Strategic Planning - Utah NAHRO

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Nov 18, 2013 (3 years and 6 months ago)

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Strategic
Planning
Under

Asset
Management

Learning Objectives


Understand the asset management life cycle


Connect the PHA’s mission and overall strategic plan
to asset management plans for each property


Review roles and functions of board, management,
and HUD in long term planning


Examine basic information required for long term
planning

2

Asset Management Lifecycle

Holding Period

Acquisition

&

Development

Activities

Repositioning

Or

Disposition

Activities

Project
Operations


Project
management


Capital
improvements


Compliance

Year 1

Year X

3

PHA Mission


The PHA’s mission is critical to making
organizational design as well as long
-
term
investment decisions. Major mission questions for
PHAs include:


Who to serve?


Quality of housing desired?


Standard of affordability?


Housing or services?


Financial viability of properties vs portfolio?

Let’s discuss these………..



4

What if a Goal is to Attract More Working
Families?


May affect the types of
services offered


May affect the number of
properties that are desirable
based on location (near
transportation, employers)


May require a more
organized marketing effort


May affect office hours (may
need evening or weekend
hours for leasing)

5

What if a Goal is to Provide the Highest
Possible Quality of Housing?


May affect the way
maintenance staffing is
organized


May affect marketability to
wider range of incomes


May affect priority of capital
spending and financing


May affect priorities in
annual budget


6

What if a Goal is to Provide an Expansive
Range of Resident Services?


May affect number of
households served (and
revenues) at properties
(e.g. using a unit for
services, sharing with
manager)


May affect marketability


May affect prioritization of
resources


less available
for bricks and mortar

7

What if a Goal is for Each Property to Be
Financially Viable On Its Own?


May require repositioning
of one or more properties


May affect staffing levels
at properties


May affect delivery of
services at properties


May affect how capital
spending is prioritized




8

Learning Activity #1


What is the PHA’s mission?


Does the PHA have goals that guide the
accomplishment of its mission?


Would more specific goals be helpful in
attaining the objectives of asset
management? What would they be?

9

Creating an Asset Management Plan for Each
Property


Current conditions


Long term plan
(sometimes called an
investment plan) with link
to mission and goals


Hold and defer


Repair and hold


Upgrade (rehab) and hold


Reposition


Replace


Dispose



Tie plan to physical needs
assessment (PNA)


Identify financial
resources, including
capital fund


Immediate plan (next 3 to
5 years), including
fungibility


Link to annual budget

10

A Look at Entitles, Roles and Function

PIH

Field Offices

PHA Staff

or Mgmt

Company

PHA Board

Entity

Role

Function

Owner

Regulator

Operator

Management/

Administration

Oversight

and

Monitoring

Policy/Investment

Decisions

11

Key Information


The following information is essential to making
good investment decisions:


Physical needs assessment (PNA)


Market data


Asset value


Possible funding sources


12

PNAs

A “good” PNA will identify and provide cost estimates for:


Immediate physical needs


Physical needs over the expected building viability term


Also consider “as
-
is” versus “upgrade” options

13

Washington Park PNA


Summary Report

Cost
Per Unit
Cost
Per Unit
Cost
Per Unit
Building
$60,000
$400
$240,000
$1,600
$750,000
$5,000
Heating/Cooling
$30,000
$200
$270,000
$1,800
$187,500
$1,250
Mechanical
$30,000
$200
$270,000
$1,800
$187,500
$1,250
Site
$90,000
$600
$210,000
$1,400
$375,000
$2,500
Dwelling Unit
$90,000
$600
$210,000
$1,400
$250,000
$1,667
Total
$300,000
$2,000
$1,200,000
$8,000
$1,750,000
$11,667
Immediate Needs
Years 1 - 5
Years 6 - 20
Component
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Learning Activity #2

The Karson Housing Authority receives $500,000/year
under the Capital Fund program. It spends 10% on
“administration” (management fee). Assume the rest is
spent directly on capital work. Also assume that the agency
provides about an equal proportion of its Capital Funds to
Washington Park and Chapin Street, on a per
-
unit basis.


Approximately how many years will it take for Washington
Park to meet current needs with available Capital Funds?

15

Learning Activity #2
-

Solution


Approximately how many years will it take for
Washington Park to meet current needs with
available Capital Funds?

16

Why Collect Comparable Market Data?


Establish flat rents


Better know the
“competition”


Better inform
investment decisions


17

What Type of Market Data is Most Useful?


Information regarding
the “competition”


Rents


Amenities and
concessions


Occupancy levels,
etc.


Information on the
“neighborhood”


Trends


Demographics
(incomes, etc.)


Supply


Demand


18

Washington Park Market Data

Summary Report

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Learning Activity #3

Consider the market data for Washington Park.

1.
In their present condition, 2
-
brm units at Washington
Park could rent for $500. With
repairs
, the units could
command $525. With
upgrades,
rents could increase to
$560. What does the relationship of these numbers
imply?

2.
As an income producing asset, Washington Park is
currently valued at $1.2 million ($8,000/unit). In contrast,
the as
-
is land value is $900,000. What is the significance
of these two numbers? How important is market value to
this project?

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Funding Sources

The following are the main sources of funding
to address public housing capital needs.


Operating budget*


Operating reserves*


Capital Fund


Financing proceeds (CFFP, OFFP, other)


Energy service contracting


Tax credits


Sales proceeds


Other

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Capital Fund Financing Program (CFFP)


Allows PHAs to leverage their Capital Fund (CF)
grant (i.e., “grant acceleration”)


PHAs can use one
-
third of the CF grant to pay for
debt service payments,
with HUD approval


Loan terms can extend to 20 years


Proposed rule published July 18, 2007, but
applications currently being approved on

case
-
by
-
case basis

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Learning Activity #4


The Karson HA's yearly CFP grant is $500,000 of
which 1/3rd can be used for debt service under the
CFFP, thus $166,667 is available


How much could the Karson HA leverage under the CFFP if
they were to obtain a loan for 6% interest for the following
periods using the amortization factors that have been
provided:


10 years (.13323)


15 years (.10126)


20 years (.08597)

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Hint
-

the loan amount can be obtained by dividing the CFP funds available

by the amortization factor.

Resources


Additional information on the Capital Fund, Capital
Fund Financing Programs, Operating Fund
Financing Programs, Physical Needs Assessments,
etc., are available through Public Housing’s Office
of Capital Improvements at:


http://www.hud.gov/offices/pih/programs/ph/capfund /index.cfm

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Questions?


What questions do you
have regarding any of
the materials we have
covered?

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