Current through Register Vol. 49, No. 6, March 15, 2024
(1) For a developer fee to be a Qualified
Rehabilitation Expenditure (QRE), the developer fee agreement must be on the
form approved and made available by the department in the program guidelines
for the applicable state fiscal year.
(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 written
records indicating:
1. A requirement of full
payment of the developer fee within five (5) years of final completion, as
defined within the developer fee agreement; and
2. That the applicant will be personally
liable for repayment of all credits attributable to any amount of the developer
fee not paid within five (5) years of final completion; and
(C) The developer fee agreement is
provided to the department with an applicant's preliminary application, if
notarized at or prior to that date, but not after the later to occur of the
project's initial closing on construction financing; or initial closing on
federal historic tax credits, 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 deemed eligible as
QREs for such project.
1. Any amendments to
the developer fee agreement that change the amount of the developer fee shall
include the justification for such increase or decrease to such
amount.
2. All developer agreements
and amendments thereto must be signed and notarized by all parties involved to
be considered eligible as a QRE.
3.
In the event applicant amends any developer fee agreement for any developer
fees that applicant requests or has requested as QREs, applicant shall provide
the department with such amendment upon its execution.
(3) In order to be included as a
QRE, general contractor overhead, including general requirements, 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 profit is presumed to
be reasonable if it is equal to or less than six percent (6%) of total eligible
project costs less related party fees, overhead, and profit.
(B) General contractor overhead, including
general requirements, is presumed to be reasonable if it is equal to, or less
than four percent (4%) of total eligible project costs less related party fees,
overhead, and profit.
(4) Payment of a developer fee within a
reasonable period of time following its accrual is material to the department's
approval of such developer fee as 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 an accrued developer fee for which tax credits have been issued
within five (5) years of such developer fee's accrual.
