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Property Management & Tax Credit Compliance

This workshop provides an overview of property management activities to help individuals decide whether to manage their own property, think about managing in the future, or choose a third-party management agent. Topics covered include marketing plans, lease-up activities, resident selection criteria, move-in/move-out activities, rent collections, budgeting, financial reporting, preventive maintenance, fair housing laws, and evaluating management agents.

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Property Management & Tax Credit Compliance

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  1. Property Management & Tax Credit Compliance Getting StartedWorkshop Tera L. Lockley Virginia Community Development Corporation Chrystal Strickler Community Housing Partners Corporation

  2. Presentation Goal • To provide an overview of property management activities to help you: • Decide whether you are ready to manage your own property • Think about managing in the future, or • Make an informed decision on how to choose a third-party management agent.

  3. Property Management Basics • Developing A Marketing Plan • Lease-up Activities • Model Lease & Resident Selection Criteria • Move-in & Move-out Activities • Rent Collections • The Operating Budget Process • Financial Reporting • Long Range Management Plan • Preventive Maintenance • Fair Housing AA, VRLTA, Section 504 RA, ADA • Evaluating The Management Agent & Fee

  4. Marketing Plan Should Include • Property Description • Lease-up Goals • Targeted Geographic Area • Marketing Strategy • Newspaper Advertising. Flyers, Brochures • Community Outreach • Resident Referrals • Open Houses • Lease-up Specials • Property Signage • Calendar of Events

  5. Lease-up Activities • Flexible Office Hours • Maintain Traffic Report • Guests Cards • Model Apartment

  6. Sample Traffic Report

  7. Model Lease & Resident Selection Criteria Lease Form • Conform With State LTA Requirements • Should Be Workable, Lawful, Enforceable • Have Attorney Review Typical Resident Selection Criteria* • Employment History • Prior Landlord History • Credit Review • Criminal Background Check *Other criteria may apply depending upon project financing (ex: LIHTC, Section 8, HOME, Bond Program Financing)

  8. Move-in & Move-Out Activities • New Resident Orientation • Review Lease & Attachments • Walk Through Inspection • Move-in / Move-out Inspection Form

  9. Rent Collections • Develop Property Rent Collection Policy & Forms • Review With New Resident At Move-in Orientation • Enforce! • Agreement For Payment Of Delinquent Rent

  10. Sample Rent Collection Policy Rent is due on the first day of each month. If rent is not paid by the 5th of the month the following action is recommended. Day of MonthRecommended Action 6thA five day pay or quit notice should be issued advising the resident to pay rent by the 11th of the month. 12th The landlord will obtain an unlawful detainer from the local court seeking possession of the unit. The court clerk will set a hearing date at that time. After the 12thIf the resident pays rent after an unlawful detainer is obtained, a rent with reservation letter should be sent to resident advising that the landlord reserves the right to proceed to eviction. Court DateUpon court ruling for landlord possession for nonpayment of rent, the resident has 10 days to appeal. After the 11th day, the landlord should obtain a writ of possession from the local sheriffs office. Eviction ProcessWithin 24 hours, the sheriff will post writ on resident’s door giving the resident 24 hours to vacate the property.

  11. Sample 5 Day Notice

  12. Sample Agreement For Payment Of Delinquent Rent

  13. Operating Budget Process • Who Should Be Involved? • Should Include A Budget Narrative • Includes: Income, Expenses & Debt Svc, Reserves, Capital Improvements • Information To Consider • Prior Year & Current YTD Performance • Market Conditions • Who Ya Gonna Call? • Capital Needs (Ex. Roof Replacement)

  14. Operating Budget Sample

  15. Operating Budget Sample

  16. Operating Budget Sample Narrative

  17. Financial Reporting Typical Monthly Project Financial Reports Include: • Profit & Loss Statement • Balance Sheet • Property Rent Roll • Accounts Payable Reports • Accounts Receivable Reports

  18. Profit & Loss Statement

  19. Sample Balance Sheet

  20. Property Rent Roll Sample Report

  21. Accounts Receivable Sample Report

  22. Accounts Payable Sample Report

  23. Long Range Management Plan It’s A Multi-Year Forecast • Income • Expenses • Capital Improvements • Capital Needs Assessment

  24. Preventive Maintenance Plan Benefits • Enhances Marketability & Resident Retention • Increased Cost Effectiveness • Extends Useful Life Of Equipment • Cost Savings To Resident (ex: lower utility costs) Frequency • Monthly, Quarterly, Semi-Annually, Annually

  25. Sample Preventive Maintenance Report

  26. Fair Housing & Uniform Residential LTA • Fair Housing Amendments Act laws provide a critical way to deter and counteract housing discrimination (ex: family composition, discrimination based on race, religion, steering, etc.) • VRLTA Landlord Tenant Actgoverns the rental of residential property. It is composed primarily of state statutory and common law which spells out common rights and obligations of the landlord and resident. • Section 504 Rehabilitation Act of 1973 & ADA of 1990 • Need For Continuing Education • Who Needs It? Property Management Staff Maintenance Staff

  27. Evaluating TheManagement Agent • General Experience • Review Policies & Procedures Manual • Property Management Staff Experience & Training Opportunities • Review Sample Reports • Visit Other Portfolio Properties • Talk With Other Clients

  28. Housing provider Fair housing advocate Social worker Marketing specialist Accountant Collection agent Maintenance Technician Community organizer Management Agent’s Hats Compliance officer Leasing agent

  29. IRS SECTION 42 FEDERAL LOW INCOME HOUSING TAX CREDIT PROGRAM COMPLIANCE OVERVIEW

  30. Low Income Housing Tax Credit Program Compliance • Minimum Set Asides • LIHTC Program Compliance Period • Record Retention • Rent & Income Limits • Determining Eligibility • Sample Resident File • Annual Recertification Process • Subsidy Layering Restrictions • LIHTC Compliance Training Options

  31. Minimum Set Asides Federal Minimum Set Aside Requirements • 20% of units @ 50% of AMI • 40% of units @ 60% of AMI Stricter Occupancy Requirements • Subject To Owner’s Contract With State Agency (Ex: 100% @ 60%)

  32. LIHTC Program Compliance Period • Time Frame For Complying With LIHTC Program Requirements • Minimum Term Of 15 Years • Can Be Extended Beyond 15 Years

  33. Record Retention • First Year Original Resident Files Kept For 6 Years Beyond Compliance Period • Future Files Retained For 6 Years After Move-Out Date

  34. Rent & Income Limits • Must Adhere To LIHTC Program Rent & Income Limits • Hold Harmless/HERA Income Limits • Available For Each Virginia Locality At www.vhda.com.

  35. Sample Rent Table

  36. Sample Income Table

  37. Utility Allowances • 6 available options in Virginia • HUD rent schedule • RD approved budget • PHA(Public Housing Authority) • Utility Company • HUD Utility Model • Engineer

  38. Utility Allowances • Evaluated annually • 90 days to implement, after publish date • Utility allowance figure is subtracted from the gross rent

  39. Determining Eligibility • Eligibility Checklist • Property Application • Student Certification form • Income & Asset Verification Forms • Tenant Income Certification (TIC) • Lease Agreement • Tax Credit Lease Addendum

  40. Eligibility Checklist

  41. Sample Verification Form

  42. Tenant Income Certification (TIC) Form

  43. Sample Resident File • Rental Application & Application Addendum • Lease & Lease Addendum • Privacy Act Letter • Tenant Income Certification • Income/Asset Verification Forms • Other Property Required Forms

  44. Annual Recertification Process • Must Be Completed Within 12 Months After Initial Income Certification • Begin Recertification Process 120 Days Before Lease Anniversary Date

  45. Subsidy Layering Restrictions • Other Program Restrictions Project Based Section 8 HOME Program Funding Bond Financing Rural Development • Must Meet All Program Regulations

  46. LIHTC Report of Noncompliance

  47. LIHTC Compliance Training Options • A.J. Johnson Consulting – 757.599.3964 • Elizabeth Moreland Consulting – 1.800.644.0390 • TheoPro Compliance & Consulting Inc. 1.877.783.1133 • Quadel Consulting – 1.800.987.2581 • Spectrum Consulting – 207.767.8000 • National Center For Housing Mgt. – 1.800.368.5625

  48. Helpful Resources • VHDA –www.vhda.com • Institute of Real Estate Management –www.irem.org • Mid-Atlantic AHMA – www.midatlanticahma.org • Novogradic – www.novogradic.com

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