R 125.203 Requirements for conducting business with identity of interest vendors.

Rule 203. Owners and management agents shall conform to all of the following requirements when conducting business with vendors with whom there is an identity of interest: (a) Both the owner and management agent shall inform the authority division of asset management of any proposed vendor with whom there is an identity of interest. The notification must be submitted concurrent with submission of the development operating budget, but at least once per year. (b) The owner and management agent shall submit a certified disclosure for each proposed vendor with whom there is an identity of interest that lists the names of all of the following individuals: (i) All owners and managers of vendors that are sole proprietorships. (ii) All copartners or general partners of vendors that are copartnerships or limited partnerships. (iii) All joint venturers of vendors that are joint ventures. (iv) All directors, officers, and shareholders of vendors that are corporations. (c) The certified disclosure must list, for each individual described in subdivision (b) of this subrule, the names of the individuals involved with the owner or management agent with whom there is an identity of interest and the extent or degree of the identity of interest. The certified disclosure must also contain other information as the authority requires, such as the following: (i) Federal tax identification number of all vendors with whom there is identity of interest. (ii) The location of all offices that contain business records of the vendors with whom there is an identity of interest. (iii) The names and addresses of the bookkeepers and accountants of the vendors with whom there is an identity of interest. (d) The certified disclosure must be submitted on forms designated by the authority staff and be submitted together with the submission described in subdivision (a) of this subrule or, if the proposed vendor is not listed on the submission, when the owner or management agent requests approval to contract with a proposed vendor with whom there is an identity of interest. (e) The owner and management agent shall submit, together with its certified disclosure, a copy of the organizational documents for each proposed vendor with whom an identity of interest is shared. (f) The authority staff has the right to audit the books of the vendor with whom there is an identity of interest to determine whether amounts paid to identity of interest vendors were reasonable and whether there has been compliance with applicable restrictions on return. The owner, management agent, and proposed vendor shall acknowledge, in the certified disclosure, the authority's right to conduct such an audit. (g) Both the owner and management agent shall submit to the authority a request for approval to use a proposed vendor with whom there is an identity of interest. Neither the owner nor management agent may contract for goods or services from any vendor with whom there is an identity of interest until the proposed vendor and contract amount is approved by the authority staff. If an owner or management agent enters into a contract for goods or services beyond the goods or services previously approved by the authority, or if the contract price increases beyond the prices previously approved by the authority, an additional approval must be requested of the authority. (h) The authority staff may, upon a request from the owner or management agent and after review of the disclosure required pursuant to the provisions of subdivisions (b) to (f) of this subrule, determine that the identity of interest between the owner and agent is insignificant. If such a determination is made, the owner and management agent need not comply with the provisions of subdivision (i) of this subrule. (i) Unless compliance with this subdivision is excused pursuant to the provisions of subdivision (h) of this subrule, all requests for approval of proposed vendors must be accompanied by a detailed explanation of the goods or services to be provided by the proposed vendor and not less than 3 bids for the goods and services. The 3 bids must include a bid from the vendor with whom there is an identity of interest. (j) Requests for approval of a proposed vendor must be submitted concurrent with the submission of the development operating budget and any other time that the owner or management agent wishes to contract with a vendor with whom there is an identity of interest. However, a proposed vendor and contract amount need be approved only 1 time per operating year per development, unless the vendor supplies goods or services beyond the goods or services previously approved by the authority or the contract price increases beyond the prices previously approved by the authority.