Posted by Jill Norcross on October 06, 2009 at 11:55:38:
October 9, 2009
Ms. Carol Galante
Deputy Assistant Secretary, Multifamily Housing
U.S. Department of Housing and Urban Development
451 7th Street, S.W., Room 6110
Washington, DC 20410
RE: PROPOSED POLICY CHANGE ON ASSET MANAGEMENT FEES
Dear Ms. Galante:
It was our pleasure to have you as the keynote speaker for the annual meeting of the Housing Association of Nonprofit Developers (HAND) earlier this year on June 1 at the McLean (Virginia) Hilton. I know that you have had a whirlwind schedule in your first five months on the job and we appreciated the opportunity to be a part of your transition to life at HUD.
In the spirit of your encouragement to HAND members to share our ideas with you, I wanted to bring up a particular issue of concern to a number of our nonprofit members and to suggest a policy change. This issue was identified, and this proposal prepared by, a group of our HAND members known as the Asset Management Discussion Group.
As you know from your work at BRIDGE Housing, affordable housing development has a long “tail” which extends many years beyond when the doors are opened and the last loan draw or equity payment has arrived. Asset management is so vitally important to preserve this new affordable housing asset, yet many nonprofit organizations give it short shrift. A common problem is the lack of a funding source to pay for professional asset planning, particularly with projects financed with certain HUD programs and subject to HUD regulatory restrictions. Prime examples include HUD 202 and LIHPRHA projects, where nonprofit sponsors / owners are not allowed to earn an asset management fee, though they have responsibility to ensure that the community provide quality affordable housing in compliance with all HUD regulations for the long-term.
As such, HAND and the list of organizations signed on to this letter, respectfully request that HUD consider authorizing a reasonable asset management fee to be paid to the nonprofit sponsor /owner as compensation for these services. This would be an “above-the-line” expense. Such a fee would allow nonprofits to provide quality asset management to ensure that HUD-financed properties are maintained up to and beyond their estimated useful lives and to provide the residents of these communities with the highest quality housing possible. This fee would also bring HUD-financed communities in alignment with other affordable housing developments financed with other sources of funds.
We look forward to beginning this dialogue with you and the appropriate HUD staff members, in the hopes that our proposal can be done administratively rather than through a legislative process. Please contact me at (703) 587-4098 or jnorcross@handhousing.org at your earliest convenience. Thank you for your time and consideration.
Best regards,
Jill C. Norcross
Executive Director
cc: HAND Board of Directors
Asset Management Discussion Group members
Representatives of Supporting Organizations
List of Supporting Organizations:
AHC Inc.
Arlington Partnership for Affordable Housing
Community Preservation and Development Corporation
Homes for America
Montgomery Housing Partnership
NHT/Enterprise Preservation Corporation
Victory Housing, Inc.
Enclosure