1. Section 13A Fast Track Rent Increase Rent Increase 6.1A Feb. 2010

2. Introduction Rent Increase 6.1A  What is a Fast Track Rent Increase?  What to send in hard copy to MassHousing.  The methodology behind the Fast Track Rent Increase.  Who is eligible for a Fast Track Rent Increase?  What system requirements are needed to use the Rentinc 6.1 software?  How to request a Fast Track Rent Increase.  How to access MassHousing’s secured website messenger service.  How to populate the Rentinc 6.1A software.  What to post for Tenant Notification. In this presentation:  Explaining the Fast Track Rent Increase at the Tenant Meeting.  Frequently Asked Questions: FAQ’sFAQ’s 1

3. What is a Fast Track Rent Increase? MassHousing’s Fast Track allows owners of eligible Section 13A developments to obtain a rent increase with minimal processing. Management (MGMT) may propose a Fast Track rent increase, provided the proposed rent increase is equal to or less than the current “Operation Cost Adjustment Factor”, or OCAF. Rent Increase 6.1A This approach mirrors HUD’s approach in apportioning the project operating costs among unit types and applying the OCAF to the apportioned expenses (less debt service) to determine an increase factor. The increase factor is applied directly to the basic rent. (Note: the increase factor applied to the Basic Rents is not identical to the OCAF). Developments may apply for no more than two (2) consecutive rent increases using this methodology. For every third rent increase proposal, developments will be required to submit a full budget-based rent increase package. 2

4. Methodology Behind the Fast Track Rent Increase MassHousing acknowledges that in recent years, some owners have deferred seeking rent increases due to the administrative burdens of submitting a budget-based request. This has resulted in less frequent but often substantial (i.e. above 10%) increases in the basic rent, well in excess of ordinary inflation. Although less frequent, these significant increases often have a greater impact on basic rent payers. In an effort to encourage owners to periodically seek modest increases in the approved basic rents (and to protect tenants from the impact of these occasional albeit substantial increases), MassHousing adopted the Fast Track policy to allow owners to seek a rent increase without the burden of preparing an entire budget-based request. Notwithstanding, MassHousing recognizes the value of tenant input; therefore, this policy preserves the tenant protections (i.e. resident meetings) afforded during the budget-based rent increase process. Rent Increase 6.1A 3

5. Who is eligible for a Fast Track Rent Increase? 1. 13A Developments without federally funded project-based assistance of any kind, such as Rent Supplement or RAP; and Rent Increase 6.1A 2. that have completed all capital items or repairs detailed in the prior approved rent increase (see “findings” page); or 3. those that have not completed capital items or repairs but are able to demonstrate that there are mitigating factors that reasonably excuse MGMT from completing the capital items or repairs. 4. Those that have certified that the attached Notice to Residents regarding Fast Track Rent Adjustments was publically posted for a period of five consecutive business days, as prescribed by MassHousing. 4

6. Who is eligible for a Fast Track Rent Increase?  A Notice to Residents must be posted for no less than five (5) days in high traffic areas to explain what the Fast Track methodology is. A certification letter that this posting occurred must be signed and faxed to MassHousing by the date specified for a development to be eligible for a Fast Track rent increase in the future.  Posting this notice does not mean a development must process a Fast Track rent increase, it simply notifies tenants of the possibility in the future. 5

7. System Requirements  The RentInc Software is a large MS Excel program/ tool that requires compatible hardware and software systems that will allow the program to run effectively.  If your system has a newer version of MS- Excel (MS-Excel 2007 & higher), you must save it as an MS-Excel 97-2003 workbook before you send it to MassHousing.  MassHousing recommends that MGMT save a hard copy of the Rentinc 6.1A software to your hard drive before you begin to work with it.  When opening the software, you must “Enable Macros” for the software to function properly. (FAQ: How to “Enable Macros” )How to “Enable Macros” Rent Increase 6.1A 6

8. Software Minimum: Microsoft Windows 2000 operating system Microsoft Excel 2000 Internet Browser capable of 128 bit SLL Security (for Tumbleweed) Recommended: Microsoft Windows XP Pro or Windows 7 Microsoft Excel 2000 Internet Browser capable of 128 bit SLL Security (for Tumbleweed) Hardware Minimum: Intel Pentium III CPU (or AMD equivalent) 512 Meg of RAM memory Broadband/Cable Internet Access 10 Gig Free space on the hard drive Recommended: Pentium Core2 Duo CPU (or AMD equivalent) 2 Gig of RAM memory 5 MIPS Broadband/Cable Internet Access 20 Gig free space on the hard drive Writeable optical drive (CD-R or DVD- R/DVD+R) System Requirements Rent Increase 6.1A 7

9.  Contact the Subsidy Administration Staff at MassHousing. (Contact Info)Contact Info  You will receive an email within 3 to 5 business days, directing you to MassHousing’s secure message server.  Follow the steps in the email to obtain a password.  Once you log in, you will be able to access the Rentinc ver. 6.1A software.  A copy of the Rentinc 6.1 Software is available in disc form sent via USPS. Requesting a Fast Track Rent Increase Package Rent Increase 6.1A 8

10. Accessing MassHousing’s Secure Messenger System Similar to most email servers, users have the ability to compose emails, search their inbox for emails, check sent items, download attachments, reply and forward emails. Rent Increase 6.1A MassHousing’s Secure Messenger is the server that the agency uses to securely transfer confidential or non-public information (NPI) with external parties via email. It is the means by which you will receive and return your Fast Track Rent Inc package. (FAQ: Why is a Secure E-mail Server necessary?)Why is a Secure E-mail Server necessary? 9

11.  To access the message the recipient is required to register with the MassHousing Secure Message server by filling in all available fields. (password must be 8 characters long and contain at least one letter and one number)  The email address that the message was delivered to will be the recipient’s “username”.(i.e.“JSmith@Mgmtco.com”)  When you log in after creating an account, you will find a message with the Rentinc software 6.1A attached. Fill in all pertinent fields… MassHousing Secure Message Server Rent Increase 6.1A 10

12.  If a MGMT agent forgets their password, they have the ability to ask for the hint that they previously registered or have their password reset.  Both actions trigger the server to send a message to the email address that was used to register the account. MassHousing Secure Message Server  The user account will be “disabled” after 90 days of inactivity. If this occurs, please contact Subsidy Administration to re-activate the account.  Registered accounts are deleted 30 days after being disabled. Rent Increase 6.1A 11

13. MassHousing Secure Message Server  MGMT now has access to the Secure Messenger service and will be able to send and receive emails through the server. (NOTE: Do not try to log on with an incorrect password more than three (3) times. Ask for the password to be reset after the third failed login attempt.) Rent Increase 6.1A  It can be accessed at any point by going to https://securemail.masshousing.com and logging in. https://securemail.masshousing.com  If you receive a message through the server, a notice directing you to the secured server will be delivered to the e-mail address you created your account with.  When you have completed the Rentinc 6.1A Fast Track Rent Increase package, you will create an e-mail within the Secure server, attach the completed package and send it to MassHousing. 12

14. Fast Track Processing Rent Increase 6.1A 13

15. The Introduction When you open the Rentinc 6.1A software, you will be brought to the Introduction page. To begin the Fast Track process, click the gray button labeled “Fast Track Rent Increase”. Rent Increase 6.1A 14

16. !!!!STOP!!!!  HAVE YOU SAVED A COPY OF THE RENTINC 6.1A SOFTWARE TO YOUR HARD DRIVE? Rent Increase 6.1A  If you have done both of the bullet points above, please proceed.  HAVE YOU ENABLED THE MACROS TO ALLOW THE SOFTWARE TO RUN CORRECTLY? 15

17. Fast Track Directions How To Process a Fast Track Adjustment Rent Increase 6.1A  On the tab labeled MGMT will find a detailed description of the process you will be following.  With 4 steps, MGMT will have completed the data entry for a Fast Track rental increase.  Please read these directions completely before beginning the Fast Track process.  Steps 1 – 4 detail the Request Letter, Repair and Replacement, Deferral of Items, and allocating the increase to eligible items on the budget. 16

18. Fast Track Directions Posting Tenant Notifications Much like a regular rental increase, MGMT must notify tenants of the proposed Rent Increase, schedule a tenant meeting, and post notifications in high traffic areas such as the laundry room or mail box areas. The “Print Fast Track Posting Notice” button located on the Request Letter worksheet will print the Posting Notice worksheet, the DHCD Rent Schedule worksheet and the BAW worksheet. You now have your posting notice prepared. Rent Increase 6.1A 17

19. After clicking the Fast Track Rent Increase button, MGMT will be taken to the “Request Letter”. This letter displays the current Basic rents and adjusted Basic rents based on the increase factor. Request Letter: Current and Adjusted Rents Rent Increase 6.1A 18

20. Request Letter: Current and Adjusted Rents Also found on this letter are required fields that will notify tenants of the first tenant Meeting, the time of the meeting and the place. Suggested posting and meeting dates are based on the implementation date but may be changed. This information will populate the Posting Notice and Data Consolidation worksheet. 19

21. Request Letter: Current and Adjusted Rents  The OCAF factor is found on the Request Letter, the OCAF Adjustment page, and the BAW. When MGMT receives the repopulated Rentinc 6.1A the factor applied to the Increase Factored 12 Month Budget will be the adjusted OCAF factor.  MGMT may elect to request a factor less than the published OCAF. By entering this elected percentage in the Management Requested Adjustment, MGMT will see the Basic Rents change on the Request Letter based on the new adjustment factor. (NOTE: IF THE FACTOR IS CHANGED, THE “CALCULATE OCAF BUDGET” BUTTON MUST BE CLICKED.) Rent Increase 6.1A 20

22. Request Letter: Repair and Capital Replacement Tracking  After choosing the increase factor, MGMT will be asked to complete the above chart. The starting quantity of major repairs and/or capital replacements, noted as “To Be Completed” at the time of the last approved budget, will either be given a “Completion Date”, a “Target Completion Date”, or a reason why it is being deferred. Rent Increase 6.1A 21

23. Request Letter: Repair and Capital Replacement Tracking  It is very important to enter a “Completion Date” and also a “Target Completion Date” for all items that appear in the Repair and Capital Replacement Tracking section. All items that are deferred require an explanation. Until both criteria are met, these error message will remain on the worksheet. A Fast Track package returned without these dates will be invalid. The error messages above will remain on the worksheet until MGMT has accurately completed the required lines. 22

24. Request Letter: Repair and Capital Replacement Tracking  The “Starting Quantity” is a pre-populated field; the data drawn from the last MassHousing approved budget.  When the “Starting Quantity” is populated, it will also automatically appear in the Quantity Deferred column.  When a “Quantity Completed” is entered, the change is reflected in the “Quantity Deferred” column. (ex. 24 stoves – 10 completed = 14 to be completed)  When entering the “Completion Date” use the standard “mm/dd/yyyy” format. Rent Increase 6.1A 23

25. Request Letter: Repair and Capital Replacement Tracking  If MGMT has entered the date using the standard “mm/dd/yyyy” format, it will automatically format itself as seen above.  When MGMT populated the “Quantity To Be Completed” column, the change is reflected in the “Quantity Deferred” column as well. This represents a commitment to complete these items within the budget year.  EX: 24 Stoves to be replaced 10 Completed since last budget review 5 To Be Completed in the next 12 months 9 Stoves Deferred Rent Increase 6.1A 24

26. Request Letter: Repair and Capital Replacement Tracking  If the repair or replacement information is from more than a year prior, include any additional maintenance that has been completed in the “Quantity Completed” column. This additional work will populate the “Additional Completed” column that appears on the Posting Notice to inform tenants of ongoing efforts. EX: 24 Stoves to be replaced 61 Completed since last budget review 37 Additional Completed

27. Request Letter: Repair and Capital Replacement Tracking  When an item is “Deferred”, (i.e. item (s) that will not be completed within the next 12 months) the item and quantity will appear in a chart below the Repair and Capital Replacement Tracking grid.  MGMT will be expected to explain why the items are being deferred. EX:  Reasons must be entered for every instance of a deferred item, even if the reason is the same for all of the items.  Ensure the name and title are correct at the bottom of the letter before printing. These lines may be edited by MGMT. Rent Increase 6.1A 25

28. OCAF Adjustment  Listed at the top of this worksheet are the current approved development rents by type. The total monthly rent potential is formulated here. Rent Increase 6.1A 26

29. OCAF Adjustment  The data compiled is then computed based on the HUD published formula to arrive at the budget increase.  The adjustment is based on the Moderate Units Rent Potential attributed to operations and then multiplied by either the OCAF factor or the factor chosen by management. Rent Increase 6.1A 27

30. OCAF Adjustment Cont’d  This grid shows the specific increases that are applied to the Basic 13A units based on the increase factor. Rent Increase 6.1A  This information is transferred to the BAW worksheet to calculate the Increase Factored 12 Month Budget. 28

31. Management Fee  The Total Budget Increase as found in column “O”, line 5 of the BAW is derived from applying the OCAF or Owner factor to the eligible rents, in this case Basic Rents, excluding MRVP Project Based units.  That amount is to be applied to the eligible line items in the last approved BAW with one exception;  The management fee as derived per the management agreement, including fixed fee schedules, is subtracted from the increased rental income. The balance is then apportioned to each of the eligible line items in the Increase Factored 12 Month Budget found in column “J”. Property Management Fee Worksheet Rent Increase 6.1A 29

32. OCAF Adjustment Cont’d EX:  To arrive at the Adjustment Factored 12 Month Budget, we determined the percentage each line item represented in the original budget. For example: Payroll is 12.06% of the operating budget here.  Using that percentage, we calculated how much of the Total Budget Increase should be allocated to each line item. We did this for each eligible line item to arrive at 100% of the increase, applied incrementally against the eligible line items. Rent Increase 6.1A 30

33. BAW (FT1) The Budget Analysis Worksheet Ex: Line Items 31 LAST APPROVED 12 MONTH BUDGET Jul-30-2008

34. BAW (FT1) The Budget Analysis Worksheet  MGMT may choose to adjust the allocations made to the eligible line items. Items in GREEN are open for re-allocation. For instance, in the above example, Elevator Maintenance and Recreation did not have any funds allocated to them in the original 12 month budget, but with the factored budget, funds were allocated to them.  MGMT may remove the funds from these line items and add them to other line items to assure that line “61” matches in the Adjustment Factored budget, and the Owner’s Revised budget. Rent Increase 6.1A 32

35. BAW (FT1) The Budget Analysis Worksheet  When funds are removed from one line, the value must be added to another  Line 61, The “Total Disbursement Prior to Cap Exp & D/S” must match on the revised 12 month budgets. Rent Increase 6.1A 33

36. BAW (FT1) The Budget Analysis Worksheet  To the right of the BAW the funds available for allocation appear as MGMT adjusts the values found in the green cells. For example, $25,615 has been removed and appears as “Funds to be Allocated less Management Fee”. When those funds are added back into the budget as MGMT decides, the “Funds to be Allocated less Management Fee” will return to $0. If this field turns red, it means MGMT has allocated more funds than are available. Blue indicates there are funds left to be allocated, red indicates an over allocation Funds to be Allocated less Management Fee 34

37. BAW (FT1) The Budget Analysis Worksheet  In the same way MGMT may adjust the expense line items, the income line items may be adjusted but only within the confines of the income portion of the BAW. This pertains to line items 15.A – 15.E and 18.A only. As changes are made the funds still available for allocation will appear in blue to the right of the income portion of the BAW. 35

38. BAW (FT1) The Budget Analysis Worksheet  MGMT is allowed to increase or decrease the dividend distribution in proportion to the Maximum Increase as displayed to the right of the BAW. A cell above Line 80 “The Net Available for Equity – Distribution Base” in the “Owner’s Revised 12 Month Budget” will be $0 upon receipt of the package. To the right of cell is the Maximum Increase allowed based upon the apportionment of the OCAF derived funds. 36

39. Fast Track Time Line  The Time Line is integral to the rent increase process. As seen above and in the RentInc 6.1A Fast Track, this Time Line dictates the tenant meetings, comment periods, Agency approval/denial dates, and most importantly, the posting date that dictates the rental increase effective date. Rent Increase 6.1A 37

40. Posting Notice  The Posting Notice informs residents of the changes in rent, the comment period and the formal meeting. The date the Posting Notice is issued starts the countdown reflected on the Time Line. Rent Increase 6.1A 38

41. Posting Notice What Tenants Should Receive DHCD Rent SchedulePosting Notice Rent Increase 6.1A  These items should be posted in high traffic areas such as the laundry room, mailroom and common rooms. In addition, the entire Fast Track Rentinc package should be available in the management office for tenants to view. (NOTE: This does not include the Rent Roll or any sheets holding protected information.) 39

42. BAW (FT1) Request Letter Posting Notice What MassHousing Requires in Hard Copy Owners Cert Agent Check List  MassHousing requires the Fast Track Rent Increase package to include hard copies of the Request Letter, the BAW, the Posting Notice, Owner’s Cert and Agent Check List. Rent Increase 6.1A 40

43. Asset Mgmt & MGMT Agent Interaction: Tenant Meeting  Tenant meetings are an opportunity for residents and MGMT to interact and discuss the proposed rent increase. To qualify for a Fast Track, MGMT must notify tenants about the Fast Track methodology prior to beginning the process, with a memo drafted by MassHousing that will be posted in high traffic areas. The formal Fast Track package will be made available in the MGMT office for tenant review, excluding any protected information.  The Asset Manager from MassHousing will be on hand at the meeting to help open the discussion and serve as a representative of MassHousing. 41 Rent Increase 6.1A

44. Final Steps  Setting up a MassHousing Secure Message account.  Receiving a Fast Track Rentinc 6.1A package pre populated with your most recent approved budget information.  Completing the required fields to process a Fast Track Rent Increase.  Distributing the Posting Notice and the DHCD Rent Schedule in high traffic areas for the tenants to see.  Supplying MassHousing with a hard copy of the Request Letter, BAW, Owner Certification, and the completed Check List.  Returning the completed Fast Track Rentinc 6.1A package to MassHousing via the MassHousing Secured Message Server.  Congratulating yourself for completing the Fast Track Rentinc package!  At this time you have completed the Fast Track Rent Increase process by; Rent Increase 6.1A 42

45. Rent Increase 6.1A Conclusion We hope this presentation has been both fun and informative. If you have any questions concerning the Fast Track Rent Increase process, please contact Laureen Reardon, Senior Subsidy Analyst, at 617- 854-1176. 43

46. FAQ’s Frequently Asked Questions 44 Rent Increase 6.1A

47. How do I get the Rentinc package macros to work? If you open the file and the “Enable Macros” Dialog Box does not appear, please do the following:  Close the Fast Track Rentinc file;  Open Excel to a blank page;  Select from the Excel Menu “Tools/Macro/Security”;  In the Dialog box, select “Medium Security”;  Press OK;  Open the Fast Track Rentinc file again. This time you should see the ‘Enable Macros’ dialog box;  Click on “Enable Macros” and the Rentinc macros should work as designed. 45 FAQ

48.  The Gramm-Leach-Bliley Act (GLBA), the Federal Fair Credit Reporting Act (FCRA), and Massachusetts Law 93-H require that each financial institution have an affirmative and continuing obligation to respect the privacy of its customers and to protect the security and confidentiality of those customers’ non-public personal information (protected information).  It allows MassHousing users to send or receive confidential or non-public information (NPI) from outside of MassHousing by e-mail.  It can send large attachments (up to 100 MB) that would otherwise be blocked by the Exchange message size restriction (currently 12MB). Why is a Secure E-mail Server necessary? 46 FAQ Rent Increase 6.1A

49. What is “protected information”?  Non-public personal information is any “personally identifiable financial information” that a financial institution collects about an individual in connection with providing a financial product or service unless that information is otherwise “publicly available.”  This refers to the Rent Roll, worksheets 22A/22B, and worksheets 31A/31B specifically. There is sensitive “protected information” about tenants and site employees contained here that is not to be displayed publicly or transmitted electronically unencrypted. 47 FAQ Rent Increase 6.1A