Other Owner Costs

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Other Owner Costs refer to costs paid to outside entities to address many of the organizational, financial and legal requirements associated with undertaking a real estate development project. These costs include:

• Project Consultant Fees. Consulting fees may or may not be a cost to the project. Less experienced housing developers may choose to obtain technical assistance from a consultant. The terms and conditions of that contract are negotiable based on the scope of services, but this line item should only include costs associated with this project.
  
  
• Legal and Organizational Expenses/Syndication Fees. Some owners will incur organizational costs for each project undertaken as a result of the corporate structures created to own and manage assets. Syndication fees are another expense associated with organizing corporate entities to handle ownership and tax credit issues.
  
  
• Market Study / Survey. These costs should also be directly related to the project. The market study helps determine the feasibility of the project, while the survey determines the physical boundaries of the project site for construction and legal purposes.
  
  
• Appraisal Fees. In buying land or real property, developers will need an appraisal of the property. It is important to make sure that the appraiser to be used is acceptable to the lender. Lenders rely heavily on the appraisal when making loans, and they usually maintain a list of approved appraisal firms.
  
  
• Soil Boring / Environmental Survey / Lead-Based Paint Evaluation. If the project architect does not include the environmental survey as part of his/her contract, it must be arranged and paid for independently. The costs of any required lead-based paint inspection should be entered here. The costs of lead-based paint hazard reduction, however, should be included as part of the rehabilitation cost.
  
  
• Tap Fees and Impact Fees. The water and sewer authority often requires connection or tap fees before a project can be connected into the utility system. Some communities also charge impact fees to help recoup some less direct costs associated with development activities, such as environmental impacts, school system capital costs, etc. Like building permits, these fees are readily available from the appropriate governing agency.
  
  
• Permitting Fees. Various government agencies responsible for enforcing site plan review and building codes generally will require payment of review fees and building or construction permit fees before construction can commence.
  
  
• Real Estate Attorney Fees / Construction Loan Legal Fees. Legal fees will be incurred for incorporation, contract negotiations, property acquisition, loan closings and other assorted parts of the development process. Unless the project is highly unusual, and will require inordinate legal attention, legal fees should be in line with similar development projects.
  
  
• Use the Other Owner Costs field to enter owner costs that are not represented by the other items in this category. Enter a label (replacing the "Other Owner Costs" text) and an amount. If you do not need to use this field, simply leave it blank.