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January 12, 2017 · A.J. Johnson

Notice H 2016-18, Automating Capital Needs Assessments

HUD published Notice H 2016-18 on December 30, 2016, "Implementation of the CNA e Tool: Automating Capital Needs Assessments (CNA), and Related Policy Changes."   The Notice introduces new Capital Needs Assessment tools, and consolidates and aligns due diligence methods for CNAs. These tools are optional at this time, but will become mandatory in the future.   Background In 2010, the Domestic Policy Counsel convened the Rental Policy Working Group (RPWG) that included the Departments of Treasury, Agriculture, and HUD to align their policies and practices applicable to multifamily housing projects.   RPWG recommendations were published in 2011 and included a proposal to create a standard, automated, electronic template and process for CNAs for use by various agencies and programs, and available for use by all multifamily industry participants.   The CNA e Tool and training and technical assistance resources for users are released in conjunction with this Notice and will continue to be developed by HUD. The Tool and associated components can be found at the CNA e Tool home page: http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/mfh/can    Implementation of the Tool for HUD Programs   The Notice describes:
  1. The implementation schedule for optional use, then mandatory use, of the CNA e Tool;
  2. Which HUD programs will use the Tool;
  3. System user access credentials and methods; and
  4. Training and self-help resources, technical assistance and help desk resources that are available to users.
  Calendar for Implementation   All program participants and their CNA providers are encouraged to begin using the CNA e Tool for preparation of CNAs submitted to HUD beginning on January 15, 2017. All CNAs submitted to HUD on or after July 1, 2017, must be submitted through the CNA e Tool in order to be an acceptable CNA.   Applicability to HUD Programs   This Notice does not apply to any Public Housing Authority (PHA) except those for the RAD program. On or after July 1, 2017, CNAs are required to be submitted using the CNA e Tool for the following programs:
  1. Refinance/Acquisition Section 223(a)(7) & 223(f);
  2. Substantial Rehab less than gut rehab Sections 220, 221, & 231;
  3. New Construction or Substantial Rehabilitation (gut rehab) Sections 220, 221, 231;
  4. Supplemental Loans Section 241(a);
  5. Mark to Market Restructuring;
  6. RAD - Rental Assistance Demonstration without insured mortgage financing;
  7. Ten-year update CNAs for assets with insured mortgages;
  8. Partial payment of claims or Loan Modifications; and
  9. Section 202-811 with PRAC assistance, but not an insured mortgage transaction.
  Owners with projects falling in these categories should obtain a copy of the Notice and begin the process of understanding and using the CNA e Tool.      
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