Slide #1 Terry Provance Managing PHAS

Slide #2 Managing PHAS  As a result of attending this session, you will: Understand the theory behind PHAS Identify PHAS indicators and how they are measured and scored Understand the new PHAS as proposed Begin to be able to use these assessments as a management tool

Slide #3 Introduction  PHAS was designed to be system of accountability to assist HUD in monitoring and evaluating public housing Defines acceptable standards for key areas PHAs should use PHAS as a management tool  Don’t wait for a score from HUD!

Slide #4 Introduction  We’ll describe how PHAS should be applied to the asset management projects (AMPs) AMPS will become the new PHAS measurement focus We’ll be discussing the new project-based PHAS

Slide #5 PHAS  Four indicators: Physical condition Financial condition Management operations Resident service and satisfaction

Slide #6 Four Indicators  Physical condition30 points  Financial condition30 points  Management operations30 points  Resident service & satisfaction10 points

Slide #7 PHAS Scoring  A PHA’s overall PHAS grade will place it in one of the following categories: High performer90% to 100% Standard performer60% to 89% Troubled performer 0% to 59%

Slide #8 Mandatory Requirements  Many of the current PHAS indicators are statutory Vacancy rate Capital fund obligation and expenditure Rent collection Utility consumption Unit turnaround time…

Slide #9 Mandatory Requirements  PHAS indicators which are statutory: Work orders Inspections of units and systems Screening, eviction, and anti-crime strategies Economic self-sufficiency Acceptable basic housing conditions Other factors as deemed by HUD

Slide #10 PHAS Indicator #1: Physical Condition

Slide #11 Description & Purpose  For HUD to ensure that all PHAs provide housing that is: Decent Safe Sanitary In good repair

Slide #12 The Condition of Properties  HUD’s intent is to determine condition of PHA’s housing stock  HUD assigns score UPCS software has all PHA addresses Physical condition measured numerically Objective and consistent For all property types and configurations

Slide #13 What is Inspected  Inspector inspects: SiteAlways 100% Building ExteriorsSampled Building SystemsSampled Common AreasSampled UnitsSampled

Slide #14 How Inspectors Inspect  HUD-contracted inspectors use hand-held computers with PASS software from HUD Random sample generated Software starts with a perfect score of 100  Deficiencies carry point deductions  Health & safety deficiencies biggest deductions

Slide #15 Indicator #2: Financial Condition

Slide #16 Description & Purpose  Measures financial condition of PHA Does the PHA have, and is it capable of managing, financial resources to support a housing program

Slide #17 Assessment  Six financial condition components: Current ratio Number of months expendable fund balance Tenant receivable outstanding Occupancy loss Expense mgmt/utility consumption Net income or loss

Slide #18 Indicator #3: Management Operations

Slide #19 Assessment  Vacant unit turnaround time  Capital Fund  Work orders  Inspection of units and systems  Security  Economic self sufficiency

Slide #20 Reporting Requirements  PHA must certify on HUD form on performance under each of the management indicators  This is the indicator which will change from self-certification to onsite management review Form 5834 will be used

Slide #21 PHAS Indicator #4 Resident Service & Satisfaction  10 points maximum 5 points implementation and follow-up 5 points for the survey results

Slide #22 Project-Based PHAS

Slide #23 Project-Based PHAS  PHAS is being revised to be project-based The AMPs will be the new measurement focus  Each AMP will receive its own PHAS score  The AMPs are the PHA’s groupings of properties for project-based accounting, budgeting, and management

Slide #24 The New PHAS  9/6/06 Fed Register Guidance Notice on Asset Mgt - HUD would revise PHAS to support the transition to asset mgt PHAs to be measured at AMP level  March, 2007 Asset Management e-Newsletter - HUD discussed conforming PHAS to multifamily housing standards

Slide #25 HUD Proposed Changes  03/2007 Asset Mgt e-Newsletter - HUD to: Conduct and track PIH-REAC physical inspections by AMP Modify electronic submission of the FDS to support collection of AMP-level data Replace PHA’s current MASS submission with on-site reviews (similar to multifamily)

Slide #26 HUD Proposed Changes  03/2007 Asset Mgt e-Newsletter - HUD to: Establish new “integrated” assessment based on newly developed PHAS indicators  Simplify current scoring methodologies  Significantly reduce PHA submission requirements

Slide #27 HUD Proposed Changes  On-site management reviews of AMPs (similar to multifamily) Would replace the subject-specific reviews Will eliminate need for PHAS confirmatory reviews (no PHA certifications)

Slide #28 HUD Proposed Changes  Note that fee income (property management fees, bookkeeping fees, asset management fees, capital fund management fees, etc) is not considered “program income” No review of the COCC Not subject to federal review! Will streamline PHA compliance reviews

Slide #29 HUD Proposed Changes  In Federal Register, February 8, 2008, HUD published for public comment it’s proposed “Management Review for Public Housing Projects” form HUD-5834 Form to be used by HUD (or contractor) review team

Slide #30 The New PHAS  PIH (HA) published March 27, 2008 HUD is moving forward on project-based PHAS HUD will issue a proposed PHAS rule in Spring of 2008 – including four scoring notices  Scoring will be in the proposed rule

Slide #31 Notice PIH  The new PHAS indicators will assess, for each AMP: Physical condition Financial condition Management assessment Capital fund obligation/expenditure

Slide #32 Notice PIH  Notice is mostly FAQs For first year, will PHA continue to be scored under the old (current) PHAS?  No – the last PHAs to get a score under the current PHAS will be those with FYE March 31, 2008

Slide #33 Notice PIH  Physical condition No significant changes are anticipated in the protocol for REAC inspections  If a PHA scored 80 or above in the year immediately before the transition year, the PHA’s AMPs won’t get inspected in the transition year If projects were combined into different AMPs, HUD will use a unit-weighted score

Slide #34 Notice PIH  Financial condition Although PHAs have to submit the project- based FDS, financial condition will not be scored by project under the transitional PHAS Only physical condition of each project will be scored

Slide #35 Notice PIH  Financial condition Financial condition of each AMP will be measured  HUD will issue a final version of the Financial Data Schedule (FDS)  Probably financial liquidity (current ratio) will be assessed COCC and non-public housing won’t be included in the financial assessment

Slide #36 Notice PIH  Management assessment HUD will attempt to conduct at least one onsite management review at all PHAs in the transition year, in order to expose PHAs to the new system Management reviews will not be scored in the transition year

Slide #37 Notice PIH  Management assessment Onsite management review will utilize HUD-5834  Form based on HUD-9834 for multifamily  HUD says it will “delineate” between performance, compliance and process Performance will be what’s scored

Slide #38 Goals of Review Form  To consolidate reviews of performance and compliance in a flexible manner  Allows reviewers to tailor on-site work to the needs of the project and HUD guidance  HUD-5834 contains information related to both performance and compliance

Slide #39 Performance vs. Compliance  Performance items are those that most directly relate to how well the project is operated (e.g. rate of rent collection)  Compliance items are related to project observance of program regulations (e.g. did the staff calculate rent in accordance with HUD rules)

Slide #40 On-Site Reviews  Management review form (5834) will provide the framework for the on-site reviews Basic review will be high-level, looking at key performance & compliance indicators More detailed checklists can be incorporated into the review as needed

Slide #41 Notice PIH  Management assessment Performance will be scored  HUD is “examining” primary vs. secondary performance measures Primary = indicator of high level financial, physical, or management performance Secondary = diagnoses potential problems in these areas

Slide #42 Notice PIH  Management assessment Performance will be scored  HUD states that a project’s vacancy rate is a primary performance indicator, while unit turnaround is a secondary measure

Slide #43 Form HUD-5834  Let’s look at this form more closely, since it will be an important assessment tool for project-based management under PHAS 7 sub-indicators

Slide #44 Form HUD-5834 Review for Projects  General appearance and security Appearance and market appeal  Entrance, building exterior, paved surfaces, fencing, porches, trash, landscaping, graffiti, public spaces and amenities windows, debris, units…

Slide #45 Form HUD-5834 Review for Projects  General appearance and security Security  Crime statistics, law enforcement certification, discussions with law enforcement, observations, discussions with resident, policies for screening and evicting for history of drug-related criminal activity, alcohol abuse, and criminal

Slide #46 Form HUD-5834 Review for Projects  Follow-up and monitoring of project inspections Exigent H&S deficiencies Lead-based paint inspection deficiencies…

Slide #47 Form HUD-5834 Review for Projects  Maintenance Unit inspections Work orders  Average completion time Progress in preceding three years

Slide #48 Form HUD-5834 Review for Projects  Maintenance Preventive maintenance  Systems applicable to property and in preventive maintenance plan: HVAC, security, fire safety, roof, gutters & downspouts, intercoms & doorbells, accessibility, elevators, mechanical, boilers, emergency generators, other

Slide #49 Form HUD-5834 Review for Projects  Maintenance Energy conservation/utility consumption  Energy audit within past 5 years?  Energy audit less than 1 year old?  Audit contains cost-effective recommendations? Implemented? On schedule?

Slide #50 Form HUD-5834 Review for Projects  Modernization Physical needs assessment completed?  Updated in last 5 years?  Estimating the useful life remaining and modernization cost for all major building systems?

Slide #51 Form HUD-5834 Review for Projects  Modernization Is there a plan and budget for modernization needs for major building systems projected to reach end of useful life in the coming FY?  Consistent with PHA’s Annual Plan? Was a plan for mod work in previous FY?  Work completed?

Slide #52 Form HUD-5834 Review for Projects  Financial management Accounts payable Rent collection Budget management Procurement

Slide #53 Form HUD-5834 Review for Projects  Leasing and occupancy Vacancy rate Turnaround time  You need to analyze make-ready time and lease-up time

Slide #54 Form HUD-5834 Review for Projects  Leasing and occupancy Occupancy review – forms 5834-A and 5834-B  Very detailed forms  Number of files reviewed  Income correctly computed and verified?  Rent correctly computed and verified?  Applicants denied/admitted re: TSAP?

Slide #55 Form HUD-5834 Review for Projects  Leasing and occupancy Occupancy review – forms 5834-A and 5834-B  Move-outs processed correctly?  Lease contains required provisions?  Grievances implemented appropriately?  Met PIC reporting requirements?

Slide #56 Form HUD-5834 Review for Projects  Leasing and occupancy Occupancy review – forms 5834-A and 5834-B  Complied with UIV procedures for safeguarding data, system security and resolution of income discrepancies?

Slide #57 Form HUD-5834 Review for Projects  Tenant/management relations Economic self-sufficiency  At least 85% of households have head, spouse or sole member who is elderly or disabled?  Current % of adults employed?  Current % of adults participating in self- sufficiency?

Slide #58 Form HUD-5834 Review for Projects  Tenant/management relations Economic self-sufficiency  Opportunities offered by project and/or coordinates with outside agency: Child care, financial counseling, homeownership counseling, substance abuse counseling, GED, vocational or job training, other activities

Slide #59 Form HUD-5834 Review for Projects  Tenant/management relations Resident involvement in project administration  Newsletter, Neighborhood Watch, regular tenant meetings, resident participation on committees, tenant management, contracts with resident-owned businesses, substance abuse counseling, service coordinator, Neighborhood Networks Center, other

Slide #60 Form HUD-5834 Review for Projects  General management practices Prior management review findings  Findings/corrective actions?  Corrections initiated/progress being made? Other prior review findings

Slide #61 Form HUD-5834 Review for Projects  General management practices Insurance  Does the project have the coverage required by ACC?

Slide #62 Form HUD-5834 Review for Projects  General management practices Insurance policies held:  Commercial property, commercial general liability, worker’s comp, owned and non-owned auto, theft, disappearance & destruction, fidelity, boiler and machinery, directors & officers or public liability, law enforcement liability, flood, wind, other

Slide #63 The New PHAS  Capital fund program Obligation and expenditure will be assessed for each AMP

Slide #64 Proposed PHAS Breakdown The proposed PHAS is anticipated to be comprised of four components PASS - 30 Points FASS - 20 Points MASS (onsite review) – 40 Points Capital Fund – 10 Points

Slide #65 A Systems Approach

Slide #66 A Systems Approach  You have to know how the projects are performing Continuous trend analysis  Leadership, a plan, and smart work  An efficient COCC  More transparent data

Slide #67 A Systems Approach  Key components: Highly skilled staff at the projects Accurate, on-time electronic reports from and to the project Properties performing well  Early intervention when needed

Slide #68 A Systems Approach  Highly skilled staff at the projects: Project managers are business managers  Managing to the budget  Understanding and managing to financial reports  Skilled at marketing and tenant relations

Slide #69 A Systems Approach  Highly skilled staff at the projects: Up-to-date job descriptions Analysis of knowledge, skills and abilities needed and actual – and individual development plans Performance of property tied to performance evaluations

Slide #70 A Systems Approach  Accurate, on-time financial reports See stop-loss kit and forms HUD-5834  These are your templates Quality control and file reviews Define which reports the onsite staff will see and manage to, reports to the asset manager, reports to the executive team, etc.

Slide #71 A Systems Approach  Review of project performance PHA systematically reviews financial, physical, and management performance of each project, and identifies non-performing properties

Slide #72 A Systems Approach  Review of project performance – a non- performing property has: PHAS physical score below 70 Significant crime and drug problems Below 95% occupancy TARS that exceed 7% of monthly rent roll  FAQ clarifies this means rent…

Slide #73 A Systems Approach  Review of project performance – a non- performing property has: PHAS grade of “D” or below for vacant unit turnaround and work orders Utility consumption more than 120% of agency average Other major management problems Turnaround = D more than 30 days WOs = D more than 40 days

Slide #74 A Systems Approach  Review of project performance Long-term prospects for each property:  Maintain project as is  Identify capital improvements needed  Dispose of property (demo, sale, etc)  Conversion  Political ramifications Stop-Loss FAQs 9/1/06

Slide #75 Summary  Start now Train staff Define performance standards and manage to them Leadership, a plan, and hard work

Slide #76 NMA Lunch ‘n’ Learn Seminar NEXT TOPIC…

Slide #77 NMA Lunch ‘n’ Learn Seminar

Slide #78 Upcoming Lunch ‘n’ Learns  Managing SEMAP – May 16  Public Housing Rent Calculation – June 12  HCV Rent Calculation – June 13  Ethics in your Housing Authority – June 20