Tenant Services may be delivered by owner/partners or non-profit vendors and are mostly funded outside of building operations to the extent feasible. Such services include resident training/education, activities, and social services to assure property management problem-solving, housing stability, and referral services to connect residents to social and economic opportunity programs. This may be the most straightforward example of easily documentable social costs expenditures, although most affordable housing sponsors will admit to a gap in the external funding needed to provide quality resident services.
Unreimbursed pre-development and development project carrying costs are borne by non-profit housing sponsors. These include items such as unbudgeted vacancy losses that are otherwise invisible on the books as unrealized cash.
Asset Management by owner/partners (not lenders/investors) — includes the property management evaluations and oversight, conditions monitoring, refinancing work for improvements or re-development provided by the owner-partners.
Property Management & Operating Costs[i] that are more labor or cost-intensive than private, market-rate property management by virtue of income and social status of residents, community-specific considerations and the sources of funding or subsidies:
- Affirmative Fair Housing Marketing, Tenant Selection Procedures (required with financing or subsidies; costs include vacancy losses at rent-up and re-leasing).
- Maintenance & Security — based on family sizes, special needs, immigration or cultural transition, and geographic-specific crime, safety and vandalism mitigation costs may be documentable for affordable housing.
- Lease renewals notices, procedures and income re-certifications are time-consuming and complicated processes, often requiring staffing of certified personnel.
- Lease Enforcement and Evictions where service intervention is a first resort, and enforcement and eviction is a last resort this property management function is more labor and cost intensive, particularly with government-approved leases, with requirements that exceed local requirements.
- Inspections, Project Reporting and Compliance to lenders, investors, regulators – accountabilities are multiple and overlapping in affordable housing. Related work is often completed by property management line staff with significant executive, finance and professional help, whose time is not reflected in operating expenses.
- Property Management labor costs, which may be incorporated into management fees or separately charged to the project, can include unfunded overtime of salaried employees. If this is consistently delivered, it can be a risk to projects’ viability or contribute to dis-economies of scale for staff assigned to growing portfolios.
- Property Management Professional Development is more than a staffing cost of doing business with in affordable housing property management with changing compliance requirements, laws/regulations/ordinances, low-income tenant needs for services, or accommodating services for more diverse population of residents.
[i] NOTE: In property tax appeals, income statement expense assumptions are used by agencies to evaluate what may be considered reasonable. Unless separately argued, these expenses do not typically include in-kind or externally funded costs, balance sheet expenditures like investments, improvements, draws on reserves or essential expenditures not made because of limits of cash flow.