Spreadsheet: c46b8612-c891-4aae-92d9-7630cbb90abd
Sheet: Construction-CH.12

[NAME] | ANSWER | Last Updated
If we have already submitted an Initial Firm Commitment Application for a new construction project, but at that time were not ready to submit the Early Start request (as the design documents were not completed),  may we submit this request separately, though you have not yet acted upon the application in the queue? | A Post-Commitment Early Start request can only be submitted after a Firm Commitment has been issued.  Please refer to our website for links to the necessary Post-Commitment Early Start documents. | 2012-02-01 00:00:00
What marketing allowance is acceptable for the 232 New Construction program? | Marketing Allowance should be set at some percentage of the average monthly rent. | 2012-02-01 00:00:00
Is OHP still approving the start of construction prior to application review (while in the queue) or prior to Firm Commitment? | Per the January 6, 2012 Email Blast, OHP is no longer doing "Early Commencement of Construction".  In light of risks associated with allowing construction starts prior to issuing a commitment, ORCF no longer intends to authorize construction starts prior to commitment.  (This applies with respect to applications being submitted after February 29, 2012.)  This is true with respect to Section 232 new construction or substantial rehabilitation and blended rate projects.  ORCF will, however, consider approving a post-commitment early start of construction, and ORCF is working to revise and repost forms to facilitate this.  PLEASE NOTE:  The January 6, 2012 Email Blast, was revised on February 2, 2012 to allow lenders to continue to request construction starts prior to commitment on 241(a)’s. | 2012-04-01 00:00:00
Is it eligible to use the 232/223(f) acquisition program to acquire a facility that had a substantial renovation done in the last year or will the 3 year construction rule apply? Are there any waivers available for borrowers who are acquiring facilities vs. refinancing them? | We are using the sub rehab definition in the MAP Guide 3.10 B.  If the work done constitutes a sub. rehab., per 24 CFR 232.902, we cannot insure under 232/223f for 3 years. | 2012-04-01 00:00:00
HUD requires their inspector to make two visits per month during construction, so we have required architect contracts to include at least two inspections per month.  Can an architect contract include less than two site visits per month during construction? | HUD expects “adequate” site visits by the Supervisory Architect.  The “twice per month” site visits have been an unwritten standard.  Therefore, while the Lender’s Third Party Architectural Reviewer can’t require the Supervisory Architect to visit the site a minimum two times per month, they can certainly make the recommendation to the Lender, who can in turn advise their client (the “Owner” part of the Owner/Architect Agreement).  The Owner will have to determine what is adequate, but having the Architect visit the site more than once per month, especially in the beginning and the end of construction, would be recommended. | 2012-04-01 00:00:00
Does OHP hold pre-construction 'concept' meetings to discuss details of a potential project? | Within OHP, we have worked to incorporate Lean practices, which include being fair, consistent and timely in our responses to customers.  As a part of that concept, in the December 18, 2009 Email Blast, OHP announced that no further pre-application submissions would be accepted on new construction projects, thus requiring  that applications be submitted direct to firm.  Also in an effort to assure fairness and consistency, we have made it a practice not to hold formal pre-construction ‘concept’ meetings; instead we encourage Lenders to submit specific questions on a project to our general mailbox at [EMAIL].    The newly established ORCF Policy Team now reviews these inquiries weekly, and responds to them as quickly as possible.  By responding to questions from a central mailbox, with a standard review team,  we further ensure consistency and fairness to our customers.  We also post frequently asked questions from the Lean Thinking mailbox to our website (and update them quarterly), furthering this practice and simultaneously encouraging transparency. | 2012-04-01 00:00:00
Can a project originally closed as a 221(d)(4) loan be refinanced using a 223(a)(7) loan? | No, OHP can only process 223a7’s on Section 232 loans.  The project would need to enter the program as 232/223(f) refinance; however if the cost of improvements would exceed 15% of the value, the facility would need to enter the program as a 232 Substantial Rehab. | 2012-09-28 00:00:00
Is Early Commencement allowed on 241a transactions? | The excerpt from the 2/2/12  email Blast:                                                                                                                          REVISION TO PROCEDURE ON CONSTRUCTION STARTS PRIOR TO COMMITMENT January 6, 2012 Email Blast stated that HUD will no longer authorize construction starts prior to commitment on new construction, substantial rehabilitation, and 241(a) projects after a certain date. We are hereby revising this language to allow lenders to continue to request construction starts prior to commitment on 241(a)’s. | 2012-09-28 00:00:00
It is our understanding that all units within an Assisted Living Facility must qualify as residential units in order to use residential rates.  This would mean that all (100%) units must have an operable kitchen with adequate counter space, cooking and cleaning capabilities as identified in the Minimum Property Standards. I have a developer who is looking for definition regarding the application of Building vs. [NAME].  The wage determination will identify that 4 stories and less will qualify as residential and that more than 4 stories is building rates.  Further definition is require regarding the type and use of the facility. | On each project, the Labor Relations staff assigned to the project will make a determination (if needed, going to the Department of Labor) as to whether [NAME] or Residential rates apply.  Our understanding is that Residential Rates could apply to properties with four stories or less, and containing units  with full kitchens/kitchenettes and bathrooms.  Therefore, a determination by HUD's Office of Labor Relations is essential.  If you have any projects where you want a determination before being assigned to an OHP Underwriter, you’ll need to have the lender forward a request to Lean Thinking ([EMAIL]) for a Labor Relations Specialist to be assigned.  Your request should include the Lender Narrative, with all of the pertinent data. | 2013-03-01 00:00:00
When does HUD consider the construction to be substantially complete? | HUD deems substantial completion to have occurred when any and all construction that is included in the construction documents have been completed as provided for in the Construction Contract.  HUD will not sign off on a Final Inspection until the HUD Permission to Occupy is executed, which requires a Local Authority Certificate of Occupancy, and proof of insurance (i.e. Property, Fidelity, and PLI). | 2013-03-01 00:00:00
What is the current calculation method for Reserve for Replacement on a Skilled Nursing Facility.  Is it acceptable to provide a Reserve for Replacement analysis (schedule) in lieu of the prescribed formula on a new construction SNF? | The formula for calculating the reserve for replacement for new construction and substantial rehabilitation is required.  The formula is: 0.0060 times the total replacement cost of the structures plus 0.10 times  the major moveable equipment | 2013-03-01 00:00:00