# Presentation: 269775

## Office of Multifamily Housing Assistance Restructuring(OMHAR)

- Mark-to-Market Program
- PAE Invoice Training - 2004

## Objective	

- To provide PAE staff with technical assistance on the Mark-to-Market invoicing process that will enable the PAE to become: 1) familiar with the invoicing process and its requirements; and 2) proficient in completing the invoicing forms.

## Invoice Training Materials

- Invoice Memoranda
- Form 2.12
- Form SF 3881
- Form 2.13
- Form 2.14A
- Form 2.14B
- Form 2.15
- Form 2.16

- Form 2.17
- Invoice timeline
- Gov’t Travel Info
- Per diem rates
- POV mileage rates
- Critical Dates Tracking
- Incentive fees
- Sample cases

**Notes:**
Information contained in notebook for training

## Invoice Memoranda (Tab C)

- Guidance memos issued to clarify or update invoicing process:
- Voucher Payment Process – February 22, 2000
- Third Party Payments – April 19, 2000
- Compensation regarding new owner and purchaser initiatives – October 4, 2000

**Notes:**
Included past memoranda to aid with invoicing process and as historical reference.
Note, PAE needs to reimburse their 3rd party vendors within 5 days of receiving funds from OMHAR.

Invoice memoranda contents:
Memo:  Voucher Payment Process – February 22, 2000 – April LeClair Chang
Memo:  Third Party Payments – April 19, 2000 – Kurt Hahn
Memo:  Additional Invoicing Payment Process Clarifications – May 10, 2000 – Barbara Chiapella
Memo:  revision of existing financial models – October 4, 2000 – Ira G. Peppercorn

## Form 2.12 – Transmittal Letter (Tab D)

- Transmittal Letter from OMHAR HQ to the PAE with Invoicing Instructions
- Distributed following execution of PRA
- Provided necessary invoicing forms
- Provided summary guidance on completing each form

## Form SF 3881 – ACH Payment (Tab E)

- ACH Vendor/Miscellaneous Payment Enrollment Form
- Standard government form
- Used to obtain banking information in order to wire transfer payments to vendors
- _ANY_ change in banking information (account #, routing #, or TIN), required to complete new form
- Ensure form is signed by Financial Institution
- Forward to OMHAR HQ Senior Voucher Specialist

**Notes:**

Must complete when there is any change affecting the following info:
Account number
Routing number
TIN
Send to Sula Miller, OMHAR HQs, after form is signed by Financial Institution.
It’s best to give Sula notice that a change is in the works so she can hold up payment 
   of all of the PAE’s invoices in the system in order to avoid an entire schedule of payments to
   multiple PAEs being rejected because of inaccurate banking info for one PAE.

## Form 2.13 (Tab F)

- Asset Payment Authorization Form
- Sets forth the maximum expenses that will be paid by OMHAR per PRA
- Need waiver (Form 2.15) for _**ALL**_ amounts exceeding 2.13 and PRA
- Must be executed by the PAE for each asset identified on Exhibit 1 of the PRA limits

**Notes:**
10/5/04 Resource Desk Announcement eliminated Form 2.13 – References to amounts allowed by Form 2.13 
    should be interpreted to mean the amounts allowed by the Portfolio Restructuring Agreement (PRA)

## Form 2.13 (Tab F, cont’d)

- Forward to the appropriate OMHAR Production Office for signature
- Revised form must be attached to Form 2.16 whenever there is a change in asset status (e.g. lite to full; rent comp. to a lite; tier 1 to tier 2)

## Form 2.14A (Tab G)

- Asset Specific Fees
- Third Party and Other Reimbursements
- Base Fees
- Incentive Fees
- To request payment for restructuring expenses on individual assets
- Submit one invoice per month per asset at any time during the month
- Do not submit invoices for nominal amounts

## Form 2.14A (Tab G, cont’d)

_**MUST**_ attach supporting documentation for _**ALL**_ items invoiced
- Include completed Government Travel Voucher when travel is involved
- Copies attached to invoice should be legible
- Must include original signatures when submitting to PO
- PAE _**must**_ maintain copies of all invoices and supporting documents
- Written explanation of disallowances is provided to PAE from Production Office

## Form 2.14B (Tab H)

- Non-asset specific invoice form
- Used to request reimbursement for restructuring activities that pertain to the PAE as a whole (e.g. training)
- PAE should receive written approval from the appropriate OMHAR Production Office before incurring non-asset specific expenses
- Include a completed government travel voucher and supporting documentation when travel is involved

## Form 2.14B (Tab H, cont’d)

- Submit only one invoice per month as needed
- PAE _**must**_ maintain copies of all invoices and supporting documents

## Form 2.15 (Tab I)

- OMHAR Waiver Form
- Used by PAE to request authorization from the OMHAR PO to exceed Form 2.13 limitations
- Authorization must be granted by appropriate OMHAR PO _prior_ to the PAE incurring the cost
- Amounts **exceeding limit by $15,000 must** also have HQ approval
- Line item - “Total Amount Requested” = additional cost + authorized cost

**Notes:**
NOTE: Form 2.13 has been eliminated.  Reference to this form should be construed to mean the amount allowed by the PRA.

## Form 2.15 (Tab I, cont’d)

- Also used to request time waiver when PRA timeframes cannot be met.
- If waiver is intended to allow PAE to earn an incentive fee, the form _must_ specifically state this in the comments box
- PRA ¶5.7.1
- Executed by PAE and appropriate OMHAR PD
- Attach copy to Form 2.14A, when applicable

## Form 2.16 (Tab J)

- Used by PAE to Request Change of Asset Status
- lite to full, rent comp. review to a lite or full, full to a lite, re-entry
- Required whenever there is a change in asset status
- Reminder - revised Form 2.13 is required except for reentry deals
- May require a new contract renewal election (aka 99-36) from the owner – (anything to a full)
- Attach to 2.14A, when applicable

**Notes:**
NOTE:  Form 2.13 is no longer required.

## Form 2.16 (Tab J, cont’d)

- Complete when AOTC deal re-entering M2M Program
- Third party reports < 18 months
- Memo – “PAE Compensation on Properties Reentering the M2M Program” (5/2/03)
- Provides guidance and fee schedule
- Items to include in comments box
- Fees previously paid
- Additional base fees being requested
- Additional 3rd party reports and travel costs
- Timeframes for completing key milestones
- Attach executed copy to invoice for relevant fees

**Notes:**
Reference memo:  PAE Compensation of Properties Reentering M2M – May 2, 2003 – Charles H. Williams

## Form 2.17 (Tab K)

- PAE’s request to place a project on hold due to circumstances that have occurred outside the PAE’s control which prevents the PAE from doing work on the project for an extended period of time
- Stops the clock
- When clock resumes, may still be able to earn incentive fees per Exhibit 5 of PRA
- Deduct hold time period from time to accomplish milestone to determine “true” timeframe
- Attach to invoice when invoicing for incentive fees, when applicable

**Notes:**
Memo:  Portfolio Restructuring Agreement (PRA) Interpretation – Projects on Hold – March 31, 2003 – S. Paige Warren
Note – released on Resource Desk 04/07/2003

## PAE Invoice Training

- Questions

## Timeline Overview	Invoice Processing – PAE (Tab L)

- Review third party work product for compliance with PRA
- Third party bill/receipt must indicate work performed and reference project
- Prepare bill on PAE letterhead for earned fees
- Indicate work performed & reference project
- Review travel voucher for compliance with Federal travel guidelines
- Update M2M MIS system, if appropriate

- Prepare Form 2.14A or 2.14B
- Assign invoice number
- Verify claims are made on appropriate line items
- Verify eligibility and accuracy of $ amounts
- Check adequacy of supporting documentation
- Ensure bills/receipts match claimed amounts
- Include 2.15, 2.16, & 2.17, if applicable
- Attach evidence that M2M MIS system has been updated, when applicable

- Submit one original invoice with copies of bills/receipts and other supporting documentation to the appropriate OMHAR Production Office

- Third Party bill/receipt  received or fee earned

- PAE authorized official reviews for completeness and accuracy and signs Forms 2.14A, 2.14B, and government travel voucher

**Timeline**

- _TARGET -_
- 30 days  from receipt of third party bill/receipt or earned fee

**Notes:**
PAE to Production Office

## Timeline Overview Invoice Processing – PO (Tab L)

- Invoice received in mail

- Production Office Logs-in/Updates Integrated Invoice Tracking System
- PAE No.
- Project No.
- Invoice No.
- Indicate if final invoice
- Asset Designation
- Date of Invoice
- Date PO Received

- Production Office Review for Accuracy
- Checks for consistency w/ PRA and OPG
- Verify claims are made on appropriate line items
- Verify eligibility and accuracy of $ amounts
- Check adequacy of supp. documentation
- Ensure bills/receipts match claimed amounts
- Ensure 2.15, 2.16, & 2.17 are included, if applicable
- Verify M2M MIS system has been updated, if applicable

- Production Office Approval
- Indicate allowed amounts and explain any disallowances
- RM Verification/ Signature
- PD Verification/ Signature
- Update Integrated Invoice Tracking System

- Fed Ex orig., supporting documentation and copy of pgs. 1 & 2 of 2.14A or page 1 of 2.14B, whichever is applicable, to OMHAR HQ, Attn:  Voucher Specialist

- PAE Corrects Deficiencies
- (Submitted to PAE for correction within 7 days of receipt.  30-day clock “restarts” when invoice is resubmitted to OMHAR PO.)

- _TARGET –_
- 10 Days  from receipt of complete invoice

**Timeline**

**Notes:**
Production Office responsibilities

When invoice form is returned to PAE for corrections, clock starts over.

## Timeline Overview	Invoice Processing – HQ (Tab L)

- OMHAR HQ
- Enters invoice info into Integrated Invoice Tracking System
- Enters into HUD payment system

- HQ Reviews Invoices
- Check for consistency with PRA and OPG
- Verify eligibility and accuracy of $ amounts
- Check adequacy of supp. documentation
- Ensure bills/receipts match claimed amounts
- Ensure 2.15, 2.16, & 2.17 are included, if applicable
- Verify M2M MIS system has been updated

- OMHAR HQ sends approved invoices grouped by PAE to Cash Management

- Cash Mgmt. requests Treasury Wire Transfer

- Cash Mgmt. updates payment info in payment system

- OMHAR HQ
- Confirms payment with Cash Mgmt. staff
- Updates Integrated Invoice Tracking System
- Notifies PAE and OMHAR PO by email of payment

- Invoice received in mail from PO

- HQ Logs-in/ Updates Integrated Invoice Tracking System
- PAE No.
- Project No.
- Invoice No.
- Indicate if final invoice
- Asset Designation
- Date of Invoice
- Date Received

- Notify OMHAR PO of deficiencies within 7 days of receipt.
- PO and/or PAE corrects deficiencies and/or provides missing documentation.
- 10-day clock for payment by OMHAR HQs “restarts” when revised invoice or missing documentation is submitted to OMHAR HQs.

- PAE should receive payment within 5 business days of notification

**Timeline**

- _TARGET -_
- 10 days of HQ’s receipt of completed invoice

- _OVERALL TARGET-_
- 30 days from receipt of completed invoice

- _TARGET -_
- 10 days from completion of HQ’s review

**Notes:**
HQ responsibilities

## PAE Invoice Training

- Questions

## Government Travel

- Government Contract Expense Reimbursement Travel Voucher (Tab M)
- Traveler must summarize daily expenses, except for M&IEs, on this form
- Guidance memo – May 2000
- Per diem rate (Tab O)
- POV mileage rates (Tab P)

**Notes:**
References:
Form:  Government Contract Expense Reimbursement Travel Voucher
Memo: Government Contract Expense Reimbursement Travel Voucher Guide – May 4, 2000 – Kurt Hahn
Memo:  Official Travel of Government Contractors – updated as needed by PAE
Chart:  Domestic Per Diem Rates
Chart:  POV Mileage Rates

## Critical Dates Tracking (Tab Q)

- General Rule:  Always attach to Form 2.14A
- Exception – when amounts on invoice _only_ include fees for other subcontractor fees and/or travel
- Update M2M MIS system

## Invoices - Things to remember

_**Submit**_ only one invoice per asset each month
_**Record**_ claims on the appropriate line items
_**Verify**_ $ for eligibility and accuracy
_**Check**_ adequacy of supporting documentation - Does it match claimed amount?
_**Update**_ M2M MIS system, if applicable (i.e. PCA date)
_**Attach**_ Critical Dates Tracking
- OMHAR’s _**goal**_ - pay invoices within 30 days of receipt of an acceptable invoice
_**Changes**_ to banking information, complete new ACH Form (Form SF 3881)

## PAE Invoice Training

- Questions

## 2.14A (Tab G)Third Party and Other Reimbursements

| Item | PRA Amount | Asset Type |
| --- | --- | --- |
| Appraisals | $6,000 | F, R |
| PCA | $4,000 | F, R |
| Legal Counsel | $5,000/$7,500 | F |
| Environmental Assessment | $1,000 | F, R |
| Travel | $3,000 | F, R |
| Use of other Subcontractors | $2,500 | F, R |
| Rent Comp. Study (3rd party) | $3,000 | F, R, C |
| Mgmt or Financial Reviews | per PRA | F |
| Bond Trustee Fees | per PRA | F |

**F = Full; R = Rent Restructuring (Lite); C = Comparability Review**

**Notes:**

Refer to page 3 of Form 2.14A
Legal counsel fee - $7,500 limit applicable to properties assigned after Jan. 1, 2002.

## Form 2.14A (Tab G)Third Party and Other Reimbursements

- Required supporting documentation
- Attach receipts for _**ALL**_ work performed by third party vendors (i.e. appraisals, PCA, legal counsel)
- Travel voucher and supporting documents
- Include waivers – Form 2.15 (actual > PRA $$)
- Update M2M MIS system
- Attach Critical Dates Tracking, when applicable
- Not necessary when only invoicing for other subcontractors  fees and/or travel

## PAE Invoice Training

- Questions
- - Break 10 minutes -

## Travel (Tab M)

- Summarize daily expenses and per diem (Meals and Incidental Expenses, a.k.a M&IE) on  Government Contract Expense Reimbursement Travel Voucher
- Must sign travel form – travel _and_ PAE certifier
- Use most economical mode of travel
- PAE receives letter from OMHAR HQ authorizing them to obtain Federal government rates (hotels, car rental) – (Tab N)
- One travel voucher per traveler

**Notes:**
GO SULA GO!

Letter
 is not for contract airfare
Issued each year with PRA renewal

## Travel (Tab M, cont’d)

- Include bills/receipts for all travel costs except M&IEs
- Visiting multiple properties on one trip
- Complete only one government travel voucher
- Attach a summary breakdown of costs for each project to the travel voucher
- Submit 2.14As for _all_ projects visited on the one trip at the same time

## Travel (Tab M, cont’d)

- Multiple persons are traveling together
- Each traveler _must_ submit a separate travel voucher
- Request reimbursement for the travel costs on the same 2.14A
- Personal travel is combined with business travel
- Include a written explanation which clearly identifies dates and costs associated with business travel
- Only costs associated with business portion of the trip are reimbursable
- SSN - not applicable
- Address - required only when POV is used and reimbursement for mileage is from traveler’s residence

## Travel (Tab M, cont’d)

- Voucher number
- Enter appropriate voucher number per the 2.14A
- Per diem allowance (Tab O)
- Daily payment for lodging, M&IEs
- Established for most localities
- Standard rate for U.S. localities that do not have a specific rate
- Maximum per diem rates and lodging rates are published in the Federal Register and may be accessed through GSA web page
- _[http://](http://policyworks.gov/org/main/mt/homepage/mtt/perdiem/travel.htm)__[policyworks](http://policyworks.gov/org/main/mt/homepage/mtt/perdiem/travel.htm)__[.](http://policyworks.gov/org/main/mt/homepage/mtt/perdiem/travel.htm)__[gov](http://policyworks.gov/org/main/mt/homepage/mtt/perdiem/travel.htm)__[/org/main/](http://policyworks.gov/org/main/mt/homepage/mtt/perdiem/travel.htm)__[mt](http://policyworks.gov/org/main/mt/homepage/mtt/perdiem/travel.htm)__[/homepage/](http://policyworks.gov/org/main/mt/homepage/mtt/perdiem/travel.htm)__[mtt](http://policyworks.gov/org/main/mt/homepage/mtt/perdiem/travel.htm)__[/](http://policyworks.gov/org/main/mt/homepage/mtt/perdiem/travel.htm)__[perdiem](http://policyworks.gov/org/main/mt/homepage/mtt/perdiem/travel.htm)__[/travel.](http://policyworks.gov/org/main/mt/homepage/mtt/perdiem/travel.htm)__[htm](http://policyworks.gov/org/main/mt/homepage/mtt/perdiem/travel.htm)_

## Travel (Tab M, cont’d)

- Meals and Incidental Expenses (M&IE)
- Limited to Federal government per diem rate (updated each fiscal year)
- Must be in travel status for _**more than 12 hours**_ and travel more than 50 miles from duty station
- 3/4 (75%) of per diem rate allowed for _first_ and _last_ day of travel
- Receipts for M&IE’s not required

## Travel (Tab M, cont’d)

- Lodging
- Limited to lesser of actual cost or Federal government per diem rate
- Actual cost > per diem rate
- Only be allowed if it is evidenced that per diem rate was not available
- Contact _3_ other hotels in order to validate that rate was not available, attach this documentation to voucher
- Per diem rate is not expected to cover room tax
- Traveler should request the Federal government rate using letter issued by OMHAR (Tab N)

## Travel (Tab M, cont’d)

- Lodging Taxes
- Claim under “other”
- Only claim amount applicable to per diem rate
- Airfare
- Limited to _cost of coach fares_
- Copy of ticket receipt required
- Booking fee _**not**_ reimbursable

## Travel (Tab M, cont’d)

- Car Rental
- Written justification is required
- Traveler should request the Federal government rate using letter issued by OMHAR (Tab N)
- Compact cars must be used to the extent reasonable
- Excess cost for renting luxury/full sized car will be borne by traveler
- Supporting documentation must identify type of vehicle rented
- Reimbursed for gas
- Mileage _**NOT**_ reimbursable

## Travel (Tab M, cont’d)

- Privately-Owned Vehicle (POV)
- Flat mileage rate is allowed (updated each calendar year)
- Must indicate number of miles traveled
- Website for mileage rates – (Tab P): _[http://www.](http://www.dtic.mil/perdiem/faqpovpast.html)__[dtic](http://www.dtic.mil/perdiem/faqpovpast.html)__[.mil/](http://www.dtic.mil/perdiem/faqpovpast.html)__[perdiem](http://www.dtic.mil/perdiem/faqpovpast.html)__[/](http://www.dtic.mil/perdiem/faqpovpast.html)__[faqpovpast](http://www.dtic.mil/perdiem/faqpovpast.html)__[.html](http://www.dtic.mil/perdiem/faqpovpast.html)_

## Travel (Tab M, cont’d)

- Other
- Receipts for costs =< $75 are not required to be submitted to OMHAR (except trains)
- PAE must retain copies of _**all**_ bills/receipts (except M&IE’s)
- Only business calls related to M2M Program are eligible for reimbursement
- explanation of purpose must be provided

## Travel (Tab M, cont’d)

- _Reimbursable Expenses_
- Coach airfare
- Rental car and gas
- POV mileage
- Per diem on travel _greater than_ 12 hours
- Hotel costs within per diem limits

- _Non-Reimbursable Expense_
- Booking fee
- Rental car mileage
- Gas for POV
- Per diem on travel _less than_ 12 hours
- Hotel costs exceeding per diem – unless noted

## PAE Invoice Training

- Questions

## Travel – Sample Case (Tab R)

- Demonstrates
- When multiple properties are visited during one trip
- Documentation required for a car rental
- Lodging rate > per diem rate
- POV mileage – home to airport
- Taxi fare – airport to home

## PAE Invoice Training

- Questions
- - Lunch -

## Base Fees

- Items
- Full Debt Restructuring
- Rent Restructuring after Attempted Debt Restructuring (full to lite)
- Tier 1 Rent Restructuring
- Tier 2 Rent Restructuring
- Rent Comparability Review
- Other - Reactivated Project and Bonds and TPAs
- Requires bill on PAE letterhead
- Update M2M MIS system

## Base Fees – Full

- Refer to PRA _and_ PAE Acceptance Date for appropriate amount
- Adjusted each calendar year (eff. January 1)
- Lite becomes a full restructuring
- Any base fee paid for the Lite is applied against the full restructuring base fee (excludes incentives paid)
- Verify amount is entered on appropriate line item
- Update M2M MIS system
- Attach Critical Dates Tracking

## Base Fees – Full

- Paid in increments – 30%-40%-30%
- Initial 30% after completion of due diligence
- Next 40% after PD’s approval of the Restructuring Plan
- Final 30% within 30 days of closing and document distribution
- Attach _signed_ Form 8.1 from OMHAR Closing Dept.
- Closing documents must have been distributed
- Update M2M MIS system
- Attach Critical Dates Tracking

## Base Fees – Full to Lite

- Fee paid upon the PD’s acceptance of the PAE’s required work products
- Refer to PRA _and_ PAE Acceptance Date for appropriate amount
- Adjusted each calendar year
- Update M2M MIS system
- Attach Critical Dates Tracking

## Base Fees – Lite (Tier 1 & 2)

- Submit one invoice for the base fee
- Fee paid upon the PD’s acceptance of the PAE’s required work products
- Refer to PRA _and_ PAE Acceptance Date for appropriate fee
- Adjusted each calendar year
- Reimbursable costs for third party reports can be invoiced separately from base fee
- Update M2M MIS system
- Attach Critical Dates Tracking

## Base Fees – Rent Comp Review

- Submit one invoice
- Refer to PRA _and_ PAE Acceptance Date for appropriate fee
- Adjusted each calendar year
- Include cost of 3rd party rent comp. study
- Update M2M MIS system
- Attach Critical Dates Tracking

## Base Fees – Reactivated Projects

- Attach a copy of the Form 2.16
- _Executed_ by the PAE, RM, PD, and
- Initialed by HQ PAE Management
- Memo - “PAE Compensation on Properties Reentering M2M Program”  (Tab J)
- Guidance memo (05/02/2003)

## PAE Invoice Training

- Questions

## Base Fees - Bonds

- Refer to Exhibit 1 Transmittal Letter
- Allowed amounts
- Collection of all relevant bond documents - $500
- Invoice upon completion of Due Diligence
- Include e:mail from OMHAR’s Bond Department
- Submission to OMHAR of Executive Summary -$1,000
- Invoice upon completion of Due Diligence
- Include e:mail from OMHAR’s Bond Department

**Notes:**
In addition to Base Fees discussed by Nancy for completing a full, lite or rent comparability review:
-PRA also provides for PAEs to earn additional bases fees for the additional work required due to a project involving bond financing
-In accordance with par. 5.5.2 of PRA, as part of its required work during due diligence, the PAE must determine whether a project is subject to state or local bond financing.
-Since sometimes OMHAR will be aware that a project involves bonds before an owner makes an election to come into the M2M Program, it is important that PAEs check the Exhibit 1 transmittal letter for an indication as to whether OMHAR is aware the project involves bonds at the time of asset assignment and has provided additional instruction in this area, e.g., PAE not required to collect bond docs or prepare Exec. Summary..
 -- Amounts provide for in the part A.5 of Exhibit 4 of the PRA for the additional work associated with a project involving state or local bond financing is as follows:
-collection of docs $500
-preparation and submission of Exec. Summary to OMHAR $1000 EXEC SUMMARY ??
**both can be invoiced when invoicing for DD base fee
**include e:mails from OMHAR’s bond dept that work has been done successfully
     ** should have been forwarded by your RM

## Allowed amounts (cont’d)
Strategy for Redemption of Bonds – $1,500
$1,200 earned for creation of redemption strategy
Will be paid upon OMHAR’s approval of the plan or AOTC recommendation
$300 paid if closing includes a redemption of bonds

- Strategy for Redemption of Bonds – $1,500
- $1,200 earned for creation of redemption strategy
- Will be paid upon OMHAR’s approval of the plan or AOTC recommendation
- $300 paid if closing includes a redemption of bonds

- Base Fees – Bonds (cont’d)

**Notes:**
There are times when OMHAR will request that PAE develop a strategy for either redeeming  or defeasing the bonds:

-- If this is the case, in addition to the $1500 for collecting the bond docs and preparing an Executive Summary recommendation, PAE can also earn 

--$1500 for developing and implementing a strategy for redeeming the bonds

$1200

$300

## Base Fees – Bonds (cont’d)

- Allowed amounts (cont’d)
- Strategy for Defeasance of Bonds - $6,500
- $5,000 earned for creating a defeasance strategy and submission of cost/benefit analysis
- Paid upon OMHAR’s approval of the plan or acceptance of AOTC recommendation
- $1,500 paid if closing includes defeasance of bonds

**Notes:**
If OMHAR requests a PAE to develop a strategy for defeasing the bonds, the PAE will be entitled to an additional base fee of $6,500
$5000

$1500

## Base Fees – Bonds (cont’d)

- PAE fees are inclusive of any third party legal or other professional service charges the PAE may incur in order to complete this work
- Reasonable fees incurred by the PAE for bond trustee, bond counsel for the trustee  or other services required by the bond trustee are eligible for reimbursement
- If deal closes – as a transaction cost at closing
- If deal doesn’t close – as a bond trustee fee on 2.14A

**Notes:**
The additional base fees paid to PAEs for the extra work required on a deal involving State or local bond financing are intended to be inclusive of any third party or other professional services charges the PAE may incur in order to complete this work

Reasonable fees for bond trustee, bond counsel for trustee are eligible for reimbursement

## Base Fees - TPAs

- Modified - $2,500
- Full - $4,500
- Fee will be paid upon closing
- Fee includes all necessary additional work by the PAE and any third party legal or other professional services fees contracted by the PAE to complete the TPA

**Notes:**
For projects involving a Transfer of Physical Assets – PAEs are entitled to receive an additional base fee due to the additional work required per par A.4 of Exh 4 of PRA

Amount will depend on whether PAE is processing a modified or a full TPA

Modified – required when property undergoes a change of control of the current mortgagor

Full – property is sold to a new mortgagor

APP D of OPG provides more detail regarding TPA processing

## PAE Invoice Training

- Questions

## Third Party and Other Reimbursements and Base Fees - Sample Case (Tab S)

- Demonstrates
- Numbering of invoices when there are multiple invoices for one asset
- Shows amounts paid on previous invoices for same asset
- Invoicing for a third party report - appraisal, PCA, Environmental Assessment
- Form 2.15 (fee waiver form) - Environmental Assessment
- First 30% of full base fee – due diligence
- Updated M2M MIS system

**Notes:**
Now we will cover the Third Party, Other Reimbursements and Base Feed.  I will walk you thru a sample case.  Please turn to the Sample Case – Tab S in your binder.

I will discuss the numbering of invoices when there are multiple invoices for one asset.

We will show you were the new amounts on the 2.14A should be placed and shown and where the previous/invoices for the same asset should be placed.

Invoicing for a third party report – appraisal, PCA and the Environmental Assessment

I will give you an example of when you would be required to submit a 2.15 (waiver form)

We will discuss the first 30% of the full base fees – the first 30% is also know as due diligence

Finally I will share the importance of attaching an updated critical dates tracking sheet from the M2M system

Now let’s look at the sample case:  Asset Name – First Asset and this is Invoice 002.

Please note this will be your second invoice as you have invoiced previously for travel when the staff went out for the first site visit.  Make certain all information is completed in Section A and Section B.  The majority of PAE’s use the FHA number and then start invoicing with 001 so this invoice is 002 as shown.

Section D – on the line under Section D you will see a blank line on this line you need to enter the amount that has previously been billed to OMHAR.  Since we invoiced on invoice number 001 for travel we have put the amount of travel 687.39 on this line.

The second line is for the exact dollar amount that you are claiming on this invoice.

Make certain that the authorized representative in your office has signed as authorizing official.  Invoices will be returned if there is not a signature.

Now turn to page 3 of 4 you will place all of your new claims in Column F that states this is the column for the current amount being claimed from the PAE.  The attached documentation supporting the 3rd party receipts is attached for the First Asset.  You will notice that we have an appraisal receipt in the amount of $5500 dollars and that is noted on the appraisal line in Column F.  We have the Physical Condition Report receipt in the amount of $3800 dollars that we have placed in Column F and we have the Environmental Assessment receipt in the amount of $1200 that we have placed in Column F.

On the Environmental you will note that this amount is greater than the OMHAR approval amount by $200 dollars.  When you have items that are higher and exceed the maximum amounts on the 2.13 you must make certain that prior to billing this amount you have requested the amount not covered on a 2.15 waiver form.  On the 2.15 line item you need to place the total amount requested which equals the additional cost plus the cost you which to have approved.

You should have adequate justification for this and OMHAR’s relationship manager and portfolio direction must approve prior to submitting the invoice.  When the waiver is approved please make certain to attach the 2.15 (waiver form) to the 214.A.

Scrolling down you will see the amount previously invoiced on invoice 001 is showing on this invoice under Section E Total Amount Previously Paid To/Invoice by PAE.

Now that the 3rd party reports have been completed and are being billed or have been billed, you may now bill for due diligence which is 30% of your base fee.  To determine this amount you will need to verify the year the asset was assigned and your base fee for that year.  Again, you are only eligible for this fee if the appraisal and PCA have been completed.  In this scenario (sample case) they have.  Please note the M2M critical date fields must be completed and the M2M should be attached with invoice for verification and processing through OMHAR.  All line items require a receipt so for your base fees you will need to have a receipt on the PAE’s letterhead.  Please see the sample receipt for this as attached in this case study.

At the bottom of page 3 of 4 you will need to enter the subtotal amount for your line items.  You will show this amount on the second to the last line of page 4 or 4 and if there are any items on page 4 you will total and put the total of all items being billed on the TOTAL Amount line item.  Jenny will cover the item on page 4 under incentive fees in the next section.

You have now completed invoice 002 for the First Asset.  With all of your supporting documentation, including the M2M critical dates, you are now ready to submit your invoice to OMHAR.

## PAE Invoice Training

- Questions

## Incentive Fees

- Earned per PRA – Exhibit 5
- Timeframe - measured from PAE Acceptance Date
- Calendar days
- Completion of specific milestones per PRA (e.g. closing)
- Requires bill on PAE letter head
- Update M2M MIS system
- Attach Critical Dates Tracking
- Attach 2.15, 2.16, or 2.17, if applicable

**Notes:**

-5.7.1 of PRA includes timeframes PAEs must meet in order to avoid a default of their PRA

-In order to encourage PAEs to peform quality work as timely as possible, Exhibit 5 of the PRA includes incentive payment provisions.  

Based on these provisions, the PAE can earn incentive fees in addition to their base fees for accomplishing key milestones in the restructuring process within the timeframes indicated in Exh 5.

For example, if the PAE is successful in completing Due Diligence within 75 calendar days of acceptance of the asset, the PAE will earn a $4,000 incentive fee.
-If PAE is successful in earning an incentive fee, an 
invoice on PAE letterhead must be submitted
-M2M MIS
-Critical dates
-2.15  -2.16—2.17, if applicable

## Incentive Fees – Lites

- _Tier 1_
- Approved by PD
- Within 75 days of acceptance
- $1,250

- _Tier 2_
- Approved by PD
- Within 90 days of acceptance
- $1,250

- _Conversion - Full to Lite_
- Approved by PD
- Within 180 days of acceptance
- $1,250

**Notes:**
If full converts to a lite, the only incentive fee the PAE can earn is if the PAEs recommendation for conversion is approved by the PD within 180 days of acceptance.

Once deal converts – PAE is not entitled to then earn Tier 1or Tier 2 incentive fees

## Incentive Fees – Full Closes

| Milestone | Timing | Amount |
| --- | --- | --- |
| Due Diligence | 75 days | $4,000 |
| OMHAR Execution of RC | 150 days
(180 days eff. 3/24/2004) | 
$4,000 |
| Closing | 8 months | $2,500 |
| Closing | 9 months | $2,500 |
| Public Interest Survey | plan approval | $2,500 |
| Cost Savings | If (NPV / PPC) >1.0 | $2,500 |
| Cost Savings | and if (NPV / PPC) >1.1 | $2,500 |
| Use of additional funds | Closing | $2,500 |
| Closings with additional funds | Closing | $2,500 |
| Total |  | $25,500 |

## Incentive Fees – Full AOTC

| Milestone | Timing | Amount |
| --- | --- | --- |
| Due Diligence | 75 days | $4,000 |
| OMHAR Execution of RC | 150 days
(180 days eff. 3/24/2004) | 
$4,000 |
| Completion – Chapter 6 | 9 months | $2,500 |
| Public Interest Survey | plan approval | $2,500 |
| Cost Savings | N/A | $0 |
| Cost Savings | N/A | $0 |
| Use of additional funds | Approval of AOTC | $2,500 |
| Closings with additional funds | N/A | $0 |
| Total |  | $15,500 |

**Notes:**
Use of additional funds for AOTC – even though the chart in Ex 5 of PRA doesn’t currently show $2,500 as a possible incentive for AOTC deals, it refers to NOTE 9, which indicates that the PAE is entitled to $2500 for completing extra work associated to a deal involving additional funds and an additional $2500 if the deal closes with additional funds.  

We will correct this in our next amendment of the PRA.  In the meantime, PAEs should request this using a 2.15 waiver.

## Incentive Fee – Due Diligence

- Update M2M MIS system
- Attach Critical Dates Tracking
- Shows milestone completed w/in 75 days of acceptance
- Requires bill on PAE letterhead
- Invoice at same time requesting portion of base fee for due diligence
- Applies to fulls – closed and AOTC
- Reactivation deals – see 2.16 for eligibility

## Incentive Fee - OMHAR Executes RC

- Plan approval _must_ be completed
- OMHAR _**signs**_ RC
- Within 150 days of acceptance, if RC signed before 03/24/2004
- Within 180 days of acceptance, if RC signed after 03/23/2004
- Attach page 1 and last page of RC to evidence approval by OMHAR
- Requires bill on PAE letterhead
- Applies to fulls – closed and AOTC
- Reactivation deals – see 2.16 for eligibility

## Incentive Fee – Closing

- Update M2M MIS system
- Attach Critical Dates Tracking
- Shows milestone completed w/in 8 and/or 9 months of acceptance
- Requires bill on PAE letterhead
- Invoice at same time requesting portion of base fee for closing
- Applies to fulls – closed only

## Incentive Fee – Completion per Ch. 6

- Update M2M MIS system
- Attach Critical Dates Tracking
- Shows milestone completed w/in 9 months of acceptance
- Requires bill on PAE letterhead
- Excludes
- Ineligible properties (e.g. below market)
- Owner prepays the mortgage
- Owner opts out of section 8 program
- Owner withdraws property from M2M program
- Applies to fulls – AOTC only

## Incentive Fee – Public Interest Survey (Tab T)

- Eligibility criteria
- PAE conducts both first and second tenant meeting, _and_
- OMHAR approves restructuring plan or recommendation for AOTC
- Excludes AOTC’s prior to second tenant meeting
- Notice of 1st tenant meeting distributed prior to 3/24/04
- Attach resident feedback forms
- Eligibility is based on resident feedback forms containing favorable comments

## Incentive Fee–Public Interest Survey (Tab T, cont’d)

- New guidance issued 3/23/04
- Effective for all projects where notice of 1st Tenant Meeting distributed subsequent to Memo.
- Must complete sections A & B of Form 3.8
- Attach resident feedback forms (Form 3.7)
- Attach comments from residents and tenant stakeholders
- RM approves/disapproves Form 3.8
- Invoice must include bill on PAE letterhead

**Notes:**
*TAB T – Look at guidance
PAE must complete sections A and B of Form 3.8
Form 3.8 PAE Certification for Public Interest Survey Performance Incentive Fee
By making this certification, the PAE is stating that they have complied with the requirements in Ch. 3 of the OPG and Sec III of Appendix L
If for some reason PAE cannot certify to all items in section B of Form 3.8, an explanation must be provided
Invoice, Form 3.8, and supporting documentation will be reviewed by RM
Section C of Form 3.8 must be signed by RM indicating approval or disapproval of the incentive
If there are negative comments about the PAE’s performance on resident feedback forms or in tenant stakeholders comments and/or if PAE has not certified to all items in Sec. B and if RM has cause to question the PAE’s performance, the RM will research matter and make a decision to approve or disapprove the incentive fee.  RM’s decision must be documented in writing
If incentive is disallowed, RM returns Form 3.8 to PAE with written justification
OMHAR Invoice Specialist adjusts the PAE invoice accordingly

## Incentive Fee – Cost Savings

- Attach Critical Dates Tracking
- Showing property has closed
- Attach Sources and Uses statement from model
- Eligibility (2 opportunities) – Tab U
- NPV/PPC > 1.0
- and NPV/PPC >1.1
- Requires bill on PAE letterhead
- Invoice at same time requesting portion of base fee for closing
- Applies to fulls – closed only

## Incentive Fee – Use of Additional Funds

- Attach Critical Dates Tracking
- Attach Additional Funds Transaction (AFT) Sources and Uses statement from model
- Requires bill on PAE letterhead
- Invoice at same time requesting portion of base fee for plan approval

**Notes:**
This incentive is applicable to all fulls provided the OMHAR PD approves the PAEs plan that reflects an additional funds transaction.

## Incentive Fee – Closes with Additional Funds

- Attach Critical Dates Tracking
- Showing property has closed
- Attach AFT Sources and Uses statement from model to Form 7.4 or 7.4a
- Requires bill on PAE letterhead
- Invoice at same time requesting portion of base fee for closing
- Applies to fulls – closed only

## Incentive Fees – Sample Case

- Demonstrates (Tab S)
- Due Diligence completed w/in 75 days

## PAE Invoice Training

- Questions
- - Break -

## Form 2.14A - Helpful Hints

- Be sure claimed amounts on current invoice have not been previously invoiced and PAID
- Page 1 – Cover Page (Tab G)
- Verify the invoice number is not a duplicate invoice number
- Verify accuracy of PRA contract no., asset name, FHA project no., asset designation and final invoice indicator
- Verify FHA number with M2M MIS system
- If invoice is returned for corrections, make a notation on the invoice when resubmitting

## Form 2.14A - Helpful Hints

- Page 2 – Signature Page (Tab G)
- Ensure $$ in Part D are accurate
- Be sure invoice contains _**original**_ signatures and adequate supporting documentation
- stamped signatures are not accepted
- provide authorizing documentation when one person signs on behalf of another
- Ensure FHA project number on bottom of page is correct and matches number indicated on page 1

## Form 2.14A - Helpful Hints

- Pages 3 and 4 - Schedule A (Tab G)
- Verify $$ claimed in Column F _**do not**_ exceed maximum amounts identified in Column D or Form 2.13
- Fully executed **Form 2.15**, OMHAR Waiver Form, must be attached to invoice when claimed amount exceeds maximum amount
- Reimbursement of third party reports requires a bill from the third party indicating the services provided and referencing the project
- Be sure claimed amounts match supporting bills/receipts

**Notes:**
NOTE:  References to 2.13 should be construed to mean the amounts allowed by the PRA.  Form 2.13 is no longer required.

## Form 2.14A - Helpful Hints

- Pages 3 and 4 - Schedule A  (Tab G, cont’d)
- When travel is involved govt. travel voucher, supporting receipts and project cost breakdown are required
- Claims for base fees and incentive fees require a bill on PAE letterhead which indicates work performed _and_ references project
- Base fee
- Verify $$ are entered on proper line
- Verify invoicing for correct amount – refer to PRA for appropriate base fee which based on the PAE acceptance date of the asset

## Form 2.14A - Helpful Hints

- Pages 3 and 4 - Schedule A  (Tab G, cont’d)
- Be sure the M2M MIS system has been updated for appropriate items (e.g., appraisal and PCA complete, due diligence complete, etc.)
- Attach Critical Dates Tracking for supporting documentation
- Be sure FHA project number on bottom of page is correct _and_ matches number indicated on Page 1

## PAE Invoice Training

- Questions

## Form 2.14B – Sample Case

- Demonstrates (Tab V)
- Invoicing of non-asset specific expenses
- Taxi to and from airport
- Taxi from hotel to OMHAR

## PAE Invoice Training

- Questions

## Invoice Contracts

- Chicago Production Office:
- Arnold Taylor
- 312-886-4133 ext. 2512
- _[Arnold_L._Taylor@hud.](mailto:Arnold_L._Taylor@hud.gov)__[gov](mailto:Arnold_L._Taylor@hud.gov)_
- Central Production Office
- Kim Leagan
- 202-260-2746 ext. 3749
- _[N._Kimberly_Leagan@hud.gov](mailto:N._Kimberly_Leagan@hud.gov)_