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MARCIA RINGO, ATLANTA MULTIFAMILY HUB

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Understand the role of the Lender's Appraiser and/or Market Analyst under MAP ... To find the project mortgage amount for Section 220 and Section 221, use the ... – PowerPoint PPT presentation

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Title: MARCIA RINGO, ATLANTA MULTIFAMILY HUB


1
MAP Multifamily Accelerated Processing
U.S. Department of Housing and Urban Development
  • PRESENTED BY
  • MARCIA RINGO, ATLANTA MULTIFAMILY HUB


2
Objectives of Session
U.S. Department of Housing and Urban Development
  • Understand the role of the Lenders Appraiser
    and/or Market Analyst under MAP
  • Understand HUDs expectations on what information
    is needed to support the loan application
  • Know the components of a complete application

3
Agenda
U.S. Department of Housing and Urban Development
  • Qualifications
  • Appraisal and Market Study Requirements
  • Estimate of Rental Income
  • Estimate of Operating Expenses
  • 220 and 221d Projects
  • 223f Projects
  • Substantial Rehabilitation
  • Ground Lease Processing Ground Rent Payments

4
Whats different for valuation?
U.S. Department of Housing and Urban Development
  • HUDs review of rents and expenses completed at
    pre-application stage and follow-up review at
    firm stage
  • Vacancy and collection loss no less than 5
  • Phase I ESA required for all MAP programs
  • Phase I ESA at pre-application stage for 220,
    221d and 232
  • HUD appraiser visits site and evaluates critical
    and non-critical repairs
  • Updates to appraisals (120 days or more) require
    re-inspection

5
Lenders Appraiser
6
Lenders AppraiserQualifications
U.S. Department of Housing and Urban Development
  • Certified General Appraiser in State where
    subject is located
  • Temporary certifications are permitted but
    competency requirements still apply
  • Not permissible for an appraiser who is not
    certified in the appropriate jurisdiction to have
    a locally certified appraiser co-sign the report
  • Anyone acting as an assistant should be disclosed
    to the processing center
  • Meet the requirements of the Competency Rule
  • Have at least three years of income property
    appraisal experience (this pretty much a given if
    they are certified)
  • Regularly engaged in the appraisal of multifamily
    properties

7
Lenders AppraiserQualifications . . . Continued
. . .
U.S. Department of Housing and Urban Development
  • Experienced in appraising multifamily properties
    similar in complexity to the subject property
  • Knowledgeable concerning current real estate
    market conditions and financing trends in the
    geographic market area where the subject property
    is located
  • Requirements apply to each general certified
    appraiser signing the report

8
MAP AppraiserRequirements / Duties
U.S. Department of Housing and Urban Development
  • Inspect the subject property
  • Sign the appraisal report, including the
  • MAP Certification
  • The Supporting HUD Forms
  • Lenders often want to bring in out-of-area or
    national experts with significant MAP experience
  • However . . .
  • Locational Competency is can be a problem

9
Highlight and Purposeof the Appraisal
U.S. Department of Housing and Urban Development
  • Evaluate the property as security for a long-term
    HUD-insured mortgage (usually 35-40 years)
  • Includes estimates of
  • Market Value
  • Feasibility e.g. Analysis of market need,
    location, earning capacity, operating expenses
    (NOI)
  • Warranted Cost of the property

10
Lenders Market AnalystQualifications
U.S. Department of Housing and Urban Development
  • Each market analyst must meet the following
    minimum qualifications
  • Have at least three years of experience in
    performing market analysis for income producing
    property
  • Be currently active and regularly engaged in
    performing market studies for multifamily
    properties and have experience with properties of
    similar complexity
  • Be knowledgeable concerning real estate market
    conditions and financing trends in the area where
    project is located

11
Lenders AppraiserAppraisal Requirements
U.S. Department of Housing and Urban Development
  • Each appraisal must meet the following
    requirements
  • Be prepared for, paid for, and initiated by the
    Lender
  • Be a complete, self-contained appraisal in
    support of conclusions made on forms completed by
    the appraiser, including
  • Form HUD-92264
  • HUD-92264-A
  • HUD-92273
  • HUD-92274

(continued)
12
Lenders AppraiserAppraisal Requirements
U.S. Department of Housing and Urban Development
  • For value-based programs, Section 223(f), Section
    232 and Section 232/223(f), each appraisal shall
    be a complete appraisal in accordance with all
    applicable requirements contained in USPAP
    Standards Rule 1 and in compliance with this
    guidebook.
  • For Sections 220 and 221, the appraiser may
    prepare a limited appraisal as outlined in
    paragraph 7.4 A 4 of the MAP Guide.
  • Adequately describe the geographic area,
    neighborhood, rental competition, sales
    comparables, site, and improvements
  • Produce a fair market value, replacement cost, or
    as is value depending on type of project

(continued)
13
Lenders AppraiserAppraisal Requirements
U.S. Department of Housing and Urban Development
  • Have an effective date within 120 days before the
    Firm Commitment application or pre-application
    package is delivered by the Lender to HUD
  • Be prepared with information provided by MAP
    Lender (Appendix 4)
  • Have an appraiser certification
  • The primary appraiser designated by the Lender
    and approved by HUD must perform the property
    inspection AND sign the appraisal report and the
    supporting HUD forms
  • Photos of the subject, comparable sales and
    comparable rentals are required with all
    submissions.

14
Lenders AppraiserAppraisal Requirements
U.S. Department of Housing and Urban Development
  • Discrimination in appraising. As the basis of
    determining value, the appraiser may not
    consider,analyze, or report any information that
    makes reference to race, color, sex, handicap,
    familial status, religion, or national origin of
    the geographic area, neighborhood, occupants,
    owners or prospective owners. HUD will reject any
    Firm Commitment application for mortgage
    insurance that considers any of these issues in
    the preparation of an appraisal.
  • The Discounted Cash Flow (DCF) is not a
    permissible analysis technique under MAP or TAP
    for any HUD programs

15
Items the AppraiserShould have Available
U.S. Department of Housing and Urban Development
  • These Will Be Submitted to HUD by Lender
  • New/Sub-Rehab
  • Phase 1
  • Deed/Lease/Contract
  • Market Study (if other)
  • Sketches Layouts (Pre-App.)
  • Plans Specs. (Firm)
  • Cost Estimates (Firm)
  • Existing Properties
  • Phase 1
  • Deed/Lease/Contract
  • PCNA
  • 3 Yrs. Financials
  • Rent Roll
  • 3 Yrs. Occupancy Data

16
Lenders AppraiserMarket Study Requirements
U.S. Department of Housing and Urban Development
  • Each market study must meet the following
    requirements
  • Be prepared for, paid for, and initiated by the
    Lender
  • Adequately describe
  • ü the geographic boundaries
  • ü general characteristics of the market area
  • ü specific housing market conditions
  • ü characteristics of projects under
    construction and in planning
  • ü contain a demand estimate and analysis and
    estimated absorption time

(continued)
17
Lenders AppraiserMarket Study Requirements
U.S. Department of Housing and Urban Development
  • Each market study must meet the following
    requirements
  • Have an effective date within 120 days before the
    date the pre-application is delivered by the
    Lender to HUD 232/233(f)
  • Be prepared with information provided by the MAP
    Lender (Appendix 4)
  • Be prepared in conformance to the market study
    format found in Appendix 7A
  • Have a market analyst certification

18
Lenders Appraiser220 and 221d projects
U.S. Department of Housing and Urban Development
  • Estimated Rental Income
  • Prepare one HUD-92273 form for each type and size
    of rental unit (if significantly different).
    Include location map and narrative supporting
    data for comparables.
  • Rental comparables shall be as similar as
    possible to the subject related to
  • Location
  • Structural type
  • Number of bedrooms
  • Average unit size
  • Rental adjustments are always made to the
    comparables for differences from the subject
    property

19
Lenders Appraiser220 and 221d projects
U.S. Department of Housing and Urban Development
  • Estimated Rental Income
  • Rents as of the appraisal date or market study
    date. Rather than being trended to some future
    date, rental estimates shall be made as of the
    appraisal or market study date.
  • The Lender's appraiser must establish a factor
    for vacancy and collection loss when determining
    the effective gross annual income for the
    residential units.
  • The vacancy and collection loss rate used by the
    Lenders appraiser may not be less than 5 percent
    and must be adjusted upward if property and/or
    market conditions require.

20
Lenders Appraiser220 and 221d projects
U.S. Department of Housing and Urban Development
  • Estimated Rental Income
  • This requirement applies to all programs, 221(d)
    and 223(f) under MAP.
  • Where commercial facilities are included in a
    project, a separate analysis must be made of the
    effect that the commercial operation will have on
    the project. Comparable information or lease rate
    information must be submitted with the
    application.

21
Lenders Appraiser220 and 221d projects
U.S. Department of Housing and Urban Development
  • Operating Expense Analysis Worksheet
  • HUD-92274 must be prepared for all cases
    processed
  • Used for the development of project expense
    estimates for Section E of Form HUD-92264,
    Project Income Analysis and Appraisal
  • Section 7.7, Operating Expense Estimates, covers
    in detail
  • Sources of expense data
  • Estimate of operating expenses by units of
    comparison
  • Expense adjustments
  • Updating procedures

22
Lenders Appraiser220 and 221d projects
U.S. Department of Housing and Urban Development
  • Operating Expense Analysis Worksheet
  • Sources of expense data
  • For new construction projects, operating expenses
    must be estimated on the basis of comparable
    projects.
  • For existing projects, operating expenses must be
    estimated on the basis of comparable projects, as
    well as tested against the past 3 years of
    operating experience for the subject project.

23
Lenders Appraiser220 and 221d projects
U.S. Department of Housing and Urban Development
  • Operating Expense Analysis Worksheet
  • Estimate of operating expenses by units of
    comparison
  • Items of expense shown under each comparable and
    the expense items applicable to the subject
    proposal reflected in a suitable unit of
    comparisonsuch as expense per unit per annum
    (PUPA), The expense comparables and units
    selected must be as similar as possible to the
    subject project.

24
Lenders Appraiser220 and 221d projects
U.S. Department of Housing and Urban Development
  • Operating Expense Analysis Worksheet
  • Expense adjustments
  • Project expenses must be expressed in the same
    units of comparison in order to ensure accurate
    adjustments and correct reporting of expense
    estimates. Next, the process of correlation must
    be used to correlate the comparable expense for
    each component which is applicable to the subject
    project.

25
Lenders Appraiser220 and 221d projects
U.S. Department of Housing and Urban Development
  • Operating Expense Analysis Worksheet
  • Updating procedures
  • Expense estimates should be effective as of the
    date of the appraisal. Income and expense
    estimates must reflect the same year of
    operation.
  • HUD does allow the appraiser to use an updating
    percentage to bring expense comparables up to the
    same date as the most current expense comparable
    in order to make a more creditable comparison.

26
Lenders Appraiser220 and 221d projects
U.S. Department of Housing and Urban Development
  • Actions
  • May prepare market study (can be performed by
    Market Analyst)
  • Use market comparables to
  • Determine project rents
  • Determine operating expenses

27
Lenders Appraiser220 and 221d projects
U.S. Department of Housing and Urban Development
  • Deliverables
  • HUD-92013
  • Location map
  • Evidence of site control
  • Market study with comparables
  • Phase I Environmental Site Assessment (ESA) with
    a narrative environmental report. If needed, a
    Phase II Assessment should also be submitted at
    this time.
  • Estimate of Market Rent by Comparison (HUD 92273)
  • Photographs and location map of rental
    comparables used in the HUD-92273 analysis.
  • Operating Expense Analysis Worksheet (HUD 92274)

28
Lenders Appraiser220 and 221d projects
U.S. Department of Housing and Urban Development
  • Actions
  • Perform a complete appraisal establishing the
    replacement cost
  • Update HUD 92273 and 92274 from pre-app stage
  • Prepare sections of the Rental Housing Project
    Income Analysis and Appraisal (HUD 92264).
    Calculate
  • market rents
  • estimated income
  • estimated total operating expenses
  • total estimated replacement cost
  • warranted price of the land for new
    construction
  • as is value for substantial rehabilitation
  • estimate of operating deficit and replacement
    reserve

29
Lenders Appraiser220 and 221d projects
U.S. Department of Housing and Urban Development
  • Deliverables
  • HUD-92013
  • Evidence of permissive zoning
  • Evidence of last-arms-length transaction and
    price
  • Complete, self-contained appraisal
  • Rental Housing Project Income Analysis and
    Appraisal Form (HUD 92264) and Supplement to
    Project Analysis (HUD 92264A)
  • Updated estimates of Market Rent by Comparison
    (HUD 92273)
  • Updated operating Expense Analysis Worksheet (HUD
    92274)

30
Lenders Appraiser220 and 221d projects
U.S. Department of Housing and Urban Development
  • Deliverables
  • Appraisers certification
  • All exhibits for HUD to complete the
    Environmental Assessment and Complete Findings
    for the Related Laws (HUD-4128)
  • Estimate of operating deficit and replacement
    reserve for rehab

31
Lenders Appraiser223f projects
U.S. Department of Housing and Urban Development
  • Actions
  • Perform a complete appraisal of the property
    establishing market value
  • Inspect property with Lenders Needs Assessor to
  • consider eligibility of project (condition)
  • check project occupancy level
  • verify owners rent roll
  • determine whether apartments are furnished
  • Analyze property for site acceptability
  • Review balance sheets and operating statements
  • Determine project rents (HUD 92273)

(continued)
32
Lenders Appraiser223f projects
U.S. Department of Housing and Urban Development
  • Actions
  • Determine project operating expenses (HUD 92274)
  • Prepare sections of the Rental Housing Project
    Income Analysis and Appraisal (HUD 92264).
  • Calculate
  • market rents
  • estimated income
  • estimated total operating expenses
  • total estimated replacement cost
  • warranted price of the land
  • fair market value of project
  • estimate replacement reserve
  • estimated occupancy rate

33
Lender and/or Appraiser 223f projects
U.S. Department of Housing and Urban Development
  • Deliverables
  • HUD-92013
  • Location Map
  • Evidence of Permissive Zoning
  • Evidence of Site Control
  • Evidence of Last-Arms-Length Transaction and
    Price
  • A Complete Appraisal
  • Estimate of Market Rent by Comparison (HUD 92273)
  • Operating Expense Analysis Worksheet (HUD 92274)
  • Rental Housing Project Income Analysis and
    Appraisal (HUD 92264)

(continued)
34
Lender and/or Appraiser 223f projects
U.S. Department of Housing and Urban Development
  • Deliverables
  • Trial Supplement to Project Analysis (HUD 92264A)
  • Balance sheets and Operating Statements
  • Rent Roll
  • Project Capital Needs Assessment
  • Appraisers Certification
  • Phase I Environmental Site Assessment (ESA) with
    a narrative environment report. A Phase II
    Environmental Site Assessment must also be
    submitted, should the Phase I assessment disclose
    a need for further study.

35
Substantial Rehabilitation Projects
U.S. Department of Housing and Urban Development
  • Differences from New and Existing Projects
  • In general. A substantial rehabilitation project
    is processed in accordance with the instructions
    found in Sections 7.9 and 7.10 of this chapter,
    except as noted below.
  • 1. Supplemental HUD-92264. A supplemental
    HUD-92264 will need to be completed to estimate
    the As Is Value. The form should be titled
    Supplemental 92264 As Is Value. Both the Direct
    Sales Comparison and Income approaches to value
    are used in the value estimation.
  • 2. The HUD-92273 and HUD-92274 analysis used to
    support the income and expenses on the primary
    HUD-92264 will reflect the conditions that exist
    after substantial rehabilitation has taken place.
    An estimate of replacement cost new is made on a
    worksheet (a supplementary form, HUD-92264,
    Section G) and the result is reported in Part O,
    Remarks Section of the primary HUD-92264.
  • 3. A value for the land without improvements will
    need to be estimated and entered on the primary
    HUD-92264 in Section H.

36
Substantial Rehabilitation Projects
U.S. Department of Housing and Urban Development
  • Differences from New and Existing Projects
  • "As Is" value in multifamily rehabilitation. The
    estimate of As Is value of the property before
    rehabilitation will be estimated by the direct
    market comparison approach and the income
    approach to value.
  • The market value of the project is the sum of the
    land appraisal for the vacant portion of the
    subject site and the value of the existing
    property (land and improvements).
  • Use the Replacement Cost by Formula, Rehab
    Projects, with or without BSPRA, found in the MAP
    Forms Book to find the total project cost
    (summation estimate) using the market value "As
    Is" of the property, and the rehabilitation cost
    estimate furnished by the cost analyst, plus
    carrying charges and financing.
  • Complete HUD-92264, headed Value of the Project
    after Rehabilitation. In Section G of that form,
    the market "As Is" value of the property before
    rehabilitation will be shown on the line titled
    "As Is" value of property.

37
Substantial Rehabilitation Projects
U.S. Department of Housing and Urban Development
  • Differences from New and Existing Projects
  • To find the project mortgage amount for Section
    220 and Section 221, use the lower of Criteria 1,
    3, 4, or 5 on HUD-92264A. Estimate the "As Is"
    value of the property before rehabilitation.
    Then, add the total for all improvements, plus
    soft costs to the AS-IS Value to obtain the sum
    of the above costs.
  • Contingency reserves. For the purpose of
    provision for unanticipated costs inherent in the
    rehabilitation of older structures, there will
    normally be included in the mortgage amount a
    reserve for contingencies. This reserve is based
    on the sum of the total land improvements, total
    structures and general requirements. This percent
    may range between 0 percent and 10. This
    percentage, determined by the cost analyst, is
    included as a separate line item in the estimate
    of replacement cost on HUD-92264.

38
Substantial Rehabilitation Projects
U.S. Department of Housing and Urban Development
  • Differences from New and Existing Projects
  • Interest during construction. For Section 220/221
    projects, interest during construction will be
    calculated based on the sum of one-half the
    mortgage amount plus one-half of the "As Is"
    value of the property, plus demolition, plus
    off-site costs.
  • Inspection fee. The inspection fee is calculated
    at .5 percent of the loan amount when the project
    involves new construction. For substantial
    rehabilitation projects, the inspection fee is
    calculated as the sum of Total for All
    Improvements (plus BSPRA, if applicable), rounded
    to the next higher 100, times .5 percent.
  • Offsite costs. If there are any offsite costs
    associated with the rehabilitation, enter them as
    a line item in the Estimated Replacement Cost.
    This separate entry is necessary in
    rehabilitation processing, since the "As Is"
    value does not include offsite cost requirements.
  • Rehabilitation cost not attributable to
    residential use. This entry must be completed for
    all rehabilitation projects. This cost is
    prepared on Rehabilitation Cost Not Attributable
    to Residential Use, found in The MAP Book. This
    cost is transferred to line 4b under Criterion 4,
    HUD-92264A.

39
Points to Remember
U.S. Department of Housing and Urban Development
  • Understand what documentation is necessary to
    support an application
  • Lenders appraisers are expected to be familiar
    with HUD requirements
  • Appraisal must be clear as to methodology and
    reasoning, and show all data

40
Lenders Appraiser220 and 221d projects
U.S. Department of Housing and Urban Development
  • Ground Lease Processing
  • The lease term must satisfy one of the following
    requirements
  • For Section 223(f)
  • Term is 99 years and renewable, or
  • Term is at least 50 years beyond date mortgage is
    executed
  • For Sections 220, 221(d) and 232
  • Term is 99 years and is renewable, or
  • Term has at least 10 years to run after maturity
    date of mortgage

41
Lenders Appraiser220 and 221d projects
U.S. Department of Housing and Urban Development
  • Ground Lease Processing
  • Unacceptable methods of ground rent payments
  • Graduated schedule of future increases on a lump
    sum year by year basis (e.g., year one 20,000,
    year two 25,000, etc.)
  • Payment schedule based on COLA increases
  • Increases based on future appraisals

42
Lenders Appraiser220 and 221d projects
U.S. Department of Housing and Urban Development
  • Ground Lease Processing
  • Acceptable methods of ground rent payments
  • Fixed percentage of gross collections (or
    effective gross income) e.g. 8 of EGI
  • Fixed percentage of net cash flow to equity
    (after debt service payments but before lease
    payments)
  • Stated dollar amount per year to stay fixed 10
    years beyond insured term

43
MAP Multifamily Accelerated Processing
U.S. Department of Housing and Urban Development
Technical TrainingEnvironmental Analysis
44
Applicable Environmental Issues
U.S. Department of Housing and Urban Development
  • Lead-based paint
  • Asbestos
  • Historic Preservation
  • Floodplain Management
  • Wetlands Protection
  • Endangered Species
  • Noise Analysis
  • Explosive/Flammable Hazards
  • Coastal Barrier Resources
  • Coastal Zone Management
  • Sole Source Aquifers
  • Airport Clear Zones
  • Other Federal or State Laws
  • Additional Hazards and Nuisances

45
Objectives of Session
U.S. Department of Housing and Urban Development
  • Understand role of environmental professionals
    and Lenders in the environmental review
  • Know the applicable environmental concerns
  • Understand HUDs expectations regarding MAP
    submissions
  • Review application documents and exhibits

46
Agenda
U.S. Department of Housing and Urban Development
  • Whats Different for Environmental Review Under
    MAP
  • Professional Qualifications
  • 220, 221d, and 223f Projects
  • Sample Field Notes Checklist and Form HUD-4128
  • Addressing Important Issues Including
  • Historic Preservation
  • Noise
  • Floodplains and Wetlands
  • Explosive/Flammable Hazards
  • Lead-based Paint
  • Asbestos

47
Whats different for the environmental review
under MAP?
U.S. Department of Housing and Urban Development
  • Phase I ESA required for all MAP-qualified
    programs
  • Phase I ESA conducted prior to pre-application
    stage for 220, 221d and 232 projects

48
EnvironmentalProfessionals Role
U.S. Department of Housing and Urban Development
49
Environmental ProfessionalQualifications
U.S. Department of Housing and Urban Development
  • It is up to the sponsor/developer to select the
    professionals to be used in the environmental
    review
  • It is up to the Lender to verify that the
    professionals used are qualified for their
    assigned responsibilities
  • Environmental professionals preparing the Phase 1
    ESA must meet the requirements set forth in the
    ASTM E-1527-05 as amended Standard Practice for
    Environmental Site Assessments Phase 1
    Environmental Site Assessment Process

(continued)
50
Environmental ProfessionalQualifications
U.S. Department of Housing and Urban Development
  • Other professionals may be required to evaluate
    technical areas, such as toxic chemicals or soil
    conditions
  • The Lender should assure itself that these
    technicians are qualified
  • When these professionals are required, the Lender
    may contract for those services if the
    sponsor/developer has not done so

51
Environmental Professional220 and 221d projects
U.S. Department of Housing and Urban Development
  • Actions
  • Conduct Phase I Environmental Site Assessment
    (ESA)
  • Identify any Recognized Environmental Concerns
    (REC)
  • Conduct Phase II ESA if Phase I is inconclusive

Pre-application Stage
52
Environmental Professional220 and 221d projects
U.S. Department of Housing and Urban Development
  • Phase I (ESA) includes
  • Review of current and historical records
  • Interviews with people knowledgeable of the site
  • Inspection of buildings, grounds, and adjacent
    properties
  • Report on details of data investigation,
    reporting process, and an opinion of the datas
    accuracy

Pre-application Stage
53
Environmental Professional220 and 221d projects
U.S. Department of Housing and Urban Development
  • Actions
  • Determine that all RECs are or can be resolved
  • Update reports from pre-application

Firm Commitment Stage
If ESA Reports submitted at Pre-application are...
dated more than 180 days from the date of
submission of the firm commitment
must be updated no later than 150 days past the
expiration of the original
Then they...
within 60 days of submission of firm commitment
And...
180
150
60
Days Before and After Submission of Firm
Commitment
54
Environmental Professional223f projects
U.S. Department of Housing and Urban Development
  • Actions
  • Conduct Phase I Environmental Site Assessment
    (ESA)
  • Identify any RECs
  • Conduct Phase II ESA if Phase I is inconclusive

55
U.S. Department of Housing and Urban Development
Lenders Role220 and 221d projects
  • Actions
  • Consult with HUD staff regarding any
    environmental concerns
  • Submit completed Phase I ESA
  • Submit a narrative environmental report Use
    HUD-4128 and the sample field notes checklist as
    a guide

Pre-application Stage
(continued)
56
U.S. Department of Housing and Urban Development
Lenders Role220 and 221d projects
Pre-application Stage
  • Actions
  • Demonstrate that REC from the Phase I ESA are or
    can be resolved
  • Verify that
  • Historic preservation issues resolved
  • Project not located in a high noise zone
  • Property not located in 100-year floodplain

57
Lenders RoleNarrative Environmental Report
U.S. Department of Housing and Urban Development
  • The Sample Field Notes Checklist is meant to
    provide a generalized outline of typical
    questions for environmental review in the
    narrative environmental report
  • The checklist should identify any environmental
    issues to be resolved
  • This narrative report will help HUD staff
    complete Form HUD-4128, Environmental Assessment
    and Compliance Findings for Related Laws
  • HUD and the Lender should reach agreement at
    pre-app with regard to the measures taken to
    resolve issues

58
Resolve Issues at Pre-application Stage
U.S. Department of Housing and Urban Development
  • In addition to issues regarding site
    contamination, important issues that usually must
    be resolved at the pre-application review
    include those related to
  • Historic Preservation
  • Noise
  • Floodplains and Wetlands
  • Explosive/Flammable Hazards

59
Resolve Issues at Pre-application Stage
U.S. Department of Housing and Urban Development
  • HISTORIC PRESERVATION
  • ALL applications for HUD mortgage insurance are
    considered federal undertakings which require
    HUD to make a determination of
  • no effect,
  • no adverse effect, or
  • adverse effect upon historic properties

(continued)
60
Resolve Issues at Pre-application Stage
U.S. Department of Housing and Urban Development
  • HISTORIC PRESERVATION
  • Lenders should notify the State Historic
    Preservation Officer (SHPO) when submitting
    exhibits for pre-application review or earlier
  • If a problem is expected, it should be discussed
    with Hub or Program Center
  • The response from the SHPO must be received
    before a commitment is issued
  • HUD must make a determination and finding
    regarding historic preservation before firm
    commitment can be issued

61
Resolve Issues at Pre-application Stage
U.S. Department of Housing and Urban Development
  • NOISE
  • If the project is located near a major noise
    source, a noise assessment will be required for
    new construction. Possibilities include
  • Civil airports (within 5 miles)
  • Military airfields (within 15 miles)
  • Major highways and busy roads (within 1000 feet)
  • Railroads (within 3000 feet)
  • Facilities generating loud or repetitive noises
    (factories, quarries, trucking terminals, etc.)

(continued)
62
Resolve Issues at Pre-application Stage
U.S. Department of Housing and Urban Development
  • NOISE
  • HUD standards regarding the acceptability of
    noise impacts on residential property are found
    at 24 CFR Part 51
  • For new construction and conversion from
    non-residential to residential projects, these
    standards must be met
  • For rehabilitation and refinancing, noise
    exposure by itself will not result in rejection
    of existing properties for insurance, but will be
    considered as a marketability factor

63

U.S. Department of Housing and Urban Development
HUDs 8-step decision-making process for
Floodplains and Wetlands
  • 1. Is the site in a floodplain?
  • 2. Serve public notice
  • 3. Review alternatives accept project as
    submitted, accept with modifications as
    dictated by HUD, or reject.
  • 4. Consider impacts
  • 5. Consider mitigation of impacts
  • 6. Reconsider alternatives
  • 7. Serve 2nd public notice with decision to
    proceed
  • 8. Approval of firm commitment

64
Resolve Issues at Pre-application Stage
U.S. Department of Housing and Urban Development
  • FLOODPLAINS
  • If any part of the site or integral offsite
    development is located within the 100-year
    floodplain according to the applicable FEMA map,
    this should be discussed with HUD at the
    pre-application stage
  • New construction in mapped 100-year floodplains
    is strongly discouraged
  • Proposed rehabilitation, refinancing, or new
    construction for facilities housing or serving
    mobility-impaired individuals in mapped 500-year
    floodplains is strongly discouraged

(continued)
65
Resolve Issues at Pre-application Stage
U.S. Department of Housing and Urban Development
  • FLOODPLAINS
  • Any existing building accepted for mortgage
    insurance which is located within a FEMA mapped
    floodplain is required to carry flood insurance
  • In the amount of the loan
  • For the term of the loan
  • Subject to available maximum coverage
  • ALL leases must contain acknowledgements signed
    by tenants indicating that they have been advised
    that
  • The property is in the floodplain, and
  • Flood insurance is available for their personal
    property

66
Resolve Issues at Pre-application Stage
U.S. Department of Housing and Urban Development
  • WETLANDS
  • Applications for mortgage insurance on new
    construction are subject to Executive Order
    11990, Protection of Wetlands
  • Wetlands are those identified on the National
    Wetland Inventory maintained by the U.S. Fish and
    Wildlife Service
  • Proposals impacting wetlands must be reviewed by
    HUD
  • Wetlands under local or state jurisdiction are
    subject to state or local review as appropriate

67
Resolve Issues at Pre-application Stage
U.S. Department of Housing and Urban Development
  • EXPLOSIVE/FLAMMABLE HAZARDS
  • HUD will not insure a property where structures
    and residents will be exposed to unacceptable
    risks posed by proximity to explosive or
    flammable hazards.
  • There must be an Acceptable Separation Distance
    (ASD) away from aboveground storage facilities
    with explosive or flammable material contents and
    similar industrial facilities
  • Analysis of sites near or in the vicinity of
    these types of facilities must be performed by
    HUD

68
U.S. Department of Housing and Urban Development
Lenders Role220 and 221d projects
  • Actions
  • Demonstrate that all RECs have been (or can be)
    resolved
  • If necessary, develop maintenance plans for any
    asbestos and/or lead-based paint problems
  • Report any changes or updates to pre-application
    environmental information

Firm Commitment Stage
69
U.S. Department of Housing and Urban Development
Lenders Role223f projects
  • Actions
  • Consult with HUD staff regarding any
    environmental concerns
  • Submit Phase I ESA
  • Submit narrative environmental report
  • Demonstrate that all RECs have been or can be
    resolved

Firm Commitment Stage

70
Lead-based Paint and Asbestos
U.S. Department of Housing and Urban Development
  • Topics not covered in the SFNC or Form HUD-4128
    include
  • Lead-based paint (may be present in buildings
    built prior to 1978)
  • Asbestos (may be present in buildings built prior
    to 1976)
  • These topics must be addressed by the sponsors
    architect
  • All structures with lead-based paint and asbestos
    need an Operations Maintenance Plan

71
Lead-based Paint and Asbestos
U.S. Department of Housing and Urban Development
  • LEAD-BASED PAINTS
  • Lead based paint requirements
  • Are relevant to conversion, substantial
    rehabilitation, and to refinancing or purchase of
    apartments under Section 223(f)
  • Are not applicable to rehabilitation,
    refinancing, or purchase of healthcare facilities
  • All HUD regulations have been updated. Copies of
    the new regulation, with guidance materials, may
    be downloaded from www.hud.gov/lead or obtained
    by phoning 1-800-424-LEAD

72
Lead-based Paint and Asbestos
U.S. Department of Housing and Urban Development
  • ASBESTOS
  • If there is asbestos and it is friable, HUD
    recommends that it be removed
  • If asbestos is not friable or damaged, it is
    usually acceptable for encapsulation
  • This course of containment will require and
    Operations and Management plan

73
Environmental AnalysisMore Information
U.S. Department of Housing and Urban Development
  • All Federal agencies are required to comply with
    the National Environmental Policy Act of 1969.
    HUD regulations implementing NEPA are contained
    in 24 CFR, Part 50. HUD may not delegate its
    environmental responsibilities to others.
  • HUD has issued two handbooks covering
    environmental issues Handbook 1390.2
    Environmental Assessment Guide for Housing
    Projects and Handbook 1390.4 Guide to HUD
    Environmental Criteria and Standards contained in
    24 CFR 51.
  • HUD has established an environmental form,
    HUD-4128, that documents compliance with NEPA,
    and other environmental Federal laws,
    authorities, Executive Orders, and HUD standards.
    HUD-4128, Environmental Assessment and
    Compliance Finding for Related Laws is in the
    Forms Appendix.

74
Environmental AnalysisMore Information
U.S. Department of Housing and Urban Development
  • The Forms Appendix also contains the Sample Field
    Notes Checklist which the HUD staff will use to
    provide information supporting the conclusions
    listed on Form HUD-4128. Existing projects do not
    require an environmental assessment under the
    National Environmental Policy Act but do need to
    comply with Part A requirements of Form HUD-4128.
    Rehabilitation projects that meet the condition
    of 24 CFR 50.20(a)(2) also do not require an
    environmental assessment under NEPA except in
    extraordinary circumstances. (Still need a Phase
    I)
  • This chapter is not a substitute for requirements
    in the laws, regulations, and Executive Orders
    regarding environmental analysis.

75
Environmental AnalysisMore Information
U.S. Department of Housing and Urban Development
  • MAP Guide is available on the HUD web site
  • www.hud.gov/fha/mfh/map/maphome.html
  • Questions?
  • FAQs on web site

76
Points To Remember
U.S. Department of Housing and Urban Development
  • HUD cannot give up its environmental regulatory
    responsibilities (HUD-4128)
  • The Sample Field Notes Checklist should be used
    as a guide for the narrative report
  • Informal communication with HUD staff concerning
    environmental requirements is encouraged
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