| ID | Status | Date | Public/Private | Industry | AHACPA Contact |
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| #6661 | Closed | public | Multifamily | Les Sparks |
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Regarding a cost certification audit for a 232 assisted living facility where the partners of the Borrower(Owner)entity are the same in another entity that’s the Operator of that project and there exists Borrower/Operator lease agreement (both Borrower and Operator have executed respective Regulatory Agreements), can I insert into the Borrower’s cost cert report/package, immediately after the Borrower’s income statement, a separate audit report and income statement for the Operator for the lease-up period? Are there any samples out there for this? |
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From Les Sparks: I do not have any examples of that type of approach as HUD never wants to see a consolidated entity. I would not pollute the borrower’s cost certification with information from the operator’s P&L. In particular, any income recorded in the 92330 reduces the maximum insurable mortgage, so it is not desirable to show them together. Please refer to HUD Handbook 4232.1. the specific reference should be in the chapter on cost certification. From client: That’s what I thought, Les. In this instance there’s no income, so there’ll be no reduction, but since the underwriter wants to see the operating income during the cut off period, I just issued a separate report with footnotes and supporting schedules, accordingly. I’ll see what comes of it and keep you posted in case it may be helpful to any of our other members. |