Spectrum 2015 Reporting Format

Written by Wesley Chisholm, Spectrum Enterprises

SPECTRUM 2015 REPORTING FORMAT

Spectrum has recently completed an update to the reporting format we use for investor clients.  We have refined our reports to include more information, to improve the text quality for reading and printing, and to make it easier for property management staff to understand what corrections are needed.  It may take some time before you feel familiar with these reports as they are a departure from what our previous reports looked like.  However, I have spent a lot of time on this and I firmly believe these are an improvement for you and your partners.  Spectrum 2015 Sample Investor Report is available for review.

Going forward, all reports will consist of a cover letter along with the following items:

 Exhibit A: “File Results Based on Risk”

The primary concerns of our work relate to income eligibility, student eligibility, and rent restriction.  This exhibit lists all units sorted to show files with a highest risk of noncompliance first.  These files should be prioritized by management staff responsible for submitting corrections for re-review. The files with the least risk of noncompliance will be sorted to appear later in the report. The exhibit includes detailed notes from the Spectrum Compliance Analyst to list all issues of potential noncompliance along with suggested corrective action.

 Exhibit B: “File Results Sorted by Unit Number”

This exhibit is a streamlined listing of all files submitted for review.  Each file is sorted by Unit Number and the report can be compared to rent roll or year-end status reports prepared by the site.  Although the full text of our findings is not included here, the exhibit does include our file ratings.  Also listed is the tenant name; move in date; bedroom size; set aside election; income; rent; and utility allowance.  This exhibit includes a summary of unit mix (bedroom size and set aside elections) which can be compared to the property’s tax credit application filed with the HFA.

 Exhibit C: “Spectrum Review of Management Procedures”

In this exhibit we assess critical procedures related to the organizational structure of tenant files; how applicants are screened for eligibility; how income/assets are verified; whether the manager tests income using a variety of approaches; whether the correct income and rent limits are used; and whether the correct utility allowance is used.  Our Compliance Analyst will provide suggestions on any area that could be improved.

 Exhibit D: “Income and Rent Limits”

Spectrum performs an independent calculation of Section 42 income and rent limits.  Our data is included for your reference.

FILE RATINGS EXPLAINED

On the Exhibit A and Exhibit B reports our Compliance Analyst has summarized a risk rating for each file submitted.  The risk rating includes 2 elements.  The overall household/unit LIHTC eligibility is ranked as follows:

 Yes: Spectrum Analyst has confirmed the household/unit is eligible based on income; gross rent; and student status.

A: Spectrum Analyst believes the household/unit appears to be eligible based on income; gross rent; and student status.  Additional work is required to make a final determination.

?: Spectrum Analyst is questioning whether the household/unit is eligible based on income; gross rent; or student status.  Additional work is required to make a final determination.

No: Spectrum Analyst has confirmed the household/unit is not eligible based on violations related to income; gross rent; or student status.

 In addition to a determination of household/unit eligibility; our reports reflect a numerical rating to assess overall tenant file compliance and whether the manager should be required to submit additional corrective materials.  Here is an outline of the ratings criteria used:

Rating 3:  Household/unit is not LIHTC qualified.  File contains severe noncompliance which could result in loss of credit.  Please submit file corrections for re-review.

Rating 2:  File appears to contain at least one issue which may be reported to the IRS as noncompliance.  Please submit file corrections for re-review.

Rating 1:  Unit is qualified; file corrections are suggested however they do not need to be submitted for re-review.           

Rating 0:  Unit is qualified; file does not require corrective action.


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