Kauffman Associates

Services Offered and Costs

Kauffman Associates enjoys a unique place in the tax-exempt compliance industry because we are not just a compliance agency that receives completed reports, but we actually physically prepare the reports that go out to the housing authorities and trustees each month. Once we receive the list of monthly changes and supporting documentation from the manager, our specially-designed computer program allows us to update the database of each property’s monthly activity, indicating all changes that have occurred since the prior month and then generate an updated report. A hard copy of the updated Lower-Income tenant listing becomes part of the reporting package that is then sent to the Issuer and Trustee, and an e-mail copy of the updated listing is sent to the property and other parties, as may be requested. In addition to our reporting capabilities, our computer software enables us to perform targeted lease file audits by selecting a year’s worth of the most recent additions to the program so that those files can be selected for review and current staff performance can be evaluated.

Bond Compliance Reports

We prepare all monthly, quarterly and annual reports pertaining to Lower-Income occupancy requirements, based on information provided each month by the on-site managers. Distribution of reports and all enclosures are made to the Issuers, Trustees, guarantors, and all other parties required to receive reports under the terms of the financing documents. In the case of post ’86 tax-exempt properties, we also file the owner’s Forms 8703 with the Department of the Treasury. Reporting requirements for all properties are pulled up each month from our calendar and scheduled for preparation and distribution by the 15th of the following month. Costs for this service are included in the standard quarterly fee, which ranges from $500 to $800 per quarter depending on the complexity of the reporting requirements. Discounted fees are offered for properties of 100 units or less, and for portfolios of 10 or more properties.

Compliance Audits

In order to minimize costs to the owner, we have found that it is generally not necessary to travel to a property in order to conduct a compliance audit. We use a “box audit” system where the managers box-up the selected files and send them to us by overnight delivery. The files are then reviewed, the audit report is written up, and the files are re-boxed, along with the Audit Report, and returned to the property for delivery the next day. This system saves the owner the cost of an auditor’s travel expenses. Compliance audits are priced separately from the quarterly compliance fees, and are performed either at the request of the owner, or upon the recommendation of Kauffman Associates, with owner approval. Fees range from about $500 to $1,200 (depending on the size of the property or the time involved) plus the cost of shipping the boxes.

Due Diligence

We also use the “box audit” system for due diligence reviews. Financing documents, current reporting procedures, lease files and the rent roll are reviewed. Cost is determined by the job, and is based on an estimate of the time necessary to complete the work. Since due diligence reviews can sometimes involve periodic work over a number of days or weeks (particularly if there are compliance problems), the cost will depend on the time necessary to complete the work.

Staff Training

Included in the standard quarterly compliance fee is on-going training during the month through the use of training memos which are prepared during the processing of the monthly compliance reports. The owner/management company is also copied each month with this information so that they can direct their attention to managers who may need more supervision and training. In addition, we are always readily available by phone to answer questions that arise from the properties. While we do occasionally go “on location” to conduct training seminars, we have found that they are often not cost-effective to the owner because of the frequency of staff turnover and also because it is difficult to get a sufficient number of property managers in one place, who have the exact same program and reporting requirements.

Updated Income Limits

Properties are notified each spring of updated income limits as published by HUD. In addition, if maximum rent formulas are part of the program, those rents are also calculated and utility adjustments (if applicable) are researched and factored in. This service is included in the quarterly fee.