Understanding Assumption Header Information

Set up assumption header information such as new and renewal market rates, new and renewal consumer price index (CPI) rates, rent step rates, growth pattern codes, and bill codes in the AREF Unit Assumptions program (P15L102). You can also set up miscellaneous information that includes the months of free rent and the associated bill code to use to post the amount, the renewal probability, and the downtime, or expected duration of vacancy, of the unit.

Note: Free rent calculations net out with base rent calculations. That is, if the assumption header has three months of free rent, then the account for the free rent bill code is debited for three months, but base rent calculations is credited for those three months so that the net result for that time period is zero.

Although you can specify the term of the both new and renewal assumptions, you enter the effective dates for the assumption in the Budget Start Period and Budget Start Fiscal Year processing options of the AREF Budget Calculation program (R15L1091). For example, if you enter the budget start period as 01, the budget start fiscal year as 07, and you set up the assumption for a new or renewal term of four years, then the effective dates for the assumption are 01/01/07 through 12/31/11. If you do not specify a new or renewal term on the assumption, the assumption is effective throughout the years in which the budget is forecast.

Note: You can also use the processing options in the AREF Budget Calculation report (R15L1091) to specify whether the system uses the assumption term or the budget term values when calculating detail assumptions.

When the assumption is in effect, the system calculates the forecasted rent amount for the unit by multiplying the unit area by either the market or CPI rate, which represents an amount per square foot, and then applying the growth pattern. The system updates the result to the account represented by the associated bill code.