14.12.1 Treatment of Developer Fee

A. Developer fees may, though are not required to be, treated as mortgageable costs so long as they are:

1. In amounts approved by the project’s LIHTC allocation agency and

2. Scheduled for payment in amounts and at times agreed upon with the syndicator or investor.

B. Developer Fees for different project types and loan programs are addressed in greater detail in Appendix 3, Section A.3.2.1. and Appendix 2.

C. Neither BSPRA nor SPRA may be claimed when a Developer’s Fee is included in the project budget, regardless of whether the Developer Fee is treated as a mortgageable cost.

D. An IOI between the GC and the owner is allowed and does not require a waiver, but it must be disclosed in the application and may affect the fee and profit structure (may use Lump Sum or Cost-Plus form of Construction Contract and neither the General Contractor nor the Borrower need to cost certify if the project is exempt from providing a Cost Certification per Chapter 13 as determined at the time of Firm Commitment). No blanket restriction has been imposed on the amount of General Contractor profit, except it must be reasonable based on the market and the scope of work. HUD generally relies on the policies of the State tax credit allocation agencies, which often scale fees down when a single party or two related parties are receiving both the Developer Fee and the GC Profit .