PURPOSE: This rule explains the treatment of developer fees and general contractor requirements under the Historic Preservation Tax Credit program.

1. (1) For a developer fee to be a Qualified Rehabilitation Expenditure (QRE), the developer fee agreement must be on the form approved and made available by the department in the program guidelines for the applicable state fiscal year.

2. (2) A developer fee shall be deemed a QRE only if:

   1. (A) The developer fee is reasonable, which shall mean that it does not exceed twelve percent (12%) of total project cost less non-qualified expenditures, related party fees, profit, and the total amount of the developer fee itself;

   2. (B) The developer fee is evidenced by written records indicating:

      1. 1. A requirement of full payment of the

developer fee within five (5) years of final completion, as defined within the developer fee agreement; and

1. 2. That the applicant will be personally

liable for repayment of all credits attributable to any amount of the developer fee not paid within five (5) years of final completion; and

1. (C) The developer fee agreement is provided to the department with an applicant’s preliminary application, if notarized at or prior to that date, but not after the later to occur of the project’s initial closing on construction financing; or initial closing on federal historic tax credits, if applicable. If no developer fee agreement has been submitted to the department for review by the later to occur of either event in the preceding sentence, no developer fees will be deemed eligible as QREs for such project.

   1. 1. Any amendments to the developer fee

agreement that change the amount of the developer fee shall include the justification for such increase or decrease to such amount.

1. 2. All developer agreements and amend-

ments thereto must be signed and notarized by all parties involved to be considered eligible as a QRE.

1. 3. In the event applicant amends any

developer fee agreement for any developer fees that applicant requests or has requested as QREs, applicant shall provide the department with such amendment upon its execution.

1. (3) In order to be included as a QRE, general contractor overhead, including general requirements, and profit must be separately listed on the expense report form submitted with the final application. General contractor profit and overhead must be reasonable.

   1. (A) General contractor profit is presumed to be reasonable if it is equal to or less than six percent (6%) of total eligible project costs less related party fees, overhead, and profit.
   2. (B) General contractor overhead, including general requirements, is presumed to be reasonable if it is equal to, or less than four percent (4%) of total eligible project costs less related party fees, overhead, and profit.
2. (4) Payment of a developer fee within a reasonable period of time following its accrual is material to the department’s approval of such developer fee as a QRE. The appropriate real party in interest to represent the state shall have standing to bring suit for an applicant’s failure to pay an accrued developer fee for which tax credits have been issued within five
3. (5) years of such developer fee’s accrual.

AUTHORITY: section 135.487, RSMo 2016, and section 620.010, RSMo Supp. 2019.* Emergency rule filed March 20, 2019, effective March 30, 2019, expired Dec. 31, 2019. Original rule filed March 20, 2019, effective Nov. 30, 2019. *Original authority: 135.487, RSMo 1999 and 620.010, RSMo 1971, amended 1981, 1983, 1986, 1989, 1990, 1993, 1994, 1995, 1999, 2001, 2007, 2008, 2010, 2014, 2019.