Kentucky Housing Corporation (KHC) has updated its 2019 – 2020 Multifamily Program Guidelines to state that the developer fee on Tax-Exempt Bond projects may not exceed 20 percent of the total development cost, minus the following deductions:
- Developer fee
- Consultant fee
- Any fees resembling developer or consultant fees
- Acquisition costs (related-party transfers only)
KHC has made the decision to eliminate the requirement to subtract acquisition costs from total development costs for the developer fee calculation. However, please note that the total acquisition cost may not exceed the as-is, appraised value at restricted rents.
The Tax-Exempt Bond underwriting model includes a formula to automatically calculate the maximum developer fee; however, KHC has updated the model to revise this calculation and has replaced the previous version on KHC’s website under Development, Multifamily, Underwriting Resources.
Developers who have already prepared models using the previous version may request KHC to correct the formula within those models by forwarding them to Shawn Dyer or Diane Beidleman at sdyer@kyhousing.org or dbeidleman@kyhousing.org, respectively. This change will take effect immediately; however, it will not be reflected in the Multifamily Program Guidelines until the 2020 funding round.
