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Housing & Redevelopment Authority - HRA-Packet-08-20-2024 Supporting Documents - 08/20/2024
OTTER TAIL COUNTY – MINNESOTA HOUSING AND REDEVELOPMENT AUTHORITY AGENDA Government Services Center, Otter Tail Lake Room 515 West Fir Avenue, Fergus Falls, MN August 20, 2024 | 11:45am 1.Call Meeting to Order and Roll Call – Chairperson 2.Approval of Agenda 3.Consent Agenda A.Regular Board Meeting Minutes, July 16, 2024 B.HRA-CDA Joint Work Session Notes, July 16, 2024 C.Housing Choice Voucher Rental Assistance Program Report July 2024 D.Community Housing Investment Programs Report July 2024 E.Public Housing Program Report July 2024 F.Check Report July 2024 Reports 4.Public Hearing A.Public Housing Agency Five-Year and Annual Plans, the Housing Choice Voucher Administrative Plan, The Public Housing Admissions and Occupancy Plan and the Public Housing 5 Year Capital Fund Plan 5.New Business A.2023 Audited Financial StatementsB.Resolution No. 286 Approving the Agency Five Year Plan, 2025 Annual Plan, the Capital Fund Five Year Action Plan and definition of Significant Amendment C.Resolution No. 287 Approving Administrative Plan for HCV Program andAdmissions and Continued Occupancy Plan for Public Housing ProgramD.Resolution No. 288 Approving Creation of Finding Home, LLCE.Resolution No. 289 Approving Special Benefit Levy for Taxes Payable 2025 F.Cancellation of Ottertail Purchase Agreement G.Authorization to Apply for Tax Credit General Allocation Pool for NYMH.Resolution No. 290 Approving Realtor for Pelican Rapids Lot 6.Discussion 7.Executive Director Report 8.General Discussion – Topics by Commissioners 9. Adjourn 1/110 2/110 The Otter Tail County HRA Board of Commissioners Met for a regular meeting on July 16, 2024 at 11:45am At the Otter Tail County Government Services Center 515 W. Fir Ave., Fergus Falls, MN Board Members Present: Wayne Johnson, Chairperson Jeff Ackerson Kurt Mortenson Leland Rogness, Vice Chairperson Absent: Betty Murphy Others Present: Amy Baldwin, OTC HRA Executive Director Tanya Westra, OTC HRA Housing Program Supervisor Julie Bakken, OTC HRA Accounting Specialist Mitch Harry, OTC HRA Project Manager Paula Grunewald, OTC HRA Administrative Assistant Via Teams: Sarah Schake, CDA Project Manager 1. CALL TO ORDER Chairperson Johnson called the meeting to order at 11:46 am. 2. APPROVAL OF AGENDA Motion made by Lee Rogness, second by Kurt Mortenson to approve the July 16, 2024 Agenda without changes. Motion passed unanimously. 3. APPROVAL OF CONSENT AGENDA ITEMS Motion made by Kurt Mortenson, second by Jeff Ackerson to approve the Consent Agenda. No additional discussion Motion passed unanimously. 4. NEW BUSINESS None 5. DISCUSSION A. North Fields of Dalton Senior Housing Amy Baldwin, Otter Tail County HRA Executive Director, reported that a groundbreaking event would be happening on Friday, July 26 at 9:00am in Dalton, MN. Barbara Dacy, former OTC HRA Director, and John Lindquist and Bob Maki, former HRA Commissioners, were invited. She reported that the property transfer has been completed and that Mitch Harry, HRA Project Manager, has been providing progress updates to HRA staff, Commissioners and to the City of Dalton. She reported that production on the modular units is to start this week and there has been two change orders: 1) The Sentence to Serve Program was not able to do the final clearing of stumps. Leitch Excavating will do the final clearing (not to exceed $20,000) and grinding will happened in-house 3/110 OTTERTAIL COUNTY -MINNESOTA HOUSING AND REDEVELOPMENT AUTHORITY Government Services Center 500 West Fir Avenue Fergus Falls, MN 56537 218-998-8730 ® OTTER TAIL COUNTY IS AN EQUAL OPPORTUNITY EMPLOYER @ ottertailcounty.gov LIVE YOUR best life HERE. Pg. 2 with an estimated cost of $2,000 for the rental. 2) We will be moving the crawl space access to the garage for easy maintenance with our ownership. The total cost should be $7,000 for all units. 6. EXECUTIVE DIRECTOR REPORT Amy Baldwin, Otter Tail County HRA Executive Director reported: A Housing Assistance Coordinator Position has been posted. A draft report for the 2023 audit is being prepared. The Finance Committee is to meet in early August and will be comprised of HRA Commissioners Lee Rogness and Wayne Johnson with Kurt Mortenson as an alternate. This is the last year of the contract with Brady Martz. Contract terms give the HRA an option to extend the existing agreement for an additional two years. No action items this month. Follow up on a real estate transaction that is on track to be resolved without legal action. 7. GENERAL DISCUSSION – TOPICS BY COMMISSIONERS Commissioners questioned what the next projects could be. Amy Baldwin, Otter Tail County HRA Director responded that the purchase agreement for property in New York Mills expires at the end of this year. An application was submitted for Congressionally Directed Spending, to help fund two affordable senior triplexes in New York Mills, but we will not find out if it was funded for several months. The County’s 2024 Statewide Affordable Housing Aid Allocation $143,671 could be a source of funding for this project. Other opportunities were discussed. Staff will continue to monitor both opportunities as well as potential funding sources that align with available opportunities. Amy Baldwin, Otter Tail County HRA Director, noted that next month the HRA would be holding the Public Hearing on the Administration Plan and Capital Plan. 8. ADJOURNMENT At 12:31 pm a motion was unanimously carried to adjourn the meeting. ________________________________________________________ ___________________ Secretary/Clerk Date 4/110 NOTES OF THE JOINT WORK SESSION BETWEEN HOUSING AND REDEVELOPMENT AUTHORITY AND COMMUNITY DEVELOPMENT AGENCY OF OTTER TAIL COUNTY Government Services Center, County Board Room 515 W Fir Ave, Fergus Falls MN 56537 July 16, 2024 Call to Order The joint meeting convened at 12:45 p.m., Tuesday, July 16, 2024. Attendance was as follows: CDA HRA Present in person Present via Tech Absent Board Members: Jeff Ackerson CDA/HRA x Dena Johnson CDA @ 1:45 Until 1:45 Wayne Johnson HRA x Val Martin CDA x Kurt Mortenson CDA/HRA x Betty Murphy HRA x Dave Ripley CDA x Betsy Roder CDA x Leland Rogness CDA/HRA x Heidi Samuelson CDA x Dave Schornack CDA x Staff: Amy Baldwin, HRA Executive Director/CDA Director x Tanya Westra, HRA Housing Program Supervisor x Sarah Schake, CDA Project Manager x Mitch Harry, HRA Project Manager x Erik Osberg, Rural Initiative Coordinator x Julie Bakken, HRA Accounting Specialist x Paula Grunewald, HRA Adm. Assistant x Discussion Items Amy Baldwin, Community Development Director (CDA) and Housing and Redevelopment (HRA) Director, discussion items included: 1) Core mission areas for each agency 2) Active housing programs and projects 3) 2025 budget proposal 4) Board discussion CDA Core Mission Areas: Expand Housing Opportunities with Big Build, Community Assistance for new Development – Battle Lake, Pelican Rapids, etc. Promote Business Development with OTC Works, Business Development Strategy Foster Coordination of Public & Private Resources with Empowered Work Program, Childcare Project Manager Support, Broadband Support And Digital Programming HRA Core Mission Areas: Affordable Housing Development & Property Management with Affordable Senior Housing in Dalton 5/110 OTTERTAIL COUNTY· MINNESOTA Housing Stabilization with Housing Choice Voucher Program, Scattered Sites Public Housing Program, Emergency Housing Repair Program and Rental Rehabilitation Loan Program Community Investment with Tax Forfeit Property Redevelopment, HRA Rehabilitation Program including Small Cities Development Programs from DEED, Down Payment Assistance and Community Assistance for New Development Amy Baldwin, CDA and HRA Director, discussed: “What are we missing?” Tax forfeiture opportunities were discussed. The current board structure for the CDA is 2 elected officials and 7 community members for a total of 9 members and for HRA 3 elected officials, 1 CDA and 1 community member for a total of 5 members. (2 elected officials are required by State Statue for the CDA board) The 2024 Organizational Chart noting that Barbara Dacy, former HRA Executive Director and Kevin Currie, Construction Consultant, were no longer included and the addition of a second Housing Assistance Coordinator position currently being hired for. She discussed the four active housing projects we are involved in: Dalton North Fields Senior Housing, Pelican Rapids Tax Forfeit Lot, Pelican Rapids Pinewood Estates and The Lincoln in Battle Lake. HRA also owns vacant lots in Vergas. Available local housing programs were reviewed. The Builders and Landlord Programs include Multi-Family New Construction and Rental Rehab Loans. The Homebuyers & Homeowner Programs include Down Payment Assistant, Residential Owner Occupied Loan, Emergency Housing Repair and Property Tax Rebate. The Tax Rebate Program was discussed. What’s on the horizon: Create New Homes – New York Mills and tax forfeit lots in Vergas – 3 are HRA owned and 8 are owned by the City of Vergas. Also Keeping People in their homes – HRA rehab programs, Small Cities Development Program (DEED) Discussion of Down Payment Assistance Program and how to supplement with a partnership between County, City, Utilities, etc. to create a relocation package as this would benefit the community by having people move to our county Discussion on the forfeited lots. Usually these are blighted and have limited value as not being the most desirable lots. Staff will continue to monitor and leverage opportunities as they come forward. The 2025 budget – Amy Baldwin asked if we should maintain the same percentage of the max levy as in the past. Board members expressed that they would like to put more towards the CDA Special Levy budget allocation, to give more flexibility in each agency. It was advised to go 50/50 split of market value increase and remain at the 76% of the maximum levy. What are we doing well? o Commissioners responded that HRA and CDA are doing a great job. Making the communities aware and there’s a good knowledge base. o The commissioners appreciated the updates and letting the board know what’s going on. o The CDA has a positive impact. What are the unmet needs/opportunities? o There are huge opportunities in the senior area in building aging communities. Are they in the right housing option? And if not, create an option for them so that others can move into the communities. Meeting was adjourned 2:10pm 6/110 7/31/2024 8/1/2024 Difference 59,718.52$ 55,795.52$ -$3,923.00 110 110 0 *HAP Transactions 54,698.00$ 53,439.00$ *Utility Reimbursements 1,293.00$ 1,118.00$ *HAP Adjustment 2,489.00$ *Utility Adjustment *Portability Tranactions (Out) 1,200.00$ 1,200.00$ *Portablilty Admin Fee (Paid)38.52$ 38.52$ 7/31 8/1 New Admissions 1 End Participation 2 Shop Mode/ARS 0 Ports-Out Paid 0 1 Ports Out Pending 0 2 Ports In Pending 0 1 7/31/2024 Waiting List/To Date 56 Applications in Progress 0 Vouchers Issued 2 Vouchers "On the Strreet"0 ELI%79% Monthly Trend Report*Units Available Units Leased Leasing %Budget %Per Unit $ February 2024 144 108 72.2% 118.7% 510.61$ March 2024 144 109 73.4% 120.8% 505.69$ April 2024 144 112 74.5% 128.7% 509.88$ May 2024 144 111 75.1% 127.8% 505.73$ June 2024 144 111 75.6% 128.6% 490.83$ July 2024 144 110 75.2% 129.4% 542.89$ *Leasing % and Budget % based on cumulative activity during calendar year Per Unit $ is rolling three month average *Portability Utility Reimbursement *Hold Landlord Transaction OTC Section 8 Housing Choice Voucher Rental Assistance Program Summary of Actions July 31, 2024 Program Total Financial Transaction Paid This Month* UML (Unit Months Leased or # of Households) 7/110 &, OTTE:R 'TAIL ~, COUNTY-MINNESOTA 218-998-8730 ® HOUSINIG AND REDEVIELOPMENT AUTHO,RITY OTTER TAIL COUNTY IS AN EQUAL OPPORTUNITY EMPLOYER Go,v,etn mein,t Services Center 500 West Fir Avenue Fergus Falls, MN 56537 @ ottertailcounty.gov COMMUNITY HOUSING INVESTMENT PROGRAMS (CHIP) BOARD REPORT July 2024 Program Applications Approved Applications Denied Inspections Conducted Proceed to Work Issued Projects Complete Goal Program End Date Emergency Home Repair Program (EHRP) 1 1 1 On-Going Down Payment Assistance (DPA) 1 1 On-Going SCDP: Reuse On-Going Rent Rehab – RR On-Going Affordable Rental Unit Construction - ARUC On-Going BATTLE LAKE 09/30/2024 SCDP: Commercial 6 2 2 1 8 SCDP: Homeowner 12 7 10 7 6 20 Residential Owner-Occupied Leverage (ROHL) 4 4 3 UNDERWOOD 09/30/2024 SCDP: Homeowner 12 4 12 9 8 17 Residential Owner-Occupied Leverage (ROHL) 5 5 4 8/110 218-998-8730 @ HOUSING AND REDEVELOPMENT AUTHORITY OTTER TAIL COUNTY IS AN EQUAL OPPORTUNITY EMPLOYER Government Services Center 500 West Fir Avenue Fergus Falls, MN 56537 (!) EOU/\L HOUSING OPPORTUNITY @ ottertailcounty.gov PUBLIC HOUSING BOARD REPORT July 2024 Rents Payable $3,800 Rents Collected $3,800 Total Negative Rents $524 Negative Rents Paid $0 Late Fees Charged $111 Late Fees Collected $111 Number of Units Paying Flat/Ceiling Rent 0 Fiscal Year ELI 100% WAITING LIST as of 07/09/2024 Community 2 Bedroom 3 Bedroom 4 Bedroom Pelican Rapids 7 3 N/A Underwood 5 2 1 Henning 3 2 1 New York Mills 2 2 2 VACANCIES UNIT VACATED LEASE SIGNED 4 Bdrm – New York Mills 01/31/2024 Decks have been replaced. Flooring install occurring now. Cabinet and baseboard installation will start in a few weeks. HUD approved Mod Vacancy status is in effect until 09/30/2024. 9/110 OTTERTAIL COUNTY -MINNESOTA 218-998-8730 ® HOUSING AND REDEVELOPMENT AUTHORITY OTTER TAIL COUNTY IS AN EQUAL OPPORTUNITY EMPLOYER Government Services Center 500 West Fir Avenue Fergus Falls, MN 56537 (!) EOUl\l HOUSING OPPORTUNITY @ ottertailcounty.gov Doc Num Voided Type Document Recipient 101 No DD Barbara Dacy LLC 102 No DD Jeff A Ackerson 103 No DD Kurt A. Mortenson 104 No DD Wayne Johnson 1474 No VD Keith Williams LLC 1478 No CHK Keith Williams LLC 1479 No CHK Language Line Services Inc 1480 No CHK Nan McKay & Associates Inc 1481 No CHK Otter Tail County Treasurer 1482 No CHK Otter Tail County Treasurer 1483 No CHK Paula Grunewald 1484 No CHK First National Bank-Henning 1485 No CHK Leitch Excavating 1486 No CHK MinnKota EnviroServices Inc 1487 No CHK Nan McKay & Associates Inc 1488 No CHK Novelty Construction LLC 1489 No CHK Sign Guys LLC 1490 No CHK State Farm Insurance Companies Payments $107,267.65 $107,267.65 Count 4 1 13 18 End of Report ($12,838.00) Check (CHK)$119,568.39 Total:$107,267.65 Project Summary Program - Project Deposits General Revolving (GR) - General Revolving $0.00 Total:$0.00 Type Summary Document Type Amount Direct Deposit (DD)$537.26 Void Payment (VD) 07/26/2024 Construction Insurance-N Fields of Dalton No $483.00 Cleared: 13 $70,266.15 Uncleared: 5 $37,001.50 Total Payments: 18 $107,267.65 07/26/2024 N Fields of Dalton - Sewer/Water Work Yes $15,928.65 07/26/2024 4x8 Sign & Frame for N Fields of Dalton No $799.00 07/26/2024 Shredding Services Yes $35.40 07/26/2024 Model Adm & Cont Policy Digital Rev Serv Yes $239.00 07/26/2024 Down Payment Assistance 2024-02 No $12,900.00 07/26/2024 Partial Pmt-CWIP N Fields of Dalton No $22,800.00 07/12/2024 Payroll, Postage, Accounting June 2024 Yes $46,149.49 07/12/2024 Postage Reimb No $19.50 07/12/2024 Remote Admin Plan & Policy Review, Policy Edits, ACOP Yes $1,725.00 07/12/2024 2023 Audited Work Comp Yes $5,623.00 07/12/2024 SCDP Stubs Battle Lake (Electrical)Yes $12,838.00 07/12/2024 Interpretive Services Yes $28.35 07/26/2024 Per Diem/Mileage July 24 Yes $102.47 07/11/2024 Lost check.Yes ($12,838.00) 07/26/2024 Per Diem/Mileage July 24 Yes $82.37 07/26/2024 Per Diem/Mileage July 24 Yes $92.42 Payment Date Document Description Cleared Amount 07/12/2024 6-8-24 thru 7-11-24 Services Yes $260.00 Otter Tail County Housing Redevelopment Authority General Ledger Cash Payment/Receipt Register General Revolving (GR) Posted Payments www.pha-web.com © 2024 Management Computer Services, Inc. (MCS) Page 1 of 1 8/9/2024 3:15:16 PM Printed by: Julie Bakken 10/110 58% Period YTD Annual Remaining Amount Amount Budget Budget INCOME 3610 Interest Income 3703/5353/3741/0054 665.71 7,036.33 6,000.00 1,036.33 117% 3690 Other Revenue MISC 3,500.00 3,500.00 3690.01 SCDP Administration (DEED) - All Communities 3,029.55 15,079.55 50,000.00 (34,920.45)30% 3690.02 SCDP City/Grant Funds - All Communities 20,467.00 100,825.00 907,860.00 (807,035.00)11% 3690.99 Refunds & Reimbursements 3,097.20 20,000.00 (16,902.80)15% 3691 Levy Revenue 868,060.25 1,513,771.00 (645,710.75)57% 3692 CHIP Down Payment Assistance Repayment 10,638.00 10,638.00 10,638.00 3693.02 CHIP Res Owner Occup Housing Lev (ROHL) Repayment 5,177.00 5,177.00 3693.03 CHIP FFHRA Rehab Repayments 18,820.71 31,772.91 31,772.91 3693.05 CHIP Rental Rehab Revolving Loan Payments 9,074.00 28,899.70 28,899.70 3697 Owner Match Revenue 1,513.00 16,719.00 16,719.00 3699 Sale of Property 35,379.79 35,379.79 TOTAL INCOME 64,207.97 1,126,184.73 2,497,631.00 (1,371,446.27) EXPENSES 4130 Legal 15,000.00 15,000.00 0% 4140 Staff Training 637.00 9,000.00 8,363.00 7% 4150 Travel 406.69 1,500.00 1,093.31 27% 4170 Accounting 5,000.00 30,000.00 60,000.00 30,000.00 50% 4171 Audit 9,800.00 16,000.00 6,200.00 61% 4190 Other Administrative Expenses 416.75 617.60 1,000.00 382.40 62% 4190.01 Manuals, Subscriptions 239.00 239.00 1,000.00 761.00 24% 4190.02 Office Supplies 602.71 1,700.00 1,097.29 35% 4190.03 Postage 262.41 1,461.32 2,500.00 1,038.68 58% 4190.04 Telephone & Internet 300.00 300.00 0% 4190.05 Dues 926.20 1,500.00 573.80 62% 4190.06 Advertising 476.23 2,000.00 1,523.77 24% 4190.08 Consulting Fees 6,352.10 6,463.00 85,000.00 78,537.00 8% 4190.2 Management Fees-OTC Admin 36,370.28 188,158.06 459,350.00 271,191.94 41% 4190.21 Management Fees-Administrator Contract (4,338.75) 4190.22 Management Fees - Construction Consultant 9,395.58 65,000.00 55,604.42 14% 4210 Board Member Payments 277.26 2,288.43 4,000.00 1,711.57 57% 4430.1 Misc Contracts - Software 6,680.00 7,700.00 1,020.00 87% 4510 Insurance 47,762.42 47,000.00 (762.42)102% 4521 Assessments 80.00 80.00 0% 4570 Housing Choice Voucher Operating Support 2,302.34 8,095.76 30,000.00 21,904.24 27% 4580 Public Housing Operating Support 7,856.96 22,055.48 20,000.00 (2,055.48)110% 4590.01 SCDP O & E Reports 285.00 (285.00) 4590.02 SCDP Lead Based Paint Testing 1,350.00 (1,350.00) 4590.03 SCDP Construction (DEED)19,746.00 907,860.00 888,114.00 2% 4590.04 SCDP Recording Fees 138.00 (138.00) 4590.05 SCDP General Expense - Leverage 209,110.00 209,110.00 0% 4592.01 HOP Demolition/Site Clearance 45,000.00 45,000.00 0% 4593.02 CAP Property Acquisition 48.65 48.65 25,000.00 24,951.35 0% 4593.03 CAP Consulting Fees 455.00 10,000.00 9,545.00 5% 4593.04 CAP Architect/Engineering 45,000.00 45,000.00 0% 4593.05 CAP Legal Fees 5,000.00 5,000.00 0% 4593.06 CAP Affordable Senior Housing Program Leverage 131,031.00 131,031.00 0% 4594 CHIP Down Payment Assistance 12,900.00 21,720.00 55,000.00 33,280.00 39% 4595.01 CHIP Emergency Housing Repair Program (EHRP)141.00 45,000.00 44,859.00 0% 4595.02 CHIP Res Owner Occupied Housing Leverage (ROHL)92.00 70,000.00 69,908.00 0% 4595.04 CHIP Affordable Rental Unit Constr (ARUC) Program 70,000.00 70,000.00 4596.50 CWIP Pre-Development Expense 39,610.65 229,432.64 (229,432.64) TOTAL EXPENSES 107,297.65 609,473.77 2,447,631.00 1,838,157.23 25% SURPLUS (43,089.68)516,710.96 50,000.00 466,710.96 1033% Otter Tail County Housing Redevelopment Authority Operating Statement Seven Months Ending 07/31/2024 Program: General Revolving (GR) Project: Consolidated Percent of Year www.pha-web.com © 2024 Management Computer Services, Inc. (MCS) Page 1 of 1 8/9/2024 3:05:27 PM Printed by: Julie Bakken 11/110 Period Amount Balance ASSETS 1111 Cash (52,234.52)2,208,150.86 1111.1 Certificates of Deposit 148,687.23 1111.2 Cash MHFA Loan Acct #0054 0.52 4,087.19 1111.4 Committed for Housing Trust Fund 542,835.00 1113 Cash Rental Rehab 9,144.32 336,280.29 1130.1 Loan Receivable-Rental Rehab 112,295.99 1130.2 Loan Receivable-Down Payment Assistance 79,238.00 1130.3 Loan Receivable-Tax Levy Rehab Provision 268,804.14 1130.4 Loan Receivable-Homeowner Rehab 337,957.94 1130.9 Loan Allowance (606,762.08) 1400.12 Assets Held for Resale 1,051,541.58 1400.5 Accumulated Depreciation (3,487.25) 1400.9 Furn/Equip/Mach - Admin 9,657.00 TOTAL ASSETS (43,089.68)4,489,285.89 LIABILITIES AND SURPLUS LIABILITIES TOTAL LIABILITIES SURPLUS 2700 Income/Expense Clearing Account 420,948.43 2806 Unrestricted Net Position 3,551,626.50 2806 Unrestricted Net Position (Current Year) (43,089.68)516,710.96 TOTAL SURPLUS (43,089.68)4,489,285.89 TOTAL LIABILITIES AND SURPLUS (43,089.68)4,489,285.89 Otter Tail County Housing Redevelopment Authority Balance Sheet July 2024 Program: General Revolving (GR) Project: Consolidated www.pha-web.com © 2024 Management Computer Services, Inc. (MCS) Page 1 of 1 8/9/2024 2:59:21 PM Printed by: Julie Bakken 12/110 Doc Num Voided Type 997 No DD 998 No DD 999 No DD 1000 No DD 1001 No DD 1002 No DD 1003 No DD 1004 No DD 1005 No DD 1006 No DD 1007 No DD 1008 No DD 1009 No DD 1010 No DD 1011 No DD 1012 No DD 1013 No DD 1014 No DD 1015 No DD 1016 No DD 1017 No DD 1018 No DD 1019 No DD 1020 No DD 1021 No DD 1022 No DD 1023 No DD 1024 No DD 1025 No DD 1026 No DD 1027 No DD 1028 No DD 1029 No DD 1030 No DD 1031 No DD 1032 No DD 1033 No DD 1034 No DD 1035 No DD 1036 No DD 1037 No DD 1038 No DD 1039 No DD 1040 No DD 1041 No DD 1042 No DD 1043 No DD 1044 No DD 6354 No CHK 6355 No CHK 6356 No CHK 07/01/2024 HAP Payment Jul 24 Yes $1,077.00 07/01/2024 HAP Payment Jul 24 Yes $349.00 07/01/2024 HAP Payment Jul 24 Yes $2,489.00 07/01/2024 HAP Payment Jul 24 No $225.00 07/01/2024 HAP Payment Jul 24 Yes $2,200.00 07/01/2024 HAP Payment Jul 24 Yes $272.00 07/01/2024 HAP Payment Jul 24 Yes $598.00 07/01/2024 HAP Payment Jul 24 Yes $672.00 07/01/2024 HAP Payment Jul 24 Yes $618.00 07/01/2024 HAP Payment Jul 24 Yes $605.00 07/01/2024 HAP Payment Jul 24 Yes $1,969.00 07/01/2024 HAP Payment Jul 24 Yes $294.00 07/01/2024 HAP Payment Jul 24 Yes $440.00 07/01/2024 HAP Payment Jul 24 Yes $250.00 07/01/2024 HAP Payment Jul 24 Yes $331.00 07/01/2024 HAP Payment Jul 24 Yes $496.00 07/01/2024 HAP Payment Jul 24 Yes $188.00 07/01/2024 HAP Payment Jul 24 Yes $517.00 07/01/2024 HAP Payment Jul 24 Yes $672.00 07/01/2024 HAP Payment Jul 24 Yes $324.00 07/01/2024 HAP Payment Jul 24 Yes $460.00 07/01/2024 HAP Payment Jul 24 Yes $357.00 07/01/2024 HAP Payment Jul 24 Yes $421.00 07/01/2024 HAP Payment Jul 24 Yes $1,477.00 07/01/2024 HAP Payment Jul 24 Yes $391.00 07/01/2024 HAP Payment Jul 24 Yes $3,736.00 07/01/2024 HAP Payment Jul 24 Yes $380.00 07/01/2024 HAP Payment Jul 24 Yes $546.00 07/01/2024 HAP Payment Jul 24 Yes $1,391.00 07/01/2024 HAP Payment Jul 24 Yes $1,038.00 07/01/2024 HAP Payment Jul 24 Yes $589.00 07/01/2024 HAP Payment Jul 24 Yes $5,367.00 07/01/2024 HAP Payment Jul 24 Yes $145.00 07/01/2024 HAP Payment Jul 24 Yes $2,489.00 07/01/2024 HAP Payment Jul 24 Yes $550.00 07/01/2024 HAP Payment Jul 24 Yes $800.00 07/01/2024 HAP Payment Jul 24 Yes $450.00 07/01/2024 HAP Payment Jul 24 Yes $1,033.00 07/01/2024 HAP Payment Jul 24 Yes $699.00 07/01/2024 HAP Payment Jul 24 Yes $625.00 07/01/2024 HAP Payment Jul 24 Yes $470.00 07/01/2024 HAP Payment Jul 24 Yes $8,556.00 07/01/2024 HAP Payment Jul 24 Yes $400.00 07/01/2024 HAP Payment Jul 24 Yes $345.00 07/01/2024 HAP Payment Jul 24 Yes $710.00 07/01/2024 HAP Payment Jul 24 Yes $439.00 07/01/2024 HAP Payment Jul 24 Yes $392.00 07/01/2024 HAP Payment Jul 24 Yes $700.00 07/01/2024 HAP Payment Jul 24 Yes $529.00 07/01/2024 HAP Payment Jul 24 Yes $301.00 Payment Date Document Description Cleared Amount 07/01/2024 HAP Payment Jul 24 Yes $1,770.00 Otter Tail County Housing Redevelopment Authority General Ledger Cash Payment/Receipt Register Housing Choice Vouchers Posted Payments www.pha-web.com © 2024 Management Computer Services, Inc. (MCS) Page 1 of 2 8/9/2024 4:19:11 PM Printed by: Julie Bakken 13/110 Otter Tail County Housing Redevelopment Authority General Ledger Cash Payment/Receipt Register Housing Choice Vouchers 6357 No CHK 6358 No CHK 6359 No CHK 6360 No CHK 6361 No CHK 6362 No CHK 6363 No CHK 6364 No CHK 6365 No CHK 6366 No CHK 6367 No CHK 6368 No CHK 6369 No CHK 6370 No CHK 6371 No CHK 6372 No CHK 6373 No CHK 6374 No CHK 6375 No CHK 6376 No CHK 6377 No CHK 6378 No CHK 6379 No CHK 6380 No CHK Payments $65,167.52 $65,167.52 Count 48 27 75 End of Report $14,676.52 Total:$65,167.52 Project Summary Program - Project Deposits Housing Choice Vouchers - $0.00 Total:$0.00 Type Summary Document Type Amount Direct Deposit (DD)$50,491.00 Check (CHK) Cleared: 71 $64,788.52 Uncleared: 4 $379.00 Total Payments: 75 $65,167.52 07/01/2024 Port Out Payment Jul 24 Yes $1,238.52 07/12/2024 HCV Payroll June 2024 Yes $5,449.00 07/01/2024 HAP Util Payment Jul 24 Yes $35.00 07/01/2024 HAP Util Payment Jul 24 Yes $61.00 07/01/2024 HAP Util Payment Jul 24 Yes $103.00 07/01/2024 HAP Util Payment Jul 24 No $50.00 07/01/2024 HAP Util Payment Jul 24 Yes $24.00 07/01/2024 HAP Util Payment Jul 24 Yes $147.00 07/01/2024 HAP Util Payment Jul 24 Yes $12.00 07/01/2024 HAP Util Payment Jul 24 Yes $84.00 07/01/2024 HAP Util Payment Jul 24 Yes $14.00 07/01/2024 HAP Util Payment Jul 24 Yes $6.00 07/01/2024 HAP Util Payment Jul 24 Yes $52.00 07/01/2024 HAP Util Payment Jul 24 Yes $161.00 07/01/2024 HAP Util Payment Jul 24 Yes $120.00 07/01/2024 HAP Util Payment Jul 24 No $37.00 07/01/2024 HAP Util Payment Jul 24 Yes $74.00 07/01/2024 HAP Util Payment Jul 24 Yes $108.00 07/01/2024 HAP Util Payment Jul 24 No $67.00 07/01/2024 HAP Util Payment Jul 24 Yes $138.00 07/01/2024 HAP Payment Jul 24 Yes $977.00 07/01/2024 HAP Payment Jul 24 Yes $2,666.00 07/01/2024 HAP Payment Jul 24 Yes $667.00 07/01/2024 HAP Payment Jul 24 Yes $735.00 www.pha-web.com © 2024 Management Computer Services, Inc. (MCS) Page 2 of 2 8/9/2024 4:19:11 PM Printed by: Julie Bakken 14/110 58% Period YTD Annual Remaining Amount Amount Budget Budget INCOME 3110 Dwelling Rent HAP Repayment 5,214.00 1,776.00 3,438.00 294% 3301 Admin Subsidy 6,047.00 44,376.00 77,347.00 (32,971.00)57% 3301.1 HAP Subsidy 56,249.00 378,445.00 493,508.00 (115,063.00)77% 3450 Fraud Recovery - Admin 50%860.50 860.50 3450.1 Fraud Recovery - HAP 50%860.50 860.50 3610 Investment Income (0062)11.24 76.17 120.00 (43.83)63% 3690.1 Other Revenue HAP 30,000.00 (30,000.00)0% TOTAL INCOME 62,307.24 429,832.17 602,751.00 (172,918.83)71% EXPENSES 4150 Travel 600.00 600.00 4190 Other Admin Expenses (Apps, Service Charges)22.00 88.00 400.00 312.00 22% 4190.01 Manuals, Subscriptions 1,078.00 500.00 (578.00)216% 4190.08 Consulting Fees 1,945.00 1,945.00 0% 4190.2 Management Fees-OTC 5,449.00 36,848.00 91,887.00 55,039.00 40% 4715.1 HAP Occupied Units 55,991.00 381,731.00 474,401.00 92,670.00 80% 4715.P HAP-Portability Out 1,200.00 3,981.00 23,500.00 19,519.00 17% 4716.P Port Out Admin Fee 38.52 105.33 1,200.00 1,094.67 9% TOTAL EXPENSES 62,700.52 423,831.33 594,433.00 170,601.67 71% SURPLUS (393.28)6,000.84 8,318.00 (2,317.16)72% Otter Tail County Housing Redevelopment Authority Operating Statement Seven Months Ending 07/31/2024 Program: Housing Choice Vouchers Project: Consolidated Percent of Year www.pha-web.com © 2024 Management Computer Services, Inc. (MCS) Page 1 of 1 8/9/2024 3:59:09 PM Printed by: Julie Bakken 15/110 Period Amount Balance ASSETS 1111 Cash Unrestricted (2,882.28)59,083.67 1121 Fraud A/R (75.00)678.00 1129 A/R Tenants 75.00 4,536.00 TOTAL ASSETS (2,882.28)64,297.67 LIABILITIES AND SURPLUS LIABILITIES 2112 A/P HAP (2,489.00) TOTAL LIABILITIES (2,489.00) SURPLUS 2700 Inc & Exp Clearing 4,078.69 2805 Restricted Net Position 18,225.24 2805 Restricted Net Position (Current Year) (942.00)(6,406.50) 2806 Unrestricted Position 35,992.90 2806 Unrestricted Position (Current Year) 548.72 12,407.34 TOTAL SURPLUS (393.28)64,297.67 TOTAL LIABILITIES AND SURPLUS (2,882.28)64,297.67 Otter Tail County Housing Redevelopment Authority Balance Sheet July 2024 Program: Housing Choice Vouchers Project: Consolidated www.pha-web.com © 2024 Management Computer Services, Inc. (MCS) Page 1 of 1 8/9/2024 3:59:08 PM Printed by: Julie Bakken 16/110 Doc Num Voided Type #01-00000621-00-0 June 24 No INV #01-00000683-00-0 June 24 No INV #01-00000684-00-1 June 24 No INV #01-00000683-00-0 July 24 No INV #01-00000684-00-1 July 24 No INV #01-00041004-00-6 June 24 No INV #01-00041101-00-0 June 24 No INV #01-00041152-00-6 June 24 No INV #10108 July 24 No INV #10350 July 24 No INV #10787 July 24 No INV #440572 July 24 No INV #480160 July 24 No INV #991 721 5394 4 July 24 No INV 7381 No CHK 7382 No CHK 7383 No CHK 7384 No CHK 7385 No CHK 7386 No CHK 7387 No CHK Doc Num Voided Type 1068 No CHK 1069 No CHK 1255 No CHK 1257 No CHK 1328 No CHK 2844 No CHK 2846 No CHK 3644 No CHK 5651 No CHK 5654 No CHK 028446 No MO 028500 No MO 10464154 No CHK 22-066872536 No MO 2898533903 No MO Payments $10,258.17 $10,258.17 Count 14 18 4 36 End of Report $13,350.77 Money Order (MO)$1,440.00 Total:$16,358.51 Project Summary Program - Project Deposits Public Housing - Family $6,100.34 Total:$6,100.34 Type Summary Document Type Amount Invoice (INV)$1,567.74 Check (CHK) 07/01/2024 Payment - Money Order Yes $377.00 Cleared: 15 $6,100.34 Uncleared: 0 $0.00 Total Deposits: 15 $6,100.34 07/24/2024 Payment - Bank Check Yes $89.00 07/08/2024 Payment - Money Order Yes $600.00 07/01/2024 Payment - Money Order Yes $350.00 07/16/2024 Payment - Money Order Yes $113.00 07/01/2024 Payment - Check Yes $924.51 07/08/2024 Payment - Check Yes $675.00 07/24/2024 Payment - Check Yes $600.00 07/01/2024 Payment - Check Yes $400.00 07/08/2024 Payment - Check Yes $542.11 07/24/2024 Payment - Check Yes $600.00 07/01/2024 Payment - Check Yes $519.65 07/16/2024 Payment - Check Yes $89.42 07/16/2024 Payment - Check Yes $75.42 07/19/2024 Payment - Check Yes $145.23 Posted Deposits Control Date Document Description Cleared Amount Cleared: 13 $9,775.65 Uncleared: 8 $482.52 Total Payments: 21 $10,258.17 07/12/2024 Solid Waste - Demolition Yes $30.00 07/26/2024 July 24 Mileage Reimb Yes $36.03 07/12/2024 June 24 Services Yes $100.00 07/12/2024 Water, Gas, Sewer Yes $463.86 07/12/2024 NYM - Carpet Materials Yes $7,855.55 07/12/2024 Faucet - Henning Yes $149.99 07/11/2024 Gas No $16.50 07/12/2024 Solar Salt Yes $55.00 07/31/2024 Gas No $27.79 07/31/2024 Gas No $16.59 07/25/2024 Water, Sewer No $84.44 07/25/2024 Water, Sewer No $93.48 07/01/2024 Water, Electric, Gas, Sewer Yes $281.02 07/25/2024 Water, Sewer No $91.28 07/01/2024 Water, Electric, Gas, Sewer Yes $250.00 07/01/2024 Water, Electric, Gas, Sewer Yes $225.08 07/31/2024 Water, Sewer No $87.33 07/31/2024 Water, Sewer No $65.11 07/01/2024 Water, Sewer Yes $73.23 07/01/2024 Water, Sewer Yes $69.89 Payment Date Document Description Cleared Amount 07/01/2024 Water, Electric, Gas, Sewer Yes $186.00 Otter Tail County Housing Redevelopment Authority General Ledger Cash Payment/Receipt Register Public Housing Posted Payments www.pha-web.com © 2024 Management Computer Services, Inc. (MCS) Page 1 of 1 8/12/2024 8:30:56 AM Printed by: Julie Bakken 17/110 58% Period YTD Annual Remaining Amount Amount Budget Budget INCOME 3110 Dwelling Rental 3,276.00 23,607.16 32,000.00 (8,392.84)74% 3401.1 HUD Operating Subsidy 17,162.00 45,000.00 (27,838.00)38% 3401.2 HUD Capital Funds-Operations/Admin 148.00 305.00 7,000.00 (6,695.00)4% 3401.3 HUD Capital Funds-Project 5,927.32 7,618.44 33,000.00 (25,381.56)23% 3610 Interest Income (5673/0070)16.67 162.38 200.00 (37.62)81% 3690 Other Income (NSF, Late Fee, GR Support)111.00 873.60 21,000.00 (20,126.40)4% 3690.1 Water Charge Income 494.86 3,911.21 6,300.00 (2,388.79)62% 3690.2 Electric Charge Income 990.76 5,307.92 12,000.00 (6,692.08)44% 3690.3 Gas Charge Income 258.25 4,935.16 11,000.00 (6,064.84)45% 3690.31 Sewer Charge Income 566.79 4,478.47 7,350.00 (2,871.53)61% 3690.4 Other Tenant Charges (Maint)1,325.96 1,325.96 TOTAL INCOME 11,789.65 69,687.30 174,850.00 (105,162.70) EXPENSES 4130 Legal 8,443.50 750.00 (7,693.50)1126% 4140 Staff Training 2,000.00 2,000.00 0% 4150 Travel 36.03 223.67 500.00 276.33 45% 4171 Audit 2,200.00 2,200.00 100% 4190 Other Admin Expenses (Reports, Apps)200.00 200.00 0% 4190.01 Manuals, Subscriptions 600.00 500.00 (100.00)120% 4190.06 Advertising 200.00 200.00 0% 4190.08 Consulting Fees 1,950.00 1,950.00 0% 4190.2 Management Fees-OTC 24,999.97 25,000.00 0.03 100% 4310 Water 600.86 3,661.54 6,400.00 2,738.46 57% 4320 Electric 851.32 4,558.36 12,250.00 7,691.64 37% 4330 Gas 350.93 4,441.98 11,500.00 7,058.02 39% 4331 Sewer 701.12 4,262.39 7,500.00 3,237.61 57% 4400 Maintenance - Tools & Equip 500.00 500.00 0% 4420 Maintenance - Materials 2,078.22 8,475.15 5,500.00 (2,975.15)154% 4430 Maintenance - Contracts 155.00 10,558.58 15,000.00 4,441.42 70% 4431 Garbage and Trash Removal Contracts 30.00 595.50 500.00 (95.50)119% 4510 Insurance 26,073.17 25,000.00 (1,073.17)104% 4520 PILOT 3,900.00 3,900.00 0% 4521 Assessments 912.26 1,400.00 487.74 65% 4570 Collection Loss 500.00 500.00 0% 4580 Interest Expense (on Security Deposits)300.00 300.00 0% 4600 Capital Fund Projects 5,927.32 7,618.44 33,000.00 25,381.56 23% 4610 Extraordinary Maintenance 3,500.00 3,500.00 0% TOTAL EXPENSES 10,730.80 107,624.51 160,050.00 52,425.49 67% SURPLUS 1,058.85 (37,937.21)14,800.00 (52,737.21)-256% Otter Tail County Housing Redevelopment Authority Operating Statement Seven Months Ending 07/31/2024 Program: Public Housing Project: Consolidated Percent of Year www.pha-web.com © 2024 Management Computer Services, Inc. (MCS) Page 1 of 1 8/12/2024 8:19:02 AM Printed by: Julie Bakken 18/110 Period Amount Balance ASSETS 1111 Cash 1,461.53 88,449.67 1114 Tenant Security Deposit Cash 9,173.50 1122 A/R Tenants (193.58)5,623.19 1122.1 Allowance for Doubtful Accts (200.00) 1129 A/R Other 0.83 1400.5 Accumulated Depreciation (1,112,431.70) 1400.6 Land 32,990.31 1400.7 Buildings 1,661,869.49 TOTAL ASSETS 1,267.95 685,475.29 LIABILITIES AND SURPLUS LIABILITIES 2114 Tenant Security Deposits 9,688.08 2119 Accounts Payable (418.66) 2119.1 A/P Admin 418.66 2240 Tenants Prepaid Rent 209.10 299.51 TOTAL LIABILITIES 209.10 9,987.59 SURPLUS 2700 Income/Expense Clearing Account (59,196.97) 2700 Income/Expense Clearing Account (Current Year) 1,058.85 (37,937.21) 2700 Income/Expense Clearing Account (Unclosed 2022) 0.01 2802 Invested in Capital Assets, Net of Related Debt 679,466.94 2806 Unrestricted Net Position 93,154.93 TOTAL SURPLUS 1,058.85 675,487.70 TOTAL LIABILITIES AND SURPLUS 1,267.95 685,475.29 Otter Tail County Housing Redevelopment Authority Balance Sheet July 2024 Program: Public Housing Project: Consolidated www.pha-web.com © 2024 Management Computer Services, Inc. (MCS) Page 1 of 1 8/12/2024 8:19:01 AM Printed by: Julie Bakken 19/110 OTTER TAIL COUNTY HOUSING AND REDEVELOPMENT AUTHORITY REQUEST FOR BOARD ACTION _August 20, 2024__ BOARD MEETING DATE AGENDA ITEM # 5A Amy Baldwin 08/15/2024 REQUESTOR’S SIGNATURE/DATE BOARD ACTION REQUESTED Motion to Accept Audited Financial Statements for the Year Ended December 31, 2023 PROPOSED REQUEST/JUSTIFICATION The Finance Committee met on August 12, 2024 with Auditor, Bryce Karel, from Brady Martz regarding the 2023 Audit. Mr. Karel provided an overview of the 2023 audit. The two findings identified are the same findings that have been reported in previous years: 1) preparation of the financial statements and 2) recording a variety of journal entries prior to the audit.These findings are typical of Government entities. He noted that there have been vast improvements and said that a Correction Action Plan will not be needed. The financial data for 2023 will be submitted by September 30, 2024 to the federal reporting agency (REAC –the Real Estate Assessment Center) for approval. PREVIOUS ACTION ON REQUEST/OTHER PARTIES ADVISED EXECUTIVE DIRECTOR DATE: Amy Baldwin 08/15/2024 ATTACHMENT LIST: August 12, 2024 Finance Committee Meeting Notes2023 Audited Financial Statements FINANCIAL IMPLICATIONS: NA BUDGETED: YES NO FUNDING: NA COMMENTS 20/110 The Otter Tail County HRA Board of Commissioners Met for a Finance Committee meeting on August 12, 2024 at 2:30 p.m. In the Dead Lake Room at the Otter Tail County Government Services Center 500 W. Fir Ave, Fergus Falls, MN Board Members Via Teams: Wayne Johnson, HRA Board Chairperson Present: Leland Rogness, HRA Board Vice Chairperson Others Present: Amy Baldwin, OTC HRA Executive Director Tanya Westra, OTC HRA Housing Program Supervisor Julie Bakken, OTC HRA Accounting Specialist Kris Vipond, OTC Assistant Finance Director Ava Weber, OTC Intern Paula Grunewald, OTC HRA Administrative Assistant Via Teams: Bryce Karel, Brady Martz & Associates, P.C. 1.2022 Audited Financial Statements Bryce Karel, Brady Martz & Associates, P.C., gave an overview as of August 3, 2024 for the 2023 audit. He highlighted the Audit of Financial Statement and noted that this is an unmodified opinion. He went over the Management Discussion analysis – there were not a lot of changes but more expenses. He showed the Financial Situation and touched on Revenues, Expenses and Changes in Net Position - overall the financial situation is good, in the footnotes he explains the differences as there were economic factors included. He showed the Combining Statement Funds – assets and liabilities and that the liabilities are similar to last years. Not much has changed with the exception of the homes in Hidden Meadow selling. He commented that he felt we were pretty healthy and items that will change include our energy choice and interest expenses. He also stated that our cash flow was nothing out of the ordinary. He addressed the Financial Statement and stated that there has not been a lot of changes, collectively they are looking good. He touched on the loan receivables, capital assets and interim financing, standard disclosures, a few new pronouncements and the Dalton Project. Overall he had 2 findings for the Final Compliances: 1) Proposition of Journal Entries and 2) Preparation of Financial Statements. These findings line up with Government Standards and are a repeat of last year. He noted that there have been vast improvements and said that a Correction Action Plan will not be needed. He also reaffirmed that this audit is for the year ended December 31, 2023. Commissioner Lee Rogness questioned subsequent events and why Dalton was included in the Audit. Bryce Karel responded since it was a future liability and a large development. Kris Vipond, OTC Assistant Finance Director commented that Julie Bakken did a good job and that the audit went nice and smooth. Bryce Karel also commented that he appreciated the process and was pleased with how well it went. Commissioner Wayne Johnson observed that Public Housing maintenance costs increased and asked if other agencies are disposing of their units. . Bryce Karel said yes some have, but there will still be maintenance costs, property managers, etc. Wayne Johnson asked if it be better to move Public Housing units to an LLC as it sounds like each has their own path. 21/110 218-998-8730 @ HOUSING AND REDEVELOPMENT AUTHORITY OTTER TAIL COUNTY IS AN EQUAL OPPORTUNITY EMPLOYER LIVE YOUR best life HERE. Government Services Center 500 West Fir Avenue Fergus Falls, MN 56537 @ otterta ilcounty.gov Pg. 2 Amy Baldwin, OTC HRA Executive Director, commented that Bryce Karel will be in person at the August 20th, 2024 HRA Board Meeting. His changes from this draft will not be major and when it is finalized a copy will be sent to each of the HRA Commissioners with the August 20th Board Packet. The meeting ended at 2:30pm. 22/110 23/110 OTTER TAIL COUNTY HOUSING AND REDEVELOPMENT AUTHORITY FERGUS FALLS, MINNESOTA AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2023 24/110 TABLE OF CONTENTS ROSTER OF OFFICIALS INDEPENDENT AUDITOR'S REPORT MANAGEMENT'S DISCUSSION AND ANALYSIS FINANCIAL STATEMENTS Statement of Net Position Statement of Revenues, Expenses, and Changes in Net Position Statement of Cash Flows Notes to the Financial Statements SUPPLEMENTARY INFORMATION Combining Schedule of Net Position Combining Schedule of Revenues, Expenses, and Changes in Net Position Combining Schedule of Cash Flows Schedule of Capital Fund Costs Page 1 2 6 10 11 12 14 23 25 27 29 INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS 30 SCHEDULE OF FINDINGS AND RESPONSES SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS CORRECTIVE ACTION PLAN 32 34 35 25/110 OTTER TAIL COUNTY HOUSING AND REDEVELOPMENT AUTHORITY ROSTER OF OFFICIALS -UNAUDITED DECEMBER 31, 2023 Name Position Term Expires Wayne Johnson Chairperson August 2027 Lee Rogness Commissioner August 2024 Betty Murphy Commissioner August 2025 Kurt Mortenson Commissioner August 2028 Jeff Ackerson Commissioner August 2026 -1- 26/110 Brady Martz INDEPENDENT AUDITOR'S REPORT Board of Commissioners Otter Tail County Housing and Redevelopment Authority Fergus Falls, Minnesota Report on the Audit of the Financial Statements Opinion We have audited the accompanying financial statements of the business-type activities of Otter Tail County Housing and Redevelopment Authority, a component unit of Otter Tail County, Minnesota, as of and for the year ended December 31, 2023, and the related notes to the financial statements, which collectively comprise the Authority's basic financial statements as listed in the table of contents. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the business-type activities of Otter Tail County Housing and Redevelopment Authority, as of December 31, 2023, and the changes in financial position and cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinion We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of Otter Tail County Housing and Redevelopment Authority, and to meet our ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Make Every Day Count I ww.bradymartz.com -2- 27/110 In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about Otter Tail County Housing and Redevelopment Authority's ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. Auditor's Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards, we: • Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Authority's internal control. Accordingly, no such opinion is expressed. • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. • Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Authority's ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit. -3-Make Every Day Count I WW bradym rtz com 28/110 Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis as listed in the table of contents be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Authority's basic financial statements. The combining schedules and capital fund costs are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining schedules and capital fund costs are fairly stated, in all material respects, in relation to the basic financial statements as a whole. Other Information Management is responsible for the other information included in the annual report. The other information comprises the Roster of Officials on page 1 but does not include the basic financial statements and our auditor's report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon. In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report. -4-Make Every Day Count I WW bractymartz.com 29/110 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated August 12, 2024, on our consideration of the Authority's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of Otter Tail County Housing and Redevelopment Authority's internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Authority's internal control over financial reporting and compliance. ~AMIJ- BRADv, MARTZ & ASSOCIATES, P.C. GRAND FORKS, NORTH DAKOTA August 12, 2024 -5-Make Every Day Count I iww bradymllrt% com 30/110 OTTER TAIL COUNTY HOUSING AND REDEVELOPMENT AUTHORITY MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2023 INTRODUCTION The Otter Tail County Housing and Redevelopment Authority's (the Authority) Management's Discussion and Analysis (MD&A) is designed to (a) assist the reader in focusing on significant financial information, (b) provide an overview of the financial activity, (c) identify changes in the financial position (its ability to address the next and subsequent year challenges), and (d) identify individual issues or concerns. Since the MD&A is designed to focus on the current year's activities, resulting changes, and current known facts, it should be read in conjunction with the Authority's financial statements. FINANCIAL HIGHLIGHTS Key financial highlights for the 2023 fiscal year include the following: • The assets of the Authority exceeded its liabilities at the close of the recent fiscal year by $3,783,31 O (net position). Of this amount, $3,156,410 (unrestricted net position) may be used to meet the Authority's ongoing obligations to citizens and creditors. • The Authority's cash and cash equivalents balance at December 31, 2023 was $2,912,930, representing an increase of $790,115 from December 31, 2022. • The Authority had HUD Grant revenue of $671,027, an increase of $89,877 from that received in 2022. OVERVIEW OF THE FINANCIAL STATEMENTS The discussion and analysis is intended to serve as an introduction to the Authority's basic financial statements. The Authority's basic financial statements comprise two components: 1) Financial statements, and 2) Notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. The Authority is a special-purpose government engaged only in Housing Assistance type activities and accounts for its financial activities as an enterprise fund. Accordingly, only business- activities financial statements are presented as the basic financial statements. The financial statements are prepared on the accrual basis of accounting. Therefore, revenues are recognized when earned and expenses are recognized when incurred. Capital assets are capitalized and depreciated, except for land, over their useful lives. See notes to the financial statements for a summary of the Authority's significant accounting policies and practices. The Authority's basic financial statements include the statement of net position, the statement of revenues, expenses and changes in net position, and the statement of cash flows. The statement of net position provides information about the nature and amount of assets and obligations (liabilities) of the Authority as of the end of the year. The statement of revenues, expenses and changes in net position reports revenues and expenses for the current year. The statement of cash flows reports cash receipts, cash payments, and net changes in cash resulting from operating activities, capital and related financing activities, and investing activities. -6- 31/110 OTTER TAIL COUNTY HOUSING AND REDEVELOPMENT AUTHORITY MANAGEMENT'S DISCUSSION AND ANALYSIS -CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2023 This report also contains other supplementary information in addition to the basic financial statements themselves. The Authority is a special-purpose government engaged only in Housing Assistance type activities and accounts for its financial activities as an enterprise fund. Accordingly, only business-activities financial statements are presented as the basic financial statements. The financial statements are prepared on the accrual basis of accounting. Therefore, revenues are recognized when earned and expenses are recognized when incurred. Capital assets are capitalized and depreciated, except for land, over their useful lives. See notes to the financial statements for a summary of the Authority's significant accounting policies and practices. USING THIS ANNUAL REPORT Our auditors have provided assurance in their independent auditor's report, located immediately preceding this Management's Discussion and Analysis, that the Basic Financial Statements are fairly stated. Varying degrees of assurance are being provided by the auditors regarding the other information included in this report. A user of this report should read the independent auditor's report carefully to ascertain the level of assurance being provided for each of the other parts of this report. CHANGES IN NET POSITION Total net position increased from the previous year by $632,388. The largest component of net position is unrestricted. Unrestricted net position increased from the previous year by $652,983. FINANCIAL POSITION The following table summarizes the financial position of the Authority as of December 31, 2023 and 2022. Condensed Statement of Net Position 2023 2022 Current assets $ 3,021,624 $ 2,548,718 Loans receivable, noncurrent 164,663 165,914 Capital assets, net 614,998 631,703 Total assets 3,801,285 3,346,335 Current liabilities 17,975 28,407 Long-term liabilities 167,006 Total liabilities 17,975 195,413 Net position Net investment in capital assets 614,998 631,703 Restricted 11,902 15,792 Unrestricted 3,156,410 2,503,427 Total net position $ 3,783,310 $ 3,150,922 -7- 32/110 OTTER TAIL COUNTY HOUSING AND REDEVELOPMENT AUTHORITY MANAGEMENTS DISCUSSION AND ANALYSIS -CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2023 The following table summarizes the changes in net position of the Authority for the years ended December 31, 2023 and 2022: Condensed Statement of Revenues, Expenses and Changes in Net Position 2023 2022 Operating revenues $ 2,122,260 $ 2,127,369 Operating expenses 1,550,442 1,246,606 Operating income (loss) 571,818 880,763 Nonoperating income (loss) 60,570 {5,444) Change in net position 632,388 875,319 Total net position -beginning of year 3,150,922 2,275,603 Total net position -end of year $ 3,783,310 $ 3,150,922 Operating revenues decreased by $5,109 as a result of a combination of factors. From prior year, grants from federal, state and local governments increased by approximately $463,000. The increase was primarily offset by the sale of various assets held for resale, which resulted in a net decrease of approximately $408,000. In addition, property tax revenues decreased by approximately $28,000 and revenues from other sources experienced a decrease of approximately $42,000. Operating expenses increased by $303,836 due to increases in contracted management services of approximately $130,000, repairs and maintenance of $31,000, general expenses of $89,000, and housing assistance payments of $30,000. Federal grants totaled $671,027 for the year ended December 31, 2023 and $581,150 for the year ended December 31, 2022. Housing Units Managed The following table shows housing units managed by the Authority for the years ended December 31, 2023 and 2022: Owned by Authority Units under vouchers Total housing units managed CAPITAL ASSETS 2023 2022 13 144 157 13 141 154 During 2023, there were three lots of land located in Vergas, MN, that were acquired and placed into service. There were no disposals of capital assets during 2023. Please see Note 6 for additional details. DEBT ADMINISTRATION As of December 31, 2023, the Authority has no long-term debt, as it was able to pay off a loan obtained in 2022 through the Minnesota Housing Finance Agency for $750,000. Please see Note 8 for additional details. -8- 33/110 OTTER TAIL COUNTY HOUSING AND REDEVELOPMENT AUTHORITY MANAGEMENTS DISCUSSION AND ANALYSIS -CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2023 ECONOMIC FACTORS The Otter Tail County Housing and Redevelopment Authority administers several programs aimed at providing affordable housing choices for individuals, families, and seniors seeking both rental and owner-occupied housing. The Authority also operates rehabilitation programs in partnership with homeowners and rental property owners. From time to time, the Authority also responds to specific community requests for services to redevelop properties that, due to their condition, are obsolete or unsafe, and have a detrimental impact in the community. While the Authority receives federal funding from the Department of Housing and Urban Development (HUD) for its Housing Choice Voucher and Public Housing program, the Authority's budget is also bolstered by the Special Benefit Levy permitted in state law for housing authorities and other public or private funding sources. Combined, the Authority uses these funding sources to accomplish its mission in partnership with cities and townships. REQUESTS FOR INFORMATION The annual financial report is designed to provide a general overview of the Authority's finances for all those with an interest in the Authority's finances. Questions concerning any information provided in this report or requests for additional information should be addressed to Amy Baldwin, Executive Director, Otter Tail County Housing and Redevelopment Authority, 500 W Fir Ave, Fergus Falls, Minnesota 56537. -9- 34/110 OTTER TAIL COUNTY HOUSING AND REDEVELOPMENT AUTHORITY STATEMENT OF NET POSITION DECEMBER 31, 2023 Current assets Cash and cash equivalents Restricted cash Accounts receivable ASSETS Tenants, net of allowance for doubtful accounts Accounts receivable -other Taxes receivable Loans receivable, current Assets held for resale Prepaid expenses Total current assets Noncurrent assets Loans receivable, net of allowance for doubtful accounts Capital assets Nondepreciable Depreciable, net Total capital assets Total noncurrent assets Total assets LIABILITIES AND NET POSITION Current liabilities Accounts payable Payment in lieu of taxes Tenant security deposits Unearned revenue Due to other governments Net position Total current liabilities Total liabilities Net investment in capital assets Restricted for Section 8 HAP Unrestricted Total net position See Notes to the Financial Statements -10- $ 2,891,854 21,076 1,600 1,167 30,321 18,120 42,589 14,897 3,021,624 164,663 59,390 555,608 614,998 779,661 3,801,285 1,804 3,395 9,174 1,650 1,952 17,975 17,975 614,998 11,902 3,156,410 $ 3,783,310 35/110 OTTER TAIL COUNTY HOUSING AND REDEVELOPMENT AUTHORITY STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION FOR THE YEAR ENDED DECEMBER 31, 2023 Operating revenues Dwelling rentals Property taxes HUD operating grants Operating subsidy Housing Choice Vouchers Other government grants Tenant utility charges Proceeds on sale of assets held for resale Cost of sale on assets held for resale Fraud recovery Other Total operating revenues Operating expenses Service agreement fees Contract services Professional services Bad debt expense Advertising Office expense Travel Dues Staff training Consulting fees Tenant services Utilities Repairs and maintenance Insurance General expenses Payments in lieu of taxes Housing assistance payments Depreciation Total operating expenses Operating income (loss) Nonoperating revenues (expenses) Interest income Investment income Interest expense Capital grants Conveyance of forfeited lands Total nonoperating revenues (expenses) Change in net position Net position -beginning of year Net position -end of year See Notes to the Financial Statements -11- $ 35,489 1,288,716 145,668 488,387 488,651 36,084 717,368 (1,125,168) 5,569 41,496 2,122,260 233,597 311,584 79,500 30,300 2,003 6,639 1,713 912 8,117 11,755 22,417 35,553 60,391 47,666 156,735 3,395 495,061 43,104 1,550,442 571,818 276 9,112 (12,190) 36,972 26,400 60,570 632,388 3,150,922 $3,783,310 36/110 OTTER TAIL COUNTY HOUSING AND REDEVELOPMENT AUTHORITY STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2023 Cash flows from operating activities: Receipts from tenants Receipts from other governmental units Receipts from property taxes Other receipts Payments to vendors Payments to other governmental units Payments for housing assistance Other payments Net cash provided (used) by operating activities Cash flows from capital and related financing activities: Proceeds from loans payable Payments on loans payable Capital grants Interest paid Net cash provided (used) by capital and related financing activities Cash flows from investing activities: Payments received on loans receivable Issuance of loans Interest income Net cash provided (used) by investing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents -beginning of year Cash and cash equivalents -end of year Reconciliation of cash and cash equivalents Cash and cash equivalents Restricted cash -tenant security deposits Restricted cash -Section 8 HAP Total See Notes to the Financial Statements -12- $ 73,958 1,122,706 1,288,484 1,028,639 (1,705,956) (234,335) (495,061) (156,735) 921,700 347,602 (514,608) 36,972 (12,190) (142,224) 18,751 (17,500) 9,388 10,639 790,115 2,122,815 $ 2,912,930 $ 2,891,854 9,174 11,902 $ 2,912,930 37/110 OTTER TAIL COUNTY HOUSING AND REDEVELOPMENT AUTHORITY STATEMENT OF CASH FLOWS-CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2023 Reconciliation of cash flows from operating activities Operating income (loss) Adjustments to reconcile operating income (loss) to net cash from operating activities: Depreciation Bad debt expense Changes in assets and liabilities Accounts receivable Taxes receivable Assets held for resale Prepaid expenses Accounts payable Payments in lieu of taxes Tenant security deposits Unearned revenue Due to Otter Tail County Cash flows from operating activities Schedule of noncash investing, capital and financing activities: Gain on conveyance of forfeited lands Forgiveness of loans receivable See Notes to the Financial Statements -13- $ $ $ 571,818 43,104 30,300 (30,029) (232) 295,467 21,703 (14,241) 705 130 1,023 1,952 921,700 26,400 193,340 38/110 OTTER TAIL COUNTY HOUSING AND REDEVELOPMENT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2023 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations Otter Tail County Housing and Redevelopment Authority (the Authority) is a separate legal entity formed by Otter Tail County, Minnesota under the State of Minnesota statutes. The Authority was formed to own and operate housing for low-income clients, which is accounted for in the Low Rent Public Housing activity. The Authority has an agreement with the Housing and Urban Development (HUD) to help individuals and families procure decent and affordable housing by subsidizing their rent payments (Housing Choice Vouchers Program), which is accounted for in the Section 8 Housing Choice Vouchers activity. All other activities of the Authority are accounted for in the General & State/Local activity. The Authority, a component unit of Otter Tail County, Minnesota, was established in 1972 and is governed by a five-member Board of Commissioners who are appointed by the Otter Tail County Board of Commissioners. General The accounting policies of the Authority conform to accounting principles generally accepted in the United States of America. Basis of Accounting The Authority is a governmental entity and uses the proprietary fund model to account for its operations; therefore, the accrual basis of accounting is followed. Under this method of accounting, revenues are recognized when earned and expenses are recognized when incurred. When both restricted and unrestricted resources are available for use, it is the Authority's policy to use restricted resources first and then unrestricted resources as needed. Basis of Presentation The funds of the Otter Tail County Housing and Redevelopment Authority are presented as proprietary funds. Proprietary funds are used to account for operations financed and operated in a manner similar to private business enterprises, where the intent of the governing body is that the costs of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund 's principal ongoing operations. Operating revenues include intergovernmental revenue and property taxes. Operating expenses for proprietary funds include the cost of service agreement fees, contract services, housing assistance payments, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. -14- 39/110 OTTER TAIL COUNTY HOUSING AND REDEVELOPMENT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS -CONTINUED DECEMBER 31, 2023 The Authority reports on the following programs: The General & State/Local Fund accounts for money levied under state statute through Otter Tail County. These funds are used for both owner-occupied and rental rehabilitation throughout Otter Tail County, excluding the City of Fergus Falls. Owner- occupied loans are deferred over ten years and forgiven if the property remains owner occupied. These funds are also used to cover unreimbursed administration expenses in the Section 8 Housing Choice Voucher Program. The Low Rent Public Housing Program Fund is used to account for the operations of the 13 units (nine buildings) of family public housing that are rented to families who meet the low-income guidelines as established by the U.S. Department of Housing and Urban Development (HUD). Revenues for continuing operations consist primarily of dwelling rentals and operating subsidies from HUD. The Public Housing Capital Fund Program is used to account for grant funds provided to the Authority by HUD annually for capital and management activities, including the ongoing modernization of its public housing stock. The funds received for this program are transferred to the Low-Rent Public Housing Program. The Section 8 Housing Choice Voucher Program is used to account for the operation of the income-based program, which is funded by HUD. HUD contracts with the Authority, which, in turn, contracts with owners of rental housing to make assistance payments on the tenant's behalf. Payments made to the owners are generally the difference between the local payment standard and 30 percent of the family's adjusted gross income. Cash and Cash Equivalents The Authority's cash and cash equivalents consist of savings and checking accounts, cash on hand, and certificates of deposit. Restricted cash is shown separately from cash and cash equivalents. Receivables Property tax levies are set by the Authority and are certified to Otter Tail County each year for collection in the following year. In Minnesota, counties act as collection agents for all property taxes. Real property taxes are generally due from taxpayers in equal installments on May 15 and October 15. The County remits tax settlements to the Authority at various times during the year. Taxes collectible in a given calendar year are generally recognized as revenue during that fiscal year. Amounts due from individuals and organizations are recorded as receivables at year-end. Receivables in the Low Rent Public Housing Program Fund have been shown net of an allowance for uncollectible accounts of $200. Prepaid Expenses Certain payments to vendors reflecting expenses applicable to future accounting periods are recorded as prepaid expenses. -15- 40/110 OTTER TAIL COUNTY HOUSING AND REDEVELOPMENT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS -CONTINUED DECEMBER 31, 2023 Restricted Assets Certain funds of the Authority are classified as restricted assets on the statement of net position because the restriction is either imposed by law through constitutional provisions or enabling legislation or imposed externally by creditors, grantors, contributors, or laws or regulations of other governments. Therefore, their use is limited by applicable laws and regulations. Capital Assets Capital assets, which include land and buildings, are reported in the fund financial statements. Capital assets are defined by the Authority as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of three years. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at acquisition value. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend lives are not capitalized. Capital assets are depreciated using the straight-line method over their useful lives (5-50 years). The estimated useful lives are as follows: Buildings and improvements Furniture, equipment and machinery Vehicles Net Position Classification Net position is classified and displayed in three components: 10~50 years 5-10 years 3 years a. Net investment in capital assets -Consists of capital assets including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. b. Restricted net position -Consists of net position with constraints placed on the use either by (1) external groups such as creditors, grantors, contributors, or laws or regulations of other governments; or (2) law through constitutional provisions or enabling legislation. c. Unrestricted net position -All other net position that does not meet the definition of "restricted" or "invested in capital assets." -16- 41/110 OTTER TAIL COUNTY HOUSING AND REDEVELOPMENT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS -CONTINUED DECEMBER 31, 2023 Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NOTE 2 DEPOSITS AND INVESTMENTS Deposits In accordance with Minnesota statutes, the Authority maintains deposits at those depository banks and brokerages authorized by the Authority Commission, all of which are covered by Federal Depository Insurance. Statutes require that all Authority deposits be protected by insurance, collateral, or surety bonds. The market value of the collateral pledged must be equal to or greater than 110% of the deposits not covered by insurance or bonds. At December 31, 2023, the carrying amount of the Authority's deposits was $2,912,930 and the bank balance was $3,077,741. The entire bank balance was covered by the Federal Depository Insurance Corporation (FDIC) and pledged collateral at December 31, 2023. Interest Rate Risk The Authority does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from changing interest rates. Credit Risk The Authority may invest idle funds in deposits that are properly secured by FDIC insurance coverage and are with designated depositories, which meet or exceed the Governmental National Mortgage Association Ratings. NOTE 3 RESTRICTED CASH Restricted cash consists of $9,174 in Low Rent Public Housing tenant security deposits and $11,902 restricted for HUD Section 8 vouchers. -17- 42/110 OTTER TAIL COUNTY HOUSING AND REDEVELOPMENT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS-CONTINUED DECEMBER 31, 2023 NOTE 4 LOANS RECEIVABLE The Authority offers several loan programs through its General & State/Local Fund. The loans due are from homeowners and landlords for assistance purchasing or rehabilitating properties. Homeowner rehab loans are "deferred loans" that are completely forgiven after ten years if all conditions are met. If the rehabilitated property is not sold, transferred, or otherwise conveyed within ten years, the conditions are met, and no repayment shall be due, the loan will be forgiven. If the conditions are not met, the recipient shall repay the principal amount of the loan, and the Authority shall have a lien for repayment of all funds. It is estimated that conditions are likely to be met by the borrower, and an allowance for the full amount of outstanding homeowner rehab loans has been recognized to offset the loan balance. Rental rehab loans are required to be paid back by the landlords in monthly payments, typically over ten years with a zero percent interest rate. Loans may have a forgivable portion, typically 25 percent, which will be forgiven after the first five years of loan compliance. The initial loan is reduced by the 25 percent forgivable portion when recorded on the books at inception. Down payment assistance loans are written for the term of the original mortgage on the home. The loans have a zero percent interest rate. The loans are to be repaid at final payment of original mortgage, upon loan refinancing, or upon sale or transfer of the property. The Authority records the loan at face value at inception, and it remains at that value until paid or written-off. Tax levy rehab loans are "deferred loans" that are forgivable at ten percent each year and completely forgiven after ten years, if all conditions are met. If the rehabilitated property is not sold, transferred, or otherwise conveyed within ten years, the conditions are met, and no repayment shall be due, the loan will be forgiven. If the conditions are not met, the recipient shall repay the principal amount of the loan, and the Authority shall have a lien for repayment of all funds. It is estimated that conditions are likely to be met by the borrower, and an allowance for the full amount of outstanding tax levy rehab loans has been recognized to offset the loan balance. Loans receivable activity for the year ended December 31, 2023, was as follows: Beginning Ending Balance Balance Due Within 1/1/2023 Additions Retirements 12/31/2023 One Year Loan receivable Homeowner rehab $ 337,958 $ -$ (121,456) $ 216,502 $ Rental rehab 112,292 (18,751) 93,541 18,120 Down payment assistance 71,742 17,500 89,242 Tax levy rehab provision 268,804 30,094 (71,884) 227,014 Total 790,796 47,594 (212,091 ) 626,299 18,120 Allowance for doubtful accounts: Homeowner rehab (337,958) 121,456 (216,502) Tax levy rehab provision (268,804) (30,094) 71,884 (227,014) Total (606,762) (30,094) 193,340 (443,516) Total loan receivable, net $ 184,034 $ 17,500 $ (18,751) $ 182,783 $ 18,120 -18- 43/110 OTTER TAIL COUNTY HOUSING AND REDEVELOPMENT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS-CONTINUED DECEMBER 31, 2023 NOTE 5 ASSETS HELD FOR RESALE The Authority has assets held for resale totaling $42 ,589 as of December 31, 2023. These assets held for resale represent costs incurred to purchase and rehabilitate/renovate homes and land that the Authority expects to be sold for economic development throughout Otter Tail County. These assets have been classified as current on the statement of net position and are reported at cost. See also Note 8 for a loan received to assist in financing these activities. NOTE 6 CAPITAL ASSETS The Authority's capital asset activity for the year ended December 31, 2023, was as follows: Beginning Ending Balance Balance 1/1/2023 Additions Retirements 12/31/2023 Capital assets, not being depreciated: Land $ 32,990 $ 26,400 $ -$ 59,390 Total capital assets not being depreciated 32,990 26,400 59,390 Capital assets, being depreciated: Buildings and improvements 1,661,870 1,661,870 Vehicles 9,657 9,657 Total capital assets being depreciated 1,671,527 1,671,527 Less accumulated depreciation for: Buildings and improvements (1 ,072,546) (39,885) (1,112,431) Vehicles {269) {3,219) {3,488) Total accumulated depreciation {1,072,815) (43,104) {1,115,919) Total capital assets, being depreciated -net 598,712 (43,104) 555,608 Total capital assets $ 631 ,702 $ (16,704) $ -$ 614,998 NOTE 7 DUE TO OTHER GOVERNMENTS The Authority has $1,952 due to several local municipalities for utilities charges incurred but not paid as of December 31, 2023. NOTE 8 LONG-TERM LIABILITIES On April 1, 2022, the Authority entered into a loan agreement with the Minnesota Housing Finance Association (MHFA). The Authority obtained an Interim Loan Pilot Program loan of $750,000 through the MHFA's Community Homeownership Impact Fund to be used for economic development related to assets held for resale in Note 5. During the year ended December 31, 2023, the loan was paid off, upon the sale of three development properties, prior to its original maturity date of June 1, 2024. -19- 44/110 OTTER TAIL COUNTY HOUSING AND REDEVELOPMENT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS-CONTINUED DECEMBER 31, 2023 The following is a summary of the activity in long-term liabilities for the year: Interest Balance Balance Rate 1/1/2023 Additions Retirements 12/31/2023 MHFA Interim Loan 3.75% $ 167,006 $ 347,602 $ !514,608) $ -$ Totals $ 167,006 $ 347,602 $ (514,608) $ -$ NOTE 9 ANNUAL CONTRIBUTIONS CONTRACT Current Maturities The Authority has an annual contributions contract for Section 8 Housing Choice Vouchers and adjustments vary based on requirements. The total of administrative and HAP revenues was $566,150 for 2023. NOTE 10 RISK MANAGEMENT The Authority is exposed to various risks of losses including general liability, property damage and employee bodily injury. The insurance coverage is considered to be adequate to cover unexpected claims against the Authority. The Authority retains the responsibility to cover any settlements exceeding the specific coverage. There was no reduction in coverage from the prior year and settlements have not exceeded insurance coverage in the past three years. NOTE 11 COMMITMENTS AND CONTINGENCIES Grants The Authority participates in federal grant programs, which are governed by various rules and regulations of the granter agency. Costs charged to the respective grant programs are subject to audit and adjustment by the granter agency; therefore, to the extent that the Authority has not complied with the rules and regulations governing the grants, refunds of any money received may be required and the collectability of any related receivable at December 31, 2023, may be impaired. In the opinion of the Authority, there are no significant contingent liabilities relating to compliance with the rules and regulations governing the respective grants; therefore, no provision has been recorded in the accompanying financial statements for such contingencies. NOTE12 MANAGEMENTFEES The Authority has a management contract with Otter Tail County. Under this contract, the County will provide on-site workspace, internet access, technology, technological support, and office related functions to the Authority as needed. The County will make County employees available to support operations and purposes of the Authority. The services under the agreement began on January 1, 2022, and are renewed automatically for additional one-year terms. Either party may terminate this agreement early, upon not less than 90 days' notice given in writing prior to the end of the fiscal year. The management fee paid by the Authority was $545, 181 for the year ended December 31, 2023. -20- 45/110 OTTER TAIL COUNTY HOUSING AND REDEVELOPMENT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS -CONTINUED DECEMBER 31, 2023 NOTE 13 NEW PRONOUNCEMENTS GASB Statement No. 99, Omnibus 2022, provides guidance on the following accounting matters: • The requirements related to extension of the use of LIBOR, accounting for SNAP distributions, disclosures of nonmonetary transactions, pledges of future revenues by pledging governments, clarification of certain provisions in Statement 34, as amended, and terminology updates related to Statement 53 and Statement 63 are effective upon issuance. • The requirements related to leases, PPPs, and SBITAs are effective for fiscal years beginning after June 15, 2022, and all reporting periods thereafter. • The requirements related to financial guarantees and the classification and reporting of derivative instruments within the scope of Statement 53 are effective for fiscal years beginning after June 15, 2023, and all reporting periods thereafter. GASB Statement No. 100, Accounting Changes and Error Corrections -An Amendment of GASB Statement No. 62, enhances the accounting and financial reporting requirements for accounting changes and error corrections. The statement is effective for fiscal years beginning after June 15, 2023. GASB Statement No. 101, Compensated Absences, updates the recognition and measurement guidance for compensated absences through aligning the recognition and measurement guidance under a unified model and by amending certain previously required disclosures. The statement is effective for fiscal years beginning after December 15, 2023. GASB Statement No. 102, Certain Risk Disclosures, requires entities to disclose critical information about their exposure to risks due to certain concentrations or limitations that could lead to financial distress or operational challenges. This statement is effective for fiscal years beginning after June 15, 2024. GASB Statement No. 103, Financial Reporting Model Improvements, revises the requirements for management's discussion and analysis with the goal of making it more readable and understandable, requires unusual or infrequent items to be presented separately, defines operating and nonoperating revenues, includes a new section for noncapital subsidies for proprietary funds' statement of revenues, expenses and changes in net position, removes the option to disclose major component information in the notes and requires them to be shown individually or in combine financial statements following the fund financial statements and requires budgetary comparisons to be presented as RSI with new columns for variances between original-to-final budget and final budget-to-actual results. This statement is effective for fiscal years beginning after June 15, 2025. Management has not yet determined the effect these pronouncements will have on the Authority's financial statements. -21- 46/110 OTTER TAIL COUNTY HOUSING AND REDEVELOPMENT AUTHORITY NOTES TO THE FINANCIAL STATEMENTS-CONTINUED DECEMBER 31, 2023 NOTE14 SUBSEQUENTEVENTS In March 2024, the Authority authorized the purchase of land from the City of Dalton, Minnesota, with the intention to undertake the acquisition and construction of two triplex buildings, which will provide a total of six units of affordable senior housing. The total cost of the development project ("North Fields of Dalton") is estimated at $1,637,622. The Authority anticipates funding this project through approximately $825,000 in project financing assistance from Otter Tail County and $143,671 in statewide affordable housing aid from Otter Tail County, with the remaining costs to be covered by Authority reserves. Work on the project commenced shortly after construction contracts were executed in June 2024. Subsequent events have been evaluated through August 12, 2024, which is the date the financial statements were available to be issued. -22- 47/110 OTTER TAIL COUNTY HOUSING AND REDEVELOPMENT AUTHORITY COMBINING SCHEDULE OF NET POSITION DECEMBER 31, 2023 Section 8 Low Rent Housing General & Public Choice State/Local Housing Vouchers Totals ASSETS Current assets Cash and cash equivalents $ 2,707,270 $ 137,492 $ 47,092 $ 2,891,854 Restricted cash 9,174 11,902 21,076 Accounts receivable Tenants, net of allowance for doubtful accounts 1,600 1,600 Accounts receivable -other 1,167 1,167 Taxes receivable 30,321 30,321 Loans receivable, current 18,120 18,120 Assets held for resale 42,589 42,589 Prepaid expenses 14,897 14,897 Total current assets 2,814,364 148,266 58,994 3,021 ,624 Noncurrent assets Loans receivable, net of allowance for doubtful accounts 164,663 164,663 Capital assets Nondepreciable 26,400 32,990 59,390 Depreciable, net 6,170 549,438 555,608 Total capital assets (net) 32,570 582,428 614,998 Total noncurrent assets 197,233 582,428 779,661 Total assets $ 3,011,597 $ 730,694 $ 58,994 $ 3,801,285 -23- 48/110 OTTER TAIL COUNTY HOUSING AND REDEVELOPMENT AUTHORITY COMBINING SCHEDULE OF NET POSITION -CONTINUED DECEMBER 31, 2023 Section 8 Low Rent Housing General & Public Choice State/Local Housing Vouchers Totals LIABILITIES AND NET POSITION Current liabilities Accounts payable $ 9 $ 1,098 $ 697 $ 1,804 Payment in lieu of taxes 3,395 3,395 Tenant security deposits 9,174 9,174 Unearned revenue 1,650 1,650 Due to other governments 1,952 1,952 Total current liabilities 9 17,269 697 17,975 Total liabilities 9 17,269 697 17,975 Net position Net investment in capital assets 32,570 582,428 614,998 Restricted 11,902 11,902 Unrestricted ( deficit) 2,979,018 130,997 46,395 3,156,410 Total net position $ 3,011,588 $ 713,425 $ 58,297 $ 3,783,310 -24- 49/110 OTTER TAIL COUNTY HOUSING AND REDEVELOPMENT AUTHORITY COMBINING SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN NET POSITION FOR THE YEAR ENDED DECEMBER 31, 2023 Section 8 Low Rent Housing General & Public Choice State/Local Housing Vouchers Totals Operating revenues Dwelling rents $ -$ 35,489 $ -$ 35,489 Property taxes 1,288,716 1,288,716 HUD operating grants Operating subsidy 67,905 77,763 145,668 Housing Choice Vouchers 488,387 488,387 Other government grants 488,651 488,651 Tenant utility charges 36,084 36,084 Proceeds on sale of assets held for resale 717,368 717,368 Cost of sale on assets held for resale (1,125,168) (1,125,168) Fraud recovery 5,569 5,569 Other 40,600 896 41,496 Total operating revenues 1,410,167 140,374 571,719 2,122,260 Operating expenses Service agreement fees 149,321 17,000 67,276 233,597 Contract services 311,584 311,584 Professional services 76,717 2,783 79,500 Bad debt expense 30,094 206 30,300 Advertising 2,003 2,003 Office expense 5,922 239 478 6,639 Travel 680 551 482 1,713 Dues 912 912 Staff training 7,442 450 225 8,117 Consulting fees 7,865 1,945 1,945 11,755 Tenant services 22,417 22,417 Utilities 35,553 35,553 Repairs and maintenance 6,374 54,017 60,391 Insurance 31,903 15,763 47,666 General expenses 152,056 1,296 3,383 156,735 Payments in lieu of taxes 3,395 3,395 Housing assistance payments 495,061 495,061 Depreciation 3,219 39,885 43,104 Total operating expenses 808,509 173,083 568,850 1,550,442 Operating income (loss) 601,658 {32,709) 2,869 571,818 -25- 50/110 OTTER TAIL COUNTY HOUSING AND REDEVELOPMENT AUTHORITY COMBINING SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN NET POSITION - CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2023 Section 8 Low Rent Housing General & Public Choice State/Local Housing Vouchers Totals Nonoperating revenues (expenses) Interest income 276 276 Investment income 8,977 135 9,112 Interest expense (12,126) (64) (12,190) Capital grants 36,972 36,972 Conveyance of forfeited lands 26,400 26,400 Total nonoperating revenues (expenses) 23,251 37,184 135 60,570 Change in net position 624,909 4,475 3,004 632,388 Net position -beginning of year 2,386,679 708,950 55,293 3,150,922 Net position -end of year $ 3,011,588 $ 713,425 $ 58,297 $ 3,783,310 -26- 51/110 OTTER TAIL COUNTY HOUSING AND REDEVELOPMENT AUTHORITY COMBINING SCHEDULE OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2023 Section 8 Low Rent Housing General & Public Choice State/Local Housing Vouchers Totals Cash flows from operating activities: Receipts from tenants $ -$ 73,958 $ -$ 73,958 Receipts from other governmental units 488,651 67,905 566,150 1,122,706 Receipts from property taxes 1,288,484 1,288,484 Other receipts 1,022,174 896 5,569 1,028,639 Payments to vendors (1,607,809) (95,714) (2,433) (1,705,956) Payments to other governmental units (149,321) (17,738) (67,276) (234,335) Payments for housing assistance (495,061) (495,061) Other payments (152,056) (1,296) (3,383) {156,735) Net cash provided (used) by operating activities: 890,123 28,011 3,566 921,700 Cash flows from capital and related financing activities: Proceeds on loans payable 347,602 347,602 Payments on loans payable (514,608) (514,608) Capital grants 36,972 36,972 Interest paid (12,126) (64) (12,190) Net cash provided (used) for capital and related financing activities (179,132) 36,908 (142,224) Cash flows from investing activities: Payments received on loans receivable 18,751 18,751 Issuance of loans receivable (17,500) (17,500) Interest income 8,977 276 135 9,388 Net cash provided (used) for investing activities 10,228 276 135 10,639 Net increase (decrease) in cash and cash equivalents 721,219 65,195 3,701 790,115 Cash and cash equivalents, Beginning of year 1,986,051 81,471 55,293 2,122,815 Cash and cash equivalents, End of year $ 2,707,270 $ 146,666 $ 58,994 $ 2,912,930 Reconciliation of cash and cash equivalents Cash $ 2,707,270 $ 137,492 $ 47,092 $ 2,891,854 Restricted cash 9,174 11,902 21,076 TOTAL $ 2,707,270 $ 146,666 $ 58,994 $ 2,912,930 -27- 52/110 OTTER TAIL COUNTY HOUSING AND REDEVELOPMENT AUTHORITY COMBINING SCHEDULE OF CASH FLOWS -CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2023 Reconciliation of cash flows from operating activities Operating income (loss) Adjustments to reconcile operating income (loss) to net cash from operating activities Depreciation Bad debts (recovery) Changes in assets and liabilities: Accounts receivable Taxes receivable Assets held for resale Prepaid expenses Accounts payable Payments in lieu of taxes Tenant security deposits Unearned revenue Due to Otter Tail County Cash flows provided (used) by operating activities Schedule of noncash investing, capital and financing activities: General & State/Local $ 601,658 3,219 30,094 (31,261) (232) 295,467 5,940 (14,762) $ 890,123 Low Rent Public Housing $ (32,709) $ 39,885 206 1,232 15,763 (176) 705 130 1,023 1,952 $ 28,011 $ Section 8 Housing Choice Vouchers 2,869 697 3,566 Totals $ 571,818 43,104 30,300 (30,029) (232) 295,467 21,703 (14,241) 705 130 1,023 1,952 $ 921,700 Conveyance of forfeited lands Forgiveness of loans receivable $ 26,400 $ -$ -$ 26,400 193,340 193,340 -28- 53/110 OTTER TAIL COUNTY HOUSING AND REDEVELOPMENT AUTHORITY SCHEDULE OF CAPITAL FUND COSTS DECEMBER 31, 2023 Grant Year Grant Year Grant Year Grant Year 2023 2022 2021 2020 Grant Year 2019 MN46P17750123 MN46P17750122 MN46P17750121 MN46P17750120 MN46P17750121 Funds Approved $ 42,596 $ 41,474 $ 34,495 $ 33,107 $ 33,054 Funds Expended 7 000 34,495 21 210 33,054 Excess of Funds Approved $ 42,596 $ 34474 $ -$ 11 897 $ -29- 54/110 Brady Martz INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Board of Commissioners Otter Tail County Housing and Redevelopment Authority Fergus Falls, Minnesota We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the business-type activities of Otter Tail County Housing and Redevelopment Authority as of and for the year ended December 31, 2023, and the related notes to the financial statements and have issued our report thereon dated August 12, 2024. Report on Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the Authority's internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Authority's internal control. Accordingly, we do not express an opinion on the effectiveness of the Authority's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that have not been identified. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. We did identify certain deficiencies in internal control, described in the accompanying schedule of findings and responses as items 2023-001 and 2023-002 that we consider to be significant deficiencies. Make Every Day Count I ,ww.bradymartz.com -30- 55/110 Report on Compliance and Other Matters As part of obtaining reasonable assurance about whether the Authority's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, non-compliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Otter Tail County Housing and Redevelopment Authority's Response to Findings Government Auditing Standards requires the auditor to perform limited procedures on Otter Tail County Housing and Redevelopment Authority's responses to the findings identified in our audit and described in the accompany schedule of findings and responses. Otter Tail County Housing and Redevelopment Authority's responses were not subjected to the other auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on the responses. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. ~)(~ BRADY, MARTZ & ASSOCIATES, P.C. GRAND FORKS, NORTH DAKOTA August12,2024 -31-Make Every Day Count I WW dym rtz.com 56/110 OTTER TAIL COUNTY HOUSING AND REDEVELOPMENT AUTHORITY SCHEDULE OF FINDINGS AND RESPONSES FOR THE YEAR ENDED DECEMBER 31, 2023 Significant Deficiency 2023-001 Preparation of Financial Statements Criteria -An appropriate system of internal control requires the Authority to prepare financial statements in compliance with accounting principles generally accepted in the United States of America. Condition -The Authority's personnel prepare periodic financial information for internal use that meets the needs of management and the board. However, the organization does not prepare financial statements, including accompanying note disclosures, as required by accounting principles generally accepted in the United States of America. The Authority has elected to have the auditors assist in the preparation of the financial statements and notes. Cause -The Authority elected to not allocate resources for the preparation of the financial statements. Effect -There is an increased risk of material misstatement to the Authority's financial statements. Repeat Finding -This is a repeat finding of 2022-001 Recommendation -We recommend the entity consider the additional risk of having the auditors assist in the preparation of the financial statements and note disclosures and consider preparing them in the future. As a compensating control the entity should establish an internal control policy to document the annual review of the financial statements and schedules and to review a financial statement disclosure checklist. Views of Responsible Officials and Planning Corrective Actions -Due to cost constraints, the Authority will continue to have the auditors draft the financial statements and accompanying notes to the financial statements. -32- 57/110 OTTER TAIL COUNTY HOUSING AND REDEVELOPMENT AUTHORITY SCHEDULE OF FINDINGS AND RESPONSES-CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2023 Significant Deficiency 2023-002 Proposition of Journal Entries Criteria or Specific Requirement -The Authority is required to maintain internal controls at a level where underlying support for the general ledger accounts can be developed and a determination can be made that the general ledger accounts are properly reflected in accordance with GAAP. Condition -During our audit, adjusting entries to the financial statements were proposed in order to properly reflect the financial statements in accordance with GAAP. Cause -The Authority's internal controls continued to be developed throughout 2023 but were not fully sufficient to identify all adjustments necessary to properly reflect the financial statements in accordance with GAAP. Effect -The Authority's financial statements were materially misstated prior to adjustments detected as a result of audit procedures. Repeat Finding -This is a repeat finding of 2022-002 Recommendation -Accounting personnel will need to determine the proper balance in each general ledger account prior to the audit. Views of Responsible Officials and Planning Corrective Actions -The Authority's management and Board of Commissioners will review current and prior audit entries and implement a process to prepare those entries prior to the succeeding audit's field work for any entries the Authority is able to prepare. -33- 58/110 2022-001 OTTER TAIL COUNTY HOUSING AND REDEVELOPMENT AUTHORITY SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS FOR THE YEAR ENDED DECEMBER 31, 2023 Preparation of Financial Statements Criteria or Specific Requirement -Management is responsible for preparing the Authority's financial statements in accordance with generally accepted accounting principles (GAAP). The financial statement preparation in accordance with GAAP requires internal control over both: (1) recording, processing, and summarizing accounting data (that is, maintaining internal books and records); and (2) preparing and reporting appropriate government-wide and fund financial statements, including the related notes to the financial statements. A deficiency in internal control over financial reporting exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements of the financial statements on a timely basis. Auditing standards define a material weakness as a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the Authority 's financial statements will not be prevented, or detected and corrected, on a timely basis. Condition -The Authority's personnel prepare periodic financial information for internal use that meets the needs of management and the Authority. However, the Authority does not have internal resources to maintain a general ledger and prepare full-disclosure financial statements required by GAAP for external reporting. The Authority is aware of this deficiency and obtains our assistance in the preparation of its annual financial statements. Current year status -See 2023-001 2022-002 Proposition of Journal Entries Criteria or Specific Requirement -A complete system of internal accounting control contemplates an adequate system for recording and processing adjusting journal entries significant to the financial statements. Condition -During the course of our engagement, we proposed numerous significant audit adjustments that had not been identified as a result of the Agency's existing internal controls, and therefore could have resulted in a material misstatement of the Agency's financial statements. Current year status -See 2023-002 -34- 59/110 ~ .............. , ! ..... ..,.i\.o· •• ..,~~-.,,. ,:· ... . ," OTTER .TAIL COUNTY· MINNESOTA HOUSING AND REDEVELOPMENT-AUTHORITY ---· ••• ~ • Government Services Center 500 West Fir Avenue Fergus Falls, MN 56537 """" CORRECTIVE ACTION PLAN FOR THE YEAR ENDED December 31, 2023 Contact Person Amy Baldwin, Executive Director Corrective Action Plan No action is planned on the finding. The Authority feels that the additional costs to the Authority would not be significantly beneficial. The Authority does mitigate this situation through the review of the draft financial statements and accompanying notes to the financial statements. Planned Completion Date for CAP None. See above. 2023-002 Contact Person Amy Baldwin, Executive Director Corrective Action Plan The Authority's management and Board of Commissioners will review proposed audit entries and approve them. Any common adjustments, such as those identified in the current year, not likely to be recurring will be reviewed and approved by appropriate Authority personnel. Planned Com pletion Date for CAP December 31, 2024 (!? 218-998-8730 ~~ ottertailcounty.gov hra@ottertailcounty.gov -35- OTTER TAIL COUNTY HOUSING AND REDEVELOPMENT AUTHORITY REQUEST FOR BOARD ACTION _August 20, 2024 BOARD MEETING DATE AGENDA ITEM # 5B Tanya Westra 08/14/2024 REQUESTOR’S SIGNATURE/DATE BOARD ACTION REQUESTED Approval of Resolution No. 286 Adopting the Agency 5 Year and Annual Plans, Capital Fund Five Year Action Plan and Definition of Significant Amendment PROPOSED REQUEST/JUSTIFICATION Pending no changes as a result of the public hearing, staff recommends approval of the resolution. There are no proposed changes to our current definition of significant amendment. PREVIOUS ACTION ON REQUEST/OTHER PARTIES ADVISED EXECUTIVE DIRECTOR DATE: Amy Baldwin 08/14/2024 ATTACHMENT LIST: Resolution No. 286 5 Year Agency Plan 2025-2029 Agency Annual Plan 5 Year Capital Fund Plan Definition of Significant Amendment FINANCIAL IMPLICATIONS: approximately $40,000 in Capital Funds for 2025 BUDGETED: X YES NO FUNDING: Public Housing Budget COMMENTS 60/110 RESOLUTION NO. 286 RESOLUTION ADOPTING THE AGENCY’S FIVE YEAR (2025-2029), ANNUAL PLAN FOR 2025 AND CAPITAL FUND PROGRAM FIVE YEAR ACTION PLAN (2022-2026) WHEREAS, the Otter Tail County Housing and Redevelopment Authority (the “Authority”) has prepared the Agency’s Five Year (2025-2029) and Annual Plan for 2025, including amendments to its Administrative Plan for the Housing Choice Voucher Program and the Admissions and Continued Occupancy Policy for the Public Housing program, and updates to its Goals and Objectives (the “Annual Plan and Documents”); and WHEREAS, the Authority has prepared its Capital Fund Program Five Year Action Plan for Fiscal Years 2022–2026 (the “CFP 5 Year Action Plan”) for the thirteen scattered site public housing units (the “Public Housing Program”); and WHEREAS, the Authority issued a public notice for the Capital Fund 5 Year Action Plan, Agency 5 Year and Annual Plans including amendments to its Administrative Plan for the Housing Choice Voucher Program and the Admissions and Continued Occupancy Policy for the Public Housing program, for a forty-five (45) day comment period beginning on June 29, 2024; and WHEREAS, the Authority is required to complete certain forms regarding the CFP 5 Year Action Plan and Annual Plan, including but not limited to the Civil Rights Certification, the Certification of Consistency with the State Consolidated Plan, and the Annual Consolidated Contribution Contract for each year of the Capital Fund Program (the “Required Certifications and Contracts”); and WHEREAS, the Authority has revised its Goals and Objectives in the 5 Year Agency Plan for years 2025-2029 as represented in Exhibit A; WHEREAS, the Authority has revised its Goal and Objectives in the Annual Agency Plan for 2025 as represented in Exhibit B; WHEREAS, the Authority is revising its Capital Fund 5 Year Action Plan as represented in Exhibit C; and WHEREAS, the Capital Fund 5 Year Action Plan contemplates, subject to Congressional Appropriation, approximately $40,000 in annual capital grants to include limited portions of projected grant funds for operations; and WHEREAS, the Authority is required to define a significant amendment or modification to the Capital Fund 5 Year Action Plan, which is also stated in Exhibit D, incorporated herein and attached hereto. 61/110 WHEREAS, the Authority has not received any comments during the comment period; and WHEREAS, the Authority conducted the public hearing at its August 20, 2024 board meeting; and NOW THEREFORE, BE IT RESOLVED by the Board of Commissioners of the Housing and Redevelopment Authority in and for Otter Tail County, Minnesota, as follows: 1. That the Five Year Agency Plan for 2025-2029 is hereby approved; 2. That the Annual Agency Plan for 2025 is hereby approved; 3. That the Capital Fund 5 Year Action Plan is hereby approved; 4. That the definition of a significant amendment or modification to the CFP 5 Year Plan attached in Exhibit D of this resolution is hereby adopted; 5. That the Executive Director is hereby directed and empowered to submit the 5 year Agency Plan for 2025-2029, the Annual Agency Plan for 2025, and the CFP 5 Year Action Plan to the Department of Housing and Urban Development (“HUD”); 6. That the Chair and Executive Director are hereby directed and empowered to execute the Required Certifications and Contracts, as well as any other document necessary to comply with the requirements of the 5 Year and Annual Plans as well as the Capital Fund Program of the Public Housing Program. 7. That the Executive Director is hereby directed and empowered to take any other action necessary to comply with the requirements of the Capital Fund Program of the Public Housing Program. 8. That the required documents pertaining to the Agency Five Year Plan, Annual Plan and the Capital Fund 5 Year Action Plan are available for public inspection and are on file at the offices of the Authority. Upon the motion of________________, seconded by____________, and passed on a unanimous vote, the above resolution is hereby adopted by the Otter Tail County Housing and Redevelopment Authority Board of Commissioners. Adopted this 20th day of August, 2024. Dated: _______________________________ OTTER TAIL COUNTY HRA BOARD OF COMMISSIONERS Attest:________________________________ By:_______________________________ 62/110 218-998-8730 ottertailcounty.gov housing@ottertailcounty.gov OTTER TAIL COUNTY HOUSING AND REDEVELOPMENT AUTHORITY 2025-2029 5 YEAR PLAN I.Key components to the 2025 – 2029 Five Year Plan. a. Updated Goals and Objectives. II.Goals and Objectives The HRA Board adopted two strategic initiatives beginning in 2023: 1) Housing Stability Initiative –“Keep People In Their Homes”; and 2) Strengthening Communities Initiative – “Create New Homes”. The goals for the Housing Stability Initiative includes the following: a.To maintain High Performer Status for the Scattered Site Public Housing Program.b.To investigate “repositioning” options for the Scattered Site Public Housing Program, includingmeeting with residents and the Board to determine a final recommendation.c.To complete necessary capital improvements to the properties to maintain and improve thecondition of housing units.d.Partner with area agencies to offer all rental assistance participants programs and information on budgeting, caring for rental property and homeownership.e.To maintain High Performer status for the Housing Choice Voucher Program.f.To apply for additional rental assistance vouchers to serve targeted populations including but notlimited to foster youth, veterans, persons without a home, and others as identified by countyneed.g. To continue administration of the “Community Housing Investment Programs” to rehabilitate existing owner occupied and rental properties.h. To administer the “Small City Development Program” to complete rehabilitation and othercommunity improvement programs in communities which request assistance.i.To implement other federal or state funded owner-occupied rehabilitation programs. j.To continue programs to enable homeownership including down payment assistance and first-time home buyer programs. k.Continued administration of the Community Housing Investment Programs to offer emergencyowner occupied home repair and rental unit rehabilitation for private landlords.l.Own, operate and manage 6 units of senior affordable housing in Dalton. The goals for the Strengthening Communities Initiative – “Create New Homes” a.Administration of the Otter Tail County Housing Trust Fund for rental assistance, down payment assistance, rehabilitation, and/or new construction.b.To investigate financing mechanisms to construct affordable senior housing units in New York Mills, Ottertail and Vergas.c.To continue administration of the Community Housing Investment Program Mutli-Family New Construction Loan and Down Payment Assistance Programs.d.Engage with cities to identify potential build sites for future MN Housing Impact Fund Application. e. To administer the Housing Opportunity Program to acquire, rehabilitate/demolish existing homesor rental buildings and to identify vacant lots to facilitate the construction of new housing. Exhibit A 63/110 HOUSING AND REDEVELOPMENT AUTHORITY ti) EQUAL HOUSING OPPORTUNITY Government Services Center 500 West Fir Avenue Fergus Falls, MN 56537 218-998-8730 ottertailcounty.gov housing@ottertailcounty.gov OTTER TAIL COUNTY HOUSING AND REDEVELOPMENT AUTHORITY 2025 ANNUAL PLAN I.Key components to the 2025 Annual Plan. a.Proposed changes to the Housing Choice Voucher Program Administrative Policy. b.Proposed changes to the Public Housing Admissions and Continued Occupancy Policy. c.Proposed activity for the Public Housing program Capital Fund. In 2025, capital improvements will include deck repair/improvements. Replacement of all cabinetry, countertop and flooring as needed will take place at time of unit turn. II.Goals and Objectives The HRA Board adopted two strategic initiatives beginning in 2023: 1) Housing Stability Initiative –“Keep People In Their Homes”; and 2) Strengthening Communities Initiative – “Create New Homes”. The goals for the Housing Stability Initiative includes the following: a.To maintain High Performer Status for the Scattered Site Public Housing Program. b.To complete necessary capital improvements to the properties to maintain and improve thecondition of housing units. c.To adopt an updated Administrative and Continued Occupancy Policy for the Public HousingProgram.d.Partner with area agencies to offer all rental assistance participants programs and information onbudgeting, caring for rental property and homeownership. e.To maintain High Performer status for the Housing Choice Voucher Program.f.To adopt an updated Administrative Plan aimed utilizing all federal funds as efficiently as possible.g.To apply for additional rental assistance programs to serve target special populations includingbut not limited to foster youth, veterans, persons without a home, and others as identified by thecounty. h. To administer the “Community Housing Investment Programs” to rehabilitate existing owneroccupied and rental properties. i.To implement the “Small Cities Development Program” to complete owner occupied andcommercial rehabilitation in Pelican Rapids if awarded by MN DEED.j.To continue programs to enable homeownership including down payment assistance and first-time home buyer programs. k.Own, operate and manage six affordable senior housing units in Dalton. The goals for the Strengthening Communities Initiative – “Create New Homes” a. To administer the Otter Tail County Housing Trust Fund for activities such as rental assistance,down payment assistance, rehabilitation, and/or new construction.b.To investigate financing mechanisms to construct affordable senior housing units in New York Mills.c.To continue administration of the Community Housing Investment Program Mutli-Family NewConstruction Loan and Down Payment Assistance Programs.d.Engage with cities to identify potential build sites for 2025 MN Housing Impact Fund Application.e. To administer the Housing Opportunity Program to acquire, rehabilitate/demolish existing homesor rental buildings and to identify vacant lots to facilitate the construction of new housing. Exhibit B 64/110 HOUSING AND REDEVELOPMENT AUTHORITY ti) EQUAL HOUSING OPPORTUNITY Government Services Center 500 West Fir Avenue Fergus Falls, MN 56537 $0.00 $0.00 $42,500.00$42,500.00 $7,000.00 $9,500.00 $0.00 $6,000.00 $20,000.00 $2,500.00 $24,000.00$0.00 $0.00 $7,000.00 $9,000.00 $0.00 $12,500.00 $43,716.00 $7,000.00 $15,596.00 $0.00 $0.00 $0.00 $7,500.00 $12,500.00 $42,596.00 $14,519.12 $7,602.88 $0.00 $0.00 $0.00 $12,500.00 $41,622.00 Radon Testing & Mitigation Replace Water Heater - Underwood Total Replace Furnace/Air conditioner - Underwood Replace Light Fixtures Replace deck, stairs and railings Capital Fund Five Year Action Plan 2022-2026 MN 177 Otter Tail County HRA $7,500.00 $7,000.00 $16,716.00 $0.00 $0.00 $0.00 Year 2 2023 Year 4 2025 Year 5 2026Year l 2022 Year 3 2024 Operations $7,000.00 Unit Update Exhibit C 65/110 218-998-8730 HOUSING AND REDEVELOPMENT AUTHORITY ottertailcountymn.us Government Services Center 500 West Fir Avenue Fergus Falls, MN 56537 hra@co.ottertail.mn.us DEFINITION OF SIGNIFICANT AMENDMENT OR MODIFICATION TO THE CFP 5 YEAR ACTION PLAN FOR 2025 “A significant amendment and modification to the CFP 5 Year Plan, which would require a public hearing, is hereby defined as follows: •The addition of a new work activity, the amount of which would exceed $50,000. •A proposed demolition, disposition, homeownership, Rental Assistance Demonstration conversion, Capital Fund Financing, development, or mixed finance proposal is also considered to be a significant amendment to the CFP 5 Year Action Plan.” •Emergencies caused by fire, water, or casualty loss scenarios that impact the health and safety of the residents, and which require immediate remediation are excluded from the significant amendment or modification definition. Exhibit D 66/110 OTTER TAIL COUNTY HOUSING AND REDEVELOPMENT AUTHORITY REQUEST FOR BOARD ACTION August 20, 2024 BOARD MEETING DATE AGENDA ITEM # 5C Tanya Westra 08/14/2024 REQUESTOR’S SIGNATURE/DATE BOARD ACTION REQUESTED Resolution No. 287 Adopting Changes to the HCV Administration Plan and the PH Admissions and Continued Occupancy Plan PREVIOUS ACTION ON REQUEST/OTHER PARTIES ADVISED The Housing Opportunity Through Modernization Act (2016) changed several provisions to the Housing Choice Voucher program, and other federally supported programs. HUD has issued a final rule for the HCV Program that changed the treatment of family assets and further defined annual income. The HRA must adopt and implement the new rule in its HCV Administration Plan prior to the required deadline of January 1, 2025. In addition to HUD’s regulatory changes, HRA staff is recommending the implementation of termination/denial provisions in the Attachment. In the current policy there is no penalty differentiation between a household who fails to complete their annual recertification and another household who provides false information to the HRA. Proposed changes from staff to the Public Housing Admissions and Continued Occupancy Plan can be found in the Exhibit A. Staff recommends the Board adopt Resolution No. 287 with an effective date of December 1, 2024. EXECUTIVE DIRECTOR DATE: Amy Baldwin 8/14/2024 ATTACHMENT LIST: Resolution No. 287 Non regulatory proposed changes FINANCIAL IMPLICATIONS: N/A BUDGETED: YES X NO FUNDING: HUD COMMENTS 67/110 RESOLUTION NO. 287 RESOLUTION ADOPTING AMENDMENT TO THE ADMINISTRATIVE AND ADMISSIONS AND CONTINUED OCCUPANCY PLANS WHEREAS, the Otter Tail County Housing and Redevelopment Authority (the “Authority”) operates a scattered site Public Housing program and the Housing Choice Voucher program (the “Programs”); and WHEREAS, the Department of Housing and Urban Development (“HUD”) has issued PIH Notice 2024-19 (the “Notice”) regarding the final rule of the Housing Opportunity Through Modernization Act (the “HOTMA” Regulation); and WHEREAS, the HOTMA Regulation requires the Authority to amend its Administration and Admissions and Continued Occupancy Plans (the “Plans”); and WHEREAS, the Notice identifies the pertinent regulations to incorporate into the Plans. NOW, THEREFORE, IT IS HEREBY RESOLVED: 1. That the Plans including Exhibit A are hereby amended to include the provisions of the Notice with an effective date of December 1, 2024. 2. That the Executive Director is authorized, empowered, and directed to undertake any other tasks as she deems necessary or desirable in her discretion to effectuate the purposes of the foregoing Resolution. Upon the motion of __________, seconded by__________, and passed on a _________vote, the above resolution is hereby adopted by the Otter Tail County Housing and Redevelopment Authority Board of Commissioners. Adopted this 20th day of August 2024. Dated: _______________________________ OTTER TAIL COUNTY HRA BOARD OF COMMISSIONERS Attest:________________________________ By:_______________________________ 68/110 Exhibit A Proposed Administrative Plan Changes for the Housing Choice Voucher Program 1. A deadline of the 20th of each month for documentation (Request for Tenancy Approval form, income change documents) to be received by the HRA for an action to completed for the first of the following month. 2. Incorporated penalties for Denial of Participation/Termination of Assistance (copy attached).* Proposed Admission and Continued Occupancy Plan Changes for the Public Housing Program 1. Increase of pet deposit from $300 to $400 with a maximum of 1 animal (this does not include service or companion animals). 2. Increase in billable rate for maintenance charges from $20 per hour to $30. 3. Participants households who have a negative rent will be required to complete a Negative Rent Questionnaire quarterly. This list does not include regulatory changes required by HUD. 69/110 218-998-8730 ® HOUSING AND REDEVELOPMENT AUTHORITY (!) EQUAL HOUSING OPPORTUNITY OTTER TAIL COUNTY IS AN EQUAL OPPORTUNITY EMPLOYER Government Services Center 500 West Fir Avenue Fergus Falls, MN 56537 @ ottertailcounty.gov Otter Tail County Housing Choice Voucher Program Proposed Penalties For Denial Of Participation/Termination Of Assistance VIOLATION RESULT AND PENALTY Failure to notify the owner and the HRA in writing before moving out of the unit or terminating the lease. Termination. Participant will be ineligible for a 1-year period dating back to the date of termination. Failure to use the assisted unit for residence by the family (see glossary for definition of family). Failure to use the assisted unit as the families only place of residence. Termination. Participant will be ineligible for a 3-year period dating back to the date of termination. Failure to request HRA approval to add someone to the household PRIOR to the member(s) physically moving into the unit. Termination. Participant will be ineligible for 3-year period dating back to the date of the termination. Failure to report if a family member no longer lives in the unit. HRA will proceed to terminate assistance for the family unless a repayment agreement is reached. If HRA ends up terminating, the household will be ineligible for a 3-year period, dating back to the date of termination. Refer to Admin Plan 16-IV.B. Failure to pay utility bills and supply appliances that the owner is not required to supply under the lease. If failure to pay and/or supply results in termination of tenancy (serious lease violation) assistance will be terminated/participant ineligible for 12-mo. period dating back to date of termination. Failure to notify the HRA within ten (10) working days, of the household income increases. Refer to Admin Plan, 16-IV.B. Termination. Participant will be ineligible for 3-year period dating back to date of determination. Refer to Admin Plan 16-IV.B. If the HRA determines that the family owns or has any interest in the assisted unit. Termination. Participant will be ineligible for 3-year period dating back to date of termination. If the family commits any serious or repeated violations of the lease. Termination. Participant will be ineligible for 12-mo. period dating back to date of termination. If the family commits fraud, perjury, bribery or any other corrupt or criminal act in connection with the program. Termination. Participant will be ineligible for 3-year period dating back to date of termination. If the family member is convicted of drug-related or violent criminal activity (see glossary for definitions). If a family member has a pattern of illegal drug use that interferes with the health, safety, or right to peaceful enjoyment of the premises by other residents. Drug- related criminal activity includes members of the family found to be using medical marijuana. Termination. Participant will be ineligible for 3-year period dating back to date of termination. Refer to Admin Plan 12-I.E. If the family subleases or lets the unit or assigns the lease or transfers the unit. Termination. Participant will be ineligible for 3-year period dating back to date of termination. 70/110 218-998-8730 @ HOUSING AND REDEVELOPMENT AUTHORITY tat EQUAL HOUSING OPPORTUNITY OTTER TAIL COUNTY IS AN EQUAL OPPORTUNITY EMPLOYER Government Services Center 500 West Fir Avenue Fergus Falls, MN 56537 @ ottertailcounty.gov 2 VIOLATION RESULT AND PENALTY If the family receives Section 8 assistance while receiving another subsidy, for the same unit or a different unit under any other federal, State, or local housing assistance program. Termination. Participant will be ineligible for 3-year period dating back to date of termination. If the family damages the unit or premises or permits any guest to damage the unit or premises. If failure becomes serious or repeated, termination. Participant ineligible for 6-mo. period dating back to date of termination. If the HRA determines that the family is renting from a parent child, grandparent, grandchild, sister or brother of any member of the family, unless a reasonable accommodation has been granted for a person with a disability. Termination. Participant will be ineligible for 3-year period dating back to date of termination. If a family member engages in the illegal use of a controlled substance; or abuses alcohol in a manner that threatens the health and safety or right to peaceful enjoyment of the premises by other residents/or persons residing in the immediate vicinity of the premises. Termination. Participant will be ineligible for 3-year period dating back to date of termination. Refer to Admin Plan Section 12.1.E. If the family allows a guest to stay in the unit for more than two (2) weeks. Termination. Participant will be ineligible for 3-year period dating back to date of termination. If the family allows a foster child/foster adult or a live-in aide to reside in the unit without landlord and HRA approval. If the additional household member is determined to be ineligible, if the unit becomes over-crowded, if the landlord is not willing to allow the additional member, and the ineligible member is allowed to continue to reside in the unit, assistance will be terminated/ participant will be ineligible for 3-year period dating back to date of termination. If the family makes additional payments to the landlord other than security deposit and amount of rent determined by the HRA. Termination. Participant will be ineligible for 1-year period dating back to date of termination. If the family provides false or incomplete information. Applicants will be denied admission and ineligible to reapply for a twelve (12) month period and participants will be terminated from the program and ineligible for a twelve (12) month period of time dating back to the date of denial/termination. A household member who is or becomes a fugitive felon, parole violator or person fleeing to avoid prosecution, or custody or confinement after conviction for a crime, or attempt to commit a crime that is a felony under the laws of the place from which the individual flees. Will be terminated and ineligible for a 3-year period dating back to the date of termination or until the member is cleared by law enforcement as no longer being in violation. If the household breaches an agreement with the HRA to pay amounts owner to this HRA, as agreed upon. The HRA will proceed with termination and the household will be ineligible for a 3-year period of time dating back to the date of termination. If a household member engages in or threatens abusive or violent behavior toward any HRA staff member or resident. Assistance will be terminated and participant will be ineligible for a 3-year period of time dating back to the date of termination. 71/110 OTTER TAIL COUNTY HOUSING AND REDEVELOPMENT AUTHORITY REQUEST FOR BOARD ACTION August 20, 2024 BOARD MEETING DATE AGENDA ITEM #5D Amy Baldwin 08/15/2024 REQUESTOR’S SIGNATURE/DATE BOARD ACTION REQUESTED Resolution No. 288 Authorizing Establishment of Finding Home, LLC PROPOSED REQUEST/JUSTIFICATION The HRA Board has discussed a recommendation to create a Limited Liability Company (LLC) to own and operate North Fields of Dalton and other potential future housing projects to be owned and operated by the HRA. Minnesota state law permits housing authorities to be a general partner in an LLC (469.012 subd. 2j). Many housing authorities in the state take advantage of this provision to create a “liability shield” as opposed to exposing all of the assets of the HRA. The HRA Board adopted Resolution No. 281 on March 19, 2024 authorizing staff to work with legal counsel on the creation of an LLC to protect the assets of the HRA. Attached are the draft materials prepared by legal counsel. Staff recommends approval of the resolution, authorizing execution of the necessary documents to complete the establishment of the LLC. PREVIOUS ACTION ON REQUEST/OTHER PARTIES ADVISED EXECUTIVE DIRECTOR DATE: Amy Baldwin 8/15/2024 ATTACHMENT LIST: Resolution No. 288 Articles of Organization Consent of Organizer Written Action of Member (appointing manager) Written Action of Manager (organizational) Contribution Agreement Operating Agreement FINANCIAL IMPLICATIONS: Legal expenses BUDGETED: X YES NO FUNDING: project budget COMMENTS 72/110 RESOLUTION NO. 288 RESOLUTION AUTHORIZING CREATION OF LLC TO OWN AND OPERATE PROJECTS SUCH AS NORTH FIELDS OF DALTON AS WELL AS FUTURE HRA OWNED HOUSING PROJECTS WHEREAS, the Housing and Redevelopment Authority in and for Otter Tail County (the "HRA"), is undertaking the construction of two triplex buildings, totaling six units of affordable senior housing (the "Project") to be located on certain real property purchased from the City of Dalton, Minnesota (the "City"); and WHEREAS, the HRA requested assistance from Otter Tail County (the "County") to help pay for certain costs of the Project; and WHEREAS, Minnesota Statutes, Chapter 469 (the "Act"), and particularly Section 469.041, authorizes the County to provide such assistance; and WHEREAS, such assistance to the HRA from the County has been approved pursuant to the Project Financing Assistance Agreement (the "Agreement"); WHEREAS, the HRA adopted Resolution No. 277 “Authorizing Staff to Proceed with Financing and Contract Preparation for Construction of Senior Affordable Housing” on February 20, 2024; and WHEREAS, the HRA adopted Resolution No. 281 on March 19, 2024 authorizing staff to work with legal counsel on the creation of an LLC that is appropriate to protect the assets of the HRA through a limited liability company as permitted in the Act and particularly Section 469.012 (subd. 2j); and NOW, THEREFORE, IT IS HEREBY RESOLVED: 1. The Executive Director is hereby authorized, empowered, and directed to work with the HRA legal counsel to execute the necessary documents to create the Finding Home Limited Liability Company, with the HRA acting as the sole member; 2. The Executive Director is hereby authorized to execute and deliver in the name and on behalf of the Authority any other documents and instruments in such form and on such terms and conditions as she deems necessary or appropriate in connection with the LLC as contemplated above. 3. The Executive Director is hereby authorized, empowered, and directed to do all other acts and things as she deems necessary or desirable in her discretion to effectuate the purposes of the foregoing Resolutions. 73/110 Upon the motion of ___________________, seconded by ____________________ and passed on a ________________ vote, the above resolution is hereby adopted by the Otter Tail County Housing and Redevelopment Authority Board of Commissioners. Adopted this 20th day of August 2024. Dated: _______________________________ OTTER TAIL COUNTY HRA BOARD OF COMMISSIONERS Attest:________________________________ By:_______________________________ 74/110 75/110 ARTICLES OF ORGANIZATION OF FINDING HOME, LLC The undersigned, being a natural person 18 years of age or older, for the purpose of forming a limited liability company under the Minnesota Revised Uniform Limited Liability Company Act, Minnesota Statutes, Chapter 322C (the "Act"), hereby adopts the following Articles of Organization: 1. Name. The name of the limited liability company shall be Finding Home, LLC (the "Company"). 2. Registered Office. The registered office of the Company is: 500 West Fir A venue Fergus Falls, Minnesota 56537 3. Organizer. The name and address of the organizer of the Company is: Alina Yasis 2200 IDS Center 80 South 8th Street Minneapolis, MN 55402 IN WITNESS WHEREOF, the undersigned has caused these Articles of Organization to be duly executed as of the 18th day of July, 2024. Isl Alina M. Yasis Alina M. Y asis, Organizer Email: ayasis@taftlaw.com 134085278v] 76/110 CONSENT OF ORGANIZER OF FINDING HOME, LLC The undersigned, being the sole organizer of Finding Home, LLC, a limited liability company organized under Minnesota Statutes, Chapter 322C (the "Company"), does hereby consent to and take the following action pursuant to Minnesota Statutes, Section 322C.0401, Subd. 3, to be effective as of July 18, 2024. RESOLVED, that the following person shall constitute the initial member of the Company: Housing and Redevelopment Authority in and for the County of Otter Tail, Minnesota, a public body corporate and politic duly organized and existing under the laws of the State of Minnesota RESOLVED FURTHER, that the undersigned hereby resigns as organizer of the Company, effective as of the date hereof, subsequent to the filing of the Articles of Organization of the Company, and concurrent with the appointment of the initial member of the Company. 134085291vl Isl Alina M Yasis Alina M. Yasis Constituting the sole organizer of Finding Home,LLC 77/110 WRITTEN ACTION OF THE SOLE MEMBER OF FINDING HOME, LLC The undersigned, constituting the sole member (the "Member") of Finding Home, LLC, a Minnesota limited liability company (the "Company"), acting pursuant to Minnesota Statutes, Section 322C.0407, Subd. 5, do hereby authorize, consent to, adopt and approve the following resolutions, effective as of July 18, 2024, as if said resolutions had been adopted at a meeting of the members duly called and held for that purpose, to-wit: APPOINTMENT OF MANAGERS WHEREAS, the Member has determined that the Company will be manager-managed pursuant to the terms and conditions of the Operating Agreement of the Company and, to the extent not inconsistent with such Operating Agreement, Minnesota Statutes, Section 322C.0407, Subd. 3;and WHEREAS, the Member desires to elect and appoint the person designated below as the manager of the Company; it is RESOLVED, that the following person is hereby elected as the to serve until their successors have been duly elected and qualified, subject to their earlier dissolution, disqualification, resignation or removal: Housing and Redevelopment Authority in and for the County of Otter Tail, Minnesota, a public body corporate and politic duly organized and existing under the laws of the State of Minnesota RESOLVED FURTHER, that this written action may be executed in two or more counterparts, which together shall constitute one and the same instrument. [SIGNATURE PAGE FOLLOWS] l34087335vl 78/110 IN WITNESS WHEREOF, the undersigned has executed this written action, effective as of the date and year first above written. MEMBER: HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE COUNTY OF OTTER TAIL, MINNESOTA By: ---------------Name: Its: Constituting all of the members of Finding Home,LLC [SIGNATURE PAGE -WRITTEN ACTION (MANAGER APPOINTMENT)] 134087335vl 79/110 FINDING HOME, LLC WRITTEN ACTION OF MANAGER IN LIEU OF MEETING The undersigned, being the sole manager of Finding Home, LLC, a Minnesota limited liability company (the "Company"), acting pursuant to the Minnesota Revised Uniform Limited Liability Company Act (the "Act"), does hereby adopt the following resolutions, effective as of July 18, 2024 as if said resolutions had been adopted at a meeting duly called and held for that purpose, to-wit: ACTIONS OF ORGANIZER RESOLVED, that the original Articles of Organization of the Company, filed in the office of the Secretary of State of Minnesota on July 18, 2024 are hereby approved and adopted as the Articles of Organization of the Company, and shall be filed in the record book of the Company. FURTHER RESOLVED, that all actions of the Organizer as disclosed by the public records be, and the same hereby are, in all things ratified, confirmed, approved and adopted as the acts and deeds of the Company. OFFICERS RESOLVED, that the following persons be, and they hereby are, elected to the offices of the Company set opposite their respective names to serve until their successors are duly elected and qualified, subject to their earlier death, disqualification, resignation, or removal: Amy Baldwin Tanya Westra Julie Bakken Office Chief Executive Officer and President Chief Financial Officer and Treasurer Secretary OPERA TING AGREEMENT WHEREAS, a form of Operating Agreement of the Company for the regulation of its affairs has been prepared by legal counsel and reviewed by the manager; it is RESOLVED, that the Operating Agreement presented to and reviewed by the manager, be, and the same hereby is, adopted as the Operating Agreement of the Company, and any officer of the Company is hereby authorized, empowered and directed to execute the Operating Agreement on behalf of the Company and, upon such execution, the Secretary of the Company is hereby directed to insert it into the minute book of the Company. 134088833vl 80/110 CONTRIBUTION AGREEMENT WHEREAS, the Company has received a contribution agreement from the Housing and Redevelopment Authority in and for the County of Otter Tail, Minnesota, a public body corporate and politic duly organized and existing under the laws of the State of Minnesota (the "HRA"), for the purchase of 100 membership units of the Company as set forth in the contribution agreement (the "Contribution Agreement"); and WHEREAS, said Contribution Agreement and the consideration to be paid pursuant thereto is fair and reasonable to, and should be accepted by, the Company; it is RESOLVED, that the Contribution Agreement be and hereby is accepted, adopted and approved. FURTHER RESOLVED, that any officer of the Company is hereby authorized, empowered and directed to accept the Contribution Agreement, to execute and deliver such Contribution Agreement on behalf of the Company and, upon contribution of the capital set forth therein, to issue to the HRA the membership units of the Company as set forth in the Contribution Agreement. FURTHER RESOLVED, that upon the issuance of the membership units in accordance with the requirements set forth in the foregoing resolutions, such membership units shall be duly authorized, validly issued, fully paid and nonassessable. BANKING RELATIONSHIP WHEREAS, it is desirable and in the best interest of the Company to establish bank accounts at such banks as the manager of the Company deem to be advisable ( collectively, the "Banks") and to appoint said Banks as depositories for the funds of the Company; it is RESOLVED, that the manager of the Company is authorized and directed to establish bank accounts in any jurisdiction that the manager deems appropriate, necessary or convenient, and the Company hereby adopts the banking resolutions of such banks as the manager of the Company shall designate for the deposit and withdrawal of the Company's funds. FURTHER RESOLVED, that checks and withdrawal orders on accounts at such banks may be made by such persons as the manager shall from time to time designate, but in the absence of such designation, by the manager, President and Treasurer of the Company. FURTHER RESOLVED, that the manager of the Company is authorized and directed to certify to said banks designated as depositories for the funds of this Company the effect of these resolutions in the normal form of certificate required by such banks, and a copy of such certificate shall be included in the minute book of the Company and made a part of the formal records of the Company. 2 134088833vl 81/110 FISCAL YEAR RESOLVED, that the fiscal year of the Company shall end on December 31 of each calendar year. REIMBURSEMENT OF EXPENSES WHEREAS, it is anticipated that the member, manager and/or officers of the Company will incur expenses in connection with the performance of their services to the Company and in the promotion of its business; it is RESOLVED, that the Company shall reimburse the member, manager and officers for reasonable expenses incurred or expended by them in the performance of their services on behalf of the Company or in furtherance of the promotion of the Company's business upon submission by the member, manager or officer requesting the same of proof of expenses incurred. ORGANIZATIONAL EXPENSES RESOLVED, that the Company hereby is authorized and directed to pay all fees and expenses incidental to and necessary for the organization of the Company. GENERAL FURTHER RESOLVED, that in addition to the specific authority hereby conferred, the manager and the officers of the Company are each hereby authorized, empowered and directed, in the name and on behalf of the Company, to do or cause to be done any and all such further acts and things, including the execution and delivery of any and all such further papers, agreements, consents, certificates and other documents and instruments specifically required or as the manager or the officers may deem necessary or appropriate in order to complete and carry out the intent and purposes of the foregoing resolutions, the signature of the manager or such officer being conclusive evidence of such determination. FURTHER RESOLVED, that any and all actions taken to date on behalf of the Company by the manager and the officers of the Company regarding the foregoing resolutions are hereby ratified, approved, confirmed and adopted as actions of the Company, and the Company shall hereafter be bound by the actions taken by the manager on behalf of the Company in connection with the foregoing resolutions and shall accept and hereby adopts all agreements, arrangements, negotiations and contracts made or entered into on behalf of the Company by the manager in connection therewith. [SIGNATURE PAGE FOLLOWS] 3 l34088833vl 82/110 IN WITNESS WHEREOF, the undersigned has executed this written action effective as of the first day above. 134088833vl MANAGER: HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE COUNTY OF OTTER TAIL, MINNESOTA By: ______________ _ Nrune: Its: Constituting the sole manager of Finding Home,LLC [SIGNATURE PAGE -WRITTEN ACTION (ORGANIZATIONAL)] 4 83/110 FINDING HOME, LLC CONTRIBUTION AGREEMENT (Member/Cash) Contribution. The undersigned hereby agrees to make a capital contribution valued at $100 Dollars ($100.00) in exchange for one hundred (100) membership units in Finding Home, LLC, a Minnesota limited liability company (the "Company"). The contribution is to be satisfied by the undersigned's contribution of cash. This Contribution Agreement is irrevocable and the entire capital contribution shall be made on the date hereof. Securities Representations. The undersigned represents to the Company that the undersigned is acquiring such membership interest for the undersigned's own account and not as nominee for any other person or entity or for distribution. The undersigned agrees not to effect a disposition of the membership interest unless either: (i) there exists an exemption from registration and, if requested by the Company, it has received the opinion of counsel acceptable to the Company that registration under the Securities Act of 1933, as amended (the "Act"), is not required; or (ii) a registration statement covering the membership interest has become effective under the Act. Investment Risk. The undersigned acknowledges that an investment in the membership interest is a speculative investment which involves a substantial degree of risk of loss by the undersigned of all or a portion of the value of the undersigned's investment in the Company. The undersigned understands and takes full cognizance of the risk factors related to the purchase of the membership interest. Economic Risk. By reason of the undersigned's business or financial experience, the undersigned is capable of evaluating the risks and merits of an investment in the Company and of protecting the undersigned's own interests in connection with this investment. The undersigned is financially able to bear the economic risk of an investment in the membership interest, including a total loss thereof. Acknowledgments and Covenants. The undersigned acknowledges: (i) that the undersigned is familiar with the Company's business; (ii) that the undersigned has received and reviewed a copy of the Articles of Organization and Operating Agreement ( collectively, the "Organizational Documents") for the Company and its members and agrees to be bound by the terms thereof; (iii) that the management and control of the Company will be governed by its managers in accordance with the Organizational Documents and applicable law; and (iv) that the undersigned has had the opportunity to ask questions and obtain additional information about the Company and its business. Restrictions on Transferability. The undersigned acknowledges that there are substantial restrictions on the transferability of the membership interest, that there is no public market for such membership interest and none is expected to develop. Accordingly, it may not be possible for the undersigned to liquidate the undersigned's investment in the Company. Accredited Investor. The undersigned is an "accredited investor" as defined in Rule 501(a) of Regulation D under the Act. 134089076vl 84/110 No Registration of Membership Interest. The undersigned acknowledges that the membership interest has not been registered under the Act or any applicable blue sky laws in reliance, in part, on the representations, warranties, and agreements of the undersigned herein. The undersigned acknowledges and agrees that the Company is under no obligation to register or qualify the membership interest under the Act or under any state securities law, or to assist the undersigned in complying with any exemption from registration and qualification. [SIGNATURE PAGE FOLLOWS] 134089076vl 85/110 IN WITNESS WHEREOF, the undersigned has executed this Contribution Agreement, effective as of the 18th day of July, 2024. Approval by Company: HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE COUNTY OF OTTER TAIL, MINNESOTA By: _____________ _ Name: Its: The foregoing Contribution Agreement is approved and accepted by Finding Home, LLC. Effective Date: July 18, 2024 FINDING HOME, LLC By: Name: Amy Baldwin Title: Chief Executive Officer 134089076vl 86/110 OPERATING AGREEMENT OF FINDING HOME, LLC THIS OPERATING AGREEMENT ("Agreement") is made and entered into effective as of July 18, 2024, by and between Finding Home, LLC, a Minnesota limited liability company (the "Company"), and the undersigned member (the "Member(s)"). RECITALS A. The Company was organized on July 18, 2024. B. The undersigned Member is the sole Member of the Company. C. This Agreement constitutes an "operating agreement", as defined in Minn. Stat. § 322C.0102, Subd. 17, and is entered into for the purpose of providing for the operation and management of the business of the Company and the other matters hereinafter provided. NOW, THEREFORE, in consideration of the foregoing and the agreements and undertakings contained in this Agreement, the parties agree as follows: SECTION 1 DEFINITIONS 1.1 Definitions. In addition to the abbreviations and terms otherwise defined in the text of this Agreement, the capitalized terms used herein shall be defined as provided below: "Act" means the Minnesota Revised Uniform Limited Liability Company Act, Chapter 322C of the Minnesota Statutes, as amended from time to time. "Affiliate" of a person means a person or entity that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such person. "Articles of Organization" means the Articles of Organization of the Company filed on July 18, 2024 with the Minnesota Secretary of State, as the same may be amended from time to time. "Assignee" means any person who is a transferee of a Member's Units in the Company, or part thereof, and who does not become a Member pursuant to Section 9 .1 hereof. "Capital Account" means, with respect to any Member, the account established and maintained for such Member in accordance with the provisions of Section 6.1 hereof. "Capital Contribution" means, with respect to any Member, the aggregate amount of money and the initial fair market value of any property (other than money) contributed to the Company pursuant to Section 6.2 hereof with respect to the Interests held by such Member. In the case of an Assignee who acquires an Interest in the Company by virtue of an assignment in 134089149vl 87/110 accordance with the terms of this Agreement, "Capital Contribution" means the allocable portion of the transferor's Capital Account. "Code" means the Internal Revenue Code of 1986, as amended, and any successor thereto. "Covered Person" means a Member, a Manager, any Affiliate of a Member or a Manager, any shareholders, members, partners, employees, directors, officers, representatives or agents of a Member or a Manager or their respective Affiliates, or any employee or agent of the Company or its Affiliates. "CTA'' shall mean the Corporate Transparency Act (31 U.S.C. Section 5336), enacted as part of the National Defense Authorization Act for Fiscal Year 2021, as amended, and the rules and regulations promulgated thereunder. "Fiscal Year" means any twelve (12) month period commencing on January 1 and ending on December 31 or any portion thereof for which the Company is required to allocate Profits, Losses and other items of Company income, gain, loss or deduction pursuant to Section 7 .1 hereof. "Interest" means all of a Member's rights and interests in the Company in such Member's capacity as a Member, all as provided in the Articles of Organization, this Agreement and the Act, including the Member's interest in the capital, income, gain, deductions, losses, and credits of the Company. "Majority in Interest" means Members whose combined Percentage Interests represent more than fifty percent (50%) of the Percentage Interests then held by all Members or by all Members in a particular class, as applicable. "Manager(s)" means an individual or entity designated by the Members as a manager of the Company within the meaning of the Act. The Company may have one or more managers. "Percentage Interest" means each Member's percentage ownership interest in the Company, represented by the number of Units of the Company owned by each Member as a percentage of all Units outstanding at such time. "Profits" and "Losses" means, for each Fiscal Year or other accounting period of the Company, the net profits or net losses, as the case may be, of the Company for such Fiscal Year or other accounting period, determined on the accrual method of accounting in accordance with generally accepted accounting principles. "Substitute Member" means a person who is admitted to the Company as a Member pursuant to Section 9.1 hereof, and who is named as a Member on Schedule A to this Agreement. "Transfer" means to sell, exchange, transfer, assign, gift, mortgage, pledge, hypothecate, devise or otherwise dispose of, encumber or grant a security interest in all or any part of a Member's Units, whether voluntarily or involuntarily, by operation oflaw or otherwise. "Treasury Regulations" means the income tax regulations, including temporary regulations, promulgated under the Code, as such regulations may be amended from time to time. 2 134089149vl 88/110 "Units" means the units into which the Members' ownership interests in the Company are divided and shall, unless otherwise determined by the Members in accordance with the terms of this Agreement, consist of one class of common ownership interests. SECTION2 NAME; FORMATION; OFFICES 2.1 Formation. The Company was formed upon the filing of its Articles of Organization with the Minnesota Secretary of State. The preparation, execution and filing of the Articles of Organization of the Company is hereby authorized and ratified in all respects. The Members agree that the rights, powers, duties and liabilities of the Members shall be as provided in the Act, except as provided in this Agreement. Each Member shall be admitted as a Member of the Company upon such Member's execution of this Agreement. 2.2 Name. The name of the Company is Finding Home, LLC. The business of the Company may be conducted under any other name or names that the Managers deem advisable. 2.3 Existence. The Company shall have perpetual existence, unless dissolved in accordance with the provisions of this Agreement. 2.4 Principal Executive Office. The Company's principal executive office shall be 500 West Fir Avenue, Fergus Falls, Minnesota 56537. The Managers may change the location of the Company's principal executive office at any time. 2.5 Registered Office and Agent. The location of the registered office and the name of the registered agent of the Company in the State of Minnesota are as stated in the Articles of Organization. The Managers may change the registered office and registered agent of the Company at any time. 2.6 Qualification. The Managers shall cause the Company to be qualified, formed or registered under assumed or fictitious name statutes or similar laws in any jurisdiction in which the Company transacts business. The Managers, or any person designated by the Managers as an authorized person within the meaning of the Act, shall execute, deliver and file any certificates (and any amendments and/or restatements thereof) necessary for the Company to qualify to do business in a jurisdiction in which the Company may wish to conduct business. Notwithstanding the foregoing, the Company shall not do business in any jurisdiction that would jeopardize the limitation on liability afforded to the Members under the Act or this Agreement. 2.7 No State Law Partnership. The Members intend that the Company not be a partnership (including a limited partnership) or joint venture, and that no Member be an agent, partner or joint venturer of any other Member for any purposes other than federal, state and local tax purposes if there is more than one Member, and this Agreement shall not be construed to suggest otherwise. 2.8 Ratification of Prior Acts. Pursuant to Section 322C.0105, Subd. 3 of the Act, the Company and the initial Member hereby ratify all actions taken before the Company had at least one Member. 3 134089149v] 89/110 SECTION3 PURPOSES AND POWERS 3.1 Purposes. The Company may engage in any lawful business, purpose or activity for which a limited liability company may be organized, as set forth in Section 322C.0104, Subd. 2 of the Act. 3.2 Powers. The Company shall have the powers set forth in this Agreement and the Act, including Section 322C.0105, Subdivision I of the Act, which powers shall include, in all events, the power to borrow money, sell, mortgage, convey, pledge or lease property owned by the Company; to purchase, receive, lease or otherwise acquire, own, hold, improve, use and otherwise deal with property; and to make contracts, appoint agents and attorneys-in-fact, create corporations or other entities owned by the Company and to undertake any and all other lawful activities as may be required to carry on the business permitted hereunder or under the Act. SECTION 4 MANAGEMENT OF THE COMPANY 4.1 General Powers. Except as otherwise provided by this Agreement, the business and affairs of the Company shall be manager-managed within the meaning of Section 322C.0407, Subd. 3 of the Act. The Managers may exercise all such powers and do all such things as may be exercised or done by the Company, subject to the provisions of applicable law, the Articles of Organization and this Agreement. 4.2 Number, Tenure, and Qualification. The Company may have one or more Managers who shall be elected by a vote of the Members holding a Majority in Interest. The Company initially shall have one Manager and Housing and Redevelopment Authority in and for the County of Otter Tail, Minnesota, a public body corporate and politic duly organized and existing under the laws of the State of Minnesota, shall serve as the initial Manager. The Managers may increase the number of Managers and fill the vacancy or vacancies created thereby. If the number of Managers has been increased by the Managers, as provided herein, then at the next succeeding meeting of the Members at which Managers are elected, the number of Managers to be elected shall be such increased number, unless otherwise fixed by the Members. Except as otherwise provided in this Agreement, Managers shall be elected by the Members entitled to vote and shall hold office until the next regular meeting of the Members and thereafter until a successor is duly elected and qualified, unless a prior vacancy shall occur by reason of death, resignation or removal from office. Managers need not be natural persons or Members. 4.3 Meetings. If more than one Manager is designated by the Members, meetings of the Managers may be held at such times and places as shall from time to time be determined by the Managers. Meetings of the Managers may be called by any Manager and the Manager calling such meeting may fix the date, time and place thereof and shall cause notice of the meeting to be given. 4.4 Notice of Meetings. If the date, time and place of a meeting of the Managers (if more than one Manager has been designated by the Members) has been announced at a previous meeting, no notice is required. In all other cases, two (2) business days' written notice of meetings 4 134089149vl 90/110 of the Managers, stating the date, time and place thereof and any other information required by law or desired by the person or persons calling such meeting, shall be given to each Manager. If notice of a meeting is required, and such notice does not state the place of the meeting, such meeting shall be held at the principal executive office of the Company. The notice need not state the purpose of the meeting. 4.5 Waiver. A Manager may waive notice of any meeting. A waiver of notice by a Manager is effective whether given before, at or after the meeting, and whether given orally, in writing or by attendance. The attendance of a Manager at any meeting shall constitute a waiver of notice of such meeting, unless such Manager objects at the beginning of the meeting to the transaction of business on grounds that the meeting is not lawfully called or convened and does not participate thereafter in the meeting. 4.6 Quorum and Voting. If more than one Manager is designated by the Members, a majority of the Managers currently holding office shall constitute a quorum for the transaction of business at any meeting of the Managers. In the absence of a quorum, a majority of the Managers present may adjourn the meeting from time to time until a quorum is present. If a quorum is present when a duly called or held meeting is convened, the Managers present may continue to transact business until adjournment, even though the withdrawal of a number of Managers originally present leaves less than the number otherwise required for a quorum. The Managers shall take action by the affirmative vote of at least a majority of Managers present at any duly held meeting, except as to any question upon which any different vote is required by law, the Articles of Organization or this Agreement. 4. 7 Vacancies. If more than one Manager is designated by the Members, any vacancy in such position may be filled by the affirmative vote of a majority of the Managers remaining in office, even though such remaining Managers may be less than a quorum. Any Manager so elected shall hold office until the next regular or special meeting of Members and until a successor is duly elected and qualified. 4.8 Removal of Managers. Unless otherwise provided for in this Agreement, any Manager may be removed from office, with or without cause, at any special meeting of the Members duly called for that purpose as provided in this Agreement, by a vote of the Members holding a Majority in Interest. At such meeting, without further notice, the Members may fill any vacancy or vacancies created by such removal. Any such vacancy not so filled may be filled by the Managers, as provided in Section 4.7 of this Agreement. 4.9 Absent Managers. A Manager may give advance written consent or opposition to a proposal to be acted on at a meeting of the Managers. If the Manager is not present at the meeting, consent or opposition to a proposal does not constitute presence for purposes of determining the existence of a quorum, but consent or opposition shall be counted as a vote in favor of, or against, the proposal and shall be entered in the minutes or other record of action of the meeting if the proposal acted on at the meeting is substantially the same or has substantially the same effect as the proposal to which the Manager has consented or objected. 4.10 Action in Writing. Any action required or pennitted to be taken by the sole Manager, or at a meeting of the Managers (if more than one), may be taken or by written action 5 134089!49vl 91/110 signed by the sole Manager or by the number of Managers (if more than one) that would be required to take the same action at a meeting at which all Managers were present. If any written action is taken by less than all Managers, all Managers shall be notified immediately ofits text and effective date. The failure to provide such notice, however, shall not invalidate such written action. 4.11 Meeting by Means of Electronic Communication. If more than one Manager is designated by the Members, the Managers or any committee designated by the Managers may participate in a meeting of the Managers or committee by any means of communication by which all persons participating in the meeting can simultaneously hear and respond to each other. Participation in a meeting pursuant to this Section 4.11 shall constitute presence in person at such meeting. 4.12 Appointment of Officers. The Company may have such officers as the Managers determine and appoint, which may include a Chief Executive Officer, President, a Chief Financial Officer, a Treasurer and a Secretary. Individuals may simultaneously be appointed to and serve in more than one officer position. Officers may include such other officers as the Managers may determine. Except as otherwise expressly set forth in this Agreement or by resolution of the Managers, the officers shall have such powers and perform such duties incident to each of their respective offices as are usually vested in officers of business corporations organized under the Minnesota Business Corporation Act holding such offices and shall have such other duties and powers as may be provided in this Agreement or as may from time to time be conferred upon or assigned to them by the Managers. An officer shall hold office until a successor shall have been duly elected, unless prior thereto such officer shall have died, resigned or been removed by the Managers. Any officer may be removed, with or without cause, at any time by the Managers. SECTIONS UNITS; MEMBERS AND MEETINGS 5.1 Number of Members. The Company shall have one or more Members. 5.2 Units. Unless otherwise provided herein, all Units shall be equal in all respects. The Members may, by the affirmative vote of a Majority in Interest of the Members entitled to vote, establish multiple classes of ownership interests and series within classes and may fix the relative rights, preferences, powers and duties of such classes or series of ownership interests, including rights, preferences, powers and duties senior to existing classes or series. Unless otherwise required by the affirmative vote of a Majority in Interest of the Members entitled to vote, the Company shall not issue certificates evidencing Units in the Company. 5.3 Additional Units. The Company may issue Units representing any class or series, including new classes or series of ownership interests created pursuant to Section 5.2, upon such terms and conditions and for such consideration as the Members may approve. Prior to the issuance of any Units to a person or entity other than a current Member, the Company shall require the proposed new Member to become subject to this Agreement and to execute a contribution agreement in form and substance acceptable to the Members. 5.4 Authoritv of Members. The Members shall have the power to exercise any and all rights or powers granted to the Members under the express terms of this Agreement or as 6 134089149v 1 92/110 otherwise required by the Act. Except as otherwise expressly provided in this Agreement, no Member shall take part in the operation or control of the business and affairs of the Company. No Member is an agent of the Company solely by virtue of being a Member, and no Member has any power or authority to bind or act on behalf of the Company in any way, to pledge its credit, to execute any instrument on its behalf or to render it liable for any purpose solely by virtue of being a Member. Any Member who takes any action or purports or attempts to bind the Company in violation of this Section 5.4 shall be solely responsible for any loss and/or expense incurred by the Company, any Manager or any other Member as a result of such unauthorized action, and such Member shall indemnify and hold harmless the Company, each Manager and each other Member with respect to such loss and/or expense. 5.5 Compensation of Members. No Member shall receive any salary or draw with respect to such Member's Capital Contributions or Capital Account or for services rendered on behalf of the Company, except by separate resolution or agreement approved by the Managers. 5.6 Place of Meeting. All meetings of the Members shall be held at the principal executive office of the Company, unless some other place is designated by the Managers in the notice of meeting. 5. 7 Regular Meetings. Regular meetings of the Members will be held on such dates and at such times and places as may be designated by the Managers in the notice of meeting. At regular meetings, the Members entitled to vote shall elect one or more Managers and transact such other business as may be appropriate for action by the Members. 5.8 Special Meetings. Special meetings of the Members, for any purpose or purposes appropriate for action by the Members, may be called by the Managers. A special meeting shall be held on such date and at such time and place as shall be fixed by the person or persons calling the meeting and designated in the notice of meeting. Business transacted at any special meeting of the Members shall be limited to the purpose or purposes stated in the notice of meeting. Any business transacted at any special meeting of the Members that is not included among the stated purposes of such meeting shall be voidable by or on behalf of the Company, unless all of the Members entitled to vote have waived notice of the meeting. 5.9 Notice of Meetings. Written notice of each meeting of the Members, stating the date, time and place and, in the case of a special meeting, the purpose or purposes, shall be given at least ten (10) days and not more than sixty (60) days prior to the meeting to every Member entitled to vote at such meeting, except as specified in Section 5.10 or as otherwise permitted by law. The business transacted at a special meeting of Members is limited to the purposes stated in the notice of the meeting. 5.10 Waiver of Notice. Any Member may waive notice of any meeting of the Members. Waiver of notice shall be effective whether given before, at or after the meeting and whether given orally, in writing or by attendance. Attendance by a Member at a meeting is a waiver of notice of that meeting, except where the Member objects at the beginning of the meeting to the transaction of business because the meeting is not lawfully called or convened and does not participate thereafter in the meeting, or objects before a vote on an item of business because the item may not 7 134089149vl 93/110 lawfully be considered at that meeting and does not participate in the consideration of that item at the meeting. 5.11 Quorum. Unless otherwise provided in the Articles of Organization or this Agreement, Members holding a Majority in Interest shall constitute a quorum for the transaction of business. If a quorum is present when a duly called or held meeting is convened, the Members present may continue to transact business until adjournment, even though the withdrawal of Members originally present leaves less than the proportion otherwise required for a quorum. 5.12 Proxies. A Member may cast or authorize the casting of a vote by filing a written appointment of proxy (including by means of electronic transmission or as otherwise provided by applicable law), but no appointment of a proxy shall be valid for any purpose more than eleven (11) months after the date of its execution, unless a longer period is expressly provided in the appointment. Every appointment of a proxy shall be in writing and shall be filed with the Manager of the Company before or at the meeting at which the appointment is to be effective. All questions regarding the qualification of voters, the validity of appointments of proxies, and the acceptance or rejection of votes shall be decided by the Manager or other authorized person of the meeting. 5.13 Acts of Members. Except where a different vote is required by law, the Articles of Organization or this Agreement, the Members shall take action by the affirmative vote of the greater of (a) the Members holding a Majority in Interest present, in person or represented by proxy; or (b) the Members holding a Majority in Interest that would constitute a quorum of the Members at a duly held meeting of the Members. Members shall be entitled to vote only on those matters requiring member approval under this Agreement, the Act or other applicable law. All other matters shall be decided by the Managers, as provided in this Agreement. 5.14 Action in Writing. Unless otherwise required by this Agreement or by law, any action required or permitted to be taken at a meeting of the Members may be taken without a meeting by written action signed (including by means of electronic transmission or as otherwise provided by applicable law) by that number of Members with voting power equal to the voting power that would be required to take the same action at a meeting of the Members at which all Members were present. If any written action is taken by less than all of the Members, all Members shall be notified immediately of its text and effective date. The failure to provide such notice, however, shall not invalidate such written action. 5.15 Participation bv Electronic Communications. A Member may participate in a meeting of the Members by any means of communication through which the Member, other Members so participating and all Members physically present at the meeting may simultaneously hear and respond to each other during the meeting. Participation in a meeting pursuant to this Section 5 .15 shall constitute presence in person at such meeting. SECTION6. CAPITAL ACCOUNTS; CONTRIBUTIONS AND LOANS 6.1 Capital Accounts. A separate Capital Account shall be maintained by the Company for each Member in accordance with Treasury Regulation Section 1.704-l(b)(2)(iv). The Capital Account for each Member shall be increased by such Member's Capital Contributions 8 134089149vl 94/110 and shall be decreased by the amount of money and the fair market value of any property distributed to such Member. Each Member's Capital Account also shall be increased or decreased, as the case may be, to account for allocations of Profits and Losses to such Member. 6.2 Contributions. Each Member shall acquire Units in the Company effective upon making the contribution to the capital of the Company set forth in the contribution agreement signed by such Member. The names, addresses, Units and Percentage Interests of each Member shall be set forth on Schedule A, as may be updated from time to time by the Managers to reflect Transfers and issuances of Units. 6.3 Additional Contributions. No Member shall be obligated to make any additional Capital Contributions beyond that agreed to in such Member's contribution agreement with the Company. 6.4 Return of Capital Contributions. Except as specifically set forth in this Agreement, no Member shall be entitled to withdraw, and no withdrawing or resigning Member shall be entitled to receive the return of any part of such Member's Capital Contribution or Capital Account, or to receive any distribution from the Company. 6.5 No Interest on Capital Contributions. No interest will be paid to any Member on any part of such Member's Capital Contribution. 6.6 Liability. The Members shall not be liable for any of the debts or obligations of the Company or be required to contribute any capital or lend any funds to the Company. No Member, Manager or officer shall be personally liable for the return of all or any part of a Member's Capital Contribution or payment of any amounts allocated to such Member or credited to such Member's Capital Account, which return or payment shall be made solely from, and to the extent of, the Company's assets pursuant to the terms of this Agreement. 6.7 Waiver of Partition and Withdrawal Rights. Each Member waives any and all rights that such Member may have to maintain an action for partition of the Company's property or to voluntarily withdraw or resign from the Company. A Member may not withdraw or resign from the Company before the dissolution and winding up of the Company, unless approved by the Managers. 6.8 Loans from Members. Members may make loans to the Company from time to time, as authorized by the Managers. Any payment or transfer accepted by the Company from a Member which is not an agreed or required Capital Contribution shall be deemed a loan and shall neither be treated as a contribution to the capital of the Company for any purpose hereunder, nor entitle such Member (as such) to any increase in such Member's share of the Profits and Losses of the Company. Any such loans shall be repaid at such times and with such interest (at rates not to exceed the maximum permitted by law) as the Managers and the lending Member shall reasonably agree. 9 134089149v] 95/110 SECTION7 ALLOCATIONS 7.1 Profits and Losses. Subject to the allocation rules of Section 7.2 hereof, Profits and Losses for any Fiscal Year or other specified accounting period shall be allocated among the Members in proportion to their respective Percentage Interests. 7 .2 Allocation Rules. Except as otherwise provided in this Agreement or except for special allocations authorized by the Members: (a) Allocation to New Members. If Members are admitted to the Company pursuant to this Agreement on different dates, the Profits or Losses allocated to the Members for each Fiscal Year or other specified accounting period during which Members are so admitted shall be allocated among the Members in proportion to their respective Percentage Interests from time to time during such Fiscal Year or other specified accounting period in accordance with § 706 of the Code, using any convention permitted by law and selected by the Treasurer. (b) Allocation Period. For purposes of determining the Profits, Losses or any other items allocable to any Fiscal Year or other specified accounting period, Profits, Losses and any such other items shall be determined on a daily, monthly or other basis, as determined by the Treasurer using any method that is permissible under §706 of the Code and the Treasury Regulations thereunder. (c) Allocation of Other Items. All items of Company income, gain, loss, deduction and any other allocations not otherwise provided for shall be divided among the Members in the same proportions as they share Profits and Losses for the Fiscal Year or other specified accounting period in question. (d) Agreement of Members. The Members are aware of the income tax consequences of the allocations made by this Section 7 and hereby agree to be bound by the provisions of this Section 7 in reporting their share of the Profits and Losses of the Company and such other items of income, gain, loss and deduction for income tax purposes. 7.3 Tax Allocations: Section 704(c) of the Code. In accordance with§ 704(c) of the Code and the Treasury Regulations thereunder, income, gain, loss and deduction with respect to any property contributed to the capital of the Company shall, solely for income tax purposes, be allocated among the Members so as to take account of any variation between the adjusted basis of such property to the Company for federal income tax purposes and its initial fair market value. SECTION 8 DISTRIBUTIONS 8.1 Operational-Nonliguidating Distributions. Subject to the right of the Company to maintain reserves, distributions of all excess available cash or property from the Company's operations, other than in liquidation, may be made as follows: 10 134089149vl 96/110 (a) Tax Distributions. The Company shall make reasonable efforts to make cash distributions to the Members on an annual basis in an aggregate amount approximating the combined federal and state income tax liability of the Members resulting from allocations of Profits. All such distributions shall be made to the Members in proportion to the allocation of taxable income to such Members. (b) Other Distributions from Operations. Upon the approval of the Managers, the Company may make other distributions of cash or property to the Members in proportion to their Percentage Interests. 8.2 Distributions Upon Company's Liquidation. The net proceeds resulting from the liquidation of the Company shall be applied and distributed in the following order of priority: (a) Companv Debts and Liabilities. To the extent available, proceeds shall be applied to the payment of debts and liabilities of the Company, including all expenses of the Company incident to its liquidation and all loans and other obligations owed to Members. (b) Reserves. To the extent available, proceeds shall be applied to the setting up of any reserves which the Managers deems reasonably necessary for contingent, unmatured or unforeseen liabilities or obligations of the Company. (c) Balance. Notwithstanding Section 322C.0707, Subd. 2 of the Act, the balance of any proceeds shall be distributed among the Members in accordance with the positive balances in their Capital Accounts after taking into account all Capital Account adjustments for the Company's Fiscal Year during which liquidation occurs. ( d) Timing of Liquidation Distributions. Liquidation distributions shall be made by the end of the Fiscal Year ofliquidation ( or, iflater, within ninety (90) days after the date of such liquidation). If the Company has sold or, during the winding up period, sells all or part of the Company's property in a deferred payment sale, the liquidation period may be extended for any such period as the Managers reasonably deems necessary to collect the proceeds of such sale and interest thereon. 8.3 Distributions in Kind. No Member shall have any right to demand or receive a distribution from the Company in any form other than cash, nor shall any Member be compelled to accept any distribution of property in kind, except in the dissolution and winding up of the Company under circumstances where all Members receive undivided interests in property on the same basis. In the event of a distribution of property in kind, such property shall be assumed to have been sold at its fair market value at the time of the distribution, and the resulting gain or loss shall be allocated among the Members in accordance with the terms of this Agreement and applicable law and their Capital Accounts shall be adjusted accordingly. 8.4 Limitations on Distributions. Notwithstanding any provision to the contrary contained in this Agreement, the Company shall not make a distribution to any Member or Assignee on account of such Member's interest in the Company if such distribution would violate Section 322C.0405, Subd. 1 of the Act or other applicable law. 11 l34089149vl 97/110 SECTION9 TRANSFER OF UNITS 9.1 Transfer of Units. No Member may Transfer the whole or any portion of such Member's Units without the prior consent of the Managers. If the prior consent of the Managers is obtained for any such Transfer, such Transfer shall, nevertheless, not entitle the Assignee to become a Substitute Member or to be entitled to exercise or receive any of the rights, powers or benefits of a Member, other than the right to receive distributions and allocations of Profits and Losses to which the assigning Member would be entitled, unless the assigning Member designates, in a written instrument delivered to the other Members and the Company, such Member's Assignee to become a Substitute Member and the Members holding a Majority in Interest consent to the admission of such Assignee as a Member; and provided further, that such Assignee shall not become a Substitute Member without having first executed an instrument reasonably satisfactory to the Managers accepting and agreeing to the terms and conditions of this Agreement, including, if so requested, a counterpart signature page to this Agreement, and without having paid to the Company a fee sufficient to cover all reasonable expenses of the Company in connection with such Assignee's admission as a Substitute Member. If a Member assigns all of such Member's Units, and the Assignee of such Units is entitled to become a Substitute Member pursuant to this Section 9.1, then, unless otherwise agreed, immediately following such admission, the assigning Member shall cease to be a Member of the Company. If the Assignee of Units is not entitled to become a Substitute Member, then the Units assigned to such Assignee shall have only those rights accorded to the transferee of a transferable interest as set forth in Section 322C.0502 of the Act and shall be disregarded for purposes of determining a quorum or a Majority in Interest. 9.2 Recognition of Transfer by Company. No Transfer of all or any portion of a Member's Units that is in violation of Section 9 .1 shall be valid or effective for any purpose, and neither the Company nor the Members shall recognize the same for the purpose of making distributions or allocating Profits and Losses with respect to such Units. Neither the Company nor the non-assigning Members shall incur any liability as a result of refusing to make any such distributions to the Assignee of any such invalid Transfer. 9.3 Indemnification. In the case of a Transfer or attempted Transfer of Units that has not received the consents required by Section 9.1, the parties engaging or attempting to engage in such Transfer shall be liable to indemnify and hold harmless the Company and the other Members from all costs, liabilities and damages that any of such indemnified persons may incur (including, without limitation, incremental tax liability and attorneys' fees and expenses) as a result of such Transfer or attempted Transfer and efforts to enforce the indemnity granted hereby. 9.4 Effective Date of Assignment. Unless otherwise authorized by the Managers or specified in an agreement with the Company, any valid Transfer of a Member's Units pursuant to the provisions of Section 9 .1 shall be effective as of the close of business on the last day of the calendar month in which the Managers consent to such Transfer ( or the last day of the calendar month in which such Transfer occurs, iflater). The Company shall, from the effective date of such Transfer, thereafter pay all further distributions on account of the Units so Transferred to the Assignee of the Units. As between any Member and its Assignee, Profits and Losses for the accounting period of the Company in which such Transfer occurs shall be apportioned for federal 12 134089149vl 98/110 income tax purposes in accordance with any convention permitted under §706(d) of the Code and selected by the Treasurer. SECTION 10 LIABILITY; EXCULPATION; INDEMNIFICATION; INSURANCE 10.1 Liability. Except as otherwise provided by the Act, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Company, and no Covered Person shall be obligated personally for any such debt, obligation or liability of the Company solely by reason of being a Covered Person. 10.2 Exculpation. (a) Limitation of Liability. No Covered Person shall be liable to the Company or any other Covered Person for any losses, claims, demands, costs, damages, liabilities Goint or several), expenses of any nature (including reasonable attorney's fees and disbursements), judgments, fines, settlements or other amounts ("Damages") incurred by reason of any act or omission performed or omitted by such Covered Person, other than for (i) breach of the duty of loyalty, (ii) a financial benefit received by the Covered Person to which the Covered Person is not entitled, (iii) a breach of a duty under Section 322C.0406 of the Act, (iv) intentional infliction of harm on the Company or a Member, or (v) an intentional violation of criminal law. (b) Reliance by Covered Person. A Covered Person shall be fully protected in relying in good faith upon the records of the Company and upon such information, opinions, reports or statements presented to the Company by any Manager, employee or committee of the Company, or by any other person as to matters the Covered Person reasonably believes are within such other person's professional or expert competence and who has been selected with reasonable care by or on behalf of the Company. 10.3 Fiduciary Duty. To the extent that, at law or in equity, a Covered Person has duties (including fiduciary duties) and liabilities relating thereto to the Company or to any other Covered Person, a Covered Person acting under this Agreement shall not be liable to the Company or to any other Covered Person for its good faith reliance on the provisions of this Agreement. The provisions of this Agreement, to the extent that they restrict the duties and liabilities of a Covered Person otherwise existing at law or in equity, are agreed by the parties hereto to replace such other duties and liabilities of such Covered Person to the fullest extent permitted by applicable law. 10.4 Indemnification and Ex penses. The Company shall indemnify and advance expenses to Covered Persons acting in their "official capacity" (as defined in Section 322C.0408 of the Act) with respect to "proceedings" (as defined in Section 322C.0408 of the Act) to the fullest extent required by Section 322C.0408 of the Act. 10.5 Insurance. The Company may purchase and maintain insurance on behalf of any person in such person's official capacity against any liability asserted against and incurred by such person in or arising from that capacity, whether or not the Company would otherwise be required 13 134089149vl 99/110 or permitted to indemnify the person against the liability. The Company may purchase "key man" life insurance on any Manager or other person, including an Affiliate of a Member, if the Managers determine it is advantageous for the Company to be the owner and beneficiary of such a policy. SECTION 11 DISSOLUTION, LIQUIDATION AND TERMINATION 11.1 No Dissolution. The Company shall not be dissolved by the admission of additional Members or Substitute Members in accordance with the terms of this Agreement or by the death, retirement, resignation, expulsion, bankruptcy or dissolution of a Member or the occurrence of any other event under the Act that terminates the continued membership of a Member in the Company. 11.2 Events Causing Dissolution. The Company shall be dissolved and its affairs shall be wound up upon the occurrence of (a) the affirmative vote of the Members holding a Majority in Interest; or (b) the entry of a decree of judicial dissolution under Section 322C.0701, Subdivision 1 of the Act. Notwithstanding Section 322C.0701 of the Act, the foregoing events are the exclusive events which cause the dissolution of the Company. 11.3 Notice of Dissolution. Upon the dissolution of the Company, the person or persons approved by the Members holding a Majority in Interest to carry out the winding up of the Company (the "Liquidating Trustee") shall promptly notify the Members of such dissolution. 11.4 Liquidation. Upon dissolution of the Company, the Liquidating Trustee shall immediately commence to wind up the Company's affairs; provided, however, that a reasonable time shall be allowed for the orderly liquidation of the assets of the Company and the satisfaction ofliabilities to creditors so as to enable the Members to minimize the normal losses attendant upon a liquidation. 11.5 Termination. The Company shall terminate when all of the assets of the Company, after payment of or due provision for all debts, liabilities and obligations of the Company, shall have been distributed to the Members. 11.6 Claims of the Members. The Members and Assignees shall look solely to the Company's assets for the return of their Capital Contributions, and if the assets of the Company remaining after payment of or due provision for all debts, liabilities and obligations of the Company are insufficient to return such Capital Contributions, the Members and Assignees shall have no recourse against the Company or any other Member. SECTION 12 RECORDS, ACCOUNTING, REPORTS AND TAX MATTERS 12.1 Books and Records. At all times during the existence of the Company, the Company will cause to be maintained full and accurate books of account, which will reflect all Company transactions and be appropriate and adequate for the Company's business. The books and records of the Company will be maintained at the principal office of the Company. 14 134089149vl 100/110 12.2 Tax Classification of Company. The Members acknowledge that, at such time as the Company has two (2) or more Members, the Company will be classified as a "partnership" for tax purposes. Until such time, the Company shall be a disregarded entity for federal tax purposes. 12.3 Corporate Transparency Act. During any period of time in which the Company is a "reporting company," that does not qualify for an applicable exemption from reporting under the CTA, each Member covenants and agrees (a) to cooperate with the Company with respect to any inquiry and determination of any direct or indirect owners of such Member who are "beneficial owners" of the Company, and (b) to deliver to the Company such information regarding any such "beneficial owners" (including all personal identifying information and an "acceptable identification document") required by the Company to comply with the CTA with respect to such Member and, if applicable, any individual directly or indirectly owning any "ownership interests" of such Member or exercising "substantial control" through such Member over the Company. Each term set forth in quotes in the prior sentence shall have the respective meaning of such term set forth in the CT A. SECTION 13 MISCELLANEOUS 13.1 Term of Agreement. This Agreement shall terminate upon the happening of any of the following events: (a) a bankruptcy of the Company; (b) the dissolution or liquidation of the Company; and (c) the written consent of the Members holding a Majority in Interest. 13.2 Amendments. This Agreement may only be amended in a writing signed by Members holding a Majority in Interest; provided, however, that any such amendments do not affect, in a material adverse manner, the ownership interests of any non-approving Members regarding their allocations, distributions or liquidation rights. 13.3 Governing Law. This Agreement and the rights of the parties hereunder will be governed by, interpreted and enforced in accordance with the internal laws, and not the laws pertaining to choice or conflict oflaws, of the State of Minnesota. 13.4 Binding Effect. Except as otherwise provided in this Agreement, every covenant, term and provision of this Agreement shall be binding upon and inure to the benefit of the Members and their respective heirs, legal representatives, successors and permitted assigns. 13.5 No Third Party Beneficiary. This Agreement is made solely and specifically among and for the benefit of the parties hereto, and their respective successors and permitted assigns, and no other person will have any rights, interests or claim hereunder or be entitled to any benefits under or on account of this Agreement, whether as a third party beneficiary or otherwise. 13.6 Securities Law Compliance. Any Transfer of Units shall be made in full compliance with applicable federal and state securities laws. Any offeree or transferee of Units under this Agreement shall provide documentation satisfactory to counsel to the Company that such offeree or transferee is acquiring shares for such Member's own account, for investment purposes only and not with a view to their resale or distribution and in compliance with all applicable laws and regulations. 15 134089149vl 101/110 13.7 Copy of Agreement. The Company agrees that it shall supply, free of charge, a copy of this Agreement to any Member of the Company upon written request from such Member to the Company at its principal office; provided that the failure to supply a copy of this Agreement shall not affect the validity or enforcement of this Agreement. 13.8 Waivers. No waiver of this Agreement, or any part hereof, shall be binding unless made in writing and signed by the party claimed to have made such waiver. No waiver of any breach or condition of this Agreement shall be deemed to be a waiver of any other condition or subsequent breach, whether oflike or different nature. 13.9 Notices. All notices and other communications hereunder shall be in writing and shall be sufficiently given if made by hand delivery, by telecopier or fax, by overnight delivery service or by registered or certified mail (postage prepaid and return receipt requested) to the parties at the addresses and facsimile numbers specified on Schedule A hereto ( or at such other address or facsimile number for a party as shall be specified by like notice). All such notices and other communications shall be deemed to have been duly given: when delivered by hand, if personally delivered; five (5) business days after being deposited in the mail, postage prepaid, if delivered by mail; when receipt is acknowledged, if sent by facsimile; and the next day after being delivered to an overnight delivery service. 13.10 Non-Assignment. All rights granted or accorded to the Members under this Agreement are personal to each Member and may not be assigned or transferred directly or indirectly, voluntarily or involuntarily, to any other person, except in accordance with the terms of this Agreement. 13.11 Additional Acts and Instruments. Each Member agrees to perform all further acts and execute, acknowledge and deliver all further documents which may be reasonably necessary, appropriate or desirable to carry out the provisions of this Agreement. 13.12 Entire Agreement. This Agreement, in conjunction with the Articles of Organization, constitutes the entire agreement and understanding of the Members with respect to the subject matter hereof, and supersedes all prior agreements relating thereto, whether written or oral. In the event of any conflict between a provision of this Agreement and any provision of the Act not subject to variation in this Agreement, the provisions of the Act shall govern. 13.13 Interpretation. All Section headings are for reference purposes only, and shall not affect the interpretation of this Agreement. All references in this Agreement to one gender shall include all genders; any reference to the singular shall include the plural, where appropriate, and vice versa. 13.14 Severability. If any provision of this Agreement is or becomes invalid, illegal or unenforceable, then such provision shall be deemed amended to the extent necessary to make it valid, legal and enforceable in order to carry out the intent and purpose of this Agreement, and the remainder of this Agreement shall remain in full force and effect. 16 134089149vl 102/110 13.15 Counterparts. This Agreement and any amendments hereto may be executed in multiple counterparts, each of which shall be deemed an original agreement and all of which shall constitute one and the same agreement. [SIGNATURE PAGE FOLLOWS] 17 134089149vl 103/110 IN WITNESS WHEREOF, the parties have entered into this Agreement as of the date first above written. 134089149vl COMPANY: FINDING HOME, LLC By: _____________ _ Name: Amy Baldwin Title: Chief Executive Officer MEMBER: HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE COUNTY OF OTTER TAIL, MINNESOTA By: ______________ _ Name: Its: [SIGNATURE PAGE TO OPERATING AGREEMENT] 18 104/110 SCHEDULE A MEMBERS' NAMES, ADDRESSES, UNITS AND PERCENTAGE INTEREST FINDING HOME, LLC Member Name and Address Units Housing and Redevelopment Authority in and for the County of Otter Tail, Minnesota 100 500 West Fir Avenue, Fergus Falls, Minnesota 56537 Totals: 1fill A-1 134089149vl Percentage Interests 100% 100% OTTER TAIL COUNTY HOUSING AND REDEVELOPMENT AUTHORITY REQUEST FOR BOARD ACTION _August 20, 2024__ BOARD MEETING DATE AGENDA ITEM # 5E Amy Baldwin 08/15/2024 REQUESTOR’S SIGNATURE/DATE BOARD ACTION REQUESTED Resolution No. 289 Adopt Special Benefit Levy for Taxes Payable 2025 PROPOSED REQUEST/JUSTIFICATION The proposed levy request for taxes payable in 2025 is $1,610,431. The levy is a crucial resource in accomplishing the HRA strategic initiatives; Strengthening Communities Initiative: “Create New Homes” and the Housing Stability Initiative: “Keeping People in Their Homes”. Based on the 2021 housing needs analysis, there is a significant need for affordable senior housing and work force housing, both owner occupied and rental. The HRA is constructing a 6-unit affordable senior housing development in Dalton and exploring options for constructing a similar project in New York Mills. The HRA administers important programs to enable households to access existing housing and to maintain the livability of their homes. The HRA Community Housing Investment Programs provides down payment assistance for new homebuyers and rehabilitation assistance for single family and multiple family owners. Rehabilitation programs serve to maintain the livability of housing units and preserve the overall market value of neighborhoods. The HRA collaborated with the City of Pelican Rapids to submit a Small Cities Development Program (SCDP) Grant Application for rehabilitation of owner occupied and commercial properties. Awards for this funding pool have not yet been announced. Staff is working to identify a community for a 2026 SCDP application submission. Finally, the housing assessment also documented a shortage of rental units, and the Housing Choice Voucher and Public Housing programs provide an opportunity for lower income households to find housing. HRA work is done in partnership with communities. The HRA staff provides the technical capacity regarding housing initiatives as authorized by communities, and when authorized by the HRA Board, provides financial capacity to assist in accomplishing community housing needs. Staff recommends the Board adopt the Resolution as presented. PREVIOUS ACTION ON REQUEST/OTHER PARTIES ADVISED EXECUTIVE DIRECTOR DATE: Amy Baldwin 8/15/2024 ATTACHMENT LIST: Resolution No. 289 FINANCIAL IMPLICATIONS: $1,610,431 BUDGETED: Pending YES NO FUNDING: Tax Levy COMMENTS 105/110 RESOLUTION NO. 289 APPROVE SPECIAL BENEFIT LEVY FOR TAXES PAYABLE IN 2025 FOR THE OTTER TAIL COUNTY HRA WHEREAS, the Otter Tail County Housing and Redevelopment Authority (the “Authority”) is empowered by Minnesota Statute 469 to levy a Special Benefit Levy in an amount not to exceed .0185% of the estimated market value; and WHEREAS, the Authority has determined that $1,610,431 is necessary to effectuate the strategic initiatives for 2025; and NOW, THEREFORE, IT IS HEREBY RESOLVED: 1. That $1,610,431 is requested for the Otter Tail County HRA. 2. That the Executive Director is authorized to communicate the amount to the County Auditor in a timely fashion. Upon the motion of ___________________, seconded by ____________________, and passed on a _________________ vote, the above resolution is hereby adopted by the Otter Tail County Housing and Redevelopment Authority Board of Commissioners. Adopted this 20th day of August 2024. Dated: _______________________________ OTTER TAIL COUNTY HRA BOARD OF COMMISSIONERS Attest:________________________________ By:_______________________________ 106/110 OTTER TAIL COUNTY HOUSING AND REDEVELOPMENT AUTHORITY REQUEST FOR BOARD ACTION August 20, 2024 BOARD MEETING DATE AGENDA ITEM #5F Amy Baldwin 08/15/2024 REQUESTOR’S SIGNATURE/DATE BOARD ACTION REQUESTED Motion to Cancel of Purchase Agreement for Property in Ottertail PROPOSED REQUEST/JUSTIFICATION On June 20, 2023, the Otter Tail County HRA and the City of Ottertail executed a purchase agreement for property located in Ottertail. Contingencies listed within the purchase agreement state that the document is; 1) subject to approval of funding from Minnesota Housing Finance Agency for affordable senior housing funding and a construction contract approved by the Otter Tail County Board of Commissioners; and 2) subject to receiving variance or other development approvals from the City of Ottertail, Minnesota. The Purchase Agreement is set to expire December 31, 2024. Because the Housing Infrastructure Bond application was not funded and another entity has expressed interest in the property for use as a childcare, it is the recommendation of staff that the Board cancel the purchase agreement dated June 20, 2023 with the City of Ottertail. PREVIOUS ACTION ON REQUEST/OTHER PARTIES ADVISED: EXECUTIVE DIRECTOR DATE: Amy Baldwin 08/15/2024 ATTACHMENT LIST: FINANCIAL IMPLICATIONS: N/A BUDGETED: NA YES NO FUNDING: COMMENTS 107/110 OTTER TAIL COUNTY HOUSING AND REDEVELOPMENT AUTHORITY REQUEST FOR BOARD ACTION August 20, 2024 BOARD MEETING DATE AGENDA ITEM # 5G Amy Baldwin 08/15/2024 REQUESTOR’S SIGNATURE/DATE BOARD ACTION REQUESTED Motion to Submit New York Mills Senior Affordable Housing Development for Minnesota Housing State Housing Tax Credit Funds PREVIOUS ACTION ON REQUEST/OTHER PARTIES ADVISED Minnesota Housing is administering a new State Housing Tax Credit Program and Contribution Fund which allows taxpayers who have a state tax liability to invest in affordable housing. Contributions may be allocated to either the General Contribution Pool or a Qualified Project. Contribution awards are generally in the form of a 0% interest loan amortized over 30 years that may be forgivable. The loan term may be adjusted based on requirements of other funding sources. As staff works to identify and secure funding for construction of senior affordable rental housing in New York Mills, we are requesting authorization to apply as the project meets program criteria. EXECUTIVE DIRECTOR DATE: Amy Baldwin 8/15/2024 ATTACHMENT LIST: FINANCIAL IMPLICATIONS: n/a BUDGETED: YES X NO FUNDING: Minnesota Housing COMMENTS 108/110 OTTER TAIL COUNTY HOUSING AND REDEVELOPMENT AUTHORITY REQUEST FOR BOARD ACTION August 20, 2024 BOARD MEETING DATE AGENDA ITEM # 5H Amy Baldwin 08/14/2024 REQUESTOR’S SIGNATURE/DATE BOARD ACTION REQUESTED Resolution No. 290 Authorizing Execution of the Realtor Agreement for HRA owned property PREVIOUS ACTION ON REQUEST/OTHER PARTIES ADVISED An RFP for realtor services for the HRA owned property located at 117 1st Avenue NW in Pelican Rapids, MN was issued on July 8, 2024. Three responses were received and reviewed by the CDA Housing Committee on August 12, 2024. Scoring of proposals was completed by Executive Director, Amy Baldwin and Housing Program Supervisor, Tanya Westra prior to the committee meeting. The highest scoring proposal was submitted by Andrew Yaggie of eXp Realty. The selected real estate agent will also be representing the CDA to sell property in Pinewood Estates. It is the recommendation of staff and the CDA Housing Committee that Mr. Yaggie’s proposal be approved contingent on the CDA Board of Commissioners approving this proposal at its meeting on August 20, 2024. EXECUTIVE DIRECTOR DATE: Amy Baldwin 8/14/2024 ATTACHMENT LIST: Resolution No. 290 FINANCIAL IMPLICATIONS: N/A BUDGETED: YES X NO FUNDING: Commission to be paid with sale proceeds COMMENTS 109/110 RESOLUTION NO. 290 RESOLUTION AUTHORIZING EXECUTION OF REALTOR AGREEMENT FOR PROPERTY IN PELICAN RAPIDS WHEREAS, the Otter Tail County Housing and Redevelopment Authority (the “Authority”) is empowered to carry out housing and redevelopment programs within its jurisdiction; and WHEREAS, the Otter Tail County Housing and Redevelopment Authority (the “Authority”) owns property located at 117 1st Avenue NW in Pelican Rapids, Minnesota (the “Property”); and WHEREAS, the Authority has determined that it is necessary to partner with the Otter Tail County Community Development Agency (the “CDA”) to retain Realtor services to sell the Property; and WHEREAS, the CDA issued a Request for Proposal (the “Realtor RFP”) on July 8, 2024 to interested parties to represent the Authority regarding sale of CDA owned parcels and the HRA owned Property; and WHEREAS, three proposals were received by the deadline of July 29, 2024; and WHEREAS, an agreement is typically executed between a realtor and the Authority (the “Agreement”); and WHEREAS, the Authority has determined, upon due consideration, that an Agreement with eXp Realty, Andrew Yaggie be executed so long as the CDA approves the proposal at its August 20, 2024 meeting. NOW, THEREFORE, IT IS HEREBY RESOLVED: 1.That the Board Chair and Executive Director are authorized to execute the Agreementbased on the information contained in the proposal. 2. That the Executive Director is authorized, empowered, and directed to undertake any other tasks as she deems necessary or desirable in her discretion to effectuate thepurposes of the foregoing Resolution. Upon the motion of__________________, seconded by __________________, and passed on a __________________vote, the above resolution is hereby adopted by the Otter Tail County Housing and Redevelopment Authority Board of Commissioners. Adopted this 20th day of August 2024. Dated: _______________________________ OTTER TAIL COUNTY HRA BOARD OF COMMISSIONERS Attest:________________________________ By:_______________________________ 110/110