CDBG-DR Small Rental Rehab Program Guidelines · Web viewAll property owners with tenants being temporarily relocated by the Small Rental Property program are required to enter into

PROGRAM GUIDELINES

Small Rental Rehabilitation Implementation Tool #3

Description: As part of the Disaster Recovery Small Rental Rehab Program Design & Implementation Toolkit, the Program Guidelines were developed by a State recipient of CDBG-DR funds to implement a Small Rental Rehabilitation Program (SRRP), administered and run by the State throughout the impacted region. The Guidelines intermittently state that the grantee has funded this program several times (i.e. rounds of funding) and describes additional details that were part of subsequent funding rounds. It is essential to create a process to update the Program Guidelines, and other pertinent documents, on a regularly basis as disaster recovery funding and priorities shift often. This document is for a complex program, with several funding options.

Modification of Source Documents Provided by: State of Louisiana

Caveat: This is an informational tool and/or template that should be adapted to each grantee’s specific program design.

This is not an official HUD document and has not been reviewed by HUD counsel. It is provided for informational purposes only. Any binding agreement should be reviewed by attorneys for the parties to the agreement and must conform to state and local laws.

U.S. Department of Housing and Urban DevelopmentCommunity Planning and Development, Disaster Recovery and Special Issues Division

For More Information

This resource is part of the Disaster Recovery Small Rental Rehab Program Design and Implementation Toolkit. View all of the Disaster Recovery Toolkits here: https://www.onecpd.info/resource/2853/cdbg-dr-toolkits.

For additional information about disaster recovery programs, please see your HUD representative.

https://www.onecpd.info/resource/2853/cdbg-dr-toolkits

https://www.onecpd.info/resource/2853/cdbg-dr-toolkits

https://www.onecpd.info/resource/2871/disaster-recovery-small-rental-rehabilitation-program-toolkit

https://www.onecpd.info/resource/2871/disaster-recovery-small-rental-rehabilitation-program-toolkit

PROGRAM GUIDELINES

Table of Contents

1.0 PROPERTY OWNER ELIGIBLITY.....................................................................................................................................3

1.1 Rental Property eligibility..........................................................................................................................................3

1.2 Owner Eligibility.........................................................................................................................................................7

2.0 FUNDING OPTIONS......................................................................................................................................................9

2.1 Estimated Cost to Repair...........................................................................................................................................9

2.2 Awards for Affordable Units....................................................................................................................................11

2.3 Owner Occupant Awards.........................................................................................................................................12

2.4 Bonus Awards..........................................................................................................................................................15

2.5 Scoring Criteria........................................................................................................................................................17

3.0 DUE DILIGENCE PROCESSES.......................................................................................................................................18

3.1 Environmental Review.............................................................................................................................................18

3.2 Verification of $5,000 in Storm-related Damages....................................................................................................18

3.3 Verification of Estimated Cost to Repair.................................................................................................................19

3.4 Uniform Relocation Act............................................................................................................................................21

4.0 DUE DILIGENCE EXCEPTIONS FOR COMMITMENT LETTER PROCESSING...................................................................24

5.0 CLOSING REQUIRMENTS............................................................................................................................................25

5.1 Building Conditions..................................................................................................................................................25

5.2 Affordable Rent Levels.............................................................................................................................................26

5.3 Tenant Selection......................................................................................................................................................27

5.4 Bankruptcy, Liens and Judgments............................................................................................................................27

5.5 Owner-Occupied Closing Requirements..................................................................................................................28

5.6 Insurance Requirements..........................................................................................................................................28

6.0 APPEALS POLICY.........................................................................................................................................................28

6.1 Level I: The Review Determination Process.............................................................................................................28

6.2 Level II: SRPP Appeals Process.................................................................................................................................29

7.0 COMPLIANCE AND MONITORING..............................................................................................................................31

7.1 Non Compliance.......................................................................................................................................................31

Small Rental Rehabilitation Tool: Program Guidelines 1

7.2 Sale/Transfers of the Property.................................................................................................................................32

8.0 Initiative Option.........................................................................................................................................................32

9.0 Construction Management Initiative Option Section 3.............................................................................................36


1.0 PROPERTY OWNER ELIGIBLITY

1.1 Rental Property eligibility

To be eligible for funding from the Small Rental Property Program, properties must meet all of the following criteria:

Properties containing between one and four dwelling units prior to {enter date}. A dwelling unit is defined as having complete independent living facilities for one or more persons, including permanent provisions for living, sleeping, eating, cooking and sanitation.

Properties located in {enter area} Properties that sustained storm damage of at least $5,000 as verified by a visual inspection or a 3rd. party

verification, including FEMA, Insurance, USDA or County estimates. Properties must have access to water, sewer, and electricity. Properties must have an oven, stovetop, and refrigerator.

Must be the owner(s) of record of the property at the time of application.

Further, property owners with ownership of a property prior to the storms receive an absolute preference over new investors who have purchased property since the storms.

Pre-storm owner(s) were the owner(s) of record of the property on {enter date of disaster}. Properties with multiple owners, where a member of the pre-storm ownership group has sold his/her interest to the other partners are eligible to compete as a pre-storm ownership group.

New Investor(s) are the owner(s) of record at the time of application and were not the owner(s) of record on {enter date of disaster}.

Special Circumstances related to type of ownership:

Rent to own: Not eligible Bond for deed: Not eligible Lease to own: Not eligible Usufruct: Case by case basis to be determined by the program. Usufruct cases should be encouraged to apply for

the Rental program.

Expanded Funding Options

“Eligibility of rental properties denied by the Homeowner Program”

Some owners of rental properties applied to the Homeowners Program but were denied due to having multiple units. These applicants can apply to the Small Rental Property Program and be eligible for potential awards for both eligible rental units and owner occupied units. To be eligible at least one unit must have been rental pre-storm, and one unit must be intended to be rental post-storm.

Self-Certification of property as rental pre-storm: Program Application Elements Requiring Self-Certification


There are no reliable systemic methods for the program to conclusively validate 100% of applications on certain eligibility criteria, such as rental property status, at the time of the storm or vacancy at the time of application. The program has historically relied on this self-reported information as self-certified on the application, under penalty of perjury, and this precedence was established at program inception. If, during the course of processing a file, it becomes evident that eligibility criteria may not have been accurate or comes into question, the file is submitted to Fraud Waste and Abuse for review where additional documentation is requested.1

Special Considerations regarding property uses

Properties containing mixed-uses are eligible to apply. A mixed-use property contained both commercial/office uses (groceries, corner stores, etc.) and residential uses (primary residences, rental units, etc.) prior to the storms. These rental properties will receive an award only for each affordable rental unit. Structures or spaces for commercial uses prior to the storms which will be converted to residential rental space are not eligible.

When determining the number of units in a small rental property, units identified for commercial use will not be considered in the 1- to 4-unit count, at the program’s discretion. In reviewing these cases, the program will take all efforts to ensure the overall program objectives are met.

Units used to house family members or others at no charge are eligible. If the persons occupying the unit are income-eligible tenants, the owner may receive funding for the units. If the persons occupying the units are not income-eligible tenants, the owner may apply to the program for other

units on the property and list the unit as a market rate unit. Single Room Occupancy (SRO) units are not eligible. SRO units are residential properties that include multiple

single room dwelling units where each unit is for occupancy by a single individual.

1.1.1 Eligible Structure TypesThe following section defines eligible and ineligible types of dwelling units that could have been located on the property prior to the storms or will be used in the reconstruction efforts.

Modular constructed housing is an eligible structure type. Modular homes are built in sections at a factory, transported to the building site on truck beds, and then joined

together by local contractors. Modular homes are built to conform to all state, local or regional building codes at their destinations.

A manufactured home (also known as a mobile home) is built to the Manufactured Home Construction and Safety Standards (HUD Code) and has a vehicle identification number (VIN) and/or a still undercarriage.

Manufactured homes, RVs, and houseboats are not eligible structure types.

1.1.2 Vacancy RequirementsProperty owners competing in the General Pool and the Nonprofit Set-aside (i.e., non owner occupants) may apply with partially occupied properties but will only receive funding for units which have been continuously vacant since {enter date of disaster}. Any occupied units at the time of application will be processed as market rate units and only vacant units will be eligible to receive an incentive award.

1 Note to CDBG-DR Grantees: By setting up a Fraud Waste and Abuse group, items that prove difficult to prove can be evaluated by trained staff, when necessary.


After submitting an application to the Rental program, it is preferred that owners should not rent any units identified on the application as vacant until construction is complete and the program verifies the income of potential tenants.

In the event that an owner has rented any restricted unit(s) post-date of application and prior to completing construction and passing final inspection or after final inspection but prior to receiving program approval, the program will continue to process the final award under these conditions:

It is determined that the tenant is income eligible for the unit using the income documentation and certification method of the program.

The owner will only qualify for the incentive award amount that is consistent with the income level of the tenant. The owner must supply the program with a move in notice prior to date of executed lease.

Special Circumstances Related to Vacancy:

Owner occupants of three- and four-unit properties are exempt from the vacancy policy above.

If any property owner is found to have improperly asked a tenant to leave, or some other illegal displacement has occurred, the owner is not eligible to receive an incentive from the program, and may be subject to legal penalties.

Self-Certification of Vacancy: Program Application Elements Requiring Self-Certification

There are no reliable systemic methods for the program to conclusively validate 100% of applications on certain eligibility criteria, such as rental property status, at the time of the storm or vacancy at the time of application. The program has historically relied on this self-reported information as self-certified on the application, under penalty of perjury, and this precedence was established at program inception. If, during the course of processing a file, it becomes evident that eligibility criteria may not have been accurate or comes into question, the file is submitted to Fraud Waste and Abuse for review where additional documentation is requested.

1.1.2.1 Advanced Funding Option Vacancy Requirements(Please also reference the URA Section)

At time of initial disbursement, all units without Certificate of Occupancy (COO), or COO equivalent, must be vacant and have remained vacant since the time of application. Properties which may have been issued a partial COO, or COO equivalent, for one or more units may have those units occupied.

Units issued a partial COO, or COO equivalent, (Note: This is not a program approved COO) at any time since application which are requesting AFO funds may have those units issued a COO occupied.

Clarification of Advanced Funding

Confirmed that for all Pre-COO disbursements all identified affordable units must be vacant.

When the initial AFO disbursement occurs Post-COO, tenant income documents will be verified if submitted. If no documentation has been submitted, the program will assume that affordable unit is vacant. Vacancy will not be verified at that time.


If the tenant’s income exceeds the rental tier that the owner specified in the application, the program will adjust the tier to match the tenant’s income (reducing the owner’s award value), or if the tenant is above 80% AMI the unit will become a market rate unit, i.e. , no incentive award will be provided. The AFO loan and disbursement will be adjusted accordingly by the designated section of the program.

Second Disbursement:

Upon receiving a program approved COO, or COO equivalent, for the all units on the property the owner may receive an additional 30% disbursement. If the previously vacant units have become occupied prior to a program approved COO, proper tenant income and lease information will be requested and evaluated for eligibility requirements. The AFO loan and disbursement will be adjusted accordingly to meet program requirements by the designated section,

If at any time a lease ends on a previously occupied unit and a new tenant is moved into that previously occupied unit or any vacant unit; the new tenant’s income documentation will be required and any subsequent disbursement will be reduced (adjusted) if the new tenants do not meet the tier requirements selected in the application accordingly by the designated section.

Final Disbursement:

Final disbursement will be based upon providing tenant income and lease information for all units and passing final inspection. The file will be reviewed for meeting all program eligibility requirements, and final disbursements amount will be adjusted accordingly to the requirements that have been satisfied.

Relocation:

If at any time, tenants are forced to move out, existing policy will be followed and the cost will be borne by the homeowner, and as noted in the commitment letter noted below:

Uniform Relocation Assistance and Real Property Acquisition Act

Eligibility for participation in the Incentive Program requires that all units requiring construction and/or rehabilitation must be vacant. When vacant eligible units are attached to occupied units the tenants residing in a property receiving Small Rental Property Program (the Program) funds may be eligible for relocation assistance under the Uniform Relocation Assistance and Property Acquisition Policies of Act of 1970 (URA), 42 U.S.C. 4601, et seq., as amended. The regulations implementing the URA are found at 49 CFR Part 24. As determined by the Program, and in compliance with applicable laws and regulations, tenants who must move from their residential rental units temporarily while repair work is underway, or permanently as a direct result of rehabilitation, demolition or acquisition may be eligible for relocation benefits as defined under URA and the State’s relocation plan including, but not limited to, financial assistance for moving expenses and increased housing costs. By signing the commitment letter Borrowers hereby agree that if it is necessary to relocate tenant(s) either permanently or temporarily the Borrower will be responsible for payment of such relocation costs.

In the event that tenants require temporary relocation while repairs are underway, the tenants must be permitted to return to and reoccupy their original unit(s) or other similar units on the same property upon completion of the work at rents that are not greater than the prescribed rents at the applicable income tier. If a Borrower refuses to allow the temporarily relocated tenants to return and reoccupy their former units the Borrower will be considered in violation of


their loan agreement, and may be responsible for permanent relocation costs. The State reserves the right to exercise any and all remedies as allowed in the recorded documents; and the borrower may be required to reimburse the Program for temporary relocation costs and may be charged with the cost of all permanent relocation expenses associated with any displaced tenants. These costs may include tenants‟ increased housing costs, moving expenses, and necessary out-of-pocket expenses.

If any property owners is found to have improperly asked a tenant to leave, or some other illegal displacement has occurred, the owner is not eligible to receive an incentive award from the program, and may be subject to legal penalties.

Note: It is always the programs intent to have any potential tenant’s income verified for selected rent tier(s) and lease(s) approved prior to allowing occupancy of any affordable units. Owners are notified that approval should occur before occupancy of any designated unit(s).

Recapture of Funds:

Should it be determined at any time post disbursement(s) that a tenant, lease or other program requirement is in violation on a property, such property will be recommended and directed for recapture,

1.2 Owner Eligibility To be eligible to apply for Program as a rental property owner, the property owner or group of owners must have been a resident or jurisdiction-based business or nonprofit organization authorized to operate in the State on {enter date of disaster}. Property owners do not have to reside in the State at the time of application to be eligible.

1.2.1 Ownership SizeOwnership size is determined by the number of rental units a property owner had any ownership on {enter date of disaster}.

For properties which have multiple property owners, size is determined the smallest ownership size of any individual or single owner in the ownership group. Small Owners are eligible residents or jurisdiction-based corporations, partnerships, or nonprofits who owned 1 to 20 rental units; Mid-Size Owners are eligible residents or jurisdiction-based corporations, partnerships, or nonprofits who owned between 21 and 100 rental units; and Large Size Owners are eligible residents or jurisdiction-based corporations, partnerships, or nonprofits who own more than 100 rental units.

1.2.2 Owner OccupantsTo be eligible to apply for the program as an owner occupant, the property owner or group of owners must meet the following criteria:

At least one property owner(s) must have owned and occupied one unit of a three- or four-unit property as their primary residence on or before {enter date of disaster}.

At least one property owner(s) must re-occupy the subject property within 3 years of the date of closing on the compensation award. During this three year time period, the owner will not be able to use their owner-occupied unit as a rental unit.

Owner Occupants must be the owner(s) of record of the property at the time of application. Owner- occupancy will be verified by program by establishing that the homeowner applied for a homestead exemption.


Special Circumstances related to Owner Occupants:

Owners of owner-occupied three- or four-unit properties that applied to Homeowner Assistance program and were notified of the denial of homeowner assistance after the deadline for applying to the Small Rental Program are able to complete an application and be awarded for both eligible rental units and an owner occupied unit.

Special Circumstances related to type of ownership:

Rent to own: Not eligible, unless the homeowner converts their contract to full ownership prior to receiving funding assistance

Bond for deed: Not eligible, unless the homeowner converts their contract to full ownership prior to receiving funding assistance

Lease to own: Not eligible, unless the homeowner converts their contract to full ownership prior to receiving funding assistance

Usufruct: Case by case basis to be determined by the program. Usufruct cases should be encouraged to apply for the program.

Special Circumstances related to ownership identity:

Power of attorney: Property owner(s) may grant power of attorney to someone who can apply on their behalf.

Co-ownership: All property owner information must be included on the application, all property owners must be present at closing, and all property owners must sign closing documents unless one is granted power of attorney for the others. Co-owners (i.e. joint ownership) who reside in more than one unit on a three- or four-unit property must submit one application to the Rental program, noting each owner- occupied unit on the property. Properties with multiple owners, where a member of the pre-storm ownership group has sold their interest to the other partners, are eligible to compete as Owner Occupants if all other criteria are met.

Nonprofit Organization: Nonprofit organizations which had an IRS 501(c)(3) designation and were registered to do business in the jurisdiction on or before {enter date of disaster} and at the time of application may file as an Owner Occupant if all the above criteria are met.

Succession: If the property owner(s) has died since the time of the storms, an heir must have been placed into legal possession of the property to be eligible in place of the deceased owner.

Clarification on Process for Closing Succession cases

The Grantee allowed closings to occur in succession cases with order s appointing independent Executor (Administrator) and Letters Testamentary/Letters of Independent Administration in specific cases..

Divorce: If the property owner(s) have divorced since {enter date of disaster}, the terms of the divorce settlement must include a transfer of ownership of record are required to be eligible.

Incapacity or infirmity: If a property owner is incapacitated due to illness or other infirmity, someone with a legal right to bind that person legally, such as is provided by a power of attorney, are eligible to apply on behalf of the property owner.


1.2.3 Nonprofit Set-aside

Nonprofit owners are eligible to apply for a long-term affordability set-aside in each round. The set-aside will contain at least 5% of the total round funding. Application to this funding set-aside will require all units in the property to be affordable for a minimum of 20 years.

Nonprofit property owners competing in the nonprofit set-aside will not receive staged forgiveness tiers. Instead, Incentive awards will be totally forgiven at the end of 20 years from the date of the Incentive.

Loan Forgiveness Methodology for SRPP

In the forgiveness process for Non-profits they will follow the same patterns of forgiveness but on a 20 year timeline. For those properties that have selected an extended term of affordability the forgiveness methodology will be based on the number of years selected.

To be eligible to apply for program as a nonprofit rental property owner in the nonprofit set- aside, the nonprofit organization must meet the following criteria:

Must have a registered 501(c)(3) tax filing status with the Internal Revenue Service (IRS) Must be registered to do business in the jurisdiction at the time of application. Owner(s) of record of the property at the time of application are given preference.

Nonprofit organizations in the set-aside are not required to have owned the rental property prior to the storms, but those that did will receive an absolute preference over new investors who have purchased property since the storms.

Pre-storm owner(s) were the owner(s) of record of the property on {enter date of disaster}. Properties with multiple owners, where a member of the pre-disaster ownership group has sold his/her interest to the other partners are eligible to compete as a pre-storm ownership group.

New Investor(s) are the owner(s) of record at the time of application and were not the owner(s) of record {enter date of disaster}.

Special Circumstances related to ownership identity:

Number of Units: Nonprofit owners may only receive funding for up to 50 units per nonprofit in each competitive funding round. Nonprofit owners may only receive funding for a total of 200 units from all rounds over the course of the Program.

Power of attorney: Property owner(s) may grant power of attorney to someone who can apply on their behalf.

2.0 FUNDING OPTIONSThe jurisdiction will provide an incentive to property owners to provide affordable housing located in the most heavily storm damaged areas. Awards are equal to the lesser of the following amounts:

The maximum allowable award, including any bonuses selected by the applicant for providing a higher quality housing unit 100% of the estimated cost to repair the property to meet the State Building Code.


2.1 Estimated Cost to RepairThe Estimated Cost to Repair (ECR) includes the following items or costs which could be incurred by a property owner participating in the Program.

Acquisition (non-profit set-aside only) Site Work (Utility lines, landscaping, etc.) Demolition Repair / Reconstruction costs Elevation Costs Lead Abatement Soft Costs:

o Architectural/Engineering (Drawings, specifications, if applicable) o Financing costs (Construction interest, appraisal, origination fees) o Surveyo Legal costs (Attorney Fees, Notary Fees, etc.)

o Title Insurance

o Building Permit

o Other Soft Costs

o Consultant Fee (if applicable) Relocation (if applicable) Contingency (to pay for unexpected costs - not greater than 10%) Other development costs

Special Considerations regarding Estimated Cost to Repair:

In mixed-use properties, the ECR is based on the costs to repair the residential space to meet the State Code without concern for the cost to repair the commercial space.

Applicants who responded to Universal Design, Green Design, Visitability, and/or Historic Properties scoring questions will receive an additional allowance in the calculation of the ECR.

Additional allowance for Universal $27,000 for each affordable unitAdditional allowance for Green Design $32,000 for each affordable unit

Additional allowance for Visitability $3,690 per rental unit for handicap accessibility$1,900 per rental unit for a wheelchair ramp.

Additional allowance for Historic Properties $10,000 for each affordable unit

2.1.1 Calculation of Estimated Cost to RepairCalculation of the ECR is required before commitment letter, final inspection, and disbursement of the award to the property owner may occur. To determine this value, an applicant may either submit paid bills and/or contracts from a licensed Contractor or request an estimated cost to repair from the jurisdiction.

If Work has been completed:

By a licensed Contractor, property owner may submit paid bills or choose jurisdiction-approved estimate of cost


to repair. By anyone other than a licensed contractor, including the property owner, the jurisdiction will determine

estimated cost to repair. By both licensed and unlicensed contractors, owner may choose to combine methods of verification: use paid

bills from licensed contractors and a jurisdiction-approved estimate for other work.

If Work has to be performed:

The owner may submit a copy of a formal bid (with a scope of work) from a registered or licensed contractor, professional architect, or professional engineer (even if the owner does not plan to actually hire this entity to perform the construction work) provided that the owner supplies a certification that estimated cost is a valid third party estimate. The contractor’s estimate would also contain a certification that the scope is not substantially greater than what is required to return the property to service and it provides the building amenities listed in the application.

The owner may submit a scope of work and a written cost estimate from a business or individual that is not a licensed contractor (even though the owner does not plan to hire this entity to do the construction work), however, the Small Rental Property program will need to send an inspector to ensure that the scope of work is not inappropriate and that cost per item is within the range of industry standards. The owner is cautioned to consult the grantee’s statues regarding the use of contractors other than licensed contractors.

The owner may request that a Small Rental Property Program inspector visit the property and make an estimate of costs required to bring the building up to code and provides costs for the building amenities listed in the application.

If Work is in Progress:

If the owner is in the middle of repairing the property, verifications for both the completed work and the work that is yet to be done must be provided. Any combination of the methods listed above may be used. The owner may also choose to have a SRPP inspector visit the property and make a total estimate of all costs associated with the work completed to date, work to be performed to bring up to the State Building Code and for the cost of the building amenities listed in the application.

The State will conduct a cost reasonableness Quality Assurance review on all owner supplied cost estimates to prevent fraud. This quality assurance review may include a desk review or the State’s cost estimate.

2.2 Awards for Affordable UnitsIncentives for affordable housing will be made in the form of a no interest, no payment, forgivable loan requiring property owners to maintain affordable rent levels for up to ten years. A forgivable loan is completely forgiven over time and may be spent at the borrower’s discretion, without restriction. The loan does not require repayment if all the conditions of the loan are met. Forgiveness of the loan will occur in staged intervals, depending on the level of affordability chosen by the applicant.

Loan Forgiveness Methodology

The SRPP will implement straight line methodology of forgiveness. The loan will be amortized yearly from the closing date of the loan.


Note: In the forgiveness process for Non-profits they will follow the same patterns of forgiveness, but on a 20 year timeline. For those properties that have selected an extended term of affordability the forgiveness methodology will based on the number of years selected.

To be consistent throughout the Program, forgiveness and prepayment schedules for all SRPP loans will use the closing date as a trigger date. Legal documents and procedures will be reviewed and adjusted as necessary for consistency. SRPP will identify any cases which may need to have legal documents re-filed and provide information to the State. Closing dates will also be issued for all system modifications for long term monitoring and pay-off/recapture calculations.

Property owners may choose to rent one or more units on a property at one of the three rent tiers calculated to be affordable to households at 80, 65, and 50 percent of area median income (AMI).

Awards are determined by the specific housing market and the number of bedrooms for each unit. Applicants may increase or decrease the number of bedrooms in each unit from what was previously indicated on the application. Owners willing to increase the number of bedrooms must submit a written request to do so. This request must be made prior to the final inspection so that the inspector can correctly determine if any of the scoring points are affected.

2.2.1 Owner OccupantsOwner Occupants competing in any round are allowed to change their AMI tiers down to the 50% level in order to be eligible for the Additional Incentive Loan (AIL). As with all other awardees, they may choose to increase the income levels and decrease their award at any period prior to closing.

2.3 Owner Occupant AwardsThe Small Rental Property program is committed to ensuring qualified owner occupants of three- and four-unit properties receive equitable compensation for their home and are able to receive an incentive for affordable housing on their rental units. NOTE: Duplex owner occupants are not eligible for an owner occupied awards described in this section. These owners are only eligible to receive the awards for affordable units described above.

Owners are not required to provide affordable units in order to receive a compensation award. However, if an affordable unit is selected, the amount of the award for each affordable unit is calculated in the same manner as for all other affordable units in the Small Rental Property Program. Award levels for owner occupants of three- and four-unit properties include up to $150,000 in compensation for damages to a pro rata share of the owner-occupied portion of the property.

If more than one property owner resided in separate units before the storms and will continue to reside in separate units after the storm, then each owner residing in a separate unit will be eligible for compensation of up to $150,000. If co-owners resided in the same unit on the property, together they are only eligible for $150,000 for the one unit they resided in.

Special Considerations regarding Owner Occupants:

Owner Occupants who received a Homeowner Assistance grant from the HAP for owner-occupied units in a separate structure on the tax parcel

Owner Occupants of up to four units on a tax parcel who received a homeowner grant under the Homeowner Assistance


program for an eligible single family home or duplex, but also have separate structures on the tax parcel that serve as rental properties, may receive a Small Rental Property Program incentive award for the remaining rental units(in separate structure from the homeowner unit) on the tax parcel. All SRPP program and eligibility requirements remain in effect.

The owners will receive an owner occupant classification, but will only receive an award from the Rental program for the affordable rental units not included in the structure that received a Homeowner Assistance grant.

2.2.3 Calculation of Homeowner CompensationAn evaluation of the home will compare the total square footage of all the units on the three- or four-unit property with the square footage of the owner’s unit. This percentage is then used to determine the portion of the following inputs that apply to the homeowner’s compensation award. No elevation allowance is provided to Owner Occupants of three- or four-unit properties.

The owner occupant compensation is based on the lesser of the Pre-storm value (PSV) or the Estimated Cost of Damages (ECD), minus any insurance proceeds and FEMA payments. That amount is reduced by an additional 30% if the homeowner did not carry hazard, or did not have flood insurance for properties located in a flood zone.

Estimated Cost of Damages (ECD) – The ECD is derived by an evaluator using Home Evaluation protocols and costs to assess damages to the interior of the owner-occupied unit(s), plus a pro-rata share of common elements (roof, porches, hallways, etc.).

Type 1 Evaluations consist of obtaining data (house dimensions and compensation area) that allows the computation of a replacement allowance for the home and an elevation allowance.

Type 2 Evaluations consist of a component by component assessment of damages to the home, as well as the determination of an elevation allowance.

For Type 2 Evaluations, the jurisdiction makes the determination of what Evaluation Type cost estimate to use in award calculations by approximating the percentage damage to the home, which is determined as follows:

(Evaluation Type 2 Cost Estimate/Evaluation Type 1 Cost Estimate) x 100 = % Damage

To facilitate the calculation shown above, a Type 1 cost estimate is calculated for Type 2 Evaluations. If the percentage damage as calculated above for a Type 2 evaluation is equal to or greater than 51%, then the Type 1 cost estimate is used in the award calculation. If the percentage damage is less than 51%, then the Type 2 Evaluation cost estimate is used in the award calculation. If the home has been cleared or demolished or the home evaluator finds it otherwise impossible to complete an Evaluation Type 2, the home evaluator will make a note that Evaluation Type 2 could not be completed and complete Evaluation Type 1. The home in this instance is considered equal to or greater than 51% damaged.

Duplication of Benefits - Sources of duplication of benefits compensation include sources of funding assistance provided for structural damage and loss related to the disaster. The following sources are deducted from the award amount for the homeowner’s unit:

FEMA payments for structural damage USDA loans and/or SBA loans National Flood Insurance Program (NFIP) Insurance Payments


Private insurance: All private insurance settlement amounts for loss to structures are considered in the award calculation. Private insurance payments for contents or other expenses are not considered.

Tax adjustments resulting from filings related to losses to the rental property are not considered duplication of benefits and do not affect awards.

Pre-Storm Value (PSV) – The PSV is calculated only for the owner-occupied unit on the property. Acceptable sources of PSV data are:

A Pre-storm Appraisal provided by the owner on a voluntary basis. It must have been completed by a licensed appraiser between {enter date} and the date of the storm. It must also reflect the value of the damaged property at some point during that same time frame. Value may be appreciated or depreciated using the HUD price index.

A Post-storm Appraisal provided by the owner on a voluntary basis. This is only used if (1) above is not provided by the owner. A post-storm appraisal is also provided by the owner and completed by a licensed appraiser. The value may not exceed 20% of the jurisdiction’s appraisal (see #4 below). If the value is over 20% more than the jurisdiction’s appraisal, the Rental Program will calculate PSV as 120% of the jurisdiction’s appraisal.

A Fannie Mae/Freddie Mac or FHA Estimate. If (1) and (2) above are not provided or not valid, PSV is based on a pre-storm appraisal performed by a third party, obtained by a lender or government agency, and completed since January 1, 2000. The jurisdiction uses two databases for this: Fannie Mae/Freddie Mac and FHA. As above, this value must be appreciated or depreciated. If there is more than one pre-storm appraisal available for the property from Fannie Mae/Freddie Mac or FHA, we will use the highest value.

The jurisdiction’s Appraisal. If (1), (2) and (3) above are not available or not valid, PSV is based on a market analysis ordered by the jurisdiction from a licensed appraiser.

2.3.2 Affordable Compensation GrantThe Affordable Compensation Grant (ACG) is available to Owner Occupants of three- or four-unit properties receiving a Conditional Award Letter for the Small Rental Property program and having income of less than or equal to 80% of Area Median Income based on income tax returns filed with the federal and state government for the previous three years. The income as reported on the tax returns must be at or below 80% of AMI for each of the previous three years.

The income calculation includes the annual income of all adult household members including earning and in-kind sources like social security and pensions and, if the total household assets are equal to or greater than $500,000, and imputed income from assets equal to 2% of the cash value of household assets, exclusive of the value of the primary residential unit. Only owner occupants whose total household assets are equal to or greater than $500,000 must provide information regarding cash value of their household assets.

The ACG is capped at $50,000 to fill any possible gap between estimated cost of damage and Compensation Award, insurance proceeds, and FEMA payments. Disbursement of the grant occurs at the same time as the Owner Occupant Homeowner Award is disbursed. The Borrower must agree to maintain casualty insurance and flood insurance, if property is located within a FEMA designated Special Flood Hazard area, for greater of the term of the ten (10) years or the term of the ACG.

A Borrower is not required to make payments on the ACG, provided they maintain residence at the property for the three year term of the loan. If the owner occupant fulfills the three (3) owner-occupancy requirement, the grant is forgiven. Borrowers who do not remain owner-occupants for three (3) years and default during the three year term must pay back


the ACG principal balance on a pro-rata basis.

2.3.3 Additional Incentive LoanThe Additional Incentive Loan (AIL) is available to help finance the rebuilding costs in excess of the maximum incentive award available under the Small Rental Property program, up to a maximum amount of $100,000 per assisted rental unit. The AIL is available to Owner Occupants of three- or four- unit properties receiving a Conditional Award Letter for the Small Rental Property program and having at least one affordable rental unit on their property.

The AIL is calculated as the difference between the estimated cost of damages per unit or $100,000.00 per unit, whichever is less, minus the authorized Small Rental Property Award amount per unit. The Borrower must agree to maintain casualty insurance and flood insurance, if property is located within a FEMA designated Special Flood Hazard area, for greater of the term of the ten (10) years or the term of the AIL.

A Borrower is not required to make payments on the AIL, provided they maintain residence at the property for the three year term of the loan. Borrowers who do not remain owner-occupants for three (3) years and default during the three year term must pay back the AIL principal balance on a pro-rata basis.

2.4 Bonus AwardsBonus awards are funds awarded in excess of the base award amount and are provided as part of the forgivable loan. Bonus awards are included as part of the affordable housing incentive up to 100 percent of the total repair cost.

Property owners may receive multiple bonus awards for one property. In these instances, each bonus award is calculated on the base award amount (i.e., bonuses are not compounding).

2.4.1 Special Needs Housing BonusThe Small Rental Property program seeks to make rental housing units available to residents with special needs by encouraging development of units intended to help tenants advance other life goals, including economic self-sufficiency. By designating units for Special Needs, the nonprofit organization agrees to:

Accept tenant referrals from other disaster recovery programs Accept referrals from DSS of tenants who live in group housing funded by the Federal Emergency Management

Agency and whose income is up to 50 percent of the AMI.

Nonprofit organizations that commit to serving these tenants at initial occupancy should elect to receive the 10-point scoring criterion for serving a Special Needs occupant. While the owner is not required to offer the unit to Special Needs tenants following initial occupancy, the owner is responsible for demonstrating that the unit will be affordable to the initial tenant at initial occupancy and throughout the tenant’s tenure in the unit. This can be accomplished by agreeing to take Special Needs tenants with tenant-based vouchers.

A 15 percent bonus award is available to nonprofit property owners choosing to offer either special needs or supportive housing units on their property. Units designated for special needs or supportive housing must be rented at the 50 percent of AMI rent tier. Owners will receive an award based on the 50 percent of AMI rent level of the affordable unit and then receive an additional 15 percent bonus. The bonus amount is calculated only on the units designated for special needs or supportive housing, not all affordable units on the property. The Special Needs Housing Bonus is available to nonprofit organizations competing in either the General Pool or the Nonprofit Set-aside.


2.4.2 Permanent Supportive Housing BonusPermanent Supportive Housing (PSH) is housing that is safe and secure; affordable to the eligible target population (monthly rent and utilities do not exceed 30 percent of monthly household income); and permanent, with continued occupancy as long as the eligible target population pays the rent and complies with the terms of the lease or applicable landlord/tenant laws. PSH units must be linked with supportive services that are flexible and responsive to the needs of the individual, available when needed by PSH tenants, and accessible where the tenant lives, if necessary.

The eligible populations for PSH are Extremely Low Income Households consisting of one or more of the following criteria:

Disaster-displaced individuals in need of PSH, living in the homeless shelter system, or otherwise in temporary housing

Households where an individual or member has a substantial, long-term disability as determined by the State, including any one of the following:

o Serious mental illnesso Addictive disorder (i.e., individuals in treatment/recovery from substance abuse problems)o Developmental disability (i.e., mental retardation, autism, or other disability acquired before age 22o Physical, sensory, or cognitive disability occurring after age 22o Disability caused by chronic illness (e.g., people with HIV/AIDS who are no longer able to work)o Frail, elder household

Homeless household in need of PSH or household determined by the State to be most at risk of homelessness and in need of PSH

Individual or household member aging out of the foster care system and determined by the State to be in need of PSH

A 15 percent bonus award is available to nonprofit property owners choosing to offer either special needs or supportive housing units on their property. Units designated for special needs or supportive housing must be rented at the 50 percent of AMI rent tier. Owners will receive an award based on the 50 percent of AMI rent level of the affordable unit and then receive an additional 15 percent bonus. The bonus amount is calculated only on the units designated for special needs or supportive housing, not all affordable units on the property. The Permanent Supportive Housing Bonus is available to nonprofit organizations competing in either the General Pool or the Nonprofit Set-aside.

Nonprofit property owners competing in the nonprofit set-aside will receive priority scoring points over other nonprofit applicants if PSH is selected. The highest priority will be given to nonprofit owners who make a 15-year commitment to providing at least 50 percent of the property for PSH occupants referred by the State, with wraparound services funded through the State’s Supportive Services Program and rent subsidies funded by the property owner.

A second priority is for nonprofit owners who designate PSH units but will require additional rental assistance through the State. These owners must agree to accept PSH tenants referred by the State for at least 15 years, contingent on the State also providing the necessary project-based rental assistance and service funding the PSH residents require.

2.4.3 Mixed-Income Bonus

A 15 percent mixed-income bonus award is available to property owners choosing to rent at least one unit on a property at unrestricted, market rents and at least one unit at any tier of the restricted rents established by the Rental program.


Owner-occupied units do not count as a market rate unit.

Mixed-income properties will receive awards based on the rent levels of the affordable units in the property and then receive an additional 15 percent bonus on the total award for the property. Units designated as market rate will not receive an incentive from the Rental program.

The total amount of funding available for a mixed-income property may not exceed the percent of total development costs equal to the percentage of affordable units on the property. Total development costs are calculated for the repair or reconstruction of the entire property so that all units meet the State Building Code. For example, if two units on a four unit property are market rate, the property owner may only receive 50% of the total development costs for the property from the Small Rental Property program.

2.4.4 Owner-Occupied BonusAn owner-occupied bonus award is available to property owners choosing to live with their tenants with at least one unit at the restricted rents established by the program.

Owner occupied properties will receive awards based on the rent levels of the affordable units in the property and then receive an additional 15 percent bonus. The award amount is calculated only on the total award amount for the affordable units on the property.

2.5 Scoring CriteriaThe State uses scoring criteria to select which applications will receive incentives in each round. Property owners will respond to scoring questions that have points assigned to them. Based on the responses to these questions, the application is given a score.

Ownership size determines the level of priority an application receives in a funding round. The Rental program has set the following owner type priority hierarchy:

Owner occupants of three- and four-unit buildings Small owners Mid-size owners Large owners

2.5.1 Application ProcessingApplications where responses are provided by either the property owner or the Rental program for at least all of the following fields are considered “complete enough” for processing.

Responses are provided for the first five Eligibility Questions on Page 1 A response to either Rental Property Information Question 6 (“Have you purchased the property since the

disaster?”), OR the date purchased field. At least one Owner Size is identified on the application; The property address must have (a) the community of the damaged property; or (b) the city and zip code of the

damaged property; The bedroom size for AMI units must be provided; Primary contact information is sufficient for mailing (first name, last name, street address and zip code).


There is complete information provided for at least one owner (first name, last name, street address, zip code).

Applications that do not contain a property address will be considered an incomplete application. The applicant will be permitted to provide a property address along with any other missing information. Applicants are not allowed to alter scoring questions.

3.0 DUE DILIGENCE PROCESSESAs part of the due diligence process, the Small Rental Property program will contact applicants who are not the owner of record and do not have a power of attorney in place. The applicant must provide this to the jurisdiction before further processing can occur.

3.1 Environmental ReviewAll properties must pass an Environmental Review process completed by the State. No application may receive a commitment letter from the Small Rental Property program without a signed Notice to Proceed from the Environmental Officer at the State.

The State will prepare a data summary sheet for each property with the following information:

Address – critical to screening Lat/Long coordinates – critical to screening Date(s) of construction – critical to screening Six photographs – critical to screening Whether plans, specs, scopes of work, bids, or similar documentation exist for review – necessary for NMI Contact information (if additional info needed) – necessary for NMI

Once the State receives the data summary sheet, the Environmental Officer will coordinate with the State Historic Preservation Office to approve the properties. The State will prepare a Notice to Proceed for each property that passes the Environmental Review process.

3.2 Verification of $5,000 in Storm-related Damages

The following table defines the categories which allow a rental property to meet or exceed an appropriate threshold of damage in order to be considered eligible for an incentive award:

CriteriaNumber

CriteriaDefinition

Small Rental Evaluation Criteria DeterminationMethod

1 If an applicant’s owneroccupied unit received a Type 1 evaluation it will be considered eligible

All applicants with an owner occupied unit that received a type 1 evaluation are considered eligible. Additionally, owner occupied units that were evaluated as Type 2s, but that received enough damage such that their evaluation was changed to a type 1 are considered eligible.

Automated


2 If any applicant’s structures,based on the State’s evaluation report, sustained more than600 square feet of roof damage they will be eligible

The Small Rental Evaluation team determines if the following spec is set to yes or no.

S p e c Nu m b er : 8940S p e c T itle: STORM DAMAGE TO ROOF?S p e c Desc r ip t ion: For the structure that this unit is in, is the total storm related damage to the roof in excess of600SF? 1=Y 2=N

If this is true, the threshold is considered met.

Automated

3 If the photos of the property taken by State’s inspector show that it was NOT elevated AND pictometry and/or photos show flood waters were one foot or more, then the property is eligible.

The Small Rental Evaluation review team manually reviews pictures to determine that the home was not elevated and that there is some proof of 1 foot of flood water or more in area of structure via pictometry and/or photos.

Manual

4 If the photos of the property taken by the State show the level of water equal to at least one foot on the first floor living level, then the property is eligible.

The Small Rental Evaluation review team manually reviews pictures to determine that the structure received flood waters equal to at least one foot of water on the first floor living level.

Manual

5 If the State’s estimate of damage or cost to repair for electrical systems and drywall confirms a need for replacement of all items on the first floor, then the applicant is eligible.

1. The Small Rental Evaluation review team will determine if the sum of the following electrical replacement specifications is greater than 80% of the compensable area of the unit.

Specs 8121 and 8122

2. The Small Rental evaluation team will determine if the sum of the following drywall replacement specifications is greater than 80% of the compensable area. Specs 5302, 5303, and 5304

If either 1 or 2 above is true, for any one of theApplicant’s units, the threshold is considered met.

Automated

3.3 Verification of Estimated Cost to RepairTo validate a given ECR, the State will perform a combination of desk reviews and field evaluations, as follows, depending


on the source of the documentation submitted:

(1) Licensed Contractor, Registered Home Improvement Contractor, or similar professional

Documentation may consist of paid bills, or an accepted / proposed bid and scope of work, and similar documents, plus a certification signed by the applicant attesting to the impartiality and validity of the documentation.

Rental Program will perform basic due diligence checks (address match, name match, contractor appears in LA licenses database).

If documentation passes these basic checks, the Estimated Cost to Repair value is accepted as-is.

If documentation fails these basic checks and the fails cannot be resolved, the Program will perform a Small Rental cost evaluation to generate an Estimated Cost to Repair. This is similar to a Home Evaluation in Homeowner Program.

(2) Owner-Builder, in which the owner is the same person as the licensed/registered contractor that estimated the cost.

Acceptable forms of documentation and due diligence test are the same as above.

In addition, all Owner-Builders will receive a Rental program cost evaluation to validate their submitted documentation.

The validation is a +/- 20% bounce test against the State’s cost estimate.

If the applicant’s value is up to 20% higher than the State’s estimate, we will use the applicant’s value.

If the applicant’s value is > 20% higher than the State’s estimate, we will use 120% of the RH estimate.

If the State’s value is higher, we will use the applicant-provided value.

If the documentation fails the due diligence test and the applicant supplied documentation is higher, the State will use the Rental program cost evaluation to generate an Estimated Cost to Repair.

(3) Owners Undertaking Work Themselves. In this case, the owner is submitting documentation from a 3rd party, but is not licensed or registered as above.

The Program must perform a Small Rental cost evaluation.

If Owner contests the estimate, s/he may submit valid bills for materials, while labor costs will be estimated by the Program using industry standards. The owner’s labor cost will be estimated using the standard pay rate of skilled labor.

If the original evaluation was inaccurate, the Program may correct the evaluation or order a re- evaluation, as per Home Evaluations protocol.

If the evaluation protocol itself constrains the ECR cost rollup, the Program will accept the owner-provided


documentation of value, up to 120% of the RH estimate.

(4) Combination of Above

If the owner used a combination of (1), (2), and (3) above, the Program must perform a Small Rental cost evaluation. The property owner may also submit some documentation for work completed, which will require a mix of the verification procedures above.

(5) Small Rental Cost Estimate

The owner may also simply choose to have the State order an evaluation without submitting any of the above documentation.

3.4 Uniform Relocation Act

(Please also reference the Vacancy Requirements sections of this document)

Prior to receiving an incentive payment, property owners may be required to complete repairs or reconstruction of their rental property. The Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 provide important protections and assistance for people affected by the acquisition, rehabilitation, or demolition of real property for Federal or federally funded projects. This law was enacted by Congress to ensure that people whose real property is acquired, or move as a direct result of projects receiving Federal funds, are treated fairly and equitably and receive assistance in moving from the property they occupy.

Each applicant must provide information on current occupants of their property on their application for each Round. In addition, properties which have been occupied since {enter date of disaster} by any person besides an owner(s) of the property is required to provide a Small Rental General Information Notice to each head of household. The Notice details preliminary information pertaining to the property owner’s application for assistance, the potential for either temporary or permanent displacement, and contact information for the Rental Program. Each property owner is responsible to maintain documentation that the tenant received the General Information Notice. This is either a copy of the Certified Mail, Return Receipt Requested Card with the tenant’s signature or a copy of Acknowledgment of Receipt of General Information Notice if the Notice was hand-delivered to the tenant.

An Individual Relocation Plan must be written for each project. The plan must describe the nature of the temporary or permanent displacement and establish the assistance to be provided.

3.4.1 Temporary RelocationA household or an individual that is moved temporarily from any unit on a property due to the potential incentive payment award under the Small Rental Property program, but is offered the right to return to the property (although not necessarily the same unit on the property) is considered temporarily relocated. The State will issue a Notice of Non-displacement, a Notice of Temporary Relocation, and a Move Notice once alternative housing has been secured and at least 10 days prior to the scheduled move.

All property owners with tenants being temporarily relocated by the Small Rental Property program are required to enter into a lease agreement with the tenants prior to relocation and document the income of the tenant. The lease must state the tenants will be allowed to re-occupy a unit on the property. The Small Rental Property program will not grant an


award to the owner until the relocated tenant returns to the rental unit.

If a tenant’s income is above the rental tier selected by the owner for the unit, the owner may charge no more than the allowable rent for the selected tier and the tenant will be permitted to return to the unit until s/he chooses to leave or until the lease is lawfully terminated. However, when the temporarily relocated tenant leaves, any subsequent tenant must be income eligible for the affordable rental unit.

If the tenant is refused re-occupancy by the owner, the tenant is considered permanently displaced. If the State determines that a permanent displacement is the result of a property owner’s actions, the owner may be liable for all or a portion of these costs, which will be deducted from their final incentive award.

Tenants that are temporarily relocated may be offered the following types of assistance:

Packing and Moving Assistance: It is the obligation of the Program to ensure that all households have their belongings and household goods moved, at no cost to them, by either providing packing boxes and tape, or professional moving services. If professional moving services are used, the tenant will be provided direct payment or reimbursement for the costs of the moving assistance.

Incidental Costs: Incidental costs include utility deposits for water, sewer, gas, and electricity, if required, at the temporary housing, and telephone installation at the temporary housing and the newly rehabilitated unit on the property if the household previously had a telephone. If the newly rehabilitated unit has resident-purchased rather than landlord furnished utilities, which require utility deposits, the Program will not pay for the new utility deposits since they are required to be paid by any new resident moving into a unit.

For households that are temporarily relocated, the Program will provide direct payment or reimbursement for all disconnection/reconnection of necessary utilities and other incidental expenses. For households that are temporarily relocated, the tenant will be provided direct payment or reimbursement after the tenant provides documentation of utility and/or incidental costs.

Temporary Housing: The State will ensure that temporary housing provided to families or individuals is decent, safe, and sanitary and is provided on a nondiscriminatory basis. Temporary housing shall not be used for longer than one year. If a relocated tenant is unable to return to the property within a one year period, the tenant is considered permanently displaced. If the State determines that a permanent displacement is the result of a property owner’s actions, the owner may be liable for all or a portion of these costs, which will be deducted from their final incentive award.

For households that are temporarily relocated, the Program will provide direct payment or reimbursement for the cost of temporary housing for up to one year.

3.4.2 Involuntary Permanent Move Assistance

A household or an individual that is permanently and involuntarily moved from a project due to the potential incentive payment award under the Small Rental Property program, and is not offered the right to return to a unit on the property is considered displaced.

The Program will not require any household or individual to move unless at least one (where possible, three or more) comparable replacement dwelling unit(s), as defined in 49 CFR 24.2(d), is/are made available. No household will be


required to move prior to the provision of 90 days notice, and when appropriate if longer, 30 days notice closer to the actual move date, as required. (Refer to 49 CFR 24.204). Each affected household will receive a 90 or 30 Day Move Notice.

Tenants that are permanently displaced may be offered the following types of assistance:

P ermanent and I n vol u ntary M o v e A s si s t an c e : The Program will provide payment for moving and related expenses to each affected household. The displaced household has the choice of taking a fixed payment, incurring the cost of a commercial mover, or reimbursement of actual expenses.

For a commercial move, households must submit two (2) written estimates from a qualified mover and the lower of the two bids will be used to determine payment.

If the household wishes to be reimbursed for actual and reasonable moving and incidental costs, these may include:

Transportation of the displaced household and personal property up to 50 miles, including the current mileage rate for personally owned vehicles.

Packing, crating, unpacking, and uncrating of personal property Storage of personal property for a period not to exceed 12 months. Disconnecting, dismantling, removing, reassembling, and reinstalling relocated household appliances and other

personal property. Insurance for the replacement value of property in connection with the move and necessary storage. The replacement value of property lost, stolen, or damaged in the process of moving (through no fault or

negligence of the household) where insurance covering such loss, theft or damages is not reasonably available. Credit checks Professional home inspection Utility hook ups, including reinstallation of telephone and cable service. Other costs determined reasonable by the State

If the household chooses to be paid directly, they will be eligible to receive the applicable and current fixed moving expense and dislocation allowance required at 49 CFR 24.302. This schedule is based on the number of rooms of furniture to be moved, and has been established by the Department of Transportation, Federal Highway Administration. In the event the household does not own furniture, the fixed payment will be $375 for one room, and $60 for each additional non-furnished room will be provided.

1-room Unit $500 2-room Unit $700 3-room Unit $9004-room Unit $1,100 5-room Unit $1,300 6-room Unit $1,500

7-room Unit $1,100 8-room Unit $1,300 Each Add’t. room $200

R ep l a c e ment H o u sing P a y me n t : In addition to moving assistance, households that are permanently and involuntarily displaced are entitled to a Replacement Housing Payment (RHP). This payment is intended to cover any increase in monthly housing costs for a 42-month period. When calculating the RHP, the Program will use the rent from the Comparable Replacement Housing unit offered to the household as the basis for establishing the upper limit of assistance when determining the difference in increased monthly housing cost. Since assistance will be based on this formula, an affected household may choose to occupy a housing unit renting higher than the comparable replacement unit provided,


and may not be compensated dollar for dollar in actual increased housing cost.

Special Considerations Regarding Permanent Relocation Costs:

At any point prior to final disbursement, if a tenant qualifies for relocation assistance, and a move-in notice was not signed by the tenant prior to the move-in, the Small Rental Property Program will deduct the relocation costs from the owner’s incentive award and allow the owner to continue with the Small Rental application for all restricted units included on the application.

3.4.3 Relocation Appeals and ComplaintsTenants may consult with a Relocation Specialist to resolve their complaint within 10 business days. If resolved, the Relocation Team Lead sends resolution determination in writing to tenant via first-class mail, or if unable to reach resolution with the Tenant, advises Tenant in writing, by first-class mail, of the right to appeal and provides a copy of the Description of Tenant Appeals Process.

Tenants may file an appeal of any decision in writing, sent via U.S. Postal Service, FED EX, UPS, DHL, only (no email or faxed appeals will be accepted), to the Program. The person filing an appeal has the right to legal or other representation at their own expense. If the claimant is a low- income person (defined as having annual income within 80% of the Area Median Income) and is unable to file a written appeal on their own, the Program will assist them or refer them to a qualified source, such as Legal Aide, to assist them to prepare their appeal.

Tenants may appeal a decision related to:

Qualify for benefits as a displaced person, or will qualify upon moving, and the Program has determined they do not meet the requirements as a “displaced person.”

Are entitled to a greater amount of relocation payments than Program has approved. However, the person’s acceptance of the approved amount does not prohibit the appeal from going forward.

Did not receive appropriate referrals to suitable temporary or comparable permanent replacement units or The Program did not inspect either the temporary or permanent replacement unit in a timely manner.

Are being unjustly denied a claim for relocation benefits because they failed to secure decent, safe, and sanitary housing within one year or file a claim within 18 months after being permanently displaced.

The Program will accept appeals from tenants up to 60 days from the time they receive written notification of the Program’s determination on their claim. After 60 days, the Tenant must document a hardship or special circumstances that would support their need for an extension.

Appeals will be decided within 60 days upon receipt of all appeal documents. All official communication will be provided to the tenant in writing and sent via first-class mail.

A tenant may file an appeal to HUD, which will arrange for prompt hearing by staff and make a written determination with an explanation of the basis for the determination.

4.0 DUE DILIGENCE EXCEPTIONS FOR COMMITMENT LETTER PROCESSINGThere are several verifications that are performed as due diligence before granting a Small Rental Property Program


award. Upon the instruction of the State, some due diligence checks must occur prior to closing, but are not required prior to issuing a commitment letter to the applicant. Applicants are noticed in the commitment letter that all program requirements must be met and outstanding due diligence items must be cleared prior to closing. The following due diligence checks are not required to issue a commitment letter, but will be verified prior to closing:

Credit Reports and Authorizations to Release Information

Credit reports are used to check if the property is in bankruptcy. Applicants must sign and return an Authorization to Release Information before the Small Rental Property Program can order a credit report and confirm that the property is not in bankruptcy. The Authorization to Release Information must be received and the Credit Report must be reviewed prior to closing. Applicants in bankruptcy cannot proceed to closing without evidence that the property is not included in the bankruptcy estate.

Title Reports

When applicants are identified that have outstanding liens and judgments on title, the SRPP will process applicants with outstanding liens and judgments totaling up to 100% of the incentive loan award amount. Applicants will be notified in writing that liens and judgments have been identified and that clean title is required for closing.

Tenant Income and Leases

Prior to final disbursement, applicants must provide tenant income documentation and leases entered into with applicants.

Applicant Provided Bids from Licensed Contractors

Applicants might have indicated when they signed and returned their conditional award letters that they would provide an acceptable bid from a Licensed contractor to determine their estimated cost to repair. If the applicant has not provided an acceptable bid, a Cost Estimate will be ordered.

5.0 CLOSING REQUIRMENTS

5.1 Building ConditionsAll construction that is necessary to comply with the building code must be completed before any award funds will be disbursed. The rental units must be in compliance with the building code within nine (9) months of the date of the loan commitment documents. If an extension is required, the property owner must contact the Rental program detailing the progress of the construction and an estimated date of completion.

Properties also must meet the flood elevation requirements determined by the FEMA, if applicable.

SRPP property owners must receive a Certificate of Occupancy or equivalent from the City/County to demonstrate that State and local building codes have been met and submit it to the program.

5.1.1 Final InspectionUpon completion of repairs to the affordable units, the Small Rental Property program will conduct a final inspection to


ensure that the affordable units meet the program requirements and all priority scoring items selected appear in the units. Once the property passes final inspection, the applicant is allowed to proceed to the pre-closing stage. The items verified as part of the Final Inspection will be different for each property depending on the funding round, the number and configuration of the affordable rental units and the “scoring items” selected by the applicant. The checklist is composed of the following five sets of Scoring Items selected by the applicant:

Appliances and Amenities Universal Design Minimum Units Size Visitability Green Design

Property owners that do not pass the Small Rental final inspection, are given a period of time to bring the units into compliance. At the end of the allotted period or when the owner notifies the program that the necessary adjustments have been made, the Small Rental program will conduct a second final inspection. Property owners that pass the second inspection will then move to pre-closing. If the property owner does not pass the second inspection, the property owner may make the necessary repairs and a third Small Rental inspection will be granted. For any subsequent inspection after three final inspections, the inspection fees may be deducted from the property owner’s Small Rental award.

In instances where an applicant fails the SRPP final inspection because the applicant is unwilling or unable to fulfill specific physical building features (amenities) that they selected in order to receive priority scoring points, the Small Rental Property program will offer the applicant the option of:

(1) Making the necessary changes to the structure to meet the original scoring items that were selected and proceeding with the original loan terms.

(2) Agreeing to an additional period of affordability in exchange for not providing post-construction scoring item(s) Owners who are unable to meet three or fewer scoring items will be required to

maintain an additional three (3) additional years of affordability. Owners who are unable to meet more than three scoring items will be required to

maintain an additional five (5) years of affordability.(3) Receiving a discounted award.

Owners who are unable to meet three or fewer scoring items will receive the total award amount, reduced by 30%.

Owners who are unable to meet more than three scoring items receive the total award amount, reduced by 50%.

All owners must continue to provide a unit that meets the applicable code requirements and pass all SRPP maintenance requirements in order to receive their award. If the owner elects additional years of affordability, the additional years will not affect the five year term to receive the first scheduled amount of debt “forgiveness”.

5.1.2 Slums and Blighted PropertiesAwards to properties which are on a local jurisdiction’s slums and blighted properties list will be de-obligated unless the owner can provide evidence that they were incorrectly listed or that they are working with the jurisdiction to bring the property into compliance and will be removed from the list within 30 days.


5.2 Affordable Rent LevelsAll rental units that receive an incentive from the Rental program must be rented to a low- to moderate- income individual or family. Rent levels were calculated to be affordable to households at 80, 65, and 50 percent of area median income (AMI). Restricted rents in the Rental program will be adjusted upward annually with the publication of new AMI tables by the Federal government. (See Section 5.2.2)

The amount of rent charged to the tenant cannot exceed the amount established by the Rental program for that rent tier. Rents charged to the tenant may be calculated in one of two ways:

5.2.1 Utility AllowancesIf the property owner pays all the utilities for the rental unit, the property owner may charge the tenant the gross rent listed on the chart or as published annually by the State.

If the tenant is required to pay utilities for the unit, the property owner must deduct a utility allowance from the gross rent listed on the chart. Acceptable utility allowances include Section 8 utility allowances published by local or state Housing Authorities, amounts certified by utility companies providing service to the unit, or an allowance from the following utility allowance chart developed by the Rental program.

Small Rental Program Utility Allowance Chart0 BR 1 BR 2 BR 3 BR 4 BR

Jurisdiction A $50 $75 $85 $100 $125Jurisdiction B $50 $50 $60 $70 $80

5.2.2 Annual Rent AdjustmentsThe State will publish new rent levels annually along with the allowable income levels for each program year. Allowable rent levels will be calculated annually by the State as the higher of an AMI or AAF factor, up to 5 percent each year. There will not be cumulative adjustments if the increase is more than 5 percent the previous year.

5.3 Tenant SelectionProperty owners will screen and select their own tenants. Tenant selection must comply with the requirements of the Fair Housing Act (42 U.S.C. 3601-3620), which prohibits discrimination based on race, color, religion, sex, national origin, familial status, and disability.

5.3.1 Tenant Race and Ethnicity ReportingIn accordance with the U.S. Department of Housing and Urban Development’s criteria for race and ethnicity reporting, the Small Rental Property program will provide a Tenant Race and Ethnicity Reporting form to all active applicants to the Small Rental Property program. The applicant will be required to provide the form to all existing and new tenants for the assisted rental units throughout the term of the rental incentive loan.

Tenant Race and Ethnicity forms that are returned to the program will be documented in the applicant’s file. Any Tenant Race and Ethnicity forms that are not returned to the program, are returned with no selected race and/or ethnicity, and/or, are returned with a checkbox for the “I choose not to provide this information” will be documented as a no response to the Race and Ethnicity categories.


5.4 Bankruptcy, Liens and JudgmentsBankruptcy: Any property included in an open bankruptcy will not receive an incentive loan, and will not be processed further once identified. The SRPP will de-obligate the incentive award amount from the property.

Liens and Judgments: Applicants with outstanding liens and judgments must clear the liens and judgments in order to receive an incentive award. First and second mortgages, however, are acceptable outstanding liens that will not prohibit a property owner from receiving an incentive loan.

5.5 Owner-Occupied Closing RequirementsAll owner occupied units will be subject to the regulatory requirements of the Homeowner Assistance Program and the owner will be required to re-occupy the property within 3 years of the date of closing on the compensation loan.

If assistance is provided to one or more rental units, then all of the regulatory requirements that apply to the rental units will also apply to the owner occupied unit.

5.6 Insurance RequirementsThe amount of insurance coverage will be the amount as determined as appropriate by the insurance agent. The lender shall be named as additional insured. The Title Company will confirm the required insurance is in place at or prior to closing.

The borrower must agree to maintain casualty insurance and flood insurance, if property is located within a FEMA designated Special Flood Hazard area. The closing agent will collect proof of flood insurance if applicable.

6.0 APPEALS POLICY

6.1 Level I: The Review Determination ProcessApplicants to the Small Rental Property program that are not satisfied with a decision by the State should work through the Review Determination process first, as this will expedite the determination of the issues and possibly avoid a need for a further appeal. Small Rental Property staff will work to resolve applicant’s issues at the Review Determination level by careful review of specific circumstances, explanation of program policies and procedures, and correction of processing errors found.

The State Review Determination process takes a case management approach to providing applicants the highest level and quality of customer service. Throughout the review determination process, a case consists of all issues relevant to an individual’s Small Rental Property program application. The Review Determination process encourages immediate, informative contact between state staff and applicants to ensure clear communication occurs.

Review determination Issues

Applicants to Small Rental Property Program have the right to seek a determination from the Review Determination process for any decision by the State. Specifically, applicants may work through the Review Determination process for, but not limited to, the following:

Amount of award funding, including:


Estimated cost of repair calculation by the State Review and verification of the owner supplied estimated cost of repair Calculation of the “lesser of” incentive award

Owner Occupant Award items, including:

Pre-storm value Estimated cost of damage Insurance proceeds

Deferral of award based on:

Scoring responses Priority ranking group Round eligibility requirements

Denial of Award based on:

Eligibility decisions Incomplete application Late application

6.2 Level II: SRPP Appeals ProcessA concerted effort will be made to resolve an applicant’s issue(s) at the Review Determination level by careful review of specific circumstances, explanation of program policies and procedures, and correction of errors found. Staff will strive to resolve potential disputes at this level, obviating the need for a formal appeal. Staff is committed to providing applicants with professional, polite, and responsive service at all times, with the goal of reducing the incidence of disputes. However, if a review determination is not to the satisfaction of an applicant, the applicant has the opportunity to file a formal appeal in writing with Program. While it is preferable that an applicant first receives a decision from the Review Determination Team, appeals will be accepted by Appeals Office without requiring this step.

Appeal to the State

If an applicant does not first go through the Review Determination Process or if an applicant disagrees with the decision of Review Determination Team and would like to appeal that decision, the applicant must provide a written statement to Appeals Office. Applicants must mail their written appeal request to: {enter contact information}.

The applicant should include the following information in the written appeal request:

A detailed explanation of the appeal Supporting documentation for the appeal Any additional justification for appealing decision Full name of all Applicants/Property Owners Complete property address Application ID number Signature of one or more Applicant(s)/Property Owner(s)


Contact telephone number E-mail address

Applicants that have received a disbursement are only able to submit an appeal to Appeals office within 30 days from the date of disbursement.

Processing an Appeal Letter

Written appeals received by Appeals Office will be stamped with the time and date of receipt. All applicants that submit a written appeal will receive written acknowledgement from Appeals Office when their appeal is accepted. If the written appeals letter provided by the applicant is not applicable or if it does not include enough information to process the case, the Appeals Office will mail a letter explaining the requirements necessary to submit an appeal and informing the applicant that they need to resubmit their appeal request with specific additional information. If the Appeals Office receives a fax transmittal, e-mail, or telephone call from an applicant, the Appeals Department will contact the applicant and inform them that formal appeals must be received in writing and submitted to the mailing address mentioned above. The Review Determination team member may also describe the formal appeals procedure and advise the application that the appeal must be mailed for consideration.

The Appeals Office will strive to reach a final appeals decision for each case within 60 days of the receipt of the written letter.

Upon receipt, the Document Management Department will scan and upload the written appeals letter and any attached information to the applicant’s application file. All communication between the appeals office and the applicant will be recorded in the HDS Communications Log. Final determinations will be recorded in the JIRA case file and the HDS Communications Log.

A final determination may result in only one of the following outcomes:

Approve Appeal –policies and procedures were not followed accurately, timely, or appropriately. Corrective action will be documented.

Deny Appeal –policies and procedures were followed accurately, timely, and appropriately.

Table Appeal (one time only) – Additional information is required by the Manager/Assistant Manager or designated representative to fully consider all aspects of the case for determination. Tabling a case can result in a onetime 30 day extension for Appeals Office to render an appeal determination. The applicant will be informed of this extension in a written letter prior to the initial 60- day deadline.

Dismissal – The applicant is appealing an issue where no formal communication has been received by the applicant from the program concerning a decision. (Note: Update from Appeals Section)

Appeals Determination Process

The Appeals Coordinator will notify the applicant of the final determination by sending the applicant an Appeal Determination Report by first-class mail. The Appeal Determination Report will serve as formal notification of Appeals


Office decision.

An Appeal Determination Report denying an appeal will include, at a minimum, the following information:

Summary of the appeal submitted by applicant Summary of policies and/or procedures challenged by the applicant Summary of materials and policies/procedures reviewed by the Appeals Office Appeal final determination Summary of program policies related to the Appeals Office Instructions on filing a Level III appeal with the Office of Community Development.

An Appeal Determination Report approving the appeal will be mailed to the applicant and will include the following information:

Summary of appeal submitted by applicant Summary of policies and/or procedures challenged by the applicant Summary of materials and policies/procedures reviewed by the Appeals Office Appeal final determination Actions steps to be implemented by the State Contact information for the department assigned to implement corrective actions Summary of program policies related to the Appeals Office Instructions on filing a Level III appeal with the Office of Community Development

If an applicant is appealing multiple issues, it is possible that one or more issues will result in a Determination Report approving certain items but denying other issues.

In some cases, an applicant’s case may require an additional review by the Appeal Review Committee (ARC). The committee is comprised of management staff delegated to ensure consistency in appeal determinations.

7.0 COMPLIANCE AND MONITORINGTenants shall provide a self-certification with accompanying documentation of their household income to the property owner at initial occupancy. The property owner will provide this certification and documentation to the Rental program at initial occupancy.

If an income eligible tenant’s income increases once the lease has been signed, there is no required change in rent or tenant eligibility.

The property owner should provide documentation to the Program in order to approve income eligibility for all new tenants prior to allowing the tenants to move into the property after closing. (Source: Tenant Income Packet)

The property owner will certify that building health and safety standards are met at initial occupancy and maintained annually thereafter.

7.1 Non ComplianceProperty Owners that are out of compliance with the transaction requirements on their units, including rents, tenant


incomes, and/or building standards will have a 45 day period from the date of a written letter of notification to document their compliance.

If the property owner does not comply with Regulatory Agreement and fails to remedy the non-compliance within the allowed 45-day period, the following payment amounts will become due.

If the non-compliance occurs between 0 to 3 years of the award, the full principal amount and all accrued interest at 8% is due.

If the non-compliance occurs between 3 to 10 years of the award, the outstanding principal balance after forgiveness of the award and all accrued interest at 8% is due.

7.2 Sale/Transfers of the PropertyProperty owners that have received a Commitment Letter from the Program are allowed to sell or transfer properties. If the new owner accepts the conditions of the award, the award will be processed for the new owner. If the new owner does not agree to accept the conditions of the award, the application will not be processed or the commitment letter will become void.

The new owner(s) or any affiliated entity controlling or controlled by the new owner(s), will be able to assume the rights and obligations associated with the property. The new owner is required to meet the same building standards for the unit as submitted in the original application. However, the new owner would not have to meet standards specific to the original applicant for which the original application may have received scoring priority.

If the sale occurs within 3 years of the award, the new owner must agree to assume responsibility for the regulatory agreement and continue to participate in the program. If a sale occurs within 3 years and the new owner does not agree to participate in the program, the property is deemed in violation of the program regulatory agreements. The owner applicant must repay the incentive loan in full to the Office of Community Development.

Applicants who sell their properties within 3 years after closing on an award will repay the loan amount plus (1) 8% penalty on the award amount; OR (2) an additional $10,000, whichever is less.

Applicants may sell their properties within 3 years after closing to owners who assume the affordability period without a penalty. However, the prepayment penalty remains in effect for subsequent owners. If the sale occurs within more than 1 to 5 years of the award and a balance remains, the owners have two options: the new owner must assume the loan, including responsibility for the regulatory agreement or pay the balance of the loan and accrued interest at eight percent (8%) since 30 days after final disbursement. If responsibilities are assigned, the new owner must sign an acknowledgement of the regulatory agreement as part of the closing. If the sale occurs within more than 5 to 10 years of the award and a balance remains, the owners have two options: transfer the regulatory agreement to the new owner or pay the balance of the loan at no interest. If the sale occurs for less than the amount of the balance of the loan which remains, the owner continues to owe this amount of the loan.

8.0 Initiative Option The purpose of the Initiative Option is to provide existing Small Rental Property Program awardees program-managed construction oversight and funding. Applicants eligible for the Initiative Option may choose this option to facilitate


upfront construction financing.

Pr og r am C ommi t ment

The Initiative Option award amount will be equal to the contractor’s cost to repair less duplication of benefits plus allowable activities as defined by the Allowable Activities Worksheet up to the SRPP allowable maximum allocation $100,000 per affordable unit offered to the program.

Requirements to Use Approved General Contractors

SRPP will develop a pool of General Contractors through a Request for Proposal. Applicants will be assigned one of the contractors from this pool. The Program will provide construction oversight for all Initiative construction projects.

Eligibility for the Initiative Option

Applicants must be active participants in the existing SRPP and must meet each of the following requirements in order to be eligible for participation in the Initiative Option.

Eligibility Requirements

Signed Commitment Letter:

Eligibility to participate in the Initiative Option is restricted to Applicants who have returned an executed Incentive Option Commitment Letter, evidencing acceptance into the Incentive Option portion of the program.

Certificate of Occupancy:

The Initiative Option is restricted to properties that have not received a Certificate of Occupancy.

Open Project:

Participation in the Initiative Option is restricted to projects where construction has not been completed and that have not closed under the Incentive Option. Applicants may participate in only one option.

Vacant Unit:

The Unit(s) for which funding has been requested and repairs are still required must have been continuously vacant since the time of the storm and must remain vacant until there is an approved Certificate of Occupancy.

If there are currently tenants living in any units where repairs are complete or tenants residing in market rate units, the Applicant may still participate in the program provided that move-in notices were executed

Clear Title:

Incentive Option participants must establish and maintain a clear title prior to closing in the Initiative Option.

Applicant Project Funding Requirements

Verifications


The SRPP must use third party verification where available to validate Applicant submissions including an updated property title report before closing and disbursement of Initiative Option funds. SRPP may also use properly authorized Applicant sworn affidavits certifying that information submitted to the Program is true and correct. All liens on the subject property identified by SRPP as requiring removal must be released at the Applicant’s expense within thirty (30) days of notification. Applicant must have clear title prior to closing and disbursement of Initiative Option funds. Applicants will be placed in Inactive Status. Applicants who are unable to obtain clear title within thirty (30) days from notification will return to the Incentive Option.

Applicants who fail to provide valid funds to the SRPP title company at or before the loan closing for projects where a funding gap is present are subject to the Inactive status as defined in Section VI below.

The Initiative Option award calculation will utilize the chart below to avoid a potential duplication of benefits.

Calculation FormulaCost to Repair (Bid mount): $300,000.00Max Loan Award Amount: $100,000.00Net Construction Gap: $200,000..00 =IF(C3>C4,C3-C4,0)

Duplication of Benefit (DOB) Amount:

$200,000.00Less: Allowable Activities $300,00 0 .00 Net Duplication of Benefits: $0.00 =IF(C7>C8,C7-C8,0)

Net Construction Gap: $200,000.00Add: Net Duplication of Benefits: $0.00Total Amount Due from Applicant: $200,00 0 .00 =IF(c9>=c3,c3,sum(c11:c12))

Total Funds to Contractor: $100,000.00 =IF(C3>C4,C4,C3)Less: Net Duplication of Benefits: $0.00Total Loan Award Amount: $100,00 0 .00 =IF(c16>=c15,0,SUM(C15- C16))

Maximum Funding:

The maximum funding under the Initiative Option is defined by the calculation table above, not to exceed $100,000 per affordable rental unit, multiplied by the total affordable rental units on the property currently under the Incentive Option.

Estimated Repair Costs:

In the Initiative Option, the initial estimated cost to repair is prepared by the SRPP inspector. The assigned contractor prepares a detailed bid. If construction change orders are approved for a project, the Program will fund changes up to the maximum allowable loan for that project. Change orders which may exceed the maximum allowable loan will be reviewed by the Program on a case- by-case basis.

Inspection/Work Order Review:

SRPP Inspectors will conduct inspections to evaluate property conditions, perform estimated cost to repair inspections, develop work-write-ups for contractor bids and track the progress of construction to initiate payment draws (to be paid


directly to the contractor). The property owner will be required to attend all inspections and approve all passed inspections.

Rehabilitation Standards:

Upon completion of construction financed by the Initiative Option, all SRPP rehabilitation projects must meet applicable local, state and Federal building codes and, requirements and statutes. Local, state, and federal codes and statutes prevail over the program.

SRPP will establish minimum construction standards specifying quality of materials and workmanship that will be used in the Program. Each SRPP project must meet or exceed these minimum standards before construction can begin. In addition, SRPP will establish standards to prevent unreasonable or luxury items.

Pr ope r ty R equi r ements

Project Requirements

All buildings that are located on the same property will be aggregated for purposes of determining requirements for handicapped accessibility and Davis-Bacon.

Applicable Federal Requirements

Davis-Bacon

Projects containing eight (8) or more units must comply with the Davis-Bacon Prevailing Wage Requirements.

HUD Section 3 Requirements

Construction contracts exceeding $100,000 must comply with the HUD Section 3 Requirements.

National Emissions Standard for Hazardous Air Pollutants (NESHAP):

Asbestos Lead Based Paint Radon Elevation Environmental

V acancy R equi r em e nts

Vacancy Requirements (Uniform Relocation Act (URA) requirements are applicable for all Initiative Option Program applicants. Property owners must provide tenants, occupying units for which funding has not been requested, with move-in notices dated at or before the lease and within thirty (30) days. Relocation of owner occupants is voluntary and at the owner’s expense.

Draw Schedule

SRPP will establish draw schedules to be paid during each phase of construction. The draw schedule should minimally


include four draws:

Initial Draw

The initial draw will be made upon passing the Initial Construction Inspection which includes; demolition complete, all required permits have been obtained and when building materials are on site.

Intermediate Draw

The intermediate draw will be paid upon passing a Rough-In inspection. The amount of the progress draw will not exceed 75% of the total construction contract cost.

Final Draw

Upon completion of construction, acquisition of the Certificate of Occupancy and passing a final SRPP inspection, a final draw will be scheduled and paid in an amount not to exceed 90% of the total construction contract cost.

Close out Draw

The draw schedule is as follows:

SRPP CONTRACTOR PAYMENT SCHEDULEDraw # Name Schedule Description Inspection Amount Cumulative

1 Initial Draw Initial Payment @ Closing N/A 25% 25%N/A N/A N/A Demo + Materials Initial N/A N/A

2 IntermediateDraw

Second Payment Rough In Intermediate 50% 75%

3 Final Draw Third Payment Construction Complete (COO + FI Pass) Final 15% 90%

4 Close Out Draw Final Payment Retainage Retainage 10% 100%

Lease Info r mati o n

The property owner will have sixty (60) days from the date the final inspection was passed to provide the Program with income and lease documentation for eligible tenants. If tenant information is not received within sixty (60) days, a non-compliance letter will be sent informing the owner that they have forty-five (45) days to remedy the situation. If property owners have not provided eligible tenants with lease documents by the end of forty-five (45) days, the SRPP will begin the process to recover program funds from the property owner.

9.0 Construction Management Initiative Option Section 3 SRPP Construction Management Initiative Option is in compliance with 24 CFR 135, otherwise known as Section 3. The purpose of Section 3 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701u) is to ensure that employment and other economic opportunities generated by certain HUD financial assistance shall, to the greatest extent feasible, and consistent with existing federal, state and local laws and regulations, be directed to low-and very low- income persons, particularly those who are recipients of government assistance for housing, and to business concerns which provide


economic opportunities to low- and very low-income persons.

SRPP provides a conduit for use by Initiative Option General Construction Contractors in identifying and hiring eligible Section 3 persons in SRPP construction projects. SRPP provides referral services utilizing the existing network of community service organizations, faith-based organizations, government agencies and community-based organizations as resources.

SRPP General Construction Contractors comply with the requirements of 24 CFR 135, to the greatest extent feasible pursuant to the Request for Proposal 107140-023, Exhibit 1, #9.
