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HUD Albuquerq

ue Multifamil

y

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 ability to manage

risk

Increases accountabi

lity

Improves national

consistency

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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 ModelMultifamily Asset Management

Account Executiv

e

Today’s Project

Managers

Focus on non-

troubled properties

Troubled Asset

Specialist

New position

Focus on troubled

properties

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Streamlined Organizational Model

Consolidate 17 hubs to 5

hubs

Streamlined decision-

making

Enhanced accountabi

lity

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Timeline

All Waves will be complete by Spring 2016

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)

MFT will take place over five Waves

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Action Plans

• MPIP: Marketing and Physical Improvement Plan

• EMPIP: Expense Management and Process Improvement Plan

• CP: Capital Plan

Three types of 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.

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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 PlanFor 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

• Discuss HUD’s observations and solicit owner’s feedback

• Establish reasonable benchmarks

• Prioritize tasks• Establish timeline

HUD initiates meeting

with owner

• Submit monthly updates to HUD

• Assess effectiveness of plan• Close monitoring, extend

timeline, or take further action

Once Action Plan is

approved

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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•Michael.A.Gamez@hud.gov