Operating Your Operating Company

3 min read

Operating an affordable housing company is an intricate endeavor. Project development and finance tends to get most of the attention, but operations and maintenance, human resources and asset management are equally important disciplines, particularly as companies mature. As a means of helping educate our members and help build capacity across our industry, NH&RA has been exploring a diverse array of approaches, models and best practices aimed at increasing portfolio value, reducing operating expenses and mitigating company risk. One result of this effort is the Preservation Through Energy Efficiency Road Show, which has visited six cities thus far and was featured prominently in a recent Tax Credit Advisor article. This month I’d like to share some additional ideas and initiatives we have learned about.

Hiring & Training Building Operators
Whether you are a vertically integrated development company or you utilize third-party property managers turnover of onsite property management staff is a significant challenge. With annual turnover rates exceeding 30 percent for building operators, this is a significant exposure point for most companies. At a corporate level, there are significant costs involved in advertising, screening, hiring and training new employees. Modest reductions in turnover through effective employee engagement and well-designed compensation and benefit plans can have a significant impact on the bottom line.

At the site level, the steady loss of institutional knowledge as a result of high turnover can dramatically reduce the efficacy for energy retrofits, investments in commissioning and well-designed operations and maintenance plans. Of course, turnover can’t be avoided entirely so it is critical to hire a skilled workforce and to have an effective training and engagement plan in place when they come “onboard.”

Recently, I met Josh Olsen at the Department of Energy’s Office of Weatherization and Intergovernmental Programs and was surprised to learn that over the past four years DOE has developed some interesting resources aimed at addressing these challenges. This includes the development of job/task analyses (JTAs) that identify and catalog all of the tasks, knowledge, skills, and abilities necessary for operators of energy efficient buildings.

I think this is a great resource for owners and property managers to help develop better job descriptions, screening criteria and training plans. Speaking of training, DOE has also developed accredited training centers around the country which can be potentially leveraged as part of a company’s practices.

Creating Value through Asset Management
The discipline of affordable housing asset management is relatively underdeveloped. When functioning properly, a developer’s asset management department is really acting as the “owner’s rep,” helping identify opportunities to increase portfolio value, holding various departments involved in construction, development, property management and finance accountable to the owner’s priorities, mitigating risk and informing decision making through the use of portfolio data.

We have been exploring many approaches and structures as we develop the program for our Asset Management Symposium on July 15 in Newport, RI and have been surprised to learn the scope and breadth of activity some innovative asset management departments are taking and where they are adding value. This includes strategies to mitigate property loss and liability exposures, manage insurance claims, identify and underwrite market risks, manage the relationship between ownership and property management, as well as, effective deployment of outsourcing and technology.

At a time when competition for subsidies is getting stiffer and public policy is driving smaller deals, growth solely through development is a challenge for many companies. This makes it essential that owners dedicate more resources to strengthening existing resources and maximizing efficiencies.