7.8.5 Expense Comparables

A. All HUD-insured properties used as expense comparables must be identified and disclosed in the appraiser’s form HUD-92274 (Operating Expense Analysis Worksheet) and in the appraisal, except as noted below.

1. General Requirements. All comparables (confidential and disclosed) must be representative of the physical and location-specific characteristics of the subject project. Appraisers must always present the best comparables available for their analysis and must refrain from repeatedly using the same disclosed comparable merely to meet the disclosure requirement.

2. Confidential Expense Data. The appraiser may include confidential expense comparables in the expense analysis; however, the analysis must include at least one fully identified and disclosed expense comparable to serve as a benchmark. Confidential expense data sources must be disclosed to a HUD review appraiser upon request (and are subject to confidentiality requirements similarly imposed on licensed HUD review appraisers). Appraisers may only use confidential expense comparables that are supportive and consistent with the fully disclosed comparables used in the

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Chapter 7 Valuation & Market Analysis 7.8 Project Operating Expenses, NOI

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analysis. When submitting confidential expense comparables, the appraiser must redact only the minimum amount of information necessary to protect the confidentiality of their client. The city, state, and general market area within the city must be disclosed unless this information would clearly identify the comparable and thus breach the appraiser’s confidentiality requirement. The project description, unit mix, and the physical characteristics of the comparables’ units must be disclosed. It is unacceptable for the appraiser to base conclusions on confidential expense comparables that are not supported by the fully disclosed comparables used in the analysis.

3. Review of Insured Expense Comparables. The HRA will compare the FASS or OPIIS systems file for the insured expense comparables used by the appraiser to confirm the data. In order to accomplish this, the HRA will combine the following accounts: Acct. No. 6263T (Administrative Expenses, subtracting Acct. No. 6203 (Conventions and Meetings) and Acct. No. 6370 (Bad Debts)), Acct. No. 6400T (Utility Expenses), Acct. No. 6500T (Operating and Maintenance Expenses), and Acct. No. 6700T (Taxes and Insurance).