Reginald Walker, MBAReginald Walker, MBATatum and Associates, LLCTatum and Associates, LLC

Explain the concept and requirements of the Central Office Cost Center (COCC) under the Final Rule

Describe the allowable fees charged by the COCC

Discuss how asset management might impact the organizational structure of the PHA

Owners of Multifamily properties employ property management companies for the day-to-day operation of properties

The Central Office Cost Center will operate like a property management company

Final Rule requires all large PHAs (250 or more units) to establish a COCC

Business unit within the PHA that earns income from fees and/or by overseeing other business activity

Simplifies administrative requirements

Provides greater flexibility to support mission of PHA

• Property Management Fee

• Asset Management Fee

• Bookkeeping Fee

• Program Management Fees

• Fee-for-Service

HUD PHAOLD$

HUD

AMP

NEW PHA/COCC

$ Subsidy $ Fees

Property management fee

Bookkeeping fee

Asset management fee

Program management fees and other business activity

Fee-for-service (e.g., centralized painting or extermination)

Fee charged to AMPs for oversight provided by COCC

Replaces traditional PHA overhead allocations

Based on occupied units and HUD-approved vacancies (not including limited vacancies)

Average management fee in HUD’s multifamily housing programs was $35 PUM (2004)

80th percentile of fees paid by market

Local HUD multifamily fee schedules

Other compelling local market data

COCC is permitted to charge a bookkeeping fee for the project accounting function of $7.50 PUM

Based on occupied units and HUD-approved vacancies (not including limited vacancies)

Average bookkeeping fee in HUD’s multifamily housing programs was approximately $3.50 PUM (2004)

Fees charged to AMPs for those tasks that would be residual if all property management functions were contracted to a third-party ($10 PUM)

Subject to the availability of excess cash

Based on total number of ACC units

Fee charged to the Capital Fund Program for management related to capital activities

COCC may charge up to 10% of total Capital Fund Program grant as management fee

Fees charged for all administrative work performed by COCC staff related to the operation of HCV program

Two different fees can be charged: HCV Management Fee – Higher of either

20% of annual administrative fee or $12 PUM based on number of vouchers leased

HCV Bookkeeping Fee – $7.50 PUM based on number of vouchers leased

Public Housing Development

Other HUD Programs (ROSS, HOPE VI, etc.)

Other business activity

PHAs may choose to centralize various front-line expense activities and charge AMPs a fee for these services

Examples Maintenance Legal Services

PHAs must adhere to the following: Fees must be based on the market rate for

the work received and not the actual cost PHAs must use the fee for service approach

for centrally provided maintenance Centrally provided front-line services must

be in the best interest of the AMPs and cannot cost more than if performed on-site

PHAs must maintain documentation for the fees charged to the AMPs

Fee Fee Fee Calculation Fee Calculation Amount Amount

Management Fee Management Fee $40 x 1,000 units x 12 $40 x 1,000 units x 12 months x 97% occupancy months x 97% occupancy

$465,600 $465,600

Bookkeeping Fee Bookkeeping Fee $7.50 x 1,000 units x 12 $7.50 x 1,000 units x 12 months x 97% occupancy months x 97% occupancy

$87,300 $87,300

Asset Management Asset Management Fee Fee

$10 x 1,000 units x 12 $10 x 1,000 units x 12 months months

$120,000 $120,000

Extermination Extermination Fee-for-ServiceFee-for-Service

$50 x 1000 treatments$50 x 1000 treatments $50,000 $50,000

TotalTotal $722,900 $722,900

Unlike in the past, front-line expenses and administrative expenses, called fee expenses, will need to be separated

Fee Expenses:Fee Expenses: An expense of the COCCAn expense of the COCC Paid for by fee income Paid for by fee income

generated by COCCgenerated by COCC

Front-Line Expenses:Front-Line Expenses: An expense of the An expense of the

AMPAMP Paid for by AMP Paid for by AMP

income (e.g. subsidy income (e.g. subsidy and rent)and rent)

Certain personnel costs, including: Executive Director Regional Managers Human Resource Finance and accounting

Equipment, furniture, and services necessary to sustain COCC

Central servers and software supporting COCC

Refer to Table 7.2 of the Supplement to PIH Notice 2007-09

Onsite personnel Housing Manager Maintenance Technician Resident Services

Equipment, furniture, and services required to maintain site-based office

AMP utility costsRefer to Table 7.2 of the Supplement

to PIH Notice 2007-09

Improved services provided to each AMP

Organizational structure allows for greater efficiency

Onsite staff provide greater service to tenants

System enhancements will allow PHAs to operate more efficiently

Revisions to the Public Housing Operating Fund Program; Final Rule - 24 CFR Part 990

Preparing for Asset Management Under the New Public Housing Operating Fund Rule (24 CFR 990): A Planning Document

Demonstration of a Successful Conversion to Asset Management (Stop-Loss) Submission Kit Year 2

Demonstrating Successful Conversion to Asset Management: A Site Visit to the Charlotte Housing Authority

PIH Notice 2007-09, Changes in Financial Management and Reporting for Public Housing Agencies Under the New Operating Fund Rule (24 CFR Part 990), issued April 10, 2007

Asset Management Help Desk Email: AssetManagementHelpDesk@hud.gov Toll-Free Telephone: 1-800-511-8478