Budgets: Annual, Acquisition, and Capital Reserve

May 2, 2012

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Goals for Today

Discuss the importance of budgeting to the health and sustainability of a nonprofit corporation.

Review the difference between budgeting for operations and budgeting for acquisition or capital replacement.

Learn from examples of two counties with excellent budgeting processes.

Today’s Presenters

Janice Novotni, Executive Director, Fairfield Affordable Housing, Inc.

Marti Goetz, General Manager, Miami Valley In-Ovations, Inc.

Cathy Allen, Technical Assistance Consultant, Disability Housing Network

DHN Recommendations for Budgeting

Housing Corporation Self-Assessment Tool:Cathy Allen

Self-Assessment Tool: Budgeting

4. The board determines the direction of the organization and takes primary responsibility for … c) funding strategy.

5. The Board creates, revises, and insures compliance with policies in the areas of planning, finance, community relations, and organizational operations.

6. The Board reviews the resource needs of the organization and approves a comprehensive funding strategy.

10. The Board reviews, approves and monitors the operating budget and financial plans for development activities.

Self-Assessment Tool: Budgeting

46. Goals for the current fiscal year and beyond are developed and approved by the Board with input of staff.

49. There is a realistic plan/strategy for matching human and financial resources with objectives.

Self-Assessment Tool: Budgeting

60. Housing Corporation has an operational budget covering at least the following categories:– Debt Service– Utilities– Reserve– Maintenance– Lawn Care– Management Overhead– Insurance– Property Taxes (If exemption not granted)

Self-Assessment Tool: Budgeting

61. Housing Corporation has an acquisition budget (Showing Revenue Sources) and tracking system;– Appraisals– Inspections– Earnest Money– Title Insurance– Closing Fees

Self-Assessment Tool: Budgeting

62. Housing Corporation has a capital replacement budget and reserve.

63. Housing Corporation has a renovation budget based on property inspection and special tenant accommodations.

64. Housing Corporation has a monthly report showing Budget/Expenses/Supporting Revenue

Duties of Nonprofit Board Members in Ohio

Duty of Care– Requires “prudent” action

Duty of Loyalty– Conflict of interest provisions

Duty of Compliance– Requirement to follow laws, as well as policy

Duty to Manage Accounts– Requirement to develop budget

Annual/Operating Budgets

Janice Novotni, Fairfield Affordable Housing, Inc.

Snapshot of Fairfield Affordable Housing, Inc.

10 houses/operated on contract with Fairfield County Board of DD

5-unit house/operated on contract with Fairfield JFS for youth aging out of foster care.

Low-Income, senior apartment building with 42 units that we own and manage.

2 staff: Full time executive director and Full time maintenance technician

Fiscal year is calendar year.

Budget Process Overview

Process begins in July of each year when director begins gathering information.

Based on available estimates, director completes blank home budget form (house by house).

Director then completes additional cost estimate forms. (Administration and maintenance.)

Organizational budget is sent to FCBDD by October 15 for review and approval.

FAH Board approves budget at November Board meeting

Revenue

FAH’s only source of income is rent. Rent amount for each house is based on actual

operating costs (house budget) Three sources of rent:

– Tenants (amount set by county board)– Metropolitan Housing Authority subsidy– County Board subsidy

Amounts change annually as part of budgeting process.

Costs – House by House

Data gathering begins by requesting estimates from contractors and others…

Can be difficult to project a year in advance. Home budget worksheet sent to CBDD. Many of the amenities we provide tenants are

required by the county board per our contract – mowing, security systems, etc.

2 of the 10 houses are past their 15 year commitment

Costs – House by House, cont.

We build mortgage costs into the rent amount for all homes, even those that are paid off.– Helps keep rent amounts even for tenants

Cost of homeowners insurance also evenly divided among homes

Costs - Administration

We make estimates for all of the various costs (see handout)– Salary and payroll taxes– Insurance– Office space and utilities– Office supplies– Accounting (monthly and annual reports/990/audits)– Postage and shipping

75% of the total administrative costs are apportioned to the 10 houses.

25% to the senior apartment building and JFS house.

Costs - Maintenance

Maintenance includes:– In-house staff – Equipment – Supplies – Contractor fees for projects we cannot do

internally. Home inspections conducted by Metro (@

$75 per home for homes that currently do not have a voucher)

Acceptance/Approval Process

County board has opportunity to review and accept budget (October).

FAH Board Approval (November).– Budget sent out in board packet before November

meeting– Board members with questions generally call prior

to the meeting– After approval, board reviews financial statements

at quarterly board meetings

Capital Reserve, Acquisition and Renovation Budgeting

Marti Goetz, Miami Valley In-Ovations

Snapshot of Miami Valley In-Ovations

77 properties, including:– 61 in Montgomery County– 11 in Miami County– 6 in Darke County

Housing Manager is CB employee, on loan 100% to nonprofit – Fees paid by Miami and Darke CB’s to Montgomery County

for salary reimbursement Repairs & ongoing maintenance done by CB Staff

– Painting, carpentry, driveways etc are contracted out

Capital Reserve Budgeting

Inspections are conducted on each property. Property Maintenance Spreadsheet is filled out

for 1-3, 4-6 & 7-10 year schedule. (includes equipment & improvements – see next slide).

Based on our estimated needs for the following years, the county board sets aside an amount for capital replacement. A separate contract is drawn between the nonprofit and the county board delineating responsibilities and shares of expenses.

Property Maintenance Schedule MVIO Home Maintenance Schedule

11/15/2011

Property Address

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REFR

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WASH

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CO

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SEPT

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SYSTEM

GAR

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WIN

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Estimated Cost

Dec-00

Jan-02

Oct-00

Oct-00

Mar-01

Mar-01

Aug-01

Aug-01

Nov-06

Mar-08

May-27

Dec-00

May-27

COST TO REPLACE IN THE NEXT 3 YEARSCOST TO REPLACE IN THE NEXT 4-7 YEARSCOST TO REPLACE IN THE NEXT 7-10YEARSCOST TO REPLACE IN THE NEXT 10-15 YEARS

AMITY RD. 13212, BROOKVILLE, OHIO 45309Jul-09 Jan-11 Jul -09 Jul-09 Jul-09 Jul-09 Oct-09 Oct-09 2005 June-2010 1995+ 2000+ Jun/09

ASHVIEW CT. 5072, HUBER HEIGHTS, OH 45424Jan 2011 10+ 1996 1996 Jan 2009 2008 Jan 2008 2001 1996 10+ N/A 10+ 1998

BENCHWOOD RD. 3088, DAYTON, OHIO 454142003 2003 10 10 Dec 2008 Dec 2008 4-10 N/A Sept 2008 Sept 2008 N/A N/A Nov/09

BENCHWOOD RD.3086, DAYTON, OHIO 45414July 2009 2003 10+ 10+ 0-3 0-3 4-10 N/A 0-3 0-3 N/A N/A 11/09

BRITTON AVE. 699, DAYTON, OHIO 45429Aug-10 Aug 2008 10+ 10+ Jul 2002 Jul 2002 10+ N/A Jun 2007 10+ N/A 8-15 0-7

BURCHDALE ST. 4233, KETTERING, OHIO 45429Aug-10 Mar 2007 4-10 4-10 May 2010 Aug 2010 4-10 N/A 10+ 10+ N/A 8-15 7

BURMAN AVE. 610, TROTWOOD, OHIO 45426N/A Mar 2011 Mar 2007 Mar 2007 4-10 4-10 10+ N/A Oct 2002 Sept 2006 N/A N/A 6-10

BURMAN AVE. 612, TROTWOOD, OHIO 45426N/A Sep 2009 Mar 10 Mar 10 Feb 2002 Feb 2002 10+ N/A Sept 2008 Sept 2006 N/A N/A 6-10

CEDAR BLUFF CR. 4179, DAYTON OH 45415Jan 2010 10+ 7-10 7-10 Nov-11 Apr 2008 n/a Jul 2004 Jul 2004 n/a 8-15 Nov 2003

CEDARCLIFF CR. 3000, DAYTON, OHIO 45414Oct 2010 10+ 10+ 10+ 0-3 4-10 10 N/A 4-10 10 N/A N/A Mar 2011

CEDARCLIFF CR. 3002, DAYTON, OHIO 45414Oct 2010 June 2009 Mar 2011 Mar 2011 Jan 2007 Jan 2007 10+ N/A 4-10 10 N/A N/A Nov 2009

CLIFFWOOD PLACE 6911, HUBER HEIGHTS0-3 0-3 0-3 0-3 Oct 2010 Oct 2010 0-3 4-10 4-10 n/a 0-7

CONCEPT CT. 297 May 2011 0-3 0-3 0-3 Dec 2010 Dec 2010 Apr 2010 x2 n/a 4-10 4-10 n/a 8-15 4-10

Residential Development

Residential Planning Committee, includes county board staff and nonprofit housing corporation staff.

Meets twice per month. Discusses need for new development,

vacancies, individual moves between properties, and provider agency and quality assurance concerns.

Community Capital Assistance

Beginning with the 2013-2014 allocations, housing corporations will have to prepare a 4-year plan and submit specific requests for new purchases or for renovation/ rehabilitation.

Housing corporation and county board plans together (Residential Planning Committee).

Availability of residential support dollars is an important consideration.

Acquisition (County Board Funds)

The nonprofit acquires homes for cash with reserves from a fund to purchase new homes.

The amount available changes from year to year.

The county board found that fronting funds to the nonprofit allows for flexibility in closing.

The nonprofit then invoices the county board to replenish funds.

Renovation

For accessibility, explore using Medicaid waiver environmental modification.

Include grants from DODD (RRP and RHAP) in planning.

HOME, CDBG, CHIP, etc. as applicable. Manpower is a consideration in such

projects.

DHN Technical Assistance

Funded by Ohio Developmental Disabilities Council.

Provides DHN consultant who can:– Assist with self-assessment– Attend/facilitate board meetings– Attend/facilitate stakeholder meetings– Facilitate strategic planning retreats– Provide consultation on board development,

policy development and housing operations

Upcoming Events

Spring Regional Meetings:– East: May 8– South: May 9– West: May 15– Northwest: May 16

Jacalyn Slemmer, Executive Director614-595-4110

jacalynslemmer@disabilityhousingnetwork.org*

Cathy Allen, Technical Assistance Consultant

419-732-1770cathyallen@disabilityhousingnetwork.org

www.disabilityhousingnetwork.org

Staff Contacts

Questions and Answers