Property Management & Tax Credit Compliance Getting Started Workshop Tera L. Lockley Virginia...

Property Management & Tax Credit Compliance

Getting Started Workshop

Tera L. Lockley

Virginia Community Development Corporation

Chrystal Strickler

Community Housing Partners Corporation

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.

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

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

Lease-up Activities

Flexible Office Hours

Maintain Traffic Report

Guests Cards

Model Apartment

Sample Traffic Report

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)

Move-in & Move-Out Activities

New Resident Orientation

Review Lease & Attachments

Walk Through Inspection

Move-in / Move-out Inspection Form

Rent Collections

Develop Property Rent Collection Policy & Forms

Review With New Resident At Move-in Orientation

Enforce!

Agreement For Payment Of Delinquent Rent

Sample Rent Collection PolicyRent 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 Month Recommended Action

6th A 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 12th If 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 Date Upon 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 Process Within 24 hours, the sheriff will post writ on resident’s door giving the resident 24 hours to vacate the property.

Sample 5 Day Notice

Sample Agreement For Payment Of Delinquent Rent

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)

Operating Budget Sample

Operating Budget Sample

Operating Budget Sample Narrative

Financial Reporting

Typical Monthly Project Financial Reports

Include: Profit & Loss Statement Balance Sheet Property Rent Roll Accounts Payable Reports Accounts Receivable Reports

Profit & Loss Statement

Sample Balance Sheet

Property Rent Roll Sample Report

Accounts Receivable Sample Report

Accounts Payable Sample Report

Long Range Management Plan

It’s A Multi-Year Forecast

Income Expenses Capital Improvements Capital Needs Assessment

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

Sample Preventive Maintenance Report

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 Act governs 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 StaffMaintenance Staff

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

Management Agent’s Hats

Housing provider

Fair housing advocate

Social worker

Marketing specialist

Accountant

Collection agent

Maintenance Technician

Community organizer

Compliance officer

Leasing agent

IRS SECTION 42

FEDERAL LOW INCOME HOUSINGTAX CREDIT PROGRAM COMPLIANCE OVERVIEW

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

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%)

LIHTC Program Compliance Period

Time Frame For Complying With LIHTC Program Requirements

Minimum Term Of 15 Years Can Be Extended Beyond 15 Years

Record Retention

First Year Original Resident Files Kept For 6 Years Beyond Compliance Period

Future Files Retained For 6 Years After Move-Out Date

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.

Sample Rent Table

Sample Income Table

Utility Allowances

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

Utility Allowances

Evaluated annually 90 days to implement, after publish

date Utility allowance figure is subtracted

from the gross rent

Determining Eligibility

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

Eligibility Checklist

Sample Verification Form

Tenant Income Certification (TIC) Form

Sample Resident File

Rental Application & Application Addendum

Lease & Lease Addendum Privacy Act Letter Tenant Income Certification Income/Asset Verification Forms Other Property Required Forms

Annual Recertification Process

Must Be Completed Within 12 Months After Initial Income Certification

Begin Recertification Process 120 Days Before Lease Anniversary Date

Subsidy Layering Restrictions

Other Program Restrictions

Project Based Section 8HOME Program FundingBond FinancingRural Development

Must Meet All Program Regulations

LIHTC Report of Noncompliance

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

Helpful Resources

VHDA – www.vhda.com

Institute of Real Estate Management – www.irem.org

Mid-Atlantic AHMA – www.midatlanticahma.org

Novogradic – www.novogradic.com