The meeting began with a presentation on the 2024 audit results by a representative from Redpath and Company. This audit encompassed assessments for the HRA, the city, and the port authority, and resulted in five reports that provided opinions on financial statements and compliance at both state and federal levels. The audit issued a “clean opinion,” confirming no internal control findings or legal compliance issues, although it did highlight four findings related to federal compliance. These findings included a missed check under the American Rescue Plan Act for ensuring contractors were not on a suspended or debarred list, inaccuracies in Community Development Block Grant reports, and incomplete environmental reviews for certain projects. The HRA staff had already identified these issues and developed a corrective action plan, including a secondary review process for reports and the implementation of new software to ensure adherence to procedures.

Additionally, the audit process aimed to verify that financial statements were fairly stated according to Generally Accepted Accounting Principles (GAAP) with no material misstatements. The audit identified overarching risks such as management override of controls and potential grant revenue recording issues, yet no specific problems were noted for the HRA. The city and HRA were also recognized for receiving the Certificate of Achievement and Excellence for Financial Reporting Award for the 53rd consecutive year.

The board also focused on the maintenance and condition of HRA-owned rental properties, particularly discussing the extension of an emergency maintenance contract with Renew Homes. This contract, valued at $174,996 for the year, aligns with budget plans and reflects the strong partnership Renew Homes has formed with residents. The contract aims to address emergency maintenance needs effectively, with plans to issue a Request for Proposals (RFP) for emergency on-call services in 2026. The maintenance framework adopted consists of emergency on-call maintenance, general maintenance, and capital improvements, each addressing different aspects of property upkeep. The general maintenance segment includes compliance with housing quality standards and involves various vendors handling specific tasks like plumbing and electrical work, while capital improvements focus on larger projects such as roof replacements and kitchen upgrades.

An important aspect of the meeting was the discussion of vacant units, with eight vacancies occurring this year due to households reaching their five-year term in the rental homes program and subsequently purchasing homes. The board is conducting time-of-sale inspections to assess immediate capital needs, with a broader assessment planned later in the year. The current estimated per-unit maintenance cost is around $18,300, higher than the industry standard of $12,300 due to property age and deferred maintenance issues. Capital improvements are projected at $150,000 annually over the next decade, maintaining per-unit costs around $17,980 for 2026.

Revenue discussions highlighted that approximately 60% of income is directed towards maintenance, with the remaining 40% supporting operating expenses. While exploring alternative funding sources, the board decided against applying for the Public Owned Housing Program through Minnesota Housing this year due to competitiveness but identified the Affordable Housing Program through the Federal Home Loan Bank of Des Moines as a potential future source, contingent on completing capital needs assessments.