On October 26, 2016, HUD published a memorandum allowing special and add-on management fees for properties implementing a homeless preference.
HUD has been working to increase the number of assisted properties with homeless preferences. Recognizing that establishing and operating such preferences require time and effort on the part of management agents, HUD is now permitting owners of Multifamily assisted housing to negotiate add-on and/or a special fee with their property management company to assist in implementing a homeless preference.
Fees will cover the cost of staff time associated with establishing and managing a Homeless Preference, including the following activities:
- Identifying and engaging local homeless service providers;
- Learning about the local area needs and determining which families/individuals experiencing homelessness will be the best match for the property;
- Formalizing agreements and establishing referral processes with local homeless service providers;
- Amending the Tenant Selection Plan (TSP) and submitting to HUD for approval;
- Receiving applicant referrals and screening applicants to ensure they meet eligibility criteria;
- Providing support, education, and tools to property management staff during lease up and management;
- Facilitating a household’s move-in and access to necessary household items; and
- Documenting results
Special Management Fee
A special management fee will be permitted during a nine-month start up period to enable owners and management agents to create and implement the homeless preference process. The special fee amount is $2.50 per unit per month (PUPM). For example, a 100-unit property can collect up to $2.50 x 100 units x 9 months = $2,250.
The maximum special management fee cannot exceed $4,500 per property, and if the O/A does not complete the process during the nine-month period, the term of the special fee cannot be extended.
Management agents may collect the special fee for the entire nine-month period, even if they complete the preference process in a shorter period of time. Once the nine-month period has ended, the agent may start collecting the add-on fee at the beginning of the 10th month.
Add-on Fee
Once the homeless preference is in place, management agents may collect a monthly add-on fee as long as at least one previously homeless individual or household is admitted to a particular property during a one-year period. The add-on fee is $2.00 PUPM. For example, a 100-unit property can collect up to $2.00 x 100 units x 12 months = $2,400 in a one-year period. The fee may not exceed $3,600 per property per year.
Management agents may not simultaneously collect a special and add-on fee. Collecting an add-on fee is permissible even if a special fee is not requested or approved. The add-on fee can be collected on an ongoing monthly basis as long as the following conditions are met:
- A property’s homeless preference is active;
- Local homeless service providers continue to refer eligible applicants; and
- TRACS shows that the project had a least one homeless household move-in within a one-year period.
Other Provisions
The special and add-on fees cannot be retroactive. If a property already has an approved TSP with a homeless preference and a notification of the preference has already been sent to the waiting list applicants, the management agent cannot collect a special fee for that property.
A rent increase may not be requested in order to pay the special or add-on management fee.
If an owner has agreed to a homeless preference or has reserved units as a homeless set-aside for a specific property as a condition of receipt of Low-Income Housing Tax Credits or other public funding, the management agent can collect a special or add-on management fee for the property.
Interested owners/agents should obtain a copy of the complete Memorandum for information on the request and approval process. If you have questions about the memorandum, contact Carissa Janis at HUD at 202-402-2487 or at Carissa.1.janis@hud.gov.