Construction / Rehabilitation Costs

Information by State  Print version   In This Section Development Costs   Development Costs and the HOME Multifamily Underwriting Template   Acquisition Costs   Site Work Costs   Construction / Rehabilitation Costs   Architectural and Engineering Fees   Other Owner Costs   Interim Financing Costs   Permanent Financing Fees and Expenses   Developer's Fee   Initial Project Reserves   Tenant Relocation Costs   Project Administration and Management Costs   Other Development Costs

The Construction / Rehabilitation Costs portion of the Development Costs tab should cover all costs included in a construction contract:

• Other Site Work includes only costs included in the construction contract, usually a set of standard items that are required to prepare the site for construction or to put it in usable condition after construction is complete. Any additional or atypical site work should be entered under Site Work Costs.
  
  
• New Construction refers to the cost of labor and materials for the construction of new housing units.
  
  
• Rehabilitation refers to work on existing structures, such as installing new plumbing, facade improvements, installing new appliances, treating lead-based paint hazards etc.
  
  
• General Requirements refers to an allowance for the contractor's on-site overhead expenses. General requirements typically include building permits, fencing around the site, temporary storage for materials, construction supervision, the "job trailer," and temporary utilities.
  
  
• Builder's Overhead is an allowance for the portion of the builder's off-site (home office) overhead that is attributable to the project.
  
  
• Builder Profit is typically based on the size of the project, the total development cost and the risk associated with the project. This cost is expressed as a percentage of construction costs in the Other Information column.
  
  
• Performance Bond Premium refers to the cost of a performance bond. By issuing a performance bond, a bonding company commits to completing the development project in the event that the original contractor defaults on its contractual obligations. An estimated performance bond premium can be obtained from a bonding company. Federal rules (24 CFR Part 85.36) require bonds for 100 percent of a contract value for all contracts over $100,000.
  
  
• Construction Contingency refers to funds held to account for cost overruns. Weather changes in the planned construction are among the many factor that can lead to cost overruns. Be sure an up-front agreement is made about how any remaining construction contingency funds will be distributed after project completion. The construction contingency is expressed as a percentage of all construction costs under the Other Information column.
  
  
• Use the Other Construction / Rehabilitation Costs field to enter costs related to construction and rehabilitation that are not represented by the other items in this category. Enter a label (replacing the "Other Construction / Rehabilitation Costs" text) and an amount. If you do not need to use this field, simply leave it blank.