PSH Risk Mitigation Pool Guiding Principles, Policies and Procedures

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PSH Risk Mitigation PoolGuiding Principles,
Policies and Procedures

• The Housing Development Center
• Presentation to Participating Owners
• Thursday, April 6, 2006

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AGENDA

• Policies and Procedures Development Process
• Guiding principals and approach
• Implementation schedule
• Contract between BHCD and Participating Owners
• Roles
• Program Policies
• Maximum amount per project and per claim
• Allowed uses and types of claims
• Assumptions on utilization
• Claims and Procedures
• Procedures for certification
• Filing claims and disbursement process
• Appeals process

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1. Policies and Procedures Development Process
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Guiding Principals and Approach

• Offset potential increased risk to non-profit
  property owners who own PSH units beyond
  traditional affordable housing for seven years
• Provide financial protection without having to
  set aside substantial reserves per project
• To manage the RMP in a fair and efficient manner
• Built in evaluation component to adjust policies
  and procedures over time as we learn where the
  risks lie in managing PSH
• Policies and procedures are not meant to be rigid
  - it provides a basis to gather data on risks and
  claims to provide PSH for seven or more years

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Implementation Schedule

• BHCD approved RMP policies and procedures on
  April 1
• Begin processing claims in mid-April
• BHCD identifies new PSH units from Spring RFP
  with additional resources for RMP
• RMP Advisory Committee will meet every six months
  or as needed

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Roles

• Participating Owners (POs)
• 14 non-profit owners are responsible for filing
  claims and providing data for evaluation
• RMP Advisory Committee
• Mary Lucero (PCRI), Seth Lyon (Mult. Co.), Dave
  Bachman (Cascade Management), Juli Garvey
  (Cascadia), and Ben Wickham (HAP)
• Reports and makes recommendations to BHCD
• No decision making authority on claims
• HDC
• Provide administrative services, program
  development, fiscal management, and reporting to
  BHCD quarterly
• Staffs the Advisory Committee
• Process claims
• BHCD
• Final authority on policies, procedures, and
  appeals
• Selects PSH units covered by RMP
• Approves Advisory committee membership and
  monitors HDCs reports and audits

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Contract between BHCD and Participating Owners

• Dawn to update POs

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1. Policies and Procedures Development Process

• Any questions on the previous slides?

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2. Program Policies
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Maximum Amount Per Project

• There is a maximum lifetime cap for a project
  regardless of which PSH unit is affected
• Project maximum
• Multiply the number of PSH units by the maximum
  amount per claim to get your project RMP coverage
  maximum
• The maximum amount per claim is based on unit
  size

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Maximum Amount Per Claim

• Maximum claim amount is based on 4 unit sizes
• SRO 7,500
• Studio 9,000
• One-bedroom 10,000
• Two-plus bedroom 14,500

Example Building A has 10 studios covered by
RMP 10 units x 9,000 (studio cap)
90,000 Project Maximum 90,000 in RMP coverage
for up to 7 years to reimburse for losses Per
Claim Maximum 9,000
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Maximum Claim Per Unit, cont.
Total claims exposure when maximum is adjusted
for unit size
Total claims exposure when maximum is fixed at
10,000 per unit
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Allowed Uses and Types of Claims Physical

• Physical damage caused by the PSH tenant such as
• Excessive cleaning
• Debris removal
• Extermination
• Repair of doors, walls, cabinetry
• Other damage in excess of normal costs
• An administrative fee of 5 of the damage costs
  is allowed to POs to supervise the repairs
• Deductible of 475 per physical claim
• Cannot be reimbursed for typical turnover costs
  or normal wear and tear

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Allowed Uses and Types of Claims Operational

• Operational claims are claims related to lost
  rent revenues or excessive operating losses
• Legal costs related to evictions
• Relocation expenses, including moving a tenants
  belongings, when the move is necessary to
  protect the property, staff, or other tenants
  from physical harm
• Rent that is owing but not collected, not to
  exceed 90 days
• Vacant turnover time in excess of 60 days
• Deductible is 350 per operational claim, which
  does not apply when physical claim is included

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Allowed Uses and Types of Claims Operational,
cont.

• Not eligible for reimbursement
• Any increase in insurance premiums
• Claims for supportive services
• Lost rent during initial lease-up period
• NOTE The RMP is not a rent subsidy program

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Allowed Uses and Types of Claims Insurance

• Insurance Claim Adjustment
• The amount eligible from the fund will be reduced
  by the amount that could be recovered from an
  insurance claim when the after-deductible benefit
  amounts to 3,000 or more
• The decision of whether to actually file a claim
  is up to the owner

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Assumptions on Utilization
Maximize number of units covered by minimum
dollars
Assure adequate coverage for PSH owners

• Variables
• Number of units covered
• Claim frequency - will this be more (harder
  population) or less (more services)?
• Cost per claim - wide range, 540 average to
  5,000

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Assumptions on UtilizationClaim Frequency
Costs per Claim

• CEP 189 unit sample
• Average claim lt 5,000
• Frequency 2.69 per year
• Prescott Terrace 47 units
• Average claim 544
• Frequency since opening (1 yr) 14.9
• HAP Section 8 Program 7,900 tenants
• Average loss 2,000
• Frequency .1

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Assumptions on UtilizationSix Scenarios
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2. Program Policies

• Any questions on the previous slides?

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3. Claims and Procedures
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Procedures for Certification

• BHCD will certify PSH units and maintain list as
  new projects are placed or taken out of service
• BHCD will send HDC list of PSH designated units
  with the projects contract with BHCD
• Owners of floating PSH units need to submit
  documentation that unit is being used as PSH (see
  certification form in packet)
• Documentation of move-in condition (use
  own form)

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Claim Review

• Requirement HDC must verify that the claimant
  has sustained an eligible loss and that the
  reimbursement requested is cost reasonable
• Process
• Submit claims application to the HDC Asset
  Manager, who will determine that the unit is
  eligible and that the application is complete
• Physical repair claims will be assigned to an HDC
  Construction Project Manager
• Operational claims will be reviewed by the HDC
  Asset Management Program Manager

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Disbursement of Funds

• Requirement Funds will be held by HDC for
  direct disbursement to the claimant from HDC
• Process
• All claim amounts will be approved by the Asset
  Management Program Manager
• Claim checks will be sent to Owner (not
  management company, unless so directed) within 10
  business days after complete application has been
  processed

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Appeals Process

• If your claim was denied, you can file an appeal
• Appeals Process
• HDCs Asset Manager, Molly Rogers
• HDCs Executive Director, Robin Boyce
• BHCDs RMP manager, Dawn Martin, for final
  decision

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3. Claims and Procedures

• Any questions on the previous slides?

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Claims and Procedures

• Steve will go through the claims procedures using
  three case studies

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Questions and Answers

• The Housing Development Center
• 2627 NE Martin Luther King Blvd.
• Portland, OR 97212
• [phone]