BROADCAST EMAIL – Regulatory Update
August 7, 2022
On August 4th, Rural Development (RD) published Procedural Notice (PN) 589 announcing management fees for Fiscal Year (FY) 2024. Management fees will vary from state-to-state because RD based this year’s increase on HUD’s Operating Cost Adjustment Factor (OCAF) which varies based on location in the country and is applied to each state’s current maximum fee. Except for last year when RD based the management fee increases on HUD’s FY 2022 Income Limits, they have used OCAF as the base since FY 2015. After CARH’s Annual Meeting in June, CARH sent a letter in support of higher management fees due to continued cost increases associated with unprecedented insurance premium increases, historically high utility, supply, and staffing costs, and other pressures as a result of high inflation at properties throughout the country.
To view the chart listing your state’s FY 2023 management fee adjustment, visit pages 53-54 of Attachment 3-F, Chapter 3 of HB-2-3560. The middle column provides the OCAF adjustment percentage, and the final column provides the final FY 2024 fee rounded up to the nearest dollar. In most instances, fees have increased between $3-$6.
The PN includes allowable add-on fees of $5.00 per unit per month. CARH has advocated for add-on fees since 2014 and RD began making them available beginning with the FY 2021 budgets. See section 3.8 B.2 (page 3-16) of the PN for the list of add-on fees. Of particular interest to many CARH members is the $5.00 add-on fee for properties where there are multiple subsidies (i.e., reporting requirements in addition to and separate from Low-Income Housing Tax Credits or project-based Section 8).
For those properties wanting to claim the add-on fee for “management of properties in a remote location,” beginning in FY 2023, RD provided a definition of “remote location” as those properties located within the USDA Economic Research Service (ERS) Level 4 Frontier & Remote (FAR) Area codes. Please note that the following states/territories do not have areas that meet the Level 4 FAR definition: Connecticut, Delaware, Indiana, Massachusetts, New Jersey, Ohio, Puerto Rico, Rhode Island, South Carolina, and the Virgin Islands. Properties in Alaska or Hawaii that are authorized to take the “off-road” management fee are not eligible to claim an additional add-on fee for remote location. Reasonable justification must be submitted to the Multi-Family Housing servicing specialist for review. Justifications could include extensive travel time, difficulty obtaining services or retaining staff, or required unique means of travel (4-wheel drive, ferry, etc.).
CARH will continue our discussions with RD regarding any future concerns regarding management fees. Please contact the CARH National Office at carh@carh.org or 703-837-9001 should you have questions or concerns.
For other news and information affecting the affordable rural housing industry, please visit the Newsroom on CARH’s website, www.carh.org.