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Operating Fund

This Website serves to link professionals working in public housing with program requirements, supplemental guidance, announcements of related training opportunities, and other helpful materials associated with the public housing Operating Fund.
 

Overview

In contrast with funding PHAs at the entity level (pre-asset management), the final rule establishes a system of project-based funding, one of the first building blocks of asset management.

Under project-based funding, PHAs will complete a separate subsidy form for each project. A major component of a project's subsidy calculation will be its Project Expense Level, or PEL. The PEL is a model-generated estimate of the cost to operate the project, excluding utilities and taxes. It is based on the costs of operating other federally-assisted housing projects with similar characteristics (building type, location, number of bedrooms per unit, etc.)

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Overview

Along with project-based funding, PHAs will be required to undertake project-based budgeting, the next building block of asset management.

Essentially, project-based budgeting means that operating budgets will now be completed at the project-level as opposed to the PHA or entity-wide level.

  • Primarily, project-based budgets will be used for internal PHA planning purposes.
  • Project-based budgets must be approved by the PHA's Board prior to the start of each fiscal year.
  • However, these budgets will not be subject to HUD approval, except in the case of non-performing properties.
  • HUD does prescribe a specific budget format although the budget should reconcile to the updated Financial Data Schedule or FDS.

Overview

The third core reform under asset management is project-based accounting. Project-based accounting provides the ability to track financial performance at the project-level. Ultimately, project-based accounting provides the necessary information to make effective decisions at the project-level.

  • As with other federally-assisted housing programs, PHAs will be required to submit to HUD year-end financial statements on each project. These financial statements will include revenue, expense, and balance sheet items.
  • Further, PHAs will only be able to charge projects for services actually received. For example, in accounting for project costs, PHAs will not be permitted simply to spread the cost of central maintenance across projects.
  • Lastly, any overhead fees and any fees for centrally-provided property management services, must be considered reasonable. This means that the costs must not exceed what other efficient operators would incur for those same services in the local market.

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Management Fees

Overview

As part of asset management, PHAs must also convert to project-based management (PBM), the forth building block of asset management. As stated in 24 CFR 990.275:

PBM is the provision of property-based management services that is tailored to the unique needs of each property, given the resources available to each property, Under PBM, [these] property management services are arranged, coordinated or overseen by management personnel who have been assigned responsibility for the day-today operation of that property and who are charged with direct oversight of operations of that property. Property management services may be arranged or provided centrally; however, in those cases in which property management services are arranged or provided centrally, the arrangement or provision of these services must be done in the best interest of the property, considering such factors as cost and responsiveness.

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Resources