texas state affordable housing corporation asset oversight … · texas state affordable housing...

Texas State Affordable Housing Corporation Asset Oversight Observation Report

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One Westfield Lake 2800 Hirschfield Spring, TX 77373

Owner: The American Opportunity Foundation, Inc. Date Built: 1984 Management Company: USR Group Property Manager: Danny Martin Inspection Date/Time: April 10, 2013 at 8:30 Inspector’s Name: Mindy Green

Occupancy at Time of Report: 80% Average Occupancy Over Last 12 Months: 84%

Number of Units: 246

Number of One Bedrooms: 72 Number of Two Bedrooms: 126

Number of Three Bedrooms: 48 Number of Four Bedrooms: NA

PHYSICAL INSPECTION YES NO N/A 1) Are the access gates in operable condition? X

2) Is the community monument sign in acceptable condition? X

3) Is the perimeter fence surrounding the property in acceptable condition? X

4) Are the grounds and landscaping in acceptable condition? X

5) Are trees and shrubs properly trimmed? X

6) Are the grounds free of erosion, foot paths and tree root elevation? X

7) Are sidewalks clean and in good repair? X

8) Is parking lot clean and in good repair with handicap parking clearly marked? X

9) Are recreational/common areas clean, maintained and accessible? X

10) Are laundry facilities clean, maintained and accessible? X

11) Is facility equipment operable and in acceptable condition? X

12) Is the area around the waste receptacles clean and are the enclosures in good repair? X

13) Is the exterior of the buildings in acceptable condition? X

14) Are hallways clean and maintained? X

15) Are storage/maintenance areas clean, maintained and organized? X

16) Are building foundations in good repair? X

17) Are the gutters, downspouts and fascia boards on the buildings in good repair? X

18) Do the building roofs appear to be in good condition? X

19) Do balconies and upper level walkways appear to be in good condition? X

20) Do windows, blinds, doors, and trim appear to be in good condition? X

21) Is Management addressing all health, fire or safety concerns on the property? X 22) Have repairs or corrections recommended or required from the last physical inspection been

satisfactorily completed? X

COMMENTS: On the day of the site visit the curb appeal near the leasing office was good. Additional directional signage has been added since the previous visit and that appears to have had a positive impact on traffic. The grounds are mostly free of grass with exposed tree roots due to large trees that do not allow enough sunlight to the ground. Trash enclosures were missing pickets. The exterior of the buildings and walk ways are dirty, it is suggested that management power wash buildings and breezeways as part of the preventative maintenance program. There are several units that have structural issues on the balcony concrete pads. The property continues to have issues with wildlife as the property is next to a nature preserve. Since the prior review, the cat walks throughout the property have been painted with slip resistant paint. Observation:

• Management stated that several trees on the property still need to be removed. During the site visit there were uprooted and fallen trees on the property that are a potential safety hazard. It is suggested that Management collect bids from landscapers/arborists to determine the amount of trees that need to be removed and the cost associated with the removal. Once the bids have been collected management should create a plan to remove trees starting with the most hazardous first.

Finding: • Management stated that they have collected bids to repair balconies that are not structurally sounds, but repairs have not been

made. The Owner must review the bids and select the most appropriate contractor. A written plan of funding these repairs must be


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submitted to TSAHC by May 30, 2013.

SECURITY PROGRAM Part I 1) After review of the prior 3 months of police reports, the following incidents were noted and includes the number of times incidents occurred:

Incident Type # of Occurrences Comments: Burglary 1 Stolen Vehicle

Theft 2

Criminal Mischief

Personal Assault

Drug Activity

Gunfire 1

Domestic Violence

Disturbance 11 2(Domestic), 3(Family), 3(Noise), 3(Other)

Other 2 1(Terroristic Threats), 1(Fraudulent us of Identification) 2) Is the property currently following a crime prevention plan/program? Ø Management uses the resident services program, which includes crime prevention, to address crime throughout the year with the assistance of

courtesy officer. 3) What pro-active measures is the property taking to address crime on the property? Ø Monthly crime watch meetings are held and generally receive a good turn out and the courtesy officer patrols the property several nights a

week. 4) How often is a light check conducted on the property? Who performs light checks on the property? Ø A light check is completed twice monthly.

COMMENTS:

SECURITY PROGRAM Part II YES NO N/A 1) Is the Staff trained in addressing crime on the property? X Ø Does the Management Policy or the Resident Services Program address any of the following activities responding to the needs of the

community? Ø Violent Crime X

Ø Drug Activity X

Ø Family Violence X

Ø Other X

2) Is the property free of graffiti and vandalism? X

3) Are criminal background checks being conducted on all residents over 18 years of age? X

4) Has a risk assessment been conducted to determine (risk) liabilities at the property? X

COMMENTS: Management stated that the latest risk assessment was performed in December 2012.

OFFICE YES NO N/A 1) Is the office neat, the desk uncluttered? X

2) Are accurate office hours posted? X

3) Are emergency phone numbers posted? X

4) Are the EHO logos clearly posted? X

5) Are the following displayed in full view in the leasing office?

Ø Fair Housing Poster X

Ø Occupancy Qualifications X

6) Are property licenses and permits on file and renewed on a timely basis? X

7) Are insurance binders maintained on vendors on-site and/or at the corporate office? X 8) Is there a compliance department that ensures the set aside and eligibility requirements are being

maintained? X

9) Which of the following community amenities are provided for resident use?

Ø Playground X

Ø Community Room X

Ø BBQ/Picnic Area X


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Ø Laundry Facility X

Ø Business Center X

Ø Pool X

Ø Other (Greenbelt fitness program) X

COMMENTS: On the day of the site visit, the office appeared clean, organized and inviting.

KEY CONTROL YES NO N/A 1) Are all property keys properly coded? X

2) Is key box locked and secured? X

3) Is the key code list kept separate from the key box? X

4) Are locks being changed during turnover of vacant units and turnover of staff? X

COMMENTS:

MAINTENANCE PROGRAM YES NO N/A 1) Does the property have a preventative maintenance program? X 2) Is the preventative maintenance schedule being implemented? X 3) Is the maintenance shop clean and organized? X 4) How often are Pest Control services provided? Ø Pest control is provided every Tuesday and each building is serviced quarterly.

5) Does the maintenance area have properly documented MSDS material and chemicals labeled properly? Ø A Material Safety Data Sheet binder was found in the maintenance shop.

6) What is the policy on follow ups for completed service requests? Ø Management calls residents on Thursday and Friday to notify residents of the status of their work order if there has been a major issue and/or

contractors are involved. 7) What is the property’s after hours emergency policy? Ø Residents call the main office phone number that rolls over to an answering service. In the event of an emergency the answering services

contacts the on call maintenance person. 8) What capital improvements have been scheduled or completed for this budget year? Ø Management stated that gutter repairs, landscaping repairs/tree trimming, and landing pad repairs will be completed in 2013.

Detail of Ongoing Repairs and Replacements Completed in Last Budget Year

9) Unit Interior upgrades Ø In 2012, vinyl planking was installed in first floor units.

10) Appliance Replacements Ø Appliances were replaced as needed last year.

11) Building Exterior repairs Ø Building exterior repairs included repairing wooden landings, siding, and landing pads.

12) Curb Appeal upgrades Ø Drainage repairs near the back of the property were completed in 2013. In addition 40 trees removed.

13) Amenity upgrades Ø There were not any amenity upgrades in 2013.

14) Other repairs or replacements Ø There were not any additional repairs or replacements.

Number of service requests received: 150

Number of service requests completed: 139

Number of service requests completed within 24 hours: 54

Number of outstanding service requests: 11

COMMENTS: Management keeps a very organized preventative maintenance binder that includes details of the program and information from prior years.

MARKETING 1) Complete the table below with the most recent information available.

SOURCE COST # of Prospects # of Leases Drive-By/Word of Mouth (sign) $600 53 7


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Flyers (marketing to local businesses) $35 0 0 Resident Referral ($50 @ 1-2/quarter) $50 4 3 Locator Service 1-2 per month $1,200 8 2 Printed Advertising ( Apartment Finder and Greensheet) $649 2 1 Internet Advertising (gosection8.com, apartmentguide.com, rent.com, property website, ADS, & weblisters) $848 25 0

Other Source (yellow pages) 0 1 0

TOTAL $3,382 93 13

The rental activity reflected in the above table was for the month of: March 10, 2013-April 10, 2013

YES NO N/A 2) Is the property doing bilingual advertising? X 3) Does the property have any competitors nearby? X

4) How often are competitors shopped? Ø Competitors are shopped regularly.

5) How often is a market survey completed? Ø A market survey is completed monthly.

COMMENTS:

LEASE RENEWAL YES NO N/A 1) Does it appear that an effective lease renewal program in place? X

2) What percentage of residents renewed last month, past 6 months, and past 12 months? Current: 64%

6 months: 53%

12 months: 59%

3) When are the lease renewal/rent increase notices sent to residents? Ø Renewal/recertification notices are sent to residents120 days prior to expiration and every 30 days thereafter.

4) Are individual files being reviewed to determine renewal/non-renewal status? X 5) How are renewals tracked and monitored? Ø A renewal binder is being kept to monitor lease renewals.

6) Are rent increases being implemented? $10

7) What is the number of month-to-month leases? 1

8) What is the month-to-month charge? MKT + $50

COMMENTS:

VACANT/MAKE READY UNITS 1) Number of vacant units at time of activity report: 46 2) Number of completed made ready units at time of activity report: 3 3) Number of completed one bedroom units at time of activity report: 1 4) Number of completed two bedroom units at time of activity report: 1 5) Number of completed three bedroom units at time of activity report: 1 6) Number of uncompleted made ready units at time of activity report: 43 7) Number of uncompleted one bedroom units at time of activity report: 10 8) Number of uncompleted two bedroom units at time of activity report: 26 9) Number of uncompleted three bedroom units at time of activity report: 7

Units Walked (model and minimum of 3 make ready units)

Unit # Brief Description (See Unit Inspection Sheet for details)

3 2x2 Made Ready 46 3x2 Nearly Made Ready

103 2x2 Made Ready 108 2x2 In progress –has been painted and resurfaced but does not have carpet.

Units Walked (units vacant and unready for extended period of time and all down units)


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Unit # Brief Description (See Unit Inspection Sheet for details)

29 (Vacant more than 300 days) 3x2 Stripped unit 53 (Vacant more than 200 days) 2x2 No carpet

100 (Vacant more than 200 days) 2x1 Stripped unit. Balcony pad is not stable/structurally sound 201 (Vacant more than 200 days) 2x1 Upstairs balcony is falling down 206 (Vacant more than 180 days) 2x2 Exterior storage wall damaged 213 (Vacant more than 200 days) 2x2 214 (Vacant more than 300 days) 2x2 Stripped unit 225 (Vacant more than 200 days) 2x2 Stripped unit 232 (Vacant more than 200 days) 2x2 Stripped unit 234 (Vacant more than 200 days) 2x2

YES NO N/A 1) Does the Unit Availability Report match the make ready board? X

2) Are units being turned in a timely manner? X

3) Are there any down units? X

4) Are there vacant units that have been vacant for an extended period of time? X

5) What system is used by management to monitor the timely preparation of units? Ø Upon a unit becoming vacant the Manager and Maintenance staff walk each unit to determine the amount of time and cost to turn each unit.

Management then uses a make-ready board to monitor the preparation of vacant units.

6) How often are occupied units inspected? Ø Occupied units are inspected semi-annually.

7) How often are vacant units inspected? Ø Management stated that vacant units are inspected every 2-3 weeks.

8) How many vacant unready units are in progress of being made ready? Ø Several units have had some make-ready activities completed and therefore are in progress of being made ready. However, the reviewer was

unable to determine how many units are currently in progress.

9) What is the company policy on the number of days to turn vacant units? Ø Management policy is to complete a make ready four days after a unit has been vacated.

COMMENTS: Management is unable to turn vacant units due to a lack of funding. Finding:

• Units 29, 53, 100, 201, 206, 213, 214, 225, 232, and 234 are considered down because they are not available for rental on a continuous basis to members of the general public. The units must be deleted from the May 2013 Unit Status Report due June 10, 2013 until repairs are made. In response to this review, the owner must submit proof that the units are back on-line and available for rental to the general public in the form of invoices, work orders, pictures, and/or Tenant Income Certifications to TSAHC. Once TSAHC has reviewed Tenant Income Certifications, invoices, work orders and/or pictures and have given Management approval, then the unit can be added back to the Unit Status Report with a market designation until a qualified household occupies the unit.

• Several units that have been designated as down units have structural damage and there are additional units that have been completely gutted due to a fire that haven’t been touched since the previous site review. Management stated that they do not have funds to repair these units. The Owner must submit a plan of action to repair the structurally damaged and gutted fire units within the next 6 months. The plan of action must be submitted to TSAHC by May 30, 2013.

BUDGET MANAGEMENT YES NO N/A 1) Is management using the current budget to monitor and control operating expenses? X 2) How many bids are solicited in order to obtain materials, supplies, and services? Ø Three bids are collected to obtain materials and services.

3) Have there been any large unexpected repairs or purchases that have negatively affected the budget? Ø According to management, there have not been any large expenses this budget year.

4) Explain YTD variances of 10% or greater.

Expense Items that Varied by 10% or Greater from the Budget for Year to Date Operations Ending (Please note that a positive variance is under budget and a negative variance is over budget.)

EXPENSE ITEM ACTUAL BUDGET VARIANCE % EXPLANATION Personnel Expenses $42,091 $64,836 $22,745 35% Office Salaries, maintenance Salaries, Group


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Employee Insurance, Employers FICA taxes

Administrative Expenses $7,561 $9,401 $1,840 20% Professional Services, Site Travel

Leasing Expenses $1,334 $8,536 $7,202 84% Locator fees, Advertising

Service Expenses $12,671 $18,349 $5,678 31% Exterminating Services and Supplies, Trash removal

Cleaning & Decorating Expenses $22,268 $31,257 $8,989 29% Contract Painting & Labor, Carpet Cleaning , Countertop Resurfacing

Repairs & Maintenance Expenses $4,985 $15,835 $10,580 69% HVAC Supplies & Repairs, Electrical Supplies & Repairs, Plumbing Supplies & Repairs

Property taxes & Insurance $18,048 $20,688 $2,640 13% Hazard/Liability Insurance

COMMENTS:

REVENUE FOR THE MONTH OF FEBRUARY, 2013 YEAR TO DATE 2013

Gross Potential $171,640 Gross Potential $357,249

Budgeted $169,478 Budgeted $338,368

Variance + (-) $2,162 Variance + (-) $18,881

Collected to Date $122,985 Collected to Date $260,462

Other Revenue $11,908 Other Revenue $19,321

Total Collected $134,893 Total Collected $279,782

Budgeted $131,439 Budgeted $255,801

Variance + (-) $3,454 Variance + (-) $23,981

COMMENTS:

DELINQUENCIES YES NO N/A

1) Is the delinquency report up to date? X 2) What is the collection policy for outstanding rents? Ø Rent is due on the first and is late on the fourth at which time a $50 late fee is charged and a fee of $5/day is charged every day thereafter.

3) When is legal action taken against delinquent accounts? Ø Evictions are typically filed on the 15 if payment arrangements have not been made.

4) Does the property currently have any resident(s) under eviction? X

5) Does Housing have any outstanding balances? X

COMMENTS: The current outstanding balance appears to be somewhat high. However the over 30 days delinquency paired with the date of this review (March 10, 2013) does not appear that rent collection are an issue.

Current: $25,080

30 Days: $1,910 60 Days and Over:

$0

TOTAL $26,990

ACCOUNTS PAYABLE YES NO N/A 1) Is the payable report up to date? X

2) Is the property in good standing with all vendors? X

3) How often are invoices processed? Ø Invoices are processed weekly.

4) If payments are a problem, what is management doing to correct the problem? Ø According to management, payment arrangements are being made with certain vendors and an operating reserve draw is in progress to pay

other vendors. The operating reserve draw will not cover the majority of outstanding debt but, management believes that improved occupancy will increase income which will then allow vendors to be paid.

COMMENTS:

Current: $31,173

30 Days: $35,193 60 Days and Over:

$97,986

TOTAL $164,352


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RETURNED CHECKS YES NO N/A

1) Total number of returned checks in the past 3 months: 2

2) Has the manager collected and deposited all returned checks? X

3) Is the manager following company policy on returned checks? X

COMMENTS:

PERSONNEL YES NO N/A 1) Does owner/agent have a system/procedure for providing field supervision of on-site personnel? X

2) Does the property appear to be adequately staffed? X

3) Is overtime being controlled? X

4) Were requested pre-audit reports submitted on time? X

5) Does it appear that personnel are team oriented? X

6) Are name tags/photo IDs being worn by the maintenance personnel? X

7) Was management staff prepared for the site visit? X 8) How often are staff meetings held? Ø Staff meetings are held twice a week.

9) Have personnel been trained in Fair Housing? X 10) List training staff has received in the past year. Ø Management has completed Grace Hill training courses, Compliance 101 classes, and Yardi training.

COMMENTS:

OWNER PARTICIPATION YES NO N/A 1) Does the owner have access to computer generated reports? X 2) How often are the reports submitted to the owner? Ø Reports are sent to owners each Friday.

3) What is the dollar amount of an unbudgeted or over budget expense that requires owner approval for the release of funds? Ø Any unbudgeted or over budget expense of $600 or more requires approval from the District Manager. Approximately $600.

4) Are the funds for needed capital improvement items, turning of units, and marketing campaigns released by the owner according to what has been budgeted? X

COMMENTS: Funds are being released according to the budget. However, funding is not available to improve the asset.

SUMMARY OF OBSERVATIONS AND FINDINGS Finding:

• Management stated that they have collected bids to repair balconies that are not structurally sounds, but repairs have not been made. The Owner must review the bids and select the most appropriate contractor. A written plan of funding these repairs must be submitted to TSAHC by May 30, 2013.

• Units 29, 53, 100, 201, 206, 213, 214, 225, 232, and 234 are considered down because they are not available for rental on a continuous basis to members of the general public. The units must be deleted from the May 2013 Unit Status Report due June 10, 2013 until repairs are made. In response to this review, the owner must submit proof that the units are back on-line and available for rental to the general public in the form of invoices, work orders, pictures, and/or Tenant Income Certifications to TSAHC. Once TSAHC has reviewed Tenant Income Certifications, invoices, work orders and/or pictures and have given Management approval, then the unit can be added back to the Unit Status Report with a market designation until a qualified household occupies the unit.

• Several units that have been designated as down units have structural damage and there are additional units that have been completely gutted due to a fire that haven’t been touched since the previous site review. Management stated that they do not have funds to repair these units. The Owner must submit a plan of action to repair the structurally damaged and gutted fire units within the next 6 months. The plan of action must be submitted to TSAHC by May 30, 2013.

Observation: • Management stated that several trees on the property still need to be removed. During the site visit there were uprooted and fallen

trees on the property that are a potential safety hazard. It is suggested that Management collect bids from landscapers/arborists to determine the amount of trees that need to be removed and the cost associated with the removal. Once the bids have been collected management should create a plan to remove trees starting with the most hazardous first.


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