Achieving maximum occupancy: Tip #1
In any rental housing endeavor — whether public housing or private rental housing — occupancy is the lifeblood of the business. Your agency cannot collect rent on an unoccupied unit; nor can it receive subsidy from HUD for those units, generally speaking. In light of ever-decreasing public housing subsidy, it's essential to keep your units filled.
HUD measures PHA performance related to occupancy through the public housing assessment system (PHAS). The four indicators under PHAS are:
These four indicators are all interrelated, and poor occupancy rates can negatively impact all of them. That is, without the money that occupied units generate, it's difficult to keep the physical condition of the properties in decent, safe, and sanitary condition, and in good repair. In turn, renting a unit in poor physical condition is more difficult, causing the occupancy rate to sink further. That means even less money to do upkeep on the housing stock, creating a vicious circle. It's crucial that property managers understand the importance of keeping units filled.
Tip #1: Be aware of how PHAS measures occupancy.
Under PHAS, occupancy is scored twice: under the management operations indicator and under the capital fund indicator. Under management operations, it's measured by development, based on information which is entered into the financial data schedule (FDS) at the end of the PHA's fiscal year. It's measured again under capital fund, but for the entire public housing portfolio rather than the individual developments, and the data comes from HUD's Public and Indian Housing Information Center under the Inventory Management System (IMS/PIC).
The management operations indicator is worth 25 total points, 16 of which are contributed by the occupancy subindicator. In order to achieve the full 16 points, a public housing development must achieve an occupancy rate of 98 percent.
A detailed breakdown of how points are awarded by occupancy
rate under the management operations indicator can be found in
the Federal Register Notice on Management Operations Scoring.
The PHA's overall score for management operations is based on the sum of the unit weighted averages for all the public housing developments, divided by the total number of public housing units in the PHA's portfolio. This means that if one development has very poor performance in occupancy, it will most likely have an effect on the overall PHA score.
For each development, the occupancy rate for management
operations scoring is based upon the unit months leased divided
by the unit months available. Unit months leased means the
number of months within the assessed fiscal year that each unit
was actually occupied. Unit months available means the number
of months within the assessed fiscal year that each unit
was potentially available for occupancy.
Under the capital fund indicator, occupancy rate is one of two subindicators, the other being timeliness of fund obligation. This is important to note because the PHA must first receive all the points available for the timeliness of fund obligation subindicator in order to receive any of the five total possible points for occupancy rate. Remember, this measurement is taken using data in IMS/PIC for the PHA's entire public housing portfolio rather than by development.
A detailed breakdown of how points are awarded by occupancy
rate under the capital fund indicator can be found in
the Federal Register Notice on Capital Fund Scoring.
PHAS is scored based on a 100-point system, 21 points of which (16 in management operations and 5 in capital fund) come from occupancy. That's nearly a quarter of the overall PHAS score! Poor occupancy will have a negative impact on performance in the physical and financial areas as well.
It's safe to say that if each property manager is maximizing their occupancy rate, the PHAS occupancy and overall scores will reflect it.
Next: Achieving maximum occupancy: Tip #2
Terry Provance has been a trainer and consultant at Nan McKay and Associates since 1999. He specializes in the public housing program and is responsible for writing and keeping staff updated on asset management materials. He recently took the lead role in creating and developing NMA's new PH Occupancy Tracking Tool, which can be used by any rental development, whether or not it's HUD-assisted, including mixed finance and LIHTC properties.
