5.12.2 Cost Categories

• A. The cost estimate consists of the following items:

1. Structures and Land Improvements include:

   • Costs of all residential buildings, including footings and foundations.

• Garages, including all covered parking, from individual carports to complete parking structures. For new construction and substantial rehabilitation, include free-standing garage structures with other accessory buildings on the Accessory Structures line on form HUD-92326. Garages are reported separately in Line G.39 on form HUD-92264, except when the garage space is an integral portion of a larger structure; in which case individual trade costs should be reported for the entire

17 HUD forms reflect the sixteen-division CSI format (pre-2004).

MAP Guide, March 2021 Go to beginning of Chapter 5

Bookmarked Version Go to Acronym and Abbreviation List, Glossary, Index

Chapter 5 Page 5-45

To return to this page after clicking a link, press ALT + Back Arrow

Chapter 5 Architectural and Construction Analysis 5.12 Cost Estimating for Lenders

Go to Table of Contents

structure and not separately for the parking element. Similarly, costs should not be separated when accessory uses or commercial space is included as part of a larger dwelling structure.

• Surface parking, including carports, which are treated as site improvements in the CNA e-Tool. In a building designed exclusively for parking (or if parking is a use of space in a larger building with other uses), all enclosed (garage) parking is treated as a common space even if spaces can be or are assigned to particular tenants or units. In some building configurations (e.g., attached townhouses) garages may be part of a dwelling unit and available only to a resident of that unit. Such garages are called “in unit” garages and the square foot area of such “in unit” garages is included in the area of the unit. “In unit” garages are not common space. Replacement cost is estimated for each building including all the uses of space in the building.

• Onsite land improvements that make up the following trade line items on form HUD-92326: Earthwork, Site Utilities, Roads and Walks, Site Improvements, Lawns and Planting, and Unusual Site Conditions. In the CNA e-Tool onsite land improvements are identified as the need category “site systems.”

• In new construction and sometimes in substantial rehabilitation, unusual land improvements required to address conditions not typical to most construction in the locality (e.g., excessive excavation, rock excavation, cuts and fills, special foundations, high water table, problem soils, environmental remediation work or installations). These items are taken from the Unusual Site Conditions trade line item on form HUD-92326 and are reported separately in Line G.36a of form HUD-92264. They must be itemized separately because of their possible impact on site value. The Lender’s Construction Analyst should consult with the Lender’s Underwriter and appraiser to define and quantify the need for unusual land or site improvements.

  • Short extensions or connections of roads, walks, and utilities from project site boundaries to adjacent offsite public improvements are considered onsite land improvements.

• B. Supplemental Cost Estimates include:

1. Demolition. Demolition, which is defined as onsite work to remove the existing structure, footings, foundations, and utilities to prepare a site for new construction.

   • Include the removal and disposal of debris and fill and compaction of excavations. Include General Contractors' and subcontractor’s overhead and profit in the estimate.

• Report on form HUD-92326, under “demolition,” and form HUD-92264, Section O. Appraiser will report Demolition costs in Section J of form HUD-92264.

Demolition should not be included in the construction contract.

• “Demolition” in this context does not include interior demolition within existing structures undergoing substantial rehabilitation.

2. Offsite. Offsite work is work not adjacent to project boundaries including utilities, walks, curbs, gutters, streets, drainage structures, landscaping, etc., that extend away from the project site. These improvements are not included in the construction contract. Report on form HUD-92326 and Section M of form HUD-92264.

3. Cost Not Attributable. Cost Not Attributable to dwelling use is the construction cost estimate of certain project amenities not directly used for residential dwelling and is calculated only for

MAP Guide, March 2021 Go to beginning of Chapter 5

Bookmarked Version Go to Acronym and Abbreviation List, Glossary, Index

Chapter 5 Page 5-46

To return to this page after clicking a link, press ALT + Back Arrow

Chapter 5 Architectural and Construction Analysis 5.12 Cost Estimating for Lenders

Go to Table of Contents

properties where Criterion 4 is the determining criterion. This cost is calculated by the cost analyst and used by the appraiser to increase the maximum mortgage amount under Criterion 4 of form HUD92264-A (Statutory maximum insurable mortgage amount per dwelling unit). Criterion 4 is typically not material in determining the maximum insurable mortgage, and the calculation is material only when project costs are likely to exceed the statutory limit and when a portion of those costs are not attributable to dwelling units.

• Cost Not Attributable must be included within the estimate of total structures and land improvements, and the costs must be itemized and reported separately on form HUD-92326 and Section M of form HUD-92264. The reason to estimate cost-not-attributable is to isolate construction costs for (A) all improvements and for (B) selected improvements not related to or necessary for the dwellings (non-residential use). In each case, the total is without general requirements and fees.

• The percentage of (B) divided by (A) is the percentage of costs not attributable. Such a percentage should be calculated for both residential buildings/spaces and commercial buildings/spaces in the project, and neither number may exceed a fixed maximum of 15%. The two are added together to obtain the project percentage of cost-not-attributable.

• This figure is used to allocate a proportionate share of all other mortgageable costs (fees, construction period interest and finance charges, etc.) between dwelling use and costs not attributable to dwelling use. The total of all Costs Not Attributable times the maximum percentage loan-to-cost ratio is added to the maximum statutory limit calculated for the number of units by type. The sum is the maximum mortgage amount per Criteria 4. (See Appendix 5, Section A.5.10).

• Cost Not Attributable to dwelling use for Section 223(f) Statutory Limit Constrained deals may be used to adjust the statutory limits (Criteria 4 of the form HUD-92264A) for all Section 223(f) insured loans applications. See Appendix 5, Section A.5.11 for calculating Cost Not Attributable for Section 223(f)s.