Asset Management for Public Housing

1
Asset Management for Public Housing

• Outline Discussion
• August 15, 2007

2
History and Background

• 1998 Quality Housing and Work Responsibility Act
• 1999 Negotiated-Rulemaking I, Funding of Harvard
  Cost Study
• 2003 Cost Study Completed
• 2004 Negotiated-Rulemaking II
• 2005 Final Rule on Operating Fund Program
• Provides a new formula for distributing operating
  subsidy to PHAs
• Establishes requirements for PHAs to convert to
  asset management
• 2007 PIH Notice 2007-9 (Financial Reporting
  Requirements)

3
Operating Fund Rule (24 CFR 990) Key Themes

• PHAs shall manage their properties according to
  an asset management model, consistent with the
  management norms in the broader multi-family
  management industry. PHAs shall also implement
  project-based management, project-based
  budgeting, and project-based accounting, which
  are essential components of asset management.
• property-management services must be tailored
  to the unique needs of each property, given the
  resources available to that property.
• property management services are arranged,
  coordinated, or overseen by management personnel
  who have been assigned responsibility for the
  day-to-day operation of that property and who are
  charged with direct oversight of operations of
  that property.
• The arrangement of property management services
  must be done in the best interests of the
  property, considering such factors as cost and
  responsiveness.

4
Suppose

• You own a group of restaurants.
• Would you hire a manager for each restaurant?
• Would you establish a budget for that restaurant?
• Would you assign significant responsibility for
  the day-to-day operation of that restaurant to
  the on-site manager?
• Would you monitor the individual performance of
  each restaurant in your portfolio, including
  financial performance?

5
Initial Priorities/Building Blocks

• Project-based funding
• Project-based budgeting
• Project-based accounting
• Project-based management
• Project-based performance assessment

6
Initial Priorities/Building Blocks, contd

• Project-based funding
• Separate subsidy form for each project
• Project Expense Level (PEL) is a major component

Project-based funding
7
Initial Priorities/Building Blocks, contd

• Project-based budgeting
• Must be approved by PHA Board
• Not subject to HUD approval
• Used for planning purposes

Project-based budgeting
Project-based funding
8
Initial Priorities/Building Blocks, contd

• Project-based accounting
• Year-end project statements submitted to HUD
• Can only charge projects for services actually
  received
• Fees must be
• considered
• reasonable

Project-based accounting
Project-based budgeting
Project-based funding
9
Initial Priorities/Building Blocks, contd

• Project-based management
• Arrange property management services in the best
  interest of the project
• Assign management personnel to each project

10
Initial Priorities/Building Blocks, contd

• Project-based performance assessment
• PHAS will be revised to emphasize project-based
  monitoring
• Each project will be evaluated on financial,
  managerial, and
• physical condition

Project-based performance assessment
Project-based management
Project-based accounting
Project-based budgeting
Project-based funding
11
Note

• Asset management doesnt change the mission of
  public housing. Rather, it is intended to improve
  the business processes, consistent with the norms
  in private/multifamily housing.

12
Helpful Resources

• The following documents, and other related
  materials, can be found on the Asset Management
  Website at
• http//www.hud.gov/offices/pih/programs/ph/am
• Preparing for Asset Management Under the New
  Public Housing Operating Fund Rule (24 CFR 990)
  A Planning Document
• Demonstrating Successful Conversion to Asset
  Management A Site Visit to the Charlotte Housing
  Authority
• Asset Management Newsletter, Issue 02, March
  2007, Special Issue on Administrative Reform