Hi Les,

We have 221(d)(4) project, we have issued our audited 92330. The lender is questioning couple of lines on the 92330.

For the BSPRA calculation, HUD Ch.13 Cost certification states use the same percentage as the 92264 firm commitment review. There is no percentage listed on 92264, so we calculated it as BSPRA dollar amount (Part A) divided by development costs (Part B). This gave us 9.09%. The Lender says we should have used 10%. Did we calculate it correctly? If not, how should we have calculated it?

Although, the lender is not questioning the balance we use in the calculation. My partner wanted me to ask if we are using the correct balance because an article, he found said it should be times the replacement costs.  To determine the balance on 92330, we multiplied the 9.09% by Total costs on 92330 less the moveable equipment (had none of other items listed by HUD except for land which is already excluded on the 92330).  Are we correct? Or, should we have used the replacement cost and where does the replacement cost come from?

Due to fighting between owners (who are the architects also) and contractor, the owner did not submit any of the change orders to HUD for approval. At the end, they had 1.3 million in change order not submitted to HUD for approval. We reviewed HUD regulation it states for cost-plus contract (with identity of interest with contractor) Line B should be lesser of actual cash paid or to be paid under construction contract or contract price plus approved change orders. We use the original contract amount because they did not get the change orders approved by HUD. The lender is saying we should have used the total from the 92330A for line 1B which includes unapproved change orders. Who is correct?

Chet Woolard and Al Masciangelo said they had a blast at your Vegas conference this year and look forward to next year. They said I can attend next year.
Thanks for your time.