Establishing Management Agent Fees for HUD Multifamily Projects

摘要

The Office of Program Planning and Evaluation was asked to evaluate the management agent fee process for HUD multifamily insured projects since the fees being paid are discretionary and there is no common definition of what is 'good' or 'bad' management and no clear idea of what services are provided for the fee paid. Five specific techniques were used in the evaluation: indepth interviews with Housing Management officials in each field office in Region 9 (San Francisco, Calif.), interviews with managing agents in the San Francisco and Los Angeles (Calif.) areas, a site visit to the Seattle (Wash.) Regional Office and the Portland (Ore.) office, requests for information to the Office of Housing Management in each of the other HUD regions, and interrogation of the Ollie's Loan Management System regarding existing management fees. Basic findings were that the majority of field offices in Region 9 use some sort of fee review worksheet (or schedule) based in principle on that proposed in the 1973 draft handbook, most systems do not impose penalties for poor management quality, and the approach used varies for subsidized and unsubsidized projects only in the level of fees allowed. Fees requested by managing agents are generally very close to the maximums which could be approved by the field office, and field office loan management officials think that when rents increase, the management fee should be allowed to rise proportionately to account for the agent's own cost inflation. The estimated range of fees currently approved and in force is from 5 to 7.5 percent for subsidized and 4 to 6 percent for unsubsidized. Further findings, recommendations, and the study instruments are appended.