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Secured Loan Rental Program

In accordance with the Regulatory Agreement and Mortgage executed in conjunction with your Agency mortgage loan you are required to submit audited financial statements to this Agency. (In most cases the audited financial statements are required to be submitted within 90 days of year end).

This document will outline the level of detail the Agency requires in audited financial statements submitted by its borrowers. By obtaining the information outlined below we should be able to limit the number of follow-up questions we have to direct to borrowers.

Please share this memo with your auditors. The Agency will return any financial statements that do not comply with our requirements. Any borrower that is not in full compliance with their regulatory requirements will not be eligible for Reserve for Replacement Account releases, Regulatory Agreement amendments or other actions that require Agency approval.

Please review this memo carefully.

If you have received an Empire Housing Fund or other subsidy program loan where payment of interest and principal is required, if certain conditions exist, you must include in your financial statements a schedule that shows the calculation of cash available for payment. The actual loan documents (Subsidy Loan Note etc.) must be reviewed to determine the actual components of each project's available cash calculation and the allocation of payments made out of available cash. Any interest or principal payment required must be submitted with your audited financial statements.

If any project believes that they can not meet the deadline detailed in their Regulatory Agreement they should request, in writing, an extension of time to submit their audited financial statements. Only written requests for extensions will be considered; a request must specify the reason an extension is needed and state the date that the audited financial statements will be submitted. In no case will an extension greater than thirty (30) days be granted.

If there are any questions regarding this memo, project representatives and CPA firms should feel free to contact Kenneth Kelly, Director of Financial Operations, Housing Portfolio Management Unit at (212) 688-4000, ext. 321.

Thank you for your cooperation in this matter.


AUDITED FINANCIAL STATEMENT REQUIREMENTS


GENERAL

The Agency requires comparative audited financial statements that include financial statements for the last two fiscal years of the borrower.

REVENUE

In addition to reporting revenue earned from the leasing of residential units, the Agency requires that all revenue earned from the leasing of commercial space (if any) be clearly identified as such in the Income Statement. If commercial leases generate a material amount of the project's revenues a full description of the commercial leases should appear in the footnotes to the audited financial statements.

EXPENSES

The Agency requires that, at a minimum, expenses be broken out by the categories listed below. The expense detail required can appear either in the Income Statement or in a supplemental schedule included as part of the audited financial statements. The categories required are:

RENTAL EXPENSE

  • Advertising
  • Marketing, etc.
  • Subtotal

ADMINISTRATIVE

  • Management Fee
  • Legal & AuditOther Administrative Expense
  • Subtotal

UTILITIES

  • Oil
  • Electricity
  • Gas
  • Other Utilities (water/sewer)
  • Subtotal

PAYROLL, REPAIR & MAINTENANCE

  • Payroll, Benefits and Payroll Taxes
  • Security
  • Repairs and Maintenance
  • Grounds
  • Other Operating Expenses
  • Subtotal

TAXES

  • Real Estate Taxes
  • Subtotal

INSURANCE

  • Insurance (Property and Liability)
  • Subtotal

FINANCIAL

  • Debt Service (Broken out by individual loans)
  • Mortgage Insurance Premiums
  • Service Fees
  • Letter of Credit Fees
  • Other
  • Subtotal

ELDERLY AND CONGREGATE SERVICES

  • Subtotal

FOOTNOTES

To help the Agency perform its financial statement reviews in an effective manner, with a minimum of follow-up between the Agency and its projects, we require that the subjects detailed below be fully described in the footnotes to the audited financial statements.

GENERAL AND LIMITED PARTNERS

The footnotes must include identification of the general and limited partners.

DEBT

All project debt must be fully detailed in the footnotes. The term, interest rates, repayment schedules and other important provisions of loans must be fully disclosed. In addition, we will need to know if any loan is payable to a related party.

RELATED PARTIES

Any receivables or payables carried on the balance sheet that are due from or to related parties must be fully disclosed in the footnotes.

Any expenditures or accruals included in Operating Expenses that represent a related party transaction must be disclosed. (e.g. payment of incentive management fees paid to the general partner as detailed in the partnership agreement).

TAX CREDITS

If the project has received an allocation of federal Low Income Housing Tax Credits information regarding the amounts and types of credits and the number of buildings that have received credits must be detailed in the footnotes.

TAX ABATEMENTS

If the project is a party to any tax abatement agreement (e.g. PILOT agreements) the terms of the agreement(s) must be discussed in the footnotes.

OCCUPANCY

We require that the project=s average and year end occupancy percentages be disclosed in the footnotes.

SUBSIDIES

We require that any subsidies involved in the operation of the project be fully disclosed. This holds for governmental subsidies such as rental assistance or private subsidies such as a parent corporation paying project expenses.

Last updated: 11/14/2008 6:13:36 PM