Presentation is loading. Please wait.

Presentation is loading. Please wait.

Section 3: The Central Office Cost Center. The Central Office Cost Center: Learning Objectives Explain the concept and requirements of the Central Office.

Similar presentations


Presentation on theme: "Section 3: The Central Office Cost Center. The Central Office Cost Center: Learning Objectives Explain the concept and requirements of the Central Office."— Presentation transcript:

1 Section 3: The Central Office Cost Center

2 The Central Office Cost Center: Learning Objectives Explain the concept and requirements of the Central Office Cost Center (COCC) under the Final Rule Explain the concept and requirements of the Central Office Cost Center (COCC) under the Final Rule Describe the allowable fees charged by the COCC Describe the allowable fees charged by the COCC

3 Central Office Cost Center (COCC) Owners of Multifamily properties employ property management companies for the day-to-day operation of properties Owners of Multifamily properties employ property management companies for the day-to-day operation of properties The Central Office Cost Center will operate like a property management company The Central Office Cost Center will operate like a property management company Final Rule requires all large PHAs (250 or more units) to establish a COCC Final Rule requires all large PHAs (250 or more units) to establish a COCC

4 Central Office Cost Center Business unit within the PHA that earns income from fees and/or by overseeing other business activity Business unit within the PHA that earns income from fees and/or by overseeing other business activity Simplifies administrative requirements Simplifies administrative requirements Provides greater flexibility to support mission of PHA Provides greater flexibility to support mission of PHA

5 Review: The Flow of Funds Property Management Fee Asset Management Fee Bookkeeping Fee Program Management Fees Fee-for-Service HUDPHA OLD $ HUD AMP NEW PHA/COCC $ Subsidy $ Fees

6 Types of Fee Income Property management fee Property management fee Bookkeeping fee Bookkeeping fee Asset management fee Asset management fee Program management fees and other business activity Program management fees and other business activity Fee-for-service (e.g., centralized painting or extermination) Fee-for-service (e.g., centralized painting or extermination)

7 Property Management Fee Fee charged to AMPs for oversight provided by COCC Fee charged to AMPs for oversight provided by COCC Replaces traditional PHA overhead allocations Replaces traditional PHA overhead allocations Based on occupied units and HUD- approved vacancies (not including limited vacancies) Based on occupied units and HUD- approved vacancies (not including limited vacancies) Average management fee in HUD’s multifamily housing programs was $35 PUM (2004) Average management fee in HUD’s multifamily housing programs was $35 PUM (2004)

8 Methods of Determining Property Management Fees 80 th percentile of fees paid by market 80 th percentile of fees paid by market Local HUD multifamily fee schedules Local HUD multifamily fee schedules Other compelling local market data Other compelling local market data

9 Bookkeeping Fee COCC is permitted to charge a bookkeeping fee for the project accounting function of $7.50 PUM COCC is permitted to charge a bookkeeping fee for the project accounting function of $7.50 PUM Based on occupied units and HUD- approved vacancies (not including limited vacancies) Based on occupied units and HUD- approved vacancies (not including limited vacancies) Average bookkeeping fee in HUD’s multifamily housing programs was approximately $3.50 PUM (2004) Average bookkeeping fee in HUD’s multifamily housing programs was approximately $3.50 PUM (2004)

10 Asset Management Fee Fees charged to AMPs for those tasks that would be residual if all property management functions were contracted to a third-party ($10 PUM) Fees charged to AMPs for those tasks that would be residual if all property management functions were contracted to a third-party ($10 PUM) Subject to the availability of excess cash Subject to the availability of excess cash Based on total number of ACC units Based on total number of ACC units

11 Capital Fund Program Management Fee Fee charged to the Capital Fund Program for management related to capital activities Fee charged to the Capital Fund Program for management related to capital activities COCC may charge up to 10% of total Capital Fund Program grant as management fee COCC may charge up to 10% of total Capital Fund Program grant as management fee

12 Housing Choice Voucher Program Fee Fees charged for all administrative work performed by COCC staff related to the operation of HCV program Fees charged for all administrative work performed by COCC staff related to the operation of HCV program Two different fees can be charged: Two different fees can be charged: HCV Management Fee – Higher of either 20% of annual administrative fee or $12 PUM based on number of vouchers leasedHCV Management Fee – Higher of either 20% of annual administrative fee or $12 PUM based on number of vouchers leased HCV Bookkeeping Fee – $7.50 PUM based on number of vouchers leasedHCV Bookkeeping Fee – $7.50 PUM based on number of vouchers leased

13 Public Housing Development Public Housing Development Other HUD Programs (ROSS, HOPE VI, etc.) Other HUD Programs (ROSS, HOPE VI, etc.) Other business activity Other business activity Program Management Fees and Other Income

14 Fee for Service: Centralized Front-Line Functions PHAs may choose to centralize various front-line expense activities and charge AMPs a fee for these services PHAs may choose to centralize various front-line expense activities and charge AMPs a fee for these services Examples Examples  Maintenance  Legal Services

15 Fee for Service Guidelines PHAs must adhere to the following:  Fees must be based on the market rate for the work received and not the actual cost  PHAs must use the fee for service approach for centrally provided maintenance  Centrally provided front-line services must be in the best interest of the AMPs and cannot cost more than if performed on-site  PHAs must maintain documentation for the fees charged to the AMPs

16 Sample COCC Revenue from Fees Fee Fee Calculation Amount Management Fee $40 x 1,000 units x 12 months x 97% occupancy $465,600 Bookkeeping Fee $7.50 x 1,000 units x 12 months x 97% occupancy $87,300 Asset Management Fee $10 x 1,000 units x 12 months $120,000 Extermination Fee-for-Service $50 x 1000 treatments $50,000 Total$722,900

17 Front-Line Expenses vs. Fee Expenses Unlike in the past, front-line expenses and administrative expenses, called fee expenses, will need to be separated Unlike in the past, front-line expenses and administrative expenses, called fee expenses, will need to be separated Fee Expenses:  An expense of the COCC  Paid for by fee income generated by COCC Front-Line Expenses:  An expense of the AMP  Paid for by AMP income (e.g. subsidy and rent)

18 What is Classified as a Fee Expense? Certain personnel costs, including: Certain personnel costs, including: Executive DirectorExecutive Director Regional ManagersRegional Managers Human ResourceHuman Resource Finance and accountingFinance and accounting Equipment, furniture, and services necessary to sustain COCC Equipment, furniture, and services necessary to sustain COCC Central servers and software supporting COCC Central servers and software supporting COCC Refer to Table 7.2 of the Supplement to PIH Notice Refer to Table 7.2 of the Supplement to PIH Notice

19 What is Classified as a Front-Line Expense? Onsite personnel Onsite personnel Housing ManagerHousing Manager Maintenance TechnicianMaintenance Technician Resident ServicesResident Services Equipment, furniture, and services required to maintain site-based office Equipment, furniture, and services required to maintain site-based office AMP utility costs AMP utility costs Refer to Table 7.2 of the Supplement to PIH Notice Refer to Table 7.2 of the Supplement to PIH Notice

20 Summary and Online Resources

21 Benefits of Asset Management Improved services provided to each AMP Improved services provided to each AMP Organizational structure allows for greater efficiency Organizational structure allows for greater efficiency Onsite staff provide greater service to tenants Onsite staff provide greater service to tenants System enhancements will allow PHAs to operate more efficiently System enhancements will allow PHAs to operate more efficiently

22 Online Resources Revisions to the Public Housing Operating Fund Program; Final Rule - 24 CFR Part 990 Revisions to the Public Housing Operating Fund Program; Final Rule - 24 CFR Part 990 Preparing for Asset Management Under the New Public Housing Operating Fund Rule (24 CFR 990): A Planning Document Preparing for Asset Management Under the New Public Housing Operating Fund Rule (24 CFR 990): A Planning Document Demonstration of a Successful Conversion to Asset Management (Stop-Loss) Submission Kit Year 2 Demonstration of a Successful Conversion to Asset Management (Stop-Loss) Submission Kit Year 2 Demonstrating Successful Conversion to Asset Management: A Site Visit to the Charlotte Housing Authority Demonstrating Successful Conversion to Asset Management: A Site Visit to the Charlotte Housing Authority

23 Online Resources (continued) PIH Notice , Changes in Financial Management and Reporting for Public Housing Agencies Under the New Operating Fund Rule (24 CFR Part 990), issued April 10, 2007 PIH Notice , Changes in Financial Management and Reporting for Public Housing Agencies Under the New Operating Fund Rule (24 CFR Part 990), issued April 10, 2007 Asset Management Help Desk Asset Management Help Desk Toll-Free Telephone: Toll-Free Telephone:

24 End of Section 3


Download ppt "Section 3: The Central Office Cost Center. The Central Office Cost Center: Learning Objectives Explain the concept and requirements of the Central Office."

Similar presentations


Ads by Google