explicitly allows this. Eden Fees: Allow $33,000, based on industry standard of $8,000 HCD has observed wide variation in fees, and believes asset management plus $25,000 partnership management $30,000 is adequate compensation for the work involved with fees. these activities. In addition, there is no barrier to sponsors receiving additional fees from distributions. This section only limits fees payable on a priority basis, before cash flow is Fees: Escalators should be either 3.5%, or, for consistency apportioned between soft lender payments and sponsor with other parts of the regulations, annual CPI. distribution. HCD agrees that a flat annual percentage increase would be simpler, and is now proposing 2.5%, which is slightly above inflation for the past 20 years. The standard 3.5% operating expense inflation factor used in underwriting is greater because it takes into account some cost items, such as maintenance, that increase over time at a rate greater than Services: Base the amount on restriction level, not actual inflation, as buildings age. There is no reason to believe these household income (which could be higher, but still needing fees should behave in the same manner. services). HCD is proposing to drop the distinction between tenant Services: Allow more for 35% units, which was the level income levels. See the revised text of §8314(d). used in old programs, and allow more for 50% units for the same reason. Same response. BH Clarify that past year payables can be paid from current year HCD agrees that this would be a useful clarification, and has operating cash flow. revised 8314(a) accordingly. BH Agrees with Mid-Penn letter on services recommendations. HCD agrees with this concept, and is now proposing to add a Specific language: allow and supportive services, broad definition of Services in Section §8301 “resident “Supportive Costs” case management, and on-site supportive services that includes resident services, beyond TCAC requirements. coordination.” §8314a MPH
explicitly allows this. Eden Fees: Allow $33,000, based on industry standard of $8,000 asset management plus $25,000 partnership management fees. Fees: Escalators should be either 3.5%, or, for consistency with other parts of the regulations, annual CPI. Services: Base the amount on restriction level, not actual household income (which could be higher, but still needing services). Services: Allow more for 35% units, which was the level used in old programs, and allow more for 50% units for the same reason. HCD has observed wide variation in fees, and believes $30,000 is adequate compensation for the work involved with these activities. In addition, there is no barrier to sponsors receiving additional fees from distributions. This section only limits fees payable on a priority basis, before cash flow is apportioned between soft lender payments and sponsor distribution. HCD agrees that a flat annual percentage increase would be simpler, and is now proposing 2.5%, which is slightly above inflation for the past 20 years. The standard 3.5% operating expense inflation factor used in underwriting is greater because it takes into account some cost items, such as maintenance, that increase over time at a rate greater than inflation, as buildings age. There is no reason to believe these fees should behave in the same manner. HCD is proposing to drop the distinction between tenant income levels. See the revised text of §8314(d). Same response. BH Clarify that past year payables can be paid from current year operating cash flow. HCD agrees that this would be a useful clarification, and has revised 8314(a) accordingly. BH Agrees with Mid-Penn letter on services recommendations. Specific language: allow “resident and supportive services, case management, and on-site supportive services coordination.” HCD agrees with this concept, and is now proposing to add a broad definition of “Supportive Services Costs” in Section §8301 that includes resident services, beyond TCAC requirements. §8314a MPH
summary-and-response-to-comments.docx