Report on Additional Public Housing Field Research

							                                                                       Harvard Design School
                                                          Public Housing Operating Cost Study



Additional Field Research Report
The GSD’s September 25, 2000 Progress Report and Revised Work Plan
described in some detail the initial field research in Houston, Texas; Norfolk,
Virginia; Portland, Oregon and Springfield, Massachusetts. This work included
 a) gathering and analyzing operating cost data on 14 to 25 comparable
properties in each market as a basis of comparison with each housing authority’s
AEL and b) subsequently visiting each city to discuss with the PHA, as well as
private and non-profit housing providers, the results of the cost analysis and the
factors that might influence costs. The observations detailed therein have been
reviewed extensively, researched more thoroughly and incorporated as
appropriate throughout this reconnaissance phase and subsequent draft
research design.

1. Additional field research

The initial field work in Houston, Norfolk, Portland and Springfield revealed that
none of these four PHAs maintains accounting systems that can readily and
routinely identify and monitor all the actual costs of a property’s operations on a
project-by-project basis. We believe it is very important to collect this data so we
continued to seek well-run PHAs that had some or all of the following
characteristics:

     a) not only budgeted but tracked actual project-by-project operating costs.
     b) had some portion of their portfolio under private management so we could
        discuss the differences / similarities between operating costs of public
        housing when managed by the PHA and when managed by third parties
     c) had some assisted and conventional multi-family housing, so we could
        discuss the differences / similarities between public housing managed by
        the PHA and other housing managed by the PHA, and
     d) had developed a sophisticated methodology for allocating property-
        related central office costs (such as maintaining a centralized waiting list
        or procuring contracts) on a property-by-property basis.

This additional work took us to Atlanta, Georgia; Boston, Massachusetts; Central
Falls and Coventry, Rhode Island; Kansas City, Missouri; Miami, Florida;
Montgomery County, Maryland; Philadelphia, Pennsylvania; Puerto Rico; St
Louis, Missouri; Seattle, Washington; Washington, DC and Winter Park, Florida.
Our protocol included requesting the following information from the PHAs:

         a.   FY00 site-based operating actuals for each PHA property
         b.   FY01 site-based operating budgets for each PHA property
         c.   FY00 agency-wide financial actuals
         d.   Salary allocation schedule
         e.   Last PHA agency plan
         f.   Last PHA Statement of Operating Receipts and Expenditures


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                                                                     Harvard Design School
                                                        Public Housing Operating Cost Study


         g.   Last PFS funding submission to HUD – including vacancy rate
              calculation
         h.   Basic property information/statistics
         i.   Any other information or reports the PHA thought would be helpful

During our site visits we routinely met with senior PHA staff to outline the
purpose of the study in general and then met with appropriate PHA finance,
operations and asset management staff who could best assist us in
understanding how the PHA budgeted and then tracked site operating costs;
what method, if any, had been developed for allocating centralized “overhead”
costs to each property and what operating budgets and tracking were utilized by
and/or with their private managers. PHA and private management staff were
universally available, helpful and eager to contribute to the study and conduct
site visits of both PHA and privately managed public housing properties.

Wherever applicable, we also met with one or more of the private managers of
the PHAs we visited. We specifically sought their observations of the operating
budgets they had to operate public housing compared with the budgets they had
to operate other types of rental multi-family housing, particularly assisted
housing. We also routinely inquired about what factors most influenced costs in
managing public housing. Several private managers also provided us with
extensive operating cost actuals and assisted us in identifying appropriate
assisted comparables in their local markets.

2. Observations

The observations identified in the Field Research section of the September 25,
2000 Progress Report and Revised Work Plan were confirmed in this additional
research. These observations also informed the disadvantages discussed in
Method 2: Sample of Well-run PHAs in Chapter 2. Additionally, the following
were more specifically identified during this reconnaissance phase:

      PHAs utilize different methodologies for determining the site-based
operating budgets of their private managers PHAs who contract with private
managers employ different methodologies for establishing their private
managers’ property operating budgets. Some PHAs (reasonably) negotiate
annual operating budgets with their private managers on a project-by-project
basis; other PHAs (less reasonably) “give” their private managers the same
operating budget on a PUM basis for each privately managed property. Some
PHAs (reasonably) revise the project operating budgets annually with their
private managers; others (less reasonably) have held their private managers to
essentially the same operating budgets for years. Some PHAs provide manned
security to private managers through PHA staffed and funded programs; others
require their private managers to contract for security independently of the PHA;
each method has advantages and disadvantages. PHAs also vary widely in what
site-based operations they perform centrally for their private managers (for


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                                                                       Harvard Design School
                                                          Public Housing Operating Cost Study


example, some do contract procurement for private managers; others do some or
none); again each method has advantages and disadvantages. Some PHAs
regularly and consistently respond to private managers’ requests for “non-
routine” operating funds (generally, for major capital repairs and replacements);
others are less responsive. These differences, coupled with the absence of
consistent and reliable project-based operating actuals at most PHAs, make a
review of actual costs across PHAs very difficult without greater standardization
of practice and reporting.

      PHAs have local factors that effect costs PHAs, like any owners and
managers of real estate, are subject to local vagaries of their properties’
locations, climate, geography, number and types of units, building styles and the
like. But in addition, we have found that PHAs may have a number of other
demands on their resources that private owners and managers usually do not.
These demands vary considerably across PHAs and result in quite varied
amounts of money “getting” to the real estate. For example, some PHAs find
themselves providing public infrastructure repairs (maintaining sidewalks and
roadways) that private managers do not, thus decreasing funds for resident
services or even routine property repairs Some PHAs see themselves as asset
managers; others see themselves as anti-poverty agencies and consequently
use their aggregated funding sources to address their real estate and resident
needs differently. PHAs may be loosely or tightly affiliated with the local
municipal government which can impact everything from whether or not the
municipality provides trash collection or enacts ordinances that decree the level
of security required in PHA properties.

      PHAs have a funding system that makes their real estate vulnerable
Because PHAs’ funding streams are aggregated to the public housing authority
in general rather than allocated to each property individually, PHAs are
vulnerable to the pressures of special interests at the local level, no matter how
legitimate those interests are. PHAs’ responses vary considerably as do the
costs associated with those responses. One of the most frequently cited
examples is the cost of full-time manned security in PHA properties for the
elderly and disabled. While neighboring assisted and conventional properties
have little or occasional security, the PHA property often has 24-hour coverage
because of a local “expectation” or even ordinance. With resources diverted to
security, opportunities to provide additional resident services or basic apartment
modernization are gone.

      Private managers of public housing are very good sources in
evaluating what it should cost to manage public housing Successful private
managers of public housing have provided operating actual financial results to
the cost study for both their public and assisted properties. In general, these
operating results indicate that the costs to manage public housing and private
assisted housing are similar. Moreover, in general, the GSD found that the
private managers of public housing are doing as good or better job as PHAs in


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                                                                     Harvard Design School
                                                        Public Housing Operating Cost Study


managing public housing. PHAs who are using private managers generally
declare them equal or better than themselves at managing the properties to
which they are assigned. Where the private managers have been sub-
performers, the PHAs act like any owner and replace the private manager with
either another private manager or themselves. This is not to suggest that all
housing authorities should have all of their properties privately managed. But
with a growing corps of respected private managers of well-run public housing
and their longstanding familiarity with project-based budgeting, performance and
monitoring, a dynamic public housing benchmarking protocol can be developed
with the benefit of such a public-private approach.




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