Five Tips for Better Site Management Reports

Everyone who has financial responsibility for a low-income housing tax credit site understands the importance of keeping owners informed of how well it's performing. That means you need to be able to identify, document, and deliver the critical pieces of information that owners need to make prompt, informed decisions about their properties.

A good management report provides the right amount of transparency into the site. That can be challenging, and attempting to present a clear picture of performance by producing volumes of data simply will not work. Simplicity and clarity are your best tools for the task.

So what works, what doesn't, and what is likely to frustrate the recipient of your report? We've asked two leading affordable housing experts to share their insights, tips, and pet peeves when it comes to presenting the most relevant information in an effective, succinct way.

Tip #1: Create Cover Sheet to Highlight Key Information

It's easy to overwhelm site owners with too much information. You want to provide highlights of the most relevant financial and occupancy data, and allow the owner to pick and choose where to investigate the details further. The key is to make sure that this first presentation of the data offers the reader a clean, short path to the financial performance of the site. Owners should be able to see at a glance what they need to know.

What is the best way to provide a quick, effective overview? Robert Edwards recommends a single-page cover sheet, or dashboard, that gives the reader instant insight into the most important performance data. “Readers should be able to look at that page and decide within the first five minutes whether they need to flip back into the report and look at the detail behind the expenses,” he says. Edwards is a partner with Plante and Moran, one of the nation's largest accounting and business advisory firms.

Leslie Holleman, an affordable housing consultant and owner of six tax credit properties in Texas, enjoys receiving her management reports because the property management firm takes the time to write a narrative cover letter each month that highlights occupancy levels, rental income, budgets, and operating expenses, and explains any significant variances. “It's extremely helpful,” she says. While savvy owners can get the same information from a variance report, she adds, “if you have several properties, you're probably not going to spend a lot of time on it, unless you notice something that you want to drill down into. This just makes it easy.”

PRACTICAL POINTER: If you have been pumping out monthly reports for a year or more, it's probably time to check in with the site owner on the relevancy of the content that you're providing. Make sure that the information within your management reports meets the owner's exact requirements. Anything more or less is inefficient.

Tip #2: Provide More Thorough Occupancy Report

One area in which a little more detail is generally beneficial is in the occupancy portion of the report. Management reports “typically show just occupancy or vacancy,” Edwards says. “A more advanced look at those issues would be helpful.” He suggests including turnover (move-outs, move-ins), an overview of the waiting list, and the average turnaround time from a unit being vacated to occupied.

Although it's not included in the operating report that Holleman receives from her management firm, she requests that sites with multiple set-asides maintain a monthly unit availability chart, which she created in Excel. Previously, she found that site managers routinely overleased the cheaper set-asides, locking the higher-rent units into lower-priced leases and negatively affecting the financial performance of those sites. Holleman's chart provides a simple visual that allows site managers to tell, at a glance, how many units are available at which set-aside level (see the Sample Unit Availability Chart).

Tip #3: Combine Small Expenses

While more detail regarding occupancy is useful, Edwards finds that some properties include so much information about repairs and maintenance expenses that it's hard to get a good picture of what's going on. “I don't really want to look at how much was spent on the grounds contract, the elevator contract, or light bulbs,” he says. “Obviously, the onsite management has access to that level of detail, but for purposes of preparing reports for outside users, some combination of those very small expense accounts is really more appropriate.”

Tip #4: Make Sure Information Is Timely and Complete

Although you don't want to list each small expense on your monthly management report, it is important to ensure that the information you provide is timely and complete.

Often, expenses can be left out due to a separation and lag time between the accounting function and the onsite management, says Edwards. For example, if you have several invoices for recent repairs that you did not get to the accounting group in time, your report may show no expenses for repairs and maintenance that month, but the next month, you may be over budget.

Tip #5: Provide Checklist of Moving Targets

In addition to financial and occupancy information, it's important to keep owners apprised of issues surrounding compliance. Holleman suggests including a checklist with the management report that shows dates, deadlines, and tasks associated with compliance, audits and inspections, and verifications.

“As owners, we need to know that the management company has responded promptly to the compliance requirements,” she says. “You want to make sure that everything is turned in on time so that you're in compliance. If you have several properties, it's hard to keep track of all the moving targets, so a checklist would be a helpful management tool.”

EDITOR'S NOTE: For an outline on additional information to include in your management report, check out the Model Form: Give Owners the Information They Need in Comprehensive Management Report, in the Model Tools section of our online library at http://www.taxcredithousinginsider.com.

Insider Sources

Robert Edwards: Partner, Plante and Moran; (877) 622-2257; http://www.plantemoran.com.

Leslie Holleman: Leslie Holleman and Associates Inc.; (325) 784-9797; leslieholleman@aol.com.

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