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Project Based Accounting & Asset Management

Project Based Accounting & Asset Management. Julie Miles, Financial Analyst HUD-Kansas City, KS 913-551-5529. Agenda. All PHAs Project-Based Budgeting & Accounting Small PHAs (Less Than 250 PH Units) Single AMPs Multiple AMPs Large PHAs (250+ PH Units)

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Project Based Accounting & Asset Management

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

  2. 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

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

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

  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 • Leasing • Resident Services • Routine and Preventative Maintenance • Lease Enforcement • Protective Services

  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

  7. Applicability • PBB & PBARequired 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

  8. 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

  9. 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

  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 • Elimination Column Subtracts Internal COCC/AMP Transactions from Entity-Wide Totals

  11. 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

  12. New FDS—PHA Level

  13. New FDS—AMP Level

  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

  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

  16. 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

  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

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

  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, 80th Percentile Administrative Costs • http://www.hud.gov/offices/pih/programs/ph/am/accounting.cfm

  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

  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 • 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)

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

  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

  24. 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

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

  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

  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

  28. 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

  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

  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

  31. 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

  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

  33. 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

  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

  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

  36. 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

  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

  38. 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

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

  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

  41. 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

  42. Bookkeeping Fee • Up to $7.50 PUM • 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 • Cannot charge if Project Accounting Functions Also Performed On-site & Charged as Front-line/AMP Cost • Can Also Charge to HCV Program

  43. 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

  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

  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 • Subject to Fee Reasonableness in 2nd Year • FYEs 6/30/09, 9/30/09, 12/31/09, 3/31/10

  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

  47. 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

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

  49. 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

  50. 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**

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