Setting Up Cap Rules
Access the Cap Rule Revisions form.
- Cap Rule
Enter a user-defined value, up to 10–digits, that specifies a cap rule. Enter a description of the cap rule in the next unlabeled field.
- Cap Type
Enter a code from user-defined code (UDC) table 15/CT that specifies which basis to use during cap processing. Values are:
1: Fixed. If you select this option, enter an annual amount as a percentage factor.
2: Base. If you select this option, tenants typically pay the amount of increase over the base year.
3: Cumulative. If you select this option, the system applies and grows the cap percentage to each subsequent year, regardless of expenses.
4: Noncumulative. If you select this option, the system applies the subsequent year calculations to the cap percentage for the prior year amount so that the amount from the prior year becomes the cap basis.
- Cap Operator
Enter a code from UDC table 15/OP that specifies whether the cap value is the greater or lesser of two values. Values are:
1: Greater of
2: Lesser of
For example, if the cap is the lesser of 5 percent or the CPI increase, you would enter 0.05 in the Percentage Factor field, select 2 in the Cap Operator field, and enter the CPI index information from which to calculate the cap percentage.
- Cap Operator Value 1 and Cap Operator Value 2
Enter codes from UDC table 15/OI that specify the two values that are compared in reference to the cap operator. These fields are used with the Percentage Factor and Cap CPI Index fields. Values are:
1: CPI Increase
2: Percent Increase
3: Prior Year Actual
- Percentage Factor
Enter a value that specifies the annual increase of the cap rule.
Enter the value as a decimal, for example, 3% is 0.03.
- Cap CPI Index (cap consumer price index)
Enter a code from UDC table 15/IX that specifies the escalation index to use to calculate a percentage increase allowed by a cap. You can use indices such as the CPI to determine the percentage by using the formula (Current Index − Base Index) ÷ Base Index.
If you enter a value in this field, the system retrieves the index values from the Escalation system for the month and year defined in the Cap Index Month and Cap Index Year fields. If you leave this field blank, the system uses the previous year, the year prior to the current year of the calculation.
- Cap Index Month
Enter the month for which the system retrieves the cap index value.
- Cap Index Year
Enter the year for which the system retrieves the cap index value.
- Cap Roll Forward
If you select this check box, the system rolls the cap overage amount into the successive calculation.
Note: The system does not roll forward cap credit amounts, regardless of the setting in this check box.- Building
Enter a specific building or to supply cap basis information.
You can enter * for all buildings.
Because you can apply different cap basis amounts to different buildings, you must enter an amount type and define the values entered for Expense Cap Basis, Cap Floor, and Cap Ceiling for each building
- Cap Base Year
Enter the starting year from which successive cap increases are calculated.
- Expense Cap Basis
Enter a value that specifies the rate per square foot or amount for the base year. This value may differ from one building to another.
If you leave this field blank, the system attempts to determine the cap basis using prior year expenses.
- Cap Floor
Enter the minimum cap increase amount. If the calculated cap amount is less than the cap floor, the system uses the cap floor.
- Cap Ceiling
Enter the maximum cap increase amount. If the calculated cap amount is greater than the cap ceiling, the system uses the cap ceiling.
- Amount Type
Enter a value from UDC table 15/AY that specifies whether the cap basis, cap floor, and cap ceiling values represent amounts or rates per square foot. Values are:
1: Amount.
2: Rate per square foot.
- Cap Frequency Of Increase
Enter the annual frequency at which a cap increase is applied.
For example, if you enter 5, the defined increase is applied every five years. If you do not enter a value, the cap increase is applied every year.
- Cap Percent Base Rent (cap percent of base rent)
Enter a cap that is determined by a defined percentage of base rent.
- Cap Area
Enter an area value that is used as the denominator when an amount type of rate per square foot is used to define the cap basis, cap floor, and cap ceiling. The rates entered are multiplied by the area value to express the cap as an amount.
- Cap Fixed Amount
Enter a value that indicates a fixed increase applied to a cap for base caps, cumulative caps, and non-cumulative caps. For fixed caps, this field represents the fixed cap amount applied each year.