ASSET MANAGEMENT PLAN

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ASSET MANAGEMENT PLAN

  1. 1. DISCLAIMER This form is provided by the Community Development Law Center (CDLC) for informational purposes only. This is a DRAFT (and by no means perfect) asset management plan, intended to be revised for your particular project. Permission is granted to nonprofit community-based organizations to reproduce and/or adapt this document for their own use, provided proper credit is given. Speaking of which, credit is due and thanks are in order to Local Initiative Support Corp., the Housing Development Center and CASA of Oregon for developing some of the material in this plan, and to HUD, which provided funding for the plan. © 2002 CDLC ASSET MANAGEMENT PLAN ________________________________________ (Name of Project) Table of Contents Topic Page A. Description of the Organization and Project 2 B. Asset Management Generally 5 C. Oversight of Property Management 8 D. Oversight of Financial Performance 11 E. Oversight of Physical Property 16 F. Resident and Community Relations 18 G. Reporting, Recordkeeping and Monitoring 20 Attachments 1. Property Management Agreement 2. Property Management Plan 3. Capital Needs Assessment 4. Resident Services Plan 5. Pro Forma Development Budget and Operating Budget 6. Chart of Funder Requirements Date Asset Management Plan adopted by CDC Board of Directors: ______________________ REVISIONS: Date Revised: ______________ Section(s) Revised:_________________________ Date Revised: ______________ Section(s) Revised:_________________________ Date Revised: ______________ Section(s) Revised:_________________________ Sample Asset Management Plan (from CDLC/HDC Training, January 2002) 1
  2. 2. A. DESCRIPTION OF THE ORGANIZATION AND PROJECT 1. DESCRIPTION OF THE ORGANIZATION _________ Community Development Corporation (CDC) is a nonprofit community development organization whose general service area includes …. Mission: CDC’s mission is….. Portfolio: CDC owns ____ rental units within ___ project sites. This includes ___ single-family rental units and ___ multi-family units. Additionally, CDC is the general partner in, or sponsoring agency of __ projects with ___ rental units. Of the ___ projects in total, CDC manages ___ projects (___ units) and ___ projects (___ units)are managed by outside property management firms. Board of Directors: The CDC is governed by a Board of Directors, whose general roles with regard to asset management are to provide policy direction for the organization and for each project, develop specific policies for each project, and to assume overall responsibility for the success of each project and for the organization. Specific policies that the board is responsible for adopting are noted in the Plan. CDC Asset Management Staff: CDC has a staff of ______ people that perform asset and property management functions as well as other activities related to its mission to develop and maintain affordable housing and to promote community economic development and neighborhood livability. Asset management responsibilities are performed by the Executive Director, Accountant, and Asset Manager (together, these staff members are referred to as “the asset management staff”).1 To the extent that other staff (for example, the resident services coordinator and housing developer) are involved with this or other projects, it is the responsibility of the asset management staff to coordinate such involvement in the organization. More specific roles and responsibilities are set forth in the tables of tasks in each section. ORGANIZATION CHART Board of Directors Executive Director Resident Housing Accountant Asset Property Manager Services Developer Manager Resident Manager Maintenance PM Accountant 1 In this draft Asset Management Plan, no distinction is made among asset management staff. If “Staff” is designated as responsible party, you should replace “staff” with the title of the particular person on the staff who is responsible (e,g., asset manager, executive director, finance manager, maintenance, etc.). Sample Asset Management Plan (from CDLC/HDC Training, January 2002) 2
  3. 3. 2. DESCRIPTION OF THE PROJECT Project Name: __________________________________ Project Address: _________________________________________________________ The project is newly constructed (or) acquired and rehabilitated (Yr. Built _______) Placed in service on: ___________________ Legal Owner the CDC (or) _______________________, of which CDC is the general partner; limited partner is _________________________ sponsoring agency. Target population: ___________________________________ (income levels, special needs) Project financing: Federal low income housing tax credits amount: $__________ HOME (_______________ is the PJ) amount: $__________ Housing Trust Fund amount: $__________ “first-position” bank loan____________________ amount: $__________ (Name of bank) subordinate loan from ______________________ amount: $__________ other: ___________________________________ amount: $__________ other: ___________________________________ amount: $__________ Total Project Cost: $__________ No. of buildings____ Total No. of Units: __________ Unit Type No. of Units Target Income (% Area in Comments of AMI) Sq. Ft. Studio 1 BR, 1 BR, 2 BR 2 BR 3 BR 3 BR 4 BR 4 BR Other Other Totals Sample Asset Management Plan (from CDLC/HDC Training, January 2002) 3
  4. 4. TABLE 1. SUMMARY OF MOST RESTRICTIVE PROJECT REQUIREMENTS Special Needs Population: ___________ No. of Units: ___ Preference or Requirement? (circle) Source: _______________________________ Maximum Rents _____ units at _____% AMI (area median income); ____ units at _____% AMI Rent increase restrictions: __________________________________________ Source: _______________________________ Tenant Incomes at Initial Occupancy: ___ units at ___% AMI __ units at ___% AMI at Recertification: __________________________________________ Source: _______________________________ Lease Restrictions Prior Approval of Lease and/or changes required Minimum Lease Term: ________ Good cause eviction? __________ Grievance Procedure? __________ Special Notice Provisions ________________________________ Source: _______________________________ Reserves Replacement Reserve: $__________ per unit per year Operating Reserve: $__________ Source: _______________________________ Insurance Property insurance $__________________ (coverage amount) Liability insurance $__________________ (coverage amount) Rent loss insurance ________ months Name funder as additional or named insured? (circle appropriate) Notice to funder required before termination? No. of Days: ______ Source: _______________________________ Reports Audit Other financial statements? _________________________ Other reports: _____________________________________________ Frequency (monthly/quarterly/annually/other): _________________________ Source: _______________________________ Monitoring Site visit every ___ years, starting ____________ (year) Source: _______________________________ Number of Yrs Restrictions in Place _______ yrs. Expiration Date: _____________________ Source: _______________________________ Sample Asset Management Plan (from CDLC/HDC Training, January 2002) 4
  5. 5. B. ASSET MANAGEMENT GOALS GENERALLY (CDC) recognizes that strategic asset management is necessary for the successful long-term operation of its housing projects. This Asset Management Plan (“the Plan”) has been developed to provide a framework for providing ongoing oversight of CDC's portfolio. The Plan takes into consideration this individual project’s goals and the CDC's organizational mission, while recognizing that the operation of this project must be analyzed in the context of CDC’s entire portfolio. This Plan is intended to be used not only as a plan, but also as a tool, to identify policies that need to be adopted, tasks to be undertaken, the party responsible for performing the task, and the performance standards to apply. However, it must be understood that this is a plan that is subject to constant revision, and that total compliance with the plan is neither intended nor possible. CDC views this Asset Management Plan as a tool for the systematic plan for and ongoing oversight of the management of this project and CDC’s other projects in furtherance of the projects’ goals and CDC’s mission. CDC’s goals for this project are to see that the project provides affordable housing over the long-term to its target population, while fostering CDC’s financial health and community reputation. To do so, CDC must keep the property manager, tenants, funders and community happy; it must keep the money flowing while keeping rents affordable; and it must keep the project in good repair over the life of the project. The CDC recognizes that it is typically dealing with (a) difficult to house populations, (b) limited funds, (c) limited ability to raise additional funds, and (d) public agencies requiring maximum accountability. Good asset management systems are needed to make this work!!! CDC needs to be proactive, which means starting out with a well-thought out asset management plan. The Plan differentiates between the role of property management and the role of asset management. The role of asset management is to assure that established standards and expectations regarding financial and physical condition, regulatory and statutory compliance, and reporting requirements are being met. Property management is the day-to-day management of the project. Asset management is seen as an opportunity to step back from the day-to-day operations of the housing and address strategic objectives of the property—is the property achieving its mission, is it helping the CDC achieve the organization’s mission? Are there risks or problems that have arisen that were not initially anticipated? What financial trends can be discerned from performance indicators over time? There are three basic questions that CDC’s asset management addresses: 1. Is the project financially healthy? If not, what are the problems or risks to its financial stability and how can these be addressed? 2. Is the project being properly maintained to provide decent, safe and sanitary housing for its occupants and to enhance the neighborhood in which it is located? If not, what are the problems and how can they be corrected? 3. Is the project operating in accord with all funders’ regulatory requirements and all applicable local, state and federal requirements? If not, what are the problems and how can they be resolved? Sample Asset Management Plan (from CDLC/HDC Training, January 2002) 5
  6. 6. STAFF AND BOARD ROLES AND RESPONSIBILITIES The Board of Directors provides policy direction for the organization and for each project, develops specific policies for each project, and assumes overall responsibility for the success of each project and for the organization. The asset management staff includes the Executive Director, Accountant, and Asset Manager.2 To the extent that other staff (for example, the resident services coordinator and housing developer) are involved with this or other projects, it is the responsibility of the asset management staff to coordinate such involvement in the organization. More specific roles and responsibilities are set forth in the tables of tasks in each section. GENERAL ASSET MANAGEMENT TASKS: Table 2 sets forth general tasks not specific to any particular area. Tables 3 to 8 set forth asset management tasks related to specific areas of oversight. 2 See footnote 1 (page 2). Sample Asset Management Plan (from CDLC/HDC Training, January 2002) 6
  7. 7. TABLE 2. GENERAL ASSET MANAGEMENT TASKS GENERAL ASSET MANAGEMENT RESPONSIBLE FORM, REPORT TASK FREQUENCY PARTY3 OR RESOURCE Develop and update Asset Management Plan Predevelopment, Staff and Board Asset Management every 3 yrs. Plan ASSET MANAGEMENT BINDER Compile Asset Management looseleaf binder(s) with following documents:: Project Documents (Loan and Grant Staff (Developer See sample table of Agreements, As-Built Plans and Specs, and/or Lawyer) contents Warranties and Operations Manuals) (3 sets: 2 for org,, 1 for PM) Summary of Each Funder’s Project Staff (Developer) See Form Requirements (Max. rents, tenant incomes, Prior to Initial etc.) Occupancy Summary of Most Restrictive Project Staff (Developer) See Form Requirements (Max. rents, tenant incomes, etc.) Calendar of Reporting Requirements Staff (Developer) See sample calendar Updated Operating Budget and “Sources of Staff & PM Funds” Pro Formas; Have PM adjust its format for budget and Staff & PM income/expense statement to match CDC desired format (e.g., Gr. Potential Inc.) Make sure agreements with development team Predevelopment Staff Contract language in contain necessary asset management developer and requirements (e.g., builder to provide capital builder agreements needs assessment info, developer or lawyer to compile asset manager binders) Develop job description for Asset Mgr Predevelopment Staff Job Description Make sure funder approvals of mgt docs are Lease-Up and Staff obtained as required (lease, budgets, property prior to changes management agreement and plan, etc.); also any changes to these documents Keep up-to-date on legal requirements placed Ongoing Staff See Chart of Funder on project by particular funding sources and Requirements by particular laws Investigate, purchase and use software for Staff & acctg tracking AM Coordinate AM tasks within organization Ongoing Staff Provide notices to funders of address changes; Ongoing Staff maintain current contact list Provide training to staff and board on asset Ongoing Staff & Board management Evaluate whether project is fulfilling the Every 2-3 years Staff and Board Self-assessment tool project’s mission and whether the portfolio is fulfilling CDC’s mission 3 If “Staff” is designated as responsible party, you should replace “staff” with the title of the particular person on the staff who is responsible (e,g., asset manager, executive director, finance manager, maintenance, etc.). Sample Asset Management Plan (from CDLC/HDC Training, January 2002) 7
  8. 8. C. PROPERTY MANAGEMENT OVERSIGHT GOALS OF PROPERTY MANAGEMENT OVERSIGHT While the property manager oversees the day-to-day operations (including rent collection, record keeping, financial reporting and maintenance), the CDC remains ultimately responsible for the well-being of the project. Good asset management means that the owner: • chooses a good property manager • makes sure that the property manager does a good job • reviews the property manager’s reports, files whatever additional reports need to be filed, and maintains appropriate records • makes sure that the property will remain in good shape for forty years or more, by maintaining appropriate reserves for replacement and for operations • makes sure that all the regulatory agencies are happy (which should be true if you’ve done all the above) STAFF AND BOARD ROLES AND RESPONSIBILITIES The Asset Manager is the primary contact for communicating with the property manager. The roles of the CDC staff vis-à-vis the property manager are spelled out in the Management Agreement. Where uncertainty exists, the asset manager will discuss these areas with the executive director, who will work with the property manager to resolve the uncertainty. The Board of Directors is responsible for adopting a number of policies related to property management. These are spelled out in Table 3, Property Management Oversight. They include: • criteria for deciding whether to self-manage or hire an outside property manager • if there will be outside property management, approving criteria for selecting the property manager, and ultimately making the decision on who is selected • approving the property management agreement • adopting the Property Management Plan • adopting tenant screening and selection criteria, addressing topics such as criminal record checks, credit references (and whether tenant will pay for such), landlord references, income to rent ratios, occupancy guidelines (number of persons per bedroom) • adopting a fair housing policy, including policies on affirmative marketing and reasonable accommodation • rent collection policies, and how to address late payments, partial payments and non-payments • whether to adopt a “good cause” eviction policy, even if it is not required by law • adopting a progressive discipline policy • adopting written grievance policy if required or desired PERFORMANCE STANDARDS4 • Property manager (PM) selected and evaluated according to applicable criteria and in timely fashion • Property manager shall comply with all laws and procedures • PM to Certify and Verify Eligibility of All Tenants prior to Occupancy • PM to Recertify and Reverify Tenant Eligibility within 12 months of last certification • Waiting List: Have 5 applicants for each unit size and type; update waiting list every 6 months • Applicants and residents treated fairly; no fair housing violations 4 Specific performance standards related to oversight of financial performance, physical property, resident and community relations and reporting, recordkeeping and monitoring are found in those sections. Sample Asset Management Plan (from CDLC/HDC Training, January 2002) 8
  9. 9. TABLE 3. SPECIFIC TASKS FOR PROPERTY MANAGEMENT OVERSIGHT PROPERTY MANAGEMENT RESPONSIBLE FORM, REPORT TASK FREQUENCY PARTY5 OR RESOURCE PROPERTY MANAGER OVERSIGHT Decide whether to self-manage Predevelopment Staff & Board See CHAM, LISC & HAC papers6 Develop Property Manager selection Predevelopment Staff & Board See PM Selection criteria; Criteria Select property manager Predevelopment Staff & Board See sample RFQ & & every 2-3 yrs Mgt. Agreement Adopt and update Property Mgt Plan Predevelopment Staff & Prop Mgr See Management & every year w/ Board approval Plan; HCS CFC app Evaluate property manager; renew Annually Staff & Board management agreement Make sure procurement policies are Monthly Staff complied with TENANT ELIGIBILITY & SELECTION Tenant Selection Criteria Prior to Initial Staff & Prop Mgr Fair Housing & Reasonable See Samples Occupancy w/ Board approval Accommodation Occupancy Guidelines (# of persons/BR) Review all tenant files for eligibility and During lease-up, Staff, PM, Funders Summary of Most for proper file set-up prior to tenant’s Restrictive Eeq’ts occupancy Review random sampling of tenant files: Annually Staff check for tenant eligibility, completeness of file Review waiting lists and waiting list Annually Staff procedure Test for fair housing compliance Annuaully Staff 5 See footnote 1 (page 2). 6 CHAM, (The Consortium for Housing and Asset Management), The Options of Property Management. It discusses the pros and cons of self-management, and includes a checklist to help in evaluating whether self-management is for you. CHAM, 10227 Wincopin Circle, Suite 500, Columbia, MD 21044; (410) 772-2724 LISC, Occasional Paper 2, Selecting a Manager, a Workbook and Forms, from LISC, 733 3rd Ave., 9th Fl., NY, NY 10017; (202) 455-9800 Housing Assistance Council (HAC), Should We Do It Ourselves or Hire Someone Else? A Rural Property Management Planning Guide, from HAC, 1025 Vermont Ave. NW, Washington, D.C. 20005 (202) 842-8600 Sample Asset Management Plan (from CDLC/HDC Training, January 2002) 9
  10. 10. PROPERTY MANAGEMENT RESPONSIBLE FORM, REPORT TASK FREQUENCY PARTY5 OR RESOURCE OCCUPANCY Policy for Rent Collections, Partial Payments, Bad debt write-offs Prior to Initial Develop Policy for Rent Increases Occupancy; Staff & Prop Mgr See Samples Develop Policy for evictions (For cause- Update every 2- w/ Board approval no cause), Progressive Discipline, 3 yrs. Grievance Procedure. Keep current on applicable Ongoing Staff & PM regulations/requirements related to sources of financing, landlord tenant law, fair housing Make sure PM makes payments to Ongoing Staff vendors on time, preferably within time necessary to get discounts Sample Asset Management Plan (from CDLC/HDC Training, January 2002) 10
  11. 11. D. OVERSIGHT OF FINANCIAL PERFORMANCE GOALS FOR FINANCIAL PERFORMANCE OVERSIGHT The primary goal of financial performance oversight is to assure that the project remains financially viable over the life of the project. Specific financial goals include assuring that: • this project’s financial goals are met: □ subsidize other projects and/or organization; □ break even and operate at lowest rents possible; □ other:_________________________________________) • project meets or exceeds minimum debt coverage ratio • rents do not exceed maximum rent levels • required reports are timely submitted • operating and replacement reserves are adequately funded • plans are in place for one-time events (e.g., LIHTC yr 15, OAHTC yr. 20, balloon payments, etc.) • development team meets with others in organization (asset manager, maintenance, accounting) to assure that new projects have updated cost and expense information Further, CDC recognizes that asset management and resident services are two organizational functions that have historically been underfunded in the organization. CDC desires to assure that the costs of these functions is recovered , preferably by the project and if not by the project then by grants or other funding. STAFF AND BOARD ROLES AND RESPONSIBILITIES The asset manager is responsible for seeing that the Project Documents are compiled and available at the organization’s office. The asset manager shall be the contact person for communications between the property manager and the organization. The asset manager is responsible for the monthly review of the financial statements, for calculating financial performance standards, and for the initial review of the annual budget prepared by the property manager. The asset manager shall provide the executive director with a summary report of the performance standards, noting any unusual events requiring executive director and/or board action. The executive director shall provide the Board with regular financial reports related to the project, and shall recommend to the Board any corrective actions required in the event of poor financial performance. The Board (or a subcommittee) shall review the financial performance of the project quarterly and shall approve any extraordinary corrective action required in light of financial non-performance. The full Board shall review the annual audit/year-end financials for the project and shall formally approve the annual project budget. Sample Asset Management Plan (from CDLC/HDC Training, January 2002) 11
  12. 12. FINANCIAL PERFORMANCE STANDARDS RATIO CALCULATION (see below) STANDARD 1. Debt Coverage Ratios NOI / P & I portion of loan payment a. 1st position loan > 1.15 (unless higher DCR req’d) b. all “must-pay” loans > 1.10 2. Turnover ratio No. of moves in month / no. units < % (annualized) 3. Economic occupancy rate NRI/ GRI at least 95% (this means that “economic vacancy rate” is < 5%) 4. Physical occupancy rate No. units occupied / total units at least 95% (this means that “physical vacancy rate” is not more than 5%) 5. Expenses per unit (12 * mo. expenses / # units) < $______ per unit (annualized) 6. Bad debt losses Rents written off / GRI < 2% of gross potential rent 7. Rent loss Economic Vac. Rate + Bad Debt Loss < = 7% 8. Operating Reserves (acct balance / annual budget) = 25% of annual budget 9. Replacement Reserves (acct balance / 5 yrs replacement needs) > 20% 10. Asset Management and quantify actual cost of these services 100% of costs recovered Resident Services Costs 11. Accounts Receivable Accounts Receivable/ EGI <10% The above ratios rely on these calculations: Gross Potential Rental Income = Rental income to project if all units were rented and all rents were (GRI) collected Net Rental Income = Actual rental income collected during period (NRI) Effective Gross Income = Net Rental Income + Other Income (e.g., laundry income) (EGI) Operating Expenses = Total operating expenses during period (includes replacement reserve, pro rata share of one time costs e.g., taxes, insurance, audit, monitoring fee; does not include principal and interest portion of loan payment Net Operating Income = EGI – Operating Expenses (NOI) Net Cash Flow = NOI – all must-pay debt service Sample Asset Management Plan (from CDLC/HDC Training, January 2002) 12
  13. 13. TABLE 4. FINANCIAL PERFORMANCE OVERSIGHT FINANCIAL OVERSIGHT RESPONSIBLE FORM, REPORT, TASK FREQUENCY PARTY7 OR RESOURCE Compile Asset Management looseleaf Developer and/or See Chart of Project binder(s) (See “General Asset Management” lawyer Requirements, tasks), with sample calendar Summary of Each Funder’s Project Req’ts; Prior to Initial Summary of Most Restrictive Proj. Req’ts; Occupancy Calendar of Reporting Requirements; and Updated Operating Budget and “Sources of Funds” Pro Formas Have PM adjust its format for budget and Prior to Initial Staff & PM income/expense statement to match CDC Occupancy desired format (eg, show GRI Insurance: Make sure required insurance is Prior to Initial Staff & PM See Form ____ in place, with proper coverages, limits & Occupancy named insureds/additional insureds Monitor perm loan conversion conditions Lease-up Staff & PM Perm loan docs Review project financials and calculate Monthly PM prepares; Staff Monthly financials; financial ratios reviews Performance Stds Quarterly Board reviews Compare w/ YTD budget Consider accruals & expenses not in PM’s statements Make sure required payments are made (PITI, reserves, etc.) If reserves have been used, for what? was approval given as required? Phone call/meeting with prop. mgr to discuss Monthly Staff problems, potential solutions) Insurance Requirements: Review Risk Annually Staff, w/ PM, ins. Management issues, Update insurance agt Property Tax Exemption or Valuation Annually Staff (PM) File w/ Assessor Prepare Annual Budget Annually PM prepares Annual Budget Update and verify correctness of Max. Timeline: draft budget; Form Rents, Tenant Incomes, and Utility budget to Bd for Staff reviews; Allowances; approval by Board approves Do phone survey for current Market Rents Nov., to allow for Compare YTD expenses with last 2-3 30 days notice to years and with other projects, anticipating tenants & likely out-of-ordinary increases such as implementation insurance or utilities; starting Jan. 1 Identify any one-time or extraordinary needs for upcoming year (eg, balloon payments, additions to reserves, deferred maintenance); Determine need for rent increase, timeline for implementation; 7 See footnote 1 (page 2). Sample Asset Management Plan (from CDLC/HDC Training, January 2002) 13
  14. 14. FINANCIAL OVERSIGHT RESPONSIBLE FORM, REPORT, TASK FREQUENCY PARTY7 OR RESOURCE Review Annual Audit and Year-End Financial Annually Staff & Board Statements Did accountant re-categorize any expenses (e.g., from maintenance to capital expense) or add organizational expenses attributable to project? Check “Notes” section of audit Make sure that income tax filings are made Annually timely (incl. K-1s to partners if applicable) Prepare required financial reports to funders Annually or as Staff, PM See Forms ____. and to board required _____, ______ Prepare for and participate in monitoring by As required Staff, Board & PM funders Evaluate & plan for “end of term” situations (e.g., balloon payment dates, 16th year for tax credit projects, yr. 20 for OAHTC); transfer of reserve accounts Staff & Board Evaluate refinancing options. Workouts – In event of poor financial performance, identify causes and develop solutions Sample Asset Management Plan (from CDLC/HDC Training, January 2002) 14
  15. 15. TABLE 5. SUMMARY OF PROJECT REQUIREMENTS BY FUNDER Funder Name: ___________________________________________________________________ Contact Person: ______________________________________ Title: _________________________________ Address: ____________________________________________________________________ Phone: ________________ Fax:______________ E-mail: __________________________ Amount: $_____________________________ Date of Funding: ___________________ Source: ______________________________ (e.g. HOME, Housing Trust Fund, etc) Grant Loan Loan Term: _____ yrs. Amortization Period: _____ yrs. Int. Rate: ____% OAHTC? ___ (Y/N) Monthly P&I Payment: $______ Must make loan payment? or Make payment if cash available Loan Position: First Subordinate: ____ position Debt Coverage Ratio: _________ Other (e.g. deferred payments, interest only, balloon payment): ___________________ Equity LIHTC Other equity: ___________________________________________ Other Subsidy (e.g., rental assistance, property tax exemption): ___________________ Requirements and Restrictions Special Needs Population: ___________ No. of Units: ___ Preference or Requirement? (circle) Maximum Rents _____ units at _____% AMI (area median income); _____ units at ____% AMI Rent increase restrictions: __________________________________________ Tenant Incomes at Initial Occupancy: ___ units at ___% AMI __ units at ___% AMI at Recertification: __________________________________________ Lease Restrictions Prior Approval of Lease and/or changes Minimum Lease Term: ________ Good cause eviction? __________ Grievance Procedure? __________ Special Notice Provisions ________________________________ Reserves Replacement Reserve: $__________ per unit per year Operating Reserve: $__________ Insurance Property insurance $__________________ (coverage amount) Liability insurance $__________________ (coverage amount) Rent loss insurance ________ months Name funder as additional or named insured? (circle appropriate) Notice to funder required before termination? No. of Days: ______ Reports Audit Other financial statements? _________________________ Other reports: _____________________________________________ Frequency (monthly/quarterly/annually/other): _________________________ Monitoring Site visit every ___ years, starting ____________ (year) Number of Yrs Restrictions in Place _______ yrs. Expiration Date: _____________________ Sample Asset Management Plan (from CDLC/HDC Training, January 2002) 15
  16. 16. E. PHYSICAL PROPERTY GOALS FOR OVERSIGHT OF PHYSICAL PROPERTY: The primary goal related to oversight of the physical property is to make sure that the project is maintained well and that long-term needs are planned for and taken care of. CDC’s goal is to assure that the project is being properly maintained to provide decent, safe and sanitary housing for its occupants and to enhance the neighborhood in which it is located. More specifically, this means that over the expected useful life of the project, CDC’s goals are that: • the project meets acceptable building, housing code and maintenance standards • maintenance tasks and inspections are performed in a timely manner • capital replacement needs are identified and quantified, and replacement reserves are adequately funded and appropriately used STAFF AND BOARD ROLES AND RESPONSIBILITIES The asset manager is responsible for seeing that the Project Documents include as-built plans and specs, appliance manuals, systems manuals (HVAC, irrigation, etc.) and that they are available at the organization’s office. The asset manager shall be the contact person for communications between the property manager and the organization. While the asset management staff is primarily responsible for oversight of the physical property, other staff in the organization must be consulted to fulfill the above goals. The maintenance team should meet with the organization’s housing developers to assure that new projects are well-designed, with durable materials, to assure long-term viability. Likewise, project financing should make adequate allowances for maintenance costs and major repairs and replacements. PERFORMANCE STANDARDS Turnover Time Custodial maintenance done within 2 weeks Make unit ready: 6 working days Re-lease unit: 10 working days Work Orders: Work on work orders = 100% Preventive Maintenance: 90% of preventive Inspections: 100% of units every year maintenance inspections and servicing completed within 14 days of schedule; remaining 10% within Energy Usage: not more than 3% increase in 30 days of schedule. consumption per year Emergency requests done within 24 hours Curb Appeal: Clean site daily, to present a pleasing curb appeal at all times Routine Requests done within 3-7 business days Sample Asset Management Plan (from CDLC/HDC Training, January 2002) 16
  17. 17. TABLE 6. OVERSIGHT OF PHYSICAL PROPERTY OVERSIGHT OF PHYSICAL RESPONSIBLE FORM, REPORT, PROPERTY TASK FREQUENCY PARTY8 OR RESOURCE GENERALLY: Review plans and specs Design phase Asset manager, and development budgets to assure that long- with developer, term physical needs of project are adequately maintenance staff addressed & PM MAINTENANCE AND INSPECTIONS Create a Preventive Maintenance Guide, Prior to Initial Asset Manager, Maintenance Plan with priorities for different types of repairs Occupancy Gen. Contractor, Create a Building Systems Manual. Vendors Conduct Drive-through inspection of Monthly Staff &/or Board property Review work order summaries, inspection Monthly Staff reports Conduct Inspection of unit interiors, exterior Annually Staff Inspection forms, and common areas such as HUD 52580 Review all purchases for reasonableness/approve purchases by agent above the established spending limit. EMERGENCIES Develop and post Emergency Contingency Plan (for fire, flood, loss of power or water, etc.) Perform drills to test emergency plan Annually Staff (PM) LONG-TERM CAPITAL IMPROVEMENTS Develop/revise capital budgets. Prior to Initial Bldr, Staff, PM Contract language Occupancy in builder contract Update capital replacement plan; Annually Staff w/ Bd apprvl Review change orders for their management & maintenance implications Assess physical condition and determine repair/replacement and capital improvement needs. 8 See footnote 1 (page 2). Sample Asset Management Plan (from CDLC/HDC Training, January 2002) 17
  18. 18. F. RESIDENT AND COMMUNITY RELATIONS GOALS OF RESIDENT AND COMMUNITY RELATIONS OVERSIGHT It is the goal of CDC to provide opportunities that extend beyond “bricks and mortar,” by providing residents with access to services appropriate to the identified needs of the project’s target population, by giving residents a voice in property operations, by giving residents an opportunity to develop resident leadership skills, and generally to facilitate resident empowerment. As noted in the “Financial Oversight” section, CDC recognizes that resident services is one of the organizational functions that has historically been underfunded in the organization. CDC desires to assure that the costs of this function is recovered , preferably by the project and if not by the project then by grants or other funding. The project shall have a Resident Services Plan, which will address the following areas: • identify services appropriate for the resident population (e.g., information and referral, health-related services, job training/job placement, educational (day care, tutoring, GED/adult ed, parenting, computer training), counseling (legal, consumer, family. drug), recreational and arts, transportation), • will they available on-site or off-site, • what equipment, materials, space and staffing is needed, • how will they be paid for, • are contracts for services needed/in place; • what are responsibilities of staff and PM (and resident mgr); • will additional insurance be required? The project shall have a Resident Participation Plan, which will cover the following areas: • how will residents participate in project decision-making? • Will there be a formal grievance procedure for tenants and/or applicants? • Will tenants facing eviction or other disciplinary issues be referred to social service agencies? • Will there be a residents’ association.—what role will it play, how will it be sustained, what training will be provided? • What are the expected costs of implementing the Plan and the intended sources of payment? In addition to addressing resident needs, CDC desires that this project is an asset to the community. CDC’s intent is not simply to build housing, but also to build a neighborhood. CDC will ask for community input during the design phase, and will work to assure community satisfaction during the operations phase. When appropriate, CDC will offer services to the community that are also offered to residents. CDC will encourage its residents to participate in their community, through such programs as NeighborWatch. STAFF AND BOARD ROLES AND RESPONSIBILITIES The Board of Directors shall adopt a Resident Services Plan and Resident Participation Plan. The asset management staff is responsible for quantifying and funding the expenses related to resident services and resident participation. CDC recognizes the potential conflicts that on-site resident managers face when trying on the one hand to enforce rules and trying on the other hand to see that resident services and resident participation programs are effectively provided. Therefore, CDC’s Resident Services Coordinator shall oversee these areas, while relying on the Property Manager to inform the Resident Services Coordinator of tenants who could benefit from such programs. In the event there is a question as to whether CDC or Property Manager is responsible for a particular task, the Resident Services Coordinator shall consult with the Asset Manager, who shall be the primary contact with the Property Manager. Sample Asset Management Plan (from CDLC/HDC Training, January 2002) 18
  19. 19. PERFORMANCE STANDARDS Resident and community surveys disclose ___% of residents and community members are satisfied with the Project. For Resident Services, evaluation will be based on the extent to which identified services are provided, the level of tenant participation, the number of youths graduating from high school, the number of adults joining the work force, the percent of children receiving inoculation, the number of households using computer room. Other factors to consider include the number of vandalism incidents and the number of other criminal incidents. For both resident services and resident participation, ___% of the costs of such activities is funded from either the project budget or outside sources (other than being subsidized by the organization). TABLE 7. RESIDENT AND COMMUNITY RELATIONS OVERSIGHT FORM, RESIDENT AND COMMUNITY FREQUENCY RESPONSIBLE REPORT, OR RELATIONS TASK PARTY9 RESOURCE Adopt and periodically update the Resident HCS Resident Services Plan Services Plan Review Plans & Specs: evaluate need for physical space for res. services (e.g., community rm, office space, equipment, Staff and Board, Design Phase, playground) and resident security (e.g., with PM & and every 2-3 yrs lighting, fencing); does design include such resident input space, are improvements needed? Adopt and periodically update the Resident RD: 7 CFR 1944, participation plan: Part L (1944.551- .559) Review Pro Forma Operating Budget and Design Phase and Staff , w/ PM annual budgets: does it include expenses for annually input res. services (e.g., staff, materials, contracts with other agencies) Assure that Res. Svcs Plan & Res. Quarterly Staff (with PM Participation Plan are implemented input) Hold tenant meetings Ongoing Staff Publicize project in community Ongoing Staff Maintain tenant demographics database Annually Staff, w/ PM (income, family size, where tenants move from/to, etc.) Survey tenants and former tenants: resident Every 2-3 yrs Staff, w/ PM services, tenant satisfaction Get feedback from tenants, neighbors, local Every 2-3 yrs Staff, w/ PM government and funders 9 See footnote 1 (page 2). Sample Asset Management Plan (from CDLC/HDC Training, January 2002) 19
  20. 20. G. REPORTING, RECORDKEEPING AND MONITORING GOALS It is the CDC’s goal to provide needed data and reports to appropriate persons in a timely fashion, to maintain files as required and for required time periods, to participate in monitoring of the project’s records and property, and do all this to the satisfaction of the project’s funders. ROLES AND RESPONSIBILITIES Compliance with reporting and recordkeeping is primarily the responsibility of the Property Manager. The asset manager is responsible to see that these activities are performed satisfactorily. It is expected that asset management staff and the Property Manager will also participate in monitoring, with the Board of Directors providing input as needed. PERFORMANCE STANDARDS Full compliance with all reporting and recordkeeping requirements that would otherwise result in adverse findings is required. (For example, if this is a federal tax credit project, any noncompliance may result in issuance of an IRS Form 8823, and therefore is unacceptable.) Where funders provide an opportunity to correct findings without prejudice to the project, substantial compliance is acceptable, provided that any findings are satisfactorily resolved without prejudice to the project or the organization. In addition to containing the proper information, files should be organized so that the information is readily available. Every tenant file should contain an application (containing information on household composition, income, and assets, and dated prior to move-in), screening information, a lease (signed and with all blanks filled in), tenant certification, third party verifications, timely recertifications and verifications (completed within one year of the previous certifation/verification) TABLE 8. REPORTING, RECORDKEEPING AND MONITORING REQUIREMENTS Note: There are additional reporting and recordkeeping requirements found in each of the other sections of this Plan. REPORTING, RECORDKEEPING AND RESPONSIBLE FORM, REPORT, MONITORING TASKS FREQUENCY PARTY10 OR RESOURCE See “General Asset Management” tasks for Developer See sample compiling Asset Management looseleaf calendar binder(s), with Calendar of Reporting Requirements Make sure timely reports to funders are As required Staff or PM See “Project provided. (usually annually, Requirements” more often Chart during 1st year) Provide timely reports to Board of Directors Quarterly Staff Review Annual Audit or other annual Annually Staff financial statement Review annual tax return(s); provide K-1s Annually Staff & to partners, if applicable accounting 10 See footnote 1 (page 2). Sample Asset Management Plan (from CDLC/HDC Training, January 2002) 20
  21. 21. REPORTING, RECORDKEEPING AND RESPONSIBLE FORM, REPORT, MONITORING TASKS FREQUENCY PARTY10 OR RESOURCE Attend compliance and monitoring Ongoing Staff workshops and get certified as appropriate; have available applicable program manuals from administering agencies (e.g., HOME project manual, LIHTC Compliance Manual) Prepare for Monitoring Visits Per funder’s Staff, Board, PM schedule Make sure complete applicant and tenant files are kept, in an organized manner to facilitate third party review Make sure PM files required property tax forms for exemption or for valuation challenge, if applicable. A Good Asset Manager Has Lots of Looseleaf Binders (Photo courtesy of NPF: Ellen Marie Hannan photographer; Pietro Ferrari binder-keeper) Sample Asset Management Plan (from CDLC/HDC Training, January 2002) 21

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