Keith, sorry we did not really see this before.  Kathy and I are not sure how we all missed this.

Requests to increase the management fee must be approved by HUD.  So far as I  know, you must first determine what type of management fee you already had.  See below or the explanation.  You simply follow those procedures. IN general, I do not anticipate them being very successful in their quest.  Furthermore, if they are generating surplus cash an increase in management fee will only reduce surplus cash.  So, what is the purpose behind this?  Are they charging for bookkeeping fees?  That is another potential place to increase their take of money from the project.

Good luck.

3.24 GENERAL

The provisions in this section apply only to management fees subject to HUD review that were approved by HUD on or before August 1, 1986 and continue to remain in effect. These provisions are referred to as the “hold harmless” provisions for management fees. Figure 3-9 contrasts the fee review procedures for projects with management fees approved prior to August 1986 with the procedures for all other projects subject to HUD management fee reviews.

3.25 CONTINUATION OF EXISTING AGREEMENTS

On August 1, 1986, HUD implemented the reasonableness criteria for management fees described in the above sections of this chapter for projects that are subject to management fee reviews. If the current management agreement and fee percentages payable from project funds were approved by HUD on or before August 1, 1986, the agent may continue collecting that approved fee percentage for the term of the agreement. This is true even if the per-unit per-month (PUPM) fee yield exceeds the upper limit of the fee range that the Area Office would use to assess the reasonableness of the agent’s fees if a fee review were being performed.

3.26 REQUESTS FOR INCREASES IN PERCENTAGE FEES AT OWNER-MANAGED PROJECTS AND PROJECTS WITH OPEN-ENDED AGREEMENTS

The following procedures apply to projects with active management agreements signed on or before August 1, 1986 that have self-managing owners or owners/agents with open-ended agreements. If the owner/agent requests an increase in the residential management fee percentage payable out of project funds and the fee is subject to HUD review, Loan/Asset Management staff must use the following procedures.

1. The proposed fee percentage increase may not be approved if the PUPM yield under the new fee would exceed the maximum amount allowed by HUD under the criteria set forth in Sections 2 and 3 of this chapter. A smaller increase in the percentage fee may be approved as long as the fee yield does not exceed the maximum allowable amount.
2. If the proposed increase cannot be approved because it exceeds the reasonableness range, the existing fee percentage is held harmless. Area Offices may not reduce the current HUD-approved residential fee percentage for these projects, even if the yield produced by this percentage exceeds the applicable reasonableness range.

Figure 3-9 indicates the following:

Owners

From: AHACPA Support <support@ahacpa.org>
Sent: Wednesday, February 5, 2020 5:04 PM
To: les@ahacpa.org
Subject: Management Fee Increases