§4103 Appraisal and Preservation Value of Eligible Low-income Housing

Summary

When an owner files a notice saying they want to keep affordability rules in place or transfer eligible low-income housing, the Secretary must get a preservation value for the property. Two appraisals are required: one chosen by the Secretary and one chosen by the owner. Both appraisals must be done within 4 months after the notice is filed. The Secretary must send a written notice within 30 days after the owner files. That notice tells the owner to get an appraisal, explains the rules and deadline, warns that the Secretary’s appraiser will need to inspect the buildings and records, and says if a State agency will help. The owner must give the Secretary its appraiser’s report within 90 days after getting that notice. If the two appraisers disagree and the Secretary and owner still can’t agree, they pick and pay a third appraiser whose number is final. The Secretary can approve incentives only if the appraisal is no more than 30 months old. Preservation value is the property’s fair market value. If the owner seeks to extend affordability and get incentives, the value is based on the property’s best use as rental housing. If the owner seeks a transfer, the value is based on the property’s highest and best use. The Secretary must give written appraisal rules that assume the federal mortgage is repaid, the low-income rules and any federal rental aid end, and costs to follow state or local laws. The rules may use State agency estimates for rehab and conversion costs. Appraisers must use the larger of actual operating costs (the average of the prior 3 years) or projected operating costs after conversion. The rules must include ways to estimate rehab needed and other costs to convert to market-rate rental housing or to the property’s highest and best use.