1. Presented by: Naomi W. Byrne, principal Stinger consulting, llc
CONVERTING YOUR PHA MINDSET – RELYING LESS ON HUD AND MORE ON YOUR OWN PHA
Presented by:
Naomi W. Byrne, principal
Stinger consulting, llc

2. Is this your PHA?

3. NATIONAL AND REGIONAL TRENDS

4. HOUSING TRENDS Operating Fund Decreasing Capital Fund
Section 8 (TBV, PBV, PBRA)
Mostly level
# of Public Housing units
* Historical – 2018 increase was an anomaly

5. Historically, Appropriations are not enough to fund 100% of Operating Fund requests.
On average, a PHA receives 85% - 95% of its requested Operating Funds.
2018 was an anomaly – PHAs received an increase in spite of the Administration’s proposed budget.

6. CAPITAL FUNDING HAS FALLEN FAR BEHIND NEED
Capital funding has declined 53% since 2000 by nearly a billion dollars, to just $1.9 billion in 2016.
HUD estimates the projected annual accrual of needs is at least $3.4 billion per year on average over the next 20 years
As a result, the backlog of needed repairs, estimated in to be some $26 billion, continues to grow.
CAPITAL FUNDING HAS FALLEN FAR BEHIND NEED

7. SECTION 8 (TBRA, PBRA, PBV) = SAME
Traditionally, Congress has provided adequate housing voucher renewal funding (HAP or rent subsidy costs)
Is not true of Administrative fees (funds PHAs receive to administer the HCV program), which have seen a steady decrease
However, rent costs in most jurisdictions have risen and the funding levels now support fewer voucher users
HUD estimates 300,000 units of public housing have been lost between 1990 and 2010, mainly due to lack of investment in repairs
Underfunding of capital repairs results in approximately 10, ,000 units lost every year
HUD has been actively pursuing demolition/ disposition activities as a “management strategy” and PHAs are demolishing with HUD approval
In 2013, sequestration cuts were implemented for tenant based HCV
SECTION 8 (TBRA, PBRA, PBV) = SAME
PUBLIC HOUSING UNITS = DECREASING

8. 2018 BUDGET - WHITE HOUSE VS CONGRESS
FY2018 Budget proposed $ billion in funding cuts for affordable housing programs
Operating funds - cut by 11.3%
Capital funding – cut by 68%
HCV – cut by 11.6% (estimated 256,900 fewer vouchers nationwide)
Tenant rent share - increased from 30% to 35%
CONGRESS
FY2018 budget ignored WH budget
March 22, 2018, Congress and the President signed the FY2018 Omnibus Bill; resulted in an overall 24% increase
Operating funds – up 3.5% (2 yrs)
Capital funding - up 41.6%:
HCV – up 8.5%
RAD - up 102% (in units; no $)
Choice Neighborhoods - up 9.1%

9. 2019 BUDGET - WHITE HOUSE VS CONGRESS
Proposed FY2019 Proposed budget more drastic than 2018.
Operating funds - cut by 37% from $4.5B to $2.8B
Capital funding - eliminated ($1.9B)
Choice Neighborhoods, CDBG, HOME and SHOP - eliminated
RAD - removes cap and provides $100m in support
CONGRESS
The House Proposed FY2019 ignores the WH budget proposal, proposing 24% increase (still must pass Senate)
Operating funds/ Capital funds – funded at 2018 levels
$30m in competitive demolition grants
HCV (HAP) – increased funding
HCV (Administrative fees) - level Choice Neighborhoods - level

10. What Does an Executive Director Do?
Less Money from HUD
Harder to Maintain Units
Harder to Lease to Good Tenants
Less Money from Residents
What Does an Executive Director Do?

11. options Convert from public housing to rad
Convert from public housing to vouchers
Build/ acquire/ manage more non-ph units
Build other businesses within your pha
Apply for exceptions
Repurpose current units
Management contracts/ Consortiums/ consolidations
PIH : A PHA may apply for an exception waiver allowing for a flat rental amount for a property that is lower than the amount outlined in the options above. The Secretary may grant such an exception if HUD determines that the fair market rent for the applicable market area does not reflect the market value of the property and the proposed lower flat rental amount is based on a market analysis of the applicable market.
PIH : Special use categories can be used to offset vacant units or to provide resident amenities

12. SHOULD WE CONVERT? Benefits Preservation of units
Creation of new units
Unrestricted cash/ income
Fewer regulations
No Annual Plan/ NO CFP Plan

13. Should we convert? Potential Concerns Debt on property
Risk of foreclosure
Lender/ Equity provider compliance
Private sector management model
Community restrictions to Public Housing change (privatization)

14. Low Income Housing Tax Credits
Should we convert?
Financial Factors
Current PH funds
Need for other funds
Conventional debt
Low Income Housing Tax Credits

15. Should we convert? Current PHA Staff Capacity
11/18/2018
Should we convert?
Current PHA Staff Capacity
Can the PHA administer the program, or will we need help?
Procurement processes
Post-conversion operations
Does my HA have the capacity to administer the recapitalization effort, or will we need help – a developer partnership?
How can a developer partnership help my PHA?
Experience: Development and Construction, Architectural Needs, Financing, Accounting, Legal Resources
They often have the staff capacity.
They can coordinate the effort with lenders, team members.
Knowledge of LIHTC industry, investor/banking relationships.
Your HA also brings resources to the partnership table!
Community/Municipality/HUD Relationships – Help to find additional funding or equity resources
Property Needs / Area Knowledge / Resident Relationships

16. Should we convert? Does the property remain tax exempt?
11/18/2018
Should we convert?
Does the property remain tax exempt?
Management Fees should be based on market (3%-5% average)
Policies may need to change
Accounting

17. CONVERT YOUR MINDSET DIVERSIFY YOUR REVENUE STREAM
REPOSITION YOUR PORTFOLIO
STREAMLINE YOUR BUSINESS PROCESSES
DEVELOP CAPACITY
GROW YOUR BUSINESS

18. RUN YOUR BUSINESS LIKE BUSINESS
CONVERT YOUR MINDSET
RUN YOUR BUSINESS LIKE BUSINESS
MEASURE PERFORMANCE
DEMAND RESULTS
Insist on good, tough audits – it’s better to have a tough audit that identifies your issues that you can correct than to have an auditor that whitewashes problems; you don’t want someone else finding your mistakes later on down the road

19. Convert your mindset UNDERSTAND YOUR PHA’S ROLE
MANAGE STAFFING – MAY NEED TO DECREASE OR RETRAIN
MANAGE EXPECTATIONS – IF YOU CONVERT, YOU ARE MORE PRIVATE OWNER THAN PUBLIC HOUSING AUTHORITY
– YOU ARE STILL A PHA BUT WITH NO FEDERAL PROGRAMS

20. Convert your mindset
MANAGE YOUR ROI and your p&l (RETURN ON INVESTMENT AND PROfit and loss)
you have to lease units to make money
You have to spend wisely on labor and materials
You have to set a budget and stick to it

21. CONVERT YOUR MINDSET Get your board on Board
Dedicate appropriate time AND ENERGY to any change in business operations, structure, PROCESSES.
Do your DUE DILIGENCE.

22. Above all else… Be Flexible Be CREATIVE BE SMART
DON’T LET YOUR SIZE STOP YOU
DON’T LET YOUR FEAR STOP YOU
Above all else…

23. Questions?