1. Project Based Accounting & Asset Management
Julie Miles, Financial Analyst
HUD-Kansas City, KS
Welcome to HUD’s presentation of Project Based Accounting and Asset Management. The slide number is in the lower-right corner. Please turn to slide 2.

2. Agenda All PHAs Small PHAs (Less Than 250 PH Units)
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 PBM & AM Optional 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

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 Net Income $370 $10 $15 $30 $425 $ Thousands Program
Total
Total AMPs
S8 HCV
Rural Housing
COCC
Elim.
Assets
$10,100
$300
$750
$400
 -$50
$11,500
Liabilities
$4,850
$200
$250
- $50
$5,550
Equity
$5,250
$100
$500
$5,950
Revenue
$1,730
$1,000
$575
$270
-$250
$3,325
Expenses
$1,360
$990
$560
$240
$2,900
Net Income
$370
$10
$15
$30
$425

13. Asset Management Projects
New FDS—AMP Level
$ Thousands
Asset Management Projects
Total
Project 1
Project 2
Project 3
Other 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

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

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 , Financial Management Handbook, Table 9.1
Admin Threshold Updated Annually, Schedule of Management Fees, Table 2, 80th Percentile Administrative Costs

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 , Financial Management Handbook Supplement Table 7.2
Multifamily Management Agent Handbook, HUD , 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 , 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**

51. 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

52. 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

53. Resources PIH Notice 2006-14 PIH Notice 2006-35
PIH Notice
Stop-Loss Submission Kit
Asset Management Planning Guide
PIH Notice