Long Term Sustainability Monitoring

Another element of monitoring is to create an ongoing comprehensive process for evaluating and, as needed, helping to improve long term sustainability of housing funded through the ARCH Trust Fund. Working with property owners and other funders, ARCH will undertake regular evaluations of funded properties.  This work will also be used to inform evaluation of applications of new projects requesting funding through the ARCH Trust Fund, and to share with property owners lessons learned and best practices. 

There are seven areas of data collection (Benchmarks) that will be used as an initial step in assessing long term sustainability of developments funded through the ARCH Trust Fund. These include:

·  Vacancy rate
·  Revenues (scheduled rent)
Expenses and Management Fees
Net Operating Income and, cash flow (on a per unit basis)
Reserve contributions and balance (building condition)
Contingent (soft) Debt status
Deferred developer fee;
ARCH Debt service;

These Benchmarks rely primarily on data already collected by property owners in order to not create added reporting burdens to owners. It is also noted that many owners are already doing similar analysis as part of their day to day oversight of their properties and ARCHs monitoring in this area will take advantage of the Owners’ existing efforts.

 The following is a description of the monitoring process related to long-term sustainability of projects.

 Annual Review Process

·  Annually update of Benchmark data for each project using information in the Annual WBARS reports and project audits, and supplemental materials requested directly from owners (off-site management fee, balances on deferred developer fee, and if available capital needs assessment).

·  Analyze data for each project relative to the following:
Thresholds for each Benchmark
Other like properties
Prior year performance

·  Develop list of projects that warrant some level of follow up with the owner and other public funders regarding long-term sustainability/viability.  There is no explicit cumulative ‘scoringsystem for individual projects. This step does not involve making conclusions regarding property performance or strategies to implement. Its purpose is to determine what properties warrant going through additional review as described below.

·  To the extent practical, do on-site visits of projects, especially for projects identified for follow up analysis.  Site visits will be coordinated with property inspections already being done by other funders. 

·  Share information with other public lenders, and determine how they will be involved in follow up work with property owners.

·  For those properties identified for further evaluation, meet with the property owner to:

o   Review information collected.
Seek explanations for data results. The goal is to understand reasons for the results and discuss if additional action to address the findings is warranted or plausible.
Review strategies that the owner has already been doing or considering.
Consider additional strategies and what would be required to implement.  A number of strategies have been identified that could better position properties for long-term viability/sustainability. This is meant to act as a menu of strategies to consider. Not all strategies are applicable in all circumstances. It is acknowledged that in many cases owners may have already initiated some of these strategies. The process will allow the owner to share with funders what they have already done, and if so, how that is working, and if further strategies should be considered. Some of these strategies are ones that can be done without any formal changes to existing provisions of agreements with public funders, while others require would require revisions to existing provisions with public funders.

· Keep other public funders informed of conversations with the owner, either through participation in meeting or by providing meeting notes.

· Depending on the outcome of the initial meeting and types of strategies discussed, potential follow up activities include:

o   For strategies already being implemented, monitor results on an agreed upon time schedule.
For potential ‘internal’ strategies (e.g. improve rental income), confirmation from owner on strategies being used and time period for monitoring results.
For potential ‘external’ strategies (e.g. adjusting reserve funding level), follow up with appropriate stakeholders to evaluate further and implement agreed upon strategies.

· Include results of sustainability monitoring work in annual monitoring summary reports to member cities.

"ARCH has proven to be an invaluable resource to its member cities and local housing developers in structuring partnerships that work, and funding the gap for projects in need. "

Mark Thometz, Former Executive Director, DASH