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Property Owner's Handbook - Northampton PROPERTY OWNER’S HANDBOOK CITY OF NORTHAMPTON CDBG HOUSING REHABILITATION PROGRAM David J. Narkewicz, Mayor Keith Benoit, Community Development Planner 210 Main Street Northampton, MA 01060 Program Administrators Pioneer Valley Planning Commission 60 Congress Street, Floor 1 Springfield, Massachusetts 01104 (413) 781-6045 TABLE OF CONTENTS INTRODUCTION ................................................................................................................................. 1 IS THIS A LOAN OR GRANT?............................................................................................................ 2 WHAT ARE THE ROLES AND RESPONSIBILITIES OF THE CITY/TOWN AND PVPC? ................ 3 WHAT IS THE REHABILITATION PROCESS? WHAT ARE MY RESPONSIBILITIES? .................. 3 INSPECTIONS ......................................................................................................................................... 3 HIRING THE CONTRACTOR ...................................................................................................................... 4 CONSTRUCTION ..................................................................................................................................... 5 WHO PROVIDES UTILITIES DURING CONSTRUCTION? ............................................................... 6 WHO GETS THE PERMITS FOR THE CONSTRUCTION? ............................................................... 6 HOW DO I GET READY FOR CONSTRUCTION? WHAT KIND OF THINGS SHOULD I EXPECT DURING CONSTRUCTION?............................................................................................................... 6 CAN I DO ANY OF THE WORK MYSELF? ........................................................................................ 6 WHAT IF MY HOUSE NEEDS TO BE VACATED DURING CONSTRUCTION? .............................. 7 WHAT IF MY HOUSE NEEDS MORE WORK THAN THE WORK LISTED IN THE SPECIFICATION? ............................................................................................................................... 8 WHAT IF THE REHABILITATION COSTS ARE TOO HIGH? ........................................................... 8 WHAT SHOULD I DO IF I AM NOT SATISFIED WITH THE WORK DURING CONSTRUCTION? .. 8 WHAT KIND OF WARRANTIES DO I HAVE ON THE CONSTRUCTION? ....................................... 8 WHAT IF I WANT TO REFINANCE MY PROPERTY AFTER CONSTRUCTION IS COMPLETED?8 WHEN DO I PAY OFF THE LOAN? .................................................................................................... 9 WHAT SHOULD I DO IF I HAVE AN EMERGENCY BEFORE MY LOAN IS APPROVED? ............. 9 APPENDIX: WHAT TO DO IF YOU HAVE QUESTIONS OR CONCERNS GRIEVANCE POLICY 1 Introduction Welcome to the Housing Rehabilitation Program (HR). The City of Northampton has received federal funds to help its citizen’s repair their homes. The City can now make deferred payment loans to single family property owners to help cover these repair costs. The following will determine if your application for housing rehabilitation assistance will be approved. These are: ♦ Verification that the items in need of repair on your property are eligible activities in accordance with the federal policies and regulations that guide the use of these moneys. ♦ Your willingness to accept the terms of your deferred payment loan (DPL), including all federal, state and local policies, procedures and regulations that are conditions of the DPL. This handbook has been designed to explain the policies, procedures and regulations that guide the program, as well as explain the roles and responsibilities of all the parties who will carry out the rehabilitation project on your property. The format of the handbook is a series of questions and answers. Please review the handbook thoroughly. If you need any assistance or have any questions, our staff is available to review the program with you. Please contact PVPC Housing Coordinator Shirley Stephens at (413) 781-6045. 2 Is this a loan or grant? A deferred payment loan (DPL) is a no-interest loan that is similar to a second mortgage on your home, with a few important differences: ♦ No payments are made during the lifetime of the loan. ♦ No payment is required at the end of the loan. ♦ Payment of the loan is made only if the property is sold or transferred during the lifetime of the loan or when the conditions of the loan agreement are not met. The loan funds have been made available to the City of Northampton (City) through the United States Department of Housing and Urban Development (HUD) Community Development Block Grant Program (CDBG). The length of the loan is fifteen years, with the maximum loan amount up to $45,000. A loan agreement is made between you and the City. The loan agreement outlines the terms of the loan, such as payment, insurance requirements and regulatory requirements of the funding source. An attachment to the agreement is an assignment of proceeds, a document that allows the program to record a lien, in the amount of the loan, on your property. At the loan closing, the property owner will sign the assignment of proceeds that will be recorded at the registry of deeds at the start of the project. If at any time it is determined that income levels have been falsified, a permanent lien will be placed on the property. The loan agreement requires property owners to maintain homeowners insurance and floodplain insurance if the property is located within the 100-year floodplain. If your property requires floodplain insurance, the DPL requires that you maintain floodplain insurance for the lifetime of the loan. The program will pay for the first year of floodplain insurance. All clients are evaluated for a financial contribution to the project. Depending on your income level and debt situation, you may be asked to contribute up to 10% of the total project cost. If your property requires repairs and improvements over a certain dollar amount, you may not qualify for a loan. However, we may be able to help you find money from other private or public sources to complete your rehabilitation project. When private funds are being used, the owner contribution will be the first funds used toward the payment. The owner will issue a payment in the form of a certified check, banker’s check or money order. No personal checks are allowed. There are rare exceptions to the loan limit. If extraordinary conditions exist and no other funding can be found, a waiver of the maximum loan limit may be sought from the City, and when necessary, from the funding source. Any loan that is approved over the loan limit will require a permanent lien on the property. In that case, when property is transferred to another party, the property owner will be required to repay the entire amount above the loan limit. Waivers of the loan limit are only permitted on an exception basis for extraordinary circumstances. A DPL may be used for repairs and improvements including but not limited to correction of building code violations, health or sanitation concerns, or the replacement of failed 3 mechanical or structural systems. The following is a list of some of the types of allowable work: ♦ lead paint abatement ♦ electrical repairs and improvements ♦ plumbing repairs and improvements ♦ heating systems ♦ roof repair or replacement ♦ insulation ♦ storm windows ♦ septic system repair or replacement ♦ accessibility modifications ♦ other work as approved What are the roles and responsibilities of the City and PVPC? It is the responsibility of the City to comply with all federal and state regulations regarding the use of these funds. In order to do this, the City has hired the PVPC to administer and coordinate its loan program. The PVPC is responsible for processing loan applications and making recommendations to the city/town for housing rehabilitation and/or septic system repair loans. In addition, the PVPC coordinates the use of the loan funds in order to comply with various federal and state policies and regulations. What is the rehabilitation process? What are my responsibilities? Inspections The first part of the rehabilitation process consists of a series of inspections of your property: ♦ For housing rehabilitation projects, the housing rehabilitation specialist will inspect the property for code violations and general property conditions. ♦ For properties that may require lead paint removal, a lead paint inspector will review the property to determine the location of lead paint on the exterior and interior of the house. ♦ For septic repair, a septic designer will conduct an inspection of your current septic system. ♦ Through a site visit or photograph the historic preservation planner determines if the house is considered historically significant. The inspections for lead paint and septic system repair are conducted on a consulting basis. The fee for these services will be included in your DPL. The PVPC maintains a list of qualified lead paint inspectors and septic designers from which you may choose. During each inspection, it is your responsibility to assist the inspector in identifying items in need of repair. The inspector will determine the extent of the condition or problem. Some of the inspectors will photograph your property. These photographs will become 4 part of the inspection report. Each inspector will create an initial inspection report. These reports will be in written format and will be signed and dated. It is your responsibility to review these reports and assure yourself that your property has been accurately described. You will be asked to indicate your approval by signing the inspection reports. All inspection reports are for the use of program staff only and will not be used for any other purpose. It does not take the place of any inspections that may be required for necessary permits. The results of the inspection report will be the basis for the project work specifications. If the house is historically significant, the project specifications must be in compliance with historic preservation standards. The scope of work for the rehabilitation project or septic repair must be for eligible construction items as per the program guidelines for the CDBG HR Program. The housing rehabilitation specialist or the septic designer will prepare the project specifications noting items to be rehabilitated, estimated cost and justification or reason for the rehabilitation. This report will be signed and dated by the housing rehabilitation specialist or septic designer. It is your responsibility to: ♦ Review these reports to make certain that the work specifications address the needs as identified in the initial inspection reports of your property. ♦ Approve the work to be performed on your property. You must approve the specifications by signing the final specifications approval by property owner form. In addition, you must initial the first page of the work specifications or the septic plans. Once the specifications are approved, a loan closing (signing of contract) is held. At the closing, loan documents are signed and contractors/consultants are selected for bidding. Hiring the Contractor General contractors and septic installers are hired through a bidding process conducted by the PVPC on your behalf. For the housing rehabilitation program, you are asked to select three contractors from the approved contractor list. The program selects two additional contractors from the list on a rotating basis. For the septic repair program, the program staff mails the invitation to bid to all approved septic contractors. Contractors are invited to attend a project walk-through and submit bids for the project. All bids will be reviewed with the homeowner before the contract award is made. While the contractor submitting the lowest bid is usually chosen, you may choose any contractor who submits a bid. The program, however, will not finance a loan for other than the amount of the lowest bid that is qualified and approved by the staff, with the balance to be financed from other sources by the owner. If the bid price is over the loan limit, the project may be able to proceed under the following circumstances: • You may make a contribution to the cost of the project for the amount over the loan limit. • The specifications may be revised and the project may be re-bid. • Depending on the community and amount, a permanent lien may be authorized for the additional amount. If the bid price is still higher than the total amount of funds available for the project, and no other options are available, it may be determined that your project is outside the scope of this program. 5 Once the award has been made, a contract between the owner and the contractor will be signed. All the contract forms are prepared by the PVPC. Construction During construction, the housing rehabilitation specialist or the septic designer makes periodic inspections to ensure the work performed complies with the approved specifications. The housing rehabilitation specialist or the septic designer makes recommendations for approval of payment requests based on their inspections. A progress payment request is made and must be agreed to by the owner, contractor, housing rehabilitation specialist or septic designer and community development staff. Progress payments will only be made for completed items from the specifications. Housing rehabilitation progress payments generally are made at 33%, 66%, and 100% intervals and the release of retainage (30 days after completion). Payments for the septic repair program are often made at the completion of the project and the release of retainage. The contractor must provide the PVPC with signed copies of permits, or a certificate of compliance from the building inspector, with their request for the final payment. The program holds back 10% for retainage. It is your responsibility to be present at the progress inspections and to be certain that when you authorize payment that you are satisfied with the quality of the workmanship and the materials used. The PVPC is responsible for ensuring that the work is in compliance with the project specifications. If you have a concern or issue with the work being performed on your property, it is your responsibility to notify the PVPC directly or through the housing rehabilitation specialist. To disburse funds, the owner will be required to approve, in written form, all work that has been completed and the payment for same. Once this approval for payment has been made, a check in the approved amount will be made directly to the contractor. If during the application process a determination for an owner contribution was made, the owner contribution will be the first funds used toward the payment. The owner will issue a payment in the form of a certified check, banker’s check or money order. No personal checks will be accepted. The owner must submit a copy of their check to the PVPC. The final inspection is conducted to confirm that all work has been properly completed and that all code violations have been corrected. This documentation, as prepared by the housing rehabilitation specialist or septic designer, will consist of a final report and/or statement noting that all work as specified has been completed and all items are functional with photographic documentation of the same. For historic housing rehabilitation projects the report must also contain the final historic inspection conducted by the historic preservation planner. This must be agreed to by the owner, contractor, housing rehabilitation specialist or septic designer, the PVPC and when applicable, the historic preservation planner. Usually there are a few items that need to be completed. The housing rehabilitation specialist creates a punch list of these remaining items for the contractor to complete during the retainage period (usually 30 days). At the release of retainage inspection, you will be asked to sign the owner’s statement of completion. As part of the release of retainage, the contractor should provide the property owner all applicable material and equipment warranty information. 6 Who provides utilities during construction? The owner provides the contractor with all necessary utilities, including water and power, at no charge during the construction period. This also includes access to a telephone for receipt of messages and the placing of local calls. Who gets the permits for the construction? The contractor is responsible for obtaining all permits for construction. Payments may be withheld during construction if permits are not obtained. The retainage payment may not be issued unless all required local permits have been obtained and approved. How do I get ready for construction? What kind of things should I expect during construction? ♦ Start planning ahead. Plan adequate storage space for contractor tools, equipment and materials. ♦ Make arrangements for the contractor to get into your property if you or your tenants will not be home during the day. ♦ Prepare your property and furnishings for remodeling. Put away all breakables and valuable items that may be in the way of the workers. ♦ When the work starts, keep your copy of the contract handy and refer to it often. CHECK WITH THE REHABILITATION SPECIALIST or the septic designer if there is anything you do not understand once the work has started. ♦ Try to stay out of the construction area, this is especially true for children. This will help prevent injuries and allow the workers room to work. ♦ Expect the unexpected – unforeseen problems may be uncovered during the course of the work which may require a plan change. Be prepared if this should happen and discuss changes with the rehabilitation specialist. Changes must be approved by you and the contractor and be authorized by the PVPC in writing. ♦ Stop problems before they start – if something isn’t going the way you feel it should, or if you don’t understand it, SPEAK TO THE CONTRACTOR FIRST. IF THE PROBLEM CANNOT BE RESOLVED, CALL THE REHABILITATION SPECIALIST and get an acceptable explanation or correction before it progresses too far. Can I do any of the work myself? In certain cases, the program may allow for self-help to complete a rehabilitation project. You may perform some or all of the tasks required to rehabilitate the property, as long as you have the degree of skill required to perform the work involved. 7 Self-help is usually appropriate for the accomplishment of tasks of an unskilled nature such as general cleanup; demolition of a small building on the property; removal, cartage and disposal of debris; and for work that involves minimal use of expensive material and equipment. Work of a skilled nature is appropriate if it is established that you have the necessary ability and experience to do the work. Under the self-help program, you are expected to perform the work in a workman-like and expeditious manner. The housing rehabilitation specialist will prepare a detailed work write-up and you will prepare an itemized material cost estimate. This cost estimate must be accompanied by a quote from the suppliers. Materials must be installed before a payment will be issued. No power tools, hand tools or equipment will be paid for with program funds. Labor performed by you, or a member of your immediate family is not considered an eligible cost. Receipts from other sources must be approved and will be paid on final inspections. Invoices made out by you will not be paid. Finance charges will not be paid. No substitutes or changes will be made without the written consent and approval of the housing rehabilitation specialist in the form of a change order. All checks will be made payable to the supplier and you. All work must be conducted and completed in an expeditious manner. If there are any delays, you must notify the housing rehabilitation specialist. If, at any time, the housing rehabilitation specialist finds the material is not being installed correctly and in a good workman-like manner, or you have stopped the work, or are not making reasonable progress, a determination will be made whether or not you will be allowed to continue or if the remainder of the work will be contracted out or the project canceled. You are responsible for getting all applicable permits when the work is not covered by contractors’ permits. You are encouraged to take out adequate liability insurance. What if my house needs to be vacated during construction? In the case of construction that includes removal of lead paint or asbestos, it may be necessary for the property residents to be temporarily relocated. Housing rehabilitation program staff will be available to help residents coordinate their temporary relocation. The following policies guide the relocation process: 1. Under most circumstances, owner occupants are encouraged to stay with relatives or friends or otherwise provide for their relocation needs while they are temporarily relocated. 2. Under certain circumstances, owner occupants may also receive some assistance if a financial hardship can be demonstrated. The type of assistance that may be offered includes reasonable moving expenses, reasonable lodging, meals at a rate not to exceed $25.00 per person per day, transportation (per approval only) and moving and/or storage expenses and advisory services needed to help in relocating. Only pre-approved expenses will be reimbursed. Receipts for expenses must be submitted to the PVPC for reimbursement. 8 What if my house needs more work than the work listed in the specification? During construction, a situation may be uncovered which requires a change in the specifications. The housing rehabilitation specialist or the septic designer will inspect the suspect area and make a determination of the need for a change order. If the program makes a determination for a change order, that change order must be agreed to in writing by you, the contractor, the housing rehabilitation specialist or the septic designer, the PVPC and when appropriate the historic preservation planner. (NOTE: Emergency circumstances may require verbal authorization followed by written confirmation.) If the change order requires a waiver of the loan limit, a permanent lien may be placed on your property for the amount above the loan limit. What if the rehabilitation costs are too high? In some cases, the rehabilitation costs are beyond the scope of the CDBG HR Program and therefore the project cannot move forward. However, for projects which are proceeding, yet exceed $45,000 in cost, prior approval from HUD is required. What should I do if I am not satisfied with the work during construction? If something isn’t going the way you feel it should, or if you don’t understand it, SPEAK TO THE CONTRACTOR FIRST. IF THE PROBLEM CANNOT BE RESOLVED, CALL THE REHABILITATION SPECIALIST and get an acceptable explanation or correction before it progresses too far. If you are still not satisfied, call the PVPC. If you remain unsatisfied with the decision of the PVPC, you may be able to pursue the matter further by filing a formal grievance. What kind of warranties do I have on the construction? The contract between you and the contractor provides a one-year warranty on all work and materials from the date of the 100% completion. Should any problems arise please contact the contractor directly. The contractor should provide you with all material and equipment warranties for work performed on your house. If you need assistance, please contact the PVPC. What if I want to refinance my property after construction is completed? Property owners may seek refinancing of their property after construction completion. Your financing institution may require that the lien held by the City for the rehabilitation project be subordinated to their mortgage. The property owner should contact the PVPC to get instructions on how to proceed. 9 When do I pay off the loan? The DPL is a no interest and no payment loan for the lifetime of the loan as long as you occupy the property. The requirement to repay the loan is triggered if the property is sold or transferred to another party during the loan period or if there is a departure from the agreed upon conditions. A permanent lien on the property will require re-payment of the amount to the City whenever the property is transferred. What should I do if I have an emergency before my loan is approved? An emergency is defined as a threat to the health and safety of the house’s occupants as determined in writing by City officials. If an emergency occurs you should call the PVPC. The PVPC will need a letter or document from the City Building or Health Department confirming your emergency. If emergency conditions are confirmed by the program, the emergency condition ONLY will be addressed. All other program conditions and qualifications must still be met. Any other required non-emergency rehabilitation work may occur once your name comes up on the wait list. At that time, you will go through the normal qualification process. Appendix WHAT TO DO IF YOU HAVE QUESTIONS OR CONCERNS (Housing Rehabilitation Program) If you have a question or concern regarding the work being done at your property, this sheet provides a list of who to get in touch with: • If you have a question or concern about the work being done, speak to the contractor first. Remember that you have a contract with the contractor. Feel free to ask questions or voice any concerns. • If your concerns are not addressed by the contractor, please contact the housing rehabilitation specialist who is overseeing the contractor’s work. • If your questions or concerns cannot be answered by the contractor or rehabilitation specialist, or if you feel that you need to speak to someone in the PVPC office regarding the housing rehabilitation program, please contact the PVPC Community Development Section Manager. • If you have a complaint or grievance that cannot be addressed by speaking to the people listed above, please see the attached Grievance Policy. City of Northampton CDBG Housing Rehabilitation Program Grievance Policy Level I: The client(s) will be given an opportunity to submit a complaint or grievance in writing to the PVPC Program Manager. The PVPC Program Manager will review the complaint or grievance with program staff and review any paperwork or documents as necessary. The PVPC Program Manager will then make a determination on the complaint or grievance and advise the client(s) of the decision in writing. If the client(s) is dissatisfied with the decision it may be appealed to the Northampton Office of Planning & Sustainability. Level II: The client(s) will be given an opportunity to submit a complaint or grievance in writing to the Northampton Office of Planning & Sustainability. The Office of Planning & Sustainability will review the complaint or grievance with the PVPC Program Manager or other program staff as deemed necessary. Any paperwork or documents deemed necessary to review the complaint or grievance will be made available to the Office of Planning & Sustainability. Once the Office of Planning & Sustainability makes a determination on the complaint or grievance, the client(s) will be advised of the decision in writing. If the client(s) is dissatisfied with the decision it may be appealed to the Mayor. Level III: The client(s) will be given an opportunity to submit a complaint or grievance in writing to the Mayor. The Mayor will review the complaint or grievance with the Office of Planning & Sustainability, PVPC Program Manager or other program staff as deemed necessary. Any paperwork or documents deemed necessary to review the complaint or grievance will be made available to the Mayor. Once the Mayor makes a determination on the complaint or grievance, the client(s) will be advised of the decision in writing. The Mayor’s decision is final.