Project Capital Needs Assessments and HUD 223(f) Financing
In order to obtain a HUD 223(f) loan to refinance or acquire a multifamily property, you will need to have a completed Project Capital Needs Assessment, or PCNA before submitting your application to HUD. A PCNA, which may also be referred to as a Capital Needs Assessment (CNA), or a Physical Needs Assessment, is a third-party report that estimates the costs of maintaining a building over time. To do so, a third-party inspector will examine each of a building's major systems, such as insulation, plumbing, and roofing, in order to determine each system's lifetime, and when it will likely need to be repaired or replaced.
HUD multifamily borrowers are required to submit an updated pcna every 10 Years
Unlike most other third-party reports, such as an Appraisal, Market Study, or Environmental Assessment, a PCNA needs to be updated every 10 years for the entire life of the loan. This is to ensure that the project remains safe and will continue to be financially viable (i.e. will not pose a significant financial risk to HUD.)
HUD Borrowers Must subMit reports using The CNA E-TOOL
As of November 2017, HUD has made it mandatory for new borrowers to use the CNA e-tool, an online hub which "automates and standardizes the preparation, submission, and review of a capital needs assessment." And, as of February 2018, use of the CNA e-tool also became mandatory for 10-year PCNA updates, as well as Rental Assistance Demonstration (RAD) conversions.