1. HUD Albuquerque Multifamily
MFT – Multifamily for Tomorrow
August 20, 2014 `
Presented by Michael Gamez, Project Manager

2. MFT – Multifamily for Tomorrow
By 2016, the Office of Multifamily Housing (MFH) will complete a transformation of the way we work from a 1970s operating model to a 21st-century model that:
Applies industry best practices
Improves our ability to manage risk
Increases accountability
Improves national consistency

3. MFT – Multifamily for Tomorrow
Workload Sharing
Account Executive Model
Streamlined Organizational Model

4. Workload Sharing Distribute workload evenly across the country
Address fluctuations in work volume
Reduce wait time for customers

5. Account Executive Model
Multifamily Asset Management
Account Executive
Today’s Project Managers
Focus on non-troubled properties
Troubled Asset Specialist
New position
Focus on troubled properties

6. Streamlined Organizational Model
Consolidate 17 hubs to 5 hubs
Streamlined decision-making
Enhanced accountability

7. Timeline MFT will take place over five Waves
All Waves will be complete by Spring 2016
Wave 1 will be completed in January 2015 (Albuquerque, Des Moines, Houston, Little Rock, New Orleans, Oklahoma City, Omaha, St. Louis, San Antonio, Shreveport, and Tulsa)
MFT will take place over five Waves

8. Three types of Action Plans:
When a property is classified as Troubled (rating of 1-5), a formal Action Plan is required to identify specific steps to improve performance.
MPIP: Marketing and Physical Improvement Plan
EMPIP: Expense Management and Process Improvement Plan
CP: Capital Plan
Three types of Action Plans:

9. Marketing and Physical Improvement Plan
For revenue issues
Goal: Increase revenue by raising community awareness, better targeting tenants, and improving the property’s appeal and safety.
Indicators:
Poor curb appeal
Poor reputation
Low occupancy & high turnover
Low rents
Lack of amenities
Criminal activity
Tenant complaints

10. Expense Management and Process Improvement Plan
For expenses issues
Goal: Reduce waste and inefficiency in the project’s budget and operations.
Indicators:
Increasing operating expenses
High accounts payable balance
Improper distributions and withdrawals of project funds
Poor Management and Occupancy Review (MOR) rating
Failure to file annual financial statements
Failure to maintain property
Unresponsive to tenant and HUD inquiries

11. Capital Plan For debt issues
Goal: Improve the viability of the project through the reduction of debt service or injection of additional funding.
Indicators:
Difficulty paying debt service
High interest rate
High loan age
Low reserve for replacement account balance
Project is in need of extensive rehabilitation

12. Developing an Action Plan
Discuss HUD’s observations and solicit owner’s feedback
Establish reasonable benchmarks
Prioritize tasks
Establish timeline
HUD initiates meeting with owner
Submit monthly updates to HUD
Assess effectiveness of plan
Close monitoring, extend timeline, or take further action
Once Action Plan is approved

13. Marketing and Physical Improvement Plan (MPIP)
Case Study #1
Marketing and Physical Improvement Plan (MPIP)
Marble Apartments – Carlsbad, NM
40% vacancy rate
Extended vacancies
Vacant units are boarded up
Frequent burglaries and drug activity
Frequent tenant complaints about lighting in parking lot
Negative publicity in local newspaper
What would you do?

14. Marketing and Physical Improvement Plan (MPIP)
Case Study #1
Marketing and Physical Improvement Plan (MPIP)
Marble Apartments – Carlsbad, NM
Meet with local law enforcement and review calls for service logs
Set up police substation
Improve curb appeal to attract new residents
Improve lighting, gates, and surveillance systems
Assess tenant selection criteria and house rules
Update Affirmative Fair Housing Marketing Plan
Hire an experienced management agent

15. Expense Management and Process Improvement Plan (EMPIP)
Case Study #2
Expense Management and Process Improvement Plan (EMPIP)
Bosque Apartments – Santa Fe, NM
Accounts payable balance of $180K
Contract with Billy’s Landscaping for $10K monthly
Unpaid property taxes
Annual financial statement is past due
Owner does not respond to HUD’s phone calls or s
Unauthorized withdrawal of $30K from reserve account
Deferred maintenance issues
Overgrown weeds
What would you do?

16. Expense Management and Process Improvement Plan (EMPIP)
Case Study #2
Expense Management and Process Improvement Plan (EMPIP)
Bosque Apartments – Santa Fe, NM
Submit Monthly Accounting Reports to closely monitor expenses
Examine contracts and compare rates
Examine process for obtaining and awarding contracts
Develop preventative maintenance schedule
Develop prioritized plan of action to reduce payables
Develop formal staff training program
Hire an experienced management agent

17. Case Study #3 La Cumbre Apartments – Las Cruces, NM What would you do?
Capital Plan (CP)
La Cumbre Apartments – Las Cruces, NM
Difficulty making monthly mortgage payments
95% occupancy rate
12% interest rate
Mortgage matures in 2020
Low reserve for replacement account balance
What would you do?

18. Case Study #3 La Cumbre Apartments – Las Cruces, NM Capital Plan (CP)
Contact lender to lower interest rate or extend amortization period
Refinance and rehabilitate the property
Request approval for owner advances
Sell property to another entity with the ability to infuse capital

19. Michael Gamez, Project Manager
Contact Information
Michael Gamez, Project Manager