1. 2012 PHADA COMMISSIONERS CONFERENCE JANUARY 8-11, 2012 Coping with HCV Budget Cuts Michael LaRiccia, Program Advisor, U.S. Dept. HUD Mike.LaRiccia@HUD.Gov

2. 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)

3. 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.

4. 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%.

5. Admin Fee Calculation Estimated Fee Rate for 2012

6. Admin Fee Variation $47.91: Peru, Indiana $106.07: Santa Monica, Ca 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.

7. Number PHAs by Rate Level: 2011 528 HAs

8. Revenue vs. Exp: Breakeven Levels

9. Admin Reserve per Unit: Median by Size

10. 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.

11. 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

12. 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

13. Reduce Expenses: Cost Analysis Financial Statement compilation – All PHAs.

14. High Level National Information  Some Nationwide Median Measures

15. Comparing Admin Salaries by Fee rates

16. Comparing Benefits costs per UML by Fee Rate

17. Organization and Staffing  See Chapter 21 of HUD’s HCV Guidebook

18. 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.

19. 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

20. 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…..?”

21. Reducing Expenses: Policy Choices  Limit Interim Reexams: balancing HAP PUC and Admin burden Finding 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?

22. 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 Board Responsibility: Assessing and Managing Trade-Offs.

23. Alternative Management Approaches  Shared Executive Director, Finance Dept.  Contracting out functions  Consolidating with another HA  Transfer of Program  Consortium Board Responsibility: Strategic Assessment of viability of program in current environment.