Multi-Family Housing Preservation and Revitalization (MPR) Demonstration Program-Section 514 and Section 515 for Fiscal Year 2022, 14441-14507 [2022-05252]

Download as PDF khammond on DSKJM1Z7X2PROD with NOTICES Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices should be considered in our evaluation of the petition. APHIS received nine comments on the petition from agricultural trade groups, farmers, and members of the public. Five comments generally supported BASF’s petition, while four expressed objections to crops developed or modified through genetic engineering. APHIS decided, based on its review of the petition and its evaluation and analysis of the comments received during the 60-day public comment period on the petition, that the petition involves an organism developed using genetic engineering that raises substantive new issues. According to our public review process for such petitions (see footnote 3), APHIS is following Approach 2, in which we first solicit written comments from the public on a draft environmental assessment (EA) and a draft plant pest risk assessment (PPRA) for a 30-day comment period through the publication of a Federal Register notice. Then, after reviewing and evaluating the comments on the draft EA and the draft PPRA and other information, APHIS revises the draft PPRA as necessary and prepares a final EA. APHIS also publishes a notice in the Federal Register announcing the regulatory status of the organism developed using genetic engineering and the availability of APHIS’ final EA, PPRA, finding of no significant impact (FONSI), and our regulatory determination. A second opportunity for public involvement was provided on August 17, 2021, with a notice published in the Federal Register (86 FR 45955–45956) announcing the availability of the draft EA and draft PPRA for public review and comment. That comment period closed on September 16, 2021. APHIS received 2,743 comments on the petition and supporting documents. All but eight of the comments consisted of identical and near-identical copies of a form letter submitted by different individuals who expressed their general opposition to the concept and use of genetic engineering for any purpose. Commenters objected to GMB151 soybean because it expresses a novel protein from Bacillus thuringiensis, which many stated has not been adequately evaluated for use as a pesticide. Others objected to deregulation of GMB151 soybean on grounds that it would contribute to weed resistance. Commenters also opposed deregulation because it would contribute to an increase in the use of isoxaflutole, which they stated will jeopardize human health and safety. VerDate Sep<11>2014 21:10 Mar 14, 2022 Jkt 256001 The comments are addressed in our final EA. National Environmental Policy Act The final EA contains the results of APHIS’ review and evaluation of the comments received during the comment period on the draft EA, draft PPRA, and the petition. The final EA provides the public with documentation of APHIS’ review and analysis of any potential environmental impacts associated with the determination of nonregulated status of GMB151 soybean. The EA was prepared in accordance with: (1) National Environmental Policy Act (NEPA), as amended (42 U.S.C. 4321 et seq.), (2) regulations of the Council on Environmental Quality for implementing the procedural provisions of NEPA (40 CFR parts 1500–1508), (3) USDA regulations implementing NEPA (7 CFR part 1b), and (4) APHIS’ NEPA Implementing Procedures (7 CFR part 372). Based on our EA, the response to public comments, and other pertinent scientific data, APHIS has reached a FONSI with regard to the preferred alternative identified in the EA (to make a determination of nonregulated status of GMB151 soybean). Determination Based on APHIS’ analysis of field and laboratory data submitted by BASF, references provided in the petition, peer-reviewed publications, information analyzed in the EA, the PPRA, comments provided by the public, and information provided in APHIS’ response to those public comments, APHIS has determined that GMB151 soybean is unlikely to pose a plant pest risk and therefore is no longer subject to our regulations governing the importation, interstate movement, or release into the environment of organisms developed using genetic engineering. Copies of the signed determination document, PPRA, final EA, and FONSI, as well as the previously published petition and supporting documents, are available as indicated in the ADDRESSES and FOR FURTHER INFORMATION CONTACT sections of this notice. Authority: 7 U.S.C. 7701–7772 and 7781–7786; 31 U.S.C. 9701; 7 CFR 2.22, 2.80, and 371.3. Done in Washington, DC, this 10th day of March 2022. Anthony Shea, Administrator, Animal and Plant Health Inspection Service. [FR Doc. 2022–05444 Filed 3–14–22; 8:45 am] BILLING CODE 3410–34–P PO 00000 Frm 00002 Fmt 4703 Sfmt 4703 14441 DEPARTMENT OF AGRICULTURE Rural Housing Service [Docket No. RHS–22–MFH–0002] Multi-Family Housing Preservation and Revitalization (MPR) Demonstration Program—Section 514 and Section 515 for Fiscal Year 2022 Rural Housing Service, United States Department of Agriculture. ACTION: Notice of Solicitation of Applications (NOSA). AGENCY: The Rural Housing Service (RHS) (Agency), a Rural Development agency of the United States Department of Agriculture (USDA), announces it is soliciting applications to defer existing eligible loans for the Multi-Family Housing (MFH) Preservation and Revitalization (MPR) Demonstration Program. Current RHS borrowers (stayin owners) and/or eligible applicants applying to assume existing Section 515 Rural Rental Housing (RRH) or Section 514 Off-Farm Labor Housing (Off-FLH) loans that are closed and were obligated on or after October 1, 1991, are invited to apply for MPR deferral-only assistance for such loans. This Notice does not provide any funding or additional units of Agency Rental Assistance (RA). DATES: Complete applications requesting deferral-only assistance under this NOSA must be received no later than 5 p.m., Eastern Standard Time, May 16, 2022. The Agency will not consider any applications received after the closing deadlines. ADDRESSES: Application Submission: All materials must be submitted via CloudVault. The submission process is detailed in section III. Application and Submission Information of this Notice. After publication in the Federal Register, this Notice will be posted on the Rural Development (RD) website, www.rd.usda.gov/newsroom/noticessolicitation-applications-nosas. The Agency will publish, as necessary, any revisions and amendments reflecting program modifications, in the Federal Register within the period this Notice remains open. Expenses incurred in applying for this NOSA will be borne by and be at the applicant’s sole risk. FOR FURTHER INFORMATION CONTACT: Fallan Faulkner, Multi-Family Specialist, Multi-Family Housing, RHS, U.S Department of Agriculture, via email: fallan.faulkner@usda.gov, or by phone: 615–812–0050. Any questions on eligibility for deferral should be directed via email at: RD.MPR@ usda.gov. Please include in the subject SUMMARY: E:\FR\FM\15MRN1.SGM 15MRN1 14442 Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices line ‘‘MPR NOSA Eligibility’’ and the name and address of the property in question. For information regarding the Addendum: Capital Needs Assessment Process located at the end of this notice, contact: Fallan Faulkner, Multi-Family Specialist, Multi-Family Housing, RHS, U.S. Department of Agriculture, via email: fallan.faulkner@usda.gov or telephone: (615) 812–0050. SUPPLEMENTARY INFORMATION: Authority The Consolidated Appropriations Act, 2021 (H.R. 133) authorized USDA to conduct a demonstration program for the preservation and revitalization of the Section 514 (Off-FLH) and 515 programs authorized by the Housing Act of 1949; 7 CFR part 3560. Rural Development: Key Priorities The Agency encourages applicants to consider projects that will advance the following key priorities: • Assisting Rural communities recover economically from the impacts of the COVID 19 pandemic, particularly disadvantaged communities. • Ensuring all rural Residents have equitable access to RD programs and benefits for RD funded projects. • Reducing climate pollution and increasing resilience to the impacts of climate change through economic support to rural communities. For further information, visit https:// www.rd.usda.gov/priority-points. khammond on DSKJM1Z7X2PROD with NOTICES Executive Summary This Notice solicits applications for deferrals of any closed Section 514 (OffFLH) or 515 Agency loan obligated on or after October 1, 1991 for the purpose of revitalization and preservation of existing properties. Under this NOSA, eligible loan payments can be deferred for 20 years. The cash flow from the deferred RHS direct loan principal and interest payment will be deposited to the RHS project’s reserve account or as directed by the Agency to meet the specific project’s present and future physical needs as determined by the Capital Needs Assessment (CNA) concurrently approved by the Agency. At the end of this Notice, a CNA addendum is provided with detailed instructions to assist the applicant in completing CNA reports, expected useful life tables, and forms. The deferral may also support new debt payments being incurred for repair/ rehabilitation loans and/or to reduce tenant rents as determined by the Agency to be in the best interests of the tenants and Government. There are no VerDate Sep<11>2014 21:10 Mar 14, 2022 Jkt 256001 other MPR tools or forms of assistance available under this NOSA. I. MPR Debt Deferral Information A. Deferral of Principal and Interest Payments A deferral of principal and interest payments for 20 years of any closed Section 514 (Off-FLH) or Section 515 Agency loan(s) that was obligated on or after October 1, 1991. Loans obligated prior to October 1, 1991 are not eligible for deferral under this NOSA. If there are multiple loans on the account, all loans must be obligated on or after October 1, 1991 to be eligible. If the account has a loan(s) obligated prior to October 1, 1991, the account/property is not eligible for MPR. The total of all liens against the project, with the exception of Agency deferred debt, cannot exceed the Agency-approved security value of the project. All Agency debt, either in first lien position or in a subordinated lien position, must be secured by the project, except deferred debt, which is not included in the Agency’s total lien position for computation of the Agency’s security value in the MPR program. (1) The deferral will assure the continued feasibility of preserving needed rental units based on criteria described in 7 CFR 3560.57(a)(3). (2) Transfers with MPR Deferrals must be processed through the MFH Production and Preservation Division in accordance with the transfers regulations. (3) All terms and conditions of the deferral will be described in the MPR Conditional Commitment (MPR–CC), the MPR Debt Deferral Agreement, and any associated transfer approval. (4) A balloon payment of principal and accrued interest (deferral balloon) will be due at the end of the deferral period, or upon default pursuant to the terms contained therein. Interest will accrue at the promissory note rate. If applicable, the subsidy will be applied as set out in the Agency’s Form RD 3560–9, ‘‘Multiple Family Housing Interest Credit Agreement.’’ B. Eligibility Deferral Information Any questions on eligibility for deferral should be directed via email at: RD.MPR@usda.gov. Please include in the subject line ‘‘MPR NOSA Eligibility’’ and the name and address of the property in question. C. Project Consolidation Information MPR deferrals may be approved for project consolidations for stay-in-owner or transfer transactions in accordance with 7 CFR part 3560 providing the following are met: PO 00000 Frm 00003 Fmt 4703 Sfmt 4703 (1) All projects being consolidated must be submitted on one application and located in the same market area as defined in 7 CFR 3560.11; (2) Projects must be of the same type, managed under one management plan and one management agreement, and in sufficient proximity to permit convenient and efficient management of the property. D. Terms The Agency will require a reamortization of the existing loan(s). MPR debt deferrals authorized in conjunction with transfers or subordinations will become effective upon completion of all planned repairs and rehabilitation deemed acceptable to the RHS approval official as outlined in the MPR conditional commitment. E. Transfers Special conditions apply to transfers. Under the provisions of 7 CFR 3560.406, debt deferral for any eligible loans(s) as described herein may be included in the transfer underwriting under the following conditions: 1. The new owner, including all principals, sharing an identity of interest (IOI) with the selling entity in any other RHS properties, is fully compliant with all Agency requirements and conditions, unless there is an Agency approved workout agreement as specified in 7 CFR 3560.453 in place and on schedule for at least six (6) months prior to the date of application. 2. The maximum return-to-owner(RTO) will be determined prior to applying the deferral. II. Eligibility Information A. Applicant Eligibility Requirements (1) For the purpose of this Notice, ‘‘Applicant’’ includes the applying entity (e.g., ABC LLP) and the entity’s principals (e.g., John Doe, General Partner of ABC LLP; XYZ, Inc., General Partner of ABC LLP; John Doe Jr., President of XYZ, Inc.). In the case of a single asset entity that is not a natural person, the Agency will rely solely on the qualifications of the natural person(s) managing/controlling the entity (whether directly or indirectly through other entities) to establish the applicant’s eligibility. (2) Eligible applicants for the MPR program include individuals, partnerships or limited partnerships, consumer cooperatives, trusts, State or local public agencies, corporations, limited liability companies, non-profit organizations, Indian tribes, associations, or other entities authorized by the Agency that own (stay in owner) E:\FR\FM\15MRN1.SGM 15MRN1 Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices khammond on DSKJM1Z7X2PROD with NOTICES or will be the owner of the project for which an application for transfer of ownership by the Agency has been submitted. (3) Eligibility requirements include substantial and verifiable favorable experience and creditworthiness as required by the respective MFH program regulations specified in 7 CFR part 3560, with the exception that stay-in owner applicants are not required to meet the test for other credit for MPR purposes as stated in 7 CFR 3560.55(a)(2). Appropriate credit reports for the applicant, entity and principals will be submitted and considered in both the MPR and transfer processing eligibility determination as defined in Section III. Application and Submission Information B. 9. below. B. Additional Eligibility Requirements (1) All applicants must meet the respective (Section 515 or 514 Off-FLH) requirements for initial and/or current (continuing) borrower eligibility and program participation. Initial eligibility will be determined as of the date of the application filing deadline. The Agency reserves the right to discontinue processing any application due to material changes in the applicant’s status occurring at any time after the initial eligibility determination. (2) Eligibility also includes the continued ability of the borrower/ applicant to provide acceptable management and will include an evaluation of any current outstanding deficiencies. Any outstanding violations or extended open operational findings associated with the applicant/borrower or any affiliated entity having an identity of interest (IOI) with the project ownership and which are recorded in the Agency’s automated Multi-Family Information System (MFIS), may preclude further processing of any MPR applications unless there is a current, approved workout agreement in accordance with § 3560.453 in place and the plan has been satisfactorily followed for a minimum of six (6) consecutive months, as determined by the Agency. (3) In the event of an MFH transfer, the proposed transferee must submit evidence of site control together with a copy of the borrower’s written request signed by both the proposed buyer and the seller describing the general terms of the proposed transfer. Evidence may include a valid and unexpired Purchase Agreement, Letter of Intent, or other documentation acceptable to the Agency. Transfers will be processed in accordance with the guidelines of § 3560.406. (4) All applicants are subject to the applicable requirements of the Office of VerDate Sep<11>2014 21:10 Mar 14, 2022 Jkt 256001 Management and Budget (OMB)approved USDA Suspension and Debarment, and Drug-Free Workplace Certifications as prescribed under Title 2 CFR parts 417 and 421. C. Project Eligibility Requirements (1) Project loans must have been obligated on or after October 1, 1991. Any projects with a loan(s) obligated prior to October 1, 1991, are not eligible for this MPR demonstration program. (2) Projects must have open physical finding(s) identified by a recent physical inspection and recorded by the Agency. Furthermore, the open physical finding(s) of record must be the result of circumstances beyond owner and/or management control and/or must be uncorrected due to insufficient operating income/reserve funds necessary to address the outstanding physical need(s) of the project. Any projects with open physical findings resulting from deferred maintenance, as recorded by the Agency, are not eligible for this MPR demonstration program. Physical deficiencies identified by the Agency or another lending organization (i.e., HUD, Housing Finance Agency, etc.) or reported by local code enforcement of imminent threats to the health and safety of tenants that have not been recorded but are documented by the applicant and provided as part of the application, may be considered when determining project eligibility. D. Key Priority Eligibility For an application to be deemed eligible, applicants must also meet the criterion of at least two of the Agency’s three key priorities (COVID–19, Equity and Climate). To help with your understanding of the Key Priorities and how your property could qualify, please refer to the key priority eligibility information below, and then on the following website for details: https:// www.rd.usda.gov/priority-points. Please note for purposes of this NOSA, the Key Priorities as described below and on the website, are being used solely for eligibility purposes and no points will be awarded. All eligible applications will be accepted. (1) COVID–19—the project must be located in or serving one of the top 10% of counties or county equivalents based upon the county risk score in the United States. The dashboard located at https:// www.rd.usda.gov/priority-points will be used to determine if a project is eligible to apply based upon its location. Applicants must use the dashboard to verify if the project is located within one of the top 10% of counties or county equivalents based upon the county risk score in the United States PO 00000 Frm 00004 Fmt 4703 Sfmt 4703 14443 and provide documentation from the dashboard within the application to verify the location in order to be eligible. (2) Equity—the project must be located in or servicing a community with a score of 0.75 or above on the CDC Social Vulnerability Index. The dashboard located at https:// www.rd.usda.gov/priority-points will be used to determine if a project is eligible to apply based upon its location. Applicants must use the dashboard to verify if the project is located in or servicing a community with a score of 0.75 or above on the CDC Social Vulnerability Index and provide documentation from the dashboard within the application to verify the location in order to be eligible. (3) Climate Impacts—applicants may be eligible through one of two methods: a. The project must be located in or serving coal, oil and gas, and power plant communities whose economic well-being ranks in the most distressed tier of the Distressed Communities Index. The dashboard located at https:// www.rd.usda.gov/priority-points will be used to determine if a project is eligible to apply based upon its location. Applicants must use the dashboard to verify if the project is located within or serving coal, oil and gas, and power plant communities and whose economic well-being ranks in the most distressed tier of the Distressed Communities Index and provide documentation from the dashboard within the application to verify the location in order to be eligible. b. demonstrate through a written narrative how proposed climate-impact projects improve the livelihoods of community residents and meet pollution mitigation or clean energy goals. III. Application and Submission Information A. Submission Process (1) All materials must be submitted via CloudVault. (2) The process for submitting an electronic application to RHS via CloudVault is outlined below: a. At least three business days prior to the application deadline, the applicant must email RHS a request to create a shared folder in CloudVault. The email must be sent to the following address: RD.MPR@usda.gov. The email must contain the following information: (i) Subject line: MPR NOSA Submission. (ii) Body of email: Applicant Name, Applicant Contact Information, Project State, Project Name, and Project City. E:\FR\FM\15MRN1.SGM 15MRN1 14444 Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices khammond on DSKJM1Z7X2PROD with NOTICES (iii) Request language: ‘‘Please create a shared CloudVault folder so that we may submit our application documents.’’ (b) Once the email request to create a shared CloudVault folder has been received, a shared folder will be created within two business days. When the shared CloudVault folder is created by RHS, the system will automatically send an email to the applicant’s submission email with a link to the shared folder. All required application documents in accordance with this NOSA must be loaded into the shared CloudVault folder. When the submission deadline is reached, the applicant’s access to the shared CloudVault folder will be removed. Any document uploaded to the shared CloudVault folder after the application deadline will not be reviewed or considered. B. Submission Requirements (1) The applicant must upload a Table of Contents for the documents that have been uploaded to the shared CloudVault folder. (2) Applications must include all applicable information requested on the MPR application form (Form Approved: OMB No. 0575–0190) to be considered complete. The application form can be found at https://www.rd.usda.gov/ programs-services/housingpreservation-revitalizationdemonstration-loans-grants. Click on the To Apply tab to access the ‘‘Fiscal Year 2022 Application for MFH Preservation and Revitalization Demonstration Program (MPR).’’ (3) Responding entity’s Dun and Bradstreet Data Universal Numbering System (DUNS) number, registration in the System for Award Management (SAM) prior to submitting an application pursuant to 2 CFR 25.200(b), and other supporting information to substantiate their legal authority and good standing. Applicants can receive a DUNS number at no cost by calling the dedicated toll-free DUNS Number request line at (866) 705–5711 or via the internet at https://www.dnb.com/. Additional information concerning this requirement can be obtained on the grants.gov website at https:// www.grants.gov. All applicants must be registered in SAM prior to submitting an application, unless determined exempt under 2 CFR 25.110. Federal award recipients must maintain an active SAM registration during which time they have an active Federal award or an application under consideration by the Agency. The applicant must ensure that the information in the database is current, accurate, and complete. Applicants must ensure they complete VerDate Sep<11>2014 21:10 Mar 14, 2022 Jkt 256001 the Financial Assistance General Certifications and Representations in SAM. Similarly, all recipients of Federal financial assistance are required to report information about first-tier subawards and executive compensation in accordance with 2 CFR part 170, so long as an entity respondent does not have an exception under 2 CFR 170.110(b), they must have the necessary processes and systems in place to comply with the reporting requirements should the responding entity receive federal assistance. See 2 CFR 170.200(b). (4) Applicant must provide a narrative describing the transaction in detail of how the deferral-only MPR tool will benefit their transaction. List any adverse impacts or physical failures (i.e., natural causes not foreseen, damage not reimbursable by insurance or disaster loan or grant, etc.) (5) Applicant must complete the Form SF 424, ‘‘Application for Federal Assistance,’’ which can be found and completed online at the following website: https://apply07.grants.gov/ apply/forms/readonly/SF424_2_1V2.1.pdf. (6) Provide evidence of site control for all transfers of ownership. (7) For Section 515 projects, the average physical vacancy rate for the 12 months preceding this Notice’s application submission date can be no more than 10 percent for projects consisting of 16 or more revenue units and no more than 15 percent for projects less than 16 revenue units. If the applicant is seeking an exception to this requirement or there are concerns about the market, the applicant must submit an explanation as to the circumstances affecting the vacancy rate. The Agency will request additional information if the vacancy rates along with a current market study to support the need of the project and its continued financial feasibility. The Agency will request additional information if the vacancy rates exceed the percentages stated above, which may include a current market study, to assess the need of the project and its continued financial feasibility. To further demonstrate there is a continuing need for the RHS project, the Agency may request waiting lists and/or confirmation of a housing shortage by local housing agencies. The market data must show a clear need and demand for the project. The Agency will determine whether the proposal has market feasibility based on the data provided by the applicant. Any costs associated with the completion of the market data is NOT an eligible program project expense. If a project consolidation is involved, the consolidation will remain eligible so PO 00000 Frm 00005 Fmt 4703 Sfmt 4703 long as the average vacancy rate for each individual project meets the occupancy standard noted in this paragraph each project must meet the average vacancy rate outlined above. (8) For Sections 514/516 Off-FLH projects, since this program is typically seasonal which affects the vacancy rate, rather than an average physical vacancy rate as noted in section (ii) above, a positive cash flow for the previous full three (3) years of operation is required unless an exception applies as described section III(A)(3), above for projects with an approved work out plan. (9) Submit a current (no older than six months from the date of issuance) combination comprehensive credit report for both the entity and the actual individual principals, partners, members, etc. within the applicant entity, including any sub-entities, who are responsible for controlling the ownership and operations of the entity. Although a commercial credit report for a new entity may have limited information available, a combination report ties the entity and individual principal(s) together under the applicant/borrower name based on the credit report agency’s ability to provide a single reporting source. However, if any of the principals in the applicant entity are not natural persons (i.e., corporations, other limited liability companies, trusts, etc.) separate commercial credit reports must be submitted on those organizations as well. Individual personal consumer credit reports are not required if a combination report is being provided. Only Credit reports provided by accredited major credit bureaus will be accepted. In the past, the Agency has required the applicant to submit the credit report fee. In lieu of the applicant submitting the fee, the Agency will require the applicant to provide the credit report. It is the Agency’s expectation that this change will create an efficiency in the application process that did not exist, which should assist with streamlining the application process for the applicant. Failure to submit all required documents, forms and information prior to the deadline will result in an incomplete application, the application will be rejected and the applicant will be notified of appeal rights under 7 CFR part 11. Applicants are reminded that all submissions must be received by the deadline. Applications received after the deadline will not be evaluated. Upon request, RHS will provide the responding entities with a written acknowledgement of receipt. E:\FR\FM\15MRN1.SGM 15MRN1 khammond on DSKJM1Z7X2PROD with NOTICES Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices IV. Agency Review and Selection Information The Agency will conduct an initial screening for eligibility within 90 business days of the NOSA closing deadline. Transfer applicants must meet Agency eligibility, application, and approval process requirements outlined in HB–3–3560, Chapter 7. Eligibility determination is not an award or commitment for federal assistance. If the application is not accepted for further processing due to being incomplete or ineligible, the applicant will be notified of appeal rights under 7 CFR part 11. Applications that are deemed eligible but are not selected for further processing (i.e., financially infeasible, etc.) will be withdrawn from processing and the applicant will be notified of appeal rights under 7 CFR part 11. Eligible applicants accepted for further processing that do not include a project transfer (stay-in owner) will be required to submit a CNA in accordance with 7 CFR 3560.103(c) and the addendum at the end of this NOSA. The timeframe for submitting the CNA will be included in the applicant’s selection letter. The CNA will be used to underwrite the proposal to determine financial feasibility. The CNA must be approved by the Agency prior to the Agency underwriting the transaction. Stay-in owner applicants can use property reserve account funds to pay for CNA costs if approved by the servicing specialist assigned to the property. Servicing specialist assignments by property can be found at: https://www.sc.egov.usda.gov/data/ MFH.html. A CNA is comprised of nine main sections: • Definitions; • Contract Addendum; • Requirements and Statement of Work (SOW) for a CNA; • The CNA Review Process; • Guidance for the Multi-Family Housing (MFH) CNA Recipient Regarding Contracting for a CNA; • Revising an Accepted CNA During Underwriting; • Updating a CNA; • Incorporating a Property’s Rehabilitation into a CNA; and • Repair and Replacement Schedule. Additionally, there are seven attachments which accompany the CNA addendum identified as follows: • Attachment A, ADDENDUM TO THE CAPITAL NEEDS ASSESSMENT CONTRACT • Attachment B, CAPITAL NEEDS ASSESSMENT STATEMENT OF WORK • Attachment C, FANNIE MAE PHYSICAL NEEDS ASSESSMENT VerDate Sep<11>2014 21:10 Mar 14, 2022 Jkt 256001 • • • • GUIDANCE TO THE PROPERTY EVALUATOR Attachment D, CNA e-Tool Estimated Useful Life Table Attachment E, CAPITAL NEEDS ASSESSMENT REPORT Attachment F, SAMPLE CAPITAL NEEDS ASSESSMENT REVIEW REPORT Attachment G, CAPITAL NEEDS ASSESSMENT GUIDANCE TO THE REVIEWER Transfer applicants must comply with the requirements of 7 CFR 3560.406 and Chapter 7 of HB–3–3560, including all Agency approval and closing conditions prior to closing the MPR debt deferral. The Agency will provide additional guidance to the applicant and request information and documents necessary to complete the underwriting and review process within 45 days of the Agency’s selection letter. Since the character of each application may vary substantially depending on the type of transaction proposed, additional information may be requested as appropriate. V. Agency Processing Information A. Feasibility and Structure The feasibility and structure of each proposal will be based on the Agency’s underwriting and the following parameters: (1) For applications submitted under this Notice, the Agency will conduct eligibility determinations and eligible applicants will be processed accordingly. (2) Applications marked as any of the following will be prioritized for the initial review and processing. Priority projects will have an initial review completed within 30–60 business days of the NOSA closing deadline: a. ‘‘Deferral needed as part of a pending transfer’’ b. ‘‘stay-in owner transaction with third-party funding that will expire within 120 days’’ c. ‘‘project with urgent health/safety/ accessibility issues to address’’ d. ‘‘projects with an average physical vacancy rate of no more than 5% for the 12 months preceding this Notice’s application submission date with a demonstrated waiting list’’ e. ‘‘projects that meet all three of the Agency’s key priorities (COVID–19, Equity and Climate)’’. (3) Upon completion of RHS underwriting, MPR debt deferral offers will be presented to successful applicants as a conditional commitment (CC) and the Letter of Conditions (LOC). These documents will outline the borrower’s requirement for executing and recording an Agency-approved PO 00000 Frm 00006 Fmt 4703 Sfmt 4703 14445 Restrictive-Use Covenant (RUC) for a period equivalent to the remaining term of any non-deferred existing loan or the remaining term of any existing RUC, whichever ends later. (4) Stay-in-owner applicants that have secured third party funding that will add new hard debt in an amount more than the amount approved to be deferred, will require an appraisal to ensure the property remains secure before the transaction will be approved. (5) Transfer applicants requesting MPR debt deferral will be presented an opportunity to accept or reject the offered terms and conditions for such deferral in the MPR CC. Additional transfer requirements will be outlined in a Transfer Letter of Conditions. (6) If no offer is made or if the applicant fails to accept or reject the offer presented, the application will be rejected, and appeal rights will be given. (7) Closing of MPR offers will occur within six months of the accepted MPR CC unless extended in writing by the Agency. (8) Applicants will be informed of any proposals that are determined to be financially infeasible. Any proposal denied by the Agency will be returned to the applicant, and the applicant will be given appeal rights pursuant to 7 CFR part 11. (9) Any MPR applications not approved one year from the selection notice date will be withdrawn, unless an extension is approved by the Agency. Applicants may reapply for federal assistance under future Notices as they may be made available. B. Third Party Funding Sources If third party funding sources have not yet been committed, the Agency may issue a conditional approval contingent upon receipt of firm funding commitments consistent with the terms used in the PAT attached to the Conditional Commitment to underwrite the transaction. Agency approval will be withdrawn if a satisfactory firm commitment is not received as the transaction cannot close until a firm commitment is provided. Any changes to the proposed sources that cause substantial material changes will require re-evaluation of the transaction by the National Office Underwriter and, in some cases, may cause approval to be rescinded and/or a new concurrence to be issued. VI. Other Information A. Paperwork Reduction Act The information collection requirements contained in this Notice have received approval from the Office E:\FR\FM\15MRN1.SGM 15MRN1 14446 Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices khammond on DSKJM1Z7X2PROD with NOTICES of Management and Budget (OMB) under Control Number 0575–0190. B. Non-Discrimination Statement In accordance with Federal civil rights laws and U.S. Department of Agriculture (USDA) civil rights regulations and policies, the USDA, its Mission Areas, agencies, staff offices, employees, and institutions participating in or administering USDA programs are prohibited from discriminating based on race, color, national origin, religion, sex, gender identity (including gender expression), sexual orientation, disability, age, marital status, family/parental status, income derived from a public assistance program, political beliefs, or reprisal or retaliation for prior civil rights activity, in any program or activity conducted or funded by USDA (not all bases apply to all programs). Remedies and complaint filing deadlines vary by program or incident. Program information may be made available in languages other than English. Persons with disabilities who require alternative means of communication to obtain program information (e.g., Braille, large print, audiotape, American Sign Language) should contact the responsible Mission Area, agency, or staff office; the USDA TARGET Center at (202) 720–2600 (voice and TTY); or the Federal Relay Service at (800) 877–8339. To file a program discrimination complaint, a complainant should complete a Form AD–3027, USDA Program Discrimination Complaint Form, which can be obtained online at https://www.ocio.usda.gov/document/ ad-3027, from any USDA office, by calling (866) 632–9992, or by writing a letter addressed to USDA. The letter must contain the complainant’s name, address, telephone number, and a written description of the alleged discriminatory action in sufficient detail to inform the Assistant Secretary for Civil Rights (ASCR) about the nature and date of an alleged civil rights violation. The completed AD–3027 form or letter must be submitted to USDA by: (1) Mail: U.S. Department of Agriculture, Office of the Assistant Secretary for Civil Rights, 1400 Independence Avenue SW, Washington, DC 20250–9410; or (2) Fax: (833) 256–1665 or (202) 690– 7442; or (3) Email: program.intake@usda.gov. Addendum: Capital Needs Assessment Process A Capital Needs Assessment (CNA) provides a repair schedule for the property in its present condition, VerDate Sep<11>2014 21:10 Mar 14, 2022 Jkt 256001 indicating repairs and replacements necessary for a property to function properly and efficiently over a span of 20 years. The purpose of this Addendum is to provide clarification and guidance on the Rural Development CNA process. The document includes general instructions used in completing CNA reports, specific instructions on how to use the expected useful life tables, and a set of applicable forms including the Terms of Reference form; Systems and Conditions forms; and Evaluator’s Summary forms. 1. Definitions The following definitions are provided to clarify terms used in conjunction with the CNA process: CNA Recipient: This will be who enters into the contract with the CNA Provider. The Recipient can be either the property owner or applicant/ transferee. ‘‘As-Is’’ CNA: This type of CNA is prepared for an existing MFH property and reports the physical condition including all Section 504 Accessibility and Health and Safety items of the property based on that moment in time. This CNA can be useful for many program purposes other than the MPR Demonstration program such as: An ownership transfer, determining whether to offer pre-payment aversion incentive and evaluating or resizing the reserve account. The ‘‘as-is’’ report will include all major repairs and likely some minor repairs that are typically associated with the major work: Each major component, system, equipment item, etc. inside and outside; building(s); property; access and amenities in their present condition. A schedule of those items showing the anticipated repair or replacement timeframe and the associated hard costs for the ensuing 20-year term of the CNA serves as the basis or starting point in evaluating the underwriting that will be necessary to determine the feasibility and future viability of the property to continue serving the needs of eligible tenants. ‘‘Post Rehabilitation’’ CNA: This type of CNA builds on the findings of the accepted ‘‘as-is’’ CNA and is typically prepared for a project that will be funded for major rehabilitation. The Post Rehabilitation CNA is adjusted to reflect the work intended to be performed during the rehabilitation. The assessment must be developed from the rehabilitation project plans and any construction contract documents to reflect the full extent of the planned rehabilitation. PO 00000 Frm 00007 Fmt 4703 Sfmt 4703 Life Cycle Cost Analysis (LCCA): A LCCA is an expanded version of a CNA and is defined at 7 CFR 3560.11. The LCCA will determine the initial purchase cost, the operation and maintenance cost, the ‘‘estimated useful life’’, and the replacement cost of an item selected for the project. The LCCA provides the borrower with the information on repair or replacement costs and timeframes over a 20-year period. It also provides information that will assist with a more informed component selection and can provide the borrower with a more complete financial plan based on the predictive maintenance needs associated with those components. If the newly constructed project has already been completed without any previous LCCA requirements, either an ‘‘as-is’’ CNA or LCCA can be provided to establish program mandated reserve deposits. An Architect or Engineer is the best qualified person(s) to prepare this report. Consolidation: In some circumstances, RD may permit two or more properties to be consolidated as defined in 7 CFR 3560.410 when it is in the best interests of the Government. The CNA Recipient must consult with the RD loan official before engaging the CNA Provider in any case where the CNA intends to encompass more than a single (one) existing RD property to determine if a consolidated CNA may be acceptable for RD underwriting. 2. Contract Addendum RD uses a Contract Addendum to supplement the basic CNA Agreement or ‘‘Contract’’, between the CNA Recipient and CNA Provider, with additional details and conditions. It can be found in Attachment A, Addendum to Capital Needs Assessment Contract and must accompany all contracts executed between the CNA Recipient and CNA Provider for CNAs used in RD transactions. If any conflicts arise between the ‘‘Contract’’ and ‘‘Contract Addendum’’, the ‘‘Contract Addendum’’ will supersede. The Contract Addendum identifies the responsibilities and requirements for both the CNA Recipient and the CNA Provider. To assure proper completion of the contract documents the following key provisions must be completed: a. The Contract Addendum will include the contract base amount for the CNA Provider’s cost for services on page A–2, and provisions for additional services to establish the total price for the CNA. b. Item I e, will require an itemized listing for any additional anticipated services and their unit costs including E:\FR\FM\15MRN1.SGM 15MRN1 Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices khammond on DSKJM1Z7X2PROD with NOTICES future updates and revisions that may be required before the CNA is accepted by RD. Note: Any cost for updating a CNA must be included, in the ‘‘additional services’’ subpart, of the original CNA Contract. c. The selection criteria boxes in II a, will identify the type of CNA being provided. d. In III a, the required language for the blank on ‘‘report format’’ is: ‘‘USDA RD CNA Template, current RD version, in Microsoft Excel format’’. This format will import directly into the RD underwriting template for loan underwriting purposes. 3. Requirements and Statement of Work (SOW) for a CNA Minimum requirements for a CNA acceptable to RD can be found in Attachment B, Capital Needs Assessment Statement of Work. This is supplemented by Attachment C, Fannie Mae Physical Needs Assessment Guidance to the Property Evaluator. To resolve any inconsistency in the two documents, Attachment B, the CNA SOW, will in all cases prevail over Attachment C, Fannie Mae Physical Needs Assessment Guidance to the Property Evaluator. (For example, on page C–2 of Attachment C, Fannie Mae defines the ‘‘term’’ as ‘‘term of the mortgage and two years beyond’’. For USDA, the ‘‘term’’ will be 20 years, as defined in the CNA SOW.) Attachment B includes the required qualifications for the CNA Provider, the required SOW for a CNA assignment, and general distribution and review instructions to the CNA Provider. The CNA Providers must be able to report the current physical condition of the property and not base their findings on the financial condition of either the property or the CNA Recipient. Attachment C is a three-part document RD has permission to use as reference to the CNA process throughout the RD MFH program efforts. The three key components of this Attachment are: (1) Guidance to the property evaluator; (2) expected useful life tables; and (3) a set of forms. An acceptable CNA must appropriately address within the report and narrative all Accessibility Laws and Requirements that apply to Section 515 and Sections 514/516 MFH properties. The CNA Provider must assess how the property meets the requirements of accessibility to persons with disabilities in accordance the Uniform Federal Accessibility Standards (UFAS) and Section 504 Accessibility Requirements. It is the responsibility of the Provider to inspect and verify whether all accessibility features are compliant. VerDate Sep<11>2014 21:10 Mar 14, 2022 Jkt 256001 4. The CNA Review Process A CNA used by RD will be reviewed by the designated RD CNA Reviewer with experience in construction, rehabilitation, and repair of MFH properties, especially as it relates to repair and replacement. A CNA report must be obtained by the CNA Recipient from an independent third-party CNA Provider that has no identity of interest with the property owner, management agent, applicant/ transferee or any other principle or affiliate defined in 7 CFR 3560.11. The CNA Recipient will contract with the CNA Provider and is therefore the client of the provider. However, the CNA Recipient must consult with RD, before contracting with a CNA Provider to review Guidance Regarding Contracting for a CNA. The RD CNA Reviewer will evaluate a proposed agreement or engagement letter between the CNA Recipient and the CNA Provider using Attachment G, Capital Needs Assessment Guidance to the Reviewer, prior to reviewing any CNA report. Unacceptable CNA proposals, contracts or reports will be returned to the CNA Recipient for appropriate corrections before they will be used for any underwriting determinations. The CNA Reviewer will also review the cost of the CNA contract. The proposed fee for the CNA must be approved as an eligible housing project expense under 7 CFR 3560.103 (c) for the agreement to be acceptable and paid using project funds. In most cases, the CNA service contract amount has not exceeded $3,500 based on the Agency’s most recent cost analysis. Borrowers and applicants are encouraged to obtain multiple bids in all cases. However, there is no Agency requirement to select the ‘‘low bidder’’ under this UL and the CNA Recipient may select a CNA Provider that will provide the best value, based on qualifications, as well as price after reviewing references and past work. If the CNA is funded by the property’s reserve account, a minimum of two bids is required if the CNA service contract amount is estimated to exceed $5,000 as specified in HB–2–3560, Chapter 4, Paragraph 4.17 B. If the CNA contract under this UL is funded by another source, or will be under $5,000, a single bid is acceptable. If the proposed agreement is acceptable, the reviewer will advise the appropriate RD servicing official, who will in turn inform the CNA Recipient. If the proposed agreement is unacceptable, the reviewer will notify the servicing official, who will notify the CNA Recipient and the CNA PO 00000 Frm 00008 Fmt 4703 Sfmt 4703 14447 Provider in writing and identify actions necessary to make the proposed CNA agreement acceptable to RD. Upon receipt of a satisfactory agreement, the RD CNA Reviewer should advise the appropriate RD servicing official or underwriting official to accept the proposal. The CNA Reviewer will review the preliminary CNA report submitted to RD by the CNA Provider using Attachment G and write the preliminary CNA review report. During the CNA review process, the CNA Reviewer and underwriter will consult with the servicing field office most familiar with the property for their input and knowledge of the property. Any differences of opinion that exist regarding the findings must be mutually addressed by RD staff. If corrections are needed, the loan official will notify the CNA Recipient, in writing, of any revisions necessary to make the CNA report acceptable to RD. The CNA Reviewer will review the final CNA report and deliver it to the loan official. The final report must be signed by both the CNA Reviewer and the loan official (underwriter). Upon signature by both, this report becomes the ‘‘accepted’’ CNA indicating the actual condition of the property at the time of the CNA inspection—a ‘‘snapshot’’ in time—and will be marked ‘‘Current Property Condition’’ for indefinite retention in the borrower case file. A CNA Provider should be fully aware of the intended use for the CNA because it can impact the calculations necessary to perform adequate accessibility assessments and can impact the acceptability of the report by RD. Unacceptable reports will not be used for any RD underwriting purposes even though they may otherwise be acceptable to the CNA Recipient or another third-party lender or participant in the transaction being proposed. 5. Guidance Regarding Contracting for a CNA CNA Recipients are responsible for choosing the CNA Provider they wish to contract with, and for delivering an acceptable CNA to Rural Development. RD in no way guarantees the performance any Provider nor the acceptability of the Provider’s work. CNA Recipients are advised to request an information package from several CNA Providers and to evaluate the information before selecting a provider. At a minimum, the information package should include a list of qualifications, a list of references, a client list, and a sample CNA report. However, the CNA Recipient may request any additional information they feel necessary to E:\FR\FM\15MRN1.SGM 15MRN1 khammond on DSKJM1Z7X2PROD with NOTICES 14448 Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices evaluate potential candidates and select a suitable provider for this service. Consideration for the type of CNA required should be part of the CNA Recipient’s selection criteria and inserted into the contract language as well. The necessary skill set to perform the ‘‘as-is’’ versus the Post Rehabilitation CNA or a LCCA needs to be considered carefully. Knowledge of the accessibility laws and standards and the ability to read and understand plans and specifications should also be among the critical skill elements to consider. Attachment A, Contract Addendum must be submitted to RD with the contract and signed by the CNA Recipient and CNA Provider. The proposed agreement with the CNA Recipient and CNA Provider must meet RD’s qualification requirements for both the provider and the CNA SOW, as specified in Attachment B, Capital Needs Assessment Statement of Work. RD must review the proposed agreement between the CNA Recipient and the CNA Provider, and concur only if all of the RD requirements and conditions are met. (See the previous Section 3 of this UL, The CNA Review Process.) Please note: It is in the CNA Recipient’s best interest to furnish the CNA Provider with the most current and up-to-date property information for a more comprehensive and thorough CNA report. RD recommends that the CNA Recipient conduct a pre-inspection meeting with the Owner, Property Manager, maintenance persons familiar with the property, CNA Provider, and Agency Representatives at the site. This meeting will allow a forum to discuss specific details about the property that may not be readily apparent to all parties involved during the review process, as well as making some physical observations on-site. Certain issues that may not be evident to the CNA Provider due to weather conditions at the time of review should also be discussed and included in the report. Additionally, other issues that may need to be addressed include environmental hazards, structural defects, and complex accessibility issues. It is imperative that the Agency be fully aware of the current physical condition of the property at the time the CNA is prepared. An Agency representative must make every effort to attend the CNA Providers on-site inspection of the property unless the Agency has performed a physical inspection of the property within the previous 12 months. This pre-inspection meeting also allows the CNA Provider to discuss with the CNA Recipient total number of units to be inspected, as well as identifying VerDate Sep<11>2014 21:10 Mar 14, 2022 Jkt 256001 any specific units that will be inspected in detail. The minimum number of inspected units required by the Agency for an acceptable CNA is 50 percent. However, inspecting a larger number of units generally provides more accurate information to identify the specific line items to be addressed over the ‘‘term’’ being covered by the CNA report. CNA Recipients are encouraged to negotiate with the CNA Provider to achieve inspection of all units whenever possible. The ultimate goal for the CNA Recipient and CNA Provider, as well as the Agency, is to produce the most accurate ‘‘baseline or snapshot’’ of current physical property conditions for use as a tool in projecting future reserve account needs. 6. Revising an Accepted CNA During Underwriting (Applies to RD Actions) During transaction underwriting and analysis, presentation of the information contained in the ‘‘accepted’’ CNA may need to be revised by RD to address financing and other programmatic issues. The loan underwriter and the CNA Reviewer will work together to determine if revisions are necessary to meet the financial and physical needs of the property, and established RD underwriting or servicing standards and principals. These may involve shifting individual repair line items reported in the CNA, moving work from year to year, or other adjustments that will improve cash flow. The revised underwriting CNA will be used to establish reserve funding schedules as well as operating budget preparation and analysis and will be maintained by RD as supporting documentation for the loan underwriting. The initial CNA, prepared by the CNA Provider, will be maintained as an independent third-party record of the current condition of the property at the beginning of the 20-year cycle. Original CNAs will be maintained in the case file, clearly marked as either ‘‘Current Property Condition’’ (‘‘As-is’’), ‘‘Post Rehabilitation Condition’’, or ‘‘Revised Underwriting/Replacement Schedule’’, as applicable. Note: The CNA Provider is not the appropriate party to ‘‘revise’’ a CNA which has already been approved by the CNA Recipient and concurred with by the Agency. The CNA Provider’s independent opinion was the basis of the ‘‘As is’’ or ‘‘Post Rehabilitation’’ CNA. The CNA developed for underwriting may only be revised by RD staff during the underwriting process or as part of a post-closing servicing action. PO 00000 Frm 00009 Fmt 4703 Sfmt 4703 7. Updating a CNA (Applies to ‘‘As-is’’ and ‘‘Post-Rehabilitation’’ That Have Not Been Accepted by RD) A completed CNA more than a year old at the time of the RD CNA review and approval must be ‘‘updated’ prior to RD approval. Likewise, if at the time of underwriting the CNA is more than a year old (but less than two years old), it must be updated before the transaction can be approved. To update a CNA, the CNA Provider must review property changes (repairs, improvements, or failures) that have occurred since the date of the original CNA site visit with the CNA Recipient, review costs and quantities, and submit an updated CNA for approval. However, if the site visit for the CNA occurred more than two years prior to the loan underwriting, the CNA Provider should perform a new site visit to verify the current project condition. Once the CNA has been updated, the CNA Provider will include a statement noting ‘‘This is an updated CNA of the earlier CNA dated lll,’’ at the beginning of the CNA’s Narrative section. The CNA Provider should reprint the CNA with a new date for the updated CNA, and provide a new electronic copy to the CNA Recipient and RD. If the CNA age exceeds 2years at the time of the RD CNA review and approval, the CNA Provider will need to repeat the site visit process to reevaluate the condition of the property. The original report can remain the basis of the findings. 8. Incorporating a Property’s Rehabilitation Into a CNA A CNA provides a repair schedule for the property in its present condition, indicating repairs and replacements necessary for a property to function properly and efficiently over a span of 20 years. It is not an estimate of existing rehabilitation needs, or an estimate of rehabilitation costs. If any rehabilitation of a MFH development is planned as part of the proposed transaction, a rehabilitation repair list (also called a ‘‘Scope of Work’’) must be developed independently based on the CNA repair schedule. This rehabilitation repair list may be developed by the CNA Recipient, a project Architect, or an outside party (such as the CNA Provider, when qualified) hired by the CNA Recipient. The CNA Recipient must not use repair line-item costs taken from the CNA to develop the rehabilitation cost estimates for the rehabilitation loan, as these costs will not be accurate. The repair costs in a CNA are based on E:\FR\FM\15MRN1.SGM 15MRN1 khammond on DSKJM1Z7X2PROD with NOTICES Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices estimated costs for the property. Typically, these costs include the labor, materials, overhead and profit, but do not include applicable ‘‘soft costs’’. For example, for CNA purposes, the probable cost is to send a repairman out, remove an appliance, and put a new one in its place. For rehabilitation cost estimates, the CNA Recipient typically intends to hire a general contractor to oversee and supervise the rehabilitation work, which is then considered a ‘‘soft cost’’. The cost of rehabilitation includes the costs for that general contractor, the general contractor’s requirements, the cost of a project Architect (if one is used), tenant relocation (if needed), and interim financing (if used), which are considered ‘‘soft costs’’ attributed to the rehabilitation costs for the project. must be provided to the CNA Provider. The CNA Provider will prepare a ‘‘Post Rehabilitation’’ CNA indicating what repairs are planned for the property in the coming 20 years based on conditions after the rehabilitation is completed. Items to be replaced during rehabilitation that will need to be replaced again within the 20 years, such as appliances, will be included in the ‘‘Post Rehabilitation’’ CNA. Items that will not need replacement during the coming 20 years, such as a new roof, will not need to be calculated in the ‘‘Post Rehabilitation’’ CNA. The line item should not be removed from the CNA, but the cost data should be zeroed out. Appropriate comments should be included in the CNA report to acknowledge the SOW or rehabilitation/ repairs that were considered. If a ‘‘Post Rehabilitation’’ CNA is required and authorized by RD, a copy of the rehabilitation repair list or SOW 9. Repair and Replacement Schedule VerDate Sep<11>2014 21:10 Mar 14, 2022 Jkt 256001 A CNA is not a formal repair and replacement schedule and cannot be PO 00000 Frm 00010 Fmt 4703 Sfmt 4703 14449 used as an exact replacement schedule. A CNA is an estimate of the anticipated replacement needs for the property over time, and the associated replacement costs. The goal of a CNA is to estimate the replacement times based on the Expected Useful Life (EUL) to assure funds are available to replace equipment as it is needed. Hopefully, materials will be well maintained and last longer than estimated in the CNA. However, the CNA cannot be used to mandate replacement times for the identified building components. The RD underwriter may find it necessary to adjust the proposed replacement schedule during the course of the underwriting to allow for an adequate Annual Deposit to Replacement Reserves (ADRR) payment that will sustain the property over a 20-year period and keep rents below the maximum rents that are allowed. BILLING CODE 3410–XV–P E:\FR\FM\15MRN1.SGM 15MRN1 14450 Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices ADDENDUM TO THE CAPITAL NEEDS ASSESSMENT CONTRACT {Between CNA Recipient and CNA Provider) This ADDUNDUM to the CAPITAL NEEDS ASSESMENT (CNA) CONTRACT between _ _ _ _ (CNA Provider) and (CAN Recipient) is entered intothis_ _day of_, 20 _ _(the Effective Date) for the property known as _ _ _ _ _ _ _ _ _ _ (Property). DEFINITIONS "Acceptance" means the act of an authorized representative of the United States Department of Agriculture (USDA), Rural Development by which the representativeapproves the Agreement and this Addendum. "Agreement" means the contract entered into between the CNA Recipient and the CNA Provider to provide a CNA of the property. It includes the original document entered into between the parties, this Addendum, and any other document incorporated by the Agreement. "CNA Report" means a report in general conformance with the Statement of Work that is attached hereto and the Fannie Mae Physical Needs Assessment Guidance to the PropertyEvaluator. "CNA Reviewer" means a person assigned to review the CNA report on behalf ofUSDA, Rural Development program. "CNA Provider" means the person or entity entering into the Agreement with the CNARecipient to perfonn all work required to provide a CNA of the property. "CNA Recipient" means the person or persons who have or will have legal title and/or ownership of a property participating under USDA, Rural Development programs. "Program" means any MFHprogram authorized by Section 514 or 515 of the Housing Act of 1949, as amended and administered by USDA, Rural Development. "Property" means any structure(s), dwelling(s) and/or land that is the subject of any Multi- family Housing program administered by the U.S. Department of Agriculture, Rural Development, and for which a CNA is required by U.S. Department of Agrieulture,Rural Development. "USDA RD" means the United States Department of Agriculture, Rural Development. 'Work" means the CNA Statement of Work as attached hereto. RECITALS WHEREAS, the property known as _ _ _ _ _ _ _ _ _ _ _~Property is included in the program being administered by USDA RD. WHEREAS, as a condition of participating in the program, the CNA Recipient is required to obtain a CNA for the Property, which has been prepared inaceordance with the Statement of Work; CNA Recipient and CNA Provider must agree to a Contract to prepare a CNA for the Property. WHEREAS, CNA Provider and CNA Recipient are parties to that certain CNA Contract, dated - - - - - - - - - - - - - - - ~ 20_, Agreement, pursuant to which the CNA Recipient has retained the services of CNA Provider to provide a CNA for the Property for the base Contract amount of $._ _ _ _ _ _ _ _ _~and for itemized "Additional VerDate Sep<11>2014 21:10 Mar 14, 2022 Jkt 256001 PO 00000 Frm 00011 Fmt 4703 Sfmt 4725 E:\FR\FM\15MRN1.SGM 15MRN1 EN15MR22.039</GPH> khammond on DSKJM1Z7X2PROD with NOTICES A-I Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices 14451 Services" as follows: (see listing inspection i.e. below,) in the amount of$_ _ per item or service. The total Contract amount is$_. WHEREAS, the parties hereby wish to incorporate into the Agreement andits Exhibits certain additional provisions as set forth below. NOW, THEREFORE, in consideration of the promises and mutual covenantscontained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree to the following additional terms and conditions as follows: ADDITIONS TO THE AGREEMENT {Between CNA Recipient and CNA Provider) L CNA RECIPIENT OBLIGATIONS a. SUBMISSION OF CONTRACT FOR CONCURRENCE BY USDA RD CNA Recipient will promptly submit to USDA RD for review and concurrence a copy of the executed Agreement and this Addendum. b. NOTIFICATION OF CONCURRENCE OF AGREEMENT BY USDARD Upon receiving notification from USDA RD of its concurrence of the Agreement, CNA Recipient will promptly furnish CNA Provider with evidence of this acceptance. c. ACCESS TO THE PROPERTY Owner must allow CNA Provider, CNA Recipient and; if requested, the CNA Reviewer, complete, timely and unconditional access to the Property and its premises for the purpose of conducting the inspections that are required for preparing the CNA. d. FURNISHING PROPERTY INFORMATION At least._ _ _ _ _ _ _ _ _(.number) day(s) prior to the commencement of the CNA inspection, CNA Recipient must furnish to the CNA Provider all information on any recent and/or immediate planned capital improvements to the Property,any recent and/or scheduled repairs, finalized maintenance schedules, and information on the existence of any known environmental hazards at the property. In addition, Owners must provide any available information on any current "Transition Plan" and "Self -Evaluation" addressing proposals for complying with all applicable Federal accessibility requirements, and other matters relevant to the CNA Statement ofWork. A-2 VerDate Sep<11>2014 21:10 Mar 14, 2022 Jkt 256001 PO 00000 Frm 00012 Fmt 4703 Sfmt 4725 E:\FR\FM\15MRN1.SGM 15MRN1 EN15MR22.040</GPH> khammond on DSKJM1Z7X2PROD with NOTICES Attachment A 14452 Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices Specific items the CNA Recipient should provide the CNA Provider include: 1. Contact information for the Owner's representative at USDA RD (Name,address, telephone number, e-mail address, etc.). 2. Building-by-building breakdown ofunits by bedroom count and type (i.e.garden, townhouse, fully accessible) to aid in selection of units at time of inspection. 3. Any available plans or blueprints of development (as-built drawingspreferred). 4. Listing of capital expenditures for the Property over the past three to five yearsand maintenance expenditures over the last 12 months. 5. Maintenance logs to help identify any significant or systemic areas ofconcem. 6. Copies of invoices for any recently completed capital improvements and/orcopies of quotes for any pending/planned capital improvements. 7. A valid/current Section 504 Accessibility Self Evaluation/Transition Plan (nomore than three years old). 8. Any available capital/physical needs assessments (CNAs/PNAs) that werepreviously completed. 9. Any available structural or engineering studies that were previouslycompleted. 10. Any available reports related to lead-based paint testing or other environmental hazards (i.e. asbestos, mold, underground storage tanks, etc.) that were previously completed and/or related certifications if environmentalremediation has been completed. 11. Reports including, but not limited to: local Health Department inspections,soils analysis, USDA's last compliance review, or USDA's last security inspection. 12. If the CNA Recipient certifies below that (a) third-party funds have been committed for use in the transaction for which the CNA is required; and (b) USDA RD has communicated its acceptance or acknowledgement of the availability of these funds (whether by an award of points in a portfolio revitalization program or otherwise); and (c) these funds are to be used towards a rehabilitation program at the Property, the CNA Recipient will provide the CNA Provider with a copy of the proposed rehabilitation scopeand budget. e. ADDITIONAL SERVICES When a CNA exceeds the one-year duration beyond the original acceptance dateof the document, the report is required to be updated. The Contract should designate anticipated tasks and costs that would be necessary to update the CNAafter the one-year or two-year time frames have been exceeded. The Contract should include, at a minimum: VerDate Sep<11>2014 21:10 Mar 14, 2022 Jkt 256001 PO 00000 Frm 00013 Fmt 4703 Sfmt 4725 E:\FR\FM\15MRN1.SGM 15MRN1 EN15MR22.041</GPH> khammond on DSKJM1Z7X2PROD with NOTICES A-3 Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices 14453 1. Identify Property where update is required. 2. Itemized list of possible tasks to be performed to accomplish the update:Time and materials Interviews Document reviews (photos, construction documents, contracts, etc.). Additional site visit as required (travel). 3. Associated unit costs for each task required for the CNA Update. II. CNA RECIPIENT'S CERTIFICATIONS- CNA Recipient hereby certifies asfollows: a. STATUS OF PROPOSED CNA (check correct box) D CNA Recipient has received a commitment for third-party funding for the revitalization transaction for which application was made. The CNAProvider will create the CNA based on existing conditions "as is". CNA Recipient is responsible for the Scope of Work and budget for the proposed rehabilitation of the Property (typically obtained from a projectArchitect), incorporating any requirements of the third-party lender. TheCNA Provider will then revise their CNA based on the anticipated conditions "post rehabilitation" of the Property after the rehabilitation. Both CNAs will be provided to Rural Development. D CNA Recipient has requested or will request third-party funds but has no commitment. lfCNA Recipient does not have a commitment of third-party funds, CNA Reviewer agrees that it is within USDA RD's sole discretion to determine whether the CNA Provider should consider any rehabilitation Scope of Work and budget for a "post rehabilitation" CNA after conducting a CNA based on the Property's "as is" condition. USDARD will make such a determination on the likelihood of third-party funds being made available. CNA Provider should verify this decision with Rural Development prior to performing a "post rehabilitation" CNA. D CNA Recipient does not anticipate third-party funds being utilized, or does not anticipate a rehabilitation at this time. In this case, the CNAProvider will conduct a normal review of the Property, not including/anticipating any rehabilitation, and base the CNA on the existing conditions at the Property. NOTE: The CNA Recipient will not instruct the CNA Provider to perform a "post rehabilitation" CNA without approval from Rural Development. b. COMPLIANCE WITH STATEMENT OF WORK A-4 VerDate Sep<11>2014 21:10 Mar 14, 2022 Jkt 256001 PO 00000 Frm 00014 Fmt 4703 Sfmt 4725 E:\FR\FM\15MRN1.SGM 15MRN1 EN15MR22.042</GPH> khammond on DSKJM1Z7X2PROD with NOTICES CNA Recipient must allow the CNA Provider to comply with the Statement of Work in creating and developing a CNA report that will incorporate and meet all terms, conditions and requirements as set forth in the attached Statement of Work. CNA Recipient must not impede or attempt to influence the CNA Provider's impartiality inapplying the CNA requirements and guidelines established by Rural Development in describing the physical condition and needs of the Property. 14454 Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices Attachment A c. AVAILABILITY CNA Recipient must be available to promptly discuss any draft or preliminary CNAreport with the CNA Provider and must address in writing to the CNA Reviewer anydesired revisions, corrections, comments or concerns the CNA Recipient may have relating to such report. d. ADDRESSING DEFICIENCIES CNA Recipient must promptly furnish to the CNA Provider USDA RD's CNA Review report. CNA Recipient will discuss any deficiencies observed by the CNA Reviewer and request that the deficiencies be addressed within five (5) wotking days. Should deficiencies not be addressed within five (5) wotking days, CNA Recipient may order the CNA Provider in writing to suspend, delay, or interrupt all or any part ofthe work under the Agreement that remains to be perfonned for such period of time until deficiencies identified by the CNA Reviewer have been satisfied. e. PAYMENT The CNA Recipient must pay the CNA Provider 50 percent of the negotiated contractamount for the base CNA Contract once the Contract for CNA services has been executed. If the CNA Recipient chooses to include and pay for additional services from the CNA Provider exceeding the negotiated base CNA Contract amount, then these services must be listed and the payment method addressed in the Contract between the CNA Recipient and CNA Provider. If funds for additional services will be withdrawn from the reserve account, then 50 percent of the base Contract ammmt along with the additional services will be paid once the contract for CNA services hasbeen executed. Upon concurrence by the CNA Reviewer of the CNA Provider's final report (signatureofReviewer and Underwriter required), the CNA Recipient will promptly satisfy and pay the remaining 50 percent balance of the base Contract amount and additional services if they are paid for out of the reserve account. Any remaining fees and/or dues owed to the CNA Provider pursuant to the terms of the Agreement will also be due upon the CNA Reviewer's concurrence of the CNA Provider's final report. Other payments must be subject to the schedule identified in the Agreement. ill. CNA PROVIDER'S OBLIGATIONS- (applies to "as-is" "updates" and"post rehabilitation") a. CNA PROVIDER'S RESPONSIBILITY FOR WORK The CNA Provider must furnish all necessary labor, materials, tools, equipment, and transportation necessary for performance of the work as described in the Statement ofWork, which is attached hereto. The format utilized for this report must be _ _ _ _ _ _ _ _ _ _ _ _ _ _ . (Write in "USDA RD CNA Template in Microsoft ExcelFom1at" or similar electronicfonnat.) A-5 VerDate Sep<11>2014 21:10 Mar 14, 2022 Jkt 256001 PO 00000 Frm 00015 Fmt 4703 Sfmt 4725 E:\FR\FM\15MRN1.SGM 15MRN1 EN15MR22.043</GPH> khammond on DSKJM1Z7X2PROD with NOTICES b. COMPLIANCE WITH STATEMENT OF WORK Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices 14455 CNA Provider will comply with the Statement of Work by creating and developing a CNA report that will incorporate and meet all terms, conditions and requirements as setforth in the attached Statement of Work. c. DELIVERY OF PRELIMINARY CNA REPORT CNA Provider must promptly provide to the CNA Recipient and USDA RD apreliminary CNA report. d. AVAILABILITY TO DISCUSS CNA REPORTFTNDTNGS CNA Provider must take any reasonable measures to be readily available to discuss and respond to any findings, concerns, comments, or revisions the CNA Reviewer mayhave regarding the preliminary CNA report. e. SUBMISSION OF FINAL CNA REPORT After receipt of the CNA Reviewer's report, the CNA Provider must promptly providethe CNA Recipient and USDA RD with a finalized CNA report. The fmalized report will incorporate observations, comments and/or changes identified by the CNA Reviewer. IV. CNA PROVIDER'S CERTIFICATIONS CNA a. Provider hereby certifies 15fgllow5: LICENSING AND COMPLIANCE CNA Provider possesses valid and current licenses and certifications necessary to comply with the Statement of Work and as regulated by all applicable State, county,and/or local laws and/or ordinances. b. CONFLICTS OF INTEREST CNA Provider has no identity of interest as defined in 7 CFRpart 3560 with CNA Recipient or Owner's Property or the management agency/company for the Property. c. PROPERLY TRAINED A-6 VerDate Sep<11>2014 21:10 Mar 14, 2022 Jkt 256001 PO 00000 Frm 00016 Fmt 4703 Sfmt 4725 E:\FR\FM\15MRN1.SGM 15MRN1 EN15MR22.044</GPH> khammond on DSKJM1Z7X2PROD with NOTICES CNA Provider and any Provider personnel who will have actual responsibility for theProperty inspection and preparation of the CNA are properly trained and experienced in evaluating site and building systems, health and safety conditions, physical and structural conditions, environmental and accessibility conditions, and estimating costsfor repairing, replacing and improving site and building components. 14456 Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices Attachment A d. PROFESSIONALLY EXPERIENCED CNA Provider and any Provider personnel who will have actual responsibility for the Property inspection and preparation of the CNA are professionally experienced in preparing and prO\,iding CNA 's for multifamily housing properties that are similar in scope and operation to those typically fmanced in USDA RD's Multi-Family Housingprogram. e. KNOWLEDGEABLE OF CODES CNA Provider and any Provider personnel who will have actual responsibility for theProperty inspection and preparation of the CNA are knowledgeable about applicable site and building standards and codes, including Federal, State and local rcquircmcntson environmental and accessibility issues. f. DEBARMENT AND SUSPEKSION CNA Provider is not debarred or suspended from participating in Federally assisted programs and will comply with the requirements of7 CFRpart 3017 and 2 CFR part 417 or any successor regulation, pertaining to debarment or suspension of a personfrom participating in a Federal program or activity. g. SIGNED CERTIFICATION Include a written and signed certification by the CNA Provider that it meets all of the above qualifications for the proposed Agreement with the CNA Recipient for CNA services. fThe CNA Provider's execution of this Addendum will constitute its "writtenand signed certification" that it meets these qualifications.] V. MISCELLANEOUS a. USDA RURAL DEVELOPMENT PROVISIONS Upon request of the CNA Provider or CNA Recipient, USDA RD will make availablepertinent project data such as the reserve replacements for the last 2-3 years, budget summary of the last two years, and copies of Physical Inspections and Supervisory Visits for the Property, if available. b. ASSIGNMENT OF CO~TRACT CNA Provider must not assign or transfer any interest in or performance of this Contract, without written authorization from the CNA Recipient and a USDA RDrepresentative. c. ENTIRE AGREEMENT If there are inconsistencies between any provision in this Addendum and any provisionin the Agreement, the provision in this Addendum must govern. No oral statements orrepresentations or prior written matter contradicting this instrument must have any force and effect. VerDate Sep<11>2014 21:10 Mar 14, 2022 Jkt 256001 PO 00000 Frm 00017 Fmt 4703 Sfmt 4725 E:\FR\FM\15MRN1.SGM 15MRN1 EN15MR22.045</GPH> khammond on DSKJM1Z7X2PROD with NOTICES A-7 Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices 14457 d. GOVERNINGLAW All matters pertaining to this Addendum (including its interpretation, application, validity, performance and breach) in whatever jurisdiction action may be brought, must be governed by, construed and enforced in accordance with the laws of the Stateof_ _ _ _ _ _ _ _ _ . (Location of the Property) e. HEADINGS This Addendum must be governed by and interpreted as part of the Agreement and itsgeneral terms and conditions. f. TERMS AND CONDITIONS Except as expressly stated herein, all other terms and conditions of the Agreementmust remain in full force and effect. IN WITNESS WHEREOF, the undersigned who are duly authorized to execute andenter into this Addendum, intending to be legally bound hereby, have executed this Addendum as of the date first written above. Project: Project Location: CNA Recipient CNA Provider By its: _ _ _ _ _ _ _ _ _ __ (Title/Position) By its: _ _ _ _ _ _ __ (Title/Position) Concurred by: The United States Department of Agriculture, Rural Development Title/Position A-8 VerDate Sep<11>2014 21:10 Mar 14, 2022 Jkt 256001 PO 00000 Frm 00018 Fmt 4703 Sfmt 4725 E:\FR\FM\15MRN1.SGM 15MRN1 EN15MR22.046</GPH> khammond on DSKJM1Z7X2PROD with NOTICES Rural Development Representative 14458 Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices Atta~hment B CAPITAL NEEDS ASSESSMENT STATEMENT OF WORK Nature of the Work A Capital Needs Assessment (CNA) is a systematic assessment to determine a Property's physical capital needs over the next 20 years based upon the observed current physical conditions of a Property. The CNA report provides a year-by-year estimate of capital replacement costs over this 20-year period for use by the CNA Recipient and the U.S. Department of Agriculture (USDA) Rural Development (RD) personnel in planning the reserve account for replacements and other funding to cover these costs. Note: RD will use the CNA report as a key source of information about expected capital needsat the Property and the timing of these needs. However, the CNA report is only an estimate of these needs and their timing. It should not be viewed as the formal schedule for actual replacement of capital items. Replacement of capital items should occur when components reach the end of their actual useful life, which may occur earlier or later than estimated in the CNA report. Payment The CNA Recipient must pay the CNA Provider 50 percent of the negotiated Contract amount for the base CNA Contract amount once the Contract for CNA services has been executed. If the CNA Recipient chooses to include and pay for additional services from the CNA Provider exceeding the negotiated base CNA Contract amount, then these services must be listed and the payment method addressed in the Contract between the CNA Recipient and CNA Provider. Tf funds for additional services will be withdrawn from the reserve account, then 50 percent of the base Contract amount along with the additional services will be paid once the Contract for CNA services has been executed. Upon concurrence by the CNA Reviewer of the CNA Provider's final report (signature of Reviewer and Underwriter required), the CNA Recipient will promptly satisfy and pay the remaining 50 percent balance of the base Contract amount and additional services if they arepaid for out of the reserve account. Any remaining fees and/or dues owed to the CNA Provider pursuant to the terms of the Agreement will also be due upon the CNA Reviewer's concurrence of the CNA Provider's final report. Other payments must be subject to the schedule identified in the Agreement. Qualifications B-1 VerDate Sep<11>2014 21:10 Mar 14, 2022 Jkt 256001 PO 00000 Frm 00019 Fmt 4703 Sfmt 4725 E:\FR\FM\15MRN1.SGM 15MRN1 EN15MR22.047</GPH> khammond on DSKJM1Z7X2PROD with NOTICES The CNA Provider must: 1. Possess valid and current licenses and certifications necessary to comply with the Statement of Work and as regulated by all applicable State, county and/or local lawsand/orordinances. Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices 14459 2. Have no identity of interest as defined in 7 CFR part 3560, with CNA Recipient or owner's Property, or management agent. An architectural firm performing a CNA whichis also involved in the rehabilitation of the Property would be considered an Identity oflnterest. For example: the Architect that performs the CNA assessment could overstate the conditions of the Property in order to inflate the rehabilitation scope, resulting in an increase to the Architect's compensation which is typically a percentage oftheconstruction costs. 3. Be properly trained and experienced in evaluating site and building systems, health and safety conditions, physical and structural conditions, environmental and accessibility conditions, and estimating costs for repairing, replacing, and improving site and building components. (This applies to the CNA Provider or any Provider personnel who will have actual responsibility for the property inspection and preparation of the CNA.) 4. Be professionally experienced in preparing and providing CNAs for Multi-Family Housing properties that are similar in scope and operation to those typically financed in USDA RD' s Section 515 program. (This applies to the CNA Provider or any Provider personnel who will have actual responsibility for the Property inspection and preparationofthe CNA.) 5. Be knowledgeable about applicable site and building standards and codes including Federal, State and local requirements on environmental and accessibility issues. (Thisapplies to the CNA Provider or any Provider personnel who will have actual responsibility for the Property inspection and preparation of the CNA.) 6. Not be debarred or suspended from participating in Federally assisted programs and will comply with the requirements of 2 CFR parts 417 and 180 or any successor regulation, pertaining to debarment or suspension of a person from participating in a Federal program or activity. Statement of Work The CNA Provider must: 1. Perform a CNA in general conformance with the document: "Fannie Mae PhysicalNeeds Assessment Guidance to the Property Evaluator," except as modified herein. 2. Inspect the property. A minimum of 50 percent (50 percent if less than 50 units) (45 percent if Property includes 50 - 99 units, 40 percent if the Property contains 100 or more units) of all dwelling units must be inspected in a non-intrusive manner. Consideration must be given to inspecting at least one unit per floor, per building, and per unit type (one-bedroom, twobedroom, etc.) up to the threshold percentage. CNA Providers must ultimately be responsible for appropriate unit sampling but are encouraged to consult with site representatives to gather adequate information. This willhelp ensure that unit samples represent a cross-section of unit types and current physical conditions at the Property and are reflective of substantive immediate physical condition concerns. VerDate Sep<11>2014 21:10 Mar 14, 2022 Jkt 256001 PO 00000 Frm 00020 Fmt 4703 Sfmt 4725 E:\FR\FM\15MRN1.SGM 15MRN1 EN15MR22.048</GPH> khammond on DSKJM1Z7X2PROD with NOTICES B-2 14460 Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices Attachment B All site improvements, common facilities (every central mechanical room, every laundry etc.), and building exteriors must be inspected. (ASTM guidelines, allowing for "representative observations" of major elements are not adequate in this regard. Although inspections are "non-intrusive", CNA Providers must include an inspection of crawlspaces and attics (when these spaces can be reasonably and safely accessed) in a number sufficient to formulate an opinion of the condition of those spacesand any work necessary). All units designated as fully accessible for the handicapped must be inspected. The inspection must include interviews with the CNA Recipient, applicant/transferee, management staff, and tenants as needed. It must also include consideration of all relevant Property information provided by the CNA Recipient, including: • Contact information for the client's representative at Rural Development (Name,address, telephone number, e-mail address, etc.). • Building-by-building breakdown of units by bedroom count and type (i.e. garden,townhouse, handicap accessible) to aid in selection of units at time ofinspection. • Any available plans or blueprints of development (as-built drawings preferred). • Listing of capital expenditures for the Property over the past three to five years and maintenance expenditures over the last 12 months. • Maintenance logs to help identify any significant or systemic areas ofconcem. • Copies of invoices for any recently completed capital improvements and/or copies ofquotes for any pending/planned capital improvements. • A valid/current Section 504 Accessibility Self-Evaluation/Transition Plan (no morethan three years old). • Any available capital/physical needs assessments (CNAs/PNAs) that were previously completed. • Any available structural or engineering studies that were previously completed. • Any available reports related to lead-based paint testing or other environmental hazards(i.e. asbestos, mold, underground storage tanks, etc.) that were previously completed and/or related certifications if environmental remediation has been completed. • Reports including but not limited to: local Health Department inspections, soilsanalysis, USDA's last Civil Rights compliance review, USDA's last security inspection. VerDate Sep<11>2014 21:10 Mar 14, 2022 Jkt 256001 PO 00000 Frm 00021 Fmt 4703 Sfmt 4725 E:\FR\FM\15MRN1.SGM 15MRN1 EN15MR22.049</GPH> khammond on DSKJM1Z7X2PROD with NOTICES B-3 Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices • 14461 If the CNA Recipient certifies that: (a) third-party funds have been committed for use in the transaction for which the CNA is required; and (b) USDA RD has communicated its acceptance or acknowledgement of the availability of these funds(whether by an award of points in a portfolio revitalization program or otherwise); and (c) these funds are to be used towards a rehabilitation at the Property, the CNARecipient will provide the CNA Provider with a copy of the proposed rehabilitationscope and budget. Attachment J provides more rehabilitation requirements. 3. Prepare a report using forms developed by Rural Development or other similar documents. The report must be on an electronic worksheet in excel format commonlyused in the industry, or as prescribed elsewhere herein. The report must contain the following components, at a minimum: a. Project Summary. Identification of the CNA Provider and CNA Recipient, and abrief description of the project, including the name, location, occupancy type (family/elderly) and unit mix. b. Narrative. A detailed narrative description of the Property, including year the property was constructed or rehabilitated (of each phase if work completed in multiple phases), interior and exterior characteristics, conditions, materials and equipment, architectural and structural components, mechanical systems, etc. it must also include: 1. 11. Number, types, and identification of dwelling units inspected and used as a basisfor the findings and conclusions in the report; An assessment of how the Property meets the requirements for accessibility topersons with disabilities; a) The report must include any actions and estimated costs necessary to correct deficiencies in order for the Property to comply with applicable Federal, State, and local laws and requirements on Section 504 accessibility. The report must also include an opinion on the adequacy of any existing and approved Transition Plans for the Property in accordance with USDA RD requirements. CNA Providers mustnot assume that a Property built in accordance with accessibility standards prevailing at the time of original construction is "grandfathered" on accessibility requirements. b) The CNA Provider must include in the final report an accessibility evaluation in accordance with all applicable Federal accessibility requirements and standards. CNA Providers are strongly encouraged to review Appendix 5 to HB-2-3560. B-4 VerDate Sep<11>2014 21:10 Mar 14, 2022 Jkt 256001 PO 00000 Frm 00022 Fmt 4703 Sfmt 4725 E:\FR\FM\15MRN1.SGM 15MRN1 EN15MR22.050</GPH> khammond on DSKJM1Z7X2PROD with NOTICES m. An assessment of observed or potential on-site environmental hazards (e.g.,above or below ground fuel storage tanks, leaking electrical transformers); 14462 Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices Attachment B Note: The narrative portion of the report must address and include any existing testing results for the presence of radon, lead in water, lead-based paint, and other environmental concerllS. CNA Providers are not expected to conduct or commission any testing themselves. However, where test results provided by the CNA Recipient qffirmatively point to hazards, the CNA Provider must inquire aboutsubsequent remediation steps and include cost allowances for any identified hazards not yet remediated. iv. Recommendations for any additional professional reports as deemed necessaryby the CNA Provider, such as additional investigations on potential structural defects or environmental hazards; Note: The narrative portion of the report must address each study or report necessary; why, and what expertise is needed so that the CNA Recipient can alleviate that issue, including estimates for repairs, prior to underwriting. It is not the L'NA Provider 's re~ponsibility to estimate the cost of the study or repairs/ remediation necessary. v. Needs of the Property funded or to be funded from a third-party (if any), such astax credits, including a brief description of the work, the source of funding, the year(s) the work is planned to be completed, and the total estimated costs in current dollars; and: Note: For projects where the CNA Recipient advises the CNA Provider that third-party funding for rehabilitation is committed and the work will begin within 12 months. the L'NA must address the existing conditions at the Property, and the "post-rehabilitation" needs at the Property. An example would be a CNA Recipient who has submitted a pre-application to Rural Development for the Multifamily Preservation and Revitalization (MPR) Demonstration Program where Rural Development has awarded points to the application for third-party funding,and it has committed third-party funding. Under the MPR, a CNA Recipient who has appliedfor third-party funding for rehabilitation but does not have a commitment for this funding must have the CNA prepared based on conditions at the Property "as is, " not ''post rehabilitation". In these cases, consult with RuralDevelopment a,; to whether a "post rehabilitation" CNA should he done. When aCNA Recipient receives the funding commitment, and rehabilitation is planned within the next 12 months, the CNA Contract must be renegotiated to indicate thatrehabilitation is planned and specify that a ''post rehabilitation" CNA should be prepared In preparing CNAs for these properties, the L'NA Provider should undertake the CNA on the basis that the third-party funded rehabilitation will occur as describedin the Scope of Work for the rehabilitation project provided by the CNA Recipient and determine the Property's ''postrehabilitation" capital needs over the next 20 years. In these cases, the CNA Provider is expected tu review and understand the Scope of Work for planned rehabilitation funded from third-party sources, but aside from apparent substantive omissions is not required to comment on the planned rehabilitation. VerDate Sep<11>2014 21:10 Mar 14, 2022 Jkt 256001 PO 00000 Frm 00023 Fmt 4703 Sfmt 4725 E:\FR\FM\15MRN1.SGM 15MRN1 EN15MR22.051</GPH> khammond on DSKJM1Z7X2PROD with NOTICES B-5 Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices 14463 If there is no evidence that third-party funding for rehabilitation has been committed (e.g., if rehabilitation is not indicated in the Rural Development MP R pre-application and/or Rural Development has not awarded points for it), then the c-WA Provider must verify with the Rural Development contact prior to performinga ''post rehabilitation" CNA. If no funds are committed, and Rural Development does not agree to a ''post-rehabilitation" CNA, the CNA Provider may note the c-WA Recipients rehabilitation proposal in the c-WA but the report must be undertaken as though there will be no immediate rehabilitation. In these cases, theCNA must be based on the CNA Provider 's independent professional opinion of current andfuture needs at the Property. (For example, if the c-WA Recipient wishesfor a rehabilitation, but has no funds allocated to perform one.) vi. Acknowledgments (names and addresses of persons who: performed the inspection, prepared the report, and were interviewed during, or as part oftheinspection). c. Materials and Conditions. This component must be reported on a Microsoft Office Excel ©worksheet.The following major system groups must be assessed in the report: Site; Architectural; Mechanical and Electrical; and Dwelling Units. ALL materials and systems in the major groups must be assessed (not every specific material used in the construction of the Property), including the following items: Item Description; 1. ii. Expected Useful Life (EUL). Data entries must be based on the EUL Table included in the "Fannie Mae Physical Needs Assessment Guidance to the PropertyEvaluator'', unless otherwise explained in the report based upon the installation or most recent replacement date, quality, warranty, degree of maintenance or any other reasonable and documentable basis. Any EUL entry that varies from the Table must include an explanation in the "Comments" column. Any EUL that varies from the table by 25 percent or more must be adequately supported separately from spreadsheet (for example, provide the documentation or explanation in the Narrative section); iii. Age. The actual age of the material or system; iv. Remaining Useful Life (RUL). Any RUL entry that varies from the difference between the EUL and age must be explained in the "Comments" column. Any RUL entry that varies 2 years or more must be adequately supported separately from the spreadsheet (for example, provide the documentation or explanation in the "Narrative" section). Variances of more than 25 percent will not be accepted; v. Condition. The current physical condition (excellent - good - fair- poor) of thematerial or system; v1. Comments or field notes that are relevant to the report. B-6 VerDate Sep<11>2014 21:10 Mar 14, 2022 Jkt 256001 PO 00000 Frm 00024 Fmt 4703 Sfmt 4725 E:\FR\FM\15MRN1.SGM 15MRN1 EN15MR22.052</GPH> khammond on DSKJM1Z7X2PROD with NOTICES v11. Description of action needed (repair - replace - maintain construct - none); and, 14464 Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices Attachment B d. 1. Capital Needs. This component must be reported on a Microsoft Office Excel© worksheet. This component identifies all materials and systems for each of the four majorsystem groups to be repaired, replaced, or specially maintained. It must include the following items for such materials or systems: Year or years when action is needed; ii. Number of years to complete the needed action (duration of the repair work); iii. Quantity and Unit of Measure. Any data entry that is not from a physical Property measurement or observation during the inspection must be explained in the report ( contrary to ASTM guidance, lump sum allowancesmust be used only for capital projects, such as landscaping, that cannot readily be quantified); and, iv. Estimated repair, replacement, or special maintenance unit cost and total cost in current (uninflated) dollars for each line item. The report must identity the source(s) used for the cost data. Entries must include estimated costs for materials, labor (union or non-union wages, as appropriate), overhead & profit. Consultant fees, and other associated costs may be incurred by the CNA Recipient when repair or replacement work involves extensive capital activities (e.g., a major landscaping or site drainage project). These activities are likely to include design costs, or the involvement of general contractors, with associated overhead and profit considerations. If the CNA Provider anticipates work will beaffected by these cost factors, notes should be added to the CNA spread sheet/report to explain the cost logic. Discussions with the CNA Recipient and the Agency will be necessary to confirm the proposed cost of these capital activities. CNA Providers using such standard cost sources must use costallocations that include overhead and profit. Note: An estimated unit cost that is significantly different from an industry standard cost, such as R.S. Means or equivalent, must be adequately supported. B-7 VerDate Sep<11>2014 21:10 Mar 14, 2022 Jkt 256001 PO 00000 Frm 00025 Fmt 4703 Sfmt 4725 E:\FR\FM\15MRN1.SGM 15MRN1 EN15MR22.053</GPH> khammond on DSKJM1Z7X2PROD with NOTICES Generally, replacement actions must involve "in-kind" materials, unless a different material is more appropriate, approved by the State Historic Preservation Office, if applicable, and explained in the report. Exceptions must be made for components that are seen as inadequate (e.g. twenty gallon water heaters, prompting resident complaints) or below contemporary design/ construction standards (e.g. single- glazed windows in temperate climates). Rural Development also encourages the consideration of alternative technology and materials that offer the promise of reduced future capital and/or operating costs (more durable and/or less expensive to maintain over time, reduce utility expenses, etc.). CNA Providers are not expected to conduct quantitative cost-benefit analyses but must use sound professional judgment in this regard. Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices 14465 In addition to the exceptions described in the paragraph above, Rural Development may consider the inclusion of market-comparable amenities/upgrades (e.g. air conditioning in wann climates) proposed by the CNA Recipient when such features are essential to the successful operational and financial perfonnance of the Property. Such items should be identified specifically in the CNA report as "CNA Recipient - recommended upgrades" and include an explanation of why these upgrades are necessary in supporting the financial and operational performance of the Property. Where included, CNA Provider comments on the feasibility and appropriateness of the upgrade are required. v. The capital needs must be presented in two time frames: a) Immediate Capital Needs. All critical health and safety deficiencies (e.g.inoperative elevator or central fire alarm system, missing/unsecured railings, blocked/inadequate fire egress, property-wide pest infestation) requiring corrective action in the immediate calendar year. Separately, the CNA Recipient must provide any repairs, replacements, and improvements currently being accomplished in a rehabilitation project, regardless of funding source, and anticipated to be completed within 12 months. The CNA Recipient will includethe budget for any planned rehabilitation (e.g., rehabilitation proposed in the CNA Recipients pre-application to the MPR). CNA Provider can, but is not required, to offer comments about the rehabilitation budget. The CNA must notinclude minor, inexpensive repairs or replacements that are part of a prudent CNA Recipients operating budget. (If the aggregate cost for a material line item is less than $1,000, then the line item must not be included in the CNA. An aggregate cost for a line item is an item which needs to be replaced in any given year, the cost exceeds the $1,000, and the item should be replaced in the one-year duration. Applying a duration that exceeds one-year may decreasethe aggregate amount below the $1,000 threshold, thus circumventing the intent of the threshold to include a particular item in the CNA. Where immediate rehabilitation is proposed by the CNA Recipient using third-party funds, the CNA Provider must note the current condition and remaining effective useful lives of affected systems and components in an "as is" CNA. B-8 VerDate Sep<11>2014 21:10 Mar 14, 2022 Jkt 256001 PO 00000 Frm 00026 Fmt 4703 Sfmt 4725 E:\FR\FM\15MRN1.SGM 15MRN1 EN15MR22.054</GPH> khammond on DSKJM1Z7X2PROD with NOTICES b) Capital Needs over the Term. Such capital needs include significant maintenance, repairs, and replacement items required during subsequent twentycalendar years to maintain the Property's physical integrity and long term marketability. It must include repairs, replacements, and significant deferred maintenance items currently being planned and anticipated to be completed after the immediate calendar year and corrections for violations of applicable standards on environmental and accessibility issues. It must also include the needs described in paragraph 3.b.v. above in the appropriate year(s), if any, if these will not be completed within 12 months from the closing of the program revitalization transaction. The CNA must not include minor, inexpensive repairs or replacements that are part of a prudent Property owner's operating budget 14466 Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices Attachment B (If the aggregate cost for a material line item is less than $1,000, then the line item must not be included in the CNA. An aggregate cost for a line item is an item which needs to be replaced in any given year, the cost exceeds the $1,000, and the item should be replaced in the one-year duration. Applyinga duration that exceeds one-year may decrease the aggregate amount below the $1,000 threshold, thus circumventing the intent of the threshold to include aparticular item in theCNA. Exceptions to these exclusions may be appropriate for very small properties, and/or for low cost items that may affect resident health andsafety (e.g., a damaged or misaligned boiler flue). For example, in smallprojects (total of 12 units or less), items exempted would be for materialline items less than $250, not $1,000. The report must be realistic and based on due diligence and consideration of the Property's condition, welfare of the tenants, and logical construction methods and techniques. The estimated unit costs and total costs to remedy the detailed needs must be provided in current (on-inflated) dollars. Capital Needs over the term must be based on the actual remaining useful lives of the components and systems at hand. Aside from formal work that is accounted for in the "Immediate Capital Needs" section, capital activitiesmust not be"front-loaded. Note: New components or upgrades addressed in a Property's rehabilitation may have long-term capital needs implications as well Those items with expected useful lives of less than twenty years (e.g. air conditioners) also will need to be accountedfor in Capital Needs over the Term. e. Executive Summary. This component must be reported on a MicrosoftOffice Excel © worksheet. It must include: Summary oflmmediate Capital Needs - the grand total cost of all majorsystem groups (in current dollars); 1. Summary of Capital Needs Over the Term -the annual costs and grand totalcost of all major system groups (in current and inflated dollars). The inflation rate must be 3 percent; and, 11. iii. Appendices. This component must include a minimum 25 color digital photographs that describe: the Property's buildings (interior and exterior) and other facilities, specific material or system deficiencies, and the bathrooms and kitchens in the units accessible for the handicapped. Include a Property location map and other documentsas appropriate to describe the Property and support the findings and summaries in the report. The CNA Provider must provide some sort of visual documentation for each line item that cannot be clearly identified by a written description alone. B-9 VerDate Sep<11>2014 21:10 Mar 14, 2022 Jkt 256001 PO 00000 Frm 00027 Fmt 4703 Sfmt 4725 E:\FR\FM\15MRN1.SGM 15MRN1 EN15MR22.055</GPH> khammond on DSKJM1Z7X2PROD with NOTICES f. Summary of All Capital Needs - the grand total costs for the immediate and over the term capital needs (in current and inflated dollars). The grand total costs (in current and inflated dollars) per dwelling unit must also be included. Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices 14467 For instance,if an entrance needs to become handicap accessible, a picture of the entrance will helpthe CNA Recipient understand where the construction should take place. The CNA Recipient needs to be able to associate reserve account funds with the correct line items during the life of the CNA during the underwriting process. 4. Deliver the following: a. A minimum of one electronic copy of the report must be delivered on a compact disk, or other acceptable electronic media, e.g. e-mail, to both the CNA Recipientand USDA RD for their review and written acceptance. To the greatest extent possible, delivery must be made within 15 business days of execution of the Agreement with the CNA Recipient. b. If the report is not acceptable, the CNA Provider must make the appropriate changesin accordance with the review comments. A minimum of one electronic Excel copyofthe revised report must be delivered on a compact disk or via e-mail to both the CNA Recipient and USDA RD for their review and written acceptance. The delivery must be made within 5 business days of receiving the review comments. c. If the revised report is still not acceptable, additional revisions will be made andelectronic Excel copies delivered on compact disks or via e-mail to the CNA Recipient and USDA RD until the report is acceptable. 5. Be available for consultation with the CNA Recipient or USDA RD after writtenacceptance of the report on any of its contents. B-10 VerDate Sep<11>2014 21:10 Mar 14, 2022 Jkt 256001 PO 00000 Frm 00028 Fmt 4703 Sfmt 4725 E:\FR\FM\15MRN1.SGM 15MRN1 EN15MR22.056</GPH> khammond on DSKJM1Z7X2PROD with NOTICES 6. The CNA Provider must NOT analyze the adequacy of the Property's existing or proposed replacement reserve account nor its deposits as a result of the capital needsdescribed in the report. 14468 Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices Attachment C FANNIE MAE PHYSICAL NEEDS ASSESSMENTGUIDANCE TO THE PROPERTY EVALUATOR Used by Permission and Sublicense from Fannie Mae Expected Useful Life Tables and Forms Developed for Fannie Mae by On-Site Insight of Needham, MA©© 1991 On-Site Insight, Inc. UseReproductionandDistribution of These Materials May be Made Solely in Connection with the Implementation of Rural Development's Rural Rental Housing Program or Intended Uses within the Rural Rental Housing and Farm Labor Housing Programs Related to: 1. Transfer of Project Ownership; 2. Loan Reamortization; 3. Loan Write-Down; or 4. Development of an Equity Loan Incentive or EquityLoan for a Sale to a Non-Profit Sponsor. 5. Facility Rehabilitation, including MPR C-1 VerDate Sep<11>2014 21:10 Mar 14, 2022 Jkt 256001 PO 00000 Frm 00029 Fmt 4703 Sfmt 4725 E:\FR\FM\15MRN1.SGM 15MRN1 EN15MR22.057</GPH> khammond on DSKJM1Z7X2PROD with NOTICES 6. New Construction Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices 14469 Introduction While many factors affect the soundness of a mortgage loan over time, one of the most significant is the physical condition of the Property - past, present and future. A prudent lender must be concerned with the past maintenance and improvements because they may indicate owner and management practices as well as expenses to be incurred in the future. The lender must be concerned with the condition of the Property at the time the loan is made, and over the term of the loan, because Property conditions may directly impact marketability to prospective tenants and the need for major expenditures may impact the economic soundness and value of the Property. The lender must also be concerned with the condition of the Property at the end of the loan term. If the Property has deteriorated, the owner may not be able to secure sufficient financing to pay off the loan at maturity. Most lenders have always given some attention to physical conditions and needs of properties in their underwriting. However, the amount of attention, the data secured, the quality and analysisof that data, and the impact of this information on underwriting has varied widely. Indeed, many properties and the loans that they secure are now in trouble because of inadequate consideration of physical needs in the underwriting coupled with inadequate attention to Property maintenance which has diminished the marketability and overall value of the Property. The guidance and forms in this package, together with the guidance provided to our lenders in our Delegated Underwriting and Servicing (DUS) and Multifamily Guides, is based upon a desire to see a more standardized approach to assessing the physical needs of properties that will be securing our loans. These documents attempt to respond to stated desires on the part of our lenders for a "level playing field" among competing lenders who may otherwise have different notions of the level of data and analysis required to assess a Property's physical condition. They also attempt to respond to the needs of Property evaluators who, desiring to produce the quantity and quality of information deemed necessary, need specific guidance to avoid the appearance of glossing over problems or providing material which is too detailed or complex to be usable by the underwriters. VerDate Sep<11>2014 21:10 Mar 14, 2022 Jkt 256001 PO 00000 Frm 00030 Fmt 4703 Sfmt 4725 E:\FR\FM\15MRN1.SGM 15MRN1 EN15MR22.058</GPH> khammond on DSKJM1Z7X2PROD with NOTICES C-2 14470 Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices Attachment C These documents are meant to provide useful guidance and tools to the evaluators. They cannot cover all situations and are not meant to be inflexible. They are designed to elicit the judgment of the evaluator (in a format which is useful to the underwriter), not to substitute for it. We welcome comments from evaluators in the field offices, as we did in developing this package, on improving either our forms or guidance so that this package can best serve the needs of both the evaluators and our lenders. If you have such comments, please contact: VerDate Sep<11>2014 21:10 Mar 14, 2022 Jkt 256001 PO 00000 Frm 00031 Fmt 4703 Sfmt 4725 E:\FR\FM\15MRN1.SGM 15MRN1 EN15MR22.059</GPH> khammond on DSKJM1Z7X2PROD with NOTICES April LeClair Director of Multifamily Product Management 3900 Wisconsin Avenue, N.W. Washington, D.C. 20016 (202) 752-7439. Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices 14471 Specific Guidance to the Property Evaluator The purpose of the Physical Needs Assessment is to identify and provide cost estimates for the following key items: • Immediate Physical Needs - repairs, replacements and significant maintenance itemswhich should be done immediately. • Physical Needs Over the Term - repairs, replacements and significant maintenance itemswhich will be needed over the term of the mortgage and two years beyond. As part of the process, instances of deferred maintenance are also identified. The assessment is based on the evaluator's judgment of the actual condition of the improvements and the expected useful life of those improvements. It is understood that the conclusions presented are based upon the evaluator's professional judgment and that the actual performance of individual components may vary from a reasonably expected standard and will be affected by circumstances which occur after the date of the evaluation. This package explains how to use the set of forms provided by Fannie Mae. It is important to recognize that the forms are intended to help the evaluator conduct a comprehensive and accurate assessment. They also present the results of that assessment in a relatively standard format which will be useful to the lender in making underwriting decisions. However, the formsshould not constrain the evaluator from fully presenting his or her concerns and findings. The forms should be used and supplemented in ways which facilitate the preparation and presentation of information useful to the lender regarding the physical needs of the Property. C-4 VerDate Sep<11>2014 21:10 Mar 14, 2022 Jkt 256001 PO 00000 Frm 00032 Fmt 4703 Sfmt 4725 E:\FR\FM\15MRN1.SGM 15MRN1 EN15MR22.060</GPH> khammond on DSKJM1Z7X2PROD with NOTICES The Systems and Conditions forms may be altered and/or computerized to serve the evaluators' needs so long as information is provided on the condition and Effective Remaining Life (ERL) of all components and the ERL is compared to the standard Expected Useful Life (EUL). The Summary forms may also be extended or computerized so long as the basic format is maintained. 14472 Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices Attachment C Terms of Reference Form The lender completes this form for the evaluator. lt serves as a reference point for the assessment and provides the evaluator with basic information about the property and the term ofthe loan. Four additional topics are covered: • Sampling &pectations - The lender's expectations about the number and/or percentage of dwelling units, buildings and specialized systems to evaluate may be stated. If there is no stated expectation, the evaluator should inspect sufficient units, buildings, and numbers of specialized systems to state with confidence the present and probable future condition of each system at the Property. The evaluator should provide a separate statement indicating the sampling systems used to ensure a determination of conditions and costs with acceptable accuracy. If a sampling Expectation is provided by the lender which is not adequate to achieve the requisite level of confidence, the evaluator should soadvise the lender. Considerations in determining an adequate sample size are age and number of buildings (especially if the Property was developed in phases), total number of units, and variations in size, type and occupancy of units. Effective sampling is based on observing a sufficient numberof each significant category. Using the above criteria, categories could include buildings by ageof each building (e.g. inspect buildings in the 8-year old phase and in the I I-year old phase), buildings by type (e.g. rowhouse, L-shaped rowhouse, walkup, elevator) and/or buildings by construction materials (e.g. inspect the garden/flat roof/brick walls section and the garden/pitched roof/clapboard walls section). Dwelling units are separate categories from buildings. At a minimum, sampling is by unit size (0/1/2/3/4 bedrooms). There may be further categories if units are differently configured or equipped, or have different occupants (especially family or elderly). Generally, we would expect the percentage of units inspected to decrease as the total number of units increases. Systems which are not unit specific, such as boilers, compactors, elevators and roofs, will often have a 100 percent sample. The overriding objective: SEE ENOUGH OF EACH UNIT TYPE AND SYSTEMTO BE ABLE TO STATE WITH CONFIDENCE THE PRESENT AND PROBABLE FUTURE CONDITON. • Market Issues - In certain instances, market conditions may necessitate action on certainsystems. Examples are early appliance replacement or re-carpeting, new entry paving, special plantings, and redecorated lobbies. If the owner or lender has identified such anaction, the evaluator should include a cost estimation for such action and indicate what, if any, other costs would be eliminated by such action. VerDate Sep<11>2014 21:10 Mar 14, 2022 Jkt 256001 PO 00000 Frm 00033 Fmt 4703 Sfmt 4725 E:\FR\FM\15MRN1.SGM 15MRN1 EN15MR22.061</GPH> khammond on DSKJM1Z7X2PROD with NOTICES C-5 Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices • Work In Progress - In some instances, work may be underway (which can be observed) orunder contract. When known by the lender, this will be noted. For purposes of the report, such work should be assumed to be complete, unless observed to be unacceptable in quality or scope. • Management-Reported Replacements - In some instances, the Property ownership or management will provide the lender with information about prior repairs or replacementswhich have been completed in recent years. The lender may provide this information to the evaluator to assist in the assessment of these components. The evaluator should include enough units, buildings, or systems in the sample to reasonably verify thereported repairs or replacements. 14473 Systems and Conditions Forms It is the responsibility of the evaluator to assess the condition of every system which is presentat a Property. All conditions, except as noted below, requiring action during the life of the loanmust be addressed regardless of whether the action anticipated is a capital or operating expense. To assist evaluators in reviewing all systems at a Property, four Systems and Conditions Forms are provided. Each lists a group of systems typically related by trade and/or location. The four forms are Site, Architectural, Mechanical and Electrical, and Dwelling Units. While the forms have several columns in which information may be recorded, in many instances only the.first three columns will be completed. If the condition of a system is acceptable, the ERL exceeds the term of the mortgage by two years, and no action is required, no other columns need to be completed. The report is not expected to identify minor, inexpensive repairs or other maintenance items which are clearly part of the Property owner's current operating pattern and budget so long as these items appear to be taken care of on a regular basis. Examples of such minor operating items are occasional window glazing replacement and/or caulking, modest plumbing repairs, and annual boiler servicing. However, the evaluator should comment on such items in the report if they do not appear to be routinely addressed or are in need of immediate repair. The report is expected to address infrequently occurring "big ticket" maintenance items, suchas exterior painting, all deferred maintenance of any kind, and repairs or replacements which normally involve significant expense or outside contracting. While the evaluator should noteany environmental hazards seen in the course of the inspection, environment-related actions, such as removal of lead-based paint, will be addressed in a separate report prepared by an environmental consultant. VerDate Sep<11>2014 21:10 Mar 14, 2022 Jkt 256001 PO 00000 Frm 00034 Fmt 4703 Sfmt 4725 E:\FR\FM\15MRN1.SGM 15MRN1 EN15MR22.062</GPH> khammond on DSKJM1Z7X2PROD with NOTICES C-6 14474 Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices Attachment C Using the Systems and Conditions Forms Purpose The forms can be used both to record actual observations at a specific location and for an overall summary. For example, the Architectural form can be used for a specific building (orgroup or identical buildings) as well as for summarizing all information for buildings at a Property. The same is true for the Dwelling Unit form. An unlabeled form is included which can be used as a second page for any of the Systems and Conditions Forms. In some instances, the evaluator will note components which, while they may continue to be functional, may reduce marketability of the Property. For example, single-door refrigerators or appliances in outmoded colors may have such an impact in some properties. The evaluator should note these items, discuss them with the lender, and provide separate estimates of the cost to replace such items if requested. Items EUL Each of the four forms has a number of frequently-occurring systems and components listed.This list represents only the most frequently observed and is not meant to be all inclusive. Every system present at the Property must be observed and recorded Any system not listed on the form may be included in the spaces labeled "Other". Note that the assessment includes the systems and components in both residential and non-residential structures. Thus, garages, community buildings, management and maintenance offices, cabanas, pools, commercial space, and other non-residential buildings and areas are included. The EUL figure which appears in parentheses after the "Item" is taken from the "Expected Useful Life Table" provided. This table provides standard useful lives of many components typically found in apartment complexes. Where the parentheses do not contain a number, it is because there are various types of similar components with differing economic lives. The evaluator should turn to the "Expected Useful Life Table" and select, and insert, the appropriate EUL number. If the EUL will; without question, far exceed the term of the mortgage plus two years, the EUL number need not be inserted. C-7 VerDate Sep<11>2014 21:10 Mar 14, 2022 Jkt 256001 PO 00000 Frm 00035 Fmt 4703 Sfmt 4725 E:\FR\FM\15MRN1.SGM 15MRN1 EN15MR22.063</GPH> khammond on DSKJM1Z7X2PROD with NOTICES Note: It is recognized that the "Expected Useful Life Table" represents only one possible judgment of the expected life of the various components. Ifwe receive substantial material to the effect that one or more of the estimates are inappropriate, we will make adjustments. Until such changes are made, the Tables provide a useful and consistent standard for all evaluators touse. They avoid debate on what the appropriate expected life is and permit focus on the evaluator's judgment of the effective remaining life of the actual component in place, as discussed below. Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices 14475 Age The evaluator should insert the actual Age of the component or may insert "OR" for original. If the actual age is unknown, an estimate is acceptable. If there is a range in Age (for example, components replaced over time), the evaluator may note the range (i.e., 5-7 years) or may use several lines for the same system, putting a different Age of that system on each line. Condition This space is provided to indicate the Condition of the component, generally excellent, good,fair, or poor, or a similar and consistent qualitative evaluation. Effective Remaining Life This space is provided for the evaluator to indicate the remaining life of the component as is.For standard components with standard maintenance, the "Expected Useful Life Table" provided by the lender could be used to determine ERL by deducting the Age from EUL. However, this should not be done automatically. A component with unusually good originalquality or exceptional maintenance could have a longer life. On the other hand, if the component has been poorly maintained or was of below standard original quality, the useful lifecould be shorter than expected. The evaluator applies his or her prqfessional judgment in making a determination qf the ERL. If the ERL is longer than the term of the loan plus two years, no deferred maintenance exists, and no action needs to be taken during the l?fe qf the loan, no other columns need to be filled out. The only exception may be Diff'? (Difference), as discussed below. This should be notedwhen the evaluator's estimate of the ERL varies by more than two years from the standard estimate. Dirr? (Difference) The Age of the component should be deducted from the EUL in parentheses and the answer compared to the ERL estimated by the evaluator. Where there is a difference of over two years, the evaluator should insert a footnote number in the DIFF? (Difference) column and supply, in an attached list of footnotes, a brief statement of why, in his or her judgment, the ERL of the component varies from the standard estimate. This approach provides consistency among evaluators while making best of the evaluators' professional judgment. Action If any Action is required - immediately, over the life of the loan or within two years thereafter the Action should be recorded as repair, replacer or maintain. Repair is used when only a part of an item requires action, such as the hydraulics and/or controls of a compactor. Replace is used when the entire item is replaced. Maintain is us where special, non0routine maintenance is required, such as the sandblasting of a swimming pool. In cases where a repair or maintenance may be needed now, and replacement or further maintenance may be needed later, separate lines may be used to identify the separate actions and timing. VerDate Sep<11>2014 21:10 Mar 14, 2022 Jkt 256001 PO 00000 Frm 00036 Fmt 4703 Sfmt 4725 E:\FR\FM\15MRN1.SGM 15MRN1 EN15MR22.064</GPH> khammond on DSKJM1Z7X2PROD with NOTICES C-8 14476 Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices Attachment C Now? If the item involves a threat to the immediate health and safety of the residents, clearly affects curb appeal, will result in more serious problems if not corrected, or should otherwise be accomplished as part of an immediate repair, maintenance or replacement program, this space should be checked. Replacements which may be needed in year one, but do not require immediate attention, need not be checked. Deferred Maintenance (DM) The DM space is marked in any instances where current management practice is clearly inadequate and the owner's attention should be called to the item, even if no major expenditureor significant labor may be required. Quantity For items requiring action, the evaluator should note the "Quantity" of the system, with the applicable unit of measure entered ( each, unit, square feet, square yards, linear feet, lump sum, etc.). Field Notes This space, as well as attachments may be used to record the type of component (16cf, fros. free, Hotpoint), the problem (valves leaking) or other information (consider replacement for marketing purposes, replace 30 percent per year, work in progress, etc.) that the evaluator will need to complete the "Evaluator's Summary". Sample Form The following example from the Dwelling Unit Systems and Conditions form illustrates howthis form is properly used. The example presumes an 11 story building containing 1 and 2 bedroom units. There are 100 units. The age of the building is 9 years. The term of the proposed loan is 7 years. COND 9 EX 10+ 1 - - - 9 Good 6 - REPL - - Disposal (5) 0-9 Good 0-5 - REPL - Bath Fixtures (20) Ceiling 04 Stack () 9 Good 11+ - - - - 9 Hater Damage - - Repair Yes - Countertop/ Sinks (10) Refrigerator (15) khammond on DSKJM1Z7X2PROD with NOTICES ERL DlFF? AGE VerDate Sep<11>2014 21:10 Mar 14, 2022 Jkt 256001 PO 00000 Frm 00037 ACTION Fmt 4703 Sfmt 4725 NOW? DM? QUANTITY E:\FR\FM\15MRN1.SGM NOTES - ea. Corian Stainless Steel lO0ea Hot point l 6cf. ff20%/yr@ YRS lO0ea 20%/yr.@ YR 1 OPTE - Dated Looking Repair-Now lOea Plumbing Leak 15MRN1 EN15MR22.065</GPH> lTEM(EUL) Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices 14477 Countertop/Sinks are 9 years old. (The entry could also be "OR"). Condition isexcellent, with an ERL of 10 years. This is significantly different from the anticipated ERL of 1 (a EUL of 10 years minus an Age of9 years). Therefore, there is a footnote entry "1" in the Diff? (Difference) column. The footnote willindicate that this item is made of an exceptionally durable material (Corian), along with a top quality stainless steel sink. The evaluator's estimate of an ERLof 10 years + is beyond the term of +2. No capital need would be reported. Refrigerators are also original, reported as 16 cf frost free Hotpoint. Replacementis expected around the ERL, noted as 20 percent annually and beginning in the fifth year of the loan when the refrigerators are 14 years old. Disposals range from new to original (Age= 0-9). Twenty percent per year replacements will be needed starting in year 1. The evaluator notes that disposalsappear to be replaced as part of the project's normal operations. Bath.fixtures are original, and in good condition. No replacement is expected to be required during the term +2 years. The Notes indicates that they are "datedlooking," which may prompt a market consideration for replacement. Ceiling is a special entry. The "04" stack of units has experienced water damage to ceiling from major plumbing leak. This is noted for repair NOW. As this apparently occurs in all IO units in this stack and; therefore, is likely to have morethan a modest cost, this action would be reported on the Immediate Physical Needssummary form. Evaluator's Summary Forms Two separate forms are used to summarize the evaluator's conclusions from the Systems and Conditions Forms. One summarizes Immediate Physical Needs and the other summarizes the Physical Needs Over the Term +2 years. Evaluator's Summary: Immediate Physical Needs C-10 VerDate Sep<11>2014 21:10 Mar 14, 2022 Jkt 256001 PO 00000 Frm 00038 Fmt 4703 Sfmt 4725 E:\FR\FM\15MRN1.SGM 15MRN1 EN15MR22.066</GPH> khammond on DSKJM1Z7X2PROD with NOTICES All of the items for which NOW? is checked are transferred to this form. This form provides for the listing of Items, Quantity, Unit Cost and Total Cost of each. The Item and Quantity are transferred directly from the Systems and Conditions form. 14478 Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices Attachment C Unit Cost - This is the cost per unit (sf, ea, If, etc.) in current dollars to implement the required action. The source of the cost estimate should be listed in a separate attachment. The sources may include a third-party estimation service ( e.g., R.S. Means: Repair and Remodeling Cost Data), actual bid or Contract prices for the property, estimates from contractors or vendors, the evaluator's own cost files, or published supplier sources. Total Cost - This is the result of multiplying the quantity times the unit cost. It is expressed in current year dollars. Deferred Maintenance (DM) - If the item evidence deferred maintenance, this column is checked. Comments - the comments column, or an attachment, should clearly provide information on the location and the nature of problem being addressed for each item. The information should be adequate for the owner to begin to implement the action. Evaluator's Summary: Physical Needs Over the Term Those items not listed on the Immediate Physical Needs form, but for which action is anticipated during the term of the loan plus two years, are listed on the form. The item and Quantity are transferred directly from the Systems and Conditions form. The Unit Cost is calculated in the same manner as on the Immediate Physical Needs form. An attachment should be provided which gives any necessary information on the location of action items andthe problem being addressed for each item. The information should be adequate for the ownerto begin to implement the action. Cost by Year - the result of multiplying the quantity times the unit cost, in current dollars, is inserted in the column for the year in which the action is expected to take place. Generally, the ERL estimate provided by the evaluator on the Systems and Conditions will indicate the Action year. For example, if the evaluator has indicated that the ERL of the parking lot paving is 4 years, the cost, in current dollars, is inserted in Year 4. If the items are likely to be done over a number of years, the costs, in current dollars should be spread over the appropriate period. For example, if the ERL of the refrigerators is estimated to be 4 years, or 3-5 years, one third of the cost of replacing the refrigerators may appear in each of years 3, 4, and 5. Total Uninflated- After inserting all of the appropriate action items, the evaluator should totalthe items for each year. Total Inflated - The evaluator should multiply the Total Uninflated times the factor provided to produce the Total Inflated. Total Inflated All Pages - On the last sheet, the evaluator should include the Total lnflatedDollars for that page and all prior pages. VerDate Sep<11>2014 21:10 Mar 14, 2022 Jkt 256001 PO 00000 Frm 00039 Fmt 4703 Sfmt 4725 E:\FR\FM\15MRN1.SGM 15MRN1 EN15MR22.067</GPH> khammond on DSKJM1Z7X2PROD with NOTICES C-11 Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices 14479 Cumulative Total All Pages - On the last sheet, the evaluator should insert the Total Inflated Dollars of that year and all prior years. Special Repair and Replacement Requirements While performing a Property Inspection, the evaluator must be aware that certain building materials and construction practices may cause properties to experience (or to develop in a short time period) problems that can be corrected only with major repairs or replacements. The following identifies some specific construction related problems; however, the evaluator must be aware that other construction related problems may be found in any Property and should be identified. If any of the following requirements are not met or if the evaluator determines that the following conditions (or others) are present, the evaluator must contact the lender immediately to discuss the timing as well as the cost of the repairs or replacements. The evaluator should ensure that any of these conditions are thoroughly addressed in the Physical Needs Assessment. Minimum Electrical Capacity - Each apartment unit must have sufficient electrical capacity (amperage) to handle the number of electrical circuits and their use within an apartment. Therefore, the evaluator must determine, based on referencing the National Electric Code as well as local building codes, what is the minimum electrical service needed. In any event, thatservice must not be less than 60 amperes. Electrical Circuit Overload Protection - All apartment unit circuits, as well as electrical circuits elsewhere in an apartment complex, must have circuit breakers as opposed to fuses ascircuit overload protection. Aluminum Wiring - In all cases, where aluminum wiring runs from the panel to the outlets of a unit, the evaluator's inspection should ascertain that the aluminum wiring connections (outlets, switches, appliances, etc.) are made to receptacles rated to accept aluminum wiring or that corrective repairs can be done immediately by the owner. Fire Retardant Treated Plywood - While performing the roof inspection, the evaluator should investigate whether there is any indication that fire-retardant treated plywood was used in the construction of the roof (primarily roof sheathing). This inspection should focus on sections of the roof that are subjected to the greatest amount of heat (e.g., areas that are not shaded or that are poorly ventilated) and; if possible, to inspect the attic for signs of deteriorating fire- retardant treated plywood or plywood that is stamped with a fire rating. Our concern is that certain types of fire-retardant treated plywood rapidly deteriorates when exposed to excessive heat and humidity or may cause nails or other metal fasteners to corrode. Common signs of this condition include a darkening of the wood and the presence of a powderlike substance, warping of the roof and the curling of the shingles. Fire-retardant treated plywood is most likely to be in townhouse properties or other properties with pitched, shingled roofs that were constructed after 1981 and that are located in States east of the Mississippi River and some southwestern States. VerDate Sep<11>2014 21:10 Mar 14, 2022 Jkt 256001 PO 00000 Frm 00040 Fmt 4703 Sfmt 4725 E:\FR\FM\15MRN1.SGM 15MRN1 EN15MR22.068</GPH> khammond on DSKJM1Z7X2PROD with NOTICES C-12 14480 Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices Attachment C Narrative Conclusion and Attachments A complete narrative summary of the Property and its components is not required. However, the evaluator should supply a concise summary of the conclusions reached concerning the overall condition of the Property, its future prospects, and the quality of the current maintenance programs. Any items affecting the health and safety of residents should be clearly.flagged The summary should include a discussion of the sampling approach used, discussed above, and any market issues which the evaluator believes it may be appropriate to address or which were noted by the lender. The narrative, the forms use and the attachments (footnotes explaining Differences, information regarding sources of costs, and, if necessary, information needed to identify the location and type of problem addressed in the Evaluator's Summary: Physical Needs Over the Term) shouldbe supplied. VerDate Sep<11>2014 21:10 Mar 14, 2022 Jkt 256001 PO 00000 Frm 00041 Fmt 4703 Sfmt 4725 E:\FR\FM\15MRN1.SGM 15MRN1 EN15MR22.069</GPH> khammond on DSKJM1Z7X2PROD with NOTICES C-13 khammond on DSKJM1Z7X2PROD with NOTICES VerDate Sep<11>2014 Attachment D Jkt 256001 CNAe- Tool Estimated Useful Life Table PO 00000 . . . - - - - - - - - - - - - - - - - - - - - - - - - b e more specific than the "Component Type", e.g (a particular kind, size, etc of refrigerator, not just any refrigerator.) Numbering by ASTM 2018-08 Outline Frm 00042 System Description Overall General Description SubComponent I Component 3 tiers of categorization: Component Description Family I Bderly Need Category, Need Item, Component Type Fmt 4703 3 System Description and Observations Sfmt 4725 E:\FR\FM\15MRN1.SGM 15MRN1 3.2.2.1 3.2.2.2 3.2.2.3 3.2.2.4 3.2.2.5 3.2.2.6 Catch basins, inlets, culverts Marine or stormwater bulkhead Earthwork, swales, drainways, erosion controls Storm drain lines Stormwater mgmt ponds Fountains, pond aerators 50 35 50 50 50 15 S0IAII items not color coded 35lare "Component Type" 50lnames. 50 50 15 3.2.4.1 3.2.4.2 3.2.4.3 3.2.4.4 3.2.4.5 3.2.4.6 3.2.4.7 3.2.4.8 3.2.4.9 Asphalt Pavement Asphalt Seal Coat Concrete Pavement Curbing, Asphalt curbing, Concrete Parking, Gravel Surfaced Permeable Paving Systems (brick, concrete pavers) Striping and Marking Signage, Roadway/ Parking 25 5 50 25 50 15 30 15 15 25 5 50 25 50 15 30 15 15 Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices 21:10 Mar 14, 2022 This table lists the recommended average useful life of the categories of assets that should be considered in a Capital Needs Assessment. If an observed item is not listed, it should be assigned to the most closely related category. The Standard EUL for a component type is fixed. The user may estimate the Remaining Useful Life of any existing component independent of the Standard EUL by entering the assessed RUL in the appropriate space on the Components tab of the Excel Assessment Tool and by justifying the assessed RUL in the adjacent comment box. When identifying an alternative toan existing component the user may specify an EUL for the alternative which differs from the Standard EUL for that component type but must enter an explanation in the Notes space on the Alternatives tab of the Tool. Each specific component assessed is given a free-form description by the needs assessor and this description is the "component ID" or component name which may 14481 EN15MR22.070</GPH> khammond on DSKJM1Z7X2PROD with NOTICES 14482 VerDate Sep<11>2014 Jkt 256001 PO 00000 Frm 00043 Fmt 4703 Sfmt 4725 E:\FR\FM\15MRN1.SGM 15MRN1 EN15MR22.071</GPH> any existing component independent of the Standard EUL by entering the assessed RUL in the appropriate CNAeTool Estimated Useful Life Table space on the Components tab of the Excel Assessment Tool and by justifying the assessed RUL in the adjacent comment box. When identifying an alternative loan existing component the user may specify an EUL for the alternative which differs frorn the Standard EUL for that component type but must enter an explanation in the Notes space on the Alternatives tab of the Tool. Each specific component assessed is given a free-form description by the needs assessor and this description is the "component ID" or component name which may be more specific than the "Component Type", e.g (a particular kind, size, etc of refrigerator, not just any Numbering by ASTM 2018-08 Outline System Description Overall General Component Description refrigerator.) 3 tiers of categorization: Sub- Component Description Component Family Elderly 3.2.4.10 Carports, wood frame 30 30 3.2.4.11 Carports, metal frame 40 40 3.2.5.1 3.2.5.2 3.2.5.3 Asphalt 25 50 15 25 50 15 30 30 40 15 20 60 40 20 25 60 3.2.5.4 Concrete Gravel Permeable Paving (brick, concrete pavers) 3.2.6.1 3.2.6.2 3.2.6.3 3.2.6.4 Fencing, chain-link 3.2.6.S 3.2.6.6 Fencing, steel or aluminum Fencing, concrete Masonry unit (CMU) 3.2.6.7 3.2.6.8 3.2.6.9 Fencing, PVC Signage, Entrance/Monument Mail Kiosk Retaining Walls, heavy block (50-80 lb) Fencing, wood picket Fencing, wood board (=>l"x 6") Fencing, wrought Iron 20 25 30 15 25 15 30 20 25 20 Retaining Walls, reinforced concrete masonry unit (CMU) 60 40 60 40 3.2.6.12 3.2.6.13 Retaining Walls, treated timber Storage sheds 25 30 25 30 3.2.7.1 Sport Court- asphalt 25 25 3.2.7.2 Sport Court- synthetic 15 20 3.2.6.10 3.2.6.11 Need Category, Need Item, Component Type Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices 21:10 Mar 14, 2022 This table lists the recommended average useful life of the categories of assets that should be considered in a Capital Needs Assessment. If an observed item is not listed, it should be assigned to the most closely related category. The Standard EUL for a component type is fixed. The user may estimate the Remaining Useful Life of khammond on DSKJM1Z7X2PROD with NOTICES VerDate Sep<11>2014 Jkt 256001 CNAeTool Estimated Useful Life Table PO 00000 . - - - - - - - - - - - - - - - - - - - - - - - - - - , b e more specific than the "Component Type", e.g (a particular kind, size, etc of refrigerator, not just any refrigerator.) Numbering by ASTM 2018-08 Outline System Frm 00044 Description Overall General SubComponent , Component Component Description Family Elderly I 3 tiers of categorization: Need Category, Need Item, Component Type Description Fmt 4703 Sfmt 4725 3.2.7.3 3.2.7.4 3.2.7.5 3.2.7.6 3.2.7.7 3.2.7.8 3.2.7.9 3.2.7.10 E:\FR\FM\15MRN1.SGM 15MRN1 3.2.8.2.1 3.2.8.2.2 3.2.8.2.3 3.2.8.2.4 3.2.8.2.5 3.2.8.2.6 3.2.8.2.7 3.2.8.2.8 3.2.8.2.9 3.2.8.2.10 Sport Court-hardwood Tot Lot (playground equipment) Tot Lot- lose ground cover Pool Deck Pool/Spa Plastic Liner Pool/Spa pumps and equipment Decks-treated lumber Decks-composite 50 10 3 15 8 10 20 50 50 15 5 15 8 10 20 50 Electric distribution center Electric distribution lines Transformer Emergency Generator Solar Photovoltaic panels Photovoltaic Inverters Pole mounted lights Ground lighting Building Mounted Lighting Building Mounted High Intensity Discharge (HID) Lighting 40 40 30 25 15 10 25 10 10 10 40 40 30 25 15 10 25 10 10 20 Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices 21:10 Mar 14, 2022 This table lists the recommended average useful life of the categories of assets that should be considered in a Capital Needs Assessment. If an observed item is not listed, it should be assigned to the most closely related category. The Standard EUL for a component type is fixed. The user may estimate the Remaining Useful Life of any existing component independent of the Standard EUL by entering the assessed RUL in the appropriate space on the Components tab of the Excel Assessment Tool and by justifying the assessed RUL in the adjacent comment box. When identifying an alternative toan existing component the user may specify an EUL for the alternative which differs from the Standard EUL for that component type but must enter an explanation in the Notes space on the Alternatives tab of the Tool. Each specific component assessed is given a free-form description by the needs assessor and this description is the "component ID" or component name which may 14483 EN15MR22.072</GPH> khammond on DSKJM1Z7X2PROD with NOTICES 14484 VerDate Sep<11>2014 Jkt 256001 CNAeTool Estimated Useful Life Table PO 00000 . - - - - - - - - - - - - - - - - - - - - - - - - - - , b e more specific than the "Component Type", e.g (a particular kind, size, etc of refrigerator, not just any refrigerator.) Numbering by ASTM 2018-08 Outline Frm 00045 System Description Overall General Description I Component SubComponent 3 tiers of categorization: Component Description Family I Elderly Fmt 4703 Sfmt 4725 E:\FR\FM\15MRN1.SGM 15MRN1 EN15MR22.073</GPH> 3.3.1.1 3.3.1.2 3.3.1.3 3.3.1.4 3.3.1.5 3.3.1.6 3.3.1.7 Need Category, Need Item, Component Type Slab, reinforced concrete Slab, post tensioned Continuous reinforced concrete footer and CMU stem wall Piers, reinforced concrete footer and CMU pier Piers, treated timber post/pole Foundation Waterproofing Foundation suction, drainage, groundwater, radon gas controls, pumps, sumps, equip. failure alarms I 100 100 100 100 40 40 100 100 100 100 40 40 101 10 Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices 21:10 Mar 14, 2022 This table lists the recommended average useful life of the categories of assets that should be considered in a Capital Needs Assessment. If an observed item is not listed, it should be assigned to the most closely related category. The Standard EUL for a component type is fixed. The user may estimate the Remaining Useful Life of any existing component independent of the Standard EUL by entering the assessed RUL in the appropriate space on the Components tab of the Excel Assessment Tool and by justifying the assessed RUL in the adjacent comment box. When identifying an alternative toan existing component the user may specify an EUL for the alternative which differs from the Standard EUL for that component type but must enter an explanation in the Notes space on the Alternatives tab of the Tool. Each specific component assessed is given a free-form description by the needs assessor and this description is the "component ID" or component name which may khammond on DSKJM1Z7X2PROD with NOTICES VerDate Sep<11>2014 Jkt 256001 PO 00000 Frm 00046 System Description Overall General Description Sub- Component I Component Component Description Fmt 4703 Sfmt 4725 E:\FR\FM\15MRN1.SGM 3.3.2.1.1 3.3.2.1.2 3.3.2.1.3 3.3.2.1.4 3.3.2.1.5 3.3.2.1.6 Wood, timbers, dimensioned lumber, laminated beams, trusses Tie downs, clips, braces, straps, hangers, shear walls/panels Steel, beams, trusses Reinforced concrete Reinforced masonry, concrete masonry units (CM Us) Solid Masonry (obsolete) 3.3.2.2.1 3.3.2.2.2 3.3.2.2.3 3.3.2.2.4 3.3.2.2.5 Family I Elderly 100 75 100 100 100 100 Sealed crawl space system Vents, screens, covers Vapor Barrier (VDR) ground or underfloor Penetrations, caulking/sealing Crawl space, (de)pressurization, fans, pumps, sumps, equipment failure alarms 40 30 30 15 40 30 30 15 10 10 Caulking and Sealing Concrete/Masonry Sealants Wood waterproofing and sealants 15 10 10 15 15MRN1 100 75 100 100 100 100 3.3.2.4.1 3.3.2.4.2 3.3.2.4.3 3 tiers of categorization: Need Category, Need Item, Component Type Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices 21:10 Mar 14, 2022 This table lists the recommended average useful life of the categories of assets that should be considered in a Capital Needs Assessment. If an observed item is not listed, it should be assigned to the most closely related category. The Standard EUL for a component type is fixed. The user may estimate the Remaining Useful Life of any existing component independent of the Standard EUL by entering the assessed RUL in the appropriate CNAespace on the Components tab of the Excel Assessment Tool and by justifying the assessed RUL in the adjacent comment box. When identifying an alternative toan existing component the user may specify an EUL for the Tool Estimated alternative which differs from the Standard EUL for that component type but must enter an explanation in the Useful Life Table Notes space on the Alternatives tab of the Tool. Each specific component assessed is given a free-form description by the needs assessor and this description is the "component ID" or component name which may ~ - - - - - - - - - - - - - - - - - - - - - - - b e more specific than the "Component Type", e.g (a particular kind, size, etc of refrigerator, not just any Numbering by ASTM 2018-08 Outline refrip;erator. 10 10 14485 EN15MR22.074</GPH> khammond on DSKJM1Z7X2PROD with NOTICES 14486 VerDate Sep<11>2014 Jkt 256001 CNAeTool Estimated Useful Life Table space on the Components tab of the Excel Assessment Tool and by justifying the assessed RUL in the adjacent comment box. When identifying an alternative toan existing component the user may specify an EUL for the alternative which differs from the Standard EUL for that component type but must enter an explanation in the Notes space on the Alternatives tab of the Tool. Each specific component assessed is given a free-form description by the needs assessor and this description is the "component ID" or component name which may be more specific than the "Component Type", e.g (a particular kind, size, etc of refrigerator, not just any PO 00000 N_u_m_b-er-i-ng_b_y_A_S_T_M_2_0_1_8_-0_8_0_u_tl-in-e---lrefrigerator.) - 1_ _ _ Frm 00047 System Description Overall General Description 3 tiers of categorization: Sub- Component Description Component , Component Family I Elderly 3.3.2.4.4 3.3.2.4.5 Building wraps & moisture resistant barriers Paints and stains, exterior 50 50 8 8 3.3.2.7.1 3.3.2.7.2 3.3.2.7.3 3.3.2.7.4 3.3.2.7.5 3.3.2.7.6 3.3.2.7.7 3.3.2.7.8 3.3.2.7.9 3.3.2.7.10 3.3.2.7.11 3.3.2.7.12 Exterior Stairs, wood frame/stringer Exterior Stair Tread-wood 30 15 40 20 50 50 25 40 20 50 20 50 30 15 40 Fmt 4703 Sfmt 4725 E:\FR\FM\15MRN1.SGM 15MRN1 EN15MR22.075</GPH> Need Category, Need Item, Component Type Exterior Stairs-steel frame/stringer Exterior Stair Tread-metal, concrete filled Exterior Stairs, Concrete Fire escapes, metal Balcony/Porch, Balcony/Porch, Balcony/Porch, Balcony/Porch, Railings, wood Railings, metal wood frame steel frame or concrete wood decking composite decking 20 50 50 25 40 20 50 20 50 Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices 21:10 Mar 14, 2022 This table lists the recommended average useful life of the categories of assets that should be considered in a Capital Needs Assessment. If an observed item is not listed, it should be assigned to the most closely related category. The Standard EUL for a component type is fixed. The user may estimate the Remaining Useful Life of any existing component independent of the Standard EUL by entering the assessed RUL in the appropriate khammond on DSKJM1Z7X2PROD with NOTICES VerDate Sep<11>2014 Jkt 256001 CNAeTool Estimated Useful Life Table comment box. When identifying an alternative toan existing component the user may specify an EUL for the alternative which differs from the Standard EUL for that component type but must enter an explanation in the Notes space on the Alternatives tab of the Tool. Each specific component assessed is given a free-form description by the needs assessor and this description is the "component ID" or component name which may be more specific than the "Component Type", e.g (a particular kind, size, etc of refrigerator, not just any PO 00000 N_u_m_b_e_r-in_g_b_y_A_S_T_M_2_0_1_8_-0_8_0_u_t_li_n_e_~lrefrigerator.) - 1_ _ _ 5 Frm 00048 ystem . . Description I Overall General . . Description Component 3 tiers of categorization: Sub- Component Description Component Fmt 4703 3.3.2.7.13 3.3.2.7.14 3.3.2.7.15 Sfmt 4725 E:\FR\FM\15MRN1.SGM 3.3.2.8.1 3.3.2.8.2 3.3.2.8.3 3.3.2.8.4 3.3.2.8.5 3.3.2.8.6 3.3.2.8.7 3.3.2.8.8 3.3.2.8.9 3.3.2.8.10 15MRN1 3.3.3.1.1 3.3.3.1.2 3.3.3.1.3 3.3.3.1.4 3.3.3.1.5 3.3.3.1.6 3.3.3.1.7 3.3.3.1.8 Family Elderly Need Category, Need Item, Component Type Railings, composite Canopy, Concrete Canopy, Wood/Metal 50 50 40 50 50 40 Unit Entry Door, Exterior, solid wood/metal clad 25 30 25 5 25 25 30 50 30 20 30 30 25 10 30 30 30 50 30 20 40 25 45 20 30 50 40 60 40 25 45 20 30 50 40 60 Common Exterior Door, aluminum and glass Common Exterior Door, solid wood /metal clad Storm/Screen Doors Sliding Glass Doors French or Atrium Doors, wood/metal clad Automatic Entry Doors Commercial Entry Systems Overhead Door Automatic Opener, overhead door - Aluminum Siding Vinyl Siding Cement Board Siding Plywood/Laminated Panels Exterior Insulation Finishing System (EIFS) Stucco, over wire mesh/lath Metal/Glass Curtain Wall Precast Concrete Panel (tilt-up) Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices 21:10 Mar 14, 2022 This table lists the recommended average useful life of the categories of assets that should be considered in a Capital Needs Assessment. If an observed item is not listed, it should be assigned to the most closely related category. The Standard EUL for a component type is fixed. The user may estimate the Remaining Useful Life of any existing component independent of the Standard EUL by entering the assessed RUL in the appropriate space on the Components tab of the Excel Assessment Tool and by justifying the assessed RUL in the adjacent 14487 EN15MR22.076</GPH> khammond on DSKJM1Z7X2PROD with NOTICES 14488 VerDate Sep<11>2014 Jkt 256001 PO 00000 Frm 00049 Fmt 4703 Sfmt 4725 E:\FR\FM\15MRN1.SGM 15MRN1 EN15MR22.077</GPH> any existing component independent of the Standard EUL by entering the assessed RUL in the appropriate space on the Components tab of the Excel Assessment Tool and by justifying the assessed RUL in the adjacent CNAeTool Estimated Useful Life Table comment box. When identifying an alternative toan existing component the user may specify an EUL for the alternative which differs from the Standard EUL for that component type but must enter an explanation in the Notes space on the Alternatives tab of the Tool. Each specific component assessed is given a free-form description by the needs assessor and this description is the "component ID" or component name which may be more specific than the "Component Type", e.g (a particular kind, size, etc of refrigerator, not just any ~I___N_u_m_b-er-i-ng_b_y_A_S_T_M_2_0_1_8_-0_8_0_u_tl-in-e--~lrefrigerator.) System Description Overall General Description I Component SubComponent 3 tiers of categorization: Component Description Family Elderly Need Category, Need Item, Component Type 3.3.3.1.9 3.3.3.1.10 3.3.3.1.11 3.3.3.1.12 3.3.3.1.13 Brick/block veneer Stone Veneer Glass Block Cedar/Redwood shakes, clapboard Pine board, clapboard 60 50 50 50 50 60 50 50 50 50 3.3.3.2.1 3.3.3.2.2 3.3.3.2.3 3.3.3.2.4 3.3.3.2.5 3.3.3.2.6 Wood, (dbl, sgl hung, casement, awning, sliders) Wood, fixed pane, picture Aluminum Vinyl Vinyl/Alum Clad Wood Storm/Screen Windows 35 40 35 30 50 7 45 45 40 30 50 15 3.3.4.1.1 3.3.4.1.2 3.3.4.1.3 3.3.4.1.4 3.3.4.1.5 Asphalt Shingle Metal Slate shingle Clay/cementitious barrel tile 20 50 75 60 25 20 50 75 60 25 3.3.4.2.1 3.3.4.2.2 3.3.4.2.3 3.3.4.2.4 Low slope-Built-up Roof, with gravel finish Low slope-Built-up Roof, no mineral or gravel finish 20 10 15 15 20 10 15 15 Wood Shingle, Cedar Shakes/Shingles Low slope-Adhered rubber membrane, (EPDM) Low slope-Thermoplastic membrane, (TPO, vinyl) Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices 21:10 Mar 14, 2022 This table lists the recommended average useful life of the categories of assets that should be considered in a Capital Needs Assessment. If an observed item is not listed, it should be assigned to the most closely related category. The Standard EUL for a component type is fixed. The user may estimate the Remaining Useful Life of khammond on DSKJM1Z7X2PROD with NOTICES VerDate Sep<11>2014 any existing component independent of the Standard EUL by entering the assessed RUL in the appropriate space on the Components tab of the Excel Assessment Tool and by justifying the assessed RUL in the adjacent Jkt 256001 CNAeTool Estimated Useful Life Table comment box. When identifying an alternative toan existing component the user may specify an EUL for the alternative which differs from the Standard EUL for that component type but must enter an explanation in the Notes space on the Alternatives tab of the Tool. Each specific component assessed is given a free-form description by the needs assessor and this description is the "component ID" or component name which may PO 00000 be more specific than the "Component Type", e.g (a particular kind, size, etc of refrigerator, not just any ~----------------------~ refrigerator.) Numbering by ASTM 2018-08 Outline Frm 00050 System Description Overall General Description Sub- Component Description Component , Component Fmt 4703 Sfmt 4725 E:\FR\FM\15MRN1.SGM 15MRN1 3.3.4.2.5 Low slope-Rubberized/elastomeric white/cool roof 3.3.4.3.1 3.3.4.3.2 3.3.4.3.3 3.3.4.3.4 3.3.4.3.5 3.3.4.3.6 3.3.4.3.7 3.3.4.3.8 Gutters/Downspouts, aluminum Gutters/Downspouts, copper Low slope-roof drains, scuppers Soffits, Wood, Vinyl, Metal 3.4.1.1.1 3.4.1.1.2 3.4.1.1.3 3.4.1.1.4 3.4.1.1.5 3.4.1.1.6 3.4.1.1.7 3.4.1.1.8 3.4.1.1.9 3.4.1.1.10 PVC/CPVC pipe, supply and waste Copper/brass hard pipe, supply Copper Tube, supply Galvanized pipe, supply Cast iron sanitary waste I Fascia, Wood, Vinyl Roof Hatch Service Door Roof Skylight Domestic Cold Water Pumps Sewage Ejectors Commercial Sump Pump Residential Sump Pump Water Softener/Filtration Family Elderly 15 15 20 50 30 20 20 30 30 30 20 50 30 20 20 30 30 30 75 75 50 40 75 20 50 20 15 15 75 75 50 40 75 20 50 20 15 15 3 tiers of categorization: Need Category, Need Item, Component Type Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices 21:10 Mar 14, 2022 This table lists the recommended average useful life of the categories of assets that should be considered in a Capital Needs Assessment. If an observed item is not listed, it should be assigned to the most closely related category. The Standard EUL for a component type is fixed. The user may estimate the Remaining Useful Life of 14489 EN15MR22.078</GPH> khammond on DSKJM1Z7X2PROD with NOTICES 14490 VerDate Sep<11>2014 Jkt 256001 CNAeTool Estimated Useful Life Table space on the Components tab of the Excel Assessment Tool and by justifying the assessed RUL in the adjacent comment box. When identifying an alternative toan existing component the user may specify an EUL for the alternative which differs from the Standard EUL for that component type but must enter an explanation in the Notes space on the Alternatives tab of the Tool. Each specific component assessed is given a free-form PO 00000 Numbering by ASTM 2018-08 Outline System Frm 00051 Description Overall General Description Component 3 tiers of categorization: Sub- Component Description Component Fmt 4703 Sfmt 4725 E:\FR\FM\15MRN1.SGM 15MRN1 3.4.1.2.1 3.4.1.2.2 3.4.1.2.3 3.4.1.2.4 3.4.1.2.5 3.4.1.2.6 3.4.1.2.7 3.4.1.2.8 3.4.1.2.9 3.4.1.2.10 3.4.1.2.11 3.4.1.2.12 3.4.1.2.13 3.4.1.2.14 3.4.1.2.15 3.4.1.2.16 3.4.1.2.17 3.4.1.2.18 3.4.1.2.19 3.4.1.3.1 3.4.1.3.2 3.4.1.3.3 3.4.1.3.4 EN15MR22.079</GPH> description by the needs assessor and this description is the "component ID" or component name which may be more specific than the "Component Type", e.g (a particular kind, size, etc of refrigerator, not just any refrigerator.) Family Elderly Need Category, Need Item, Component Type DHW circulating pumps DHW storage tanks Exchanger, in tank or boiler External tankless heater, gas or electric Solar hot water Residential hot water heater, gas or electric Flue, gas water heaters Boilers, Oil Fired, Sectional Boilers, Gas Fired, Sectional Boilers, Oil/ Gas/ Dual Fuel, Low MBH Boilers, Oil/ Gas/ Dual Fuel, High MBH Boilers, Gas Fired Atmospheric Boilers, Electric Boiler Slowdown and Water Treatment Boiler Room Pipe Insulation Boiler Room Piping Boiler Room Valves Boiler Temperature Controls Heat Exchanger Faucets & valves Bath tubs & sinks, cast iron Bubs tubs & sinks, enameled or stainless steel, fiberglass Bath tubs & sinks, porcelain 15 15 15 20 20 12 35 25 25 30 40 25 20 25 25 50 25 15 35 15 15 15 20 20 15 35 25 25 30 40 25 20 25 25 50 25 15 35 15 75 40 50 20 75 40 50 Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices 21:10 Mar 14, 2022 This table lists the recommended average useful life of the categories of assets that should be considered in a Capital Needs Assessment. If an observed item is not listed, it should be assigned to the most closely related category. The Standard EUL for a component type is fixed. The user may estimate the Remaining Useful Life of any existing component independent of the Standard EUL by entering the assessed RUL in the appropriate khammond on DSKJM1Z7X2PROD with NOTICES VerDate Sep<11>2014 Jkt 256001 CNAeTool Estimated Useful Life Table PO 00000 ~ - - - - - - - - - - - - - - - - - - - - - - ~ b e more specific than the "Component Type", e.g (a particular kind, size, etc of refrigerator, not just any refrigerator.) Numbering by ASTM 2018-08 Outline System Frm 00052 Description Overall General Description I Component SubComponent 3 tiers of categorization: Component Description Family Elderly Need Category, Need Item, Component Type Fmt 4703 Sfmt 4725 E:\FR\FM\15MRN1.SGM 15MRN1 3.4.1.3.5 3.4.1.3.6 3.4.1.3.7 Toilets/bidets/urinals Flush valves Tub/shower units or integrated assemblies 40 10 30 40 15 30 3.4.2.1.1 3.4.2.1.2 3.4.2.1.3 3.4.2.1.4 3.4.2.1.5 3.4.2.1.6 3.4.2.1.7 3.4.2.1.8 3.4.2.1.9 3.4.2.1.10 3.4.2.1.11 3.4.2.1.12 3.4.2.1.13 3.4.2.1.14 3.4.2.1.15 3.4.2.1.16 3.4.2.1.17 3.4.2.1.18 3.4.2.1.19 Boilers, Oil Fired, Sectional - Centralized Boilers, Gas Fired, Sectional - Centralized Boilers, Oil/ Gas/ Dual Fuel, Low MBH - Centralized Boilers, Oil/ Gas/ Dual Fuel, High MBH - Centralized Boilers, Gas Fired Atmospheric - Centralized Boilers, Electric- Centralized Boiler Blowdown and Water Treatment - Centralized Boiler Room Pipe Insulation - Centralized Boiler Room Piping - Centralized Boiler Room Valves - Centralized Boiler Temperature Controls - Centralized Heat Exchanger - Centralized Combustion Air, Duct with Fixed Louvers Combustion Air, Motor Louvers and Duct Combustion Waste Flue Cooling tower Chilling plant Steam supply station Free standing chimney 25 25 30 40 25 20 25 25 50 25 15 35 30 25 40 25 20 50 50 25 25 30 40 25 20 25 25 50 25 15 35 30 25 40 25 20 50 50 Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices 21:10 Mar 14, 2022 This table lists the recommended average useful life of the categories of assets that should be considered in a Capital Needs Assessment. If an observed item is not listed, it should be assigned to the most closely related category. The Standard EUL for a component type is fixed. The user may estimate the Remaining Useful Life of any existing component independent of the Standard EUL by entering the assessed RUL in the appropriate space on the Components tab of the Excel Assessment Tool and by justifying the assessed RUL in the adjacent comment box. When identifying an alternative toan existing component the user may specify an EUL for the alternative which differs from the Standard EUL for that component type but must enter an explanation in the Notes space on the Alternatives tab of the Tool. Each specific component assessed is given a free-form description by the needs assessor and this description is the "component ID" or component name which may 14491 EN15MR22.080</GPH> khammond on DSKJM1Z7X2PROD with NOTICES 14492 VerDate Sep<11>2014 Jkt 256001 CNAeTool Estimated Useful Life Table PO 00000 . - - - - - - - - - - - - - - - - - - - - - - - - - - , b e more specific than the "Component Type", e.g (a particular kind, size, etc of refrigerator, not just any refrigerator.) Numbering by ASTM 2018-08 Outline System Frm 00053 Description Overall General SubComponent , Component 3 tiers of categorization: Need Category, Need Component Description Item, Component Type Description Fmt 4703 Sfmt 4725 E:\FR\FM\15MRN1.SGM 15MRN1 3.4.2.2.1 3.4.2.2.2 3.4.2.2.3 3.4.2.2.4 3.4.2.2.5 3.4.2.2.6 3.4.2.2.7 3.4.2.2.8 3.4.2.2.9 3.4.2.2.10 3.4.2.2.11 3.4.2.2.12 Fuel oil/propane storage tanks Remediate/remove abandoned tanks/fuel lines Fuel transfer system Gas/oil distribution lines Gas meter 2 pipe/4 pipe hydronic distribution-above grade 2 pipe/4 pipe hydronic distribution-in ground Hydronic/Water Circulating Pumps Hydronic/Water Controller Radiation-steam/hydronic (baseboard or freestanding radiator) Fan Coil Unit, Hydronic Central exhaust fans/blowers 3.4.3.1.1 3.4.3.1.2 3.4.3.1.3 3.4.3.1.4 3.4.3.1.5 3.4.3.1.6 3.4.3.1.7 3.4.3.1.8 3.4.3.1.9 Electric heat pump, condenser, pad or rooftop Electric AC condenser, pad or rooftop Electric furnace/air handler Gas furnace/air handler Hydronic heat/electric AC air handler Hydronic feed electric heat pump/air handler Wall mounted electric/gas heater Electric baseboard heater PTAC Thruwall (packaged terminal air conditioning) 40 100 25 50 40 50 25 20 20 50 30 20 40 100 25 50 40 50 25 20 20 50 30 20 15 15 20 20 25 25 25 30 15 15 15 20 20 25 25 25 30 15 Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices 21:10 Mar 14, 2022 EN15MR22.081</GPH> This table lists the recommended average useful life of the categories of assets that should be considered in a Capital Needs Assessment. If an observed item is not listed, it should be assigned to the most closely related category. The Standard EUL for a component type is fixed. The user may estimate the Remaining Useful Life of any existing component independent of the Standard EUL by entering the assessed RUL in the appropriate space on the Components tab of the Excel Assessment Tool and by justifying the assessed RUL in the adjacent comment box. When identifying an alternative toan existing component the user may specify an EUL for the alternative which differs from the Standard EUL for that component type but must enter an explanation in the Notes space on the Alternatives tab of the Tool. Each specific component assessed is given a free-form description by the needs assessor and this description is the "component ID" or component name which may khammond on DSKJM1Z7X2PROD with NOTICES VerDate Sep<11>2014 CNAeTool Estimated Jkt 256001 Useful Life Table PO 00000 ~ - - - - - - - - - - - - - - - - - - - - - - ~ b e more specific than the "Component Type", e.g (a particular kind, size, etc of refrigerator, not just any Numbering by ASTM 2018-08 Outline refrigerator.) System Frm 00054 Description Overall General Description I Component SubComponent Fmt 4703 Sfmt 4725 E:\FR\FM\15MRN1.SGM 3.4.3.1.10 3.4.3.1.11 3.4.3.1.12 3.4.3.1.13 3.4.3.1.14 3.4.3.1.15 3.4.3.1.16 3.4.3.1.17 3.4.3.1.18 3.4.3.1.19 3.4.3.1.20 Component Description Family Elderly I 3 tiers of categorization: Need Category, Need Item, Component Type Window or thru-wall air conditioners Package HVAC rooftop Air filtration/humidity control devices (humidifiers, HRV's) Duct, rigid sheet metal, insulated if not in conditioned space Duct, flexible, insulated Duct, sealing-mastic or UL 181A or 181B tape. Diffusers, registers Fireplace, masonry & firebrick, masonry chimney Fireplace, factory assembled Fireplace insert, stove Chimneys, metal, and chimney covers 10 15 20 35 20 20 20 75 35 50 35 10 15 20 35 20 20 20 75 35 50 35 15MRN1 Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices 21:10 Mar 14, 2022 This table lists the recommended average useful life of the categories of assets that should be considered in a Capital Needs Assessment. If an observed item is not listed, it should be assigned to the most closely related category. The Standard EUL for a component type is fixed. The user may estimate the Remaining Useful Life of any existing component independent of the Standard EUL by entering the assessed RUL in the appropriate space on the Components tab of the Excel Assessment Tool and by justifying the assessed RUL in the adjacent comment box. When identifying an alternative toan existing component the user may specify an EUL for the alternative which differs from the Standard EUL for that component type but must enter an explanation in the Notes space on the Alternatives tab of the Tool. Each specific component assessed is given a free-form description by the needs assessor and this description is the "component ID" or component name which may 14493 EN15MR22.082</GPH> khammond on DSKJM1Z7X2PROD with NOTICES 14494 VerDate Sep<11>2014 Jkt 256001 CNAeTool Estimated Useful Life Table PO 00000 . - - - - - - - - - - - - - - - - - - - - - - - - - - , b e more specific than the "Component Type", e.g (a particular kind, size, etc of refrigerator, not just any refrigerator.) Numbering by ASTM 2018-08 Outline System Frm 00055 Description Overall General SubComponent , Component Component Description Family Elderly Need Category, Need Item, Component Type Description 3.4.4.3.1 3.4.4.3.2 3.4.4.3.3 3.4.4.3.4 3.4.4.3.5 Fmt 4703 Switches & outlets Lighting - exterior entry Lighting- interior common space Lighting- Tenant Spaces Door bells, chimes 35 15 25 20 20 35 20 30 25 25 Electrical switchgear Electrical wiring Elevator controller, call, dispatch, emergency Elevator cab, interior finish Elevator cab, frame Elevator, machinery Elevator, shaftway doors Elevator, shaftway hoist rails, cables, traveling Elevator, shaftway hydraulic piston and leveling Escalators 50 30 10 10 35 20 10 20 20 50 50 30 20 20 50 30 20 25 25 50 Sfmt 4725 E:\FR\FM\15MRN1.SGM 15MRN1 EN15MR22.083</GPH> I 3 tiers of categorization: 3.5.1.1 3.5.1.2 3.5.1.3 3.5.1.4 3.5.1.5 3.5.1.6 3.5.1.7 3.5.1.8 3.5.1.9 3.5.1.10 Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices 21:10 Mar 14, 2022 This table lists the recommended average useful life of the categories of assets that should be considered in a Capital Needs Assessment. If an observed item is not listed, it should be assigned to the most closely related category. The Standard EUL for a component type is fixed. The user may estimate the Remaining Useful Life of any existing component independent of the Standard EUL by entering the assessed RUL in the appropriate space on the Components tab of the Excel Assessment Tool and by justifying the assessed RUL in the adjacent comment box. When identifying an alternative toan existing component the user may specify an EUL for the alternative which differs from the Standard EUL for that component type but must enter an explanation in the Notes space on the Alternatives tab of the Tool. Each specific component assessed is given a free-form description by the needs assessor and this description is the "component ID" or component name which may khammond on DSKJM1Z7X2PROD with NOTICES VerDate Sep<11>2014 Jkt 256001 CNAeTool Estimated Useful Life Table space on the Components tab of the Excel Assessment Tool and by justifying the assessed RUL in the adjacent comment box. When identifying an alternative toan existing component the user may specify an EUL for the alternative which differs from the Standard EUL for that component type but must enter an explanation in the Notes space on the Alternatives tab of the Tool. Each specific component assessed is given a free-form description by the needs assessor and this description is the "component ID" or component name which may be more specific than the "Component Type", e.g (a particular kind, size, etc of refrigerator, not just any PO 00000 N_u_m_b-er-i-ng_b_y_A_S_T_M_2_0_1_8_-0_8_0_u_tl-in_e_ __,lrefrigerator.) . - 1_ _ _ 5 Frm 00056 ystem . . Description I Overall General . . Description Component 3 tiers of categorization: Sub- Component Description Component Family Elderly Fmt 4703 Sfmt 4725 E:\FR\FM\15MRN1.SGM 3.6.1.2 3.6.1.3 3.6.1.4 Fire pumps Fire hose stations Fire extinguishers 3.6.2.1 3.6.2.2 3.6.2.3 3.6.2.4 3.6.2.5 3.6.2.6 3.6.2.7 3.6.2.8 3.6.2.9 Tenant space alarm systems Ill Residential smoke detectors Call station Emergency/auxiliary generator Emergency/auxiliary fuel storage tank Emergency lights, illuminated signs Smoke and fire detection system, central panel Buzzer/intercom, central panel Tenant buzzer/ intercom /secured entry system 20 50 10 20 50 15 10 5 10 25 25 5 15 20 20 15 7 15 25 25 10 15 20 20 15MRN1 3.7.1.1.1 3.7.1.1.2 3.7.1.1.3 3.7.1.1.4 3.7.1.1.5 Need Category, Need Item, Component Type Drywall - Common Plaster - Common Paints, stains, clear finishes, interior - Common Wallpapers - Common Wall tile, ceramic, glass, natural stone - Common 35 50 15 15 35 40 50 Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices 21:10 Mar 14, 2022 This table lists the recommended average useful life of the categories of assets that should be considered in a Capital Needs Assessment. If an observed item is not listed, it should be assigned to the most closely related category. The Standard EUL for a component type is fixed. The user may estimate the Remaining Useful Life of any existing component independent of the Standard EUL by entering the assessed RUL in the appropriate 20 20 50 14495 EN15MR22.084</GPH> khammond on DSKJM1Z7X2PROD with NOTICES 14496 VerDate Sep<11>2014 21:10 Mar 14, 2022 This table lists the recommended average useful life of the categories of assets that should be considered in a Capital Needs Assessment. If an observed item is not listed, it should be assigned to the most closely related category. The Standard EUL for a component type is fixed. The user may estimate the Remaining Useful life of any existing component independent of the Standard EUL by entering the assessed RUL in the appropriate space on the Components tab of the Excel Assessment Tool and by justifying the assessed RUL in the adjacent comment box. When identifying an alternative toan existing component the user may specify an EUL for the alternative which differs from the Standard EUL for that component type but must enter an explanation in the Notes space on the Alternatives tab of the Tool. Each specific component assessed is given a free-form description by the needs assessor and this description is the "component ID" or component name which may be more specific than the "Component Type", e.g (a particular kind, size, etc of refrigerator, not just any PO 00000 ~I___N_u_m_b-er-i-ng_b_y_A_S_T_M_2_0_1_8_-0_8_0_u_tl-in-e--~lrefrigerator.) System Frm 00057 Description Overall General 3 tiers of categorization: Sub- Component Description Component , Component Family Elderly Fmt 4703 Sfmt 4725 E:\FR\FM\15MRN1.SGM 15MRN1 3.7.1.1.6 3.7.1.1.7 3.7.1.1.8 3.7.1.1.9 3.7.1.1.10 Floor tile, ceramic, natural stone - Common Concrete/Masonry/Terrazzo - Common Hardwood floor (3/4" strip or parquet) - Common Wood floor, laminated/veneered - Common Resilient tile or sheet floor (vinyl, linoleum) - Common 40 75 50 20 15 50 75 50 25 20 3.7.1.1.11 Carpet - Common 6 15 10 20 3.7.1.2.1 3.7.1.2.2 3.7.1.2.3 3.7.1.2.4 Interior, hollow core doors - Common Interior doors, solid core, wood, metal clad, fire rated Door trim - Common Wall trim (base, chair rail, crown moldings) - Common 20 30 20 30 25 35 30 35 3.7.1.2.5 3.7.1.2.6 3.7.1.2.7 3.7.1.2.8 3.7.1.2.9 Passage & lock sets - Common Bifold & sliding doors - Common Cabinets & vanities - Common 15 15 20 50 40 20 20 25 50 50 15 20 20 15 25 25 10 10 Tops, granite, natural stone, engineered stone - Common Tops, solid surface, stainless steel - Common Tops, plastic laminates, wood - Common Vanity tops, cultured marble, molded acrylic, fiber 3.7.1.3.1 3.7.1.3.2 3.7.1.3.3 3.7.1.3.4 EN15MR22.085</GPH> Need Category, Need Item, Component Type Description Refrigerator/freezer - Common Range, cook top, wall oven - Common Range hood - Common Microwave- Common Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices Jkt 256001 CNAeTool Estimated Useful Life Table khammond on DSKJM1Z7X2PROD with NOTICES VerDate Sep<11>2014 21:10 Mar 14, 2022 This table lists the recommended average useful life of the categories of assets that should be considered in a Capital Needs Assessment. If an observed item is not listed, it should be assigned to the most closely related category. The Standard EUL for a component type is fixed. The user may estimate the Remaining Useful life of any existing component independent of the Standard EUL by entering the assessed RUL in the appropriate space on the Components tab of the Excel Assessment Tool and by justifying the assessed RUL in the adjacent comment box. When identifying an alternative toan existing component the user may specify an EUL for the alternative which differs from the Standard EUL for that component type but must enter an explanation in the Notes space on the Alternatives tab of the Tool. Each specific component assessed is given a free-form description by the needs assessor and this description is the "component ID" or component name which may be more specific than the "Component Type", e.g (a particular kind, size, etc of refrigerator, not just any PO 00000 ~I___N_u_m_b-er-i-ng_b_y_A_S_T_M_2_0_1_8_-0_8_0_u_tl-in-e--~lrefrigerator.) System Frm 00058 Description Overall General SubComponent , Component 3 tiers of categorization: Component Description Family Elderly Need Category, Need Item, Component Type Description Fmt 4703 Sfmt 4725 E:\FR\FM\15MRN1.SGM 15MRN1 3.7.1.3.5 3.7.1.3.6 3.7.1.3.7 3.7.1.3.8 Disposal (food waste) - Common Compactors (interior, residential grade) - Common Dishwasher - Common 3.7.1.4.1 3.7.1.4.2 3.7.1.4.3 3.7.1.4.4 3.7.1.4.5 3.7.1.4.6 3.7.1.4.7 3.7.1.4.8 3.7.1.4.9 3.7.1.4.10 3.7.1.4.11 Interior Mail Facility Common area bath accessories (towel bars, Mirrors & medicine cabinets - Common 3.7.2.1.1 3.7.2.1.2 3.7.2.1.3 3.7.2.1.4 3.7.2.1.5 3.7.2.1.6 7 7 10 10 10 10 15 15 Ceiling fans - Common Window treatments, drapery rods, shades, blinds, etc. - Common Indoor recreation and fitness equipment Entertainment centers, theatre projection and seating 20 7 20 20 50 15 15 15 15 10 15 25 12 25 25 50 25 15 15 25 15 25 Drywall Plaster Paints, stains, clear finishes, interior Wallpapers Wall tile, ceramic, glass, natural stone Floor tile, ceramic, natural stone 35 50 10 10 30 40 40 50 15 15 40 50 Clothes washer/dryer - Common grab bars, toilet stalls, etc.) Closet/storage specialties, shelving- Common Common area interior stairs Common area railings Bath/kitchen vent/exhaust fans - Common Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices Jkt 256001 CNAeTool Estimated Useful Life Table 14497 EN15MR22.086</GPH> khammond on DSKJM1Z7X2PROD with NOTICES 14498 VerDate Sep<11>2014 Jkt 256001 CNAeTool Estimated Useful Life Table space on the Components tab of the Excel Assessment Tool and by justifying the assessed RUL in the adjacent comment box. When identifying an alternative toan existing component the user may specify an EUL for the alternative which differs from the Standard EUL for that component type but must enter an explanation in the Notes space on the Alternatives tab of the Tool. Each specific component assessed is given a free-form description by the needs assessor and this description is the "component ID" or component name which may PO 00000 . - - - - - - - - - - - - - - - - - - - - - - - - - - , b e more specific than the "Component Type", e.g (a particular kind, size, etc of refrigerator, not just any refrigerator.) Numbering by ASTM 2018-08 Outline System Frm 00059 Description Overall General SubComponent , Component Family Description Elderly I Fmt 4703 Sfmt 4725 E:\FR\FM\15MRN1.SGM 15MRN1 3.7.2.1.7 3.7.2.1.8 3.7.2.1.9 3.7.2.1.10 3.7.2.1.11 Concrete/Masonry/Terrazzo Hardwood floor (3/4" strip or parquet) Wood floor, laminated/veneered Resilient tile or sheet floor (vinyl, linoleum) Carpet 75 50 15 15 6 75 50 20 20 10 3.7.2.1.12 Acoustic tile/drop ceiling 15 20 3.7.2.2.1 3.7.2.2.2 3.7.2.2.3 3.7.2.2.4 Interior, hollow core doors Interior doors, solid core, wood, metal clad Door trim Wall trim (base, chair rail, crown moldings) Passage & lock sets 20 30 20 25 25 35 30 35 12 12 20 50 40 15 25 20 20 25 50 50 25 35 12 15 15 10 15 25 25 10 7 10 3.7.2.2.5 3.7.2.2.6 3.7.2.2.7 3.7.2.2.8 3.7.2.2.9 3.7.2.2.10 3.7.2.2.11 3.7.2.3.1 3.7.2.3.2 3.7.2.3.3 3.7.2.3.4 3.7.2.3.5 EN15MR22.087</GPH> Component Description Bifold & sliding doors Cabinets & vanities Tops, granite, natural stone, engineered stone Tops, solid surface, stainless steel Tops, plastic laminates, wood Vanity tops, cultured marble, molded acrylic, fiber glass Refrigerator/freezer Range, cook top, wall oven Range hood Microwave Disposal (food waste) 3 tiers of categorization: Need Category, Need Item, Component Type Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices 21:10 Mar 14, 2022 This table lists the recommended average useful life of the categories of assets that should be considered in a Capital Needs Assessment. If an observed item is not listed, it should be assigned to the most closely related category. The Standard EUL for a component type is fixed. The user may estimate the Remaining Useful Life of any existing component independent of the Standard EUL by entering the assessed RUL in the appropriate khammond on DSKJM1Z7X2PROD with NOTICES VerDate Sep<11>2014 Jkt 256001 CNAeTool Estimated Useful Life Table space on the Components tab of the Excel Assessment Tool and by justifying the assessed RUL in the adjacent comment box. When identifying an alternative toan existing component the user may specify an EUL for the alternative which differs from the Standard EUL for that component type but must enter an explanation in the Notes space on the Alternatives tab of the Tool. Each specific component assessed is given a free-form description by the needs assessor and this description is the "component ID" or component name which may be more specific than the "Component Type", e.g (a particular kind, size, etc of refrigerator, not just any PO 00000 N_u_m_b-er-i-ng_b_y_A_S_T_M_2_0_1_8_-0_8_0_u_tl-in_e_ __,lrefrigerator.) . - 1_ _ _ System Frm 00060 Description Overall 3 tiers of categorization: SubComponent , Component General Family Component Description Elderly Fmt 4703 Sfmt 4725 E:\FR\FM\15MRN1.SGM 3.7.2.3.6 3.7.2.3.7 3.7.2.3.8 Compactors (interior, residential grade) Dishwasher Clothes washer/dryer 7 10 10 10 15 15 3.7.2.4.1 3.7.2.4.2 3.7.2.4.3 3.7.2.4.4 3.7.2.4.5 3.7.2.4.6 3.7.2.4.7 3.7.2.4.8 Bath accessories (towel bars, grab bars, etc.) Mirrors & medicine cabinets Closet/storage specialties, shelving Interior stairs Stair and loft railings Bath/kitchen vent/exhaust fans Ceiling fans 7 15 15 50 20 15 10 10 12 25 25 50 25 15 15 20 I 1001 100 I I 201 1001 20 100 Window treatments, drapery rods, shades, blinds, etc. 15MRN1 4.2.1 4.2.2 I I 4.2.2.1 4.2.2.2 4.2.3 Need Category, Need Item, Component Type Description I LBP inspection Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices 21:10 Mar 14, 2022 This table lists the recommended average useful life of the categories of assets that should be considered in a Capital Needs Assessment. If an observed item is not listed, it should be assigned to the most closely related category. The Standard EUL for a component type is fixed. The user may estimate the Remaining Useful Life of any existing component independent of the Standard EUL by entering the assessed RUL in the appropriate Lead based paint abatement LBP encapsulation (abatement) LBP removal Lead based paint interim controls 14499 EN15MR22.088</GPH> khammond on DSKJM1Z7X2PROD with NOTICES 14500 VerDate Sep<11>2014 Jkt 256001 PO 00000 any existing component independent of the Standard EUL by entering the assessed RUL in the appropriate CNAe- Frm 00061 Fmt 4703 Sfmt 4725 E:\FR\FM\15MRN1.SGM 15MRN1 EN15MR22.089</GPH> space on the Components tab of the Excel Assessment Tool and by justifying the assessed RUL in the adjacent comment box. When identifying an alternative toan existing component the user may specify an EUL for the alternative which differs from the Standard EUL for that component type but must enter an explanation in the Notes space on the Alternatives tab of the Tool. Each specific component assessed is given a free-form Tool Estimated Useful Life Table description by the needs assessor and this description is the "component ID" or component name which may be more specific than the "Component Type", e.g (a particular kind, size, etc of refrigerator, not just any N_u_m_b_e_r-in_g_b_y_A_S_T_M_2_0_1_8_-0_8_0_u_t_li_n_e_---,lrefrigerator.) , . . . I_ _ _ System Description I overall General Description Component 4.2.3.1 4.2.3.2 4.2.4 I 4.2.4.1 4.2.4.2 I SubComponent Component Description LBP hazard interim control LBP Encapsulation (interim control) Family Elderly I 6 6 6 6 10 100 10 100 Asbestos Asbestos encapsulation (abatement) Asbestos Removal Owner provided item(s) (specify) Owner provided$ allowance (specify) 3 tiers of categorization: Need Category, Need Item, Component Type Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices 21:10 Mar 14, 2022 This table lists the recommended average useful life of the categories of assets that should be considered in a Capital Needs Assessment. If an observed item is not listed, it should be assigned to the most closely related category. The Standard EUL for a component type is fixed. The user may estimate the Remaining Useful Life of 14501 Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices Attachment E CAPITAL NEEDS ASSESSMENT REPORT GENERAL NOTES: A Reviews of preliminary Capital Needs Assessment (CNA) reports should be based on: 1. The Statement of Work referenced in the written Agreement with the Provider. 2. Rural Development case file, such as property records and inspection reports. 3. Latest available cost data published by RS Means. 4. Rural Development guidelines. 5. Fannie Mae guidelines. B The reviewer should give special attention to the line items with the highest total costs. C The reviewer should be careful to note whether all systems or components that should be included have indeed been included in the report. If all review items are answered "YES", the Provider should be advised to finalize the CNA with no or only a few minor changes. Any review items answered ''NO" should be explained in writing to the Provider in sufficient detail for clarity and appropriate actions taken. The final report should be reviewed to verify that any minor changes and items answered with a "NO" in the first review have been satisfactorilv addressed or corrected. When item "D" is completed, the CNA Reviewer should advise the appropriate Rural Development official that the CNA should be accepted as the final report. E F G PRIMARY BASIS* REVIEW ITEMS: 1 2 3 4 5 6 7 8 9 10 11 khammond on DSKJM1Z7X2PROD with NOTICES 12 13 14 15 16 17 VerDate Sep<11>2014 Is the report in the required format? Does the report fully describe the property'? Are photographs provided to generally describe the property's buildings and other facilities? Docs the report identify who performed the on-site inspection? Does the report identify who prepared the report? Was an adequate number of dwelling units inspected? Is the length of the study period adequate? Is the list of property components complete? Is the list divided into the appropriate major system groups? Are the existing property components accurately described? Are the expected useful lifetimes of the components reasonably accurate? Are the reported ages of the components reasonably accurate? Is the current condition of each component accurately noted? Are the effective remaining lifetimes of components correctly calculated? Are proposed corrective actions appropriately identified? Are critical immediate repairs appropriately identified? Are items being replaced with "in-kind" materials when anuropriate? 21:10 Mar 14, 2022 Jkt 256001 PO 00000 Frm 00062 Fmt 4703 Sfmt 4725 E:\FR\FM\15MRN1.SGM YES NO 1 1 1 1 1 1 1 5 1 2 5 2 2 5 1 1 1 15MRN1 EN15MR22.090</GPH> D 14502 Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices 18 Are the component quantities reasonably accurate? 2 19 Are photographs provided to describe deficiencies? 1 PRIMARY BASIS* YES 20 Does the report adequately address environmental hazards and other relevant environmental issues? Does the report adequately address accessibility issues? 1 1 28 Does the report address any existing accessibility transition plans and their adequacy? Are photographs provided to describe existing kitchens and bathrooms in the fully accessible units? Are the proposed years for repair or replacement reasonable? Are the repair/replacement durations appropriate and reasonable? Are the detailed estimated repair and replacement costs calculated in current dollars? Are the estimated repair and replacement costs reasonable? Are the sources for cost data explained in the report? 29 Is the projected inflation rate appropriate? 1 30 Have the costs in current and inflated dollars been totaled for each year? Have the costs for each year and grand totals been correctly calculated? Does the data in the report narrative and summary charts match? Does the report exclude routine maintenance, operation, and low cost expenses? Does the report include all deficiencies known to Rural Development? Does the report include all other relevant data or information known to Rural Development? 1 21 22 23 24 25 26 27 31 32 33 34 khammond on DSKJM1Z7X2PROD with NOTICES 35 VerDate Sep<11>2014 21:10 Mar 14, 2022 Jkt 256001 PO 00000 Frm 00063 Fmt 4703 Sfmt 4725 E:\FR\FM\15MRN1.SGM NO 1 1 5 5 1 3 1 5 5 4 2 2 15MRN1 EN15MR22.091</GPH> REVIEW ITEMS: 14503 Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices Attachment F SAMPLE CAPITAL NEEDS ASSESSMENT REVIEW REPORT [Review of Preliminary/Final CNA Report] Property Name and Location: CNA Provider: CNA Reviewer: Date of Preliminary / Final CNA Report: Date of Review: Reviewer's Comments: • • • Purpose / Intended Use / Intended User of Review: • The purpose of this CNA review assignment is to render an opinion as to the completeness, adequacy, relevance, appropriateness, and reasonableness of the workunder review relative to the requirements of Rural Development. • The intended use of the review report is to help meet Rural Development loan underwriting requirements for permanent financing under the Section 515 l\.1PRdemonstration program. The review is not intended for any other use. • The intended user of the review is only Rural Development. Scope of Review: The scope of the CNA review process involved the following procedures: • The review included a reading/analysis of the following components from the CNAreport and the additional due diligence noted. The contents from the CNA work filewere not reviewed. The components that were reviewed are: • Date of the Report • Narrative • Description oflmprovements F-1 VerDate Sep<11>2014 21:10 Mar 14, 2022 Jkt 256001 PO 00000 Frm 00064 Fmt 4703 Sfmt 4725 E:\FR\FM\15MRN1.SGM 15MRN1 EN15MR22.092</GPH> khammond on DSKJM1Z7X2PROD with NOTICES • Photographs of the Subject Property 14504 Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices • Capital Needs Summary • Systems and Conditions Forms • Critical Needs Forms • Capital Needs over the Term Forms • This is a desk review, and the reviewer has not inspected the subject Property. • The reviewer has/has not confirmed data contained within the CNA report. Review Conclusion: In the reviewer's opinion, given the scope of the work under review: • The subject CNA meets/does not meet the reporting requirements ofRural Development. • The data appears/does not appear to be adequate and relevant. • The CNA methods and techniques used are/are not appropriate. • The analyses, opinions, and conclusions are/are not appropriate and reasonable. • This is a review report on a preliminary/final CNA report. The preliminary/final CNA report is subject to review discussions between Rural Development and the CNA Recipient of the subject Property and between the CNA Recipient and the CNAProvider. The CNA Recipient is the CNA Provider's client, and only the client can instruct the CNA Provider to revise the preliminary/final report. To be acceptable to Rural Development, the final CNA report should address any errors or deficiencies identified in the Reviewer's Comments section of this review report. CNA PROVIDER TO INSERT IN MEMO FORMAT THEIR WRITTEN REPORT AND THEN HAVE SIGNATURE PAGE BELOW FOR REVIEWER AND UNDERWRITER/LOAN OFFICIAL TO SIGN. Signed by: (CNA Reviewer) (Underwriter/ Loan Official) (Please note: for the CNA Review Report ofthe preliminary CNA, only the CNA Reviewer needs tosign the report on behalfofRural Development. For the CNA Review Report of the final CNA, the CNA Reviewer and the Underwriter/Loan Official must sign the report. This is to encourage discussion between the Agencies parties, so that both the CNA Reviewer and the Underwriter are involved in the process ofaccepting the final CNAfor the Property.) VerDate Sep<11>2014 21:10 Mar 14, 2022 Jkt 256001 PO 00000 Frm 00065 Fmt 4703 Sfmt 4725 E:\FR\FM\15MRN1.SGM 15MRN1 EN15MR22.093</GPH> khammond on DSKJM1Z7X2PROD with NOTICES F-2 14505 Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices Attachment G Capital Needs Assessment Guidance to the Reviewer AGREEMENT TO PROVIDE CAPITAL NEEDS ASSESSMENT GENERAL NOTES: B C D E Reviews of proposed agreements for Capital Needs Assessments (CNA) should be based on Rural Development and other Rural Development -recognized guidelines. If all review items are answered "NO", the reviewer should advise the appropriate Rural Development official that the Agreement should be accepted. Any review items answered with a ''YES" should be explained in writing to the proposed Provider in sufficient detail for clarity and appropriate actions to be taken. If all review items answered with a ''YES" are satisfactorily addressed or corrected by the proposed Provider, the reviewer should advise the appropriate Rural Development official that the Agreement should be accepted. If any review items answered with a ''YES" cannot be satisfactorily addressed or corrected by the proposed CNA Provider, the reviewer should advise the appropriate Rural Development official that the Agreement should NOT be accepted. REVIEW ITEMS: 1 2 3 4 5 6 7 8 khammond on DSKJM1Z7X2PROD with NOTICES 9 VerDate Sep<11>2014 YES NO Does the proposed Agreement omit Rural Development's Addendum to CNA Contract? Does the proposed Agreement omit Rural Development's CNA Statement of Work? Is there any evidence or indication that the proposed CNA Provider has an identity of interest, as defined in 7 CFR part 3560? Is there any evidence or indication that the proposed CNA Provider is NOT trained in evaluating site and building systems, and health, safety, physical, structural, environmental and accessibility conditions? Is there any evidence or indication that the proposed CNA Provider is NOT trained in estimating costs for repairing, replacing, and improving site and building components? Is there any evidence or indication that the proposed CNA Provider is NOT experienced in providing CNAs for MFH properties that are similar to those in the Section 515 Program? Is there any evidence or indication that the proposed CNA Provider is NOT knowledgeable of site. building and accessibility codes and standards? Is there any evidence or indication that the proposed CNA Provider is debarred or suspended from participating in Federally-assisted programs? Does the proposed fee appear to be unreasonable? 21:10 Mar 14, 2022 Jkt 256001 PO 00000 Frm 00066 Fmt 4703 Sfmt 4725 E:\FR\FM\15MRN1.SGM 15MRN1 EN15MR22.094</GPH> A 14506 Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices CAPITAL NEEDS ASSESSMENT REPORT GENERAL NOTES: A Reviews of preliminary Capital Needs Assessment (CNA) reports should be based on: 1. The Statement of Work referenced in the written agreement with theprovider 2. Rural Development case file, such as property records and inspectionreports 3. Latest available cost data published by RS Means B The reviewer should give special attention to the line items with the highest total costs. C The reviewer should be careful to note whether all systems or components that should be included have indeed been included in the report. If all review items are answered ''YES", the Provider should be advised to finalize the CNA with no or onlv a few minor changes. Any review items answered with a ''NO" should be explained in writing to the Provider in sufficient detail for clarity and annropriate actions taken. The final report should be reviewed to verify that any minor changes and items answered with a ''NO" in the first review have been satisfactorily addressed or corrected. When item "D" is completed, the CNA Reviewer should advise the appropriate Rural Development official that the CNA should be accepted as the final report. E F G PRIMARY BASIS* REVIEW ITEMS: 1 2 3 4 5 6 7 8 9 10 11 khammond on DSKJM1Z7X2PROD with NOTICES 12 13 14 15 16 17 VerDate Sep<11>2014 Is the report in the required format? Does the report fully describe the property? Are photographs provided to generally describe the property's buildings and other facilities? Does the report identify who performed the on-site inspection? Does the report identify who prepared the report? Was an adequate number of dwelling units inspected? Is the length of the study period adequate? Is the list of property components complete? Is the list divided into the appropriate major system groups? Are the existing property components accurately described? Are the expected useful lifetimes of the components reasonably accurate? Are the reported ages of the components reasonably accurate? Is the current condition of each component accurately noted? Are the effective remaining lifetimes of components correctly calculated? Are proposed corrective actions appropriately identified? Are critical immediate repairs appropriately identified? Are items being replaced with "in-kind" materials when annropriate? 21:10 Mar 14, 2022 Jkt 256001 PO 00000 Frm 00067 Fmt 4703 Sfmt 4725 E:\FR\FM\15MRN1.SGM YES NO 1 1 1 1 1 1 1 5 1 2 5 2 2 5 1 1 1 15MRN1 EN15MR22.095</GPH> D 14507 Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Notices 2 1 Are the component quantities reasonably accurate? Are photographs provided to describe deficiencies? PRIMARY BASIS* REVIEW ITEMS: 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 Does the report adequately address environmental hazards and other relevant environmental issues? Does the report adequately address accessibility issues? Does the report address any existing accessibility transition plans and their adequacy? Are photographs provided to describe existing kitchens and bathrooms in the fully accessible units? Are the proposed years for repair or replacement reasonable? Are the repair/replacement durations appropriate and reasonable? Are the detailed estimated repair and replacement costs calculated in current dollars? Are the estimated repair and replacement costs reasonable? Are the sources for cost data explained in the report? Is the projected inflation rate appropriate? Have the costs in current and inflated dollars been totaled for each year? Have the costs for each year and grand totals been correctly calculated? Does the data in the report narrative and summary charts match? Does the report exclude routine maintenance, operation, and low-cost expenses? Does the report include all deficiencies known to Rural Development? Does the report include all other relevant data or information known to Rural Development? Joaquin Altoro, Administrator, Rural Housing Service. [FR Doc. 2022–05252 Filed 3–14–22; 8:45 am] the Committee to hear testimony regarding Voting Rights in the state of Tennessee. BILLING CODE 3410–XV–C DATES: COMMISSION ON CIVIL RIGHTS Notice of Public Meeting of the Tennessee Advisory Committee Commission on Civil Rights. Announcement of meeting. AGENCY: ACTION: Notice is hereby given, pursuant to the provisions of the rules and regulations of the U.S. Commission on Civil Rights (Commission), and the Federal Advisory Committee Act (FACA) that the Tennessee Advisory Committee to the Commission will hold two virtual (online) meetings on Wednesday, April 13, 2022, at 11:00 a.m.–1:00 p.m. (CT) and on Wednesday, April 27, 2022 at 11:00 a.m.–1:00 p.m. (CT). The purpose of the meetings is for khammond on DSKJM1Z7X2PROD with NOTICES SUMMARY: VerDate Sep<11>2014 21:10 Mar 14, 2022 Jkt 256001 The meetings will be held on: Wednesday, April 13, 2022, 11:00 a.m. CT, https://civilrights.webex.com/ civilrights/j.php?MTID=m6b44009 fa84fafca92fa4fb38e35cdd6 Join via phone: 800–360–9505 USA Toll Free; Access Code: 2764 248 5508 # Wednesday, April 27, 2022, 11:00 a.m. CT, https://civilrights.webex.com/ civilrights/j.php?MTID=m89025 8a2a8dff46faf2be6ca9d4e1285 Join via phone: 800–360–9505 USA Toll Free; Access Code: 2762 495 9020# FOR FURTHER INFORMATION CONTACT: Victoria Moreno at vmoreno@usccr.gov or by phone at 434–515–0204. SUPPLEMENTARY INFORMATION: This meeting is available to the public through the WebEx link above. If joining only via phone, callers can expect to incur charges for calls they initiate over wireless lines, and the Commission will PO 00000 Frm 00068 Fmt 4703 Sfmt 4703 YES NO 1 1 1 1 5 5 1 3 1 1 1 5 5 4 2 2 not refund any incurred charges. Individuals who are deaf, deafblind and hard of hearing may also follow the proceedings by first calling the Federal Relay Service at 1–800–877–8339 and providing the Service with the call-in number found through registering at the web link provided above for the meeting. Members of the public are entitled to make comments during the open period at the end of the meeting. Members of the public may also submit written comments; the comments must be received in the Regional Programs Unit within 30 days following the respective meeting. Written comments may be emailed to Victoria Moreno at vmoreno@usccr.gov. All written comments received will be available to the public. Persons who desire additional information may contact the Regional Programs Unit at (434) 515–0204. Records and documents discussed during the meeting will be available for E:\FR\FM\15MRN1.SGM 15MRN1 EN15MR22.099</GPH> 18 19

Agencies

[Federal Register Volume 87, Number 50 (Tuesday, March 15, 2022)]
[Notices]
[Pages 14441-14507]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-05252]


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DEPARTMENT OF AGRICULTURE

Rural Housing Service

[Docket No. RHS-22-MFH-0002]


Multi-Family Housing Preservation and Revitalization (MPR) 
Demonstration Program--Section 514 and Section 515 for Fiscal Year 2022

AGENCY: Rural Housing Service, United States Department of Agriculture.

ACTION: Notice of Solicitation of Applications (NOSA).

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SUMMARY: The Rural Housing Service (RHS) (Agency), a Rural Development 
agency of the United States Department of Agriculture (USDA), announces 
it is soliciting applications to defer existing eligible loans for the 
Multi-Family Housing (MFH) Preservation and Revitalization (MPR) 
Demonstration Program. Current RHS borrowers (stay-in owners) and/or 
eligible applicants applying to assume existing Section 515 Rural 
Rental Housing (RRH) or Section 514 Off-Farm Labor Housing (Off-FLH) 
loans that are closed and were obligated on or after October 1, 1991, 
are invited to apply for MPR deferral-only assistance for such loans. 
This Notice does not provide any funding or additional units of Agency 
Rental Assistance (RA).

DATES: Complete applications requesting deferral-only assistance under 
this NOSA must be received no later than 5 p.m., Eastern Standard Time, 
May 16, 2022. The Agency will not consider any applications received 
after the closing deadlines.

ADDRESSES: Application Submission: All materials must be submitted via 
CloudVault. The submission process is detailed in section III. 
Application and Submission Information of this Notice.
    After publication in the Federal Register, this Notice will be 
posted on the Rural Development (RD) website, www.rd.usda.gov/newsroom/notices-solicitation-applications-nosas. The Agency will publish, as 
necessary, any revisions and amendments reflecting program 
modifications, in the Federal Register within the period this Notice 
remains open. Expenses incurred in applying for this NOSA will be borne 
by and be at the applicant's sole risk.

FOR FURTHER INFORMATION CONTACT: Fallan Faulkner, Multi-Family 
Specialist, Multi-Family Housing, RHS, U.S Department of Agriculture, 
via email: [email protected], or by phone: 615-812-0050. Any 
questions on eligibility for deferral should be directed via email at: 
[email protected]. Please include in the subject

[[Page 14442]]

line ``MPR NOSA Eligibility'' and the name and address of the property 
in question.
    For information regarding the Addendum: Capital Needs Assessment 
Process located at the end of this notice, contact: Fallan Faulkner, 
Multi-Family Specialist, Multi-Family Housing, RHS, U.S. Department of 
Agriculture, via email: [email protected] or telephone: (615) 
812-0050.

SUPPLEMENTARY INFORMATION:

Authority

    The Consolidated Appropriations Act, 2021 (H.R. 133) authorized 
USDA to conduct a demonstration program for the preservation and 
revitalization of the Section 514 (Off-FLH) and 515 programs authorized 
by the Housing Act of 1949; 7 CFR part 3560.

Rural Development: Key Priorities

    The Agency encourages applicants to consider projects that will 
advance the following key priorities:
     Assisting Rural communities recover economically from the 
impacts of the COVID 19 pandemic, particularly disadvantaged 
communities.
     Ensuring all rural Residents have equitable access to RD 
programs and benefits for RD funded projects.
     Reducing climate pollution and increasing resilience to 
the impacts of climate change through economic support to rural 
communities.
    For further information, visit https://www.rd.usda.gov/priority-points.

Executive Summary

    This Notice solicits applications for deferrals of any closed 
Section 514 (Off-FLH) or 515 Agency loan obligated on or after October 
1, 1991 for the purpose of revitalization and preservation of existing 
properties. Under this NOSA, eligible loan payments can be deferred for 
20 years. The cash flow from the deferred RHS direct loan principal and 
interest payment will be deposited to the RHS project's reserve account 
or as directed by the Agency to meet the specific project's present and 
future physical needs as determined by the Capital Needs Assessment 
(CNA) concurrently approved by the Agency. At the end of this Notice, a 
CNA addendum is provided with detailed instructions to assist the 
applicant in completing CNA reports, expected useful life tables, and 
forms. The deferral may also support new debt payments being incurred 
for repair/rehabilitation loans and/or to reduce tenant rents as 
determined by the Agency to be in the best interests of the tenants and 
Government. There are no other MPR tools or forms of assistance 
available under this NOSA.

I. MPR Debt Deferral Information

A. Deferral of Principal and Interest Payments

    A deferral of principal and interest payments for 20 years of any 
closed Section 514 (Off-FLH) or Section 515 Agency loan(s) that was 
obligated on or after October 1, 1991. Loans obligated prior to October 
1, 1991 are not eligible for deferral under this NOSA. If there are 
multiple loans on the account, all loans must be obligated on or after 
October 1, 1991 to be eligible. If the account has a loan(s) obligated 
prior to October 1, 1991, the account/property is not eligible for MPR. 
The total of all liens against the project, with the exception of 
Agency deferred debt, cannot exceed the Agency-approved security value 
of the project. All Agency debt, either in first lien position or in a 
subordinated lien position, must be secured by the project, except 
deferred debt, which is not included in the Agency's total lien 
position for computation of the Agency's security value in the MPR 
program.
    (1) The deferral will assure the continued feasibility of 
preserving needed rental units based on criteria described in 7 CFR 
3560.57(a)(3).
    (2) Transfers with MPR Deferrals must be processed through the MFH 
Production and Preservation Division in accordance with the transfers 
regulations.
    (3) All terms and conditions of the deferral will be described in 
the MPR Conditional Commitment (MPR-CC), the MPR Debt Deferral 
Agreement, and any associated transfer approval.
    (4) A balloon payment of principal and accrued interest (deferral 
balloon) will be due at the end of the deferral period, or upon default 
pursuant to the terms contained therein. Interest will accrue at the 
promissory note rate. If applicable, the subsidy will be applied as set 
out in the Agency's Form RD 3560-9, ``Multiple Family Housing Interest 
Credit Agreement.''

B. Eligibility Deferral Information

    Any questions on eligibility for deferral should be directed via 
email at: [email protected]. Please include in the subject line ``MPR 
NOSA Eligibility'' and the name and address of the property in 
question.

C. Project Consolidation Information

    MPR deferrals may be approved for project consolidations for stay-
in-owner or transfer transactions in accordance with 7 CFR part 3560 
providing the following are met:
    (1) All projects being consolidated must be submitted on one 
application and located in the same market area as defined in 7 CFR 
3560.11;
    (2) Projects must be of the same type, managed under one management 
plan and one management agreement, and in sufficient proximity to 
permit convenient and efficient management of the property.

D. Terms

    The Agency will require a re-amortization of the existing loan(s). 
MPR debt deferrals authorized in conjunction with transfers or 
subordinations will become effective upon completion of all planned 
repairs and rehabilitation deemed acceptable to the RHS approval 
official as outlined in the MPR conditional commitment.

E. Transfers

    Special conditions apply to transfers. Under the provisions of 7 
CFR 3560.406, debt deferral for any eligible loans(s) as described 
herein may be included in the transfer underwriting under the following 
conditions:
    1. The new owner, including all principals, sharing an identity of 
interest (IOI) with the selling entity in any other RHS properties, is 
fully compliant with all Agency requirements and conditions, unless 
there is an Agency approved workout agreement as specified in 7 CFR 
3560.453 in place and on schedule for at least six (6) months prior to 
the date of application.
    2. The maximum return-to-owner-(RTO) will be determined prior to 
applying the deferral.

II. Eligibility Information

A. Applicant Eligibility Requirements

    (1) For the purpose of this Notice, ``Applicant'' includes the 
applying entity (e.g., ABC LLP) and the entity's principals (e.g., John 
Doe, General Partner of ABC LLP; XYZ, Inc., General Partner of ABC LLP; 
John Doe Jr., President of XYZ, Inc.). In the case of a single asset 
entity that is not a natural person, the Agency will rely solely on the 
qualifications of the natural person(s) managing/controlling the entity 
(whether directly or indirectly through other entities) to establish 
the applicant's eligibility.
    (2) Eligible applicants for the MPR program include individuals, 
partnerships or limited partnerships, consumer cooperatives, trusts, 
State or local public agencies, corporations, limited liability 
companies, non-profit organizations, Indian tribes, associations, or 
other entities authorized by the Agency that own (stay in owner)

[[Page 14443]]

or will be the owner of the project for which an application for 
transfer of ownership by the Agency has been submitted.
    (3) Eligibility requirements include substantial and verifiable 
favorable experience and creditworthiness as required by the respective 
MFH program regulations specified in 7 CFR part 3560, with the 
exception that stay-in owner applicants are not required to meet the 
test for other credit for MPR purposes as stated in 7 CFR 
3560.55(a)(2). Appropriate credit reports for the applicant, entity and 
principals will be submitted and considered in both the MPR and 
transfer processing eligibility determination as defined in Section 
III. Application and Submission Information B. 9. below.

B. Additional Eligibility Requirements

    (1) All applicants must meet the respective (Section 515 or 514 
Off-FLH) requirements for initial and/or current (continuing) borrower 
eligibility and program participation. Initial eligibility will be 
determined as of the date of the application filing deadline. The 
Agency reserves the right to discontinue processing any application due 
to material changes in the applicant's status occurring at any time 
after the initial eligibility determination.
    (2) Eligibility also includes the continued ability of the 
borrower/applicant to provide acceptable management and will include an 
evaluation of any current outstanding deficiencies. Any outstanding 
violations or extended open operational findings associated with the 
applicant/borrower or any affiliated entity having an identity of 
interest (IOI) with the project ownership and which are recorded in the 
Agency's automated Multi-Family Information System (MFIS), may preclude 
further processing of any MPR applications unless there is a current, 
approved workout agreement in accordance with Sec.  3560.453 in place 
and the plan has been satisfactorily followed for a minimum of six (6) 
consecutive months, as determined by the Agency.
    (3) In the event of an MFH transfer, the proposed transferee must 
submit evidence of site control together with a copy of the borrower's 
written request signed by both the proposed buyer and the seller 
describing the general terms of the proposed transfer. Evidence may 
include a valid and unexpired Purchase Agreement, Letter of Intent, or 
other documentation acceptable to the Agency. Transfers will be 
processed in accordance with the guidelines of Sec.  3560.406.
    (4) All applicants are subject to the applicable requirements of 
the Office of Management and Budget (OMB)-approved USDA Suspension and 
Debarment, and Drug-Free Workplace Certifications as prescribed under 
Title 2 CFR parts 417 and 421.

C. Project Eligibility Requirements

    (1) Project loans must have been obligated on or after October 1, 
1991. Any projects with a loan(s) obligated prior to October 1, 1991, 
are not eligible for this MPR demonstration program.
    (2) Projects must have open physical finding(s) identified by a 
recent physical inspection and recorded by the Agency. Furthermore, the 
open physical finding(s) of record must be the result of circumstances 
beyond owner and/or management control and/or must be uncorrected due 
to insufficient operating income/reserve funds necessary to address the 
outstanding physical need(s) of the project. Any projects with open 
physical findings resulting from deferred maintenance, as recorded by 
the Agency, are not eligible for this MPR demonstration program. 
Physical deficiencies identified by the Agency or another lending 
organization (i.e., HUD, Housing Finance Agency, etc.) or reported by 
local code enforcement of imminent threats to the health and safety of 
tenants that have not been recorded but are documented by the applicant 
and provided as part of the application, may be considered when 
determining project eligibility.

D. Key Priority Eligibility

    For an application to be deemed eligible, applicants must also meet 
the criterion of at least two of the Agency's three key priorities 
(COVID-19, Equity and Climate). To help with your understanding of the 
Key Priorities and how your property could qualify, please refer to the 
key priority eligibility information below, and then on the following 
website for details: https://www.rd.usda.gov/priority-points. Please 
note for purposes of this NOSA, the Key Priorities as described below 
and on the website, are being used solely for eligibility purposes and 
no points will be awarded. All eligible applications will be accepted.
    (1) COVID-19--the project must be located in or serving one of the 
top 10% of counties or county equivalents based upon the county risk 
score in the United States. The dashboard located at https://www.rd.usda.gov/priority-points will be used to determine if a project 
is eligible to apply based upon its location. Applicants must use the 
dashboard to verify if the project is located within one of the top 10% 
of counties or county equivalents based upon the county risk score in 
the United States and provide documentation from the dashboard within 
the application to verify the location in order to be eligible.
    (2) Equity--the project must be located in or servicing a community 
with a score of 0.75 or above on the CDC Social Vulnerability Index. 
The dashboard located at https://www.rd.usda.gov/priority-points will 
be used to determine if a project is eligible to apply based upon its 
location. Applicants must use the dashboard to verify if the project is 
located in or servicing a community with a score of 0.75 or above on 
the CDC Social Vulnerability Index and provide documentation from the 
dashboard within the application to verify the location in order to be 
eligible.
    (3) Climate Impacts--applicants may be eligible through one of two 
methods:
    a. The project must be located in or serving coal, oil and gas, and 
power plant communities whose economic well-being ranks in the most 
distressed tier of the Distressed Communities Index. The dashboard 
located at https://www.rd.usda.gov/priority-points will be used to 
determine if a project is eligible to apply based upon its location. 
Applicants must use the dashboard to verify if the project is located 
within or serving coal, oil and gas, and power plant communities and 
whose economic well-being ranks in the most distressed tier of the 
Distressed Communities Index and provide documentation from the 
dashboard within the application to verify the location in order to be 
eligible.
    b. demonstrate through a written narrative how proposed climate-
impact projects improve the livelihoods of community residents and meet 
pollution mitigation or clean energy goals.

III. Application and Submission Information

A. Submission Process

    (1) All materials must be submitted via CloudVault.
    (2) The process for submitting an electronic application to RHS via 
CloudVault is outlined below:
    a. At least three business days prior to the application deadline, 
the applicant must email RHS a request to create a shared folder in 
CloudVault. The email must be sent to the following address: 
[email protected]. The email must contain the following information:
    (i) Subject line: MPR NOSA Submission.
    (ii) Body of email: Applicant Name, Applicant Contact Information, 
Project State, Project Name, and Project City.

[[Page 14444]]

    (iii) Request language: ``Please create a shared CloudVault folder 
so that we may submit our application documents.''
    (b) Once the email request to create a shared CloudVault folder has 
been received, a shared folder will be created within two business 
days. When the shared CloudVault folder is created by RHS, the system 
will automatically send an email to the applicant's submission email 
with a link to the shared folder. All required application documents in 
accordance with this NOSA must be loaded into the shared CloudVault 
folder. When the submission deadline is reached, the applicant's access 
to the shared CloudVault folder will be removed. Any document uploaded 
to the shared CloudVault folder after the application deadline will not 
be reviewed or considered.

B. Submission Requirements

    (1) The applicant must upload a Table of Contents for the documents 
that have been uploaded to the shared CloudVault folder.
    (2) Applications must include all applicable information requested 
on the MPR application form (Form Approved: OMB No. 0575-0190) to be 
considered complete. The application form can be found at https://www.rd.usda.gov/programs-services/housing-preservation-revitalization-demonstration-loans-grants. Click on the To Apply tab to access the 
``Fiscal Year 2022 Application for MFH Preservation and Revitalization 
Demonstration Program (MPR).''
    (3) Responding entity's Dun and Bradstreet Data Universal Numbering 
System (DUNS) number, registration in the System for Award Management 
(SAM) prior to submitting an application pursuant to 2 CFR 25.200(b), 
and other supporting information to substantiate their legal authority 
and good standing. Applicants can receive a DUNS number at no cost by 
calling the dedicated toll-free DUNS Number request line at (866) 705-
5711 or via the internet at https://www.dnb.com/. Additional information 
concerning this requirement can be obtained on the grants.gov website 
at https://www.grants.gov. All applicants must be registered in SAM 
prior to submitting an application, unless determined exempt under 2 
CFR 25.110. Federal award recipients must maintain an active SAM 
registration during which time they have an active Federal award or an 
application under consideration by the Agency. The applicant must 
ensure that the information in the database is current, accurate, and 
complete. Applicants must ensure they complete the Financial Assistance 
General Certifications and Representations in SAM. Similarly, all 
recipients of Federal financial assistance are required to report 
information about first-tier sub-awards and executive compensation in 
accordance with 2 CFR part 170, so long as an entity respondent does 
not have an exception under 2 CFR 170.110(b), they must have the 
necessary processes and systems in place to comply with the reporting 
requirements should the responding entity receive federal assistance. 
See 2 CFR 170.200(b).
    (4) Applicant must provide a narrative describing the transaction 
in detail of how the deferral-only MPR tool will benefit their 
transaction. List any adverse impacts or physical failures (i.e., 
natural causes not foreseen, damage not reimbursable by insurance or 
disaster loan or grant, etc.)
    (5) Applicant must complete the Form SF 424, ``Application for 
Federal Assistance,'' which can be found and completed online at the 
following website: https://apply07.grants.gov/apply/forms/readonly/SF424_2_1-V2.1.pdf.
    (6) Provide evidence of site control for all transfers of 
ownership.
    (7) For Section 515 projects, the average physical vacancy rate for 
the 12 months preceding this Notice's application submission date can 
be no more than 10 percent for projects consisting of 16 or more 
revenue units and no more than 15 percent for projects less than 16 
revenue units. If the applicant is seeking an exception to this 
requirement or there are concerns about the market, the applicant must 
submit an explanation as to the circumstances affecting the vacancy 
rate. The Agency will request additional information if the vacancy 
rates along with a current market study to support the need of the 
project and its continued financial feasibility. The Agency will 
request additional information if the vacancy rates exceed the 
percentages stated above, which may include a current market study, to 
assess the need of the project and its continued financial feasibility. 
To further demonstrate there is a continuing need for the RHS project, 
the Agency may request waiting lists and/or confirmation of a housing 
shortage by local housing agencies. The market data must show a clear 
need and demand for the project. The Agency will determine whether the 
proposal has market feasibility based on the data provided by the 
applicant. Any costs associated with the completion of the market data 
is NOT an eligible program project expense. If a project consolidation 
is involved, the consolidation will remain eligible so long as the 
average vacancy rate for each individual project meets the occupancy 
standard noted in this paragraph each project must meet the average 
vacancy rate outlined above.
    (8) For Sections 514/516 Off-FLH projects, since this program is 
typically seasonal which affects the vacancy rate, rather than an 
average physical vacancy rate as noted in section (ii) above, a 
positive cash flow for the previous full three (3) years of operation 
is required unless an exception applies as described section III(A)(3), 
above for projects with an approved work out plan.
    (9) Submit a current (no older than six months from the date of 
issuance) combination comprehensive credit report for both the entity 
and the actual individual principals, partners, members, etc. within 
the applicant entity, including any sub-entities, who are responsible 
for controlling the ownership and operations of the entity. Although a 
commercial credit report for a new entity may have limited information 
available, a combination report ties the entity and individual 
principal(s) together under the applicant/borrower name based on the 
credit report agency's ability to provide a single reporting source. 
However, if any of the principals in the applicant entity are not 
natural persons (i.e., corporations, other limited liability companies, 
trusts, etc.) separate commercial credit reports must be submitted on 
those organizations as well. Individual personal consumer credit 
reports are not required if a combination report is being provided. 
Only Credit reports provided by accredited major credit bureaus will be 
accepted. In the past, the Agency has required the applicant to submit 
the credit report fee. In lieu of the applicant submitting the fee, the 
Agency will require the applicant to provide the credit report. It is 
the Agency's expectation that this change will create an efficiency in 
the application process that did not exist, which should assist with 
streamlining the application process for the applicant.
    Failure to submit all required documents, forms and information 
prior to the deadline will result in an incomplete application, the 
application will be rejected and the applicant will be notified of 
appeal rights under 7 CFR part 11. Applicants are reminded that all 
submissions must be received by the deadline. Applications received 
after the deadline will not be evaluated. Upon request, RHS will 
provide the responding entities with a written acknowledgement of 
receipt.

[[Page 14445]]

IV. Agency Review and Selection Information

    The Agency will conduct an initial screening for eligibility within 
90 business days of the NOSA closing deadline. Transfer applicants must 
meet Agency eligibility, application, and approval process requirements 
outlined in HB-3-3560, Chapter 7.
    Eligibility determination is not an award or commitment for federal 
assistance. If the application is not accepted for further processing 
due to being incomplete or ineligible, the applicant will be notified 
of appeal rights under 7 CFR part 11. Applications that are deemed 
eligible but are not selected for further processing (i.e., financially 
infeasible, etc.) will be withdrawn from processing and the applicant 
will be notified of appeal rights under 7 CFR part 11.
    Eligible applicants accepted for further processing that do not 
include a project transfer (stay-in owner) will be required to submit a 
CNA in accordance with 7 CFR 3560.103(c) and the addendum at the end of 
this NOSA. The timeframe for submitting the CNA will be included in the 
applicant's selection letter. The CNA will be used to underwrite the 
proposal to determine financial feasibility. The CNA must be approved 
by the Agency prior to the Agency underwriting the transaction. Stay-in 
owner applicants can use property reserve account funds to pay for CNA 
costs if approved by the servicing specialist assigned to the property. 
Servicing specialist assignments by property can be found at: https://www.sc.egov.usda.gov/data/MFH.html. A CNA is comprised of nine main 
sections:
     Definitions;
     Contract Addendum;
     Requirements and Statement of Work (SOW) for a CNA;
     The CNA Review Process;
     Guidance for the Multi-Family Housing (MFH) CNA Recipient 
Regarding Contracting for a CNA;
     Revising an Accepted CNA During Underwriting;
     Updating a CNA;
     Incorporating a Property's Rehabilitation into a CNA; and
     Repair and Replacement Schedule.

Additionally, there are seven attachments which accompany the CNA 
addendum identified as follows:
 Attachment A, ADDENDUM TO THE CAPITAL NEEDS ASSESSMENT 
CONTRACT
 Attachment B, CAPITAL NEEDS ASSESSMENT STATEMENT OF WORK
 Attachment C, FANNIE MAE PHYSICAL NEEDS ASSESSMENT GUIDANCE TO 
THE PROPERTY EVALUATOR
 Attachment D, CNA e-Tool Estimated Useful Life Table
 Attachment E, CAPITAL NEEDS ASSESSMENT REPORT
 Attachment F, SAMPLE CAPITAL NEEDS ASSESSMENT REVIEW REPORT
 Attachment G, CAPITAL NEEDS ASSESSMENT GUIDANCE TO THE 
REVIEWER

    Transfer applicants must comply with the requirements of 7 CFR 
3560.406 and Chapter 7 of HB-3-3560, including all Agency approval and 
closing conditions prior to closing the MPR debt deferral. The Agency 
will provide additional guidance to the applicant and request 
information and documents necessary to complete the underwriting and 
review process within 45 days of the Agency's selection letter. Since 
the character of each application may vary substantially depending on 
the type of transaction proposed, additional information may be 
requested as appropriate.

V. Agency Processing Information

A. Feasibility and Structure

    The feasibility and structure of each proposal will be based on the 
Agency's underwriting and the following parameters:
    (1) For applications submitted under this Notice, the Agency will 
conduct eligibility determinations and eligible applicants will be 
processed accordingly.
    (2) Applications marked as any of the following will be prioritized 
for the initial review and processing. Priority projects will have an 
initial review completed within 30-60 business days of the NOSA closing 
deadline:
    a. ``Deferral needed as part of a pending transfer''
    b. ``stay-in owner transaction with third-party funding that will 
expire within 120 days''
    c. ``project with urgent health/safety/accessibility issues to 
address''
    d. ``projects with an average physical vacancy rate of no more than 
5% for the 12 months preceding this Notice's application submission 
date with a demonstrated waiting list''
    e. ``projects that meet all three of the Agency's key priorities 
(COVID-19, Equity and Climate)''.
    (3) Upon completion of RHS underwriting, MPR debt deferral offers 
will be presented to successful applicants as a conditional commitment 
(CC) and the Letter of Conditions (LOC). These documents will outline 
the borrower's requirement for executing and recording an Agency-
approved Restrictive-Use Covenant (RUC) for a period equivalent to the 
remaining term of any non-deferred existing loan or the remaining term 
of any existing RUC, whichever ends later.
    (4) Stay-in-owner applicants that have secured third party funding 
that will add new hard debt in an amount more than the amount approved 
to be deferred, will require an appraisal to ensure the property 
remains secure before the transaction will be approved.
    (5) Transfer applicants requesting MPR debt deferral will be 
presented an opportunity to accept or reject the offered terms and 
conditions for such deferral in the MPR CC. Additional transfer 
requirements will be outlined in a Transfer Letter of Conditions.
    (6) If no offer is made or if the applicant fails to accept or 
reject the offer presented, the application will be rejected, and 
appeal rights will be given.
    (7) Closing of MPR offers will occur within six months of the 
accepted MPR CC unless extended in writing by the Agency.
    (8) Applicants will be informed of any proposals that are 
determined to be financially infeasible. Any proposal denied by the 
Agency will be returned to the applicant, and the applicant will be 
given appeal rights pursuant to 7 CFR part 11.
    (9) Any MPR applications not approved one year from the selection 
notice date will be withdrawn, unless an extension is approved by the 
Agency. Applicants may reapply for federal assistance under future 
Notices as they may be made available.

B. Third Party Funding Sources

    If third party funding sources have not yet been committed, the 
Agency may issue a conditional approval contingent upon receipt of firm 
funding commitments consistent with the terms used in the PAT attached 
to the Conditional Commitment to underwrite the transaction. Agency 
approval will be withdrawn if a satisfactory firm commitment is not 
received as the transaction cannot close until a firm commitment is 
provided. Any changes to the proposed sources that cause substantial 
material changes will require re-evaluation of the transaction by the 
National Office Underwriter and, in some cases, may cause approval to 
be rescinded and/or a new concurrence to be issued.

VI. Other Information

A. Paperwork Reduction Act

    The information collection requirements contained in this Notice 
have received approval from the Office

[[Page 14446]]

of Management and Budget (OMB) under Control Number 0575-0190.

B. Non-Discrimination Statement

    In accordance with Federal civil rights laws and U.S. Department of 
Agriculture (USDA) civil rights regulations and policies, the USDA, its 
Mission Areas, agencies, staff offices, employees, and institutions 
participating in or administering USDA programs are prohibited from 
discriminating based on race, color, national origin, religion, sex, 
gender identity (including gender expression), sexual orientation, 
disability, age, marital status, family/parental status, income derived 
from a public assistance program, political beliefs, or reprisal or 
retaliation for prior civil rights activity, in any program or activity 
conducted or funded by USDA (not all bases apply to all programs). 
Remedies and complaint filing deadlines vary by program or incident.
    Program information may be made available in languages other than 
English. Persons with disabilities who require alternative means of 
communication to obtain program information (e.g., Braille, large 
print, audiotape, American Sign Language) should contact the 
responsible Mission Area, agency, or staff office; the USDA TARGET 
Center at (202) 720-2600 (voice and TTY); or the Federal Relay Service 
at (800) 877-8339.
    To file a program discrimination complaint, a complainant should 
complete a Form AD-3027, USDA Program Discrimination Complaint Form, 
which can be obtained online at https://www.ocio.usda.gov/document/ad-3027, from any USDA office, by calling (866) 632-9992, or by writing a 
letter addressed to USDA. The letter must contain the complainant's 
name, address, telephone number, and a written description of the 
alleged discriminatory action in sufficient detail to inform the 
Assistant Secretary for Civil Rights (ASCR) about the nature and date 
of an alleged civil rights violation. The completed AD-3027 form or 
letter must be submitted to USDA by:
    (1) Mail: U.S. Department of Agriculture, Office of the Assistant 
Secretary for Civil Rights, 1400 Independence Avenue SW, Washington, DC 
20250-9410; or
    (2) Fax: (833) 256-1665 or (202) 690-7442; or
    (3) Email: [email protected].
Addendum: Capital Needs Assessment Process
    A Capital Needs Assessment (CNA) provides a repair schedule for the 
property in its present condition, indicating repairs and replacements 
necessary for a property to function properly and efficiently over a 
span of 20 years.
    The purpose of this Addendum is to provide clarification and 
guidance on the Rural Development CNA process. The document includes 
general instructions used in completing CNA reports, specific 
instructions on how to use the expected useful life tables, and a set 
of applicable forms including the Terms of Reference form; Systems and 
Conditions forms; and Evaluator's Summary forms.
1. Definitions
    The following definitions are provided to clarify terms used in 
conjunction with the CNA process:
    CNA Recipient: This will be who enters into the contract with the 
CNA Provider. The Recipient can be either the property owner or 
applicant/transferee.
    ``As-Is'' CNA: This type of CNA is prepared for an existing MFH 
property and reports the physical condition including all Section 504 
Accessibility and Health and Safety items of the property based on that 
moment in time. This CNA can be useful for many program purposes other 
than the MPR Demonstration program such as: An ownership transfer, 
determining whether to offer pre-payment aversion incentive and 
evaluating or resizing the reserve account. The ``as-is'' report will 
include all major repairs and likely some minor repairs that are 
typically associated with the major work: Each major component, system, 
equipment item, etc. inside and outside; building(s); property; access 
and amenities in their present condition. A schedule of those items 
showing the anticipated repair or replacement timeframe and the 
associated hard costs for the ensuing 20-year term of the CNA serves as 
the basis or starting point in evaluating the underwriting that will be 
necessary to determine the feasibility and future viability of the 
property to continue serving the needs of eligible tenants.
    ``Post Rehabilitation'' CNA: This type of CNA builds on the 
findings of the accepted ``as-is'' CNA and is typically prepared for a 
project that will be funded for major rehabilitation. The Post 
Rehabilitation CNA is adjusted to reflect the work intended to be 
performed during the rehabilitation. The assessment must be developed 
from the rehabilitation project plans and any construction contract 
documents to reflect the full extent of the planned rehabilitation.
    Life Cycle Cost Analysis (LCCA): A LCCA is an expanded version of a 
CNA and is defined at 7 CFR 3560.11. The LCCA will determine the 
initial purchase cost, the operation and maintenance cost, the 
``estimated useful life'', and the replacement cost of an item selected 
for the project. The LCCA provides the borrower with the information on 
repair or replacement costs and timeframes over a 20-year period. It 
also provides information that will assist with a more informed 
component selection and can provide the borrower with a more complete 
financial plan based on the predictive maintenance needs associated 
with those components. If the newly constructed project has already 
been completed without any previous LCCA requirements, either an ``as-
is'' CNA or LCCA can be provided to establish program mandated reserve 
deposits. An Architect or Engineer is the best qualified person(s) to 
prepare this report.
    Consolidation: In some circumstances, RD may permit two or more 
properties to be consolidated as defined in 7 CFR 3560.410 when it is 
in the best interests of the Government. The CNA Recipient must consult 
with the RD loan official before engaging the CNA Provider in any case 
where the CNA intends to encompass more than a single (one) existing RD 
property to determine if a consolidated CNA may be acceptable for RD 
underwriting.
2. Contract Addendum
    RD uses a Contract Addendum to supplement the basic CNA Agreement 
or ``Contract'', between the CNA Recipient and CNA Provider, with 
additional details and conditions. It can be found in Attachment A, 
Addendum to Capital Needs Assessment Contract and must accompany all 
contracts executed between the CNA Recipient and CNA Provider for CNAs 
used in RD transactions. If any conflicts arise between the 
``Contract'' and ``Contract Addendum'', the ``Contract Addendum'' will 
supersede.
    The Contract Addendum identifies the responsibilities and 
requirements for both the CNA Recipient and the CNA Provider. To assure 
proper completion of the contract documents the following key 
provisions must be completed:
    a. The Contract Addendum will include the contract base amount for 
the CNA Provider's cost for services on page A-2, and provisions for 
additional services to establish the total price for the CNA.
    b. Item I e, will require an itemized listing for any additional 
anticipated services and their unit costs including

[[Page 14447]]

future updates and revisions that may be required before the CNA is 
accepted by RD. Note: Any cost for updating a CNA must be included, in 
the ``additional services'' subpart, of the original CNA Contract.
    c. The selection criteria boxes in II a, will identify the type of 
CNA being provided.
    d. In III a, the required language for the blank on ``report 
format'' is: ``USDA RD CNA Template, current RD version, in Microsoft 
Excel format''. This format will import directly into the RD 
underwriting template for loan underwriting purposes.
3. Requirements and Statement of Work (SOW) for a CNA
    Minimum requirements for a CNA acceptable to RD can be found in 
Attachment B, Capital Needs Assessment Statement of Work. This is 
supplemented by Attachment C, Fannie Mae Physical Needs Assessment 
Guidance to the Property Evaluator. To resolve any inconsistency in the 
two documents, Attachment B, the CNA SOW, will in all cases prevail 
over Attachment C, Fannie Mae Physical Needs Assessment Guidance to the 
Property Evaluator. (For example, on page C-2 of Attachment C, Fannie 
Mae defines the ``term'' as ``term of the mortgage and two years 
beyond''. For USDA, the ``term'' will be 20 years, as defined in the 
CNA SOW.)
    Attachment B includes the required qualifications for the CNA 
Provider, the required SOW for a CNA assignment, and general 
distribution and review instructions to the CNA Provider. The CNA 
Providers must be able to report the current physical condition of the 
property and not base their findings on the financial condition of 
either the property or the CNA Recipient.
    Attachment C is a three-part document RD has permission to use as 
reference to the CNA process throughout the RD MFH program efforts. The 
three key components of this Attachment are: (1) Guidance to the 
property evaluator; (2) expected useful life tables; and (3) a set of 
forms.
    An acceptable CNA must appropriately address within the report and 
narrative all Accessibility Laws and Requirements that apply to Section 
515 and Sections 514/516 MFH properties. The CNA Provider must assess 
how the property meets the requirements of accessibility to persons 
with disabilities in accordance the Uniform Federal Accessibility 
Standards (UFAS) and Section 504 Accessibility Requirements. It is the 
responsibility of the Provider to inspect and verify whether all 
accessibility features are compliant.
4. The CNA Review Process
    A CNA used by RD will be reviewed by the designated RD CNA Reviewer 
with experience in construction, rehabilitation, and repair of MFH 
properties, especially as it relates to repair and replacement.
    A CNA report must be obtained by the CNA Recipient from an 
independent third-party CNA Provider that has no identity of interest 
with the property owner, management agent, applicant/transferee or any 
other principle or affiliate defined in 7 CFR 3560.11. The CNA 
Recipient will contract with the CNA Provider and is therefore the 
client of the provider. However, the CNA Recipient must consult with 
RD, before contracting with a CNA Provider to review Guidance Regarding 
Contracting for a CNA. The RD CNA Reviewer will evaluate a proposed 
agreement or engagement letter between the CNA Recipient and the CNA 
Provider using Attachment G, Capital Needs Assessment Guidance to the 
Reviewer, prior to reviewing any CNA report. Unacceptable CNA 
proposals, contracts or reports will be returned to the CNA Recipient 
for appropriate corrections before they will be used for any 
underwriting determinations.
    The CNA Reviewer will also review the cost of the CNA contract. The 
proposed fee for the CNA must be approved as an eligible housing 
project expense under 7 CFR 3560.103 (c) for the agreement to be 
acceptable and paid using project funds. In most cases, the CNA service 
contract amount has not exceeded $3,500 based on the Agency's most 
recent cost analysis.
    Borrowers and applicants are encouraged to obtain multiple bids in 
all cases. However, there is no Agency requirement to select the ``low 
bidder'' under this UL and the CNA Recipient may select a CNA Provider 
that will provide the best value, based on qualifications, as well as 
price after reviewing references and past work.
    If the CNA is funded by the property's reserve account, a minimum 
of two bids is required if the CNA service contract amount is estimated 
to exceed $5,000 as specified in HB-2-3560, Chapter 4, Paragraph 4.17 
B. If the CNA contract under this UL is funded by another source, or 
will be under $5,000, a single bid is acceptable.
    If the proposed agreement is acceptable, the reviewer will advise 
the appropriate RD servicing official, who will in turn inform the CNA 
Recipient. If the proposed agreement is unacceptable, the reviewer will 
notify the servicing official, who will notify the CNA Recipient and 
the CNA Provider in writing and identify actions necessary to make the 
proposed CNA agreement acceptable to RD. Upon receipt of a satisfactory 
agreement, the RD CNA Reviewer should advise the appropriate RD 
servicing official or underwriting official to accept the proposal.
    The CNA Reviewer will review the preliminary CNA report submitted 
to RD by the CNA Provider using Attachment G and write the preliminary 
CNA review report. During the CNA review process, the CNA Reviewer and 
underwriter will consult with the servicing field office most familiar 
with the property for their input and knowledge of the property. Any 
differences of opinion that exist regarding the findings must be 
mutually addressed by RD staff. If corrections are needed, the loan 
official will notify the CNA Recipient, in writing, of any revisions 
necessary to make the CNA report acceptable to RD. The CNA Reviewer 
will review the final CNA report and deliver it to the loan official. 
The final report must be signed by both the CNA Reviewer and the loan 
official (underwriter). Upon signature by both, this report becomes the 
``accepted'' CNA indicating the actual condition of the property at the 
time of the CNA inspection--a ``snapshot'' in time--and will be marked 
``Current Property Condition'' for indefinite retention in the borrower 
case file.
    A CNA Provider should be fully aware of the intended use for the 
CNA because it can impact the calculations necessary to perform 
adequate accessibility assessments and can impact the acceptability of 
the report by RD. Unacceptable reports will not be used for any RD 
underwriting purposes even though they may otherwise be acceptable to 
the CNA Recipient or another third-party lender or participant in the 
transaction being proposed.
5. Guidance Regarding Contracting for a CNA
    CNA Recipients are responsible for choosing the CNA Provider they 
wish to contract with, and for delivering an acceptable CNA to Rural 
Development. RD in no way guarantees the performance any Provider nor 
the acceptability of the Provider's work.
    CNA Recipients are advised to request an information package from 
several CNA Providers and to evaluate the information before selecting 
a provider. At a minimum, the information package should include a list 
of qualifications, a list of references, a client list, and a sample 
CNA report. However, the CNA Recipient may request any additional 
information they feel necessary to

[[Page 14448]]

evaluate potential candidates and select a suitable provider for this 
service. Consideration for the type of CNA required should be part of 
the CNA Recipient's selection criteria and inserted into the contract 
language as well. The necessary skill set to perform the ``as-is'' 
versus the Post Rehabilitation CNA or a LCCA needs to be considered 
carefully. Knowledge of the accessibility laws and standards and the 
ability to read and understand plans and specifications should also be 
among the critical skill elements to consider.
    Attachment A, Contract Addendum must be submitted to RD with the 
contract and signed by the CNA Recipient and CNA Provider. The proposed 
agreement with the CNA Recipient and CNA Provider must meet RD's 
qualification requirements for both the provider and the CNA SOW, as 
specified in Attachment B, Capital Needs Assessment Statement of Work. 
RD must review the proposed agreement between the CNA Recipient and the 
CNA Provider, and concur only if all of the RD requirements and 
conditions are met. (See the previous Section 3 of this UL, The CNA 
Review Process.)
    Please note: It is in the CNA Recipient's best interest to furnish 
the CNA Provider with the most current and up-to-date property 
information for a more comprehensive and thorough CNA report. RD 
recommends that the CNA Recipient conduct a pre-inspection meeting with 
the Owner, Property Manager, maintenance persons familiar with the 
property, CNA Provider, and Agency Representatives at the site. This 
meeting will allow a forum to discuss specific details about the 
property that may not be readily apparent to all parties involved 
during the review process, as well as making some physical observations 
on-site. Certain issues that may not be evident to the CNA Provider due 
to weather conditions at the time of review should also be discussed 
and included in the report. Additionally, other issues that may need to 
be addressed include environmental hazards, structural defects, and 
complex accessibility issues. It is imperative that the Agency be fully 
aware of the current physical condition of the property at the time the 
CNA is prepared. An Agency representative must make every effort to 
attend the CNA Providers on-site inspection of the property unless the 
Agency has performed a physical inspection of the property within the 
previous 12 months.
    This pre-inspection meeting also allows the CNA Provider to discuss 
with the CNA Recipient total number of units to be inspected, as well 
as identifying any specific units that will be inspected in detail. The 
minimum number of inspected units required by the Agency for an 
acceptable CNA is 50 percent. However, inspecting a larger number of 
units generally provides more accurate information to identify the 
specific line items to be addressed over the ``term'' being covered by 
the CNA report. CNA Recipients are encouraged to negotiate with the CNA 
Provider to achieve inspection of all units whenever possible. The 
ultimate goal for the CNA Recipient and CNA Provider, as well as the 
Agency, is to produce the most accurate ``baseline or snapshot'' of 
current physical property conditions for use as a tool in projecting 
future reserve account needs.
6. Revising an Accepted CNA During Underwriting (Applies to RD Actions)
    During transaction underwriting and analysis, presentation of the 
information contained in the ``accepted'' CNA may need to be revised by 
RD to address financing and other programmatic issues. The loan 
underwriter and the CNA Reviewer will work together to determine if 
revisions are necessary to meet the financial and physical needs of the 
property, and established RD underwriting or servicing standards and 
principals. These may involve shifting individual repair line items 
reported in the CNA, moving work from year to year, or other 
adjustments that will improve cash flow. The revised underwriting CNA 
will be used to establish reserve funding schedules as well as 
operating budget preparation and analysis and will be maintained by RD 
as supporting documentation for the loan underwriting.
    The initial CNA, prepared by the CNA Provider, will be maintained 
as an independent third-party record of the current condition of the 
property at the beginning of the 20-year cycle.
    Original CNAs will be maintained in the case file, clearly marked 
as either ``Current Property Condition'' (``As-is''), ``Post 
Rehabilitation Condition'', or ``Revised Underwriting/Replacement 
Schedule'', as applicable. Note: The CNA Provider is not the 
appropriate party to ``revise'' a CNA which has already been approved 
by the CNA Recipient and concurred with by the Agency. The CNA 
Provider's independent opinion was the basis of the ``As is'' or ``Post 
Rehabilitation'' CNA. The CNA developed for underwriting may only be 
revised by RD staff during the underwriting process or as part of a 
post-closing servicing action.
7. Updating a CNA (Applies to ``As-is'' and ``Post-Rehabilitation'' 
That Have Not Been Accepted by RD)
    A completed CNA more than a year old at the time of the RD CNA 
review and approval must be ``updated' prior to RD approval. Likewise, 
if at the time of underwriting the CNA is more than a year old (but 
less than two years old), it must be updated before the transaction can 
be approved.
    To update a CNA, the CNA Provider must review property changes 
(repairs, improvements, or failures) that have occurred since the date 
of the original CNA site visit with the CNA Recipient, review costs and 
quantities, and submit an updated CNA for approval. However, if the 
site visit for the CNA occurred more than two years prior to the loan 
underwriting, the CNA Provider should perform a new site visit to 
verify the current project condition.
    Once the CNA has been updated, the CNA Provider will include a 
statement noting ``This is an updated CNA of the earlier CNA dated 
___,'' at the beginning of the CNA's Narrative section. The CNA 
Provider should reprint the CNA with a new date for the updated CNA, 
and provide a new electronic copy to the CNA Recipient and RD.
    If the CNA age exceeds 2years at the time of the RD CNA review and 
approval, the CNA Provider will need to repeat the site visit process 
to re-evaluate the condition of the property. The original report can 
remain the basis of the findings.
8. Incorporating a Property's Rehabilitation Into a CNA
    A CNA provides a repair schedule for the property in its present 
condition, indicating repairs and replacements necessary for a property 
to function properly and efficiently over a span of 20 years. It is not 
an estimate of existing rehabilitation needs, or an estimate of 
rehabilitation costs. If any rehabilitation of a MFH development is 
planned as part of the proposed transaction, a rehabilitation repair 
list (also called a ``Scope of Work'') must be developed independently 
based on the CNA repair schedule. This rehabilitation repair list may 
be developed by the CNA Recipient, a project Architect, or an outside 
party (such as the CNA Provider, when qualified) hired by the CNA 
Recipient.
    The CNA Recipient must not use repair line-item costs taken from 
the CNA to develop the rehabilitation cost estimates for the 
rehabilitation loan, as these costs will not be accurate. The repair 
costs in a CNA are based on

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estimated costs for the property. Typically, these costs include the 
labor, materials, overhead and profit, but do not include applicable 
``soft costs''. For example, for CNA purposes, the probable cost is to 
send a repairman out, remove an appliance, and put a new one in its 
place. For rehabilitation cost estimates, the CNA Recipient typically 
intends to hire a general contractor to oversee and supervise the 
rehabilitation work, which is then considered a ``soft cost''. The cost 
of rehabilitation includes the costs for that general contractor, the 
general contractor's requirements, the cost of a project Architect (if 
one is used), tenant relocation (if needed), and interim financing (if 
used), which are considered ``soft costs'' attributed to the 
rehabilitation costs for the project.
    If a ``Post Rehabilitation'' CNA is required and authorized by RD, 
a copy of the rehabilitation repair list or SOW must be provided to the 
CNA Provider. The CNA Provider will prepare a ``Post Rehabilitation'' 
CNA indicating what repairs are planned for the property in the coming 
20 years based on conditions after the rehabilitation is completed. 
Items to be replaced during rehabilitation that will need to be 
replaced again within the 20 years, such as appliances, will be 
included in the ``Post Rehabilitation'' CNA. Items that will not need 
replacement during the coming 20 years, such as a new roof, will not 
need to be calculated in the ``Post Rehabilitation'' CNA. The line item 
should not be removed from the CNA, but the cost data should be zeroed 
out. Appropriate comments should be included in the CNA report to 
acknowledge the SOW or rehabilitation/repairs that were considered.
9. Repair and Replacement Schedule
    A CNA is not a formal repair and replacement schedule and cannot be 
used as an exact replacement schedule. A CNA is an estimate of the 
anticipated replacement needs for the property over time, and the 
associated replacement costs. The goal of a CNA is to estimate the 
replacement times based on the Expected Useful Life (EUL) to assure 
funds are available to replace equipment as it is needed. Hopefully, 
materials will be well maintained and last longer than estimated in the 
CNA. However, the CNA cannot be used to mandate replacement times for 
the identified building components. The RD underwriter may find it 
necessary to adjust the proposed replacement schedule during the course 
of the underwriting to allow for an adequate Annual Deposit to 
Replacement Reserves (ADRR) payment that will sustain the property over 
a 20-year period and keep rents below the maximum rents that are 
allowed.
BILLING CODE 3410-XV-P

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Joaquin Altoro,
Administrator, Rural Housing Service.
[FR Doc. 2022-05252 Filed 3-14-22; 8:45 am]
BILLING CODE 3410-XV-C