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BUDGET SOP Powered By Docstoc
					                            BUDGET SOP

This entire procedure should be read and understood before beginning the
budgeting process.

Throughout this procedure certain abbreviation codes will be utilized. They
are as follows:

PM                  Property Manager
APM                 Associate Property Manager
MS                  Maintenance Superintendent
AMS                 Associate Maintenance Superintendent
RPM                 Regional Property Manager
DOM&S               Director of Maintenance Operations and Safety
DOPM                Director of Property Management
SrVPM               Senior Vice President, Property Management
SrVAS               Senior Vice President, Accounting Services
SrVAM               Senior Vice President, Real Estate Asset Management
SrVPC               Senior Vice President, Construction
VPAM                Vice President Asset Management
AM                  Asset Management Team
DOA                 Director of Accounting
IT                  Information Technology Department
DOC                 Director of Compliance
DOM                 Director of Marketing
SM                  Service Manager
DOMS                Director of Maintenance Services


       Budgets represent a financial plan based upon anticipated market
       conditions, actions necessary to meet the physical and expense
       standards established for the project under consideration. Approved
       budgets should represent realistic objectives mutually agreed upon by
       both staff and owners.

       The PM/RPM should utilize the input of the MS in developing the
       operating and maintenance portion of the budget. With the assistance
       of the DOMOS the PM/RPM should carefully consider the physical
       needs of the project so that the cost involved may be taken into
       consideration in the budget and five-year plan. The PM will provide
       input in developing the administrative portion of the budget.

       The budget should represent a professional operation in which
       expenses are controlled and income is maximized. The budget should
       be a zero-based budget where each line item is fully justified regardless
       of what was spent last year such as one time non-recurring
       expenditures, etc. Budgeting should be guided by historical
       performance with modifications representing known differences for the
       budget year. If the historical performance does not represent an
       efficient operation, adjustments should be considered.

       The budget should be as accurate as possible (with a slight inclination
       to the conservative side), representing a goal for operating the project
       during the budget year. It is the most important tool to ensure earning
       the cash flow goal.

       Approved budgets should:

1. Provide a goal and the achievement of; which demonstrates an
   understanding of expense control while maintaining physical standards and
   providing a strong sense of accomplishment.

2. Grant authority to proceed with the plan of action included in the budget.

3. Identify potential cash flow problems.

4. Provide the ability to monitor and control the actual performance by
   reporting exceptions.


1.   By mid-August, budgeting instructions will be distributed to the PMs.

2.   Prior to beginning the actual budget process, the PM should gather
     copies of all input, which will be used in preparing the budget. This
     would include the expanded project inspections and items that may
     have resulted from inspections concerning work that should be done
     next year. It would also include copies of all contracts - trash,
     exterminating, etc., so the budget process is not slowed down and
     maximum use of the available budget time is made. Bids and other
     estimates should be available when the budget process begins.
     The Budget Training Distance Learning Course should be reviewed
     to learn the Budget Software process.

3.   Prior to preparing the budgets each year, all RPMs should review
     the Budget Training Distance Learning Course.

4.   All accounts budgeted by the Accounting Department should be
     reviewed and challenged upon receipt and appropriate budget
     revision(s) requested from the Accounting Department. The RPM is
     to review and verify these revisions. (Reference Policy Manual,
     utility and tax monitoring.)

5.   As each budget is completed, the RPM will receive an e-mail from each
     property’s budget software program. The RPM will review each budget.
     As each budget is completed, the DOPM will receive an e-mail from the
     RPM’s budget software program. Other documents or support may
     need to be sent to the RPM or DM prior to budget review.

6.   The supporting detail should be available to be reviewed by the
     DOPM in his/her challenge of the budget. In addition, a copy of this
     supporting detail should be maintained by the RPM and PM to assist
     with the monitoring process.

7.   The DOPM is to recap any projects not budgeted to earn the cash flow
     goal based upon the budgets for the coming year, and the DOPM
     should include a brief explanation as to why the goal will not be

8.   Once the budget has been agreed upon and finalized, the PM is to
     operate within that budget unless prior authorization has been
     obtained from the all appropriate individuals to deviate therefrom.

9.   When any item of approximately $5,000 or more is not completed
     and must be postponed to the following year, the SrVPAS
     should be notified so an appropriate amount of working capital
     may be held back. The VPAM should be notified of these items by
     approximately January 2nd of each year.

                    INFORMATION TO GATHER


  1. Subsidized: A copy of the current HUD form 92458-Rent
     schedule showing the monthly rent by unit type.

  2. Conventional: The monthly gross rent amounts for the current
     year and prior 3 years and non-recurring rents and
     assessments for past two years.


  Information regarding current market trends to be used to
  determine the appropriate vacancy percentage to be budgeted.


  1. Each property’s current employees and salaries are available
     on the Budget Software. Only employees who need to be
     added to the property need to be adjusted in the software. The
     Budget Software pro-rates salaries for properties that are multi-

  2. Historical overtime hours per week for hourly workers should
     only include emergency service/after hour calls.

  3. MS(s) monthly apartment-allowance amount(s) if applicable
     and address(es).

  4. Percentage of time spent by maintenance personnel, except
     MS, (if applicable).

  5. Temporary labor: total wages (in dollars) for each month (Do
     not prorate for individual phases).

  6. Leasing personnel: total wages (in dollars) for each month for
     each property (including leasing bonuses).

D. Schedule A

  1. Historical information from prior year and current year actuals
     are available for each account number on the Budget
  2. Contract data log (included in the Budget Manual).
3. Listed below are some of the items that should be considered
   in budgeting:

   Cathodic inspections.

   Review staffing to ensure that it is in line with established
    guides and, if not, provide specific authorization including the
    reasons for a deviation.

   The trend of expenses over a period of years, after being

   Travel & Meeting Expense:

    RENTAL: ACCOUNT #73110-000

    Training needs of personnel: consider courses available & travel

    Include such classes as General Subsidy, Yardi, Marketing
    Sales & Service, HVAC, and Regional meetings, etc.

   Tenant Relations : ACCOUNT #73930-000

    OBJECTIVE: The following HUD Handbook Section 4381.5,
    Section 4.1 citation, was used to develop the Gene B. Glick
    Tenant Relations procedure.

    HUD expects owners and their management agents to build
    good resident/management relations. The participation and
    cooperation of residents is important in creating a suitable
    living environment and can contribute to the successful
    operation of these properties. For example, resident
    involvement can help maintain the physical condition of the
    property, ensure proper maintenance, improve security,
    contribute to improvements in energy efficiency, and control
    operating costs.

    HUD regulations establish several basic requirements that
    owners and their management agents must abide by with
    respect to resident involvement. HUD views these
    requirements as minimum standards for resident participation

and encourages owners and agents to take further steps to
foster strong resident/management relations.

PROCEDURE: The following procedure was developed to
meet these HUD requirements. All Gene B. Glick properties
will be divided into categories entitled "Proactive Outreach" or
"Reactive Outreach." Those properties that are under the
proactive status may spend up to $7.75 per unit per year for
tenant relation programs. Reactive status properties may
spend up to $2.50 per unit per year for tenant relations.

A property defined as a Proactive Outreach property is
currently advertising and promoting the product on an ongoing
basis to increase occupancy or waiting lists at a D4
conventional or subsidized property. Reactive Outreach sites
include government subsidized properties that have an
ongoing waiting list that opens only periodically without an
ongoing outreach effort.

The following is a list of activities that all properties may
consider for resident service programs.

1. Encourage and work with free service tenant organizations
   for blood pressure screening and safety awareness and

2. Holiday parties and/or dinners for the resident, including
   food provided for the residents an/or pitch-in items,
   entertainment such as a DJ or duet where the party is
   conducted in the clubhouse.

3. A weeklong series of activities to promote resident relations.

4. A movie and game night in the clubhouse.

5. Card and marketing item gifts for residents attending pool
   parties and/or other activities.

6. Resident communications such as cards for holidays,
   including New Year's, Mother's Day, etc.

7. A student study night during final examination time
   sponsoring free pizza, soft drinks, and coffee.

    8. A parent's night out evening where there are planned
       activities for children in the clubhouse where they watch
       videos and games for three hours.

    9. Halloween haunted house through the clubhouse for the
       residents and their children.

    A resident committee should be formed to help develop
    activities and functions for all members of the community. The
    purpose of the tenant relations procedure is to improve a sense
    of community and opportunities for residents to meet and
    become acquainted so they will want to continue living in a
    friendly atmosphere where they have developed relationships
    with fellow residents and neighbors and with the management

   Engineering – Repair & Maintenance:

    Expenses associated with the demonstration (Portfolio Re-
    engineering/Mark-to-Market) program will be recorded in this
    account. This is done so that costs associated with the
    demonstration program can be easily identified and also so as
    not to have these expenses affect normal operating costs.

    76540-000- Engineering Affiliated