DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT: CREATE AN ASSET MANAGEMENT FUNCTION

3-C
DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT: CREATE AN ASSET MANAGEMENT FUNCTION

 

Problem Identification:
Despite approximately 1,500 units under private management (mostly units in newer HOPE VI projects), HABC has no formal system for overseeing and monitoring the performance of the private managers. Such a system will become even more important ‘ indeed, critical to success ‘ with expanded privatization.

Recommended Action:
Develop an asset management monitoring system.

Classification:
Cost Savings, Organizational, Service Improvement

Functional/Operational Area:
HABC/Asset Management

Estimated Annual Impact:
Increased control over and improved standards of privately managed properties.

Estimated Implementation Costs:
See recommendation on privatizing property management. Estimate to cost between $500,000 and $1 million (cost of technical assistance for one to two years ‘ based on privatization efforts in Chicago and other cities).

Barriers to Implementation:
None

Projected Implementation:
90 – 180 days to build the basic system; 1 year to fine tune new system.

Next Steps:
One of the first steps is to hire the necessary staff. Assuming full privatization, the agency might need 8-10 asset management staff. This would consist of one asset manager for every 2,000-3,000 units, one supervisor, and various administrative staff. These costs are already factored into the $25 PUM overhead costs described in recommendation on privatizing property management (see Recommendation 3-A).

Analysis:
Over the past several years, HABC has placed approximately 1,500 units under private management. This includes all HOPE VI projects, various scattered sites, and Poe Homes (which, as indicated earlier, was privatized because of its proximity to a HOPE VI project).

Despite this recent growth in the program, there is no single individual or unit in the agency that has the responsibility for overseeing the performance of the private managers. Nor are there any standardized systems – management contracts, management plans, monthly reporting, etc. Not surprisingly, in many cases the relationship with the existing private firms is strained.

Because of the lack of focus or attention, the agency has also had difficulty in attracting participation from qualified private management companies. In soliciting bids for one of its HOPE VI management contracts, the agency received only two bids; in soliciting firms for various scattered site units, the agency received only one bid. The agency has not done sufficient work to attract qualified firms and, quite to the contrary, has sent signals that have effectively discouraged firms from bidding. In essence, it has created the image of an adversarial relationship. For privatization to be successful, HABC must demonstrate its support, which, to date, it has not.