CONSUMER PRICE INDEX (CPI) Explained

The Consumer Price Index (CPI) measures the average change in prices paid for a fixed market base of goods and services.  The Index figures are reported by the U.S. Department of Labor, Washington, D.C. 20212.  For additional information contact:

   Bureau of Labor Statistics

   Office of Prices and Living Conditions

   2 Massachusetts Ave, NE, Room 3615

   Washington, DC 20212-0001

   (202)606-7000

NOTE:  Updates to the CPI information in Property Manager must be obtained from the office above and entered in the CPI table located in the SYSTEM MENU\ CODE SUBMENU\ CPI Window.

Escalation agreements using the CPI involve changing the base Rent by the percentage of change in the level of CPI between the reference period and a subsequent time period.  The following example shows the computation of the percentage of change:

   136.0   CPI for the current period

   129.9   Less CPI for the previous period

   --------

       6.1   Equals index point change

   129.9  Divide by previous period CPI

   --------

    0.047  Result

    0.047 x 100  Result multiplied by 100

   --------

        4.7   Percentage of change

This percentage increase can be used for factoring Rent Increases.

HOW TO DO CPI RENT INCREASES (Solution 2409)

Property Manager Edge can do CPI Rent Increases manually or automatically.

1. Setup the Rent Amount paid by the Tenant in the Rent Schedule Tab in the Tenant Window.  Enter the Rent Amount, beginning date, the ending date (the date the Tenant will be due for a CPI rent increase) and check the CPI check box in the Rent Schedule.

2. The Autocharge Process will warn you 1 month in advance when a Tenant is due for a CPI Rent Adjustment.

3.  You can manually enter the Rent Increase in the Tenant's Rent Schedule, or you can use the Mass Rent Rate Change Process located in the Tenant Menu to do the CPI Rent Increase automatically.