Capital Needs Assessment
A Capital Needs Assessment (CNA) is best described as a pre-purchase inspection of a multi-family residence or Community Association Facility. Similar to a single-family residential pre-purchase inspection, the CNA identifies the repairs, replacements, and significant maintenance items that will require attention over the term of the mortgage.
Most often, the CNA will also require an estimate of the costs to implement the recommended repairs or replacements. It may therefore also be referred to as a Preservation Capital Needs Assessment or simply a Physical Needs Assessment.
The scope of services included under the general heading of a Capital Needs Assessment may vary significantly from project to project. Certain types of CNA’s cover just the building exterior and common areas. Some include interiors, but again only those elements that are common or maintained by management. Other elements that may or may not be within the scope of services are:
- Structural Systems and Roofs.
- Mechanical Systems.
- Outbuildings and Amenities (e.g. club houses, pools, etc.)
Finally, other related evaluations may be required along with the CNA. Among these are:
- Environmental Site Assessments.
- American with Disabilities Act (ADA) Compliance.
- Code and Safety Inspections.
The work to be performed may be divided into the following basic components:
- Initial Research
- Development of a list of key contacts within the Association
- Documenting as-built drawings, permits, violations, and citations that may have been received.
- Development of an inventory of building elements to be included in the Assessment.
- Maintenance Personnel
- Tenant/Unit Owners
- Site Investigation
- Examination of inventory of building elements
- Identify the estimated useful life of each element
- Estimate of the repair/replacement of each element
- Statement of current condition, estimate of future capital requirements, and a schedule to be used in the development of a budget
- Report Preparation and Presentation
- Includes Summary, Purpose and Description, Site Inspection, Interviews, Results and Analysis, and Recommendations.