Mandatory Use of Capital Needs Assessment Tool (CNA e Tool) Begins

Regulation | November 07, 2017 | by Colleen Bloom

Mandatory use of this new tool for new FHA insurance applications began November 1; additional use requirements will begin February 1, 2018. Tutorials on the tool and other resources are also now available online.

The Capital Needs Assessment (CNA) e-Tool automates and standardizes the preparation, submission and review of a capital needs assessment. Its use became mandatory starting November 1, 2017 as detailed in Notice H 2017-14 for new FHA multifamily mortgage insurance applications.

Use of the Capital Needs Assessment (CNA) e-Tool for all Rental Assistance Demonstration conversions; 10-year update capital needs assessments for FHA-insured multifamily properties; and other asset management milestones, such as partial payment of claims, is currently voluntary but will become mandatory starting February 1, 2018.

Background:

Notice H 2016-18: Implementation of the CNA e Tool: Automating Capital Needs Assessments, and Related Policy Change introduced the new Capital Needs Assessment tools, which consolidate and align due diligence methods for Capital Needs Assessments. All needed due diligence documents for properties participating in programs of the Office of Multifamily Housing - previously referred to as physical condition assessments, project capital needs assessments, physical needs assessments and variations thereof – are now renamed and hereafter to be known as Capital Needs Assessments (or CNAs). The common name for the combination of software, and systems tools and associated protocols used to develop the documents shall be collectively called the CNA e Tool.

As discussed earlier, HUD and USDA-RD jointly developed the Capital Needs Assessment (CNA) e Tool to align agency and industry practice for preparation and submission of standardized capital needs assessments. 

Future Asset Management Uses:

HUD's Office of Asset Management and Portfolio Oversight (OAMPO) has clarified that, for PRAC properties, the only routine submission point for a CNA would be as part of request to increase reserve for replacement deposits, made in conjunction with a budget based rent increase. OAMPO is also planning further development of the CNA e Tool to support various asset management processes, but at this time do not have specific plans or timelines for additional required use.

As previously indicated, the assessor tool and validation engine are available to the public and can be used voluntarily at any time.

Continued Improvements:

HUD and USDA anticipate future enhancements and revisions to the tools and protocols as warranted by working experience with the CNA e Tool, and continue to solicit further input or recommendations on how the system can best be put to good use beyond the currently required submissions.  Users may offer comments, suggested best practices, and raise questions of either a technical or policy nature by email to CNAeTOOL@Hud.Gov .

CNA e-Tool Tutorials and Additional Resources

The following CNA e tool tutorials are now available:

Additional information will continue to be posted on HUD’s new CNA e-tool webpage.