Posted on December 18, 2015
BOSTON --- In an ongoing effort to help owners of affordable housing, the Massachusetts Housing Partnership (MHP) recently hosted two events that focused on managing operating expenses.
On Nov. 12, members of MHP's lending and portfolio management teams met with nonprofit project and property managers to share an analysis of operating expense data collected from over 200 affordable housing developments across Massachusetts.
On Dec. 17, MHP followed up on one of the issues raised at the Nov. 12 meeting, co-hosting a workshop on how affordable housing property owners can file for tax abatements on their properties.
At the Nov. 12 meeting, members of the Massachusetts Association of Community Development Corporation's Housing Peer Group (MACDC) met at MHP for a presentation by Managing Director Mark Curtiss and Portfolio Program Manager Tom Hopper on operating expenses in MHP's rental financing portfolio, which totals 256 projects statewide.
"Understanding how operating expenses change over time helps our lenders better predict expenses during underwriting," said Curtiss. "It's also useful information that our portfolio managers can share with owners and property managers to help them identify potential operating issues before they become bigger problems."
MHP's overview included a snapshot of expense categories as a percentage of total operating expenses, a breakdown of maintenance and administrative costs, trends in various expense categories and differences in costs by location and types of projects.
In its analysis, MHP found that maintenance costs experienced a 4.38 pecent compound annual growth rate from 2010 to 2014, while administrative costs during the same period have seen a 1.92 percent compound growth rate. Real estate taxes over the same period have had a 3.95 percent compounded annual growth rate.
MHP's analysis of its portfolio has found that two costs that have been surprisingly difficult to budget accurately for are real estate taxes and property insurance. Discussion with the MACDC group centered around how to better predict these costs.
“MACDC appreciates MHP sharing its data and insights about operating costs,” said Don Bianchi, senior policy advocate at MACDC. “Accurate budgeting for, and management of, operating costs can help CDCs sustain successful projects.”
During the discussion, one issue that came up was filing for tax abatements. This issue was the focus of the Mel King Institute's Dec. 17 webinar at MHP on how to file for tax abatements. At this session, attorney John E. Ryder, managing consultant for the New England office of Marvn Poer & Co. took project and property managers through the steps of applying to a municipality for a real estate tax abatement.
If you would like more information about these sessions, contact Rus Lodi at rlodi@mhp.net. If you have information of questions about expense trends you're seeing that you would like have analyzed and discussed, contact MHP's Tom Hopper at thopper@mhp.net.