Asset Management

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Asset Management Powered By Docstoc
					Project Based Accounting
  & Asset Management
    Julie Miles, Financial Analyst
        HUD-Kansas City, KS
            913-551-5529



                                     1
                    Agenda
All PHAs
   Project-Based Budgeting & Accounting
Small PHAs (Less Than 250 PH Units)
   Single AMPs
   Multiple AMPs
Large PHAs (250+ PH Units)
   Decliners Accelerate AM Implementation for
    Stop-Loss


                                                 2
 Asset Management

             Asset
           Management
              (AM)


           Project-Based
           Management
               (PBM)

Project-Based        Project-Based
  Budgeting           Accounting
    (PBB)                (PBA)

                                     3
               PBB & PBA

Project Level
   Budgeting
   Accounting
   Financial Statement Reporting
Applies To All Programs & Revenue
Sources Supporting Projects Under ACC



                                        4
                    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
   Leasing
   Resident Services
   Routine and Preventative Maintenance
   Lease Enforcement
   Protective Services
                                                5
                  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
               Applicability
PBB & PBA Required for All PHAs
  FYBs 7/1/07 & Later

PBM & AM Required FY 11
  PHAs With 250 or More PH Units

  Accelerate AM Implementation for Stop Loss


PBM & AM Optional
   PHAs With Less Than 250 PH Units & 1 AMP
   Elect AM Implementation for Stop Loss Incentive



                                                      7
               PBB
Budget Required for Each AMP
Budget Recommended for Central Office
Cost Center (COCC)
 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
            PBB Format
Revise Existing Budget Forms
No Uniform Budget Format, but Must:
 Reconcile to FDS

 Allow Comparison to Actual Revenues &
  Expenses
 Include All Revenues & Expenses of the
  Operating & Capital Funds
 Include Estimate of Operating Subsidy
  Proration
 Include Fungibility Transfers (ex. CFP for
  Operations)
 Include Anticipated Uses of Excess Cash
                                               9
          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
   Elimination Column Subtracts Internal
    COCC/AMP Transactions from Entity-Wide
    Totals

                                             10
        New FDS Line Items
Fee Revenues & Expenses
More Expense Detail
   Other Operating-Administrative
   Ordinary Maintenance & Operations-Contract
    Costs
   Insurance Premiums
Memo Accounts
   Measure Revenue Loss
   Unit Month Detail
   CFP Expenditure Data                     11
        New FDS—PHA Level
                         Program
    $
             Total  S8     Rural              Total
Thousands                         COCC Elim.
             AMPs HCV Housing
    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
       New FDS—AMP Level
                Asset Management Projects
$ Thousands Project Project Project Other       Total
                 1      2      3      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
               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
           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
                Stop-Loss
Transition Calculation
   FFY 04 Subsidy Eligibility if New Operating
    Subsidy Formula Implemented
   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
     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
  Stop-Loss for Large PHAs
250 PH Units or More
COCC
Multiple AMPs
Traditional Asset Management




                               18
    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, 80th Percentile
Administrative Costs
http://www.hud.gov/offices/pih/programs/ph/am/acc
ounting.cfm
                                              19
       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
    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
   Narrative Explaining Specific Changing Market Conditions
    (ex. Population Decline, Competing Project, etc.)
   Narrative Explaining Marketing Efforts
   Certify No Waiting List for Unit Months in Appeal
   Certify Unit Months in Appeal Ready to Rent (not
    Downtime or Make-Ready)
                                                          21
                 AM
250+ PH Units
To Qualify for Stop-Loss, Decliners Less
Than 250 PH Units & Exceeds Admin
Limit




                                           22
                 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
AM—Balance Sheet Allocation
Required 1st Year of AM
Assign to AMP/COCC/Other Program if
Direct Relationship Exists
Assign Equipment to Controlling
AMP/COCC/Other Program




                                  24
 Legacy Costs & Associated
    Unfunded Liabilities
Allocate to AMP, COCC & Other
Programs to Ensure All Bear
Proportionate Share—May Consider
Ability to Pay




                                   25
  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
   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
      Other Post-Employment
         Benefits (OPEBs)
Historically Pay-As-You-Go
GASB 45 Requires Liability Recording
Annual Required Contribution (ARC)
   Normal Annual Cost
   Share of Unfunded Liability—Not to
    Exceed 30 Years
Charge to COCC for All Employees
                                         28
    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
        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
AM—Balance Sheet Allocation
Restricted Assets
Real & Personal Property Assigned to
COCC
   Restricted Assets Subject to Federal
    Program Rules
   Future Guidance on COCC Asset Disposal




                                        31
       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
                                                 32
           Cost Assignment
Front Line (AMP) Expenses
   Related to Direct Operation of the Property
vs. Management Fee (COCC) Expenses
   Related to Corporate Support
Guidance
   Asset Management Planning Document
    Attachment B
   PIH Notice 2007-9, Financial Management
    Handbook Supplement Table 7.2
   Multifamily Management Agent Handbook, HUD
    4381.5, Chapter 6
                                                  33
    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
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
 Central Front-Line Maintenance
Technical & Routine Maintenance
Must Use Fee-for-Service
Begins 2nd 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
     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
                   COCC
Not Subject to Program Income Rules if
Fees Reasonable
   State and Local Restrictions May Still Apply


May Include Business Activities
   Example: Management Fees for Non-Profit or
    Private Properties



                                                   38
              Fees
Property Management
Bookkeeping
Asset Management
CFP Management
HCV Program Management
Other PIH & HUD Program Management
Non-Federal Program Management


                                     39
 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
    Property Management Fee
Reasonable in 2nd + Years
   Additional 2 Year Extension Available
   Stop-Loss Requires Reasonableness in 1st 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
         Bookkeeping Fee
Up to $7.50 PUM
Reasonable in 2nd + Years
  Additional 2 Year Extension Available

  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
   Asset Management Fee
1st Year—Up to $10 PUM
2nd+ 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
    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
      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
Subject to Fee Reasonableness in 2nd
Year
 FYEs 6/30/09, 9/30/09, 12/31/09, 3/31/10



                                         45
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



                                          46
     Other Management Fees
Development Activities
   3% Total Project Budget
   Up to 6% if HUD Approved
Other PIH & HUD Grants Management
   Up to 15% Grant Amount, if No Fee Rate
    Established
Non-Federal Program Management
   Voluntary Fee-for-Service


                                             47
Fee Payment & Documentation
Invoice Recommended
Documentation Supporting How Fees
Earned
    Occupancy
    Fee Reasonableness




                                    48
            Fungibility
1st Year AM: Full Fungibility AMP/COCC
2nd Years AM: Fungible Only Between AMPs
& Subject to Positive Excess Cash
Restriction
3rd+ 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
 Excess Cash Calculation: 2nd 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
Excess Cash Calculation: 3rd+ 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
          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
   Legal Costs Incurred Prior to AM
   Legacy Costs



                                                52
                     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

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