Missouri Housing Development Commission

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(No Transcript)
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Asset Management Compliance Accounting

• Presented by
• Deb Giffin Director, Asset Management
• Scott Hanak Supervisor, Asset Management
• August 28, 2007 315 430

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Asset Management

• Industry Definition
• A systematic process of effectively monitoring
  the physical, fiscal, and regulatory operations
  of affordable housing by using sound business
  practice and economic rationale to measure
  performance.
• Reality
• Everything After Closing!!

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Meet the Staff
MHDC STL 4625 Lindell, Suite 300 St. Louis, MO
63108 314-877-1350
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Responsibilities

• Budgets
• Annual Financial Statements
• Rent Increases
• Occupancy
• Replacement Reserves
• Operating Reserves

• Insurance Claims
• Surplus Cash
• Owners Equity
• Management Fees
• IRP Administration
• RAP Administration

Note Above list applies to all properties that
have at least an MHDC mortgage. Rules for Tax
Credit Only properties may be different.
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Upcoming Due Dates

• Budgets due - November 15, 2007
• Rent Increases due November 15, 2007
• AFS due March 31, 2008
• Monthly Occupancy due -15th of every month

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2008 Policy Changes!

• Rent Increase will be required to be submitted at
  budget time or by December 31st - No more
  February 1st to April 30th window
• Rent increases for all elderly properties will be
  capped at the Social Security COLA adjustment .
  (2007 COLA 3) - Effective on all 2008 rent
  increase requests
• www.ssa.gov/cola/automatic-cola.htm
• R4R requests will be required to be submitted
  through on-line AMRS system Effective January
  1, 2008

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Management Fees

• 3 increase for 1st time increases
• 2 increase thereafter up to 40
• of Collected Revenue requests are converted to
  per unit for reasonableness test
• Submit Request 30 days prior to expiration - Form
  2004-A Management Certification

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Review Process

• Look at DCR before and after increase
• Most Recent Inspection Rating
• Open 8823s
• Current Occupancy
• Non-Compliance Issues!!

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Something to Think About

• MHDC is considering adjustments to the
  management fee cap. Any suggestions?

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Insurance Claims

• Notify MHDC immediately (24 hrs if at all
  possible)
• Submit Insurance Checklist
• Need copy of Insurance Claim
• Schedule an MHDC inspection
• Claim check must be deposited with MHDC
• Applies only to MHDC mortgage properties!

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Insurance Claim Checks

• Must name MHDC as an additional loss payee
• Check needs to be endorsed prior to submission to
  MHDC
• Held in a separate insurance account
• Owner/contractor is reimbursed upon completion of
  work and MHDC inspection
• Partial releases are allowed still subject to
  MHDC inspections

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Accounting Treatment

• Remaining balances are transferred to R4R
• No Netting of Expenses
• Consult CPA for appropriate GAAP accounting
• Financial Statement Disclosure required!
• May be subjected to an insurance investigation if
  procedures are not followed!

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Non-Compliance

• Failure to submit AFS and Budgets by due date
• Failure to respond to AFS Budget findings
• Failure to respond to open inspection items
• Failure to report occupancy totals for 3
  consecutive months

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While in Non-Compliance

• In violation of the Regulatory Agreement!
• Placed on a minimum 90 day review period
• MHDC will not process
• Replacement reserve withdrawals
• Rent increases
• Surplus cash disbursements
• Operating reserve requests

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Websites to Remember

• www.mhdc.com
• Asset Management Section
• Download all forms, handbooks, and policies
• Extensive FAQ Sections
• amrs.mhdc.com
• Asset Management Reporting System
• Need User Name and Password

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AMRS(Asset Management Reporting System)
amrs.mhdc.com
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Modules
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New Features

• New look and feel to Main Menu
• Archived Reports capability
• Ability to review submission status
• Extension request button still needs MHDC
  approval
• Replacement Reserve Request Module

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Main Menu
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Archived Reports
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Submission Status
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Replacement Reserve Module

• New look Same Process
• Quicker turnaround times
• Improved tracking capability
• No more paper
• Use the Budget/AFS password

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Replacement Reserve Module
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Replacement Reserve Module
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Replacement Reserve Module
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Replacement Reserve Module
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Replacement Reserve Module
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Replacement Reserve Module
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AMRS(Asset Management Reporting System)Helpful
Tips
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Logging In
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Logging In
If you do not see this question Your pop-up
blocker needs to be turned off for this site only
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Updating Contact Info
It is the propertys responsibility to keep this
current
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Help Bubbles
Over 100 help bubbles containing definitions and
tips
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Top 5 Budgeting Errors

• Poor or unreasonable explanations
• Gross potential rents are incorrect
• Budgeting large R4R in operations
• Non-operating items are included in operating
  budget
• Applying an across the board increase for every
  line item

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Unreasonable Explanations
Above examples were taken from the 2007 budget
submission period
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Good Explanations

• Explain the specific event(s) that changed
• Explain the full change in amount
• Pertain to the right year
• Are consistent

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Example

• Budget Scenario Budget projects 10,000 for
  Insurance. Insurance was 3,000 in the previous
  year.
• Explanation
• Insurance quote shows a 4,000 increase for the
  upcoming year. Additionally, due to the recent
  floods in the surrounding area management has
  decided to purchase additional coverage which is
  estimated to be 3,000 more.

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Gross Potential Rent
GPR should not be netted, and should be based
upon the Regulatory Agreement, Land Use
Restriction Agreement, HUD Rent Schedule or
MHDCs Schedule II.
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Budget Menu
If the submission bar is not 100 your submission
is not complete!
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Top 5 AFS Errors

• Not using the required Chart of Accounts
• Audit Report does not match Submission Entry
• Gross Potential Rent calculation
• Non-operating items are included in operating
  expenses Surplus cash note interest is not an
  operating expense
• Overpaid Management Fees

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Non-Operating Expenses
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Calculating Management Fees
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The AFS Header
All questions can be answered from the contents
of the financial statement when qualified staff
input information
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Surplus Cash Distributions

• Question is only asked if Surplus Cash Exists
• Selecting OK will take you to the request form
• Selecting Cancel submits your AFS, but no
  distribution request is submitted
• Still can request a distribution a later date if
  cancel is selected

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Surplus Cash Request
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Top 5 Rent Increase Errors

• Not charging current rents!
• Didnt provide 3 comparables - for each BR size
• Incomplete rent rolls were uploaded
• Not Implementing rents at effective date
• Poor Budgeting

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3 Comparables
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The Rent Increase Request

• Rent Increase will be required to be submitted at
  budget time or by December 31st (No more February
  1st to April 30th window)
• Question is asked at the end of the budget
  submission
• Can still request an increase by December 31st if
  request is not entered at budget submission

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Implementing Rent Increases

• Notify tenants of a proposed rent increase at the
  time of the request
• MHDC authorizes adding language to the lease that
  allows for a rent increase at any point during
  the year with a 30 day notice maximum of 1
  increase per year

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Top 5 Occupancy Errors

• Not Submitting
• Not providing explanations if occupancy is below
  85
• Reporting the number of occupied units instead of
  vacant units
• Did not answer the waiting list question
• Reporting on incorrect bedroom sizes

Failure to report occupancy timely places the
property in Non-Compliance
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Occupancy
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Under 85
3 consecutive months below 85 (after
stabilization) places the property on the
Commission Watch List.
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Questions