In recent years, the Housing Development Center (“HDC”) has emerged as leader in developing asset management capacity within the Portland Area nonprofit community. Our mission is to support the efforts of other nonprofits to successfully develop and own affordable housing. HDC has helped the nonprofit affordable housing industry redefine success to consist of not only the development of units, but also the long term ownership of those units. The goals of successful ownership include:

    Successful residents (access to affordable housing and appropriate services)
    Viable and well-managed housing
    Strong and competent owner organizations

Asset management is a critical component to achieving these goals. However, asset management is also a relatively new arena for most affordable housing developers. Many nonprofit developers in the Portland area recognize that they need assistance to grow their asset management capacity. HDC’s asset management efforts provide that missing expertise. Our goal is to help our community assure a long-term future for housing for populations that cannot be served adequately in the private market. HDC uses three primary channels to promote the growth of asset management expertise in the nonprofit affordable housing community:

	Restructuring of Non-performing Properties: This work, completed on both specific properties and across portfolios, has included a) identifying and helping to implement changes to property or asset management, b) revising the current financial debt structure and/or securing additional financing, and c) completing rehabilitation work;
	Direct Technical Assistance to Nonprofits: HDC helps nonprofits develop systems to manage their housing portfolios and also trains staff and boards in the skills needed to do this work. HDC sometimes links clients with other organizations who provide more general organizational TA such as improving financial systems and strategic planning; and
	Industry Support: This work falls into three primary activity areas: a) work with Community Development Network (CDN) to support the nonprofit housing community around the area of asset management (such as technical support for the CDN Property and Asset Management Working Group “PAMWG” and development of shared tools such as compliance charts and replacement reserve models), b) participation in planning and presentations in local asset management trainings, and c) participation in local and state policy and program development work related to asset management.

HDC Asset Management Program Recent Accomplishments

PROJECT RESTRUCTURES
The Housing Development Center began its work in asset management in response to lender and owner requests for assistance with non-performing properties. After work on more than 20 of these properties, HDC has developed a methodology for evaluating the properties that starts by determining the contributing factors and then identifies actions needed to bring these properties back into viable operations. Even with this work, the outcomes of restructures are limited by the age, unit mix, location, original underwriting restrictions, or other characteristics of a particular property. Success cannot be measured by comparison to standards currently used in new developments, but rather through financial stability, strong occupancy, and adequate physical conditions which meet life safety standards.

HDC has completed or is the process of completing restructures on over 747 units, for 8 organizations.

HDC has a history of successful financing and construction management, and is able to utilize this expertise on the more complex refinances and rehabilitation of occupied properties. HDC’s work has included restructuring tax credit investments, private loans and public financing. We have worked with private lenders, investors, Oregon Housing and Community Development, the Portland Development Commission and Washington County.

DIRECT TECHNICAL ASSISTANCE TO NONPROFIT OWNERS
Through the restructures, HDC recognized the need to provide asset management technical assistance to nonprofit owners. Both nonprofit owners and private lenders and investors report that they spend the bulk of their asset management time on a few troubled properties. Prevention and early intervention on non-performing properties are the only way to assure long time cost efficiencies within the nonprofit community.

Since 2002, HDC has worked one-on-one with eight nonprofits on asset management system development and staff and board training. This work has focused primarily on three areas:

	Compliance work: Compiled document binders for more than 30 projects, and prepared compliance charts describing funder requirements, including HOME regulations, LIHTC requirements, rent and income restrictions. These charts serve as a guide for asset managers and are also being attached as contractual requirements to property management agreements;
	Financial Oversight: Assisted organizations to establish and review annual budgets for projects, prepared rent increase charts, created a financial performance model for tracking critical financial indicators, and provided training on monitoring financial performance;
	Organizational Systems: Developed asset management plan model in collaboration with Community Development Law Center and prepared organizational specific plans for several entities. Assisted in development of job descriptions and participated in hiring asset manager. Developed an RFP format and assisted CDCs with out-sourcing or changing property management firms. Assisted in evaluating viability to bring property management in-house and helped CDCs establish board reporting formats;
	Long Term Project Planning: Assisted in development of completed replacement reserve analyses, financial projections to evaluate trends, occupancy and market reviews to assess market viability, rent increase viability and actual tenant profiles, assisted organizations to evaluate vacancy and turnover issues.

INDUSTRY SUPPORT
In recent years, Portland area nonprofit and public lenders have seen an emergence of the nonprofit asset management profession that is similar to the growth of the industry’s development capacity in the mid-nineties. This growth reflects both proactive and reactive measures taken to respond to several key factors in our industry:

	The increase in the size of the nonprofit owned portfolio: The Community Development Network membership portfolio now exceeds 5,700 units and is continuing to grow by over 500 units a year. Regionally, CDCs in Clark County, Washington and Clackamas County bring the unit count to almost 7,000 units.
	The aging of the nonprofit portfolio: Much of the nonprofit portfolio is now between five and ten years old. With this aging, there are increased capital needs, expiring funding (Section 8’s, LIHTC), and longer periods in which initial underwriting assumptions no longer meet changing market, expense or other conditions.
	Failures in systems: The industry, including funders, have only recently begun to allocate resources toward both systems and staffing to address compliance monitoring, oversight of property management, planning and other asset management functions. Without this staffing and these systems, the “weakest links,” (the most vulnerable projects, systems and organizations) have experienced failures.

The Housing Development Center has been active in several “industry wide” initiatives to help the industry recognize and address these issues:

	Community Development Network’s Property & Asset Management Working Group: HDC staff has worked collaboratively with CDN to support this group, with CDN focusing more on outreach and organizational work, and HDC focusing on technical support, facilitation and planning for the group. Some accomplishments of this group, in addition to peer support, include: • Public forum with private property management firms • Participation in development of a shared property management agreement • Fair Housing training session • Participation in rewrite of PDC’s asset management plan • Feedback session with BHCD on Housing Connections • Membership representation on BHCD’s Fresh Start program development • Review of project based program implementation • Ongoing discussions on third party property management oversight: fees    (e.g. all organizations reviewed and presented on their contractual fee structures),    average maintenance costs, role in hiring & firing on-site managers
	Participation in Resource Mapping Working Group. HDC has been an active participant in the Resource Mapping Working Group where we provide technical input to the committee meetings, report production and follow up work of the committee. HDC works to assure that Resource Mapping concepts get incorporated into local funding priorities and programs.
	Program Guidelines Committee: An HDC staff member continues to act as the chairperson of PDC’s Program Guideline Committee. HDC views this work as critical to assuring that the “lessons learned” through asset management are incorporated into industry wide policies and programs.