New York Codes, Rules and Regulations › Title 9 - EXECUTIVE DEPARTMENT › Subtitle S - Division of Housing and Community Renewal › Chapter III - Low Rent Housing › Subchapter D - Accounting Manual For Public Housing Agencies › Part 1647 - Operating Period Accounting › Subpart 1647-4 - Replacement Reserve › Section 1647-4.2 - Classification of replacements

Current through Register Vol. 46, No. 28, July 10, 2024
(a) In
						addition to replacements, other expenditures in the nature of repairs,
						maintenance and renewals (RM&R) may be made to maintain or restore the
						utility, function or revenue producing capacity of a project. Such
						expenditures, however, are charged to expense, whereas expenditures for
						replacements are charged to the reserve. Theoretical criteria for
						distinguishing between RM&R on the one hand, and replacements, on the
						other, have been stated in the preamble to the definitions of the 4400, Repairs
						and Maintenance, group of expense accounts (see Part 1641). In view of the
						practical difficulties in their application, the division does not prescribe
						the use of such criteria, except as a guide, and bases its classification on a
						system of selection and predetermination, as follows:
(1) Schedule of replacement reserve
						requirements. The first step in the system of classification is the preparation
						by the local agency of a schedule of replacement reserve requirements (see §
													1647-4.3). This schedule is
						submitted for division review and approval upon substantial completion of the
						project and lists the assets which, it is intended, will be replaced over the
						life of the project and for which reserves are to be accumulated by periodical
						provisions. It is evident that, of the aggregate of assets comprising a
						project, a selection will necessarily have to be made of the assets to be
						included in the schedule of replacement reserve requirements, inasmuch as it is
						the stated purpose of the reserve to provide funds only for such replacements
						as are required to maintain or restore the utility, function or
						revenue-producing capacity of the project over its statutory life.
(2) Operating budget. The next step in the
						system of classification is the preparation of the annual operating budget.
						Each operating budget submitted to the division for review and approval will
						include a supplementary schedule of replacements which shall give a detailed
						description and cost estimate of all replacements planned for the budget year.
						It is evident that, in the preparation of the operating budget, the local
						agency will be guided by the schedule of replacement reserve requirements in
						that the classes of assets budgeted to be replaced during a given budget year
						will be selected from the list of assets scheduled to be replaced over the life
						of the project as per the schedule of replacement reserve requirements, as
						revised to date. In the event that the need for an unanticipated replacement
						occurs during the year, the local agency shall request division approval of a
						corresponding amendment of the operating budget.
(3) Classification. The final step in the
						system of classification is to classify as replacements, to be charged to
						account 2510, Replacement Reserve, all expenditures for items listed on the
						schedule of replacements with the approved operating budget, as amended, and to
						classify as RM&R expenses, to be charged to the 4400 group of expense
						accounts, all other expenditures for maintaining or restoring the utility,
						function and revenue-producing capacity of the project.