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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. -13- 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. -19- 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: -21- (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. -25- 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. -26- 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. -27- 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: —29— (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. -31-