Flexibility is key to housing occupancy reviews of the future

The response to COVID-19 required unprecedented adaptation within the affordable housing industry to meet demands and adjust to new ways of working. In my 15 years in the affordable housing industry, I never imagined a time when performance-based contract administrators (PBCAs) would not be able to physically inspect units or conduct in-person reviews of site files. 

The housing industry continues to be largely paper-based, so COVID has changed nearly every business process that PBCAs use in managing housing operations to comply with Housing and Urban Development (HUD) requirements. PBCAs and property managers alike had to adapt to keep staff and tenants safe. HUD needed to pivot as well, placing a hold on certain processes and providing guidance on adjustments to others, all while addressing the lack of a standardized approach to COVID-related protocols across states, counties and communities. 

“What we’ve learned from our COVID experience and where we go from here” was a central theme of the National Leased Housing Administration’s (NLHA) Annual 2021 Meeting in June. I had the honor of moderating a panel alongside industry experts such as Walter Wynn, Director of the Field Asset Management Division at HUD; Doreen Donovan, Vice President of Administration for Peabody Properties; and Joseph Hughes, Subsidy Manager at MassHousing. Our panel, entitled “Management and Occupancy Reviews (MORs): Pre and Post COVID,” considered whether lessons learned from the pandemic will change how we conduct MORs in the future.   

How did COVID change MORs?

PBCAs and property managers faced many challenges in conducting MORs during the pandemic. All parties needed to stay apprised of the latest HUD, state and local guidance, and explain guidance impacts to staff. They also updated operating procedures and checklists accordingly.

However, in some cases, PBCAs attempted to schedule reviews, only to find that property managers had no staff on site. Even when property management staff were available, local policies and occupancy restrictions introduced new challenges in conducting onsite facility inspections. Property management staff and PBCA auditors needed to adapt, while keeping the safety and health of tenants in mind. With health and safety paramount, HUD and industry sought to adopt a more “low-touch” MOR approach.

Technology proved both a benefit and a stumbling block in adapting to virtual reviews. To enable social distancing, PBCAs wanted electronic rather than physical files, which required many owner agents to buy scanners for their paper documents. In some cases, PBCAs needed to provide additional time for electronic processes. For example, a 12-month wait list for a larger property manager could be over 1,000 pages, requiring hours to scan and submit. Given the sensitivity of affordable housing data, including personally identifiable information (PII), PBCAs and property managers alike needed to consider the privacy and cybersecurity implications of electronic data collection and sharing. 

What will MORs look like in the future?

PBCAs and property managers anticipate the release of the updated HUD Form 9834, Management Review for Multifamily Housing Projects. HUD’s Walter Wynn described the process HUD has undertaken to streamline and improve the 9834 by reducing the number of questions, eliminating duplication and improving instructions. When the new form is released (HUD expects to release it in FY22), PBCAs and property managers will gain a more streamlined and efficient document to conduct on-site MORs. 

Our panel discussed the future of low-touch MORs and whether remote MORs were a one-time concession or likely to continue into the future. With the pandemic far from over in many states, low-touch MORs could remain for some time yet. 

At CGI, we recognize the value of a hybrid model wherein PBCAs can apply both in-person and remote elements of an MOR when other situations arise such as weather events or civil unrest – situations our PBCA auditors have faced in multiple jurisdictions. We look forward to working with HUD and leaders from across the industry through organizations like NLHA to help define what a hybrid model might look like. 

How can we make MORs more effective?

Our panel discussed at length what industry should do to make a hybrid MOR model a viable alternative. Walter Wynn encouraged the industry to work with HUD now to identify required policy changes to codify a hybrid approach. Panelists also suggested that lessons learned from other programs could help inform the future of MORs. For example, HUD’s Housing Quality Standards program recently ran pilot projects to test remote video inspections.
Greater collaboration across programs emerged as a common theme, with discussion regarding the need to share not only lessons learned but also data from other processes such as Project-Based Rental Assistance (PBRA), Rental Assistance Demonstration (RAD), Real Estate Assessment Center (REAC) inspections and tax credit audits to reduce burdens and leverage information across programs. In the future, various audit programs could use a common data collection platform or apply secure data sharing technologies like blockchain, with strict access controls, to enable auditors to view and apply data from their counterparts in other programs. 

Industry leaders also encouraged HUD to consider a risk-based approach to its various audit programs as a means to reduce burdens for property managers and focus limited resources on those properties most at-risk. 

What does the future hold?

While policy debates will no doubt continue, government and industry panelists and attendees agreed that all stakeholders must continue to be flexible. The time for the affordable housing industry to work with HUD on policy changes is now. Holding policy discussions today will enable a more proactive approach to the next health, environmental or geopolitical event the housing industry faces. The response to COVID has demonstrated the need to move quickly and flexibly, with greater collaboration among PBCAs, property managers and HUD than ever before. More flexible policies will enable all affordable housing stakeholders to adapt to the next crisis and continue to meet the critical housing needs of our communities.  

CGI, a leader in public housing consulting and services, currently services more than 25% of HUD’s Section 8 PBCA portfolio. Learn more about our support for the affordable housing industry here.