1.01 On-Site Inspection for all projects and Opinion on Adequacy of the Property Needs Assessment ("PNA") Report and Scope of Work for renovation / adaptive re-use projects

Consultant shall:

1. Perform an On-Site Inspection of the above-reference Property (whether a bare site for new construction, or an existing building to be renovated) in order to understand the general physical condition of the property components, including to the extent available and remaining: the site, building envelope and exterior, building interior, unit interiors, Mechanical/Electrical/Plumbing/Fire Protection (MEPFP) Systems, building equipment and elevators.

For residential buildings, observation of as many or as few of the residential unit interiors will be performed as necessary to get comfortable with the "rehab program". The intent is not for the Consultant to perform an independent PNA, but rather to comment on the quality of the "rehab program". The observation will serve to generally confirm or disconfirm the findings of a previously prepared PNA, or other similar specialized assessments in the absence of a PNA, and the rehabilitation Scope of Work documents in addressing physical deficiencies; a detailed investigation, description, and evaluation of the existing Property and its condition is excluded. Ideally, the inspection should be performed once the Consultant has reviewed the PNA or similar assessments, Scope of Work and Budgets and has a good understanding of the "rehab program".

2. Review the Physical Needs Assessment, or similar assessments, to and provide commentary to:
   1. Determine whether the Developer engaged a qualified third-party Architectural/Engineering consulting firms or other specialized firms to conduct a comprehensive PNA or similar assessments, to assess the physical condition of all of the components of the existing pre-rehab property.
   2. Determine the extent to which the pre-rehabilitation condition of the Property was established. Were all of the components of the existing Property, site and all buildings, including unit interiors inspected and assessed? How many apartment units, commercial/retail units were inspected?
   3. Determine whether the PNA or similar assessments included a detailed description of each component. Was the material type, quantity, and opinion of the pre-rehab condition, age and remaining useful life of all existing components, systems and system components clearly established?
   4. Determine and describe whether any specialized tests and/or inspections were necessary, or required, to assess areas that were difficult to visually inspect. Were these tests appropriately documented within the report?
3. Provide a description of the Scope of proposed construction, the status of any current construction as relates to each major component of the project Scope (i.e. grading, storm drainage, sewer, water, paving, landscaping, foundation, superstructure, life safety, plumbing, mechanical, electrical, roofing, building enclosure system, weather proofing and flashing systems and details, conveyance systems, finishes and any off site work if applicable).
4. Provide an opinion regarding whether the documents are sufficiently complete to:
   1. Fully describe the nature of the improvements and the desired quality of the finished product (noting elements of the work that are not adequately represented.),
   2. Construct the entire project,
   3. Allow accurate costing and bidding by an "arm's length" construction contractor(s). Consultant will note any areas of inconsistency within the plans and specifications, and
   4. Specify work necessary to comply with Fair Housing Act, ADA, local, state or federal accessibility requirements.
5. Determine the Adequacy of the Rehab Scope of Work
   1. Confirm whether the Scope of Work appropriately addresses the physical needs of the Property as identified in the PNA.
   2. Confirm whether the Scope of Work adequately describes the repair and replacement work that is to be performed. Confirm whether the Scope of Work includes a clear criteria for components to be removed and replaced, how the removal is to be accomplished and what is to replace the component? If the SOW is not "wholesale" across the property, has a unit matrix been prepared and does it coincide with the inspectors findings?
   3. Confirm whether the existing structure was built before 1991, negating the need to apply the accessibility guidelines of Fair Housing to the project?
   4. Confirm whether there is a HAP Contract, government grant, or other soft financing that would trigger accessibility requirements required by Section 504?
   5. Opine generally on the degree of conformance of the Scope of Work with accessibility requirements.
   6. Confirm whether any geographic hazards exist, such as earthquakes, hurricanes, tidal surge, floodways, etc. that require structural or other infrastructure related enhancements to comply with current codes and insurance requirements?
   7. Identify any components of the Property that the Development Team elected to rely on the remaining useful life and deferred replacement or repair (building envelope, roofs, etc.) for later in the investment period rather than immediately repairing or replacing as concluded in the PNA. "AKA, immediate needs vs future capital needs"
   8. When consultant is comfortable with the proposed SOW, provide a statement in the report indicating "the SOW is feasible to meet the current needs of the property." If consultant is not able to make the statement due to an inadequate SOW, or other reasons, please provide supporting commentary.
6. For existing properties, the consultant will interview onsite management and maintenance staff and obtain the following.
   1. "As-built" drawings reflecting repairs, changes etc. to original construction and building systems performed by on-site staff in the course of normal operations (if available),
   2. List of current M/E/P/FP, elevator and security service contractors supporting the property, and
   3. Operational and preventative maintenance records and procedures related to building systems, listing of chronic system repairs or problems, and any other salient historical information.

1.02 Review of Plans and Specifications

The Consultant will perform a detailed review of the project Professionals-of-Record's drawings, specifications, scope of work, and related documents, and provide a written professional opinion of the following aspects of the documents. This review will include the following:

1. Narrative review of design requirements and program.
   1. Property Features - description of site layout, apartment buildings, leasing/clubhouse facilities, and site amenities.
   2. Building/Unit Data - number of buildings by building type; gross square footage; common area square footage; apartment distribution by type (number of bedrooms & bathrooms), and square footage,
   3. Zoning requirements (including parking) and written opinion of conformance of intended use for the zoning.
   4. If the property is legal non-conforming, as described in the provided Zoning report, provide commentary in the inspector's opinion if the same number of units can be reconstructed within the boundary of the property and zoning requirements.
   5. Accessibility requirements to include a breakdown of required parking spaces, accessible and adaptable apartments by unit type and any special facilities required by jurisdictions with authority over the work.
   6. Qualifications of the Professionals of Record. Consultant to verify that the Professionals of Record are licensed to practice in the state in which the project is to be constructed (as evidenced by stamp and seal and/or as otherwise verified by Consultant).
2. Review and comment as to required easements.
   1. Identify any requirements for easements in favor of utility companies for the installation or maintenance of utility services that may affect the project,
   2. Note if easements from other property owners are necessary/required for installing or maintaining utilities or for other construction related to the project,
   3. Identify any portion of the proposed construction which could encroach on any existing easement, setback line or adjacent property, and
   4. Note existing utility lines running across project site not subject to existing easements.
   5. Review American Land Title Association (ALTA) survey of the Project and Site Plan and render a professional opinion regarding: (1) any potential or existing encroachments onto easements, facilities, or properties; (2) access to the Project; and (3) positioning of the building footprint(s). Notwithstanding any issues stemming from the preceding, survey is considered unacceptable by PNC unless signed and stamped by registered professional civil engineer or land surveyor licensed in the Project's state. Consultant is not responsible for survey content, completeness or accuracy, but will comment on the apparent compliance or non-compliance with the ALTA standard. Variances from ALTA standards should be noted.
3. Review availability of utilities, including:
   1. Listing of local utilities providing service to the project (including sewer, water, storm sewer, natural gas, telephone service and cable television), and
   2. Review of utility letters, confirming availability and capacity, necessary for the construction and operation of the property.
   3. Notation of metering for each utility (bulk by property, building or unit).
4. Provide an itemized list of all plans, specifications, and contractor proposals reviewed, including sheet number, sheet title and description, name of preparer, date of issue and revision date, if any; and a record of further revisions, additions or deletions to the plans and specifications, referencing the same as set forth above, and noting the nature and effect thereof.
5. Comment on the level of quality, adequacy and appropriateness of the improvements to satisfy the intended use including the following:
   1. Review of the soils report for the purpose of rendering a professional opinion regarding the professional qualifications (as evidenced by stamp or seal) of the Soils Engineer, the buildable characteristics of the building site, and to summarize for PNC any concerns contained therein or related thereto. Check for the signature and professional stamp of the responsible civil or soils engineer. The soils report is considered unacceptable if these items are missing or are from a professional not licensed in the Project's state.
   2. Verification that the structural improvements are properly designed for soils conditions based on soils reports, current wind loads, occupancy loads, appropriate dead and live loads, earthquake loads, and other pertinent current design factors, building laws and regulations, and accepted construction practices, advising PNC in the event the soils conditions or structural system(s) appear(s) to be inadequate, and
   3. Verification that proposed MEP, fire protection, elevator, telecommunications and security systems are appropriate for the building structure and intended use of the property, and do not limit the building use in any way.
6. Identify any circumstance, related work, existing condition or features on or adjacent to the project not addressed in the scope of work but required for the complete and proper execution of the proposed project. Ex: roadway and utility extensions, etc.
7. Comment on any aspects of the design that might negatively affect the property's intended use including but not limited to poor access, inadequate parking facilities, poor handicap access, poor site or building drainage, dated features and appearance, low floor or roof load design, poor space planning or circulation layout, lack of sound or thermal insulation, insufficient or unclear flashing details, inadequate electrical power, lighting, or ventilation, insufficient conveyance systems, inappropriate materials, etc.
8. Identify any systems, materials, suggested construction methods, obstructions or constraints that would affect the contractor's ability to construct the work and achieve the intent of the plans, including but not limited to unrealistic detailing or tolerances in the plans, materials difficult to obtain, unusual soil conditions, or significant existing conditions or obstructions.
9. Comment on aspects of the design that could cause unusual maintenance problems. Ex: multiple exterior finishes across the building exterior.
10. Provide an opinion on the compliance of the plans, specifications and proposals with federal, state and local building laws and regulations to include potential permitting issues.
11. Provide a review of responses from the Professionals-of-Record to the Consultant's initial report and opinions.
12. Indicate the building codes applicable to the project.

1.03 Review of Construction Documents: The Consultant will review, evaluate, and provide a written professional opinion to PNC on the following aspects of the construction documents. The following are some of the documents we consider critical to a project. A complete list of potential documents are listed in Exhibit C

1. Construction Contract:
   1. Sufficiency of documents to complete the project in compliance with plans and specifications and their variance from standard AIA forms or generally accepted construction practice,
   2. Verification that underlying documents attached to the agreements (e.g. plans and specifications) are the same as those reviewed above,
   3. Identify any work shown on the plans and specifications but not included in the contract, any allowance items, any alternates which could affect the final cost of the work, and VE options,
   4. Note construction work and associated cost estimates, which are not included in the Construction Contract(s), but which will be necessary for the full utilization of the Project or compliance with building laws and regulations or the plans and specifications. Ex: owner provided finishes, systems, and/or components,
   5. Identify and provide commentary on any exclusions, clarifications and/or qualifications that reduce the scope or quality of the work described in the drawings and specifications, and
   6. Note provisions that would adversely affect the anticipated project cost, proposed retention and disbursement process or construction schedule.
   7. Discuss retainage, liquidated damages, bonus clauses, and whether or not the contract is either a Stipulated Sum agreement or a Cost Plus agreement with or without a guaranteed maximum price. Any bonding requirements and progress payment clauses that differ from the industry norm should also be discussed and documented.
   8. Regarding historic rehabilitation work, the construction contract AND the architect contract must each include the following provision: (only applicable on HTC deals)

   The contractor/architect agrees to perform the work in compliance with the approval by the National Park Service of Part 2 of the Historic Preservation Application, the plans for rehabilitation submitted to the National Park Service and the standards for rehabilitation set forth in Title 36 of the Code of Federal Regulations, Part 67.7, or any successor provisions, as amended from time to time. (Only applicable on HTC deals)

2. Project Construction Schedule:
   1. Identified activities, milestones, sequences, and durations,
   2. The schedule's completeness, level of detail, logic and adequacy,
   3. Any allowance or omission of an allowance for atypical weather conditions, unusual construction conditions, lead time items, etc. that may adversely affect the project budget, and
   4. Consistency of the schedule to the required contract milestones.
3. Project Cost/Schedule of Values:
   1. Evaluate the project cost statement on a line item basis for completeness, and consistency with project intent and level of quality specified, noting any significant discrepancies,
   2. Review the contractor allocations for profit, overhead, and general conditions for appropriateness and appearance of "front loading" on the cost statement,
   3. Advise if the line items on the contractor's cost statement are not sufficiently organized or of adequate detail so that the monthly payments can be properly monitored,
   4. Receive and review a schedule of project costs from the Development team or its agent, including a breakdown of which costs are considered Qualified Rehabilitation Expenses (QRE's), and provide an opinion as to whether or not the proposed project costs are reasonable for the scope of work as required by the approved National Park Service Part II Application, and any amendments then available. (Only applicable on HTC deals).
4. Quality Control Program: Review all aspects of the proposed program of quality assurance, commenting on its adequacy and including recommendations for additional testing or provisions, as the Consultant believes necessary to achieve the intent of the construction documents.
5. Recommendation for Contingency: After evaluating the cost statements, and subject to findings of Sections 203 (a), (b) and (c), recommend a contingency for constructing, furnishing and equipping of the property.
6. Contractor Qualifications: Verify with the applicable (local) building authority that the proposed contractor is licensed (if required by state or local law) to construct the proposed Project, noting any items of interest such as comments or claims filed against the contractor. Comment as to the contractor’'s expertise to construct the Project as planned.
7. Architectural/Engineering Contracts: Provide the consultant's professional opinion regarding the scope of services, cost, completeness, and variances from standard AIA documents.
8. Environmental Site Assessments: Provide commentary on whether issues identified in the Phase I, Phase II, LBP, and ACM reports to ensure any recommendations in such reports are included in the SOW and Budget.
9. Recommendation of Replacement Reserves: Complete a replacement reserve table having a 15-year term, showing both inflated (3%) and uninflated values. This table should be completed for new and renovation type projects, with the primary focus on capital maintenance items that can have a significant impact on the property if maintenance and repairs are not completed. Ex: caulking and painting, roof covering, windows, pavement, etc... We are NOT looking to include bath accessories, unit flooring, unit paint, unit appliances, etc.., as these are typically replaced as needed through maintenance and operations.
10. Historic Tax Credit Addendum: With regards to the National Park Service Historic Preservation Certification & Historic Tax Credits for the above-referenced project, the Consultant will provide all necessary professional and, administrative staff and resources to provide the consulting services outline in Appendix C. (Only applicable on HTC deals)
11. Other Documents, if and when provided :
    • Pertinent sections of the Loan Agreement Identified by PNC
    • Contractor's bonds
    • Sub-contracts and Sub-contractor's bonds
    • Building permits
    • Evidence of zoning compliance
    • Will-serve letter for utilities
    • Development Agreements
    • Municipal off-site requirements or Letter of Credit requirements by a municipality.
    • National Park Service Historic Preservation Certification Application Part I, Part II, Part III & any other related documents. (Only applicable on HTC deals)

1.04 Reports: The Consultant will submit the following report:

1. On-Site Observation, Initial Design and Construction Document Report ("Initial Report") Consultant will provide a draft version and a final version of its report in electronic form to Client addressing Sections 1.01, 1.02, & 1.03. The Scope of Work will include the Consultant's review of the development team's responses to the initial Report, communication and conference calls with the Syndicator or development team to address questions and any related correspondence that may be needed to finalize the report.
2. Reporting Responsibilities: The Consultant will report directly to PNC. If specifically directed by PNC, all requests for information from the General Partner/Developer will flow through PNC. PNC retains the right to deliver copies of the Consultant's reports to the General Partner/Developer AOR or Engineer, Contractor, or other interested parties for their review and comments.
3. Professional Responsibilities: Consultant acknowledges that the quality and total cost of the finished Project has a direct bearing upon the performance of the investment for the PNC. The Consultant further understands that PNC will rely upon same in analyzing the integrity of the project and the propriety of the capital disbursements. Consultant agrees to exercise standards of professional practice in preparing its reports and opinions as set forth in Section 4 of the Inspection Services Agreement
4. Pro-Active Requirement: PNC will provide some information for the Consultant to review as it comes available; but the Consultant should use all resources available and contacts provided to gather, understand and evaluate the information. PNC will assist the Consultant when required to obtain such additional information or clarification.

PNC expects the Consultant, without prompting from PNC, to follow up on any outstanding or unresolved documents or issues noted in the Pre-Construction Review, whether the Consultant conducted the review or was provided with a copy of the review performed by another Consultant. When Consultant cannot achieve resolution, Consultant must notify PNC of issues that require assistance in resolving.