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Michigan State Agency Wins National Award for Effective Use of Capital Needs Assessments |
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OSI Wins Major Contract with Michigan State Agency
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National Leased Housing Association (NLHA) Pursues REAC Scoring Problems
NLHA, a leading advocate of the affordable housing development industry, recently published an article about sharply falling REAC scores, and the unpleasant consequences associated with them. The problem has been associated with HUD’s new “reverse auction” process for procuring inspection services. Conceding that we have a viewpoint here – OSI was one of HUD’s national contractors in the REAC inspection program, before the launch of reverse auctions - the article is well worth reading. It can be found at http://www.hudnlha.com.
We would add only a few brief editorial comments. We believe that the costs savings to HUD associated with the reverse auction program are much smaller than NLHA has been led to believe and report. Second, REAC Quality Assurance was significantly under-staffed and over-burdened during the term of our contracts, when contractor quality control was in place to complement it. That function has now been eliminated, and we believe that HUD QA remains badly stressed.
We would welcome feedback on the matter.
OSI Awarded Major Contract by GSA
ON-SITE INSIGHT (OSI), has been awarded a major contract by the General Services Administration (GSA). The Mission Oriented Business Integrated Services (MOBIS) award will enable federal agencies to contract more easily with the firm for its consulting and survey services.
The GSA Multiple Award Schedule has become a preferred contracting vehicle for many federal agencies. MOBIS is designed to provide agencies with expert advice in the area of mission-oriented business tasks. OSI is being awarded contracts for consulting and survey services. The firm qualifies as a small business for federal procurement purposes.
OSI has previously teamed with MOBIS contractors on major procurements in recent years. In 1998, the firm helped Price Waterhouse pilot test HUD’s pioneering Uniform Physical Condition Standards program (review and advice on protocol, testing of hardware and software, quality control etc.). In 2003, OSI teamed with ICF International on an exhaustive Comprehensive Property Assessment of the Section 515 affordable housing portfolio, financed by the USDA Rural Development mission (OSI physical needs assessments informed policy recommendations regarding new regulatory authorities and financial resources to preserve the inventory). OSI is teamed now with ICF again, to assist Rural Development with its Multifamily Revitalization and Preservation program.
“We are thrilled with this MOBIS award. After working successfully with MOBIS teammates on major projects in recent years, it is gratifying to gain our own place on the GSA schedule. A lot of work with the GSA this fall – and twenty years leading up to it – has been rewarded,” stated David Whiston, the company’s President.
OSI on Team Selected by USDA – Rural Development for Major Contract Award
OSI is teaming with ICF International and a number of other firms to provide USDA-RD with services related to its Multifamily Housing Voucher and Revitalization Demonstration Programs. Under the Revitalization Program, RD intends to re-structure loans and implement other steps to preserve the affordable use of existing multifamily properties. Capital needs assessments (CNAs), for which OSI will be responsible, are to be a critical function in the Demonstration. OSI will also advise RD in the areas of CNA review and program redesign.
In addition to OSI, the ICF team includes several of the same firms – the Compass Group and Beekman Advisors - that worked successfully on the Comprehensive Property Assessment of the Section 515 inventory, for RD several years ago. Quadel Consulting, new to the team, will be taking a lead with voucher activities.
Michigan State Agency Wins National Award for Effective Use of CNAs
Michigan State Housing Development Authority (MSHDA) has been honored by the National Council of State Housing Agencies (NCSHA), for its effective use of capital needs assessments in stabilizing its rental housing portfolio. The award, recognizing outstanding innovation in asset management or compliance monitoring, was announced at NCSHA’s annual conference in San Francisco, on September 18. MSHDA estimates that its CNA initiative has helped avert the loss of more than 160 developments from the affordable housing stock. OSI conducted all of the CNAs for MSHDA over the past several years (our CNA contract with the Authority has just been renewed).
You can read more about the award at NCSHA’s web site (http://www.ncsha.org/section.cfm/53/522/1935).
ON-SITE INSIGHT Wins Major New Contract with MICHIGAN STATE HOUSING
DEVELOPMENT AUTHORITY
ON-SITE-INSIGHT has been awarded a major contract with the Michigan State Housing Development Authority (MSHDA). It will entail long-range CNAs of some 219 multifamily properties across Michigan, over the next three years. The dollar value of the contract is $1,047,000. OSI has a held a similar contract with the Authority for the past five years, and has completed more than 265 assignments to date. The pending initiative represents the next round of a six-year CNA cycle.
MSHDA has made CNAs an integral asset management decision-making tool, to achieve the strategic objective of preserving its multifamily portfolio. OSI’s CNA findings form the basis for the re-negotiation of replacement reserve funding arrangements with property owners and management agents. Reserve funding adjustments are typically achieved through escrow transfers, property expense reductions and or rent adjustments. Periodically, they are achieved through mortgage workouts or preservation transactions.
According to MSHDA Director of Asset Management, Donna McMillan, “We are very happy to be moving forward with this next round of work with ON-SITE INSIGHT. The program has been a huge success. To date, we have used CNA data to effect meaningful adjustments in replacement reserve funding, and have averted the loss of many properties from the affordable housing market due to deterioration that otherwise could have accrued.”
"We are thrilled with this new opportunity. It is really gratifying to see our work make a difference in the health of an affordable housing portfolio" commented OSI President David Whiston.
To date, ON-SITE INSIGHT has completed more than 5,000 long-range capital needs assessments and 20,000 basic physical inspections across the country, for a diverse array of public agencies and development sponsor/managers.
ON-SITE INSIGHT’s President, David Whiston, Appears at Rural Housing Conferences in California; Texas and Vermont Upcoming
On July 13th, 2006, Whiston addressed the USDA Rural Development Policy and Procedure Meeting, sponsored by the California Council for Affordable Housing, in Sacramento, California. Approximately 150 Rural Development staff, and Section 515 property owners and senior management representatives, attended a panel discussion on Comprehensive Needs Assessments (CNAs) and Long Range Maintenance Planning. CNAs are a critical element of Rural Development’s 2006 affordable housing preservation demonstration, and are being required in connection with many recapitalization transactions. Whiston conferred closely with RD’s National Office in the preparation of its new CNA guidelines; these draw heavily on Fannie Mae Physical Needs Assessment guidance that OSI created in 1990. Joining Whiston on the panel was RD State Architect Alan Tossman.
The Rural Rental Housing Association of Texas has invited David Whiston to speak at its annual conference in Corpus Christi on September 21, 2006. RRHA is a non-profit organization dedicated to enhancing rural multi-family housing through the promotion of professional apartment management. The topic will be effective preparation for periodic compliance inspections. For several years, OSI has had a contract with the Texas Department of Housing and Community Affairs to conduct basic physical inspections of its tax credit-financed properties in accordance with federal Uniform Physical Condition Standard (UPCS). Whiston will explain the UPCS protocol and ways that property managers can effectively prepare for future inspections.
On November 2nd, 2006, Whiston will speak at the 25th Annual Conference of the Vermont Housing Managers Association, in Stowe, Vermont. The topic will be “How to Use Capital Needs Assessments”. The conference’s sponsor, the Vermont Housing Finance Agency, has made CNAs an integral part of its asset management program. OSI is one of only three firms pre-approved by VHFA to conduct CNAs of its properties. For some time, VHFA has been working to strengthen its CNA standards and guidelines. Toward that end, it is considering adoption of the same Fannie Mae Physical Needs Assessment Guidance that RD is now drawing on.
For Further Information Contact - David Whiston at (781) 449-7752
Awarded Major Contract by Chicago Housing Authority
A major contract with the Department of Housing and Urban Development’s office of Public and Indian Housing (HUD-PIH) has been awarded to OSI. The $140,000 contract will entail physical needs assessments of approximately twenty multifamily developments in the Chicago Housing Authority portfolio. The effort is being conducted in connection with a refinancing of the bonds issued to fund the revitalization of certain CHA properties.
This undertaking will be OSI’s third major effort on behalf of the Chicago Housing Authority. In 1990, the firm conducted an exhaustive assessment of every development in the CHA portfolio; in 1997 OSI repeated its evaluation of all conventional properties, for viability purposes.
The CHA’s Plan for Transformation is aimed at improving the appearance, quality and culture of public housing in Chicago. Approximately 25,000 units of housing will be built or rehabilitated by the end of 2009. The most intensive phase of the Plan will address the Authority’s high-rise family developments, which have been deemed non-viable and are to be demolished. These are being replaced with mixed income communities, comprised of townhomes and low-rise buildings (OSI’s family housing work is focused on existing low-rise developments undergoing comprehensive rehabilitation).
Given the large scope of revitalization activities underway and the limited time to accomplish the effort before a bond refinancing deadline, OSI and its consulting partner, Abt Associates of Cambridge, MA, agreed to an approach whereby the firms model portfolio-wide physical needs based on samples of developments evaluated. These include small numbers of conventional family developments where revitalization is now underway, and larger numbers of conventional senior and scattered site developments, where rehabilitation is further along or complete. OSI is responsible for conducting long range physical needs assessments of a representative sample of developments. Abt has primary responsibility for the statistical analysis and modeling of the needs projections for the subject properties, in order to project aggregate needs for the larger bond-financed portfolios.
Almost every week, we see unit-level heat, ventilation and air conditioning (HVAC) systems with cooling and/or heat recovery coils and condensate pans. While this may seem like an odd time to be thinking about this (New England has been strangely mild so far this winter), effective maintenance of these systems can reduce energy costs year-round, and improve resident comfort.
The operation and efficiency of air conditioning (AC) and heat pump coils is a function of cleanliness. Dirty coils degrade heat-transfer efficiency, decreasing the system’s cooling capacity, and increasing energy demand to meet intended performance. Coils should be cleaned and kept that way. Various industry trade organizations and federal agencies all recommend regular coil cleaning regularly. In the face of rising energy costs, twice a year may be reasonable (spring and fall); the conventional wisdom for a long time has been once a year.
A visual inspection by site maintenance staff is generally adequate. Coils are usually downstream of the air-handling unit, fan-coil unit, or heat pump. Shine a light through the coils. Light dust is acceptable; heavy dirt demands cleaning. (Enhanced fin designs are more difficult to inspect visually, and may require third party help.) Use an alkaline detergent initially; it should break down dirt and biofilm without damaging the aluminum coil fins. An acid-based coil cleaner may be required for scale deposits if they exist.
Cleaning the condensate pan is also very important; dust, rust and other debris can clog drain lines, causing real problems. Backed up pans can allow carryover onto ductwork, which can allow mold or other microbial growth (affecting indoor air quality). Winter is a good time to work on condensate pans; they are usually dry.
When coils and condensate pans are being worked on, this is a good time to clean blower and fan blades. Accumulated dirt on such blades can drastically affect how much air they move. Cleaning them can restore performance but be careful not to dislodge any balancing weights on these blades.
Other system components worth checking are air filters (be sure to use filters specified for your system) and ducts. Some dust in ducts is normal and does not mean they need cleaning; attending to the items above should keep ducts reasonably clean. Some work – replacing coils or other components, or calibrating and adjusting air flows at the registers – may require greater expertise than your site staff should take on themselves. Where this is the case, HVAC service technicians can be brought in.
The EPA has a useful checklist for pro-actively maintaining HVAC systems. It can be found on-line at www.epa.gov/iaq/largebldgs/graphics/hvacshrt.pdf.
Documenting all this work could provide the added benefit of a paper trail in the event of air quality complaints down the road.
Awarded Contract by Hartford (CT) Housing Authority Effort to Entail Physical Needs Assessments of Federally-Assisted Housing
OSI is being awarded a contract by the Hartford Housing Authority, to prepare physical needs assessments of nine federally-assisted developments in the HHA portfolio. These will include conventional elderly and family developments, as well as several scattered site properties.
The assessments will entail comprehensive and detailed field inspections, utilizing OSI’s Observable Systems Approach – 100% of all major site, mechanical and architectural systems, and a representative sample of dwelling units. Using FNMA useful life assumptions (first developed by OSI in 1990), national third party cost sources, and its own rehab-based cost files (adjusted for property-specific circumstances), OSI will project the properties’ future major capital activities and associated costs. Quantitative presentations will be complemented with detailed narratives and photographic documentation. Preliminary reports will be reviewed with senior HHA staff before they are finalized. All work is expected to be completed within 60 days of initiation.
OSI President David Whiston remarked, “We look forward to this opportunity in Hartford; the recent transformation of some of these properties is impressive. When we are done here, we will have reached another milestone - more than two hundred assignments successfully completed in Connecticut.”
David Whiston Contributes in Buildings Magazine
David Whiston, OSI President, recently contributed to the cover story in the June 2006 issue of Building Magazine. The article advises property professionals on an effective, step-by-step approach to their capital budgets. Click on the following link for the full article.
http://www.buildings.com/Articles/detailBuildings.asp?ArticleID=3162
President David Whiston Participates in Panel Discussion of Rural Housing Conditions, Preservation Initiatives
David Whiston participated in a panel discussion regarding affordable housing preservation at the mid-year meeting of the Council of Affordable Rural Housing (CARH) in San Francisco. The focus of the January 23 panel was the new preservation initiatives being undertaken by the U. S. Department of Agriculture – Rural Development (Rural Development), to protect and revitalize its portfolio of 17,000 affordable rental developments. Whiston addressed the physical circumstances of this portfolio, and the agency’s new guidelines for assessing properties’ physical conditions.
ON-SITE INSIGHT has been actively engaged with the Rural Development multifamily inventory for some time. In 2003-04, the firm conducted more than 300 physical needs assessments across the country, in connection with a Comprehensive Property Assessment of the agency’s Section 515 portfolio. Since 2004, OSI has undertaken more than fifty capital needs assessments of Section 515 developments across the country, for Rural Development and sponsor/managers, in connection with various preservation transactions. OSI’s Whiston has also conferred extensively with Rural Development national office staff in the development of the agency’s new guidelines for such assessments, a cornerstone of its preservation initiatives.
Whiston commented, “No other agency has done as much as Rural Development to put the physical condition of its assets at the forefront of its preservation efforts. This is commendable given the critical role that this inventory plays in rural America. We are gratified to be working as closely as we are with the agency on this important undertaking.”
TEXAS DEPARTMENT OF HOUSING AND COMMUNITY AFFAIRS Renews Inspection Contract to ON-SITE INSIGHT
ON-SITE INSIGHT (OSI) announced in February, 2006 the renewal of a major inspection contract with the Texas Department of Housing and Community Affairs (TDHCA). The $200,000 contract will entail the physical inspection of approximately 265 multifamily properties developed through the Housing Tax Credit program. This will double the workload that the firm handled for TDHCA in 2005. “We look forward to continuing with ON-SITE INSIGHT on this inspection program. It is critical to our tax credit compliance efforts, and the firm did first-rate work for us last year.” commented Patricia Murphy, TDHCA’s Compliance Manager.
The Internal Revenue Service has established regulations regarding compliance monitoring of housing developments financed through the federal Low Income Housing Tax Credit (LIHTC) program. State tax credit agencies must inspect new LIHTC properties within two years of being placed in service, and periodically (every three years) thereafter. In the interest of cutting through myriad local and state codes across the country, the regulations strongly encourage the use of HUD’s Uniform Physical Condition Standards (UPCS) for inspection purposes. TDHCA is one of a number of agencies to delegate inspections to private contractors.
OSI brings to this effort considerable experience with basic housing inspections, particularly in the UPCS field. Between 1998 and 2005, the firm completed approximately 20,000 UPCS property inspections in 35 states, for HUD’s Real Estate Assessment Center (REAC). It has also done extensive UPCS-conforming inspection work for an array of other state housing agencies (including Connecticut, Massachusetts, Michigan, New Hampshire, and Pennsylvania), and private lenders. The firm has been involved in all aspects of automated inspection activity - from inspector recruitment and training, to scheduling and logistical coordination, technical support, quality control and client relations.
ON-SITE INSIGHT Principals Contribute to New Affordable Housing Guide
Two OSI principals made a primary contribution to Recapitalizing Affordable Rental Housing: A Handbook for Nonprofit Owners. The handbook was published by the Local Initiatives Support Corporation (LISC), with support from the Fannie Mae Foundation, The Home Depot Foundation, and Living Cities.
Thousands of existing affordable rental properties across the country need some form of recapitalization to remain viable. The LISC guide is intended to assist nonprofit community development corporations (CDCs) with the demands of a complex rehabilitation and redevelopment process.
OSI Principals Edward Daly and David Whiston co-authored a chapter on physical needs due diligence related to recapitalization transactions. Other chapters address general revitalization strategies including working with partners, renewing property-based subsidy assistance, the types and merits of financial resources available, and special regulatory issues.
"Preserving and revitalizing existing affordable properties is both essential and difficult. Getting to the right answers regarding the properties’ physical circumstances is critical. We are pleased to make our contribution to the Handbook." commented OSI President David Whiston.
LISC is a national organization dedicated to supporting the work of CDCs through loans, grants and equity investments, technical and management assistance, and policy support. Since 1980, it has assisted 2,800 CDCs build or rehabilitate more than 160,000 affordable homes, and almost 2.5 million square feet of retail, community and educational space.
ON-SITE INSIGHT Completes Major Contract Effort for HUD - Undertaking involved 18,250 property inspections across U.S.
On-Site Insight had completed its final multifamily housing inspections for the Department of Housing and Urban Development (HUD), under two contracts originally awarded in early 2001. In all, OSI completed 18,250 physical inspections of public housing and multifamily properties overseen by HUD. Covering 35 states in the southeastern and western regions of the country, the inspections were conducted to HUD’s Uniform Physical Condition Standards (UPCS).
OSI achieved an inspection acceptance rate of 99.66% over the term of the contracts. The firm has been responsible for all aspects of program activity - from inspector recruitment and training, to scheduling and logistical coordination, technical support, quality control and client relations.
The UPCS inspection program was established by HUD’s Real Estate Assessment Center (REAC) in 1998, to improve on the Department’s oversight of its existing housing inventory. It aims to ensure that HUD-assisted properties are “safe, decent, sanitary and in good repair”, using an automated inspection protocol and uniform physical evaluation standards. The HUD program covers site, building exterior, building system, common area and dwelling unit conditions, noting health and safety concerns in particular.
In the past several years, OSI has provided similar inspection services to the state housing agencies in Connecticut, Delaware, Massachusetts, Michigan, New Hampshire, Pennsylvania and Texas, as well as a number of public housing authorities, private lenders and development sponsor/managers.
Michigan State Housing Development Authority Renews Housing Portfolio Evaluation
The Michigan State Housing Development Authority (MSHDA) contract has been extended through the first half of 2006. The firm anticipates undertaking several dozen long-range physical needs assessments of affordable rental properties in the coming months. This follows the successful completion of more than three hundred (300) similar assessments undertaken by OSI for MSHDA in 2000-2005.
“While many agencies have directed or encouraged capital planning efforts by their development sponsors in recent years, we have taken another approach – contracting directly with OSI, in the interest of consistency and quality. This has been a valuable collaboration; we look forward to starting another round of work with OSI next year.” stated Donna McMillan, Asset Management Director for MSHDA.
The assessments support MSHDA’s ongoing asset management efforts, helping the Authority optimize its staff oversight of the portfolio. The assessments are used as early warnings of emerging capital improvement needs, and for long-term budgeting. They are used to evaluate recapitalization requests, and to prioritize the use of replacement reserves and surplus cash. A number of the assignments have been applied to transactions in the Authority’s affordable housing preservation program.
OSI has been advised that another contract with MSHDA, to provide basic annual physical inspections of the Authority’s multifamily developments, is also being extended, through 2006. The inspection program combines MSHDA’s well-established physical condition standards with two federal protocols, Uniform Physical Condition Standards (UPCS) and Housing Quality Standards (HQS), to constitute a single application covering the Authority’s wide array of federal and state housing programs. The inspections are conducted on hand-held computers, using web-based technology. In 2005, OSI completed approximately 500 inspections under this initiative, and expects a similar level of effort in 2006.
OSI President David Whiston commented, “We are proud of the work we have done for MSHDA to date, and are gratified to see it put to such effective use. We look forward to continuing these efforts next year, in support of MSHDA’s affordable housing mission.”