13.14.12 Other Costs

A. Other costs include all costs and/or recovery of costs which are not provided for elsewhere, and which are clearly attributable to the actual cost of the project. Examples include:

1. Cost of acquiring the leasehold interest, provided the acquisition cost plus ground rent and offsite costs paid by the Borrower (if any) do not exceed the HUD Fair Market Value of the Land Fully Improved. Any excess is to be reflected as a disallowed cost of acquiring the leasehold.

2. Ground rent paid during the period of the first mortgage between initial endorsement (start of construction for insurance upon completion projects) and the cut-off date as defined in Section 13.6.

3. Incentive payment due a nonidentity of interest contractor for completing construction before the scheduled completion date as amended by HUD-approved change orders.

4. Compensation from an insurance claim, including any income earned by investing the proceeds of the claim. Treat as recovery of cost after computing BSPRA.

5. Contractor’s bond premium if paid by the Borrower. If the construction contract contained an amount for the bond premium, subtract it from the contract amount when developing the adjusted upset price on line 1c of form HUD-92331A.

6. Other fees, including engineering and topographical survey. Cost staff must determine if such costs are reasonable and not duplicated in the General Contractor’s costs.

7. Contingency reserve included in the replacement cost of substantial rehabilitation projects.

   • The contingency reserve may be used for unforeseen costs of necessary items, betterment change orders approved by HUD, and unanticipated soft costs for time extensions approved by HUD.

• Expenditures for change orders and shortfalls in soft costs should be certified to and allowed under those specific line items.

• There will not normally be an amount certified to under contingency reserve, since all expenditures will be certified to on other line items.

  • An itemization of all expenditures covered by contingency reserve funds must be attached to the cost certification submission.

8. Grants, governmental loans, or tax credit equity used to pay for allowed cost items.

   • Should be treated as a recovery of cost after BSPRA.

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Chapter 13 Cost Certification 13.14 Review of Borrower’s Cost Certification

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• Do not deduct grant, loan, or tax credit equity funds from the total recognized costs when the funds were used to pay for non-replacement cost items (i.e., used toward but not limited to: paying the acquisition cost of the land in excess of the HUD allowance, the operating deficit, working capital, and items on form HUD-2880, Applicant/Recipient Disclosure.

9. Residential relocation fund established on form HUD-92264. Allow only those expenses approved by HUD up to the amount established on form HUD-92264. Apply unused allowance as a direct mortgage reduction.

10. Third Party costs for appraisals, market analysis, PCNA etc. These are no longer recorded in Other Fees and should be included with Organizational Cost line items (refer to Chapter 3).