The U.S. Department of Agriculture’s Rural Development (RD) published Procedural Notice (PN) 567 announcing final management fees for Fiscal Year (FY) 2023.
This year, RD used HUD’s FY 2022 Income Limits as the base management fee, versus their Operating Cost Adjustment Factors (OCAF), which have been used since FY 2015. To view the chart listing your state’s FY 2023 management fee adjustment, visit pages 54 and 55 of Attachment 3-F, Chapter 3 of HB-2-3560. In most instances, properties will see a much higher increase than in years past.
The PN includes allowable add-on fees of $5.00 per unit per month, see section 3.8 B.2 (page 16) of the PN for the list of add-on fees. Of note is the $5.00 add-on fee for properties where there are multiple subsidies (i.e., reporting requirements in addition to and separate from LIHTCs or project-based Section-8).
For those properties wanting to claim the add-on fee for “management of properties in a remote location,” beginning with the proposed budgets for FY 2023, RD has 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 Multifamily Housing servicing specialist for review. Justifications could include extensive travel time, difficulty obtaining services or retaining staff, or required unique means of travel (four-wheel drive, ferry, etc.).
