1. Asset Management Orientation for PHA Boards

2. Overview of Asset Management Orientation for PHA Boards Section 1: Overview of Asset Management Section 2: Asset Management Building Blocks Section 3: The Central Office Cost Center

3. Training Format Designed for PHA Board members Designed for PHA Board members Based on the curriculum presented at live, regional training sessions conducted in 2007 Based on the curriculum presented at live, regional training sessions conducted in 2007 Features include: Features include:  Fully narrated presentation slides  Ability to navigate between slides  Exercises in each section  Ability to download the training to your computer  Access to reference materials and websites

4. 12 345 Basic Instructions for Presentation Viewer.......

5. Section 1: Overview of Asset Management

6. Overview of Asset Management Learning Objectives Provide a brief history of the events leading up to Public Housing’s conversion to asset management Provide a brief history of the events leading up to Public Housing’s conversion to asset management Identify key dates associated with the transition to asset management Identify key dates associated with the transition to asset management Define asset management Define asset management Distinguish asset management from property management Distinguish asset management from property management Describe key roles and responsibilities under asset management, particularly the PHA Board’s role as owner Describe key roles and responsibilities under asset management, particularly the PHA Board’s role as owner

7. History and Background 1998: Quality Housing and Work Responsibility Act 1998: Quality Housing and Work Responsibility Act 1999: Negotiated-Rulemaking I, Funding of Harvard Cost Study 1999: Negotiated-Rulemaking I, Funding of Harvard Cost Study 2003: Cost Study Completed 2003: Cost Study Completed 2004: Negotiated-Rulemaking II 2004: Negotiated-Rulemaking II 2005: Final Rule on Operating Fund Program 2005: Final Rule on Operating Fund Program New Operating Subsidy FormulaNew Operating Subsidy Formula Asset Management Requirement for PHAs with 250+ UnitsAsset Management Requirement for PHAs with 250+ Units 2006: PIH Notice 2006-33 (Interim Guidance/Financial Reporting) 2006: PIH Notice 2006-33 (Interim Guidance/Financial Reporting) 2007: PIH Notice 2007-09 (Final Guidance/Financial Reporting) 2007: PIH Notice 2007-09 (Final Guidance/Financial Reporting) 2008 Appropriations Bill (Include full name here) 2008 Appropriations Bill (Include full name here)

8. A Look at the PHA Inventory Size Category Number of PHAs % of Total Units Less than 250 units 2,32717% 250 or more units 80583% Data is based on the “Operating Fund Annual Report Calendar Year 2007,” October 31, 2007.

9. Gainers and Decliners Under the New Operating Fund Formula Gainers/Decliners Category Number of PHAs % of Total PHAs Gainers2,30474% Decliners81426% Data is based on the “Operating Fund Annual Report Calendar Year 2007,” October 31, 2007.

10. “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.” “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.” Revisions to the Public Housing Operating Fund Program; Final Rule HUD, September 19, 2005 Central Tenet of Asset Management

11. Key Implementation Dates Determination of Asset Management Projects (AMPs) – Calendar Year 2006 Determination of Asset Management Projects (AMPs) – Calendar Year 2006 Implementation of new Operating Fund Formula – Calendar Year 2007 Implementation of new Operating Fund Formula – Calendar Year 2007 Project-Based Budgeting/Accounting (PBB/A) – Fiscal Year 2007 Project-Based Budgeting/Accounting (PBB/A) – Fiscal Year 2007 Cost Reasonableness Standards – Fiscal Year 2008 Cost Reasonableness Standards – Fiscal Year 2008 New Public Housing Assessment System – Effective Second Year of PBB/A New Public Housing Assessment System – Effective Second Year of PBB/A Full implementation of Asset Management – Fiscal Year 2011 Full implementation of Asset Management – Fiscal Year 2011

12. Effective Dates for Implementation PHA Fiscal Year-End PBB and PBA Cost Reasonableness * June 7/1/2007 through 6/30/2008 7/1/2008 through 6/30/2009 Sept 10/1/2007 through 9/30/2008 10/1/2008 through 9/30/2009 Dec 1/1/2008 through 12/31/2008 1/1/2009 through 12/31/2009 Mar 4/1/2008 through 3/31/2009 4/1/2009 through 3/31/2010 *Extension through 2011 on case-by-case basis

13. Asset Management Definition Asset management … is a process of making investment decisions for a collection (portfolio) of assets, based on the mission, goals, and objectives of the owner, lender, sponsor, or regulatory body.

14. Asset Management vs. Property Management Asset Management Asset Management  Mission/goals/policies  Strategic decision making Property Management Property Management  Day-to-day management/operations

15. A Look at Entities, Roles and Functions PIH Field Offices PHA Staff or Mgmt Company PHA Board EntityRoleFunction Owner Regulator Operator Property Management Oversight and Monitoring Asset Management

16. Difference in PHA Missions Who to serve Who to serve Quality of housing Quality of housing Standard of affordability Standard of affordability Social goals Social goals

17. Operating Fund Program Final Rule and Small PHAs PHAs with fewer than 250 units are not required to convert to asset management. Still, they will be: PHAs with fewer than 250 units are not required to convert to asset management. Still, they will be: Subject to new funding formulaSubject to new funding formula Required to use the new year-end financial reporting template (FDS, or Financial Data Schedule)Required to use the new year-end financial reporting template (FDS, or Financial Data Schedule) Affected by change in PHASAffected by change in PHAS Small PHAs may choose to implement asset management and follow the key business rules like any larger PHA Small PHAs may choose to implement asset management and follow the key business rules like any larger PHA

18. PHA Board: Owner Role Review activities for conformance with missions and goals Review activities for conformance with missions and goals Evaluate progress and recommend corrective action Evaluate progress and recommend corrective action Monitor performance Monitor performance Stay up-to-date on industry information Stay up-to-date on industry information Foster relationships with key stakeholders Foster relationships with key stakeholders

19. Asset Management Changes from Appropriations Act of 2008 The Consolidated Appropriations Act of 2008 contained two provisions which pertain directly to asset management. The two provisions are: PHA election to be exempt from asset management for PHAs with 250-400 unitsPHA election to be exempt from asset management for PHAs with 250-400 units Use of Capital Fund proceeds to pay for central office costsUse of Capital Fund proceeds to pay for central office costs The first provision is only effective for CY 2008. The second is considered permanent legislation.

20. 400-Unit Exemption for CY 2008 For the purpose of being exempt from asset management, the size threshold increased from 250 units to 400 units For the purpose of being exempt from asset management, the size threshold increased from 250 units to 400 units Does not change small PHA threshold for other program areas Does not change small PHA threshold for other program areas PHAs between 250-400 units that elect to convert will not have option of “alternative asset management model” (available only for PHAs of less than 250 units) PHAs between 250-400 units that elect to convert will not have option of “alternative asset management model” (available only for PHAs of less than 250 units) Exemption only authorized for CY 2008 Exemption only authorized for CY 2008 PHA must notify HUD via CY 2008 operating subsidy submissions by April 25, 2008 PHA must notify HUD via CY 2008 operating subsidy submissions by April 25, 2008

21. 400-Unit Exemption: Implications Will not implement fee for service model, and will not create a COCC Will not implement fee for service model, and will not create a COCC Will not receive the $4 PUM asset management add-on Will not receive the $4 PUM asset management add-on All units will be combined into one AMP, possibly affecting Project Expense Levels (PELs) All units will be combined into one AMP, possibly affecting Project Expense Levels (PELs) Refer to PIH Notice 2008-16 for additional implications Refer to PIH Notice 2008-16 for additional implications

22. Capital Fund Program Changes PHAs may transfer Capital Funds to Operations for payment of central office costs PHAs may transfer Capital Funds to Operations for payment of central office costs In implementing this provision, PHAs must maintain cost allocations for overhead costs (in lieu of fee-for-service/management fees) and, therefore, not establish a COCC In implementing this provision, PHAs must maintain cost allocations for overhead costs (in lieu of fee-for-service/management fees) and, therefore, not establish a COCC Overhead costs must still be considered reasonable and necessary Overhead costs must still be considered reasonable and necessary Large PHAs may still only transfer up to 20% to “Operations” Large PHAs may still only transfer up to 20% to “Operations”

23. Workshop 1.1: Asset Management Change Assessment How might asset management change the way your PHA does business? How might asset management change the way your PHA does business? As a group, please discuss and provide an answer to the question above.

24. End of Section 1

25. Section 2: Asset Management Building Blocks

26. Asset Management Building Blocks Learning Objectives Introduce the five building blocks of asset management Introduce the five building blocks of asset management

27. Initial Priorities/Building Blocks Project-based funding Project-based funding Project-based budgeting Project-based budgeting Project-based accounting Project-based accounting Project-based management Project-based management Project-based performance assessment

28. Project-Based Funding Separate subsidy form for each project Separate subsidy form for each project Project Expense Level (PEL) is a major component Project Expense Level (PEL) is a major component Ensures appropriate resources are allocated to each AMP Ensures appropriate resources are allocated to each AMP Project-based funding Project-based funding

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

30. Components of Formula Funding To understand the amount of funds available to any project, one must understand the following: To understand the amount of funds available to any project, one must understand the following:  Project Expense Level (PEL)  Utility Expense Level (UEL)  Add-Ons  Frozen Formula Income  Proration

31. Project Expense Level (PEL) Model-generated estimate of cost to operate a project on a per unit basis, exclusive of taxes, utilities, and add-ons Model-generated estimate of cost to operate a project on a per unit basis, exclusive of taxes, utilities, and add-ons Amount expressed in PUMs (per unit month) Amount expressed in PUMs (per unit month) Major coefficients that have a large impact on PEL Major coefficients that have a large impact on PEL  Unit Size (Bedroom Mix)  Local Market  Age of Property  Occupancy Type (Family vs. Elderly) National average was $ 325 PUM in 2007 (excluding New York City Housing Authority) National average was $ 325 PUM in 2007 (excluding New York City Housing Authority)

32. Utility Expense Level (UEL) Represents the average utility consumption for a project over the past three years, multiplied by recent utility rates Represents the average utility consumption for a project over the past three years, multiplied by recent utility rates Amount expressed in PUMs Amount expressed in PUMs National average was $125.95 PUM in 2007 National average was $125.95 PUM in 2007 Assigned UEL will vary by project Assigned UEL will vary by project

33. 2007 Add-Ons Add-OnsAmountPUM Self-Sufficiency $ 13,093,430 $ 1.00 Energy Loan Amortization $ 16,844,422 $ 1.29 Payment in Lieu of Taxes $ 95,199,853 $ 7.26 Cost of Independent Audit $ 17,159,716 $ 1.31 Resident Participation $ 24,860,325 $ 1.90 Asset Management Fee $ 42,777,668 $ 3.26 IT (Info. Technology) Fee $ 26,215,754 $ 2.00 Asset Repositioning $ 43,329,841 $ 3.31 Total Add-Ons $279,481,009$21.32

34. Frozen Formula Income Equal to a project’s rental income reported on 2004 financial statements, adjusted for changes in utility allowances Equal to a project’s rental income reported on 2004 financial statements, adjusted for changes in utility allowances Effective for 2007 through 2009 Effective for 2007 through 2009 National average was $181.09 PUM in 2007 National average was $181.09 PUM in 2007

35. Proration Each year, total subsidy eligibility is compared with appropriations for the Operating Fund program; the difference is proration Each year, total subsidy eligibility is compared with appropriations for the Operating Fund program; the difference is proration Expressed as a percentage Expressed as a percentage Example: Example:  Eligibility = $4.0 billion  Appropriation = $3.6 billion  Proration = 90%

36. Determining Project Funding Project Expense Level (PEL) + Utilities Expense Level (UEL) + Add-ons = Formula Expenses - Formula Income = Subsidy Eligibility - Proration = Actual Subsidy + Rental Income + Other Income + Transfers = Effective Income Effective Income - Operating Expenses = Net Income

37. Project-Based Budgeting Used for planning purposes Used for planning purposes Budgeted amounts must reconcile to FDS Budgeted amounts must reconcile to FDS Must be approved by PHA Board Must be approved by PHA Board Not subject to HUD approval Not subject to HUD approval Project-based funding Project-based budgeting Project-based budgeting

38. Project-Based Budgeting (continued) What are project-based budgets? Itemized projection of income and expenses over a specific period Itemized projection of income and expenses over a specific period Guideline for operating the project Guideline for operating the project

39. Sample Conventional Budget Gross Potential Income (GPI) Gross Potential Income (GPI) - Vacancy and Collection Loss + Miscellaneous Income = Effective Gross Income (EGI) - Operating Expenses = Net Operating Income (NOI) - Reserves for Replacement - Annual Debt Service (ADS) = Cash Flow

40. Ratios Used for Expense Benchmarking Operating Expense Ratio (%) = Operating Expense per Unit ($) = Several variables may impact benchmarks Several variables may impact benchmarks Expense benchmarks can be used to compare efficiencies across properties Expense benchmarks can be used to compare efficiencies across properties Operating Expenses Income Number of Units

41. Workshop 2.1: Expense Benchmarks Consider data from two similar apartment buildings shown on the next slide Consider data from two similar apartment buildings shown on the next slide Calculate the Operating Expense Ratio and Operating Expense/Unit Ratio Calculate the Operating Expense Ratio and Operating Expense/Unit Ratio In groups, identify the project with the lowest costs In groups, identify the project with the lowest costs What other factors should be considered when evaluating the results of this cost comparison? What other factors should be considered when evaluating the results of this cost comparison?

42. Workshop 2.1: Expense Benchmarks Hamilton Place Southside Apartments # of Units 2010 Income$175,000$160,000 Operating Expenses $150,000$145,000 OpEx Ratio OpEx/Unit 86%91% $7,500 $14,500

43. Calculating Expense Benchmarks Hamilton Place: Operating Expense Ratio: $150,000 (Operating Expense)/$175,000 (Income) = 86% Operating Expense per Unit: $150,000 (Operating Expense)/20 (Number of Units) = $ 7,500 Southside Apartments: Operating Expense Ratio: $145,000 (Operating Expense)/$160,000 (Income) = 91% Operating Expense per Unit: $145,000 (Operating Expense)/10 (Number of Units)= $ 14,500

44. Where Can I Find Benchmarks? Project Expense Levels (PELs) Project Expense Levels (PELs) Project Level Data Project Level Data IREM Income/Expense Analysis ® Reports IREM Income/Expense Analysis ® Reports www.irem.orgwww.irem.org Housing Finance Agencies Housing Finance Agencies NeighborWorks (small properties) NeighborWorks (small properties) Rural Development Rural Development Local and Regional Market Studies Local and Regional Market Studies

45. Project-Based Accounting Year-end project statements submitted to HUD Year-end project statements submitted to HUD Can only charge projects for services actually received Can only charge projects for services actually received Fees must be considered reasonable Fees must be considered reasonable Project-based funding Project-based budgeting Project-based accounting Project-based accounting

46. Project-Based Accounting (continued) For conventional properties, the financial performance of each property is tracked individually and reported to the owner For conventional properties, the financial performance of each property is tracked individually and reported to the owner This allows the manager and owner to make the best possible decisions for each individual property This allows the manager and owner to make the best possible decisions for each individual property Similarly, PHAs will assemble project level financial data Similarly, PHAs will assemble project level financial data

47. Project-Based Accounting Under the Final Rule Annual year-end financial statements on each AMP will be required  Revenues, expenses, balance sheet  To be included with the Financial Data Schedule (FDS)  FDS will also be revised to include a column for the COCC

48. Entity-Wide FDS Financial Reporting Model (Existing) Balance Sheet Program Total Operating Fund Capital Fund Section 8 Voucher Program Rural Housing Statement of Net Assets Assets$10,000,000$500,000$250,000$750,000$11,500,000 Liabilities$5,000,000$100,000$200,000$250,000$5,550,000 $5,000,000$400,000$50,000$500,000$5,950,000 Liabilities and Net Assets Liabilities and Net Assets $10,000,000 $10,000,000$500,000$250,000$750,000$11,500,000

49. Asset Management Project FDS Financial Reporting Model (New) Financial Statement Asset Management Projects Total Project 1 Project 2 Project 3 Balance Sheet Assets$3,434,000$3,253,000$3,131,000$9,818,000 Liabilities$1,649,000$1,521,500$1,503,500$4,674,000 Equity$1,785,000$1,731,500$1,627,500$5,144,000 Operating Statement Revenue$588,200$527,500$536,300$1,652,000 Expenses$462,400$429,000$421,600$1,313,000 Net Income $125,800$98,500$114,700$339,000

50. Project-Based Management Arrange services in the best interest of the project Arrange services in the best interest of the project Assign management personnel to each project Assign management personnel to each project Project-based funding Project-based budgeting Project-based accounting Project-based Project-based management management

51. Project-Based Management (PBM) “The provision of property-management services that is tailored to the unique needs of each property, given the resources available to that property...Under PBM, these 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 provision of property-management services that is tailored to the unique needs of each property, given the resources available to that property...Under PBM, these 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.” 24 CFR 990 24 CFR 990

52. Why Practice PBM? Maximizes performance at all levels Maximizes performance at all levels Local staff are closer to market changes and community issues Local staff are closer to market changes and community issues On-site staff can monitor the project On-site staff can monitor the project Response to resident issues is faster and more personal Response to resident issues is faster and more personal

53. Common Characteristics of PBM Each project has an operating budget to be approved by the owner Each project has an operating budget to be approved by the owner The project is assigned dedicated management and maintenance personnel who frequently work on site The project is assigned dedicated management and maintenance personnel who frequently work on site If a project is too small to afford full-time staff, the project may have part-time or shared staff If a project is too small to afford full-time staff, the project may have part-time or shared staff

54. Common Characteristics of PBM (Continued) Site personnel have significant authority and responsibility over the day-to-day operations Site personnel have significant authority and responsibility over the day-to-day operations Most project management tasks are handled or coordinated by the on-site staff Most project management tasks are handled or coordinated by the on-site staff Procurement is done by on-site management and reviewed by supervisor Procurement is done by on-site management and reviewed by supervisor The person primarily in charge of the project on a day-to-day basis, including maintenance, is the site manager The person primarily in charge of the project on a day-to-day basis, including maintenance, is the site manager

55. Project-Based Management Example You own a group of restaurants. Would you have a budget for each restaurant? Would you have a budget for each restaurant? Would you hire a manager for each restaurant? Would you hire a manager for each restaurant? What roles would you assign to on-site staff vs. central staff? What roles would you assign to on-site staff vs. central staff?

56. Workshop 2.2: Assignment of Common Tasks The table on the following slide list tasks commonly associated with managing Public Housing The table on the following slide list tasks commonly associated with managing Public Housing As a group, determine whether each task should be performed on-site or centrally under project-based management As a group, determine whether each task should be performed on-site or centrally under project-based management

57. Workshop 2.2: Assignment of Common Tasks (Answers) TaskOn-SiteCentral Leasing units and enforcing the lease Processing families for admission and submitting 50058 forms as required Grant-writing and other predevelopment activities Reviewing project-level budgets and reports Inspecting units, structures, and systems on a frequent basis Taking applications for admission Interacting with local government and HUD Overseeing the portfolio including tracking occupancy trends Preparing budgets for the property Purchasing and ordering goods/services Deciding when a property needs revitalization, demolition, or disposition

58. Project-Based Performance Assessment Revise PHAS to emphasize AMP performance Revise PHAS to emphasize AMP performance Development of internal PHA monitoring mechanisms Development of internal PHA monitoring mechanisms Project-based funding Project-based budgeting Project-based accounting Project-based management Project-based performance assessment

59. HUD Oversight and the Public Housing Assessment System (PHAS) Each project will be evaluated on financial, managerial, and physical aspects in addition to use of Capital Funds Each project will be evaluated on financial, managerial, and physical aspects in addition to use of Capital Funds New system will: New system will:  Be consistent with the norms in multifamily housing  Avoid PHA self-certifications  Rely on existing data sources  Emphasize on-site management reviews

60. Internal PHA Monitoring Mechanisms Develop mechanisms to collect data to measure actual AMP performance against goals Develop mechanisms to collect data to measure actual AMP performance against goals Goals must be clearly articulated in annual plans and budgets. For example, budget goals may include monthly income and expenditures. Goals must be clearly articulated in annual plans and budgets. For example, budget goals may include monthly income and expenditures.

61. Project Goals In order to measure performance, goals must be articulated In order to measure performance, goals must be articulated Annual budget preparation includes goals: Annual budget preparation includes goals:  Rent collections  Vacancies  Unit turnarounds  Inspections  Maintenance services

62. Sample Monthly Project Review 5 th of month: Financial statements made available 5 th of month: Financial statements made available 7 th of month: Manager ’ s monthly Project Report due to Regional Manager 7 th of month: Manager ’ s monthly Project Report due to Regional Manager 9 th of month: Meeting with Site Manager and Regional Manager to review performance 9 th of month: Meeting with Site Manager and Regional Manager to review performance 10 th of month: Regional Manager forwards narrative variance report to Director of PM and ED, accompanying monthly financial report 10 th of month: Regional Manager forwards narrative variance report to Director of PM and ED, accompanying monthly financial report 12th – 15 th of month: ED reviews performance with Board and Committees 12th – 15 th of month: ED reviews performance with Board and Committees

63. Long-term Capital Planning and Asset Repositioning Key information needed: Physical needs assessment Physical needs assessment Market data Market data Asset value Asset value Funding sources Funding sources

64. Long-Term Capital Planning and Asset Repositioning: Strategies Asset strategies: Hold/defer Hold/defer Hold/modernize Hold/modernize Refinance Refinance Sale/disposition/demolition Sale/disposition/demolition Each strategy must be compared against the mission and goals of the agency

65. End of Section 2

66. Section 3: The Central Office Cost Center

67. 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

68. 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

69. 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

70. 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

71. 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)

72. 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)

73. 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

74. 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)

75. 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

76. 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

77. 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

78. 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

79. 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

80. 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

81. 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

82. 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)

83. 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 2007-09 Refer to Table 7.2 of the Supplement to PIH Notice 2007-09

84. 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 2007-09 Refer to Table 7.2 of the Supplement to PIH Notice 2007-09

85. Summary and Online Resources

86. 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

87. Online Resources http://www.hud.gov/offices/pih/programs/ph/am http://www.hud.gov/offices/pih/programs/ph/am 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

88. Online Resources (continued) http://www.hud.gov/offices/pih/programs/ph/am http://www.hud.gov/offices/pih/programs/ph/am PIH Notice 2007-09, 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 2007-09, 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 Email: AssetManagementHelpDesk@hud.govEmail: AssetManagementHelpDesk@hud.govAssetManagementHelpDesk@hud.gov Toll-Free Telephone: 1-800-511-8478Toll-Free Telephone: 1-800-511-8478

89. End of Section 3