[Federal Register Volume 78, Number 83 (Tuesday, April 30, 2013)]
[Notices]
[Pages 25293-25295]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-10057]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-5714-N-01]


Notice of Intent To Change HUD-Wide the Operating Model of the 
Office of Multifamily Housing

AGENCY: Office of the Assistant Secretary for Housing--Federal Housing 
Commissioner, HUD.

ACTION: Notice.

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SUMMARY: This notice advises the public that HUD's Office of 
Multifamily Housing intends to make changes to its field and 
Headquarters operating model. Specifically, the Office of Multifamily 
Housing will streamline its organizational structure by consolidating 6 
Headquarters business offices into 4 offices and consolidating its 
field structure of 17 Hubs to 5 Hub offices and 5 satellite offices 
reporting to the Hubs. The other 7 Hubs and 34 program centers will be 
consolidated into the remaining 10 offices (5 Hubs and 5 satellite 
offices). The 2 existing property disposition centers will be 
consolidated into one. Affected offices that will be consolidated 
include: Hartford CT, Manchester NH, Providence RI, Newark NJ, Buffalo 
NY, Philadelphia PA, Washington DC (field office only), Baltimore MD, 
Pittsburgh PA, Richmond VA, Charleston WV, Birmingham AL, Miami FL, 
Louisville KY, Jackson MS, Greensboro NC, San Juan PR, Columbia SC, 
Knoxville TN, Nashville TN, Indianapolis IN, Minneapolis MN, Cleveland 
OH, Milwaukee WI, Little Rock AK, New Orleans LA, Albuquerque NM, 
Oklahoma City OK, Houston TX, San Antonio TX, Des Moines IA, St. Louis 
MO, Omaha NE, Phoenix AZ, Los Angeles CA, Honolulu HI, Las Vegas NV, 
Anchorage AK, and Portland OR. The Seattle WA office will remain open 
however; Office of Multifamily Housing employees will be transferred 
into like positions and provide support to the Office of Healthcare 
Programs. HUD provides this notice in accordance with section 7(p) of 
the Department of Housing and Urban Development Act.

FOR FURTHER INFORMATION CONTACT: Joseph Dubose, Office of Housing, 
Department of Housing and Urban Development, 451 7th Street SW., Room 
6138, Washington, DC 20410; [email protected], telephone (202) 402-
6886; TTY number for the hearing- and speech-impaired (202) 708-2565 
(these telephone numbers are not toll-free).

SUPPLEMENTARY INFORMATION: In accordance section 7(p) of the Department 
of Housing and Urban Development Act (42 U.S.C. 3535(p)), a plan for 
the reorganization of any HUD regional, area, insuring, or other field 
office may take effect only upon the expiration of 90 days after 
publication in the Federal Register of a cost-benefit analysis of the 
effects of the plan on each HUD office involved. Such cost-benefit 
analysis shall include, but not be limited to (1) an estimate of cost 
savings supported by background information detailing the source and 
substantiating the amount of the savings; (2) an estimate of the 
additional cost which will result from the reorganization; (3) a study 
of the impact on the local economy; and (4) an estimate of the effect 
of the reorganization on the availability, accessibility, and quality 
of services provided for recipients of those services. Where any of the 
factors cannot be quantified, the HUD shall provide a statement on the 
nature and extent of those factors in the cost-benefit analysis.

Cost Benefit Analysis

A. Background

    In order to most effectively use its human capital and other 
resources, the Office of Multifamily Housing (MFH) has been actively 
working to make fundamental changes to its operating model to improve 
effectiveness and efficiency and to maximize opportunities to reshape 
and realign its workforce. Important progress has been made to date, 
including improving productivity, reducing loan cycle times, increasing 
employee engagement, and introducing a more risk-based approach to 
asset management activities. However, several fundamental challenges 
remain, including a fragmented and unwieldy organizational structure 
antiquated systems and processes, and role specification which allows 
for little flexibility in allowing employees to perform various roles 
while responding to spikes and ebbs in workload.
    MFH proposes implementation of 3 categories of changes that will 
significantly improve the delivery model, help better manage risk and 
lead to an annual cost savings of an estimated $47M upon complete 
implementation. These changes include the following:
    (1) Streamline the organizational structure;
    (2) Introduce risk-based processing across MFH and launch greater 
workload sharing and balancing;
    (3) Create new roles and abolish outdated or under-utilized 
positions.
    The goal is to fully implement these changes by the end of fiscal 
year (FY) 2016. The reorganization is expected to enhance operational 
efficiency, as well as improve the service provided to HUD's customers.

B. Description of Proposed Changes

    Under the proposed structure, Headquarters' business units will be 
consolidated and reduced from 6 separate offices to 4. In the field, 
MFH will consolidate 17 Hubs to 5 Hub offices and 5 satellite offices 
reporting to the Hubs. The other 7 Hubs and 34 program centers will be 
consolidated into the remaining 10 offices (5 Hub offices and 5 
satellite offices). The 2 existing property disposition centers

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will be consolidated into one. Affected offices that will be 
consolidated include: Hartford CT, Manchester NH, Providence RI, Newark 
NJ, Buffalo NY, Philadelphia PA, Washington DC (field office only), 
Baltimore MD, Pittsburgh PA, Richmond VA, Charleston WV, Birmingham AL, 
Miami FL, Louisville KY, Jackson MS, Greensboro NC, San Juan PR, 
Columbia SC, Knoxville TN, Nashville TN, Indianapolis IN, Minneapolis 
MN, Cleveland OH, Milwaukee WI, Little Rock AK, New Orleans LA, 
Albuquerque NM, Oklahoma City OK, Houston TX, San Antonio TX, Des 
Moines IA, St. Louis MO, Omaha NE, Phoenix AZ, Los Angeles CA, Honolulu 
HI, Las Vegas NV, Anchorage AK, and Portland OR. The Seattle WA office 
will remain open however; MFH employees will be transferred into like 
positions in that office to support the Office of Healthcare Programs. 
The 5 remaining Hubs will be in Atlanta GA, New York NY, Chicago IL, 
Fort Worth TX, and San Francisco CA. The satellite offices will be in 
Denver CO, Kansas City MO, Jacksonville FL, Detroit MI and Boston MA.
    This new model will help establish better spans of control and 
establish clear reporting lines in the field. The new structure will 
allow for more active workload balancing which will enable MFH to 
provide more consistent servicing to its customers which will 
ultimately enhance the level of customer service received. Employees in 
affected offices will have the option to either take a buyout or 
continue their HUD careers in one of the 10 remaining locations via 
directed reassignments with relocation entitlements.
    To ensure that effective program delivery is maintained for all 
customers, MFH will introduce risk-based processing and workload 
sharing and will create new roles and abolish outdated or under-
utilized positions. To increase processing consistency and enhance 
efficiency, workload will be spread virtually across the remaining Hubs 
based on utilization. This will result in increased efficiency gains in 
both Asset Management and Asset Development, and help to maintain level 
work across the remaining hubs. More importantly, reducing the field 
footprint will increase the consistency of MFH processing across the 
country and provide a standard platform to introduce ongoing 
enhancements and efficiencies.
    MFH will segment its lenders and loans by key risk factors, 
spending less time on low-risk applications to ensure sufficient focus 
can be placed on the more high-risk ones. This will improve processing 
time and allow MFH to better manage risk within the organization. 
Additionally, MFH assets will be segmented by troubled and non-
troubled, which will provide the ability to designate specific staff to 
focus on more complex-time-consuming work.
    Additionally, MFH currently has defined roles and positions that 
are outdated and poorly designed in relationship to specification. 
Roles are overspecialized in the Asset Development arena while they are 
under specialized in Asset Management. This creates bottlenecks in 
processing (not enough of a particular role to meet workload demands or 
processing breakdowns when key players are absent). Overspecialization 
reduces the ability of employees to perform various functions as 
workload demand ebbs and peaks. Under specialization oftentimes reduces 
the ability to effectively manage risk.
    Under the new operating model, MFH will create two new models, an 
Underwriter position to support Asset Development and an Account 
Executive model for Asset Management. The creation of these models will 
improve efficiency and help to better manage risk. Review of 
underwriting applications will shift from a team approach with 
specialists each having their own defined role, to a single reviewer 
(underwriter) who will pull in technical expertise only as needed. This 
will improve efficiency and productivity by reducing processing time as 
review of applications is passed through several reviewers, and 
eliminating duplication and re-work. The Account Executive (AE) model 
will define two levels of AEs. There will be a general AE that will 
focus on non-troubled applications and a troubled asset specialist who 
will be assigned more complex, time-consuming applications. 
Additionally, AEs will be assigned portfolios segmented by region/
lender to enhance the level of customer service provided to MFH 
clients. These changes are not only expected to bring significant 
benefits to MFH, but will pave the way to HUD's overall vision for 
transforming rental assistance.
(1) Estimate of Cost Savings
    Approximately 90 days following the date of publication of this 
notice, MFH will begin consolidating offices and reducing its operating 
footprint, anticipating full implementation of the proposed changes by 
the end of FY 2016. It is anticipated that overall staffing in MFH will 
be reduced from 1,547 employees in FY 2012 to 1,173 by the end of FY 
2016.
    It is difficult to project the number of employees who will take 
advantage of the buyout, choose to relocate, or resign because these 
are individual decisions. However, it is estimated that 50-75 percent 
of the affected employees will take the buyout while 25-50 percent may 
opt to relocate. MFH is anticipating that limited recruiting will be 
needed in the remaining 10 offices to supplement the existing workforce 
and skills needed if staffing is below required levels. The total 
savings will be about $47M annually once implementation is complete. 
The savings is directly related to a reduction in salary and benefit 
costs due to reducing overall MFH staffing from 1,547 in FY 2012 to 
1,173 by the end of FY 2016.

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                                             Staffing    Total salaries
                                              levels      and expenses
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FY 2012....................................     1547       $184,161,792
FY 2016....................................     1173        146,666,808
Estimated (S&E) Savings....................     (374)     * (46,748,504)
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* Savings calculated on FY16 average cost per FTE.

(2) Estimate of the Additional Cost
    a. One Time Costs:
    i. Buyout cost (approximately $13.9M-$20.8M). It is estimated that 
50-75 percent of employees in the affected offices will take the 
buyout. The anticipated total cost includes the buyout ($25,000) and 
estimated terminal leave costs ($10,000).
    ii. Personnel relocation cost (approximately $16.8M-$33.6.1M). It 
is estimated that 25-50 percent of employees in the affected offices 
will opt to continue their HUD careers in other locations via directed 
reassignments, and certain relocation costs will be paid.
    iii. Severance or unemployment compensation costs ($0). No 
severance costs are associated with this initiative since termination 
of any staff is not expected.
    iv. Net Office closure costs ($6.1M). No offices will be closed as 
part of the MFH realignment, only MFH personnel will be removed from 
certain offices; however this may require reconfiguration of existing 
space or lease modifications to accommodate the smaller footprint. One 
time cost estimates for this reconfiguration in the 40 offices that 
will no longer have a MFH presence are estimated at $14.1M. Factoring 
in an estimated savings of $8M as leases begin to expire, this equates 
to a one-time cost of approximately $6.1M. Note: These costs

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will be incurred as offices are realigned, not all at once.
    v. Space alteration costs in the ten remaining offices ($20M). 
There will be a one-time cost to reconfigure the space in the remaining 
MFH offices, or locate alternate facilities if space alterations are 
not feasible, to accommodate the increase in staff. These costs are 
estimated at $20M and will incur throughout the various phases of the 
realignment.
    vi. Training costs ($500,000). Employees will be provided with 
training on performing the new roles under the enhanced operating 
model.
    b. Reoccurring Costs:
    Operating Costs ($0). It is anticipated that the MFH reorganization 
impact on travel funding will be minimal.
(3) Study of the Impact on the Local Economy
    It is anticipated that 25-50 percent of impacted employees (197-
395) will be reassigned to an alternate location. Any impact on the 
local economies in terms of housing, schools, public services, taxes, 
employment and traffic congestion will be minimal.
(4) Estimate of the Effect of the Reorganization
    As mentioned above, workload will be spread virtually across the 
remaining Hubs and satellite offices based on utilization. This will 
result in increased efficiency gains in both Asset Management and Asset 
Development and help to balance workload across the remaining Hubs and 
satellite offices. Additionally, developing new, more generalized roles 
that can perform multiple functions, will allow employees to more 
effectively support processing and perform multiple functions as 
workload ebbs and peaks. Program delivery will not be impacted as 
workload will be shared across remaining locations and employees will 
become more flexible in performing multiple tasks.

    Dated: April 24, 2013
Carol J. Galante
 Assistant Secretary for Housing--Federal Housing Commissioner.
[FR Doc. 2013-10057 Filed 4-29-13; 8:45 am]
BILLING CODE 4210-67-P