What Is A Capital Needs Assessment?
D3G understands the direct relationship between a Capital Needs Assessment and the complex financing required to address the growing needs of the nation’s housing stock. We pride ourselves on not only identifying the problem but offering solutions. With nationwide experience and our team of thoroughly trained inspectors, D3G can help you navigate a completive tax credit application with a large repair scope of work or a basic inspection required to preserve an aging property.
What Is A Capital Needs Assessment?
A Capital Needs Assessment (CNA) is a process typically conducted by a property owner or developer to determine the future capital expenditures required to maintain the property’s physical and functional integrity over a given period.
The CNA evaluates the physical condition of a property, including the condition of the property’s major building systems, such as roofing, plumbing, electrical, heating, and air conditioning, to identify any necessary repairs, replacements, or upgrades. It also considers any regulatory or code requirements that may apply to the property.
The CNA results estimate the useful life of building components to develop a report outlining property deficiencies and immediate needs. This information provides an analysis of anticipated future capital expenses required to maintain the property over a period of time. A CNA’s primary function is a risk assessment tool, and to inform capital planning.
A well-executed CNA can help property owners and managers plan for future capital expenditures, allocate resources more effectively, and maintain the value of their assets over time.
What’s involved in a CNA?
There are two main components of a CNA: Data Gathering and Reporting. The data-gathering process includes satellite imagery, property tax cards and maps, compliance letters, a questionnaire administered by our staff, surveys, blueprints, construction documents, floorplans and any past environmental or engineering reports, property history, and permits. The Report consists of a narrative of the property, findings of critical and non-critical repairs, Replace Reserve Analysis, and any additional documents needed to support or explain inspection results.
What other terms are associated with Capital Needs Assessments?
- Physical Needs Assessment (PNA)
- Property Condition Report (PCR)
- Project Capital Needs Assessment (PCNA)
- RAD Physical Condition Assessment (RPCA)
- Physical Condition Assessment (PCA)
- Green Physical Needs Assessment (GPNA)
Meeting expectations. What makes a CNA unique?
The reason there are so many different terms for a Capital Needs Assessment is due to the variety of uses and applications that a CNA has. A CNA for a HUD/FHA 223(f) refinance has different requirements than a CNA used as part of an acquisition rehab utilizing state low-income housing tax credits (LIHTC). For example, the HUD/FHA 223(f) refinance will require the CNA e-Tool. HUD’s online platform specifically for CNA data and reporting.
The State’s LIHTC CNA will have various state-specific requirements, such as energy studies and design standards for the rehabilitated property. Everything from the inspection density to the report format can differ depending on the compliance requirements. Each state has its own set of rules outlined in its Qualified Allocation Plan (QAP). And every state seems to have its unique term for the Capital Needs Assessment.
Layers of financing are often stacked together to fund the complex transactions requiring a CNA. Understanding these complexities and delivering a report that satisfies all requirements is what makes the process challenging yet rewarding when the deal closes.
What are some examples of critical and non-critical repairs?
Critical repairs are also known as immediate repairs that must be addressed as soon as possible.
Mitigation of these repairs is required before closing and includes life, safety, and accessibility issues. For instance, building code violations of health and accessibility standards and conditions that prevent sustainable occupancy.
Non Critical repairs identify components of a property that are past its useful life and need repair, for example, siding, draining issues, damaged asphalt, and leaks. These repairs normally take up to 12-months to complete.
Why Choose D3G?
D3G offers a range of services, including intrusive studies, energy evaluations, construction monitoring, and a strong understanding of accessibility standards. Our primary focus is Housing! We are on the cutting edge of policy changes and new opportunities available to multi-family housing. With D3G, you get an experienced team with highly skilled and proficient inspectors who are fully dedicated to your project. You can expect fast response times from our team in all aspects of your assessment. From bidding and inspection/reporting to report revisions and consulting, we offer our expertise at every stage of your project.
