cincinnati metropolitan housing authority cmha cincinnati, ohio september 17, 2008 quadel consulting...

Cincinnati Metropolitan Housing Authority

CMHA

Cincinnati, Ohio

September 17, 2008

QUADEL CONSULTING CORPORATION

THE RENT REASONABLENESS ESTIMATOR

• Background– Novogradac & Company LLP

(Novogradac), founded in 1989, is a nationally certified public accounting firm that specializes in housing and community and economic development with an emphasis on affordable housing.

NOVOGRADAC & COMPANY LLP

• Background– Novogradac was once again designated

a “Best of the Best” firm by INSIDE Public Accounting (formerly Bowman’s Accounting Report). The report analyzed 327 firms, and only the top 25 achieve the “Best of the Best” status, which signifies exceptional corporate management and firm operations. This is the fourth consecutive year that Novogradac has been recognized by IPA.


• Background– Novogradac has expertise in:

• Economic & market research, including infrastructure investments, satisfaction surveys, and specialty studies.

• Investment analysis and due diligence support, including portfolio analysis, loan work-outs, bankruptcy support, mergers and acquisitions, and model development.



• Valuation and market research, including complex property types, mixed use properties and alternative use scenarios.

• Financial advising, including developing leveraged financial structures, providing financial analysis, possible alternatives, and an opinion for the financial viability of proposed projects, etc.



• Federal government consulting including military housing privatization, Enhanced Use Leasing, HUD and OSD policies and procedures, lodging facilities, etc.

• Housing and development support for affordable to luxury housing for rent and for sale.


• Background– During the past ten years, Novogradac

has consulted on over 4,000 projects nationally. The Market Research Group does approximately 700 market studies per year and since 2003, over 2,000 market studies have been completed nationwide.

– We have prepared HUD Consolidated Plans and portions of Comprehensive Plans

– Novogradac completes market wide assessments on a periodic basis on markets throughout the U.S.


• The Rent Reasonableness Toolkit meets HUD's requirements for contract rent determinations and provides clear documentation for tenant files.

• The Toolkit ensures that a fair rent is paid for units selected for participation in the voucher program.

THE RENT REASONABLENESS TOOLKIT

QUADEL CONSULTING QUADEL CONSULTING

CORPORATIONCORPORATION

What is Rent Reasonableness?

• HUD requires that local housing authority payments for voucher-occupied units be in line with market rents.

• Rent reasonableness ensures that the rent that CMHA will pay for a unit occupied by a voucher holder is supported by market rents for similar unit types in similar neighborhoods.

• Establishing market-based payments for units occupied by voucher holders ensures that the rental market remains in balance.



The CMHA Rent Reasonableness System:



•Uses representative local rental market data;•Equitably compares one unit to another;•Accommodates the differences in areas and neighborhoods;•Has an objective system to explain to owners how the approved rent was determined;•Ensures that the process is not arbitrary;•Ensures that CMHA is getting fair value

RENT REASONABLENESS METHODOLOGY OVERVIEW

• The rent reasonableness model combines two well-established analytical tools used in the real estate profession:

1. Direct comparability of units.2. Statistical regression analysis.

• This combination creates reliable determinations of rent based upon actual comparable data from the rental market.



RENT REASONABLENESS METHODOLOGY OVERVIEW

• Unlike rent reasonableness systems that use only three or four comparable units, the Toolkit uses data from the entire rental market to determine a unit’s rent.

• The statistical model adjusts each rent according to statistically significant market variables.

• The rent for a given unit is the SAME no matter what comparable properties are used.



RENT REASONABLENESS MODEL

• The implementation of the Rental Valuation Toolkit consists of the following broad steps:



DATA COLLECTION• Newspaper/Classified Research

– Cincinnati Enquirer, CityBeat• Internet Research

– www.rent.com, www.apartmentguide.com, www.craigslist.org

• Neighborhood Survey– Physical driving survey of Cincinnati and

Hamilton County neighborhoods• Community Partner interviews• Data collected in 53 Cincinnati

neighborhoods, 62 County villages and municipalities, and 12 Townships

UNIT FEATURES – Data Collected

• Building Type

• Unit/Street Condition

• Asking Rent

• Number of Bedrooms

• Number of Baths

• Square Footage

• Utility Structure

• Concession

• Patio/yard• Central air conditioning• Refrigerator• Oven/range• Dishwasher• Garbage disposal• Washer/dryer• Washer/dryer hookup• Built-in microwave

• Swimming pool

• Garage and/or covered parking

• Off-street parking

• Blinds

• Carpeting/hardwoods

• Exterior storage

• Central/shared laundry

• Landlord-paid alarm

DEMOGRAPHIC INDICATORS

• There are locational features that affect market rents and do not relate to the physical characteristics of a property.

• We considered the following demographic indicators in our analysis:

•Median income •Median home value•Renter prevalence•Change in home value•Prevalence of vacant housing units•Crime prevalence (personal and property)

REGRESSION ANALYSIS

• The regression analysis analyzes all characteristics collected for each data point and determines which are statistically significant.

– Significant features include the number of bedrooms, building type, median income, median home value, property/street condition, and several amenities.

– Outliers are eliminated– Values are assigned to each feature to

determine appropriate adjustments.

RENT REASONABLENESS CONCLUSION

Questions?



cincinnati metropolitan housing authority cmha cincinnati, ohio september 17, 2008 quadel consulting...

Documents

novogradac company llp

market studies

market rents

fair rent

rental market

economic market research

market research group

affordable housing