7.17.4 Expenses/Fees

A. Properties with LIHTC-restricted units will commonly have a higher operating expense ratio per unit than market rate properties, which may be due to increased administrative costs for tax credit compliance monitoring, performing resident income certifications, and staffing to provide on-site resident services. Estimating operating expenses for projects that are to be funded through the sale of LIHTC requires the analysis of LIHTC comparables if available, and consultation with other experts (i.e. appraisers and project managers) in the context of current market conditions, which should consider the size of the project and unit mix. Utility expense unit rent adjustments in LIHTC projects may be estimated by the analysis of actual costs supplied by the Developer, the utility company, or by use of the Section 8 utility allowances.

1. If the project has the same operating expenses under LIHTC or Project-Based Section 8 operation as it would under market rate operation, enter expenses as usual.

2. If a project has different expense needs as a subsidized project, the expenses used for Criterion 3 must be market rate expenses and the expenses used for Criterion 5 debt service shall be the actual expenses under its proposed usage. This will ensure that the Criterion 5 debt service analysis of the form HUD 92264a is calculated based on the actual estimate of the rent restricted NOI for the project.