N.Y. Comp. Codes R. & Regs. tit. 9 § 1646-6.2

Current through Register Vol. 46, No. 25, June 18, 2024

Section 1646-6.2 - Procedure prior to initial operating period

(a) Tenants selection costs.

(1) As a matter of prudent business policy, most local agencies will undertake the screening of applicants for admission to the project proper in advance of the date the first buildings become available for occupancy. The receiving, processing, and investigation of applications thus begun prior to the initial operating period, will ordinarily continue well into the initial operating period. Tenant selection costs, whether incurred prior to or during the initial operating period, do not constitute an expense of the initial operating period. They are charged directly to account 1470.1, Tenant Selection Costs, and are paid out of the development fund.

(2) With respect to the question of what constitutes tenant selection costs, local agencies should be guided by the principle that account 1470.1 Tenant Selection Costs, should be charged only with such costs as are readily identifiable with tenant selection and which would not have been incurred if tenant selection had not been undertaken. Only the salaries, for example, of personnel especially employed for tenant selection shall be charged to account 1470.1. Where local agency personnel perform tenant selection work incidental to other duties, no allocation of salaries need be made, etc.

(b) Preliminary expenses. Prudent policy, again, would demand that a local agency, in addition to beginning the screening of applications in advance of the date the first buildings of the project proper become available for occupancy, make preparations, in advance of such date, for receiving the tenants. Such preparations might include the printing of booklets for the instruction of tenants, the recruiting of the management and maintenance staffs, the employment of such staffs for a short training and orientation period, etc. It may sometimes be found necessary, also, to furnish operating services and utilities, etc., for a short period between the date of acceptance of the first buildings by the local agency and the beginning of the initial operating period. Such costs and expenses (other than tenant selection costs) as are directly attributable to the preparations for the operation of a project or to the initial operation of the project proper, and which have been incurred or are applicable to the period prior to the beginning of the initial operating period, constitute preliminary expenses which are charged to account 1470.2 and are payable out of the development fund directly. They do not constitute expenses of the initial operating period chargeable to account 1470.3.

(c) Administration fund bank account. Prior to the date the first rentals from the project proper are expected to be received, the local agency shall open an administration fund bank account. Procedures for opening bank accounts are described in Part 1642. All income derived from the operation of the project proper during the initial operating period shall be deposited into the administration fund, and all expenses chargeable to the operating period accounts (4000 group) shall be paid out of the administration fund. In the event funds are not available for the payment of such expenses out of the administration fund, transfers may be made from the development fund to the administration fund, as described in subdivision (d) of section 1646-6.3. The administration fund bank account so established is continued beyond the date of substantial completion into the operating period.

(d) Security deposits fund bank account. Simultaneously with opening the administration fund bank account, the local agency should open a security deposits fund bank account, so that the required segregation of security deposits from other funds may be accomplished.

(e) Subsidiary income and expense analysis ledgers. Prior to the beginning of the initial operating period, the local agency shall set up, and have ready for use, subsidiary income and expense analysis ledgers prescribed for the recording of the income and expense of the project proper during the initial operating period, in accordance with the instructions contained in the definition of account 1470.3 (see Part 1641) and in Part 1642. The use of account 1470.3, Net Deficit or (Income), for the control of the subsidiary ledgers is described in sections 1642-3.8 and 1642-3.9.

(f) Tenant accounting system. Prior to the initial operating period the tenant accounting system including the subsidiary security deposits ledger should be set up and ready for use. Such preparation should be timely, inasmuch as the preparation and printing of the forms required for the system, the setting up of the control records, instruction of the staff in the operation of the system, etc., may extend over a period of some months. In addition, where machine-bookkeeping is to be used, the order for the machine may have to be placed well in advance. A specimen tenant accounting system for hand posting is described in Part 1642.

N.Y. Comp. Codes R. & Regs. Tit. 9 § 1646-6.2