Full Agenda
AGENDA
JANESVILLE COMMUNITY DEVELOPMENT AUTHORITY
REGULAR MEETING
WEDNESDAY, MAY 16, 2012
5:30 P.M.
COUNCIL CHAMBERS
MUNICIPAL BUILDING
18 NORTH JACKSON STREET
JANESVILLE, WISCONSIN
1.Roll Call.
2. Minutes of the Regular Meeting Held on April 18, 2012. “C”
3. Requests and Comments from the Public Regarding Items on the Agenda not Requiring a Public
Hearing and on Matters which can be Affected by CDA action.
4. Election of Chair and Vice Chair – 2012-2013.
5. Consideration and Action on a Revised Policy and Procedures Manual for the Rental Rehabilitation
Program.
6. Review and Action on Consolidated Plan 2013 Action Plan (Community Development Block Grant and
HOME Programs) Timetable and Citizen Participation Process.
7. Neighborhood Services Director’s Report.
8. Matters Not on the Agenda.
9. Consideration of a Motion to Convene in Closed Session Pursuant to Wisconsin State Statute Section
19.85 (1)(f) and 19.85 (1)(e) considering the Financial, Medical, Social and/or Personal History of the Home
Improvement Program Clients which information must be kept confidential under applicable Federal
Regulations including, but not limited to, the Federal Privacy Act of 1974, 5 U.S.C. 552, etc. seq., as from
time to time amended, and which, if discussed in public, would be likely to have a substantial adverse affect
upon the reputation of the participants or applicants referred to in such application, Histories, Financial Data,
and/or Related Personal Information Protected by Federal and Common Law, and deliberating or
negotiating the purchasing of public properties, the investing of public funds or conducting other specified
public business, whenever competitive or bargaining reasons require an closed session. (A) Request for
satisfaction of mortgage; (B-C) Appearances and consideration of action by Home Improvement Loan
Clients to discuss the delinquency status of their loans.
“C” Indicates an item that the Community Development Authority will take up under Consent.
NEXT MEETING
REGULAR MEETING
WEDNESDAY, JUNE 20, 2012
5:30 P.M.
COUNCIL CHAMBERS
MINUTES
JANESVILLE COMMUNITY DEVELOPMENT AUTHORITY
April 18, 2012
CDA members present: Richard Ellingson, George Fenn, Heidi Holden, Sam Liebert, Sylvia Moore, John Smecko (at 5:32 p.m.),
Russ Steeber. Staff present: Jennifer Petruzzello. Others Present: Andreah Briarmoon; Peter Apted, Karen Lisser (ECHO),
Jessica Schaefer, Jean Randles (HealthNet), and Mari Anne Warren (The Literacy Connection).
The regularly scheduled meeting of the Janesville Community Development Authority (CDA) was called to order by
Commissioner Holden at 5:30 p.m.
The minutes of the regular meeting held on March 21, 2012 were approved by consent.
Under questions and comments from the public on matters not on the agenda, Andreah Briarmoon, 339 S Locust, indicated
she would like to see the large item pick-up resumed and pro-active code enforcement discontinued.
Holden recognized Richard Ellingson for his service to the Community Development Authority and presented him with a
padfolio from City Manager Levitt in appreciation for this service.
Holden recognized George Fenn for his service to the Community Development Authority and presented him with a padfolio
from City Manager Levitt in appreciation for this service.
Petruzzello presented information about the City’s 2012 Community Development Block Grant (CDBG) allocation and how this
will lower the amount of funding that can be allocated to other organizations for public service activities. There was a motion
by Ellingson, seconded by Fenn to approve $73,000 in 2012 CDBG funding to be allocated to the following non-profit agencies
for public service activities: ECHO: $33,100; HealthNet: $33,100 and the Literacy Connection: $6,800. The motion passed
unanimously.
Petruzzello presented information regarding proposed policy changes to the Rental Rehabilitation Program. The changes
were proposed by staff to minimize the City’s risk by firming up underwriting guidelines and modifying loan terms to ensure a
consistent and more expedient return of program funds. Motion by Steeber, seconded by Ellingson to approve the proposed
changes in the Rental Rehabilitation Program as outlined by staff. Changes include: implementing a maximum number of
units to be assisted (8); shortening the loan re-payment deferral period from 5 years to during construction, plus 90 day lease
up period; changing the interest rate from a flat 5% to Prime plus 1%; creating different loan amortization periods based
upon the borrower’s income; expanding the borrower’s credit review and property cash-flow analysis to include all properties
under their ownership; and increasing the late fee. Friendly amendment by Fenn to increase the late fee to $25; accepted by
Steeber and Ellingson. Liebert inquired as to the limit of 8 assisted units. Petruzzello explained that as funding levels have
been reduced, this is an effort to assist a diverse group of property owners, and that it also reduces the City’s loan risk. The
main motion approving proposed changes with a $25 late fee passed 6-1, with Moore opposed.
Petruzzello provided the Director’s report. Fenn thanked staff for providing the Section 8 termination data and asked what
was meant by voucher expired. Petruzzello explained that a household did not successfully locate a rental unit during the
allowable time period after being offered assistance.
Under Matters Not on the Agenda, Fenn expressed his appreciation and gratification to the Neighborhood Services staff for
their professional and prompt response to his inquiries; noted that the Chair had recently called in sick without notifying the
co-chair; indicated that he finds the pro-active code enforcement efforts to be reprehensible; and expressed disappointment
that efforts to limit Council terms on the CDA was not approved. Ellingson thanked everyone who he has worked with on the
CDA board and staff during his time on the CDA.
There being no further business, a motion was made by Steeber, seconded by Moore to adjourn the meeting at 5:59 p.m. The
motion passed unanimously.
These minutes are not official until approved by the CDA.
Respectfully submitted: Jennifer Petruzzello, Neighborhood Services Director
NEIGHBORHOOD SERVICES MEMORANDUM
May 11, 2012
TO: Community Development Authority
FROM: Carrie Clark, Housing Financial & Rehabilitation Specialist
SUBJECT: Agenda Item 5–Policy & Procedure Manual for the Rental Rehabilitation Program.
Summary
At the April, 2012 CDA Meeting, revisions to the Rental Rehabilitation Program modifying the loan
terms of the Program were approved by the CDA. Following approval of these changes, staff has
developed a revised Rental Rehabilitation Program manual incorporating these changes. The manual
also includes revisions required by the HOME Program and some additional policy revisions proposed
by staff. Staff believes that incorporation of the proposed revisions, along with the new loan terms,
with provide an attractive Program and financing tool for property owners, minimize our risk by firming
up underwriting guidelines and ensuring a consistent return of Program funds for the continuation of
the Program, and provide staff with a tool to implement all Housing Programs consistently and
efficiently.
Background
The following table provides a recap of the changes that were approved last month. For the benefit of
our newest members, I have also included the terms of the “old” Program:
Criteria/Component “Old” Program Current Program
Per Unit Loan Limit 14,999.00 14,999.00
Max Units Borrower May Apply No set limit 8
for Funding
Payment Deferral Yes, 5 years Yes, during construction, plus 90-
day lease-up period
Payment Deferral Interest Rate 0% 0%
Interest Rate 5% at end of 5 th year of loan Prime +1% (currently 4.25%) first
of the month following project
completion, plus 90-day lease-up
period.
Loan Amortization 10-years (all borrowers) 10-years – borrowers 80-100%
County median income
15-years – borrowers less than
80% County median
Late Payment Fee $3.00 $25.00
Borrower Credit Review Yes, mortgage of proposed unit Yes, all mortgages, lines of
credit. Must be current.
Property cash-flow analysis Yes, subject property only Yes, all rental property. Plus
profit/loss and replacement
reserve evaluation.
HOME Affordability Period 5 years 5 years (subject to HOME limits)
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The new loan terms have been incorporated into Chapter 4, Loan Types, Terms, and Conditions (page
19) of the manual.
The HOME Program is the major source of funding for the Rental Rehabilitation Program. Rental
Rehabilitation Programs funded with HOME dollars have several HOME Program regulatory
requirements that must be met including: Maximum Home Investment, HOME Rent, Affordability
Period, and Eligible Tenant. Definitions of each of these terms have been incorporated in to the manual
in Chapter 2, Definitions, as well as into their respective, applicable areas of the policy manual.
The Maximum HOME Investment is the maximum amount of HOME dollars that can be invested, per
unit, in a project per HOME regulation. The per-unit maximum limits are set annually by the US
Department of Housing and Urban Development (HUD). The requirement has been incorporated into
Chapter 4, Maximum Loan Amount (page 18).
The HOME Rent is the maximum amount of rent and utilities that a property owner can charge an
eligible tenant residing in a HOME-assisted unit per HOME regulation. These limits are set annually by
HUD. This requirement has been incorporated into Chapter 4, Loan Types, Terms , and Conditions (page
20).
The Affordability Period is the minimum period required by an property owner of a HOME-assisted unit
to offer the improved unit to a low-moderate income tenant at HOME rent levels. The period is
determined by the amount of HOME dollars invested per unit and these levels are set by HOME Program
regulation. This requirement has been incorporated into Chapter 4, Loan Types, Terms, and Conditions
(page 20).
The HOME Program defines an Eligible Tenant as a low-moderate income household that earns no more
than 60% of the County Median income as adjusted for household size. The income limits applicable to
the HOME Program are set annually by HUD. Incorporation of this requirement has been inserted into
Chapter 3, Eligibility (page 11) and Chapter 4, Loan Types, Terms, and Conditions (page 20).
Staff is also proposing changes to the policy and procedure manual that will make it consistent with
other Neighborhood Services Housing Programs, including the Home Improvement and Down Payment
& Closing Cost Programs. Currently, a review of Criminal History records is required of all owner-
occupants applicants to the Home Improvement Program and potential homebuyer applicants to the
Down Payment & Closing Cost Program. Applicants to these Programs must not have been involved in
drug-related for a period of 3 years prior to their application or registered as a sexual offender in the
State of Wisconsin Department of Corrections Registry. Staff is proposing to extend this review to rental
property owner-applicants. A definition of Drug-Related Criminal Activity and Sexually Violent Criminal
Activity has been incorporated into Chapter 2, Definitions and into Chapter 3, Eligibility.
An additional policy revision proposed by staff is the related to the bidding process and award of
contract. Currently, when staff reviews competitive bid proposals submitted for Rental Rehabilitation
projects with the property owner, the property owner has had the discretion to select the contractor of
their choice without regard to whether the bidder was low bid, high bid or somewhere in between.
Staff is proposing that we incorporate a requirement that the property owner be required to select the
lowest competitive bidder and the level of assistance based upon the lowest bid. The property owner
would still have the option to select the contractor or bidder but would have to contribute their own
funds towards the difference between low bidder and their selected bidder/contractor. Staff is
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proposing this change to be consistent with the Lead Hazard Reduction Grant Program as well as to
make an effort to lower Program costs. This change has been incorporated into Chapter 5, Application
Processing (page 26-27).
Action
Staff is recommending that the CDA review and approve the changes to policy and procedure manual as
proposed. Staff feels the proposed policy revisions to be reasonable and consistent with other Programs
and work to achieve the goals of the CDA with respect to affordable housing creation and retention. A
motion to approve the policy and procedure manual would be in order.
Cc: Jennifer Petruzzello, Neighborhood Services Director
3
POLICIES AND PROCEDURES
Rental Rehabilitation Program
Prepared By: Department of Neighborhood Services
City of Janesville
18 N. Jackson Street
Janesville, WI 53545
(608) 755-3065
Funded By: U.S. Department of Housing and Urban
Development
Community Development Block Grant Program
HOME Investment Partnership Program
April 23, 2012
3
TABLE OF CONTENTS
PAGE
CHAPTER 1: INTRODUCTION 1
I. Objectives 1
II. Scope 2
III. Responsibility of CDA 3
IV. Authority of Neighborhood Services Director 3
V. Program Continuance 4
VI. Program Changes 4
CHAPTER 2: DEFINITIONS
5
CHAPTER 3: ELIGIBILITY
8
I. Eligible Applicants 8
II. Eligible Tenant 11
III. Eligible Property 11
IV. Eligible Work 12
V. Priorities 16
CHAPTER 4: LOAN TYPES, TERMS AND CONDITIONS
18
I. Combination Deferred Payment/Interest Loans 18
II. Loan Defaults 21
III. Satisfaction of Mortgage 22
IV. Refinancing Superior Mortgages 22
CHAPTER 5: APPLICATION PROCESSING
24
I. Processing Procedures 24
II. Application Withdrawal 30
III. Application Rejection 30
IV. Cancellation of a Loan 30
CHAPTER 6: CONTRACTING PROCEDURES
32
I. General 32
II. Qualification 32
III. Plans and Specifications 34
IV. Solicitation of Bids 35
V. Owner as Contractor 35
VI. Selection of Contractor 36
VII. Purchase Order Contracts 37
TABLE OF CONTENTS, Cont’d
VIII. Change Orders 37
IX. Quality of Work and Materials 37
X. Code and Contract Inspections 38
XI. Payments to Contractors 39
XII. Contractor's Warranty 39
XIII. Follow-up 40
XIV. Other Conditions 40
XV. Cancellation of Contract 41
CHAPTER 7 - LOAN SETTLEMENT
42
I. Loan Settlement Procedures 43
II. Accounting Procedures 43
III. Loan Close-out Action 44
CHAPTER 8 – APPEAL PROCEDURES
45
I. Appeal Procedure
45
I. Additional Review of Applications
45
CHAPTER 1
INTRODUCTION
The Community Development Authority has established a Rental Rehabilitation Loan Program to
address the housing priority needs of Janesville identified throughout the Consolidated Planning
Process. Funding for the program is provided by the U.S. Department of Housing and Urban
Development Community Development Block Grant (CDBG) as authorized by the Housing and
Community Development Act of 1974 and the HOME Investments Partnership Program authorized
by National Affordable Housing Act of 1990.
I.OBJECTIVES
The following are the OBJECTIVES of the HOME IMPROVEMENT PROGRAM.
A. Improvement of the quality of rental housing stock available to low and moderate income
persons by rehabilitating dwelling units which are deteriorating, deficient, or otherwise in
need of improvement.
B. Increase the quantity of quality, affordable rental housing stock financially accessible to
low and moderate income persons.
C. Promote attractive neighborhoods which offer a variety of dwelling units and range of
prices.
D. Prevent the City's housing stock from becoming blighted, deteriorated, or vacant, and
eliminate threats to health and safety.
E. Promote the revitalization of neighborhoods which are showing signs of decay.
F. Encourage the preservation of historic structures and areas.
G. Improve energy efficiency through appropriate renovation techniques.
H. Improve the accessibility of dwellings to the handicapped.
I. Promote neighborhood stability.
II. SCOPE
The Rental Rehabilitation Program's approach to housing rehabilitation and renovation is
comprehensive -- FUNDING in the form of home improvement loans and SERVICES including
counseling, design and construction management are offered. The program emphasizes lasting,
permanent improvements necessary to maintain a unit in a decent, safe and sanitary condition or to
return a deteriorated unit to such a condition-- in a manner compatible with the architectural/
historical characteristics of the structure.
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A. Funding
Combination Deferred-payment and Installment Payment Loans may be offered to eligible
rental property owners as the means of funding property improvement work.
The loan will be deferred at zero-percent interest throughout the period of construction,
not to exceed six (6) months. The loan will then continue to be deferred for up to another
ninety (90) days, to be referred to as a “lease-up” period. Payment will begin on the first
of the month following one full month past the lease-up date or on the first of the month
following one full month past the 6-month construction period, plus 90-day lease-up
period, whichever occurs first.
During the entire deferment period, the loan will not accrue interest. Once converted to
an installment loan, the loan will bear an interest rate of Prime plus one-percent (1%). The
loan will be amortized over a fifteen-year period for borrowers with a household income
of 80% or less than County Median and amortized over a ten-year period for borrowers
with a household income greater than 80% of County Median. The Prime rate will be
determined and “locked” upon application and documented using the current Prime Rate
published by the Wall Street Journal, which is surveyed weekly. The County Median
Income level applicable is published annually by HUD.
B. Services
Assistance may be offered to all owners of rental property in the city limits of Janesville,
whether or not they are ultimately eligible for a rental rehabilitation loan(s). The types of
services required by property owners vary from owner to owner, depending on such
factors as existing physical and financial conditions of the property, the owner's
willingness and ability to finance the cost of rehabilitation work, the specific nature of the
owner's interest in the property, etc. Therefore, the City's approach to provision of
services will be both comprehensive and flexible. At the property owner's request, the
types of services to be made available by the staff of the Rental Rehabilitation Program
include:
1. Counseling applicants as to availability of rental rehabilitation loans, preparation of
application for funding, procedures to be followed in obtaining loan funding and how
to implement a home improvement project.
2. Design services, including:
a. Inspections made by Program staff to identify conditions detrimental to safety and
welfare and to establish the scope of needed repairs.
b. Work-cost analysis identifying specific elements of work and the probable costs.
c. Specifications and plans if necessary, prepared for the owner to use in obtaining
2
contractor's bids.
3. Construction Management services, including:
a. Providing applicants with a list of eligible contractors and/or locating available
sources of labor and materials to do the rehabilitation work
b. Assisting the owner in obtaining bids from competent contractors for the needed
home improvement work and assisting the owner in analyzing bids for
completeness and reasonableness of price,
c. Inspecting home improvement work in progress and upon completion to insure
quality control and completeness,
d. Maintaining construction cost accounting records for the owner's home
improvement loan.
III. RESPONSIBILITY OF THE COMMUNITY DEVELOPMENT AUTHORITY
The Community Development Authority shall be responsible for establishing overall policy for
the Rental Rehabilitation Program. The Community Development Authority delegates to the
Neighborhood Services Director and staff the responsibility for administration of the program.
In cases of dispute in the interpretation and implementation of policy or procedure, any
aggrieved party may appeal to the Community Development Authority for final resolution
(see also Chapter VIII - Appeal Procedure).
The Authority shall have the responsibility to review and act upon applications referred to it
by the Neighborhood Services Director.
IV. AUTHORITY OF THE NEIGHBORHOOD SERVICES DIRECTOR
The Neighborhood Services Director, with the approval of the Community Development
Authority, is authorized to make such rules and regulations and to issue such orders and
notices, in such form or manner as may be necessary and proper to put into full force and
effect any and all of the provisions of the Rental Rehabilitation Program consistent with the
policies established herein. The Neighborhood Services Director, under appropriate
circumstances or conditions, and with the prior approval of the Community Development
Authority, is authorized to waive such provisions or requirements as are promulgated in the
Rental Rehabilitation Program.
V. PROGRAM CONTINUATION
Funds returned to the city as repayments of Rental Rehabilitation Program loans will be
classified as Program Income and re-invested in accordance with the appropriate HUD
funding source. For example, HOME funds received from the payment of Rental Rehab
Program loans are considered HOME Program Income and MUST be allocated to affordable
housing activities and drawn before additional HOME Entitlement dollars can be drawn from
3
the HOME Program account. HOME Program Income can be used to fund affordable
housing activity such as homebuyer property acquisition assistance, homeowner property
rehabilitation and/or Rental Rehabilitation. HOME Program Income is not limited to the type
of activity that generated the income and will be allocated for affordable housing activities
consistent with the Consolidated Plan, Annual Action Plan and Neighborhood Services
Annual Budget documents. Repaid Community Development Block Grant funds will be used
for eligible activities consistent with the Consolidated Plan, Annual Action Plan and
Neighborhood Services Annual Budget documents.
VI. PROGRAM CHANGES
The Community Development Authority shall have the right to change Rental Rehabilitation
Program policies and procedures as deemed necessary in order to accomplish overall
Community Development Authority objectives. Such changes shall be noted in the policy
manual.
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CHAPTER 2
DEFINITIONS
The following are definitions of various terms used in this manual.
AFFORDABILITY PERIOD – Period of time mandated by the HOME Program and applicable to
the Rental Rehabilitation Program to the extent of HOME funds invested in a project and for a
specified period of time where the property owner MUST make every attempt to offer the improved
rental units to low-income renter households. A restrictive deed/covenant will be recorded against the
assisted property throughout the Affordability Period and will be determined by the following:
$ HOME investment: Affordability Period
$0 - $14,999 5 years
$15,000 - $40,000 10 years
>$40,000 & New Construction 20 years
ANNUAL HOUSEHOLD INCOME - The gross amount of income of all adult household members
that is anticipated to be received during the coming twelve month period as defined by Federal
Regulation cited at 24 CFR Part 5. [Note: this is the same regulation used by the Section 8
program.]
APPLICANT - Any person(s) or other legal entity that applies for a Rental Rehabilitation loan under
the Rental Rehabilitation Program.
BORROWER - Any person(s) or other legal entity who holds title to a property being improved with
the assistance of a rental rehabilitation loan, and who is legally responsible for repayment of the loan.
CODE- Defined under Janesville General Ordinance, Chapters 15 & 16.
COMBINATION INSTALLMENT PAYMENT DEFERRED LOAN – A deferred-payment,
deferred interest loan for rental property owners who own rental property within the City limits of
Janesville. Repayment of the loan is deferred during the construction period, up to 6 months, plus an
additional 90-days, post-construction, to allow for a lease-up period. The loan converts to an
interest-bearing loan, bearing the interest rate of Prime, plus 1% to be amortized over a ten (10) year
period for borrowers with annual household incomes at 80% or greater of County Median and
amortized over a fifteen (15) year period for borrowers with annual household incomes less than 80%
of County Median. Formally structured applicants including, but not limited to LLC’s, Partnerships,
Corporations and Trusts will automatically be subject to a ten (10) year amortization.
COMMUNITY DEVELOPMENT AUTHORITY (CDA) - The "body politic" created by the
Janesville Common Council on June 14, 1976 pursuant to Sec. 66.4325, Wisconsin Statutes, which
acts as a Housing Authority and a Redevelopment Authority, and an agent for the City of Janesville
under the Housing and Community Development Act of 1974. The CDA is composed of seven
members appointed by the City Manager and confirmed by the City Council for staggered four year
terms. Two members are Council members. The CDA shall have responsibility for overall policy
5
determination for the Rental Rehabilitation Program and for reviewing administration of the Program
by the staff.
COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) PROGRAM - A federal program
administered by the U.S. Department of Housing and Urban Development, established under the
Housing and Community Development Act of 1974, serving as a major funding source of Janesville's
Rental Rehabilitation Program.
COUNTY MEDIAN INCOME LIMIT – The Rock County Median household income level, as
defined and published annually by HUD. For reference, the following limits are current as of
February, 2012:
DRUG-RELATED CRIMINAL ACTIVITY – The arrest, conviction or involvement in the illegal
manufacture, intent to manufacture, sale, distribution, possession of or use of a controlled substance
where such arrest, conviction or involvement has occurred within the three (3) years prior to
receiving assistance.
ELIGIBLE APPLICANT - An applicant who meets all of the eligibility requirements including
income, property equity, property cash-flow, etc. as set forth in this manual.
ELIGIBLE CONTRACTOR - A contractor who has been qualified by the Rental Rehabilitation
Program to perform home improvement work financed in whole, or in part, by the Rental
Rehabilitation Program. Pre-qualification shall be made on the basis of written, objective standards
established by the Home Improvement Program.
ELIGIBLE PROPERTY - Residential rental property located within the city limits of Janesville,
which meets the Program's eligibility requirements.
ELIGIBLE TENANT – A renter household with an annual income less than 60% of the County
Median income level, as defined annually by HUD.
ELIGIBLE WORK - Any home and property improvement work: additions, alterations, or repairs
which conform to the requirements and priorities of the Rental Rehabilitation Program.
HOME PROGRAM - A federal program administered by the U.S. Department of Housing and Urban
Development, established under the National Affordable Housing Act of 1990, serving as a major
funding source of Janesville's Rental Rehabilitation Program.
HOME RENT – The maximum amount of rent and utilities that a property owner may charge a
tenant residing in a HOME-assisted unit throughout the period of construction and during the entire
HOME-Affordability Period. HOME rents are defined and published annually by HUD. For
reference, the current HOME rents, effective February 2012 are:
BR Size 0 1 2 3 4
Low Rents 505 590 735 850 948
High Rents 505 590 735 962 990
6
HOUSEHOLD - Shall include all persons sharing the applicant's dwelling unit.
HUD - United States Department of Housing and Urban Development.
INCOME - See Annual Household Income.
LEAD BASED PAINT – Paint or any other surface coating material containing more than 0.06%
lead by weight, calculated as lead metal, in the total nonvolatile content of liquid paint or in the dried
film of applied paint, or more than 0.7 milligrams lead per square centimeter in the dried film of
applied paint as defined by State of Wisconsin Administrative Code, Chapter DHS 163.
MAXIMUM HOME INVESTMENT – The maximum amount of HOME funds that can be allocated
to a project and a HOME-assisted unit, based upon the number of assisted units and compared to the
HUD-published per-unit maximum subsidy limits.
PROGRAM CONTRACT - A legal document consisting of : Notice of Acceptance, Loan
Repayment Schedule, Real Estate Security Agreement, HOME Program Note, and Borrower's
Certifications. This document and all subsequent addenda shall constitute the agreement between the
borrower and the Rental Rehabilitation Program.
PROPERTY STANDARDS – The codes identified in Janesville General Ordinance, Chapters 15 &
16 and/or HUD Minimum Property Standards. (Define further as revised HOME rule is published)
REHABILITATION SPECIALIST - A member of Neighborhood Services staff responsible for the
administration of individual rehabilitation projects including inspections, plan and specification
development, cost estimates, preparation and processing of documents, project construction
management, project accounting management, and client counseling.
SEXUALLY VIOLENT CRIMINAL ACTIVITY – The arrest or conviction of or mandated registry
in the State of Wisconsin Department of Corrections Sexual Offender Registry by an individual for a
sex crime, of any degree.
7
CHAPTER 3
ELIGIBILITY
Rental Rehabilitation loans may be made only to an applicant who meets the applicant eligibility
requirements set forth in this chapter, and who owns rental property which meets the property
eligibility requirements outlined herein. Furthermore, improvement work performed using loan
proceeds must meet the work eligibility requirements of the Rental Rehabilitation Program. Eligibility
requirements are as follows:
I. ELIGIBLE APPLICANTS
To be eligible for Rental Rehabilitation Program funding, the applicant must meet the
following requirements:
A. Income Requirements
The applicant's Gross Annual Household Income, anticipated to be received during the
coming 12 month period, shall be evaluated and compared to the current HUD-defined
County Median Income Limit for the purpose of determining credit-worthiness and the
loan amortization period.
1. Required Documentation
The applicant must submit current income source documentation and/or submit and
signed authorization to gain third-party documentation of income source including the
following:
Check Stubs
Past 2 years (from date of application) of Federal Income Tax Returns
Bank Statements
Child Support Print-outs
Unemployment Compensation Award letters
Social Security Award Letters
Pension Award Letters
Other income documentation as deemed necessary
2. Credit Worthiness
The applicant must be current on all mortgage accounts to which they are a party and
cannot be a party to any pending foreclosure actions or loan modification efforts. A
written credit history will be obtained by a third-party credit reporting source. No fee
for this service will be assessed to the borrower.
Formally structured entity applicants including, but not limited to LLC’s, Partnerships,
Corporations, etc.. will be subject to a credit review of the principal registered agent,
financial review of the entity as a whole, and subject to a personal guarantee of the
Rental Rehabilitation loan funds.
8
Applicants denied assistance for unsatisfactory credit will have the opportunity to
appeal the credit decision to the Community Development Authority
The following criteria shall be taken into account when determining eligibility and loan
approval under the Rental Rehabilitation Program:
Amounts owed under any other program administered by the Neighborhood Services
Department.
Amounts owed to any other City Department relevant to the proposed assisted
property.
Irregular income.
Unable to verify income.
Delinquent credit obligations with others.
Incomplete application.
Garnishment, attachment, foreclosure, repossession, collection action or judgment.
Bankruptcy.
Satisfactory credit report.
Insufficient equity.
Property taxes not paid.
Property insurance not paid.
Zoning.
Historical Significance.
Floodplain location.
Unit currently not decent, safe, or sanitary.
Feasible for rehabilitation (physically and financially).
Income limits.
B. Interest/Equity Requirements
The applicant must have interest and equity in the property for which application is made
as follows:
1. Interest
Individually, or in aggregate with other individuals who are co-applicants, have
complete interest in the fee title of the land and structure.
2. Equity
Individually, or in aggregate with other individuals who are co-applicants for the
Rental Rehabilitation loan, have equity in the property in an amount at least equal to
the amount of the Rental Rehabilitation loan.
9
3. Cash-Flow
An evaluation of the current and potential HOME rents received or projected to be
received, less operating expenses, and the net income available to support new debt
will be performed for each property individually and in whole, where multiple
properties are a consideration. The evaluation must prove there will be a positive
after-improvement cash-flow that can be sustained throughout the period of the
proposed loan.
NOTE: The applicant's equity in the property shall be established as the positive
amount obtained by subtracting the sum of existing indebtedness on the subject
property from the calculated equalized valuation of the property. The equalized
valuation of the property shall be taken (by calculation) to be the current assessed
value or after improvement value of the property divided by the current ratio of
assessment. A third-party independent appraisal provided by the property owner may
be used to establish equity, provided that the appraisal is recent and no older than 1-
year from the date of application. The Neighborhood Services Director shall approve
loans with loan to value ratios at 100% of after improvement value or below and/or
with a positive after-improvement cash-flow.
NOTE: The CDA will consider projects in which the applicant's equity in the
property is less than the after-improvement value - cost of work analysis and the fact
that the project, if approved, would have a direct impact on CDA goals in the
neighborhood.
3. Status of Mortgage, Taxes, Insurance
In addition to interest, equity, and cash-flow requirements, payment on the
outstanding debt on the property (mortgage, CDA loans, etc.) must be current and up
to date. Real estate taxes and property insurance premiums must also be paid current.
All other debts owed to the City of Janesville, relevant to the proposed assisted
property, including, but not limited to: water utility payments, nuisance ordinance and
special assessment charges must be paid current.
E.Criminal History Review
1. If based upon the review of criminal records, the Department has reasonable cause to
believe that the applicant, or principal registered agent of the applicant LLC,
Partnership, Corporation, etc.. has engaged in drug-related criminal activity, or
Violent Criminal Activity, as defined in Chapter 2, the loan will be denied. Such
determination will be based upon the following standard:
any member of the household has been arrested for, convicted of, or in any way
involved in drug-related criminal activity, as defined in Chapter 2 OR arrested for or
convicted of a sexually violent crime, or currently registered in the State of Wisconsin
Department of Corrections Sexual Offender Registry.
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2. The preceding policy for persons denied based on drug-related criminal
activity may be waived if the person is able to demonstrate to the satisfaction of
the Neighborhood Services Director that they are no longer engaging in the illegal
activity, prior to receiving assistance and the individual:
Has successfully completed a supervised drug rehabilitation program; or
Has otherwise been rehabilitated successfully; or
Is participating in a supervised drug rehabilitation program
G. Documentation Requirements
The applicant must provide all financial data and other relevant information required to
document the applicant's eligibility for a rental rehabilitation loan and must give the Rental
Rehabilitation Program staff written permission to obtain verification of such information
from the appropriate sources. All financial information gathered by the staff will be held
confidential.
H. Requirements for Use of Loan Proceeds
The applicant must agree to use the proceeds of the rental rehabilitation loan solely for
eligible improvement work as approved by the Rental Rehabilitation Program.
II. ELIGIBLE TENANT
If the rental property is occupied at the time assistance is offered to the property owner, the
tenant must be determined to be an eligible tenant as defined in Chapter 2.
If the rental property is vacant at the time assistance is offered to the property owner, the
assisted unit must be made available to an eligible tenant as defined in Chapter 2.
III. ELIGIBLE PROPERTY
A. Location Requirement
The property must be located within the city limits of Janesville.
B. Property Characteristics
The assisted structure may consist of a single-family dwelling up to a maximum of 8-units.
Units may be occupied or vacant at the time of application. Every effort will be made to
maintain and/or decrease density by not creating additional rental units. For example,
converting a single-family residence into a multi-unit rental is not an eligible use of
Program funds.
C. Zoning Requirement
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The property must be zoned such that the intended use and number of units, after
completion of improvement work, are permissible.
D. Condition Requirement
The property must exhibit a lack of decent, safe or sanitary conditions, i.e. property is
substandard.
E. Feasibility Requirement
It must be physically and financially feasible to rehabilitate the property to a sound and
readily maintainable (decent, safe and sanitary) condition.
NOTE: Mobile homes and trailers are not eligible for rental rehabilitation loans.
Manufactured homes on a permanent foundation are not considered mobile homes.
IV. ELIGIBLE WORK
A. General Requirements
Rental Rehabilitation loans may be made only for property improvement work which
satisfies the following requirements:
1. Permanence Requirement
The rehabilitation will be a permanent improvement to an existing structure which
accomplishes any of the following:
a. Maintains the structure in a decent, safe, and sanitary condition or restores it to
that condition.
b. Extends the economic or physical life of the structure.
c. Conserves the use of energy within the structure.
d. Restores or preserves elements of architectural/historical importance.
e.Improves the accessibility of residential housing to a handicapped occupant, in
which event the rehabilitation work may be of a temporary nature.
f.Reduces identified lead based paint hazards.
2. Viability Requirement
The improvement work will be economically viable. The staff shall determine
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economic viability by assuring that the structure will have a reasonable life expectancy
after the improvements are made.
3. Code Requirement
The improvement work will be made in compliance with applicable health, housing,
and safety codes and standards. It is the intent of the Program to insure the serious
building and housing code violations, i.e. those that directly affect the health, safety,
and welfare of the occupants, are corrected through work financed with Rental
Rehabilitation Program Funds.
5. Compatibility Requirement
The improvement work will be accomplished in a manner that is compatible with the
architectural/historical character of the building.
6. Other Requirements
The improvement work accomplished with rental rehabilitation loan funds will not
include payment of all or part of any assessments for public improvements. However,
the work may include bringing a water supply or sewage connection into compliance
with local, state, or federal environmental and sanitary standards.
Rental rehabilitation loan funds will not be used to refinance or retire existing
indebtedness.
Rental rehabilitation loan funds will not be used to finance improvements completed
prior to approval of the loan.
B. Allowable Costs
For the purposes of the Rental Rehabilitation Program, the types of costs that may be
financed with a rental rehabilitation loan are classified as general improvements, special
improvements, and code-related improvements.
1. General Improvements
Whether additions, alterations, or repairs, the costs of improvement work needed to
put the property into sound and readily maintainable decent, safe and sanitary
condition with all necessary facilities in good working order, even though such work
may not be required by the property rehabilitation standards applicable to the
property, may include, but are not necessarily limited to the costs of the following
work:
a. DESIGN the necessary design services in the event the homeowner chooses to
employ a private designer to prepare plans and/or specifications
.
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b. STRUCTURAL additions and alterations to foundation and framing system
including: foundation and chimney repair/reconstruction, floor, wall and roof
framing repairs, installation of beams and columns for support, porch and step
repair/reconstruction, door and window repair/replacement, interior wall
restructuring to better utilize available space and construction of room additions if
such space is needed to alleviate an overcrowded condition.
c. ROOFING system repair and replacement including installation of gutters and
downspouts for drainage.
d. PLUMBING system repair/ replacement/ additions including: bathroom fixtures,
kitchen sink, water heaters and softeners, renovation of water supply and drain-
waste-vent systems to meet plumbing code requirements.
e. HEATING system repairs/ replacement/ alteration including: repairs to or
replacement of furnace/ boiler systems, pipes, ducts and radiation, installation of
exhaust and ventilating fans and installation of humidifiers. Mechanical air
conditioning systems are fundable on an individual project basis and shall prove to
be cost-reasonable and funded as Program funding levels permit.
f. ELECTRIC system repairs/ replacement/ additions including upgrading service to
100 amp, installation of new circuits, outlets, fixtures, switches and rewiring to
meet electrical code requirements.
g. ENERGY conservation related improvements including: insulation, installation of
storm doors and windows, caulking, weather-stripping and repair needed to
reduce infiltration. Energy system monitoring devices and devices intended to
improve efficiency of energy systems will be considered on an individual project
basis. In general, energy conserving devices and designs may be considered if it
can be established that the payback period offsetting the cost of such, is five years
or less.
h. INTERIOR renovation including: wall, floor, ceiling and woodwork repair,
general renovation of kitchen and bath, including cabinets and countertop, floor
coverings, painting, and miscellaneous such as door and window locks.
i. EXTERIOR renovation including: siding and trim repair/replacement, painting,
waterproofing, porch, deck, step and railing repair/replacement.
j. SITE improvements including: removal of deteriorated outbuildings, garage
repairs and painting, repair/replacement of walks and driveways and landscaping.
The above may be accomplished in conjunction with other, higher-priority
rehabilitation work and shall not constitute the only element of an improvement
project.
2. Special Improvements
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The costs of work in the above general improvement categories may be financed with
a Rental Rehabilitation program loan for the following improvements:
a. CONVERSION, the improvement work needed to convert the property so as to
change its use or the number of dwelling units, provided that: the use of the
structure is residential and the number of dwelling units after work has been
completed is two or less, and the improvements conform to zoning ordinance and
building code requirements. For example, a commercial space with an eligible
upper level that could be converted to an affordable housing unit is an eligible use
of Program funds.
b. ACCESSIBILITY, the alterations necessary to make the structure more readily
accessible to a handicapped tenant or member of the tenant’s family. Such
alterations include, but are not necessarily limited to: the design and construction
of ramps for wheelchair use, restructuring of doorways, modifications to kitchen
and bath facilities and installation of specialized equipment i.e. grab bars, door
hardware, shower seats, thermostatically controlled mixing valves, mechanical
lifts, etc.
c. HISTORICAL/ARCHITECTURAL RESTORATION which includes the
reconstruction and addition of architectural elements previously removed from the
structure, the repair of existing architectural elements and the appropriate
replacement of elements beyond repair.
NOTE: All improvement work funded under the Rental Rehabilitation Program
performed on structures or property of architectural/historical importance shall be
accomplished in accordance with the intent of the standards outlined in the
Secretary of the Interior's "Standards for Historic Preservation Projects".
3. Code Related Improvements
Code related improvements may include the following:
a. The cost of improvement work needed to correct existing violations of the
requirements of the Janesville General Ordinance, Chapters 15 & 16 and other
applicable property rehabilitation standards.
b. The cost of improvement work needed to correct incipient violations of the
requirements of the Janesville General Ordinance, Chapters 15 and 16 and other
applicable property rehabilitation standards. An "incipient violation" is an existing
condition of an element of the structure that is not in violation of the requirements
of applicable property rehabilitation standards at the time of inspection, but which
will clearly deteriorate into an actual violation of such requirements within a one-
or two-year period if not corrected.
C. Costs Not Allowable
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Except as otherwise provided, the costs that may be financed with a rental rehabilitation
loan do not include the following:
1. The costs of materials and labor of work which would destroy distinguishing qualities
or character of the building.
2. The costs of materials, fixtures, equipment, or landscaping of a type of quality that is
extraordinary or luxury-type quality and/or that serves as a decorative use only. This
is not meant to eliminate landscaping that may be necessary to alleviate drainage or
lead-based paint issues.
3. The costs of purchase, installation, or repair of furnishings and appliances (ie. stoves,
microwaves, refrigerators, window air conditioner units, water softeners, etc..)
4. Improvements on mixed use structures that will exclusively or primarily benefits the
commercial facilities.
5. Recreational facilities including, but not limited to: swimming pools, hot tubs, tennis
courts, barbeque pits/outdoor fireplaces, etc.
6. Greenhouses.
7. Television antennae or satellite dishes.
8. Curb, gutter or street improvements .
9. Area Rugs.
V. PRIORITIES
In addition to the area of City priority, the Community Development Authority has
established priorities for approving applicants and priorities for approving work financed with
Rental Rehabilitation Program funds. Such priorities are as follows:
A. Area Priorities
The Rental Rehabilitation Program will give priority for funding to eligible applicants
located within the Program's priority area as outlined on the Priority Area Map.
B. Work Priorities
Under the Rental Rehabilitation Program funding, emphasis will be placed on work
needed to maintain the structure in a decent, safe, and sanitary condition or to restore the
structure to such a condition. Consequently, the Community Development Authority has
established priorities for work on individual projects. The following classes of work
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establish the Rental Rehabilitation Program's priorities and work approved for funding on
an individual project will be in accordance with such priorities.
1. CLASS I: STRUCTURE/ROOF - Improvement work required to correct major
structural deficiencies and work required to correct deficiencies in roof covering shall
be considered highest priority for funding with loan proceeds. General improvements
in this class are listed in Section III, B, 1, b and c of this chapter.
2. CLASS II: MECHANICAL/ENERGY - Improvement work required to render
mechanical systems (electrical, plumbing, heating) safe, fully functional and code
complying; and work required to properly enclose the structure and conserve energy
within the structure shall be considered high priority for funding with loan proceeds.
General improvements in this class are listed in Section III, B, 1, d, e, f, and g of this
chapter.
3. CLASS III: INTERIOR RENOVATION - Work required to establish or maintain
decent, safe, and sanitary conditions within the structure shall be considered high
priority for funding with loan proceeds. Decorating and cosmetic-type improvements
shall be considered lower priority. General improvements in this class are listed in
Section III, B, 1, h, of this chapter.
4. CLASS IV: EXTERIOR RENOVATION - Work required to establish or maintain
decent, safe and sanitary conditions relating to the exterior of the structure and to the
property shall be considered high priority for funding with loan proceeds. Work of
purely cosmetic nature shall be considered lower priority. General improvements in
this class are listed in Section III, B, 1, I, and J of this chapter.
NOTE: Work required to remove hazards caused by the presence of lead-based paint
shall be considered a high priority and shall be accomplished on each project as part
of the funded work.
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CHAPTER 4
LOAN TYPES, TERMS, AND CONDITIONS
A Rental Rehabilitation Loan may be made to applicants who meet the eligibility requirements
outlined in Chapter 3.
A Loan will be structured as follows:
I. COMBINATION DEFERRED PAYMENT, DEFERRED INTEREST LOANS
Deferred payment, deferred interest loans shall be used as the principal mechanism for funding
the Rental Rehabilitation Program.
B. Maximum Loan Amount
The amount of any individual loan shall not exceed the lessor of:
1. $14,999 per rental dwelling unit and up to a maximum of 8 units, not to exceed the
maximum assistance allowed under the HOME Program defined by the current per-
unit maximum subsidy limit.
2. The actual and reasonable cost of the approved work.
C. Terms and Conditions
1. MONTHLY PAYMENT. No monthly payment will be required during the period of
construction, up to a maximum of 6 months. An additional deferred payment “lease-
up” period of 90 days will follow the construction period. Repayment of the loan will
begin on the first day of the month, one full month following completion of the project
and lease-up of the assisted units and no later than 6 months and 90 days post loan
closing, whichever occurs first.
2. INTEREST RATE/FINANCE CHARGES. The applicable interest rate will be
determined and “locked” at the time of application and determined by survey of the
current Prime Rate, plus 1% published by the Wall Street Journal.
3. PROGRAM FEES AND CHARGES. There shall be no application fees or charges
imposed by the Rental Program on the borrower of a rental rehabilitation loan. A late
payment fee of $25/month will be charged if payment of the loan is not received by
th
the 15 of each month
4. RECORDING FEES. The cost of recording the mortgage or any other documents to
be recorded in connection with the loan shall be paid by the Rental Rehabilitation
Program.
5. LOAN REPAYMENT. The Mortgage Note and, if applicable, the Mortgage
executed by the borrower of a loan shall provide that the then-outstanding balance of
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the principal loan amount shall be immediately repayable to the City of Janesville upon
the occurrence of any of the following:
Title to, or equitable ownership in, the property is transferred to any other party
The borrower further mortgages their property without prior Community
Development Authority written approval.
The borrower defaults in meeting any of the terms and conditions of the loan.
If any loan funds are used for purposes other than eligible rehabilitation work.
If the borrower's application is found to contain a material misstatement of fact.
If, after completion of work financed by the Rental Rehabilitation Program, the
borrower fails to maintain the property in the improved condition.
If borrower fails to keep real property taxes, property insurance and/or Rental
Rehabilitation Program Installment loan payments current.
7. OPTIONAL REPAYMENT OF LOAN. The borrower may repay any part or all of
the then outstanding balance of a home improvement loan at any time prior to the
time that such payment would otherwise be due without incurring any prepayment
penalty. Note: Repayment of the loan will not release the obligations defined under
the Affordability Period and the restrictive deed/covenant will remain, run with the
land, and become the obligation of the future purchaser of the property.
8. LOAN SECURITY REQUIRED. The borrower must provide security for a rental
rehabilitation loan, in the form of a mortgage establishing a lien on the assisted
property. Additionally, a restrictive deed/covenant will be recorded to provide
security for and enforcement of the Affordability Period requirements. In the case of
multiple ownership, the signature of every title holder necessary to represent complete
interest in the fee title for the structure, will be required on each instrument that
evidences or secures the loan.
9. NO FURTHER LIENS. A loan recipient may not further mortgage their property
beyond the rental rehabilitation loan without prior CDA written approval.
10. PRESERVATION OF THE SECURITY. The borrower must agree to maintain the
property in the improved condition during the term of the rental rehabilitation loan
and throughout the Affordability Period, whichever is greater.
11. PROPERTY INSURANCE. During the term of the rental rehabilitation loan, the
borrower must maintain and keep current, hazard insurance on the property to
include: fire and comprehensive general liability in a minimum amount equal to all
liens currently and proposed to be secured by the property.
12. HOMEOWNER LABOR AGREEMENT. An owner, member of the owner's family
or eligible beneficiary of the owner may agree to provide some or all of the labor
without compensation in any form from the proceeds of the home improvement loan if
the Home Improvement Program staff is satisfied with the laborer's skill and ability to
perform the work in a reasonable time. In such cases, the laborer MUST meet the
same requirements of an eligible contractor. A portion of the loan may be withheld by
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the Rental Rehabilitation Program to cover the costs of labor in the event that paid
contractors must be used to complete such improvements. The Rental Rehabilitation
Program may require the staging of the rehabilitation work, release part or all of the
withheld loan funds for further improvements if satisfied that there is no need to
withhold funds to ensure completion (of the remaining rehabilitation work).
13.COMPLETION DEADLINE. The borrower must agree to begin work within 30
days of closing of the loan and complete all work funded by the Rental Rehabilitation
loan proceeds no later than six (6) months from the date of the closing of the loan.
14.OTHER LOAN CONDITIONS. In addition to the terms and conditions outlined
above, the borrower shall agree to comply with the following:
HOME RENT: The maximum amount of rent and utilities that a property owner may charge
to an eligible tenant residing in an assisted unit will be determined to be the HOME Rent
published annually by HUD and applicable throughout the Affordability Period.
AFFORDABILITY PERIOD: Based upon the amount of assistance provided, per unit, the
assisted unit must be offered and made available to a low-moderate income, eligible tenant for
a period of time as defined in Chapter 2, Affordability Period.
Civil Rights -- The borrower shall not discriminate upon the basis of age, sex,
race, creed, color, class, national origin or ancestry in the sale, lease, rental use or
assistance of a home improvement loan.
Equal Employment Opportunity -- The borrower shall comply with all applicable
provisions of the State, local and Federal laws concerning equal employment
opportunity in respect to the improvement work to be performed with the
assistance of a home improvement loan.
Use of Proceeds -- The borrower shall agree to use the proceeds of the rental
rehabilitation loan only to pay for costs of services and materials necessary to
carry out the approved work for which the loan is made.
Disbursement of Funds -- The borrower shall agree to permit the Rental
Rehabilitation Program staff to act as agent for the proceeds of the Rental
Rehabilitation loan and permit the staff to disburse such funds to the borrower,
contractor(s), suppliers, and others in the manner set forth in the contract
documents and in this manual.
Expediting the Work -- The borrower shall assure that the improvement work
shall be carried out promptly and efficiently through written contract let only after
prior approval of the Rental Rehabilitation Program.
Standard Forms to be Used -- A standard contract form provided by the Rental
Rehabilitation Program shall be used for improvement work financed in whole or
in part with a Rental Rehabilitation loan. At the discretion of the Rental
Rehabilitation Program, contractor's forms may be substituted for the Program's
standard form.
Inspection -- The borrower shall permit any inspection of the property to be
improved with the assistance of a Rental Rehabilitation loan to insure code and
contract document compliance. The borrower shall also permit all other
20
inspections deemed necessary by the Rental Rehabilitation Program of the
property, the improvement work, and contracts, materials, equipment, payrolls,
and conditions of employment pertaining to work.
Interest of Public and Private Officers and Employees -- The borrower shall allow
no member of the governing body of the City of Janesville or the lending
institution, and no official or employee of the City of Janesville or the lending
institution who exercises any functions or responsibilities in connection with the
administration of the Rental Rehabilitation Program to have any interest, direct or
indirect, in the proceeds of a Rental Rehabilitation loan, or in any contract entered
into by the borrower for the performance of work financed in whole or in part
with the proceeds of the loan.
Transfer of Property -- The borrower shall not sell the property, nor shall title to
or equitable ownership in the property be transferred in any manner whatsoever to
any party without repayment of the entire loan unless the prior written consent of
the Community Development Authority is sought and obtained.
15. EQUITY. Rental Rehabilitation Loans require equity as described in Chapter 3.
D. Loan Approval
Rental Rehabilitation loans shall be approved by the Neighborhood Services Director on
an individual basis based on the recommendations of the Rental Rehabilitation Program
staff and consistent with Community Development Authority adopted policies. In the
event that the number of applicants and the resulting dollar amount of improvement work
requested exceeds the program's funding available for Rental Rehabilitation loans, the
applicant will be approved and/or wait-listed on the basis of area and work priorities
outlined in Chapter 3.
II. LOAN DEFAULTS
A. In the event another mortgage holder forecloses on a property on which the CDA has a
Rental Rehabilitation loan mortgage, the CDA will review on a case by case basis action
to be taken to protect the CDA's interests including a foreclosure action. In all cases, a
judgment will be sought against loan recipients defaulting on their loans where the CDA is
unable to protect its interest in any other way.
B. In the event any terms or conditions of the Rental Rehabilitation loan are violated, the
loan will be declared in default until such condition causing the default is cured. At the
time the loan is declared in default, the entire balance of the Note becomes due and
payable. The Neighborhood Services Director will have the discretion to negotiate a
“work-out” plan with the defaulted borrower consistent with over-all Home Improvement
Program collection practices. If a satisfactory “work-out” plan cannot be obtained or the
borrower defaults on such plan, the matter will be brought forth to the Community
Development Authority for further review and action, which includes, but is not limited to
foreclosure.
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1. The CDA holds the authority to require full payment of the note if it so deems
appropriate.
III. SATISFACTION OF MORTGAGE
Upon certification by the City Clerk/Treasurer that a secured Rental Rehabilitation loan has
been repaid in full, or that funds are being held in escrow therefore, the City of Janesville shall
execute a Satisfaction of Mortgage or other similar instrument, in a form approved by the City
Attorney, satisfying any mortgage executed to the City of Janesville, (mortgagee) as security
for a Rental Rehabilitation loan made under the Rental Rehabilitation Program.
IV. APPROVAL OF REFINANCING SUPERIOR MORTGAGES
A.The Neighborhood Services Director shall have the authority to approve requests of
clients to refinance mortgages superior to the CDA loan under the following
circumstances:
1.No additional debt is added to the balance of the superior mortgage.
2. A reasonable amount of the closing costs may be added to a superior mortgage,
typically these amounts will be less than $1,800.00.
3. New or additional debt may be approved provided that the additional debt is used in a
way which protects the interest of the Rental Rehabilitation Program in the property
(i.e. paying delinquent taxes, making repairs required by an insurance company,
mortgage, or Housing Quality Standards inspection), making handicapped
accessibility improvements, or making improvements to the home which increase its
value.
4. Decisions of the Neighborhood Services Director may be appealed to the Community
Development Authority (CDA). All such appeals must made in writing and received
within fourteen (14) days of the date the client was notified of the decision of the
Neighborhood Services Director.
B. The Community Development Authority (CDA) may, when it determines that it is in the
best interest of the Rental Rehabilitation Program, authorize refinancing of superior
mortgages when additional debt is placed ahead of the CDA mortgage.
The following principals have been developed to guide the Authority’s consideration of
subordination requests.
1. Rental Rehabilitation Program funds are loans and are intended to be repaid so that
funds may be reinvested in other projects.
2. Placing additional debt ahead of a Rental Rehabilitation Program mortgage may be
appropriate when the funds are being invested in the house and the funds are to be
22
used in a way which protects the interest of the Rental Rehabilitation Program in the
property (i.e. paying delinquent taxes, making repairs required by an insurance
company, mortgage, or Housing Quality Standards inspection), making handicapped
accessibility improvements, or making improvements to the home which increase its
value.
3. When approving placing additional debt ahead of the Home Improvement Program
mortgage, the Community Development Authority may require the acceleration of
repayment on the Rental Rehabilitation Program mortgage.
C. Rental Rehabilitation Program Loans may not be subordinated to loans commonly
referred to as “reverse mortgages”. A “reverse mortgage” is one in which the borrower
receives cash from the equity in the home, either in a lump-sum or as a periodic payment.
No payments are due on the loan and interest/fees are added to the balance of the loan.
The loan is then repaid when the borrower no longer occupies the home, usually following
their death. Because these mortgages rely upon numerous assumptions concerning
property value appreciation and interest rates, the Rental Rehabilitation funds are placed
at too great a risk.
D. Subordination requests involving placing additional debt ahead of the Rental
Rehabilitation Program mortgage shall be made to the Neighborhood Services Director
and placed on a meeting agenda, if the mortgagor has not made a subordination request
within the previous thirty-six (36) months.
Nothing in this section shall be construed to limit the Authority’s practice of allowing any
two Authority Members to place items on a Community Development Authority agenda
for action.
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CHAPTER 5
APPLICATION PROCESSING
The Rental Rehabilitation Program staff, employees of the City of Janesville Department of
Neighborhood Services, shall be responsible for administration of the Rental Rehabilitation Program.
The policies and procedures to be followed by the staff in preparing, processing and approving or
rejecting an application for a Rental Rehabilitation loan are outlined herein. A procedure for
canceling an application or approved loan and a procedure for appeal are also outlined.
I. PROCESSING PROCEDURES
A. Program Information
The Rental Rehabilitation Program staff will make information available concerning the
Rental Rehabilitation Program and the types of loans available to prospective applicants
through neighborhood meetings, written information statements, referrals from other
public and private agencies, and the Community Development Authority's ongoing
housing information services. Prospective applicants will be encouraged to contact the
staff to determine whether the assistance available through the program meets their
specific needs.
B. Application
The Rental Rehabilitation Program staff will contact each prospective applicant who
expresses an interest in participating in the Program. The staff will explain the Program in
detail and gather information, related to eligibility, from the prospective applicant.
Interested prospective applicants who appear to be eligible for the Rental Rehabilitation
Program will be asked to complete the Program's APPLICATION form. If the
prospective applicant so chooses, the staff will aid in the preparation of the application.
The applicant will be required to sign the application and authorization for the release of
information to be used by the staff for verification of information disclosed in the
application. Failure to sign the required consent form(s) will result in an immediate
determination of ineligibility and no further processing of the application will occur.
C. Verifications
The Rental Rehabilitation Program staff shall verify all information pertinent to eligibility
contained on the applicant’s application. Information to be verified shall include:
OWNERSHIP - applicant is the owner on record; INCOME - from all sources including
assets for both current calendar year and previously completed calendar year; DEBT on
property - all outstanding mortgages/liens; STATUS of mortgage, taxes, property
insurance; EQUITY - amount sufficient to secure the home improvement loan; CASH-
FLOW – amount of debt that can be sustained by the property; CREDITWORTHINESS
– verification that all mortgage accounts are in good standing and have been current for
the 6 months immediately preceding the application date.
1. Verification of the above information will be performed at initial application and
24
may also be required upon notification of final eligibility and issuance of Notice of
Acceptance if staff has reason to believe any information has changed or if the information
on file is older than 6 months at the time of loan closing.
Upon a re-verification of the application, an applicant shall be denied assistance if the
verifications indicate that the applicant is no longer eligible for the program.
All information gathered for an applicant's file will be kept confidential. The staff will
complete a SCREENING & ELIGIBILITY WORKSHEET confirming applicant,
property and work eligibility.
ESurvey -- Cost Estimate
.
For each applicant, the staff will complete inspections and cost estimates as follows:
1. A PROPERTY SURVEY will be completed by the Rehabilitation Specialist, together
with the applicant to establish the overall condition of the structure, work required to
meet minimum decent, safe and sanitary conditions and work being requested by the
applicant.
2. A HOME ENERGY ANALYSIS may be completed by the local utility company
energy audit personnel, Rental Rehabilitation Program staff, or third-party contractor
to identify deficiencies in relation to energy efficiency and conservation standards.
3. A Lead Based Paint Risk Assessment will be performed by a third-party independent
contractor if required by the federal regulations.
On the basis of the Property Survey, the Home Energy Analysis, Lead Based Paint
Assessment, and Program criteria for eligible work, the Rehabilitation Specialist will
recommend to applicant certain improvement work and prepare:
3. A PRELIMINARY WORK write up and COST ESTIMATE.
At this stage, applicants will be denied assistance for any of the following reasons:
property is not substandard; property is NOT lacking decent, safe and sanitary conditions;
property is NOT physically and financially fit for rehabilitation; or insufficient equity exists
to secure the necessary loan amount.
G. Review -- Conditional Acceptance
The Rental Rehabilitation Program staff will review applicants in light of Rental
Rehabilitation Program priorities outlined in Chapter 3, Section IV and Program funding
available to be committed.
Each applicant will be informed in writing of Rental Rehabilitation Program action taken
on his/her application. Applicants selected for consideration will receive a letter of
25
CONDITIONAL ACCEPTANCE outlining work being considered for funding and loan
type being offered.
H. Specifications - Plans and Review
The Rental Rehabilitation Program staff will meet with the applicant to discuss the
conditionally approved work and to clarify details from feasibility, design, cost and
Program requirement viewpoints.
A Rehabilitation Specialist will inform the applicant of services available under the
Program to assist in completing the required home improvement work. Such services
include, but are not necessarily limited to: (1) preparation of specifications for the
approved work, (2) preparation of plans (architectural drawings) for approved work,
where such are necessary to accurately describe the scope and intent of the work, and (3)
preparation of the PROJECT CONTRACT documents for the approved work
(construction documents consisting of the GENERAL CONDITIONS,
SPECIFICATIONS, PLAN (if any), contractor's PROPOSAL (bid) form, contractor's
WARRANTY and owner-contractor CONTRACT for approved work. At the discretion
of the Rehabilitation Specialist, contractor's proposal forms may be used in lieu of the
above documents.
At the owner's option, specifications and plans may be prepared by an individual or firm
(other than the Rental Rehabilitation Program) qualified to perform such services, in
which case specifications and plans MUST be approved by the Rehabilitation Specialist
prior to the solicitation of bids.
HISTORIC REVIEW -- It shall be the policy of the Rental Rehabilitation Program to
finance work that is in keeping with the proper and fitting character of the structure to be
renovated, consequently, if the homeowner does not agree with the recommendations of
the Rehabilitation Specialist, the staff will inform the local Historic Commission of the
general intent of the work to be performed and the Commission will be invited to
comment and may request further historical/architectural review. The staff will complete
the HISTORIC BUILDING worksheet and HISTORIC REVIEW.
I. Bidding Process
The Rental Rehabilitation Program requires competitive bidding on the part of interested
and qualified contractors. The homeowner shall be responsible for the solicitation of
bids; however, the homeowner may authorize the Rental Rehabilitation Program staff to
solicit bids on their behalf. In any event, bids MUST be submitted in an approved
proposal/contract format and MUST specifically refer to the previously approved
specifications and plans. Bid documents shall contain the authorized signature of the
contractor, but shall NOT be signed by the homeowner until a bid acceptable to the
homeowner has been reviewed by the Rehabilitation Specialist and the loan closing has
been accomplished.
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It shall be the policy of the Rental Rehabilitation Program staff to accept the lowest
competitive bid submitted for the project and funding will be awarded for the project
based upon the lowest acceptable, competitive bid. At the discretion of the property
owner, a higher bid can be accepted, but funding will only be made available up to the
cost of the lowest bid. The property owner MUST make up the difference in their own
funds to cover the contract and project. Owner’s funds shall be escrowed with the City of
Janesville upon loan closing.
Upon receipt of a contractor's bid acceptable to the applicant, or in the event no
acceptable bids have been received upon completion of a negotiated proposal acceptable
to the applicant, the Rehabilitation Specialist will review the contractor's proposal prior to
loan closing. In reviewing a proposal, the Rehabilitation Specialist will consider the
following:
1. Acceptability of contractor's proposal format if proposal is submitted on a form other
than the Program's forms.
2. Completeness of work description -- all items of specifications included.
3. Reasonableness of contract price.
4. Beginning and completion dates and ability of contractor to complete work in a timely
manner taking into consideration the contractor's outstanding contracts, if any, with
the Rental Rehabilitation Program and the contractor's past performance with the
Program.
5. The contractor is on file as an eligible contractor and/or eligible to be qualified as an
eligible contractor.
6. Prohibitions on the use of paint containing any compounds of lead are specifically
stated in painting specifications.
7. The contractor's warranty covering labor and materials for a period of one year from
work completion is stated in the contract documents.
If a contractor's proposal is not acceptable in light of the above conditions, the
Rehabilitation Specialist may rewrite the contract or suggest that the homeowner attain
bids from other contractors. Once bids acceptable to the homeowner and Rehabilitation
Specialist and/or cost estimates covering the approved work have been received, the staff
will prepare formal acceptance.
An application may be considered withdrawn if bids are not provided within a timely
manner.
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J. Acceptance
The Rental Rehabilitation Program staff will assess the cost reasonableness of each
project and review each project in light of Program funding and Program goals and
objectives. The staff shall recommend to the Neighborhood Services Director approval or
rejection of individual applications. The applicant will be notified in writing of acceptance
or rejection of the application. If rejected, a letter stating reasons for such rejection will
be sent to the applicant and the applicant's file with the Rental Rehabilitation Program will
be closed. If accepted, a NOTICE OF ACCEPTANCE will be sent to the applicant
stating the MAXIMUM LOAN AMOUNT for which to applicant has been approved, the
approved work and the loan terms. Action taken by the staff on each application shall be
considered final; however; any application may be submitted to the Community
Development Authority for further consideration after having been acted upon by the staff
(see Appeal Procedure, Section V, this Chapter).
Loan closing will be scheduled by the Rental Rehabilitation Program staff.
K. Loan Closing
After the applicant has indicated acceptance of the Rental Rehabilitation loan project
terms by signature on a NOTICE OF ACCEPTANCE , Program staff will prepare the
Program Contract document consisting of: LOAN REPAYMENT SCHEDULE/
TRUTH-IN- LENDING DISCLOSURE, CONSUMER MORTGAGE NOTE,
CONSUMER REAL ESTATE SECURITY AGREEMENT, BORROWER'S
CERTIFICATIONS, HOME PROGRAM NOTE, RESTRICTIVE COVENANT, and
any other Program-mandated addenda.
Following the preparation of all necessary loan documents for signature by the applicant,
the staff will establish a date, agreeable to the applicant, for loan closing. Loan closing
will be completed on the established date, at which time the borrower will sign all
necessary loan documents.
1. After a successful loan closing, the staff will then:
a. Record the applicable loan documents with the Register of Deeds.
b. Establish the borrower's construction account with the Home Improvement
Program and/or lending institution.
c. Secure borrower's signature on the construction Project Contract documents.
(See Chapter 6 for extended discussion of contracting procedures.)
d. Obtain signature of Rehabilitation Specialist and stamp of approval of the Home
Improvement Program on construction documents.
e. Furnish the borrower with borrower's copy of construction Project Contract
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documents and loan Program Contract documents.
f. Furnish the contractor with the contractor's copy of construction Project Contract
documents.
g. Authorize the work to proceed.
See Chapter 7 for extended discussion of loan settlement and closeout.
L. Construction Phase
During the time that the Rental Rehabilitation work is being performed, and upon receipt
of a contractor's REQUEST FOR PAYMENT, the Rehabilitation Specialist will make
compliance inspections of the work to insure quality control and compliance with the
plans, specifications, and intent of the construction contract documents, and to authorize
progress payments to contractors. The Rehabilitation Specialist's observations will be
noted as required on an INSPECTION REPORT and made part of the project file. Upon
completion of the work, final inspection will be made by the Rehabilitation Specialist and
borrower.
When the work has been fully and satisfactorily completed, (ie. passed final inspection,
lead paint clearance, and acceptance by the borrower and Rehabilitation Specialist), the
Rehabilitation Specialist will authorize final payment(s) to be made to the contractor(s).
The COMPLETION CERTIFICATE shall indicate acceptance of the work by both the
borrower and Rehabilitation Specialist, as evidenced by their signatures.
M. Project Closeout
After improvement work on the property has been fully and satisfactorily completed, the
Rental Rehabilitation Program staff will begin project closeout and update records.
Such work shall include:
1. Reviewing the client's file for completeness, i.e. Completion Certificate has been
issued, Lien Waivers from contractor are on file, final payments have been processed
and no outstanding bills remain.
2. Updating the DISPOSITION OF FUNDS form and establishing the account balance,
if any.
3. Disbursing construction activity funds in the Home Improvement Program
construction management software (CDM).
4. Sending a CLOSEOUT LETTER together with a copy of the Disposition of Funds
and any other property reports to the property owner.
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N. Follow Up
Post completion inspections will be arranged by the Rehabilitation Specialist at the request
of the owner to assure compliance of the work with the Contractor's Warranty and in
compliance with the Affordability Period requirements.
II. APPLICATION WITHDRAWAL
An applicant for a Rental Rehabilitation loan may withdraw the application at any time prior
to execution of the loan documents simply by informing the Rental Rehabilitation Program
staff of such withdrawal.
III. APPLICATION DENIAL
The Rental Rehabilitation Program may reject an application for a Rental Rehabilitation loan
for any of the following reasons:
A. The applicant refuses to provide all necessary information needed by the staff in
processing the application.
B. It is discovered that the applicant gave false or misleading statements in the application or
that the applicant, while participating in other Neighborhood Services Programs, refused
to follow policies and procedures of such programs.
C. It is discovered that the applicant is not eligible for a Rental Rehabilitation loan according
to eligibility criteria outlined in Chapter 3.
D. The applicant does not permit the property for which the loan is sought to be inspected as
required by the Rental Rehabilitation Program staff.
E. It is determined that the rehabilitation of the property is not feasible due to the poor
physical condition of the structure or lack of sufficient equity.
In the event the Rental Rehabilitation Program denies an applicant's application, the applicant
will be notified in writing of such denial, stating reasons.
IV. CANCELLATION OF A RENTAL REHABILITATION LOAN
A Rental Rehabilitation loan may be canceled according to the following procedures:
A. Cancellation by Borrower
1. By Appeal. The borrower may cancel the loan (after the mortgage is recorded) according
to the following appeal procedure:
a. Borrower must obtain contractor/supplier written approval for contract cancellation
(for all outstanding contracts).
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b. Borrower must obtain the written approval of loan cancellation from the
Neighborhood Services Director.
B. Cancellation by Program
Cancellation and termination of a Rental Rehabilitation loan may be effectuated by the
Rental Rehabilitation Program for any of the following reasons:
1. An adverse lien which would necessitate cancellation of the loan has been recorded
against the property before the Program's mortgage could be recorded.
2. The borrower defaults in meeting any of the terms and conditions of the loan.
3. The borrower fails to follow Rental Rehabilitation Program policies and procedures.
4. The borrower fails to complete the improvement work within the agreed time.
5. The borrower fails to cooperate with the Rental Rehabilitation Program staff in the
performance of their duties and obligations.
Cancellation and termination of a Rental Rehabilitation loan may be effectuated by the
Rental Rehabilitation Program by sending a written NOTICE of cancellation, stating
reasons, to the borrower. Such cancellation may require immediate repayment of loan
funds expended.
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CHAPTER 6
CONTRACTING PROCEDURES
The following are the requirements and procedures of the Rental Rehabilitation Program relating to
contracts for improvement work financed in whole or in part with a rental rehabilitation loan.
I. GENERAL
Work financed with Rental Rehabilitation Program funds shall be undertaken only through a
written contract between the contractor and the homeowner and approved by the Rental
Rehabilitation Program or in the case of small service contracts or materials purchases,
through Purchase Order issued by the Rental Rehabilitation Program. The professional
services offered by the Rental Rehabilitation Program will include assisting owners in
arranging for and obtaining acceptable contracts for rental rehabilitation work. The Program
shall require competitive bidding on the part of interested and qualified contractors. The
homeowner shall be responsible for the solicitation of bids, however, the homeowner may
authorize the Program staff to solicit bids on their behalf. The homeowner shall have final say
in the acceptance/rejection of bids and contractors, however, the project will be funded only
to the limit of the lowest acceptable, competitive bid. The property owner will be responsible
for funding improvement work over and above the lowest competitive bid and shall escrow
funds with the City of Janesville upon loan closing.
II. QUALIFICATION OF CONTRACTORS
The Neighborhood Services Department will establish and, on the basis of its experience,
maintain a current listing of contractors who are interested in contracting for work financed
by the Program and have been qualified as eligible by the Program. The list will not be used
as a means of excluding bidders not on the list at the time the submission of a proposal is
required. However, a contract will not be awarded to a contractor, who at the time of award
is not on the list of eligible contractors. Qualification procedures, criteria for contractor
approval, insurance requirements and standard for performance are as follows:
A. Qualification
Each prospective contractor must submit a completed and signed CONTRACTOR
QUALIFICATION FORM outlining: general background data, suppliers, subcontractors,
insurance, and types of work performed. Included also shall be a list of references, a
certification that contractor is an EQUAL OPPORTUNITY EMPLOYMENT contractor,
and a WARRANTY covering all work performed under the Home Improvement Program
and a CERTIFICATION OF INSURANCE issued by the agent establishing at least the
minimum coverage required by the Program.
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B. Insurance Coverage
Each contractor, in order to become pre-qualified to perform work under the Home
Improvement Program, shall purchase, maintain current and furnish evidence of the
following insurance:
1. GENERAL LIABILITY COVERAGE which may be Comprehensive General
Liability or Manufacturers and Contractors Liability with the following MINIMUM limits
of liability:
BODILY INJURY $500,000 each occurrence, $1,000,000 aggregate
PROPERTY DAMAGE $500,000 each occurrence, $1,000,000 aggregate;
or
COMBINED SINGLE LIMIT $500,000 each occurrence, $1,000,000 aggregate
2. WORKERS COMPENSATION with statutory limits.
NOTE: The Neighborhood Services Department reserves the right to: a) waive the
minimum limits of liability to some lower limits of liability for certain contractors
performing work involving limited exposure to risk, b) raise the minimum limits of liability
to some higher limit for certain contractors performing work involving high exposure to
risk, and c) require additional types of coverage as need arises.
Each contractor shall be responsible for the verification of insurance coverage of
subcontractor(s) in sufficient amounts and types to meet requirements outlined in this
section.
C. Approval
The Neighborhood Services Department staff will review:
1. Contractor's required certifications, licenses, references, suppliers, ongoing projects,
etc. as necessary to establish contractor's credibility and quality of work performed, and
2. Contractor's insurance coverage to insure that at least the minimum limits of coverage
have been met and premiums have been paid current.
Upon favorable review of 1 and 2 above, the Neighborhood Services Department will add
the contractor to its LIST OF ELIGIBLE CONTRACTORS. If in the opinion of the
Neighborhood Services Department, the contractor's qualifications are not sufficient to
merit the contractor's inclusion on the LIST OF ELIGIBLE CONTRACTORS, the
contractor will be informed in writing by Neighborhood Services of non-inclusion on the
list and shall have the right to appeal the staff's decision to the Neighborhood Services
Director for resolution. Such appeal on the part of the contractor shall be in writing and
submitted within 14 days of the Neighborhood Service Director’s written notification.
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D. Performance Standards
The Rental Rehabilitation Program emphasizes quality of materials and work and expects
that contractors have attained a high degree of proficiency in their respective trades.
Consequently, work under the Rental Rehabilitation Program shall be performed in a
manner (using techniques and methods) acceptable to architects, engineers, and code
enforcement officials. Work shall conform to applicable requirements outlined in State
Codes, Janesville's Codes, (housing, building, plumbing, heating, electrical, etc.)
Architectural Graphics Standards (American Institute of Architects) and the minimum
requirements outlined in Minimum Property Standards (U.S. Department of Housing and
Urban Development).
E. Ineligible Contractors
Contractors who are not included on the LIST OF ELIGIBLE CONTRACTORS will not
be eligible to contract work funded by the Rental Rehabilitation Program either as a
general contractor or as a subcontractor to another contractor.
The Rental Rehabilitation Program reserves the right to remove a contractor from the
LIST OF ELIGIBLE CONTRACTORS. Such removal will usually be due to:
unacceptable performance, i.e., demonstrated inability to perform work at the level of
skill required by the program, use of low quality and/or defective materials, failure to
complete work within time specified in contract, failure to correct deficient work
failure of contractor to maintain required insurance
failure of contractor to cooperate with and meet the requirements of other departments
of local government whether or not such projects are Home Improvement Program
funded.
Listing of contractor’s business or individual responsible for the business as a business or
individual (excluded party) barred from participation in HUD-funded Programs. Such list
is maintained at www.EPLS.gov and verified by staff upon execution of each contract.
Once removed from the list, the contractor will be considered ineligible to contract work
funded by the Rental Rehabilitation Program.
III. PLANS AND SPECIFICATIONS
Written specifications, based on the final work write-ups, covering the specific improvement
work for the property for which the home improvement loan will be made, will be prepared by
the Rehabilitation Specialist, or at the homeowner's option, by another individual or firm
qualified to perform such services, in which case the specifications and plan MUST be
approved by the Rehabilitation Specialist prior to the solicitation of bids. Plans will be
prepared when essential to show the scope of the work involved so that a fair bid for the
work can be obtained and so that misunderstanding with the bidder will be avoided. The
written specifications (and plans, if any) will be developed in close consultation with the
owner and will clearly establish the nature of the work to be done and the materials and
equipment to be installed. Known acceptable brands may be identified by reference to
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manufacturer's or association's specifications and provisions will be made for acceptance of
equal substitutions.
IV. SOLICITATION OF BIDS
The owner shall have prime responsibility for the solicitation of bids, however, the owner
may delegate this responsibility to the Rental Rehabilitation Program staff. The procedures
used by the Rental Rehabilitation Program for initiating and obtaining proposals (bids) for
work to be financed with the improvement funds are as follows:
A. Contractor Contract
The homeowner shall be free to contact ANY local contractor and request that the
contractor examine the property and become familiar with the scope of the work. The
owner will give the contractor a copy of the specifications and plans (if any) previously
prepared by the Rental Rehabilitation Program or others and request that the contractor
submit a proposal for the work outlined in the specifications. Competitive bids are
required.
In the event the owner chooses to have the Rental Rehabilitation Program staff solicit
bids, the staff will contact a minimum of three (3) eligible contractors who are qualified to
contract work under the Rental Rehabilitation Program.
B. Bid Format
Bids must be submitted in an approved proposal/contract format which may be one of the
following:
1. The Home Improvement Program's PROGRAM CONTRACT form consisting of the
general condition, specifications and plans, if any, contractor's bid, contractor's
warranty, and owner- contractor contract. This PROJECT CONTRACT form is
intended for use with all general contracts as required by the Rental Rehabilitation
Program.
2. The contractor's form, provided it is acceptable to the Program and contains all of the
above described at B.1.
Bids MUST be submitted, with authorized signature of the contractor, to the Rental
Rehabilitation Program for approval PRIOR to the owner's signature of acceptance.
V. OWNER AS CONTRACTOR
If the owner of the property to be improved with a home improvement loan elects to act as
contractor, the owner must demonstrate to the satisfaction of the Rental Rehabilitation
Program that he or she is capable of performing the work in an acceptable and expeditious
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manner. The owner MUST provide proof of any required training, certification or licensure
necessary to complete the work . Loan proceeds shall not be used to compensate the owner-
contractor for the time and labor. In any case where the owner acts as contractor, the bidding
procedures in Section IV above will not be followed for work to be performed by the owner.
Instead, the owner will complete a proposal package including OWNER LABOR
AGREEMENT and submit it to the Rental Rehabilitation Program staff. The owner's
proposal package must contain:
Bids for each subcontracted item. These bids from subcontractors are to be submitted on
the appropriate bid/proposal form with a copy of the specifications for the work to be
subcontracted.
A breakdown of the material to be used and the labor to be performed by the
homeowner.
A timetable for completion of work.
If the owner is approved as contractor, the contracts of the subcontractors will be formalized
using appropriate Rental Rehabilitation Program forms and procedures. Subcontractors must
be qualified by the Rental Rehabilitation Program.
VI. SELECTION OF CONTRACTOR AND AWARD OF CONTRACT
Upon receipt of a contractor's bid acceptable to the applicant, or in the event no acceptable
bids have been received upon completion of a negotiated proposal acceptable to the applicant,
the Rehabilitation Specialist will review the contractor's proposal prior to obtaining the
owner's signature. In reviewing a proposal, the Rehabilitation Specialist will consider the
following:
Acceptability of contractor's proposal format if proposal is submitted on a form other than
the Program's forms.
Completeness of work description; all items of specifications are included.
Reasonableness of the contract price.
Beginning and completion dates and ability of the contractor to complete work in a timely
manner, taking into consideration the contractor's outstanding contracts (if any) with the
Home Improvement Program and the contractor's past performance with the Program.
The contractor is on file as an eligible contractor.
If the contractor's proposal is not acceptable in light of the above conditions, the
Rehabilitation Specialist may rewrite the contract and/or suggest that the homeowner obtain
bids from other contractors. The process outlined above will again be followed. Once
approved bids for the work have been obtained, selection of contractors and award of
contracts will be made following arrangements for loan settlement with the homeowner.
A Award of Contract
.
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The "contract" shall contain, in addition to the authorized signature of the contractor:
1. The OWNER'S SIGNATURE indicating acceptance of the contractor's proposal
(bid), thus creating a contractual agreement between homeowner and contractor.
2. The APPROVAL of the Rental Rehabilitation Program, thus committing Rental
Rehabilitation Program funds to pay the contract price. The executed contract
documents will be distributed as follows: original to contractor, counterpart to owner
and one copy to be retained in the Rental Rehabilitation Program files. The
owner will be responsible for notifying contractors of non-acceptance of bids once a
contract has been signed with the selected contractor.
VII. PURCHASE ORDER CONTRACTS
In the event that the owner acts as contractor, no compensation shall be paid for the owner's
labor. Materials may be obtained by the owner by use of the Rental Rehabilitation Program's
PURCHASE ORDER. The cost of the materials will be billed directly to the Rental
Rehabilitation Program and will be paid for with funds from the owner's loan account.
Purchase order contracts for materials may also be used with contractors (other than
homeowners) when such arrangements would, in the opinion of the Rehabilitation Specialist,
expedite the project: ie. a situation in which an otherwise bona fide contractor is experiencing
some difficulty obtaining materials on credit. Purchase order contracts may also be used for
minor services in situations deemed expedient by the Rehabilitation Specialist. In any event,
the Rehabilitation Specialist will consult with and obtain approval of the home
owner/borrower prior to the issuance of a purchase order.
VIII. ISSUANCE OF CHANGE ORDER
In accordance with contract provisions, no changes, alterations, additions, deletions, or
substitutions are to be made in the work or materials called for in the specifications (part of
the contract) except by written CHANGE ORDER , signed by the owner, contractor and the
Rehabilitation Specialist. When issued, Change Orders shall be deemed to be modifications of
the contract as originally executed by the owner and contractor. All proposed change orders
shall be reviewed by the Rehabilitation Specialist before being signed by the owner.
IX. QUALITY OF WORK AND MATERIALS
The Rental Rehabilitation Program emphasizes quality of materials and work. Contractors
shall use quality materials in all work performed under the program whether or not materials
are specified by brand in the plans or specifications. Qualified contractors are expected to
have attained a high degree of proficiency in their respective trades, consequently, work under
the Rental Rehabilitation Program shall be performed in a manner (using techniques and
methods) acceptable to architects, engineers and code enforcement officials and shall conform
to applicable performance standards. The homeowner and Rehabilitation Specialist shall have
the right to reject materials and work that do not conform to these established quality
standards and require corrective action by the contractor.
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X. CODE AND CONTRACT INSPECTIONS
Inspections of work financed with Rental Rehabilitation Program funds will be arranged by
the Rental Rehabilitation Program as follows:
A. Code Compliance
During the performance of the work, the Building Services Department may make
inspections of the property as necessary to assure that the work being performed will
comply with the requirements of Janesville General Ordinance Chapters 15 & 16 and
other applicable local codes and ordinances.
B. Contract Compliance
During the performance of the work, inspections of the property shall be made by the
Rental Rehabilitation Program staff as necessary to assure that the work is being
completed in accordance with the Contract Documents.
C. Final Inspection
Upon completion of all work, a final inspection of the property shall be made by the
Rehabilitation Specialist and the owner to confirm that the work has been completed in
accordance with all provisions of the contract documents and Rental Rehabilitation
Program requirements. Following final inspection, a COMPLETION CERTIFICATE
indicating acceptance of the work by both owner and Rehabilitation Specialist shall be
issued.
D. Inspection for Payments
1. Progress Payments - A compliance inspection of the work shall be made by the
Rehabilitation Specialist before a progress payment on a contractor's REQUEST FOR
PAYMENT is made. If the inspection determines that the work completed is
satisfactory, the Rehabilitation Specialist may authorize payment to be made to the
contractor, the amount which shall be deducted from the borrower's account with the
Rental Rehabilitation Program.
If the work completed is not satisfactory and/or not in accordance with the
requirements for a progress payment, as specified in the Contract, the Rehabilitation
Specialist will advise the borrower of any noncompliance in the work or of an
incorrect invoice submitted by the contractor and the contractor will be informed of
any corrective action which must be taken before payment can be made.
Furthermore, no payment shall be made under the contract to a contractor until the
contractor has satisfactorily completed the necessary corrective actions.
2. Final Payments - Upon full completion of the work and receipt of contractor's final
REQUEST FOR PAYMENT, the Rehabilitation Specialist will arrange for a final
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joint inspection of the completed work. Upon issuance of the COMPLETION
CERTIFICATE and receipt of the contractor's RELEASE OF LIEN, the
Rehabilitation Specialist will authorize final payment to the contractor.
Once final payment is made to the contractor, the contractor shall remain responsible
for the replacement of faulty materials and correction of faulty work for the duration
of the time covered in the contractor's warranty.
XI. PAYMENTS TO CONTRACTORS
Checks for labor and materials funded by the Rental Rehabilitation Program are issued each
week on Friday. The Rental Rehabilitation Program will insure prompt payment to the
contractor in accordance with contract document provisions and the following procedure,
provided that contractor's work is acceptable to the owner and the Rehabilitation Specialist.
Contractors and material suppliers shall submit a REQUEST FOR PAYMENT on or before
4:30 p.m. on Friday for payment on the following Friday following completion of the work
(or the delivery of the materials) for which payment is expected. At the request of the
contractor or material supplier, the Rehabilitation Specialist may submit the Request for
Payment. The REQUEST FOR PAYMENT shall include the owner’s signature indicating
approval of the work and the payment to the contractor.
Checks will be issued to the contractor as payment for labor/or materials listed on the Request
for Payment.
In the event a dispute exists between the owner and the contractor with respect with the
work, the Rental Rehabilitation Program will take appropriate action in accordance with the
provisions of the construction contract documents. If the dispute cannot be readily resolved
between the owner and the contractor, the Rehabilitation Specialist, with the prior approval of
the Neighborhood Services Director, can make payments directly to the contractor, providing
the work has been completed in an acceptable manner.
XII. CONTRACTOR'S WARRANTY
Each contractor performing work funded by the Rental Rehabilitation Program shall
guarantee the work performed and materials installed to be free from defect for a period of
one (1) year from the date on which final payment was made to the contractor. In addition,
each contractor will furnish the owner with all applicable manufacturer's and supplier's written
guarantees and warranties covering materials and equipment installed or constructed. Each
contractor shall agree that the warranty contained herein shall apply to all work performed,
including that performed by any subcontractors to the contractor.
XIII. FOLLOW-UP
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In some cases, defects and inadequacies in the work, not apparent at the time of final
inspection, may show up after the Completion Certificate has been issued and final payment for
the work has been made to the contractor.
According to the warranty, the owner may, for a period covered by the warranty, require the
contractor to correct defects and inadequacies in the work performed under the contract. The
Rehabilitation Specialist will, at the request of the owner, inspect the work to confirm the
defects and/or inadequacies in the work and will assist the owner in obtaining prompt
corrective action from the contractor.
XIV. OTHER CONDITIONS
A. Hold Harmless
Each contractor shall agree to defend, indemnify and hold harmless the property owner(s)
and the officers, directors and employees of the funding source and the City of Janesville
from liability and claim for damages because of bodily injury, death, property damage,
sickness, disease or loss and expense arising from contractor's installation or construction
of improvements funded by the Rental Rehabilitation Program. Each contractor shall act
in the capacity of an independent contractor with respect to the property owner(s).
B. Lien Waivers
Each contractor shall protect, defend and indemnify the property owner from any claims
for unpaid work, labor, or materials with respect to contractor's performance. Final
payment shall not be due until the contractor has delivered to the owner, in care of the
Rental Rehabilitation Program, complete release of all liens arising out of contractor's
performance or receipt in full covering all labor and materials for which a lien could be
filed.
C. Permits and Codes
Each contractor shall secure and pay for all necessary permits and licenses required for
contractor's performance and shall perform all work in conformance with applicable local
codes and requirements, whether or not covered by the specifications and drawings for
the work.
D. Equal Opportunity
Each contractor shall agree not to discriminate against any employee or property owner
because of race, color, creed, religion, national origin, sex, marital status, age and status
with regard to public assistance or disability.
E. Unacceptable Risk
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Each contractor shall represent that, at the time of approval of any contract under the
Rental Rehabilitation Program, the contractor is NOT listed on the Disbarred and
Suspended Contractors list of the U.S. Department of Housing and Urban Development.
F. Indemnification
Each contractor shall defend, indemnify and hold harmless, the Wisconsin Housing and
Economic Development Agency (WHEDA), the U.S. Department of Housing and Urban
Development (HUD) and the City of Janesville, including the payment of reasonable
attorney's fees, against any claim or liability for damages or defense against the property
owner's obligation to repay the home improvement funds which may be maintained against
WHEDA, HUD and the City of Janesville as a result of a default in the contractor's
performance or as a result of any other claim or defense which the property owner has a right
to maintain against the contractor.
XV. CANCELLATION OF CONTRACT
The owner shall have the right, with approval of the Rental Rehabilitation Program to cancel a
contract with a contractor at any time prior to actual completion of the work for any of the
following reasons:
The materials used and/or work performed by the contractor fail to meet the Standards of
Performance established by the Rental Rehabilitation Program.
The contractor fails to complete the work within the time specified in the contract unless
an extension of time has been given.
The contractor or employees of the contractor fail to perform the work in a professional
and orderly manner.
In the event it becomes necessary to cancel an approved contract, a written notice of
cancellation stating reasons for such cancellation and signed by the owner and Rehabilitation
Specialist will be sent to the contractor.
CHAPTER 7
LOAN SETTLEMENT, ACCOUNTING, CLOSEOUT
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The procedures and requirements to be followed by the Rental Rehabilitation Program staff for the
completion of the loan transaction with the borrower are outlined herein.
I. LOAN SETTLEMENT PROCEDURES
After the cost of the approved work has been established (within reasonable accuracy) by
acceptable proposals and/or cost estimates, the staff will take the following actions to prepare
for loan settlement:
A. Establish a date for loan settlement -- allowing sufficient time for scheduling loan closing
with the applicant/borrower.
B. Prepare Program Contract documents for the borrower's signature. Program Contract
documents consist of: FEDERAL TRUTH-IN LENDING/CONSUMER ACT
DISCLOSURES, CONSUMER MORTGAGE NOTE, CONSUMER REAL ESTATE
SECURITY AGREEMENT, NOTICE OF RIGHT OF RESCISSION,AND
BORROWER'S CERTIFICATIONS. These Program Contract documents shall
constitute the agreement between the borrower and the Rental Rehabilitation Program for
the financing of work under the Program and the establishment of loan security.
C. Arrange for the title report or title insurance commitment to be updated to the established
date of loan settlement, if required.
D. Previous to loan settlement, the staff will have verified the following:
1. All outstanding liens on Applicant's property .
2. Property insurance coverage for fire and extended coverage in an amount sufficient to
adequately insure the property to be improved, and that insurance premium is paid
current.
3. That property taxes, any other debts owed to the City and/or current assessments are
paid current.
E. The staff will proceed with the loan settlement on the established date as follows:
1. Review with the borrower the terms and conditions of the Rental Rehabilitation loan
as outlined in the documents the borrower is about to sign.
2. Review the conditions under which the loan is repayable and obtain the borrower's
signature on the CONSUMER MORTGAGE NOTE forms.
4. Review the conditions of loan security (mortgage) and certifications incorporated into
the real estate security agreement. The staff will obtain the borrower's signature on
the CONSUMER REAL ESTATE SECURITY AGREEMENT and have the same
notarized.
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5. Review the agreement outlined in the BORROWER'S CERTIFICATIONS and obtain
the borrower's signature on the same.
6. Review accounting and contracting procedures with the borrower and provide the
borrower with copies of the above documents just signed.
F. Post Settlement – After loan closing, the staff will:
1. Record the real estate security (mortgage) agreement(s).
3. Establish the borrower's loan account.
II. ACCOUNTING PROCEDURES
The Department of Neighborhood Services will maintain separate program accounts as the
depositories for all rental rehabilitation funds for the City of Janesville. These accounts will
be separate and distinct from all other accounts maintained by the Community Development
Authority and will be for the sole purpose of depositing Rental Rehabilitation Program funds.
Accounting procedures to be following by both Rental Rehabilitation Program staff and
lending institution staff in maintaining individual borrower's loan accounts are as follows:
A. Separate Account for Each Borrower
The Rental Rehabilitation Program/lending institution will establish and maintain a
separate account for each borrower.
All receipts and disbursement made on behalf of the borrower will be recorded in the
borrower's account and recorded on the DISPOSITION OF FUNDS.
B. Account Disbursements
Disbursements from the borrower's loan account will be made only for the following
purposes:
1. Progress and final payments to suppliers and contractors for work on the borrower's
project. The Rental Rehabilitation Program, upon receipt of appropriate supplier
invoices with borrower’s signature or CONTRACTOR’S REQUEST FOR
PAYMENT form with contractor’s and borrower’s signature and lien releases will
authorize a draw for the completed/approved work/materials. Check will be made
payable to the contractor or supplier.
2. To close out the borrower's loan account by applying unutilized funds, if any, to the
principal amount of the loan. These funds will, in turn, be re-deposited in the
Program's general accounts.
III. LOAN CLOSEOUT ACTION
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After all work is complete and final payments have been made from the borrower's account,
the staff will update the DISPOSITION OF FUNDS STATEMENT, which shall account for
the disposition of the full loan amount. A signed copy of the Disposition of Funds statement
will be mailed to the borrower and the signed original of the Disposition of Funds statement
will be retained in the Rental Rehabilitation Program file.
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CHAPTER 8
APPEAL PROCEDURES
I. APPEAL PROCEDURE
The Community Development Authority has delegated the administration of the Rental
Rehabilitation Program to the Neighborhood Services Director who in turn relies on the
Program staff to assist in the daily operations of the Program including on-site decisions in the
field. In the event of conflict between owner and/or contractor and staff, an aggrieved party
may appeal to the Neighborhood Services for a decision/conflict resolution. The
Neighborhood Service’s decision shall be considered final unless a formal appeal to the CDA
is filed by the aggrieved party within 14 days. Such appeal shall be in writing and delivered to
the Neighborhood Services Director. The CDA shall consider the appeal and make a final
decision informing the aggrieved party in writing of their decision.
II. ADDITIONAL REVIEW OF APPLICATIONS
In considering loans that appear to present unusual risks or involve unusual circumstances or
conditions, that may present difficulties for complying with program rules, the Neighborhood
Services Director may forward the application to the Community Development Authority for
final review and action to approve, reject or approve with conditions the application.
The Community Development Authority shall review a broad range of information to evaluate
potential risk or potential problems with rules for compliance and shall additionally evaluate
the application in terms of the purpose and intent of the program and the long-term best
interest of the program. The Authority is to balance the individual needs and circumstances of
the applicant and the long-term interest of the program before rendering a decision.
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NEIGHBORHOOD SERVICES MEMORANDUM
May 9, 2012
TO: Community Development Authority
FROM: Jennifer Petruzzello, Neighborhood Services Director
SUBJECT: Agenda Item 6: Review and Action on Consolidated Plan 2013 Action Plan
(Community Development Block Grant and HOME Programs) Timetable
and Citizen Participation Process.
Each year, the City of Janesville receives Community Development Block Grant
(CDBG) funds and Home Investment Partnership (HOME) funds as part of the Rock
County Consortium. These funds are awarded on a non-competitive formula basis. As
a formula grantee, certain planning and reporting requirements must be met.
Every five years a Consolidated Plan is developed, followed by annual “Action Plan”
based on the five-year plan. In 2009, the 2010-2014 Consolidated Plan was developed.
The five-year
The Action Plan submitted for 2013 will be based on this five year plan.
Consolidated Plan outlines the general housing and community development
needs and strategies to fill those needs. The annual Action Plan indicates how
CDBG and HOME funds are to be expended during the specific fiscal year.
There are specific citizen participation requirements for the preparation of the
Consolidated Plan Annual Action Plan. These include holding at least one public
hearing during the development of the plan, publishing the plan (or a summary of it) and
allowing a 30 day review period for comments before the plan is submitted to HUD.
The proposed time frame includes a public hearing, the CDA setting of priorities, the
acceptance and review of applications for public service activities, and the allocation of
CDBG and HOME funds for the upcoming budget year. The process is designed to
meet the requirements of the regulations as well as fit in with the City's budget
development schedule.
The Community Development Authority is asked to review, revise if necessary, and
approve this schedule. Once approved, staff will provide information as needed to the
public about the process for the 2013 Community Development Block Grant and HOME
programs application.
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Consolidated Plan 2013 Action Plan
Community Development Block Grant and HOME Programs
Timetable and Citizen Participation Process
****************************************************************************************************
July 18, 2012 CDA holds an initial public hearing on community
development needs and on the general operation of the
CDBG and HOME Programs. The CDA will set priorities for
funding public service activities and these programs.
August 2012 Preparation of the draft 2013 budget.
August 3, 2012 Non-profit applications due for requests for funding.
August 15, 2012 CDA hears presentations by non-profits regarding their
requests for funding.
August 29, 2012 Special meeting at which CDA determines community
development priorities and makes a preliminary allocation of
the 2013 Community Development Block Grant Program and
HOME Program funds.
Sept. 17, 2012 Consolidated Plan (Action Plan) Summary published for
comment; beginning of 30 day review period.
October 17, 2012 CDA holds a public hearing on the proposed allocation of the
2013 CDBG and HOME funds and Consolidated Plan
(Action Plan) 2013 Action Plan and makes a
recommendation to the City Council.
November 2012 City Council acts on proposed budget and allocation of
CDBG and HOME funds.
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