Project Based Accounting

1
Project Based Accounting Asset Management

• Julie Miles, Financial Analyst
• HUD-Kansas City, KS
• 913-551-5529

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Agenda

• All PHAs
• Project-Based Budgeting Accounting
• Small PHAs (Less Than 250 PH Units)
• Single AMPs
• Multiple AMPs
• Large PHAs (250 PH Units)
• Decliners Accelerate AM Implementation for
  Stop-Loss

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Asset Management
Asset Management (AM)
Project-Based Management (PBM)
Project-Based Accounting (PBA)
Project-Based Budgeting (PBB)
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PBB PBA

• Project Level
• Budgeting
• Accounting
• Financial Statement Reporting
• Applies To All Programs Revenue Sources
  Supporting Projects Under ACC

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PBM

• Focus on Operation Management of Project
• Address Project Needs With Project Resources
• Day-to-Day Responsibilities Decision-Making at
  Project Levelnot Central Office
• Project-Specific
• Marketing
• Leasing
• Resident Services
• Routine and Preventative Maintenance
• Lease Enforcement
• Protective Services

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AM

• AM PBM PBB PBA
• PHA-Wide Policy Direction
• Long-Term Capital Administrative Planning
• Property Management Performance
• Review of Entity-wide Financial Information
• Long-Term Viability of Properties
• Risk Management
• Property Repositioning Replacement

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Applicability

• PBB PBA Required for All PHAs
• FYBs 7/1/07 Later
• PBM AM Required FY 11
• PHAs With 250 or More PH Units
• Accelerate AM Implementation for Stop Loss
• PBM AM Optional
• PHAs With Less Than 250 PH Units 1 AMP
• Elect AM Implementation for Stop Loss Incentive

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PBB

• Budget Required for Each AMP
• Budget Recommended for Central Office Cost Center
  (COCC)
• Stop-Loss Requires COCC Budget
• Board Approval of Each AMP on 1 Resolution
• Unless Troubled, Budget Submission to HUD Not
  Required
• Submit Board Resolution to HUD Field Office

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PBB Format

• Revise Existing Budget Forms
• No Uniform Budget Format, but Must
• Reconcile to FDS
• Allow Comparison to Actual Revenues Expenses
• Include All Revenues Expenses of the Operating
  Capital Funds
• Include Estimate of Operating Subsidy Proration
• Include Fungibility Transfers (ex. CFP for
  Operations)
• Include Anticipated Uses of Excess Cash

10
New FDS Format

• AMP Level Financial Reporting
• Operating Fund and Capital Fund Reporting at AMP
  Level vs. PHA Level
• New Columns
• AMP COCC Columns Replace Low-Rent and CFP
  Columns
• Elimination Column Subtracts Internal COCC/AMP
  Transactions from Entity-Wide Totals

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New FDS Line Items

• Fee Revenues Expenses
• More Expense Detail
• Other Operating-Administrative
• Ordinary Maintenance Operations-Contract Costs
• Insurance Premiums
• Memo Accounts
• Measure Revenue Loss
• Unit Month Detail
• CFP Expenditure Data

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New FDSPHA Level

13
New FDSAMP Level
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PBA-CFP

• CFP for AMPs OnlyExcept COCC CFP Management Fee
• Unobligated Grants Actual Costs
• Actual Costs for Unobligated Grant Prior to AM
• Future Grants Fee-for-Service if Implement AM
• Transfers to Operations Allowed with Current
  Regulatory Limits
• Work Item Fungibility Continues
• Future Transition of BLIs to FDS

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PBA-PHAS

• New PHAS Assessment
• Starting FYE 6/30/08
• AMP-Level Score Rolled Up to PHA-Level Score
• First Year Transitional Scores
• First Year CFP Bonus Based on Previous PHAS Score

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Stop-Loss

• Transition Calculation
• FFY 04 Subsidy Eligibility if New Operating
  Subsidy Formula Implemented
• 5-Year Loss Phase-in
• Year 1 CY 07 5 Limit 95 Add-on
• Year 2 CY 08 24 Limit 76 Add-on
• Year 3 CY 09 43 Limit 57 Add-on
• Year 4 CY 10 62 Limit 38 Add-on
• Year 5 CY 11 81 Limit 19 Add-on
• Stop-Loss Limits Loss to Applicable Percent in
  Year Stop-Loss Approved

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Stop-Loss Due Dates

• Year 1 Due 10/15/07
• Year 2 Due 4/15/08
• Year 3 Due 10/15/08
• Year 4 Due 10/15/09
• Year 5 Due 10/15/10

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Stop-Loss for Large PHAs

• 250 PH Units or More
• COCC
• Multiple AMPs
• Traditional Asset Management

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Stop-Loss for Small PHAs

• Less Than 250 PH Units
• Alternate Asset Management (No COCC) if PUM Admin
  Doesnt Exceed Admin Threshold
• Admin Threshold Published in Supplement to PIH
  Notice 2007-09, Financial Management Handbook,
  Table 9.1
• Admin Threshold Updated Annually, Schedule of
  Management Fees, Table 2, 80th Percentile
  Administrative Costs
• http//www.hud.gov/offices/pih/programs/ph/am/acco
  unting.cfm

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PUM Admin Calculation

• Admin Salaries
• Admin Benefits
• Outside Management Expense
• Other Admin
• Admin Costs CFP BLI 1408 Mgmt Improvements
• Occupied Units Approved Vacancies
• Calculation Excludes Audit Expense Excludes
  Limited Vacancies

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Appeal for Changing Market Conditions

• May Increase Subsidy if Vacant Unit Months
  Exceeded Limited Vacancies
• Decreases PUM Admin Cost
• Appeal With OpSub Calculation or by OpSub
  Revision Deadline
• List of Unit Numbers Periods Vacant
• Narrative Explaining Specific Changing Market
  Conditions (ex. Population Decline, Competing
  Project, etc.)
• Narrative Explaining Marketing Efforts
• Certify No Waiting List for Unit Months in Appeal
• Certify Unit Months in Appeal Ready to Rent (not
  Downtime or Make-Ready)

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AM

• 250 PH Units
• To Qualify for Stop-Loss, Decliners Less Than 250
  PH Units Exceeds Admin Limit

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AM

• COCC
• 4 PUM AM OpSub Add-on if 2 AMPs
• Monitor Cash Flow at AMP Level
• Bank Account Per AMP Not Required
• Replace Cost Allocation with Fee-for-Service

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AMBalance Sheet Allocation

• Required 1st Year of AM
• Assign to AMP/COCC/Other Program if Direct
  Relationship Exists
• Assign Equipment to Controlling AMP/COCC/Other
  Program

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Legacy Costs Associated Unfunded Liabilities

• Allocate to AMP, COCC Other Programs to Ensure
  All Bear Proportionate ShareMay Consider Ability
  to Pay

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Compensated Absences

• Allocate Based on Current Employee Assignment
• Transfer Associated Liability Liquid Asset if
  Employee TransfersA/P A/R if No Liquid Asset
  Available
• COCC May Setup A/R from AMPs Other Programs for
  COCC Share At Initial Balance Sheet Allocation
• Not Subject to Excess Cash Rules
• Eliminate A/R A/P on FDS

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Pension Other Post-Employment Benefits (OPEBs)

• Current Retired Employees
• Pension, Retiree Medical Other Related Expenses
• Accounting Contributions Based on Retirement
  Plan
• Allocate Annual Contribution Based on Employee
  Assignment

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Other Post-Employment Benefits (OPEBs)

• Historically Pay-As-You-Go
• GASB 45 Requires Liability Recording
• Annual Required Contribution (ARC)
• Normal Annual Cost
• Share of Unfunded LiabilityNot to Exceed 30
  Years
• Charge to COCC for All Employees

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OPEBs (Continued)

• Non-COCC Employee Share AMPs Other Programs
  Transfer Liquid Assets Annually to COCC to Cover
  ARC
• COCC Employee Share Covered by Fees Earned
• A/P A/R if No Liquid Assets Available
• Not Subject to Excess Cash Rules

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Other Liabilities

• Lawsuits, Legal Actions, Lead-Based Paint,
  Asbestos
• Record at COCC
• Recover from AMPs Other Programs Based on
  Reasonable Method
• Not Subject to Excess Cash Rules
• A/P A/R if No Liquid Assets Available

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AMBalance Sheet Allocation

• Restricted Assets
• Real Personal Property Assigned to COCC
• Restricted Assets Subject to Federal Program
  Rules
• Future Guidance on COCC Asset Disposal

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AMWorking Capital

• Assign Cash to COCC Equivalent of Up to 6 Months
  Estimated Property Management, Bookkeeping, and
  AM Fees Based on 100 Occupancy of All ACC Units
• Not Subject to Excess Cash Restrictions
• If Cash Not Available at AMP, May Record
  Receivable/Liability
• Receivable/Liability Must Be Paid Prior to
  Payment of Additional AM Fees or AMP Fungibility
  Transfer

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Cost Assignment

• Front Line (AMP) Expenses
• Related to Direct Operation of the Property
• vs. Management Fee (COCC) Expenses
• Related to Corporate Support
• Guidance
• Asset Management Planning Document Attachment B
• PIH Notice 2007-9, Financial Management Handbook
  Supplement Table 7.2
• Multifamily Management Agent Handbook, HUD
  4381.5, Chapter 6

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Central Front-Line Admin

• Reasonably Prorate Direct Labor, Supplies
  Equipment to AMPs
• Prorated Costs Include Equipment Purchased with
  Capital or Operating Funds remain AMP Program
  Assets
• Document Proration Method
• Adjust to Actual Costs at Year-End At Minimum
• Cannot Exceed Cost if Performed On-site
• Cant Prorate if On-site Staff Also Perform Task

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Prohibited Central Front-Line Admin

• Supervision Cost of Front-Line AdminExcept for
  Central Waiting Lists, Central Resident Services,
  and Central Protective Services
• Procurement/WarehousingUnless Cheaper than
  Project-Based Procurement/Warehousing HUD
  Approves
• Rent CollectionUnless Listed in Employees Job
  Duties
• Resident ServicesUnless Cant Reasonably Track
  Costs to AMPs
• Protective ServicesUnless Cant Reasonably Track
  Costs to AMP Plan for Future Direct Deployment
  if Extensive Central Services

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Central Front-Line Maintenance

• Technical Routine Maintenance
• Must Use Fee-for-Service
• Begins 2nd Year of PBB/PBA
• Actual Services Only
• Cant Exceed Market Rates
• Supporting Documents for Rates
• Cant Prorate Unrecovered Costs Due to
  Under-Utilization or Unreasonable Low Rates
• Cant Charge Projects for Costs of Centralized
  Supervisor or Admin Assistants

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Shared Resource Costs

• Spread Cost to AMPs Receiving Service
• Few AMPs Sharing Resource vs. All AMPs
• If Staff Shared between AMPs COCC, Prorate
  Based on Time Spent on AMPs COCC
• Limited to Reasonable Labor Rates

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COCC

• Not Subject to Program Income Rules if Fees
  Reasonable
• State and Local Restrictions May Still Apply
• May Include Business Activities
• Example Management Fees for Non-Profit or
  Private Properties

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Fees

• Property Management
• Bookkeeping
• Asset Management
• CFP Management
• HCV Program Management
• Other PIH HUD Program Management
• Non-Federal Program Management

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Property Management Fee

• Multifamily Property Management Fee
  ScheduleFederally Subsidized Properties
• 80th Percentile Property Management
  FeesFor-Profit and Limited Divided FHA
  Properties
• Other Local Market Data

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Property Management Fee

• Reasonable in 2nd Years
• Additional 2 Year Extension Available
• Stop-Loss Requires Reasonableness in 1st Year
• Earned Monthly for Occupied HUD-approved
  Vacancy, but Not Limited Vacancies
• COCC Retains Difference Between Fee Charged to
  AMP and Fee Paid for Private Management,
  Including Mixed Finance Projects.
• COCC Earns Fee if Manages Mixed Finance Property
• Demo/Dispo 75 Year 1, 50 Year 2
• Demo 25 Year 3

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Bookkeeping Fee

• Up to 7.50 PUM
• Reasonable in 2nd Years
• Additional 2 Year Extension Available
• Stop-Loss Requires Reasonableness in 1st Year
• Earned Monthly for Occupied HUD-approved
  Vacancy, but Not Limited Vacancies
• Cannot charge if Project Accounting Functions
  Also Performed On-site Charged as
  Front-line/AMP Cost
• Can Also Charge to HCV Program

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Asset Management Fee

• 1st YearUp to 10 PUM
• 2nd YearsUp to 10 PUM and Not To Exceed Excess
  Cash Calculation
• Earned Monthly for All ACC Units
• Earned For Demo/Dispo Units Until Vacant
• PHAs With 250 PH Units
• PHAs With Less than 250 PH Units 2 AMPs COCC
• No Accruals

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CFP Management Fee

• Up to 10 to Admin BLI 1410 Counts Toward 10
  Admin Limit
• Available to Earn Draw When Grant Awarded
  Available
• Prior to AM Implementation Beginning With FFY
  2007, Cant Draw Unobligated Funds Under Admin
  BLI 1410 of Open CFP Grants as CFP Management Fee

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CFP Management Fee (Continued)

• FFY 2007 Charge Management Fees Commencing with
  Start of First Year PBB/PBA
• May Have Partial Year Actual Cost Partial Year
  Fees
• Subject to Fee Reasonableness in 2nd Year
• FYEs 6/30/09, 9/30/09, 12/31/09, 3/31/10

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HCV Program Management Fee

• Voluntary
• Higher of 20 of HCV Admin Revenue or 12 PUM per
  Voucher Leased
• Guidance HCV Program Management Fee vs.
  Front-Line Costs
• PIH Notice 2007-9, Financial Management Handbook
  Supplement Table 7.2

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Other Management Fees

• Development Activities
• 3 Total Project Budget
• Up to 6 if HUD Approved
• Other PIH HUD Grants Management
• Up to 15 Grant Amount, if No Fee Rate
  Established
• Non-Federal Program Management
• Voluntary Fee-for-Service

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Fee Payment Documentation

• Invoice Recommended
• Documentation Supporting How Fees Earned
• Occupancy
• Fee Reasonableness

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Fungibility

• 1st Year AM Full Fungibility AMP/COCC
• 2nd Years AM Fungible Only Between AMPs
  Subject to Positive Excess Cash Restriction
• 3rd Years AM Fungible Only Between AMPs
  Subject to 1-Month Excess Cash Restriction
• No Restriction on Transfers from COCC to AMPs
• FDS Must Be Submitted Accepted

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Excess Cash Calculation 2nd Year

• Based on Prior Year FDS
• Adjust Excess Cash Limit for Audited FDS
  Submission
• Unrestricted Cash
• Cash-Tenant Security Deposits
• Cash-Restricted for Payment of Current
  Liabilities
• Total Receivables, Net of Allowance for
  Doubtful Accounts
• Unrestricted Investments
• Interprogram Due From
• Current Liabilities
• Must Be Positive

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Excess Cash Calculation 3rd Years

• Based on Prior Year FDS
• Adjust Excess Cash Limit for Audited FDS
  Submission
• Unrestricted Cash
• Cash-Tenant Security Deposits
• Cash-Restricted for Payment of Current
  Liabilities
• Total Receivables, Net of Allowance for
  Doubtful Accounts
• Unrestricted Investments
• Interprogram Due From
• - Current Liabilities
• - Average Monthly Operating Expenses

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Excess Cash Uses

• AMP Reserve
• Transfer to other AMPs
• Pay Asset Management Fee to COCC, but No
  Loan/Transfer
• Other Eligible Purposes
• Develop New Units-to Extent Allowed Under Program
  Rules
• Legal Costs Incurred Prior to AM
• Legacy Costs

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Resources

• PIH Notice 2006-14
• http//www.hudclips.org/sub_nonhud/html/pdfforms/0
  6-14PIH.doc
• PIH Notice 2006-35
• http//www.hudclips.org/sub_nonhud/html/pdfforms/0
  6-35PIH.doc
• Stop-Loss Submission Kit
• http//www.hud.gov/offices/pih/programs/ph/am/docs
  /stoplosskit.pdf
• Asset Management Planning Guide
• http//hudstage.hud.gov/offices/pih/programs/ph/am
  /docs/pham.pdf
• PIH Notice 2007-9
• http//www.hudclips.org/sub_nonhud/cgi/pdfforms/07
  -9PIHSupp.doc