The Formula of your Assets

As a developer, do you know how your properties are doing?  Literally, right now?

How long would it take you to compile the occupancy level of all your apartments?  What about re-certifications that are overdue or upcoming?  How about profitability ratios and delinquency levels?

A minority of industry leaders knows the current status of their properties and can retrieve that information in minutes.  However, the majority of owners are only notified of problems well after their onset. This creates an environment which is endlessly reactive, rather than proactive. 

The problem is not with any one particular business or group of businesses; it results from the structure of the industry itself. Partnerships of typical low-income housing projects consist of two entities, the MGP/GP and the LP.  The developer first conceives of the community and usually becomes the Managing General Partner or the General Partner, and selects the Limited Partner, who provides the required funding.

The Developer, or GP, is the most involved party while the property is being developed.  But once the community is in service, the developer’s focus shifts to the next development, which is more in need of the developer’s attention.   There remains an ongoing problem: the developer is still responsible for their historical properties.  However, the developer has minimal time to dedicate to ongoing supervision—and, in truth, their core value lies in creating new developments, rather than routine maintenance of existing properties.

The challenge of every developer is balancing their responsibilities to manage existing properties while continuing to develop.  The developer’s success lies in their ability to accurately and efficiently gather, process, analyze, and distribute information.  The developer must determine which data points most accurately relay the underlying reality of the status of their properties.  He or she must decide how to transform that information into value-adding knowledge, and how to distribute this value those who can best use it to drive profitability.

The average human mind can comprehend no more than seven data points at once.  This was discovered when the original Bell Companies were determining how many digits to use within a phone number.  They wanted to allow for as many possible combinations of numbers while remaining within the practical limits of our memory.  Therefore, to be most effective, the developer must determine what information can be collected that can be condensed into seven or less resultant data points that present the true standing of all their communities—while maintaining the ability to dive deeper into the data when a problem arises, of course.

 

The specific data points chosen will vary from developer to developer, based on the values of the organization and the types of communities.  Every development organization is unique, even more so than organizations in other industries. With the hundreds of events that occurring within communities every day, it can be extremely difficult to sort through the clutter to find the information that really matters.  The same is true with the human body itself: although there are thousands of measurable facts about bodily organs and systems, the general well being of a human can be accurately measured by watching a few simple key indicators such as temperature, blood pressure, cholesterol levels, and weight.  Properties might consider income, occupancy, re-certification levels, and delinquencies to be of similar value.

Once a developer determines the information that they to know, the data must be efficiently obtained and managed.  The property managers are the only participants that have first-hand knowledge of the current status of a property, and therefore they are the most valuable asset in data gathering exercise.  To achieve the long-term goal of maintaining a reliable, ongoing collection of data, the demands on the managers must be limited and the process must be fast.  Owners must request only the information that is actually relevant to their decisions, and make this information very simple to report. 

Starta Development, Inc. assists owners in this with an Internet-based system that effectively engages the manager in filling out a small series of owner-configurable, easy-to-use forms.  The service delivers these forms to the site manager on daily, weekly, monthly, or even annual intervals.  Starta recommends that each form contain 10 fields or less to demand no more than a few minutes at the end of each day.  The Starta Enterprise Service automatically sends Will-Call email messages as a reminder to the site manager with a one-click link to the input form.  The information, which can be reported daily, weekly, monthly or annually, may be approved by the manager’s corporate office before being accessible to outside parties.  The service also allows owners to design custom dashboards and reports to transform the raw data into valuable knowledge that gives a current status of the property, as well as historical snapshots and trends.

In a future release, the Starta Enterprise System will also include a rules-based engine that allows owners to define specific thresholds of comfort for each community.  The system will then alert owners and corporate property managers when these thresholds are exceeded.  For example, an owner may want to be alerted when occupancy drops below 92%, or when expenses exceed 110% of the average.  This automation allows developers to more effectively maintain their current commitments while continuing to focus their efforts where they are most valuable to the community and to their own business: developing.

The most successful developers will implement a system that limits distractions while revealing the key, actionable data that can be used in the decision-making process.   Every decision an owner makes is entirely dependent their present knowledge and awareness, and thus  must be confident  they have the most current and accurate information about all their communities to make the proper decisions.

From Data to Knowledge

The modern organization is increasingly dependent on information to operate efficiently in a competitive business environment. The collection, management, and analysis of data will grow to be the driving agent for successful organizations.

The database management system (DBMS) is the key mechanism for information storage in the modern enterprise. The DBMS is the software that manages the collection, storage, retrieval, and manipulation of the enterprise’s data. It stores key business records, including customers, employees, and financial information and when designed correctly, the DBMS is capable of converting data into knowledge. Therefore, the DBMS is the fundamental technology for driving business decisions and has become an indispensable tool for all industries.

The Meaning of Data

The Oxford English Dictionary defines data as “known facts or things used as basis for inference or reckoning.” Data represents raw facts about a business and is considered to be raw because it consists of unexamined specifics that do not have meaning on their own. Data can be stored in a structured or unstructured format. Structured data is highly organized and must be unambiguous, such as entries in an enterprise contact management system. An example of unstructured data is a system that stores resumes of individuals; each resume may be in a different format and created by a different word processor.

Data is the basic building block of information. It is the essential raw material that is processed into information. The business must drive the flow of data to encourage evolution into the knowledge that is used by all members of the enterprise. This knowledge must guide all business processes and actions, if an organization is to be effective.

Developing the Database Management System

When databases were initially developed, they were designed to simply record transactions, like product orders. This type of database is referred to as an online transaction processing (OLTP) system and is employed to automate and record basic business activities. OLTP systems support the day-to-day operations of the enterprise by recording raw data generated by a specific process.

When implementing a new database, an effective Database Administrator (DBA) will begin by documenting (on paper) a detailed data model. The data model will specify the major entities of a process, the attributes of each entity, and how each entity is related. Each entity will be stored in a table and the attributes of each entity will be structured into fields.

Generating Information

The Oxford English Dictionary defines information as “what is told; items of knowledge.” Information, within the scope of technology, is a collection of data that has been processed into a meaningful form. Most people cannot process or understand more than about 20 references of data at one time. Active organizations will rapidly gather hundreds of thousands of records, consisting of data that has no value in its raw form. Systems must be used to process data into a more comprehensible format, such as summaries or totals. Online analytical processing (OLAP) systems provide the means for business users to analyze raw data. These systems enable business users to drill down into masses of data and isolate information, such as which products or services are most profitable. I have heard many executives complain of “Information Overload.” By leveraging the abilities of an OLAP system, this problem can be eliminated. OLAP systems are designed specifically to support mission critical business decisions and therefore are classified as Decision Support Systems.

Delivering Knowledge to Determine Action

The Oxford English Dictionary defines knowledge as a “person’s range of information.” Knowledge is created when historic patterns and relationships are established to derive accurate decisions for future action. It is information taken to the next level of abstraction. 

Computers will never make better decisions than people. Knowledge is a combination of structured and unstructured information. Although structured information is fairly simple to collect, unstructured information is derived from an unlimited number of sources. Unstructured information does not reside in fixed locations and cannot be processed by a computer.

Technology is entering a new era as it enhances a leader’s ability to successfully supply refined decisions. Systems are beginning to evolve and integrate structured and unstructured information sources. One example of this improved ability is seen in an Online Knowledge Management (OLKM) system. The tool enables leaders to review information that has been created by OLAP systems and integrate it with unstructured information sources. The raw data presents key indicators that can generate an alerting mechanism and trend analyzer. However, there is the requirement that this data be linked to unstructured information to offer context and meaning.

Sharing Knowledge

Portals are the best tools to deliver diverse business content to a workforce. Using web-based technologies, a portal assimilates structured and unstructured data for easy access from a single point of reference. Portals are the view that business users see when they log on to their system, and to which they regularly return. A portal acts as a central location for finding critical information and knowledge through which business decisions are derived.  Portals are very attractive to users because they can be personalized to provide a single view into the enterprise that is relevant to a particular person’s role, responsibility, and interest.

As enterprises strive to improve their operations and work more closely with their business partners, a central repository of knowledge is essential for coordinating activities. The DBMS is that central repository, and the portal is increasingly the most efficient and effective way to present the information stored inside. Industry leaders are learning that success results when knowledge is easily accessible and when this knowledge is effectively shared with all business partners.

The Paper Explosion

The amount of documents demanded by investors, housing agencies, and HUD has dramatically increased during the past several years.  Developers not only have to collect paper, but they must distribute each document to the unique set of participants that require the information to complete the work.  A few leading edge developers have strive for the “paperless” office, yet they continue to generate more paper than ever because they cannot easily control the flow of documents to people.

The American Records Management Association (ARMA) estimates that organizations double the amount of paper that they file every 10 years.  The average white-collar worker generates an estimated 15,000 sheets of paper per year.

It is an expensive mistake to not realize the cost of inefficiencies that occur as the volume of paper increases. Paper files are difficult and time consuming to locate.  Documents are misfiled, not accessible when taken by another person, or in the worse-case scenario, permanently lost.

Even more unsettling is the amount of money organizations spend to file and maintain paper. According to the ARMA, the average 4-drawer file cabinet can costs almost $10,000 to fill. This amount does not include the $26,000 per year in labor spent to retrieve and maintain paper files. Studies have shown that the average document in an organization is photocopied 19 times, with 25% of the filing time for that document being spent in walking to and from the photocopier.

Starta Development, Inc., an organization based in North Carolina that manages documents for affordable housing developers, has determined that the developers spend more than $17,000[1]  managing the documents for each development.

Affordable housing developers are challenged daily with the generation and management of 300 to 500 documents for each development. This is further complicated by the fact that each development is comprised by an average of seventy-four individuals from thirty-three external organizations. This leads to two major tasks for the developer, the management of people and the management of paper.

The developer typically selects participants for each potential community and begins requesting documents from each third-party contact.  Most documents are mailed to the developer’s office, physically received, duplicated, and locally filed by a member of the developer’s staff.  Copies of each document are mailed to the numerous participants who require information contained within the document. The process is repeated as revisions are made, inevitably causing some parties to refer to outdated versions.

To specifically support the unique demands of the affordable housing industry, Starta Enterprise System, developed by Starta Development, is designed specifically to support the affordable housing industry.  There is no cost for anyone to use the system for any development that does not receive funding.  In theory, a developer could use the service indefinitely and never be charged (of course, this would mean they are not a successful developer).  It is important to note that at the time the development is awarded, the Starta technology is billed as a service to the development.  Starta is not absorbed by the developer as an overhead or fixed cost, but rather by each community that receives its value.  Some developers classified a portion of the servicing fee in eligible basis by demonstrating the savings created by the use of the Proposal Management module.

To effectively manage the flow of information, it is best to enable all third parties and investor to access relevant information and document.  Starta has simplified this challenge by allowing developers to specify exactly how little or how much outside parties may access or modify.  Once a development is added, the developer selects their participants and assigns roles for each person.  A person only has access only to developments where they are participating, and their role at each development limits what information and documentation they may view or modify. 

Developers should also dedicate their time to developing, not technology issues. Starta development documents are maintained in a central repository that is continuously backed-up to two offsite locations.  Internal and third party participants may submit their documents via the web, a toll-free fax line, or email.  As documents are contributed, each participant who has been granted access to the document is notified of its availability.  Outdated versions of each document are maintained for reference, but the most recent version is always presented by default.  Customizable checklists extend the value of the base document management system by providing an immediate status of every application and closing binder.

Tracking progress of each project and analyzing the status across a developer’s portfolio is more than an idea with today’s technology.  The Starta system has easy-to-use checklists that track the receipt of documents.  Reports may be quickly created that analyzes the entire portfolio or across multiple communities.

For the inevitable audit, partners may grant auditors access to one or more developments.  The auditor may be allowed access to all documents or to a specific collection with minimal effort.  In addition, the auditor may perform the audit from anywhere in the world, saving time and travel costs.  What was once a time demanding task may be accomplished in minutes with the proper system.

 

Fast Facts

•  The average company spends between 7-14% of its total costs on document processing in a paper environment

•  An estimated 7.4% of staff time is spent searching for documents

•  Average storage cost per page = $0.014 per year, or about $1,400 per file cabinet

•  Storage requirements for hard copy documents DOUBLE every 3 years

•  The average company spends 280 hours annually per employee looking for lost documents

•  Due to a lack of solid disaster recovery planning, 70% of companies Never fully recover from a disaster

 

Source:

American Records Management Association (ARMA), IDC

Starta Development Releases Tax Credit Allocation Management System

Starta Development Releases Tax Credit Allocation Management System

Web-Based tool extends features beyond managing community development

Raleigh, North Carolina, October 25, 2008:  Starta Development today announced its ability to manage tax credit allocations via a secure, web-based service. Although its service remains the most robust tool for the development of affordable housing communities, Starta has added specialized features to track the full-life cycle of tax credit allocations.

Christopher M. Park, Starta’s Chief Technology Officer, explains that “the Starta Enterprise System combines features typically found in CRM, ERP, project management, and document management systems to give your staff a consolidated view of your business.  Our robust framework allows you to quickly get your current projects up and going, while our deep customization options and custom programming services allow you to tailor the system to your exact needs.”

“This is a major step forward for Starta,” notes Gordon Blackwell, Starta’s president. “Syndication of tax credits remains a challenging operation with increasing business risk. Starta minimizes these risks by integrating client-created forecast models that synchronizes with Starta. As the models are revised, Starta imports hundreds of variables and captures snapshots of every worksheet.  This process enables analysts to make accurate and timely decisions.”

About Starta Development, Inc.

Based in Raleigh, North Carolina, Starta provides standard and custom technology services for all members of the affordable housing industry. The Starta Enterprise System was initially released in February 2001 as a turnkey solution for managing development portfolios, from the initial concept through development and asset management.