An appraisal is required for proposed acquisition/renovation bond transactions in North Carolina. The purpose of the appraisal is to establish the “as is” value of the building to be acquired. According to the North Carolina Qualified Allocation Plan (QAP), applicants must submit an “as is” appraisal with their application that is (a) dated no more than six (6) months from the application deadline, (b) prepared by an independent, state certified appraiser and (c) complies with the Uniform Standards of Professional Appraisal Practice. Appraisals for acquisition/renovation projects must break out the land and building values from the total value.
If you are looking at using a HUD program (221d4 or 223f) to credit enhance your project, HUD will also require an “as if renovated” appraisal. So be sure to select an appraiser who is HUD-approved.
Normally, the appraisal is ordered by the lender. If you get them involved early enough, your appraiser can work up a “dual purpose” report that makes both NCHFA and your lender happy. You may want to use an appraiser who is a member of the Appraisal Institute (MAI). The Appraisal Institute has appraisers who specialize in affordable housing who could do a great job with your report.
A “dual purpose” appraisal would include the following values:
- Value, As If Renovated, Restricted Rents
- Value, As If Renovated, Market Rents
- Value, Favorable Financing
- Value, Tax Credit Equity
- Value, As Is
- Value, Vacant Land
A final point. Under new HUD guidelines, the appraiser and market analyst must be different entities. You and your lender should keep this in mind when selecting the best appraiser and market analyst for your North Carolina bond deal.
Feel free to contact me (Jeff Carroll) at 704-905-2276 with any questions you may have regarding the selection of an appraiser for your NC bond application.