Case Studies

Dominion Due Diligence Group

20 years of navigating the nation's most complex housing and health care projects

As one of the original and few U.S. Department of Housing and Urban Development (HUD) Multifamily Accelerated Process (MAP) third-party consultant firms in the country, Virginia-based Dominion Due Diligence Group (D3G) is a renowned expert in the niche market. “We are an environmental, energy and engineering due diligence firm specializing in Federal Housing Administration [FHA] markets,” explains Amy Gay, director of sales and marketing for D3G. “We perform building inspections, environmental assessments and energy due diligence when a borrower attempts to get HUD-insured mortgages for multifamily properties. We operate in a very niche market. There are only about five other firms nationwide that do what we do.”

D3G operates as a third-party expert. “When a borrower approaches a lender to refinance their large-scale property, the lender hires a third-party like us to get the deal done, packaged and ready for HUD review,” says Gay. “HUD can deny or accept the proposal and that’s where we stand out. Our knowledge and expertise is considered industry-leading.”

Over the last 20 years, D3G has risen to the top of the complex market, coming to deeply understand the ins and outs of the FHA mortgage insurance industry. The firm has guided lenders, borrowers, general contractors, design professionals and equity partners through the difficult-to-navigate diligence process.

Foresight into a niche market

D3G started small in founder Rob Hazelton’s basement office in 1994. “When D3G started, it was a one-man show as a strictly environmental firm in support of construction and acquisitions,” recalls Gay.

Hazelton started to add services after realizing a need for a company to deliver due diligence in the HUD market. “He had the foresight to see that the HUD market requires a lot of due diligence that other loan protocols do not,” explains Gay.

After reading HUD’s Multifamily Accelerated Process (MAP) guide and learning how the federal housing programs were changing the mortgage insurance process, Hazelton decided the market was a place in which D3G could excel. “He focused on the details, because like any other government program, you need to be meticulous,” says Gay.

Once Hazelton determined the company’s place in the industry, D3G started hiring construction inspectors and cost estimators to do physical condition needs assessments (PCNA) and construction cost estimate reviews per FHA mortgage insurance guidelines.

Today, D3G serves nationwide clients with an office in Richmond, Va., and Denver. “We employ approximately 120 professionals,” shares Gay. “Due to the nature of our business, and the amount of traveling our employees do, D3G also has technical staff in remote offices in Detroit, Boston, Indianapolis and Raleigh, N.C.”

A critical program proponent

In a post recession economic climate, public housing across the U.S. has suffered. “It’s no secret public housing programs in the U.S. are underfunded because the federal government has less money,” notes Gay. “Public housing has slowly declined and we really need to focus on fixing these facilities now.”

Hazelton and D3G have been at the forefront of a program that hopes to stabilize and preserve affordable housing; HUD’s Rental Assistance Demonstrations (RAD) initiative. “This program is the new buzz in our industry,” reveals Gay. “RAD provides a mechanism for private funding to public housing authorities, in order to pull them into the market and give the housing the money needed to complete repairs.”

Since the program’s inception, Hazelton has been a major proponent, traveling from coast to coast to facilitate training and presentations. “D3G wrote the training model for HUD employees on what the RAD report should look like because it’s one thing to talk about it and another to implement it in real time,” adds Gay. “D3G has a lot of traction in RAD and it’s exciting to be involved in such an innovative program.”

RAD involves three scopes of work; a green PCA, an energy audit and a utility consumption baseline, which is a benchmark for comparison of other public housing facilities.

“We have done about 100 projects so far, and are discovering that greater than two-thirds of the RAD projects we assess are excellent candidates for substantial rehabilitation,” Hazelton says. “Using the mixed finance markets, these aged properties can recapitalize themselves, which creates construction jobs and a local economic boost.”

Building for a greener future

Gay says D3G is also leading the industry in growing services for the long term, performing sustainability and energy studies of existing and proposed housing and health care facilities. “Sustainability for the long term is particularly important in the case of government-funded or insured facilities,” she explains.

D3G completed the first ever Green Property Condition Assessment (GPCA) for HUD in 2008. Green PCA reports integrate an ASHRAE energy audit and identify opportunities to improve energy efficiency, maximize utility efficiency and increase a property’s overall sustainability, according to Hazelton.

“For us, the multifamily housing energy market is about 6 years old,” reveals Gay. “Although it’s still in the introductory stages, we think the HUD green multifamily programs will soon be business as usual. In two years, everything is going to be a green PCA.”

“The continued shift to energy efficient and sustainable building materials in the multifamily markets should continue to create opportunities for design engineers and specialty contractors,” Hazelton adds.

D3G continues to share its industry-leading knowledge, assisting in the development of critical programs. “Our goal is to have a D3G University to circulate our extensive and unmatched knowledge in the field,” adds Gay.

After 20 years, Dominion Due Diligence Group remains a leader in a complex, niche market, guiding clients and the progress of programs that improve the future prosperity of the nation.

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