How AEI Consultants Navigates the HUD Process
In this EXCLUSIVE, James Rice, vice president with AEI Consultants, recently shared his insights into navigating the HUD process, cost reduction and environmental issues on the horizon.
SAN JOSE—An average of 32.1% of multifamily development spending is a result of fees and other costs associated with government regulations, including agency approval systems. These costs have a direct impact on the growing affordable housing crisis.
“To address the increasing need for affordable housing across the country, Department of Housing and Urban Development allocations have risen to $47.9 billion for the next fiscal year,” says Staige Miller, vice president–HUD environmental services at AEI Consultants. “Accordingly, we continue to expand our in-house services to accommodate the rising industry demand for HUD-related projects.”
AEI Consultants is responding to these increasing regulations and complex approval systems by continuing to grow its HUD-related offerings with the addition of a vice president of HUD AEC Services. In his new role, James Rice will provide architectural planning and cost review services for construction and substantial rehabilitation projects that will be funded or insured through HUD. In this exclusive, Rice recently shared some insights into navigating the HUD process, cost reduction and environmental issues on the horizon.
GlobeSt.com: How do AEI’s reports help lenders and developers to more smoothly complete the agency’s internal and external review process, ultimately reducing costs?
Rice: HUD offers multiple programs for real estate financing and a variety of options to meet the needs of specific clients–typically new construction or substantial rehabilitation of existing properties. Depending on the HUD financing program, our reporting assists clients in navigating the HUD application and review process, and minimizing client stress while conducting investigations on specific properties and buildings. Ultimately, client costs are reduced through our thorough site investigations and on-time delivery of reports, which provide environmental and property assessment as well as risk analyses including expected loss scenarios.
GlobeSt.com: As it relates to HUD lending regulations, what do AEI’s assessment and consulting services entail?
Rice: HUD insures mortgage loans for varying levels of property rehabilitation and new construction for multifamily and healthcare properties throughout the country. Prospective borrowers may seek HUD mortgage insurance for a variety of reasons, including low, fixed interest rates and long loan amortization periods. To qualify, both the borrower and the mortgage lender must demonstrate that the project will be completed in compliance with all applicable codes, regulations and HUD standards. In addition, associated costs must be shown to be allowable, reasonable and directly related to the requirement. Our HUD team is a full-service environmental and building assessment due diligence provider that specializes in third-party reporting for affordable housing and healthcare transactions by providing the following key services: Phase I and II environmental site assessments, hazardous materials studies, National Environmental Policy Act/NEPA compliance, capital needs assessments, intrusive studies, architectural review and cost estimation. Additionally, AEI’s third-party plan review ensures that structures meet the requirements for quality, safety and performance, as well as being code compliant. We verify that HUD, modular, residential, commercial and industrial buildings are compliant to the International Residential Code, International Building Code, and other state and federal standards.
GlobeSt.com: Because fees and other costs associated with government regulations have a direct impact on the growing affordable housing crisis, what role does AEI play in reducing costs?
Rice: The housing crisis is largely caused by the severe lack of affordable rental homes for the lowest-income families, as this is the only segment of the population for which there is an absolute shortage of affordable and available homes. AEI’s responsibility is to ensure that we do a thorough job. As the demand for HUD-related services and projects continues to increase, we constantly evaluate the ever-changing economic environment to ensure that we can review the necessary local-state and federal regulations associated with specific projects and the jurisdictions in which they are located. Additionally, we remain cognizant of other necessary third-party reports that carry an expiration date to ensure reporting is delivered on time.
GlobeSt.com: What environmental concerns are on the horizon that need to be addressed?
Rice: The environmental portion of HUD reporting changes constantly. Different issues take precedence depending on market activity. In 2020, HUD will release an updated Multifamily Accelerated Processing/MAP Guide which will include changes to requirements for Radon testing and mitigation system requirements and reporting. Current regulations deal with low-income families living in low-income housing and ensure that there are no environmental issues that will cause them harm. Moving forward, our government and regulators will expand that focus to ensure future environmental issues are identified and addressed.