4 CSR 85-5.090 - Developer Fees; General Contractor Overhead and Profit
(1) For a developer fee to be a QRE, the
developer fee agreement must meet the requirements of this rule.
(2) A developer fee shall be deemed a QRE
only if-
(A) The developer fee is reasonable,
which shall mean that it does not exceed twelve percent (12%) of total project
cost less non-qualified expenditures, related party fees, profit, and the total
amount of the developer fee itself;
(B) The developer fee is evidenced by a
signed and notarized written agreement between the applicant and the
developer;
(C) The developer fee is
incurred by the applicant no later than upon substantial completion of the
project, and the basis for substantial completion, which must be one (1) of the
alternatives in 4 CSR
85-5.010(2)(EE), is specified in the
developer fee agreement;
(D) The
developer fee agreement is submitted to the department by the later of the
project's initial closing on construction financing, or initial closing on
federal historic tax credit equity, if applicable. If no developer fee
agreement has been submitted to the department for review by the later to occur
of either event in the preceding sentence, no developer fees will be eligible
as a QRE for the project; and
(E)
It is preferred that the developer fee agreement does not include activities
that are in support of costs that are ineligible as QRE, such as syndication,
organization, property acquisition, obtaining permanent financing,
rent-up/lease-up of the property, and ongoing property management (non-QRE
activities). If, however, the developer fee agreement includes both QRE and
non-QRE activities, the applicant must submit a breakdown of the portions of
the developer fee that are for QRE activities and non-QRE activities before
being issued tax credits.
(3) Up to ninety percent (90%) of a developer
fee can be deferred (incurred but unpaid) and be a QRE, provided that the
requirements in section (2) of this rule are met and the developer fee
agreement requires full payment of the deferred amount of the developer fee by
applicant within five (5) years of substantial completion.
(4) The applicant that is issued tax credits
for deferred developer fees as set forth in section (3) of this rule shall be
personally liable for repayment of all tax credits attributable to any amount
of the developer fee for which tax credits were issued but the developer fee is
not paid within five (5) years of substantial completion of the
project.
(5) For a developer fee to
be a QRE, any amendment to the developer fee agreement-
(A) That changes the amount of the developer
fee shall include the justification for such increase or decrease to such
amount;
(B) Must be in writing,
signed, and notarized by all parties; and
(C) Must be submitted to the department with
the project's final application.
(6) Payment of a deferred developer fee
within a reasonable period of time following it being incurred is material to
the department's determination that a deferred developer fee is a QRE. The
appropriate real party in interest to represent the state shall have standing
to bring suit for an applicant's failure to pay a deferred developer fee for
which tax credits have been issued within five (5) years of substantial
completion of the project.
(7) In
order to be a QRE, general contractor soft costs of overhead and profit must be
separately listed on the expense report form submitted with the final
application. General contractor profit and overhead must be reasonable.
(A) General contractor overhead and profit is
presumed to be reasonable if together it is equal to or less than ten percent
(10%) of total eligible contractor costs less related party fees, overhead, and
profit.
Notes
State regulations are updated quarterly; we currently have two versions available. Below is a comparison between our most recent version and the prior quarterly release. More comparison features will be added as we have more versions to compare.
No prior version found.