9.5.3 Projects with Incomplete Removal of Site Contamination

A. HUD staff should follow the guidance in Section 9.5.2 regarding initial removal or mitigation costs.

B. HUD staff must assure that the cost of any requirement for continuous monitoring and/or mitigation is accommodated. An escrow account established by the Lender at Endorsement may be the most appropriate choice. This may also be accomplished by including the cost in Section E of the form HUD92264 under “Other Maintenance” and would include fees charged by service providers who are engaged to perform monitoring. If an expense is for actual or anticipated replacement of a component such as a pump, it should be included in the Reserves for Replacement. The basis for the expense or additional replacement reserve will be obtained from a qualified engineer and/or contractor. The engineer/contractor’s estimate should be sufficiently detailed and supported to allow review by the construction analyst as well as the appraiser.

C. Any effect on project marketability, value or rents due to the need for continuous monitoring/mitigation must be quantified and discussed in the appraisal.