N.J. Admin. Code § 5:80-33.28

Current through Register Vol. 56, No. 18, September 16, 2024

Section 5:80-33.28 - Project cost certification and contractor fee limits

(a) An independent C.P.A. shall audit the development costs of the project in accordance with generally accepted auditing standards. A separate audit of the general contractor's costs, which includes a sampling of subcontractor invoices, shall also be submitted in order to verify consistency with the developer's cost certification. To make sure that the necessary paperwork is submitted to NJHMFA in a timely manner, owners shall ensure that the cost certification process begins immediately upon construction completion. NJHMFA reserves the right to require a compilation of the construction costs of the project as approved by an independent C.P.A.

(b) Contractor fee limits are as set forth at (b)1, 2, and 3 below.

1. NJHMFA shall approve only up to a maximum of two percent of the total hard costs for general contractor overhead expenses and up to a maximum of six percent of the total hard costs for general contractor profit fees. Bonding and permitting fees are not permitted in calculations of overhead and profit.

2. Costs for general requirements and/or general conditions are indirect costs incurred during the construction of a project, exclusive of material and labor costs. These costs are administrative and facilitatory project costs, generally spread out over the course of construction. NJHMFA shall approve only up to a maximum of six percent of the total hard costs for general requirements and/or general conditions.

3. Limitations for general contractor overhead expenses, general contractor profit fees, and general requirements/general conditions costs are set forth in the Technical Services Design and Document Guidance Standards, available at http://ni.aov/dca/hmfa/developers/techservices. These limitations apply to applications submitted for both NJHMFA and LIHTC funding.

(c) For projects seeking IRS Form 8609 allocations and for projects with carryover allocations, where completion is scheduled to occur close to the end of the year, interim audits should be taking place throughout construction so that when the certificate of occupancy is issued, the final cost certification is virtually complete. For projects still incurring eligible costs, NJHMFA may consider the owner's projection of costs and basis incurred through the end of the first year of the credit period. The projection shall be based on executed contracts with contractors/vendors for amenities such as security system, playground, and landscaping.

(d) In addition to the audit report, the owner shall submit a Sponsor Certification for Placed in Service showing all sources, uses, and eligible basis items, as well as the pricing from the limited partner investor

N.J. Admin. Code § 5:80-33.28

Amended by 51 N.J.R. 833(a), effective 6/3/2019

Amended by 56 N.J.R. 343(b), effective 3/4/2024