2012 PHADA COMMISSIONERS CONFERENCE JANUARY 8-11, 2012
Coping with HCV Budget Cuts
Michael LaRiccia, Program Advisor, U.S. Dept. HUD [email protected]
Revenue Reduction & Liquidity Squeeze
The Pie is getting smaller and HUD is handing out the slices on an as needed basis. Reduced Administrative Fees again in 2012 HUD Cash Disbursement Changes
Will pay PHAs the amount needed to pay landlords vs. 100% payout of funding as in the past 6 years.
HUD will recover and hold, for PHA use, the HAP Reserve (NRA)
Liquidity Impact This 1700 unit PHA received $7.9 million in 2011, and is on track to spend about $7.5 million. It began the year with a NRA $217,097 – about 2.7% of BA, and will end the year with about $655,000, an 8.6% NRA. (It will lease 98.6% of its units.)
In 2011, HUD will disburse all $7.9 million, and MMHA will retain a reserve of $655,000. They will also earn about $866,517 in admin fees. All tolled, $8.8 million will be disbursed. Had the 2012 admin fee levels and disbursement changes been applied to 2011, MMHA would have received $8.062 million, and would have no NRA funds in the bank at year end. Admin fees would have dropped from $866,517 to $782,997.
This 1700 unit PHA received $7.9 million in 2011, and is on track to spend about $7.5 million. It began the year with a NRA $217,097 – about 2.7% of BA, and will end the year with about $655,000, an 8.6% NRA. (It will lease 98.6% of its units.)
In 2011, HUD will disburse all $7.9 million, and MMHA will retain a reserve of $655,000. They will also earn about $866,517 in admin fees. All tolled, $8.8 million will be disbursed. Had the 2012 admin fee levels and disbursement changes been applied to 2011, MMHA would have received $8.062 million, and would have no NRA funds in the bank at year end. Admin fees would have dropped from $866,517 to $782,997.
Reduced Admin Fee
2010: 90% Proration of earned fees 2011: 83% Proration 2012 : 75% estimated proration
300 unit sample PHA at median fee rate of $61.54 pum. Leasing at 98.5%.
300 unit sample PHA at median fee rate of $61.54 pum. Leasing at 98.5%.
Admin Fee Calculation
Estimated Fee
Rate for 2012
Admin Fee Variation
Median: $61.01
Little Rock, Ar.
$179,306$143, 127 $316,932
A 300 unit fully leased program would have earned the above amounts in the three locations in 2011.
Number PHAs by Rate Level: 2011
528 HAs 528 HAs
Revenue vs. Exp: Breakeven Levels
Admin Reserve per Unit: Median by Size
Options to Address Lowered Admin Prorations
Increase/Maintain Revenue Maximize UMLs
2 Yr Projection Tool Scrutinize HAP Per Unit Cost HAP
Fraud Recovery Performance Reduce Expenses
Cost Analysis – Peer Norms Streamline functions/ Best Practices Policy Choices Alternative Management Approaches
Spend out of Admin Reserves –short term strategy
Subsidize from other Sources
In our 300 unit PHA Example: An underleasing
PHA can add $1,600 in revenue in 2012 with each additional UML Percentage
Point .
Revenue: Maximize Unit Months Leased Manage Issuance process to tap into
Unrealized Leasing Potential. Use Two Year Projection tool to model key variables and Year 2 Funding:
Per Unit Cost, Success rate, Turnover rate, length of time to lease.
Manage HAP Per Unit Cost. Deconstruct costs by location, bedroom size.
Analyze rent burdens. Ensure Rent Reasonableness is vigorous Maximize tenant income contribution
Revenue: Fraud Recovery Revenue to Admin
Median is $.31 per UML, but over one third of PHAs recover
zero fraud, while one-fifth recover over $1 per UML.
A $1.00 Fraud
Recovery rate earns a 300 unit HA about
$3,500
A $1.00 Fraud
Recovery rate earns a 300 unit HA about
$3,500
Reduce Expenses: Cost Analysis
Financial Statement compilation – All PHAs.
High Level National Information Some Nationwide Median Measures
256 Program Unit Size$60 Admin fee rate $27 Admin salaries per UML
$9 Employee Benefits per Uml$53 total admin per UML$58 total operating per UML$26 Admin Equity per UML
$0.31 Fraud Recovery to Admin per UML35.8% benefits as % of admin salaries$28.8 UNA per UML
Comparing Admin Salaries by Fee rates
Comparing Benefits costs per UML by Fee Rate
Organization and Staffing
See Chapter 21 of HUD’s HCV Guidebook
Reducing Expenses: Streamlining and Reducing Workload
Stabilize Leasing – Even pattern of issuance vs. boom and bust leasing effort. Use of Projection tool.
Minimize “bad turnover”: Better briefings, more forgiving policies will reduce need to issue vouchers
Increase Success Rate of leasing – fewer will have to be issued, inspected, etc. Better briefings, landlord outreach etc.
Reducing Expenses: Streamlining and Reducing Workload Reduce Inspections by:
Prevent HQS fails by preparing landlords and participants: Publicize “top 10 HQS Violations”.
Remote validation of fail corrections
2003 Ohio PHA Survey
Reducing Expenses: Streamlining and Reducing
Workload Reduce third Party verification by using UIV
and or accepting tenant originals Better workload and inspection location
scheduling by de-linking HQS Inspections and Reexaminations
Removing self-imposed requirements, e.g. yearly verification of birth certificates, and citizenship
Lessons from VASH Boot camps (process mapping): “Why are we still doing this…..?”
Reducing Expenses: Policy Choices
Limit Interim Reexams: balancing HAP PUC and Admin burdenFinding the judicious trade-off between cost to administer and PUC
cost savings. What are thresholds for triggering an Interim?
Finding the judicious trade-off between cost to administer and PUC cost savings.
What are thresholds for triggering an Interim?
Reducing Expenses: Policy Choices Limiting the number of moves to once
per year Closing the waiting list Absorb Port families rather than billing
other PHAs
Alternative Management Approaches Shared Executive Director, Finance Dept. Contracting out functions Consolidating with another HA Transfer of Program Consortium