The Trainer — September 2015
Requesting Add-On Management Fees
In this month’s feature, we discussed how to apply for and get approval from your local HUD office for add-on management fees. Add-ons are additions to management fees, designed to give incentives and compensation to managing agents who can show that site conditions make management of a property more demanding than normal. Add-ons are intended only to compensate agents who are dealing with long-term site conditions. And they’re in addition to the percentage-based, standard management fees an owner pays an agent.
QUIZ
QUESTION #1
Add-on fees are also known as “special fees.” True or false?
a. True.
b. False.
QUESTION #2
HUD issues a single, nationwide list of HUD-approved add-ons every two years. True or false?
a. True.
b. False.
QUESTION #3
HUD won’t consider add-on fees until after it has approved your fee percentages for residential, commercial, and miscellaneous income. True or false?
a. True.
b. False.
QUESTION #4
When applying for add-on fees, HUD requires you to attach backup documents to the form to prove you’re entitled to the add-ons you’re claiming. True or false?
a. True.
b. False.
ANSWERS & EXPLANATIONS
QUESTION #1
Correct answer: b
False. “Special fees” are different from add-on fees. Special fees are intended to compensate agents for dealing with short-term site conditions and correcting a specific problem or handling a specific task over a set period of time.
QUESTION #2
Correct answer: b
False. HUD doesn’t have a single, nationwide list of HUD-approved add-ons. Instead, it requires each area Hub office to issue its own list of permissible add-ons with flat dollar amounts per unit per month (PUPM) for its area. As a result, what may qualify for an add-on in one area may not qualify for an add-on in another area. However, as guidance to the Hubs, HUD includes a list of “Examples of Long-Term Project Conditions That Could Justify Add-On Fees” in Handbook 4381.5, fig. 3-4.
QUESTION #3
Correct answer: a
True. Handbook 4381.5, par. 3.7, says that HUD won’t consider add-on fees until after it has approved your fee percentages for residential, commercial, and miscellaneous income.
QUESTION #4
Correct answer: b
False. Although this isn’t required, it’s a good idea because otherwise, HUD may deny your request for add-ons. A few examples of documents to attach include copies of: regulatory agreements to support add-on fees for managing sites with multiple subsidies; copies of police reports and local crime statistics to support add-on fees for managing sites with adverse neighborhood conditions; copies of time sheets listing time spent in meetings with tenants, to support an add-on fee for managing sites with tenant unrest; or travel records to support an add-on fee for managing sites in remote locations.