Spreadsheet: c46b8612-c891-4aae-92d9-7630cbb90abd
Sheet: Arch. & Cost-CH.6

[NAME] | ANSWER | Last Updated
Are there current guidelines for acceptable construction cost per sq. ft. for an addition to an existing facility? | There are no general benchmarks.  As a part of the underwriting the lender will hire a 3rd party architectural/cost review that will review the costs (and comparables). | 2012-02-01 00:00:00
Does LEAN have a minimum size for assisted living studio units? | No minimum size.  However, the lender and other 3rd party providers will need to take into account the subject’s physical aspects in comparison to the competitors in the market. | 2012-02-01 00:00:00
What is the process for HUD LEAN certification of third-party consultants, for example to provide Phase I ESAs and Property Capital Needs Assessments? | It is up to the lender to determine whether the third party providers are qualified under LEAN 232 processing.  Below is our website that contains info on our various programs – including a PCNA SOW.  http://portal.hud.gov/portal/page/portal/HUD/federal_housing_administration/healthcare_facilities/section_232/LEAN_processing_page/underwriting_guidance_home_page | 2012-02-01 00:00:00
If submitting a 241a application for expansion and some repairs are the existing plant, where some of the bathrooms may not be fully ADA compliant under the proposed design and some are not compliant currently, would we need a waiver to process this 241 application? | The new unit bathrooms would have to comply with the Uniform Federal Accessibility Standards (UFAS).  This would be consider changes to the existing floor plan, which require UFAS compliance as described in the Purchase/Refinance and Sub Rehab sections.  Please be sure to reference the Handicap Accessibility Matrix. | 2012-02-01 00:00:00
What are the standards or guidelines for tenant emergency call systems in an Assisted Living Facility?  Where can I access the complete standards document to prepare an existing assisted living facility for LEAN financing? | The requirements of the emergency call system can be found on our LEAN Lender’s Architectural & Cost Analyst’s Statement of Work, which can be downloaded on www.HUD.gov.  The specific wordings are as follows:  10. Emergency Call Systems. Program must furnish each sleeping area and each bathroom with an emergency call system that:  a. Registers a call (annunciator and alarm) at one or more supervised locations, or  b. Has an intercommunicating telephone system connected to a switchboard which is monitored 24 hours a day, or  c. Sounds an alarm (not the fire alarm) in the immediate corridor and automatically activates a visual signal in the corridor at the entrance to the residential accommodation.  Note:  may be hardwired and/or wireless.  Personal pendant-style systems alone, meeting one or more of the above criteria, will satisfy the requirement as well.   The emergency call system requirements are from the Minimum Property Standards (MPS) and apply to elderly housing, without distinguishing between licensed or unlicensed beds.  Therefore, regardless of Assisted Living, Skilled Nursing or Independent Living units, the requirement applies. | 2012-04-01 00:00:00
Does OHP permit modular construction? This is project where the units are assembled at the factory, then shipped to the site. | LEAN, as with Multifamily, does not prohibit modular construction.  We haven’t seen it done frequently, though.  If it moved to construction, we would also need to figure out the inspecting at the factory and the site – we would do so at that time through discussions with the lender, GC, and HUD Inspector. | 2012-02-01 00:00:00
I have questions regarding bonding policies and the LEAN 232 Program.  1.  What are the HUD policies and requirements regarding bonding if the owner wants to qualify for the LEAN 232 program on the new construction? 2.  Specifically is the general contractor required to bond the entire project; or can the owner just require the subcontractors to be bonded? | The general contractor is required to bond the entire project and must post  100% payment and performance bonds.  In lieu of bonds, cash or a letter of credit may be acceptable. In addition, the general contractor must execute a guaranteed maximum price contract and have liquid net worth equal to at least 5% of the project construction contract plus all other uncompleted construction work. | 2012-02-01 00:00:00
Is a large new construction project with more than 150 units acceptable in the 232 program? | There is no size limit. It depends on the market and the market study will be carefully reviewed by an OHP appraiser and the loan committee. | 2012-02-01 00:00:00
Is a PCNA needed for Section 241a? | A PCNA is not applicable to a 241a.  The Third Party deliverable for a 241a relates to a review of Plans and [NAME] (similar to New Construction and Sub Rehab).  Any work to the original building, if any, would be reflected in the Plans and [NAME]. | 2012-02-01 00:00:00
What are the LEAN standards for fire alarms and strobes in sleeping rooms of residential facilities?  Where can I get a copy of the standards for fire alarm system for HUD? | The LEAN (Section 232) A/E & Cost Statement of Work has certain specifics describing the emergency call system (with strobe alarm and such). We don't have specifications on fire alarm systems from HUD/LEAN.  We follow the specifications that are approved by the local/state code/standard (these are area- and project-specific). | 2012-02-01 00:00:00
Does HUD have a list of states that require termite reports on refinancing of nursing homes? | No, we do not have a specific list of states that require termite reports.  We suggest you refer to your PCNA reports for their recommendations on termites [NAME] reports. | 2012-02-01 00:00:00
Is the installation of a fire sprinkler system a non-critical repair if the state does not require it this year? | Installation of a sprinkler system as a non-critical repair—a) if the PCNA does not call it out as a critical repair & b) if the state does not require a sprinkler system to be retrofitted within the year & c) total costs of the sprinkler system and other repairs are below the sub-rehab threshold—the addition of a sprinkler repair called out by the lender would be an acceptable non-critical repair and not considered a Major Building Component. | 2012-02-01 00:00:00
Can we submit Major Moveable Equipment (MME) numbers in a cumulative fashion rather than individual line items in each year for each piece of equipment? | The analysis of Major Movable Equipment must be in the format found in the PCNA Statement of Work. | 2012-02-01 00:00:00
The applicability of Uniform Federal Accessibility Standards is still not entirely clear to us, mainly the "built after 1973" statement and where it applies.  Would we prepare a UFAS discussion of deficiencies for an existing facility built in 1972, no federal financial assistance nor rehab? If it was built in 1980? | No, because it was built before 1973, and is not receiving Federal financial assistance.  However, it would not preclude an analysis because of marketability. For the 1980 building, yes and no.  Yes, if is receiving Federal financial assistance, and No, if it is not receiving Federal financial assistance. | 2012-02-01 00:00:00
Does the PCNA analyst have to inspect 100% of the facility? | Per the Statement of Work, Section IV.B.1.b., “The Needs Assessor must inspect enough dwelling units to be able to formulate an accurate estimate of repair, replacement and major maintenance needs.” | 2012-02-01 00:00:00
Does the PCNA analyst have to test every smoke detector within the facility or can we rely on the latest fire alarm test that the facility has? | Per the Statement of Work, Section IV.B.3.c., “Smoke detectors.  Every dwelling unit shall be supplied with smoke detector(s) in appropriate location(s).  The Contractor (Needs Assessor) shall verify that the smoke detectors are operational.  If the smoke detectors are not in every dwelling unit, the installation and cost of the smoke detectors shall be listed as a critical repair item.”  It does not specifically state the method the inspector must use to verify the smoke detectors are operational. | 2012-02-01 00:00:00
Does the PCNA analyst have to include a Sales Tax Column for the Critical and Non-Critical Repairs along with the labor and materials? | To stay consistent with the proposed Statement of Work format, do not include a separate Sales Tax column.  Include applicable sales tax within the labor and materials. | 2012-02-01 00:00:00
On the LEAN PCNA reports, will your office require Year 1 Reserves for Replacement to include only items that are going to be replaced on an on-going basis? | It is acceptable to allow Non-Critical Repairs to be completed within 12 months of Closing.  Therefore we would only expect to see items to be replaced on an on-going basis to be included in Year 1 of the Replacement Reserve Analysis. | 2012-02-01 00:00:00
How would you like the third party providers to address UFAS within assisted living facilities that were built with a percentage of fully accessible units and the remainder adaptable units per FHAAG? | Per the LEAN PCNA Statement of Work, Section IV.B.3.e.: “Handicapped Accessibility Requirements. The Fair Housing Accessibility Guidelines are applicable for projects with first occupancy after March 13, 1991, and for which building permits were issued or reissued after June 15, 1990, on a building by building basis.  Section 504 / Uniform Federal Accessibility Standards (UFAS) is applicable for all housing receiving Federal financial assistance, plus all existing HUD Section 232 New Construction, and existing HUD Section 232 Substantial Rehabilitation (but only those elements that underwent alteration), built after 1973.” | 2012-02-01 00:00:00
The new PCNA format does not require the analyst to come up with a replacement cost estimate.  Where do we get the information to complete the insurance schedule? | For a 232/223(f), the data to complete the HUD-92329, is obtained from the [NAME] (not the Needs Assessor).  The Fair Market Value comes from the HUD-92264-HCF, Section M, and the Warranted Price of the Land comes from Section H, Line 38.  The Major [NAME] are then subtracted out, and included in a line item of their own. | 2012-02-01 00:00:00
What if the  developer has a relationship with a subcontractor that the contractor is going to hire? The contractor does not have a relationship with the subcontractor.  Is this allowed and what steps have to be followed to disclose the information?  Where can I find this information on the website? | Below is the document, located on the HUD.gov website, that discusses identity of interest situations.  The Office of Healthcare Programs homepage is: http://hud.gov/healthcare  Then go to the following links: Office of Residential Care Facilities -> Underwriting Guidance -> Section 232 New Construction Lender Tools for Firm Application  The actual document is called: 2-4 and 2-5 Lender’s ArchCost Reviewer SOW 2-03-2009 When you open the document, go to Section IV.C.8 which begins on page 10. | 2012-02-01 00:00:00
For assisted living properties, should the design follow Title 24, 1134 A, and at 1134A.6 which specifies that all units must have at least one shower which is at least 42"X48"? Is this the appropriate code? It appears to conflict with the UFAS guidelines. | The new construction design should follow UFAS guidelines, which call for a 30" X 60" roll in shower unit. | 2012-02-01 00:00:00
Do all major & minor UFAS deficiencies (e.g. levered door/sink hardware, scald/abrasion, improper door width, improper bed clearance, improperly sized bathrooms, etc.) have to be included within the Critical Repairs? | If the project must comply with UFAS per the Statement of Work, then yes, the deficiencies must be included as Critical Repairs.  This is the same for compliance and deficiencies with the Fair Housing Accessibility Guidelines. | 2012-02-01 00:00:00
Do the proposed owner repairs have to be separated out from the PCNA recommended Non-Critical Repairs? | Yes. Three lists of repairs are included, “Critical Repairs,” “Non-Critical Repairs,” and “Owner Proposed Work.” | 2012-02-01 00:00:00
Does the PCNA have to use the attached forms (Inspection Report Form general and detailed, Property Conditions, etc.) within the LEAN PCNA June 11, 2008 Scope of Work or can we develop our own that match the formatting? | The Needs assessor is required to follow the instructions in the Statement of Work, including the Inspection Report Form, found in Exhibit 1. | 2012-02-01 00:00:00
For the determination of Residential Wage rates for LEAN financing, does HUD look at the new development as a total, or will it just look at the assisted living building units? | If 80% of the total number of units are self contained with a bathroom and kitchen or kitchenette, then all the units would fall under the Residential Wage Decision.  The final decision will be made when the Firm Application is submitted to HUD, and a Labor Relations Specialist is assigned to the project. | 2012-02-01 00:00:00
If it has been determined that a property was built under a building code whose seismic requirements exceed that of the HUD minimum standards, is a seismic analysis required or possibly a statement from the engineer that it is covered by the building code? | A seismic hazard analysis is not required when an engineer determines the applicable code requirements at the time of construction equals or exceeds the HUD seismic standard.  An affirmative statement would need to be provided.  Currently under the LEAN Section 232 program, we do not require a seismic analysis on all refinance/purchase loans.  However, even if the applicable code is equal to or more strict than HUD’s current standard, and you see seismic issues that are of concern, I would not discourage you, as the expert in the field, from making a seismic analysis recommendation to the Lender. | 2012-02-01 00:00:00
Can design costs associated with offsites be included on Borrower Other Fees, and included in the mortgage? | No.  Offsite improvements are not allowed in the mortgage, consequently, the related architectural design fees would not be included in the owners other fees as a mortgage-able cost. | 2012-04-01 00:00:00
Where can I find the Architectural Reviewer’s requirements for the initial submittal under HUD LEAN 232 reports? | Currently, loan modifications for borrowers are only being done in conjunction with loss mitigation actions.. | 2012-04-01 00:00:00
Questions about specific items on the Project Capital Needs Assessment (PCNA) Statement of Work for Lean Section 232/223(f): |  | 2012-02-01 00:00:00
PCNA Statement of Work: I am unclear on Section 4, D. 11 of what is meant by “The Needs Assessor shall identify and describe all on-site and off-site existing liabilities.  Please clarify especially the scope of off-site liabilities. | Examples of liabilities (onsite and offsite) would include, but are not limited to: flood zones, excessive noise sources, nearby hazardous waste, and adjacent land uses not typically compatible with a care facility.  The purpose is to identify any issues that could adversely affect HUD’s mortgage insurance risk. The appraiser may be able to help identify such issues as well. | 2012-02-01 00:00:00
PCNA Statement of Work: II G 4, RUL.  Is this simply asking for the overall estimated EUL of the property? | No, this refers to the Remaining Useful Life of the property.  This is different than the Remaining Economic Life determined by the [NAME]. | 2012-02-01 00:00:00
PCNA Statement of Work: II G 12, Supplemental Comments & Recommendations.  Just add whatever other comments or recommendations we feel are informative or useful? | Yes | 2012-02-01 00:00:00
PCNA Statement of Work: III Summary and Conclusions.  Is this is asking for a narrative summary of the property condition and recommended repairs? | Correct. | 2012-02-01 00:00:00
PCNA Statement of Work: IV Special Engineering Reports/Studies.  Section IV D 4 of the SOW says to “recommend those additional specialized tests and/or analyses (e.g., structural, mechanical, seismic, termite, etc.), if any, that the Needs Assessor determines to be necessary”.  Should we restate recommendations that would be made earlier or just list the reports or studies?  Does this include reports or studies that were reviewed for this assessment? | It would include reports recommended by you, as well as provided and reviewed by you. | 2012-02-01 00:00:00
PCNA Statement of Work: Do you prefer to see the Critical and Non-Critical Repairs as in our typical Immediate Repairs and Replacement Reserves table formats or such as listed in the LEAN Statement of Work, with General and Specific listed separated for both Interior and Exterior Areas, and also for each line to be broken into Labor and Materials? | Please follow the List of Repairs format in the SOW. | 2012-02-01 00:00:00
PCNA Statement of Work: IV D 9, Unit [NAME] of the SOW says that “the Assessor shall prepare a unit-by-unit work write-up of the inspected units.”  Is this detail required and if so would we include it in II E, Condition of Building Interiors & Units?  Can you provide an example of the detail you’re looking for here? | This section is the basis for the Lists of Critical and Non-Critical Repairs, specifically repairs related to the individual living units.  The Repairs are to be written to clearly describe what needs to be done, and detailed enough for an inspector to verify completion of work. | 2012-02-01 00:00:00
The checklist illustrates that a PCNA is only required if the Borrower is looking to extend the term.   Is this correct?  No PCNA is required if an extension is not requested? | For 223(a)(7) loan applications, there are three circumstances when FHA requires a PCNA.  These circumstances are: 1. For applications requesting a term extension,  2. For projects where a PCNA has not been submitted to HUD within the last 10 years, and, 3. For projects that do not meet the fire sprinkler requirements for projects participating in Medicaid or Medicare Programs.   The source document for this response is HUD’s Lean 232 Program, Office of Healthcare Programs, Update as of January 25, 2012. | 2012-09-10 00:00:00
For a 223(a)(7) project, if the Owner proposes work, must he or comply with the  typical non critical repair requirements such as :                                                                                                                                     1.       Work to be completed within one year?  2.       Repair escrow to be placed for the total of all owner proposed work? 3.       Three bids for work in excess of $25,000? | Please refer to the Non-critical Repairs and Owner Protocol form for full details.  When completing owner proposed repairs on a 223(a)(7) project, the work must be completed within one year and the repair escrow must put in place for the total of all owner proposed work.  However, it will not be required to submit three bids for work in excess of $25,000. | 2013-03-01 00:00:00
Can waivers to the Fair Housing Amendments Act be requested for assisted living facilities that require non-critical repairs? | Assisted living facilities must comply with the Fair Housing Amendments Act (FHAA) and this requirment cannot be waived.  FHAA applies to all buildings that received their initial certificate of occupancy after March 13, 1991. For reference, the Office of Healthcare Programs’ Handicapped Accessibility Matrix for Section 232 is located on OHP's website. | 2013-03-01 00:00:00
Where can I find more information on kitchens/kitchenettes? | The Office of Residential Health Facilities has  published its Section 232 - facility requirements in of the Lender’s Architectural Reviewer and Cost Analyst’s Statement of Work.  The link to that Statement of Work is below. http://portal.hud.gov/hudportal/documents/huddoc?id=2-4_2-5LenArCsReSOW122311.doc It includes the following language regarding kitchens/kitchenettes in ALF units: The assisted living unit may contain a kitchen, kitchenette or no kitchen depending on the design and market conditions. Cooking facilities may be disconnectable for certain residents.  (1)   A full kitchen consists of a sink, refrigerator, slip-in range with oven or built-in cook top plus a built-in oven, cabinetry, and storage for cooking/eating utensils.  (2)   A kitchenette has a small sink and small refrigerator, cook top or microwave.  (3)   A kitchen is not required in each unit. | 2013-03-01 00:00:00
Is there a specific aging requirement for Architectural and Cost Reports? | There is not a specific aging requirement on the Architectural and Cost reports as there is with the other third party reports.  Though as with any document, there may be individual circumstances that would warrant OHP requesting updated information, there is not a general aging period for this report. | 2013-03-01 00:00:00