Finance for the Public
Housing Director
Cara Gillette
Slide Number #1
Today’s Topics
 Overview of the new operating fund
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formula
Stop-loss provision
Project-based accounting
Basic financial concepts and reports
Excess cash and fungibility
Slide Number #2
Building Blocks
Project-based
performance assessment
Project-based management
Project-based accounting
Project-based budgeting
Project-based funding
The New Formula
 Requires PHAs with 400 or more PH units to
transition to project-based accounting,
budgeting, and management
 Threshold of 400 doesn’t apply to stop-loss PHAS
 Is based on HUD’s multifamily industry
 Will force the PH program to become more
property-based
Slide Number #4
Hot Off the Press
 PIH Notice 2008-16(HA)
 PHAs with 250-400 units can exempt
themselves
 But the election for exemption is only
authorized for CY 2008
 PHAs that elect the exemption aren’t
“grandfathered” in for future years
 And there are lots of requirements
Slide Number #5
Key Implementation Dates
 Determination of Asset
Management Projects
(AMPs) – CY 2006
 Implementation of new
Operating Fund Formula –
CY 2007
 Operating Subsidy by
 Project-Based
Budgeting/Accounting –
Begins with PHA FYs July
1, 2007 and forward
 Subsidy is fully fungible in
CY 2008
AMPs – Begins in CY 2008  Cost Reasonableness –
Begins in Fiscal Year 2009
Slide Number #6
The New Model for PH
 Fundamental shift for public housing
 Historically, operating subsidy was
calculated on an aggregate level
 Op sub was allocated to the central office,
which decided where the subsidy went
 Now, subsidy is calculated for and
allocated to each project
Slide Number #7
The New Model for PH
 Funding goes to the projects, and projects
pay for everything else
 Any service to the project not at the
project will come from a cost center
 Every PHA will have a central office cost
center
 Direct, indirect, and allocated services
Slide Number #8
The New Model for PH
 Two main components
 Project-based management is decentralized
property services tailored to the needs of each
property, given the resources available to each
property
 Asset management is strategic oversight and
centralized services tailored to the needs of the
portfolio as a whole
Slide Number #9
AMPs – the Economic Engine of PH
 Your PHA defined its asset management
projects (AMPs) for purposes of projectbased accounting, budgeting, and
management
 Each AMP has its own budget, financial
statements, staffing, subsidy, capital plan,
and will have its own performance scoring
Not in book
Slide Number #10
AMPS – the Economic Engine
 The PHA’s decision on the grouping of
AMPS is based on:
 Geographic location
 Resident population
 Organizational structure  Delivery systems
 Size of the PHA
 Maintenance delivery
 Housing stock
Not in book
Slide Number #11
Compliance with Asset
Management
 Best definition of
compliance so far is
notice to stop-loss
agencies, since they
have to comply early
Slide Number #12
Notice 2006-14(HA)
 Even though these are the instructions
for stop-loss agencies, this notice, and
the Stop Loss Kit, is the clearest
roadmap for all PHAs
 The difference is in the deadline
Slide Number #13
Seven Criteria for Compliance
with Asset Management
1. Project-based accounting


Monthly operating statements for each
project – revenues and expenses vs.
budget levels, including all fees from the
COCC and Capital Fund
Must reasonably reflect the financial
performance of each project
Slide Number #14
Seven Criteria for Compliance
with Asset Management
2. Project-based management

Property management services are
arranged or provided in the best interest of
the property considering needs, cost, and
responsiveness, relative to local market
standards
Slide Number #15
Seven Criteria for Compliance
with Asset Management
3. Central office cost center (COCC) must
charge reasonable fees to the AMPs


COCC must operate on the allowable fees
and other permitted reimbursements from
its PH and S8 programs
In other words, the COCC must support
itself
Slide Number #16
Seven Criteria for Compliance
with Asset Management
4. Centralized services that directly support
projects are funded using a fee-for-service
approach or through other allowable
charge-backs

Each project is charged for actual services
received - must be reasonable compared to
local market
Slide Number #17
Seven Criteria for Compliance
with Asset Management
5. Review of project performance

PHA systematically reviews financial,
physical, and management performance of
each project, and identifies non-performing
properties
Slide Number #18
Seven Criteria for Compliance
with Asset Management
5. Review of project performance – a nonperforming property has:

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PHAS physical score below 70
Significant crime and drug problems
Below 95% occupancy
TARS that exceed 7% of monthly rent roll
Slide Number #19
Seven Criteria for Compliance
with Asset Management
5. Review of project performance – a nonperforming property has:

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PHAS grade of “D” or below for vacant unit
turnaround and work orders
Utility consumption more than 120% of
agency average
Other major management problems
Slide Number #20
Turnaround = D more than 30 days
WOs = D more than 40 days
Seven Criteria for Compliance
with Asset Management
5. Review of project performance

Long-term prospects for each property:
 Maintain project as is
 Identify capital improvements needed
 Dispose of property (demo, sale, etc)
 Financial condition of each project
Stop-Loss FAQs 9/1/06
Slide Number #21
Seven Criteria for Compliance
with Asset Management
6. Capital planning

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Physical needs assessment and a five-year
plan for each project

Five-year plan needs to consider revenue
sources, market, tenancy, and project
needs
Long-range energy consumption reduction
Slide Number #22
Seven Criteria for Compliance
with Asset Management
7. Risk management responsibilities related
to regulatory compliance

PHA not carrying out responsibilities if:

Designated troubled under PHAS

Any outstanding FHEO findings or
voluntary compliance agreement not
implemented…
Slide Number #23
Seven Criteria for Compliance
with Asset Management
7. Regulatory noncompliance if:
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No current energy audit…
Outstanding IG audit findings w/no progress
Not in compliance with ACOP
Unsatisfactory progress under RHIIP/RIM
PIC (50058) reporting rate under 95%
Any other major compliance deficiency
Slide Number #24
The Deal with Stop-Loss
 Under the new
op sub formula,
about a third of
PHAs gained, a
third stayed the
same, and a third
lost op sub
Slide Number #25
The Deal with Stop-Loss
 The PHAs who are “losers”
under the new formula can stop
the loss of subsidy by early
conversion to asset
management
Slide Number #26
Stop-Loss Provision
 Deadline for Year 1 was October 15, 2007
 If PHA demonstrated conversion by that date,
the reduction of subsidy stopped at 5% of the
difference for CY 2007
 That means that 95% of the PUM difference
will be added to the lower op sub level under
the final rule
Slide Number #27
Stop-Loss Provision
 For subsequent years, the % of loss goes
up
Slide Number #28
Stop-Loss Provision
 There will be additional requirements for
subsequent years
 Year 2 has more requirements than Year 1

HUD staff will have to monitor
Slide Number #29
Per Unit Month (PUM)
 Budgeted income and
expense items are shown
in a monthly and yearly
total dollar amount – and
also in a per unit per
month (PUM)
Page 6-3
Slide Number #30
Per Unit Month (PUM)
 PUM is an important concept
 PUM applies to any line item ($) that:
 Was spent, is being spent, or will be spent
 Was earned, is being earned, or will be earned
 Formula is: Any line item $ ÷ EUM = PUM
Slide Number #31
Per Unit Month (PUM)
 PUM also allows the portfolio to be tracked
over time as the number of units change
 Example:
 Last year the PHA had 1200 units
 This year, due to demo/dispo, there are 1100
units
Slide Number #32
Per Unit Month (PUM)
 PUM also allows sites to be compared –
even if they aren’t of similar size type and
age
 If one AMP’s landscape cost is $26.82 and
another’s of similar common grounds is
$10.45, costs may need to be analyzed
Slide Number #33
Operating Subsidy Formula
The Money is Driving the Changes
Page 6-4
Slide Number #34
The New Operating Subsidy
 The old op sub was aggregate - AEL
 Under the new formula, subsidy is
calculated and allocated by project - PEL
 The op sub will go directly to the projects,
and all other activities will be supported by
fees paid by the projects
 We see these in PUM (per unit month) figures
Slide Number #35
The New Operating Subsidy
 Operating subsidy formula:
Project expense level (PEL)
+ Utility expense level
- Formula income frozen at 2004 level
+ Applicable add-ons
= Operating subsidy
Slide Number #36
The New Operating Subsidy

Ten components used to calculate PEL:
1. Geographic variable – one of the two most
significant variables – where you are in the
country
2. Central city variable
3. Clientele (occupancy) variable – family
properties tend to cost 6% more
Page 6-5
Slide Number #37
The New Operating Subsidy

Ten variables used to calculate op sub:
4. Property size variable – number of units
5. Building type variable – high-rise, garden
walk-up, single family home, etc.
6. Bedroom mix variable – the other most
significant variable
Slide Number #38
The New Operating Subsidy

Ten variables used to calculate op sub:
7. Percent assisted variable – 100%
subsidized tends to cost 6% more
8. Property age variable
9. Neighborhood poverty variable
10. Ownership type variable – for-profits have
costs that are 6% less
Slide Number #39
The New Operating Subsidy
 National floor of $200 PUM for senior
properties and $215 PUM for family
properties
 National ceiling of $420 PUM and 4%
reduction for PUMs over $325
Slide Number #40
The New Operating Subsidy
Add-ons – the PHA determines which are
applicable:
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Self-sufficiency
Energy loan amortization
PILOT
Audit cost – actual most recent
Resident participation - $25 per unit per yr
Page 6-6
Slide Number #41
The New Operating Subsidy
Add-ons – the PHA determines:


Asset management fee
 $4 PUM for PHAs with 250 or more
 $2 PUM for smaller PHAS who transition
to PBM who have a COCC
Slide Number #42
The New Operating Subsidy
Add-ons – the PHA determines:

Information technology fee
 $2 PUM
 Asset repositioning fee (demo or dispo)
 Costs attributable to changes in federal
law, regulation, or economy

Slide Number #43
The New Operating Subsidy
Approved vacancies – still get op sub:
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Units undergoing mod (if on schedule)
Units approved for resident services
Units in court litigation
Units undergoing casualty loss settlement
Units vacant due to disaster (federal or
state)…
Page 6-7
Slide Number #44
The New Operating Subsidy
Approved vacancies – still get op sub:

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Units vacant due to changing market
conditions
Up to a 3% vacancy
The PHA will enter types of vacancies
into PIC
Slide Number #45
Costs
Page 6-12
Slide Number #46
Costs

All budget costs and expenses will fall
into one of three general categories:
Direct cost (at the project)
Central office cost center (COCC)
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
Indirect services
Other cost centers (optional)
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For direct and allocated services
Slide Number #47
Cost Centers
 Every PHA will have at least one cost
center, the central office cost center
(COCC)
 Centralized maintenance may also be a
cost center
Slide Number #48
Frontline (Direct) Costs
 These are expenses of the project:
 Personnel costs of staff assigned to project
 Repair and maintenance costs including
supplies, contracted repairs, make-readies,
preventive maintenance, etc.
 Utility costs
 Costs related to the site office – phones,
office supplies, computers, postage, etc.
Slide Number #49
Frontline (Direct) Costs
 These are expenses of the project:
 Advertising including procurement and
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
employment notices
Costs of employee recruiting and screening
PILOT
Insurance (allocated)
Legal fees
Slide Number #50
Frontline (Direct) Costs
 These are expenses of the project:
 Property management fees, bookkeeping
fees, and asset management fees
 Audit costs (allocated)
 Vehicle expense for site-based vehicles
Slide Number #51
Charging for Maintenance
 Maintenance is an example of services that
may need to be provided directly to
projects that are centrally located and
charged based on time spent or actual work
performed
Slide Number #52
Charging for Maintenance
 How to organize maintenance is an
important PBM decision
 A PHA can decide to organize maintenance:
 Decentralized – front line
 Supervised by the property manager
 Centrally
 A mix
Slide Number #53
Charging for Maintenance
 If the PHA uses centralized maintenance,
will be required to use fee-for-service
method when charging the project
 Project can only be charged for actual
services provided
 Could be a single blended hourly rate,
separate hourly rates for various activities,
or flat fee – must be reasonable
Slide Number #54
Centralized Maintenance
 For all centralized
maintenance staff providing
direct services, the PHA can
charge up to the market rate
 Even if it’s above what the
technician is actually paid
Slide Number #55
Centralized Maintenance
How Much Can the PHA Charge?
 Sally is a maintenance worker
$52.26
$23.52
$75.78
Wages
Benefits (45%)
Hourly rate
 If the market rate is $100, the hourly charge
could be $100, regardless of what Sally is paid
Slide Number #56
Charging for Maintenance
 Costs of overall labor cost include:
 Gross salary, employer FICA contributions,
federal unemployment tax, state
unemployment tax, worker’s comp insurance,
health insurance premiums, cost of fidelity or
comparable insurance, performance
incentives and or annual bonuses, and
retirement benefits (pre and post retirement)
Not in book
Slide Number #57
Charging for Maintenance
 PHAs may charge for actual materials
used as well as labor
Not in book
Slide Number #58
Costs of Other Functions
 Charging the project
 Where it’s cost-effective,
PHA can prorate across
projects, the cost of
centralized staff who
perform frontline functions
Page 6-17
Slide Number #59
Charging Back to the Project
 These are called front line allocated costs
 For example, collecting rent centrally,
employee handing rent collection, as well as
direct costs, could be charged back to
applicable projects on any reasonable basis
 Not necessary for the rent collection clerk to
track his or her activity per AMP
Slide Number #60
Charging Back to the Project
 Two exceptions to charging projects for
centralized staff performing frontline
functions:
 Can’t charge projects for cost of a centralized
supervisor
 Can’t charge projects cost of centralized staff
handling procurement
Slide Number #61
Update – Centralized Warehouse
 FAQ December 1, 2006
 If a warehouse at the COCC is for
“storerooms” of scattered sites, with HUD
approval, this can be an eligible frontline
cost
Not in book
Slide Number #62
Charging Back to the Project
 HUD will allow charging back to project:
 Central waiting lists, screening, leasing and
occupancy – PHAs can prorate costs direct
costs of these functions to the AMPs, including
supervisory personnel
 The proration can be based on the number of units
leased at a project, average turnover at a project, or
other reasonable allocation method
Page 6-18
Slide Number #63
Charging Back to the Project
 HUD will allow charging back to project:
 Resident programs – PHA can prorate
centralized resident programs across projects
on a reasonable basis, including supervisory
staff
Slide Number #64
Charging Back to the Project
 HUD will allow charging back to project:
 Protective services – PHAs can charge
centralized protective services, either in-house
or through local law enforcement, including
supervisory staff
 HUD eventually wants these tracked by project
Slide Number #65
Charging Back to the Project
 HUD will allow charging back to project:
 Work order processing
 Although it is the norm in multifamily
housing to handle work order processing on
site, a PHA may charge the cost of
centralized work order processing only if
the PHA can document/justify that the cost
pro rated is reasonable and necessary
Slide Number #66
Shared Resource Costs
 HUD knows it may not
make economic sense
to have FT maintenance
staff dedicated to one
AMP
 In this case the PHA may establish a
reasonable method to spread these personnel
costs to the AMPs receiving the service
Page 6-19
Slide Number #67
Shared Resource Costs
 Shared resource costs are distinguished
from front line prorated costs in that the
services being shared are limited to a few
projects as opposed to being prorated
across all projects
 An example of a shared resource cost might
be a maintenance person assigned to and
paid for by two projects
Slide Number #68
Shared Resource Costs
- What if there is PHA personnel who provide
services both to the projects and the central
office cost center?
Slide Number #69
Shared Resource Costs
- For PHA staff who provide services both to
the projects and the central office cost
center, the PHA must separate the amount
of time spent on providing services to the
projects and the central office cost center,
based on a reasonable methodology
Slide Number #70
Shared Resource Costs
- The time spent by the
staff on projects must
be at an hourly rate that
does not exceed the
reasonable hourly fee
for the service
Slide Number #71
Fees Allowed under PBM
Slide Number #72
Fees Allowed under PBM
 Fees the projects will pay to the COCC:
 Property management fees
 Bookkeeping fees
 Asset management fees
 Capital fund management fees
Page 6-20
Slide Number #73
Fees Allowed under PBM
 Property management fee
 Is “reasonable fee” paid by project to COCC
for project oversight
 HUD has established some “reasonability”
guidelines
 Notice: Guidance on Implementation of
Asset Management, issued Sept 6, 2006
Slide Number #74
Fees Allowed under PBM
 Management fee – “reasonable”
 Based on multifamily fee (annual letter from
field office); or
 80th percentile as established by HUD; or
 Other compelling data of local market
 Might include fees paid pay the PHA for
private management of other properties
Slide Number #75
Updated April 10, 2007
Fees Allowed under PBM
 Management fee
 Based on units leased (occupied units and
approved vacancies, but not the 3% limited
vacancies) (EUM) using monthly lease-up rate
 Stop-loss FAQs (question 12) says that the
PHA can use either the first day or last day
of the month (but must be consistent)
Slide Number #77
Eligible Unit Months (EUM)
 The AMP’s eligible
unit months (EUM) is
used to monitor on a
per unit basis, and to
calculate property
management fees
the AMP will pay to
the COCC
Slide Number #78
Eligible Unit Months (EUM)
 Occupied units are those
occupied by:
 Eligible families
 Police officers
 Security
 PHA employees
Slide Number #79
Property Management Fee
Calculation Example
PUM
Prop Mgmt Fee
X{
Occupied
+
HUDApproved
Vacancy
+
Demo/Disp
Unit Mos
 The Elms has 120 units = 1440 total unit months
 1200 occupied unit months last year
 100 HUD-Approved Vacant Unit Months
 Management fee = $45
 Calculation: 1200 + 100 x $45 = $58,500
Slide Number #80
}
Fees Allowed under PBM
 Property Management Fee – Demolition
 Year 1
 Year 2
 Year 3
75% of PUM management fee
50% of PUM management fee
25% of PUM management fee
Slide Number #81
Fees Allowed under PBM
 Property Management Fee – Disposition
 Year 1
 Year 2
75% of PUM management fee
50% of PUM management fee
Slide Number #82
Fees Allowed under PBM
 Bookkeeping fee
 An extension of the management fee
 For accounting for project funds, charged to
the project from the COCC
 Based on occupied units and allowable
vacancies
 HUD will consider $7.50 PUM reasonable
Page 6-22
Slide Number #83
Fees Allowed under PBM
 Asset management fee
 Fee paid by project to COCC for oversight of
portfolio
 Based on total ACC
 Must be reasonable, not to exceed $10 PUM
 Only paid if the project has excess cash flow
(no limit first year)
Slide Number #84
Fees Allowed under PBM
 In the 1st year of PBM, there is no excess cash
requirement for the payment of the asset
management fee
 In the 2nd year, each AMP must have excess
case to pay the asset management fee
 In the 3rd year, excess cash must equal
specific assets minus current liabilities minus
one month’s operating expenses
Slide Number #85
Asset Management Fee
Calculation Example
$10 PUM
Asset Mgmt Fee
X
Total ACC
Units
 AMP has 120 units:
 $10 x 120 units x 12 months = $14,400
Slide Number #86
Capital Fund Management Fee
 CFG management fee
will be an optional fee
paid to the central office
to cover all costs of the
central office’s oversight
and management
(program administration)
of the CFG
Page 6-22
Slide Number #87
Capital Fund Management Fee
 Fee may be up to 10% of the CFG including
replacement housing funds
 The fee is paid by each AMP from CFG
proceeds
 HUD is still defining the way the fee will be
earned
Slide Number #88
Capital Fund Management Fee
 Examples of costs covered by the CFG
management fee include the physical
needs assessment, planning, preparation
of the Annual Plan, processing of LOCCs
draw downs, preparation of reports,
budgeting, accounting, and procurement
paid for with CFG
Slide Number #89
Capital Fund Management Fee
 This fee is not intended to cover costs
associated with construction supervision
and inspection
 These costs are considered frontline costs to
the project
Slide Number #90
Management Fees for Other PIH &
HUD Grants
 If a fee rate has not been established for a grant:
 The COCC can charge up to 15% of the grant
amount as a management fee
 Where administrative costs are set through other
notices, regulations and existing grant
agreements these policies and agreements are
controlling
Slide Number #91
Fee Income Non-Program
Income
 Reasonable fees charged to AMPs and programs
are not considered federal program income for the
purposes of 24 CFR part 85
 Fee income is considered local revenue
 Control over its use is subject only to state or
local requirements imposed on individual PHAs
Slide Number #92
COCC – Working Capital
 Working capital for the COCC:
 HUD will allow the COCC to be initially
funded (year 1) with working capital of up
to six months of property management,
bookkeeping, and asset management fees
based on 100% occupancy of all ACC units
Slide Number #93
Costs of a Project
Project
Front line costs:
Direct admin costs
Direct maintenance
Direct office costs
Utilities
Fees paid by project
Management fee
Asset management fee
Bookkeeping fee
Other fees for services
Slide Number #94
Central Office
Cost Center
How Cost Centers are
Funded
Cost recovery based on fees paid by
projects and from other programs
Cost recovery will occur based billing
projects for services performed
Some centrally provided service
costs will be allowed to be allocated
to projects
Slide Number #95
Central Office
Cost Center
Central
Maintenance
Cost Center
Waiting List
Eligibility
Revenues
Project
Revenues
- Dwelling rent
- Other tenant revenue
- Interest income
- Misc. income
- Operating subsidy
- Capital grant funds
COCC
Revenues
-Management fees earned
-Bookkeeping fees
-Asset mgmt fees earned
-Capital fund mgmt fees
-S8 management fees
-Other eligible reimbursements
-No direct subsidy!!
Summary – All Together Now
Frontline Activity
Management
Activity
Method
Management
Fees
Administrative
Maintenance
Rent Collection
Security
Screening/WL
Occupancy
Leasing
Resident Svcs
Work Orders
Technical
Routine
Other
Audit Costs
Warehousing
Proration
Other
Purchasing
Other
Inspections
Method
Fees for Service
None
Some Basic Financial Concepts
Page 6-26
Slide Number #98
Key Financial Terms
 Financial Data Schedule (FDS) is the
HUD-required financial statement that’s
submitted electronically to HUD
 FDS is submitted for each program of PHA
 PHAs will now be preparing the FDS to
report financial activity at the AMP level
 Balance sheet and income statement
Slide Number #99
Financial Data Schedule
Slide Number #100
Financial Data Schedule
Slide Number #101
Financial Reports
 Income statement reports on an accrual
basis how much the project has earned
(revenue) and subtracts expenses,
resulting in how much your project has
made or lost in the period
 Gives you a sense of how well the project is
operating for the period of time assessed
Page 6-32
Slide Number #102
Financial Reports
 Balance sheet shows the overall status
of your project’s finances at a fixed
point in time – a snapshot
 Totals all assets and subtracts liabilities to
compute overall net worth (or net loss)
 What the project owns, what it owes, what
it’s worth
Slide Number #103
Assignment of Assets and
Liabilities
At the end of the first year of project-based
accounting PHAs will assign all items on the
balance sheet between the COCC, AMPs, and
other programs
PHA Fiscal Year End
June
September
December
March
Allocation Date
June 30, 2008
September 30, 2008
December 31, 2008
March 31, 2009
The Budget
 The budget is a
management tool
 Each AMP will have
its own budget
 Property managers
need to manage to
their budgets
Page 6-65
Slide Number #105
Financial Reports
 Budget is a financial forecast
 Estimates what each AMP expects to spend
(expenses) and earn (revenue) for period of
time
 It’s important for the PHA to train property
managers to understand their AMP budgets
and manage to them
Slide Number #106
Key Budgetary Concepts
 Itemized projection of income and
expenses over a specific period
 Guideline for operating the project
 Tool to prevent fraud and theft
 Measure of project’s financial health
 Measure of staff performance
Slide Number #107
The Budget
 Operating budget should be a realistic
estimate and should contain:
 Operating receipts
 Operating admin
 Tenant service
 Utility expenses
 Maintenance
Slide Number #108
 Protective services
 General expenses
 Nonroutine expenses
An AMP Budget
 Stop Loss Kit provides template
 Budgets for each projects must total budget of PH
 Budgets should include all charges and fees from
the COCC, and Capital expenses
 One budget spreadsheet will reflect PUM, and one
budget spreadsheet will reflect annual figures
Slide Number #109
An AMP Budget
 Sample AMP budget
Slide Number #110
The Budget
Sample Conventional Budget
Gross Potential Income (GPI)
- Vacancy and Collection Loss
+ Miscellaneous Income
= Effective Gross Income (EGI)
- Operating Expenses
= Net Operating Income (NOI)
- Reserves for Replacement
- Annual Debt Service (ADS)
= Cash Flow
The Budget Process
 To approach developing a budget, look at
actual data from the past – see where the
project underspent and overspent
 Decide what needs to change and what needs
to stay the same
 For example, a major marketing campaign
may be needed to improve lease-up
 Costs may need to be cut in some areas
Page 6-72
Slide Number #113
Excess Cash and Fungibility
 Overview
 There are limitations and
freedoms on the use of
project income depending
whether your project has
excess cash
Slide Number #114
Excess Cash and Fungibility
 Excess cash is the project’s net liquid
assets, or “surplus cash”
 After the first year, calculation is based
on prior year-end financial statements
 Audited statements will determine final
excess cash amount
Slide Number #115
Uses of Excess Cash
 Retain funds for future project use
 Transfer funds to other AMP
 Pay as asset management fee to COCC
 Use for other HUD-approved eligible
purposes
 Financing new units, handling lawsuits,
covering accrued pension and retirement
Slide Number #116
Excess Cash and Fungibility
 Uses of excess cash not permitted:
 Loaning or giving COCC cash other than as
the asset management fee
 Proceeds from the sale of assets to the
COCC – these belong to the AMP
 Except with HUD approval
Slide Number #117
Excess Cash Defined
 Excess cash will be calculated from the
FDS – it’s the sum of certain current
assets minus the sum of all current
liabilities, minus one month’s operating
expenses for the AMP
Slide Number #118
Calculation of Excess Cash
 Calculation of excess cash:
Sum of asset accounts on the FDS
- Sum of ALL current liabilities
- One month operating expenses for AMP
= Excess cash
Slide Number #119
Fungibility
 Fungibility effective date
 Prior to first project-based submissions, on
or after July 1, 2008, all funds are considered
fully fungible, including to the COCC
 Once the PHA has reported PBM data,
excess cash restrictions and limitations
apply
Slide Number #120
Fungibility
 In the 1st year of project-based accounting,
full fungibility of op funds between projects
 In the 2nd year, fungibility is allowed
provided project has excess cash
 In the 3rd year, fungibility will require that
excess cash must equal at least one month
of operating expenses
Slide Number #121
Allowable Fungibility
Is this transfer fungible?
Transfer cash from AMP 1 to AMP2
Yes
No

Transfer cash from AMP 1 to COCC

Transfer cash from HCV to AMP1

Transfer cash from Cap Fund to AMP1

Transfer cash from COCC to AMP1

Slide Number #122
Summary of Building Blocks
Slide Number #123
Project-Based Funding
 Separate subsidy form for
each project
 Project Expense Level (PEL) is
a major component
 Ensures appropriate resources
are allocated to each AMP
based on unique
characteristics
Slide Number #124
Project-based funding
Project-Based Budgeting
 Used for planning purposes
 Budgeted amounts must reconcile
to FDS
 Must be approved by PHA Board
 Not subject to HUD approval
Project-based budgeting
Project-based funding
Slide Number #125
Project-Based Accounting
 Income & expense are
reported at the project level
 Project financial statements
are submitted to HUD at year
end
Project-based accounting
 Can only charge projects for
Project-based budgeting
services actually received
Project-based funding
 Fees must be reasonable
Slide Number #126
Project-Based Management
 Arrange property
management services
in the best interest of
Project-based
the project
management
 Assign skilled
Project-based accounting
management
Project-based budgeting
personnel to each
Project-based funding
project
Slide Number #127
Project-Based
Performance Assessment
 PHAS will be revised
to emphasize projectbased monitoring
 Each project will be
evaluated on financial,
managerial, physical
condition, and Capital
Fund
Slide Number #128
Project-based
performance assessment
Project-based manageme
Project-based accounting
Project-based budgeting
Project-based funding
Summary
 Thank you for
attending!
 Join us again
Slide Number #129
Summary of Building Blocks
 Thank you for attending!
 Join us again
Slide Number #130
Upcoming Lunch ‘n’ Learns
 April 4 – Adjusted Income
 April 25 – Housing 101: Overview for New
Managers and Directors
 May 2 – Verification Issues
 May 9 – Managing PHAS
 May 16 – Managing SEMAP
Slide Number #131