Accounting: the expanded

Construction

Although the construction of Community Village occurred over a period of ten years, to keep the example simple, it is assumed that each building is constructed in a period of one fiscal year. The costs of construction of the rental buildings and amenities are capitalized and amortized over 40 years, including interest charges incurred during the time of construction. Half of the financing for Community Village comes from private lenders, and the other half from pension funds: twenty-five percent in the form of equity investments and another twenty five percent through an investment trust.

Operations

Rental management. Expense categories and percentage of revenues to manage the four rental buildings are outlined in Table 5.2. The percentage of specific expense categories as compared to revenues is based on a study of five apartment buildings.²⁶ The rental rate in the first year is based on actual rental rates of similar buildings in Vancouver: $1.15 per square foot per month, and increased yearly by the cost of living adjustment set by the provincial government.

26. 
    http://www.canfedapts.org/TaxStudy.htm#intro
    

Table 5.2: Breakdown by Percentage of Expenses of Rental Buildings

Revenues	100.00 %
Expenses
Advertising	0.78%
Insurance	1.21%
Professional	0.26%
Management	5.76%
Property taxes	8.03%
Repairs	12.61%
Utilities	4.88%
Wages & benefits	5.22%
Miscellaneous	0.17%
Office	0.33%
	39.26%
Net income	60.74%

Condominium management. Fees paid monthly by condominium owners cover costs associated with common areas in their buildings and provide funds for a reserve for future capital expenditures. For this example, condominium fees are calculated at $0.20 per square foot per month. Expense categories and reserve appropriations are shown in Table 5.3.