SOW.docx

AG-F32L-RFQ-12-001 Multi-Family Housing appraisals for USDA Rural Development

SECTION C

SPECIFICATIONS

USDA, RURAL DEVELOPMENT, KENTUCKY STATE OFFICE

SPECIFICATIONS - MULTIFAMILY HOUSING APPRAISALS

STATEMENT OF WORK (SOW) FOR MULTI-FAMILY HOUSING CONTRACT APPRAISAL

C.1 Background: USDA Rural Development provides loans to eligible applicants for multi- family housing properties. In support of this program, Rural Development 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 (RHS) Multi-Family Housing appraisal requirements (supplemental standards), which are set forth in the Statement of Work (SOW), 7 CFR 3560, subpart P, and Chapter 7 of the RHS HB-1-3560. The appraiser should note that there are other agencies within Rural Development with different appraisal needs and requirements.

C.2 Objective: To determine the market value of multiple family income producing housing properties. If required, the Contractor shall defend the appraisal in court or in Rural Development’s appeals process. Should this be necessary cost associate with the defense will be negotiated under a separate purchase order. No cost associated with the defense of this appraisal will be included in this purchase order.

C.3 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.

C.4 Professional Insurance Coverage: The contractor shall maintain professional insurance coverage in accordance with local and State Government statutes.

C.5 Non Discriminatory Appraisal Criteria: 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 do the following in connection with doing appraisals for Section 515 Rural Rental Housing

1. To use factors that are discriminatory on the basis of race, color, religion, sex, handicap, familial status or national origin in the sale, rental, leasing or financing of housing.

2. To use an appraisal in connection with the sale, rental or financing of a dwelling, that the appraiser knows, or reasonably should know, improperly takes into consideration, race, color, religion, sex, handicap, familial status or national origin.

C.6 Subcontracting: The appraiser engaged by Rural Development 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 Rural Development Contracting Officer.

C.7 Client: The appraiser must understand and agree that USDA Rural Development is the appraiser's client, and all reports must be addressed to USDA Rural Development (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, Ms. Arlene I. Zambrana, and will not be directed to the property owner.

C.8 Confidentiality: The appraiser must keep all information and materials furnished by Rural Development, 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.

C.9 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.

C.10 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 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.

C.11 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.

C.12 Appraisal Report Formats: The appraisal type shall be complete, the report type shall be self-contained and report format shall be narrative. 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.

C.13 Approaches to Value: The approaches to value are included in the enclosed Attachment to Statement of Work. 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.

C.14 Value Types: The types of value are enclosed in the Attachment to the Statement of Work hereby included.

C.15 Complete Appraisal Requirements: All RHS Complete Appraisals must comply with the following unless the CAS requires otherwise:

1) 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,

• Identification of the client and any other intended users of the appraisal,

• Identification of the intended use of the appraisal,

• Description of the subject real estate,

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

• Identification of the purpose of the appraisal,

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

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

• Description of the scope of work used to develop the appraisal,

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

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

• 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,

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

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

2) All reports must include an executive summary.

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

4) 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.

5) 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

6) All reports must include the following exhibits of the subject property:

• Survey

• Site plan

• Floor plans

7) All analyses within the Income Approach must be well supported. 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 Rural Development Review Appraiser will require the contract appraiser to make revisions that provide the necessary support before the appraisal can be accepted.

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

9) 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.

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

C.16 Review of Appraisal: Appraisal reports are subject to review by Rural Development. Appraisers must be prepared to discuss their analyses, opinions, and conclusions and provide additional written support, clarification, and/or corrected appraisal pages if requested.

C.17 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 Rural Development, and that appraiser must sign the report and be accountable for it.

C.18 Payment of Services: Late delivery of any report may result in liquidated damages. Lacking specific arrangements in writing to the contrary, Rural Development 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 Rural Development. If delivery of the report is 30 days past due, the appraisal engagement is cancelable by Rural Development, and the appraiser's right to all fees associated with the assignment may be forfeited.

C. 19 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: 1) the appraiser cannot gain adequate access to the property, 2) the appraiser does not receive essential property information in a timely manner, 3) the appraiser has previously appraised or is in the process of appraising the property, 4) the appraiser has any other potential conflict of interest.

The property contact cannot make any changes to any of the provisions of the purchase order. Changes to the purchase order can only be made by the contracting officer who signed the award.

C.20 TIME OF DELIVERY

Delivery of a complete and accurate appraisal shall be within 30 days after issuance of the award.

C.21 INSPECTION AND ACCEPTANCE

Inspection and acceptance will be at the USDA, Puerto Rico State Office. Inspection is normally limited to determining compliance with the requirements stated in the purchase order and the Statement of Work.

C.22 INVOICING

All payments under this Purchase Order will be made under the Prompt Payment Act. (See Clause 52.232-1.) The contractor shall not be entitled for any payment for services not rendered, including anticipatory profits, overheads, personnel costs, or any and all similar costs.

C.23 RETURNED INVOICES

Invoices are returned for:

1. Incomplete report

2. Quality unacceptable.

3. Report not compliance with SOW.

4. Having other payment discrepancies.

Resolution and correction will require the contractor to contact the Contracting Officer.

C.24 ADMINISTRATION

The purchase order will be administered by:

Contracting Officer-Minerva Alonso USDA Rural Development 654 Munoz Marin Ave., Suite 601 San Juan, PR 00918 The contractor will make deliveries to and will deliver their invoice to the above address.

APPRAISAL INFORMATION SHEET

SANTA ISABEL APARTMENTS

787-766-5095 ext. 144

787-766-5095 ext. 156

USDA, Rural Development, 654 Munoz Rivera Ave., Suite 601, San Juan, Puerto Rico 00918

APPRAISAL INFORMATION SHEET

ALTURAS DE PEÑUELAS APARTMENTS

787-766-5095 ext. 144

787-766-5095 ext. 156

787-836-1995

SABANA GRANDE APARTMENTS

787-766-5095 ext. 144

787-766-5095 ext. 156

ALTURAS DE VILLALBA

787-766-5095 ext. 144

787-766-5095 ext. 156

787-847-7400

Villalba, Puerto Rico