From Les Sparks:

A project can always pay for employees who are performing work that is considered “front-line”. These are tasks that HUD considers to be things normally performed at the project. Tasks not considered front-line, are to be paid from the management fee.

Now, the tricky thing about this is that he cannot charge management fees unless there is already in place a HUD-approved management agreement. Many owners have employees. However, if they want to collect management fees in addition to be able to charge for front-line employees they must ahve a management agreement.

Such an agreement is not required to be in place just to bill for front-line employees.

From client:

Thanks for clarifying.
Would you consider the following employees front line

1. Bookkeeping/ accounting – billing the operator and reconciling the receivables, processing invoices for replacement reserve transactions, cash management, compliance monitoring

2. Would they have to be paid directly from the project or can the project pay the front line employees by paying a related party for an invoice which bills for direct labor relating to the project or would that be automatically deemed a management fee?
Thanks!

From Les Sparks:

It might be best if I just attach a summary from HUD.

Front-line employees can be paid directly from the project or through the management agent. That is not a management fee.
Look to the summary attached.