Loan Terms—Debt service coverage (DSC) of at least
1. 7 is proposed, although 1. 5 would be permitted for
properties demonstrating history of stable net operating
income (NOI).
Loan-to-Value (LTV) Requirement—the combined LTV
cannot be more than 65 percent.
Valuation of the Collateral—the originator of a QCRE
must determine that the purchase price for the property
secures the loan and reflects the current market value
of the property. The agencies want to ensure that the
collateral is sufficient to recover any unpaid principal in
the event of default, and that the borrower has sufficient
equity in the property.
Risk Management and Monitoring Requirements—
there are certain covenants to be included in the loan
documents, which are intended to facilitate the ability of
the originator to monitor and manage credit risk over the
full term of the loan.
NO WIPE TEST NEEDED IN LEAD-PAINT TESTING
Last August, the U.S. Environmental Protection Agency (EPA) released a
Final Rule regarding testing requirements for the Renovation, Repair and
Painting Program (RRP) of testing for lead-based paint in commercial and
public buildings. This Final Rule does not require a dust wipe test as one was
originally proposed in 2010. Instead, a certified renovator must collect a paint
chip sample and send it to a recognized lab to obtain an analysis of any possible lead-based paint. Other changes include minimum enforcement provisions for authorized renovation programs, and minor revisions to the training
and certification requirements for renovators. The EPA has also clarified the
requirements for vertical containment on exterior renovation projects, and
the mandatory standards for high-efficiency particulate air (HEPA) vacuums.
In July, 2010, IREM joined a coalition with various partners in the commercial real estate and property management industry. This coalition was
formed in response to the Advance Notice of Proposed Rulemaking issued by
the EPA concerning the Renovation, Repair and Painting Program (RRP) for
Commercial and Public Buildings concerning lead-based paint. The Coalition
submitted comments to the EPA with respect to RRP activities.
IREM legislative staff will continue to monitor the lead-based paint issue
and report back when necessary. n
IREM Legislative Staff will continue to monitor these issues closely and report back when necessary. If you have any questions regarding
these issues, please contact Beth Price, the legislative liaison for IREM Headquarters in Chicago, at bprice@irem.org or (800) 837-0706
ext. 6021.
