Im not sure how many folks are on this particular forum (seems like more follow only the ESA stuff, but lets take a shot.
I am looking to see how many folks, as companies or ICs do Freddie Mac PCAs.
They are taking the position of cracking down and enforcing, through the seller/servicers, the requirments for those doing the inspections/reports.
they are as follows, straight from the guide:
A consultant performing inspections and preparing property condition reports must have ALL
of the following qualifications:
I am working with a client to discuss this and its ramifications (extensive) with Freddie so I am gathering data.
Of all of us out there doing this work, how many actually fully meet these specific criteria? How many are doing Freddie PCAs that dont meet this? Raise your hands please. If you are with a mid to large consulting firm, take a guess at the percentage or what your drop in capacity would be if you could only use these people for the PCA, perhaps also sending now a 2nd person for the ESA.
I want to develop a set of suggested alterations to the guide requirements that will satisfy their need/desire for the proper professional background, and experience without sacrificing those that are qualified in reality and do good work.
Any other input, such as how this will affect fees, timeframes, etc would be appreciated. Feel free to pass onto anyone with a vested interest
For those of you that perform and order HUD PCNAs, major changes are afoot. I've summarzied the proposed changes here for everyone.
HUD is in the process of revamping the Project Capital Needs Assessments (PCNA) procedures and it is going to significantly impact the way we perform our field inspections and the reports we generate. The following is a list of the major changes to HUD’s process:
1) The PCNA’s will now be based on an expanded scope to the ASTM PCA process
2) Accessibility – Accessibility is becoming more on the forefront and is going to continue to be scrutinized heavily. We will now have to make much more detailed accessibility reviews for properties built after 1991. There is so much more that they are going to be expecting out of these reviews it is going to double time on site to make all the measurements and analysis. The adaptability of structures, i.e. first floor apartments (buildings without an elevator) and all units on buildings with elevators need to be considered adaptable for someone with a handicap. They want to know if things like wood blocking is behind the drywall so that grab bars above the toilets can be added at a later date. If it can’t be determined with a stud finder HUD wants destructive testing to inspect in the wall to find out. No more making assumptions or saying the condition is hidden or nknown. Every public accommodation (leasing offices, pools, etc) must conform to ADA standards. The Fair Housing Act requirements fall into any building built after 1991. If the apartment has federal assistance (Section 8) then the UFAS accessibility provisions come into play as well. Any deficiencies found must have a supplemental report submitted that includes schedule for correction, costing information, and could potentially require construction specifications and architectural drawings.
3) Forensic Examination – This is the most significant of the proposed changes. Any building that is 30 years old or older is going to require a level of testing that the industry hasn’t seen before. The logic behind HUD’s thinking is that most major building systems have an expected useful life of 30-50 years. Once the building gets to this age they want to know a lot more specific information about the condition of the building systems in place.
This examination work could involve things like:
a) Having elevator contractors on-site to determine condition of elevator machine equipment
b) Scoping sewer pipes with cameras to determine condition of the piping
c) Infrared scanning for moisture issues
d) Drywall removal in areas to observe hidden conditions like electrical wiring, and plumbing piping
e) Boiler flue gas analysis
f) Building Envelope studies for moisture issues
g) Roofing core sampling
h) In-depth HVAC equipment analysis
i) Etc. as determined appropriate for the building and systems installed
4) Shelf life – The PCNAs will now have a six month self life. Anything older will require an update and more than likely another visit to the site.
5) 10 year updates – the owners will have perform updates to the PCNAs at 10 year intervals where there could be changes to the annual deposits. The owners must bear the cost of these updates
6) Reserve Term Tables – The tables will be changing from the current 37 years to 20 years.
Right now these are all proposed changes (with no expected implementation date yet) but don’t expect to see much change before the final draft. The winds at HUD have shifted to this higher level of analysis and that isn’t going to change anytime soon. The long and short of this is the cost of performing PCNAs is going to be increasing significantly due to the increase in scope of work by HUD. There is a likelihood that additional services will be warranted depending on what is found on site (i.e. if a corrective action plan needs to be submitted due to an accessibility issue). Buildings that were built in the 1983-1990 year range fall into an area that won’t require more scrutiny for the time being.
What role do you think property condition assessments (PCAs) play in the recovery of the market?
According to Bill Tryon, director of technical quality at GRS Group:
“PCAs are more important than ever. In the market downturn, many property owners deferred major maintenance and replacements, which can significantly impact the value and cash-flow of properties.”
Confidence is returning to the market causing more buyers and lenders to step up their game and focus some attention on neglected properties that have had little to no activity over the past few years. Potential investors are paying closer attention to environmental due diligence amid the high risk aversion that still exists in the market and buyers want to avoid getting caught up in a deal where a property has issues that may cause devaluation. As a result of these factors, PCAs are playing a more crucial role in due diligence as a way to identify any material, structural issues, as well as augment the property appraisal process.
PCAs are important for financial institutions, as well. Mike Kulka, P.E., founder and CEO of PM Environmental stated that "over the next few years, more financial institutions could adopt PCAs as a standard part of property assessments." According to Kulka, in a recent panel including environmental risk managers and appraisal professionals, "three large banks all stated they see great value in PCAs and see this as a growing area in the due diligence group at their institutions."
Now, here are a few questions for you:
1. Do you believe that PCAs hold value in the property assessment market?
2. What variables affect the cost and turnaround time of a PCA?
3. Have you seen more PCA work coming down the pipeline for your firm lately?
4. Will PCAs continue to be relevant further into recovery, and if so, are they more likely to be bundled with Phase I ESAs?
Sean Dundon of Blackstone Consulting, David Drummond of Key Bank, Mike Kulka of PM Environmental and Bill Tryon of GRS Group weighed on the questions above and shared more insights on the role that PCAs play in the recovery, the value of PCAs and whether bundling PCAs with Phase I ESAs creates a competitive advantage.
You can continue reading this EDR Insight article to see what they had to say.
ASTM Standard Guide for Property Condition Assessment, E-2018, must be reauthorized to avoid sunset of the standard. Also, the appendix should be updated to reflect changes to ADA requirements, and a few minor revisions such as discussion of the continued viability of reports and estimation of reserve costs have been suggested. This meeting is intended to identify stakeholders, key areas of interest, and task group volunteers. In order to avoid sunset of the existing guide, the intent is to limit changes; however, additional changes will be considered for future revisions.
PCA Task Group Meeting - Task Group Chairs: Bob Barone and Bill Tryon
Date: Wednesday, June 5, 2013
Time: 1:00 pm, Eastern Daylight Time (New York, GMT-04:00)
If you would like to join us but have not received an invitation from ASTM, please send me an email at firstname.lastname@example.org to be added to the distribution list.
It does not appear that there is much in the way of discussions or active membership in this forum. Are all of the discussion getting put in the ESA forum instead? I wonder if posting here is worthwhile.
Is anyone else sitting in on HUD's presentation regarding requirements for the evaluation of accessibility? What they seem to be asking relative to Fair Housing goes far beyond Tier I or even Tier II ADA assessment contemplated by the 2018 guideline.
I'd be interested in what others think on this.
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Consider a firm where your value is measured beyond your gross report production.
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Our company is seeking a Subcontractor or Independent Representative with a Professional Engineer's License for occasional peer reviews of Property Condition Reports. We are not seeking to fill a fulltime position, only a P.E. for occasional peer reviews of Property Condition Reports on a per project / contract basis. If qualified and interested or if you have any questions whatsoever, please reply to this post or contact us via the link below.
Rutledge Realty Solutions, LLC
I am buying a half acre parcel. The owner had an in-ground hydraulic auto lift installed on the property that he removed while I was in contract. THis work was done without permits or inspections and I was never informed of the lift. I happened to drive by and see the the equipment being loaded onto a trailer with an excavator. I later leanred trough a mutual aquaintence that the lift was aquired from a defunct auto repair shop, installed and used on the on the property to work on his many vehicles. What environmental and legal issues might this present?
We were recently performing a PCA at a multifamily property when we discovered an approximately 1.5 ton - 2-ton pile of coal (appears to be anthracite) stored in an old crawlspace. The crawlspace obviously is unoccupied and does not have ready access. The only building services running through the space are domestic hot and cold water lines (copper and galvanized) and hot water heating pipes (steel). The floor is dirt and the walls are masonry. The floor directly above the crawlspace is a flat-arch system of clay block and cast in place concrete beams. In other words, durable materials. There does not appear to be a water infiltration issue and there does not appear to be any openings to occupied areas above the crawlspace except incidental air seepage where the water lines might penetrate the floor.
Should we advise that something be done with the coal? Its obviously no longer needed to operate the building heating system. Are there any environmental concerns?
From a PCA standpoint, we have considered the fire/life safety concerns.
As an aside, I've reached out to a friend who is a train aficionado to see if he can determine if one of the historic railroads in the area might want to come and get it if that becomes something the Owner would agree to. Any ideas of what to do with it if they decide to remove it?