#2 Authorize to enter into a developers agreement to rehabilitate 403 Lincoln Street (File Res. #2012-919)
NEIGHBORHOOD SERVICES MEMORANDUM
June 1, 2012
TO: City Council
FROM: Jennifer Petruzzello, Neighborhood Services Director
SUBJECT: Action on a Proposed Resolution Authorizing the City Manager to
Enter into a Developer’s Agreement with the Wisconsin Partnership
for Housing Development, Inc. for the Purpose of Rehabilitating the
Home at 403 Lincoln Street under the Neighborhood Stabilization
Program. (File Resolution # 2012-919)
Summary
In 2009, the City of Janesville received nearly $1.2 million under the
Neighborhood Stabilization Grant Program (NSP) to purchase foreclosed or
abandoned homes; and rehabilitate, resell or redevelop these homes in order to
stabilize neighborhoods and stem the decline in values of neighboring homes.
To date, the City of Janesville has purchased 12 vacant foreclosed properties
under this program for rehabilitation (6) or blight elimination (6). At this time, 2
homes have sold and an additional 3 are listed for sale. When properties
acquired under this program are resold, sale proceeds can be used to implement
additional projects under the NSP program. As a result of the property sales,
funding is available to undertake an additional project.
The heirs of the property at 403 Lincoln Street, a vacant, tax delinquent property,
have offered to transfer title of the property to the Wisconsin Partnership for
Housing Development (the Partnership) or the City of Janesville in exchange for
a Community Development Block Grant loan satisfaction. The Partnership has
expressed a willingness to rehabilitate the property under the Neighborhood
Stabilization Program.
Under the proposed Developer’s Agreement, the Partnership would rehabilitate
the property and resell it under the Neighborhood Stabilization Program to an
income eligible household. The property would be fully converted back to a
single-family residence, allowing the property to remain owner-occupied.
Rehabilitation would be consistent with City plans for neighborhood revitalization.
A total of $109,622 in NSP Program income would be designated for this project,
and sale proceeds would again be returned to the NSP Program.
Department Recommendation
The Neighborhood Services Department recommends that the Council approve
File Resolution #2012-919, authorizing the City Manager to enter into the
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attached Developer’s Agreement between the City of Janesville and Wisconsin
Partnership for Housing Development for the rehabilitation of 403 Lincoln Street
under the Neighborhood Stabilization Program.
City Manager Recommendation
The City Manager recommends approval.
Suggested Motion
I move to approve File Resolution #2012-919 authorizing the City Manager to
enter into a Developer’s Agreement with The Wisconsin Partnership for Housing
Development, Inc. for the purpose of rehabilitating the home at 403 Lincoln
Street under the Neighborhood Stabilization Program.
Background
In 2009, the Rock County Consortium was awarded $1,930,275 in funding under
the Neighborhood Stabilization Grant Program. Of this total, the City of Janesville
will receive $1,189,865. To date, the City of Janesville has purchased 12 vacant
foreclosed properties under this program. Six of these homes have been or are
being rehabilitated and six of the homes were demolished for future
redevelopment purposes. A final home was donated by a bank to Community
Action and is being rehabilitated with Neighborhood Stabilization funds.
When properties acquired under this program are resold, sale proceeds can be
used to implement additional projects under the NSP program. Two of the
rehabilitated homes have been resold, so funding is available to take on an
additional project at this time. A total of $109,622 in NSP Program income would
be designated for this project.
The property located at 403 Lincoln Street is identified as a 2-unit residential
property although it was most recently being used as a single-family home. It was
built in approximately 1900 and is zoned R-2 Limited General Residence District.
It is a contributing structure in the Old Fourth Ward Historic District, as are most
of the homes located in the Fourth Ward. The 1,596 sf home has a combined 5
bedrooms and 2 baths and a 2-car detached garage. It is located 1 block from
the Fourth Ward Park and next door to the recently rehabilitated NSP property at
407 Lincoln Street.
In 1999, a $24,000 deferred payment home improvement loan was awarded to a
low income, elderly individual for her property at 403 Lincoln Street funded
through the Community Development Block Grant (CDBG) Program. Work
completed at that time included: exterior siding, gutters and downspouts,
windows and doors, partial electrical upgrade and other items meant to address
minimum housing standards. Terms of the loan included the requirement that
payment on this loan becomes due when the property is no longer occupied by
the Borrower as a principal residence. The loan holder passed away in 2011, and
the loan is now due in full.
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The heirs have twice attempted to sell the property via auction for the list price of
$35,000 without success. They have approached the City to see if we would be
interested in purchasing the property for an amount sufficient to cover
outstanding bills. The property is currently vacant, and property tax bills are one
year delinquent ($1,546.72 plus penalties).
The Community Development Authority (CDA) reviewed the request of heirs at
their meeting on May 16, 2012. At that time, they considered several options,
including: satisfying the loan and rehabilitating the property, declining the offer
and attempting to collect on the lien, satisfying the loan and demolishing the
property and initiating foreclosure. The CDA directed that the loan be forgiven if
the property is transferred to the Partnership or the City and recommended that
the City Council approve a Developer’s Agreement to provide funding for the
rehabilitation of the property. The CDA determined that the rehabilitation of this
home meets CDBG program goals of improving existing housing stock and
increasing homeownership opportunities.
The City has entered into an Agreement with the Partnership, a private nonprofit
corporation working to expand affordable housing opportunity through innovation
in housing development, consulting, finance and advocacy for the
implementation of the Neighborhood Stabilization 3 Program. Under that
Agreement, the Partnership is responsible for the rehabilitation of five single
family homes and the construction of one new home. To date, the working
relationship with the Partnership has been good and work under the NSP 3
Agreement has been proceeding ahead of schedule.
Since founding in 1985, the Partnership has formed numerous collaborations
with the public, nonprofit and private sectors in efforts to build and sustain strong
neighborhoods and communities. The Partnership has extensive experience
administering federal housing funds. Currently, the Partnership is engaged in
acquisition, rehabilitation and resale of 15 homes in four communities using
NSP1 funds. The partnership manages the HOME-funded down payment
assistance, home improvement and purchase/rehabilitation loan programs of the
HOME Consortium (Jefferson, Ozaukee, Washington and Waukesha Counties)
and a CDBG-funded housing rehabilitation loan program of Waukesha County.
The Partnership is also providing extensive consulting services in the design and
implementation of housing programs for flood relief in Cedar Rapids, Iowa which
are funded primarily with federal funds. The Partnership has several staff
members who have been involved in its NSP1 development activity and in
providing NSP technical assistance under contract to HUD, all of whom are
available as staffing resources for the proposed NSP 3 activity.
City staff approached the Partnership regarding their willingness to undertake an
additional rehabilitation project in Janesville. Staff and members of the
Partnership have conducted a property inspection to assess the potential for
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resale and/or rehabilitation purposes. At this time, we have an estimate of
$75,000-$85,000 to complete conversion of the home back to a single family
home; address structural issues with the foundation; reconfigure the first floor to
improve functionality as a single-family home; address lead hazards, electrical
and heating deficiencies, energy efficiency, and housing quality standards.
Under the proposed Developer’s Agreement, the Partnership would be
responsible for acquiring the property at 403 Lincoln Street, rehabilitating this
property as a single family home, and reselling it to an income eligible household
under the guidelines of the NSP Program. The Partnership would ensure
property taxes are brought current. Rehabilitation would begin by the end of
September.
Analysis
The Neighborhood Stabilization Program provides that funding obtained
through the sale of rehabilitation projects may be used to continue to
purchase additional properties and to rehabilitate or demolish such
properties to help stabilize neighborhoods. Funding is available through
the sale of 2 properties to undertake an additional project.
The property at 403 Lincoln is currently secured by a $24,000 mortgage
held by the City of Janesville Community Development Authority.
Repayment is due at this time, but the heirs of the property have indicated
there is no money in the estate and that they have been unable to sell the
property. The CDA has recommended that this loan be satisfied upon
transfer to the Wisconsin Partnership for Housing Development or the City
of Janesville. Given the current condition of the home, conventional
financing for a homeowner is not likely to be approved. A cash purchase
by an investor to re-establish the property as a 2-unit rental is possible,
but again is not likely given the nature of the repairs. Increasing rental
properties and density in this neighborhood is contrary to City goals. If the
loan is not forgiven, the property may continue to deteriorate.
The rehabilitation of the property and full conversion back to a single
family home is consistent with the City of Janesville Look West and Old
Fourth Ward Neighborhood Revitalization Plans and the City of Janesville
Comprehensive Plan, which call for the revitalization of neighborhoods
that have experienced decline and for the City to acquire vacant,
dilapidated, and tax-delinquent properties for rehabilitation and resale to
increase owner-occupancy and promote continued investment in existing
neighborhoods.
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The Partnership has 20 years of housing development experience, has
staff who are knowledgeable in the Neighborhood Stabilization programs,
and who have the experience necessary to ensure the NSP program is in
compliance with the State and Federal Requirements. The Partnership will
act on behalf and in cooperation with the City of Janesville and adhere to
all NSP rules.
Attachments: Location Map
Property Photos
Developer’s Agreement
cc: Eric J. Levitt, City Manager
Jay Winzenz, Director of Administration / Assistant City Manager
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RESOLUTION NO. 2012-919
A Resolution Authorizing the City of Janesville to enter into a Developer’s
Agreement with the Wisconsin Partnership for Housing Development, Inc. for the
Purpose of Rehabilitating the home at 403 Lincoln Street under the Neighborhood
Stabilization Program.
This agreement entered into between the City of Janesville, a Wisconsin Municipal Corporation,
conducting its principal business at 18 North Jackson Street, Janesville, WI 53547-5005 (hereinafter
referred to as the “City”), and The Wisconsin Partnership for Housing Development, a private, non-profit
organization operating as provided in Section 49.265 and other related provisions of the Wisconsin
Statutes, as from time to time amended or renumbered, conducting its principal business at 121 South
Pickney Street, Suite 200, Madison, WI 53703 (hereinafter referred to as the “Developer”).
WHEREAS
, the City has received funding under the Neighborhood Stabilization Program (NSP) for the
purpose of stabilizing neighborhoods through the acquisition, demolition, rehabilitation, and
redevelopment of foreclosed properties; and
WHEREAS,
The Developer has expressed a willingness to rehabilitate the 2-unit residential property at
403 Lincoln Street and convert this property into a single family home under the Neighborhood
Stabilization Program; and
WHEREAS,
the Owners of the property have expressed a desire to deed the property to the Developer
for rehabilitation and resale; and
WHEREAS,
the City will provide up to $109,622 in funding to the Developer for the purpose of acquisition
and rehabilitation of the residential property located at 403 Lincoln Street and such property will remain
under the ownership of the Developer; and
WHEREAS,
The rehabilitation and conversion of the property into a single family home is consistent with
the City of Janesville Look West and Old Fourth Ward Neighborhood Revitalization Plans and the City of
Janesville Comprehensive Plan, which call for the revitalization of neighborhoods that have experienced
decline and for the City to acquire vacant, dilapidated, and tax-delinquent properties for rehabilitation and
resale to increase owner-occupancy and promote continued investment in existing neighborhoods; and
WHEREAS,
the Developer will identify income eligible, potential homebuyers; and
WHEREAS,
the Developer agrees to adhere to all HUD rules and guidelines for the NSP; and
WHEREAS,
the Common Council hereby find that this program and partnership are of benefit to and in
the best interests of the City, its residents, businesses, and taxpayers.
NOW, THEREFORE, BE IT RESOLVED,
by the Common Council of the City of Janesville that they
hereby authorize and direct the City Manager to enter into a developer’s agreement on behalf of the City
of Janesville withthe Wisconsin Partnership for Housing Development for the purpose of utilizing
Neighborhood Stabilization Program grant funding; and
BE IT FURTHER RESOLVED,
that the City Manager, and/or his designees, are hereby authorized to
negotiate, draft, prepare, execute, file, and modify such other documents, papers and agreements
ancillary and/or pertaining hereto, and, from time to time, to take and/or make whatever other minor
actions and/or minor modifications to the above described agreement(s) as the City Manager and/or his
designee may deem necessary and/or desirable to effectuate the purposes of such agreements, the
program, and/or the intent of this Resolution.
ADOPTED:
Motion by:
Second by:
APPROVED:
Councilmember Aye Nay Pass Absent
Dongarra-Adams
Farrell
Eric J. Levitt, City Manager
Kealy
Liebert
ATTEST:
Severson
Steeber
Voskuil
Jean Ann Wulf, City Clerk-Treasurer
APPROVED AS TO FORM:
Wald Klimczyk, City Attorney
Proposed by: Neighborhood Services
Prepared by: Neighborhood Services Director
Johnson St
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NSP AGREEMENT
THIS AGREEMENT MADE this day of 2012 by and between the City of Janesville hereinafter
referred to as the “SUBGRANTEE”, and Wisconsin Partnership for Housing Development a non-profit corporation,
hereinafter referred to as the “DEVELOPER” and which is located at: 121 S. Pinckney Street, Suite 420, Madison, WI
53703 .
WITNESSETH
WHEREAS, the SUBGRANTEE is the recipient of Neighborhood Stabilization Program Funds from the State of
Wisconsin, who received such funds from the U.S. Department of Housing and Urban Development (HUD); and
WHEREAS, the DEVELOPER has submitted a proposal for use of funds for an NSP-eligible PROJECT;
NOW, THEREFORE in consideration of the mutual covenants and obligations herein contained, including the
Attachments, and subject to the terms and conditions hereinafter stated, the parties hereto understand and agree as
follows:
I. Definitions
Unless specifically provided otherwise or the context otherwise requires, when used in this Agreement:
1.“Abandoned” refers to homes where no mortgage or tax payments have been made by the property
owner for at least 90 days or a code enforcement inspection has determined that the property is not
habitable, and the owner has taken no corrective actions within 90 days of notification of the
deficiencies.
2. “Appraisal” means an appraisal which meets the criteria specified in the Uniform Relocation
Assistance and Real Property Acquisition Policies Act (“URA”), as further defined in 49 CFR 24.103.
3.“Blighted structure” means a structure that exhibits objectively determinable signs of deterioration
sufficient to constitute a threat to human health, safety, and public welfare.
4.“CDBG Act” means the Housing and Community Development Act of 1974, Pub. L. No. 93-383, as
amended. Unless otherwise noted in HERA (as amended) and the alternative requirements in the NSP
Notices, NSP is governed by the CDBG regulations.
5.“Current market appraised value” means the value of a property that is established through an
appraisal made in conformity with the appraisal requirements of the URA at 49 CFR 24.103 and
completed within 60 days prior to a final offer made for the property by the Subrecipient, developer, or
individual homebuyer; provided, however, if the anticipated value of the proposed acquisition is
estimated at $25,000 or less, the current market appraised value of the property may be established
by a valuation of the property that is based on a review of available data and is made by a person the
Subrecipient determines is qualified to make the valuation.
6."Eligible Costs" means costs for the activities specified in Error! Reference source not found. of this
Agreement for which NSP funds are budgeted, provided that such costs (i) are incurred in connection
with any activity which is eligible under HERA and Section 105A of Title I of the CDBG Act, and (ii)
conform to all NSP requirements.
7."Environmental Requirements" means the requirements described in 24 CFR Part 58.
8. “Foreclosed” refers to a property that is at least 60 days delinquent on its mortgage and the owner has
been notified; or the property owner is 90 days or more delinquent on tax payments; or under state or
local law, foreclosure proceedings have been initiated or completed; or foreclosure proceedings have
been completed and title has been transferred to an intermediary aggregator or servicer that is not an
NSP SUBGRANTEE, subrecipient, developer, or end user.
9."HERA" means the Neighborhood Stabilization Program (NSP) found in Title III of Division B of the
Housing and Economic Recovery Act of 2008, as amended.
10."HUD" means the United States Department of Housing and Urban Development.
11.“Land bank” means a governmental or nongovernmental nonprofit entity established, at least in part, to
assemble, temporarily manage, and dispose of vacant land for the purpose of stabilizing
neighborhoods and encouraging re-use or redevelopment of urban property. For the purposes of the
NSP, a land bank will operate in a specific, defined geographic area. It will purchase properties that
have been abandoned or foreclosed upon and maintain, assemble, facilitate redevelopment of, market,
and dispose of the land-banked properties. If the land bank is a governmental entity, it may also
maintain abandoned or foreclosed property that it does not own, provided it charges the owner of the
property the full cost of the service or places a lien on the property for the full cost of the service.
12.“LMMI” is a HUD-defined term incorporating households with eligible incomes (at or below 120% of
area median, based on household size and county), including low-, moderate-, and middle-income, in
referring to the national objective of the CDBG program.
13.“Low-Income Set-Aside” refers to the HERA requirement that not less than 25 percent of the funds
NSP funds to the SUBGRANTEE shall be used for the purchase and redevelopment of abandoned or
foreclosed upon homes or residential properties that will provide permanent housing to individuals or
families whose incomes do not exceed 50 percent of area median income.
14.“NSP Notice” refers to the alternative requirements for NSP issued by HUD in the Federal Register on
October 6, 2008, and as modified in the Bridge Notice issued on June 19, 2009.
15."NSP Funds" mean those funds to be provided by the SUBGRANTEE pursuant to the terms of this
Agreement, as specified in Section II of this Agreement.
16.“Program Income" means the NSP3 portion of any proceeds received by the DEVELOPER and repaid
to the SUBGRANTEE.
17."PROJECT" means the activities described in the Proposal and in Exhibit A of this Agreement which
are to be carried out to meet the objectives of the NSP3 Program.
18."Proposal" means the DEVELOPER’s response to the SUBGRANTEE’s NSP Request for Proposals or
such other submittals, as are specified in Exhibit A of this Agreement.
19.“Purchase Discount” means the minimum discount percentage from the current market- appraised
value under which a property may be purchased. Under HUD Notice FR–5255–N–02, the purchase
discount for NSP is “at least 1 percent from the current market-appraised value of the home or
property.”
20.“Vacant properties” includes both vacant land and properties with vacant structures on the land.
II. Terms and Conditions of the Funding
A.Funding Amount – NSP Program Income Funds in the amount of $109,622 are obligated for use in
compliance with this agreement, as reflected in the budget in Error! Reference source not found..
1.These amounts represent an allocation of the SUBGRANTEE’s total NSP funding contingent upon
DEVELOPER performance and not an entitlement to a certain grant amount, and shall only be
disbursed for approved projects and costs.
2.Approved budget – The approved budget is attached to this agreement as Error! Reference source
not found.. It is understood and agreed that funds will be used according to the approved budget.
DEVELOPER may reallocate up to 10% of the Total NSP Funding for increases or decreases in
individual line items of the budget. Reallocations of more than 10% require SUBGRANTEE
approval.
B.Use of Funds – NSP funds obligated under this agreement may be used as follows:
1.No Commitment or Expenditure Prior to Environmental Clearance – This obligation of NSP funds is
conditional upon satisfactory completion of environmental review under 24 CFR Part 58 as provided in
Section VIII. Notwithstanding any provision of this Agreement, the parties hereto agree and
acknowledge that this Agreement does not constitute a commitment of funds or site approval, and that
such commitment of funds or approval may occur only upon satisfactory completion of environmental
review and receipt by SUBGRANTEE of a release of funds from the U.S. Department of Housing and
Urban Development under 24 CFR Part 58. The parties further agree that the provision of any funds
to the project is conditioned on SUBGRANTEE’s determination to proceed with, modify or cancel the
project based on the results of environmental review. Further, the DEVELOPER will not undertake or
commit any funds to physical or choice-limiting actions, including property acquisition, demolition,
movement, rehabilitation, conversion, repair or construction prior to the environmental clearance, and
understands that violation of this provision may result in the denial of any funds under the agreement.
2.Eligible Activities – Funds may be used for the NSP eligible activities that are checked below:
Acquisition __1__ abandoned or foreclosed single-family properties
Rehabilitation/reconstruction __1__ acquired abandoned or foreclosed
New construction _____ vacant properties
3.Eligible Properties – The DEVELOPER may only utilize NSP funds for properties approved by the
SUBGRANTEE. Approved properties are listed in Exhibit A. Other than those properties explicitly
listed in Exhibit A, the DEVELOPER must prepare and submit a Property Approval Request Form
attached in Exhibit C for each property to be assisted with NSP funds. Eligible properties must meet
the following conditions for approval by SUBGRANTEE:
a.Must be located in an NSP Target Area as identified in Exhibit A.
b.Must have no substantial adverse environmental factors as determined by an environmental
review.
c.Must have only one dwelling unit on site or a multi-unit to be converted to a single family unit;
acquisition or two-family or other mixed owner-rental properties require SUBGRANTEE
advance approval in writing and compliance with NSP rental restrictions.
d.Must otherwise be in suitable locations for marketing and resale to low- and moderate-income
homebuyers.
e.Must be unoccupied and have no personal possessions on site, unless SUBGRANTEE
approves acquisition of an occupied property and stipulates compliance with relocation
requirements in Section VIII.
f.Must be eligible for acquisition under NSP as foreclosed or abandoned or vacant.
4.Activity Limitations – In implementing projects, DEVELOPER shall undertake only those activities
permitted by this agreement, and comply with all provisions of this agreement, including the project
requirements in Section III, as they may be modified by HUD. In particular
a.Acquisition – In order to ensure that only NSP-eligible properties are acquired, DEVELOPER
may acquire only those properties listed in Exhibit A or subsequently approved by
SUBGRANTEE. No acquisitions may occur without environmental clearance, and
determination of the applicability of URA provisions.
b.Demolition – Primary structures on properties acquired or contributed may not be demolished
unless they are declared as blighted by SUBGRANTEE.
c.Construction/Rehabilitation/Reconstruction – DEVELOPER may use NSP funds for the
construction, rehabilitation or reconstruction of properties as approved by the SUBGRANTEE
and permitted by this agreement, and shall implement the requirements in Section VII as
applicable to all projects.
C.Cost Limits – All uses of funds are subject to the approval of the SUBGRANTEE.
D.Deadlines – Timely completion of the work specified in this agreement is an integral and essential part of
performance. The NSP funds are subject to Federal deadlines and failure to comply could result in the loss
of the Federal funds. By the acceptance and execution of this agreement, it is understood and agreed by the
DEVELOPER that the PROJECT will be completed as expeditiously as possible and that the DEVELOPER
will make every effort to ensure that the project will proceed and will not be delayed. Failure to meet these
deadlines can result in cancellation of this contract and the revocation of NSP funds.
1.Project Expenditure Deadlines – All project activities and all expenditures of NSP funds must be
completed by December 31, 2013. If checked the additional interim deadlines apply to project
expenditures:
50% of NSP funds expended and drawn by _____________
75% of NSP funds expended and drawn by ____________
100% of NSP funds expended and drawn by Sept 30, 2013 _
2.The DEVELOPER expressly agrees to complete all work required by this agreement in accordance
with the timetable set forth in Error! Reference source not found. and as provided above.
a.If DEVELOPER fails to obligate or expend NSP funds as indicated in this agreement,
SUBGRANTEE in its sole discretion may recapture a portion or all of the DEVELOPER’s total
NSP funding allocation.
b.Changes to the timetable may be approved by the SUBGRANTEE, in the event the
DEVELOPER is unable to meet the above deadlines or complete the above services because
of delays resulting from Acts of God, untimely review and approval by the SUBGRANTEE and
other governmental authorities having jurisdiction over the PROJECT, or other delays that are
not caused by the DEVELOPER, the SUBGRANTEE shall grant a reasonable extension of time
for completion of the WORK. It shall be the responsibility of the DEVELOPER to notify the
SUBGRANTEE promptly in writing whenever a delay is anticipated or experienced, and to
inform the SUBGRANTEE of all facts and details related to the delay. However,
SUBGRANTEE may not provide extensions beyond deadlines imposed by HUD.
3.Since it is mutually agreed that time is of the essence, the DEVELOPER shall cause appropriate
provisions to be inserted in all contracts or subcontracts relative to the work tasks required by this
agreement, in order to ensure that the PROJECT will be completed according to the timetable set forth
in this agreement.
E.Sale to Buyers – All units acquired under this agreement shall be sold to eligible buyers in accordance with
the provisions of this section.
1.Eligible Buyers – Eligible homebuyers must be determined to be income-eligible in compliance with the
limit checked below.
Middle Income – less than 120% of Area Median Income __1__ properties
Moderate Income – less than 80% of Area Median Income _____ properties
Low Income – less than 50% of Area Median Income _____ properties
2.Sales Price – Sales prices must be in compliance with the price limits in Section III.F, and the sales
price of each property must be approved by SUBGRANTEE.
3.Income Certification and Documentation – Every purchaser shall be determined to be eligible
according to the requirements at 24 CFR 570.5.
4.NSP Financing to Buyers – All buyers must have first mortgages from a mortgage lender. To further
increases the affordability of the home purchase, DEVELOPER will offer a “soft second mortgage” to
each buyer from the NSP Funds awarded under this agreement. These funds are included in the
amount of funding provided under this agreement, and not an additional amount, and represent a
transfer of some of the NSP assistance used by DEVELOPER to the eligible buyer. The terms of this
assistance are as follows:
a.Amount – The amount of the NSP buyer financing shall be determined based upon the gap
between the approved sales price and buyer funds from the first mortgage and downpayment.
b.Affordability Period – The term shall be 5, 10, or 15 years, based on the amount of the NSP
assistance in the unit and based upon HOME rules related to affordability period.
c.Resale During Affordability Period – If the buyer sells prior to the end of the affordability period,
NSP funds will be recaptured by the SUBGRANTEE out of net proceeds of the sale according
to the formyla containued in the NSP recapture note and mortgage.
d.Buyer Note & Mortgage – All NSP-assisted properties are subject to ongoing compliance
requirements during the period of affordability. Upon sale of an NSP-funded home,
DEVELOPER will cause the homebuyer(s) to execute a promissory note and mortgage deed in
favor of SUBGRANTEE as mortgagee for the combined amount of the mortgage assistance
and down payment assistance as defined herein.
i.The note and mortgage documents must be approved by SUBGRANTEE prior to their
being executed by the homebuyer(s).
ii.After each closing occurs, DEVELOPER will provide the recorded note and mortgage to
SUBGRANTEE.
e.Limitation on Downpayment Assistance – No buyer may receive more than 50% of the
downpayment amount as downpayment assistance from NSP funds. No buyer may receive
additional NSP assistance from programs or sources other than this agreement without the
express consent of the SUBGRANTEE based on a determination that the additional assistance
does not constitute double dipping.
5.Net Proceeds of Sale – Upon sale of an NSP-funded home, from the net proceeds of the sale after
payment of all closing costs and approved developer fees, DEVELOPER will repay SUBGRANTEE the
total amount of NSP funds advanced, minus the following amounts:
a.The amount of the development subsidy as defined herein; and
b.The amount of any buyer assistance, including mortgage assistance and down payment
assistance as defined herein.
c.FCI funds invested into the property
III. Project Requirements
The DEVELOPER agrees to comply with all requirements of the NSP Program as stated in the NSP Notice and
CDBG regulations, including but not limited to the following:
A.NSP Eligible Use, CDBG National Objective and Eligible Activities – The DEVELOPER will ensure and
document that its NSP activities meet LMMI national objective, eligible use, allowable cost, and eligible
activity requirements of the NSP Notices & CDBG Regulations. The DEVELOPER will ensure that any
expenditure of NSP funds will be in compliance with the requirements, and acknowledges that NSP funds will
only be provided as reimbursement for eligible costs incurred, including actual expenditures or invoices for
work completed.
B.Property Acquisition – If any foreclosed-upon homes or residential properties are to be acquired with NSP
funds, the DEVELOPER will acquire property with NSP funds at a minimum discount of one percent from fair
market value for each residential property. This requirement applies to foreclosed properties purchased with
NSP funds, and the discount must be taken from the current market appraised value as described in the NSP
NOFA.
1.Eligible properties – HERA and NSP limits the properties that are eligible for assistance to certain
locations and types of properties (depending on the Eligible Use.) Eligible property types and
locations are listed in Exhibit A. If the DEVELOPER has proposed to undertake any activities subject
to the NSP Low-Income Set-Aside, these activities may only be undertaken on foreclosed or
abandoned residential property.
2.Prohibition against eminent domain – The DEVELOPER will not undertake any involuntary acquisition
of property with NSP funds without prior written consent of the Lead Applicant and written opinion of
counsel that such acquisition is lawful.
3.Appraisal – Appraisals funded with NSP funds are required for all foreclosed properties. Exceptions to
this requirement may be approved by the SUBGRANTEE.
a.NSP requires appraisals to be performed with respect to the NSP funded acquisition of
foreclosed upon homes and residential properties, even though they may be considered
voluntary under the URA. The SUBGRANTEE further requires an appraisal for all NSP-
assisted acquisitions of property to ensure cost reasonableness.
b.The URA appraisal requirements of 49 CFR 24.103 must be met. For acquisitions which meet
the applicable voluntary acquisition requirements of 49 CFR 24.101(b), the DEVELOPER must
ensure that the owner is informed in writing of what it believes to be the market value of the
property, and that the DEVELOPER will not acquire the property if negotiations fail to result in a
an amicable agreement (see 49 CFR 24.101(b)(1) & (b)(2)).
c.The appraisal must have been completed within 60 days of the offer made for the property (an
initial offer can be made, subject to the completion of the appraisal within 60 days of a final
offer).
4.Occupied properties – If the PROJECT is occupied at the time of this commitment, the DEVELOPER
will comply with the relocation requirements of 24 CFR 570.606.
5.Purchase Discounts – HERA requires all NSP-assisted acquisitions of foreclosed property to be at a
discount from the current market appraised value of the property, taking into account its current
condition, and such discount shall ensure that the DEVELOPER is paying below-market value for the
home or property. A minimum discount of 1 percent less than current market appraised value for each
property purchased with NSP funds is required for all acquisitions funded with NSP. The address,
appraised value, purchase offer amount, and discount amount of each foreclosed property purchase
must be documented in the DEVELOPER’s records.
C.Demolition – The DEVELOPER will not use NSP funds to demolish the primary residence. Permission for
demolition of minor structures such as porches, sheds and garages shall be deemed to have been granted
when SUBGRANTEE approves the plans and specifications (which may also be called work write-ups) for a
particular property proposed by DEVELOPER.
D.Construction/rehabilitation – For any construction or rehabilitation in this project, DEVELOPER will comply
with the provisions of Section VII. If this project involves the construction or rehabilitation of properties with 8
or more units, the DEVELOPER shall comply with the provisions of the Davis-Bacon Act and regulations (29
CFR, Part 5), as amended. If the building or commonly owned development (e.g. condo or townhouse) has 8
or more units, Davis Bacon is applicable, even if NSP funds only treat one unit.
E.Property Standards – The DEVELOPER will carry out all NSP-assisted activities in accordance with
applicable laws, codes, and other requirements relating to housing safety, quality, and habitability, in order to
sell, rent, or redevelop such homes and properties.
1.Property Standards – DEVELOPER will carry out all NSP-assisted rehabilitation of a foreclosed-upon
home or residential property in compliance with property standards, and in accordance with applicable
laws, codes, and other requirements relating to housing safety, quality, and habitability.
2.Lead-based paint – The DEVELOPER agrees that any construction or rehabilitation of residential
structures with assistance provided under this Agreement shall be subject to HUD Lead-Based Paint
Regulations at 24 CFR 570.487 or 24 CFR 570.608, and 24 CFR Part 35, Subpart B. Such
regulations pertain to all NSP-assisted housing and require that all owners, prospective owners, and
tenants of properties constructed prior to 1978 be properly notified that such properties may include
lead-based paint. Such notification shall point out the hazards of lead-based paint and explain the
symptoms, treatment and precautions that should be taken when dealing with lead-based paint
poisoning and the advisability and availability of blood lead level screening for children under seven.
The notice should also point out that if lead-based paint is found on the property, abatement measures
may be undertaken. The regulations further require that, depending on the amount of Federal funds
applied to a property, paint testing, risk assessment, treatment and/or abatement may be conducted.
3.Accessibility – The DEVELOPER shall work with any homebuying household that includes a person
with disabilities to provide accessibility modifications required under the policy of reasonable
accommodations and reasonable modifications. All such modifications shall be considered to be
eligible NSP costs under this agreement.
F.Maximum Sales Price – Approved sales prices are listed in Exhibit A. Changes to the prices must be
approved by the SUBGRANTEE. However, in no event shall the sales price exceed the amount permitted by
the NSP requirements listed below:
1.If an abandoned or foreclosed upon home or residential property is to be sold to an individual as a
primary residence, no profit may be earned on such sale.
2.HERA Section 2301(d)(2) directs that the sale of such property shall be in an amount equal to or less
than the cost to acquire and redevelop or rehabilitate such home or property up to a decent, safe, and
habitable condition. Further, the sale price must be the lesser of the post-development fair market
value or the acquisition/redevelopment cost.
3.The maximum sales price for a property is determined by aggregating all costs of acquisition,
rehabilitation, and redevelopment (including related activity delivery costs, which generally include,
among other things, costs related to the sale of property).
4.In determining the sales price, the SUBGRANTEE will NOT consider the costs of boarding up, lawn
mowing, maintaining the property in a static condition, or, in the absence of NSP-assisted rehabilitation
or redevelopment, the costs of completing a sales transaction or other disposition to be redevelopment
or rehabilitation costs.
G.Sale and Occupancy – All of the funds made available under this Agreement shall be used with respect to.
1.Marketing and Selection – In the marketing, intake and selection of buyers for PROJECT units, the
DEVELOPER shall comply with non-discrimination and fair housing requirements listed in Section VIII.
2.Buyer Qualification – All buyers of NSP-assisted units shall be individuals and families whose incomes
do not exceed 120% of area median income (referred to as “low-, moderate- and middle-income”, or
LMMI), unless lower income limits are specified in Exhibit A. DEVELOPER shall verify and document
income eligibility of all buyers in compliance with 570.203(a) definition of “Income.”
3.Counseling Requirement – Each NSP-assisted homebuyer is required to complete at least eight hours
of homebuyer counseling from a HUD-approved housing counseling agency. First Mortgage –
DEVELOPER must ensure that homebuyers obtain a mortgage loan from a lender who agrees to
comply with the bank regulators’ guidance for non-traditional mortgages. DEVELOPERS are
cautioned against providing or permitting homebuyers to obtain subprime mortgages for whom such
mortgages are inappropriate.
4.First Mortgage- DEVELOPER must ensure that homebuyers obtain a mortgage loan from a lender who
agrees to comply with the bank regulators’ guidance for non-traditional mortgages. DEVELOPERS are
cautioned against providing or permitting homebuyers to obtain subprime mortgages for whom such
mortgages are inappropriate.
5.Affordability Period – All NSP-assisted units must adhere to the affordability provisions as listed in
Exhibit A, which is based upon the total amount of NSP funds provided per unit.
a.Affordability periods must be enforced utilizing a mortgage, promissory note and, where
applicable, deed restriction.
b.The Affordability Period is a minimum standard, and DEVELOPER may propose a longer
Affordability Period.
H.Project Monitoring and Recordkeeping – The DEVELOPER will be monitored by the AGENCY for compliance
with the NSP requirements and the applicable CDBG regulations of 24 CFR Part 570. The DEVELOPER will
provide reports and access to project files as requested by the SUBGRANTEE during the PROJECT and for
Five (5) years after completion and closeout of the AGREEMENT as required under Section IX of this
Agreement.
IV. SUBGRANTEE Responsibilities
A.SUBGRANTEE is responsible for the following tasks and deliverables.
B.The SUBGRANTEE shall furnish the DEVELOPER with information regarding requirements for the project,
including any changes in NSP regulations or program limits that affect the project, including but not limited to
income limits.
C.Environmental Review – SUBGRANTEE will complete environmental assessments and provide clearances for
all NSP target areas, as well as approvals of site-specific environmental reviews. DEVELOPER will provide all
information required by SUBGRANTEE.
D.Property Approval – SUBGRANTEE will provide prompt approval of any property selected by DEVELOPER
and submitted on the form with all required documentation for approval. Failure to provide all required
information will result in a delay in approval. Approval can only be provided on completion of environmental
review.
E.Homebuyer Counseling – SUBGRANTEE will contract with one or more agencies that are qualified to provide
pre-purchase counseling and homebuyer education to prospective homebuyers, and will notify DEVELOPER
of approved counselors so that the DEVELOPER can refer buyers.
F.Inspections – The SUBGRANTEE will conduct progress inspections of work completed and review of project
files and information to protect its interests as lender and regulatory authority for the project, and will provide
information to the DEVELOPER regarding any progress inspections or monitoring to assist it in ensuring
compliance. The SUBGRANTEE’s review and approval of the WORK will relate only to overall compliance
with the general requirements of this Agreement and NSP requirements, and all SUBGRANTEE regulations
and ordinances.
G.Disbursements – SUBGRANTEE will manage all draws of NSP funds from HUD and payment of valid and
properly documented draw requests from DEVELOPER. The SUBGRANTEE will disburse funds as provided
in Section IV of this Agreement. SUBGRANTEE will process requests for disbursements of NSP funds,
including necessary construction inspections, in a timely manner. SUBGRANTEE will clearly and promptly
describe any deficiencies identified by SUBGRANTEE that prevent a disbursement or portion of a
disbursement from being approved.
H.Monitoring – SUBGRANTEE will monitor all program activities of DEVELOPER to assure compliance with the
terms of this Agreement including all NSP requirements.
I.Nothing contained herein shall relieve the DEVELOPER of any responsibility as provided under this
Agreement.
V. Disbursement of Funds
A.Project expenses (excluding developer fee) shall be paid based on vouchers for actual expenses incurred or
paid. All such expenses shall be in conformance to the approved project budget. Budget revision and
approval shall be required prior to payment of any expenses not conforming to the approved project budget.
B.Requests for payment must be submitted by the DEVELOPER on forms specified by the SUBGRANTEE, with
adequate and proper documentation of eligible costs incurred in compliance with NSP and CDBG rules. The
DEVELOPER agrees to submit requests for payment in a timely manner in the form and times directed by the
SUBGRANTEE.
C.The SUBGRANTEE will pay to the DEVELOPER funds available under this Agreement based upon
information submitted by the DEVELOPER and consistent with any approved budget and SUBGRANTEE
policy concerning payments. Payments will be made for eligible NSP related expenses actually incurred by
the DEVELOPER, and will not exceed actual cash requirements. Payments will be adjusted by the
SUBGRANTEE in accordance with advance fund and program income balances available in DEVELOPER
accounts. In addition, the SUBGRANTEE reserves the right to liquidate funds available under this contract for
costs incurred by the SUBGRANTEE on behalf of the DEVELOPER.
D.To ensure expeditious implementation of activities, SUBGRANTEE make payment to the DEVELOPER
promptly on receipt of the DEVELOPER’s complete and properly submitted requests for payment for activities
under this agreement. Generally, requests for payment received by the end of day on Friday will be
disbursed the following Friday.
E.The NSP funds advanced to the Project will be secured by a note and mortgage on the property, which shall
be released upon sale to an eligible buyer.
F.The SUBGRANTEE reserves the right to inspect records and project sites to determine that reimbursement
and compensation requests are reasonable. The SUBGRANTEE also reserves the right to hold payment
until adequate documentation has been provided and reviewed.
G.The DEVELOPER may submit a final invoice upon completion. Final payment shall be made after the
SUBGRANTEE has determined that all services have been rendered, files and documentation delivered, and
units have been placed in service in full compliance with NSP regulations, including submission of a
completion report and documentation of eligible occupancy, property standards and long-term use
restrictions.
H.The SUBGRANTEE shall pay the DEVELOPER, as maximum compensation or FEE for the developer
services as provided in the approved Budget in Error! Reference source not found.. If multiple projects or
buildings are involved, the developer fee may be pro-rated to each building or project, and the applicable
percentage may be applied to each.
I.The DEVELOPER shall report to SUBGRANTEE at time of sale any net proceeds of sales, after the payment
of all closing costs and approved developer fee, under this contract, and shall comply with the following (as
checked):
The DEVELOPER may reuse such net proceeds of sale during the contract period for
NSP-eligible activities permitted under this contract and shall reduce requests for
additional funds by the amount of any such proceeds on hand. All unexpended net
proceeds shall be returned to the SUBGRANTEE at the end of the contract period.
The DEVELOPER shall return the net proceeds of each sale to the SUBGRANTEE at
each closing.
VI. Repayment of Funds
A.All NSP funds are subject to repayment in the event the PROJECT does not meet the Project Requirements
and Other Requirements as outlined in this Agreement, including deadlines.
B.It is understood that, upon the completion of the PROJECT, any NSP funds obligated but not expended under
this agreement will revert to the SUBGRANTEE.
C.All net sales proceeds after payment of all development and closing costs, including developer fee, shall be
returned to the SUBGRANTEE.
D.Prior to each closing or sale to an eligible buyer, the DEVELOPER will provide to the SUBGRANTEE the
estimated settlement statement, along with a reconciliation statement and the draft note and mortgage. The
reconciliation statement shall account for the pro-ration of NSP project funds to the individual unit, and identify
those funds that are to be lent to the buyer secured by the NSP note and mortgage, the amount of developer
fee and the amount of net sales proceeds to be returned to the SUBGRANTEE.
VII. Contracting, Labor & Hiring Provisions
During the performance of this contract, the DEVELOPER agrees as follows:
A.The DEVELOPER will not discriminate against any employee or applicant for employment because of race,
color, religion, sex, or national origin(s). The DEVELOPER will take affirmative action to ensure the
applicants are employed, and that employees are treated during employment, without regard to their race,
color, religion, sex or national origin(s). Such action shall include, but not be limited to, the following:
employment, upgrading, demotion, or transfer, recruitment or recruitment advertising; layoff or termination;
rates of pay or other forms of compensation; and selection for training, including apprenticeship. The
DEVELOPER agrees to post in conspicuous places, available to employees and applicants for employment,
notices to be provided by the contracting officer of the SUBGRANTEE setting forth the provisions of this
nondiscrimination clause.
B.The DEVELOPER will, in all solicitations or advertisements for employees placed by or on behalf of the
DEVELOPER, state that all qualified applicants will receive consideration for employment without regard to
race, color, religion, sex, or national origin.
C.The DEVELOPER will comply with all provisions of Executive Order 11246 of September 24, 1965, and of the
rules, regulations, and relevant orders of the Secretary of Labor.
D.The DEVELOPER will furnish all information and reports required by Executive Order 11246 of September 24,
1965, and by the rules, regulations, and orders of the Secretary of Labor, or pursuant thereto, and will permit
access to its books, records, and accounts by the AGENCY and the Secretary of Labor for purposes of
investigation to ascertain compliance with such rules, regulations, and order.
1.In the event the DEVELOPER is found to be in noncompliance with the nondiscrimination clauses of
this contract or with any of such rules, regulations or orders, this contract may be canceled, terminated
or suspended in whole or in part and the DEVELOPER may be declared ineligible for further
Government contracts in accordance with procedures authorized in Executive Order 11246 of
September 24, 1965, and such other sanctions may be imposed and remedies invoked as provided in
Executive Order 11246 of September 24, 1965 or by rule, regulations, or order of the Secretary of
Labor or as otherwise provided by law.
E.The DEVELOPER shall conduct all contracting and purchases with NSP funds to ensure that materials and
services are obtained in a cost-effective manner. When procuring for services to be provided under this
agreement, the DEVELOPER shall adhere all NSP and Local, State and Federal guidelines, rules and laws.
F.The DEVELOPER will include the provisions of this Section in every subcontract or purchase order unless
exempted by rules, regulations, or orders of the Secretary of Labor issued pursuant to Section 204 of
Executive Order 11246 of September 24, 1965, so that such provisions will be binding upon each
subcontractor or vendor. The DEVELOPER will take such action with respect to any subcontract or purchase
order as the AGENCY may direct as a means of enforcing such provisions, including sanctions for
noncompliance; provided, however, that in the event the DEVELOPER becomes involved in, or is threatened
with litigation with a subcontractor or vendor as a result of such direction by the AGENCY, the DEVELOPER
may request the United States to enter into such litigation to protect the interest of the United States.
G.The DEVELOPER agrees to comply with the non-discrimination in employment and contracting opportunities
laws, regulations, and executive orders referenced in 24 CFR 570.607, as revised by Executive Order 13279.
The applicable non-discrimination provisions in Section 109 of the HCDA are still applicable.
H.The DEVELOPER agrees to comply with the requirements of the Secretary of Labor in accordance with the
Davis-Bacon Act, as amended, the provisions of Contract Work Hours and Safety Standards Act (40 U.S.C.
327 et seq.) and all other applicable Federal, state and local laws and regulations pertaining to labor
standards insofar as those acts apply to the performance of this Agreement.
I.The DEVELOPER agrees to comply with the Copeland Anti-Kick Back Act (18 U.S.C. 874 et seq.) and its
implementing regulations of the U.S. Department of Labor at 29 CFR Part 5. The DEVELOPER shall maintain
documentation that demonstrates compliance with hour and wage requirements of this part. Such
documentation shall be made available to the SUBGRANTEE for review upon request.
J.The DEVELOPER will use its best efforts to afford small businesses, minority business enterprises, and
women’s business enterprises the maximum practicable opportunity to participate in the performance of this
contract. As used in this contract, the terms “small business” means a business that meets the criteria set
forth in Section 3(a) of the Small Business Act, as amended (15 U.S.C. 632), and “minority and women’s
business enterprise” means a business at least fifty-one (51) percent owned and controlled by minority group
developers or women. The DEVELOPER may rely on written representations by businesses regarding their
status as minority and women-owned business enterprises in lieu of an independent investigation.
K.The DEVELOPER agrees that, except with respect to the rehabilitation or construction of residential property
containing less than eight (8) units, all contractors engaged under contracts in excess of $2,000.00 for
construction, renovation or repair work financed in whole or in part with assistance provided under this
contract, shall comply with Federal requirements adopted by the SUBGRANTEE pertaining to such contracts
and with the applicable requirements of the regulations of the Department of Labor, under 29 CFR Parts 1, 3,
5 and 7 governing the payment of wages and ratio of apprentices and trainees to journey workers; provided
that, if wage rates higher than those required under the regulations are imposed by state or local law, nothing
hereunder is intended to relieve the DEVELOPER of its obligation, if any, to require payment of the higher
wage. The DEVELOPER shall cause or require to be inserted in full, in all such contracts subject to such
regulations, provisions meeting the requirements of this paragraph. The DEVELOPER shall comply with the
provisions of the Copeland Anti-Kick-Back Act (18 U.S.C. 874) as supplemented in the AGENCY of Labor
Regulations (29 CFR Part 3), as amended.
L.Compliance with the provisions of Section 3 of the Housing and Urban Development Act of 1968, as
amended, and as implemented by the regulations set forth in 24 CFR 135, and all applicable rules and orders
issued hereunder prior to the execution of this contract, shall be a condition of the Federal financial assistance
provided under this contract and binding upon the SUBGRANTEE, the DEVELOPER and any of the
DEVELOPER’s contractors and subcontractors. The DEVELOPER certifies and agrees that no contractual
or other disability exists that would prevent compliance with these requirements.
1.The DEVELOPER further agrees to comply with these Section 3 requirements and to include the
following language in all subcontracts executed under this Agreement: “The work to be performed
under this Agreement is a project assisted under a program providing direct Federal financial
assistance from HUD and is subject to the requirements of Section 3 of the Housing and Urban
Development Act of 1968, as amended (12 U.S.C. 1701). Section 3 requires that to the greatest extent
feasible opportunities for training and employment be given to low- and very low-income residents of
the project area, and that contracts for work in connection with the project be awarded to business
concerns that provide economic opportunities for low- and very low-income persons residing in the
metropolitan area in which the project is located.”
2.The DEVELOPER further agrees to ensure that opportunities for training and employment arising in
connection with a housing rehabilitation (including reduction and abatement of lead-based paint
hazards), housing construction, or other public construction project are given to low- and very low-
income persons residing within the metropolitan area in which the NSP-funded project is located;
where feasible, priority should be given to low- and very low-income persons within the service area of
the project or the neighborhood in which the project is located, and to low- and very low-income
participants in other HUD programs; and award contracts for work undertaken in connection with a
housing rehabilitation (including reduction and abatement of lead-based paint hazards), housing
construction, or other public construction project to business concerns that provide economic
opportunities for low- and very low-income persons residing within the metropolitan area in which the
NSP-funded project is located; where feasible, priority should be given to business concerns that
provide economic opportunities to low- and very low-income residents within the service area or the
neighborhood in which the project is located, and to low- and very low-income participants in other
HUD programs.
3.The DEVELOPER further warrants and agrees to include or cause to be included the criteria and
requirements of this Section in every non-exempt subcontract in excess of $100,000. The
DEVELOPER also agrees to take such action as the federal, state or local government may direct to
enforce aforesaid provisions.
VIII. Compliance with Other Federal, State & Local Laws
A.The DEVELOPER covenants and warrants that it will comply with all applicable laws, ordinances, codes, rules
and regulations of the state local and federal governments, and all amendments thereto.
B.Environmental review – All NSP assistance is subject to the National Environmental Policy Act of 1969 and
related federal environmental authorities and regulations at 24 CFR Part 58.
1.No NSP project funds will be advanced, and no costs can be incurred, until the SUBGRANTEE has
conducted an environmental review of the proposed project site as required under 24 CFR Part 58.
The environmental review may result in a decision to proceed with, modify or cancel the project.
Notwithstanding any provision of this Agreement, the parties hereto agree and acknowledge that this
Agreement does not constitute a commitment of funds or site approval, and that such commitment of
funds or approval may occur only upon satisfactory completion of environmental review and receipt by
the SUBGRANTEE of a release of funds from the U.S. Department of Housing and Urban
Development [or the State of Wisconsin] under 24 CFR Part 58.
2.Further, the DEVELOPER will not undertake or commit any funds to physical or choice-limiting actions,
including property acquisition, demolition, movement, rehabilitation, conversion, repair or construction
prior to the environmental clearance, and must indicate that the violation of this provision may result in
the denial of any funds under the agreement.
3.A copy of the Environmental Review Record shall be maintained by both the DEVELOPER and the
SUBGRANTEE.
C.Flood Disaster Protection – In accordance with the requirements of the Flood Disaster Protection Act of 1973
(42 U.S.C. 4001), the DEVELOPER shall assure that for activities located in an area identified by the Federal
Emergency Management Agency (FEMA) as having special flood hazards, flood insurance under the National
Flood Insurance Program is obtained and maintained as a condition of financial assistance for acquisition or
construction purposes (including rehabilitation.)
D.Historic Preservation – The DEVELOPER agrees to comply with the Historic Preservation requirements set
forth in the National Historic Preservation Act of 1966, as amended (16 U.S.C. 470) and the procedures set
forth in 36 CFR Part 800, Advisory Council on Historic Preservation Procedures for Protection of Historic
Properties, insofar as they apply to the performance of this agreement.
E.Relocation – The DEVELOPER agrees to comply with the Uniform Relocation Assistance and Real Property
Acquisition Policies Act of 1970, as amended (URA), and implementing regulations at 49 CFR Part 24; 24
CFR Part 42 – Displacement, Relocation Assistance and Real Property Acquisition for HUD and HUD
Assisted Programs; and 24 CFR 570.606 – Displacement, relocation acquisition, and replacement of housing,
as may be amended by the NSP NOFA. The DEVELOPER also agrees to comply with applicable
SUBGRANTEE or local ordinances, resolutions and policies concerning the displacement of persons.
1.To meet these requirements, the owner of record must be notified in writing that Federal financial
assistance will be used in the transaction and that if agreement cannot be reached through
negotiation, that the acquisition will not take place. There are specific URA voluntary acquisition
requirements that must be met depending on whether or not the buyer has the power of eminent
domain and will not use it (see 49 CFR 24.101(b)(1)(i)-(iv)) or if the buyer does not have the power of
eminent domain (see 49 CFR 24.101(b)(2)). Any acquisition under possible threat of eminent domain,
cannot be considered a “voluntary acquisition” (even if the seller is willing to negotiate).
2.The relocation provisions of the Uniform Relocation Act apply to NSP funds. An unlawful occupant
(see 49 CFR 24.2(a)(29)) who is displaced for an NSP-funded acquisition will not be entitled to
relocation assistance and payments. However, a lawful occupant displaced for an NSP-funded
acquisition will generally be eligible for relocation assistance and payments under URA. The
DEVELOPER shall provide appropriate relocation assistance (URA or Section 104(d)) to eligible
displaced persons as defined by applicable HUD and/or URA regulations that are displaced as a direct
result of acquisition, rehabilitation, demolition or conversion for an NSP-assisted project.
F.The DEVELOPER agrees to comply with applicable state and local civil rights ordinances and with Title VI of
the Civil Rights Act of 1964 as amended, Title VIII of the Civil Rights Act of 1968 as amended, Section 104(b)
and Section 109 of Title I of the Housing and Community Development Act of 1974 as amended (the HCDA),
Section 504 of the Rehabilitation Act of 1973, the Americans with Disabilities Act of 1990, the Age
Discrimination Act of 1975, Executive Order 11063, and Executive Order 11246 as amended by Executive
Orders 11375, 11478, 12107 and 12086, and will include the provisions in every subcontract or purchase
order, specifically or by reference, so that such provisions will be binding upon each of its contractors and
subcontractors.
G.The DEVELOPER agrees to comply with all applicable standards, orders, or requirements issued under
Section 306 of the Clean Air Act (42 U.S.C. 1857(h)), Section 508 of the Clean Water Act (33 U.S.C. 1368),
Executive Order 11738, and Environmental Protection Agency regulations (40 CFR part 15).
H.The DEVELOPER agrees that no funds provided, nor personnel employed under this Agreement, shall be in
any way or to any extent engaged in the conduct of political activities in violation of Chapter 15 of Title V of
the United States Code. The DEVELOPER is prohibited from using funds provided herein or personnel
employed in the administration of the program for inherently religious activities, lobbying, political patronage,
and nepotism activities.
I.Conflict of Interest – The provisions of 24 CFR 570.611, apply to the award of any contracts under the
agreement and the selection of buyers for NSP-assisted units. No member or Delegate to the Congress of
the United States shall be permitted to any share or part of this contract or any benefit herefrom. No
member, officer or employee of the SUBGRANTEE; or its designees, or agents; or member of the
SUBGRANTEE Council of the SUBGRANTEE; and no other public official of the SUBGRANTEE who
exercises any functions or responsibilities with respect to the program during his tenure or for one (1) year
thereafter, shall have any interest direct or indirect, in any contract or subcontract, or the proceeds thereof, for
work to be performed under this agreement. Exceptions must be requested by the DEVELOPER and the
AGENCY may grant exceptions as permitted by Regulation.
IX. Reporting, Monitoring & Access to Records
A.The DEVELOPER agrees to submit any and all reports required by HUD or the SUBGRANTEE.
B.The DEVELOPER shall collect and maintain Project beneficiary information pertaining to household size,
income levels, racial characteristics, and the presence of Female Headed Households in order to determine
low and moderate-income benefit in a cumulative and individual manner. Income documentation shall be in
a form consistent with NSP requirements.
C.The DEVELOPER agrees to provide the SUBGRANTEE access to records and projects at any time during
project implementation or for five years after project closeout for purposes of verifying compliance with NSP
requirements and this agreement. Access shall be immediately granted to the SUBGRANTEE, HUD, the
Comptroller General of the United States, or any of their duly authorized representatives to any books,
documents, papers, and records of the DEVELOPER or its contractors which are directly pertinent to that
specific contract for the purpose of making audit, examination, excerpts, and transcriptions.
D.The SUBGRANTEE reserves the right to audit the records of the DEVELOPER any time during the
performance of this Agreement and for a period of five years after final payment is made under this
Agreement. If required by A-133, the DEVELOPER will provide the AGENCY with a certified audit of the
DEVELOPER’s records representing the Fiscal Year during which the PROJECT becomes complete.
E.Project Closeout – The DEVELOPER’s obligation to the SUBGRANTEE shall not end until all close-out
requirements are completed. Activities during this close-out period shall include, but are not limited to:
making final payments, accounting for use of funds, provision of all reports and records required by the
SUBGRANTEE.
X. Suspension & Termination
In accordance with 24 CFR 85.43, suspension or termination may occur if the DEVELOPER materially fails to comply
with any term of the award, and that the award may be terminated for convenience in accordance with 24 CFR 85.44.
A.If the DEVELOPER fails in any manner to fully perform and carry out any of the terms, covenants, and
conditions of the agreement, or if the DEVELOPER refuses or fails to proceed with the work with such
diligence as will insure its completion within the time fixed by the schedule set forth in this agreement, the
DEVELOPER shall be in default and notice in writing shall be given to the DEVELOPER of such default by the
AGENCY or an agent of the AGENCY. If the DEVELOPER fails to cure such default within such time as may
be required by such notice, the SUBGRANTEE, acting by and through the AGENCY, may at its option
terminate and cancel the contract.
1.In the event of such termination, all funds awarded to the DEVELOPER pursuant to this agreement
shall be immediately revoked and any approvals related to the PROJECT shall immediately be
deemed revoked and canceled. In such event, the DEVELOPER will no longer be entitled to receive
any compensation for work undertaken after the date of the termination of this agreement, as the grant
funds will no longer be available for this project.
2.In such event, the DEVELOPER shall be entitled to receive just and equitable compensation for any
work satisfactorily completed hereunder to the date of said termination.
3.Notwithstanding the above, the DEVELOPER shall not be relieved of liability to the SUBGRANTEE for
damages sustained by the SUBGRANTEE by virtue of any breach of the contract by the DEVELOPER
and the SUBGRANTEE may withhold any payments to the DEVELOPER for the purpose of setoff until
such time as the exact amount of damages due the SUBGRANTEE from the DEVELOPER is
determined whether by court of competent jurisdiction or otherwise.
4.Such termination shall not effect or terminate any of the rights of the SUBGRANTEE as against the
DEVELOPER then existing, or which may thereafter accrue because of such default, and the foregoing
provision shall be in addition to all other rights and remedies available to the SUBGRANTEE under the
law and the note and mortgage (if in effect), including but not limited to compelling the DEVELOPER to
complete the project in accordance with the terms of this agreement, in a court of equity.
5.The waiver of a breach of any term, covenant or condition hereof shall not operate as a waiver of any
subsequent breach of the same or any other term, covenant, or condition hereof.
B.The SUBGRANTEE may terminate for its convenience this contract at any time by giving at least thirty (30)
days notice in writing to the DEVELOPER. If the contract is terminated by the SUBGRANTEE, as provided
herein, the SUBGRANTEE will reimburse for any actual and approved expenses incurred, including those
costs involved in terminating the contracts and shutting down the work as of the date of notice, and the
DEVELOPER will be paid as a FEE an amount which bears the same ratio to the total compensation as the
services actually performed bear to the total service of the DEVELOPER covered by this contract, less
payments of compensation previously made. Claims and disputes between the parties will be submitted to
the American Arbitration Association for resolution. Award or judgment may be entered in any court having
jurisdiction thereof.
XI. Amendments
A. The SUBGRANTEE may amend this Agreement at any time provided that such amendments make specific
reference to this agreement, and are executed in writing, signed by a duly authorized representative of both
organizations. Such amendments shall not invalidate this Agreement, nor relieve or release the
SUBRANTEE or the DEVELOPER from their obligations under this Agreement. Such amendments may
Include reallocation of program income to the DEVELOPER for additional NSP activities.
XII. General Conditions
A.All notices or other communication which shall or may be given pursuant to this Agreement shall be in writing
and shall be delivered by personal service, or by registered mail addressed to the other party at the address
indicated herein or as the same may be changed from time to time. Such notice shall be deemed given on
the day on which personally served; or, if by mail, on the fifth day after being posted or the date of actual
receipt, whichever is earlier.
SUBGRANTEE DEVELOPER
City of Janesville, Neighborhood Services Dept. Wisconsin Partnership for Housing Development
18 N. Jackson St., P.O. Box 5005 121 S. Pinckney St., Suite 420
Janesville, WI 53547-5005 Madison, WI 53703
B.Title and paragraph headings are for convenient reference and are not a part of this Agreement.
C.In the event of conflict between the terms of this Agreement and any terms or conditions contained in any
attached documents, the terms in this Agreement shall rule.
No waiver or breach of any provision of this Agreement shall constitute a waiver of a subsequent breach of
D.
the same or any other provision hereof, and no waiver shall be effective unless made in writing.
E.The SUBGRANTEE’s failure to act with respect to a breach by the DEVELOPER does not waive its right to
act with respect to subsequent or similar breaches. The failure of the SUBGRANTEE to exercise or enforce
any right or provision shall not constitute a waiver of such right or provision.
F.The parties hereto agree that this Agreement shall be construed and enforced according to the laws of the
State of Wisconsin.
G.Should any provisions, paragraphs, sentences, words or phrases contained in this Agreement be determined
by a court of competent jurisdiction to be invalid, illegal or otherwise unenforceable under the laws of the State
of Wisconsin or the SUBGRANTEE, such provisions, paragraphs, sentences, words or phrases shall be
deemed modified to the extent necessary in order to conform with such laws, or if not modifiable to conform
with such laws, then same shall be deemed severable, and in either event, the remaining terms and
provisions of this Agreement shall remain unmodified and in full force and effect.
H.The obligations undertaken by DEVELOPER pursuant to this Agreement shall not be delegated or assigned to
any other person or agency unless SUBGRANTEE shall first consent to the performance or assignment of
such service or any part thereof by another person or agency.
I.The Agreement shall be binding upon the parties hereto, their heirs, executors, legal representative,
successors and assigns.
J.DEVELOPER shall indemnify and save SUBGRANTEE harmless from and against any negligent claims,
liabilities, losses and causes of action which may arise out of DEVELOPER’s activities under this Agreement,
including all other acts or omissions to act on the part of DEVELOPER, including any person acting for or on
its behalf, and, from and against any orders, judgments, or decrees which may be entered and from and
against all costs, attorneys fees, expenses and liabilities incurred in the defense of any such claims, or in the
investigation thereof.
K.DEVELOPER and its employees and agents shall be deemed to be independent contractors, and not agents
or employees of the SUBGRANTEE, and shall not attain any rights or benefits under the civil service or
pension ordinances of the SUBGRANTEE, or any rights generally afforded classified or unclassified
employee; further they shall not be deemed entitled to state Compensation benefits as an employee of the
SUBGRANTEE.
L.Funding for this Agreement is contingent on the availability of funds and continued authorization for program
activities and is subject to amendment or termination due to lack of funds, or authorization, reduction of funds,
and/or change in regulations.
IN WITNESS WHEREOF,
the SUBGRANTEE of the State of Wisconsin and the DEVELOPER have caused their signatures to be hereunto
affixed and duly attested
For the SUBGRANTEE: For the DEVELOPER:
___________________________________ ___________________________________
Jennifer Petruzzello, Neighborhood Services Director Kathy Kamp, Deputy Director
City of Janesville Wisconsin Partnership for Housing Development
Exhibit A. Project Description & Requirements
The project involves the acquisition/rehabilitation/ and resale of the property at 403 Lincoln Street. This will result in
the conversion of a 2-unit home into a single family owner-occupied home. This property is located in census track 3.
The home will be re-sold to an income eligible household at a maximum income level of 120% of LMI or less. .
The property to be acquired is a vacant and abandoned residential property.
It is a program goal of this NSP project to increase the level of sustainability and energy efficiency in residential
property in the City of Janesville through rehabilitation and reconstruction of vacant, abandoned and/or foreclosed
properties. Within the context of this project, energy efficiency and sustainability are to be understood as
incorporating both specific types of construction practices and building materials. We consider these issues to be
fundamental aspects of quality housing rehabilitation and reconstruction. An energy efficient and sustainable
approach provides both environmental and health merits which traditional construction methods have typically not
considered. The production and use of these “green” methodologies means less energy consumption, less natural
resource depletion and pollution, and are generally less toxic for both the planet and its occupants. For this project,
the selection and implementation of sustainable building materials and practices will be considered a critical
component of overall project success. To achieve this goal we propose the following:
All units being rehabbed in the City of Janesville will have an energy audit conducted prior to work
commencing. The findings of these audits will be used as a guide in the creation of the rehab work plans.
All units built new will conform to Energy Star new construction standards, using an energy audit during the
building process to ensure compliance. Through this process, the work done using NSP funds will ensure
that the homes are as energy efficient as possible regarding issues of insulation and air infiltration.
As a part of the program, all units will come equipped with new Energy Star rated appliances.
All works sites (demolition, rehabilitation, and new construction) will practice on-site construction recycling in
an attempt to eliminate as much construction waste as possible.
Within budget constraints, material choice will give preference to items that demonstrate ‘green’ and
recycled features. This can range from sustainably harvested and local lumber products to materials like
counter tops and siding that are created out of post consumer waste. In addition, low VOC adhesives,
finishes, paints, and carpets will be given preference in all the units.
We will investigate the physical and financial feasibility of using gray water systems, unique storm water
management techniques, and solar hot water on each unit.
Sales prices will be determined by a market analysis done by a Wisconsin licensed real estate agent upon individual
completion of the projects.
Each property acquired with NSP 3 funds will operate with the affordability requirements as stipulated in the
HOME program rules. To ensure compliance the program will utilize a recapture methodology which is detailed
below.
The duration of the affordability period will be based on the total amount of direct subsidy made to the buyer with
NSP funds. Under this program, the total direct subsidy exists in three forms; down payment assistance, closing
cost assistance, and a soft second mortgage loan. The type of subsidy used will be determined based upon the
need of the buyer. In all cases the assistance will be in the form of a zero percent interest, forgivable loan that is
secured by a loan agreement and a mortgage that will be in second position to the first mortgage.
If the buyer remains in the purchased NSP property as their primary residence for the entirety of the assigned
affordability period, the NSP subsidy is forgiven completely. However, if for any reason the buyer sells the NSP
property prior to the end of the designated affordability period, a portion of the subsidy will be recaptured. The
amount recaptured will be determined pro rata based on how many years of the affordability period the home
owner completed. Under this program, the recapture of funds is only applicable to the amount of the subsidy,
and is not tied to any appreciation that the property experiences. After paying the determined recapture cost, the
buyer is entitled to any additional gains made through the sale of the property. We believe this type of benefit
package will be necessary to effectively market and sell the properties to potential buyers given the constraints
of the location.
Exhibit B. Project Budget & Schedule
PROGRAM TIMETABLE
The Grantee agrees to complete the housing activities according to the following schedule:
On or Before Housing Activity
06/30/12 Finalize agreements with partnering organizations
Establish record keeping system
Execute grant agreement
09/30/12 Set-up __1_ Acquisition/Rehab/Resale
$ EXPENDED: $10,000
12/31/12
$ EXPENDED: $50,000 (cumulative)
03/31/13
$ EXPENDED: $97,622 (cumulative)
06/30/13
$ EXPENDED: $97,622 (cumulative)
09/30/13
$ EXPENDED: $109,622 (cumulative)
12/31/13
MUST =100% OF CONTRACT $)
$ EXPENDED $109,622
Budget—Acquisition and Rehab 403 Lincoln Street
Acquisition (Hard Cost) Expenses
Acquisition Cost $ 1,500
Closing Costs and Fees $ -
SUBTOTAL $ 1,500
Rehabilitation (Hard Cost)
Total Construction Costs $ 85,000
Construction Loan Fees/Interest $
Construction Contingency $ 5,000
SUBTOTAL $ 90,000
Housing Management (Soft Costs) 9 months estimated
Insurance $ 750
Maintenance (lawn & snow) $ 900
Utility Bills $ 1,125
Pro rated share of Real Estate Taxes $ 1,102
Energy Audit $ 400
Appraisal_ Pre Rehab $ 350
Appraisal_ Post Rehab $ 350
Lead and Environmental Assessments $ 400
Lead Clearance Test $ 400
Conditions Inspection-Pre Purchase $ 300
Conditions Inspection-Post Rehab $ 300
SUBTOTAL $ 6,377
TOTAL COST—403 Lincoln Street $ 97,877
Developer Fee $ 11,745
TOTAL WITH DEVELOPER FEE $ 109,622
Exhibit C. NSP Project Approval Request Form
See the Neighborhood Stabilization Project Feasibility Analysis Template and instruction manual in the NSP toolkit.
To be completed for each project.