Moving to Work (MTW) - PHA Stories

Overview

This “Spotlight” describes two MTW agencies’ experiences in the past year with converting to project-based management (PBM).  While MTW flexibility is not required for implementing PBM (in fact, any public housing authority may implement PBM), the two MTW agencies profiled below, King County Housing Authority (KCHA) and Housing Authority of Portland (HAP), determined that this change would be an important and central component of their broader MTW strategies.  In the case of KCHA, the agency wanted to demonstrate to equity partners its capacity to manage its HOPE VI project following revitalization.  HAP determined that the transition to PBM would strengthen the agency’s ability to undertake its various MTW initiatives.  The two brief “case studies” below provide insight into the conversion process, highlighting some generalized observations.  The lessons learned in the two agencies’ experiences are especially instructive for any PHAs currently considering the conversion to PBM.

With KCHA and HAP’s recent conversion to PBM, the agencies have assigned significant new authority and responsibility to their housing managers for functions that previously were centrally arranged or provided. Also in both cases, the agencies decided first to implement in one region before expanding agency-wide.  The motivation behind converting to PBM has been fueled by a number factors, including:

• Improving management responsiveness;

• Reducing operating costs, including overhead;

• Managing public housing more in line with other operators of affordable housing; and

• Stemming possible subsidy losses under the pending Operating Fund Rule through early conversion to PBM.

It should be noted that both agencies own more “affordable” housing (tax credit, bond-financed, Section 8 New Construction, etc.) than public housing, nearly all of which are privately managed. As a consequence, these agencies have extensive and quite successful experience in real estate finance, development, and asset management. These collective experiences have helped inform the structure of their PBM programs.

Housing Authority of Portland

The HAP owns approximately 2,300 public housing units and another 3,600 affordable units. It recently demolished its oldest and largest public housing property, Columbia Villa, which is being rebuilt under the HOPE VI program but will be privately managed. 

In past years, the agency has been divided into three management regions, each with about 1,000 units (which included Columbia Villa) and supervised by regional managers.  The maintenance department was separate from management. A central maintenance department oversaw many specialized trades (electrical, plumbing, carpentry, etc.) but also a central preventive maintenance team, a central trash crew, and a central vacant unit preparation team (which at one time had been contracted out but had recently been brought in-house to off-set the impact of personnel cuts from, among other causes, the demolition of Columbia Villa). In addition, regional maintenance supervisors oversaw maintenance crews that were responsible for building cleaning and routine work orders.

Prior to PBM, housing managers, as well as assistant housing managers, were assigned either to specific buildings (where there were sufficient units to support dedicated staffing) or to clusters of buildings (where grouping properties made economical sense in terms of staffing). As is typical under centralized management systems elsewhere in public housing, housing managers had limited authority over the operations of their properties. For example, they did not supervise/direct maintenance, they did not order their own goods or supplies, and they had only limited knowledge of the costs to operate their buildings.

The agency decided to begin PBM in its West Region, which has 633 units.  (This region would later be consolidated with a second, smaller region so that there would eventually be just two regions, and two regional managers, each responsible for around 1,100-1,200 units). The agency wanted each property grouping to be essentially self-sufficient in terms of staffing and responsibilities. The managers would collect rent on-site, receive and respond to work orders, prepare units for re-occupancy, order needed goods and supplies, lease units, etc. In other words, they would be responsible for the same functions as performed by their peers in conventional housing.

With the above vision in mind, early planning tasks were centered around five major areas:

• Property groupings. Did the agency’s long-standing property groupings make sense under a PBM model? Should certain properties be disaggregated and managed separately? Should other properties be combined to make more sensible groupings?  The decision over whether to change the existing groupings was essential in that it would drive both personnel assignments and financial reporting. (In the end, modest changes were made to the existing groupings, in part because the agency has fewer “small” properties and the agency already assigned housing managers to its bigger sites.)

• Staffing needs. Once the groupings were firmly established, the next major planning task was to determine the ideal management and maintenance staffing for each property. Previously, management personnel had more limited responsibilities. Now, they would be taking on expanded administrative functions (opening/closing work orders, purchasing, etc.), which would affect the number and type of personnel needed. Additionally, maintenance personnel were previously regionally- or centrally-assigned. The agency would need to determine both the number and mix of maintenance staff necessary to support each property grouping. (The experience of the agency with its affordable housing program was of great benefit in developing appropriate staffing plans and ratios.) These “ideal” staffing models would then need to be compared with existing staffing levels.

• Systems. For those functions that were changing (procurement, work order intake, etc.), the agency needed to figure out how to enable those tasks to be performed at the site level – and also still provide proper controls.  The agency’s MIS system, for example, had been developed around a centralized purchasing system. It did not readily enable purchase orders to be generated by the housing managers.

• Project-based budgeting and accounting. In order to expand substantially the responsibilities of the housing managers, particularly in the area of purchasing, each property would need to have its own budget, against which performance would be measured monthly. But what should be the operating budget assigned to each property? Previously, the agency maintained mostly a centralized accounting system. Consequently, there was little history of what it should cost to operate each property. (Here, again, the operating experience of the agency’s affordable housing program was invaluable.)

• Implementation plan. Lastly, the agency needed to put together a plan of action and communicate that plan with all staff. Would PBM initially be implemented agency-wide or within a specific region? Would all affected tasks be decentralized at once or would they be staged – say, first work orders and then rent collections? How quickly could supporting changes be made to the agency’s MIS system? What about training of personnel?

The West Region was “substantially” decentralized in May 2004. The agency then converted the remaining properties in September 2004. Except for a two- or three-person maintenance crew retained in each region, as well as a few centrally assigned technicians, the housing managers now oversee the maintenance of their properties. Work orders are taken in the manager’s office and assigned to on-site staff. The managers are also responsible for ordering their basic supplies and materials. Certain “blanket” contracts are arranged centrally, but the sites access them directly. Although rents are still collected through a lock-box, the agency will switch to site-based rent collections on April 1, 2005. The agency also intends to implement site-based waiting lists at that time (it must first amend its admissions policy). 

King County Housing Authority

The KCHA owns approximately 3,300 units of public housing and 4,400 local affordable units. It, too, has long operated under a fairly centralized management structure, with limited authority and responsibility provided to housing management personnel. In fact, management personnel have operated from regional offices, which are mostly located at the largest property within each region. Except for the properties that house the regional offices, the agency does not maintain on-site management offices.

Like the HAP, the KCHA decided it was best to pilot test PBM in one area, the South Region, representing 748 units.  Among these 748 units, however, were two “affordable” properties, totaling about 150 units, that the agency was refinancing using low-income housing tax credits (all other units in the region were public housing). Importantly, the agency wanted to show success in self-managing these two tax-credit properties as evidence of its ability to manage its upcoming HOPE VI project.

At the KCHA, both the planning tasks, and the ultimate structure of the PBM program, were quite similar to the HAP’s. However, there were many more logistical considerations, requiring a longer planning period, as a result of the following: 

• First, the KCHA owns many more smaller properties. What is the best way to implement PBM for a portfolio of small properties? What is the proper staffing structure for small properties? When should smaller properties be “stand-alone” in terms of staffing and when should they be combined into larger groupings for management purposes? Ultimately, the agency decided that there would be six property groupings in the South Region, or about 125 units per housing manager.

• Second, because the agency had managed from regional offices prior to PBM, few properties had “ready-to-go” management offices. The agency had to decide where to locate housing management personnel (which buildings) and had to outfit those offices with necessary equipment, furniture, etc. Then, it needed to arrange for this equipment to be installed. (In the case of the HAP, the offices were already functional, with terminals, printers, phone lines, etc.)

The agency began planning for PBM in the Winter of 2004 and “converted” the South Region on October 1, 2004. The basic shape of the program looks much like the HAP’s.  Key elements include the following:

• For each property or property grouping, there are now dedicated management and maintenance personnel. With the exception of a central trash crew and three regionally-assigned maintenance staff (including a painter), the on-site maintenance staff are expected to perform all day-to-day maintenance tasks, from cleaning to vacant unit preparation. When there’s peak demand (say, an unusual number of move-outs), the sites get support from the regional crew or they access a blanket service contract.

• Each property has a dedicated operating budget.

• Each property is responsible for receiving/closing work orders and ordering goods and supplies (up to $500 without approval of Regional Manager). Various blanket contracts are available for commonly ordered goods.

• As with the HAP, the agency has established a task force to recommend how/when to decentralize the waiting list. However, the agency will retain its central lock-box system for rent collections, which it finds effective.

The agency indicates that the pilot program is progressing well and that it plans to implement PBM agency-wide in 2005.

Comments

Some generalized experiences of these two agencies include:

• As a result of their efforts, these agencies are well ahead of the requirements for implementing PBM, as contained in the draft Operating Fund Rule produced by the Negotiated-Rulemaking Committee (June, 2004).

• There are a substantial number of purely logistical considerations required in any conversion – from making sure that a site office has furniture and equipment to creating new computer access codes to allow a manager to enter work orders on-site – that require careful consideration and planning. The more “centralized” an agency has been, the greater these logistical issues will be.

• Similarly, PHAs can anticipate that significant changes will be required in their MIS systems. These MIS systems have previously supported mostly centralized management structures. They will now need, where applicable, to enable on-site personnel to collect rent, receive and close work orders, issue purchase orders, maintain a waiting list, etc. Likewise, management and financial reports will need to be re-tooled to focus on property-level performance. 

• Converting to PBM has major implications in the area of personnel – the number of staff, job requirements, compensation, training, etc. These personnel issues, too, require careful planning.  Both agencies have collective bargaining agreements that cover their maintenance and (most) housing management personnel. These agreements influenced decisions regarding staffing levels and assignments. Both agencies found that much of the new training (budgeting, work order intake/close-out, procurement, etc.) could be done with in-house staff. For example, the centralized purchasing staff provided the training to the housing managers on site-based purchasing. Utilizing in-house staff for this type of training helped in teaching the idiosyncrasies of any agency’s particular systems.

• PHAs will need to re-examine their existing property groupings to determine what makes the most sense for PBM. Are some properties currently grouped together but should be split into more manageable groupings? Alternately, how should smaller properties best be handled? Should these smaller properties be aggregated into larger clusters? Which properties are large enough to support dedicated personnel?

• In order to capture the true costs of operating each property, and to produce financial reports to that effect, significant changes can be expected in an agency’s accounting practices. It is not unusual, for example, for housing authorities to assign property insurance to a central cost center rather than charging each property its actual (or pro-rated) insurance premium. Agencies must also find ways to charge each property for any centrally (or regionally) provided maintenance or for agency overhead. It is also helpful to plan in advance both the format for site-based financial reports and the role of the site managers in approving invoices. If the managers are going to approve invoices for goods they ordered, and if vendors had previously forwarded those invoices directly to accounting, the agency will need significant lead-time to change it accounts payable practices.

• The use of an action plan/strategic plan, listing key dates and responsibilities, is a beneficial planning tool to be used by senior staff to monitor the conversion process.

Finally, both agencies stress the need to start the process early and to communicate with all staff the goals, purpose, and meaning of PBM. The conversion to PBM can be a huge cultural change for an organization. It is extremely helpful that there first be a common understanding or vision of where the agency wants to go and what PBM will look like for all departments once conversion is complete. Virtually every sector of the organization will be affected. Both agencies utilized a PBM steering committee that included representatives from affected departments and that became a conduit for information. Understandably, staff will question why long-standing procedures and protocols need to change. An agency must be prepared to address these issues and concerns. Also understandably, successful conversion requires support and focused direction from senior staff. The leadership of senior staff is key to overcoming the barriers of comfort that impede the adoption of new habits.