accumulated Depreciation CAPITAL ASSETS, NET
7
PAISANO HOUSING REDEVELOPMENT CORPORATION Paisano Housing Redevelopment Corporation (PHRC), is a non-profit 501 (C)(3) subsidiary of HACEP. Alamito Terrace In 2007, PHRC developed Alamito Terrace through Alamito Terrace GP, LLC. PHRC owns 100% as a general partner of the 76 units in a Low-Income Housing Tax Credit real estate partnership designated for elderly residents. PHRC was also the developer of this property which was completed in 2010. Alamito Gardens In 2007, the PHRC development Alamito Terrace created Alamito Gardens GP, LLC. PHRC owns 100 of this property in order to serve a General Partner for future construction project of 142 units in a Low-Income Housing Tax Credit real estate partnership designated for elderly residents. PHRC was also the developer of this property which was completed in 2011. Elvin Estates In 2012, PHRC development Alamito Terrace obtained a grant from the City of El Paso for the construction of a 15-unit elderly apartment community. Construction of this project was finished in March 2013. Kenworthy In 2011, PHRC acquired 47 acres of land on the Eastside of El Paso. Site improvement work is currently underway. This site will be utilized for the development of a mixed-income, mixed-finance community in the years to come. Eastside Crossings In 2012, the PHRC development Alamito Terrace created Eastside Crossings GP, LLC. PHRC owns 100 of this property in order to serve a General Partner for construction project of 188 units in a LowIncome Housing Tax Credit real estate partnership. PHRC is also the developer of this property, which will be completed in 2013. Arrowhead Place, LP In late 2012, PHRC acquired the General Partnership of this 24 unit complex. As General Partner, PHRC will provide oversight of the financial and operational compliance. Geronimo Trail Townhomes, LP In late 2012, PHRC acquired the General Partnership of this 22-unit community. As General Partner, PHRC will provide oversight of the financial and operational compliance. Western Sunshine, LP In late 2012, PHRC acquired the General Partnership of this 36-unit community. As General Partner, PHRC will provide oversight of the financial and operational compliance. Bienvivir Parkside Seniors Bienvivir is a 56-unit affordable housing community of which PHRC maintains an investment in this limited partnership. 8
HACEP ACQUISITION CORPORATION (HAC) The HACEP Acquisition Corporation, doing business as Housing Acquisition Corporation, or simply HAC, is a whollyowned subsidiary of the Housing Authority of the City of El Paso. HAC manages 1,288 Low Income Housing Tax Credit (LIHTC) and Non Subsidized (or Non-Annual Contributions Contract Non-ACC) properties. Both programs provide affordable housing to tenants who can afford to pay rents at 60 percent of the area median income. s a dollar-for-dollar tax credit in the United States for affordable housing investments. It was created under the Tax Reform Act of 1986 (TRA86) that gives incentives for the utilization of private equity in the development of affordable housing aimed at low-income Americans. LIHTC accounts for the majority - approximately 90 percent - of all affordable rental housing created in the United States today. The primary goal of HAC is to provide property management services to owned and non-owned affordable and other multi-family properties. HAC is managed by a professional team of 34 employees who specialize in the property management, maintenance, and finance fields.
HAC provides property management services to the following non-owned tax credit and market rate properties, each of which has a property of the same name:
HAC currently invests through a limited partnership with the following entities, each of which has a property of the same name:
ENTITY UNITS NAME UNITS Western Burgundy Ltd. 64 Saul Kleinfeld Ltd. 30 Western Carolina Ltd. 56 Western Pellicano Ltd. 30 Western Crosby Ltd. 56 Western Pebble Hills Ltd. 30 Western Gallagher Ltd. 49 Meadowbrook Townhomes Ltd. 25 Western Redd Road Ltd. 30 Bienvivir Parkside Ltd. 56 Western Yarbrough Ltd. 32 Cedar Oaks Ltd. 160 Lee Seniors Ltd. 19 North Mountain Ltd. 200 Western Eastside Seniors Ltd. 19 TOTAL: 531 Villa Alegre 369 Lomaland Townhomes 14 St. Johns 12 Las Casitas 5 Orchard 4 Desert Sun 28 TOTAL: 757
9
COMMUNITY PARTNERS AVANCE – El Paso Border Network for Human Rights Boys & Girls Clubs of El Paso Cancer and Chronic Disease Consortium Celebrando La Recuperacion Centro de Salud Familiar La Fe Christian Joy Center Academy City of El Paso Department of Community and Human Development City of El Paso Department of Public Health City of El Paso Parks & Recreation County of El Paso Elections Department Doll Ladies El Paso Affordable Housing CUSO El Paso Collaborative for Community and Economic Development El Paso Community College El Paso County Juvenile Probation Department El Paso First Health Plans El Paso Police Department Girl Scouts of the Desert Southwest Greater El Paso Association of Realtors (GEPAR) Home Instruction Program for Preschool Youth (HIPPY) El Paso Houchen Community Center NAMI El Paso Project ARRIBA Project Bravo Project VIDA Health Center Region 19 Migrant Education Program Robles and Associates Rio Grande Council of Governments - Area Agency on Aging Texas AgriLife Extension Service Texas Department of Aging and Disability Services Texas Tech University Health Sciences Center School University of Texas at El Paso VOLAR Center for Independent Living Workforce Solutions Upper Rio Grande Ysleta Independent School District YWCA - El Paso del Norte Region
10
11