Quarterly Owner s Financial Certification Reporting Instructions Quarterly Owner Financial Certification Reports are due by the 15 th business day of April (for the Quarter Jan Mar), July (for the Quarter Apr Jun), October (for the Quarter Jul Sept), and January (for the Quarter Oct Dec) of each year for all Exchange and TCAP developments. Quarterly Reports are completed in the Contract Monitoring and Tracking System (CMTS) and will also require submission of the following items (preferred submission method is as an uploaded attachment in CMTS submitted under the name of your Asset Manager): A Balance Sheet as of the end of the applicable quarter, An Income Statement, Operating Statement, or Profit and Loss Statement as of the end of the applicable quarter, A Statement of Cash flow as of the end of the applicable quarter, and Any other items requested by your Asset Manager to close the review and analysis of your report. Reports are required by the Department s Uniform Multifamily Rules, Subchapter F, Section 10.607(d)(1) and by Section 9.1 of the Exchange Subaward Agreement for Exchange developments. Failure to submit quarterly reports will result in errors in your reporting system and will require you to back-enter previous reports before you can correct the non-compliance. You may be asked by your Asset Manager to complete all reports prior to receiving approval of any other activity. Questions about the Quarterly Report can be directed to your Asset Manager at any time. Note that income and expense categories are further detailed in Subchapter D of the Uniform Multifamily Rules (see Section 10.302(d)(1)-(4) for general guidelines and definitions). Accessing the Report To access the CMTS system, use the log in located on the Compliance page under Housing Contract System : 1
1) From the Your Property Listings page, select Unit Status Report. 2) Select Submit Reports from the top menu on the screen: 3) Scroll down until you see the Quarterly Owners Financial Certification header the Reports, Due Dates, and link to the Entry screen will appear in the table: 4) From the above menu, click Start, Edit, or View before submission to go into your report. Other actions from this table: Check to see if a report has been submitted by viewing the Submitted Date. If the Department has received the report, the date of submission will show up in the Submitted Date column. If it shows Has not been submitted the Department has not received the report. Submit your report. Once you have completed your report, you can click Submit from the next column. Preview your report submission or print past submissions. Preview before submitted or Print as Submitted from the following column to see a PDF of your report or print a copy for your records. 2
In general, the quarterly report is divided into three major sections: 1) Vacancy Information, 2) Income Information, and 3) Expense Information. These sections are detailed below: Part One (Occupancy Information) The first screen will show your total number of units and will request additional information on vacancy The Development name and CMTS # will show at the top of the screen and beneath it will be a table labeled Vacancy Information. The Total Units at the Development will be auto-populated in the screen for you. 1) Enter the total number of units currently vacant as of the date of report submission. Example: If, as of the date of your report entry, you have 3 vacant units, enter 3 in the box to the right of the question. 2) Enter the number of employee occupied or model units. Example: If your Development has one model unit and one Employee occupied unit, enter 2 in the box to the right of the question. 3) The system will auto-populate a percentage of vacant units for you based on the data you entered and the data in CMTS in the property profile. If the percentage shown is greater than 10%, you must provide a short explanation regarding the vacancy. Example: Ten units are vacant out of 76 total units. The vacancy % shown (# of vacant units / Total units model or employee occupied units) is 13.16%. The following comment is entered: The property has seen a decline in applicants this year after a new property opened around the block. Concessions will be given over the next three months to draw in potential renters and the property has widened its marketing attempts to neighboring cities. A market survey will be conducted to assess rents. 4) Pressing the Save button will default to moving you on to the Income section of the report and save your entries. If you do not wish to leave the page, click the radio button to the top option of Calculate Percentage, Save and Return to This Page or select the Return to the My Report Listing to go back to your 3
Property List. If you return to your Property List without first clicking the save button, your entries will not be saved. NOTE: If the vacancy shows as larger than 10% and a short explanation regarding the vacancy is not entered, the system s error validation will not let you continue with your report until an explanation is entered. Part Two (Quarterly Income) To avoid errors, DO NOT cut and paste into the online forms or use your browser buttons use only the save functions at the bottom of the screen and the links that appear at the bottom of the screen to navigate through the report. DO NOT use commas or dollar signs in your entries, as these will cause system errors. DO NOT enter negative numbers the system will deduct these items for you without negative number notations. Note that any auto-calculations will not appear until the page is saved if you automatically save and go on in the report, you will still be able to get back and preview the auto calculations on the previous screen using the buttons and links at the bottom of the screen. 1) Using the property s income statement for the three months of the quarter, enter the potential gross rental income (income received from rent) for the property for only the quarter for which you are reporting. Include items like rental subsidies in the rent total and deduct items such as loss to lease. 2) Enter the total of all secondary income received for the property (such as laundry fees, application fees, carport or storage fees, etc.) and enter a short description of all secondary income in the narrative space below. The average secondary income per unit per month will auto-calculate but not until the page is saved. 4
3) Enter any other non-rental income that is not considered rental or secondary income and enter a short description in the narrative space below. 4) Enter the total for any vacancy and collection loss (enter only as a positive number). 5) Enter the total of any rental concessions (move in rent specials, etc.) (enter only as a positive number). 6) Enter any loss from non-income or employee units (such as security officer units, manager units, or office staff unit discounts) (enter only as a positive number). 7) Select Calculate Totals, Save and Return to This Page to review the income information entered and ensure it matches the totals on the profit and loss or operating statement. Once the information is reviewed and all corrections are made, select Save Then Owners Financial Certification Annual Operating Expenses Page to move on to entering expenses. NOTE: The system will auto-calculate Potential Gross Quarterly Income and Effective Gross Quarterly Income, but the auto-totals will not appear until the page is saved by pressing the Save button shown below. The system will default to saving and moving to the expenses page if you don t select to return to the page (see the top option in the graphic above), but you will be able to get back to the Income page by scrolling to the bottom of the Expense page and selecting Calculate Totals, Save and Return to Income page. 5
Part Three (Expenses) To avoid errors, please do not cut and paste into the online forms or use your browser buttons use only the save functions at the bottom of the screen and the links that appear at the bottom of the screen to navigate through the report. Please do not use commas or dollar signs in your entries, as these will cause system errors. Please do not enter negative numbers the system will deduct these items for you without negative number notations. Also note that if you enter 0 or 0.00 in any Other or Miscellaneous blank in a category that the system will not allow you to move forward without entering a comment please just leave those fields blank if they do not apply. NOTE: Auto-calculations will not appear until the page is saved if you automatically save and go on in the report, you will still be able to get back and preview the auto calculations on the previous screen using the buttons and links at the bottom of the screen. 1) Enter all General and Administrative Expenses by the categories listed. If the categories in the operating statement don t match the items as categorized on the screen, try to make the best determinations on where the listed items should go. Enter total accounting expenses for the quarter, advertising expenses for the quarter, etc. Include items not considered other office expenses that do not match any other category as Miscellaneous and describe them in the narrative box below. Depreciation, amortization, and other non-cash expenses should not be included in the Annual Owner s Financial Certification. Partnership related asset management expenses and partnership related accounting/audit fees should not be included. 2) Enter the total management fees for the year. If management fees were included in the General and Administrative Expenses, make sure they are subtracted from the General and Administrative Expenses so Expenses are not overstated. 3) Enter the total payroll, payroll taxes, and employee benefits expenses for management employees and maintenance employees (for example, total the salaries, payroll taxes, and benefits expenses for all office employees in the management block and total the salaries, payroll taxes, and benefits expenses for all maintenance employees in the maintenance block). Enter any other salary, payroll, payroll tax, or 6
benefit expenses not included in the above totals in Other and describe them in the narrative space below. Payroll expenses should not include third-party security or tenant service contracts. Staffing specific to tenant services, security or other staffing not related to customary property operations should be itemized and included in other expenses or tenant services expenses. 4) Enter all quarterly Repairs and Maintenance Expenses by the categories listed. If the categories in the operating statement don t match, try to make the best determinations on where your listed items should go. Enter total elevator, exterminating, grounds keeping, unit make-ready, repairs expenses, etc. Third party maintenance contracts should also be included. Please do not include costs that are customarily capitalized and would result from major replacements or renovations. 5) Enter the total quarterly utilities expenses for the property (make sure that electrical, natural gas, garbage/trash, and water/sewer are entered separately). Other fuel might include oil heat or etc. Include any other utilities in other and describe them in the narrative box below. 6) Enter the quarterly property insurance expense for the property. Insurance premiums will include cost of insurance coverage for the buildings, contents, and general liability, but should not include health or workman s compensation insurance, which should be added into payroll costs. 7
The system will auto-calculate the net rentable square footage from CMTS and the property insurance rate per net rentable square foot per month but the figures will not appear until the report is saved. 7) Enter the property taxes paid for the quarter and any personal property tax for the quarter. Payroll taxes should not be included in this item but should be directed to payroll expenses. Personal property tax must be described in the available narrative space (include the title of the tax and a breakdown of multiple personal property tax expense line items). 8) Enter the quarterly amount contributed to the reserve for replacements account. These will be the periodic deposits to a reserve account to pay for the future replacement or major repair of building systems and components (generally items considered capital costs). For Developments mixed with HOME funds, your reserve payments per unit must be equal or greater to the amount stated in your HOME LURA. The system will auto-calculate the amount of reserves contributed per unit per year but the figure will not appear until the report is saved. The system will also auto-calculate the total quarterly reserve for replacement contribution (which will reiterate your above entry). 12) Enter Other Expenses as shown, including Cable TV, Support Services contract fees, Compliance fees, security fees, and any other reasonable customary and documented property-level operating expenses. Describe the other expenses entered in the narrative box below. This expense category should not include tenant reimbursements, depreciation, interest expense, lender or syndicator s asset management fees, or other ongoing partnership fees. 8
The system will auto-calculate the Total Other Expenses but the figure will not appear until the report is saved. The system will also auto-calculate the total annual expenses (each item total from the expenses section will be totaled) and will auto-calculate Net Operating Income (NOI) or the total income remaining after all expenses (operating, replacement reserves, taxes, etc.) are subtracted (Total EGI Total Expenses). 13) Enter all debt service. Select the Lienholder position and then enter the name of the lender in the Debt Service 1 Comment Box. List the amount paid in annual debt service in the expense box on the right side of the screen (enter the total amount of payments made for the quarter principal and interest, which can be found on the property s loan statements). If TDHCA is the first lien lender, please select, 1 st Lienholder TDHCA and then again list TDHCA in the Debt Service 1 Comment box. If TDHCA is another position lienholder, just choose the appropriate lien position and list TDHCA in the Debt Service Comment box under the appropriate lien position. The system will auto-calculate total debt service and Debt Coverage Ratio (NOI/Debt Service Total) from the blanks above. Net Cash flow will also calculate below this section. If the Net Cash Flow calculated by the system is a negative number, include an explanation of the plans to identify or resolve any current operating issues in the narrative box below. NOTE: The report will not allow you to move on until negative net cash flow is described. Example: The property experienced both a larger than average vacancy rate and higher than average repair and maintenance costs related to unit turnover during the quarter. A new management team will be brought in by the Owner to assist with retaining current residents. The Owner has also recently implemented a resident survey to determine why vacancy is increasing at the property. 14) Enter any Capital Improvements expensed during the quarter. Enter a short description for the item (for example, Carpet replacements or roof repair) and then select the Type of Account that was 9
used from the drop down box. You can choose either First Lien Reserve for Replacement Account or Other Reserve for Replacement Account. If you select Other Reserve for Replacement Account, describe the type of account in the narrative box below. Identify the amount for the capital item in the Amount box. The system will auto-calculate the total capital improvements but the figure will not appear until the report is saved. 15) Optional: Enter Below the Line Expenses. Below the line expense categories were added based on requests from external users; however, these fees will not be added to the expense totals above. Entering below the line expenses is optional for Owners and Agents. 16) Enter whether all required reserve accounts have been established and enter the Replacement Reserve Account information in the following table. The Exchange Subaward Agreement (Section 8) requires the establishment of a reserve account for capital replacements and a minimum reserve amount based on Texas Government Code. It also required an Operating Lease-Up Reserve and Special Reserve Account. If all of these accounts were established as required, respond yes. If you have not established the Special Reserve Account, select No. TCAP Written Agreements required a minimum reserve in Section 8.1. If the account was established as required, repond yes. If it was not established as required or is not being funded with the minimum amount per unit per year, enter no. Enter the Replacement Reserve Account information in the following table: 10
17) Exchange Developments ONLY must also indicate whether there has been more than $10,000 requested from the replacement reserve during the quarter. This is a requirement in the Exchange Subaward Agreement under Section 8.1, which states that any withdrawal of funds which would cause an aggregate withdrawal in any one calendar to exceed $10,000 is subject to prior written consent of the Asset Manager. If more than $10,000 was drawn during the applicable quarter, regardless of whether the funds were drawn at once or over the course of each month, enter yes. If not, enter no. If the answer was yes, enter the date(s) that TDHCA approved the replacement reserve disbursement(s). If this is a TCAP deal, leave the section blank. 18) Exchange Developments ONLY must enter Special Reserve Account information and whether disbursements have been made from the Special Reserve Account during the applicable quarter. All Exchange Developments are required to have a Special Reserve Account by Section 8.3 of the Exchange Subaward Agreement. Enter the requested Account information. If a disbursement(s) was made, indicate the date(s) of the TDHCA approval(s). 11
19) Enter Calculate Totals, Save, and Move on in the Report. To calculate auto-totals and review your screen, select Calculate Totals, Save and Return to This Page and press the Save button. You can also use other options to return to the Income Page, or you can return to the Property Listings in order to submit the report and then press Save. The report also has links that will return you to the vacancy information page and the property listings pages without saving (NOTE: If you do not first calculate and save the page, your expense data will be lost). 20) To submit the report, click Calculate Totals, Save and Return to Your Property Listings and return to the Property Listing Submit Reports page to select Submit or to Preview the report before submitting. Previewing the report will give you a PDF of the document to review: You can save a copy of the document to your desktop or print a copy for your records from this screen. Clicking out of the report will return you to the Reports screen where you can then submit the report. Click on submit and a new screen will open. 12
21) Enter your name and title in the Preparer s Name and Title blocks and press the final submit button. If the report has successfully submitted, it will now show the submitted date under the submitted date in the Reports table. 13