Part D. Site — HUD Section 8 Renewal Policy Guidebook

This section details specifics about the project and its amenities. The RCS appraiser should use the blank line #32 to add site amenities that are not listed but affect the rent a tenant would pay. Total adjustments in this Part should not exceed the total value a typical tenant would place on all amenities in this Part.

Line 24. Parking ($ Fee). The RCS appraiser must enter “L” for lot parking, “G” for garage, and “CP” for covered parking, followed by a slant bar and the amount of the additional charge, if any, the tenant pays for the service. Properties that offer choices for type of parking such as lot parking or garages, will show a code and dollar amount for each type of parking offered. If there is no charge, the RCS appraiser should enter “0”.

Next, the RCS appraiser must adjust for the magnitude of the difference between the parking ratio at each comparable versus the subject property. The impact of parking charges on the average base rental rate for living units at the respective property depends on the percentage of total tenant households that have parking available; the parking fee at

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a property that has only one space for each ten apartments has much less impact on average rents than a property that has nine spaces for each ten apartments. The RCS appraiser should create a weighting factor by dividing the smaller parking ratio into the larger ratio. That figure should show the magnitude of the difference in parking availability between each comparable and the subject, so if the comparable has a ratio of 0.40 ratio of spaces to living units, and the subject property has a ratio of 0.80, the weight factor would be 50 percent.

Finally, the RCS appraiser must weigh the extra value of one type of parking over another. If it is determined that covered parking is worth $20 more to tenants in this market than open lot parking, that cost must be weighted for the parking ratio at that respective property; if that property has 7 spaces for every ten living units, the weighted value of covered parking there is $14 (note that the weighting factor to the type of parking is based on the parking ratio at that property only).

A graphic presentation of parking adjustments, using a chart or table, will typically be helpful if more than just a few simple adjustments are being made.

Example: The subject property charges $25 for monthly parking and has twice as many apartments as parking spaces, thus indicating a 0.50 parking ratio. The only parking offered is in an open lot. Comparable A charges $40 for monthly parking and has three apartments for every two parking spaces, indicating a 0.67 parking ratio. Comparable A likewise offers only open parking spaces. The weighting for parking availability between the subject property and Comparable A is 0.50/0.67, or 75 percent. The net adjustment for Comparable A is 0.75 x $15, or $11; the adjustment is positive because the parking rate at the subject property is cheaper. Comparable B charges $60 for monthly parking but has four apartments for every parking space, indicating a 0.25 parking ratio. The weight between the subject property and Comparable B is 0.25/0.50, or 50 percent. The net adjustment for Comparable B is 0.50 x $35, or $18. The adjustment is once again positive because the parking rate at the subject property is cheaper. But an additional adjustment is needed for Comparable B because all the parking is covered, compared to only open lot parking at the subject property. The RCS appraiser also identified another apartment complex nearby that offers both open lot parking and covered parking. The difference in cost is $15, which would be the incremental value of covered parking. The RCS appraiser further adjusts the $15 by applying the 0.25 parking ratio, resulting in a “net” value of $4 for covered parking. Therefore, the final adjustment for Comparable B parking is $14 (or $18 less $4).

Line 25. Extra Storage. The RCS appraiser must enter “Y” or “N” indicating whether tenants are provided with additional storage space. This may include extremely large or functional closets or outside storage. Before adjusting for any storage inside the unit, the RCS appraiser must ensure that any adjustment for unit size did not already capture that value. Also, when adjusting for this line item, RCS appraisers must distinguish between availability of storage versus cost of storage. An adjustment based on cost rather than availability would be the case where the subject project offers ancillary storage for no charge while the comparables charge for a similar sized storage unit. The RCS appraiser should indicate the cost of storage by inserting the cost after the letter code. For example,

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a comparable that offers storage lockers for a $20 fee can be represented by “Y/$20, versus a comparable that offers free storage can be represented by “Y/$0”.

Example: If the subject offers no ancillary storage while Comparable A offers storage units at market rents, then Comparable A needs to be adjusted downwards if tenants value the convenience of on-site storage.

Line 26. Security. The RCS appraiser must enter “Y” or “N”, and must describe and evaluate the subject’s security features, such as locked exterior doors with intercom, onsite security guards, secured site access, and exterior/corridor lighting. Only those features that tenants value and thus impact rent must be compared to the comparables and appropriately adjusted.

Line 27. Clubhouse/Meeting Rooms/Dining Rooms. The RCS appraiser must enter “C” for clubhouse, “MR” for meeting rooms, and “DR” for dining room. If the project has none, the RCS appraiser should enter “N”.

Line 28. Pool/Recreation Areas. The RCS appraiser must enter “P” for pool, “E” for exercise rooms, or “R” for other recreation facilities such as playgrounds, volleyball or basketball courts. The RCS appraiser must be sure to describe the type of recreation facilities in the underlying narrative description of adjustments. If any adjustment amount here exceeds the higher of $10 or 2 percent of unadjusted rent of the comparable, which is possible in some resort or warm climate markets, the RCS appraiser must explain the basis for all adjustments made under this line item.

Important Note for Lines 29, 30, 31, and 32: Appraisers must assess the value of all nonshelter services that are available to tenants at the property and should note whether the services are included in the rent or incidental. More specifically, the RCS appraisers must note the following:

The primary determining factors of the value of a service at a property are the attractiveness of the service to potential renters like those to whom the property is being marketed, and whether those services are included in the rent. The cost to the Owner of providing a service has no bearing on its effect on the valuation of the property.
Services can be valued in two tiers depending on whether they are included in the rent or whether they are incidental. Services that are included in the rent are valued most highly, and an RCS should reflect the full value of provision of these services. Incidental services receive a reduced valuation, equivalent to the value of the convenience/availability of the service taking into account whether tenants must pay a fee to use the service.

Example: A comparable does not offer a shuttle service to tenants, while the subject property does provide this service.

a. If the subject property includes the shuttle service in the rent at no charge and the service is funded by the owner, the comparable should be adjusted upward by the amount that tenants would pay to use such a shuttle service at comparable properties, on average.

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b. If the subject property provides the shuttle on an infrequent basis (thus as an incidental service) at no charge, the comparable should be adjusted upward by an amount equal to the convenience value of a local community organization that provides the same service free of charge.
c. If the subject property provides the shuttle and charges a fee (thus as an incidental service), the comparable should be adjusted upward by an amount equal to the convenience value of a local organization that provides a shuttle service at the same cost as that charged by the property.
d. If a local nonprofit fully funds and operates a shuttle service with a stop at the property (thus as an incidental service), the comparable should be adjusted upward by an amount to reflect the convenience of the arrangement, as opposed to a situation where the tenant would need to contact the nonprofit and organize the shuttle independently.

RCS appraisers must explain the basis and rationale for any adjustments made under Lines 29, 30, 31 and 32. This explanation should include evidence- and experience-based reasoning for arriving at a given adjustment amount. If the total net adjustments for Lines 29, 30, 31, and 32, exceeds the larger of $50 or 5 percent of the comparable’s unadjusted rent, the RCS appraiser must also support the overall adjustment with market-based evidence regarding the value of these services.
In some cases, non-shelter services may be provided out of a single common area facility. A single space used to provide more than one service has no bearing on whether an adjustment is warranted or not; the consideration is exclusively based on the value of each respective service to residents.
The lack of a fee at the subject property that is prohibited by other HUD regulation or guidance (such as an Application Fee) is not a service, and thus may not form the basis for a rent adjustment.
If a service forms the basis for a valuation in an RCS, but that service is also funded by a grant from HUD, that grant may be reduced by an amount equal to the gross amount by which the service increases the RCS rent conclusion. RCS appraisers must identify which valuations are associated with a grant from HUD.
RCS appraisers should indicate which property in the market area served as a comparable for deriving the valuation for each non-shelter service at the property. If a service is provided to support vulnerable populations but is not observed in the market area, appraisers should provide specific and evidence-based information that informed the service valuation conclusion.

Line 29. Business Center/Neighborhood Network. If the project has a business center offering office services such as copying and faxing, the RCS appraiser must enter “BC.” If the project has a HUD sponsored Neighborhood Network, the RCS appraiser must enter “NNW”, or “N” for neither. RCS appraisers must review the “Important Note” above pertaining to Lines 29, 30, 31, and 32.

Line 30. Service Coordination. The RCS appraiser must identify if the project has a service coordinator who helps residents access social services, health care or resources

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for meeting other needs, and enter “Y” or “N” on this line item accordingly. RCS appraisers must review the “Important Note” above pertaining to Lines 29, 30, 31, and 32.

Line 31. Non-Shelter Services. The RCS appraiser must enter “M” for meals, “T” for transportation, “EC” for emergency call systems, “H” for housekeeping, and “L” for laundry service, “ED” for educational classes, “AS” for after school care, “SP” for summer programs, “O” for other, or “N” for none. The RCS appraiser must record and fully describe (in the accompanying narrative explanations) any other services provided at the property. RCS appraisers must review the “Important Note” above pertaining to Lines 29, 30, 31, and 32.

Lines 32. Neighborhood Networks (non HUD). The RCS appraiser should populate this line to capture features such as Neighborhood Networks-type programs or other types of social support programs provided by sources other than HUD. RCS appraisers must review the “Important Note” above pertaining to Lines 29, 30, 31, and 32.