Multi-Family Housing Preservation and Revitalization (MPR) Demonstration Program-Section 514 and Section 515 for Fiscal Year 2022, 14441-14507 [2022-05252]
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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.
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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
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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
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:
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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.
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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
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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:
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(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)
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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
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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
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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.
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(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
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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
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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.
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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
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•
•
•
•
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
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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
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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,
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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.
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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
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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.
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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
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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
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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
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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.
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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
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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.
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
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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
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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 $._ _ _ _ _ _ _ _ _~and for itemized "Additional
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14451
Services" as follows: (see listing inspection i.e. below,) in the amount of$_ _ 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
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Attachment A
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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:
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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
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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
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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
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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.
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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.
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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
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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
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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.
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B-2
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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.
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•
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
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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.
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B-5
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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
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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
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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
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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
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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
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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
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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.
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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:
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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
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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.
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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.
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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.
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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.
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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)
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ERL DlFF?
AGE
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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
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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
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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.
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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.
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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.
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Useful Life Table
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. . . - - - - - - - - - - - - - - - - - - - - - - - - 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
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3
System Description and Observations
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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
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14482
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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
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Useful Life Table
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. - - - - - - - - - - - - - - - - - - - - - - - - - - , 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
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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
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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
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E:\FR\FM\15MRN1.SGM
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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
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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
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E:\FR\FM\15MRN1.SGM
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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
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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
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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?
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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
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24
25
26
27
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34
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REVIEW ITEMS:
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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
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• 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.)
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F-2
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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
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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?
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A
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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
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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?
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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:
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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
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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
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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]
-----------------------------------------------------------------------
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).
-----------------------------------------------------------------------
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
