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Public Housing Operating Fund

Julie Miles, Financial AnalystHUD—Kansas City, KS

913-551-5529

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Agenda

Formula

Unit Months

Utilities

Add-ons

Formula Income

PUM Change in Utility Allowances

Stop-Loss

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Formula

PEL X EUM

+ UEL X EUM

+ Add-ons

– Formula Income X EUM

= Operating Subsidy Eligibility

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Unit Months

Eligible Unit Months (EUM)

Occupied Units

Approved Vacancies

Limited Vacancies

ACC Units Ineligible for OpSub

Units Leased to Tenants Over-Income at Move-in

Units Offline for Non-Dwelling Use (ex. Storage, Office

Space, Rental to Businesses, etc.)

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Unit Months Reporting Period

Latest 12 months ended June 30 CY 09: 7/1/07 – 6/30/08

Reconciliation of ACC Units: Units as of 7/1 Plus Units Added Less Units Deleted Units as of 6/30

Monthly Status Based on Unit’s Status as of 1st or Last Day of Month Chosen by PHA

Future Expectation: Pre-populated from PIC HUD-50058 Reporting Unit Status Selection (ex. Vacant, Mod, Exception)

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EUM Occupied

Under ACC & Occupied by Public Housing Eligible Family Under Lease

Approved Vacancies Modernization Special Use: Resident Services, Resident Organizations,

Self-Sufficiency and Anti-Crime Initiatives Litigation Casualty Loss Settlement Delays Disasters Changing Market Conditions

Limited Vacancies More Than 100 Units = Up to 3% Total ACC Unit Months 100 Units or Less = Up to 60 Unit Months

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Project Expense Level (PEL)

PEL X EUM

+ UEL X EUM

+ Add-ons

– Formula Income X EUM

= Operating Subsidy Eligibility

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Project Expense Level (PEL) Estimated Cost for PH Projects Compared to Actual

Costs of Federal Housing Administration Projects 10 Characteristics Calculated CY07 Inflated Each Year by HUD-Determined Weighted

Average Percentage Increase In Local Government Wages and Salaries for the Area PHA Is Located and Non-Wage Expenses

2009 Advisory Committee Will Review Methodology to Evaluate PEL Based on Actual Cost Data

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Utilities Expense Level (UEL)

PEL X EUM

+ UEL X EUM

+ Add-ons

– Formula Income X EUM

= Operating Subsidy Eligibility

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Utilities Expense Level (UEL)

Payable Consumption

X Rate

- Excess Utilities

X Inflation or Deflation

= UEL

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UEL Payable Consumption

Current Consumption

+ 75% Decreased Consumption

- 75% Increased Consumption

= Payable Consumption

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UEL Payable Consumption

Current Consumption Latest 12 Months Ended June 30 CY 09: 7/1/07 – 6/30/08

Compare Current Consumption to Rolling Base Average Annual Consumption for 36 Month Period Ended

June 30--18 Months Prior to Applicable Funding Period CY 09 Year 1: 7/1/06 – 6/30/07 CY 09 Year 2: 7/1/05 – 6/30/06 CY 09 Year 3: 7/1/04 – 6/30/05

Consumption Incentive or Penalty PHA Retains 75% of Cost Savings Due to Decreased

Consumption PHA Absorbs 75% of Cost Increase Due to Increased

Consumption

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UEL

Actual Average Utility Rate Latest 12 Month Ended June 30 CY 09: 7/1/07 - 6/30/08 Actual Cost ÷ Actual Consumption = Actual Average Rate

Subtract Excess Utilities Consumption Surcharge Latest 12 Months Ended June 30 CY 09: 7/1/07 - 6/30/08

Inflation/Deflation Factor One Annual factor for All Utilities in Specific Geographic

Areas Fuels & Utilities Component of the US Dept of Labor BLS

CPI-U

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Add-Ons

PEL X EUM

+ UEL X EUM

+ Add-ons

– Formula Income X EUM

= Operating Subsidy Eligibility

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Add-Ons Self-sufficiency

Only Elderly/Disabled Service Coordinator Renewals Energy Loan Amortization PILOT

Greater of Most Recent FDS or Cooperation Agreement Audit

Most Recent FDS Cost is “Proxy” for Next Audit No Adjustment of Proxy to Actual cost

Resident Participation: $25 Occupied Unit Asset Management (Only if COCC & Multiple

AMPs) Information Technology Fee: $2 PUM under ACC Asset Repositioning (Demo/Dispo)

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Formula Income

PEL X EUM

+ UEL X EUM

+ Add-ons

– Formula Income X EUM

= Operating Subsidy Eligibility

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Formula Income

Tenant Rent / Unit Months Leased

Frozen at 2004 Level for CY07- CY09 OpSub

2004 FDS

FYEs 3/31/04, 6/30/04, 9/30/04, or 12/31/04

Adjusted Annually by PUM Change in Utility

Allowances (UA)

Appeal for Adjustment of Baseline Income If Severe

Local Economic Hardship

2009 Reevaluate Frozen Concept

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PUM Change in UA

Required for PHAs with Any Tenant Paid Utilities, Regardless of Whether Utility Allowance Schedule Changed

Prorate UA if Rent Prorated for Mid-Month Move-in or Move-out

Exclude Off-line Units (ex. Tenants Over-Income at Move-in, Special Use, Storage, Office)

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PUM Change in UA

FYE 2004

Utility Allowances Given ÷ Unit Months

Leased = PUM UA

Reporting Period CY09 7/1/07-6/30/08

Utility Allowances Given ÷ Unit Months

Leased = PUM UA

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Transition Calculation: Gainers

2-Year Phase-In

Gain Included in OpSub Calculation

50% Gain Subtracted in 1st Year (CY 07)

No Gain Subtracted in 2nd Year (CY 08)

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Transition Calculation: Decliners

5-Year Phase-In Reduction Included in OpSub Calculation

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

Cost-Benefit of Stop-Loss

Successfully Apply by: 10/15/07 = Loss Frozen @ 5% CY07+ 4/15/08 = Loss Frozen @ 24% CY08+ 10/15/08 = Loss Frozen @ 43% CY 09+ 10/15/09 = Loss Frozen @ 62% CY 10+ 10/15/10 = Loss Frozen @ 81% CY 11+

Alternate Asset Management for PHAs with Less Than 250 Units

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Stop-Loss

Traditional Asset Management

PHAs with 250+ Units

COCC & Multiple AMPs

Alternate Asset Management

PHAs with Less Than 250 Units

Limit Administrative Costs (Excluding Audit)

Project Performance

Risk Management

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Alternate AM

Admin Calculation Administrative Salaries + Administrative Benefits + Outside Management Fees + Administrative Operating Expenses Divide by Occupied & Approved Vacant Unit

Months

Admin Limits Schedule of Management Fees, Table 2, 80th

Percentile Administrative Costs http://www.hud.gov/offices/pih/programs/ph/am/

accounting.cfm

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Alternate AM

Review Project Performance & Address Areas of Non-Performance REAC Physical Inspection score at least 70 Crime & Drug Problems Not Exceeding 120% of

Surrounding Community At least 95% Occupied Tenant Accounts Receivable 7% or Less of

Monthly Rent Unit Turnaround & Work Orders scores better

than “D” Utility Consumption Not Exceeding 120% of

Agency Average

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Alternate AM

Risk Management Not Troubled for PASS, FASS, MASS or

Capital Fund No Outstanding FHEO Compliance Findings or

Voluntary Compliance Agreement Not Implemented

No Current Energy Audit No Outstanding IG Audit Findings Greater

Than 6 Months Old Without Progress Compliance with ACOP & Other Related

Occupancy Directives

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Alternate AM

Risk Management (continued) Satisfactory Progress under RHIIPS/RIM

Corrective Action Plan 95% or Higher HUD-50058 Reporting Meeting CFP Obligation & Expenditure

Deadlines No other Major Compliance Deficiencies

HUD May Consider PHA Progress in Addressing Compliance Issues and Other Extenuating Circumstances

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Guidance

PIH Notice 2008-33 CY09 OpSub http://www.hud.gov/offices/adm/ hudclips/notices/pih/files/08-33PIHN.doc

PIH Notice 2008-31 Stop Loss Year 3 http://www.hud.gov/offices/adm/ hudclips/notices/pih/files/08-31PIHN.doc