Any number of issues can keep multifamily developers and owners awake at night. I’ve identified the following four top problem areas for developers when it comes to billing and compliance based on my experience working on new construction projects. The following tips can help minimize unnecessary delays, reduce staff frustration, avoid fines and lower costs all while allowing for a smooth transition into operations.
1. Deposits
Setting up deposits for multifamily developments is a challenge that requires careful attention to details such as regulatory compliance, financial management and tenant relations. Awareness of deposit options or deposit payments is key to limiting confusion as to who is responsible, holding the proper entity accountable.
Make sure all deposits are paid correctly the first time. Too many times, we see deposits for accounts being paid in the construction name, only to realize too late that when a name is changed to a different legal entity, a developer must pay another deposit.
Handling it properly from the start saves time and money. Additionally, tracking the deposits so they are returned to the correct team after they are refunded is another issue that causes headaches, especiallyif a property is going to be sold. No one wants a buyer to get a deposit refund that should have been paid to the previous owner.
Understanding these complexities and addressing them helps developers to streamline the process and reduce disputes. As the multifamily sector grows, adopting the best practices for deposit management is critical for operational excellence and long-term success.
2. Construction Account Set-Up
Setting up accounts for the construction of multifamily housing is complicated and involves planning, execution and ongoing management. By following proper steps, developers and contractors can create a solid foundation for their projects, ensuring transparency, accountability and financial stability.
Effective account setup and management leads to successful completion of projects and less confusion. It also prevents losing track of accounts when a project is complete.
3. Legal Compliance
Legal compliance can be a nightmare when it comes to multifamily development and operations. In addition to safety standards and environmental regulations that govern the utility industry, every municipality has its own set of regulations that can be tricky to navigate.
These can often be overlooked or misunderstood for any number of reasons. Adherence to these regulations is critical to minimize the financial burden of fines and penalties from non-compliance and to reduce overpayments and avoid any unwarranted utility shutdowns to your property.
Requirements change constantly, and lack of compliance can result in an apartment operator being named in a class action suit.
4. Local Requirements and Submittal Process
Understanding and adhering to local requirements and the timing of the submittal process are crucial for the success of any project, yet many developers face unnecessary challenges because of a lack of knowledge in these areas. Such challenges can be mitigated through training, interaction with local authorities and the right use of technology.
Multifamily property owners, developers and managers should never underestimate the importance of proper set-up of deposits and construction accounts, legal compliance or understanding of the local requirements and submittal process. Following the correct protocol for each of these can pre-empt serious problems, which means fewer headaches and more cost savings.
— Jill Keene is senior director of development services with Utility Revenue Services. URS provides utility management to real estate owners, developers and property management companies.