Understanding Cap Rules

When setting up expense participation, you can use caps, or limits, to specify the amount that the tenant is monetarily responsible for. In general, caps are assigned to expenses that are considered controllable. For example, cleaning is a controllable expense while snow removal is an uncontrollable expense.

Use the Cap Rules program (P1515) to set up cap rules. The system applies caps to the class exposure after it has been adjusted for gross ups. Use the E.P. Class Information program (P1530) to assign caps at the class level or use the E.P. Information program (P15012) to assign capes at the lease level.

In the P1515 program, you can:

• Define caps as fixed, base, cumulative, or noncumulative (prior year).

• Define the cap as greater or lesser of a cap percentage and a CPI (consumer price index) increase or simply as a percentage increase.

• Define cap floors and ceilings to limit caps.

• Define building-specific cap rule details for expense-level caps.

• Recover expenses that were capped in prior years by selecting the Cap Roll Forward check box.

The system stores cap rules information in the E.P. Caps Rules table (F1515) and cap rule building information in the Building E.P. Caps table (F15151).