FOR YOUR INFORMATION
I consult with owners and managers on the full range of 515 issues:
appeals related to OIG audits; Workout Plans; appeals of adverse RHS
decisions; issues with the Agency; and, prepayments and equity loans.
I have the following comments on the program:
SUPREME COURT. The decision on Jeff Eckland’s suit is
available on the Web at The U.S. Supreme Court. The next step, hopefully, will be the trials in April 2003 to determine
damages to be paid by the government.
ADDITIONAL SUITS? Contact Jeff Eckland at Faegre and Benson, LLP, Minneapolis, MN (612-766-7060) to discuss any additional suits he
may bring on behalf of similarly situated owners.
CPA AUDIT COSTS. Changes in the Accounting business are very likely to
raise the cost of required audits. Check with your Accountants about this,
and plan accordingly.
3560. With publication said to be closer, be alert for the short window
of time in which to prepare and submit comments.
INSURANCE. Insurance cost increases need to be monitored closely, even as
the Agency tries to push the costs down. The Agency is focussing especially
on inappropriate arrangements and relationships for project insurance.
GAO REPORT. The GAO Report “Multifamily Rural Housing: Prepayment Potential and Long-Term
Rehabilitation Needs for Section 515 Properties” (10-MAY-02,
GAO-02-397) is a MUST read. Note Page 14: RD “agrees that heavy dependence on rental assistance would
limit prepayments from occurring.”
RENTAL ASSISTANCE. Best to convert RA tenants to Section 8 vouchers and give up
RA ASAP. Given the present large number of unused RA units, the Agency can
then focus on using RA
to support projects as part of a rehab strategy.
RENT INCREASES. Request realistic rent increases to cover maintenance and
capital needs, and to cure any physical deficiencies. The request can help
support your position as a responsible owner and manager, even if the Agency
rejects it.
THIRD PARTY EQUITY LOANS. The Agency permits an equity loan to be funded
by a conventional lender. Thus, it is not necessary to wait for an equity
loan. With the Agency outlook on RA and enforcement, however, it may be best
to consider prepaying.