7.13.12 Developer’s Fee, when Applicable

• A. HUD may include a nonprofit Developer’s fee in the estimated replacement cost of a project, in addition to the legal, organizational and audit fees normally included in the estimated replacement cost of a project. 1. The fee will be based on a sliding scale at eight percent of the mortgage, but not less than $40,000 or more than $400,000.

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2. The following exceptions apply:

   • For mortgages in excess of $5,000,000, increase the maximum fee to provide an additional 2 percent based on that portion of the mortgage that is in excess of $5,000,000.

   • At the option of the nonprofit Sponsor/Borrower, the fee included in the replacement cost may be reduced.

3. Part of or the entire fee may be used to pay for transactional costs related to developing the subject project, including but not limited to:

   • Reduction of the estimated closing costs of the project,

• Staff salaries,

• Nonprofit working capital deposit,

• Relocation expenses,

• Operating deficit escrow,

  • Financing fees above the 3.5 percent included in the estimated replacement cost of the project,

• Environmental studies, and/or

Housing Consultant services provided by either in-house staff or contractor.

4. Funds not used to meet the estimated cash requirements of the project will be released to the nonprofit based on a percentage of completion method.