Understanding Expense Participation Setup

In the real estate management industry, a process exists of billing tenants a pro rata share of operating expenses that are related to a property or building, such as utilities, taxes, insurance, maintenance, cleaning, advertising, and promotions. These expenses are known by many terms, such as common area maintenance, expense pass-through, rebills, escalations, triple net, and building operating costs. In the JD Edwards EnterpriseOne Real Estate Management system, it is termed expense participation because the system can generate billings that result in invoices and vouchers for almost any type of expense sharing.

The expense participation process assumes that each tenant pays for expenses based on the percentage of the area in the building or property that they occupy. However, because leases can be negotiated to exclude a unit from expense sharing or reduce the level of a unit's share, you can adjust the expense category, tenant's area, and the area of the building to derive the tenant's expense share amount.

You can set up expense participation to generate estimated billings for the tenants' expected share of expenses on a recurring frequency, such as monthly, and then generate billings again at the end of the year based on actual amounts from which you can deduct the estimated paid amounts. You can also use the actual amounts as the basis for the estimated billings for the following year, as well as generate estimated expenses based on a budget ledger type.

This table describes the setup tasks that are associated with expense participation:

Task	Description
Set up cap rules.	Set up expense participation caps to place a maximum limit on the tenant's monetary responsibility.
Set up ledger type groups.	Set up ledger type groups to enable you to retrieve expenses from multiple ledger types.
Set up expense participation classes.	Set up classes by property or building, account numbers, and time period to specify the expenses for each class.
Set up expense participation information.	Set up expense participation information to specify the expense classes for each tenant based on the tenant's lease.
Set up group and subgroup limits. (Optional)	Set up a group / subgroup that defines a combination of two or more expense classes with a common limit. If the system determines that the limit has been exceeded, the system calculates an adjustment that is applied to adhere to the limit.
Set up expense participation adjustments.	Set up adjustments by revising components of the expense participation calculation; expense class, tenant's area, and the building or property area.
Set up the share factor denominator. (Optional)	Set up a denominator to use in the expense participation calculation that excludes units from the area of the building or property based on the expense participation unit type, the area of the unit, or both.
Set up tenant exclusions. (Optional)	Set up rules to exclude expenses from the expense class based on bill codes.