Public Housing Conversion to Asset-Based Management Model will bring dramatic, sweeping changes to management of public housing

Asset-based management, which is used in the private sector to ensure profitability in property management, is now required for public housing.

The Operating Fund Program was created to provide operating subsidy to housing authorities to cover the gap between what residents pay in rent and the cost of operating public housing developments. With the new HUD-mandated asset-based management, a property expense level will be calculated for each property based on an “FHA database.” Housing authorities will now have limited ability to move funds from one property to another, and must fund central office operations with fees from the properties – if the properties have excess cash with which to pay fees.

The operating subsidy for the nation’s public housing has been seriously under-funded for almost a decade.  SAHA hopes that the implementation of asset-based management will not result in financial distress for any property or to the loss of public housing.

In anticipation of HUD’s October 2006 implementation deadline, SAHA will begin a test run of the asset-based management model at some of our properties.  Although our waiting list will continue to be administered at SAHA’s central office; applications, payments, recertifications and other customer service activities will transfer to our individual communities.  SAHA public housing managers will have more decision making control, with some staff relocated from central office to provide additional support. Revenues and expenses for each community will be submitted to HUD for review, with the community subject to subsidy reductions if the property is not performing well or fails financially.

As SAHA seeks to cut overhead expenses to prevent a loss of units, difficult choices will have to be made.  Simply put, some services that have historically been funded through other administrative budgets, such as courtesy patrols, transportation services to seniors, etc., may now be a luxury we cannot afford if we are to maintain our housing inventory.  Additionally, SAHA may be required to set rent structures based on the financial performance of the community, as properties must operate independently and more efficiently.

SAHA is preparing for the challenge of asset-based management, working closely with our property managers to develop capital plans and strategies to position our properties to remain viable to continue to serve our clients.



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