D3G was engaged by a public housing authority in the Capital Region to analyze a portfolio of eighteen (18) public housing properties through a competitive RFQ and negotiation process. The primary objective was to secure HUD Special Application Center (SAC) demolition-disposition approval for the properties. The properties needed to meet a physical obsolescence threshold determined by HUD to secure demolition-disposition approval. The threshold is based on the cost of making urgent capital repairs at the properties in question compared to the cost of replacing the buildings, which requires skilled, in-depth property analysis by D3G.
The portfolio presented significant complexity—nearly 3,000 units across various building types, ranging from historic low-rise buildings to mid- and high-rise senior towers, many of which included inaccessible or secured areas. These challenges were further compounded by elevated Total Development Cost (TDC) levels, typical of high-cost urban markets, as it is more difficult for properties to be considered obsolete with elevated TDCs.
The project’s core goal was to provide comprehensive Cost and Functional Obsolescence reporting for the PHA’s upcoming SAC submission. Section 18 approval was necessary to support the PHA’s future redevelopment strategies, including demolition and higher-density reconstruction or deep energy retrofit and preservation, depending on the property. Section 18 disposition allows properties to achieve rent structures above RAD thresholds, enabling reinvestment in affordable housing, reducing operational costs, improving energy efficiency, and ultimately delivering modern, code-compliant living environments for residents. The housing authority also expressed interest in leveraging funding sources such as Low-Income Housing Tax Credits (LIHTC), Historic Tax Credits (HTC), and Inflation Reduction Act (IRA) allocations to strengthen long-term repositioning plans.
To help the PHA secure Section 18 approval, D3G conducted detailed cost and functional obsolescence assessments for all 18 properties. The high-cost nature of the market required nuanced and well-documented justification of obsolescence findings. Our team evaluated environmental remediation needs, historic preservation requirements, climate resiliency vulnerabilities, and decarbonization opportunities to inform capital planning.
Each report featured an analysis of applicable federal codes, upcoming IECC 2021 energy standards, and local zoning and fire code regulations. Due to site access limitations, the housing authority provided dedicated staff to assist with interior access—removing barriers such as welded metal panels, wooden boards, rusted hardware, and missing keys.
D3G’s scope included SAC-compliant documentation that clearly demonstrated both cost and functional obsolescence, supporting a broader strategy to reposition aging assets. The reporting incorporated data points from climate risk assessments, historic review protocols, future LIHTC QAP requirements, and environmental hazard mitigation strategies.
D3G delivered eighteen completed Section 18 Physical Needs Assessments that synthesized the full breadth of the analysis performed. Beyond reporting, D3G also provided post-submission consultation and collaborated directly with HUD staff to validate data and secure approval.
Building and Fire Code Analysis
Climate Resiliency Analysis
Cost Obsolescence Studies
Energy Consumption Review
Functional Obsolescence Studies
Review of Existing Environmental Reports
Section 18 Physical Needs Assessments
