HomeMy WebLinkAbout1975-08-25 325 AC ORDER325 AC
Introduced by Councilor Bigney, August 25, 1975
CITY OF BANGOR
QITIFJ @rbtr,... Approving end Adopting Community. Development Program Property
Rehabilitation Loan Program.
By Bm My Caan of Me IXq of Bangor. -
ORDERED,
MT, WHEIg eS, the financing of rehabilitation of privately owned
properties through the see of direct loans is an eligible activity for the
e of grant assistance under Title I of the Housing and Co®unity, Develop-
ment Act of 1974; and
WHEREAS, the City of Banger, in its applications for funds under Title
'I of the Housing and Community Development Act of 1994, has requested and
received as part of its C munity Development Program the sum of Two Hundred
Thousand lellars ($200,000) for the purposes of funding a Property Rehabilita-
tion Coen Program; and
WHEREAS the City of Bangor Community Development Program Property Rehab-
ilitation Loan Program has been developed which provides for the loaning of
money to rehabilitate privately owned properties in Coamunity Development
Program project areas; and
WHEREAS, such loans will be limited to the amount neuessary to rehabil-
itate property to the requirements of the Housing, Building, Electrical,
Plumbing and Fire Prevention Codes of the City of Banger and to the extent that
the property, after rehabilitation, will be in generally good and readily
maintainable condition with the necessary facilities in good working order.
NOW THEREFORE BY THE CITY COUNCIL OF THE CITY of BANCJJR BE IT
OHDFBED, THAT the Co®undty Development Program Property Rehabilitation Loan
Program dated August, 1975 end on file with the City Clerk, is hereby approved
And adopted.
'IN CITY COp CIL 325 AC
Auyuet 25, 1975
Passed O R D E R
6y
Titley
..r,(.PPwinq. ana naeptiny CommunitX,,,,
Deaelopment pso9 m - P[Operty
-
............. .............
...........:
Rehabilitation Iran PrCgram.
�-1 Introduced d edMCI n
by
RECEIVED
1975 W, 21 N 4:20
CITY CIERKS.OFFICE
rrY or RARGIR, MAINE,
CM OF BANGOR
C� I&ilE]OPMBNT PROGRAM
PROPRRTI R&I4BIMTATION WAN PROGRAM
P UCIRS AND PROCEMW
AMOT 1975
Property Rehabilitation Loan Program
Table of Contents
A. Introduction ......................... 1 1
B. AMdnistrstion .......... ... .. . . ..... 1
C. Eligibility Regudx ants ................ I . I . 1
1. Cemral .............. 1
2. Property Cmersup ...... 1 1 . 1 1 .. ........ 1
0, l surance That Rehabilitatim Will Be Completed ........ 3
1. ]Dans on Residential Prt erty and Mixed-use mans ..... 3
R. Costs Includable in Rehabilitation wan .... . .... 3
L Canerel ... ................ 3
2, Includable Costs . .................... 3
3, Costs Not Includable . .................. 5
4, Work Write -UP ....................... 5
P. Ldmltatims on Amount of Lem ........... ..... 5
L Rehabilitation Loan on Residential Property . .. . . ... 6
2. Mixed -Use Loan ... ...... .. . ... . . . . .. . . 6
C. Processing eno Submissions for a Rehabilitation Loan ... ... 1 6
1. Rehabilitation Loan m Residential Property end Mixed -Use .
Loan ............................ 6
N. Soar Settl ent ................. .... 9
1. General ........... 9
2. Preparing for Loan Settlement . . .. ...... .. ... 1G
3. CwPleting loan Settlement ................. Il
4. Lost Settlement ...................... l2
I. hems and Conditions UMer Which Rehabilitation Loans ere Made . 13
L Central .......................... 13
2, Rehabilitatim Lom Condition ..... 1 . 1 ....... 13
3. Interest Rate ....................... 13
4. ham of Loan .. .................... 13
5. Points of Agmement ....... ........ ..... 13
Table of Contents Continued
G. Truth In Lending Requirements For Rehabilitation bans ..... 31
R. Loan Approval .......................... 31
S. Inas Servicing ......................... 31
T. Project Areas Bligible for lose Assistance ........... 31
Page
J.
Management of Rehabilitation Escrow Account . ..........
15
1.
General.. ...............
15
2.
Funding a I habilitation Inan ..
.. ...
. 15
3.
Rehabilitation Loan Supplemented by Other Funds ...
.. ..
15
A.
Management of Rehabilitation Harrow Account ..
. .. ..
15
R.
Appraisal for Rehabilitation Loan ................
17
L.
Numbering Iran Appllcatfons ........ ... ..
.... .
. is
M.
Determining Work To Be Done Math Rehabilitation Iran
... . . ..
18
L
General.... ................
I ...
18
2.
Property Ingpe.....................
18
3.
Work Minand Ce -Op and Coat Estimate ..
.....
18
4,
Specifications In Construction Contract Documents
......
19
N.
Contracting
For Rehabilitation Work ...............
19
1.
Introductlon ...... ............
19
2.
Ceres Conditions .. . .....
......
21
3.
Provifiwu To Need Conditions .............
21.
4,
Cravings ..........
specifications and Orsrside ......
2l.
5.
Cona
s
WL Contractors Rids and Proposals . .......
24
6,.
tatio al
Ielection To Contractors For Rid and Propos. .....
. ..
21.
7.
Selection of Suceeasfa Bidder ...............
25
8.
Awardof Contrart .... ...........
25
9.
of O
Iaboasae of Proceed Order .
ne
....
26
W.
Labor Performed SY Owner In Rehabilitation Favperty .....
26
0.
Inspection of Rehabilitation Work ................
27
L
General. ...........
27
2,
Responsibility For Making Ipnenand ..
. ..
. 28
3.
Inspnetdans for Progress PaymantaFinal Payment
".....
28
4.
certification of Final Inspectionsnd n ..............
28
P.
Applicant's Iname .... ... ... . .. .. . .......
29
1.
......................
Genera ...
29
2.
Souring of Punda and amounts Appltcant•s
Inewae
. 29
3.
Marginal
Finding Anceptabla Rtgk 3n Margins Cases ... ...
. ..
. 30
G. Truth In Lending Requirements For Rehabilitation bans ..... 31
R. Loan Approval .......................... 31
S. Inas Servicing ......................... 31
T. Project Areas Bligible for lose Assistance ........... 31
City of Beeper
Coamanity Bevelopnant Program
Property Rehabilitation Loan Program
A. Introduction
This Plan establishes the policies and procedures of the City of
Bangor applicable to providing rehabilitation loans to rehabilitate
privately ormad properties in Conwonity Development Program project areas.
B. Administration
The City of Bangor Community Development Department (hereinafter
referred to as the "Department') will be responsible for the edministration
of the Property Rehabilitation loan Program in conformance etch this Plan.
C. Eligibility Requirements
1. Gamer 1: A rehabilitation loan may be made only-ritb respect to
residential or residential portion of a mixed-use property
located vithin Community Development Program project areas
designated by Order of the City Council of the City of Bangor.
Tee property must require rehabilitation to meet the require-
meats of the Nearing Code of the City of Bangor. In order to
be eligible for a rehaDllitation loan, the applicant meet
evidence adequate capacity to repay the loan. A rehabilitation
loan cannot be approved if the applicant's record shore a
disregard for former obligations, or if there is a clear in-
ability to make the payments that will be required.
2, Pro art Ownershi , An applicant for a rehabilitation loan on
rearreai ent�xed-use property must be the owner of the
property, or must be the purchaser occupant oP the property
ander a land sales contract or aro similar contractural
arrangement for the purchase of read, property.
The term "lard sales contract, refers to any transaction,
regardless of the nomenclature by which it is known, in which
the purchaserbceuparst obtains fee title only U he em�eletes
a. series of installment, payments over a term of years.
a. Eli bilit Re uirements. In order for a purchaser under a
1 sales contract to a eligible for a rehabilitation loan
to cover rehabilitation costs, all of the following minbmn
requirements must be not.
(1) The contract shall be a written, legally binding, i.nstre,
ment involving a residential property containing, after
rehabilitation, act more than four dwelling rmits.
(2) The seller of the property must hold fee title to the
property and, while the contractis in goad standing,
must be unable to use the property for collateral or
to convey the property to any other party unless such
e for collateral or conveyance offeeis subject to
the land sales contract. legally acceptable limitations
n the effect of conveyance or eof the property for
collateral most be found to exist under local lazat the
provisions of the contract, or sere other written agree-
ment in recordable form. The City of Barger shall
record this agreement, or the contract: prwptly after
loan settlement If necessary to give either document
the legal effect described.
(7) Under the contract, the seller had aro subsequent holder
of the fee to the property most 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) Pull use, possession, and quiet enjoyment of
the property,
(b) gquitable 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 are afforded by local
law to a purchaser under a laud sales contract.
If the loan is to include on amount to re-
finance the balance due under the land sales
contract, this requirement does rot apply.
(5) The purchaser shall have had possession and use of the
property under the contract for at least 12 months prior
to the date of application for a rehabilitation.
6. Srion f Counsel. Before an application for a rehabilitation
loan to a port ser under a lord 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.
-2-
C, Loan Limitations an Property Under Lard Sales Contract.
The maim oan that may e male to a purchaser under a
land sales contract is the same as for csua occupants,
However, a contract purchaser does not have legal title
and is not able to offer a mortgage as security; there-
fore, the loan most be for less than $200 .
D. Assure Ce Mat Rehabilitation Mill Be Completed
In some instances the rehabilitation cost may exceed the amount of a
rehabilitation loan. In such cases a rehabilitation loan will net he made
mess the applicant can provide whatever additional amount is needed to
assure amnpletion of the work so that the property will meet at least the
®nimun requirements of the Housing Code,
1. Igaras on Residential art end Mlaed-Use ons. If the
applicarM, ora Lotion loan an re ddential property and
a maxed -use leen is obtaining a supplemental loan, the rehabil-
itation loan application shell not be approved until evidence
has been secured that the applicant has obtained an adequate
and satisfactory supplenental loan caritment.
When the loan will be obtained from a recognized lending
institution, evidence shall consist of a signed, bona fide
written constituent to make the loan for the purpose of the
rehabilitation work, The lam well. be in an meant which,
when added to the rehabilitation loan and any other funds the
applicant w furnish, will be sufficient for completing the
required rehabilitation work.
When the applicant is furnishing wpplanentary funds fav® soaves
other then a recognized lendiM institution, evidence that actual
funds are available shall consist of verification and documentation
that the applicant can deposit the required amount in the rehabil-
itation escrow accowt.
S. Costs Includable in Rehabilitation Ivan
L Cenral, A rehabilitation loan may be Mede only with respect to
a property which news to be brought rap to the minimum requirements
of the Housing code. With respect to a property containing rental
dwelling units, a rehabilitation loan generallyshould include
foods for sort that goes beyond the minimum requirements of the
Housing Code only to the extent that this will act cause the
routs to exceed the Means of typical families living in the
Corwalty Development Program project area.
2. Includable Costs. In addition to those costs for rehabilitation
to make property conform to the requirements of the Housing
Code, a rehabilitation loan may include foods to cover thecosts
described below:
3-
obdectives of the Covnnmdty Development Plan. A rehabilitation
lomm may inClude funds to cover the cost of meeting specific
obJectives of the Commmity Development Plan. An obJective
moat be contained in the approved Commudty Development Plan
and stated in such language that the specific rehabilitation
work roemal fn the property is clearly identifiable.
Good and Reath Maintainable Condition, `Whether or not
required by a klousiay litation loan may provide
for putting the property in generally good and readily msin-
tainable condition, with the necessary facilities in good working
order.
Chen eat, Hhether or not required by the Housing Code,
�i tation�loan for a property how for residential puN
poses mer provide for the repair or purchase mW installation
Of a kitchen stove and/or refrigerator. Purchase and install-
ation is acceptable if there is no such equipment in the
drelling unit, or ff existing equipment is unsafe or unsanitary
because of its basic physical condition, Imn foods may aiso
be used for building in a stove and/or refrigerator, if necessary
M replace existing built-in. equipment,
Ac�uvs _t'onoff land. In a Commionity Develowent Progran project
area, ra rriiiltatfw loan may provide for the purchase of a
relatively small parcel of project leap from the City In outer
to briny the property Into cwforrdty with the ordinances of
the City of Bangor.
Conversions. In general, worn rsioa of a property so mm to
change either its use or the rancher of wits my be provided
for in a rehabilitation loan only if conversion is necessary
to meet the requirements of the Housing Code or to eliminate
a nonconforming use. However, a rehabilitation loan may
provide for conversion if there is an insufficient market
for the property in its present foo, and converslm will
make rehabilitation and maintenance ecowmdcally 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 foods,
Building Penoits end Related Paes. A rehabilitation low may
Provide forts to cover the cost of building parents had related
fees that are required to carry out the proposed rehabilitation
work. However, since the construction contract documents will
require the contractor to pay for than, this cost ordinarily
would be included in the contract enmnt.
Architectural Services. In sone casual cases, an applicant
nay eap a private architect to prepare plans and dra"S
for the rehabilitation of his property. In these cases, the
rehabilitation loan may include an amount to cover the cost
of the architectural services for the foregoing rehabilitation
work to be financed by the rehabilitation loan.
h. Certain Related Costs. A rehabilitatimr loan may include foods
to cover certain costs and charges related to processing the
loan application and to obtairang security for the loan.
(1) 5s a Related Cost. A rehabilitation loan may provide
Tar the cost of tha followings _
(a) Appraisal fee.
(b) Title reports (secured loans).
(c) Fees Ior recordation and filing (assured loans).
(2) Advance of Fonds. As necessary, the C®munity Development
Dept advance furels to pay for appraisal fees
and title reports prior to final action an the rehabil-
itation loan application. If the loan is approved, the
City shall be reimbursed faun the proceeds of the loan
at the time of loan closeout. If the loan is not approved,
and the application wiUdrawn, the costs of the advances
shall be absorbed by the Comm unity Development Department,
3. Coats Not Includable. Except as otherwise provided In this section,
are ia,Mtation loan shall not provide fort
New contraction, substantial reconstruction, expansion of
the size of a structure, or the finishing of unfinished
spaces such as an attic or basement.
b. Materials, fixtures, equipment, landscaping, or paving of a
type or quality which exceeds that customarily used in the
locality for properties a the same general type as the
Property to be rehabilitated,
c. Appliances cwt required by the Noosing Cade.
d. Purchase, installation, or repair of furnishings or trade
fistvres,
p. Work Write -W. The Rehabilitation Specialist shall prepare a work
write-up to document the rehabilitation work to be financed with
the rehabilitation loss in accordance with Paragraph M.3a of this
Plan.
P. Limitations on Amount of Leen
This Section sets forth requirements for establishing the maxLmmm
amount for a rehabilitation loan on a residential and mixed-use property.
-5-
1. Rehabilitation Loan on Residential property. The measures emonav,
fora 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 rehabil-
itation loan is to be secured or unsecured.
e $3.000 per dwelling unit on residential or mixed-use structures
which contain two or more dwelling units, not W soared a total
ma%tmem loan of $12.000.
b. $9.500 for a single family, caner -occupied residential structure
containing one dwelling unit.
c. Me actual cost of rehabilitation (See Paragraph E).
d. An Amount whicht when added to any, outstanding indebtedness
related to the propertyg creates a total outstanding indebted -
ss which does not exceed 95 percent of the sue of the se is
value of the property end estimated rehabilitation costa up to
and Including $15.000. 90 percent of the next $10.000. and W
parcent of any, balance of the sum that exceeds $25.000.
2. Mixed -Use Loan. A loan for the rehabilitation of a mixed-use
property =hall be limited to the cost of rehabilitation of the
residential portion of the property and the cost of rehabilitation
of areas which serve bath the residential mW nonresidential uses
of the property such As roofing, siding, central heating, corridors.
etc. The cost of rehabilitation which is attributable entirely
and solely to the nonresidential part of the property is not an
eligible coat and can not be included W the rehabilitation loan
sensors.
G. Processine and Submissions for a Rehabilitation Loan
1. Rehabilitation ban on Residential Property end Mixed-0se Wan.
The material under this beading is in connection with a rehabilitation
loan on residential property and a mired -use lam that by itself or
in conjunction with foods to be provided by the applicant is
sufficient to accomplish the required rehabilitation.
a. Outline of Community Develounent pepattment Functions. listed
below are tM1a unctions to De per£onmd for a rehabilitation
loan on a residential property, and a mixed-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 (1) through (y) listed below.
Function
(1) Interview and advise the property owner on the general
rehabilitation objectives for the project alta.
(2) Advise the property owner on the availability and benefits
of a rehabilitation loan, And on other programs and resources
for financing rehabilitation that may be available.
-6-
(3) Inspect the property.
(4) Prepare a mark write-up and cost estimate of the
rehabilitation work.
(5) Determine eligibility of the applicant for a rehabil-
itation loon.
If applicant is a purchaser -occupant order a lard sales
contract or similar arrangement, obtain documentation to
support eligibility.
(b) Determine that items in the work write-ap conform to
purposes for which a rehabilitation loan may be used.
(7) Advise applicant concerning the conditions under which
a rehabilitation loan is made.
(8) If the loan is for a property that will contain 12 or more
dvalli urSts after rehabilitation, mtvlse applicenL that
Lha loan rill be subieeL Loa Federal revelatory agreement.
(9) If the applicant does or will receive public assistance
or other welfare benefits, advise of the effect the loan
may, have, if aro.
(10) Obtain follcwia� information with respect to the applicant.
(a) For all residential properties and for mixed-use loans,
Verification of Mortgage or Deed of Trust from each
holder of Iian secured by the property.
(b) For comer -occupied residential cases and for mixed-use
loans;
1 Credit report from recognized credit bureau.
2 Verification of employment.
3 statement of verification of other earnings.
i Verification of deposits.
(c) For investOn ed dome Form BCD , Personal Financial
Statement, or copies of current financial statements,
as applicable.
(11) Make a preliminary evaluation of ability of applicant to
repay indicated loan moment.
(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 loan case, and set up
separate file for the case.
(14) Obtain as -is appraisal of the property as followst
(a) For a loan of less than $2,0001 prepare Farm BCD -61
As -Is Property Appraisal.
(b) For a lean of $2,000 or mom, prepare Form BCD -6,
or obtain "Opinion of Value" from a qualified appraiser,
when necessary to ascertain maximum loan amount.
(15) Prepare final work write-up son cost estimate.
(16) Obtain title report for a secured loan, and determine
adequacy of title for purposes oI the rehabilitation loan.
For an unsecured loan verify omership. Evidence of o MIdn'
ship, by citation from the land records or other official
records used shall be retained in the file.
(19) Obtain other data required to cogcIete the Application Fora
BCM or BCD -2.
(18) Determine ma imum amount of loan that applicant may receive.
(19) Ascertain that through the rehabilitation loan, the property
will conform to the Housing Code. If additional assuming
is neededt assist applicant in obtaining the needed funds.
(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 Form BCD -1 or BCC-Uj based on
Information furnished by applicant and supporting document -
"Arm obtained. Give applicant copy of 'Tame and Conditions"
(BCD -5). Obtain applicant's signature on loan nepllcation
form.
(23) Assemble loan application file for presentation to the
Finance Committee of the City Council for consideration.
(24) If the loan is not approved, the Director of Community
Development will notify the applicant in writing setting
forth the reasons for disapproval
0
(23) After receipt of application approval, assist applicant
to execute selected construction contract, and transmit
original to contractor,
(26) Request Loch check fron the Finance Department and PrePare
for and carry out loan settlement.
(27) Record security instruments ani deposit loan check endorsed
by borrower to the rehabilitation escrow account.
(2e) Transmit approved loan to loan servicing agency.
(29) Assist applicant to ideas proceed order for construction
work.
(30) Impact rehabilitation work and make progress percents,
If provided in construction contract.
(31) If loan is on property that will contain 12 or more dwelling
units, assure compliance with Federal labor Standards pro—
visions. This is a continuing respouoibility until the
work is completed.
(32) If the cost of the rehabilitation work is more than 810,000,
assure compliance with equal employment opportunity require—
ments. TMs is a continuing responsibility until the such
is completed.
(33) Make final inspection of completed rehabilitation work.
(34) Issue Foam RC0.21, Certlflcation of Final Inspection.
(33) obtain from contractor: guarantee of work; manufacturers'
and suppliers' warranties, and release of lions from the
general contractor, subcontractors, and suppliers, prior
to final payment Ior rehabilitation work.
(36) Make final payment to contractor Ior completed rehabil—
itation work.
(37) Prepare for and caog,lete loan closeout, including reiMurse—
sent from the then to the City for advanced funds, and
prepare Statement of Disposition of Foods,
(38) Make followup inspection of rehabilitation work.
H. Loan Settlement
1, General. TMs section sets for the the Community Development Depart—
sent responsibilities with respect to a re1aa1l111tatim Ion for:
(a) preparing for lam settlement. (b) conpleting loan settlement;
and (c) carrying act post settlement.
2. PreoardM Yor Iwav gaEtlement. The following actions shall be
tOK en in prepuratioo for loan settlement
a. Establish a date certain for loan settlement that allows 10
days far the processing of a dlsbursoeent check by the
Finance Department.
b. prepare Form DDD -12, Troth in LOoa g Disclosure Statment.
c. After the loan check is requested. prcwptly take the following
actions:
(1) prepare a promissory note (original) in accordance with
the form of prcmissary Once approved by the Iegal
Departnent.
(2) If the loan 1e to be so secured, prepare a mortgage (or,
if required, a deed of trust or similar security instru-
ment) (original) in accordance with the form of mortgage
approved by the Legal Department.
(a) For a loan mtler $2,Ooo, recheck the ownership
information in the case Pile.
(b) For a loan of $2," or awre, 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 a secured loan, the executed proceed
oder shall be retained for five working days from the
date of signing in order to give the borrower time to
exercise his rights of rescission Order the Truth in
Leading Act.
(4) Instruct the borrower to obtain:
(a) original mal memorandum copy of insurance policies
for fire and extended coverage that provides coverage
in accodahce with the local coinsurance clause per -
cabbage of the value of the property, or, an insurance
biller or other evidence of insurance in the case of
a loan.
(b) Original or certified copy of receipt for pas ent of
initial or current insurance premia, whichever
is applicable.
(5) Make arrangements for lam settlement on the date certain.
-10-
3. C0leti Iran Sesslemeaatt, Proceed with loan settlement on the
d e certat sin ae follms:
a. Review the approved Truth in Lending Disclosure Statement with
the harrower. If applicable, emphasize that the borrower most
Include ret only in his first monthly payment, but also in his
subsequent monthly payments, an emowt for accrued escrow
expeuse account items.
b. Secure the borrower's signature on Rent Regulatory Agreement,
if applicable.
C, Secure the borrower's signature, an the Truth in Lending Me-
closure Statement.
d. Secure the borrower's signature an the orlgival promissory
note.
e• If applicable, senora the borrower's signature on the original
mortgage or deed of trust.
I, If mressmy, review with the borrower the copy of the ^Terms
and Conditions^ Mich was previously given to him before he
signed the application fond.
g, Obtain oUnlon of the Legal Department concerning the legality
and sufficiency of the executed prsmissory note and, if any,
the mortgage or dead of trust.
(1) A representative of the legal Dapmtmwt shall participate
in any proceedings as may be accessary to assure the legal
validity of the low 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 borzowe,r to be fuUy
discharged from any obligation thereunder. In addition,
the Legal Department shall review for legal adequacy the
xecuted release of mortgage or dead of trust showing its
Complete disebarge. The legal Department shall also review
the title report to assure that proper disposition has
been made of any exceptions.
h. Obtain from the borrower the required fire and extended coverage
insurance .policies and premium payment receipts.
1. Obtain from the borrower evidence aI current tax and special
assessment payments in the farm of most recent receipts.
J. Secure the borrower's endorsement on the loan cheek.
-11-
k. MViS5 the borroeer with regard toe
(1) Nemo of the loan servicer to wham aerthly payment checks
shall be made payable, where to send the first coal subse—
quent monthly payments, and the obligation to remit the
first monthly payment even though the borrower may est
receive a payment notice.
(2) Amountof the first monthly in Lending Disclosure S�meent al, f
Statement), me, i
the
Trutheppllcable,
the fact that the first monthly payment will differ from
the subsequent monthly payment amunte because of an
initial interest payment adjustment.
(3) Variation of resonant dates as follows:
(a) If settlement is completed on or before the 15th of
the month, the first monthly payment by the borrower
will be due ani payable on the first day of the
first succeeding month
(b) If settlement is completed after the 15th of the
menth, the first monthly payment by the borromer
will be due and payable on the first day of the
second succeeding month after the month in which
settlement is ucmpltshed.
(c) In either case, the payment will reflect an adjust—
ment for interest due an the full amount oT the loan.
Usually this will be a downward adjustment in the
former instance, and an upward adjustment in the
latter instance.
(4) -Need to make all monthly payments onthe date due to avoid
late charges ani legal action.
1. If appli alele, obtaincheck from borrower to cover accrued
eacmaw expense connote items.
m. Obtain borrower's signature on proceed order and hold until
it is evident that the borim rer does not intend to Cancel the
loan in accordance with the Truth in Lending Mt.
4• Post Settlement. no Legal Department shall record all recordable
nett rumens ad obtain evidence of recordation promptly after
completing loan settlement. The Community Development Impartment
shall prepare a transmittal letter (original and two copies) to
the servicing agent advising that loan settlement has been
completed ad that the loan is being transferred for loan
servicing. Preparation and release of the original ad copies
of the transmittal letter and accompayfng documents shall not be
delayed, pending. receipt of the recorded instruments sod evidence
of recordation.
—12—
I. Terns and Conditions Under Much Rehabilitation Loans Are Made
1. General. Me section sets forth re<puremonts with respect to
Viand conlitions to which an applicant meet agree io oder
to obtain a rehabilitation lose.
2, Rehabilitation luau Conditions. The specific tarns emi cmtions
with "Meet Ll o soon loan to a residential property
and for a a4zed-ase loan are incorporated in BCD -5, the mortgage
or other security instruments as applicable and the promissory
note.
a. Cancellation Provision. Under paragraph 3 of Farm BCD -5,
concerning97"'07 Bangor's right to cancel a loan if
within 60 days from the rote's execution the rehabilitation
work has not comenced, the Director of CommsdEy Develo;s ent
may extend the 60 -day period by not more than 30 days, due
to unforeseen and extenuating ciromstances.
3. Interest Rate. The interest rate for a rehabilitation loan shall
be at a rate established by the City Council of the City of Bangar.
4, Tern of Loan, The maximum tera for a secured rehabilitation loan
shall be 20 years or three-fourths of the remaining life, which-
ever is less. The maximum term for an unsecured rehabilitation
loan shall be 10 years.
5. Points of Aereement. The applicant shall agree, as required by
the related documents,. to abide by the folloeing terms and
conditions:
a. Civil Ri tat Conply with all BUD requirements with respect
to tie of the civil Bights Act of 1964, to not discriminate
upon the basis of rune, color, creed, or national origin da
sale, lease, rental, use, or occupancy of the subject property.
b, Equal IDmlovmmt Ooportonity, Ahide by the provisions of
Executive Oiler concerning equal employment opportunity
if the so, to be charged for the rehabilitation work is more
than:
(1) $10,000 with respect to a reaidential property, and a
mixed-use loan.
(2) $2,000 with respect to nonresidential property.
c. Use of Proceeds. Use the loan proceds only to pay Por costs
o sem nukes and materials necessary to carry but the rehabil-
itatian work for which the loan will be approved.
d. C let'on a Mork. Assure that the rehabilitation work shell
OWN out prago) and efficiently through written contract
let with the prior concurrence of the City of Bangor.
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e. IDelizibls Contractors. Not award any contract for rehabil-
itation work'to be paid Lor in Mole or in part with the
proseeds of the loang to anq Contractor. Mo, at the tinet
is ineligible under the provisions of arq applicable
regulations issued by the Secretary of Labor W receive an
await of such contract.
P. insaction. Permit inspection by the City of Bangor or its
es a of the property, the rehabilitation work, and all
contractst materials, equipment, payrolls, and conditions
of mploymmt pertaining to the work.
g. Records. Keep each records as may be required by the City
of Tar— or vith respect to the rehabilitation work.
M Interest oP Certain Officials. Not perndt aro member of or
Delegate to covgress m WMted Statest and nen Resident
Cmmiesdoner, to share in aro proceeds of the loa% or to any
benefit to prier Preto the same.
I, Bonus. .Commission, or Fee. Not pay any honest comdssion, or
fee for the purpose of obtaining the City of Bangor's approval
of the loan applications or any other approval or concurrence
required by the City of Bangor or its designee to complete the
rehabilitation work, financed in Mole or in part with the
rehabilitation loan.
J. Interest of Cit of Bangor. Alias no member of the governing
bdy o theP City of Bmigor Mo exercises any functions or
responsibilities in connection with the administration of the
Commity Development Programs and no other officer or employee
of the city of Bangor who exercises such iWctions or respon-
sibllities to he" eW interests 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 Mole or
in part, with the proceeds of the rehabilitation loan.
k. Federal Labor Standaris Frovisione. Abide by the Federal
Labor Stadarle prmisims, i£
she rehabilitation lom Is
for a residential loan or a mixed-use loan with respect
to a property that rill contain ] or mare dwelling units,
after rehabilitation.
L Competitive Bids for Construction Work. Allow the City of
Bmgor to obtain competitive Mia d£ the amount of the
rehabilitation park is in exeess of $109000.
m. Preseevat'm a the Securitthe Securit . Maintain the property and permit
e Cityth of Barwgor or its designee to inspect the property
during the taro of the loan.
n Hazard Insurance. Maintain bossed insurance on the property.
-w-
o. Transfer of theProperty. Not sell, lease (in the case where
the narrower is also a lessee), or transfer the property with-
out repayieff the satire loan, unless prior written consent
of the City of Bangor is sought and received.
P- Loon SaolMitv Is uirements. Provide security for a loan of
2,000 or more in the foam of a mortgage, or similar security
instrument, an the property. A loan under $21000 is not
required to be secured by the property unless such security
is necessary to make an 'acceptable risks finding. A sub-
ordinate lien is acceptable if it provides adequate security.
J. Management of Rehabilitation Escrow Accouvt
1, General. This section sets forth policies for fording the indivdd-
ual a abllitation loans, and for Cgimunity Development Department
management of the rehabilitation aserow account.
2. Fundi a Rehabilitation Lawn. A City of gauger check in the amour
of t approve loan ani m e payable to the applicant will be secured
fres! the Finance Department. At loan settlement the Consonantly Develop-
ment Department shall secure the Vplicant's endoreemeet, and deposit
the check in the rehabilitation escrow oounnt.
3. Rehabilitation Iran 3 lementM Bs Other Funds. If a rehabilitation
loan is to a supe ted by A# o�dnd by the applicant
Brom a source other than through a camutment tris a recognized
leading iastitutim, those s,pplemaM.a1 fuels shall be deposited
n the rehabilitation escrow account at the same time "a rehabil-
itation lean check is deposited. Supplemental funds provided by
means of a conmitment from a recognized lending institution may
either be deposited in the rehabilitation escrow account, or
sppliad by the PrOPerty owner Par direct payment of the rebAbil-
itation work. If the supplemental funds are to be deposited in
the rehabilitation escrow account, the deposit must he made prior
to any payment by the City of Banger to the contractar. If the
supplemental fonds are not to he depoeited in the rehabllttatim
seems account, then such Stands shall be applied in full by the
property owner before any disbursements may be made Iron the
rehabilitation escrow account for rehabilitation work,
4. Men ement oP Rehabbilitatim Escrow Account, The City shall malubsto
e busk account as the depositary fm all rehabilitation loans
that are funded, as wall as for supplementel Ionia provided by the
applicant. This account shall be separate and distinct from all
other accounts maintained by the City and shall be far the sole
purpose of depositing rehabilitation escrrow •count funds.
-15
a. 5 crate Account 4or, Each Borrower. The Conmmedty Development
DepartmarK. s lrsh and maintain a separate accowt, in
the project books of account, for each borrower who has received
rehabilitation loan. All receipts and disbursements made
for the borrower shall be recorded in the account.
It. Disbursements from the Rehabilitation Escrow Accounta
bursements from the rehabilitation escrow account shall be by
check made payable Jointly to the borrower cul the payee for
the foUaming purposes, as may be appropriate:
(1) Bake progress and final payments for rehebilitetion work.
Progress payments are limdted to BDf of the value ofthe
work satisfactorily completed.
(2) Pay for insurance binder, if regn3red.
(3) Reimburse the City for advanced loan expenses (see
Bection E. ).
(4) Close out the rehabilitation escrow account by appropriately
disbursing any unutilized funds remaining in the rehabili-
tation escrow account.
C, Disbursements by the Cortmrunity Develooment Deparhment.
(1) The Cmmmbity Development Department. upon receipt of
appropriate invoices, shall draw a check for the payment
of completed and approved work azul services. Except for
wutniaed funds in the rehabilitation escrow account to
be returned to the borrower, each check shall be made
payable Jointly to the bora er end the aypropriate payee.
Me Community Development Department shall secure the
endorsement of the borrower on checks that are made
Payable Jointly to the borrower and the payee. The
Cc®uealty, Development Department shell transmit the
endorsed check to the payee.
(2) A check to return to the borrower umvtilieed fabuls in
the rehabilitation escrow accomt shall be made payable
to the borrower only.
d. Transmittal oP Checks. After securing the borrowerws a derse-
ment on the ick a the Cmmuuity Development Department shell
transmit the check(s� to the payee. Checks which inelude aay
amounts previously withheld from progress payments shall be
accompanied by an explanation of the computation.
-16-
e Dls testes. In the event a dispute exists between the borrower
M the contractor with respect to the rehabilitation work.
the Community Development Departhent shall take appropriate
action in accordance with the provisions of the construction
contract to assure that the-hmstanr is satisfied before
making any payment to the contractor.
f. 'usLment and Closeout of Rehabilitation gxrow AecounL.
su mems made or L e purposes stated under para-
graph Lb .swill close out the rehabilitation escrow account.
However, if unutilized Ionia remain in the rehabilitation
escrow percent because the actual rehabilitation costs were.
less than anticipated or for other rempons, the unutilized
funds shall be disbursed to apply as follows:
(1) If all the fools were provided by a rehabilitation loan,
the unutilized funds shall be disbursed to apply tothe
principal amount of the loan.
(2) If the loan was supplemented by other funds, the unutilized
Fools shall be disbursed to apply to the boraoxert at his
option, to the extent of the supplemental funds provitled.
g. Disbursement of Unutilized Funds. The Ccminnity Development
Department shall disburse unutilized funds from the rehabili-
tation escrow account in astonishes ndth items lug (1) mal (2)
below. In addition, checks made payable to the borrower mud
an intended payee shall be enloraei by the borrower and
transmitted by the Community Development Department to the
Intended payee.
(1) A check to be applied to the rehabilitation loan amovnt
shall be mate payable jointly to the borrower and the
Soar seraicer and transmitted with instructions that
the check shall be applied to the reduction of principal
balance.
(2) A check to be applied in, returning supplementary foods
to the borrower shall be made payable only to the
borrower sol transmittal to him Ain a letter of
explanation.
H. Appraisal for Rehabilitation Loan
An appraisal is required for every property to be rehabilitated with
a rebabilitaties loan to determine the feasibility and maximums possible
amount of the loan (See Section F). For loans under $2900D the appredeal
shall be made by the Community Development Department staff wing Form
BCD- . For loans of $2.000 or more, when there is evidence that thereis
ample equity in the property to provide 'security for the required morigaget
the Community Development Department staff shall also perform the appraisal.
-17-
when such evidence does not exist, the appraisal in the form of an e0pinfon-
ofAalue" shall be performed by a qualified private appraiser the cast of
which shall be included in the loan amount, if the loan is approved, or
absorbed as a project cost by the Conmanity Development Department if the
loan is not approved.
L. Numbering loan Applications
The Community Development Department shall assign a number to every
application for a rehabilitation loan beginning with "1" and shell be assigned
consecutively from this sequence regardless of whether the loan is approved
or disapproved. Once assigned, numbers shall not be caused.
M. Detemdniaz York To Be Done with Rehabilitation Iron
1, General. This Section sets forth the responsibilities of the
Community Development Department for determining the rehabilitation
work necessary to bring a property into conformance with the Housing
Code of the City of Bangor and for providing assistance in the
rehabilitation of the property. In carrying out these respon-
Abilities, the Community Development Department shall:
a. Be responsible for the inspection of the property.
b. Make a preliffinary work write+up and cost estimate of
the work to be does.
C. Consult with and advise the owner on the work to be done,
and the availability of a rehabilitation loan.
d. Prepare a final work write-up and cost estimate as the
basis for a rehabilitation loan end for contracting for
the rehabilitation work.
2. ProoertvInspection. The Community Development Department shall
inspect the property aM prepare an inspection report that identifies
each deficiency with respect to the Housing Cole and other deficiencies
which mW be corrected through rehabilitation loan foods. An inspection
report prepared in this manner will later serve as the basis for
preparing a work write-up and cost estimate.
3. Xork write -Up ard Coat Estimate. A work write-up and cost estimate
Ma a s atmment prepared y the Community Development Department
based on the property inspection report that itemizes all the
rehabilitation work to be done on the property, and includes an
estimate 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. Itemisim Cost. Each item of work and its estimated cost
s=be identified in the work write-up as being either
necessary to meet Housing Cede standards, or for other
purposes that may be financed with rehabilitation loan foods.
This will be done on the work write-up by entering the cost
estimates in a columnar arrangment.
5CM
b. Identi191ru fPi. The work write-up and cost estimate shall
identify those items and costs which say be included only
an the basis of being to 'generally improve the condition
of the property."
C, AtliusIi Work WrttMo If the total estimated cost of the
work exceeds the anchat of the rehab111taLian lava the
appldemt could receive, or exceeds the applicant's financial
ability to do all the work, the Commodity Development Depart-
ment shall elimiaste or madify items in the work write-up as
necessary to reduce estimated cost; however, items of work
necessary to meet Housing Code Standards shall not be
eliminated.
d. Owners Preference. A preliminary work write-up should act
cmd��ails that have no significant effect on cost,
each as color, styles or pattern. Decision on these details
can be made Men preparing the specifications for the cmr-
struction contract documents, or even after the contract
award by providing in the contract documente, as appropriate,
the term "to be selected by omen"
4. Saecifications Ia Construction Contract Documents. Each specific-
etionconstroction contract document shall be written so that
it provides a clear understanding of the nature and scope of the
mark to be done, and a basis for carefully deteamumillds and
proposals from contractors. Each specification 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 subatltutes. If the cork write-up is sufficiently
cosmrehensive, it may itself be used for the specifications, Ain -
act any cost estimate figures or distinctions as to work required
or not required.
N. Contracting For Rehabilitation Work
1. Introduction, This Section sets forth requirements and procedures
wiOrreaped to construction contracts for rehabilitation financed
through a rehabilitation Soso. Construction Mark for rehabilitation
financed through a rehabilitation loan shall be undertaken only
through a written contract between the contractor and the recipient.
of the Soar, the Commodity Development Department shell assist
each applicant in arranging for and obtaining an acceptable con-
struction contract.
a. Form of Contract. The construction contract will consist of a
single document signed by the contractor end accepted by the
borrower, only following approval of the rehabilitation loss.
It shell contain a bid and proposal by the contractor and the
.general eanditions, as well as the specifications for the
work to be performed.
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Use of Alternates. The contract document prepared by the
Cmmnudty Development Department may provide for alternates
by Mich the biddert as part of his bid and proposal, offers
increases and decreases to the lump elm contract price to
cover alternatives in the perform moe of the crock. M
alternate may be deed to cover an item of work, the need for
Mich cannot be determined until sane time during the course
of the rehabilitation ark. For example, the construction
contract may call for replacement of a bathtub. The floor
Joists in the bathroom are not exposed, and their actual
conditions cannot be determined even with careful inspection.
However, general conditions in the bathroom, such as evidence
of plumbing leeks over a period of time, indicate that the
floor Joists may be rotted. The ark write-up, cost estimate,
end the opproved rehabilitation loan may include an mmount
to replace the floor Joists and related costs if, upon
eooval of the old bathtub, this nand is yparent. Under
such circumstances, the ark is replaed the floor Joists
should be included in the construction contract documents
as an alternate. If upon removal of the old bathtub it is
fowl that ark is not needed, an payment for it is requited
under the construction contract. II that ark terms cut to
be needed, the cost is established by the construction contract
documents, end the contractor can be ordered to proceed wlth
that ark for the stated sm.
(1) Format for Alternates. Generally, alternates sharid he
avoided, tuft ttet us the Commodity Development Deport-
ment shell provide for them specifically in the section
provided for bid and proposal by adding material such as
the following:
Alternate #1 (description of the alternate)
(2) Unrecuested Alternate$ not Considered. The Community
Develgment Department shall not consider alternates
Proposed by a bidder that we not called for in the i
contract document prepared by the Department. The
Department shell not consider a bid and proposal that
is qualified by the contractor wlth unregaated aYter-
nates or other charlves.
c. Pro curoment of Bids. An acceptable contractor's bid and pro-
posal, tact document foam prepared by the Community
Development. Department, must be obtained for all loans.
M
Add $
Deduct $
Alternate
#2
same as
abuse,
etc.
(2) Unrecuested Alternate$ not Considered. The Community
Develgment Department shall not consider alternates
Proposed by a bidder that we not called for in the i
contract document prepared by the Department. The
Department shell not consider a bid and proposal that
is qualified by the contractor wlth unregaated aYter-
nates or other charlves.
c. Pro curoment of Bids. An acceptable contractor's bid and pro-
posal, tact document foam prepared by the Community
Development. Department, must be obtained for all loans.
M
2. General Conditions, The Community Development Department shell
prepare provisions at general conditions for general use in all
construction contracts for the rehabilitation of the property.
Thew follows a listing of provisions that the Community Develop-
ment Department must include in the general condition:
a The address to which the contractor2 bid and proposal must
be subndtted.
b. Date and time by which a bid and proposal by the contractor
is to be received by the Community Development Dapaimenh.
c. A provlsion that the bid and proposal shall be accepted by
the borramer within 30 drys from the date established by
the Community Development Department for its receipt, provided
that the contract is subject to issuance of a proceed order
by the borrower, and no mark shall be comaemad by the con-
tractor until he has received a written proceed order.
d. A provision that the borrower is obligated to issue a written
proceed ander odthin 30 days from the date of acceptance of
the contractor's bid sell proposal. If the order is act re-
ceived by the contractor within this period, the contractor has
the option of withdrawing his bid and proposal.
e. A provision that the contractor mast commence nark within
30 days after issuance of the proceed order.
I. A provision that the contractor must satisfactorily eeaplete
the work within . days after the issuance of the proceed
under,
g. A provision that the contractor will be paid the contract
price, in one loop mo amount, after the work is satisfactorily
completed ,glass payment is to be made in progress prymsnts as
♦ the work progresses. When progress payments are to be made,
the contract must include a schedule that specifies the
stages at which pgment will be made and the percentage (or
amount) of the contract price that will be paid for the
satisfactory completion of each stage. Progress'peyment
shall net exceed go$ of the value of the work satisfactorily
completed. Progress Payments (limited to two) and final
peamment due the contractor well be paid within 20 drys after
the Community Development Oapartment receives the contractor's
invoice and satisfactory release of liens or claims for liens
by subcontractors, laborers, and material suppliers for com-
pleted work or installed materials.
h. Provisions that the contractor shall be required to:
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(1) Furnish evidence of comprehensive public liability
insurance coverage protecting the owner for not less
than $in the event of bodily injury
including�h. Ad $ in the event of
property damage arising out of the work performed by
the contractor) and, evidence of insurance or other
coverage required by local law goverTd i worksanIs
compensation. (The Co aunity Development Department
shall insert insurance wourks comeenaurate to the
Ask entalled in the work.)
(2) Obtain ani Pa' far all permits and licensee necessary
for the cmpletlon and ettcution of the work awl labor
to be performed.
(3) Perform all work in conformance with applicable local
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 am to be charged for the
work is more than 510.000. by incorporating the required
1a age of Executive Under 11216 as set forth in the
Terms and Conditions which are a part of the loan
application. If the contract is for a structure that
will contain 12 or more dwelling units after rehabili-
tation, the contractor will, and will require his
svbcoutractors to, abide by the Federal later Standais
provisions as eat forth In Forms HUD-6233A9 Supplmcental
Teams and Coalitions for a Federal Rehabilitation Loan
Wrier Section 332 of Housing Act of 1964, As AmeMed, - -
Resideotiat Property Contilning 12 or More Dwelling
Units, and HUO-3200, Federal Labor Sta lards Provisions
as Modified by Farm HUO-3200A, Addendum to Federal
Labor Starciards Provisions.
(5) Keep the premises clean ad orderly during the course of
the work and remove all debris at the completion of the
work. Materials and equipasat 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
owner. The request for assignment must be addressed to
Use Comanity Uevelepmeat Depa hent,
(y) Guarantee the work performed for a period of oro year from
the date of final acceptance of all the work. required by
the contract. Furthenacre, famish the canner, in care of
the Cm®unity Development Department, with all mapafactamrs•
and supplierse written guarantees and warranties covering
materials And equipment furnnished miler the contract.
byLl
(g) Fetmtt the City of e�r , or its designee, to exand m,
and inspect the rehabilitation wrk.
I. Provisions that the owner MU:
(1) Permit the contractor to we, at m cost, sainting
utilities such as light, heat, poser, and rater
necessary to the carrying outand completion of the
uork.
(2) Cooperate with the contractor to facilitate the per-
fomau:e of the work, including the removal awl
replacement of rugs, covering, and furniture, as
new$wla .
J. A provision that the prmdses are to be either mcupied or
vacant during the course of the constructim work.
k. A provision that final payment an the contract anommt •Ill be
made. only after final inspection and acceptance of all the work
to be performed by the contractor, awl the contractor has fur-
nished the amn c/o the Commonalty Development Department
satisfactory releases of liens or claims for Hens by the
contractor, subcontractors, laborers, and materials suppliers.
l» A provision that the contract consists of the bid and proposal,
the general conditions, the specifications incorporated, theis-
m by reference and identified as (the Community Development
Department will have inserted in this space appropriate
identification of the specifications for the wrk to be done
for the specific property involved), and the drawings (if ary)
identified as (the Community Development Department will have
Inserted appropriate identification of the specific drasings).
m A section at the end of the general coMitions containing
material to be completed by the bidder, generally as follows:
For the considerations nmrtd therein, the Contractor
proposes to furnish all the material and do all of the
wrk described in, and in accoMance math, the contract
identified above in item 1, of the general conditions
for the lump -sum Prins oP $
Contractor Acceptance by Owner
(none of contractor) (name of Owmr(s))
(sinnature of contractor) (signature of Owner(s))
(eddreas and ZIP cede of (address aA ZIP code of
contracT— oanerisli�
(date of proposal and bid) (date of acceptance)
-23-
(notarizatian knowledge- (wtw
aatization or ackrwl-
m t ease=act
3. Provisions To Meet local Conditions. The Community Development
Department may all other provisions to the general conditions to
reflect local conditions and to assure that the contract clearly
sets forth the requirements for the construction work to be done.
q. Snacitic tions and Drawlrlgs. Specifications, based on the work
W!
sed 1 straEive sketches, if ay, covering the specific
rehabilitation work for each property on which a rehabilitation
loan will be male shall be prepared by the Cmimmity Development
Department. Drawings shall be prepared only when essential to
show the scope of the work involved no that a fair bid for the
work can be obtained, arca to avoid misunderstandings with the
bidder. The specifications end drawings shell be based an the
work write-up resulting from an inspection of the property end
interviews, as indicated, with the applicant. The specifications
shall clearly establish the nature of the work to be done, and
the material end equipment to be installed. inmm acceptable
brands shell be identified by reference to mamrfacturerls or
association specifications, and provision shall be made for
acceptance of egael substitutions. Each page of the specifications
and drawings shall be membered and shall contain identification
that includes the name, address, and ZIP code of owner, and the
date of the specification.
5. Obtai ' Contractors Bids and Pro seals. The Cmmunity Develop-
ment OeparWent shall establish , an the basis of its experience,
maintain a current listing of contractors, subcontractors, and
materials suppliers who are qualified to perform, and are inter -
sated in doing rehabilitation ware financed through a rehabilitation
loan.
6. Invitation To Contractors For Bid end Pa. The procedures for
1;7=1, and o tanning a bid and prcposal from a contractor depend
an the cost for the work to be done under the contract documents.
If the cast of the work is:
a. loss than $]0,000, the construction contract may be negotiated
with are or more prospective bidders. However, if a bid can, -
hot be obtained for less than $10,000 through negotiations, the
Community Development Department shall obtain bids by formal
advertising.
b. $101000 br more, a low bid must be obtained by formal advertis-
ing. M invitation far sealed bids shell be published in a
newspaper having general circulation in the locality, me
Period of time between publication of the invitation ami the
bid opeeSng date shall not be less than seven days.
Q��
7, selection cr Buccessfld Diaaere If a bid other than the low bid
Is
aelecteat tM1e �plieation file will imlele all bids that were
received and a statement of the reasons for selecting other than
the low bid, The applicentls preference is not an acceptable
reason for selecting a hipper bid.
a NrXa of Bids. Under formal advertising, a bid and proposal
rpm a� t tn#c contractors must be received before selection
is made. If formal advertising does not produce two bids,
and the bid received is acceptable, the Finance Cw®ittee of
the City Council may authorise the selection of the single
bidder.
b. Acc table�Contractors. The Commud.ty Development Department
sh alxa l�care and good joagnenz in selecting a
contractor. A selected contractor shall be of goad reputation,
financially sound, have adequate financial reaourcea to carry
act Ms bid and proposal, and be qualilied to do the required
work. The Cemmwtty Development Department shall frequently
monitor its list of contractors to assure that they continue
to be acceptable.
c. No Notification to Bidder before Contract Award, The Covvwmty
Deve t Department an... not advase any bidders of either
selection or rejection before the contract is awarded.
B. Award of Construction Contract. The contract shall be awarded by
having the a� ,ii pp cant nto1�r the Tehabilitation loan properly execute
the contract with the assistance of the Generosity Development
Departs nt.
a. Issuance of Proceed One[. At the time the award is mode, the
'ty Ikwmum�re opAent pepartmeat shall randind the appiicmt
and the srccessibl contractor that the ondertaking of the work
covered by the contract is subject to issuance by the owner of
a proceed order, within the neater of days stated in the
general conditions of the contract from the date of the award.
Upon awarxi of the contract, the Cammsity Development Depart -
meat shall notify wuc essfol bidders that they have not been
awarded the contract.
b. 'Contract Awarded After Inas A roved. The contract award shall
S m er the loan has been approved by the Finance
Conmdttee of the City Conseil.
C. Award Within 30 Days a Catoff Date. In order for the bid and
proposal to be binding, the award shall be mode within a period
of 30 days fr m the cutoff date established by the Comeonity
Development Department for the receipt of the bid and proposal,
unless a later date is agreed upon in wetting.
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d. Contract Avant. In the award of a construction contract for
rehabilltaLlon, the involved parties shall execute an
original ant three copies of the contract docunants. The
Cammmity Development Department shall distribute the
executed contract documents, as follows;
(1) Executed original to contractor.
(2) Executed counterpart to borrower.
(3) Executed copy retained by the Community Development
.Department.
(y) Executed Copy retained by the City Clerk.
9. Issuance of Proceed Order. The general conditions of the construc-
tion coaract vv�that the owner will issue a proceed order
within a stated number of days from the date of acceptance of the
contractor's bid ad proposal. The proceed order for a canmtructim
contract which shall be executed by the borrowr at loan settlement,
shall be issued within 30 days of the acceptance of the contractors
bid and proposal, and shall require the start of construction within
30 dm's or less from the date of the order's signing unless an
extended Parisi of time is authorised by the Director of Cortmunity
Devalopnant ant approved by the borrower for reasons beyond the
control of the Contractor.
a. Original to the contractor.
b. One copy retained by the Cammudty Development Department.
c. One copy to grantee or borrower.
10. Labor Performed g Owner In Rehabilitation Property.
a. Type of work ant aklll of ower. A property comer may complete
LE of all' o Lhe�1 tasks required to rehabilitate his property,
if he has the degree of skill required to perform the work
involved, Self-hely is usually appropriate for the accomplish-
ment of tasks of an unskilled nature snob as general cleanup{
demolition of small buildings an a propertyi removal, cartage,
and disposal of the debris; and for work that involves minimal
use of costly materials and equipment. Work of a skilled
nature, and work involving the extensive installation of costly
materials and equipment, are appropriate if the Community
Development Department is assured the property owner has the
ability and experience required to do the work properly Ath-
out supervision, or that he has sufficient skill to do the
work properly rich technical advise and guidance Sian the
Caimundty Development Department.
b. Benefits Irani self -0e1 . Self-help may reduce the amount of
-EFai, the property caner would otherwise requlra, thereby
reducing his monthly pmments or the term of the loan, as he
prefers.
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At times, seltfielp may also enable a property owner to
obtain a rehabilitation loan by reducing costs to an
amount within the limits for a loan, and simultaneously
may make loan repayment feasible.
Provision for self-0elp in can, Whenever self-help is
MR
i tic ate , or desired, and the Coamunity Develop-
ment Department considers that Mtn or without its techrlcal
assistance and guidance, a property owner will be able to
perform the work in a reasonably acceptable end expeditious
mousers it may process an application for a rehabilitation
loenan that basis. In such a case, the amount of the loan
would provide funds to pay for the materials and equipment
to be installed by self-help, ss well as any additional
foils needed to pay for other rehabilitation work to be
performed by a contractor. The amount of the loan shall
not include fends to pay the owner or members of his family
for their labor. Further, the Community Development Depart-
ment must exercise good judgment and prudenceas to avoid
e
a situation in which an r could place hself in financial
difficulty through improper use, installation, or
e
destruction of the materials aequipment purchased
nd with
loan funds. For this reason, the owner 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 accost by the Community Develop-
ment Department only after they have been properly installed.
Coordination with contractor. When some of the rehabilitation
work is 1s to be done through selfAselp, and the remainder is to
be done by the contractor, the Community Development Depart-
ment should assure that the work is done by each of them so
as not to interfere with or jeopardize the other0s work. In
eases where a separation in the timing of the work is net
feasible, the Community Development Department should urge
the owner and contractor to make their own arrangements an
the timing, so that each may do his own work without causing
any interference in the work to be done by the other. In all
instances, the ower will be better protected if work to be
done thorough self-belp is completed before the contractor
starts his work. Such completion will help to avoid claims
by the contractor for extras or damages he mayclaim are
caused by the self-help efforts, and will assure that when
all the work is finished, the property will comply with
Housing code requirements.
O. Inspection of Rehabilitation Work
1, Genera This Section sets forth requirements for the inspection
oo regi ilitatiun work financed in whole or in part with a
rehabilitation loan.
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z. Responsibility For Matting Inspections. Inspections of construction
work shall be performed by the Covmudty Development Department.
j. Ins tions Lo[ Pro ress P ants end Pinel P ant. Inspection of
<onsLrvctive wrk sM1all a made in aecoxlanca with the followings
a.Proas P nts. A compliance inspection of the rehabili—
tat work Shall be male before the Comm erity Development
Deparlment makes a progress pigment on a contractor's invoice.
(1) P en for Satiplstacto wrk. If the inspection deteemxaas
that ver ewmeted is satisfactory@ the Commurdty Develop—
ent Department shall draw on the a account a progress
payment check payable to the borrowers i the intended
payee.
(3) obtaining Corrective Action. If the work completed is tet
in accordance with the Construction ppttrant for a progress
palement, the Cpmeandty Davelopmen. Department shall wise
the borrower of Any noncompliance in the constructive works
or of an incorrect invoice submitted by the contractor.
The borrower shall be requested to obtain with assistance
from the Co®unity Development Department@ appropriate
corrective action fium the contractor. No payment shall
be male on a construction contract vntil the contractor
has satisfactorily completed the necessary corrective
active.
b. Final Inspection. Upon completion of the rehabilitation work
and receipt of the contractor's invoice containing us certifi—
cation of satisfactory completion of all the work in accordance
with the contract and his warranty@ the Community Development
Department shall inspect the completed work. When the final
impaction determines that the work is satisfactorily completed
in accordance with the codract• the Coumudty Development
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 Commmdty Development Department shall make final payment
An accoNance with Section J.
y. Certification of Final s action. After the Commnudty Development
Department es Lhat the rehabilitation work has been fully
And satisfactorily completed ami the final inspection report
obtained, the Cansmmdty Development Department shall prepare a
Certification of Final Inspection. The Certification of Fiml
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 malet all work has been satisfactorily completed
in Co foreence with the stated contract, ami the property now meets
the requirements of the Mousing Cade of the City of Bangor.
—a—
The Certification of Final Inspection shall be signed and dated
by the person making the final inspection.
a. Distribution. The Certification of Final Inspection shall be
distributed as follows:
(1) Signed original to the property owner.
(2) Signed copy retained by the Community Development
Department.
P. Awlicad.'s Income
1. Cenral. This Section sets forth the basis for establishing an
applicant's income.
2. Souroes of Ponds and Amounts Com risi Applicant's Income. The
foliowl4 is a list o the elements comprdsing income, for
purposes of a rehabilitation loan.
a. Applicant Who is a Person. Income of an applicant who is a
"parson Includes the income of the applicant and his fanil_y.
The applicant's fondly includes the applicant and any other
person or persons related by bloods marriage, or operation of
.laws who shave the same dwelling unit. If ownership of the
property rests in more than one person, the applicant is each
ower and family. The applicants incame, therefore, is the
am of the fadly incomes of all applicants. An applicant's
Income is established on an annual basis, at the time of
applying for a rehabilitation loan, aid includes:
(1) The applicant's earrings.
(2) Spouse's earnings, and earnings of all other m m1bers
of the featly who share the household, if the employ—
ment of the spouse or other family member is a definite
characteristic of family life. Excluded is the income
of an adult member, other than the applicant and spouse,
who does not have an ownership interest in the property,
but included are any foods contributed or paid to the
family, on a regular basis by an excluded adult family
mender.
(3) Other income regularly received by the applicant or
his fmdly from a@' source.
(4) Net income from real estates other than the property
to be rehabilitated, and any other net business income.
(5) Lawn from the rental units in the property to be
rehabilitated based on:
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(a) Gross rental intone, �
(b) On the basis of an average of experience for two
r more years, expeMitures for mortgage principal
and interest, mortgage insurance premibn, service
charges, hacari insurance, real estate taxes and
spacial s a
anta, maintenance all repairs,
heating and utilities, ground rent, and other cash
expeniitures for the property, such as advertising
vacamies. If the applicant has not owned the
property for two or more years, the Comaunuty
Development Department shall estisate the income
and expenliturm on the available experience.
b. A licant that is cher local Entit . The income of an pother
legal entity^ includes all the net obe, before intone tams,
attributable to the legal entity comprising:
(1) Net inewe from real estate other than Lhe art to be
reha ic'tated and other net im att to a Lo
Ehe <g entity.
(2) Net incase fro the ro art to be rehabilitated, a=-
sisting o gross rent Sncmie less axpenditvres (on the
basis of an average of two a e yearsI experience) for
mortgage principal and interest,rMortgage insurance
premium, service charges, hazard insurance, real estate
tams all special asse5ments, maintenance and repairs,
beating and utilities, ground rent, and other cash
erynenditures for the property (including advertising
manholes).
(3) Exclusions. Intone of an "other legal entity" aces not
fxlude tree isobar of any director, official, officer,
employee, shareholder or other participant in the
business.
3. Fi�nd� ��g��A�c�c�ept�bye Ri�s_k_ in Marr ai Camas. Generally a reamili-
a dE-Finn Tuan: seams o[ ware , a�not be made Am respect
to an dnveston-amed property or far a mix use loan, if the
property clearly cannot produce sufficient revenues to satisfy
all sx mlitures related to ownership, operation, ml management
of the property, including repayment of the rehabilitation loan.
An exception is'a case in Mich the ability of the property to
produce sufficient revemus appears possible, but marginal. In
this circubstance, an applicant's strong finaicial condition and
Ability to repay may be used to support a filling of acceptable
risk.
-30
Information moat be obtained on the revenues that can be produced
by the property and expenaes estimated for the property after
rehabilitation (Form BCo 2). The estimates of imome shall be
realistic, in terms of reasonable expectation of the ability and
likelihood of the rental market in the property area to pay the
proposed rents. The estimates of expenditures shell be realistic:
taking into account the rehabilitation Work to be bade,
Q. Truth In Lending Requirements For Rehabilitation ]cans
The Director of Community Development shall prepare administrative
guidelines and policies to ensure the Cityvs compliance With the Truth in
lending Act in making rehabilitation loans. These guidelines and policies
shell become a part of this Section.
R. Ivan Approval
The Finance Cmwaittee of the City Council shall consider and approve
or disapprove all Property Rehabilitation Iran applications.
S. Lean Servicing
Property Rehabilitation loan servicing involving the collection of
loan repayments shall be the responsibility of the Community Development
Department ant shall be accomplished thru the Finance Department of the
City of Bangor With the exception that a local financial institution may
be contracted with for the accomplishment of loan servicing if autbcrieed
by separate Order of the City Council.
T. Project Areas Eligible for lean Assistance
The Commmnity Development FmUat Property Rehabilitation Loans shall
be made only With respect to a residential or residential portion of a
mixed-use property located Within the following Community Development Program
Project areas:
1. Hancock -York NDP Area bounded and described in Section I of the
^Conmonity Development Program Redevelopment Plmn ancock-York
NDP^ approved and adopted by the City Council on June 232 1975..
2. Thirtl-Nain NDP Area bouMed by Nair Street, Buck Street, Third
Street and Cedar Street.
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