HUD Albuquerque multifamily

Report
MFT – Multifamily for
Tomorrow
August 20, 2014
Presented by Michael Gamez, Project Manager
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MFT – Multifamily for Tomorrow
By 2016, the Office of Multifamily Housing (MFH) will complete a
transformation of the way we work from a 1970s operating
model to a 21st-century model that:
Applies
industry best
practices
Improves our
Increases
ability to
manage risk accountability
Improves
national
consistency
2
MFT – Multifamily for Tomorrow
Workload Sharing
Account Executive Model
Streamlined
Organizational Model
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Workload Sharing
Distribute workload evenly across the
country
Address fluctuations in work volume
Reduce wait time for customers
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Account Executive Model
Multifamily Asset Management
Account
Executive
Troubled
Asset
Specialist
Today’s
Project
Managers
Focus on
non-troubled
properties
New position
Focus on
troubled
properties
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Streamlined Organizational Model
Consolidate 17
hubs to 5 hubs
Enhanced
accountability
Streamlined
decisionmaking
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Timeline
MFT will take place over five Waves
Wave 1 will be completed in January 2015 (Albuquerque, Des
Moines, Houston, Little Rock, New Orleans, Oklahoma City,
Omaha, St. Louis, San Antonio, Shreveport, and Tulsa)
All Waves will be complete by Spring 2016
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Action Plans
When a property is classified as Troubled (rating of 1-5), a
formal Action Plan is required to identify specific steps to
improve performance.
Three types of Action Plans:
• MPIP: Marketing and Physical Improvement Plan
• EMPIP: Expense Management and Process Improvement Plan
• CP: Capital Plan
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Marketing and Physical Improvement Plan
For revenue issues
• Goal: Increase revenue by raising community awareness, better
targeting tenants, and improving the property’s appeal and
safety.
• Indicators:
• Poor curb appeal
• Poor reputation
• Low occupancy & high turnover
• Low rents
• Lack of amenities
• Criminal activity
• Tenant complaints
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Expense Management and Process
Improvement Plan
For expenses issues
• Goal: Reduce waste and inefficiency in the project’s budget and
operations.
•
Indicators:
• Increasing operating expenses
• High accounts payable balance
• Improper distributions and withdrawals of project funds
• Poor Management and Occupancy Review (MOR) rating
• Failure to file annual financial statements
• Failure to maintain property
• Unresponsive to tenant and HUD inquiries
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Capital Plan
For debt issues
• Goal: Improve the viability of the project through the reduction
of debt service or injection of additional funding.
• Indicators:
• Difficulty paying debt service
• High interest rate
• High loan age
• Low reserve for replacement account balance
• Project is in need of extensive rehabilitation
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Developing an Action Plan
HUD initiates
meeting with
owner
Once Action
Plan is
approved
• Discuss HUD’s observations and
solicit owner’s feedback
• Establish reasonable benchmarks
• Prioritize tasks
• Establish timeline
• Submit monthly updates to HUD
• Assess effectiveness of plan
• Close monitoring, extend timeline, or
take further action
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Case Study #1
Marketing and Physical Improvement Plan (MPIP)
• Marble Apartments – Carlsbad, NM
• 40% vacancy rate
• Extended vacancies
• Vacant units are boarded up
• Frequent burglaries and drug activity
• Frequent tenant complaints about lighting in parking lot
• Negative publicity in local newspaper
• What would you do?
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Case Study #1
Marketing and Physical Improvement Plan (MPIP)
• Marble Apartments – Carlsbad, NM
• Meet with local law enforcement and review calls for service
logs
• Set up police substation
• Improve curb appeal to attract new residents
• Improve lighting, gates, and surveillance systems
• Assess tenant selection criteria and house rules
• Update Affirmative Fair Housing Marketing Plan
• Hire an experienced management agent
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Case Study #2
Expense Management and Process Improvement Plan (EMPIP)
• Bosque Apartments – Santa Fe, NM
• Accounts payable balance of $180K
• Contract with Billy’s Landscaping for $10K monthly
• Unpaid property taxes
• Annual financial statement is past due
• Owner does not respond to HUD’s phone calls or emails
• Unauthorized withdrawal of $30K from reserve account
• Deferred maintenance issues
• Overgrown weeds
• What would you do?
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Case Study #2
Expense Management and Process Improvement Plan (EMPIP)
• Bosque Apartments – Santa Fe, NM
• Submit Monthly Accounting Reports to closely monitor
expenses
• Examine contracts and compare rates
• Examine process for obtaining and awarding contracts
• Develop preventative maintenance schedule
• Develop prioritized plan of action to reduce payables
• Develop formal staff training program
• Hire an experienced management agent
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Case Study #3
Capital Plan (CP)
• La Cumbre Apartments – Las Cruces, NM
• Difficulty making monthly mortgage payments
• 95% occupancy rate
• 12% interest rate
• Mortgage matures in 2020
• Low reserve for replacement account balance
• What would you do?
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Case Study #3
Capital Plan (CP)
• La Cumbre Apartments – Las Cruces, NM
• Contact lender to lower interest rate or extend amortization
period
• Refinance and rehabilitate the property
• Request approval for owner advances
• Sell property to another entity with the ability to infuse
capital
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Contact Information
• Michael Gamez, Project Manager
• 505-346-6932
• [email protected]
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