Section 125.204. Sanctions; "excessive costs" defined.

(1) If an owner or management agent  is  found  to   be  in violation of these rules concerning identity of interest, the authority, or the officers or employees to whom  it  shall   delegate  authority,   may impose the following sanctions in addition to any other remedies available through contractual documents or at law or equity:

(a)   On the first occurrence of a violation, either or both of  the following sanctions may be imposed:

(i)    The owner or management agent may be required to reimburse   the development operating account for all excessive costs, as determined by the authority, incurred as a result of the contract with the vendor with whom there is an identity of interest.

(ii)    The owner and management agent found to be in  violation   may  be prohibited from using any vendor with whom there is an  identity  of interest for a period of 1 year.

(b)   For each violation after the first, the following sanctions may be imposed, as applicable:

(i)    The owner or management agent may be required to reimburse   the development operating account for all excessive costs, as determined by the authority, incurred as a result of the contract with the vendor with whom there is an identity of interest.

(ii)    If the violation involves a vendor who has an identity of interest with the management agent, then either or both of  the   following  sanctions may be imposed:

(A)   The management agent's management agreement may be terminated and a new management agent shall be hired.

(B)   The vendor who shares the identity of interest with the  management agent may be barred from doing business with other authority-financed developments managed by the same management agent.

(iii)    If the violation involves a vendor who has an identity of interest with the owner, then the owner and its management agent   may   be     prohibited from doing

business with the  particular  vendor  at   the   development   in question for a period of 5 years.

(2)   As used in this rule, the term "excessive  costs"  means  all  costs which would not have been incurred by the development if the owner  or management agent, or both, had exercised reasonable business judgment and obtained only those goods and services reasonably necessary for operation of the development at competitive prices.

History: 1991 AACS.