1. Project Based Accounting & Asset Management Julie Miles, Financial Analyst HUD-Kansas City, KS 913-551-5529 1

2. Agenda All PHAs Project-Based Budgeting & Accounting Project-Based Budgeting & Accounting Small PHAs (Less Than 250 PH Units) Single AMPs Single AMPs Multiple AMPs Multiple AMPs Large PHAs (250+ PH Units) Decliners Accelerate AM Implementation for Stop-Loss Decliners Accelerate AM Implementation for Stop-Loss 2

3. Asset Management Asset Management (AM) Project-Based Management (PBM) Project-Based Accounting (PBA) Project-Based Budgeting (PBB) 3

4. PBB & PBA Project Level Budgeting Budgeting Accounting Accounting Financial Statement Reporting Financial Statement Reporting Applies To All Programs & Revenue Sources Supporting Projects Under ACC 4

5. PBM Focus on Operation & Management of Project Address Project Needs With Project Resources Day-to-Day Responsibilities & Decision-Making at Project Level—not Central Office Project-Specific: Marketing Marketing Leasing Leasing Resident Services Resident Services Routine and Preventative Maintenance Routine and Preventative Maintenance Lease Enforcement Lease Enforcement Protective Services Protective Services 5

6. AM AM = PBM + PBB + PBA PHA-Wide Policy & Direction Long-Term Capital & Administrative Planning Property Management Performance Review of Entity-wide Financial Information Long-Term Viability of Properties Risk Management Property Repositioning & Replacement 6

7. Applicability PBB & PBA Required for All PHAs FYBs 7/1/07 & Later FYBs 7/1/07 & Later PBM & AM Required FY 11 PHAs With 250 or More PH Units PHAs With 250 or More PH Units Accelerate AM Implementation for Stop Loss Accelerate AM Implementation for Stop Loss PBM & AM Optional PHAs With Less Than 250 PH Units & 1 AMP PHAs With Less Than 250 PH Units & 1 AMP Elect AM Implementation for Stop Loss Incentive Elect AM Implementation for Stop Loss Incentive 7

8. PBB Budget Required for Each AMP Budget Recommended for Central Office Cost Center (COCC) Stop-Loss Requires COCC Budget Stop-Loss Requires COCC Budget Board Approval of Each AMP on 1 Resolution Unless Troubled, Budget Submission to HUD Not Required Submit Board Resolution to HUD Field Office 8

9. PBB Format Revise Existing Budget Forms No Uniform Budget Format, but Must: Reconcile to FDS Reconcile to FDS Allow Comparison to Actual Revenues & Expenses Allow Comparison to Actual Revenues & Expenses Include All Revenues & Expenses of the Operating & Capital Funds Include All Revenues & Expenses of the Operating & Capital Funds Include Estimate of Operating Subsidy Proration Include Estimate of Operating Subsidy Proration Include Fungibility Transfers (ex. CFP for Operations) Include Fungibility Transfers (ex. CFP for Operations) Include Anticipated Uses of Excess Cash Include Anticipated Uses of Excess Cash 9

10. New FDS Format AMP Level Financial Reporting Operating Fund and Capital Fund Reporting at AMP Level vs. PHA Level New Columns AMP & COCC Columns Replace Low-Rent and CFP Columns AMP & COCC Columns Replace Low-Rent and CFP Columns Elimination Column Subtracts Internal COCC/AMP Transactions from Entity-Wide Totals Elimination Column Subtracts Internal COCC/AMP Transactions from Entity-Wide Totals 10

11. New FDS Line Items Fee Revenues & Expenses More Expense Detail Other Operating-Administrative Other Operating-Administrative Ordinary Maintenance & Operations-Contract Costs Ordinary Maintenance & Operations-Contract Costs Insurance Premiums Insurance Premiums Memo Accounts Measure Revenue Loss Measure Revenue Loss Unit Month Detail Unit Month Detail CFP Expenditure Data CFP Expenditure Data 11

12. New FDS—PHA Level $ Thousands Program Total Total AMPs S8 HCV Rural Housing COCCElim. Assets$10,100$300$750$400 -$50$11,500 Liabilities$4,850$200$250$300- $50$5,550 Equity$5,250$100$500$100 $5,950 Revenue$1,730$1,000$575$270-$250$3,325 Expenses$1,360$990$560$240-$250$2,900 Net Income $370$10$15$30$425 12

13. New FDS—AMP Level $ Thousands Asset Management Projects Total Project 1 Project 2 Project 3 Other AMP Assets$3,434$3,254$3,130$282$10,100 Liabilities$1,649$1,522$1,503$176$4,850 Equity$1,785$1,732$1,627$106$5,250 Revenue$588$527$536$78$1,730 Expenses$462$429$421$47$1,360 Net Income $126$98$115$31$370 13

14. PBA-CFP CFP for AMPs Only—Except COCC CFP Management Fee Unobligated Grants: Actual Costs Actual Costs for Unobligated Grant Prior to AM Future Grants: Fee-for-Service if Implement AM Transfers to Operations Allowed with Current Regulatory Limits Work Item Fungibility Continues Future Transition of BLIs to FDS 14

15. PBA-PHAS New PHAS Assessment Starting FYE 6/30/08 AMP-Level Score Rolled Up to PHA-Level Score First Year Transitional Scores First Year CFP Bonus Based on Previous PHAS Score 15

16. Stop-Loss Transition Calculation FFY 04 Subsidy Eligibility if New Operating Subsidy Formula Implemented FFY 04 Subsidy Eligibility if New Operating Subsidy Formula Implemented 5-Year Loss Phase-in 5-Year Loss Phase-in Year 1 CY 07 5% Limit = 95% Add-on Year 2 CY 08 24% Limit = 76% Add-on Year 3 CY 09 43% Limit = 57% Add-on Year 4 CY 10 62% Limit = 38% Add-on Year 5 CY 11 81% Limit = 19% Add-on Stop-Loss Limits Loss to Applicable Percent in Year Stop-Loss Approved 16

17. Stop-Loss Due Dates Year 1 Due 10/15/07 Year 2 Due 4/15/08 Year 3 Due 10/15/08 Year 4 Due 10/15/09 Year 5 Due 10/15/10 17

18. Stop-Loss for Large PHAs 250 PH Units or More COCC Multiple AMPs Traditional Asset Management 18

19. Stop-Loss for Small PHAs Less Than 250 PH Units Alternate Asset Management (No COCC) if PUM Admin Doesn’t Exceed Admin Threshold Admin Threshold Published in Supplement to PIH Notice 2007-09, Financial Management Handbook, Table 9.1 Admin Threshold Updated Annually, Schedule of Management Fees, Table 2, 80 th Percentile Administrative Costs http://www.hud.gov/offices/pih/programs/ph/am/acc ounting.cfm 19

20. PUM Admin Calculation + Admin Salaries + Admin Benefits + Outside Management Expense + Other Admin + Admin Costs CFP BLI 1408 Mgmt Improvements ÷ Occupied Units & Approved Vacancies ***Calculation Excludes Audit Expense & Excludes Limited Vacancies 20

21. Appeal for Changing Market Conditions May Increase Subsidy if Vacant Unit Months Exceeded Limited Vacancies Decreases PUM Admin Cost Appeal With OpSub Calculation or by OpSub Revision Deadline List of Unit Numbers & Periods Vacant List of Unit Numbers & Periods Vacant Narrative Explaining Specific Changing Market Conditions (ex. Population Decline, Competing Project, etc.) Narrative Explaining Specific Changing Market Conditions (ex. Population Decline, Competing Project, etc.) Narrative Explaining Marketing Efforts Narrative Explaining Marketing Efforts Certify No Waiting List for Unit Months in Appeal Certify No Waiting List for Unit Months in Appeal Certify Unit Months in Appeal Ready to Rent (not Downtime or Make-Ready) Certify Unit Months in Appeal Ready to Rent (not Downtime or Make-Ready) 21

22. AM 250+ PH Units To Qualify for Stop-Loss, Decliners Less Than 250 PH Units & Exceeds Admin Limit 22

23. AM COCC $4 PUM AM OpSub Add-on if 2+ AMPs Monitor Cash Flow at AMP Level Bank Account Per AMP Not Required Replace Cost Allocation with Fee-for- Service 23

24. AM—Balance Sheet Allocation Required 1 st Year of AM Assign to AMP/COCC/Other Program if Direct Relationship Exists Assign Equipment to Controlling AMP/COCC/Other Program 24

25. Legacy Costs & Associated Unfunded Liabilities Allocate to AMP, COCC & Other Programs to Ensure All Bear Proportionate Share—May Consider Ability to Pay 25

26. Compensated Absences Allocate Based on Current Employee Assignment Transfer Associated Liability & Liquid Asset if Employee Transfers—A/P & A/R if No Liquid Asset Available COCC May Setup A/R from AMPs & Other Programs for COCC Share At Initial Balance Sheet Allocation Not Subject to Excess Cash Rules Eliminate A/R & A/P on FDS 26

27. Pension & Other Post- Employment Benefits (OPEBs) Current & Retired Employees Pension, Retiree Medical & Other Related Expenses Accounting & Contributions Based on Retirement Plan Allocate Annual Contribution Based on Employee Assignment 27

28. Other Post-Employment Benefits (OPEBs) Historically Pay-As-You-Go GASB 45 Requires Liability Recording Annual Required Contribution (ARC) Normal Annual Cost Normal Annual Cost Share of Unfunded Liability—Not to Exceed 30 Years Share of Unfunded Liability—Not to Exceed 30 Years Charge to COCC for All Employees 28

29. OPEBs (Continued) Non-COCC Employee Share: AMPs & Other Programs Transfer Liquid Assets Annually to COCC to Cover ARC COCC Employee Share Covered by Fees Earned A/P & A/R if No Liquid Assets Available Not Subject to Excess Cash Rules 29

30. Other Liabilities Lawsuits, Legal Actions, Lead-Based Paint, Asbestos Record at COCC Recover from AMPs & Other Programs Based on Reasonable Method Not Subject to Excess Cash Rules A/P & A/R if No Liquid Assets Available 30

31. AM—Balance Sheet Allocation Restricted Assets Real & Personal Property Assigned to COCC Restricted Assets Subject to Federal Program Rules Restricted Assets Subject to Federal Program Rules Future Guidance on COCC Asset Disposal Future Guidance on COCC Asset Disposal 31

32. AM—Working Capital Assign Cash to COCC Equivalent of Up to 6 Months Estimated Property Management, Bookkeeping, and AM Fees Based on 100% Occupancy of All ACC Units Not Subject to Excess Cash Restrictions If Cash Not Available at AMP, May Record Receivable/Liability Receivable/Liability Must Be Paid Prior to Payment of Additional AM Fees or AMP Fungibility Transfer Receivable/Liability Must Be Paid Prior to Payment of Additional AM Fees or AMP Fungibility Transfer 32

33. Cost Assignment Front Line (AMP) Expenses Related to Direct Operation of the Property Related to Direct Operation of the Property vs. Management Fee (COCC) Expenses Related to Corporate Support Related to Corporate SupportGuidance Asset Management Planning Document Attachment B Asset Management Planning Document Attachment B PIH Notice 2007-9, Financial Management Handbook Supplement Table 7.2 PIH Notice 2007-9, Financial Management Handbook Supplement Table 7.2 Multifamily Management Agent Handbook, HUD 4381.5, Chapter 6 Multifamily Management Agent Handbook, HUD 4381.5, Chapter 6 33

34. Central Front-Line Admin Reasonably Prorate Direct Labor, Supplies & Equipment to AMPs Prorated Costs Include Equipment Purchased with Capital or Operating Funds remain AMP Program Assets Document Proration Method Adjust to Actual Costs at Year-End At Minimum Cannot Exceed Cost if Performed On-site Can’t Prorate if On-site Staff Also Perform Task 34

35. Prohibited Central Front-Line Admin Supervision Cost of Front-Line Admin—Except for Central Waiting Lists, Central Resident Services, and Central Protective Services Procurement/Warehousing—Unless Cheaper than Project-Based Procurement/Warehousing & HUD Approves Rent Collection—Unless Listed in Employee’s Job Duties Resident Services—Unless Can’t Reasonably Track Costs to AMPs Protective Services—Unless Can’t Reasonably Track Costs to AMP & Plan for Future Direct Deployment if Extensive Central Services 35

36. Central Front-Line Maintenance Technical & Routine Maintenance Must Use Fee-for-Service Begins 2 nd Year of PBB/PBA Actual Services Only Can’t Exceed Market Rates Supporting Documents for Rates Can’t Prorate Unrecovered Costs Due to Under- Utilization or Unreasonable Low Rates Can’t Charge Projects for Costs of Centralized Supervisor or Admin Assistants 36

37. Shared Resource Costs Spread Cost to AMPs Receiving Service Few AMPs Sharing Resource vs. All AMPs If Staff Shared between AMPs & COCC, Prorate Based on Time Spent on AMPs & COCC Limited to Reasonable Labor Rates 37

38. COCC Not Subject to Program Income Rules if Fees Reasonable State and Local Restrictions May Still Apply State and Local Restrictions May Still Apply May Include Business Activities Example: Management Fees for Non-Profit or Private Properties Example: Management Fees for Non-Profit or Private Properties 38

39. Fees Property Management Bookkeeping Asset Management CFP Management HCV Program Management Other PIH & HUD Program Management Non-Federal Program Management 39

40. Property Management Fee Multifamily Property Management Fee Schedule—Federally Subsidized Properties 80th Percentile Property Management Fees—For-Profit and Limited Divided FHA Properties Other Local Market Data 40

41. Property Management Fee Reasonable in 2 nd + Years Additional 2 Year Extension Available Additional 2 Year Extension Available Stop-Loss Requires Reasonableness in 1 st Year Stop-Loss Requires Reasonableness in 1 st Year Earned Monthly for Occupied & HUD-approved Vacancy, but Not Limited Vacancies COCC Retains Difference Between Fee Charged to AMP and Fee Paid for Private Management, Including Mixed Finance Projects. COCC Earns Fee if Manages Mixed Finance Property Demo/Dispo: 75% Year 1, 50% Year 2 Demo: 25% Year 3 41

42. Bookkeeping Fee Up to $7.50 PUM Reasonable in 2 nd + Years Additional 2 Year Extension Available Additional 2 Year Extension Available Stop-Loss Requires Reasonableness in 1 st Year Stop-Loss Requires Reasonableness in 1 st Year Earned Monthly for Occupied & HUD-approved Vacancy, but Not Limited Vacancies Cannot charge if Project Accounting Functions Also Performed On-site & Charged as Front- line/AMP Cost Can Also Charge to HCV Program 42

43. Asset Management Fee 1 st Year—Up to $10 PUM 2 nd + Years—Up to $10 PUM and Not To Exceed Excess Cash Calculation Earned Monthly for All ACC Units Earned For Demo/Dispo Units Until Vacant PHAs With 250+ PH Units PHAs With Less than 250 PH Units & 2+ AMPs & COCC No Accruals 43

44. CFP Management Fee Up to 10% to Admin BLI 1410 & Counts Toward 10% Admin Limit Available to Earn & Draw When Grant Awarded & Available Prior to AM Implementation & Beginning With FFY 2007, Can’t Draw Unobligated Funds Under Admin BLI 1410 of Open CFP Grants as CFP Management Fee 44

45. CFP Management Fee (Continued) FFY 2007 Charge Management Fees Commencing with Start of First Year PBB/PBA May Have Partial Year Actual Cost & Partial Year Fees May Have Partial Year Actual Cost & Partial Year Fees Subject to Fee Reasonableness in 2 nd Year FYEs 6/30/09, 9/30/09, 12/31/09, 3/31/10 FYEs 6/30/09, 9/30/09, 12/31/09, 3/31/10 45

46. HCV Program Management Fee Voluntary Higher of 20% of HCV Admin Revenue or $12 PUM per Voucher Leased Guidance HCV Program Management Fee vs. Front-Line Costs PIH Notice 2007-9, Financial Management Handbook Supplement Table 7.2 PIH Notice 2007-9, Financial Management Handbook Supplement Table 7.2 46

47. Other Management Fees Development Activities 3% Total Project Budget 3% Total Project Budget Up to 6% if HUD Approved Up to 6% if HUD Approved Other PIH & HUD Grants Management Up to 15% Grant Amount, if No Fee Rate Established Up to 15% Grant Amount, if No Fee Rate Established Non-Federal Program Management Voluntary Fee-for-Service Voluntary Fee-for-Service 47

48. Fee Payment & Documentation Invoice Recommended Documentation Supporting How Fees Earned Occupancy Occupancy Fee Reasonableness Fee Reasonableness 48

49. Fungibility 1 st Year AM: Full Fungibility AMP/COCC 2 nd Years AM: Fungible Only Between AMPs & Subject to Positive Excess Cash Restriction 3 rd + Years AM: Fungible Only Between AMPs & Subject to 1-Month Excess Cash Restriction No Restriction on Transfers from COCC to AMPs FDS Must Be Submitted & Accepted 49

50. Excess Cash Calculation: 2 nd Year Based on Prior Year FDS Adjust Excess Cash Limit for Audited FDS Submission + Unrestricted Cash + Cash-Tenant Security Deposits + Cash-Restricted for Payment of Current Liabilities + Total Receivables, Net of Allowance for Doubtful Accounts + Unrestricted Investments + Interprogram Due From -Current Liabilities ***Must Be Positive** 50

51. Excess Cash Calculation: 3 rd + Years Based on Prior Year FDS Adjust Excess Cash Limit for Audited FDS Submission + Unrestricted Cash + Cash-Tenant Security Deposits + Cash-Restricted for Payment of Current Liabilities + Total Receivables, Net of Allowance for Doubtful Accounts + Unrestricted Investments + Interprogram Due From - Current Liabilities - Average Monthly Operating Expenses 51

52. Excess Cash Uses AMP Reserve Transfer to other AMPs Pay Asset Management Fee to COCC, but No Loan/Transfer Other Eligible Purposes Develop New Units-to Extent Allowed Under Program Rules Develop New Units-to Extent Allowed Under Program Rules Legal Costs Incurred Prior to AM Legal Costs Incurred Prior to AM Legacy Costs Legacy Costs 52

53. Resources PIH Notice 2006-14 http://www.hudclips.org/sub_nonhud/html/pdfforms/06-14PIH.doc PIH Notice 2006-35 http://www.hudclips.org/sub_nonhud/html/pdfforms/06-35PIH.doc Stop-Loss Submission Kit http://www.hud.gov/offices/pih/programs/ph/am/docs/stoplosskit.pdf Asset Management Planning Guide http://hudstage.hud.gov/offices/pih/programs/ph/am/docs/pham.pdf PIH Notice 2007-9 http://www.hudclips.org/sub_nonhud/cgi/pdfforms/07-9PIHSupp.doc 53