2018_MFH_Appraiser_PWS.pdf

US.DEPARTMENT OF AGRICULTURE, RURAL DEVELOPMENT (USDA RD) BLANKET

PURCHASE AGREEMENT (BPA) MFH APPRAISAL SERVICES

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BLANKET PURCHASE AGREEMENT

1) DESCRIPTION: The supplier agrees to furnish appraiser services for properties in the State of Michigan assigned in accordance with the terms and conditions herein and in the Performance Work Statement. This agreement shall be effective from the date of Contracting Officer’s signature until September 30, 2022, unless cancelled prior or extended in writing. The estimated requirement is less than ten projects per year throughout the state. RD reserves the right to establish multiple agreements to ensure adequate service coverage across the entire state.

2) EXTENT OF OBLIGATION: Rural Development is obligated only to the extent of authorized purchases made under the BPA. Rural Development is not obligated to place orders.

The Contractor is not obligated to accept orders. The Contractor is contractually obligated to provide the services under the terms of this agreement once an order has been accepted (a contract). The Contractor may not be compensated for services performed outside the scope of the agreement.

3) PURCHASE LIMITATION: A competitive price quote may be required for each order. Pricing shall be at least as low as prices charged to the Contractor’s most favored customer for comparable quantities under similar terms and conditions in addition to prompt payment discounts. The Contractor’s fixed price shall include all of the cost associated with performance of the required services ( i.e. travel, printing, etc.). No additional funds will be paid above the negotiated price without the concurrence and written approval of the Contracting Officer or Contracting Officer Representative. Unless specifically exempted, the prices quoted shall include Federal, State, and local taxes.

Name/Title Order Threshold Contracting Officer Ceiling (total orders, all years) $150,000.00 Listed Ordering Official/Contracting Officer’s Representative $5,000.00

4) AUTHORIZED ORDERING OFICIALS: Quotes exceeding $5,000 must be approved by the Contracting Officer. Any order exceeding the Ordering Official’s delegated authority, or not approved by the state office is outside the scope of the agreement. Orders proffered by unauthorized persons shall not be honored or accepted by the Contractor. Failure to comply with this provision may result in termination of the BPA.

5) DELIVERY OF SERVICES: Delivery schedules will not be used. Delivery tickets will not be required. Call Orders will be used to request services. Reports shall be delivered to the assigned Rural Development Appraiser in accordance with the Call Order request (generally 30 to 40 days after receipt of order).

6) INVOICES AND PAYMENT: An invoice will be submitted with each report to the Ordering Official. The Contractor must include all of the information prescribed by FAR 32.905(b). Incorrect or incomplete invoices will be returned to the Contractor. Payment terms for all orders are Net 30.

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7) COMMERCIAL WARRANTY: The services furnished shall be covered by the most favorable commercial warranty the Contractor provides to the general public for such services.

8) LICENSING REQUIREMENTS: The Contractor represents by accepting the terms and conditions of the BPA that licensing/certification requirements necessary to perform the services are current and valid. A copy of required State license(s) shall be provided to Rural Development with the signed BPA agreement. Licenses will be tracked via the Appraisal Subcommittee site.

9) INSPECTION AND ACCEPTANCE: Deliverables will be reviewed for technical compliance with the PWS by the RD Appraiser within 15 calendar days of receipt of the completed product. Payment may not be processed prior to government acceptance.

10) BPA TERMINATION: The BPA may be terminated under any of the following circumstances:

a) By either party with 30 days written/email notice. In the event of termination, delivery or performance of outstanding orders may continue for a period of 30 days, after which time any remaining items will be cancelled.

b) When the Contractor fails to abide by the terms and conditions of the BPA, including, but not limited to:

i) Accepts orders but routinely fails to deliver on time;

ii) Fails to offer RD most favored customer pricing;

iii) When the Contractor consistently provides poor service;

c) If the Contractor files fraudulent claims;

d) If the Contractor demonstrates improper business practices or personal conflicts of interest; and

e) If the Contractor offers kickbacks

SPECIAL REQUIREMENTS

1. Contractor shall maintain an active SAM registration for contracts through final payment of all orders.

2. Contractor may be subject to performance reporting requirements.

3. Contractor shall maintain a minimum of $1,000,000.00 public liability/E&O insurance, and shall furnish evidence of required liability insurance to USDA Rural Development Contracting Officer upon request.

CONTRACT ADMINISTRATION

1. DESIGNATION OF CONTRACTING OFFICER (CO)

Karen D. Cooper, Contract Program Manager USDA Rural Development, 3001 Coolidge RD, Ste. 200 East Lansing MI 48823-6350

517.324.5203 | KarenD.Cooper@mi.usda.gov mailto:KarenD.Cooper@mi.usda.gov

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The CO is the only person authorized to approve changes to any of the requirements under this contract, and notwithstanding any provision contained elsewhere in this contract the said authority remains solely with the CO. In the event the Contractor effects any change at the direction of any person other than the CO, the change will be considered to have been made without authority and no adjustment will be made in the contract price to cover any increase in charges incurred as a result thereof. Refer any questions to the CO.

2. DESIGNATION OF CONTRACTING OFFICER’S REPRESENTATIVE (COR). Although not officially designated as COR, the assigned RD Appraiser will provide technical guidance, and shall advise the CO regarding Contractor performance and any issues noted. This review shall constitute government acceptance.

3. PAYMENT OFFICE. Payments will be processed by RD Michigan state office staff.

ATTACHMENTS/REFERENCES

1. PERFORMANCE WORK STATEMENT

2. LIST OF ORDERING OFFICIALS

3. CONTRACT CLAUSES (separate documents)

4. HB-1-3560 Attachment 7-F Appraisal Data Package Checklist (separate document)

5. Sample Appraisal Assignment Guidance (separate document)

ATTACHMENT 1: PERFORMANCE WORK STATEMENT

1) Background: USDA Rural Development (RD) provides loans to eligible applicants for multi- family housing properties. In support of this program, RD requires the services of qualified persons or firms to provide appraisals of subsidized Multi-Family Housing properties. All appraisals must be in compliance with the current edition of the Uniform Standards of Professional Appraisal Practice (USPAP) and Rural Housing Service (RD) Multi-Family Housing appraisal requirements (supplemental standards), which are set forth in the Statement of Work (SOW), 7 CFR 3560, subpart P, Chapter 7 of the RD HB-1-3560, and any current pertinent administrative notices. The appraiser should note that there are other agencies within Rural Development with different appraisal needs and requirements.

2) Professional Qualifications: All Agency Multi-Family Housing appraisals must be written by a State Certified General Appraiser, certified in the State in which the subject property is located. The appraiser must have the specialized knowledge and experience necessary to be competent to appraise subsidized housing. The appraiser must understand the housing programs, value types and definitions, real and intangible property rights, use restrictions, pertinent tax considerations, and methods for valuation of various types of favorable financing involved in the appraisal of subsidized housing.

3) Request for Quote (RFQ): The RFQ will be used to request proposals from appraisers via fax or e-mail and will contain basic property information, services requested, special requirements, and any additional information the appraiser will need to bid appropriately. It is the appraiser's responsibility to understand the scope of the assignment and its requirements. When the appraiser receives the RFQ, he/she is to notify the requesting representative by fax or e-mail within 7 days

a) that the appraiser is unavailable to bid on the assignment, or

b) with the amount of the fee and the number of calendar days required to complete the assignment.

4) Contract for Appraisal Services (CAS): Once the appraiser has been selected to complete the assignment, a RD representative will provide a CAS by fax or e-mail. The CAS form will contain the same information as the RFQ but will also include RD and property contacts as well as the agreed upon fee and due date. RD will also inform the appraiser if he/she has not been awarded the assignment. The required number of copies of the appraisal may vary, and the appraiser must pay attention to the number specified on the CAS, as well as the specific delivery instructions. The CAS will specify to whom the reports are to be addressed and where the reports and invoice should be delivered.

5) Subcontracting: The appraiser engaged by RD, or a qualified employee or associate of the appraiser, must perform the appraisal and must not subcontract it, or any part of it, to another person without written consent of the RD Contracting Officer.

6) Post Award Conference: The appraiser must contact the Contracting Officer's Representative (COR), identified in the CAS, to schedule a post-award telephone conference. The COR will discuss appraisal requirements with the appraiser and answer questions about the assignment. Furthermore, the COR will be the appraiser's contact http://www.gpoaccess.gov/cfr/retrieve.html http://www.rurdev.usda.gov/Handbooks.html

2 | 2018 MFH Appraiser PWS with the Agency during the course of the assignment. Again, it is the appraiser's responsibility to understand the scope of the appraisal and its requirements.

7) Client: The appraiser must understand and agree that USDA RD is the appraiser's client, and all reports must be addressed to USDA RD (and any other intended user specified by the Agency). Any questions related to the form or substance of the assignment will be directed to the COR and will not be directed to the property owner.

8) Property Contact: The appraiser should call the property contact, identified in the CAS, for gaining access to the property and in most cases for procuring property specific data relevant to the assignment. Appraisal fees or turnaround times should not be discussed with the property contact. The appraiser must notify the COR immediately if any of the following occurs:

a) the appraiser cannot gain adequate access to the property,

b) the appraiser does not receive essential property information in a timely manner,

c) the appraiser has previously appraised or is in the process of appraising the property,

d) the appraiser has any other potential conflict of interest with respect to the assignment.

9) Confidentiality: The appraiser must keep all information and materials furnished by RD, the owner, and/or property contact regarding the subject property confidential, as required by USPAP and the Gramm-Leach-Bliley Act. The appraiser may use such information only in connection with performance of the assignment. The appraiser must agree to prevent the unauthorized disclosure, misuse, or alteration of the confidential information. Any information obtained through public sources is not considered confidential information.

Disregard of this privacy requirement will be cause for immediate debarment as a contractor for the federal government.

10) Nondiscrimination: All appraisals of Section 515 Rural Rental Housing or Section 514/516 Farm Labor Housing properties must comply with the Fair Housing Amendments Act of 1988. According to the Act, it is unlawful for an appraiser to use factors that are discriminatory on the basis of race, color, religion, sex, disability, familial status, or national origin in the sale, rental, leasing, or financing of housing.

11) Assumptions, Hypothetical Conditions, and Limiting Conditions: All extraordinary assumptions, hypothetical conditions, and limiting conditions must be clearly described in a single location near the beginning of the report and in appropriate sections of the appraisal.

In addition, extraordinary assumptions and hypothetical conditions must be restated wherever the appraiser opines to the final value(s). Extraordinary assumptions and hypothetical conditions also must be discussed with and agreed to by the COR prior to completion of the report. General assumptions and limiting conditions that reduce the normal scope of appraisal due diligence are not allowed.

12) Potential Environmental Hazards: The appraiser must note any suspected environmental hazards, including issues external to the property that could adversely impact the property's value. Examples of environmental hazards would include damaged asbestos-containing building materials, underground storage tanks, chemical leaks, spills, or staining of ground surfaces, or on-site waste disposal such as sludge, oil, paints, or chemical

3 | 2018 MFH Appraiser PWS residues. If the appraiser observes any suspected environmental hazards, he/she must notify the COR immediately and refrain from finalizing aspects of the appraisal that could be impacted until resolution of the issue or until instructed otherwise.

13) Americans with Disabilities Act (ADA): Appraisers must be familiar with the general provisions of the ADA because subsidized housing is a property type that is likely to be affected. The appraiser must consider what impact (if any) noncompliance with the ADA has on the value of the subject property. Any impact on value must be supported by market evidence.

14) Appraisal Report Formats: The appraisal type (complete or limited), report type (self-contained, summary, or restricted use), and report format (narrative or form) will be set forth in RD's MFH Appraisal Information Sheet. Any changes will be specified in the CAS.

Narrative formats are preferred for most Multi-Family Housing appraisals, with the level of detail dependent on the scope of work and the requested appraisal type and report type.

Form reports completed on Form RD 1922-7, Appraisal Report for Multi-Unit Housing, FNMA Form 1050, FHLMC Form 71A, or the Uniform Commercial Industrial Appraisal Report (UCIAR) are generally acceptable, as long as they are modified to meet USPAP and Agency requirements and are agreed upon in advance.

15) Approaches to Value: The approaches to value (Cost Approach, Sales Comparison Approach, and Income Approach) that are to be included in the appraisal depend on the specific assignment and will be specified in the MFH Appraisal Information Sheet. Any changes will be specified in the CAS. When the purpose of the appraisal is to conclude market value, all three approaches to value must be included as part of a Complete Appraisal. When the purpose of the appraisal is to conclude market value, subject to restricted rents, the Cost Approach and the Income Approach must be included, but the Sales Comparison Approach is typically not applicable and may be excluded. When the purpose of the appraisal is to conclude value-in-use of an on-farm labor housing project, only the Cost Approach is applicable, and the other two approaches are excluded. For some assignments, an approach to value that is typically applicable may not be applicable. When this is the case, the appraiser, upon receiving the RFQ, must discuss this issue with the COR so that the CAS will correctly specify the approaches to value that will be included in the report. If, during the course of the assignment, the appraiser determines that an approach is not applicable, he/she must obtain the approval of the COR to exclude the approach from the report, and the CAS must be modified.

16) Value Types: The types of value (e.g., market value or market value, subject to restricted rents or insurable value) to be reported, including values of various types of favorable financing, will be specified in the CAS. Reference: HB-1-3560 Attachment 7- A, Value Types used in Multi-Family Appraisals.

a) Complete Appraisal Requirements: All RD Complete Appraisals must comply with the following unless the CAS requires otherwise:

b) All appraisal reports must comply with the current edition of USPAP.

Specifically, all reports must include the following items required by Standards 1 and 2 of USPAP: Identification of the appraisal type and report type,

c) Identification of the client and any other intended users of the appraisal,

d) Identification of the intended use of the appraisal, http://www.rurdev.usda.gov/SupportDocuments/3560-1chapter7.pdf http://www.rurdev.usda.gov/SupportDocuments/3560-1chapter7.pdf

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e) Description of the subject real estate,

f) Identification of the real property interest (property rights) appraised,

g) Identification of the purpose of the appraisal,

h) Identification and definition(s) of the value type(s) reported,

i) Identification of the effective date(s) of the appraisal and the date of the report,

j) Description of the scope of work used to develop the appraisal,

k) Disclosure of all assumptions, hypothetical conditions, and limiting conditions that directly affect the appraisal,

l) Description of the information analyzed, the appraisal procedures followed, and the reasoning that supports the analyses, opinions, and conclusions,

m) Description of the use of the real estate existing as of the date of value and the use of the real estate reflected in the appraisal; and (for market value) an analysis of the highest and best use of the real estate,

n) Disclosure of any permitted departures from specific requirements of Standard 1 of USPAP and the reason for excluding any of the usual valuation approaches,

o) A signed certification in accordance with USPAP Standards Rule 2-3.

p) All reports must include an executive summary.

q) All reports must include a legal description of the subject property.

r) All reports must include photographs of the interior and exterior of the subject property and of the exterior of all rent comparables and sales comparables.

• All reports must include the following maps, showing the location of the subject:

• Regional map

• City map

• Flood plain map

• Land Sales map

• Sales Comparables map

• Rent Comparables map

• All reports must include the following exhibits of the subject property:

• Survey

• Site plan

s) Floor plans. All analyses within the Income Approach must be well supported.

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When the assignment is to conclude market value, subject to restricted rents, the subject's 3-year operating history should typically be used as the primary data source to project the subject's other income, vacancy, and operating expenses. A set of expense comparables should be compiled from recent operating statements for similar restricted properties within the subject's housing program. This data can be obtained from RD and used to support these projections. All expense analyses must include a tabulated set of expense comparables and should also include supporting information from an expense survey done by RD or a State or local housing authority, if available.

The capitalization rate selected for the subject must be derived from the most recent sales of similar properties in the local (or nearest similar) conventional apartment market. Support for this overall rate should be provided using other accepted methods such as the band-of-investment technique, the debt coverage ratio formula, and regional investment criteria surveys. If the pro forma income, vacancy, expenses, or capitalization rate is not adequately supported, the RD Review Appraiser will require the contract appraiser to make revisions that provide the necessary support before the appraisal can be accepted.

t) Any method that includes the use of note rate rent as Potential Gross Income (PGI) in the Income Approach pro forma to derive a value equal to the sum of the market value, subject to restricted rents, plus the value of the interest credit subsidy is not acceptable appraisal practice. Appraisers must not use this procedure in Agency Multi-Family Housing appraisals.

u) All reports must conclude the market rents for the subject's units. A market rent adjustment grid showing quantitative adjustments in specific percentages or dollar amounts must be included and be well supported. When the assignment is to conclude market value, subject to restricted rents, the report must state whether the base rate (restricted) rents are less than, equal to, or higher than market rents. Market rents must be estimated to determine if the subject's base rate rents are attainable without RA. Base rate rents must not be higher than market rents, unless an exception is made, according to the policy of Conventional Rents for Comparable Units (CRCU)

v) All reports must include an estimate of the remaining economic life of the subject.

w) All appraisals of existing properties must include a discussion of deferred maintenance at the subject property. Items of deferred maintenance must be listed, and the cost to cure each item must be estimated, with support provided. The final value must be calculated by subtracting the total cost estimated to cure all deferred maintenance from the value indicated as if no deferred maintenance existed.

x) When favorable financing is involved, the appraisal report must contain a narrative identifying each source of financing. The amount and terms of each type of favorable financing must be described, and each type of favorable financing must be valued separately from the market value, subject to restricted rents, of the property.

Valuation of “interest credit subsidy” from Section 514/515 loans should be consistent with Attachment 7-H.

y) When the assignment is to conclude market value, subject to restricted rents, the subject's operating statements for the preceding three full years and the proposed budget for the current year must be used in the expense analysis

6 | 2018 MFH Appraiser PWS and included in the addenda of the report, if available.

z) Appraisals of properties with proposed rehabilitation must include Form RD 1924-13, Estimate and Certificate of Actual Cost, in the addenda.

aa) A copy of the CAS must be included in the addenda of the appraisal report.

17) Review of Appraisal: Appraisal reports are subject to review by RD. Appraisers must be prepared to discuss their analyses, opinions, and conclusions and provide additional written support, clarification, and/or corrected appraisal pages if requested.

18) Accountability: The engaged appraiser must inspect the subject property and be prepared to discuss the appraisal report. A staff appraiser or associate may participate in the appraisal assignment but must either sign the report or be identified, by name, as having provided significant professional assistance in the appraiser's certification. If a staff appraiser or associate wrote the majority of the report, that staff appraiser or associate may be present during any discussion of the assignment. However, it is the engaged contract appraiser whose work product has been identified as acceptable by RD, and that appraiser must sign the report and be accountable for it.

19) Defense of Appraisal: The Agency may require the appraiser to defend the appraisal in court or in RD's appeals process. This would constitute a consulting assignment that would be contracted separately from the original appraisal assignment.

20) Payment of Services: Late delivery of any report may result in liquidated damages.

Lacking specific arrangements in writing to the contrary, RD may impose a penalty equal to the lesser of 5% of the appraisal fee per day, or $100 per day, for each calendar day beyond the scheduled due date. The late fee penalty is based on the calendar days between the due date and the date the appraisal report is received by RD. If delivery of the report is 30 days past due, the appraisal engagement is cancelable by RD, and the appraiser's right to all fees associated with the assignment may be forfeited.

PERFORMANCE STANDARDS SUMMARY

The table below summarizes the performance requirements described in the preceding sections.

Item No. Required Service Standard

1 Service Performance

Orders are processed expeditiously and completely, according to contract requirements.

2 Overall responsiveness

Contractor responds adequately to RD inquiries and requests, and works proactively with Rural Development employees to resolve issues.

3 Billing and invoicing

Invoices are processed accurately according to contract requirements.

QUALITY ASSURANCE SURVEILLANCE PLAN (QASP)

1) This Quality Assurance Surveillance Plan has been developed pursuant to the requirements of the Performance Work Statement associated with this contract. The QASP

7 | 2018 MFH Appraiser PWS sets forth guidelines that will be used in evaluating the technical performance of the Contractor/Export. The procedures set forth in the QASP are not contractually binding on the Government (USDA) or the Contractor.

a) Roles and Responsibilities of Government Officials

i) The Contracting Officer (CO) has overall responsibility for monitoring Contractor performance in the areas of contract compliance, contract administration, and cost control.

ii) If required, a Contracting Officer’s Representative (COR) will be assigned in writing per task, with a copy provided to the Contractor. The COR would be assigned in cases where a liaison between the Government customer and the Contracting Officer (CO) may be required. The COR would perform specific advisory and surveillance tasks as required by the CO.

iii) The customer/requestor is responsible for acceptance of services, and for invoice certification, unless these tasks are assigned to the COR.

b) Primary Method of Surveillance

i) The Government will monitor performance through direct, documented observations of the Contractor’s performance, where appropriate; discussions with the Appraiser and, review of reports and other documents required by the contract.

Any complaints received will be discussed with the Appraiser.

ii) The COR may recommend appropriate administrative actions to the Contracting Officer when performance is less than satisfactory.

ATTACHMENT 2: LIST OF ORDERING OFFICIALS

Changes in this list will be provided by the Contracting Officer.

USDA RD Michigan State Office Email is firstname.lastname@mi.usda.gov, unless listed otherwise

Kara Niemi, Multifamily Housing Specialist 517-324-5192 Kelly Darland, Multifamily Housing Specialist 517-324-5214

Julie Putnam, Multifamily Housing Specialist 517-324-5194 mailto:firstname.lastname@mi.usda.gov

HB-1-3560 ATTACHMENT 7-F

APPRAISAL DATA PACKAGE CHECKLIST

___ sales contract or purchase agreement ___ legal description

___ Rural Development Mortgage or Deed of Trust

___ Housing Assistance Payment (HAP) contract (if applicable) ___ description of restrictive use provisions

___ environmental report ___ lead-based paint inspection report

___ Rural Development unit-by-unit inspection

___ market study ___ prior appraisal

___ survey ___ site plan

___ floor plans

___ unit mix (number of units by type, size, rent) ___ recent rent roll

___ tenants waiting list

___ operating statements for subject property from previous 3 years ___ operating statements for five expense comparables from last full year (property name, address, age, number of units, and expense year included) ___ proposed budget for current year

___ plans, specs, and cost estimates (new construction)

___ Form RD 1924-13, Estimate and Certification of Actual Cost (rehabilitation) ___ Sources & Uses Comprehensive Evaluation (SAUCE Report)

___ ownership history for past three years ___ financing information (list of existing and proposed financing sources with detailed descriptions of terms for each; e.g., amount of financing, loan balance, interest rate, loan term, remaining loan term, amortization period, payment)

ATTACHMENT 2: LIST OF ORDERING OFFICIALS