Capital Needs Assessment e-Tool Training for PRAC Providers

Regulation | February 22, 2018 | by Colleen Bloom

PRAC properties, as of February 1, need to have a comprehensive needs assessment (CNA) created and submitted using HUD's new electronic format and online submission process when seeking to increase their deposits to Reserve for Replacement accounts by more than $500 or 5% annually. HUD recorded a webinar providing an overview of HUD's Capital Needs Assessment (CNA) e-Tool and specific requirements for its use in Project Rental Assistance Contracts (PRACs).

Mandatory use of the CNA e-tool went into effect as of November 1, 2017, for all FHA-insured program application. For the PRAC programs, however (including Section 202 or 811 with PRAC assistance, but not an insured mortgage transaction), CNA’s prepared by a needs assessor on or after February 1, 2018, must use the new electronic format.

HUD's Office of Asset Management and Portfolio Oversight (OAMPO) clarified that, for PRAC properties, the only routine submission point for a CNA would be as part of a request to increase the reserve for replacement deposits, made in conjunction with a budget based rent increase. Minor R4R increases of less than 5% or $500 do not require a CNA.

The recorded February 8 webinar provides an overview of HUD's Capital Needs Assessment (CNA) e-Tool and requirements for its use in Project Rental Assistance Contracts (PRACs). This training includes a high-level overview of the e-Tool's functionality, but focuses primarily on the role of PRAC owners in determining when the CNA e-Tool is required, reviewing the e-Tool provided by an independent assessor, and submitting the e-Tool to the Asset Management office

Notable Quotables:

The following statements are taken directly from the presentation, and represent key points or considerations.

The CNA, prepared by a qualified 3rd party needs assessor:

  • describes the condition and durability of a multifamily property
  • includes a year by year schedule of projected critical and non-critical capital needs and costs
  • covers a period of 20 years
  • is reimbursable from R4R
  • is obtained from the needs assessor by the owner
  • must be reviewed by the owner for content and quality (as detailed in depth in the HUD training), then
  • is submitted to HUD by the owner

Capital needs assessments are strongly recommended for all PRAC properties because adequate reserves are key to ensuring sustainability of the property for the long-term, as discussed further in the LeadingAge white paper PRAC Preservation Needs and Options . Members having difficulty with the e-tool or obtaining necessary increases to reserves are encouraged to communicate such problems to LeadingAge

 

Additional Resources: