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HomeMy WebLinkAboutagenda.council.worksession.20080520Citizen's Budget Task Force--Housing Subcommittee Recommendations and Status Report to City Council Outline of Comments May 20, 2008 Our Appreciation for Opportunity to Work on Aspen's Most Complex Issue Team Members: Danny Aronson, Alan Fletcher, Jenny Elliot, Don Davidson, Jim DeFrancia, Marcia Goshorn, Ward Hauenstein, Pete Louras, Howie Mallory, Marilyn Marks, Paul Menter (facilitator), City Resources: Barry Crook, Bentley Henderson, Don Taylor, Chris Everson, Steve Bossart Subject Matter Exoerts: John Olson Builder, Mike Maple, Ironbridge Homes Our Work (February through May, 2008) (March 08) Divided work plan into: Moie Urgent--Issues which could have impact on Bond Important-- not directly Bond related Primary focus since April -Bond related housing issues Housing Subcommittee---Size of need, use of proceeds-- Burlingame focused. Bringing Two Recommendations for Council Consideration 5.20.08 Finance Subcommittee- Undertaking Debt Structure and Repayment Assumptions Review Representatives Present at 5.20 OS Work Session for Informal Dialogue Initial work covered topics of: • Supply/Demand Analysis and Need for Updated Information • Increasing Capacity Utilization Through: o Compliance and Enforcement o Developing Optional Financial Incentives for Freeing Up Existing Units More Recently, Burlingame Costs/Plans Have Been Our Focus Significant Variances from 01 2005 Plan: ($62.5K/unit subsidy estimate 01 2005 vs. $370K+ 02 2008) ($14.7 million subsidy 01 2005 vs. $85.5million 02 2008) (Total cost of $74million 012005, vs. approx. $140 million 02 2008) ( -0- financing cost 01 2005 vs. TBD 02 2008) How Do We Optimize Burlingame 2,3? Two Key Recommendations: -Rec. #2 --Post Completion Financial/Process Review of Burlingame 1 o Learn from Burlingame 1 experience. o Enhance Voter Confidence in Spending/Reporting o Develop Reporting Template for Burlingame 2,3. o How?-Likely use current CPA audit firm with extension of engagement scope. o When?-begin ASAP, with results expected in August, 2008. See attached recommendation #2 for Council Action. Rec #3-Expert Construction/Design Task Force for Burlingame 2,3 Review o Expert Citizen Task Force to undertake short term brainstorming of Burlingame 2,3 opportunities to better leverage limited resources. o Consider technology, modular construction, density, standardization, category mix, business model, floor plans, finishes, etc. o Size the cost/benefits, complexity, and time requirements on each ' option o Output to be array of options with comparison of roughly estimated benefits, costs, complexity and time to implement. (Likely NOT a recommendation. Council would drive further more detailed analysis for any options of interest.) o How?-Group of construction/design experts have volunteered and ready to start work. Cost estimation done at no cost by John Olson Builder Cost Estimation Team. o Who?- Dwayne Romero, John Olson Builder, RA Nelson, Shaw (TBD), Poss (TBD), Semrau, BRIKOR, Jamie Fitzpatrick (VP Corum, Denver based AH developers), Aspen SkiCo-Don Schuster, Marsha Cook, Dirk Gosda--Sunrise, Mike Maple- facilitator. Request City Staff participation from Asset Management and Comm. Dev. o When?-Immediately upon Council approval. Report expected in 30-45 days. Requested Council Action for Recommendation #3: Endorsement of the Expert Task Force Concept and Scope of Work • Authorize Staff Participation • Authorize Sharing of Burlingame Plans and Materials with Team • Recommend Additional Resources if Desired Status of Other Work Plan Items: -Recommendations on Size of Bond Issue- Premature for our comment at this time. Will be primary focus of our work after Burlingame estimates are refined. -Status of Other In-Process Recommendations: (Copies of recommendations as presented to CBTF available if desired.) Recommendations below made to full CBTF on 4.30.08. Further discussion/amendments and voting to follow at 5.28.08 meeting for those indicated before they will be brought to Council. Rec #1 Employer Sponsored Comprehensive Study of Supply/Demand, Goals, Future Needs Status: Approved by CBTF 4.30.08 Dave Ressler (AVH) in discussions with other employers on needs analysis awaiting results of current City/APCHA sponsored work. Rec #4 Specialized Task Force on Housing Incentives Develop potential optional financial incentive programs to allow existing AH residents to downsize, sell, bridge to free-market, etc. Explore providing loan support programs for bridging to free market ownership for AH and free-market renters. Status: Approved by CBTF 4.30. 08 Housing Subcommittee to initiate with help of expert citizens with specialized background. Plan to initiate work soon, and bring Council ideas in late summer. (Has taken secondary priority to Burlingame work.) Rec. #5 Establish Independent Compliance Advisory Board Establish small independent board to advise housing executives on compliance matters, and monitor compliance complaints. Adds additional free resources and builds community confidence in the system. Status: Presented to CBTF 4.30. To be presented for vote 5.28. To be discussed with APCHA board on 6.18. Rec. #6 Establish Outsourced 24 hour Help Line for Compliance Establish outsourced service for accepting anonymous compliance inquires and complaints. Board in Rec. #5 above would help monitor follow up. Status: Presented to CBTF 4.30.08. Present for vote/amendments at 5.28.08 Presenting to APCHA for discussion 6.18.08 Rec. #7 Outsource Eligibility Testing to Specialized Firm Status: Presented to CBTF 4.30.08. Present for vote/amendments at 5.28.08 Discuss with APCHA board 6.18.08 Rec. #8 Legal Review of All Contracts for Maximizing City Rights Status: Presented to CBTF 4.30.08, without vote. Update at 5.28.08 Discuss with APCHA board on 6.18.08. Determine if this is merely reinforcing/supporting present practice or whether additional work recommended. Rec. # 9 Establish Public Policy Review Committee Purpose to advise on major Capital Spending prior to legal commitments Status: Presented to CBTF 4.30.08. Vote/amend on 5.28.08. Rec #10 Update City Procurement/RFPsystern Status: Presented to CBTF 4.30.08. Vote/amend on 5.28.08 Other Topics In Workplan for Future Discussions: -Consideration of various site optioris for AH. -Rental vs. Ownership Housing philosophy and economic Impacts. -Housing Operations Structure and Efficiencies -Category Mix issues in context of future trends -Business model for AH development -Public Private Partnerships in Aspen's affordable housing future -Efficient budgeting practices for AH development -Routine financial reporting processes for AH projects. -Other topics as Council may request. Recommendation # 2 Post-Completion Review of Burlingame Phase 1 Goal: To review Burlingame 1 performance to enhance the cost efficiencies for Burlingame 2 and 3. Recommendation: Immediately engage an independent audit/consulting firm to conduct a performance review of the Burlingame Phase 1 project, rio or to approving Burlingame phases 2 and 3. The purpose of the review would be to determine areas for process improvement, causes for spending variances, and perform a quality evaluation. The independent review report should also include a list of recommendations for improvement. We recommend that this report be made available to Citizens Budget Task Force and the public. The potential scope of the post completion review of Burlingame Phase 1 would be to: - Review the Staff reconciliation of BG Brochure to Burlingame project (costs to date and the projected costs to completion for all phases) for completeness and accuracy, and ensure that the staff reconciliation of costs is accurate in "all material respects" - Conduct a review of controls and policies to show that everything is adequate - Determine areas that could benefit from process improvement efforts (looking at accounting, budgeting and planning processes in the area of project development and project management) Direct staff to either add this cost review to the existing Council Action contract with McMahan & Associates (the City's Requested external auditors) or issue an RFP to seek additional services; AND prepare a supplementary budget amendment to a for such work. /~ d N V N d 'O 1E C 'C m O C N ~y 0 0 = ~ W LL. N O a z w U Q W ~ ~~ ~~ U ~ ~ ~ Z ~ o ~ ~~ W °° a. 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This recommendation is updated by the bullet points for Council in the 5.20.08 Outline.) Reconsider Burlingame 2 and 3 Assumptions Goal: To update Burlingame 2 and 3 development plan to increase cost efficiency using lessons from Burlingame 1 and new technology. Recommendation: It appears that there may be considerable cost efficiencies available to Burlingame 2 and 3, which should be studied prior to committing to a construction plan or contract. We encourage a thorough review of that alternatives including: Consider modular construction reduce number of building designs increase standardization of unit designs increase density to reduce cost per unit reconfigure category and size mix to better match anticipated demand review pricing model for high value units Budgeting and financial control systems to be implemented to monitor and control spending. We encourage a process which will involve developers and construction firms bringing their informal recommendation and expertise to the re-engineering exercise. This should happen prior to a contract being awarded, or bond issue being taken to the public. Next Step: Our subcommittee would like to invite City staff to meet with us and some expert resources (developers, contractors), to have a strategic level discussion of potential costs/benefits of various levels of redesign efforts. We want to better understand the cost saving, increased capacity potential. Background: There appear to have been very significant variances from voter expectations. Reconsidering the design assumptions and financial control and reporting systems seem critical prior to undertaking phase 2 and 3. Moving forward with the previous plan seems likely to result in losing opportunities for savings and housing efficiency. At a time when construction costs and demand for housing greatly outstrip what was assumed for Burlingame in 2004, the plan should be updated with the goal to house more people more efficiently in quality homes. We recognize that potential re-design, including site plan modifications may cause delays in the construction plan. However, we believe that the savings and additional homes provided are may justify the effort and potential delay. We also believe that during the planning process, it allows the city to implement proper control and reporting systems to prepare for a more successful project with Burlingame 2 and 3, as well as future projects. We urge the decision makers to spend some time considering the potential cost of delay against the potential benefits of re-design. We feel that it is important to use the limited resources in very efficient ways.