Management Agent Orientation

1
Management Agent Orientation

• September 24, 2007
• MSHDA Conf Room 235

2
Email Addresses/Contact Information Handout

• Nikki Miller

3
Contact Information
4
Contact Information

• Asset Management Website Address
  http//www.michigan.gov/mshda/0,1607,7-141-8002_28
  177---,00.html
  
• Used for Property Managers to obtain current
  Asset Management Guidelines and forms.
  
• MSHDAs Property Management Admin System
  http//www.michigan.gov/mshda/0,1607,7-141-8002_34
  213---,00.html (click production)
  
• Used to submit MSHDA Financial data tenant data
  over the internet.
  
• Corporate Account needs to be established.
• Specific instructions will be emailed upon
  receipt of Corporate Account Set up form.
  
• Email Addresses to remember
• Nikki Miller - millern_at_michigan.gov
• Create a corporate account for MSHDAs property
  management admin system
  
• MSHDA property management admin system questions
  and written instructions,
  
• To be placed on Asset Managements email contact
  list.
  
• Kathy Feldpausch feldpauschk_at_michigan.gov
  policy related questions
  
• mshdaassetmgt_at_michigan.gov email address used
  for submission of
  
• Monthly Income and Expense Reports
• Audited Financials
• Budgets
• Maggie Droste drostem_at_michigan.gov
• Premium Management Fees

5
Premium Management Fee ProcessEmployee
Dishonesty Insurance Fair Housing

• Maggie Droste

6
Premium Management Fee

• The Premium Management Fee process was created to
  provide a monetary incentive to Management Agents
  for successfully meeting their obligations
  throughout each year. By meeting all of the
  required factors, Management Agents may negotiate
  a fee with the Owners for a per unit per year fee
  in addition to the maximum management fee
  allowed. The Authority applies the consumer
  pricing index to the PMF.

• Mandatory Factors
• Mortgage Payments
• Material Default
• Delinquent Water/Sewer Bills
• Employee Dishonesty/Crime Coverage Liability
  Coverage Property Umbrella Insurance Coverage
  
• Annual Certified Audit/Audit Fees
• Real Estate Tax and Property Insurance Escrows

7
Employee Dishonesty

• Insurance required to protect MSHDAs mortgage
  loan payment. These policies provide coverage
  for all employees of a development without
  exception (including Owners) against theft of the
  collected rent money each month.
• The required amount of coverage is one months
  gross rent potential (for Section 8
  developments), and two months gross rent
  potential for all other MSHDA programs. The
  gross rent potential is taken from the current
  budget.
• The cost of the policy premium is an eligible
  development expense and must be prorated among
  developments based on the amount of required
  coverage.
• Proof of renewal/continuation of existing
  coverage must be submitted each year prior to the
  anniversary date of the policy.

8
Affirmative Fair Housing Marketing Plans

• Initial Plans - must be submitted in narrative
  form and approved by Carl Bryson of MSHDAs Legal
  Division.
  
• Updated Plans - For existing developments or
  Management Agent Changes must be submitted on
  MSHDAs Affirmative Fair Housing Marketing Plan
  form to my attention for review and approval.
• Plans must be updated every 5 years.

9
Budgets

• Kathy Feldpausch/Lisa Fox

10
Budget Information

• Purpose The budgets are a projection of the
  years anticipated expenses and income and are
  submitted to MSHDA on an annual basis.
  
• First Budget Due Year after cutoff occurred.
  MSHDAs Finance Division usually notifies the
  owner and the management agent of the mortgage
  cutoff date one to two years prior to the cutoff
  date.
• Annual Budget Due Dates The due dates for the
  annual budget package submissions are
  
• October 1 Section 236 developments, including
  Section 236 Decoupled developments
  
• November 1 Section 8, Moderate,80/20, 70/30,
  Taxable Bond, 1 Tax-Exempt, TEAM and
  Neighborhood Preservation Program developments.
  
• Acceptable budget packages must be received by
  due date to qualify for the Premium Management
  Fee.
  

11
Budget Information (cont.)

• MSHDA Website The 2008 Budget Guidelines are now
  available on the MSHDA Website. Notification of
  availability was e-mailed to each management
  agent to the e-mail address provided to the
  Office of Asset Management.
• Changes from the previous year are in Comic Sans
  type but it is important to read these guidelines
  carefully, especially if you are a new management
  agent.

12
Budget Information (cont.)

• Customized Budget Templates - MSHDA 450 (upload
  into MITAS) Management agents must use this
  template to submit the 2008 budget information.
  The Proposed 2008 Budget amounts from the 450
  must be uploaded into the MSHDA Property
  Management Admin System posted on the MSHDA
  Website (MITAS). These templates were also
  e-mailed to each management agent by Lisa Fox.
  Each management agents template contains
  specific information for each of the developments
  managed by each agent. This template
  automatically fills in the following
  information
• 2008 Property Liability Insurance amount
• 2008 Real Estate Tax Escrow amount
• 2007 Budget and
• Previous 12-Month Expenses (August 2006-July
  2007, adjusted to reflect prior year payables and
  current year payables).
  
• This template also automatically flags any
  columns where there is a 2000 and 20 variance
  between the proposed budgeted amounts and the
  12-month expenses. Any flagged columns must
  include current contracts, if applicable, and
  detailed notes for the proposed budgeted amount.

13
Budget Information (cont.)

• 2008 Fees
• - Management Fees 415 PUPY
• - Premium Management Fees 66 PUPY and
• - Audit Fees 10,362 for Section 236/8
  developments
  

14
Utility Allowance/Rent Schedule Template

• Utility Allowances/Rent Schedule Template (e-mail
  and hard copies)
  
• Start collecting resident utility information
  approximately 120 days prior to budget submission
  due date
  
• Use utility rates provided in Budget Guidelines
• Enter utility allowance information into the
  MSHDA Utility Allowance/Rent Schedule template.
  Template automatically fills most of the
  information for the Owner Utility Certification
  and the applicable rent schedule for each
  development.
• E-mail the Budget Form 450 and Utility and Rent
  Schedule spreadsheets to MSHDA when completed.
  The correct address and subject line are listed
  on page 2 of the Budget Guidelines.

15
Budget Submission Requirements

• Budget Package Requirements (hard copies)
• Individual exhibits list the budget attachments
  that are required for each development type. All
  budget attachments are included with the Budget
  Guidelines or are available on the MSHDA
  Website
• Certain budget line items must include detailed
  notes, including mathematical computations and
  supportive documents (see page 3 of Budget
  Guidelines).
• Instructions for Completing the MSHDA Budget
  Form Descriptions are given for items to be
  recorded in each budget line item. Read these
  instructions carefully and budget items
  accordingly. The budget line items match the MIE
  line items.

16
Monthly Income and Expenditure Process

• Kathy Feldpausch/Lisa Fox

17
Monthly Income and Expenditure (MIE)

• Purpose The MIE report provides financial
  information to MSHDA in order to monitor
  development performance, ensure compliance with
  state and federal regulations and detect
  potential financial problems.
• MIE Report MSHDAs MIE Report consists of the
  following
  
• Monthly Income Expenditure Report, MSHDA Form
  109
  
• Schedule A Aging of Accounts Receivable
• Schedule B Aging of Trade Accounts Payable
• Schedule C Security Deposit Reconciliation
• MIE Line Item Explanation Worksheet, if
  necessary and
  
• Other financial documentation/schedules, as
  requested

18
MIE Information (cont.)

• MSHDAs MIE Report is a hybrid blend of cash
  and accrual accounting. The top half of the MIE
  (Line 1 through 1f) is accrual accounting. The
  Net Rent Collected line item starts the cash
  basis accounting. This is necessary because many
  of MSHDAs decisions are made on a cash basis
  i.e. draws, escrow releases, etc.
• It is our intent to create a template that
  will allow management agents to submit MIEs
  using accrual accounting and will allow MSHDA to
  convert the information into the format that we
  need to make our decisions

19
MIE Submission Dates

• First MIE Due The initial MIE is due on the
  15th of the month following the month any income
  or expenses occurred. The initial MIE for
  occupied rehabilitated developments must be
  submitted by the 15th of the month following the
  month in which initial closing occurred.
• Monthly Due Dates Acceptable MIEs, including
  Schedules A, B and C are due no later than
  midnight on the 15th of the month following the
  reporting month i.e. January report would be due
  no later than February 15th. There are no
  exceptions to the 15th of the month due date,
  even if the 15th is on a weekend or a holiday.
  Internet or computer problems are not a reason
  for late submissions. Be sure to allow ample
  time to submit the MIE reports.

20
MIE Submission

• MIE Submissions The MIEs must be submitted in
  two ways
  
• Via the Internet website (Nikki Miller) and
• Electronically via e-mail (Jan Stevenson)
• Internet Website Submission
• Nikki Miller will provide you with the Internet
  Website instructions after you have provided her
  with your e-mail profile information.
  
• Electronically via E-Mail
• It is imperative that the MIE Reports be
  electronically e-mailed to the correct address
  and that the correct subject line is included on
  each MIE Report (page 5 of MIE Guidelines).

21
MIE Submission Info (cont.)

• NOTE You will receive one of two messages when
  you send your MIEs electronically. If you do not
  receive one of these messages, do not assume
  that MSHDA received your MIE submission. Contact
  the MSHDA contact person listed above for
  assistance.
• Your electronic submission has been received by
  MSHDA. This message does not mean that your MIE
  is acceptable because it has not yet been
  reviewed for completeness or discrepancies.
  Problems will be brought to you attention by a
  return e-mail message. If there are no problems
  with your MIE, no further message will be
  transmitted or
• Your MIE transmission is incorrect and is being
  returned for correction. The MIE will not be
  logged as received at MSHDA until it is
  corrected.

22
MIE Instructions

• MIE Template Instructions The instructions for
  completing the MIE template are shown on page 9
  of the MIE Guidelines.
  
• Enter all amounts in whole numbers. If you enter
  cents in any amounts, you will receive an ERROR
  message at the end of the MIE
  
• Complete Schedules A, B and C before completing
  the MIE Form 109 because much of the information
  from the schedules automatically transfers to the
  MIE Form (net change in receivables, net change
  in payables, payables, etc). and
• Do not submit the MIE information if you have
  received a NO at the end of the MIE. You need
  to make corrections before submitting the MIE.
  
• MIE Instructions Descriptions are given for
  items to be recorded in each of the MIE line
  items. Read these instructions carefully and
  record the expenses on the appropriate line
  items.

23
Audits

• Kathy Feldpausch/Lisa Fox

24
Audits

• Purpose MSHDA uses the financial statements to
  assess the financial condition and the operations
  of each of its developments as the HUD subsidy
  programs administrator and a lender of
  significant amounts of money.
• The audits are prepared by an independent
  Certified Public Accountant selected by the
  owner.
  

25
Audit Due Dates

• First Audit Due The initial audit is due in the
  first year in which there was occupancy for 60
  days.
  
• Annual Due Date The annual audits must be
  submitted by the auditor within 120 days
  following the developments year-end to qualify
  for the Premium Management Fee.

26
Audits Submission Requirements

• Audit Submission Requirements The following
  audit data must be submitted by the due date
  
• Input Page approved by the auditor and the owner
  (uploaded and approved through MITAS system
  
• Excel Input Worksheet (e-mailed to MSHDA) and
• Financial Statements as an image document, i.e.
  PDF.
  
• These two documents must be e-mailed to MSHDA
  at the same time at the correct address and
  subject line (page 1 of the Audit Guidelines).

27
Audit Required Financial Statements

• Required Financial Statement Documents The
  financial statements submitted to MSHDA must
  include the following documents
  
• Audited Financial Statements (Balance Sheet,
  Income Statement, Owners Equity, Cashflow
  Statement, Notes)
  
• Schedules I II (MSHDA forms)
• Report on Compliance and Internal Controls and
• Agreed Upon Procedures

28
Management Fee Policy Including Central Office
Employees

• Kathy Feldpausch

29
Management Fee Policy

• Purpose MSHDA-approved management fees are paid
  to compensate management agents for services
  performed under the MSHDA-approved Management
  Agreement.
• Calculation of Management Fee MSHDA adjusts the
  management fee annually by applying the Consumers
  Price Index to the previous years management
  fee. The new management fee is listed in the
  annual Budget Guidelines.
• Effective Date The new management fee is
  effective with the first month of the new budget
  year after it has been approved by the owner and
  MSHDA through the yearly budget process.

30
Central Office Employees (COE)

• Violations of Management Fee Policy The steps
  that will be taken if disallowed expenses are
  paid from the developments operating account on
  described in the Management Fee Policy.
• Central Office Employees (COE) A COE is defined
  as an employee who receives a portion of their
  wages and/or benefits from the management fee.
  All COE functions must be paid from the
  management fee. However, sometimes central office
  employee costs can be charged to the
  developments operating account, if it results in
  a cost savings to the development. The following
  conditions must be met to ensure MSHDA approval
  of COE expenses charged to the developments
  operating account
• All COE expenses must meet the Management Fee
  Policy requirements
  

31
Central Office Employee (COE)

• The billing rate for COE services cannot exceed
  the actual compensation rate paid to the COE
  employees for central office duties. The billing
  rate can only include the following items
  Salary, fringe benefits (i.e health insurance,
  pension plans, etc.), employer payroll taxes and
  Workers Compensation
• Reimbursement for travel expenses for COE
  employees must be based on the actual mileage
  from the central office/home base to the
  development and return. Mileage rates cannot
  exceed the standard mileage rate published by the
  IRS.
• NOTE All COE expenses must be recorded in MIE
  Line Item 4b Premium Management Fee.
  

32
Central Office Employees (COE) Cont.

• Year-End Statement If a management agent
  charges COE costs to a developments operating
  account, the management agent must submit a
  year-end statement to MSHDA that summarizes the
  COE expenses. This summary is due to MSHDA
  February 1 of the following calendar year.
• Costs Paid from Management Fees vs Developments
  Operating Account The costs that must be paid
  from the management fee and the costs that may be
  paid from the developments operating account are
  described in the Management Fee Policy. Please
  read these carefully.

33
Management Agreement Items

• MSHDA previously required that new management
  agreements/addendums be submitted on an annual
  basis. The management agreements dated 11/06 or
  after automatically renew and no longer need to
  be resubmitted each year. Changes to the
  following items that are included in the
  management agreement are now approved in the
  budget submission
• Management Fee
• Premium Management Fee and
• Staff assigned to the development, including
  employee names, position description, number of
  hours, hourly rate and total salary (including
  COE positions).
• It is imperative that these items be budgeted
  accurately as they are now the MSHDA-approved
  amounts/items.
  

34
Housing Locator

• Paul Bursley

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Michigan Housing Locator