7.13.4 — HUD Multifamily Accelerated Processing (MAP)

A. Determine the market value of the project "As Is". Complete the Location and Description of the Project, Information concerning Land or Project, Estimate of Income, Equipment and Services Provided in Rent, Estimate of Annual Expenses, Income Computations, Income Approach to Value, and Sales Comparison Approach to Value within the report. If the project involves rehabilitation and new construction with additional land to be added, also complete a land appraisal for that portion of the land to be added for the new construction portion of the development proposal.

B. Use the Replacement Cost by Formula, Rehab Projects, with or without Builder and Sponsor's Profit and Risk Allowance (BSPRA), to find the total project cost (summation estimate) using the "As Is" market value of the project, and the rehabilitation cost estimate furnished by the cost analyst, plus carrying charges and financing.

C. Complete form HUD-92264. In Section G, the "As Is" market value of the project before rehabilitation will be shown on the line titled "As Is" value of project except as noted below.

D. Instructions for limiting the “As Is” value of project before rehabilitation, when that project is acquired as a leasehold estate, are found in Ground Leases, Section 7.15.

E. To find the project mortgage amount for Section 220 and Section 221, use the lowest of Criteria 1, 3, 4, or 5 on form HUD-92264-A. Estimate the "As Is" value of the project before rehabilitation, add the total for all improvements plus soft costs to the As-Is Value to obtain the sum of the above costs. Then multiply the sum of the project costs listed above by the applicable percentage based upon Criterion 3 to obtain the maximum project mortgage amount.

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Chapter 7 Valuation & Market Analysis 7.13 Substantial Rehabilitation for 220, 221(d)(4), and 231

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NOTE: Cost Certification instructions (set by Statute) dictate that, in substantial rehabilitation cases, the lesser of the “as is” value of the land and improvements (before repair or rehabilitation) or the purchase price of the land and improvements is used in the cost build up for Criterion 3 of form HUD 92264A,. Consequently, when mortgage proceeds will be used to fund the acquisition of the project, the “as is” value estimation will be used as a test of the reasonableness of the acquisition price.

F. When the acquisition price is less than the “as is” value of the land and improvements (as accepted by HUD) and mortgage proceeds will be used to fund the acquisition of the project, the acquisition price will be used in the cost build up for Criterion 3, forming the cost basis for the Firm Commitment

G. When the acquisition price exceeds the “as is” value of the land and improvements (as accepted by HUD), then the acquisition price must be reduced to the “as is” value and will, subsequently, comprise the basis of the cost build up for the Firm Commitment.

H. When mortgage proceeds will not be used to fund the acquisition of the project, the “as is” market value of the project will be used in the cost build up for Criterion 3, forming the cost basis for the Firm Commitment. This is particularly significant when below-market rent restrictions are in place (such as in the case of LIHTC-limited rents or Section 8 rent subsidy) and the use of market rents in valuing the project will result in a premium over these rent restrictions. (See Section 7.13.3, defining how rents are derived as the basis for the “as is” value)