The U.S. Department of Agriculture (USDA) Rural Housing Service (RHS) has published a final rule (RIN 0575″“AC66) relating to reserve accounts for new construction Section 515 or 514/516 multifamily properties. In the past, Rural Development based its reserve account on a set percentage of a property’s total development cost (TDC). With this final rule Rural Development will now base the reserve account amount on a life-cycle analysis or Capital Needs Assessment (CNA) prepared by third parties. The reserve account analysis will be used to determine the expected useful life of the building components and furnishings and to determine which building components or furnishings are the most cost efficient over the life of the building. This action will not affect reserve accounts for existing portfolios.

Click here to read RIN 0575″“AC66.