Georgia Department of Community Affairs 2011 Property Management Manual Section III PROPERTY MANAGEMENT MANUAL INTRODUCTION The purpose of this manual is to outline the requirements and suggestions for management of Affordable Housing monitored by DCA. The manual is not intended to be an all inclusive listing of policies, procedures and management requirements. Rather, it is intended to highlight some of the important areas and requirements. This manual should be the starting point of conversations between DCA and owners/recipients/managers, not the end point. Website, Training and Forms (This section also appears at the beginning of the manual) A. WEBSITE In an effort to make information available to participants in the LIHTC and HOME programs as quickly and efficiently as possible, the Compliance Department posts all general and program wide notices on the Compliance section of the DCA website. The internet address is: http://www.dca.state.ga.us/housing/HousingDevelopment/programs/compliance.asp The Compliance Department no longer sends postcards or other updates to owners or managers except as specifically required or when correspondence or notices are project specific. Using the website not only allows DCA Compliance to notify all owners and managers simultaneously, it also allows DCA to save on the cost of printing and mailing and it has a positive effect on the environment. B. TRAINING The Compliance Department is committed to providing training to the participants in the LIHTC and HOME programs. Current offerings range from basic on-site management and compliance to the advanced principals of the Tax Credit Program. From time to time, Workshops are scheduled when major changes or initiatives are announced. To see a schedule and list of classes currently offered, go to the DCA Compliance website listed above. This information may be found under Related Links; click on the training link. Training can also be provided for individual companies at a site and time agreed to with the Compliance Training Coordinator. Information on cost and availability of this type of training is available on the training page documents. 1. Required Training A representative for the owner/general partner of a funded project is required to successfully complete a compliance-training seminar provided by or sponsored by DCA prior to the beginning of lease-up. The owner of a Tax Credit property will be required to submit to DCA the Certificate of Successful Completion for the Tax Credits training prior to the project's application for 8609's. DCA requires Owners as well as an on-site Property Management Representatives to attend this course. In the event, DCA determines that a property is experiencing compliance problems, additional training may be required for Owners, Property Managers or other project representatives as part of the cure for non-compliance.. Limited partners are strongly encouraged to attend these training seminars, but may elect to have Not sure if this is the current version of the manual? Visit our website at www.tinyurl.com/dcacompliance Georgia Department of Community Affairs 2011 Property Management Manual Property Managers serve as the Limited Partner's representative. Certification testing is required and certificates are awarded upon successful completion of the training. Any Owner, Development or Owner Consultant and Management Company Representatives whose property is awarded DCA Tax Credits for Rehabilitation and that is occupied at the time of the submission of the application must attend DCA Relocation Training Seminar prior to the submission of the an application for funding and must successfully complete the Tax Credit Certification Training no later than thirty (30) days after the awards are announced or a letter of determination is issued. The Relocation Training is a specialty training conducted on a project specific basis. C. FORMS 1. Mandatory Forms DCA mandates that certain forms and formats be utilized by LIHTC program participants. As of the date of publication, the following forms are mandated by the Compliance Department: Affidavit of Child Support AFHMP Affirmative Fair Housing Marketing Plan HOME (Revised by HUD 2010) Annual Owner's Certification LIHTC (Revised annually) Annual Owner's Certification HOME (Revised annually) Certification of Habitability DCA Student Affidavit Employment Verification (Revised 2010) End of Quarterly Reports Form LIHTC Required Lease Addendum HOME Required Lease Addendum Notice of Casualty Loss Placed In Service Notification Pre-Audit Information - Attchmt A Project Concept Change Request Property Management Summary End of Recertification Form Tenant Income Self Certification -New for 2011Tenant Income Certification to be published in 2011 This list and the forms themselves are subject to updating or change. To ensure that the current form is being utilized, visit the compliance page on the website. Mandatory forms are found on the main Compliance Page. Failure to use these forms can result in state non-compliance and increased scrutiny during DCA property reviews. Penalties can include loss of future funding, and a diminished QAP Compliances Scores. 2. Suggested Forms Suggested forms are forms, while not required for use, are recommended as a best practice. There is no penalty for failing to use these forms provided that all the information requested or required can be presented to DCA. Not sure if this is the current version of the manual? Visit our website at www.tinyurl.com/dcacompliance Georgia Department of Community Affairs 2011 Property Management Manual Suggested forms are subject to updating or change. To ensure that the current form is being utilized, visit the compliance page on the website. Suggested forms are found on the main Compliance Page. I. Property Management Selection II. Management and Occupancy Plan III. Property Manager Insurance Requirements IV. Property Management Annual Reporting Requirements This Manual is applicable to multifamily projects with 12 or more units. As noted, certain sections are applicable for projects receiving Low-Income Housing Tax Credits. This Manual also applies to projects funded by the Housing Trust Fund for the Homeless Commission. Definitions: The following words and terms, when used in this guide, shall have the meanings shown below, unless the context clearly indicates otherwise: Affirmative Fair Housing Marketing Plan: is a plan to provide information and otherwise attract eligible persons from all racial, ethnic and gender groups who would least likely apply for residence; DCA: is the Georgia Department of Community Affairs; Development: means the rental community, i.e. all the apartments and the common areas under one ownership; Elderly family: is one in which the head of household, spouse or sole member is 62 years of age or older, handicapped or disabled; Family is two or more persons sharing residency and related by blood, marriage or operation of law, or who demonstrate a stable relationship over a period of time; Housing Trust Fund is an instrumentality of the State of Georgia created by the General Assembly or the State of Georgia to provide financial assistance to sponsors of housing programs and activities which are designed to mitigate the problem of homelessness in the State of Georgia; Not sure if this is the current version of the manual? Visit our website at www.tinyurl.com/dcacompliance Georgia Department of Community Affairs 2011 Property Management Manual Housing for Older Persons means housing intended and operated for occupancy by persons 55 years of age or older ("Older Persons"). According to Georgia law, such housing must also have significant facilities and service serving the Older Persons population even though the requirement has been eliminated from the federal definition of an elderly project. At least 80% of the total occupied units in such a housing project must be occupied by at least one Older Person. Up to 20% of the units may be occupied by others, including the landlord's employees, the surviving spouses or children of residents who were Older Persons when they died, and caregivers. DCA will monitor the required facilities and services during the applicable Compliance Period or the Period of Affordability whichever is longer. Household is one or more persons who share or will share a residence; HUD is the United States Department of Housing and Urban Development; Lease shall mean the form of agreement between the Borrower and a Tenant under the terms of which said Tenant is entitled to enjoy occupancy of a dwelling unit; LIHTC: Low Income Housing Tax Credit. Minority is a household in which one or more members are Black, Hispanic, American Indian or Asian/Pacific Islander; Non-Housing Income shall mean all amounts actually collected by the Manager, other than the rental income from the residential units, including but not limited to (1) vending and laundry machine income, and (2) income received from rental of parking spaces, garage spaces and commercial space; Rent shall mean the monthly amount that a Tenant is obligated to pay the Owner pursuant to the terms of a Lease; Restrictive Covenants refers to the land use restriction agreement executed by Owner which sets forth certain rent and/or occupancy restrictions; and Tenant shall mean a person occupying a dwelling unit in the Development pursuant to a Lease; Variance Report is a quarterly and annual financial report tracking income and spending by category. The Variance Report identifies: budgeted goals, actual spending, the difference (or variance) between the budget and actual spending. It also provides an explanation for the variances and the plans to correct it for the future. Generally, variances of 10% or more should be explained. Not sure if this is the current version of the manual? Visit our website at www.tinyurl.com/dcacompliance Georgia Department of Community Affairs 2011 Property Management Manual I. PROPERTY MANAGER SELECTION Management Companies wishing to manage developments financed by DCA HOME loans must be evaluated and approved by DCA and determined to be experienced and in good compliance standing with DCA and with other state and federal agencies. Management companies must be specifically approved for each HOME site. For the LIHTC programs, once approved, the management company is approved to manage any LIHTC site. To facilitate the evaluation, the prospective Property Management Companies must complete the Compliance Work Book, which is located under mandatory forms on the DCA Compliance website. Complete the form for the most recent funding round. The management evaluation includes the following areas but is not limited to the following areas: A. Type of property to be managed; B. Principals and employees of the management company; C. Management company portfolio and experience; D. Financial reporting and operating controls; E. Compliance status in GA, with other states and with federal programs. F. Physical condition of sample portfolio properties; and DCA retains the right to obtain credit reports and other pertinent information on the management company, the company principals and employees. Deficiencies in any of the above areas may need to be corrected or explained before DCA will approve the Property Manager. Based on the results of the management evaluation, DCA will either approve or deny the proposed management company. Management Companies may be removed from the DCA Experienced Property Management Company list. Examples of the reasons for removal are: significant changes in the status of management portfolio (as submitted in Performance Workbook), financial reporting or operating irregularities, repetitive physical or administrative non-compliance not corrected during the assigned cure period, failure to respond to requests for monitoring within the proscribed time period, failure to respond to audit findings and debarment by and other federal or state agency. Property Managers are generally eligible to manage all types of DCA-financed developments. In the case where a Property Manager is granted limited approval, applicable conditions will be specified. In those cases where the request for approval is rejected, DCA will state the reasons for rejection, and Property Manager may not be eligible to manage any DCA-financed development until deficiencies are corrected. Consequently, the development team may be required to engage another Property Manager acceptable to DCA. A Property Manager, who received limited approval, or whose request for approval was rejected, may reapply for approval status. DCA will review a request for reapplication if the reasons for rejection are corrected or other significant changes have occurred. The period for Not sure if this is the current version of the manual? Visit our website at www.tinyurl.com/dcacompliance Georgia Department of Community Affairs 2011 Property Management Manual re-applying is one year from the date of the decision. Property Management Companies who intend to resign property management responsibilities must provide the Borrower with no less than 60 days prior written notice. The Borrower must notify DCA Asset Management (in writing) of the resignation decision within two business days after receiving such notice. Following the Property Manager's resignation notice, Borrower shall propose a replacement Property Manager and provide DCA Asset Management with such information as outlined in this section no later than 30 days prior to the proposed takeover by new management company. Failure of the Borrower to notify DCA of a change will be considered a major non-compliance. For LIHTC properties, it is incumbent on the management company to notify DCA when assuming management or turning management over to another company. Failing to notify DCA of the management change will result in the new and previous management companies being held for responsible at scoring for non-compliance during any period where DCA was not notified of the change. II. MANAGEMENT AND OCCUPANCY PLAN Prior to the beginning of lease-up, the Borrower/Recipient (a/k/a Owner) and Manager are to submit a comprehensive property specific Management and Occupancy Plan ("Plan") detailing planned management activities. If the rental housing is assisted with HOME funds, the following procedures must comply with the HOME Final Rule: Income determinations Rents determinations Tenants and participants protections Affirmative marketing; disability status and minority outreach program Fair Housing Any other applicable state and federal requirements The Plan must be attached as an exhibit to the Management Agreement and all statements contained in the Plan should be incorporated into the Management Agreement. At a minimum, the Plan must address the areas outlined below: A. Relationship between Borrower and Property Manager Items to be addressed in this section of the Plan must include: 1. A description of the Borrower's goals and objectives, including a brief summary of the Borrower's expectations to achieve and sustain lease-up; 2. A description of the legal and corporate relationship between the Borrower and Manager, including a history of all prior services performed by the Manager on the Borrower's behalf; 3. A description of the limitations of management's authority, identifying those requiring the Borrower's prior approval, and the type of authority the Manager has in dealing with emergency situations; and Not sure if this is the current version of the manual? Visit our website at www.tinyurl.com/dcacompliance Georgia Department of Community Affairs 2011 Property Management Manual 4. A description of the levels of authority for disbursements and Borrower limitations. B. Development Characteristics This section of the Plan must include a description of the project development including location, site, neighborhood characteristics, amenities, type/number of building(s), number of stories, number of units, number of bedrooms/distribution, types of financial subsidy(s) and tenant composition (e.g. family, elderly or mixed). A copy of the Property Management Summary, listed under mandatory forms on the DCA Compliance website must be completed and submitted in electronic format to the Compliance Department. C. Property Manager's Structure of Organization This section of the Plan must include a description of the Property Manager's organization and history. Items to be addressed in this section of the Plan must include: 1. Names and resumes of personnel (if known) responsible for on-site management activities; 2. Job descriptions for both supervisory and on-site personnel, indicating; a. Job title; b. Scope and purpose of job; c. Specific duties and responsibilities associated with the job; d. Required qualifications for the position; and e. Salary (including benefits) to be charged as a project expense. f. Completion of the Property Management Staffing Breakdown form. 4. First year proposed budget for subject property which details the expenses for staff salaries, fringe benefits by position type. This budget must also include the overall management fee charged to the project. Generally, this budget should align with the proposed management fees and staffing proposed in the application budget for the subject property. If items have changed an explanation for those changes must be included. D. Policies and Procedures for Occupancy Items to be addressed in this section of the Plan must include: 1. Plan for advertising (e.g. television, radio, newspapers, signage, etc.); 2. Procedures for implementing an Affirmative Fair Housing Marketing Plan(Form HUD 935.2), including the strategy for marketing the rental units for both initial occupancy and for ongoing occupancy; Not sure if this is the current version of the manual? Visit our website at www.tinyurl.com/dcacompliance Georgia Department of Community Affairs 2011 Property Management Manual 3. Policy/procedures for screening and processing applications (including sample of the application and other appropriate forms); 4. Procedures for determining tenant income eligibility; 5. Tenant Selection policy/procedures (including priorities and preferences for admission, limitations on admission for over-income tenants and prohibited conditions for admission); 6. If an application fee will be charged to prospective tenants for credit and criminal reports, a copy of the reports must be available for DCA auditors. Management is required to document any file where the applicant failed the normal screening procedure and is allowed to enter into a lease. 7. Procedures for income certification, recertification and verification (including sample forms); 8. Procedures for notifying acceptable applicants and rejecting applicants; 9. Procedures for establishing waiting list; 10. Policy/procedures regarding non-discrimination; and 11. Policy/procedures for temporary tenant relocation (if applicable). E. Leasing Policies and Procedures Items to be addressed in this section of the Plan must include: 1. Procedures for "Move-in/Move-out" (including samples forms); 2. Procedures for handling security deposits; 3. Procedures for lease termination and eviction; 4. A written description of "House Rules" or Community Policies concerning such issues as car repairs in parking lots, loud music/ television, pool conduct, long term visitors, etc, including procedures for enforcing the rules and defining guests and how long a guest may visit before they must complete an application and be approved for residency; 5. List of all optional fees 6. List of all non-optional fees 7. Policies and procedures regarding management inspection of units, inspection of common space, HVAC filter change and pest control. 8. Standard lease forms. 9. Procedures to obtain coverage under federal crime insurance (if applicable). F. Rent Collection Policies and Procedures Items to be addressed in this section of the Plan must include: Not sure if this is the current version of the manual? Visit our website at www.tinyurl.com/dcacompliance Georgia Department of Community Affairs 2011 Property Management Manual 1. Procedures for rent collection (who, when, where and how); 2. Procedures for collecting late charges NSF checks and amount charged; 3. Procedures for collecting accounts receivable noting date when delinquent accounts will be referred to an attorney; 4. Samples of collection and other form letters; 5. Collection procedures for laundry and other receivables; and 6. Procedures for rental increases (must comply with contractual and regulatory obligations). 7. Process of collecting damage charges from current tenants when damages exceed normal wear and tear. G. Accounting Policies and Procedures Items to be addressed in this section of the Plan must include: 1. Location of tenant records; 2. Description of the accounting system including the type of software system/program with samples of an income statement, balance sheet and cash flow statement; and 3. Description of internal controls and frequency of internal auditing including payables/receivables, cash disbursements; and 4. Statement that the management entity will provide financial statements for the subject project to the Owner and/or DCA annually for Owner and DCA review. 5. Location of Tenant Credit, Criminal and Tenant/Landlord Verifications. And the ability to produce billing from company providing the verifications upon request. 6. Copies of all utility provider bills and third party utility billing service documents and invoices H. Maintenance and Security Procedures Items to be addressed in this section of the Plan must include: 1. Procedures for conducting and following-up on quarterly property inspections; 2. Procedures for conducting quarterly unit inspections; who will be conducting inspections) 3. How often the owner or general partners will inspect the development. At least annually is recommended. 4. Procedures and schedules for regular cleaning and maintenance of all project amenities and common areas (e.g. grounds, hallways, clubhouse, gutters, concrete and paving, etc.); 5. Procedures for assessing the need and for scheduling of apartment/exterior painting and other renovations; 6. Procedures for controlling tenant maintenance requests, including samples of work order forms and system used to manage; 7. Procedures and schedules for pest and insect exterminating services and for handling special tenant requests; and documentation of contract. Not sure if this is the current version of the manual? Visit our website at www.tinyurl.com/dcacompliance Georgia Department of Community Affairs 2011 Property Management Manual 8. Standard maintenance requirements to be performed by on-site staff and outside contractors; providing copies of all licenses (as required). 9. Procedures and schedules for preventative maintenance programs (mechanical systems); providing documentation of all licenses (as required). 10. Procedures for assessing security needs and resolving safety issues. Also provide policies and procedure for controlling keys, monitoring smoke alarm systems, pull cord systems, fire extinguishers, etc. 11. Policy which states management company's agreement to immediately notify DCA of any reportable incidents that occur on the subject property using DCA Casualty Loss Form. 12. Statement of office days of operation and hours and the days and hours each amenity will be available to tenant. And agreement to notify DCA if management proposes changing the hours 13. Contact information for Supportive Service Provider (if applicable) 14. Statement that emergency contact number is posted at office along with office hours and agreement that the contact for Management Company headquarters will be posted in plain sight (name and direct line). Move out fees, Move out records and fees (Please note this section is taken directly from the LIHTC manual) In 2008, DCA site reviews indicated that excessive fees were being charged to tenants at move-out. Fees are acceptable only if damages exceed reasonable wear and tear. In cases where excessive wear and tear is well documented (photos), the Owner/Manager must be able to provide documentation of the actual cost for repair or replacement of non-capital items. In the case of capital items, replacement/repair may not exceed the actual pro-rated replacement cost based on expected life span. Documentation of charges should include copies of bills from vendors, with contact phone numbers, showing that the work was completed. (If a vendor fails to cooperate with a DCA investigation, the bill will be disallowed, and the charge included in rent.) Move-Out Cost Manual Each site must keep a Move-Out Cost Manual. The following is a list of standards and materials to be kept in the manual: Section 1: Standard charges. For standard charges to residents at move out, such as drip pans, light bulbs, hardware and non-capitol fixtures, a price list by vendor must be maintained at the site. This manual may be updated at any time, and records must be kept for three years. Section 2: Labor. If labor is to be billed to a resident, it must be billed on an actual cost basis. Only time in excess of the normal turn process should be billed. Example: A tenant moves out after one year. It is determined that the tenant did damage in excess of normal wear and tear. If the average turn time for a unit is 4 hours, only time in excess of Not sure if this is the current version of the manual? Visit our website at www.tinyurl.com/dcacompliance Georgia Department of Community Affairs 2011 Property Management Manual 4 hours may be billed to the tenant. The time to complete the task should be reasonable, and a copy of time card or sheet kept with the file. Section 3: Outside contractors. A) The property and vendor should agree in writing that the vendor will respond all questions posed by DCA regarding a bill or service. A copy of this agreement must be included in this section. When an outside contractor is being used to make repairs to a unit (turn key, plumber, electrician), a copy of their bill must be maintained with the resident move out file. In the case where charges from normal turnkey vendors are being billed, it should be clear what the normal fee is, and what excess fee was charged. The bill should be signed by the vendor. Written management company policy on move-out charges and adjustments. Resident Files Move-In All resident files should have a copy of the signed move-in condition form. Each line detail an item or unit amenity should be initialed separately. Blank forms with "OK" written once are not acceptable. The form should be sufficiently detailed to document the unit condition at move in. Move-Out. A detailed report of the move-out condition should be in all files of previous tenants. Residents must be notified of their right to conduct a move out inspection with the management. A copy of this notification should be in the file. A copy of the letter notifying the resident of proposed charges, and their legal rights under Georgia Landlord Tenant Law must be in the file. The charges in this notice must be itemized and documentation of each charge must also be in the file. If the owner/manager is making damage claims in excess of the deposit, then pictures must be included in the file as well as complete documentation of all the charges. I. Tenant Services Items to be addressed in this section of the Plan must include: 1. Plan and procedures for providing tenant orientation; 2. The role management will take in the tenants' organization, programs, activities and sources of funding (e.g. recreation, social service programs, etc.), if applicable; and evidence that all entities providing service satisfy all local, state and federal licensing requirements. 3. Procedures for handling all types of tenant grievances; 4. Plan for providing proposed social services and activities as presented in the application for the subject property. Plan should include Not sure if this is the current version of the manual? Visit our website at www.tinyurl.com/dcacompliance Georgia Department of Community Affairs 2011 Property Management Manual frequency of events, marketing strategies, anticipated participation, staffing required, and the method of recording tenant participation. A record of the events and participation must be available for auditors. J. Management Fee This section of the Plan should include a description of the management fee designed to compensate the Property Management Company for directing and supervising project operations in accordance with DCA, HUD and industry guidelines and standards. The management fee must be quoted as a percentage of rental and other ancillary income collections. This fee should not exceed industry standards unless the management company has recently taken over a DCA troubled property. K. Marketing This section must include a description of the overall marketing strategy and the associated costs of furnishing a floating model apartment, hiring/training support staff (if applicable),lease-up incentives (staff and tenant) and advertising (e.g. publications, signage, collateral materials, etc.) the subject project. The section must include the annual marketing budget. Note: Any changes to the information must be provided to DCA Asset Management for review. Substantive material changes to the information, such as an adjustment in the management fee, require prior written approval from DCA Asset Management. A detailed explanation of any changes in this information must be submitted along with the Property Management Annual Report. III. PROPERTY MANAGEMENT INSURANCE REQUIREMENTS The Property Management Company shall be required to procure and maintain the insurance coverage in such form and substance specified in the Insurance Guide section of the Application Manual from the year of funding. The Management Company /Owner shall provide a copy of any claim or notification sent to the Insurance Company to DCA's Multifamily Asset Management Department within 24 hours of the initial correspondence or contact. The Management Company / Owner will continue to provide copies of any correspondence, or communication, between the Insurer and the Management Company /Owner regarding any outstanding issue connected to the property until the issues is resolved. Note: The insurance required to be maintained must be fully paid and shall be issued with appropriate coverage in such amounts, in such form and substance, and with such expiration dates as are acceptable to DCA. Such policies are to provide that the insurer shall give DCA at least thirty (30) days prior written notice of cancellation/termination/material change, and to provide that no action by the insured shall invalidate or diminish the insurance or bond(s) provided to DCA. Refer to the Insurance Requirements section of the Application Manual for the year of funding, the General Requirements section for details. IV. PROPERTY MANAGEMENT ANNUAL REPORTING REQIREMENTS Please refer to the LIHTC and HOME Compliance Manuals for Compliance reporting requirements Not sure if this is the current version of the manual? Visit our website at www.tinyurl.com/dcacompliance Georgia Department of Community Affairs 2011 Property Management Manual Variance Reports. Please see the Management Manual Atch 1 for a sample variance report. Variance reports are a tool that may assist the owner and DCA when evaluating a property. A variance report is an example of management due diligence, and may be requested at any time. The Compliance Department expects to post a DCA Management Report during 2011. Notification of requirements will be posted on the DCA website at www.tinyurl.com/dcacompliance. It is the responsibility of the borrower/recipient to review the forms when posted, and comply with the requirements. To get notification of when the website is updated, including this positing email: compliance@dca.ga.gov with "Add me to your email list" in the subject line. Not sure if this is the current version of the manual? Visit our website at www.tinyurl.com/dcacompliance