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Home My WebLink About1982-08-23 82-229 ORDER82-229 Introduced by Councilor Gess, August 23, 1982 CITY OF BANGOR (TITLE.) (Jorbert..............Approving._.,.1.and Adopting Community Development ........ Pr p ty_RehabilitationLo Program,,,,, By the City Comtel of the City ofBomsmc THAT, WHEREAS, the Einancing of rehabilitation Of privately ned properties through the a sn Of direct loans i eligible activity for use of grant assistance under Title Iofthe Housing and Community Development Act of 1974, asamended; and WIS',REAS, the City of Bangor, in its Statement of. Community Development Objectives submitted for funds under Title I of the Housing and Community Development Act, intends to expend Community Development Program funds for the purposes of funding Property Rehabilitation Loans; and WHEREAS, a City of Bangor Community Development Property Rehabilitation Loan Program has been developed which provides for the loaning of money to rehabilitate privately Owned properties in Community Development Program project areas as designated by Order of the City Council of the City of Bangor; and WHEREAS, such loans will be limited to the amount necessary to rehabilitate property to the requirements of the Property Maintenance, Building, Electrical, Plumbing, and Fire Prevention Codes of the City of Bangor, and in conformance to Federal Cost Effective Energy Conservation Standards, and to the extent that the property, after rehabilitation, will be in gen- rally'good and readily maintainable condition with the necessary facilities in good working order;,ana - NOW, THEREFORE, BY THE CITY COUNCIL OF THE CITY OF BANGOR, BE IT ORDERED, THAT: (1) .The Community Development Property Rehabilitation Loan Program, a copy of which is on file with the City Clerk, is hereby approved and adopted. (2) Said Property Rehabilitation Loan Program shall apply to govern all Community Development rehabilitation loans made subsequent to the effective date of this Order. In City Ppaunail August 23.1982- ComMy nart regular meeting i SePtafter 13, 1982 Passed as arenced. Am,ded per attached. 82-229 ORDER .........aZ.... Title, Approving and adopting C®mmity CITY , ....................... GITY CLC: Development Property Rehab 2itation ...................................... Loan program In duc d by Councilmen of Ponsofe AuDu . Date Sept. 9, 1982 Rodney G. McKay Director Mems To: City Council Somyn: Council Qragr 82-229 Mantles Sty Davelolment Property Rehabilitation Town program" The following ®endrents to Council Order 82429 are recommended to be added at the esti of said order: 9 (3) The Hohibits contained in said Program may be ®erdede modifiedr or replaced in part or in their entirety upon the advice and consent of the City Solicitor or his representative. AND FURTHERFIDAE BE = ORD M THAT the action herein ordered supersedes actions Previoasdv ordered by the City Council of Lha City of Bangor on October 15e 1980 in Council Order 301 AN end Council Order 30AR. awyrB Cc City Manager City Clerk _ CITY OF BANGOR COMMUNITY DEVELOPMENT PROPERTY REHABILITATION LOAN PROGRAM POLICIES ANO PROCEDURES AUGUST, 1982 TABLE OF CONTENTS A. Introduction - 1 B. Administration 1 C. EligibilityRequirements 1 1. General 1 2. Property Gwnersbip 2 3. Income Limitation 3 4. Sources of Funds and Amounts Comprising Applicant's or Tenant's Income 4 5. Assets 8 6. Allowances 8 7. Portion of Income Derived From Rental Units 9 8. Rent Regulatory Agreement 30 9. Non-profit Organizations 12 10. Documentation of Income 13 11. Finding Acceptable Risk in Marginal Cases 13 D. Assurance That Rehabilitation Will Be Completed 13 1. Loans on Residential Property and Mixed -Use Loans 13 E. Cost Includable in Rehabilitation Loan 14 1. General 14 2. Includable Costs - 14 - 3. Costs Not Includable - 16 4. Work Write -Up 17 F. Limitations on Amount Of Loan - 17 1. Rehabilitation Loan on Residential Property 17 2. Mixed -Use Loan 19 G. Processing and Submissions for a Rehabilitation Loan 18 1. Rehabilitation Loan on Residential Property and Mixed -Use Loan 18 PAGE H. Loan Settlement 22 1. General 22 2. Preparing for Loan Settlement 22 3. Completing Loan Settlement 23 4. Post Settlement 25 I. Terms and Conditions under Which Rehabilitation Loans are Made 25 1. General 25 2. Rehabilitation Loan Conditions 25 3. Interest Rate 26 4: Term of Loan 26 5. Points of Agreement 26 J. Management of Rehabilitation escrow Account 29 1. General 29 2., .Funding a Rehabilitation Loan 29 3. Rehabilitation Loan Supplemented by Other Funds 29 4. Management of Rehabilitation Escrow Account 29 K. Appraisal for Rehabilitation Loan 31 L. Numbering Loan Applications 32 M. Determining Work to be Done with Rehabilitation Loan 32 1. General 32 2. Property Inspection 32 3. Work Write-up and Cost Estimate 32 " 4. Specifications in Construction Contract Documents 33 N. Contracting for Rehabilitation work 33 1. Introduction 33 2. General Conditions -34 3. Provisions to Meet Local Conditions 37 4. Specifications and Drawings 37 5. Obtaining Contractors' Bids and Proposals 37 6. Invitation to Contractors for Hid and Proposal 38 7. Selection of Successful Bidder - 38 8. Award of Construction Contract 38 9. Issuance of Proceed order -. 39 10. Labor Performed by Owner in Rehabilitating 'Property 39 EXHIBITS BCD -1 Application for Rehabilitation Loan BCD -2 Application for Rehabilitation Loan - Investor Owner Residential Property or Mixed -Use Loan BCD -3 Reouest for Credit Report BCD -4A Personal Financial Statement BCD -5A Terms and Conditions BCD -6 As -Is Property Appraisal ACO -6A Rent Regulatory Agreement BCD-] Request for Verification of Employment BCD -S Request for Verification of Mortgage or Deed of Trust BCD -9 'Request for Verification of Deposit BCD -11 Verification of Title - Unsecured Loans BCD -12 Verification of Tenants Income BCD -13 Right of Rescission BCD -14 Contractors Bid or Proposal BCD -15 Cost Estimate Breakdown PAGE O. Inspection of Rehabilitation Work 41 1. General 41 2. Responsibility for Makin; Inspections 41 3. Inspections for Progress Payments and Final Payment 41 4. Certification of Final Inspection 42 P. Truth in Lending Requirements for Rehabilitation Loans 42 Q� Loan Approval 42 R. Loan Servicing 42 S. Project Area Eligible for Loan Assistance 42 EXHIBITS BCD -1 Application for Rehabilitation Loan BCD -2 Application for Rehabilitation Loan - Investor Owner Residential Property or Mixed -Use Loan BCD -3 Reouest for Credit Report BCD -4A Personal Financial Statement BCD -5A Terms and Conditions BCD -6 As -Is Property Appraisal ACO -6A Rent Regulatory Agreement BCD-] Request for Verification of Employment BCD -S Request for Verification of Mortgage or Deed of Trust BCD -9 'Request for Verification of Deposit BCD -11 Verification of Title - Unsecured Loans BCD -12 Verification of Tenants Income BCD -13 Right of Rescission BCD -14 Contractors Bid or Proposal BCD -15 Cost Estimate Breakdown BCD -16® Contractor/Owner Agreement BCD -16A Addendum to Contractor/Owner Agreement BCD -17 Non -Discrimination Statement BCD -18 Disposition of Funds BCD -19 Contractor Proceed Order BCD -20 Notice and Permisaion - Fair Credit Reporting Act BCD -21 Certificate of Final Inspection and Completion BCD -22 Waiver of Lien BCD -23 Contractors warranty BCD -24 Loan Promissory Note BCD -24A Loan Promissory Note for Deferred Payment Loan BCD -25 Mortgage Deed BCD -26 Cost Effective Energy Conservation Standards - CITY OF BANGOR COMMUNITY DEVELOPMENT PROPERTY REHABILITATION LOAN PROGRAM A. Introduction This Plan establishes the policies and procedures of the City Of Bangor applicable to providing rehabilitation assistance to rehabilitate privately Owned properties in Community Development Project Areas or properties elsewhere in the City of Bangor which have been approved for assistance under the Department of Housing. and Urban Development (HUD) Section 8 or other rent subsidy program. B. Administration - - The City of Bangor Planning and Community DevelopmentDepartment (hereinafter referred to as the "Department') will be responsible for the administration of the Property Rehabilitation Loan Program i conformance with this Plan. Property rehabilitation asistance in the form of loans and/or deferred payment loans will be provided to eligible applicants for approved property rehabilitation work from funds available under the Community Development Block Grant Program designated for this purpose. All of the funds provided in any program year will be used for the benefit of low- and moderate -income persons whose income does not exceed 80,4' of the median family income as defined by the Department of Housing and Urban Development. C. Eligibility Requirements 1. General: A rehabilitation loan may be made only with respect to a residential or residential portion of amixed-use property located within COVMUmitY Development project areas designated by Order of the City Council of the City of Bangor or properties located elsewhere in the City Of Bangor which nave been approved for assistance under HUD's Section -8 or other rent subsidy program. The property must require and be suitable for rehabilitation to meet the requirements of the Property Maintenance Code of the City Of Bangor. In order to he eligible for a rehabilitation loan other than a deferred - payment loan, the applicant must evidence -adequate capacity to repay the loan. A rehabilitation loan cannot be approved if the applicant's record shows a disregard for former obligations including non payment of property taxes, or if there is a clear inability to make the payments that may be required.The applicant for a deferred payment rehabilitation Ioan must own and reside in the structure to be rehabilitated, and must have Ownedand. resided in the property for a period of one year prior to submitting a .application. The structure must contain no more than .two dwelling units after rehabilitation. .1 2. Prot Ownershi An applicant for a rehabilitation loan n residential o mixed-use property must be the owner of the property, orrmust be the purchaser -occupant of the property under a land sales contract or any srmilar con- tractual ar{angement for the purchase of realproperty. Ownership shall be verified at the Registry of Deeds. A statement of verification shall be prepared by the person examining the record and placed in the applicants file. The term "land sales contract" refers to any transaction regardless of the nomenclature by which it is known, in which the purchaser -occupant obtains fee title only if he completes a series of installment payments over a term of years. a. Ell brlity Requirements. 2n order for a purchaser under asalso contract to be eligible for a rehabilitation loan to cover rehabilitation costs, all of the following minimum requirements must be met. (1) The contract shall be a written, legally binding, instrument involving a residential property or the residential portion of a mixed-use property. (2) The seller of the property must hold fee title to the property and, while the contract is in good standing, must be unable to use the property fox collateral or to convey the property to any other party unless such use for collateral or conveyance of fee is subject to the land sales contract. Legally acceptable limitations on the effect of conveyance or use of the property for collateral must be found to exist under local law, the provisions of the contract, or some other written agreement in recordable form. The City of Bangor shall record this agreement, or the contract, promptly after loan settlement if n ary to give either document the legal effect described. (3) Under the contract, the seller and any subsequent holder of the fee to the property must be obligated, without qualification, to deliver to the purchaser fee simple title and a deed to the property upon full payment of the contract price, or some lesser amount. (4) Under the terms of the contract, the purchaser shall have: (a) Full use, possession, and quiet enjoyment of the property, -2- Ce) Equitable title to the property, and (c) Full rights of redemption for a period of not less than 90 days, unless redemption rights not less than 90 days axe afforded by local law to a purchaser under a land sales contract. if the loan is to include an aunt to refinance the balance due under the land sales contract, this requirement does not apply. (5) The purchaser shall have bad possession and use of the property under the contract for at least 12 months prior to the date of application for a rehabilitation loan. I. Opinion of Counsel. Before an application for a rehabili- tation loan to a purchaser under a land sales contract can be approved, the City of Bangor must obtain a copy of the land sales contract and a written legal opinion from its counsel that each of the Foregoing conditions is satisfied, and setting forth the basis for the opinion. C. Loan Limitations On Pro as rty Under Land Sales Contract. um Tne loan that may be made to a purchaser under a landsalescontract is the same , s for owner -occupants. However, acontract purchaser doesnot have legal title and i,not able to offer a mortgage a security; there - fare, the loan must be for less than $2,000. 3. Income Limitation a. Bwner-occupied Applicants: A property owner who resides n the residence to be rehabilitated witha property rehabilitationloan shall be considered an eligible recipient if one of the following criterion is met: (1) The applicant's income (see Section 4), to include the income of the applicant, his family, and/or any related individuals who share the same dwelling unit, shall not exceed, after adjustments as set forth in Section C.4., 80% of the median family income Of the Bangor, Maine Standard Metropolitan Statistical Area (SMSA) as defined in the most recent publication by the U. S. Department of Housing and Urban Development establishing income limits in the Bangor, Maine Standard Metropolitan Statistical Area (SMSA) for lower-income housing assistance under Section s of the U. S. Housing Act of 1937. -3- Applicants whose family income does not exceed 60% of the median family income and who own and reside In the property to be rehabilitated and have owned and resided in the property for a period of one year or .more prior to submitting an application and the property contains no more than two dwelling units after rehabilitation, shall be eligible to apply for a deferred payment Loan of up to $7,000 which requires no repayment unless the rehabilitated property is sold or transferred within five years of the loan closing; or (2) The income of at least one of the tenants, to include the income of the tenant and his family ho share the nsaa dwelling unit, residing i the property to be rehabilitated shall nct exceed 80% of the median family i after adjustments as set forth in section C 4. b. Absentee -owner Applicants: A property owner who does not r side in the r silence to be rehabilitated with a property rehabilitation loan shall be considered a eligible recipient if one of the two following criteria are met: (1) The income immediateof the applicant's immediate family shallnotexceed 80% of the median family income after adjustments as set forth in Section C.4.; or (2) The income a of at least o of the tenants, to. include the i of thetenant and his family who share the same dwelling unit, residing in the property to be rehabilitated shall not exceed 80% of the median family income after adjustments as set forth in Section C.4. 4. Sources of Funds and Amounts Comnrisinq Applicant's or Tenant's income a. Family Composition. For purposes of determining eligibility for a loan, the composition of an applicant's r tenant's family shall include persons related,or related persons living together by mutual consent and contributing directly to the support of the family group. If ownership of the property rests in more than one person, the applicant is each owner and. family. CD b. Income. An applicant's or tenant's income in established on an annual basis, at the time the applicant applies for a rehabilitation loan, and includes: (1) The applicant's or tenant family head's earnings. (2) Spouse's earnings, and the earnings of each member Of the family, other than minorsuand any unrelated individuals who share the household and who will receive income during the next twelve months. "Minor" means a member of the household (excluding faster children), other than the family head or spouse, who is under 18 years of age or is a full-time student. (3) 11ne income of the family head or spouse shall be included a if.that person is temporarily absent (such as being on active duty.in the Armed Forces). (4) Other income e regularly r ved by the tenant family head or applicant or the tenant's or applicant -s family from any source. (5). Net income from real estate, other than the property to be rehabilitated, and any other net business (6) The applicant's income from the rental unit in the property to be rehabilitated based on. (a( Gross rental income, and (b) On the basis of a ual average of.experience for two o e years expenditures for mortgage interest and principal, mortgage insurance premium, service charges, hazard insurance, real estate taxes and special assessments, maintenance and repairs, heating and utilities, ground rent, and other cash expenditures for the property, such asadvertising a vacancy. If the applicant has not owned the property for two or more years, the Department shall estimate the income and expenditures on the available experience. (7) Income shall include, but not be limited to: (a) The gross amount, before any payroll deductions, of wages and salaries, overtime pay, commissions, fees, tips and bonuses; -5- (b) The net income from operation of a business or profession or from rental of real or personal property (for this purpose, expenditures for business expansion or amortization of capital indebtedness shall not be deducted to determine the net income from a business); _ (c) interest and dividends; (d) The full amount of periodic payments received from social s rity, annuities, insurance policies, retirement funds, pensions, disability or death benefits and other similar types of periodic receipts; (e) Payments in lieu of earnings, such as unemploy- ment and disability compensation, workmen's compensation and severance pay (but see para- graph 8 (c) below); If) Public Assistance. If the Public Assistance payment includes an amount specifically designed for shelter and utilities which is subject to adjustment by the Public Assistance Agency in accordance with the actual cost of shelter andutilities, the amount of Public Assistance income to be included as income shall consist of: (as) The amount of the allowance or grant exclusive of the amount specifically -_ designated for shelter and utilities, plus (bb) The maximum amount which the Public Assistance Agency could in fact allow for the family for shelter and utilities; (g) Periodic and determinable allowances, such a alimony and child support payments, and regular contributions or gifts received from persons not residing in the dwelling; (h) All regular pay, special pay and allowances of ember of the Armed Forces (whether or not living in the dwelling) who is head of the family or spouse. (i) All payments received ved from persons occupying the same dwelling unit as the applicant o tenant in exchange for room. C:fl (B) The following items shall not be considered as income: (a) Casual, sporadic or irregular gifts; (b) Amounts which are specifically for or in reimbursement of the cost of medical expenses; (c) Lump -sum additions to family assets, such as insurance n nce payments (including payments under health and a cident in and workmen's compensation), capital gains cand settlement for personal or property losses; (d) Amounts of educationalscholarships paid directly to the student or to the educational restitution, and amounts paid by the Government to a veteran for use in meeting the costs of tuition, fees, books and equipment. Any amounts of such scbclarships, or payments to veterans, not used for the above purposes or which are available for subsistence are to be included as income; (e) The special pay to arn head of a family away from home sand exposed to hostile fire, (£) Relocation payments made pursuant to Title 11 of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970; (g) Foster child care payments; (h) The value of coupon allotments for the purchase of food pursuant to the Food Stamp Act of 1964 which is n excess of the amount actually chargedthe eligible household; (i) Payments received pursuant to participation in the following volunteer programs under the ACTION Agency: (as) National Volunteer Antipoverty Programs which include VISTA, Service Learning Programs and Special Volunteer Programs. (bb) National Older American Volunteer Programs for persons aged 60 and over which include Retired Senior volunteer Programs, Foster Grandparent Program, Older American Community Services Program, -7- and National volunteer Program to Assist Small Business Experience, Service Corps Of Retired Executive (SCORE) and Active Corp of Executive (ACE). 5. Assets: Tne applicant shall list all assets of each member of the family. For this purpose, assets mean the vale, of equity in real property, sings, stocks, bonds, and other forms of capital i estment. The value of nary items of personal property such as furniture, clothing, and automobiles shall be excluded. Any income producing assets must be listed by the applicant and the income shall be included in annual income. 6. Allowances: in the case of an application for a deferred payment loan, the following total allowances from annual income shall be deducted to determine eligibility income Provided that, ininstance shall the applicants income s determined in Section 4, before deduction of any of the allowances set forth below, exceed 80% of the median family income of Penobscot County as defined in the most recent publication of the U. S. Department of Sousing and Urban Development establishing income limits in Penobscot County for lower income housing assistance under Section a of the U- S. Housing Act of 1937. a.. The difference of total medical expenses less three _ (3) percent of annual income. (1) Medical expenses are those medical expenses which aranticipated during the 12 -month period for which the annual i is r computed, and which are not covered by insurance (however. premiums for such insurance may be included as medical expenses). b. Unusual expenses. (1) Unusual expenses are amounts paid by the family for the care of minors under 13 years of age or for the'c of disabled or handicapped family household embers, but only where such care is.necessary to enable a family member to be gainfully employed, and the amount allowable as Unusual Expenses shall not exceed the amount of income from such employment'. C. The product of multiplying the number of minors in the family by $500. 7. Portion of Income Derived From Ren [al Unita: If the property will contain more than one dwelling unit after rehabilitation, that portion Of an applicant's income that is derived from the property shall be reported on IND-1orBCD-2 as a net figure determined as follows: a. Net Income. The net income from the rental units in the OWner-OccuPiAd property to be rehabilitated isthegross rental income, less expenditures including payments, o the basis of an average of experience for two or years, for mortgage principal and interest, mortgagee insuranceestatea premium service charges, hazard insurance, real and special assessments, maintenance repairs, heating and utilities, ground rent, and other cash expenditures for the property such as adver- tising vacancies. If the applicant has not owned the propertyfor two or more years, the Department shall estimate the income and expenditures on .the available experience. b. Allocation of E.xpendituree to Rental Units. The allocation of expenditures to the ental units may be estimated by dividing total monthly expenditures for the entire property by the number of units in the property. The result i the monthly expenditures allocable to the owner -occupied a ed dwelling unit, which when subtracted from theexpenditures for the entire property, produces the monthly expenditures allocable to the rental units. C. Net Penal Income On BC➢ -1 Ox BCD -2. The monthly expendi- tures allocable to the rental units, subtracted from the gross rental income from the property, produces the net rental income to be entered on BCD -1 or BCD -2. d. Other Allocation Methods. If the foregoing allocation method does `-not aonably equitable result, the Department may use another method Of allocating the expenditures. In that case, the Department shall attach to its copy of BCD -1 or BCD -2 a statement showing the basis, calculations, and results for the method of allocation used. e. Rehabilitation Loan Supp lamented with a Deferred Payment Loan. If the rehabilitation loan is to be supplemented with a deferred payment loan, it should be noted that n BCD -1 the income derived from the property to he rehabilitated is reported as a gross amount inccordance with the sources of incomerequirements (4.a. and b. above). 8. Rent Regulatory Agreement: Rents for dwelling units assisted un er then the De�ousing and Urban Development'ss Section 8 program will be controlled by the Lease Agreement. In structures containing rental units not receiving Section 8 asistance, (and where the property rehabilitation loan will be for more than $2,500 per dwelling unit) the borrower must enter into a rent regulatory agreement pertaining only to those dwelling unite assisted under this program which are not receiving Section8 assistance and which are occupied at the time of loan closing by families whose income is not more than BM of the median family income, or which are vacant containing the following provisions: a. That as a condition totheapproval and award of a residential property rehabilitation loan, by the Community Development Program of the City of Bangor, the property owner guarantees the present tenants the right to lease/rent and occupy a decent, safe, and sanitary dwelling for a period of at least four - years, beginning on the date of the property rehabili- tation loan closing. Tenantsmustcomply with the terms of the lease in order to remain in occupancy. { b. The monthly rent for the first year will not exceed the present rental fee, including utility charges. c. At the end of the first, second, and third years, the nit rent may be increased. However, the unit in for any given year shall not exceed the pro -rata share of the average monthly i r the previous year i n the ow actual cost, for. Community Development rehabili- tation loan debt service, additional debt service incurred 85 a result of improvements to the leased premises, Property taxes utility charges (including, but not limited to, sewer use charges and water bills), plus five (5) percent of the monthly contract rent (exclusive of debt service and utilities) charged during the previous year. d. No additional debt service obligations incurred during the term of the agreement shall n shall be passed onto tenants in the form of increased rent or utility charges. Provided, .how - that the Owners may increase the rental fee in accord- ance with subparagraph c above for debt service incurred for improvements to the leased premises or a pm -rata share of the debt service ncurred for improvements to the building in which the leased premises is located. e. The owner will not take any action whatsoever which would cause the tenant to vacate the property in question, other than for violations of the lease contract between the tenants and the landlord, or for good cause shown by the landlord. f. If any violations of this Agreement occur, the City of Bangor shall have the right to pursuelegal remedies to compel adherence; secure appropriate financial compensation (including but not limited to payments, provided for pursuant to the Uniform Relocation Assistance and Real Property Acquisition Policies Act Of 1970); obtain punitive damages and pursue revocation of the rehabilitation loan together with reasonable attorney's fees and costs. g. The City of Bangor may conduct interviews of tenants, forward any informational materials required by law, make any and all commitments required by law and the Agreement. and conduct inspections of the rehabilitated building during reasonable business hours for the purpose of ascertaining the owner's compliance with the terms and conditions of the loan program and the provisions of the Agreement. h. Present tenants, their addresses and the amounts of their rental fees will be included in the Agreement. 1." The quotedrental figure for each apartment establishes the maximum rental figure allowed for each unit (except . for the above allowed adjustments) whether the pres,nt tenant remains tbrougoot the term of agreement or the unit is vacated and reoccupied. - -11- j. The first anniversary date upon which rental fees may be adjusted i one year from the date of rehabilitation loan closing. The rental fees may also be adjusted on the second and third anniversary dates pursuant to the above provisions. k. The Agreement expires four years from the date of rehabili- tation loan closing. 1. To the greatest extent possible the owner will attempt to conform to the provisions and spirit ofthis Agreement beyond the expiration date. M. The Department will notify each tenant of the terms of the Rent Regulatory Agreement within 10 business days of the closing of the loan. Thereafter the Department shall annually send a letter explaining the terms of the Rent Regulatory Agreement to each occupant of the property. n. The owner shall explain the terms and provide a copy of the Rent Regulatory Agreement to any prospective new tenant before entering into any rental agreement with the w tenant during the period this Rent Regulatory Agree- ment is in effect. -' Non -Profit Orcanizations a. General. Public and private, non-profit, community based organizations are eligible to apply for property rehabili- tation loans, but not deferred payment loans, provided that: (1) the organization agrees tq rehabilitate acquired residential properties to meet the requirements of the City codes; (2) after rehabilitation, the organization agrees to comply with the agreed upon rent regulatory agreement; (3) the organization can demonstrate that it has the financial capability to undertake the rehabilitation and to secure financing for the acquisition of such properties. b. Sources f Income. The income of a non-profit organization inc a e—i3 s a�net income attributable to the organiza- tion comprising: (1) Net pe income from real estate other than the Prort to berehabilitated and any other net i attributable to ttie organization. (2) Net i e from the property to be rehabilitated consistrn3 of gross rental income leas expendi tueea (on the basis of an average of two or me years' experience) for mortgage principal and interest, mortgage insurance e e premium, a charges, . - hazard insurance, real estate taxes and special assessments maintenance and repairs, heating and utilities, ground rent, and other cash expenditures for the property (including advertising vacancies). (3) Exclusions. Income of a non-profit organization does not include the income of any director, official, officer, employee, shareholder or other participant in the business. 10. Documentation of Income: .The Department will require an applicant to furnish documentation of his or her income from all sources. This information will be verified i writing from outside sources such asemployers, pension funds, governmental agencies, etc. ne applicant will be required to sign anauthorization allowing the source to verify and release such information to the Department.' 11. Find ina Acceptable Risk in Marginal Cases: Generally, a rehabilitation loan, secured or unsecuxej, shall not be made with respect to a investor-ownedproperty or for a mixed - "a loan, if the property clearly cannot produce sufficient revenues to satisfy all expenditures related to Ownership, operation, and management of the property, including repay- ment of the rehabilitation loan. An exception is case in which the ability of the property to produce sufficient revenues appears possible, but marginal. In this circumstance, an applicant's strong financial condition and ability to repay may be used to support a finding of acceptable risk. D. Assurance That Rehabilitation Will Be Completed In some instances the rehabilitation cost may exceed the amount of a rehabilitation loan. In such cases a rehabilitation loan will not be made unless the applicant can provide whatever additional - unt i s needed to a completion of the work so that the property will meet the minimumrequirements of the Property Maintenance Code. 1. Loans on Residential Property and Mixed -Use Loans: I£ the applicant applicant for a rehab ra rehab li to tion loan on residential property and -a sed -use loan is obtaining,a supplemental loan, the rehabilitation loan application shall not be approved until evidence has been secured that the applicant has obtained an adequate and satisfactory supplemental loan commitment.. When the loan will be obtained from arcognized lending institution, evidence shall consist of.a signed, bona fide written commitment to make the loan for the purpose of the rehabilitation work. The loan shall be in an amount which, when added to the rehabilitation loan and any other. funds the applicant will furnish, will be sufficient for completing the required rehabilitation work. _ -13- When the applicant is furnishing supplementary funds from sources other than a recognized lending institution, evidence that actual funds a ailable shall consist of verification and documentation that the applicant can deposit the required amount in the rehabilitation escrow account. E. Cost Includable in Rehabilitation Loan 1. General: A rehabilitation loan may be made only with respect to a property which needs to be brought up to -the minimum requirements of the Property Maintenance Code. property rehabilitation undertaken with a rehabilitation loan shall conform to the Cost Effective Energy Conservation Standards as set forth in 24 CPR Part 39 and correct all outstanding Property Maintenance Code violations for the entire property being rehabilitated, whether or not. paid for by the property rehabilitation loan. With respect to a property containing ental dwelling units, a rehabilitation loan generally should include funds for work that goes beyond the m require- ments of the Property Maintenance Code only to the extent that this will not cause the rents to exceed the m of typical families living in the Community Developmentproject area or surrounding neighborhood. - ' In the case of a rehabilitation loan for property in which some of the o, cupants have family income i cess of 80% of the medianfamily income, the maximum amount of the loan shall be calculated in accordance with the following formula: Number of units with- .cupants whose i .does not exceed Bo% of Total Cost of median family income Rehabilitation of x Entire Property Total number of Dwelling Units Provided, however, that the Department may, at its sole.: discretion increase the loan amount to allow for rehabilitation costs for improvements to the units occupied by persons who meet the income qualifications contained herein. In addition, vacant dwelling units a, also eligible for a rehabilitation los if the o agrees,in an agreement satisfactory to the Department, eto rent those units only to persons whose income does not exceed BOX of the median family income after the applicable adjustments as set forth in Section C.4. Such an agreement shall be .for a period of four years from the date of the rehabilitation loan closing. 2. Includable Costs: In addition to those costs for rehabilitation to make the property conform to the requirements of the Property Maintenance Code, a rehabilitation loan may. include funds to cover the costs described below: -' a. -Energy Conservation. A rehabilitation loan may include funds for measures to increase the efficient use of energy in structuresthrough such means as installation of storm windows and doors, siding, wall and attic insulation, and conversion, modification or replacement of heating equipment, including the use of solar energy equipment. -14- b. Good and Eeaily Maintainable Cntondition. whether or not required by the Property Maienance Code, a rehabilitation loan may provide for putting the property in generally good and readily maintainable condition, with the necessary facilities in good working order. C. Kitchen Equipment. Whetber or not required by the Property Maintenance Code, a rehabilitation loan for a property used for residential purposes may provide for the repair or purchase and installation of a kitchen stove and/or refrigerator. Purchase and installation i acceptable if there is no such equipment in the dwelling nit, or if existing equipment is safe or unsanitary because of its basic physical condition. Loan funds may also be used for building in a stove and/or refrigerator, if necessary to replace existing built-in equipment. d. Acquisition Of Land. In a Community Development Program project area, a rehabilitation loan may provide for the purchase of a relatively small parcel of project land from the City in order to bring the property into con- formity with the Ordinances of the City of Bangor. a. Conversions. In general, conversion of a property s FO change either its use or the number of units may be s provided for in a rehabilitation loan only if conversion is necessary to meet the requirements of the Property Maintenance Code or to eliminate a non -conforming use. However, a rehabilitation loan, but not a deferred payment Loan, may provide for cenversir�n if there is an insufficient market for the property in its present form, and con- version will make rehabilitation and maintenance economically feasible. For example, a large single-family house which is obsolete and too expensive to rehabilitate, maintain, and heat in its present form may be converted into several dwelling units with rehabilitation loan funds. Provided, however, that the owner most agree in an agree- ment satisfactory to the Department, to rent those units only to persons whose income does not exceed 80% of the median family income after the applicable adjustments as set forth in Section C.4. Such an agreement shall be for a period of four years from the date of the rebabili- tation loan closing. f. Buildrng Permits and Related Fees. A rehabilitation loan may provide funds to c i the cost of building permits and related fees that are required tocarryrry out the proposed rehabilitation work. However,since the con- struction contract documents will require the contractor to pay for them, this cost ordinarily. would be included n the contract amount. -is- g. Architectural Services. in some s unusual cases, an applicant may employ a private architect to prepare plana and drawings for the rehabilitation of his property. In these co , the rehabilitation loan may include a amount to the cost of the archi- tectural s for the foregoing rehabilitation work to be financedbythe rehabilitation loan. h. Certain Related Costs. A rehabilitation loan may include funds to cover certain costs and charges related to processing the application and to obtaining security for the loan. (1)- Types of Related Costs. A rehabilitation loan may provide for the cost of the following: (a) Appraisal fee. (b) Title reports (secured loans). (c) Fees for recordation and filing (secured loans). (2) Advance of Funds. As necessary, the Department ssWaiia v�ance funds to pay for appraisal fees and title reports prior to final action on the rehabili- tation loan application. if the loan is approved, the City shall be reimbursed from the.proceeds of the loan at the time Of loan closeout. If the loan is not approved, and the application withdrawn, the osis of the advances shall be absorbed by the Department. 3. Costs Not Includable: Except as otherwise provided in this section, a rehabilitation loan shall not provide for: a. New construction, substantial reconstruction, expansion Of the size of a structure, or the finishing of unfinished spaces such as an attic or basement. b. Materials, fixtures, or equipment of a type or quality which exceeds that customarily used in the locality for properties of the same. general type as the property to 'be rehabilitated. c. Appliances not required by the Housing Code. d. Purchase, installation, or repair Of furnishings o trade fixtures. - -16- 4. Work Write -Up: The Department shall prepare a work write-up to document the rehabilitation work to be financed with the rehabilitation loan in accordance with Paragraph M.3. of this Plan. F. Limitations on Amount of Loan This Section sets forth requirements for establishing the maximum amount for a rehabilitation loan on a residential and mixed-use property. 1. Rehabilitation Loan on Residential Property: Me maximum amount for a rehabilitation loan on residential property is the least of the amounts determined through the application of the following limitations. All of these limitations apply whether the rehabilitation loan is to be secured or unsecured. a. $12,000 per dwelling unit on residential or mixed -use - structures which contain two or more dwelling units. b. $15,000 for a single family, owner -occupied residential structure containing one dwelling unit." Not more than $7,000 of which may be a deferred payment loan. c. The actual cost of rehabilitation (See Paragraph E). d. An amount which, when added to any outstanding indebted- ness to the property, creates a total outstanding indebtedness which does not exceed 95 percent of the sum of the as -is value of the property and estimated - rehabilitation costs up to and including $25,000, 90 Percent of the next $10,000 and 80 percent of any balance of the sum that exceeds $35,000. e. Me amount allowable under Paragraph E above for - properties in which some units are occupied by persons who do not meet the income qualifications contained herein. f. Theamount allowed in Section E.I. 2. Mixed -Use Loan: A loan for the rehabilitation of a mixed- use property shall be limited to the cost of rehabilitation of the residential portion of the property and the cost of rehabilitation of areas which serve both the residential and non-residential uses of the property such as roofing, siding, central heating, corridors, etc. The cost of rehabilitation which is attributable entirely and solely to the non-residential part ofthe property is not an eligible cost and cannot be included in the rehabilitation loan amount. No portion of a rehabilitation loan to the owner of a mixed-use property will be adeferred payment loan. -17- G. Processing and submissions for a Rehabilitation Loan 1. Rehabilitation Loan on Residential Property and Mixed -Use Loan: The material under this—ming i ectfon witb a rehabilitation loan o residentialpropertyo mixed-use property that by itself or in conjunction with funds to be provided by the applicant is sufficient to accomplish the required rehabilitation necessary to bring the property up tominimum standards of the Property Maintenance Code. This chapter sets forth the policies and procedures to be followedbythe Department in pre- paring, processing, and approving an application for a rehabilitation loan, and in cancelling an approved rehabilitation loan. a. Outline of Department Functions. -Listed below are the functions to be performed toe a rehabilitation loan on a residential property, and amixed-use loan. As applicable to each of the listed functions, cross-references are given to other sections that contain the substantive requirements for that function. Regardless of the sources of funds to rehabilitate a property, the property owner shall be assisted by performing functions p.) through (4) listed below: Functions (1) Interview and advise the property ownr the general rehabilitation objectivese for the community development program and the purpose and meaning of the Property Mainten- ance code. 6EE (2) Advise property owner on the availability and benefits of a rehabilitation loan, and on other programs and resurces for financing rehabilitation that may be available. (3) Inspect the property and determine its suitability for rehabilitation. The Director of Planning and Commodity Development shall be the final authority for determining the suitability of the property for rehabilitation. (4) Prepare a work write-up and cost estimate of the rehabilitation work. Ensure that all items conform to the includable cost listed in E.2. and correct all code violations. (5) Determine eligibility of the applicant for a rehabili- tation loan. Evidence that ownership of the property has been v rified shall be retained in the Department files. This shall include the citation from the land records or other official records from which the verification was made. If applicant isa purchaser -occupant under'a land sales contract or similar arrangement, obtain documentation to support eligibility. (6) Verify applicant's income, housing expense, and assets. (7) Advise applicant concerning the conditions under which a rehabilitationloan is made. (8) If the loan is for a property that will contain 8 or more dwelling units after rehabilitation, advise applicant that the loan will be subject to a Federal regulatory agreement. (9) If the applicant does or will receive public assistance or other welfare benefits, advise of the effect the loan may have, if any. (10) Obtain following information with respect to the applicant: (a) For all r, sidential properties and for mixed- use loans,Verification Of Mortgage or Deed of Trust from each holder of lien secured by property. (b) For owner -occupied residential cases and for mixed use loans: -19- 1 Credit report from recognized credit - bureau. 2 Verification of employment and earnings. 3 Statement of verification of other earnings. 4 Verification of deposits. C. For investor-owned loans Form BCD -4A, Personal Financial Statement, or copies of current financial statements, as applicable. (11) Make a'preliminary evaluation of ability of applicant to repay indicated loan amount if assistance is other than a deferred payment loan. (12) Consult with applicant on preliminary work write-up and cost estimate to reach agreement on work to be. done within applicant's ability to repay. (13) Assign application number to the application, and set up separate file for the case. (14) Obtain as -is appraisal of the property as follows: (a) For a loan of less than $2,000, prepare Form BCD -6, As -Is Property Appraisal. (b) For a loan of $2,000 or more, have Form BCD -6, completed by a qualified appraiser, when necessary to ascertain maximum loan amount. (15) Prepare final work write-up and cost estimate. (16) Obtain title report for asred loan, and deter- mine adequacy of title Eor purposes of the rehabilitation loan;provided, however, a title report by the Legal Department shall not be required unless requested by the Director o£ Ylann g and Community Development, for any loans of less tan �,00u (17) Obtain other data required to complete the Application Form. (18) Determine maximum amount of loan that applicant, may (19) Ascertain that through the rehabilitation loan, the property will confirm to the Housing Code. If additional financing is needed, advise applicant in obtaining the needed funds. 0 (27) Record security instruments and deposit loan check endorsed by borrower to the rehabilitation escrow account. (28) Transmit approved loan to loan servicing agency. (29) Assist applicant to issue proceed order for con- struction work.. (30) Inspect rehabilitation work and make progress pay- ments, as appropriate, if provided in construction contract. -21- (20) Prepare construction contract documents for applicant, and obtain bids and proposals from contractors. (21) Assist applicant in selecting acceptable contractor. (22) Prepare loan Application FOIn1 BCD -1 or BCD -2, based on information furnished by applicant and supporting documentation obtained. Entries of money amounts shall be made rounded to the nearest dollar. if no money i volved for a entryfor a particular application, the entry shall be "none". Obtain applicant's signature on loan application form. (23) Assemble loan application file for presentation to the Community Development Committee of the City Council for consideration. The Community Development Committee of the City Council shall consider and approve or disapprove all property rehabilitation loan applications, and shall decide all questions concerning eligibility for said program, including all questions as to possible conflict of interest. (24) If the loan isnot approved, the Director of Planning and Community Development will notify the applicant in writing setting forth the reasons for disapproval and written statement of the reasons for the:deter- ination shall be put in the application file by the Department (25) After receipt of application approval, assist _ applicant to execute selected construction contract, and transmit original to contractor. Also assist borrower in executing rent regulatory agreement, when applicable. (26) Request loan check from the Finance Department and prepare for and carry out loan settlement. (27) Record security instruments and deposit loan check endorsed by borrower to the rehabilitation escrow account. (28) Transmit approved loan to loan servicing agency. (29) Assist applicant to issue proceed order for con- struction work.. (30) Inspect rehabilitation work and make progress pay- ments, as appropriate, if provided in construction contract. -21- (31) If loan is on property that will contain B or more dwelling units, assure compliance with Federal Labor standards provisions. This is a continuing .responsibility until the work is completed. (32) pf the cost of the rehabilitation work is more than $10,000, assure compliance with equal employment opportunity requirements. This is a continuing responsibility until the work is completed. (33) Make final inspection of completed rehabilitation work. (34) Issue Form BCD -21, Certification of Final Inspection. (35) Obtain from contractor: guarantee of work; mans- . facturers' and suppliers' warranties, and release Of liens from the general contractor, subcontractors, and suppliers, prior to final payment for rehabili- tation work. - (36) Make final payment to contractor for completed rehabilitation work. (37) Prepare for and complete loan closeout, including imbursement from the Loan t0 the City for advanced funds, and prepare statement of Disposition of Funds. H. Loan Settlement 1. General. This section sets firth the Department responsibilities with respect to a rehabilitation loan for: a. preparing for loan settlement; b. completing loan settlement; and C. carrying out post settlement. 2. Preparing for Loan Settlement. The following actions shall be taken in prepaxa [ion for loan settlement: a. Establish a date certain for loan settlement that allows 10 days for the processing of a disbursement check, by the Finance Department. b. 'After the loan .check is requested, promptly take the following actions: -22- r (1) Prepare a promissory note (original) in cordance with the form of promissory note approveaby the Legal Department. (2) I£ the loan is to be s secured, prepare a mortgage '(or, if required., a deed oftrust or similar security instrument) (original) in ccordance with the form of mortgage approved by the Legal Department. (a) For a loan under $2,000, recheck the owner- - ship information in the case file. (b) For a loan of $2,000 or more, or any secured loan, arrange for updating the title report to the date certain. (3) Prepare a proceed order to be signed by the borrower at settlement. For asred loan, the executed proceed order shall be retained for 3 business days from the date of signing in Order to give the borrower time to exercise his rights of rescission under the Truth in Lending Act. (4) Instruct the borrower to obtain: (a) Original and memorandum copy of insurance policies for fire and extended coverage that. Provides coverage i accordance with. the local coinsurance clause percentage of the value oftheproperty, or, an insurance binder or other evidence of insurance in the case of a loan. (b) Original or certified copy of receipt for payment ofinitial or current insurance premium, whichever is applicable. (5) Make arrangements for loan settlement on the date certain 3. Comole ting Loan Settlement. Proceed with loan settlement on the da ie certain as follows: a. Secure the borrower's signature on Rent Regulatory Agreement, if applicable. b. Secure the borrower's signature on the original promissory note. C. If applicable, secure the borrower's signature on the original mortgage or deed of trust. -23- d. Obtain opinion of the Legal Department concerning the legality and sufficiency of the executed _promissory-- note and, if any, the mortgage-ordead of trust. (1) A representative of the Legal Department shall participate in any proceedings as may be necessary to assure the legal validity of the loan application. (2). The Legal Department shall review the loan instruments and, if refinancing is involved, shall assure that the mortgagee's payoff statement arranges for the borrower to be fully discharged from any obligation thereunder. In addition, the Legal Department shall review for legal adequacy the executed release of mortgage or deed of trust showing its complete discharge. lbe Legal Department shall also review the title report to assure that proper disposition has been made of any exceptions. e. Obtain from the borrower the required fire and extended coverage insurance policies and premium payment receipts. I. Obtain from the harrower evidence of current tax and special assessment payments in the form of most recent receipts. g. Secure the borrower's endorsement on the loan check. h. Advise the borrower of other than a deferred payment loan with regard to: (1) Name of the loan servicer to whom monthly payment checks shall be made payable, where to send the first and subsequent monthly payments, and the obligation to remit the first monthly payment without a notice. The borrower shall be advised in writing_ if at any time, during the repayment period, there is a change in the loan servicer or place of pay- ment. (2) variation of Payment Dates as Follows: (a) If settlement is completed onr before the 15tb of the month, the first monthly payment by the borrower will be due and payable on the first day of the first succeeding month. (b) If settlement is completed after the 15th of the month, the first monthly payment by the borrower will be due and payable on the first day of the second succeeding month after the month in which settlement is accomplished.. -24- (3) Need to make all monthly payments on the date due to avoid late charges and legal action. i. If applicable, obtain check from borrower to cover accrued escrow expense account items. j. Obtain borrower's signature an proceed order and hold until it is evident that the borrower does not intend to c cel the loan in accordance with the Truth in Lending Act. 4. Post Settlement. The Legal Department shall record all record- ablenstruments and obtain evidence of recordation promptly after completing loan settlement. The Department shall pre -- pare a transmittal letter (original and two copies to the servicing agent advising that loan settlement has been completed and that the loan is being transferred for loan servicing - Preparation rvicing.Preparation and release of the original and copies of the transmittal letter and accompanying documents shall not be delayed, pending receipt of the recorded instruments and evidence of recordation. I. Terms and Conditions Under which Rehabilitation Loans Are Made 1. General. This section sets forth requirements with respect to terms and conditions to which an applicant must agree in order to obtain a rehabilitation loan. 2. Rehabilitation Loan Conditions. The specific terms and conditions with respect to a rehabilitation loan to a resi- dential property and for amixed-use loan are incorporated n the mortgage or other security instruments as applicable and the promissory note. a. Cancellation Provision. Under paragraph 3 of Form BCD -5A, concerning the City of Bangor's right to cancel a loan if within 60 days from the note's a cution the rehabili- tation work has not commenced, the Director of Planning and Community Developmment may extend the 60 -day period by not more than 30 days, due to unforeseen and extenuating circumstances. b. Cancellation Letter. To cancel an approved rehabilitation loan, the Department shall prepare a letter of cancellation and distribute the letter as follows. (1) Original to applicant. (2) One copy to the application file. -25 C. Return of Funds. If funds for the cancelled rehabili- tation loan have been deposited to the rehabilitation escrowccount, the Department shall draw a check on that account for the amount originally deposited, payable to the source from which the funds were obtained. 3. Interest Rate. The interest rate for a rehabilitation loan sha-1—� rate of 3% per year on the principal out- standing. 4. Term of Loan. The maximum term of a secured rehabilitation loan 87all be 20 years or three-fourths of the remaining life, whichever is less. The max imum term of a unsecured rehabilitation loan or a securedloan on an absentee -owner owned property shall be 10 years. The maximum term of a deferred payment loan is 5 years. 5. Points of Agreement. The applicant shall agree, as required by the related documents, to abide by the,following terms and conditions. a. Civil Rights. Comply with all HUD requirements with respect to Title VI 'of the Civil Rights Act of 1964; to not discriminate upon the basis of race, color, sed,or natural origin in the sale, lease,' rental, use or occupancy of the subject property. b. Equal Employment Opportunity, Abide by the provisions of Executive Order 11 114amended by Executive Order 11375, and as supplemented in Department of Labor regulations (41 CFR Part 60) concerning equal employment opportunity if the sum to be charged for therehabili- tation work is more than: (1) $10,000 with respect to a residential- property, - and a mixed-use loan. (2) $2,000 with respect to a non-residential property. C. Use of Proceeds. Use the loan proceeds only to pay for oats of a and materials necessary ary to carry out the rehabilitation work for which the loan will be . approved. _ d. Completion of Work. Assure that the rehabilitation work shall be c ria 0 t promptly and efficiently through written contract let with the prior concurrence of the City of Bangor. -26- C e. Ineligible Contractors. Yet award and any contract for rehabilitation work to be paid for in whole or in part with the proceeds of the loan,. to any contractor,who, at the time, is neligible under the provisions of any applicable regulations issued by the Secretary Of Labor to receive an award of such contract. - - f. Inspection. Permit inspection by the City of Bangor or its designee of the property, the rehabilitation work, and all contracts, materials, equipment, payrolls, and conditions of employment pertaining to the work, g. Records. Keep such records as may be required by the City of Bangor with respect to the rehabilitation work. - h. Interest of Certain Officials. Not permit any member of or Delegate to the Congress of the United .States, and non Resident Commissioner, to share in any proceeds of the loan, or to any benefit to arise from the same. 1. Bonus, Commission, or Fee. Not pay any bonus, commission, r fee for the purpose of obtaining the City -Of Bangor's approval of the loan application, orany other approval or. concurrence required by the City of Bangororits designee to complete the rehabilitation work, financed in whole or In part with the rehabilitation loan. j. Interest of City of Bangor. Allow n member -of the- gover inq bow of Bangor who a any functions or responsibilities i connectionwiththe administration of the Community Development Program, and no other officer or employee of the City of Bangor who exercises such functions or responsibilities to have any interest, direct or indirect, in the proceeds-of.the loan, or in any contract entered into by the applicant for the performance of work financed, in whole or in part, with the proceeds of the rehabilitation loan. k. Federal Labor Standards Provisions. Abide by the Federal Labor Standards i _Pro if the rehabilitation loan is for a residential loan or a mixed-use loan with respect to a property that will contain 8 or more dwellingunits, after rehabilitation. 1. Competitive Bids for Construction Work. Allow the City - of Bangor to obtain competitive bids if the amount of the rehabilitation work is In excess of $33,-500. 27 M. Ple sewstion of the Security. Maintain the property in conformance with tie minimum standards of the Property Maintenance Code and permit the City of Bangor or its designee to inspect the property during the tern of the loan. n. Hazard Insurance. Maintain hazard 'insurance on the property. o. Transfem of the Property. Not sell, lease (in the case where the borrower is also a lessee), or transfer the property without repaying the entire loan, unless prior written consent of the City of Bangor is sought and received. For the purpose of this subsection, the word "transfer" shall include, but not be limited to, acquisition of title by inheritance and the word "sell" shall include, but not be limited to, the execution of a land sales contract o similar document. In the case of the sale or transfer of property which was rehabili- tated with funds from a deferred payment loan, repayment of The deferred payment loan is due the City of Bangor at the time of said sale or transfer in accordancewith the following schedule: (1) If the sale or transfer of the property occurs during the first, year after the date of the loan closing, 100% of the original loan amount is pay- able. (2) I£ the sale or transfer of the property occurs during the second year aft)6r the date of theloan closing, 80% of the original loanamount is payable. (3) I£ the sale or transfer of the property occurs during the third year after the date of the loan closing, 60% of the original loan amount is payable. (4) If the saleor transfer of the property occurs" during the fourth year after the date of the lean closing, 40% of the original loan amount is payable. (5) If the sale or transfer of the property occurs during the fifth year after the date of the loan closing, 20% of the original loan amount is payable. (6) No repayment of the loan is due if the sale or transfer of the property occurs more than five years after the date of theloan .closing. -28- (7) No repayment of the deferred loan is required in the following instances: (1) upon the transfer of the property by inheritance to an heir who, at the time of transfer, is an eligible applicant and the heir retains ownership for the take index of the five year period subsequent to the date of loan closing, or (2) upon a determination by the Community Develop- ment committee that repayment would constitute a unreasonable financial hardship to the applicant In such case, the applicant shall have the burden of demonstrating the alleged financial hardship to the satisfaction of the committee. p. Loan Securi[V Requirements. Provide security for a loan in the form of amortgage, or ss milar security instrument, on the property. A subordinatelien is acceptable if it provides adequate security in the opinion of the Director of Planning and Community Development. S. Management of Rehabilitation Escrow Account 1. General. This section sets forth for funding individual Titation loans, and for Community Development Depart- ment Management of the rehabilitation escorv+ account. 2. Funding a Rehabilitation Loan. A City of Bangor check in the amount of the approved loan and made payable to the applicant will be secured from the Finance Department. At loan settlement the Department shall secure the applicant's endorsement, and deposit the check in the rehabilitation escrow account. 3. Rebabili to tion Loan Supplemented by Other Funds. If a rehabili- tation loan is to be supplemented by funds to be provided by the applicant from a source other than through a commitment from ae cognized lending institution, those supplemental funds shall bedeposited in the rehabilitation escorw account at the same time the rehabilitation loan check is deposited. Supplemental funds provided by means of a commitment from a recognized lending institution may either be deposited in the rehabilitation escrow account, or applied by the property ow for direct payment of the rehabilitation work. If. the supple - ental funds are to be deposited in the rehabilitation escrow account, the deposit most be made prior to any payment by the City of Bangor to the contractor. If the supplemental funds are not to be deposited in the rehabilitation escrow account, then such funds shall be applied in full by the property owner before any disbursements may be made from the rehabilitation escrow account for rehabilitation work. 4. Management o£ Reinglehabilitation Escrow Account. The City shall intain a bank account as the depository for all rehabilitation loans that are funded, as well as for supple- mental funds provided by the applicant.This account shall be separate and distinct from all other accounts maintained by the City and shall be for the sole purpose of depositing rehabilits tion escrow account funds. a. Disbursements from the ReAa bilitation Escrow Accouni. D19 nLsements iom t e e a 1 ltd on escrow account shall be by check made payable jointly to the borrower and the payee for the following purposes, as may be appropriate: (1) Make progress and final payments for rehabilitation work. Progress payments are limited to 80% of the value of the work satisfactorily completed. (2) Pay for insurance binder, if required, (3) Reimburse the City for advanced loan expenses (see Section Ad. (4) Close out the rehabilitation escrow account by appropriately disbursing any unutilized funds remaining in the rehabilitation escrow account. b. Disbursements by the Department. (1) The Department,upon e receipt appropriate invoices, shall draw a check for the payment of completed and approved work and s Except for unutilized funds in the rehabilitation escrow account to be returned to the borrower, each check shall be made payable jointly to the borrower and the appropriate payee. The Department shall see the endorsement of the borrower on checks that are made payable to the borrower and the payee. The Department shall transmit the endorsed check to the payee. (2) A check to return to the borrower unutilized funds n the rehabilitation escrow account shall be made Payable to the borrower only. C. Transmittal of Checks. After securing the borrower's n�rsement on the check(s), theDepartmentshall transmit the cbeck(s) to the payee. Checks which include any amounts previously withheld from progress payments shall be accompanied by an explanation of the computation. d. Disputes. In the event a dispute exists between the borroweand the contractor with respect to the rehabili- tationwork, the Department shall take appropriate action n accordance with the provisions of the construction contract to assure that the borrower is satisfied before making any payment to the contractor. _3p_ e. Adjustment and Closeout of Rehabilitation Escorw Account Usually disbursements made for the purposes stated under Paragraph J.4.b., will close out the rehabilitation escrow account. However, if unutilized funds remain in the rehabilitation escrow account because the actual rehabili- tation costs were less than anticipated or for other reasons, the unutilizedfunds sball be disbursed to apply as follows (1) If all the funds were provided by a rehabilitation loan, the unutilized funds shall be disbursed to apply to the principal amount of the loan. (2) If all the funds were provided by a deferred payment loan, the unutilized funds shall be disbursed to be returned to the City of Bangor Community Development Program account. (3) If the loan was supplemented by other funds, the unutilized funds shall be disbursed to apply to the borrower, at his option, to the extent of the supple - ental funds provided and any ring unutilized funds shall be returned to the City of Bangor Community Development Program account. f. Disbursement of Unutilized Funds. The Department shall drsburse unutilized funds from the rehabilitation escrow account. In addition, checks made payable to the borrower' and an intended payee shall be endorsed by the borrower and transmitted by the Departmapt to the intended payee. (1) A check to be applied to the rehabilitation loan amountshallbe made payable jointly to the borrower and the loan servicer and transmitted with instructions that the checkshall be applied to the reduction of principal balance. (2) A check to be applied to returning supplementary funds to the borrower shall be made payable only to the borrower and transmitted to him with a letter of explanation. K. Appraisal for Rehabilitation Loan An appraisal i required forevery property to be rehabilitated with rehabilitation loan to determine the feasibility and maximum possible amount of the loan (See Section F). For loans under $2,000 the appraisal shall be made by the .Department staff using Form BCD -6. Forloans of $2,000 am more, when there isevidence that there i ample equity in the property to provide security for the required mortgage, the Department staff shall also perform the appraisal_When such evidence does not jet, the appraisal shall be performed by a qualified private appraiser the cost of which shall be included in the loan amount, if the loan is approved, or absorbed as a project cost by the Department if the loan is not approved. -31- L. Numbering Loan Applications The Department shall assign anumber to every completed application for a rehabilitation loan beginning with "1" and shall be assigned con - is cutively from this sequence regardless of whether the loan approved or disapproved. Once assigned, numbers shall not be reused. M. Determining Work to be Done With Rehabilitation 1. General. This Section sets forth the responsibilities of the Department for determining the rehabilitation work necessary to bring a property into conformance with the Property Mainten- e Code of the City of Bangor and for providing assistance in the rehabilitation of the property. In carrying out these responsibilities, the Department shall: a. Arrange for a City of Bangor Housing Inspector to inspect the property. b. Make a preliminary work and cost estimate of the work to be done. C. Consult with and advise the owner n the work to be done, and the availability ofa rehabilitation loan. d. gPrepare a final work write-up and cost estimate a the basis for a rehabilitation loan and for contracting for the rehabilitation work. 2. Property Inspection. A City of Bangor Housing Inspector shall nspect the property and prepare an inspection report that identifies each deficiency with respect to the Property mainten- ance Code. An inspection report prepared in this an... will later serve as the basis for preparing a work write-up and cost estimate and a copy will be kept on file in the Department. 3. Work Write -Up and Cost Estimate. A work write-up and cost estimate is a statement prepared by the Department based on the Property inspection report that itemizes all the rehabilitation work to be done on the property, and includes anestimate of the cost of each item. The cost estimate shall be reasonable and shall reflect actual costs prevailing. in the locality for comparable work. a. Itemizing Cost. Each item of work and its estimated cost shall Si identified in the work write-up as being either necessary to meet Property Maintenance Code standards, or for other purposes that may be financed with rehabilitation loan funds. This will be done on the work write-up entering the cost estimates in a columnar arrangement. -32- Ace b. Identifvinq GPI. The work write-up and cost estimate shall rdentrfy those items and costs which may be included only n the basis of being to "generally improve the condition of the property". C. Adiustinq Work write -Up. If the total estimated cost Of the work exceeds the amount of the rehabilitation loan the applicant could receive, exceeds the applicant's financial ability to do all the work, the. Department shall eliminate or modify items in the work write-up as necessary to reduce estimated cost; however, items of worknecessary ary to meet Property Maintenance Code Standards shall not be eliminated. a. owners Preference. A preliminary work write-up should not cometail's that nave no significant effect on cost, such as color, style, or pattern. Decisions on these details can be made preparing the specifications for the construction contract documents, oreven after the contract and by providing in the contract documents, as appropriate, the term "to be selected by owner". 4. S,2eci£ications in Construction Contract Each spemfrca trod r cons tructron contract document shall be written so that it provides a clear understanding of the nature and scope of the work to be done, and a basis for carefully determined bids and proposals from contractors. Each specifi- cation shall show the nature and location of the work; and the quantity and type of materials required. The specifications shall refer to manufacturers' brand names or to association standards to identify the quality of materials and equipment required, and may make provision for acceptable substitutes. If the work write-up in sufficiently comprehensive, it may itself be used for thespecifications, without any cost estimate figures or distinctions as to work. required or hot required. Contracting for Rehabilitation work 1. Introduction. This Section sets forth requirements and Procedures with respect to construction contracts forrehabili- tation financed through a rehabilitation loan. Construction work for rehabilitation financed through a rehabilitation loan shall be undertaken only through written contract between the contractor and the recipient of the loan. The Department shall assist each applicant inarranging for and obtaining an acceptable construction contract. -33- a. Form of contract. The construction contract will consist of a single document signed by the contractor andaccepted by the borrower, only following approval of the rehabili- tation loan. It shall contain a bid and proposal by the contractor and the agreement, as well as the specifications for the work to be performed. b. Procurement of Bids. An acceptable contractor's bid and proposal; n the form prepared by the Department, must be obtained for all loans. The bid and proposal will be signed by the contractor in the presence of Department personnel. 2. General conditions. The Department shall prepare provisions - Of general conditions for general as all construction contracts for the rehabilitation ofthe property. There follows a listing of provisions that the Department must include in the general condition: a. Aprovision that the contractor must c work within 30 days after receipt of the proceed order �and n work shall be commenced by the contractor until be has received the written proceed order. b. A provision that the borrower is obligated to issue written proceed order at the time of loan closing order work to commence from within 30 days that date. If the a order i not r received by the contractor within this period, the contractor has the option of withdrawing his bid and proposal. C. A provision that the contractor must satisfactorily complete the work within 90 days after the issuance of the proceed order. Longer periods may be specified for certain work tasks to allow for circumstances beyond the contractor's control such as winter weather, shortages of materials, etc. d. A provision that the contractor will be paid the contract price, in one lump am amount, after the work is satisfacorily completed unless payment is to be made in progress payments as the work progresses. when progress payments are to be made, the contract must include a schedule that specifies the stages at which payment will be made and the percentage (or amount) of the contract price that will be paid for the satisfactory completion of each stage. Progress payment shall not exceed 80% of the value of the work satisfactorily completed. Progress payments (limited to two) and final payment due the contractor will be paid within 20 days after the Department receives the contractor's i and satisfactory release of liens o claims for liens vbyesub- ontractors, laborers, and material suppliers for completed work or installed materials. -34- a. Provisions that the contractor shall be required to: (1) Furnish evidence of comprehensive public liability insurance coverage protecting the owner for not less than $100,000/300 000, in the event of bodily injury including death, and $100,000 in the event of property damage arising out of the work performed by the con- tractor; - tractor;Yand, evidence of insurance or other coverage required by local law governing workman's compensation. (The Department shall insert insurance amounts commensurate to the risk entailed in the work.) (2) Obtain and pay for all permits and licenses necessary for the completion and execution of the work and labor to be performed. (3) Perform all work in conformance with applicable local and state codes and requirements whether or not covered by the specifications and drawings for the work. (4) Abide by Federal and local regulations pertaining to equal employment, if the sum to be charged for the work is e than $10,000, by incorporating the required language of executive Order 11246 as amended, an set forth in the Terms and Conditions which -area part of the loan application. If the contract is for a structure that will contain 8 or moredwelling units after rehabilitation, the contractor will, and will require his subcontractors to, abide by the Davis - Bacon Act (40 U.S.C. 276a through 276a-5, as amended). The Contract work Hours and Safety Standards Act (40 U.S.C. 327-333) and all regulations issued under these Acts, and with other applicable Federal laws and regulations pertaining to labor standards including Forms HUD -4010, Federal Labor Standards Provisions; 24 CFR 135 (Section 3 Requirements of the Housing and Urban Development Act of 1968 as amended, 12 U.S.C. 1701 u.) and the affirmative action obligations set forth in 41 CFR 60.4.3(a). (5) Reap the premises clean and orderly during the course of -the work and remove all debris at the completion of the work. Materials and equipment that have been removed and replaced as part of the work shall belong to the contractor. (6) Not assign the contract without written consent of the n The request for assignment must be addressed tothe Department. -35- (7) Guarantee the work performed for a period of one year from the date of final acceptance of all the work required by the contract. Furthermore, furnish the owner, of the Department, with all manufacturers' and suppliers' written guarantees and warranties covering materials and equipment furnished under the contract. (8) Permit the City of Bangor, or its designee to examine and inspect the rehabilitation work. £. Provisions that the owner will; (1) Permit the contractor to use, at no cost, existing utilities such as light, heat, power and water neceary to the carryingoutand completion of the works (2) Cooperate with foe contractor to facilitate the performance of the work, including the removal and replacement of rugs, covering, and furniture a necessary. _ g. A provision that the premises axe to be either occupied or vacant during the course of the construction work. h. A provision that final payment on the contract amount will be made only after final inspection and acceptance of all the work to be performed by the contractor, and the contractor has furnished the owc/o the Department, satisfactory releases of liens or claims for liens by the contractor, subcontractors, laborers, and material suppliers. i. A provision that the contract consists of the bid and proposal, the agreement, the specifications incorporated therein orporatedtherein by reference and identified as (the Department will have inserted in This space appropriate identification of the specifications for the work to be done for. the specific property involved), and the drawings (if any) identified as (the Department will have inserted appropriate identification of the specific drawings). j. A section at the end of the general conditions containing material to be completed by the contractor and owner generally as follows: -36- Contractor Acceptance by Owner jaame of contractor) {name of Owner(s)) (signature of contractor) (signature of Owner(s)) (address and ZIP code of (address and ZIP code of contractor) Owner(s)) (date of bid and proposal) (date of acceptance) (notarization or acknow- (notarization or acknow- ledgement) ledgement) 3. Provisions to Meet Local Conditions. The Department may add other provisions to the general conditions to reflect local conditions and to assure that the contract clearly sets forth the requirements for s the construction work to be done. 4. Specifications and Drawins. Specifications, based on the work rite -up, and illustrative sketches, if any, covering the specific rehabilitation work for each property on which a rehabilitation loan will be made shall be prepared by the Department. Drawings will be prepared only when essential to show the scope of the work involved so that a fair bid for the work can be obtained, and to avoid misunderstandings with the bidder. The specifications and drawings shall be based n the work write-up resulting from a inspection of the property and interviews, as indicated with the applicant. The specifications shall clearly establish the nature of the work to be done, and the materials and equipment to be installed. Known acceptable brands shall be identified by reference to manufacturer's or association specifications, and provision shall be made for acceptance of equal substitutions. Each page of the specifications and drawings shall be numbered and shall contain identification that includes the name, address, and ZIP code of owner, and the date of the specifications. 5. Obtain'n Contractors' Bids and Proposals. The Department alh 1 esTanii sh and, on t e basis of RN 13 experience, maintain rent listing of contractors, subcontractors, and material suppliers who are qualified to perform, and axe interested in doing rehabilitation work financed through a rehabilitation loan. The Department will determine qualification on the basis of financial and technical capability to perform, liability insurance ance coverage, financial and customer refer- quality of past work and absence from debarred con- tractors list. -37- 6. invitation to contractors for Bid and Proposal. The procedures for inviting and obtaining a bid and proposal from a contractor depend on the cost for the work to he done under the contract documents. if the cost of the work is. a. Less than $33,500, the construction contract may be negotiated with one or more prospective bidders. How- ever, if a bid cannot be obtained for less than $33,500 through negotiations, the Department shall obtain bids by formal advertising. b. $33,500 or more, a low bid must be obtained by formal advertising. An invitation for sealed bids shall be published in a newspaper having general circulation n the locality. The period of time between publication of the invitation and the bid opening date shall not be less than seven days. 7. Selection of Successful Bidder. if a bid other than the low bid is selected, the application file will include alt bids that were received ved and a statement of the reasons for selecting other than thelow bid. The applicant's preference is not an acceptable reason for selecting a higher bid. a. Number of Bids. Under formal advertising, a bid and proposal from at least two contractors must be received before selection is made. If formal advertising does not produce two bids, and the bid received i acceptable, the Community Development Committee of the City Council may authorize the selection of the single bidder. b. Acceptable Contractors. The Department shall always exercise are and good lodgement inselecting a contractor. 'A selected contractor shall be of good reputation,financially sound, have adequate financial resources to carry out his s bid and proposal, be adequately insured, havegood financial and customer references and not be listed on the debarred contractors List. The Department shall frequently monitor its list of contractors to assure that they continue to be acceptable. B. Award of Construction Contract. The contract shall be awarded by having the applicant for the rehabilitation loan properly execute the contract with the assistance of the Department. a. Issuance of Proceed Order. At the time the award i made, e D thepartment shall remind the applicant and the successful contractor that the undertaking of the work covered red by the contract i s subject to issuance by the owner of a proceed order, within the numberof days stated in the general conditions of the contract, the Department shall notify unsuccessful bidders that they have not been awarded the contract. .. -38- b. contract Awa Idea After Loan Approval. The contract award shall be made only after the loan has been approved by the Community Development Committee of the City Council. C. Award within 30 Dara of utoff Date. In order for the bid and propoaal to be binding, the award shall be made within a period of 30 days from the cutoff date established by the Department for the receipt of the bid and proposal, unless a later date is agreed upon in writing. d. Contract Award. In the award of a construction contract for rehabilitation, the involved parties shall execute an original and two copies of the contract documents. .Phe Department shall distribute the executed contract documents as follows: (1) Executed copy to contractor. (2) Executed copy to borrower. (3) Executed original retained by the Department'. 9. Issuance of Proceed Order. The general condition of the construction contract wrlcon tract 1 state that the owner will issue a proceed order within a stated number of days from the date of acceptance of the contractor's bid and proposal. The proceed order for a construction contract which shall be executed by the borrower at loan settlement shall be issued - within 30 days of the acceptance of the contractor's bid and proposal, and shall require the stamt of construction within 30 days or less from the date of the order's signing unless an extended period of time is authorized by the Director of Planning and Community Development and approved by the borrower for reasons beyond the control of the Contractor. The Depart- ment shall distribute the proceed order as follows: a. One copy to the contractor. b. Original retained by the Department. C. One copy to grantee or borrower. 10. Labor Performed by Owner in Rehabilitating Property. a. Type of Woxk and Sk i11 of ¢caner. A property owner may omplete s e br all o£ the tasks required to rehabilitate his property, if he has the degree of skill.regyiredto perform the work involved. Self-help is. usually appropriate for the accomplishment of tasks of an unskilled nature such as general cleanup; demolition of small buildings on A property; removal, cartage, and disposal of the debris; and for work that involves minimal use of costly materials. -39- b. Benefits from Self-hely. .Self-help may reduce the amount of a loan that the property owner would otherwise require, thereby reducing his monthly payments or the term of the loan, as he prefers At times, self-help may also enable a property ower to obtain a rehabilitation loan by reducing costs to an amount within the limits for a loan, and simultaneously. may make loan repayment feasible. C. Provisionfor Self -Yelp in Loan. whenever self-help is consiary, indicated, or desired, and the Department ders that with or without its technical assistance and guidance, a property owner will be able to perform the work in a reasonably acceptable manner and within the period of the contract, itn may process a application for rehabilitation loan on that basis. In such ac , the amount of the loan shall include, r addition tothe funds needed to pay for the rehabilitation work to be performed by the contractor or subcontractor, funds to pay for the materials and equipment to be installed by self-help as well as sufficient funds for installation of the same by the contractor or subcontractor. The amount of the loan shall not include funds to pay the owner or members of his family for their labor. In the event that the self-help improvements are completed by an agreed upon date and the contractor or subcontractor is not required to complete the same, an agreed upon amount of the loan allocated for contractor or subcontractor installation of said improvements shall become part of the contingency portion of the loan. Upon satisfactory completion of the rehabilitation project, all unutilized funds shall be disbursed in accordance with Section I. Furthermore, the Department must exercise good judgement and prudence. as o to avoid a situation in which an owner could place himself in financial difficulty through improper use, installation, or even destruction of the materials and ecuipment purchased with loan funds. For this reason, the o should understand that the proceeds of a loan to pay the supplier for materials and equipment involved in self-help will be disbursed from the rehabilitation escrow account by the Department only after they have been propertyinstalled. d. Coordination with Contractor. when same of the rehabili- tation work is to be done through self-help, and the remainder is to be done by the contractor, the Department should assure that the work is done by each of than so as not to interfere with or jeopardize the other's work. In cases where a separation in the timing ofthe work is not feasible, the Department should urge the owner and contractor to make their own arrangements on the timing, o that each may do his own work without causing any interference in the work to be done by theother. MIM In all instances, the owner will be better protected if work to be done through self-help is completed before the contractor starts his work. Such completion will help to avoid claims by the contractor for extras or damages he may claim are cussed by the self-help efforts, and will assure that when all the work is finished, the property will comply with Property Maintenance Code requirements. D. Inspection of Rehabilitation Work 1. General. This Section sets forth requirements for the inspection of rehabilitation work financed in whole or in part with a rehabilitation loan. 2. Responsibility £or Making Inspection. Inspections of con- struction work ahal be performed by the Department. 3'. Mona for Progress Payments and Final Payment. IDsp tions of c nstruction work shal be made in accord- ance with the following: a. Progress Payments. A Compliance inspection of the rehabilitation work shall be made before the Department makes a progress payment on a contractor's invoice. (1) Payment forSatisfactory Work. If the inspection detezminee that work completed is satisfactory, the Department shall draw on the as crow account a progress payment check payableto the borrower and the intended payee. . (2) Obtain inq Corrective Action. If the work completed is not i ccordance with the construction contract for a progress payment, the Department shall advise the borrower of any non-compliance ompliance in the construction work, b of a incorrect invoice submitted by the contractor. The borrower shall be rearrested to obtain, with assistance from the Department, appro- priate corrective action from the contractor. No payment shall be made on a construction contract until the contractor has satisfactorily completed the necessary corrective action. b. Final Inspection. Upon completion of the rehabilitation work and race, eipt of the contractor's invoice containing his certification of satisfactory completion of all the work in accordance with the contract and his warranty, the Department shall inspect the completed work. When the final inspection determines that the work is satis- factorily completed in accordance with the contract, the Department shall obtain from the contractor a release of liens, and a copy of each warranty due the borrower for the work. After receipt of a release of liens, including releases from all subcontractors and suppliers and a copy of each warranty, the Department shall make final payment in accordance with Section S. -41- 4. Certification of Final Inspection. After the Department deter- s that the rehabilitation work has been fully and satis- factorily completed and the final inspection report obtained, the Department shall prepare a Certification of Final inspection. The Certification of Final Inspection shall include the name and address of the applicant, the address of the property and a statement to the effect that final inspection has been made, all woxk has beensatisfactorily completed in conformance with the stated contract, and the property now meets the require- ments of the Property Maintenance Code of the City of Bangor and HUD's Section 8 Minimum Property Standards. The Certi- fication of Final Inspection shall be signed and dated by the person making the final inspection. a. Distribution. The Certification of Final Inspection shall Us distributed as follows: (1) Signed copy to the property owner. (2) Signed original retained by the Department. P. Truth in Lending Requirements for Rehabilitation Loans Rehabilitation loans shall be made in compliance with the Truth in Lending Act. Q. Loan Approval - The community Development Committee of the City Council shall consider and approve or disapprove all property rehabilitation loan applications, and shall decide all questions concerning eligibility for said program including all questions as to possible conflicts of interest. R. Loan Servicing - Property Rehabilitation Loan servicing involving the collection of loan repayments shall be the responsibility of the Department and shall be accomplished through the Community Development Committee of the City of Bangor with the exception that a local financial institution may be contracted with fox the accomplishment of loan servicing if authorized by Separate Order of the City Council. S. Project Area Eligible for Loan Assistance Property rehabilitation loans under .this program shall be made only with respect to arsidential property or the residential portion of a mixed-use property located within Community Development Project Areas as designated by Order of the City,Council of the City of Bangor or properties located elsewhere in the City of Bangor which have been approved for assistance under HUD's Section 8 Moderate Rehabilitation Program or other rent subsidy program. -42-