R 125.204 Sanctions; "excessive costs" defined.

Rule 204. (1) As used in this rule, the term "excessive costs" means all costs that would not have been incurred by the development if the owner or management agent, or both, had exercised reasonable business judgment and obtained only those goods and services reasonably necessary for operation of the development at competitive prices. (2) If an owner or management agent is found to be in violation of these rules concerning identity of interest, the authority, or the officers or employees to whom it may delegate authority, may impose the following sanctions in addition to other remedies available through contractual or grant documents, or at law or equity: (a) On the first occurrence of a violation, either or both of the following sanctions may be imposed: (i) The owner or management agent may be required to reimburse the development operating account for all excessive costs, as determined by the authority or the officers or employees to whom it may delegate authority, incurred as a result of the contract with the vendor with whom there is an identity of interest. (ii) The owner and management agent found to be in violation may be prohibited from using any vendor with whom there is an identity of interest for a period of 1 year. (b) For each violation after the first, the following sanctions may be imposed, as applicable: (i) The owner or management agent may be required to reimburse the development operating account for all excessive costs, as determined by the authority or the officers or employees to whom it may delegate authority, incurred as a result of the contract with the vendor with whom there is an identity of interest. (ii) If the violation involves a vendor who has an identity of interest with the management agent, either or both of the following sanctions may be imposed: (A) The management agent's management agreement may be terminated, and the hiring of a new management agent is required. (B) The vendor who shares the identity of interest with the management agent may be barred from doing business with other authority-financed developments managed by the same management agent. (iii) If the violation involves a vendor who has an identity of interest with the owner, the owner and its management agent may be prohibited from doing business with that particular vendor at the development in question for a period of 5 years. AUTHORITY PROGRAMS AND TRANSACTIONS