nsp 3 08 - city of merced

City of Merced NSP3 Policy and Procedure Manual

NSP 3

Policy and Procedure Manual City of Merced, California Adopted by the City Council on September 3, 2013.

08 Fall


INTRODUCTION ................................................................................................................................................... 7

1. PURPOSE ............................................................................................................................................................. 7

2. ORGANIZATION SRUCTURE AND RESPONSIBILITIES ..................................................................... 8

CHAPTER I - NSP GENERAL REQUIREMENTS ............................................................................. 14

A. EXPENDITURE DEADLINES .................................................................................................................. 144

B. 25% VLI REQUIREMENT........................................................................................................................ 155

C. APPRAISAL GUIDANCE ........................................................................................................................... 155

D. CURRENT AND COST REASONABLENESS REQUIREMENTS ..................................................... 16

E. URA ACQUISITION REQUIREMENTS .................................................................................................. 16

F. AREAS OF GREATEST NEED .................................................................................................................. 17

CHAPTER II- APPLICANT PROCESS AND PROJECT SELECTION ............................................ 18

A. ACCEPTANCE GUIDELINES ................................................................................................................... 18

B. CANCELLATION BY OWNER/GRANTEE ........................................................................................... 19

C. DISPUTE RESOLUTION AND APPEALS .............................................................................................. 19

D. DOWN PAYMENT REQUIREMENTS ................................................................................................... 20

E. MORTGAGE RESERVE REQUIREMENT ........................................................................................... 200

F. PROPERTY ACQUISITION ..................................................................................................................... 200

G. ELIGIBLE PROPERTIES ........................................................................................................................... 202

H. NSP TENANT PROTECTIONS AT FORECLOSURE.......................................................................... 253

I. PRELIMINARY ESTIMATE OF PURCHASE PRICE AND REHABILITATION COST ................ 27

J. APPRAISAL AND DISCOUNT PURCHASE PRICE ............................................................................... 28

K. WORK WRITE UP AND REHABILITATION COST ESTIMATE ...................................................... 29

L. COST ESTIMATES ......................................................................................................................................... 29

M. ENVIRONMENTAL REVIEW RECORD ................................................................................................. 31


N. FORECLOSURE STATUS (ADDITIONAL DUE DILIGENCE VERIFICATION OF

OWNERSHIP) ..................................................................................................................................................... 311

O. VOLUNTARY ACQUISITION REQUIREMENTS – URA .................................................................... 32

P. OFFER TO PURCHASE ............................................................................................................................. 333

Q. DUE DILIGENCE PERIOD ........................................................................................................................ 333

R. CLOSING REQUIREMENT .......................................................................................................................... 34

S. MAINTENANCE OF ACQUIRED PROPERTIES ................................................................................... 36

T. REHABILITATION MANAGEMENT ....................................................................................................... 36

U. INSPECTIONS AND REQUESTS FOR PAYMENT ............................................................................. 37

V. CHANGE ORDERS ....................................................................................................................................... 39

W. DISPOSITION AND NSP AFFORDABILITY REQUIREMENTS 24 CFR 570.201 (B)............ 40

X. MARKETING AND PROCESSING OFFERS......................................................................................... 40

Y. CLOSING AND RECORDING THE AFFORDABILITY COVENANTS .......................................... 41

CHAPTER III- OTHER FEDERAL REQUIREMENTS ..................................................................... 59

A. EQUAL EMPLOYMENT, EXECUTIVE ORDER 11246 .................................................................... 59

B. SECTION 3 ................................................................................................................................................... 60

C. GOALS ............................................................................................................................................................ 61

D. REPORTING REQUIREMENTS ............................................................................................................. 61

E. COMPLIANCE RESOURCES .................................................................................................................... 61

F. VICINITY HIRING ....................................................................................................................................... 62

G. MINORITY/WOMEN'S BUSINESS ENTERPRISE ........................................................................... 62

H. LABOR REQUIREMENTS ........................................................................................................................ 62

I. LABOR STANDARDS ADMINISTRATION .......................................................................................... 63

J. LABOR STANDARDS ENFORCEMENT .................................................................................................. 64


K. ENVIRONMENTAL REVIEW ................................................................................................................... 67

L. FAIR HOUSING AND EQUAL OPPORTUNITIES .............................................................................. 106

M. AFFIRMATIVE MARKETING ................................................................................................................ 106

N. HANDICAPPED ACCESSIBILITY .......................................................................................................... 107

O. LEAD BASED PAINT REGULATIONS ................................................................................................. 109

P. URA - ACQUISTION AND RELOCATION ............................................................................................ 118

CHAPTER IV- FINANCIAL MANAGEMENT ................................................................................. 127

A. RECORDS TO BE MAINTAINED ........................................................................................................... 128

B. RECORD RETENTION .............................................................................................................................. 129

C. WRITTEN AGREEEMENTS .................................................................................................................... 132

D. SUBRECIPIENT/CONTRACTOR ADMINISTRATION ................................................................... 142

E. REIMBURSEMENT OF PROJECT DELIVERY COSTS/PRE-AWARD COSTS .......................... 143

F. CONDITIONS OF FUNDING DISBURSEMENT AND PAYMENT ................................................. 143

G. COMBINING NSP WITH OTHER FORMS OF FUNDING ASSISTANCE .................................... 145

H. PERFORMANCE STANDARDS .............................................................................................................. 145

I. REQUIREMENTS FOR SUBRECIPIENTS/CONTRACTORS ........................................................... 145

J. ACQUISITION OF PROPERTIES USING NSP FUNDS ...................................................................... 146

K. ENERGY EFFICIENCY .............................................................................................................................. 146

DEFINITIONS/GLOSSARY ............................................................................................................... 148

ATTACHMENTS ................................................................................................................................. 152


LISTS OF ATTACHMENTS

SAMPLE AFFORDABILITY COVENANT ................................................................................................... 153

LEAD SAFE HOUSING RULE ........................................................................................................................ 159

24 CFR PART 5 ANNUAL INCOME INCLUSION AND EXCLUSIONS ............................................... 161

TITLE 25 SECTION 6914 GROSS INCOME INCLUSION – FOR CALHOME ACTIVITIES ......... 166

24 CFR 5.609(b) AND (c) ............................................................................................................................. 168

HOUSING REHABILITATION MARKETING PLAN ................................................................................ 171

RESIDENTIAL ANTI-DISPLACEMENT AND TEMPORARY RELOCATION PLAN ...................... 172

LETTER OF FUNDS AVAILABLE TO REHABILITATE PROPERTY – SINGLE FAMILY ............ 177

LETTER OF FUNDS AVAILABLE TO REHABILITATE PROPERTY – MULTI-FAMILY ............. 178

DISCLOSURE TO OCCUPANT OF TEMPORARY RELOCATION ASSISTANCE............................. 179

PRESERVATION OF FINANCIAL INTEREST – LOAN POSITION ..................................................... 181

FORECLOSURE POLICY .................................................................................................................................. 186

CERTIFICATE OF OCCUPANCY ................................................................................................................... 188

NATIONAL OBJECTIVES AND NSP ............................................................................................................ 189

REHABILIATION CHANGE ORDER REQUEST ....................................................................................... 190

FIRST TIME HOMEBUYER ASSISTANCE PROGRAM ........................................................................... 191

STANDARDS AND CODES RELATED TO CONSTRUCTION ............................................................... 196

HOUSING DIVISION PROJECT CHECKLIST ............................................................................................. 198

WORK WRITE UP AND REHABILITATION COST ESTIMATE .......................................................... 200

PROGRAM INCOME REUSE PLAN .............................................................................................................. 203

SECTION 3 PLAN .............................................................................................................................................. 209


ATTACHMENT LIST - CONTINUED

CPD MONITORING CHECKLISTS FOR CDBG .......................................................................................... 210

ELIGIBLE USE CHECKLIST............................................................................................................................ 211

PROPERTY ACQUISITION ............................................................................................................................. 224

FEDERAL PROCUREMENT CHECKLIST ................................................................................................... 227

PROPERTY ACQUISITION CHECKLIST .................................................................................................... 234

JOB DESCRIPTIONS ......................................................................................................................................... 237

SECRETARIAL DUTIES .................................................................................................................................. 255

ORGANIZATIONAL CHARTS ........................................................................................................................ 258

DETERMINING INCOME ELIGIBILTY ....................................................................................................... 263


INTRODUCTION

The Neighborhood Stabilization Program (NSP3) for the City of Merced is authorized by section 1497 of the

Wall Street Reform and Consumer Protection Act of 2010 (Pub. L. 111-203 (July 21, 2010)) (Dodd-Frank Act),

title XII of Division A of the American Recovery and Reinvestment Act of 2009 (Public Law 111-5 (February

17, 2009)) (Recovery Act) and sections 2301-2304 of the Housing and Economic Recovery Act of 2008

(Public Law 110-289 (July 30, 2008)) (HERA).

The NSP3 is administered by the U.S. Department of Housing and Urban Development (“HUD”) and is

considered a special Community Development Block Grant (“CDBG”) allocation.

1. PURPOSE

The purpose of the NSP Policy and Procedure Manual is to provide an overview of the policies and

procedures as they pertain to NSP and guidance on the implementation of NSP projects in the City of

Merced, California. HUD notices, guidance, and frequently asked questions about the NSP program can be

found at www.hudnsphelp.info.

This manual is not meant to be a substitute for NSP regulations, but as a supplement to them. It is not

absolute regarding all considerations affecting the use of NSP funds. While careful consideration and

attention has been used in developing this manual, NSP participants are encouraged to consult with the

City's NSP staff to ensure correct interpretation of policies and regulations. Merced reserves the right to

add, remove, or change policies, procedures, or forms in this manual.

Other NSP materials as well as this document can be accessed at the City of Merced website

http://www.cityofmerced.org/depts/econdev/housing_division/neighborhood_stabilization_program_(n

sp)/default.asp

Disclaimer: Not withstanding any information contained in this document, where a conflict of language or

omission of requirements occurs, the requirements of the Federal Notice and HUD Guidance on the

Neighborhood Stabilization Program (NSP), as may be amended from time to time, will prevail.

All laws and Federal Notices governing NSP3 may be found at this link:

https://hudnsphelp.info/index.cfm?do=viewLawsandNotices

OTHER RESOURCES:

U.S. Department of HUD NSP Website:

www.hud.gov/offices/cpd/communitydevleopment/programs/neighborhoodspg/

U.S. Department of HUD CDBG Website:

www.hud.gov/offices/cpd/communitydevelopment/programs/

U.S. Department of HUD Environmental Requirements Website:

www.hud.gov/offices/cpd/environment/index.cfm

U.S. Department of HUD Labor Regulations Website:

http://www.cityofmerced.org/depts/econdev/housing_division/neighborhood_stabilization_program_(nsp)/default.asp

http://www.cityofmerced.org/depts/econdev/housing_division/neighborhood_stabilization_program_(nsp)/default.asp

https://hudnsphelp.info/index.cfm?do=viewLawsandNotices


www.hud.gov.offices/olr/

U.S. Department HUD CDBG Crosscutting Federal Requirements:

www.hud.gov/offices/cpd/communitydevelopment/toolkit/index.cfm

U.S. Department of HUD Acquisition and Relocation Resources Website:

www.hud.gov/offices/cpd.library.relocation,nsp/index.cfm

2. ORGANIZATION STRUCTURE AND RESPONSIBILITIES

Ten percent (10%) of the NSP allocation can be utilized for general administration and planning activities. The City of Merced has budgeted $127,518 for this activity in accordance with Eligible Activity under CDBG: 24 CFR 570.205 and 206.

The organization chart on pages 12 and 13 indicates the activities to be undertaken and the

staff involved. For questions concerning the NSP Program, individuals may contact the NSP

Program staff by telephone, or e-mail. The City of Merced NSP mailing address is 678 West 18th

Street, Merced, CA; 209-385-6863; [email protected].

CITY OF MERCED JOB DESCRIPTIONS

DEVELOPMENT (HOUSING) MANAGER DEFINITION Under general direction, to plan, schedule, and manage a variety of projects related to the City's Federal and State Housing programs. Includes overseeing Housing Staff, ensuring compliance with State and Federal Regulations, and working with outside agencies to provide safe housing to Merced residents. Includes overseeing local, state and federal budgets pertaining to the Housing Division, oversight of all policies and procedures, writing of five and annual year plans related to specific grants, and ensuring staff and the City of Merced are updated and in compliance with various state and/or federal mandates. REPORTS TO: Economic Development Director HOUSING REHABILITATION SPECIALIST I/II DEFINITION Under general supervision, to provide a variety of professional and technical assistance for local property owners in the rehabilitation, demolition, or reconstruction of their homes; to develop and prepare environmental reports on HOME and CDBG funded projects; to perform inspections of housing rehabilitation projects; and to do related work as required. REPORTS TO: Housing Manager

mailto:[email protected]


BUILDING INSPECTOR I/ II/III DEFINITION Under general direction, to conduct inspections of residential, commercial, or industrial building structures and installations in various states of alteration, construction, and repair; to determine that construction, alterations, and repairs are in compliance with City and Uniform Building Codes and ordinances; to enforce building and zoning codes and ordinances to answer questions regarding code enforcement and structural requirements for the public, architects, contractors and engineers; and to do related work as required. REPORTS TO: Housing Manager HOUSING FINANCE SPECIALIST DEFINITION Under general supervision, performs financial counseling, processing, implementing, and monitoring duties in applying for, obtaining and ensuring repayment of rehabilitation loans and/or grants in compliance with federal and state regulations. REPORTS TO: Housing Manager HOUSING PROGRAM SPECIALIST I/II/III Series DEFINITION Under general direction, aids the Development Manager with housing, community development projects. Prepares cost analysis, reports, and designs for special projects; prepares environmental reports, public notices, and request for release of funds on all HOME and CDBG funded projects, assist in preparing HUD annual reports and conducting public meetings. Performs related responsibilities as required, under the direction of the Development Manager. REPORTS TO: Housing Manager SECRETARY I/II/III DEFINITION Under general supervision, to coordinate and perform a variety of administrative support work for the Housing Division; to provide support for designated management and/or administrative staff; to perform difficult and specialized office support in the range of application intake for all housing programs, information gathering, information preparation, and public relations assignments; and to do related work as required. REPORTS TO: Housing Manager


ORGANIZATIONAL CHART

Director Economic

Development

Development Manager Economic

Development

Housing Finance

Specialist Housing Division

Housing Program Specialist Housing Division

Secretary Housing Division

Housing

Rehabilitation Specialist Housing Division

Building Inspector II Part-time

Secretary Part-time


Organizational Responsibilities

City Manager

Signs Documents

From Title

Economic Development Director

Approve Purchase Orders

Development Manager

- Reviews Acquisition with Staff

-Approves Eligible Houses

- Approves Rehab Write-Ups

- Approves Budget Requests

- Signs Purchasing Agreements

- Approves final Workmanship

- Reviews documents sent to City Attorney’s Office

-Oversees Compliance of Policies and Procedures

Finance Specialist

-Ensures Availability of funds.

-Reviews Budget Request

Rehabilitation Specialist

- Inspects House

- Reviews Pest/Lead Inspection Reports

- Upon Close of Escrow, make 3 sets of keys

- Estimates Cost of Rehabilitation

-Creates Work Write-Up

-Coordinates Construction Bid Tour

-Validates Construction Bid

-Oversees Construction by Contractor

-Oversees Inspections

-Works Closely with Inspector

Housing Program Specialist

- Locates Eligible House

- Request a NSP Compliant Appraisal

- Prepares Environmental Documents

- Works with Agent and the Seller (Bank)

- Coordinates Inspections

-Oversees NSP Reporting

- Prepares Insurance Request

Secretary

- Creates a File for Acquisition

- Prepares Certificate of Compliance

- Prepares Budget Request for Check

- Contacts Title Company

-Oversees Loan Application Intake

-Sets Up Loan Committee Meetings

-Prepares Acquisition and Loan Correspondence

Inspector

-Works Closely with Rehabilitation Specialist

-Inspects All Properties Prior, During and After

Construction, Reconstruction

-Assists Rehabilitation Specialist in Ensuring Work

Write-Up Includes Local and State Code/Health and

Safety Compliance Components


Ten percent (10%) of the NSP allocation can be utilized for general administration and planning activities. The City of Merced has budgeted $127,518 for this activity in accordance with Eligible Activity under CDBG: 24 CFR 570.205 and 206.

The organization chart on pages 12 and 13 indicates the activities to be undertaken and the

staff involved. For questions concerning the NSP Program, individuals may contact the NSP

Program staff by telephone, or e-mail. The City of Merced NSP mailing address is 678 West 18th

Street, Merced, CA; 209-385-6863; [email protected].

CITY OF MERCED JOB DESCRIPTIONS

DEVELOPMENT (HOUSING) MANAGER DEFINITION Under general direction, to plan, schedule, and manage a variety of projects related to the City's Federal and State Housing programs. Includes overseeing Housing Staff, ensuring compliance with State and Federal Regulations, and working with outside agencies to provide safe housing to Merced residents. Includes overseeing local, state and federal budgets pertaining to the Housing Division, oversight of all policies and procedures, writing of five and annual year plans related to specific grants, and ensuring staff and the City of Merced are updated and in compliance with various state and/or federal mandates. REPORTS TO: Economic Development Director HOUSING REHABILITATION SPECIALIST II DEFINITION Under general supervision, to provide a variety of professional and technical assistance for local property owners in the rehabilitation, demolition, or reconstruction of their homes; to develop and prepare environmental reports on HOME and CDBG funded projects; to perform inspections of housing rehabilitation projects; and to do related work as required. REPORTS TO: Housing Manager BUILDING INSPECTOR II DEFINITION Under general direction, to conduct inspections of residential, commercial, or industrial building structures and installations in various states of alteration, construction, and repair; to determine that construction, alterations, and repairs are in compliance with City and Uniform Building Codes and ordinances; to enforce building and zoning codes and ordinances to answer questions regarding code enforcement and structural requirements for the public, architects, contractors and engineers; and to do related work as required. REPORTS TO: Housing Manager



HOUSING FINANCE SPECIALIST DEFINITION Under general supervision, performs financial counseling, processing, implementing, and monitoring duties in applying for, obtaining and ensuring repayment of rehabilitation loans and/or grants in compliance with federal and state regulations. REPORTS TO: Housing Manager HOUSING PROGRAM SPECIALIST I/II/III Series DEFINITION Under general direction, aids the Development Manager with housing, community development projects. Prepares cost analysis, reports, and designs for special projects; prepares environmental reports, public notices, and request for release of funds on all HOME and CDBG funded projects, assist in preparing HUD annual reports and conducting public meetings. Performs related responsibilities as required, under the direction of the Development Manager. REPORTS TO: Housing Manager SECRETARY II DEFINITION Under general supervision, to coordinate and perform a variety of administrative support work for the Housing Division; to provide support for designated management and/or administrative staff; to perform difficult and specialized office support in the range of application intake for all housing programs, information gathering, information preparation, and public relations assignments; and to do related work as required. REPORTS TO: Housing Manager


CHAPTER I - NSP General Requirements

As an NSP recipient, the City of Merced must adhere to the general NSP program requirements, establish, and

maintain financial records and financial management recordkeeping systems that comply with federal

policies and regulations. The NSP program includes the following general requirements:

Establish financing mechanisms for the purchase and rehabilitation of foreclosed homes and

residential properties.

Acquiring and rehabilitating homes and residential properties that have been abandoned or

foreclosed upon in order to sell, rent, or develop such homes and properties.

Establish land banks for homes that have been foreclosed.

Demolish blighted foreclosed and abandoned residential properties.

Redevelop demolished or vacant residential properties.

A minimum of 1 percent discount for the acquisition of foreclosed properties. This discount is from a

current market appraised value, which is determined by an appraisal that is prepared within 60 days

of the offer on the property.

The sale of the unit cannot exceed the total investment made by the City (acquisition, rehabilitation

costs, marketing and sales costs). The cost of maintaining a property in a stagnant condition is not an

allowable cost and may not be factored into final sales price.

NSP funds are used to address the areas of greatest need.

All NSP funds must be obligated with 18 months of the fully executed agreement with HUD.

Proceeds received prior to July 30, 2013 must be used as program income for the same NSP funded

activity that generated it.

Proceeds received after July 20, 2013 are no longer required to be returned to HUD for deposit with

the U.S. Treasury, however, this program income will be required to comply with Community

Development Block Grant (CDBG) guidelines for the use of program income.

Up to 10 percent of the NSP grant including program income may be used for administration.

At least 25 percent of NSP funds must be set aside for expenditures to provide housing to households

earning 50 percent or below the AMI

A. EXPENDITURE DEADLINES

NSP3 imposes strict expenditure deadlines:

50 percent of the NSP3 funds must be expended within two years of HUD signing the grantee

agreement.

100 percent of the NSP3 funds must be expended within three years of HUD signing the grantee

agreement.

The City of Merced Grant Agreement for NSP3 was signed on March 16, 2011.

The City of Merced 50% expenditure Deadline falls on March 16, 2013 and the 100%

expenditure deadline is March 16, 2014.


B. 25% VLI REQUIREMENT

NSP3 further requires that not less than twenty-five percent (25%) of the total NSP3 funds allocated to

the City of Merced shall be utilized to provide permanent housing for households at or below fifty percent

of the AMI.

C. APPRAISAL GUIDANCE

Properties acquired using NSP will be purchased at a discount of at least 1% less than the

current appraised value of the home or residential property.

The City of Merced requires documentation to ensure the discount requirement is met including

the address, appraised value, purchase offer amount, and discount amount for each property.

The discount value calculation may take into account the likely carrying costs of the mortgagee if

it were to NOT sell the property to the applicant. Carrying costs may include taxes, insurance,

maintenance, marketing, overhead, and interest. An appraisal must be submitted with the NSP3

application. Depending upon timing, the appraisal may subsequently have to be updated.

Appraisals are required on acquisitions of foreclosed properties, valued at over $25,000, and

must be completed within 60 days from the date of the final offer.

Merced may submit an offer to purchase contingent upon completion of an appraisal and or

environmental review.

For homebuyer programs, a post-rehabilitation appraisal is required to determine sales price.

The appraisal could be a combination pre- and post-rehabilitation appraisal.

Foreclosed properties with values less than $25,000 do not require an appraisal. Instead, a

written market valuation is required that is based on a review of available data and is made by a

qualified person.

If NSP funds are used to acquire a foreclosed upon home or residential property, the grantee

must ensure that the purchase price includes a discount from the current market value

established by an appraisal that meets either the URA appraisal requirements of 49 CFR 24.103

or one of the other appraisal options specified in the October 19, 2010 NSP Notice:

Option 1 – An appraisal meeting the URA appraisal requirements of 49 CFR 24.103;

Option 2 – An appraisal meeting the requirements of the Uniform Standards of Professional

Appraisal Practice (USPAP);

Option 3 – An appraisal meeting the requirements of the Federal Housing Administration

(FHA) or a Government-Sponsored Enterprise (GSE).


D. CURRENT AND COST REASONABLENESS REQUIREMENTS

The purchase price of foreclosed property must be at a discount from the current market appraised value

of the property. The appraisal must be completed within 60 days of a final offer made for the property by

the grantee. If closing does not take place before the 60 days has expired, the grantee may obtain an

update to the initial appraisal. This update is not required to be a full appraisal and does not generally

require an inspection of the interior of the structure unless damage is visible.

In addition, if NSP funds are used to acquire properties, a grantee must also be guided by the applicable

OMB cost principles when considering the current market value of a property. A fundamental

requirement in the OMB Circulars is that costs charged to an NSP grant must be reasonable. Cost

reasonableness takes into account factors such as prudence, sound business practices, and arms length

bargaining. Given these considerations, reliance on an appraisal that is more than 120 days old at the

time of closing would appear counter to the current market appraisal and cost reasonableness

requirements. Beyond 120 days, the grantee is advised to obtain a new appraisal.

E. URA ACQUISITION REQUIREMENTS

The URA voluntary acquisition requirements (49 CFR 24.101(b)(1)-(5)) apply to anyone who uses NSP

funds to acquire real property including any Agency, nonprofit/for profit organization, or individual

homebuyers who use a federally-funded down payment or other financial assistance. This includes both

foreclosed upon residential properties subject to the NSP Appraisal Requirements and properties not

subject the NSP Appraisal Requirements. Any acquisition of real property for an NSP-assisted project

which does not meet the requirements of a voluntary acquisition under 49 CFR 24.101(b)(1)-(5) is

subject to the requirements of 49 CFR part 24, subpart B, which includes rules governing appraisals and

review appraisals, among other acquisition-related requirements (see 49 CFR 24.102-108).

1. VOLUNTARY ACQUISITION OF PROPERTY SUBJECT TO NSP APPRAISAL REQUIREMENTS

To meet the voluntary acquisition requirements, the owner of record must be notified in writing

that Federal financial assistance will be used in the transaction, what the market value of the

property is believed to be, and that if agreement cannot be reached through negotiation, the

acquisition will not take place. Such notification is not required to be made to Federal, State, or

State Agencies (FHA, for example), if the purchaser cannot acquire the property through

condemnation (see 49 CFR 24.101(b)(3)). The specific URA voluntary acquisition requirement

that must be met vary depending on whether the buyer has the power of eminent domain and

will not use it (see 49 CFR 24.101(b)(1)(i)-(iv)) or 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). HUD has

developed a number of sample guidance forms to assist NSP grantees in meeting these

requirements. The Guidance forms and other information and resources are located at:

http://www.hud.gov/offices/cpd/library/relocation/nsp/index.cfm

2. VOLUNTARY ACQUISITION OF PROPERTY NOT SUBJECT TO NSP APPRAISAL

REQUIREMENTS

When acquiring property under NSP that does not meet the definition of “foreclosed” (generally,

vacant or abandoned which are not subject to the NSP discount requirements) but which meets

the applicable URA criteria for a voluntary acquisition under 49 CFR 24.101(b)(1)-(3), no



specific URA appraisal requirement applies. Nonetheless, grantees must have a reasonable basis

for their determination of market value. See 49 CFR part 24, Appendix A, § 24.101(b)(1)(iv) and

(2)(ii). While making such a determination of market value does not require an appraisal for

these transactions, NSP grantees may still decide that an appraisal is necessary to support their

determination of the market value of these properties.

After a grantee has established an amount it believes to be the market value of the property and

has satisfied the applicable written disclosure requirements, when required under 49 CFR

24.101(b)(1) & (2), a grantee may negotiate freely with the owner in order to reach agreement.

When these transactions are voluntary and accomplished by a willing buyer and a willing seller,

negotiations may result in an agreement for the amount of the original estimate, an amount

exceeding it, or for a lesser amount. Although not required by the URA regulations, it would be

appropriate for grantees to apply the administrative settlement concept and procedures in 49

CFR 24.102(i) to negotiate amounts that exceed the original estimate of market value.

As with acquisitions subject to the NSP appraisal requirements, NSP grantees must also abide by

the cost reasonableness requirements of the CDBG program and 2 CFR part 225 (formerly

known as OMB Circular A-87) when incurring costs under a federally funded program. Grantees

must be able to document the reasonableness of costs incurred (which may include an appraisal

or other documented determination of value as support). This is especially critical in markets

where values are still unstable and risk of overpayment is greater.

A lenders appraisal may be acceptable as long as it complies with the October 19, 2010 NSP

Notice.

F. AREAS OF GREATEST NEED

NSP awarded recipients must be able to demonstrate that each activity is eligible under the Housing and

Economic Recovery Act 2301 (c) (2) (HERA) to meet the (NSP) national objective. The RNSC has

identified target areas that have been affected by the current housing market conditions. These areas

were determined by the following priority emphasis of areas:

1. With the greatest percentage of home foreclosure;

2. With the highest percentage of home financed by sub-prime mortgage related loan;

3. Identified by the State as likely to face a significant rise in the rate of home foreclosures.

The City of Merced Area of Greatest need does not differ significantly to the area of greatest need that

was selected for our subrecipient NSP1 Program with the State of California.

For more information on the Consolidated Planning Process please refer

to the City of Merced CDBG Policy and Procedure Manual.


CHAPTER II - APPLICANT PROCESS AND PROJECT SELECTION

The City of Merced is an equal opportunity housing provider. The City of Merced considers applicants

without regard to race, religious preference, gender, handicap, familial status, or national origin. The

application process consists of completion of the application form, credit check, an office interview and

completion of homebuyer education course. Eligible applicants will be selected on a first come first served

basis subject to funding availability.

A. ACCEPTANCE GUIDELINES

Acceptance guidelines are based on the following criteria:

None of the applicants have owned real estate in the past three years;

Applicants demonstrate an ability to pay with a two-year history of stable employment;

Required: the employer must complete Verification of employment.

Applicants demonstrate an acceptable credit history, which includes a good record of paying rent

and utilities; Documentation from all sources of income is required. All applicants must sign

verification of income forms if over 18 years of age.

Bankruptcies must have been discharged for at least 2 years; a credit check is required.

A HUD Approved Home Ownership Counseling Certificate is required before application

submission as well as a Pre-approval letter from a first mortgage lender approved by the

Grantee.

Ability to cover closing costs and adjustments which are in the range of $3500-4000;

Ability to afford anticipated mortgage payments including taxes and home owners insurance;

Applicants must be US Citizens or Permanent Resident Aliens. A birth certificate and copy of

social security card is required for all applicants, dependents and all household occupants.

None of the applicants owes Federal, State, or Local Tax Debts. Medical Debts up to $10,000 may

be allowable under certain circumstances.

2012 Maximum Income Guidelines City of Merced

Persons in Household Maximum Household Income

1 $40,550 Needs Updated to Current Amounts

2 $46,300

3 $52,100

4 $57,900

5 $62,550

6 $67,150

7 $71,800

8 $76,450


Total Taxable Gross Household income cannot exceed the limits defined under Eligible

Households within this manual; taxable gross income is defined as income from all taxable

sources, before deductions, projected forward for the next 12 months for all household members

18 and older. To be eligible for home ownership an applicant must be making over 40% of the

median income for the City of Merced.

REQUIRED DOCUMENTS:

Recent bank statements for all accounts;

Pay stubs for past 3 months;

Tax returns for past 3 years;

W-2’s for past 2 years;

Information on long term debts, names of creditors, account numbers and payment amounts;

Proof of all current income;

Pre-approval lender qualification letter and proof of completed home buyer training course.

B. CANCELLATION BY OWNER/GRANTEE

a. Any applicant who cancels an application while it is in process shall not be eligible for

reconsideration of the application for a six (6) months period.

b. If the buyer changes lenders during the purchase process while the house is under contract,

Grantee reserves the right to cancel the contract and place the house back on the market for sale.

c. Applications canceled by the City due to ineligibility or other reasons shall not be subject to this

provision.

The City’s financial commitment under the FTHB Program will be valid for 90 consecutive

calendar days, starting with the first working day after preliminary approval.

d. Applicants who do not have an acceptable Earnest Money Contract with a seller within the 90

consecutive days will be cancelled.

e. Other reasons for cancellation may include:

i) Applications containing false information will be cancelled.

ii) Applications found to be over income after third party verification will be cancelled.

C. DISPUTE RESOLUTION AND APPEALS

a. Any applicant denied assistance from the City’s Housing Programs has the right to appeal. The

appeal must be made in writing to the Director of Economic Development.

i) If the Director of Economic Development disapproves an application pursuant to the authority

granted to the Director, the applicant shall have the right to appeal to City Manager of the City of

Merced.


D. DOWN PAYMENT REQUIREMENTS

The Applicant must put down at least 5% for conventional financing and the requirements may be as high

as 30% for a conventional loan. 3.5% down is required for FHA financing. A minimum of 1% or $1,000

must be from the applicant’s own funds. Beyond that, any additional funds over the 1% requirement may

be from a relative.

1. Down Payment a. The minimum amount of cash required from the buyer is $1,000

b. The maximum amount of cash required by the buyer will vary according to the terms of the

first mortgage, the price of the home to be purchased, the buyer’s assets, the Lender’s

required down payment, and the closing costs.

c. A first mortgage requirement of a down payment in excess of 5% of the purchase price of the

home is prohibited

2. HOME BUYER EDUCATION CLASS A Home Buyer Education Class is required to receive City of Merced Home Buyer NSP Program

funding. The City will pay for attendance to one of two Eligible HUD Approved Education

Courses in Fresno or Modesto. Staff will work with the applicant to arrange attendance.

3. Home Restrictions a. The house price will depend on what the buyer can afford, but in no case can it exceed

$148,000 (see attached real estate market study).

b. The house must be located in The City of Merced;

c. No multifamily dwellings (buyer can purchase a condominium, townhouse, or one side of a duplex);

d. The house must pass a City of Merced Housing Inspection;

e. Buyer must be able to afford the property as determined by the housing counselor and mortgage lender.

E. MORTGAGE RESERVE REQUIREMENT

In addition to the down payment, buyer must have one mortgage payment in reserve (savings or checking)

at closing. This requirement may be waived if mortgage payments are set up for ACH withdrawals for both

the first and second mortgage and all related payments.

F. PROPERTY ACQUISITION

The NSP program notice requires that properties to be purchased with NSP funds must be abandoned or

foreclosed. Additionally, Merced restricts acquisition to single-family housing (structures with 1 unit),

condominiums, and townhouses. Structures with 2 or more units that have the same ownership are not

eligible for participation. Other ineligible structures include mobile homes, coops, houseboats, and vacant

land. Finally, cement block houses are preferred; manufactured housing is only considered if the unit was

completed recently and can be assumed to be up to the current code requirements for manufactured

housing.


PROCEDURE

1. The Agent and Housing Program Specialist locate an eligible NSP House.

Ensure the property has been vacant for a minimum of 90 days, or,

Ensures the foreclosure process has been completed for a minimum of 90 days.

Staff verifies if the residence is NSP 1 eligible.

Housing Rehabilitation Specialist (HPS) and Manager Inspects property.

The HPS prints out the property information and attaches it to file.

The HPS takes photographs of the structure to confirm structure type and places the

documentation in the project file.

Housing Rehabilitation Specialist (HPS) provides estimate for rehabilitation (See Section I).

Housing Program Specialist (HPS) checks cost of house and rehab to prepare recommendation.

Secretary creates a folder.

Housing Finance Specialist reviews funds to ensure availability.

Housing Manager gives approval to proceed with offer.

2. Agent and Housing Program Specialist (HPS) work to submit offer to Bank.

“Purchase Price must be 1% below appraised value up to the agreed upon purchase price.”

House disclosures reviewed by City Attorney prior to purchase to determine if any unexpected

and costly environmental issues might make the house ineligible for this program.

3. Housing Manager/Program Specialist Signs all Acquisition Required Documents. Once Documents

have been signed:

PDF and email agent.

Legal Service Request Form to City Attorney’s Office.

Retain Original/Copied signed documents – Placed in file.

File kept in housing drawer.

4. After Offer has been accepted:

HPS – Orders an NSP Compliant appraisal per HUD Guidelines

a. Staff contacts one of the approved appraisers for Merced.

b. Appraisal is requested within 60-days of the final offer.

c. Staff provides the appraiser with information required to be included within the

appraisal and to ensure URA Compliancy.

d. Compliant with 49 CFR 24.103 and the agreed purchase price is 1% below the appraised

value.

HPS - Sign addendum modifying purchase price

Agent & HPS - Pest inspection reports - abate any issues and provide a pest certificate stating the

structure has been properly abated.

Secretary - Certificate needs to be placed in housing folder.

5. HPS - Environmental Clearance Documents are approved for property.

House built pre- 1950 – Ensure Compliancy with SHPO.

House Built pre- 1978 – Lead Based Paint inspection is required.


6. HPS and Secretary work with Title Company for anticipated end costs and closing date.

7. Secretary - Send fund request to finance with closing date. Have check made out for highest

anticipated cost. Make copy of check and place in housing folder.

8. City Manager or designee- Sign Documents from Title Company processing.

9. Secretary prepares ‘Certificate of Acceptance’ for approval by Clerks Office.

10. Title Company picks up all forms to finalize purchase/acquisition.

11. Secretary prepares check request for the amount specified on the HUD-1 Form.

12. Secretary makes copy of check and places in folder.

13. Contact Clerk’s office to ensure they have received grant deed and insurance documents after the

deed has been recorded.

G. ELIGIBLE PROPERTIES

Eligible properties must meet the following criteria:

1. Must be located in an NSP Target Area(s) indicated in the NSP Agreement and Abbreviated Plan.

2. Must have no substantial adverse environmental factors as determined by an environmental review.

See chart below.

3. Must have no more than four dwelling units on a single property, unless with Grantee’s advance

approval in writing.

4. Must otherwise be suitable and livable locations for occupancy by NSP-qualified homebuyers.

Positive factors to be considered include lack of adverse environmental factors as determined by an


5. Must be unoccupied and have no personal possessions on site. If Developer discovers that a property

is occupied or has personal possessions on site, Developer must immediately abandon the

investigation and inform the seller that the property will not be considered for purchase. On an

exception basis and only with advance written permission from Grantee, Developer may investigate

an occupied property for possible purchase—in the event of which Developer will be obligated to

follow all relocation requirements described in Section IV below

6. Must be in one or more of the following NSP property categories and only as indicated in the NSP

Agreement. For example, Developer may not acquire a vacant or blighted property unless the

Agreement allows acquisitions in that category;

a. Foreclosed: The property 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 grantee, subrecipient, developer, or end user.

b. Abandoned: A home is abandoned when mortgage or tax foreclosure proceedings have been

initiated for that property, 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.

c. Vacant: The NSP program does not define the term vacant, but this manual defines a vacant

property as one that has been unoccupied for at least 90 days and has no bona fide tenant with

rights of occupancy.

d. Blighted: A structure is blighted and qualified for demolition with NSP funds when it exhibits

objectively determinable interior and/or exterior signs of deterioration sufficient to constitute a

threat to human health, safety, and public welfare. To be considered blighted under the terms of

any NSP Agreement, the City must declare the structure blighted according to the definition of

blighted structure under the Amended State of California Health and Safety Code Section 33030-

33031.

7. At no time will NSP funds be used in an acquisition involving an eminent domain action.

8. Property must be acquired with a valid deed free and clear of all encumbrances. Purchases with any

other form of deed or with any lien, deed restriction, land lease or other encumbrance must be

approved in writing by Grantee prior to Developer making an offer.


NSP Eligible Use and Corresponding CDBG Regulations

NSP Eligible Use Corresponding CDBG Regulations Type(s) of

Development

A) Financing mechanisms for

purchase and redevelopment of

foreclosed homes and residential

properties including such mechanisms

as soft-seconds, loan loss reserves, and

shared-equity loans for low- and

moderate-income homebuyers.

As part of an activity delivery cost for an eligible

activity as defined in 24 CFR 570.206.

In addition, the eligible activities listed below to the

extent financing mechanisms are used to carry them

out.

Homeownership

and

Rental

(B) Purchase and rehabilitate homes

and residential properties that have

been abandoned or foreclosed upon, in

order to sell, rent, or redevelop such

homes and properties.

24 CFR 570.201

(a) Acquisition

(b) Disposition,

(i) Relocation, and

(n) Direct homeownership assistance (as modified

below);

24 CFR 570.202 eligible rehabilitation and preservation

activities for homes and other residential properties

(HUD notes that rehabilitation may include counseling for

those seeking to take part in the activity).

(C) Establish land banks for homes that

have been foreclosed upon.

24 CFR 570.201

(a) Acquisition, Maintenance, and (b) Disposition.

(D) Demolish blighted structures 24 CFR 570.201

(d) Clearance for blighted structures only.

Green Space

(E) Redevelop demolished or vacant

properties

24 CFR 570.201

(a) Acquisition,

(b) Disposition

(c) Public facilities and improvements,

(e) Public services for housing counseling, but only to the

extent that counseling beneficiaries are limited to

prospective purchasers or tenants of the redeveloped

properties,

(i) Relocation, and

(n) Direct homeownership assistance (as modified

below).

204 Community based development organizations.

Homeownership

and

Rental

and

Public Facilities


H. NSP TENANT PROTECTIONS AT FORECLOSURE

The American Recovery and Reinvestment Act of 2009 (Recovery Act) imposes requirements on the

Neighborhood Stabilization Program (NSP) to ensure that bona fide tenants in NSP-affected properties

received proper treatment. A more recent law, the Protecting Tenants at Foreclosure Act of 2009 (PTAF)

provides similar protections for tenants facing eviction as a result of foreclosure on virtually all mortgaged

rental properties in the United States. On June 24, 2009, HUD published a Notice in the Federal Register

providing additional information on PTAF.

The tenant protection requirements directly affect Initial Successors In Interest (ISII), who takes title to

property through foreclosure (including lenders and others who purchase property at foreclosure sales).

The following chart outlines the tenant protection requirements under NSP by the initial successor in

interest:

The tenant protection requirements in the Recovery Act are separate and apart from the obligations

imposed on grantees by the Uniform Relocation Assistance and Real Property Acquisition Policies Act of

1970 (URA). The URA applies to any person displaced as a direct result of acquisition, rehabilitation,

and/or demolition of real property for a Federal or federally-assisted project.

Eligibility determinations under the URA and the required notices and relocation assistance requirements

are different and separate from the tenant protections in the Recovery Act. One cannot assume that a

person entitled to the tenant protections under the Recovery Act is also eligible for assistance under the

URA (or vice versa). Options for Developers to demonstrate compliance with NSP tenant protection

requirements may include:

LAW American Recovery and Reinvestment RECOVERY ACT

DATE OF APPLICABILITY Residential Properties foreclosed after February 17, 2009

PERSON AFFECTED Bona Fide tenant occupying residential property under a

lease in effect before or on the date or notice of Foreclosure.

Bona fide tenants

occupying residential

property under a tenancy

in effect after the date of

notice of foreclosure.

IMPLICATIONS Initial successor in interest (see definitions) must allow such

tenants to remain to end of the lease term* and provide a

minimum of 90 days notice to move. These periods may

overlap but cannot be less than 90 days.

Initial successor in

interest (see definitions)

must provide such

tenants a minimum 90

days notice to move.

EXCEPTIONS An initial successor in interest selling the property to a person occupying the home as the

primary place of residence MAY terminate the lease, but MUST allow at least 90 days to

vacate.


1. The purchase properties which were foreclosed upon prior to Feb. 17, 2009 and obtain

evidence of the date of foreclosure, they are not covered by the tenant protection

requirements of NSP.

2. If purchasing properties foreclosed upon after February 17, 2009, obtains adequate

documentation of tenant protection compliance (or inapplicability) from the ISII, including:

a. certification that only the former mortgagor and/or immediate family occupied the

property at the time of the notice of foreclosure;

b. Copies of the tenant's lease and any notice to vacate issued by the ISII to

substantiate compliance;

c. Where a tenancy existed without a written lease or at will, information on the

tenancy and any notice to vacate from the ISII to substantiate compliance;

d. A certification of compliance with the NSP tenant protections (or the inapplicability

of the tenant protections) from the ISII.

3. If the ISII will not or cannot certify or demonstrate compliance with the NSP tenant

protections, it may be best to abandon the transaction.

4. If the property is still desired, and no certification or documentation of compliance can be

obtained from the ISII, perform due diligence to determine whether any bona fide tenant

occupied the property. If so, determine if they were allowed to remain through the end

of the lease term or tenancy (as applicable) and received any required notices.

5. Developers that purchase tenant-occupied property can choose to continue to operate

occupied units as rental properties, but only if the tenant household income qualifies under

NSP.

6. If the Developer knows that the ISII did not comply with the NSP tenant protection

requirements and vacated the property contrary to the NSP requirements, abandon the

transaction. NSP funds cannot be used for such properties.

7. If the ISII did not comply and the tenant is still in occupancy, the developer may not assume

this responsibility.

The use of NSP funds is subject to a determination by the City of Merced that the ISII complied with the

tenant protection requirements of the Recovery Act, that the City will assume this responsibility if the ISII

did not, or that the tenant protections are not applicable. Therefore, if the Developer learns that the initial

successor in interest did not comply with the NSP tenant protection requirements and a bona fide tenant

was required to vacate the property contrary to the NSP requirements, abandon the transaction. NSP funds

cannot be used for such properties.

If the property is occupied, or was vacated for the NSP-assisted project, the Developer must also determine

if the occupant would be eligible as a displaced person under the ORA. If so, abandon the transaction unless

there is a non-NSP source of funds to pay the relocation costs, since RNSC will not authorize the use of NSP

funds for this purpose.


I. PRELIMINARY ESTIMATE OF PURCHASE PRICE AND REHABILITATION COST

REQUIREMENT

The NSP program requires that the purchase price must reflect a discount from the current market

appraised value of the property. The minimum discount required is 1% of current appraised value. Per the

NSP requirements, current market appraised value must be established through an appraisal completed

within 60 days of the purchase offer.

NSP requires that properties to be assisted with the program’s funds meet local building and housing

standards. Additionally, NSP requires that grantees describe or reference rehabilitation standards for its

programs.

The City of Merced has established written rehabilitation standards in which to evaluate preliminary costs.

Further, in addition to the purchase discount requirements of the NSP, Merced requires that the estimated

purchase price, carrying costs, and cost of rehabilitation cannot exceed $148,000. Given the price

threshold, Merced expects homes purchased with NSP funds to require limited, cosmetic repairs –not major

rehabilitation that trigger local building and housing standards as well as stringent requirements related to

lead based paint hazard reduction.

In addition to meeting established quality standards, all properties assisted with Federal funds, including

with NSP funds, and built before 1978, must meet the standards established in the Lead Safe Housing Rule

(LSHR) at 24 CFR Part 35, implementing Title X of the 1992 Housing and Community Development Act.

PROCEDURE

Preliminary Estimate of Purchase Price

As an initial estimate of the discount price, HPS assumes that the asking price of the property

reflects market value and discounts the asking price of the property by 1%.

The 1% discount from the asking price is recorded on the NSP/Merced Real Estate Acquisition

Assessment Form.

The NSP Real Estate Acquisition Assessment Form is placed in the file.

Preliminary Estimate of Repair Cost

Rehab Specialist is to hire a Housing Inspector to Inspect the property,

Document that the structure is the same as the original plans on file with Merced

Building Department,

Document the condition of the structure and any repairs needed to bring the

structure up to local code and in compliance with written rehab standards, and

Provide an estimate of the cost for all repairs needed to bring the property up to

code and in compliance.

The condition report prepared by housing inspector is reviewed by the Rehab Specialist.


The Rehab Specialist helps to establish both the scope and the cost of the rehabilitation

required.

The Rehab Specialist includes associated documentation into the files.

The Rehab Specialist performs a visual property inspection to confirm the condition of the

property and make a preliminary estimate of the cost of repairs based on local code and

written rehab standards found at Appendix _____ of this manual.

For pre-1978 properties, the following actions are taken to comply with the Lead Safe

Housing Rule:

o For properties requiring less than $5,000 in repairs, a paint test of surfaces to

be disturbed

o For properties requiring > $5,000 in repairs a paint test and a risk assessment

of surfaces to be disturbed

The preliminary estimate of the cost of repairs is captured on NSP/Merced Real Estate

Acquisition Assessment Form (see list of attachment).

Estimate of Carrying Costs

The HPS estimates the carrying costs

Carrying costs are added to the estimated cost of repairs and purchase price on the NSP Real

Estate Acquisition Assessment Form to determine whether the total costs exceed $148,000.

Outcomes of Analysis

If the total development costs are > $148,000, the City declines to make an offer.

If the total development costs are < $148,000 the project continues.

J. APPRAISAL AND DISCOUNT PURCHASE PRICE REQUIREMENT

The NSP Program requires that the purchase price reflect a minimum discount of 1% from the appraised

value of a foreclosed property. The appraised value must be established through an appraisal completed

within 60 days of the purchase offer. Additionally, the appraisal must be made in conformity with the

appraisal requirements of the Uniform Relocation Act (URA) at 49 CFR 24.103.

PROCEDURE

HPS selects an appraiser from the City’s list of pre-approved appraisers.

Once the appraisal report is furnished by the appraiser, HPS:

Calculate a minimum of 1% discount from the appraised value

Check whether the list price is above or below the required minimum Discounted Purchase

Price.


If the list price is below the Discounted Purchase Price, the list price is used to

determine whether the total estimated development cost (acquisition, carrying cost

and estimated cost of repairs) is < $148,000

If the list price is greater than the Discounted Purchase Price, then the Discounted

Purchase Price is used to determine whether the total development cost

(acquisition, carrying cost, and estimated cost of repairs) of the property is

< $148,000

If the total development cost is > $148,000 the property cannot be purchased. Merced staff

document the file that the property is ineligible for purchase.

If the total development cost is < $148,000, staff contacts the Seller or the Seller’s agent to

make an offer. The offer must be the lesser of at least 1% discount from the appraised value,

the list price, or reduction from the list price.

If the offer is accepted, the City and seller enter into a Purchase and Sales Agreement, this

document is provided by the realtor upon submittal of an offer to purchase or sell. The

Purchase and Sales Agreement is a copyrighted by the Realtor’s Association.

staff place the following items in the project files:

A copy of the appraisal report

Communications between the Seller/Seller’s Agent and reflecting negotiations

around the purchase price

Copy of the signed Purchase and Sales Agreement

K. WORK WRITE UP AND REHABILITATION COST ESTIMATE REQUIREMENT

NSP requires that properties to be assisted with the program’s funds meet local building and

housing standards. Additionally, NSP requires that grantees describe or reference rehabilitation standards

for their program. Merced has established written rehabilitation standards for the NSP. Further, the

estimated purchase price, carrying costs, and cost of rehabilitation cannot exceed $148,000. An estimated

cost of repairs was provided prior to gaining approval for purchase. The purpose of this step is to prepare a

detailed work write up and cost estimate.

L. COST ESTIMATES

Cost estimates including overhead and profit will be performed on each NSP3 home, as follows:

1. Rehab cost estimates will be completed in a line-item, work write-up format with one work

item per line unless an alternative form of estimate is approved in writing by City;

2. Cost estimates for substantial rehabilitation will be based on take-offs from the working

drawings of the quantities of materials and labor required or compilations of costs for

similar and recently-built or renovated structures;

3. Site improvement cost estimates will be completed for each improvement and based on

takeoffs of quantities of materials and labor required;


4. Construction work must be competitively bid. The cost estimate will be used to determine

the cost reasonableness of bids;

5. Work to be completed by Contractor performing as general contractor. The cost estimate for

each NSP project must be reviewed by Merced to determine cost-reasonableness and

approved by Grantee. When approved, the cost estimate becomes a schedule of values that is

used by Grantee’s construction inspector to determine the value of work completed for the

purpose of approving draw requests.

6. Likewise, if a contractor has been simply designated and not selected through a competitive

bidding process, the price proposal of such contractor must be reviewed by Merced to

determine cost-reasonableness and approved by the City. When approved (and possibly

amended by Grantee), the price proposal becomes a schedule of values that is used by City’s

construction inspector to determine the value of work completed for the purpose of

approving draw request.

PROCEDURE

Rehab Specialist uses the Design and Construction Services Online Services form to complete a Work

Order/Service Ticket.

The Work Order/Service Ticket instructs staff of the Design and Construction Services office to

complete a detailed NSP Home Inspection Report.

The NSP Home Inspection Report details both the Scope of Work and the dollar value of the

rehabilitation associated with each line item in the Scope of Work.

Rehab Specialist reviews the NSP Home Inspection Report to:

Confirm that the scope of work and estimate is in line with the initial estimate (initial

estimates are captured on the NSP Real Estate Acquisition Assessment Form which is

documented in the property file), and

Check that the total development costs associated with the property does not exceed Merced

threshold of $148,000. HPS performs this check by adding

The offer price to

The cost of the rehabilitation as established in the Home Inspection Report and

Carrying costs associated with the property

If the sum total is below the City threshold of $148,000, HPS contacts the Seller or the

Seller’s agent to relay the appraised value and the Discount Purchase Price.

If the sum total is above the City threshold of $148,000 HPS rejects the purchase.

Rehab Specialist places a copy of the NSP Home Inspection Report in the property file.


M. ENVIRONMENTAL REVIEW RECORD REQUIREMENT

Generally, rehabilitation, acquisition and property disposition actions are “Categorically Excluded” from the

National Environmental Policy Act (NEPA) and, absent special circumstances as defined by §58.2(a)(3),

neither an Environmental Assessment nor an Environmental Impact Statement is required. Though

acquisition and rehabilitation of residential buildings with 1-4 units are generally “Categorically Excluded”

from NEPA, properties are subject to an Environmental Review under the federal environmental laws and

authorities at §58.5 provided the structure will be retained for the same use (24 CFR 58.35(a)(5)). In

accordance with 24 CFR 58.35(a)(6), combinations of actions that are “Categorical Excluded” (listed in

§58.35(a)) may be combined, allowing for the acquisition, rehabilitation and disposition of an existing

single family house to be categorically excluded from NEPA.

Merced requires that Merced Planning & Environmental Officer perform an Environmental Review of each

property to be purchased.

PROCEDURE

Rehabilitation Specialist completes the Information for Environmental Review Form (see

attachments) and submits the form to the HPS along with the following attachments:

Scope of Work

Itemized budget for rehabilitation

Photograph of properties

A description of adjacent historic properties, if any, that might be affected by the activity if

the property is historic.

The HPS performs the Environmental Review using the Statutory Worksheet and communicates the

results, including making a determination, in most cases, of a “Finding of No Significant Impact”

(FONSI), to the Development Manager.

HPS places a copy of the Environmental Review and the FONSI in the property file.

If the Environmental Review does not confirm a FONSI, then staff members and Manager evaluate

whether to approve or decline purchase.

Note: For additional details regarding the environmental review requirements and process itself is

covered under, other federal requirements (part iv).

N. FORECLOSURE STATUS (ADDITIONAL DUE DILIGENCE VERIFICATION OF

OWNERSHIP) REQUIREMENT

The NSP program notice requires that properties to be purchased with NSP funds must be abandoned or

foreclosed. Prior to authorization to proceed from HUD, Merced staff made a preliminary determination

that the property was foreclosed. This step confirms the ownership and foreclosure status.

Foreclosed: The property 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 grantee, subrecipient, developer, or end user.

Vacant or Abandoned: A home or property is vacant or abandoned when;

mortgage or tax foreclosure proceedings have been initiated for that property, or

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, or

a property has had a structure at some time in the past but currently does not have any

improvements, or,

the structure has been unoccupied for at least 90 days and has no bona fide tenant with

rights of occupancy.

Blighted: A structure is blighted and qualified for demolition with NSP funds when it exhibits

interior and/or exterior signs of deterioration sufficient to constitute a threat to human health,

safety, and public welfare. To be considered blighted under the terms of any NSP Agreement, the

appropriate public entity with jurisdiction must declare the structure blighted.

PROCEDURE All properties Must be acquired with a valid deed free and clear of all encumbrances.

Purchases with any other form of deed or with any lien, deed restriction, land lease or other

encumbrance must be approved in writing by the City of Merced prior to Developer making an

offer.

O. VOLUNTARY ACQUISITION REQUIREMENTS – URA REQUIREMENT

The URA voluntary acquisition requirements (49 CFR 24.101(b)(1)-(5)) apply when Federal financial

assistance is used to acquire property. 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.

The City of Merced requires that the Voluntary Acquisition of Foreclosed Property notice is provided to

sellers. This form is used to notify sellers of the following:

The City will not pursue the acquisition of the property by eminent domain,

The listed purchase price of the property,

The market value of the property as estimated by a local appraiser,

PROCEDURE Merced staff will send notice via Certified Mail –Return Receipt Requested to owner of

record once the property is approved for purchase by the City Council.

If the certified notice is successfully delivered, Merced staff files the Return Receipt in the

property file.


If the certified mail is returned to the City of Merced as non-deliverable, the staff may further

pursue the correct owners or terminate the acquisition.

P. OFFER TO PURCHASE

CONTENTS OF THE PURCHASE AND SALES AGREEMENT REQUIREMENT

The Housing Division stipulates that Purchase and Sales Agreements (PSA) cannot include closing

requirements and/or stipulations. Additionally, non-standard clauses and costs cannot be included in the

PSA. If the seller insists that non-standard conditions, fees and/or costs must be included in the agreement,

staff must seek approval from the Housing Manager to continue with the acquisition.

The City of Merced requires that the City’s Attorney Office perform a Legal Sufficiency Review and approve

each PSA prior to sign-off by the City Manager’s Representative.

PROCEDURE

HPS obtains a hard copy of the PSA from the seller’s agent and prepares the file for Legal

Sufficiency Review by the City Attorney’s Office. Staff work includes reviewing the PSA for

nonstandard conditions, fees, and/or costs that may include but are not limited to:

Seller’s closing costs

Encumbrances

Real estate commissions and brokerage fees

If any non-standard clauses and costs are included in the PSA, HPS or their designee (i.e.:

Realtor) negotiates with Sellers for their removal.

If the seller insists that the City must cover non-standard fees and costs, the file is given to the

Housing Manager for their approval.

Once the PSA is free of non-standard clauses and fees or the Housing Manager has approved non-

standard fees, the Merced staff attaches a Template Memo to the agreement and forwards it to

the City Attorney’s Offices.

After the City Attorney’s Office approves the PSA, it is forwarded to the City Manager’s Office for

signature by the Manager’s designee.

When the PSAs are returned from the City Manager’s Office, Merced staff forward the PSA to the

seller’s agent for execution.

Q. DUE DILIGENCE PERIOD REQUIREMENT

Once the PSA has been signed by both parties, there is a 10 day due diligence period prior to the closing.

The PSA is conditional and can be dissolved during the 10 day due diligence period. During the 10-day due-

diligence period, Merced staff must confirm that all of the requirements related to the purchase of the

properties have been finalized. A property title report and a survey must also be obtained prior to the

closing.


PROCEDURE

HPS confirms that the following have been finalized and are available for review:

Completed and Approved Real Estate Acquisition Assessment Form

Environmental Review and FONSI

Appraisal with the current appraised value

NSP Home Inspection Report and detailed cost estimate

Owners & Encumbrance Report confirming that the property is free and clear of liens

Signed PSA with legal and Manager’s Representative approvals

Certification from seller regarding tenancy for properties foreclosed after February 17, 2009

Lead Based Paint and Pest Inspection Reports

Insurance Request Forms

Home Inspection Report

Certificate of Acceptance

All properties must have a title search and survey.

If the seller is paying for these items, the seller will pick the agencies that will provide the

property title and survey

If the City is paying for these items, the City will pick the agencies from their pre-approved

list of surveyors and title companies.

If any of the above items are missing, the City extends the closing process until all of the

necessary documents are on hand.

R. CLOSING REQUIREMENT

The City of Merced requires that all purchased properties be covered by title insurance and property insurance upon closing.

PROCEDURE

A title company manages the closing.

The seller selects the title company if the seller is paying for the title insurance. Otherwise, the

City selects a title company from its pre-approved list of title companies.

Merced staff expects to see the following documents at the closing:

W-9 information for the escrow agent

Transfer instructions

Closing statements

Checks for prorated taxes, if any


Checks for Recordation

Warranty deed for recording

Lead based paint notifications

Notice of Affordability

PROCEDURE HPS and Secretary II coordinate the closing with the Title Company and homebuyer.

The escrow/title company shall review the escrow instruction provided by City and shall issue a

California Land Title Association (CLTA) and the American Land Title Association (ALTA) after

closing.

The CLTA policy is issued to the homebuyer and protects them against failure of title based on

public records and against such unrecorded risks as forgery of a deed.

The ALTA is issued to each lender providing additional coverage for the physical aspects of the

property as well as the homebuyer's title failure. These aspects include anything, which can be

determined only by physical inspection, such as correct survey lines; encroachments; mechanics

liens; mining ·claims and water rights. City instructs the escrow/title company in the escrow

instructions as to what may show on the policy; the amount of insurance on the policy (all liens

should be covered) and the loss payee (each lender should be listed as a loss payee and receive

an original ALTA).

Once the closing is finalized, City staff notifies the City’s property insurance carrier of the new

purchase and obtain a certificate of insurance for the property.

HPS deposits the funds with the escrow agent responsible for administering the closing of the

acquisition of the Unit Property (the "Escrow Agent").

Escrow instructions will provide that if the acquisition of the Unit Property does not close within

thirty (30) days of the date of deposit of funds by the City of Merced (subject to written extension

by the Development Manager for good cause).

NSP funds deposited with the Escrow Agent will be disbursed first to the Seller in an amount

equal to the Due Diligence Costs (but only if the failure to close escrow is through no fault of the

Seller, as reasonably determined by the City of Merced), and any remaining funds returned to the

City of Merced in accordance with the NSP Agreement and the escrow instructions provided by

the City of Merced to the Escrow Agent.

If the acquisition of the Unit Property does close, repayment of any NSP funds deposited with the

Escrow Agent is governed by the Loan Agreement.

The Seller shall notify the City of Merced in writing of the identity of the Escrow Agent as soon as

practicable following the opening of escrow.

The HPS adds a copy of the certificate of insurance to the property file.


S. MAINTENANCE OF ACQUIRED PROPERTIES REQUIREMENT

The City of Merced requires that all purchased properties are secured and that appropriate signage is

placed on the property.

PROCEDURE

Rehabilitation Specialist secures the property by changing locks, boarding windows, and posting

signage that the property now belongs to The City of Merced.

Rehabilitation Specialist is assigned to inspect acquired properties weekly for vandalism and/or

break-ins as well as general condition.

If vandalism or break-ins have occurred, Rehabilitation Specialist the Merced City Police

Department. Once cleared, the Rehabilitation Specialist will secure the property.

If the general condition of the property requires lawn services, Merced contacts property

procured entity to cut the grass.

T. REHABILITATION MANAGEMENT

CONTRACTOR SELECTION REQUIREMENT

The City of Merced has established the Written Rehab Standards for NSP properties. A scope of work is

prepared for each property to be rehabilitated to meet the Standard. Merced allows rehabilitation work to

be accomplished by one of the following:

Staff working for the City Housing or Building Departments (Rehab Specialist or Inspector for

minor repairs);

Subcontractors from the City’s pre-approved list of firms selected to undertake NSP Projects;

Third party construction contractors selected through the proper procurement method

PROCEDURE

Merced Housing Rehab Specialist provides project file, including scope of work, architectural

drawing and estimated cost of rehabilitation to Housing Manager for approval

Rehab Specialist develops schedule for making repairs and identifies needs for subcontractor

assistance.

If subcontractors are needed:

Rehabilitation Specialist oversees the work performed by subcontractors.

Rehabilitation Specialist’s Involvement in construction is limited to monitoring construction

progress, quality control, and ensuring inspectors are contacted for scheduled reviews and

the final.


U. INSPECTIONS AND REQUESTS FOR PAYMENT REQUIREMENT

PROCEDURE

Rehabilitation Specialist monitors progress for each project to ensure completion of rehabilitation

activities to the adopted rehabilitation standard.

Perform periodic inspections, in addition to recording all inspections conducted by the City’s

Building Department, in order to ensure the quality of the rehabilitation work performed.

Prepare periodic draw requests for payment of completed work phases in accordance with the

payment schedule and timelines established in the respective contract.

Ensure that all pertinent permits for rehabilitation work have been inspected and closed by the

permitting agency (City’s Building Department) before contractor applies for payment.

Conduct a final inspection of the property and signing the final draw request.

Obtain, from contractors, a warranty of repairs for all rehabilitation contracts for a minimum of

one (1) year, in order to correct such defects due to the faulty material, equipment, and

workmanship. Roof repair work shall carry a minimum five (5) year warranty from the roofing

contractor.

Initial review and approval of detailed scope of work to ensure that the final product will comply

with Written Rehab Standards.

Regular inspections of work in progress to ensure that it is timely and in line with the approved

scope of work.

Inspections related to reimbursement requests for materials purchased by contractor. These

inspections will confirm that materials have been purchased and/or installed at the site.

Final review upon completion of rehabilitation to ensure compliance with Written Rehabilitation

Standards and state and local codes.

A note to the file will document all inspections to the property.

Welcome packet left at home for new owner.

PROCEDURE - INSPECTION

The following steps describe reviews and inspections to manage the rehabilitation acquired properties:

Housing Rehabilitation Specialist (HRS) Inspects and takes photos of the property and upon

completion discusses the inspection items with the Development Manager.

HRS Creates the work write-up.

HRS Distributes the RFP/RFQ to contractors via email upon approval by Manager to move

forward with project.

HRS Manages job site and coordinates inspections Contractor for Lead Based Pain/Pest.

HRS Conducts final walk-through with Contractor.


HRS Informs Finance Specialist when the project is completed and upon receipt of a Building

Department approved Final Inspection.

The Development Manager (DM) approves estimates, work write-ups and contracts.

DM reviews budget request.

DM ensures Procurement Process was followed.

DM verifies the proper language is included in each contract before routed to the Attorney's

office.

The Finance specialist (FS) ensures grant funds are available for the project.

FS reviews the budget request.

FS completes the "Notice of Completion."

The Secretary II files all documents related to the project.

SII processes all budget requests once approved by FS, Manager, and RHS.

SII enters project costs on the Disposition Sheet.

FS processes rehabilitation contract by sending contract to the Attorney’s office for approval.

SII maintains database of contractors approved for the NSP program, advertises annual requests

for additional contractors, and provides RHS with names for the RFP process.

SII processes all project related invoices by tracking them through the City’s financial system and

notifying contractors when checks are available for pickup (upon request).

PROCEDURE - PAYMENT REQUEST

Rehabilitation Specialist, then Finance Specialist followed by Manager will review and approve the

following payment requests:

Weekly payroll for labor assigned to and performing rehabilitation at acquired properties. Backup

documentation will include:

Property work logs and/or punch cards to confirm that payroll hours are accurate.

Reimbursement requests for materials. Backup documentation will include:

Invoices and receipts as well as staff inspection reports/pictures of materials in storage or

work-in-place.

Reimbursement requests for work performed by contractors. Backup documentation will include:

invoice from contractors,

evidence of payment to contractors,

City Building Department inspection sign-off on any permits pulled for the work, and

Staff inspection reports/pictures of work-in-place.

Final reimbursement requests will require:


warranties for all work performed,

lien releases from all contractors and sub-contractors,

City Building Department sign-off on all permits pulled for the property and

Inspection reports from staff confirming compliance with Written Rehabilitation Standards

and local codes.

V. CHANGE ORDERS

The City of Merced will document and obtain approvals for changes in Scope of Work.

REQUIREMENTS All NSP3 rehabilitation projects should be completed with no change orders.

Changes will only be permitted by the City of Merced when the Contractor encounters unforeseen

conditions which impact the work and could not be evaluated before work began.

Before approving any change order, the City of Merced will first obtain approval from the Housing

Manager before granting approval to the Contractor for the change order.

Substitutions of materials, changes in the scope of work or workmanship required by the City’s

rehabilitation standards which may be proposed by the Contractor, shall be submitted in writing

with any costs, to the City of Merced for approval prior to work beginning.

Any requested change which would conflict with these rehabilitation standards shall require the

prior written approval of the Manager.

Rehabilitation Specialist is required to notify of change orders as soon as they are confirmed as

necessary. Backup documentation will include scope of the change order and an estimate of time and

material costs associated with the change in scope.

Manager will review and approve request.

Approved change orders are placed in the property file.

PROCEDURE The Contractor will submit a change order request to the HRS.

The HRS will review the nature of the requested changes, verify need and proposed solution,

quantities and methods.

The HRS will draft a field order if appropriate.

The HRS will prepare a change order, including scope of work, time revision and component by

component estimate of a reasonable cost using local cost data.

The HRS and the Manager will negotiate the cost and time that will increase parameters with the

contractor and owner.

The HRS will determine if funds are available with which to implement the Change Order.

The HRS will obtain Manager’s verbal approval.


The HRS will create the Change Order in the Computer using the prepared form filling in the time of

the changes, construction changes, scope of work revisions and tradeoffs, and have both contractor

and Finance Specialist sign it.

The HRS will obtain approval of the Change Order from the Manager and acquire the appropriate

signature.

The HRS will post the Change Order to the project files and notifies the Finance Specialist of the

budget revision.

Administrative change orders. Even when no additional money is involved in a job change, a Change

Order must be executed. Each change to the scope of work or time to complete is a modification of

the contract and must be documented and approved.

W. DISPOSITION AND NSP AFFORDABILITY REQUIREMENTS 24 CFR 570.201 (B)

PROPERTY LISTING AND SALES PRICE

REQUIREMENTS

NSP REQUIREMENTS LIMIT THE SALES PRICE OF PROPERTIES TO THE COST OF ACQUISITION, CARRYING CODES

(EXCLUDING ROUTINE MAINTENANCE), AND COST OF REHABILITATION. THE ACTUAL SALES PRICE MAY BE LESS THAN

THE TOTAL DEVELOPMENT COSTS IF THE MARKET DOES NOT ALLOW DISPOSITION AT THE TOTAL DEVELOPMENT COSTS

OR IF GRANTEES ELECT TO SELL HOMES BELOW MARKET VALUE TO MAKE THEM AFFORDABLE TO LOWER INCOME

PURCHASERS.

X. MARKETING AND PROCESSING OFFERS REQUIREMENTS

The City of Merced Housing Division requires the following:

Advertise all properties that are available for purchase to the City’s pre-approved list of eligible

homebuyers by mailing brochures to the mailing list provided by Secretary II. The list is created by

applicants applying for the First Time Home Buyer Program.

Manage the viewing of properties by scheduling walk-through and open house visits to the

properties via the City’s Real Estate Agent.

The City’s Real Estate Agent is to market the property on List Serve.

PROCEDURE

Real Estate Agent advertises properties by sending brochures featuring properties that are

completed only to the pre-approved list of eligible homebuyers.

Real Estate Agent schedules open house and walk-through events during the evening and weekend

hours.

Staff receives and processes offers from interested parties.

Offers that match sales price:

If there is only one interested party/offer on the property during the specified timeline for

receiving and processing offers, the house will be sold to the interested party assuming the

interested party is eligible and can secure financing.


If multiple parties show interest, the Real Estate Agent follows Real Estate protocol to select

the high bidder as long as price is within NSP guidelines and buyer is income eligible.

Offers that are below listing and property price

Once an offer is accepted, staff will qualify or underwrite the homebuyer for:

Income eligibility determination

Determination of eligibility for soft-second mortgage

Y. CLOSING AND RECORDING THE AFFORDABILITY COVENANTS REQUIREMENTS

The NSP requires purchasers of properties receiving NSP funds to accept resale or recapture requirements.

The resale or recapture agreements help assures that properties remain affordable to future homeowners.

The minimum requirements imposed by NSP are those required by the HOME program.

1. AFFORDABILITY PERIODS

Merced ensures to the maximum extent practicable and for the longest feasible term that the sale, rental

or redevelopment of abandoned and foreclosed-upon homes and residential properties remain

affordable to individuals or families whose incomes do not exceed 120 percent of the AMI. For units

originally assisted with fund to meet the requirements, HUD requires that 25 percent of the funds be used

to assist households with incomes at or below 50 percent of the AMI and that these units remain

affordable to households with incomes at or below 50 percent of AMI.

Merced utilizes the HOME regulations to satisfy the minimum affordability standard for homebuyer

projects and rental projects. In homeownership programs, the HOME regulations require a minimum

affordability period of 15 years depending on the level of subsidy provided. They also require that all

homes be the homeowner's primary place of residence during the compliance period.

Subrecepients/Contractors are held responsible for their proposed affordability period, as indicated in

their respective Agreements.

HOME regulations require a minimum affordability period of 20 years for rental activities. To ensure

affordability, a restrictive covenant is placed on properties purchased by non-profits for use as

permanent housing. These covenants require that the structures remain affordable during the

affordability period and that the population that the non-profit serves remains the same during the

affordability period. Subrecepients/Contractors will be held responsible for their proposed affordability

period, as indicated in their respective Agreements.

Subrecepients/Contractors will be responsible for executing City prepared covenants with the first-time

homebuyer. The covenants will be reviewed and approved by City Counsel and legal counsel.


2. HOMEOWNERSHIP HOUSING Continued Affordability Requirement

NSP requires that NSP-assisted housing have “continued affordability” for a period of years (the

continued affordability period), and permits a Grantee to adopt the HOME standard for affordability,

except that housing may be occupied by households with incomes up to 120% of AMI.

The continued affordability period for homeownership housing is enforced through resale and recapture

requirements which are the same as the HOME program.

3. SUBSIDY TYPES A direct subsidy consists of any financial assistance that reduces the purchase price of a property from fair market value to an affordable price, or otherwise directly subsidizes the purchase. The amount of the direct subsidy determines the minimum affordability period. Examples of direct subsidies would include downpayment assistance or a reduction in the purchase price to less than the lower of total development cost or market value. A development subsidy is the amount of the NSP funds that are invested in the property that exceed the

fair market value at the time of sale to a homebuyer. The amount of the development subsidy in and of

itself is irrelevant to the minimum affordability period. But when there is a development subsidy, the

continued affordability period is determined by the total amount of NSP funds that were invested in the

property, either temporarily or permanently. For example, if $100,000 of NSP funds are invested in a

property, the development subsidy is $100,000, regardless of whether or not the buyer obtained

financing that paid back part or all of the NSP investment.

4. RESALE OR RECAPTURE?

Resale and Recapture are two methods to ensure that NSP-assisted housing remains affordable for the continued affordability period, which is determined by the amount of the NSP invested in the property. See the table below.

NSP Investment, per-unit Minimum Continued Affordability Period

Less than $15,000 5 years

$15,000 to $40,000 10 years

Over $40,000 15 years

To determine the amount of NSP funds invested in the unit, you must determine whether you are providing a “development subsidy,” or a “direct subsidy.” Resale and/or recapture provisions are described in documents that provide the assistance and are included in various documents that are recorded against the property, such as mortgages, deed restrictions, contracts for deed, and covenants.

A. Resale restrictions require the homeowner to sell the property at an affordable price to buyers

with income not exceeding 120% of AMI for the period of continued affordability, while at the

same time ensuring that the owner/seller receives a fair return on their investment. Resale may

be employed when the subsidy provided is either a direct or a development subsidy, or if both

types of subsidies are provided.


B. Recapture permits the NSP-assisted homeowner to sell the property to whomever he or she

wishes for whatever price the market will bear during the period of continued affordability, but a

portion or all of the NSP assistance must be repaid which may not exceed the net proceeds of the

sale. If the property ceases to be the homeowner’s principal residence, then the full amount of

the assistance must be recaptured.

Recapture may be employed only when a City of Merced subrecipient provides a direct subsidy.

The direct subsidy may be provided in conjunction with a development subsidy, in which case

the affordability period is based on the direct subsidy.

ENFORCEMENT MECHANISMS

The mechanisms for enforcing resale and recapture provisions must be recorded against the property.

RESALE

Because the underlying financing may be repaid at any point, the resale restriction should not be recited

only in a mortgage. To survive a mortgage or contract for deed satisfaction that could occur if the

homebuyer sells the property or even refinances it, the resale restriction must be contained in a

declaration of covenants that is also recorded against the property.

RENTAL HOUSING

Continued Affordability Requirement

NSP requires that NSP-assisted housing have “continued affordability” for a period of years (the

continued affordability period), and permits a Grantee to adopt the HOME standard for affordability,

except that housing may be occupied by households with incomes up to 120% of AMI.

HOW TO DETERMINE THE PER-UNIT NSP INVESTMENT

The per unit investment of NSP funds is dependent on the amount of NSP funds invested in the project relative to other funding sources, and the number of units that are reserved for occupancy by NSP income-eligible tenants paying NSP-qualified rents.

If a structure contains one housing unit, the NSP investment is the amount of NSP funds.

If a structure contains two housing units, at least one of the units must be occupied by and restricted

for occupancy by an NSP income-eligible tenant paying NSP-qualified rent, in which case the per-unit

investment of NSP funds is the total NSP investment in the property.

NSP Investment, per-unit Minimum Continued Affordability Period Less than $15,000 5 years

$15,000 to $40,000 10 years Over $40,000 15 years

New Construction 20 years


If both units are occupied and restricted for NSP income-eligible tenants paying NSP-qualified rents,

the per-unit investment is the average of NSP investment over the two units.

If a structure contains three or more housing units, the proportion of units occupied by low,

moderate and middle income households must be equal to or greater than the proportion of the total

project development costs borne by NSP funds. Thus, if NSP funds represent 50% of the total

development costs for a project, then at least 50% of the units must be occupied by low, moderate

and middle income persons upon completion and occupancy. If NSP funds are the sole funding source

for a project, then all units must be occupied by low, moderate and middle income persons.

If a State Subrecipient assists a homebuyer to buy a foreclosed fourplex, where the owner will live in

one unit, and NSP funds represent 60% of the acquisition and rehabilitation costs, then 2 of the 3

rental units must be occupied by income eligible tenants in addition to the homebuyer; but if NSP

funds were no more than 25% of the total costs, then none of the rental units need be occupied by

income eligible tenants.

ENFORCEMENT MECHANISMS The mechanisms to enforce continued affordability for rental housing are promissory notes, grant

agreements, and documents recorded against the property, such as declarations of covenants and mortgages.

More information can be located at the HOME Regulations, specifically 24 CFR §92.252 (a), (c), (e), and (f).

REQUIREMENTS

The City of Merced has elected to impose more stringent requirements that are incorporated in a covenant

imposed on the property. (Attachment 1).

PROCEDURE

Once the financing for the purchase of the property including the soft-second mortgage from Merced

has been finalized, HPS will coordinate the closing.

HPS sends the Purchase and Sales agreement along with documentation of the financing for purchase

of the property to the City Manager’s Office.

Upon return with signature from the City Manager’s Office, HPS will forward the PSA to the buyer’s

agent for execution.

After both parties have signed PSAs, there is a 10-day due diligence period prior to the closing. The

PSA is conditional and can be dissolved during the 10 day due diligence period. During this 10-day

period Secretary II completes internal finance forms to ensure funding is available on day of close.

As part of the closing, HPS forwards the Covenant enforcing the NSP Affordability Requirements to

the closing agent. The closing agent is responsible for obtaining signature on the covenant and

recording sales documents as well as the covenants.

HPS obtains a copy of the signed closing documents for the project files.

Once the closing is finalized, the Secretary II requests cancellation of the City’s property insurance.


5. DETERMINING SALES PRICE

The Sales price of each NSP unit shall be determined by adding the price paid by the City to purchase

the property plus rehabilitation costs and activity delivery costs OR the appraised value, whichever is

less.

The City will obtain an after rehab construction appraisal for the property. The appraised value will be the

asking price for the home unless the value is higher than the estimated total development cost (TDC) of the

home. If the total development cost of the home is less than the appraised value then the TDC will be the

sales price.

Total development cost includes all acquisition, rehabilitation and construction soft costs including the GC

and applicable developer fees, and any costs related to the sale of the property, including eligible closing

costs. The costs of boarding up the property, lawn mowing, insurance or simply maintaining the property in

static condition may not be included in the determination of the sales price.

6. NSP SUBSIDY EXCEEDING MARKET VALUE – “DEVELOPMENT SUBSIDY” When development costs exceed market value, the portion of NSP funds advanced to the project that are

above the market value become a development subsidy to the project. The homebuyer is not required to

repay NSP funds used for an approved development subsidy. However, the homebuyer will be subject to

recapture provisions for the amount of any homebuyer financial assistance that subsidizes the contract price

of the home and any closing costs – termed “buyer subsidy”.

If a price of a home has been reduced due to qualified offers after adequate marketing and sales efforts are

exhausted over a reasonable period of time (60 days) the reduced selling price will be considered market

value for purposes of calculating NSP development subsidy.

7. INCOME QUALIFICATION AND VERIFICATION REQUIREMENTS

A. APPLICATION INTAKE/SCREENING/DETERMINATION OF HOUSEHOLD ADJUSTED GROSS INCOME

The City utilizes the Part V definition of Adjusted Gross Income as defined in the Technical Guide to

Determining Income and Allowances for the HOME Program (Third Edition, January 2005).

In calculating adjusted gross income, the applicant’s income and that of all other household members at the

time of application shall be considered. The income of household members under eighteen (18) years of age

will be excluded. The income of any persons who are paid caregivers of elderly or handicapped individuals

will be excluded.

A household member is any person residing in the household at the time of application.

Income is defined as follows:

1. The full amount before any payroll deductions of wages and salaries, overtime pay,

commissions, fees, tips, bonuses, and other compensation for personal services;

2. The net income from an operation of a business or profession, as calculated by averaging

the net income as reported in their Federal Income Taxes for the past three years;


3. Interest, dividends, and other net income of any type from the real or personal property

(where the family assets are in excess of $50,000, excluding property, adjusted gross

income shall include the greater of the actual income derived from all assets or percentage

of such assets based on the current passbook savings rate);

4. The full amount of periodic payments received from social security, annuities, insurance

policies, retirements funds, pensions, disability or death benefits, and other similar types of

periodic receipts, including a lump-sum payment for the delayed start of a periodic

payment;

5. Payment in lieu of earnings, such as unemployment, workers' compensation, severance pay,

welfare assistance (NOTE: Such payments may be excluded by the lending institutions

providing the first mortgage for purposes of underwriting, but shall be included in

eligibility determinations for this Program);

6. Periodic and determinable allowances, such as alimony and child support payment, and

regular contributions or gifts received from persons not residing in the dwelling to the

extent that such payments are reasonably expected to continue;

7. All regular pay, special pay, and allowances of a member of the Armed Forces (whether or

not living in the dwelling) who is the head of the family, spouse, or other person whose

dependents are residing in the unit;

8. Any earned income tax credit to the extent it exceeds income tax liability;

9. Any other income that must be reported for Federal and State income tax purposes; and,

10. Gross Self-Employed income as reported on Schedule C, IRS 1040, will be adjusted to reflect

deductions for necessary and reasonable business expense.

11. The One CPD Income Eligibility Calculator is located at the following hyperlink:

https://www.onecpd.info/incomecalculator/

OVERVIEW Income Eligibility ensures that all applicants served are eligible and receive the correct amount of assistance

without exceeding the 120% Merced County Median Income

POLICY

B. DETERMINATION INCOME ELIGIBILITY Staff must assess applicants to determine eligibility for Neighborhood Stabilization Program and calculate

income when:

1. A new application is submitted for federal/state funding application that is more than six months old.

https://www.onecpd.info/incomecalculator/


PROCEDURE

All applicants are to meet with the Secretary II to receive overview of program, guidelines and

provided an application packet. The Secretary II is to work with the client through this and the third

party verification process ensuring all documents required are received and all forms requesting

third party verification are signed. If approved by Housing Finance Specialist and Manager, Secretary

II is to contact Loan Committee for final approval.

Once the approval process is complete, the Secretary II is responsible for ensuring all documents are

contained in the client’s folder and filed appropriately. Secretary II is also responsible for annual

verification of insurance.

Once third party verification and application have been completed, the Finance Specialist is to review

each applicant’s package to ensure compliance with NSP guidelines and that all financial

documentation is supported with third party verification. If satisfied, the Specialist is to sign off on

documents and provide to Housing Manager. If documentation is lacking, folder is to be returned to

Secretary II.

Housing Manager will review all documentation provided and give approval to call the Loan

Committee for final loan approval.

Loan Committee Members will be presented a written overview of the loan request. Names of

person/s applying and identifying information are not to be disclosed. Only financial need and ability

are to be presented during this portion of the agreement process. Secretary II will provide agenda

and give report on request. If questions or concerns arise that cannot be answered during the Loan

Committee meeting, the meeting may be adjourned until information is obtained. Minutes are to be

taken at each meeting and should be kept within the application file.

Loan Committee members must include the Housing Manager, Finance Specialist, one representative

from a local lending institution, and a representative from another City department.

C. DETERMINING IF THE APPLICANT IS ELIGIBLE FOR PROGRAM PROCEDURE 1. Secretary II assists applicants in completing applications. Required documents and 3rd party

verification forms will be signed when application is completed.

Note: Refer to Income Calculation and Determination Guide for Federal Programs Chapter 2 General

Requirements

2. Secretary II must collect and analyze appropriate income documentation paystubs, bank statements,

IRA, pension, disability, unemployment benefits, child support, dividends or interest on savings and

other miscellaneous sources of income for all household members to determine eligibility for the

program.

Note: Refer to Income Calculation and Determination Guide for Federal Programs Chapter 5

Calculating Adjusted Income.

3. Secretary II asks questions about other income sources or any other anticipated income changes, pay

raises, overtime, unborn children or family size.


4. Secretary II calculates applicants projected household income based upon documentation provided

to meet the required 120% Merced County Median Income adjusted for household size.

5. Housing Finance Specialist is to closely review income verification information prior to requesting

third party verification. Staff is looking for inconsistencies and/or family members on IRS or bank

statements that may have been overlooked and should be counted in final assessment.

6. Housing Finance Specialist will send a letter of approval is to be sent and third party verification

started once the applicant has been approved.

Note: Staff is to use all Third Party Verification Forms located in the NSP Handbook.

7. Third party verification documentation is to be screened by Secretary II in charge of said client.

8. Verification and first approval is provided by Finance Specialist then the Development Manager.

9. Final approval will be given by the Loan Committee. The Loan Committee is to consist of the

Development Manager, Finance Specialist, one representative from a local lending institution, and

one person from an outside City department.

10. If an applicant is denied a loan, a letter of action will be sent to the applicant within ten days from the

Development Manager.

11. Applicants can submit no more than two offers to the loan committee for approval. If both approvals do not

meet National guidelines and are denied, applicant will be deemed ineligible to bid further on said property

and sent a letter from the Secretary.

12. The applicant must resubmit new financial numbers within 5 days of first loan committee denial.

13. Applicants can submit no more than two offers to the loan committee for approval. If both

approvals do not meet National guidelines and are denied, applicant will be deemed

ineligible to bid further on said property and sent a letter from the Secretary.

14. The applicant must resubmit new financial numbers within 5 days of first loan committee

D. ASSESSING HOUSEHOLD INCOME REQUIREMENT

1. USE GRoss income to determine income eligibility for farmers or people self employed.

2. Use annual income from the past 12 months when the household income fluctuates each month due

to seasonal changes.

3. Include all assets for the household, cash value, and if the asset earns income.

If cash value is greater than $5,000, calculate at 2% of the asset and compare actual asset whichever

is greater number and add to income.


E. INCOME VERIFICATION - VERIFYING APPLICANT’S INCOME

PROCEDURE

1. Secretary II must verify applicant’s income through other sources with appropriate third party

verification forms. Example: Contacting the employer to verify wages sending an executed release

form by fax or mail. Follow up if the agency is unresponsive and document verification efforts in file.

2. Compare all verifications to previously submitted documents that it’s correct as reported.

3. Provide third party verification and application to Housing Finance Specialist for approval.

4. Housing Finance Specialist to provide third party verification and application to Development

Manager for approval.

5. Once approved by Housing Finance Specialist and Manager, Secretary II to schedule a meeting with

Housing committee to approve or disapprove application.

6. Secretary II to send applicant approval letters to those who qualify for program and give applicants

who aren’t income eligible a “Denial” letter. This letter is sent when applicants are over-income and

do not meet the NSP guidelines.


VERIFICATION CHECKLIST

Applicant Name:_______________________________________________________________

INCOME VERIFICATIONS

Check documents that have been sent: Required

Yes No

Processing Dates

Sent Received

Date

Updated

Employment

Employment Termination

Self Employment

Unemployment Insurance Benefits

State Disability Verification

Bank Verification

Worker’s Comp. Verification

Public Assistance Verification

Child/Spousal Support Verification

Social Security Verification

Military

Veterans Benefit, Pension, Retirement, Etc.

Severance Payments

Settlements (i.e. insurance settlements)

Disability, Death Benefits or life insurance

Regular Gifts or Payments

Educational Grants, Scholarships, etc.

Lottery Winnings or Inheritances

Net Business Income

Verification Checklist Continued


Zero Income Certification

Tax Return Information

Other

OTHER REQUIRED DOCUMENTS

Full-time Student Verification

ASSET VERIFICATION

Checking

Savings

Certificate of Deposit

Money Market

Stocks

Bonds or Treasury Bills

IRA/Lump Sum Pension

Keogh or other Retirement Fund (401K,

etc.)

Real Estate

Personal Property held as an Investment

Safe Deposit Box

Disposed of Assets-Less than Market Value

Revocable Trust

Lump Sum or One-Time Receipts

Whole Life Insurance Policy

Other


Verification Checklist Continued

QUESTIONS YES NO

Is the application complete with no blanks or unanswered questions?

Are all assets verified, interest or dividend amounts calculated?

Are all incomes verified for all family members age 18 and older?

Are all third party verifications of income complete?

Are all third party verifications of assets completed?

Did you have an applicant claiming Zero income?

If yes, did they complete a Zero income affidavit?

Were all sources verified, (i.e. AFDC/TANF, EDD, Soc. Sec., etc.)

OTHER INFORMATION YES NO

Is the file neat and organized?

Is there any whiteout on any documents?

Are all corrections initialed?

YES NO

Was credit report reviewed for possible mortgage balance within last two years?

Were there any student loans on credit report?

Was there any employment on the credit report not mentioned by applicant/tenant?

Comments:________________________________________________________________________________

Prepared by: _________________________________ Date: _______________________________

Approved by: ________________________________ Date: _______________________________


F. LIMITS OF ASSISTANCE

Primary loans underwritten by primary lenders such as FHA, USDA Rural Development, Fannie Mae, Freddie Mac, or CalHFA will be acceptable to establish creditworthiness, repayment ability, and dependability of income.

Note: City will establish the front-and back-end ratios to determine the gap financing for the borrower and when the borrower is required to make payments to City.

The front-end ratio shall be between 30% and 35% and is the percentage of a

borrower’s gross monthly income (before deductions) that would cover the cost of PITI (loan principal and interest + property taxes + property insurance).

Note: The borrower would qualify if the proposed monthly PITI payments were 35% or less than the borrower’s gross monthly income.

The back-end ratio shall be between 35% and 45% and is the percentage of a

borrower’s gross monthly income that would cover the cost of PITI plus any other monthly debt payments like car or personal loans and credit card debt.

Note: Qualifying ratio guidelines can be somewhat flexible depending on the Loan-To-Value ratios. The higher the LTV, the more conservative the ratios should be. A qualifying ratio higher than the guidelines may be acceptable if there are compensating factor. Some examples of compensating factors are: 1) the prospective homebuyer has successfully demonstrated that over a minimum 12-month period the ability to pay housing costs equal to or greater than the proposed monthly housing costs for the home to be purchased; 2) the prospective homebuyer is a limited user of credit and they show a history of being able to save money; 3) there will be no more than a 5% increase in the prospective homebuyer’s housing expense.

G. LOAN ASSISTANCE DESCRIPTION The First Time Home Buyer Program provides assistance in the form of a loan and/or a deferred payment

loan.

1. There are two types of assistance available

a. Up to $5,000 in closing cost assistance and/or

b. Principal reduction assistance up to 100% of the mortgage amount needed

2. Closing Cost Assistance

a. The maximum assistance is $5,000.00 which will be in the form of a 3% interest forgivable loan with

a term of 10 years.

b. The amount of down payment and closing cost assistance will be calculated at 3% of the purchase

price of the home.


i. Funds will be applied first to eligible closing costs

ii. Remaining funds up to 3% of the purchase price will be applied to down payment assistance.

3. Allowable Closing Costs

a. A maximum amount of one (1%) percent origination fee or processing fee (based on 1% of the loan

amount). Only one of these fees will be allowed to be charged to the buyer.

b. Up to $1,500 in Service Delivery Costs associated with the processing and approval of the application

including:

i. Amortization Schedule fee to a maximum of $10

ii. Buyer’s portion of the attorney’s fee associated with the transaction.

iii. Credit Report fee to a maximum of $70

iv. Courier fee to a maximum of $25

v. Mortgagee’s title fee/City’s title policy.

vi. Escrow fee to a maximum of $200

vii. Recording fees (determined by number of pages).

viii. Survey to a maximum of $300

ix. HUD Homeownership Counseling application review fees to a maximum of $100

x. Mortgage Insurance Premium fee.

xi. TREC Re-Inspection fee (optional).

4. Ineligible Closing Costs

a. Appraisal

b. Lender’s Inspection Fees and/or Buyer’s Initial Inspection Fees.

c. Prepaid taxes or any other City, State, Federal Tax.

d. Restrictions Fee

e. Good Funds Cost (Except if buyer requests table funding).

5. Prohibited Closing Costs

These costs may not be charged to the buyer/borrower, by the Lender, under any circumstances

a. Funding Fees

b. Tax Service Fee

c. Warehousing Fee

d. Underwriting Fee

e. Loan Discount Fee

f. Mortgage Broker Fee

g. Wire Transfer Fee

h. Mortgage Insurance Application Fee

i. Assumption Fee

j. Commitment Fee

k. Lender’s Rate Lock-In Fee

l. Abstract or Title Search Fee

m. Title Examination Fee

n. Notary Fee

o. Intangible Tax

p. Wholesale Lender’s Cost


q. Applicants are not allowed to pay for the Realtor’s sales commission or any closing costs required by

FHA that the sellers normally pay.

r. Applicants are not allowed to negotiate to pay any amount of the seller’s closing costs

s. Any other cost not specifically mentioned in Allowable Closing Costs and Prepaid Sections

6. Allowable Prepaid (Items to be deposited into the escrow account prior to closing):

a. Interest due on closing date.

b. Hazard Insurance for first year.

c. Flood Insurance (when applicable).

d. Escrow items (Insurance, etc.) excluding real estate taxes.

e. Mortgage Insurance payment in escrow.

7. Down Payment:

a. The minimum amount of cash required from the buyer is $1,000

b. The maximum amount of cash required by the buyer will vary according to the terms of the first

mortgage, the price of the home to be purchased, the buyer’s assets, the Lender’s required down

payment, and the closing costs.

c. A first mortgage requirement of a down payment in excess of 5% of the purchase price of the home

are prohibited

H. LOAN TO VALUE 1. The combined loan-to-value ratio for a City’s First Time Homebuyers Program shall not exceed 105

percent (105%).

I. LONG-TERM AFFORDABILITY Under the regulations, the period of affordability in years for homeownership assistance is based on the

amount of federal funds that are in the project (unit) and are as follows:

HOME FUNDS PROVIDED AFFORDABILITY PERIOD

Less than $15,000.00 5 Years

$15,000 – $40,000.00 10 Years

More than $40,000.00 15 Years

Long-term affordability requirements will be reserved as part of a restrictive covenant running with the deed.

Affordability requirements are triggered if the home is no longer your primary residence, and/or if the home

is sold during the affordability period.


J. HOME SALE CLOSING REQUIREMENTS

Net Sales Proceeds are calculated as follows:

a. Sales price of the home less:

b. First Mortgage Pay off;

c. Capital improvements in excess of $500;

(1) Capital Improvements must be documented with receipts.

(2) Capital Improvements must be to code.

d. The cost of the sale;

e. Equals net sales proceeds.

b) Net Proceeds Example

Sales Price 121,000$

First Mortgage Pay-off 93,500$

Capital Improvements 500$

Cost of Sale 8,415$

Net Sale Proceeds 18,585$

Net Proceeds Example

c) If the City’s loan balance is less than the net sales proceeds, then the remainder of proceeds

sale shall accrue to the program participant.

Sales Price 121,000$

First Mortgage Pay-off 93,500$

Capital Improvements 500$

Cost of Sale 8,415$

Net Sale Proceeds 18,585$

Balance on City Payable Loan 4,200$

Balance on City Deferred Loan 6,900$

Balance to Owner 7,485$

Net Proceeds w/Remainder Example

d) If the owner has made all payments on the loan during the loan term, then at the end of the

loan term, the City shall discharge the lien and the balance of the deferred payment loan, if any,

shall be forgiven

e) Loan terms may extend beyond the required affordability period for the property.

f) In the case of property sales that occur after the affordability period, the City will require

repayment of loan.

g) If the owner(s) dies within the loan term, the City shall forgive the balance of the loan upon

presentation by the heirs to the City a valid death certificate.


K. NON-DISCRIMINATION REQUIREMENTS The City’s Housing Programs will be implemented in ways consistent with the City’s commitment to non-

discrimination. No person shall be excluded from participation in, denied the benefit of, or be subject to

discrimination under any City Housing Program or activity funded in whole or in part with Federal funds

on the basis of his or her religion or, race, familial status (children), disability, or national origin.

L. NOTIFICATIONS AND DISCLOSURES REQUIREMENT

a) Each rental owner, homeowner, or homebuyer must be given the necessary disclosures for the City

Housing Program applied for.

i) Each homeowner must have read and signed the Disclosure Statement Required for the

Residential Construction Contract.

M. SUBORDINATION REQUIREMENT The City’s Housing Programs permit subordination of the City’s loan to a first mortgage.

N. WAITING LIST The City maintains a waiting list of all prospective homebuyers who are approved for assistance. Grantee

may waive this requirement at its sole discretion if City demonstrates conclusively that a waiting list serves

no purpose, because the number of homes available for sale exceeds the number of qualified buyers.

PROCEDURE

The City will follow these procedures:

1. Priority for selecting a completed home will be determined by the date that a client’s application for

assistance was approved (that is, the client with the earlier date of approval shall have priority).

2. Clients are served on a first come first served basis.

O. WRITTEN AGREEMENT A Written Agreement is required between the City and the Applicant/Home owner/Home buyer describing

terms and conditions of the program/activity requirements.

P. VERIFICATION REQUIREMENTS 1) Verification of the following items of information relative to the application shall be made with the

appropriate verification procedures:

a) A title company in the form of a Commitment shall verify ownership in written form for Title

Insurance.

b) The applicant’s income and asset information shall be verified as stated in HUD 24 CFR Part 5.

c) Payment of property taxes will be verified thru the City Tax Office. No applications will be

considered where delinquent property taxes exist. Upon determination that an applicant is eligible

for assistance, the application will be inactivated until the delinquent taxes have been paid.

i) Eligible exceptions are:

(1) Tax repayment agreement from the City’s tax office; or

(2) Verification of an eligible City tax exemption.

ii) The applicant must be current with any loans obtained through the Housing Programs Division.


J. ANNUAL MONITORING OF RESIDENCY REQUIREMENT Occupancy will be verified and reviewed by the submission of the following documents to the City:

Proof of occupancy in the form of a current utility bill

Statement of units continued primary residence

Declaration that other title holders do not reside on premises

Verification of Current property taxes

Verification of required home owners and other required insurance policies.

THE REMAINDER OF THIS PAGE WAS INTENTIONALLY NOT USED


CHAPTER III - OTHER FEDERAL REQUIREMENTS

NSP awardees and funded projects must adhere to all applicable other Federal requirements as outlined in 24

CFR part 570, HERA, ARRA, and NSP guidance from HUD.

A. EQUAL EMPLOYMENT OPPORTUNITY, EXECUTIVE ORDER 11246, AS AMENDED

These regulations prohibit discrimination against any employee or applicant for employment because of

race, color, religion, sex, or national origin. All construction contracts exceeding $10,000 must include

provisions to effectuate this prohibition. Implementing regulations may be found at 41 CFR Part 60.

The City shall not exclude any organization or individual from participation under any program funded in

whole or in part by NSP funds on the grounds of age, disability, race, creed, color, national origin, familial

status, religion, or sex.

The following federal requirements as set forth in 24 CFR 5.105(a), Nondiscrimination and Equal

Opportunity, are applicable to NSP projects:

Fair Housing Act

Executive Order 11063, as amended (Equal Opportunity in Housing)

Title VI and VII of the Civil Rights Act of 1964 (Nondiscrimination in Federal Programs)

Title VIII Civil Rights Act of 1968

Age Discrimination Act of 1975

Section 504 of the Rehabilitation Act of 1973

Executive Order 11246, as amended (Equal Employment Opportunity Programs)

Section 3 of the Housing and Urban Development Act of 1968

Executive Order 11625, as amended (Minority Business Enterprises)

Executive Order 12432, as amended (Minority Business Enterprises)

Executive Order 12138, as amended (Women’s Business Enterprise)

24 CFR 100

24 CFR 107

24 CFR 1

24 CFR 146

24 CFR 8

41 CFR 60

24 CFR 135

Executive Orders 11625, 12432, and 12138 require that participating jurisdictions and local programs must

prescribe procedures acceptable to HUD for a minority outreach program to ensure the inclusion, to the

greatest extent possible, of minorities and women entities owned by minorities and women in all contracts.

All NSP recipients must ensure that their Equal Opportunity and Fair Housing policies related to activities

funded by NSP are consistent with the current Consolidated Plan adopted by the City of Merced Consolidated

Plan.


B. SECTION 3 OF THE HOUSING AND URBAN DEVELOPMENT ACT OF 1968

Section 3 seeks to increase jobs and economic opportunities for low-income people. It does so by requiring

grantees and their contractors and subcontractor to take steps that will encourage employment, training,

and contract opportunity for low-income people and businesses owned by and/or employing low-income

people. In particular, Section 3 encourages these opportunities for residents of public housing.

Section 3 applies when a combined investment in excess of $200,000 of NSP funding is provided to projects

arising in connection with housing construction, demolition, rehabilitation, or other public construction.

This extends all the requirements of Section 3 applicable to all individual properties that receive services

with these funds, regardless of the actual amount that is spent on each individual unit/property.

Accordingly, The City of Merced needs to ensure compliance with the statutory and regulatory requirements

of Section 3 in its own operations as well as those of covered contractors. These responsibilities include the

following:

Making efforts to meet the minimum numerical goals found at 24 CFR Part 135.30

Complying with the specific responsibilities at 24 CFR Part 135.32

Submitting Annual Summary reports in accordance with 24 CFR Part 135.90

For contractors receiving awards that exceed $100,000 for the construction and rehabilitation activities

listed above, responsibility for Section 3 compliance is shared with that firm; one exception is the

submission of the Section 3 Annual report (Form HUD 60002) that must be submitted by Merced.

If no contractor receives an award exceeding $100,000, responsibility for complying with the requirements

of Section 3 remains with the City of Merced.

Specifically, Merced shall be responsible for awarding 10 percent of the total dollar amount of all covered

contracts to Section 3 business concerns. This includes the responsibilities described below to meet the

Section 3 requirements [pursuant to 24 CFR Part 135.32] for Merced and their contractors or subcontractors

when new employment, training, or contracting opportunities are created during the expenditure of NSP

funding.

With regard to extending economic opportunities to businesses owned by and/or employing low-income

people, The City of Merced’s responsibility includes the following:

Implementing procedures to notify Section 3 residents and business concerns about training

and employment opportunities generated by Section 3 covered assistance

Implementing procedures to notify Section 3 business concerns about the availability of

contracting opportunities generated by Section 3 covered assistance

Notifying potential contractors completing work on Section 3 covered projects of their

responsibilities

Incorporating the Section 3 Clause (verbatim) into all covered solicitations and contracts

(see 24 CFR Part 135.38)


Facilitating the training and employment of Section 3 residents and the awarding of

contracts to Section 3 business concerns

Assisting and actively cooperating with the Department in obtaining the compliance of

contractors and subcontractors

Refraining from entering into contracts with contractors that are in violation with the

Section 3 regulations

Documenting actions taken to comply with Section 3

Submitting Section 3 annual Summary Reports (form HUD-60002) in accordance with 24

CFR Part 135.90

C. GOALS

Compliance regarding the expenditure of NSP funding is based upon meeting the minimum numerical goals

set forth at 24 CFR Part 135.30:

30 percent of the aggregate number of new hires shall be Section 3 residents

and

10 percent of all covered construction contracts shall be awarded to Section 3 business concerns

Recipients that fail to meet the numerical goals above bear the burden of demonstrating why it was not

possible. Such justifications should describe the efforts that were taken, barriers encountered, and other

relevant information that will allow the Department to make a determination regarding compliance.

D. REPORTING REQUIREMENTS

As a recipient of NSP funding, The City of Merced is required to submit Section 3 summary data annually to

the Economic Opportunity Division using form HUD-60002. This form can be submitted online at:

www.hud.gov/section3.

Since NSP funding requires the submission of quarterly performance reports, Merced shall submit form

HUD-60002 at the same time that the 4th quarter NSP report is submitted. Form HUD-60002 should reflect

the cumulative employment, contracting, and training opportunities that were generated throughout the

entire year.

E. COMPLIANCE RESOURCES

To ensure compliance with the statutory and regulatory requirements of Section 3, additional resources

include the following:

www.hud.gov/section3

Section 3 Statute—12 U.S.C. 1701u

Section 3 regulations—24 CFR Part 135

www.hud.gov/offices/cpd/communitydevelopment/programs/neighborhoodspg/


U.S. Department of Housing and Urban Development Economic Opportunity Division 451 Seventh

Street, SW Room 5235 Washington, DC 20410 202-708-3633 (this is not a toll free number) Email

questions to: [email protected]

Additional guidance from HUD on compliance and recordkeeping for Section 3 is also available online

at http://www.hud.gov/offices/cpd/communitydevelopment/toolkit/files/MBE-WBEOutreach.pdf.

Please refer to pages 2 and 3 of the Guidance.

F. VICINITY HIRING

Per Federal Regulations and City of Merced policy, the City encourages the use of Section 3 contractors for

Neighborhood Stabilization Program rehabilitation projects. All contractors will be required to certify as to

whether the Section 3 classification applies to their company.

G. MINORITY/WOMEN'S BUSINESS ENTERPRISE

Under Executive Orders 11625, 12432 and 12138, City of Merced must prescribe procedures acceptable to

HUD for a minority outreach program to ensure the inclusion, to the maximum extent possible, of minorities

and women, and entities owned by minorities and women, in all contracts (See 24 CFR 85.36(e)).

HUD requires that all NSP recipients commit to support the participation of Minority/Women’s Business

Enterprises (M/WBE) by establishing a goal to procure contracted goods and services.

Minimum acceptable outreach standards are specified by HUD and are available online at

http://www.hud.gov/offices/cpd/communitydevelopment/toolkit/files/MBE-WBEOutreach.pdf.

H. LABOR REQUIREMENTS

The City of Merced and its funded entities must comply with the following regulations:

DAVIS-BACON AND RELATED ACTS (40 USC 276(A)-7)

This Act requires that all laborers and mechanics who are working on federally-assisted contracts in excess

of $2,000 be paid the prevailing wage rates and fringe benefits for the locality in which they are working.

These prevailing rates and benefits are determined by DOL and based on corresponding classes of laborers

working on similar projects in the area. This Act also provides for the withholding of funds to ensure

compliance, and excludes from the wage requirements apprentices enrolled in bona fide apprenticeship

programs.

CONTRACT WORK HOURS AND SAFETY STANDARDS ACT, AS AMENDED (40 USC 327-333)

This Act requires provides that mechanics and laborers employed on Federally-assisted construction jobs

are paid time and one-half for work in excess of 40 hours per week, and it provides for the payment of

liquidated damages where violations occur. This Act also addresses safe and healthy working conditions.

COPELAND (ANTI-KICKBACK) ACT (40 USC 276C)

This Act requires governs the deductions from paychecks that are allowable. It makes it a criminal offense

to induce anyone employed on a Federally assisted project to relinquish any compensation to which he/she

is entitled, and it requires all contractors to submit weekly payrolls and statements of compliance.

http://www.hud.gov/offices/cpd/communitydevelopment/toolkit/files/MBE-WBEOutreach.pdf


FAIR LABOR STANDARDS ACT OF 1938, AS AMENDED (29 USC 201, ET. SEQ.)

This Act requires establishes the basic minimum wage for all work and requires the payment of overtime at

the rate of at least time and one-half. It also requires the payment of wages for the entire time that an

employee is required or permitted to work, and establishes child labor standards.

Additional guidance on the Application of Federal Labor Standards to http://nhl.gov/offices/olr/.

I. LABOR STANDARDS ADMINISTRATION—DAVIS-BACON

There are essentially four steps to administering a program for which labor standards may apply:

determine whether the standards are applicable to the program and its activities; prepare the bid

documents and contract that will make the contractor adhere to the labor standards; verify that the

contractor is eligible to participate in Federal program; and train the contractor in its responsibilities.

1. DETERMINE DAVIS-BACON APPLICABILITY

The first and sometimes most difficult step is determining whether and to what extent Davis-Bacon wage

standards apply to a particular contract or project. In addition to Federally-assisted projects with contracts

valued above $2,000 (discussed above), Davis-Bacon requirements for prevailing wage rates and fringe

benefits apply when there is any housing activity conducted for a contract/project with eight (8) or more

units, regardless of the number of units designated as “affordable” or “assisted.”

Davis-Bacon covers most HUD-assisted construction works, but there are some exceptions. The best and

safest approach is whenever the contract/project involves construction work that is valued in excess of

$2,000 to assume that Davis-Bacon rates will be applicable and then look more closely to see if there is any

reason for non-coverage.

2. PREPARE THE BID DOCUMENTS/CONTRACT

The contract for construction is the vehicle to ensure contractor compliance and Davis-Bacon wage

enforcement. Therefore, the bid specifications and/or the contract for each project subject to Davis-Bacon

wage rates must contain both a Davis-Bacon wage decision and its own labor standards clauses. These are

usually bound into the contract specifications.

DAVIS-BACON WAGE DECISIONS

The Davis-Bacon wage decision is a listing of various construction work job classifications (such as

Carpenter, Electrician, Plumber, Laborer, etc.) and the minimum wage rates (and fringe benefits, where

prevailing) that people performing work in those classifications must be paid. Current Davis-Bacon wage

decisions are available on-line at no cost at the Government Printing Office web site. The direct address for

Davis-Bacon wage decisions is: http://www.access.gpo.gov/davisbacon. You can also contact the HUD

Labor Relations staff or assistance and/or for a copy of Davis-Bacon wage decisions.

THE LABOR STANDARDS CLAUSES

The labor standards clauses obligate the contractor to comply with Davis-Bacon wage and reporting

requirements and provide for remedies and sanctions should violations occur. HUD has standard forms

that contain the labor standards clauses appropriate for different programs: the HUD-4010, Federal Labor

http://www.access.gpo.gov/davisbacon


Standards Provisions, for CDBG and HOME; and the HUD-5370 for Public and Indian housing. These forms

are available on-line at: www.hudclips.org/subscriber/html/forms.htm

3. VERIFY CONTRACTOR ELIGIBILITY

Once the City of Merced has selected the contractor to whom to award the contract, it must verify that the

contractor is not ineligible (e.g., debarred) from participation in Federal programs. It must verify the

eligibility only of the principle contractor (also referred to as the prime or general contractor).

The U.S. General Services Administration maintains a list of debarred contractors that can be accessed on-

line at: http://epls.arnet.gov (See On the Mark! OTM #6 (6/97) for more information about on-line

verification.)

4. PROVIDE CONTRACTOR TRAINING

The City of Merced must make certain the contractor understands its responsibilities for Davis-Bacon

compliance. The principal contractor is responsible for the full compliance of all employers (the contractor,

subcontractors, and any lower-tier subcontractors) with the labor standards provisions applicable to the

project.

HUD has published a Contractor’s Guide to Davis-Bacon for this purpose which provides basic information

and instructions to contractors concerning Davis-Bacon wage and reporting requirements. Hard copies of

the Guide are available from the HUD Labor Relations Field Staff. In addition, the Guide is available in a

download-able PDF file at the HUD Labor Relations Library.

J. LABOR STANDARDS ENFORCEMENT

To ensure compliance while construction activities take place, The City of Merced’s contract administrator

should conduct at least the six activities discussed below:

1. Confirm that the contractor has posted the wage decision and notice to employees

2. Conduct on-site interviews with laborers and mechanics

3. Review contractor and subcontractor certified payroll reports to identify discrepancies,

underpayments, or falsification on the payrolls

4. Investigate probable violations and any complaints received regarding underpayment

5. Recommend debarment when evidence indicates that a contractor has repeated violations

6. Prepare and submit enforcement reports, where applicable

i. CONFIRM POSTING OF THE WAGE DECISION AND NOTICE POSTED

The contractor is required to display on the job site a copy of the applicable Davis-Bacon wage

decision and the form WH-1321, Notice to Employees. The purpose of this posting is to provide

information to the construction laborers and mechanics working on the project about their

entitlement to the prevailing wage rate for their trade and to inform them of who to contact

(the contract administrator) if they have any questions or want to file a complaint. HUD also

http://epls.arnet.gov/


has prepared a pamphlet explaining the rights of workers to be paid prevailing wages which

should be made available to laborers and mechanics on the job site or through mailings.

PROJECT WAGE RATE SHEET

Many wage decisions are multi-paged and cover several counties and/or more than one type of

construction. To make this vital information easier to read and understand, contract

administrators can offer a Project Wage Rate Sheet—a one-page listing of only the wage rates

applicable to the specific project involved—for posting on the job site.

NOTICE TO EMPLOYEES

The Notice to Employees form is available on-line at HUDClips

(www.hudclips.org/subscriber/html/forms.htm) . The Notice is also available in Spanish text

from the HUD Labor Relations Field Staff.

ii. CONDUCT ON-SITE INTERVIEWS WITH LABORERS AND MECHANICS

The City of Merced contract administrator or a designee (such as an agency construction

inspector) must periodically conduct interviews with the construction workers on the job site.

The purpose of the interviews is to capture observations of the work being performed and to

get the workers views on the hours they work, the type of work they perform, and the wages

they receive. Information gathered during the interviews is recorded on form HUD-11, Record

of Employee Interview. The HUD-11s are compared to the corresponding contractor and

subcontractor certified payrolls to test and verify the accuracy of the payroll information.

HUD-11 forms are available on-line in a fillable format in HUDClips.

iii. REVIEW CONTRACTOR AND SUBCONTRACTOR CERTIFIED PAYROLL REPORTS

In addition to comparing HUD-11s to the certified payroll reports, the City of Merced contract

administrator reviews the payroll reports generally to ensure that all laborers and mechanics

are being paid no less than the wage rates contained on the applicable Davis-Bacon wage

decision for the type of work they perform. Contract administrators should be particularly

alert for indications of payroll falsification misinformation on payrolls to conceal

underpayments. Falsification on payrolls indicates an employer (contractor or subcontractor)

is aware of their obligations, is knowingly underpaying their employees, and is attempting to

avoid detection of the violations.

DISCREPANCIES AND/OR UNDERPAYMENTS ON THE PAYROLLS

Some underpayments and other errors can appear on the face of the payroll (i.e., do not

involve falsification). In these cases, the contract administrator contacts the prime contractor

and provides instructions as to what steps should be taken to correct the payroll and to pay

any back wages that may be due to the affected workers.

INDICATIONS OF FALSIFICATION ON PAYROLLS

Information reported on payrolls that indicates falsification suggests much more serious

violations in terms of the amount of back wages that may be due and the number of employees

affected. Such cases most often warrant investigation, which can include on-site interviews

http://www.hudclips.org/subscriber/html/forms.htm


with the workers, mailing questionnaires to employees, taking written statements or

complaints, and other methods to gather and assess the facts of the case. HUD has prepared a

list and explanation of four common falsification indicators that are easy to detect during

payroll spot-checks.

iv. INVESTIGATE PROBABLE VIOLATIONS AND COMPLAINTS OF UNDERPAYMENT

The City of Merced contract administrator must investigate probable violations particularly

involving falsification of payrolls and complaints alleging underpayments.

v. RECOMMEND DEBARMENT

HUD has implemented a no-tolerance policy against contractors who repeat violations of

Davis-Bacon labor standards. The first time an employer is found in violation, the employer is

required to pay full restitution to all affected workers and to pay any CWHSSA liquidated

damages (for overtime violations), which may be assessed. In addition, the employer must

provide a written assurance of future compliance. If the employer promptly completes these

corrective actions, HUD will not object if the City of Merced contract administrator does not

recommend debarment against the employer unless there are extenuating circumstances,

which warrant debarment. If the employer is found in violation again, the contract

administrator must require full correction of any underpayments and payment of CWHSSA

liquidated damages computed, and a debarment recommendation made by City of Merced

against the employer is expected.

vi. PREPARE AND SUBMIT ENFORCEMENT REPORTS

In accordance with DOL regulations (29 CFR, Part 5, §5.7), the City of Merced contract

administrator must prepare enforcement reports in at least the following instances: 1) any

case where an employer (contractor or subcontractor) has underpaid its employees by $1,000

or more or where there is reason to believe the violations are aggravated or willful, as well as

2) semi-annually concerning all Davis-Bacon labor standards administration and enforcement

activities involving all Federal agencies and programs.

EMPLOYER-BASED ENFORCEMENT REPORTS

These enforcement reports are used for three general purposes. First, it is used to report to the

Secretary of Labor on Davis-Bacon enforcement actions successfully completed in the field by all

Federal and local agencies. Secondly, an enforcement report is used to refer to the Wage and Hour

Administrator investigative findings that are in dispute (e.g., where the employer contests findings of

underpayment made against it and requests a hearing to appeal the findings). Third, an enforcement

report is used to make recommendations for debarment and other sanctions and for

recommendations concerning liquidated damages computed for CWHSSA overtime violations. (See

Labor Relations Letter LR-92-02 for additional guidance concerning employer-based enforcement

reports.)


SEMI-ANNUAL ENFORCEMENT REPORTS

All Federal agencies and contract administrators administering programs covered by Davis-Bacon

wage requirements must report to DOL on all covered contracts awarded and on all enforcement

actions taken each six months.

HUD collects the reports from its client agencies and compiles a comprehensive report to DOL

covering all HUD-assisted Davis-Bacon construction activity. The Semi-Annual Report form and

instructions for contract administrators are available on HUD’s Homepage in the Labor Relations

Library.

K. ENVIRONMENTAL REVIEW REQUIREMENTS

The rule 24 CFR Part 58, Environmental Review Procedures for Entities Assuming HUD Environmental

Responsibilities, implements the policies of the National Environmental Policy Act (NEPA), as well as other

Federal laws and authorities, and departmental environmental requirements. Further discussion of these is

contained in the section on “Compliance with NEPA and Related Federal Laws and Authorities.”

1. ROLES AND RESPONSIBILITIES

As outlined in 24 CFR Part 58, states, and units of

local government are required to assume Federal

environmental review responsibilities for

compliance with the National Environmental Policy Act (NEPA), and related Federal laws and

authorities. HUD’s environmental review regulations identify units of general local government as

the “responsible entity” (RE)—those entities having legal authority to assume this role because they

exercise control over planning, permitting, and supplying infrastructure to support HUD-assisted

projects for their jurisdictions. For the NSP Program, the RE is the entitlement jurisdiction that is the

unit of local government that receives a formula allocation of NSP funds directly from HUD—in other

words, The City of Merced.

In the role of Responsible Entity (RE), City of Merced not only assumes the responsibility for

environmental review, decision-making, documentation, and mitigation (if necessary), but also the

legal responsibility for compliance with NEPA and all other applicable laws, regulations, and

authorizations.

2. ENVIRONMENTAL REVIEW PROCESS

The City of Merced must ensure that activities or projects that are

funded by NSP assistance, in total or in part, are in compliance

with NEPA and Part 58 requirements. This means creating a

written environmental review record (ERR) for every activity and

project regardless of the level of review (§ 58.38). Later in this

chapter, more details will be provided as to the appropriate levels of environmental review for every

type of NSP assisted activity or project.

The ERR is a type of “environmental diary” that the RE uses to substantiate its decisions and

conclusions concerning protection and enhancement of the environment as a result of approving the

project. Keeping good records and having complete documentation is necessary to fulfill the RE’s

Responsible Entity (RE) = The City of Merced

ER = environmental review

ERR is a written, public environmental review record.


environmental review obligations. This is a public record. Legal challenges to a project’s

environmental compliance may be won or lost over how complete or incomplete the RE’s ERR

documentation is; therefore, this administrative record is important. The RE is required to maintain

technical capacity and administrative capability to ensure compliance with NEPA and Part 58 is

achieved (§ 58.12). With regard to technical capacity, the RE’s staff needs to have sufficient

knowledge of the Federal laws and authorities, as well as an understanding of Part 58 requirements

in order to make informed decisions about the following:

Whether the appropriate level of review has been completed

Whether compliance with NEPA and Federal laws and authorities has been achieved

Whether the public notification requirements have been met (if required)

When HUD approval is necessary

This is true whether environmental reviews are completed by RE staff, prepared by program

partners, or a consultant is hired to perform the review. The RE is still responsible for the content of

the ERR and must make an independent evaluation of the environmental issues, take responsibility

for scope and content of the compliance findings, and make the final environmental decision

concerning project approval.

With regard to administrative capability, the RE’s staff should have sufficient knowledge about the Part

58 procedures to understand when funds may be committed and spent, the time periods for the

public notification and release of funds process, and the minimum content of the ERR.

3. ENVIRONMENTAL DECISION-MAKING

For purposes of compliance with NEPA and Part 58, the chief

executive officer of the RE, or its formal designee, is the

certifying officer (CO) (§ 288 of the Act). The certifying officer is

recognized as the “responsible Federal official under NEPA” (§

58.13, 40 CFR 1508.12) and, therefore, the decision-maker as to

whether a project is approved or rejected on the basis of the environmental review findings. This is a

Federal legal responsibility. As such, if someone other than the chief executive officer for the RE is

designated to fulfill this role, HUD requires there be a formal designation by the governing body

identifying this officer. (In making such designations, the RE may want to consider assigning the CO

authority to the office being held rather than to a particular person since personnel will generally

change.)

The CO represents the RE in Federal court if there is legal challenge to the content of the

environmental review record and the RE’s decision based upon that record [§ 58.13(a)]. The CO is

also the only person with the legal authority to sign the Request for Release of Funds and

Certification (HUD form 7015.15.)

Other responsibilities required of the CO are as follows:

Ensuring that the RE reviews and comments on all EIS documents prepared for Federal projects

that may have an impact on The City’s NSP programs [§ 58.13(b)]

Certifying Officer (CO) = RE chief executive officer = City Manager of The City of Merced


Making health and safety decisions related to whether or not to approve residential construction

projects that are exposed to high levels or noise from major roadways, railroads, and/or military

or civilian airports; [HUD regulation on Noise Abatement and Control, 24 CFR 51.104(a)(2) and

(b)(2)]

Making health and safety decisions related to the construction, rehabilitation, or conversion of

buildings exposed to blast overpressure or thermal radiation from above-ground storage tanks

within line-of-site of the project [HUD regulation on placement of HUD- assisted projects in the

vicinity of explosive or flammable operations, 24 CFR 51.206]

4. ENVIRONMENTAL ACTION

The RE is also responsible for ensuring that any environmental conditions or safeguards resulting

from completion and approval of the environmental review document are implemented. If

necessary, the RE should develop an implementation/monitoring plan to ensure conditions that were

identified as necessary for protecting and enhancing environmental quality or minimizing adverse

environmental impacts are included in agreements or other relevant documents, and implemented

during completion of the project.

In addition, the RE must re-evaluate its environmental findings and decision if one or more of the

following occurs:

Substantial changes in the nature, magnitude, or extent of the project are proposed by the project

proponent (e.g., new activities not anticipated in the original project scope).

New circumstances and environmental conditions arise that were not previously considered or

evaluated for effect (e. g, conditions discovered during implementation of the project, such as

archeological resources, asbestos containing materials, endangered species, underground

storage tanks, dry wells, etc.).

The project proponent proposes selection of an alternative not previously considered.

Upon re-evaluating its original findings and conclusions, the RE must decide whether or not its

original determination is still valid, or that a new environmental review document must be prepared

instead. If the original findings are still valid, document this in the ERR in writing.

5. ROLE OF OUTSIDE ORGANIZATIONS (INDIVIDUALS/ENTITIES) AS PROJECT PARTNERS

Any other individuals and entities that utilize NSP program assistance fall into the category of project

participants with regard to compliance with Part 58 (§ 58.22). This includes Community Based

Development Organizations (CBDOs), public or private nonprofit or for profit entities, contractors,

and individual borrowers receiving NSP grants and loans.

These partners must adhere to the following:

Not acquire, repair, rehabilitate, convert, demolish, or lease properties or undertake construction

prior to receiving approval from the RE


Not commit non-HUD funds to project activities that would have an adverse environmental

impact or limit the choice of project alternatives (These prohibited actions are discussed in the

section on “Limitations Pending Environmental Clearance.”)

Carry out any mitigation and/or conditions associated with approval of the project

Provide the RE with information about the project

CBDOs or developers may also be requested by the RE (or required by executed agreement) to

supply available, relevant information necessary for the RE to perform the environmental

compliance review. This could mean the CBDO or developer submits certain types of information to

the RE. Or, it could mean the CBDO or developer prepares the environmental compliance review for

submission to the RE for its review and adoption. Or, the CBDO or developer may decide to hire a

consultant to prepare the environmental review for the RE’s review and adoption.

6. ENVIRONMENTAL REVIEW

This section discusses the following:

Actions that trigger the requirements of Part 58

Limitation pending environmental clearance

Aggregation of project activities

Sources of compliance documentation

7. ACTIONS TRIGGERING THE REQUIREMENTS OF PART 58

Once a project participant (i.e., Recipients, CBDO’s,

developers, owners, sponsors of housing, and third party

contractors) has submitted an application for NSP funds

to the City of Merced, Part 58 requirements are

applicable to the project. At this point, the RE must

request the participant to cease all project activity until

the environmental review (ER) has been completed. Part 58 prohibits further project activities and

actions from being undertaken prior to completion of the ER and the determination of environmental

clearance. Projects in violation of this prohibition risk the denial of NSP funds.

Where a project participant has begun a project in good faith as a private project, Merced is not

precluded from considering a later application for Federal assistance for the project, but must

request the third party applicant to cease further actions on the project until the environmental

review process is completed. Project participants may proceed with the project upon receiving

approval from the City of Merced, after the environmental review process has been completed for the

project.

There are certain kinds of activities that may be undertaken without risking a violation of

requirements of Part 58. For example, the act of either hiring a consultant to prepare a Phase I

Environmental Site Assessment (an investigative study for environmental hazards), or hiring a

The submission of an application for NSP funds triggers a cessation of project activities until an ER has been completed, with a couple exceptions noted in this section.


consultant to complete an engineering design study or plan, or a study of soil and geological

conditions.

Activities that have physical impacts or which limit the choice of alternatives cannot be undertaken,

even with the project participant’s own funds, prior to obtaining environmental clearance to use HUD

funds. This process may include public notification and approval from HUD. If prohibited activities

are undertaken prior to receiving approval from the City of Merced, the applicant is at risk for the

denial of HOME assistance. Such actions include the following:

Purchasing real estate

Demolishing structures or buildings

Excavating or dredging soils

Placing fill dirt on the site

Rehabilitation or converting a new building

New construction

Undertaking any of these actions interferes with the RE's ability to comply with NEPA and Part 58. If

prohibited actions are taken prior to environmental clearance, then environmental impacts may have

occurred in violation of the Federal laws and authorities and the standard review procedures that

ensure compliance. Below is further discussion of issue under the heading, “Limitations Pending

Environmental Clearance.”

8. LIMITATIONS PENDING ENVIRONMENTAL CLEARANCE

According to the NEPA (40 CFR 1500-1508) and Part 58, the RE is required to ensure that

environmental information is available before decisions are made and before actions are taken. The

RE may not commit or expend resources, either public or private funds (HUD, other Federal, or non-

Federal funds), or execute a legally-binding agreement for property acquisition, rehabilitation,

conversion, repair, or construction pertaining to a specific site until environmental clearance has

been achieved. In other words, the RE must avoid any and all actions that would preclude the

selection of alternative choices before a final decision is made—that decision being based upon an

understanding of the environmental consequences, and actions that can protect, restore, and

enhance the human environment (i.e., the natural, physical, social and economic environment.)

In order to achieve this objective, Part 58 prohibits

the commitment of NSP funds by The City of Merced

or project participant until the environmental review

process has been completed and HUD release of funds

approval, when required, has been received.

Note also that until the City of Merced has completed the environmental review process (including receipt of HUD approval, when necessary), the project participant may not commit non-HUD funds or undertake an activity if that action would have an adverse environmental impact or limit the choice of reasonable alternatives.


For the purposes of the environmental review process, “commitment of funds” includes several

activities:

Execution of a legally binding agreement

Expenditure of NSP funds

Use of non-HUD funds on actions that would have an adverse impact—e.g., demolition, dredging,

filling, excavating

Use of non-HUD funds on actions that would be “choice limiting”—e.g., acquisition of real

property; leasing property; rehabilitation, demolition, construction of buildings or structures;

relocating buildings or structures, conversion of land or buildings/structures

Actions involving statements of funding reservation are not considered a commitment of funds for

purposes of Part 58 compliance (e.g., approval of Consolidated Plan or annual action plan, or

planning for and reserving non-HUD funds, including tax credits for the project for HUD funding).

Exhibit 2-1 poses a series of questions/answers that will help distinguish between the

“contemplation” of funds and the “commitment” of funds.

If the City of Merced is considering an application from a prospective applicant and is aware that the

applicant is about to take an action within the jurisdiction that is prohibited by Part 58, then the City

must take appropriate action to ensure that its objectives and procedures of NEPA and Part 58 are

achieved [§ 58.22(c)]. Merced is ultimately responsible for establishing internal controls to enforce

compliance with NEPA and Part 58.


Exhibit 2-1: Defining “Contemplate” and “Commitment” for the Environment Review

Once the RE contemplates assisting a project or activity with HUD funds, (§ 58.32), neither HUD funds nor

non-HUD funds may be committed (§ 58.22) until compliance with Part 58 has been achieved and

documented. The following guidance is provided to clarify the meaning of the terms contemplates and

commitments as these apply to the environmental review process.

What is a contemplated HUD assisted action?

1. The RE is considering an application from a prospective eligible funded entity, unit of

government, owner or beneficiary.

2. The RE has identified a specific activity or project in its application.

What is a commitment of funds?

1. Execution of a legally binding agreement—e.g., awarding construction contracts, entering into

project agreements with developer or eligible funded entity, etc.

2. Expenditure of HUD funds—e.g., purchase of materials by a force account crew, hiring a

consultant to prepare a Phase I Environmental Site Assessment, etc.

3. Use of HUD funds or non-HUD funds on “choice limiting actions”:

a. Actions having an adverse impact—e.g., demolition, dredging, filling, excavation.

b. Actions limiting the choice of reasonable alternatives—e.g., real property acquisition,

leasing, rehabilitation, demolition, related site improvements, relocating buildings or structures,

conversion of land or buildings/structures.

What is not a commitment of funds?

1. Statements of funding reservation—e.g., approval of an application, planning for and reservation

of non-HUD funds (including tax credits for the project for HUD funding.)

2. Non-legally binding agreements—e.g., an agreement with language such as, “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

City’s determination to proceed with, modify or cancel the project based on the results of a

subsequent environmental review.”


9. AGGREGATION OF PROJECT ACTIVITIES

To determine the appropriate level of environmental

review for a project, the RE must group together

(aggregate) all related project activities, whether or not

the project is funded entirely by NSP funds, or only

certain portions of the project will be funded by NSP

funds. An environmental review must evaluate all

activities that are geographically or functionally

related, or part of a multi-year project. The appropriate level of environmental review for an

aggregated project will be determined by whichever activity or activities being undertaken by the

RE or its partners will have the greatest environmental impact. For instance, real property

acquisition will have less of a physical impact on the human environment than newly constructing

30 units of affordable housing.

“Functionally related” describes a specific type of activity that will be undertaken in several locales

or jurisdictions. The environmental impacts will be the same or similar no matter where the

project is located. For example, rehabilitation of single family units by the City.

Geographically related project activities, for example, might include a proposal to acquire four

units for rehabilitation and resale to homebuyers. All the related activities are occurring on a

single site. In aggregation, all these activities must be evaluated in a single review, regardless of

the fact that NSP funds may only be used for rehabilitation. One activity cannot occur without the

others, and therefore all the associated environmental impacts must be evaluated together. The

environmental review for the acquisition of the properties cannot be separated from the

environmental review for the rehabilitation of the properties.

Multi-year aggregation is a process that addresses phased project activities. For instance, consider

a three-year project, during which, real property will be acquired in the first year, infrastructure

improvements will be installed in years two and three, along with several phases of affordable

housing construction. Again, a single environmental review must be completed for all phases of

the project before any of the activities may be undertaken. Only one request for release of funds

(covering all project phases) needs to be submitted to HUD for approval. After HUD approval is

received, no other approval or environmental action is required; unless circumstances arise that

require the RE to re-evaluate its original environmental findings.

10. SOURCES OF COMPLIANCE DOCUMENTATION

There are several types of resources necessary to demonstrating compliance with NEPA and the

Federal laws and authorities. These resources provide written documentation in the

environmental review record that is credible, traceable, and supportive of the conclusions reached

by the RE.

An ER is conducted by project, which can be defined one of three ways: 1) the same activity conducted on numerous sites; 2) all the activities conducted on the same site; or 3) activities conducted on one site that occurs over time in phases.


Exhibit 3: Source Documentation for Environmental Reviews

FIELD OBSERVATION – A visit to the project site to make observations of the general site conditions.

There should be written documentation of the conditions observed. Also include the name and title of

the observer and the date of the site visit.

PERSONAL CONTACT – Personal contacts are useful only when the individual contacted is an

accepted authority on the subject or subjects. Documentation should include the name and title of the

person contacted, the date of the conversation, and brief notes of the key points. Whenever the person

that was contacted cites reports, records, or other document, the title, date and source of the report

should be noted. Contacts can include staff experienced in a particular area (e.g., engineer, planner,

historian, etc.).

PRINTED MATERIALS – Printed materials such as comprehensive land use plans, maps, statistical

surveys, and studies are useful sources of detailed information. The material must be current and

reflect accepted methodologies. Environmental reviews that were completed by another

governmental entity may also used if the information is relevant. Complete citations for all material

must be included.

REVIEWER’S EXPERIENCE – Professional judgment by staff is acceptable if their expertise is relevant

to the compliance issue. For example, the reviewer may have knowledge from reviewing previous

projects in the same area. Another type of relevant experience is the professional finding of the

reviewer in subjects where he or she has the background to make judgments about a specific factor.

Some reviewers have the expertise to evaluate soil conditions, while others will need to consult an

engineer or other specialist.

SPECIAL STUDY – This is a study conducted for a particular project performed by qualified personnel

using accepted methodologies. Some tests are relatively simple to perform but others may require

elaborate equipment or personnel with additional expertise. The reviewer is responsible for obtaining

assistance from others in order to have the appropriate tests or studies conducted. Examples include

archeological reconnaissance surveys, biological assessment concerning threatened and endangered

species, or Phase I Site Assessments to determine site contamination.

See HUD Handbook 1390.2, http://www.hudclips.org/sub_nonhud/cgi/hudclips.cgi

http://www.hudclips.org/sub_nonhud/cgi/hudclips.cgi


11. CATEGORIES OF ENVIRONMENTAL REVIEW

One of the primary purposes that the environmental review process serves is to require units of

local government to include environmental impacts as part of the overall deliberation process

surrounding proposed projects. The HUD environmental review requirements at Part 58 were

written so as to best strike a balance between the imposition of reasonable requirements upon the

RE (i.e., expediting the decision process for activities that clearly have no physical impact and

requiring sufficient analysis for those that will alter environmental conditions), while ensuring that

project decisions are well-documented. Therefore, the environmental review requirements are

divided on the basis of the level of impact that a proposed project might be anticipated to have

were the RE to go through with funding approval.

There are four (4) levels of environmental review identified in Part 58. The criteria for these levels

span the range of possible impacts, from none whatsoever to significant physical impact. The

levels under Part 58 include the following:

Exempt (§ 58.34)

Categorically Excluded (§ 58.35)

Environmental Assessment (§ 58.36 and Subpart E)

Environmental Impact Statement (§ 58.37 and Subparts F and G)

NEPA and the implementing regulations at 40 CFR 1500-1508 establish direction for these review

levels. The bases for these review levels and categorizing various NSP-funded activities into the

review levels is to determine if there is potential to cause significant impact on the human

environment (i.e., natural resources, ecosystems, aesthetic, historic, cultural, social, economic,

health, etc.).

EXEMPT

HUD has determined that exempt activities will neither have a physical impact, nor potential for

altering any environmental conditions. Therefore, these actions are exempt from compliance with

NEPA and the Federal laws and authorities cited at § 58.5.

According to 24 CFR 58.34, the following types of activities have been categorized as exempt from

NEPA and other environmental laws and authorities:

Environmental and other studies, resource identification, and the development of plans and

strategies

Information and financial services

Administrative and management activities

Public services that will not have a physical impact or result in any physical changes, including

but not limited to services concerned with employment, crime prevention, child care, health,

drug abuse, education, counseling, energy conservation, and welfare or recreation needs

Inspections and testing of properties for hazards or defects


Purchase of insurance

Engineering or design costs

Assistance for temporary or permanent improvements that do not alter environmental

conditions and are limited to protection, repair, or restoration activities necessary only to

control or arrest the effects from disasters or imminent threat to public safety including those

resulting from physical deterioration

Any of the categorical exclusions listed in § 58.35(a) provided there are no circumstances that

require compliance with any other Federal laws and authorities cited in § 58.5.

Content of ERR – Exempt Activities

City of Merced (the RE) must document in writing its determination that an

activity meets the conditions for exemption. [Use the Certification of

Exemption for HUD Funded Projects form at the end of this chapter to

document the designation of a project or activity as exempt.] The RE does not

have to issue a public notice or request release of funds (RROF). § 58.34(b).

In addition to making a written determination of exemption, the RE must also

determine whether the activity triggers any of the other requirements at 24

CFR 58.6, which are the Flood Disaster Protection Act; the Coastal Barriers

Resources Act; and HUD’s requirement for disclosure of properties located in

airport runway clear zones. [See Certification of Exemption for HUD Funded

Projects and discussion in “Other Requirements (§ 58.6).]

CATEGORICAL EXCLUSION

This term refers to a category of actions that do not individually or cumulatively have potential for

significant effect on the human environment (40 CFR 1508.4). Therefore, neither an environmental

assessment (EA) nor environmental impact statement (EIS) is required to comply with NEPA.

Although these actions are categorically excluded under NEPA, a determination must still be made as to

whether they would alter any environmental conditions that would require a review or compliance

determination under the Federal laws and authorities cited in § 58.5. The laws and authorities cited in

§ 58.5 are freestanding from NEPA, such as the National Historic Preservation Act of 1966, the

Executive Orders on Floodplain Management and Wetlands Protection, and several regulations specific

to HUD concerning the health and safety of project occupants, to name a few. The RE must certify that

it has complied with the requirements under these laws and consider the criteria, standards, policies

and regulations of these laws and authorities. The section on “Compliance with NEPA and Related

Federal Laws and Authorities” provides guidance on this.

However, HUD has determined that certain kinds of categorical exclusions, because of the nature of the

actions, would never alter any environmental conditions to create circumstances requiring compliance

with these laws and authorities. And so, § 58.35 identifies two types of categorical exclusions—

categorical exclusions not subject to § 58.5 and categorical exclusions subject to § 58.5.


CATEGORICAL EXCLUSIONS SUBJECT TO § 58.5.

Categorical exclusions subject to § 58.5 are excluded from compliance with NEPA, but must comply

with the other related Federal laws and authorities cited in § 58.5. It is generally evident from the

nature and magnitude of such activities they do not have potential to have a significant impact on the

human environment; however, these types of activities are physical in nature and will alter

environmental conditions that could, for example, affect historic properties, floodplains, wetland areas,

and endangered species. The following are actions in this category:

Acquisition, repair, improvement, reconstruction, or rehabilitation of public facilities (other than

buildings)—e.g., replacement of water or sewer lines where the capacity is not changed more

than 20 percent, reconstruction of curbs and sidewalks, and repaving of streets.

Removal of material and architectural barriers restricting the mobility of and accessibility to

elderly and disabled persons.

Rehabilitation and improvement of single family (one-to-four unit) dwellings provided the unit

density is not increased beyond four units, the land use is not changed, and the footprint of the

building is not increased in a floodplain or wetland.

Rehabilitation and improvement of multifamily dwellings provided the unit density is not

increased more than 20 percent, it does not change residential use to non-residential use, and

the estimated cost of rehabilitation is less than 75 percent of the replacement cost.

An individual action on one to four dwelling units where there is a maximum of four units on any

one site. The term “individual action” refers to new construction, development, demolition,

acquisition, disposition, or refinancing.

An individual action on five or more housing units developed on scattered sites when the sites

are more than 2,000 feet apart and there are not more than four units on any one site.

Acquisition (including leasing) or disposition of, or equity loans on, an existing structure

provided the structure acquired, financed, or disposed of will be retained for the same use

Any combinations of the above activities.


Content of ERR – Categorical Exclusions Subject to § 58.5

City of Merced (the RE) should complete the Certification of Categorical Exclusion (subject to

58.5) and the Statutory Checklist forms to document its environmental findings. Such

documentation must support the RE’s determinations related to compliance with the Federal

laws and authorities cited in § 58.5. (Guidance on compliance is provided below in

“Compliance with NEPA and Related Federal Laws and Authorities”.) Upon completion of the

checklist, the RE will make one of three environmental findings in writing:

The project converts to exempt and does not require public notification or approval from

HUD [§ 58.34(a)(12)]

The project invokes compliance with one or more of the laws and/or authorities and,

therefore, requires public notification and approval from HUD before funds are committed

or spent

The unusual circumstances of the project may result in a significant environmental impact

and, therefore, compliance with NEPA is required, and an environmental assessment (EA)

must be completed instead

The ERR must also contain the following:

Supporting documentation used to prepare the review (See Exhibit 12-2 Source

Documentation for Environmental Reviews.)

If the project did not convert to exempt, a copy of public Notice of Intent to Request

Release of Funds that was issued

Copy of the Request for Release of Funds and Certification (HUD form 7015.15)

Copy of Authority to Use Grant Funds (HUD form 7015.16), issued by HUD

In addition to making a written determination of categorical exclusion, subject to § 58.5, the

Merced must also determine whether the activity triggers any of the other requirements at 24

CFR 58.6, which are the Flood Disaster Protection Act; the Coastal Barriers Resources Act; and

HUD’s requirement for disclosure of properties located in airport runway clear zones. [See

Compliance Documentation Checklist (58.6) form and discussion in “Other Requirements (§

58.)6.]

CATEGORICAL EXCLUSIONS NOT SUBJECT TO § 58.5.

The activities that are categorically excluded not subject to § 58.5 have been determined by HUD not

to have potential for altering any environmental conditions where a review or determination of

compliance with the Federal laws and authorities would be required.

Actions in this category include the following:

Tenant-based rental assistance


Activities to assist homebuyers to purchase existing dwelling units or dwelling units under

construction---e.g., closing costs, down payment assistance, interest buydowns, and similar

activities that result in the transfer of title

Affordable housing pre-development costs with no physical impact---e.g., legal consulting,

developer and other costs related to obtaining site options, project financing, administrative

costs and fees for loan commitments, zoning approvals, and other related activities which do

not have a physical impact

Approval of supplemental assistance (including insurance or guarantee) to a project

previously approved under Part 58, if the approval is made by the same RE that conducted

the environmental review on the original project and re-evaluation of the environmental

findings is not required under § 58.47

Content of ERR – Categorical Exclusion not Subject to § 58.5

The City of Merced (the RE) must document in writing its determination that

an activity meets the conditions for categorical exclusion not subject to § 58.5.

[Complete the Certification of Categorical Exclusion (not subject to 58.5) form

to document designation of a NSP project or activity in this category.] The RE

does not have to issue a public notice or request release of funds (RROF) from

HUD [§ 58.34(b)].

In addition to making a written determination of categorical exclusion, subject

to § 58.5, the RE must also determine whether the activity triggers any of the

other requirements at 24 CFR 58.6, which are the Flood Disaster Protection

Act; the Coastal Barriers Resources Act; and HUD’s requirement for disclosure

of properties located in airport runway clear zones. [See Certification of

Categorical Exclusion (not subject to 58.5) form and discussion in “Other

Requirements (§ 58.6).]

ENVIRONMENTAL ASSESSMENT

Environmental Assessment refers to a category of actions that, either individually or cumulatively, have

potential for significant effect on the human environment (40 CFR 1508.4). Therefore, the potential

environmental impacts on the human environment resulting from the proposed activity must be

analyzed and evaluated according to NEPA procedures, as well as the other Federal laws and

authorities cited at § 58.5.

The environmental assessment (EA) is a public record that, upon completion, documents the RE’s

findings and conclusions about environmental effects, and the reasons for its decision concerning those

effects, as well as compliance with Federal laws and authorities.

Actions that may be funded by NSP and that fall into the category requiring an Environmental

Assessment would include, but are not limited to the following:

New construction of five or more residential units on a single site;


New construction of five or more single family units on scattered sites that are less than 2,000

feet apart;

Major rehabilitation or reconstruction of residential units that increases or decreases the unit

density more than 20 percent;

Expanding the footprint of a single family unit into the floodplain or wetland area;

Conversion of a non-residential structure to create a residential use;

Acquisition of land for development of a housing subdivision; and

Categorical exclusions with “extraordinary circumstances”---i.e., actions that are unique or

without precedent, actions that are substantially similar to those that normally require an

Environmental Impact Statement (EIS), actions that are likely to alter existing HUD policy or HUD

mandates, or action that, due to unusual physical conditions on the site or in the vicinity, have the

potential for a significant impact on the environment or in which the environment could have a

significant impact on users of the facility.


Content of ERR – Environmental Assessment (EA)

There must be a written determination by the City of Merced (the RE) that the project falls

within this category. The EA includes the following information and analysis, according to

NEPA regulations (40 CFR 1500-1508):

Determination of existing conditions

Identification, analysis, and evaluation of all potential impacts on the human environment

(i.e., social, economic and natural resources)

Examination and recommendation of feasible ways to eliminate or minimize adverse

environmental impacts

Examination of alternatives to the proposed action

Compliance determination for all other Federal laws and authorities cited in § 58.5

Determination as to a finding of no significant impact (FONSI) or a finding of significant

impact (FSI), which requires the execution of an Environmental Impact Statement (EIS)

The RE should use the Environmental Assessment form in evidence of compliance with NEPA

and the Federal laws and authorities cited in § 58.5.

Upon completion of the environmental assessment, the RE will make either a finding of no

significant impact (FONSI), or a finding of significant impact (FOSI) determination. In the event

that a FONSI is made, the RE must issue two public notices, submit a release of funds request

and certification to HUD, and receive a release of funds from HUD before funds are committed

or spent.

The ERR must also contain:

Supporting documentation used to prepare this review (see Exhibit 12-2 Source

Documentation for Environmental Reviews)

Copy of public Notice of Intent to Request Release of Funds, if project did not convert to

exempt

Copy of the Request for Release of Funds and Certification (HUD form 7015.15)

Copy of the Authority to Use Grant Funds (HUD form 7015.16) issued by ADFA (or HUD)

In addition, the RE must also determine whether the project triggers any of the other

requirements at 24 CFR 58.6, which are the Flood Disaster Protection Act; the Coastal Barriers

Resources Act; and HUD’s requirement for disclosure of properties located in airport runway

clear zones. [See the Environmental Assessment form and discussion in “Other Requirements

(§ 58.6).]

ENVIRONMENTAL IMPACT STATEMENT (EIS)

It is not typical that a NSP project will trigger the Environmental Impact Statement requirements. If the

City believes that a project it is contemplating as a possible NSP project may in fact trigger these

requirements, the City will consult with HUD immediately before taking any further action.


12. COMPLIANCE WITH NEPA AND RELATED FEDERAL LAWS AND AUTHORITIES

The following section provides guidance to assist REs in compliance with NEPA and the related

Federal laws and authorities cited at § 58.5.

COMPLIANCE WITH NEPA

The focus of NEPA is on addressing potential impacts related to the human environment (i.e., social,

economic and natural resources). So, not only must the Environmental Assessment (EA) address

compliance with the Federal laws and authorities (§ 58.5) that were previously discussed in this

chapter, but the RE must also address additional environmental factors. To accomplish this, the RE

must determine the effects of the proposed project on the character, features and resources of the

project area. Determinations of impact should be based on site observations, information from

relevant documents and reports, special studies, or correspondence with the appropriate government

agencies.

RE’s should visit the project site to assess or determine the presence/absence of the following factors

included in the Environmental Assessment (see section called Environmental Assessment Checklist):

Unique and natural features

Site suitability, access, and compatibility with the surrounding environment

Soil stability, erosion, and drainage

Nuisances and hazards (manmade or built)

Commercial/retail and transportation

In addition, REs must contact the appropriate local agencies to assess the impact that the project will

have on the areas listed in the checklist. Detailed guidance is provided in the HUD publication entitled

Environmental Review Guide For Community Development Block Grant Programs under Title I of the

Housing and Community Development Act of 1974, as Amended (HUD-CPD-782(2), September 1991).

A summary of some of this guidance is provided below:

Unique and natural features. To supplement the determination of unique and natural features,

contact your state agency that deals with natural resources to determine if any designated

Natural Areas or Rare Species Habitats will be affected by the project.

Site suitability, access, and compatibility with the surrounding environment. To supplement the

determination of site suitability, access, and compatibility with the surrounding environment,

contact the local planning agency or board.

Soil stability, erosion, and drainage. To supplement the determination of soil stability, erosion

and drainage, refer to the Natural Resource Conservation Service (NRCS) City Soil Survey to

determine if engineering restraints are indicated. The Soil Survey may be obtained by contacting

the local NRCS office. Provide comments from the site engineer or local development

department if engineering restraints are indicated based on the Soil Survey. Where applicable, a

review of a geologic map produced by the state geological surveys may be required.

Water supply/sanitary sewers. To assess water supply/sanitary sewers, contact the local public

works department.


Solid waste disposal. To assess solid waste disposal, contact the local public works department.

School services. To assess school services, contact the local school board.

Parks, recreation, and social services. To assess parks, recreation, and social services contact the

local planning department, parks and recreation department, and social services department.

Emergency health care, fire and police services. To assess emergency health care, fire, and police

services contact the local fire department, police department, and emergency management

organization.

Transportation. To assess transportation contact the state or city transportation department.

Once determinations have been made, the appropriate impact code must be entered from the list

provided in the EA:

No impact anticipated

Potentially beneficial

Potentially adverse

Requires mitigation

Requires project modification

The RE must note names, dates of contact, telephone numbers and page references as well as any

mitigation measures required. Attach additional source documentation to the EA as appropriate.

13. HISTORIC PRESERVATION (36 CFR PART 800)

Section 106 of the National Historic Preservation Act requires RE’s to:

Consider the effects of their undertakings on historic properties; and

Provide the Advisory Council on Historic Preservation with a reasonable opportunity to

comment with regard to such undertakings.

Compliance with Section 106 is achieved by initiating procedures the Advisory Council on Historic

Preservation has outlined at 36 CFR Part 800. Section 800.2(a) recognizes the RE’s certifying officer as

having authority to carry out these procedural responsibilities.

The focus of Part 800 is on the RE making a determination whether a proposed project will affect

buildings, structures, or places that are listed on or are eligible for listing on the National Register of

Historic Places (NR). In making this determination, the RE must follow a detailed review process in

consultation with the State Historic Preservation Officer (SHPO). This process also provides an

opportunity for interested persons, agencies, and Indian tribes to be part of the RE’s decision

concerning historic properties that may be affected.

It is important to remember that before approval is given to proceed with NSP-funded projects, the

environmental review record must show the Part 800 consultation process was completed.


Basic procedures for compliance with the Section 106 Review Process (36 CFR Part 800) include the

following:

PROCEDURE

HPS is to determine whether the project is an undertaking, or has no potential to cause effects on

historic properties

Define the area of potential effects (APE) for the undertaking

Identify and evaluate historic properties in the APE

Determine the effect of the undertaking

Assess the effects on listed and/or eligible properties

Resolve any adverse effects

Compliance Documentation Required – Historic Preservation

The ERR should contain one of these types of documentation:

Letter from SHPO that no historic properties will be affected

RE adequately documents its finding of no historic properties affected and

SHPO does not object within 30 days

RE documents the project meets stipulations of a Programmatic Agreement

executed with the SHPO

Memorandum of Agreement has been executed between the RE and SHPO

regarding mitigations measures that will be implemented to resolve adverse

effects

Floodplain Management (Executive Order 11988 and 24 CFR Part 55)

The purpose of Executive Order 11988 is to require REs to consider alternatives to developing projects in

floodplains when other alternatives are available that achieve the same objective.

This is to avoid risking lives and loss of property that results from occupying a floodplain, and to avoid

losing the beneficial values of floodplains. Naturally vegetated floodplains can provide a broad area to

spread and slow floodwaters, thereby reducing velocities and flood peaks. Slower floodwaters help

maintain water quality because the slowed runoff allows sediments to be deposited. Floodplains are also

important for recharging groundwater. Rainwater and surface water infiltrate through the generally

porous soil of the floodplain into the groundwater.

RE’s are required to avoid floodplain development whenever there are practicable alternatives to

development in the floodplain. According to HUD regulation 24 CFR Part 55, floodplains are those land

areas identified on maps published by FEMA as 100-year floodplain (Zones A or V). If the project is a


“critical action,” the regulation also applies to areas in the 500-year floodplain (Zone B or X). Coastal high

hazard areas are subject to high velocity waters, such as hurricane wave wash. FEMA maps designate these

as Zones V1-30, VE, or V.

Most, if not all, communities in the U.S. have been mapped by FEMA. However, if a community has not been

mapped by FEMA, the RE must establish whether or not the area is subject to one percent or greater chance

of flooding in any given year [Section 6(c) of the Executive Order]. The RE must research the best available

information to determine whether buildings or structures could be damaged by floodwaters because of

their location. Sources of information may include: U.S. Corps of Engineers, Community Flood

Administrators; U.S. Geological Survey Maps; U.S.D.A. Natural Resources Conservation Service (formerly

Soil Conservation Service); state departments of water resources; public works; or local flood control or

levee districts. The RE may also contract to have a special study completed.

Basic steps for compliance with floodplain management requirements are at Section 55.20, which identifies

the “eight-step” decision making process REs must follow to comply with Executive Order 11988:

Step 1. Determine whether the proposed action is located in a 100-year floodplain;

Step 2. If the project is in a floodplain, publish notice of the proposal to consider an action in the

floodplain (15 calendar day comment period);

Step 3. Evaluate practicable alternatives to locating the proposed action in a floodplain (“Practicable”

means capable of being done within existing constraints);

Step 4. Identify the potential impacts associated with occupancy and modification of the floodplain;

Step 5. Design or modify the action to minimize adverse impacts and preserve the beneficial values

of the floodplain;

Step 6. Reevaluate whether the proposed action is practicable;

Step 7. If the RE decides to proceed with the project, it must publish a notice of the decision,

addressing why there is “no practicable alternative”, the alternatives that were considered, and the

mitigation measures being adopted. (Seven calendar day comment period.); and

Step 8. Implement the proposed action with mitigation measures.

HUD has determined that certain activities are excluded from the 8-step decision-making process,

including HUD assistance for purchasing, mortgaging or refinancing one-to four-family properties,

and minor repairs or improvements on one-to four-family properties [§ 55.12]. In addition, Part 55

is not applicable if FEMA has issued a Letter of Map Revision (LOMR) or Letter of Map Amendment

(LOMA) for the subject site in a floodplain.


Compliance Documentation Required – Floodplain Management


Evidence the proposed action is not within a special flood hazard area mapped by

FEMA (i.e., 100-year floodplain or 500-year floodplain for critical actions);

Documentation of the decision making process is not applicable (§ 55.12); or

The 8-step decision making process was completed and a decision made that

there is no practicable alternative

Wetlands Protection (Executive Order 11990)

The purpose of the Executive Order 11990 (Wetlands Protection, May 24, 1977) is to:

Avoid, if possible, any long and short-term adverse impacts associated with destruction or

modification of wetlands, and

Avoid direct or indirect support of new construction in wetlands whenever there is a practicable

alternative.

There are two key steps to comply with the Wetlands Protection Requirements:

1. If new construction or conversion of vacant land is being proposed in a designated wetland, the RE

should follow the decision making process in § 55.20 (24 CFR Part 55) and conclude whether there is

a practicable alternative to destroying or modifying the wetland.

2. If the wetland is within or adjacent to navigable waters of the U.S. or within the jurisdiction of the

Corps, the RE needs to obtain a permit from the U.S. Army Corps of Engineers.

Compliance Documentation Required – Wetlands Protection


The proposed action does not include new construction or expanding the footprint

of a building;

Evidence the new construction will not occur in a designated wetland or expand

the footprint of a building into a wetland; or

There is no practicable alternative, according to the completed 8-step decision

making process. (U.S. Army Corps of Engineers has issued a permit where they

have wetland jurisdiction.)


Endangered Species (Endangered Species Act and 50 CFR 402)

Section 7 of the Endangered Species Act requires that, when Federal assistance is used for a project, a

determination must be made whether continued existence of Federally-listed endangered or threatened

species is likely to be affected, and whether it will result in their Critical Habitats being destroyed or

adversely modified. The regulation implementing compliance with the Act is 50 CFR 402, issued by the

Departments of Interior (U.S. Fish and Wildlife Service) and Commerce (U.S. National Marine Fisheries).

The regulation also covers species or critical habitat that is proposed for Federal-listing and is likely to be

jeopardized by the project.

Compliance Documentation Required – Endangered Species


Evidence the habitat will not be altered or species affected.

If the proposed action may affect species or their habitat, there is evidence the USFWS

or NMFS has reviewed the biological assessment and agrees with the findings of no

effect.

If the proposed action will likely adversely affect species or their habitat, the USFWS or

NMFS has issued either a “no jeopardy” or “jeopardy” biological opinion.

Coastal Zone Management Act

When NSP funds will be used for physical changes to properties or land within or adjacent to the coastal

zone, the RE must make a determination whether the project is consistent with the state’s approved coastal

management program.

Compliance Documentation Required – Coastal Zone Management

The ERR should contain a general location map or statement verifying the existence

of coastal zone management areas in the community, or use other documentation

that may be available.

Sole Source Aquifers

Aquifers are underground geological formations that yield a significant amount of water to a well or spring.

The regulations at 40 CFR Part 149 require the RE to determine

Whether a project is within a Critical Aquifer Protection Area designated by EPA, and

whether project activities have the potential to contaminate the aquifer. For example, drilling water

wells and constructing water treatment and industrial facilities have the potential of contaminating

aquifers.


Compliance Documentation Required – Sole Source Aquifers


Documentation the proposed action is not within the boundaries of an EPA

designated SSA

Documentation the action is not a regulated activity within the boundaries of

a SSA

Documentation that EPA has reviewed and commented on the proposed

action within a SSA

Wild and Scenic Rivers Act

Entire river systems or portions of rivers may be designated wild, scenic, or recreational and included in

the National Wild and Scenic Rivers System (NWSRS) either by Act of Congress, or may be designated by a

state or states if the U.S. Secretary of Interior finds it meets the criteria established by the Act. It appears

that currently no wild and scenic river has been designated within The City of Merced.

However, in the event such designation occurs, then the City in order to be in compliance with this Act must

do the following:

It must determine whether any river listed in the NWSRS, or that is designated for inclusion in the

NWSRS, would be directly and adversely affected by development activities associated with the

project.

If the project is located above or below a listed river, it must determine whether the project will

impact the river management area or could unreasonably diminish the scenic, recreational, and fish

and wildlife values present in the area.

Compliance Documentation Required – Wild and Scenic Rivers


Evidence the proposed action is not within one mile of a designated Wild,

Scenic, or Recreational River

(http://www.nps.gov/rivers/wildriverslist.html)

Documentation that contact was made with the Federal (or State) agency that

has administrative responsibility for management of the river and that the

proposed action will not affect river designation


Clean Air Act

The Clean Air Act is a Federal law; however, the states do much of the work to carry out most of the Act.

Each state develops state implementation plans (SIP) that contain its objectives and regulations for

carrying out the Clean Air Act.

The purpose of an implementation plan is to ensure that ambient concentrations of any of six air pollutants

are within the established levels of the National Ambient Air Quality Standards (NAAQS). The six pollutants

are ozone, carbon monoxide, particulate matter, sulfur dioxide, lead, and nitrogen. Sources for pollutants

include transportation vehicles, industrial facilities, and farming operations.

Asbestos removal and abatement is a part of the Clean Air Act. Refer to 40 CFR 61, Subpart M, National

Emission Standards for Hazardous Air Pollutants (NESHAP.)

Compliance Documentation Required – Clean Air Act


A resource expert has determined the proposed action is not of a type that

would contribute air pollution

The proposed action is within an area in attainment with the NAAQS for all

six pollutants

The proposed action is within a non-attainment area for one or more of the

pollutants but is in conformance with the State Implementation Plan (SIP)

Farmland Protection Policy Act (7 CFR Part 658)

The purpose of the Farmland Protection Policy Act is to minimize the effect of Federal programs on the

unnecessary and irreversible conversion of farmland to nonagricultural uses. The Act does not apply to

lands already in, or committed to, urban development (i.e., 30 structures per 40 acres or water

impoundment). However, land that meets the definition of prime or unique farmlands, or is determined to

be of statewide or local significance (with concurrence by the U.S. Secretary of Agriculture) is subject to the

Act.

If the RE cannot determine whether or not the land is classified as prime or unique, it should request the

USDA Natural Resources Conservation Service (NRCS) to make the determination by submitting Form AD-

1006, the Farmland Conversion Impact Rating form. These forms are available at NRCS offices or the

Internet.


Compliance Documentation Required – Farmland Protection


Evidence the current zoning classification is not for farmland use (i.e.,

residential use, commercial use, etc.)

Information from NRCS that shows the site is not prime or unique farmland

Evidence from NRCS shows the site is classified prime or unique agricultural

land, and the RE completed and submitted form AD-1006 to NRCS and

received its comments

Environmental Justice (Executive Order 12898)

The Executive Order on Environmental Justice directs each Federal agency, and in the case of Part 58 the

RE, to make achieving environmental justice part of its mission by "identifying and addressing as

appropriate disproportionately high and adverse human health or environmental effects of its programs,

policies, and activities on minority populations and low-income populations." Presently, there are not any

regulations for implementing the Executive Order. However, HUD has issued a Strategy Plan for

Implementing Environmental Justice, which it uses as guiding principle in deciding whether the project

could result in disproportionate high and adverse effects on these populations.

During the environmental review process, health and environmental issues may arise concerning the

suitability of the project site for its intended use, particularly its suitability for human habitation. The RE

should document how the Executive Order was given consideration in its final decision.

Compliance Documentation Required – Environmental Justice

The ERR should contain ALL these types of documentation:

The proposed action is compatible with surrounding land uses

The site or surrounding neighborhood does not suffer from adverse

environmental conditions

The proposed action would not create a negative environmental impact or

aggravate an existing impact

Site Contamination from Hazardous and/or Radioactive Materials [§ 58.5(i)(2)]

Section 58.5(i)(2) states that all properties receiving HUD assistance must be free of hazardous materials,

contamination, toxic chemicals and gases, and radioactive substances that “could affect the health and

safety of the occupants of conflict with the intended utilization of the property.” Properties having clear

health risks for the occupants or inhabitants should be rejected. For multifamily housing (5 or more

dwelling units), compliance with this policy requires efforts to identify any hazardous substances and


radioactive materials that may be on site or off site that could harm inhabitants, as well as an evaluation of

previous uses of the properties.

Compliance Documentation Required – Site Contamination


Evidence the site is not contaminated (For multifamily housing projects this

includes on site and off site contamination and previous uses of the site.)

Evidence supporting a determination the hazard will not affect health and

safety of the occupants or conflict with the intended use of the site

Explosive/Flammable Operations (24 CFR 51, Subpart C)

The purpose of this HUD regulation is to ensure there is an acceptable separation distance between people

and buildings from stationary aboveground storage tanks more than 100 gallons in size and that contain

materials that are explosive or flammable in nature (e.g., gasoline, fuel oil, kerosene, crude oil, propane).

This is to prevent injury to people and damage to property from industrial accidents. The RE must

determine if there are hazardous liquids and gases being stored within one mile of the project, and within

line-of-sight of the project.

The regulation does not apply to rehabilitation of buildings that will not increase residential densities,

convert buildings for habitation, or makes vacant buildings habitable (§ 51.201). Neither does the

regulation apply to individual fuel supply for one to four family housing units (Memorandum from Office of

Environment and Energy, HUD, August 3, 1992).

Compliance Documentation Required –

Stationary Aboveground Storage Tanks


Documentation of the proposed action does not meet the definition of a “HUD

assisted project” (§ 51.201)

Field review documentation or aerial photos show no aboveground tanks

within one mile

If tanks are within one mile:

There is an effective barrier.

There is an acceptable separation distance for people and

buildings.

The people and buildings can be protected with mitigation

measures.


Noise Abatement and Control (24 CFR 51, Subpart B)

The purpose of this HUD regulation is to encourage suitable separation between noise sensitive lands uses,

particularly housing, and major noise sources (i.e., roadways, railroads, and military and civilian airports).

The RE must determine whether there are any major roadways with 1,000 feet, railroads within 3,000 feet,

and military or civilian airports (regulated by the Federal Aviation Administration) that are within 15 miles

of the project.

HUD’s noise standards are based on the Day-Night Average (DNL) Sound Level System---a system of

calculating noise exposure instead of measuring it with instruments. This system is a 24 hour average

sound level (expressed in decibels), with an additional 10 decibels added for nighttime noise. The

calculation is based upon projected conditions that are expected at least 10 years beyond the project

approval date. Noise is considered Acceptable when the exterior noise level is 65 DNL or less. Otherwise,

attenuation measures must be incorporated into construction plans (66-75 DNL, Normally Unacceptable).

If the exterior noise level is above 75 DNL (Unacceptable), the project requires special approval from the

certifying officer, or it should be disapproved [24 CFR 51.104(a)(2)].

The RE must determine whether the exterior noise level at the project site is within HUD’s standard for

acceptability, or whether noise attenuation is required or another site should be selected for the project.

Making this determination may require completing a noise calculation for roadways, railroads, and/or

airports according to guidelines provided in The Noise Guidebook [HUD-953-CPD(1)]. This guidebook is

issued by and available from HUD online.

Compliance Documentation Required – Noise Abatement and Control


Documentation the proposed action is not

a noise sensitive land use, according to [§ 51. 101(a)(2)] (i.e.,

housing), or

within 1000 feet of a major roadway, 3,000 feet of a railroad, or

15 miles of a military of FAA-regulated civil airfield.

If within those distances, documentation shows there is an effective noise

barrier

If within those distances, documentation shows the noise level is Acceptable

(at or below 65 DNL)

Documentation that shows the noise generated by the noise source(s) is

Normally Unacceptable, and noise attenuation requirements are identified

and will bring the interior noise level to 45 DNL and/or exterior noise level to

65 DNL


Airport Clear Zones (24 CFR 51, Subpart D)

Clear Zones, Runway Clear Zones, and Accident Potential Zones are designated areas at the end of airport

runways where the greatest number of airplane accidents occur (about 75%). This regulation prohibits

using HUD assistance for the following:

New construction

Major or substantial rehabilitation and modernization activities if projects are located within a Clear

Zone or Runway Clear Zone

It also prohibits using HUD assistance for these activities in an Accident Potential Zone, if such activities

would have at least one of the following effects:

Change the current use of the facility

Significantly increase the density or number of people at the site

Introduce explosive, flammable, or toxic materials to the area

However, this prohibition does not apply to the purchase, sale or rental of existing properties, nor to minor

rehabilitation/modernization or emergency assistance activities. (Minor rehabilitation/modernization

would mean, for Clear Zones and Runway Clear Zones, it does not significantly prolong the physical or

economic life of a building. For Accident Potential Zones, it does not change its use, increase density, or

introduce explosive, flammable, or toxic materials. See § 51.302.)

Compliance Documentation Required – Airport Clear Zones


Documentation there are no FAA-regulated airports within 2500 feet and/or

Dept. of Defense airfields within 15,000 feet (about 2.8 miles) of the proposed

project

Documentation that the rule is not applicable to the proposed project (i.e.,

acquisition of an existing building, “minor” rehabilitation, or emergency

action)

Documentation that the project is within the specified distances, but the map

of the airport/airfield shows the proposed action is not located within a

Runway Clear Zone, Clear Zone, or Accident Potential Zone

Other Requirements (§ 58.6)

The following section outlines other Environmental Review requirements.


Flood Insurance

Section 202 of the Flood Disaster Protection Act of 1973 (42 U.S.C. 4106) requires that Federal funds shall

not be provided to an area identified by the Federal Emergency Management Agency (FEMA) as having

special flood hazard areas unless

The community is participating in the National Flood Insurance Program, or it has been less than a

year since the community was designated as having special hazards, and

Flood insurance is obtained.

REs are responsible for ensuring that property owners receiving NSP assistance take flood insurance on

properties located in a 100-year floodplain. Flood insurance must be taken for the life of a loan, or the

useful life of an improvement funded by a grant.

Coastal Barriers

HUD Assistance may not be used for HOME assisted activities proposed in the Coastal Barrier Resource

System. The Act prohibits Federal assistance for development or improvement of barrier islands that are

subject to frequent damage by hurricanes and high storm surges. The RE should review costal barrier zone

maps relative to location of project.

Runway Clear Zone or Clear Zone

The RE shall advise buyers of existing property whether the property is located in a runway clear zone or

clear zone. Additional, the RE shall inform the buyer of the implications of such a location, and that there is

a possibility that the property may, at a later date, be acquired by the airport operator. The buyer must

sign a statement acknowledging receipt of this information. (A copy of this disclosure statement, Notice to

Prospective Buyers of Properties Located in Runway Clear Zones and Clear Zones/Accident Potential

Zones, is contained in the EA form.)

14. RELEASE OF FUNDS AND APPROVAL PROCESS

The following steps are related to the release of funds and approval process.

PUBLIC NOTIFICATION

The public notification process is an integral part of the environmental review process that allows the

public, interested persons, and agencies to voice their opinions about the project’s potential environmental

impact and the RE’s environmental findings. Public notices are required when the RE determines that a

project that is categorically excluded subject to § 58.5 cannot convert to exempt, or when the RE prepares

an environmental assessment (EA) or environmental impact statement (EIS).

CATEGORICAL EXCLUSIONS THAT CANNOT CONVERT TO EXEMPT

If the proposed activity triggers compliance with any of the Federal laws and authorities, and there is

documentation supporting this finding, the RE must then issue a Notice of Intent to Request Release of

Funds.


The Notice of Intent to Request Release of Funds (NOI/RROF) must be published or posted/mailed

according to §§ 58.45 and 58.70. A minimum of 7 calendar days must be allowed for public comment

if the notice is published in a newspaper of general circulation in the affected community, or a

minimum of 10 calendar days if the notice is posted and/or mailed, according to established citizen

participation procedures.

NOTE: If the notice is published, it only needs to appear once in the newspaper and does not have to

be published again for each of the 7 days of the comment period. If posted, the notice must be

maintained in place until after the public comment period has expired.

The public comment period begins at 12:01 a.m. local time on the day following the publication or

posting/mailing date of the notice (§ 58.21).

The RE must consider and respond to any comments received, and resolve any outstanding issues

before signing and submitting a Request for Release of Funds and Certification to HUD. A copy of the

public notice must accompany this request. HUD has 15 calendar days from the date it receives the

RE’s request (or 15 days from the date that appears in the notice, whichever is later) before it may

approve release of funds (Authority to Use Grant Funds is issued).

In addition to publishing or posting/mailing the notice, the RE must also disseminate a copy of the notice, at

minimum, to individuals and groups known to be interested in the project/activities, to the local news

media, to the appropriate tribal, local, state and Federal agencies, to Regional Office of the Environmental

Protection Agency having jurisdiction, and to HUD (§ 58.45).

ENVIRONMENTAL ASSESSMENTS

Upon completion of the EA, the RE will make either a finding of no significant impact (FONSI), or a finding

of significant impact (FOSI) determination. In the event that a FONSI is made, the RE must issue two public

notices: Finding of No Significant Impact (FONSI) and Notice of Intent to Request Release of Funds

(NOI/RROF). These notices may be published concurrently.

When there is a combined FONSI/NOI-RROF notice, a minimum of 15 calendar days must be allowed

for public comment if the notice is published in a newspaper of general circulation in the affected

community, or a minimum of 18 calendar days if the notice is posted and/or mailed, according to

established citizen participation procedures.

NOTE: If the notice is published, it only needs to appear once in the newspaper and does not have to

be published again for each of the 15 days of the comment period. If the notice is posted, it must be

maintained in place until after the public comment period has expired.

The public comment period begins at 12:01 a.m. local time on the day following the publication or

posting/mailing date of the notice (§ 58.21).

The RE must consider and respond to any comments received, and resolve any outstanding issues

before signing and submitting a Request for Release of Funds and Certification to ADFA (or HUD). A

copy of the public notice must accompany this request. HUD has 15 calendar days from the date it

receives the RE’s request (or 15 days from the date that appears in the notice, whichever is later)

before it may approve release of funds (Authority to Use Grant Funds is issued.)

In the event that a FOSI is made, the RE must initiate an Environmental Impact Statement (EIS) in

accordance with Subparts F and G of Part 58. An EIS has additional public involvement and

notification requirements. Consult with HUD if there is a FOSI determination.


In addition to publishing or posting/mailing the notice, the RE must also disseminate a copy of the notice, at

minimum, to individuals and groups known to be interested in the project/activities, to the local news

media, to the appropriate tribal, local, state and Federal agencies, to Regional Office of the Environmental

Protection Agency having jurisdiction, and to HUD (§ 58.45).

15. OTHER STATE AND LOCAL REQUIREMENTS

This section addresses State and local requirements and policies that must be adhered to as part of project

planning and development. Only asbestos abatement and removal, which falls under the Clean Air Act, is a

part of the Part 58 environmental review compliance process. Lead-based paint is addressed elsewhere in

the NSP program regulations.

SOLID WASTE DISPOSAL

Legislation Solid Waste Disposal Act as amended by the Resource Conservation and

Recovery Act of 1976, 42 U.S.C. 6901-6987

Citations 40 CFR 240-265

Applicability Any activity generating solid waste that will require a disposal permit

Contact Agency City of Merced

Any projects generating solid waste that will require permitted disposal methods must obtain any required

permits from the City of Merced to supply information here.

16. LEAD BASED PAINT

Legislation Lead Based Paint Hazard Elimination

Citations 24 CFR 35, and Sections 1012 and 1013 of the Residential Lead-based Paint Hazard

Reduction Act of 1992

Applicability Units built before 1978


Federal Requirements for lead-based paint are addressed in Chapter _____, Other Federal Requirements.

ASBESTOS IDENTIFICATION AND ABATEMENT

Legislation Asbestos Identification and Abatement

Citations The Clean Air Act of 1972, as amended; 40 CFR 61, dated November 20, 1990, as

amended

Applicability All projects involving rehabilitation of buildings



TABLE 1:

SUMMARY OF ENVIRONMENTAL REVIEW ACTION BY ACTIVITY

NOTE: Except for administrative costs, combinations of activities that make up a project must be evaluated in

a single environmental review. Whichever of the project activities requires the highest level of review

dictates the type of review required for the entire project (see section in this chapter on “Aggregation of

Project Activities).

Activity Action Documentation/Form Notes

Administration Exempt

§ 58.34 (a)

Complete Certification of Exemption Under NSP rules funds must

be associated with program

management, oversight and

coordination.

Reconstruction –

Homeowner unit

Cat. Ex. subject to §

58.5

§ 58.35 (a)(4)(ii)

Complete Certification of Categorical

Exclusion (subject to 58.5), Statutory

Checklist, and Compliance Documentation

Checklist (58.6)

If project does not convert

to exempt, public

notification and HUD

approval is required prior to

committing and expending

funds.

Acquisition - existing

Homeowner unit


58.5

§ 58.35 (a)(5)




Checklist (58.6)


to exempt, public




funds.

New Construction –

Homeowner unit

(single family 1-4

units)


58.5




Checklist (58.6)


to exempt, public




funds.

New Construction

development (5 or

more single family

units on scattered

sites:

The scattered

sites are more

than 2,000 feet

apart, and

No more than 4

units per site


58.5

§ 58.35 (a)(4)(ii)




Checklist (58.6)


to exempt, public




funds.


Acquisition,

Rehabilitation and

Resale (single family

1-4 units)


58.5




Checklist (58.6)


to exempt, public




funds.

Rental Acquisition

existing building

(single family 1-4

units or multifamily)


58.5




Checklist (58.6)


to exempt, public




funds.

Rental Rehabilitation

(multi-family 5 or

more units):

Unit density will

not change more

than 20% as a

result of rehab;

Current use will

not changed from

residential to

non-residential;

and/or

Estimated cost of

rehab is less than

75% of

replacement cost

after rehab


58.5




Checklist (58.6)


to exempt, public




funds.

Vacant Land

Acquisition for New

Construction (Rental

or Single Family, 5 or

more units on a site)

Environmental

Assessment

Complete Environmental Assessment

(which includes NEPA and related Federal

laws and authorities at § 58.5, as well as §

58.6 requirements)

Public notification and HUD



funds

New Construction

development (5 or

more single family

units on scattered

sites:

The scattered

sites are less than

2,000 feet apart,

Environmental

Assessment




58.6 requirements)




funds


and/or

There a more

than 4 units per

site

Rental Rehabilitation

(multi-family 5 or

more units):

Unit density is

changed more

than 20% as a

result of rehab;

Current use will

be changed from

residential to

non-residential or

vice versa;

and/or

Estimated cost of

rehab is more

than 75% of

replacement cost

after rehab

Environmental

Assessment




58.6 requirements)




funds

REQUIREMENT

EXEMPT Projects and/or Activities (§58.34)

1. A project may be determined Exempt when consisting of an exempt activity only, such as

planning. Additionally, a project may be comprised of both exempt and non-exempt activities. In

this case, and only in this case, the exempt activities can be assessed separately in order to

advance project development and/or payments for Exempt activities.

2. When, a project includes Exempt activities as well as those activities requiring a higher level of

environmental review, more than one procedural step will apply to document compliance.

3. All Exempt activities must be documented in order to prove that compliance has been met and

that project funds may be expended and are allowable for those Exempt activities.

EXEMPT ONLY projects - PROCEDURE (ENTER STAFF POSITION FOR THESE PROCEDURES)

1. HPS Complete the “Determination of Level of Environmental Review” form if the PROJECT AS A

WHOLE is determined Exempt.

2. HPS Complete the NSP “Finding of Exemption” form identifying all Exempt activities in your

project as cited at §58.34. File both forms in the ERR.

3. If the project includes only Exempt activities, no further action is required. However, if there are

any changes in the scope of the project, they are subject to environmental review requirements.


EXEMPT & NON-EXEMPT ACTIVITIES

PROCEDURE

If the project includes Exempt AND non-Exempt activities, the HPS should complete the “Finding of

Exemption” form for all Exempt activities and then determine the level of review required for the project

as a whole, continuing on to complete the procedures required for that level of review.

Categorically Excluded Levels of Review – 3 classifications:

1. Categorically Excluded SUBJECT TO (CEST) other related Federal laws and authorities [§58.35(a)]

Complete the ‘Determination of Level of Environmental Review’ form.

a. Complete and submit the “Section 106 Project Information Form” and attachments to the

SHPO and all Indian tribes identified for your county. The SHPO has a minimum 30-day

review period upon receipt of your information. If the SHPO requests more information be

submitted, a second 30-day review period will commence upon receipt of the additional

information. In some instances, this review period may be longer. It is wise to plan for a

longer review. Tribes have no specific deadline to respond - See “Consulting with Indian

Tribes During the Section 106 Process”.

b. Complete the “Statutory Checklist” and attach the “Determination of Level of Environmental

Review” form. If the project lies in a floodplain or wetland, the “HUD 8-Step Decision Making

Process” applies. Refer to the Statutory Checklist for steps in this process, and if applicable,

follow and document all steps including publishing the “Early Public Notice”, EPN - initial

floodplain/wetland notice), in a non-legal section of the newspaper of widest circulation,

observing the 15-day comment period which begins the day after publication.

c. Once all environmental clearances applicable to the project are received, submit the

Statutory Checklist and all supporting documentation to the NSP Environmental Review

Officer. Once reviewed by NSP, publish the “Notice of Intent To Request Release of Funds”

(NOI) (and “Notice of Explanation”- NOE - final floodplain/wetland notice, if applicable) in a

non-legal section of the newspaper of widest circulation. The NOI and NOE each require a 7-

day local comment that may run concurrently beginning the day after publication. If any

comments are received in writing, respond in writing,

resolve any issues, and provide copies of all

correspondence to NSP.

d. Once the 7-day local comment period expires for the

NOI and if applicable, the NOE, submit a copy of the

publication(s) and affidavit(s) of publication along with

the “Request for Release of Funds and Certification”

(RROF&C) form to NSP. It is acceptable to fax or e-mail

The “Finding of Exemption”

form is required if the project

consists solely of one or more

exempt activities, OR, if the

project requires that one or

more exempt activities be

undertaken in advance of the

project as a whole. File the

form in the ERR.


clear, signed copies to expedite the comment period; however, originals must also be mailed

to NSP. The day after receipt of this information, NSP will begin a 15-day State comment

period reviewing the entire process for compliance.

e. On the 16th day, pending resolution of any conditions or concerns by other environmental

agencies, individuals and groups, NSP will release funds by means of a “Pre-Grant Award

Environmental Approval Letter” for proposed projects not yet funded, or by means of the

“Authority to Use Grant Funds/Completion of Environmental Review Requirements” for

projects that have been awarded NSP funds.

2. Categorically Excluded NOT SUBJECT TO (CENST) other related Federal laws and authorities

[§58.35(b)].

PROCEDURE a. Complete the “Categorical Exclusion Not Subject To Related Statutory Authorities” form and

the “Determination of Level of Review” form, and submit both to the NSP Environmental

Review Officer for review. It is acceptable to fax or e-mail clear, signed copies; however, mail

originals to NSP.

b. Upon receipt and review by NSP, the environmental review process is complete.

3. Environmental Assessment Level of Review (EA) (§58.36)

If a project is not Exempt or Categorically Excluded, it requires completion of an Environmental

Assessment (EA) including applicable environmental notices and comment periods described below.

PROCEDURE 1. Complete the “Determination of Level of Environmental Review” form.

2. Complete and submit the “Section 106 Project Information Form” and attachments to the SHPO and all

Indian tribes identified for your county. The SHPO has a minimum 30-day review period upon receipt

of your information. If the SHPO requests more information be submitted, a second 30-day review

period will commence upon receipt of the additional information. In some instances, this review

period may be longer. It is wise to plan for a longer review. Tribes have no specific deadline to

respond - See “Consulting with Indian Tribes During the Section 106 Process”.

3. Complete the “Environmental Assessment” and document the Finding (FONSI or FOSI). Submit the EA

and all supporting documentation to the NSP Environmental Review Officer for review. After NSP

review, publish the applicable environmental public notices.

a. If a project lies in a floodplain or wetland, the “HUD 8-Step Decision Making Process” applies.

Refer to the EA for steps in this process, and if applicable, follow and document all steps

including publishing the “Early Public Notice” (EPN - initial floodplain/wetland notice), in a non-

legal section of the newspaper of widest circulation, observing the 15-day comment period

which begins the day after publication. If comments are received in writing, the RE must

respond in writing, resolve issues, and provide copies of all correspondence to NSP. Move

forward with steps 3-6 in the HUD 8-Step Process.

b. The 7th seventh step in the HUD 8-Step Process is publication of the “Notice of Explanation”


(NOE- final floodplain/wetland notice) one time in a non-legal section of the newspaper of widest

circulation. This notice must not be published until the 15-day comment period expires for the

“Early Public Notice”. Observe the NOE 7-day comment period which begins the day after

publication. This notice must be published and the 7-day comment period expired before

publishing the “Combined Notice”, explained below.

4. Publish the “Combined Notice” (C/N - Notice of Finding of No Significant Impact/Notice of Intent to

Request Release of Funds), one time in a non-legal section of the newspaper of widest circulation.

Submit notices to agencies listed further in this chapter. Observe the 15-day local comment period

that begins the day after publication. If comments are received in writing, respond in writing, resolve

issues, and provide copies of all correspondence to NSP.

5. Once the 15-day local comment period expires, submit a copy of the publication(s), affidavit(s) of

publication, proof of distribution of the C/N to environmental agencies and the “Request for Release of

Funds and Certification” form (RROF&C) to NSP. It is acceptable to fax or e-mail clear, signed copies to

expedite the comment period; however, originals must also be mailed to NSP.

6. One day after receipt of the above information, NSP begins a 15-day State comment period where the

entire review process is assessed for compliance. On the 16th day, pending any conditions by

environmental agencies, NSP will release funds via a “Pre-Grant Award Environmental Approval

Letter” for proposed projects, and via the “Authority to Use Grant Funds/Completion of

Environmental Review Requirements” for projects awarded NSP funds.

17. OBJECTIONS TO RELEASE OF FUNDS

HUD will not approve the Request for Release of Funds before 15 calendar days have elapsed from the time

of receipt of the Request for Release of Funds/Certification form (RROF/C). All objections must be received

by HUD within the 15-day period. HUD will consider objections of a grantee's noncompliance with

environmental requirements based on any of the grounds listed below. These are the only bases upon

which HUD will not approve the Request for Release of Funds/Certification.

The certification was not in fact executed by the City of Merced Certifying Officer.

The City of Merced has failed to make one of the two findings pursuant to §58.40 or to make the

written determination as required, either a Finding of Significant Impact (FOSI) or Finding of No

Significant Impact (FONSI) to the environment.

The City of Merced has omitted one or more of the steps for the preparation and completion of an

environmental review including publishing applicable notices and observing required comment

periods, and completion of an Environmental Assessment (EA).

Another Federal agency has submitted a written finding that the project is unsatisfactory from the

standpoint of environmental quality.

The City of Merced has omitted one or more of the steps for the preparation and completion of an

Environmental Impact Statement (EIS).

The City of Merced or other participants in the development process have committed funds, incurred

costs, or undertaken activities not authorized by 24 CFR Part 58.75 before the release of funds and

approval of the environmental certification by XXX.

No opportunity was given to the Advisory Council on Historic Preservation or its Executive Director


to review the effect of the project on a property listed on the National Register of Historic Places or

found to be eligible for such listing by the Secretary of the Interior.

With respect to a project where environmental circumstances cause a reevaluation of assessment

findings, the use of prior environmental impact statements, or the use of supplemental impact

statement, the grantee has failed to include in the Environmental Review Record (ERR) the written

decision required, or its decision is not supported by facts specified by the objecting party.

If no objections are received, HUD will issue a “Pre-Grant Award Environmental Approval” letter for

applications not yet funded, or the notice of “Authority to Use Grant Funds/Completion of Environmental

Review Requirements”, for projects that have been awarded NSP funds.

18. CONDITIONS FOR APPROVAL

When reviewing project activities for potential adverse environmental impacts, the City of Merced may

determine that, certain conditions are met to alleviate or minimize the effects during the course or at the

end of a project.

Once the environmental review process is complete, including the identification of any environmental

conditions for approval and how they will be implemented, HUD would issue environmental approval

(release of funds) with the condition that certain measures or controls be included in design plans and

construction contract documents. Evidence that conditions were met would be reviewed during the project

and/or at the project close out monitoring. Authorized environmental agencies, local zoning and codes, and

project architects/engineers are resources to consult to determine if a project requires conditions be met

later in a project, after HUD issues environmental approval, as well as how to address conditions so that

compliance is achieved.


FORMS REFERENCED IN CHAPTER

Certification of Exemption for HUD funded projects

Certification of Categorical Exclusion (not subject to 58.5)

Statutory Checklist

Instructions for Completing the Statutory Worksheet

Compliance Documentation Checklist (58.6)

Environmental Assessment

Public Notice – Notice of Intent to Request Release of Funds

Combined Public Notice – Finding of No Significant Impact and Notice of Intent to Request Release of

Funds

Request for Release of Funds and Certification (HUD form 7015.15)

Authority to Use Grant Funds (HUD form 7015.16)

Instructions for Completing HUD form 1015.15

Insurance Coverage (Flood)

Deficiency Notice

OTHER RESOURCES REFERENCED

Environmental Websites

Environmental Review Requirements Flowchart

24 CFR 51, Environmental Criteria and Standards

24 CFR 55, Floodplain Management

24 CFR 58, Environmental Review Procedures for Entities Assuming HUD Environmental

Responsibilities


L. FAIR HOUSING AND EQUAL OPPORTUNITY IN HOUSING

Recipients must comply with all of the following Federal laws, executive orders, and regulations pertaining

to fair housing and equal opportunity in housing. They are:

Title VI of the Civil Rights Act of 1964, As Amended (42 U.S.C. 2000d et seq.): This Act states that no

person may be excluded from participation in, denied the benefits of, or subjected to discrimination

under any program or activity receiving Federal financial assistance on the basis of race, color, or

national origin. The regulations implementing the Title VI Civil Rights Act provisions for HUD

programs may be found in 24 CFR Part 1.

The Fair Housing Act (42 U.S.C. 3601-3620): This Act prohibits discrimination in the sale or rental of

housing, the financing of housing or the provision of brokerage services against any person on the

basis of race, color, religion, sex, national origin, handicap, or familial status. Furthermore, section

104(b)(2) of the Act requires that each grantee certify to the secretary of HUD that it is affirmatively

furthering fair housing. The certification specifically requires grantees to conduct a fair housing

analysis, develop a fair housing plan, take appropriate actions to overcome the effects of any

impediments identified, and maintain records on the analysis, plan, and actions in this regard. Fair

Housing Act implementing regulations for HUD programs may be found in 24 CFR Part 100-115.

Equal Opportunity in Housing (Executive Order 11063, as amended by Executive Order 12259): This

Executive Order prohibits discrimination against individuals on the basis of race, color, religion, sex,

or national origin in the sale, rental, leasing, or other disposition of residential property, or in the use

or occupancy of housing assisted with Federal funds. Equal Opportunity in Housing regulations may

be found in 24 CFR Part 107.

Age Discrimination Act of 1975, As Amended (42 U.S.C. 6101): This Act prohibits age discrimination

in programs receiving Federal financial assistance. Age Discrimination Act regulations may be found

in 24 CFR Part 146.

The City of Merced has additional expectations of NSP recipients, as follows:

Adopt any existing Fair Housing Ordinances in their respective jurisdictions

Adopt any existing Affirmative Marketing Plan developed by their respective jurisdictions

Implement activities and projects consistent with the Analysis of Impediments to Fair Housing Choice (AI), specifically the appropriate actions identified to overcome the effects of impediments, in the most current Consolidated Plan

M. AFFIRMATIVE MARKETING NSP recipients and developers/owners/sponsors must create an affirmative marketing plan for all housing

with five or more NSP-assisted units. The plan will be reviewed for completeness in the following areas:

Compliance with fair housing laws (for example: use of the Fair Housing logo, or equal opportunity

language)

Detailed description of what recipients will do to affirmatively market housing assisted with NSP

funds

Detailed description of what recipients will do to inform persons not likely to apply for housing

without special outreach


Documentation of actions taken to affirmatively market NSP-assisted units and to assess marketing

effectiveness

Additionally, recipients have to describe how they will monitor the success of their affirmative marketing

efforts, including the corrective actions that will be taken where affirmative requirements are not met and/or

successful.

The most recently approved affirmative marketing plan HUD Form 935.2 template is available at the

following hyperlink: http://portal.hud.gov/hudportal/documents/huddoc?id=935-2a.pdf

N. HANDICAPPED ACCESSIBILITY

The NSP Program requires adherence to the three regulations governing the accessibility of federally

assisted buildings, facilities, and programs:

Americans with Disabilities Act (42 U.S.C. 12131; 47 U.S.C. 155, 201, 218, and 225): This Act provides

comprehensive civil rights to individuals with disabilities in the areas of employment, public

accommodations, state and local government services, and telecommunications. The Act, also

referred to as the ADA, also states that discrimination includes the failure to design and construct

facilities (built for first occupancy after January 26, 1993) that are accessible to and usable by

persons with disabilities. The ADA also requires the removal of architectural and communication

barriers that are structural in nature in existing facilities. Removal must be readily achievable, easily

accomplishable, and able to be carried out without much difficulty or expense.

Fair Housing Act (24 CFR Part 100): Multi-family dwellings must also meet the design and

construction requirements at 24 CFR 100.205, which implement the Fair Housing Act (42 U.S.C.

3601-19).

Section 504: Section 504 of the Rehabilitation Act of 1973 (24 CFR Part 8) prohibits discrimination

in federally assisted programs on the basis of handicap. Section 504 imposes requirements to ensure

that "qualified individuals with handicaps" have access to programs and activities that receive

Federal funds. The specific requirements under Section 504 are summarized in Table 9-1.

For any recipients principally involved in housing or social services, all of the activities of the

agency—not just those directly receiving Federal assistance—are covered under Section

504. However, under Section 504, recipients are not required to take actions that create

undue financial and administrative burdens or alter the fundamental nature of the program.

Contractors and vendors are subject to Section 504 requirements only in the work they do

on behalf of a recipient.

The ultimate beneficiary of the Federal assistance is not subject to Section 504 requirements.

http://portal.hud.gov/hudportal/documents/huddoc?id=935-2a.pdf


Table 2: Section 504 Requirements

Removal of Physical Barriers

For new construction of multi-family projects, 5 percent of the units in the project (but not less than

one unit) must be accessible to individuals with mobility impairments, and an additional 2 percent

of the units (but not less than one unit) must be accessible to individuals with sensory impairments.

The Section 504 definition of substantial rehabilitation multi-family projects includes construction

in a project with 15 or more units for which the rehabilitation costs will be 75 percent or more of

the replacement cost. In such developments, 5 percent of the units in the project (but not less than

one unit) must be accessible to individuals with mobility impairments, and an additional 2 percent

(but not less than one unit) must be accessible to individuals with sensory impairments.

When rehabilitation less extensive than substantial rehabilitation is undertaken, alterations must, to

the maximum extent feasible, make the unit accessible to and usable by individuals with handicaps,

until 5 percent of the units are accessible to people with mobility impairments. Alterations to

common spaces must, to the maximum extent feasible, make the project accessible.

Accessible units must be, to the maximum extent feasible, distributed throughout projects and sites

and must be available in a sufficient range of sizes and amenities so as not to limit choice.

Owners and managers of projects with accessible units must adopt suitable means to assure that

information regarding the availability of accessible units reaches eligible individuals with handicaps.

They also must take reasonable non-discriminatory steps to maximize use of such units by eligible

individuals.

When an accessible unit becomes vacant, before offering the unit to a non-handicapped individual,

the owner/manager should offer the unit: first, to a current occupant of the project requiring the

accessibility feature; and second, to an eligible qualified applicant on the waiting list requiring the

accessibility features.

The usual standards for ensuring compliance with Section 504 are the Uniform Federal Accessibility

Standards (UFAS), although deviations are permitted in specific circumstances.

Provide Program Accessibility

Individuals with handicaps must be able to find out about, apply for, and participate in Federally

assisted programs or activities.

Special communication systems may be needed for outreach and ongoing communication (e.g.,

Telecommunications Devices for the Deaf (TDD), materials on tape or in Braille, accessible locations

for activities and meetings).

Policies and procedures must be non-discriminatory (e.g., housing providers may not ask people

with handicaps questions not asked of all applicants, screen individuals with handicaps differently,

or assess an individual's ability to live independently).

Make Employment Accessible

Employers must not discriminate.


Employers must remove physical and administrative barriers to employment.

Employers must make reasonable accommodations for individuals with known handicaps (e.g., job

restructuring, providing readers or sign interpreters, making facilities accessible).

Administrative Requirements

If recipients have 15 or more employees, they must

Designate a Section 504 Coordinator, and

Notify program participants and employees of non-discrimination policies.

All recipients must conduct self-evaluations of compliance with Section 504.

O. LEAD BASED PAINT REGULATIONS

All units in a project assisted with NSP funds and built prior to 1978 must comply with the Lead Safe

Housing Rule (LSHR) at 24 CFR Part 35, implementing Title X of the 1992 Housing and Community

Development Act. This regulation has been in effect since September 15, 2000. The lead-based paint

regulation at 24 CFR Part 35 consolidates all lead-based paint requirements for HUD-assisted housing.

The purpose of the regulation is to identify and address lead-based paint hazards before children are

exposed to lead. The regulation is divided into subparts. Subparts that apply generally to the NSP program

are listed below. Which Subpart and requirements are applicable to each of the City’s NSP programs depends

on the activity and the amount of Federal funding:

Subpart A: Disclosure. This applies to activities involving selling or leasing transactions as well as

situations when dwellings are evaluated for lead-based paint and measures are taken to mitigate or

remove lead-based paint and the hazards associate with it.

In particular, it is applicable to the Soft Second Mortgage program (e.g., when homes are purchased)

and the Acquisition and Rehabilitation program (e.g., when homes are rehabbed and then sold to

buyers).

Subpart B: General Requirements and Definitions. This provides an overview of the regulation and

should be reviewed by NSP staff. It applies to program activities when any of the lead-based paint

requirements are triggered.

Attachment 10-1 is a Lead Safe Housing Rule – Applicability Form (HUD 9-03) that can be used to

determine if the property is exempt from the regulations.

Attachment 10-2 is a Lead Safe Housing Rule Checklist for General Compliance Documentation.

Subpart R: Methods and Standards for Lead-Based Paint Hazard Evaluation and Reduction. This

Subpart describes how evaluations must be conducted and the measures required during activities to

reduce lead-based paint and lead-based paint hazards.

It applies when requirements are triggered under Subparts J, K, and M.


Subpart J: Rehabilitation. This applies to rehabilitation activities in properties built prior to 19778.

The requirements become more stringent based on the amount of Federal funds expended. In

particular, these requirements are applicable to the Acquisition and Rehabilitation program and the

Soft Second Mortgage program to the extent that soft second mortgage funds are used for

rehabilitation.

Subpart K: Acquisition, Leasing, Support Services, and Operations. It is applicable to the acquisition

of properties under the Acquisition and Rehabilitation program.

Subpart M: Tenant-Based Rental Assistance. Information on this Subpart is included in this chapter

as part of the overview of lead-based paint requirements, but it is not applicable under the activities

currently planned under the City’s NSP programs.

Note: Activities conducted under the Demolition program do not trigger the lead-based paint regulations;

there are no occupants.

Note: Redevelopment activities involving new construction do not trigger the lead-based paint regulations.

Exhibit 4-1 on the next page provides a summary of the requirements, by activity and amount. The exhibit

identifies the HUD’s Approach to addressing lead-based paint in housing, the five categories of requirements,

and options that grantee may choose if they determine that the option is more efficient and/or cost-effective

to implement. The categories are as follows: notification, lead hazard evaluation, lead hazard reduction,

ongoing maintenance, and environmental intervention blood lead level. The Approach, categories, and

options are explained further in the chapter.

City of Merced DRAFT NSP3 Policies and Procedures Manual 111

Exhibit 4-1: Summary of Lead-Based Paint Requirements by Activity

Homeowner and Rental Property Rehabilitation

(Subpart J)

Tenant Based Rental

Assistance

(Subpart M)

Homebuyer (no

rehabilitation)

(Subpart K)

<$5,000 $5,000 - $25,000 >$25,000

Approach to Lead

Hazard Evaluation and

Reduction

1. Do no harm 3. Identify and

control lead

hazards

4. Identify and abate

lead hazards

2. Identify and stabilize

deteriorated paint

2. Identify and stabilize

deteriorated paint

Notification Yes Yes Yes Yes Yes

Lead Hazard Evaluation Paint Testing Paint Testing and

Risk Assessment

Paint Testing and

Risk Assessment

Visual Assessment Visual Assessment

Lead Hazard Reduction Repair surfaces

disturbed during

rehabilitation

Interim Controls Abatement

(Interim Controls on

exterior surfaces not

disturbed by

rehabilitation)

Paint Stabilization Paint Stabilization

Safe work

practices

Clearance

Safe work

practices

Clearance

Safe work practices

Clearance

Safe work practices

Clearance

Safe work practices

Clearance

Ongoing Maintenance Rental Only Rental Only Rental Only Yes No

EIBLL Requirements No No No Yes No

Options Presume lead-

based paint

Use safe work

practices on all

surfaces

Presume lead-

based paint and/or

hazards

Use standard

treatments

Presume lead-based

paint and/or hazards

Abate all applicable

surfaces

Test deteriorated paint.

Use safe work practices

only on lead-based

paint surfaces.

Test deteriorated

paint.

Use safe work

practices only on lead-

based paint surfaces.


SUMMARY OF REQUIREMENTS

HUD has defined four approaches to addressing lead-based paint, which apply to NSP-funded

projects: See the Exhibit 4-2 for more information about each approach.

Approach 1: Do No Harm

Approach 2: Identify and Stabilize Deteriorated Paint

Approach 3: Identify and Control Lead-Based Paint Hazards

Approach 4: Identity and Abate Lead-Based Paint Hazards

Exhibit 4-2: Four Approaches to Implementing

Lead Hazard Evaluation and Reduction

APPROACH 1. DO NO HARM

Lead Hazard Evaluation Lead Hazard Reduction Options

Paint testing performed on surfaces to be disturbed.

Repair surfaces disturbed during work.

Safe work practices used when working on areas identified as lead-based paint.

Clearance performed.

Presume lead-based paint is present and use safe work practices on all surfaces being disturbed.

APPROACH 2. IDENTIFY AND STABILIZE DETERIORATED PAINT


Visual assessment performed to identify deteriorated paint.

Paint stabilization of identified deteriorated paint.

Safe work practices used.


Perform paint testing on deteriorated paint. Safe work practice requirements only apply to lead-based paint.

APPROACH 3. IDENTIFY AND CONTROL LEAD HAZARDS



Risk assessment performed on entire dwelling.

Interim controls performed on identified hazards.


Clearance performed

Presume lead based paint and/or lead based paint hazards are present and perform standard treatments.


APPROACH 4. IDENTIFY AND ABATE LEAD HAZARDS



Risk assessment performed on entire dwelling.

Abatement performed on identified hazards.

Interim controls performed on identified hazards on the exterior that are not disturbed by rehabilitation.



Presume lead-based paint and/or lead-based paint hazards are present and perform abatement on all applicable surfaces – deteriorated, impact, friction, chewable surfaces, and surfaces to be disturbed.

Types of Requirements

The lead-based paint requirements established by the regulation fall into the five major categories

listed below. These five activities are summarized in Exhibit 10-3 and elaborate on the specific lead

safe housing requirements for each activity as summarized earlier in Exhibit 10-1.

Notification

Recipients must document and submit records of the four notification requirements listed below.

1. Lead Hazard Information Pamphlet. Occupants, owners, and purchasers must receive

the EPA/HUD/Consumer Product Safety Commission (CPSC) lead hazard information

pamphlet, or an EPA-approved equivalent.

2. Disclosure. Property owners must provide purchasers and lessees with available

information or knowledge regarding the presence of lead-based paint and lead-based paint

hazards prior to selling or leasing a residence. NSP recipients must document that the

relevant disclosure has been provided.

3. Notice of Lead Hazard Evaluation or Presumption. Occupants, owners, and

purchasers must be notified of the results of any lead hazard evaluation work or the

presumption of lead-based paint or lead hazards.

4. Notice of Lead Hazard Reduction Activity. Occupants, owners, and purchasers must

be notified of the results of any lead hazard reduction work.

Lead Hazard Evaluation REQUIREMENT

As noted earlier, the evaluation activity required depends on the nature of the activity funded and the

amount of Federal funding. Evaluation methods include visual assessments, paint testing, and risk

assessments. Each of these evaluation activities must be performed by properly trained and

accredited professionals.


ACTION

To appropriately comply with the requirements, the City must establish the date the dwelling unit

was constructed. The evaluation of pre-1978 housing varies depending on the program:

Homebuyer program: Visual inspection

Acquisition and Rehabilitation Program: Paint test if < $5,000; > than $5,000 paint

test and risk assessment

Lead Hazard Reduction Requirement

The required lead hazard reduction activity depends on the nature of the activity funded and the

amount of Federal funding. Reduction methods allowed include paint stabilization, interim controls,

standard treatments, and abatement. All lead hazard reduction work must be done by properly

trained professionals. Certain work practices are prohibited (see Exhibit 10–x). Clearance must be

performed by a certified clearance examiner to demonstrate that hazards have been properly

addressed.

The State of California maintains a list of state certified abatement contractors. Recipients are

encouraged to select their contractors from this list when conducting abatement. Additionally, all

reports related to reduction and abatement activities must be submitted to The City for record

keeping purposes.

PROCEDURE

See Exhibit 10-3: Summary of Required Activities to Address Lead-Based Paint

Ongoing Maintenance

The Housing Rehab Specialist is responsible for Rental Properties. Ongoing maintenance is required

for rental properties. Ongoing maintenance includes periodic visual assessments to determine if

lead-based paint hazards have reappeared.

All reports related to ongoing maintenance must be maintained on file by recipients and made

available to The City of Merced upon request for record-keeping purposes.

Response to Children with Environmental Intervention Blood Lead Levels (EIBLL)

When a poisoned child with an environmental intervention blood lead level is identified in some

types of properties, the HUD’s regulation prescribes certain activities. Exhibit 4-3 provides a

summary of required activities.


Exhibit 4-3: Summary of Required Activities to Address Lead-Based Paint

Category Required Activities

Notification All of the following notices must be provided as

appropriate:

Pamphlet

Disclosure

Notice of Lead Hazard Evaluation or

Presumption

Notice of Lead Hazard Reduction Activity

Lead Hazard Evaluation One or more of the following may apply:

Visual Assessment*

Paint Testing

Risk Assessment (or Lead Hazard Screen)

Lead Hazard Reduction One or more of the following may apply:

Paint Stabilization

Interim Controls (or Standard Treatments)

Abatement

The following always apply:

Safe Work Practices

Clearance

Ongoing Maintenance This requirement may apply:

Inspect and maintain lead hazard reduction

work.

Response to Children with

Environmental Intervention Blood

Lead Level (EIBLL)

These requirements may apply. If they do, all of

the following steps must be taken:

Sharing and Comparing Information

Risk Assessment

Interim Controls or Abatement

Notices and Disclosure

* A visual assessment is not considered a form of evaluation in the regulation; therefore, there

is no requirement for a Notice of Lead Hazard Evaluation associated with this activity.


Exhibit 4-4 provides a list of recommended and prohibited practices for addressing lead-based paint.

Exhibit 4-4: Lead Paint – Recommended and Prohibited Practices

Safe Treatment Methods

Safe treatment methods control the spread of dust and debris. They should be preceded by proper

containment practices and followed-up with proper clean-up procedures. Examples of safe treatment

methods include:

Wet scraping or wet sanding

Chemical stripping on- or off-site (except methylene chloride)

Replacing painted components

Scraping with an infra-red or coil type heat gun with temperatures below 1,100 degrees Fahrenheit

Vacuum-sanding using a sander equipped with a High Efficiency Particle Air (HEPA) filter

Using a HEPA vacuum needle gun

Contained hydroblasting or high pressure wash with a HEPA vacuum

Abrasive sanding with a HEPA vacuum

Covering the painted surface with durable materials (such as wallboard) with joints sealed and

caulked.

Prohibited Methods

Prohibited methods can spread lead dust or lead fumes.

Open flame burning or torching

Machine sanding or grinding without HEPA exhaust

Uncontained hydroblasting or high pressure wash

Abrasive blasting or sandblasting without a HEPA vacuum exhaust

Heat guns operating above 1,100 degrees Fahrenheit

Chemical paint strippers containing methylene chloride

Dry scraping (except around electrical outlets or in conjunction with heat guns).

For more information about safe and prohibited methods, see the 1995 HUD Guidelines for the

Evaluation and Control of Lead-Based Paint in Housing.


Compliance with the Lead Safe Housing Rule

Penalties [24 CFR 35.170]

Failure to comply with the lead-based paint requirements will be subject to sanctions

authorized under the Federal funding programs providing assistance to the property, and

violations may be subject to other penalties available under state or local law.

Notifying owners, purchasers, or occupants of possible lead-based paint hazards does not

relieve the City of the responsibilities under the lead-based paint regulation.

Addressing Other Regulations and Laws [24 CFR 35.145]

NSP recipients must comply with other regulations—Federal, State, tribal, and local—that apply to

lead-based paint hazard evaluation and reduction. When multiple regulations cover a program

activity, recipients must comply with the most stringent requirement.

All lead-based paint activities must be performed in accordance with other applicable Federal laws

and authorities. For example, the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.),

OSHA worker safety regulations (29 CFR 1910.1200 and 29 CFR 1926.62), and other environmental

laws and authorities cover activities related to lead-based paint evaluation and hazard reduction.

Record-keeping [24 CFR 35.175]

There are numerous records that NSP recipients must keep to verify that they conducted the

required lead hazard response activities.

Lead Hazard Information Pamphlet. A record of the distribution of the lead hazard

information pamphlet is recommended, but not required.

Notification, Evaluation, and Reduction Reports. NSP recipients must keep a copy of each

notification, lead hazard evaluation report, lead hazard reduction documentation (such as

job specifications), and clearance or abatement report for at least three years, or for such

other period as specified in the program regulations.

Again, all notifications and reports related to lead-based paint including lead hazard

reduction and abatement activities must be submitted to the City for record-keeping

purposes.

Ongoing Maintenance Records. Grantees must keep ongoing maintenance records and

records of relevant building operations for use during reevaluations.

All reports related to ongoing maintenance must be maintained by NSP recipients

and made available to the City for inspection upon request


P. URA – ACQUISITION AND RELOCATION

Whenever Federal funds are used in a project involving the acquisition,

rehabilitation, or demolition of real property, a Federal law known as the Uniform

Relocation Assistance and Real Property Acquisition Policies Act of 1970 (the

Uniform Act or URA) generally applies. The Uniform Act, passed by Congress in

1970, is a Federal law that establishes minimum standards for Federal assistance

to programs and projects that require the acquisition of real property (real

estate) or that displace persons from their homes, businesses, or farms. In

essence, the requirements help ensure that the purchase process is fair and

equitable for owners and does not create undue hardship to tenants.

In some cases, the use of NSP funds in a project involving the demolition or

conversion of low and moderate income dwelling units may also trigger another

Federal law under Section 104(d) of the Housing and Community Development

Act of 1974 (Section 104(d)). This Act also provides for tenant protections when NSP funds are used for the project. In

addition, new laws have been passed to address concerns about tenant rights and protections in foreclosed properties.

These include the American Recovery and Reinvestment Act of 209 (Recover Act) and the Protecting Tenants at

Foreclosure Act of 2009 (PTAF).

This chapter provides a general understanding of the requirements under the Federal laws as applicable to NSP and

identifies where additional information and assistance may be obtained. It is not intended as a complete review of all the

Federal requirements and procedures. Staff engaged in acquisition of properties must become familiar with the

details of the requirements in the three Acts cited above.

PROPERTY ACQUISITIONS USING NSP FUNDS

This section provides a high-level overview of the Uniform Relocation Assistance and Real Property Acquisition Policies

Act of 1970 (Uniform Act or URA) and then discusses the Uniform Act more specifically as it pertains to the acquisition of

property using NSP funds.

OVERVIEW OF THE UNIFORM ACT

The Uniform Act’s protections and assistance are triggered when Federal funds are used in a project for acquisition,

rehabilitation, or demolition of real property. The regulation and HUD policy implementation guidance is found at:

49 CFR Part 24, et al are the government-wide regulations that implement the URA

HUD Handbook 1378 provides HUD policy and guidance on implementing the URA and 49 CFR Part 24 for HUD

funded programs and projects

The Uniform Act objectives, as they pertain to the acquisition of property, are to provide uniform, fair, and equitable

treatment of persons whose real property is acquired and to encourage and expedite acquisition by agreement and

without coercion. URA requirements related to property acquisition are discussed here and most directly affect the City’s

Acquisition and Rehabilitation program.

The Uniform Act protections of displaced tenants are discussed in the second half of this chapter.

To ensure that accurate

documentation is collected and proper

compensation is provided to

displaced/relocated persons and

businesses, the City of Merced Real

Estate Section should be contacted

before conducting any acquisition

activities that appear to require the

displacement or relocation of persons

or businesses. Failure to do so may

delay the start of the project, create

financial liabilities, and/or could result

in termination of the project.


For the Merced NSP

Program, all property

will be acquired using

“voluntary acquisition.”

VOLUNTARY VERSUS INVOLUNTARY ACQUISITIONS

The Uniform Act identifies two types of acquisitions that can take place using Federal financial resources—“voluntary”

and “involuntary.” The acquisition method reflects the nature and the extent to which the acquiring party is willing to

pursue ownership of the real property to achieve the projects objectives.

Voluntary Acquisition. This is typically used when Federal resources are made available to development entities

for affordable housing activities and occurs when the buyer does not have, or will not use, the power of eminent

domain or condemnation to acquire the property. In these cases, the seller willingly makes the property available

on the open market, and the buyer is free to negotiate for its purchase. This is clearly a voluntary, or “arm’s length,

transaction, which means that the sale of property is a “transaction between unrelated entities or individuals

acting in their own interests.”

Involuntary Acquisition. This is used by government agencies and involves the need to acquire property to meet a

pressing or urgent public need, such as development of roads, public infrastructure, or schools. This type of

acquisition will utilize the government’s power of eminent domain or condemnation, and must meet specific

requirements regarding the acquisition process.

An important requirement that must be met in voluntary acquisition for URA standards is the provision, in writing, to the

seller of the estimate of market value and statement that eminent domain or condemnation will not be utilized in the

event that an agreement cannot be reached. The purchase offer made to the seller of real property may be less than fair

market value, and the sale terms can be negotiated, but the seller must be fully informed.

ACQUISITION PROCESS

Acquisition of foreclosed properties financed with NSP funds are subject to both the URA (49

CFR Part 24, et al) and the requirements set forth in the NSP Notice that was published in the

Federal Register on October 6, 2008. Merced anticipates that all acquisitions using NSP

funds will be voluntary acquisitions under the applicable regulations of 49 CFR 24.101(b).

In order to utilize NSP funds as quickly as possible to stabilize neighborhoods experiencing high rates of foreclosures and

within the time and regulatory constraints imposed by the Act, the City of Merced City Manager or City Manager’s

designee is authorized to enter into purchase contracts to acquire and sell properties, subject to the review of the City

Attorney, that are recommended by the City's NSP Evaluation and Selection Committee.

In order for an acquisition to qualify for NSP assistance, the City, prior to the execution of a contract of sale, must ensure

that the following requirements are met:

INFORM THE OWNER

The owner must be informed, in writing, of the following:

The “buyer” (the City of Merced or other eligible funded entity such as a prospective homebuyer) does not

have, or will not use the power of eminent domain (condemnation) and will not acquire the property if

negotiations fail to result in an amicable agreement. (see 49 CFR 24.101(b)(1) & (b)(2))

The “market value” of the property, which is specifically identified, does not establish the purchase price;

the price can be determined through negotiation.

Any title deficiencies, liens, or encumbrances on the property must be cleared or satisfied by the seller

prior to closing or contract of sale.

The purchase is “voluntary”, and the seller is not eligible for relocation assistance under the URA.


There may be cases where an existing contract or option was executed prior to knowing that Federal financial assistance

would be part of the project funding. In these cases, the seller must be provided the opportunity to withdraw from the

agreement after being informed of this information. Additionally, any current occupants or those who were required to

move to facilitate the sale of the property may be eligible for relocation assistance under URA and subject to the

protections in the Protecting Tenants at Foreclosure Act of 2009 (PTAF) .

PERFORM A PROPERTY APPRAISAL The URA does not require voluntary acquisitions to have an appraisal conducted, but the NSP Notice requirements state

that appraisals are required when grantees acquire foreclosed upon homes and residential properties.

In addition, although the URA criteria for appraisals refer to qualifications for review appraisers, an NSP grantee is not

required to have a review appraisal performed in connection with voluntary acquisitions under 49 CFR 24.101(b).

More information on appraisals is provided in an upcoming subsection.

NEGOTIATE THE MAXIMUM PURCHASE PRICE As required by the Act and NSP Notice, the City's purchase price or the purchase of a property to be acquired by a

prospective homebuyer with NSP assistance must be at least a 1% discount from the current appraised market value of

the property. Further, under City rules the purchase price for a single family home may not be greater than $148,000.

MARKET VALUE DETERMINATION As mentioned above, while the URA regulations do not specifically require appraisals in connection with voluntary

acquisitions, the NSP Notice requires appraisals to be performed with respect to the acquisition of foreclosed upon

homes and residential properties, even though they may be considered voluntary under the URA. The appraisal is

necessary to determine the maximum price when adjusted by the discount rate.

THE APPRAISAL The following are requirements related to the appraisal of a property under consideration for voluntary acquisition:

The appraisal must meet the URA definition of an appraisal (see 49 CFR 24.2(a)(3) and the five following

requirements (see 49 CFR 24.103(a)(2)):

An adequate description of the physical characteristics of the property being appraised (and, in the case of

a partial acquisition, an adequate description of the remaining property), including items identified as

personal property, a statement of the known and observed encumbrances, if any, title information,

location, zoning, present use, an analysis of highest and best use, and at least a 5-year sales history of the

property

All relevant and reliable approaches to value may be used. If the appraiser uses more than one approach,

the City needs to conduct an analysis and reconcile the approaches to value that is sufficient to support the

appraiser's opinion of value.

A description of comparable sales, including a description of all relevant physical, legal, and economic

factors such as parties to the transaction, source and method of financing, and verification by a party

involved in the transaction

A statement of the value of the real property to be acquired and, for a partial acquisition, a statement of

the value of the damages and benefits, if any, to the remaining real property, where appropriate

The effective date of valuation, date of appraisal, signature, and certification of the appraiser


The appraisal must have been completed within 60 days of the offer made for the property.

The appraiser must disregard any decrease or increase in the fair market value of the real property caused by the

project for which the property is to be acquired or by the likelihood that the property would be acquired for the

project, other than that due to physical deterioration within the reasonable control of the owner.

If the owner of a real property improvement is permitted to retain it for removal from the project site, the amount

to be offered for the interest in the real property to be acquired cannot be not less than the difference between the

amount determined to be just compensation for the owner's entire interest in the real property and the salvage

value (defined at §24.2(a)(24)) of the retained improvement.

HUD’s guide to preparing an appraisal scope of work under the URA is available in HUD Handbook 1378 - Appendix 19 or

through the following link: http://www.hud.gov/offices/adm/hudclips/handbooks/cpdh/1378.0/1378x19CPDH.pdf.

CITY REQUIREMENTS

As the NSP grantee, the City must ensure that the appraisal requirements identified above are met, but it has additional

responsibilities as discussed below:

Merced must establish criteria for determining the minimum qualifications and competency of appraisers.

Qualifications must be consistent with the scope of work for the assignment. It must review the experience,

education, training, certification/licensing, designation(s) and other qualifications of appraisers, and use only

those determined by the City to be qualified.

If Merced uses a contract (fee) appraiser to perform the appraisal, the appraiser must be State licensed or certified

in accordance with Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA)

(12 U.S.C. 3331 et seq. ).

As dictated by the NSP and HUD Notice, the City may not rely upon appraisals that are older than 60 days from the

date of the offer to purchase.

Appraisals for properties under consideration will be available for public disclosure or inspection. The City will not

utilize exemptions from Section 119.07(1) F.S., which identifies exemptions from the inspection and copying of

public records.

Merced must ensure that the owner is informed in writing of what the City believes to be the market value of the

property. (In conjunction with this information, the City needs to explicitly state that it will not acquire the

property if negotiations fail to result in an amicable agreement.)

TENANT RIGHTS UNDER THE NSP

In addition to the requirements that help ensure a fair and equitable acquisition process for owners, the Uniform Act also

provides for protections for tenants and, in particular, requires relocation assistance in certain situations when tenants

are displaced due to the acquisition of residential properties and/or the demolition or conversion of housing.

Tenants displaced by NSP-funded activities who are protected by the Uniform Act may also benefit from the

requirements under additional Federal regulations. The regulations in this section are as follows:

Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (Uniform Act or URA)

Section 104(d) of the Housing and Community Development Act (Section 104(d))

http://www.hud.gov/offices/adm/hudclips/handbooks/cpdh/1378.0/1378x19CPDH.pdf.


American Recovery and Reinvestment Act,

Protecting Tenants at Foreclosure Act of 2009 (PTAF)

Merced’s NSP guidelines for most, but not all, of its NSP programs stipulate that properties must be vacant to receive

funding for certain activities:

Second soft mortgage program. In order to receive NSP mortgage and closing cost assistance, the property must be

vacant at the time of listing and remain vacant until the prospective homebuyer acquires the property.

Acquisition and rehabilitation program – single family properties. In order to be considered for purchase,

residential single family properties must be vacant at time of listing and remain vacant until the property is

acquired by the City or a third party.

Acquisition and rehabilitation program – multi-family properties. In order to be considered for purchase, multi-

family rental housing units may be vacant. However, the purchase of occupied units is permitted, provided the

tenants meet income level requirements.1

Demolition program. While it is unlikely that a property meeting the definition of “blighted” (that is uninhabitable

or unsafe) would have tenants, there are no stipulations in Merced’s guidelines that the property must be vacant.

Redevelopment program. Merced’s NSP guidelines defines construction of housing on a demolition program site

as the redevelopment of vacant land.

In the event that Merced’s NSP funds are used in the acquisition, demolition, or conversion of a residential property with

tenants, this section summarizes the essential actions that the City of Merced must take to ensure that those tenants’

rights are protected.

As a recipient of CDBG funds, The City of Merced is required to and has developed a Residential Anti-displacement and

Relocation Assistance Plan (RARAP) that addresses relocation assistance and how the City will mitigate displacement of

occupants.

UNIFORM RELOCATION ASSISTANCE AND REAL PROPERTY ACQUISITION POLICIES ACT OF 1970 (UNIFORM

ACT OR URA)

The objectives of the URA as they pertain to tenants include the following: 2

To provide uniform, fair, and equitable treatment of persons who are displaced in connection with Federally

funded projects

To ensure relocation assistance is provided to displaced persons to lessen the emotional and financial impact of

displacement

To ensure that no individual or family is displaced unless decent, safe, and sanitary (DSS) housing is available

within the displaced person's financial means

To help improve the housing conditions of displaced persons living in substandard housing

1 Section II.H.1 of the Implementing Order. Section II.H.1 also states that the priority for tenancy will be given to existing tenants,

provided they meet the eligibility requirements of the NSP Homebuyer Assistance Program. Preference will also be given to those households evicted from foreclosed-upon properties.

2 Resources available online at HUD’s Real Estate Acquisition and Relocation website (http://www.hud.gov/relocation) include

Planning and Budgeting Relocation Costs for HUD-Funded Projects.


The URA provides for payment of relocation assistance when certain persons are permanently displaced from their

homes as a direct result of NSP assisted acquisition, demolition, or rehabilitation. Displacement occurs only if the person

is required to leave the project. Permanent moves within a project are not considered displacement. Eligibility for

relocation assistance is triggered by initiation of negotiations, generally a written agreement that commits the City or

third party receiving assistance from the City, to purchase or finance the purchase, of a property. Though technically

eligible for relocation assistance, only persons who are displaced must receive compensation. Displacement is triggered

when:

A tenant is required by the owner to permanently move (including an owner’s refusal to renew a lease)

The City or the owner fail to provide timely required notices to the tenant; or

The owner fails to pay the actual, reasonable out of pocket expenses for a temporary move or because the

conditions of the temporary move are unreasonable.

The tenant is not provided the opportunity to lease a suitable, affordable unit in the property

In the case of acquisitions of an occupied foreclosed property, Merced issues the following notices, depending on the

circumstances of the property:

A General Information Notice (GIN): Informs persons in a property of a possible project, including potential

acquisition, demolition, and/or rehabilitation.

A Move in Notice: Informs persons moving into a potential property after the an agreement is reached that they

may have to move and will NOT be entitled to relocation assistance.

Notice of Non-Displacement: Informs persons who will remain in the property after NSP assistance is provided of

their rights and the terms and conditions of remaining in the property.

Temporary Relocation Notice: Informs persons who will be temporarily relocated of their rights and the

conditions of their temporary move.

Notice of Eligibility for Relocation Assistance: Informs persons who will be displaced of their rights and levels of

financial assistance.

90 Day and 30 Day Notices: Informs displaced persons of the day by which they must vacate the property.

Normally displaced persons may not be given less than 90 days to vacate.

Section 104(d) of the Housing and Community Development Act (Section 104(d))

Section 104(d) of the Housing and Community Development Act (Section 104(d))—“The Barney Frank Amendment”—

provides minimum requirements for Federally-funded programs or projects when units that are part of a community’s

low-income housing supply are demolished or converted to a use other than low- or moderate-income dwellings.

Generally, Section 104(d) has two major requirements:

1. Replacement, on a one-for-one basis, of all occupied and vacant habitable low- or moderate-income dwelling

units (that are demolished or converted)

** NSP-funded projects are exempt from the one-for-one replacement requirements of 104(d) but not the

relocation assistance provisions.


Key Definitions

Bona Fide lease or tenancy: a lease or tenancy shall be considered bona fide only if: (i) the mortgagor under the

contract is not the tenant; (ii) the lease or tenancy was the result of an arms length transaction; and (iii) the lease or

tenancy requires the receipt of rent that is not substantially less than fair market rent for the property. A “lease” does

not have to be written, but either the lease or tenancy must meet the requirements of the Recovery Act.

Initial Successor in Interest (ISII): Typically, the initial successor in interest in property acquired through foreclosure

is the successful purchaser at foreclosure, such as the lender or trustee for holders of obligations secured by mortgage

liens.

2. Provision of certain relocation assistance to any lower income person displaced as a direct result of the

following activities in connection with Federal assistance (for demolition or conversion)

** NSP-funded project must adhere to these requirements.

The relocation assistance and payments for eligible persons under Section 104(d) are similar to those required for the

URA, but there are a number of differences. One significant difference is the period of time used to calculate a rental

assistance payment: Section 104(d) factors in 60 months vs. 42 months for the URA. Section 104(d) eligible displaced

persons may choose to receive relocation assistance under either Section 104(d) or the URA.

24 CFR Part 42 is the regulation that implements Section 104(d). See HUD Handbook 1378 that provides HUD policy and

guidance on implementing Section 104(d). Visit HUD’s Real Estate Acquisition and Relocation website at

http://www.hud.gov/relocation.

NSP TENANT PROTECTIONS3

Congress has expressed concern about evictions of tenants from foreclosed properties. To deal with the issue the

American Recovery and Reinvestment Act of 2009 (Recovery Act) imposes requirements on the Neighborhood

Stabilization Program (NSP) to ensure that bona fide tenants in NSP-affected properties receive proper treatment.

A more recent law, the Protecting Tenants at Foreclosure Act of 2009 (PTAF) provides similar protections for tenants

facing eviction as a result of foreclosure on virtually all mortgaged rental properties in the United States. On June 24,

2009, HUD published a Notice in the Federal Register providing additional information on PTAF.

The Recovery Act Tenant Protections, included in the NSP Bridge Notice of June 19, 2009 and the NSP2 Notice of Fund

Availability of May 4, 2009, directly affect initial successors in interest (ISIIs) who take title to property through

foreclosure (including lenders and others who purchase property at foreclosure sales). The NSP tenant protection

provisions apply to properties foreclosed on or after February 17, 2009 that had tenants at the time of the foreclosure or

afterwards. Exhibit 5-1 is a summary of general requirements under the Recovery Act.

3 Source: HUD: NSP Grants: Tenant Protections Policy Guidance: “NSP Tenant Protections at Foreclosure.”

http://www.hud.gov/relocation


Exhibit 5-1: Summary of General Tenant Protection Requirements

Law Recovery Act

(American Recovery and Reinvestment Act)

Date of Applicability Residential Properties foreclosed after February 17, 2009

Persons Affected Bona fide tenant occupying

residential property under a lease

in effect before or on the date of


Bona fide tenant occupying

residential property under a

tenancy in effect after the date of


Implications Initial successor in interest (see

definitions) must allow such tenants

to remain to end of the lease term*

and provide a minimum 90 days

notice to move. These periods may

overlap but cannot be less than 90

days.

Initial successor in interest (see

definitions) must provide such

tenants a minimum 90 days notice

to move.

Exceptions *An ISII selling the property to a person occupying the home as the primary

place of residence MAY terminate the lease, but MUST allow at least 90 days to

vacate.

The tenant protection requirements in the Recovery Act are separate and apart from the obligations imposed on

grantees by the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (URA). The URA

applies to any person displaced as a direct result of acquisition, rehabilitation, and/or demolition of real property for a

Federal or federally assisted project. Eligibility determinations under the URA and the required notices and relocation

assistance requirements are different and separate from the tenant protections in the Recovery Act. Therefore, it cannot

be assumed that a person entitled to the tenant protections under the Recovery Act is also eligible for assistance under

the URA (or vice versa).

DOCUMENTING COMPLIANCE WITH NSP TENANT PROTECTION REQUIREMENTS

HUD has provided some guidance related to purchase of properties foreclosed upon after February 17, 2009. Specifically

HUD advises grantees to obtain adequate documentation of tenant protection compliance (or inapplicability) from the

initial successor in interest (the seller), such as:

Certification that only the former mortgagor and/or immediate family occupied the property at the time of the

notice of foreclosure

Copies of the tenant’s lease and any notice to vacate from the ISII to substantiate compliance

Where a tenancy existed without a written lease or at will, information on the tenancy and any notice to vacate

from the ISII to substantiate compliance


Certification of compliance with the NSP tenant protections (or the inapplicability of the tenant protections) from

the initial successor in interest

If the seller will not or cannot provide documentation of compliance, then grantees are required to perform due diligence

to determine whether any bona fide tenant occupied the property. Grantees that purchase tenant-occupied property can

choose to assume the Recovery Act tenant protection obligations and/or may continue to operate occupied units as

rental properties. HUD notes that whether documentation is received from a seller or due diligence completed by the

NSP grantee, there is no assurance that these steps will eliminate potential lawsuits or other liability.

To meet the NSP Tenant Protection Requirements, the City carries out the following:

For properties acquired by a lender after February 17, 2009 the City either:

Obtains Certification from the seller that the property was not occupied by a bona fide tenant at the time

of foreclosure or afterward OR if occupied by bona fide tenant, the tenant was given proper notification to

vacate.

OR

City staff performs due diligence review of previous occupancy by reviewing utility usage to establish

vacancy:

If utility bills were in name of previous owners (the mortgagor) AND

Since the foreclosure, the utilities were shut off or usage so minimal the usage suggests no one

was living in property, THEN

Property is considered vacant for purposes of NSP requirements

If a property does not meet the vacancy standards, then the property is deemed ineligible and

the City is not allowed to purchase the property.


CHAPTER IV - FINANCIAL MANAGEMENT

The City OF Merced will implement the following policy:

POLICY 1. Funds will be disbursed within 15 days of draw drawn or as otherwise required by HUD or the State of CA HCD.

2. Disbursements of NSP funds will only be for carrying out eligible activities.

3. All financial transactions are supported by source documentation including, (e.g. invoices, contracts, purchase

orders, remittance advice). [24 CFR 92.502(c)(2)].

4. Any interest in excess of $100 earned on NSP funds not expended for eligible costs within 15 days of drawdown,

will be returned to the U.S. Treasury at least quarterly. [24 CFR 92.502(c)(2)].

5. All financial records identify the source and application of funds for each fiscal year.

6. Before The City of Merced release NSP funds for reimbursement Subrecipients/Contractors are required to submit

written documentation that any and all expenses are for eligible, actual, and incurred expenditures. [24 CFR

92.508(a)(5)(i)]

7. The City of Merced maintains records regarding the Federal and local NSP Fund accounts, including deposits,

disbursements, balances, and supporting documentation. [24 CFR 92.508(a)(5)(iii

8. Ledger denoting line items of approved budget and record of receipts and expenditures of all funds in each

category.

9. Copy of authorized signature form.

10. Copy of Designation of Deposit Form.

11. Copy of Electronic Transfer Form.

12. Copies of all checks and invoices for NSP funds and all local funds committed to the project.

13. Copies of all bank statements denoting NSP receipts disbursed.

14. Copies of all pay requests and supporting invoices.

15. Copies of all contracts for NSP funds.

16. Timesheets for any employee paid with NSP funds.

17. Timesheets for any grantee in-kind matching funds.

18. A listing of all fixed assets acquired with NSP funds.


A. RECORDS TO BE MAINTAINED

As required by Federal Regulations, The City of Merced will maintain the following records specified in 24 CFR

570.503(b)(2), 570.506, 570.507, and 570.508. These regulations pertain to the activities to be funded under NSP and

demonstrate compliance with all NSP requirements. Merced procedures ensure that any records maintained by

Subrecipients/Contractors are compliant with confidentiality requirements for participants.

POLICY The City of Merced maintains Records in project folders and/or Subrecepient/Contractor folders that include but are not

limited to:

1. Records providing a full description of each activity undertaken;

2. Records demonstrating that each activity undertaken meet one of the National Objective of the NSP

program;

3. Records required determining the eligibility of activities;

4. Records required to document the acquisition, use, or disposition of real property acquired or improved

with NSP assistance;

5. Records documenting compliance with the fair housing and equal opportunity component of the NSP;

6. Financial records as required by 24 CFR 570.502, and OMB Circular A-87

7. Other records necessary to document compliance with Subpart K of 24 CFR 570.

8. The source and application of program income, repayments, and recaptured funds.

9. Evidence that any fees earned were reasonable such as to avoid “undue enrichment”. [24 CFR

92.508(a)(5)(iii)].

10. Budget controls in compliance with 24 CFR 85.20, including evidence of periodic account reconciliation.

11. A tracking system documenting the need for, and actual submission of, subrecepients/contractor audits

required under OMB Circular A-133 [24 CFR 92.508(a)(5)(iv)]. Aggregate

12. A tracking system that demonstrates that the City has stayed within the 10 percent limitation, on the grant

as a whole, for general administration, technical assistance, and planning activities (for the duration of the

grant, which is 4 years from when HUD signed the grant agreement).

13. Any employees working solely on the NSP program define charges for their salaries and wages supported

by periodic certifications that the employees worked solely on the program for the period covered by the

certification.

14. Payments for employee salaries are supported by timesheets indicating actual times, not percentages, and

in accordance with the applicable regulations. If salaries are being paid from more than one source, the

fiscal records clearly define payments among the funding sources.


15. An EXCEL spreadsheet is utilized and reviewed by at least 2 staff to ensure that information entered into

DRGR is accurate.

16. A tracking system documenting subrecipient/contractor compliance regarding procurement and/or

subcontracting requirements as well as maintain adequate records for property and assets acquired with

grant funds including safeguards for preventing loss, damage, or theft of subrecipient/contractor-held

property per CFR 24 85.36.

17. Written financial management procedures covering the recording of transactions, and include an

accounting manual (and a chart of accounts.

18. Written financial management procedures cover the authority for approving financial transactions.

Procedures ensure effective internal control over, and accountability of, all grant funds, property and

other assets. Internal controls, such as segregation of duties, will be implemented that effectively reduce

the opportunity for an individual to perpetrate or conceal errors or irregularities in financial transactions

and in the course of normal duties

19. All NSP fiscal records and valuables are secured in a limited-access area.

20. Procedures are in place to ensure that the program is on track with meeting the expenditure of at least 50

percent of allocated funds within the 2-years-of-receipt deadline, meeting the 18-month NSP funds use

requirement, meeting the expenditure of at least 100 percent of allocated funds within the 3-years-of-

receipt deadline and with meeting the 4-year original allocation expenditure deadline and also comply

with Recovery Act’s Buy American requirement.

B. RECORD RETENTION

POLICY 1. The City of Merced retains all records for the time period of 5 years after the termination of all activities

funded under NSP.

2. Records for non-expendable property acquired with funds are retained for 5 years after the final

disposition of a property.

3. Records for a displaced person are kept for 5 years after he/she has received final payment or, after the

resolution of all Federal audit findings specified in the NSP final rule, whichever comes later.

4. The City requires Subrecipients/Contractors to abide by the same compliance program regulations

regarding record retention and fiscal management requirements.

The City of Merced NSP files were established to include documentation for Administration; Environmental; Acquisition

and Rehabilitation Standards.

Checklists for the files See Exhibit 6: NSP project folder checklist was also created to be used as a tracking mechanism

that is a necessary element needed to meet compliance regulations within the NSP federal guidelines.


EXHIBIT 6

NSP PROJECT FOLDER CHECKLIST

ADMINISTRATIVE FILE 1. Property Profile.

2. Broker’s Price Opinion (An appraisal may be substituted for a Broker’s Price Opinion).

3. Voluntary Sales Letter (site must be abandoned and foreclosed

4. Historical Review (SHPO Letter)/Statutory Checklist (Appendix A) and Contractor Acknowledgement of need

for further environmental clearance prior to project development.

5. Commitment Letters from Other Funding Sources (if applicable).

6. Development Budget.

7. Permanent Financing Plan.

8. Project schedule (current)

9. Copy of Contract with Subrecepient/Contractor and Bids from Subcontractors to determine if prevailing wage

rates will apply).

ENVIRONMENTAL FILE 1. Environmental Review Report

2. Environmental Clearance.

3. Inspection Report(s).

4. Asbestos Survey Report.

5. Lead-Based Paint Survey Report.

ACQUISITION 1. Site Photos (In Appraisal).

2. Location Map (In Appraisal).

3. Site Plans – As Is (In Appraisal).

4. Floor Plans – As Is (In Appraisal).

5. Elevations – As Is (In Appraisal).

6. As Is Appraisal.

7. Evidence of Property Insurance.

8. Natural Hazard Disclosure Statement.

9. 90-day Requirement Letter (Vacant), including actual Clerk-Recorder filing of conveyance noting dates at least

90 days prior.

10. Preliminary Title Report.

11. Escrow Instructions.

12. Purchase Agreement/Option Letter.

13. Estimated HUD-1 Closing Statement.

14. Title Insurance (Owner’s Policy), if required (Documentation will ensure that the initial successor in interest

in a foreclosed upon dwelling or residential real property; typically, the initial successor in interest in

property acquired through foreclosure is the lender or trustee for holders of obligations secured by mortgage

liens) has provided bona fide tenants with the notice and other protections outlined in the Recovery Act”

(NOTE: Bona fide tenants must be given a 90-day notice to vacate.)

15. Demand Letter.

16. Wire Instructions.

17. Approval Form; and


18. Other pertinent correspondence (e-mails, letters, etc.).

19. After acquisition, Subrecepients/Contractors will submit a final HUD-1 form (or comparable document if the

transaction is cash only), property insurance and the (GPR).

EXHIBIT 7 Sample NSP Property Acquisition File Checklist

Property Address: Property is (check all that apply) __Foreclosed __Abandoned __ Vacant ___ Blighted __Built prior to 1978 __Structure(s) 50+ years old Foreclosed, abandoned, blighted, and vacant status must be per NSP definitions.

X or N/A

Date

Initials Item

EVALUATION Tier 1 environmental review completed for target area (X if completed) Property listing from Multiple Listing Service (MLS) or other source (copy filed) Verification that property is in a target area (areas of greatest need as outlined in the Substantial

Amendment to the Action Plan (X to verify) Evidence that property is foreclosed (copy of deed or other document filed) If foreclosed , seller certification RE: tenant protections, if applicable (copy filed) If vacant, signed & dated inspection report indicating vacant status (copy filed) If vacant, utility status (signed, dated report or shut-off notice (copy filed) If required, General Information Notice (GIN) to occupant(s) (copy/ies filed) If occupied, relocation survey (copy filed. See Note 1 below. If occupied, estimate of relocation costs based on survey (include relocation costs in “Total

development cost estimate” below)(copy filed) Photos of property exterior and interior (copies filed) FEASIBILITY AND COST ANALYSIS Preliminary appraisal or estimate of market value to establish offer price – not NSP-required

(copy filed) Lead hazard risk assessment report if built pre-1978 (copy filed) Certification of zoning compliance by staff member or other source (copy filed) Plans & specs or work write-up (copy filed) Rehab or new construction cost estimate – include demolition costs (copy filed) Total development cost estimate including all soft costs (copy filed) APPROVAL AND PRE-CLOSING NSP grantee written approval of acquisition, if required (copy filed) Notice of Voluntary or Involuntary Acquisition with delivery confirmation (copy filed) Purchase contract with all signatures – see note below (copy filed) Completed environmental review checklist by staff or specialist (copy filed) Relocation file(s) started separately if occupied (N/A or X) Letter to SHPO re: historic status, if required (copy filed) Site-specific environmental review determination (copy filed) Appraisal, if NSP required for properties foreclosed or under threat of eminent domain or

otherwise required by grantee(copy filed) Certification of 1% discount for foreclosed property - see note 2 below (copy filed) POST-CLOSING Deed to property (copy filed) Mortgage deed(s) and promissory note(s) - (copies filed) Settlement sheet – HUD 1 (copy filed)

Note 1: If occupants are or were present, who have rights under URA, users should set up separate relocation files.


Note 2: Unless these steps have already been completed, a purchase agreement must be conditional upon receiving an approved site-

specific environmental review from the NSP grantee or other responsible entity. If foreclosed upon, the AGREEMENT MUST BE CONDITIONAL

UPON AN APPRAISAL INDICATING THAT THE OFFER PRICE IS AT LEAST 1% BELOW APPRAISED VALUE.

C. WRITTEN AGREEMENTS

The City of Merced selected subrecipients/contractors in accordance with 24 CFR Part 85. The Selection process

followed the City’s plan regarding distribution, administration, and oversight of funds identified in its Substantial

Amendment. Upon implementing any NSP activity or project, a fully executed Agreement between the City of Merced and

the Contractor was initiated. The Agreement will be reviewed and approved by Risk Management and City Counsel prior

to the release of the Agreement to the Subrecepients/Contractors for review and approval, (Exhibit 8: Sample for

SAMPLE CONTRACT FOR REHABILITATION OF PROPERTY ).

PROCEDURE

1. A combination of the Rehab Specialist, HPS, and Manager is responsible for the execution of written

agreements with all NSP-funded sub-recipients/contractors (e.g., property owners, rental owners,

subrecipients, contractors, CHDOs, etc.) before committing or disbursing funds.

2. Written agreements will include all the required provisions and provide evidence that the agreements

contain sufficient information regarding the subrecepients/contractors approved NSP activities to enable

the City to conduct effective compliance monitoring reviews.

3. Written agreements will be effective for the performance period and the affordability period.


EXHIBIT 8

SAMPLE CONTRACT FOR REHABILITATION OF PROPERTY

THIS CONTRACT made on ______________________, by and between City of

Merced, a California Charter Municipal Corporation, hereinafter called the Owner, and

_____________________________, hereinafter called the Contractor.

W I T N E S S E T H:

That the parties hereto have mutually covenanted and agreed, and by these

present do covenant and agree with each other, as follows:

1. The Contract Documents. The complete contract consists of the following

documents, to wit: (1) this contract, (2) any addenda, (3) General Conditions, (4) bid and

proposal dated ___________________, (5) Plans and Specifications, and (6) special

conditions, if any. Any and all obligations of the Owner and the Contractor are fully set forth

and described therein.

All of the above documents are intended to cooperate so that any work called for in

one and not mentioned in the other or vice versa is to be executed the same as if mentioned in

all said documents. The documents comprising the complete contract are sometimes

hereinafter referred to as the contract documents. However, in case of conflict, the first

document above-mentioned shall prevail.

2. The Work. Said Contractor agrees to furnish all tools, equipment, apparatus,

facilities, labor, transportation, and material necessary to perform and complete in a good and

workmanlike manner, the work of REHABILITATION OF THE PROPERTY

LOCATED AT ___________________________, MERCED, CALIFORNIA, AS PER

WORK WRITE-UP (ATTACHED) AND ANY CHANGE ORDERS as called for, and in

the manner designated in, and in strict conformity with, the contract documents. It is

understood and agreed that said tools, equipment, apparatus, labor, transportation, and

material shall be furnished and said work performed and completed as required in said

contract documents under the sole direction and control of the Contractor, and subject to

inspection and approval of the Owner, or its representative.


3. Contract Price. The Owner agrees to pay and the Contractor agrees to accept,

in full payment for the work above agreed to be done, the sum of $_______________ subject

to additions and deductions as provided in the contract documents.

4. Permits; Compliance With Law. The Contractor shall obtain all necessary

permits and licenses, easements, etc., for the construction of the project, give all necessary

notices, and comply with all laws, ordinances, rules and regulations relating to the work and

to the preservation of the public health and safety (including, inter alia, all codes relating to

the construction of buildings).

Contractor shall possess a valid California Contractor’s license and a valid EPA

Renovation, Repair, and Painting Certification (RRP Certificate) at the time of bid

submission for the duration of the Agreement.

5. Inspection by Owner. The Contractor shall at all times maintain proper

facilities and provide safe access for inspection by the Owner to all parts of the work, and to

the shops wherein the work is in preparation. Where the contract documents require work to

be specially tested or approved, it shall not be tested or covered up without timely notice to

the Owner of its readiness for inspection and without the approval thereof or consent thereto

by Owner. Should any such work be covered up without such notice, approval, or consent, it

must, if required by Owner, be uncovered for examination at the Contractor's expense.

6. Extra or Additional Work and Changes. Should Owner at any time during the

progress of the work request any alterations, deviations, additions or omissions from said

contract documents, it shall be at liberty to do so provided that said changes conform with

Section 05 of the General Conditions, and the same shall in no way affect or make void the

contract, but will be added to or deducted from the amount of said contract price, as the case

may be, by a fair and reasonable valuation, agreed to in writing between the parties hereto.

7. Time for Commencement and Completion. Work under this Contract shall be

commenced as indicated in the General Conditions and shall be completed within ______

calendar days thereafter.

If said Contractor shall be delayed in said work by the acts or neglect of said Owner, or

its employees or those under it by contract or otherwise, or by changes ordered in the work,

or by strikes, lockouts by others, fire, unusual delay in transportation, unavoidable casualties

or any causes beyond the Contractor's control, or by delay authorized by the Owner, or by

any cause which the Owner shall decide to justify the delay, then the time of completion shall

be extended for such reasonable time as the Owner may decide.


This article does not exclude the recovery of damages for delay by either party under

other provisions in the contract documents.

8. Liquidated Damages. Time shall be of the essence of this contract. If the

Contractor fails to complete, within the time fixed for such completion, the work

hereinbefore mentioned and described and hereby contracted to be done and performed, he

shall become liable to the Owner for liquidated damages in the sum of One Hundred Fifty

Dollars ($150.00), for each and every day or part thereof during which said work shall

remain uncompleted beyond the specified time for completion or lawful extension thereof,

which sum shall be presumed to be the amount of damage thereby sustained by Owner since

it would be impracticable or extremely difficult to fix the actual damage; and the amount of

liquidated damages may be deducted by Owner from monies due the Contractor hereunder,

or his assigns and successors at the time of completion, and said Contractor hereunder, or his

assigns and successors at the time of completion, shall be liable to the Owner for any excess.

This article does not preclude any other remedy or recovery by Owner against

Contractor for any additional cost and/or monetary damage involved to complete the Work if

Contractor fails to complete the Work within the specified time for completion or lawful

extension thereof, or if Contractor fails or refuses to complete the Work.

9. Termination. If the Contractor should be adjudged a bankrupt or if he should

make a general assignment for the benefits of his creditors, or if a receiver should be

appointed on account of his insolvency, or if he or any of his subcontractors should violate

any of the provisions of the contract, the Owner may serve written notice upon him and his

surety of its intention to terminate the Contract, such notice to contain the reasons for such

intention to terminate the Contract, and, unless within ten (10) days after serving of such

notice, such violation shall cease and satisfactory arrangements for correction thereof be

made, the contract shall, upon the expiration of said ten (10) days, cease and terminate. In

the event of such termination, the Owner shall immediately serve written notice thereof upon

the Contractor. The Owner may then take over the work and prosecute the same to

completion by contract or by any other method it may deem advisable, for the account and at

the expense of the Contractor, and the Contractor shall be liable to the Owner for any excess

cost occasioned the Owner thereby, and in such event the Owner may without liability for so

doing take possession of and utilize in completing the work, such materials, tools, appliances,

plant and other property belonging to the Contractor as may be on the site of the work and

necessary therefor.


10. Owner's Right to Withhold Certain Amounts and Make Application

Thereof. In addition to the amount which the Owner may retain under Paragraphs 8 and 16

of this Contract until the final completion and acceptance of all work covered by the

Contract, the Owner may withhold from payment to the Contractor such an amount or

amounts as in its judgment may be necessary to pay just claims against the Contractor or any

subcontractors for labor and services rendered and materials furnished in and about the work.

The Owner may apply such withheld amount or amounts to the payment of such claims in its

discretion. In so doing, the Owner shall be deemed the agent of the Contractor and any

payment so made by the Owner shall be considered as a payment made under the Contract by

the Owner to the Contractor and the Owner shall not be liable to the Contractor for any such

payment made in good faith. Such payment may be made without prior judicial

determination of the claim or claims.

11. Notice and Service Thereof. Any notice from one party to the other under the

Contract shall be in writing and shall be dated and signed by the party giving such notice or

by a duly authorized representative of such party. Any such notice shall not be effective for

any purpose whatsoever unless served in the following manner, namely, (a) if the notice is

given to the Owner, by personal delivery thereof to the personal representative of said

Owner, or by depositing the same in the United States mails, enclosed in a sealed envelope,

addressed to the personal representative of Owner, postage prepaid and registered; (b) if the

notice is given to the Contractor, by personal delivery thereof to said Contractor or to his

duly authorized representative at the site of the project, or by depositing the same in the

United States mails, enclosed in a sealed envelope, addressed to said Contractor at

___________________________________________________, postage prepaid and

registered. All notices shall also be mailed to City of Merced at 678 West 18th Street,

Merced, CA, 95340, Attn: City Attorney’s Office. Notice sent by mail shall be deemed

effective three (3) business days after mailing.

12. Assignment of Contract. Neither the Contract, nor any part thereof, nor monies

due or to become due thereunder may be assigned by the Contractor without the prior written

approval of the Owner.

13. Insurance. The Contractor shall not commence work under this Contract until

he has obtained all insurance required under this paragraph and such insurance has been

approved by Owner, nor shall the Contractor allow any subcontractor to commence work on

his subcontract until all similar insurance required of the subcontractor has been so obtained

and approved. Contractor shall furnish the Owner with satisfactory proof of the carriage of

insurance required, and there shall be a specific contractual liability endorsement extending

the Contractor's coverage to include the contractual liability assumed by the Contractor


pursuant to this Contract and particularly Paragraph 14 hereof. Any policy of insurance

required of the Contractor under this Contract shall also contain an endorsement providing

that thirty (30) days notice must be given in writing to the Owner and its officers, officials,

employees, and agents of any pending change in the limits of liability or of any cancellation

or modification of the policy. Contractor agrees to include the City of Merced as additional

insured’s on all applicable insurance policies required for the Work and shall furnish a copy

of said policies to the City of Merced prior to commencement of any work under this

Agreement.

(a) Compensation Insurance. The Contractor shall take out and maintain

during the life of this Contract workers' compensation insurance in the amount required by

State law for all of his employees employed at the site of the project and, in case any work is

sublet, the Contractor shall require the subcontractor similarly to provide workers'

compensation insurance for all of the latter's employees unless such employees are covered

by the protection afforded by the Contractor.

In signing this Contract, the Contractor makes the following certification, required by

Section 1861 of the Labor Code:

"I am aware of the provisions of Section 3700 of the Labor Code

which requires every employer to be insured against liability for

workers' compensation or to undertake self-insurance in accordance

with the provisions of that code, and I will comply with such

provisions before commencing the performance of the work of this

contract."

(b) Liability Insurance. The Contractor shall take out and maintain during

the life of this Contract bodily injury liability and property damage liability insurance in the

amount of one million dollars ($1,000,000) to protect him and any subcontractor performing

work covered by this Contract form claims for damages for bodily injury, including

accidental death, as well as from claims for property damage, which may arise from

Contractor's operations under this Contract, whether such operations be by himself or by any

subcontractor or by anyone directly or indirectly employed by either of them.

(c) Builder's Risk Insurance. The Contractor shall take out and maintain a

Builder's Risk insurance policy containing a loss payable clause in favor of the City of

Merced covering the work in the amount of $______________________.


14. Hold Harmless. The Contractor will protect, defend (with counsel selected by

the City), indemnify, and hold harmless the Owner, its officers, officials, employees, and

agents thereof, the State of California, the United States of America, Department of Housing

and Urban Development, and the City of Merced and its officers, officials, employees, and

agents, from all damages, costs or expenses, in law or in equity, that may at any time arise or

be set up because of personal injury (including the death of person or persons) or damage to

property sustained by any person or persons by reason of, or in the course of the performance

of said work, or by reason of any infringement or alleged infringement of the patent rights of

any person or persons, firm or corporation in consequence of the use in, on, or about said

work, of any article or material supplied or installed under this Contract. Said indemnified

parties shall not be liable for any accident, loss or damage to the work prior to its completion

and acceptance.

Owner and Contractor both agree to protect, defend, indemnify, and hold the City of

Merced and its agents, officers, and employees harmless from all injuries (including the death

of person or persons), property damages, costs or expenses, in law or in equity, that may arise

in the event of any dispute between Owner and Contractor concerning or relating to this

Agreement.

15. Accident Prevention. Precaution shall be exercised at all times for the

protection of persons (including employees) and property. The safety provisions of

applicable laws, building and construction codes shall be observed. Machinery, equipment,

and other hazards shall be guarded or eliminated in accordance with the safety provisions of

the Construction Safety Orders issued by the Industrial Accident Commission of the State of

California.

16. Payment. Subject to the provisions in article 10, Owner will make progress

payments based upon the schedule attached hereto, provided, however, that no payment shall

be made if work performed prior to the next scheduled payment is not satisfactorily

performed. From each progress payment, ten percent (10%) will be deducted and retained by

Owner.

Final payment will be made upon satisfactory completion of construction and

after the expiration of thirty-five (35) days from the date of recording by Owner of the notice

of acceptance of completion of all work which will be filed within ten (10) days after

satisfactory completion of all work.

The payment of progress payments by the Owner shall not be construed as a

waiver of Paragraph 8 or as an acceptance of the work done up to the time of such payments,


but the entire work is to be subjected to the inspection and approval of the Owner, and

subject to whatever inspection and approval may be required by law.

17. Waiver. No term of this Agreement shall be deemed waived and no breach

excused unless such waiver or consent shall be in writing and signed by the party claimed to

have waived or consented. The failure of a party to exercise any one or more of its rights or

remedies under this Agreement shall not constitute a waiver of that party’s right to enforce

that right or seek that remedy in the future. No course of conduct or act of forbearance on

any one or more occasions by any party to this Agreement shall preclude that party from

asserting any right to remedy available to it in the future. No course of conduct or act of

forbearance on any one or more occasions shall be deemed to be an implied modification of

the terms of this Agreement.

18. Attorney Fee. The prevailing party in any action pertaining to this Agreement

shall be entitled to all other remedies provided herein and all its costs and expenses,

including reasonable attorney’s fees.

19. Law and Venue. This Agreement shall be governed by and construed in

accordance with the laws of the State of California. Venue shall exclusively be in a State

Court location in Merced County.

20. Entire Agreement. This Agreement constitutes the entire understanding and

agreement of the parties and supersedes all previous and/or contemporaneous understanding

or agreement between the parties with respect to all or any part of the subject matter hereof.

This Agreement may not be modified unless in writing and signed by the authorized

representatives of both parties.

21. Severability. If any provision of this Agreement is for any reason held to be

invalid or unconstitutional by the decision of any court of competent jurisdiction, such

decision shall not affect the validity of the remaining portions of this Agreement.

22. Counterparts. This Agreement may be executed in one or more counterparts

with each counterpart being deemed an original. No counterpart shall be deemed to be an

original or presumed delivered unless and until the counterparts executed by the other parties

hereto are in the physical possession of the party or parties seeking enforcement thereof.

IN WITNESS WHEREOF, this Contract shall for all purposes be deemed an original thereof,

has been duly executed by the parties herein above named, on the day and year first herein

written.


CITY OF MERCED

A California Charter Municipal Corporation

BY:

City Manager

ATTEST:

JOHN M. BRAMBLE, CITY CLERK

BY:

Assistant/Deputy City Clerk

APPROVED AS TO FORM:

BY:

City Attorney Date

[Signatures continued on next page]

ACCOUNT DATA:

[To be entered by Requesting Department]:

Account No.: __________________________

Account No.: _______________________

FINANCE ENTRY:

CONTRACT NO.:

Vendor No.:

P.O. No.:

Funds Available:


ACCOUNT DATA VERIFIED:

BY:

Finance Officer

CONTRACTOR:

BY:

(Signature)

(Print name)

Contractor License No.

Taxpayer I.D. No.

ADDRESS: _________________________

_________________________

TELEPHONE: _____________________


D. SUBRECEPIENT/CONTRACTOR(S)(S) ADMINISTRATION REQUIREMENTS

Subrecipients/Contractors that are awarded NSP funds for eligible activities are required to comply with all applicable

HUD regulations and with particular procedures as agreed to in the executed Subrecipient/Contractor Agreement with

the City of Merced.

EXHIBIT 9:

DOCUMENT OF FEDERAL REGULATIONS/REQUIREMENTS LIST

A Subrecepient/Contractor is identified as Subrecepient/Contractor in the Cooperative Agreement and must adhere to the

following federal Administrative requirements and procedures:

OMB Circular A-87 "Cost Principles for State and Local Governments,"

Accounting principles and procedure provisions in 24 CFR Part 85 "Uniform Administrative Requirements for

Grants and Cooperative Agreements to State and Local Governments, and

A-133 "Audits of State and Local Governments and Nonprofit Organizations,"

24 CFR 84 "Grants and Agreements with Institutions of Higher Learning, Hospitals and Other Nonprofit

Organization," and

A-133 "Audits of State and local Governments and Nonprofit Organization."

Provide the oversight, administration, and project management necessary to accomplish all eligible contracted

activities.

Comply with all applicable federal, state, and local laws and regulations governing the NSP funds.

Provide written consent in order to assign or transfer any interest of the agreement.

Submit subcontract agreements to the City for review and consent prior to entering into an agreement.

Submit Construction Bid Package to the City for review and written approval by the Director prior to advertising

for bids and award for the construction contract.

Construct projects in accordance with the Construction Bid Package upon approval by the Director.

Assume responsibility for all subcontracted services.

Include the original Cooperative Agreement with any executed subcontract.

Monitor all subcontracted services on a monthly basis to assure Contract compliance.

Monitoring results will be summarized in written form and supported with documented evidence of follow-up

action(s) to correct any area (s) of Contract non-compliance.

Make documentation available for periodic monitoring by representatives of the City and HUD.


E. REIMBURSEMENT OF PROJECT DELIVERY COSTS/PRE-AWARD COSTS

Eligible NSP project delivery costs related to acquisition and rehabilitation include such items as appraisals fees, title

search, rehabilitation cost estimates, market studies and/or feasibility studies.

PROCEDURE

1. The City of Merced will allow reimbursement of such costs contingent upon pre-approval and the submission of

invoices detailing the project address, requested amount, type of service(s) completed along with a demand letter

from the Subrecepient/Contractor.

2. Once HPS receives the information above from the Subrecepient/Contractor, the HPS will prepare a spreadsheet

detailing the type of NSP funding source for each reimbursement.

3. Upon review and approval by the Manager, the documents will then be sent to Finance for review, approval and

processing.

4. Once processing is completing, Secretary II with the Finance Specialist’s approval, will send the

subrecepients/contractors a lump sum check for all of their requested reimbursements.

F. CONDITIONS OF FUNDING DISBURSEMENT AND PAYMENT

Disbursement of NSP funding allocations is dependent upon approval of the and will occur only when all the following

conditions have been met:

PROCEDURE

1. Availability, continuance, and budget constraints of the appropriated Federal, State, or Local Government

funds.

2. Funds will not be disbursed for any costs incurred prior to the certification by The City and/or HUD

Certificate of Insurance, environmental compliance, prior submittal of certified payroll documentation

with each invoice package/request for payment.

3. Inspection of facilities used in connections with Contracts that are used to implement programs funded

with NSP.

4. Proof of applicable licenses or permits, and facility code regulations required for the programs funded

with NSP.

5. Obligations are met according to the performance milestones from February 9, 2010 to February 9, 2011.

6. Eligible costs related to services must be incurred during the period beginning February 9, 2010.

7. Projects must be obligated and completed for eligible activities prior to August 15, 2010.

8. Any unused balance of funds will be reclaimed by the City of Merced.


9. Additional funding may be requested if the Subrecepient/Contractor has met or exceeded the Required

Obligation Thresholds prior to the milestone date and if funds are available.

10. If additional funds are available to award to a Subrecepient/Contractor, The City will amend the

Subrecipient/ Contractor Agreement to indicate that the Required Obligations, Performance Obligations,

and Expenditure Thresholds have been demonstrated.

11. Required environmental review process is satisfied.

12. Project closing documents are complete and payment of the NSP funds have been disbursed and approved

by the NSP team.

13. Written demonstration of readiness to immediately initiate Projects upon execution of a

Subrecipient/Contractor Agreement that includes documentation of Board of Council Minutes/Resolution;

Awarded bid documents with timeline requirements; executed Architect and Engineer contracts, with

specific project timeline consist with funding.

14. Provide a Project Readiness Checklist describing the status of the Project.

15. Provide projected target dates for identifying when milestones will be met and that clearly demonstrates

that the Subrecipient/Contractor will meet the "Required Obligation Thresholds" established in the

Agreement (Project Readiness Checklist may be considered to evaluate the performance of the

Subrecepient/Contractor).

16. Costs will be reimbursed only for eligible project-related costs.

17. Written requests for reimbursement(s) for payment of project activities must be submitted to the City in

accordance with the City’ Policy for Documenting Costs.

18. Submittal of a progress "GPR" report for the time period covered as prescribed by the City of Merced.

19. Reimbursement or activity payments will NOT be released without the required documentation and

reporting requirements and until so the City will withhold any reimbursement and return the entire

reimbursement request to the Subrecipient/Contractor.

20. In the case of a Subrecepient/Contractor not submitting a request for reimbursement during any quarter

of the term of the Agreement, a "GPR" is required to be submitted in lieu of the request for reimbursement

stating an explanation as to why invoices were not processed in lieu of the request for reimbursement.

21. All DRGR procedures are complete.


G. COMBINING NSP WITH OTHER FORMS OF FUNDING ASSISTANCE

The City will allow Buyers to combine the City's downpayment assistance funds with funds from other down payment

assistance programs. Buyers will also be allowed to combine City NSP funds with CDBG, CalHOME or HOME funds.

H. PERFORMANCE STANDARDS

Meeting performance measures are crucial considering that under NSP1, Merced has 18 months from the date HUD

signed the grant agreement to obligate NSP funds and four years to expend allocations; an amount equal to these

allocations.

Additionally, HUD expects that Merced and its Contractors will have contracts signed or, at a minimum, have made

written offers for properties within 18 months. Therefore, The City has set "Performance Threshold" criteria to be used

to assess the level of performance of the Contractors. This criterion was used to determine funding.

In order for a Contractor to be considered in compliance, the following performance criteria must be met:

PROCEDURE

1. On or before the requested milestone date, submit to the Rehab Specialist a request for reimbursement that

demonstrates that the Contractor has obliged funds and met their proposed accomplishment goals at the

required levels (unless exempted in wiring they the Director).

2. Submittal of quarterly "GPR" reports until all project and project-related funds are obligated and completed, in

accordance to the Contractor Scope of Service.

3. Upon project completion, cancellation, or termination prior to the termination date set in the Contractor

Agreement, a "GPR" must be submitted at the time of the completion, cancellation, or termination.

4. A "GPR" Information Form must be submitted and consist of a cumulative reporting of project-related

obligations and accomplishments relative to the Contractor Scope of Service.

5. A "GPR" report must be submitted in support of all requests for reimbursement(s).

6. The Contractor must acknowledge that the "GPR" report will be used as a monitoring tool that will be

reviewed and evaluated by The City to determine the level of performance.

7. All requested and required documentation must be submitted in the format and at times designed by the City

in order to complete the Consolidated Annual Performance and Evaluation Report (CAPER), and to monitor

program accountability and progress in accordance with HUD requirements.

I. REQUIREMENTS FOR SUBRECIPIENTS/CONTRACTORS

Subrecipients/Contractors will provide the oversight, administration, and project management necessary to accomplish

all contracted activities in a timely manner. Subrecepients/Contractors are required to comply with all applicable

federal, state, and local laws and regulations governing the NSP funds.

Subrecepients/Contractors that are non-profit organizations must comply with requirements in OMB Circular A-122

"Cost Principle for Nonprofit Organizations," 24 CFR Part 84 "Grants and Agreements with Institutions of High Learning,

Hospitals and Other Nonprofit Organizations," and A-133 "Audits of State and Local Governments and Nonprofit

Organization" Subrecepients/Contractors that are defined as government agencies must comply with OMB Circular A-87

"Cost Principles for State and Local Governments," 24 CFR Part 85 "Uniform Administrative Requirements for Grants and


Cooperative Agreements to State and Local Government," and A-133 "Audits of state and Local Governments and

Nonprofit Organizations."

ADDITIONALLY, MERCED REQUIRES THAT ALL CONTRACTORS SUBMIT FOR REVIEW AND APPROVAL A REUSE PLAN CONSISTENT

WITH THE CITY OF MERCED PROGRAM INCOME REUSE PLAN.

J. ACQUISITION OF PROPERTIES USING NSP FUNDS

NSP Contractors (s) must abide by the regulations and requirements in the NSP Agreement and their procurement

process outlined in their NSP Manual.

PROCEDURE

1. Follow the Property Project Checklist that was developed to monitor compliance with statutory and

regulatory requirements governing the acquisition of real property under NSP-assisted projects.

2. Prior to closing or disbursement of funds, all applicable categories will be initialed as complete and evidence

that required documents are in place.

3. Maintain all documentation of properties purchased with NSP funds; confirm that the properties were

purchased with a minimum of a 1 percent discount, per property of the current market appraised value.

K. ENERGY EFFICIENCY

Merced Rehabilitation Standards (see EXHIBIT 17) complies with the California Energy Commission Assembly bill 970,

Title 24, Part I of the California Code of Regulations (AB70: Building Efficiency Energy Standards), in regard to

construction and property development, when applicable.

To the extent possible, Merced will strongly encourage Energy Efficiency Improvements. Optional NSP Eligible Appliance

Purchases include; Energy Efficient (compliant with Energy Star standards) clothes washers, dryers, and dishwashers

when done in conjunction with housing rehabilitation and/or sale projects in the NSP program is permitted.

Clothes washers, dryers, and dishwashers are permitted when all of the following conditions are met:

1. NSP funds have rehabilitated or constructed the homes;

2. Installation of such appliances is comparable to unassisted homes in the local housing market (see HOME

Program standards);

3. Deed restrictions or covenants ensure that the appliances remain in the home, if appropriate; and

4. Qualifying appliances meet or exceed Energy Star standards.

OPTIONAL GREEN BUILDING PRACTICES

The City of Merced encourages incorporating green building practices that offer an opportunity to create

environmentally sound and resource-efficient buildings modern green buildings, and energy-efficient improvements, and

to incorporate HUD’s healthy homes interventions including these seven steps:

1. Dry: Ensure proper drainage away from housing; clean repair gutters and downspouts, repair

leaks seal roofs and windows.


2. Safe: Install safety devices on doors, cabinets, window blinds, and outlets; store all poisonous

items out of reach of children and labeled in the proper containers; install smoke detectors and

carbon monoxide detectors; have appropriate fire extinguisher available.

3. Well-ventilated: Service and maintain heating and cooling systems; provide exhaust fans for

kitchens, bathroom, and dryers to the outside to reduce mold; change furnace filters regularly.

4. Pest-free: Provide proper storage and disposal for food products, caulk, and seal holes; use least

toxic pest management methods.

5. Contaminant-free: Remove lead based paint hazards properly; provide test kits for radon; reduce

volatile organic compounds in paint, carpet.

6. Clean: Install dust walk-off systems in entry ways; provide smooth, cleanable surfaces; provide

effective storage space and containers; choose flooring that is easy to clean; provide vacuum with

HEPA filters; implement weekly cleaning regimen.

7. Well-maintained: Important maintenance calendar for inspecting, cleaning, repairing, replacing

housing components/systems.


DEFINITIONS/GLOSSARY

ABANDONED: A home is abandoned when 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.

AFFORDABILITY The requirements of NSP3 that relate to the cost of housing at initial occupancy and over established

required timeframes as prescribed by HERA and HUD requirements.

NSP AFFORDABILITY PERIODS

NSP INVESTMENT PER UNIT LENGTH OF THE AFFORDABILITY PERIOD

LESS THAN $15,000 5 YEARS

$15,000 - $40,000 10 YEARS

MORE THAN $40,000 15 YEARS

REFINANCING OF RENTAL HOUSING 15 YEARS

NEW CONSTRUCTION OF RENTAL HOUSING 20 YEARS

AMI: Area Median Income – for purposes of NSP, the median income for each City. The AMI varies by household size.

Annual Gross Income: Income is defined by the Section 8 Annual Income as defined under 24 CFR Part 5 and adjusted

gross income as defined for the purposes of reporting on IRS form 1040. The City of Merced uses the Section 8 annual

income definition more commonly referred to as the Part 5 definition to document income eligibility.

APPLICANT: A person or persons who have applied to Developer for purchase of an NSP-assisted housing unit.

AFFORDABILITY PERIOD: NSP requires long-term affordability of properties that receive NSP investment based on the

amount of investment. The period ranges from 5 – 15 years for home ownership or rental rehab and 20 years for rental

new construction.

BLIGHTED STRUCTURE: The structure exhibits objectively determinable sign of deterioration sufficient to constitute a threat

to human health, safety, and public welfare.

CONSTRUCTION BID PACKAGE: A package of bidding documents which includes the proposal, bidding instruction, Contract

documents, detailed estimated costs, and plans and specifications for a construction project, all prepared in accordance

with applicable Federal regulations.

COMMITMENT A written legally binding written agreement between the City of Merced and the project owner/beneficiary. .

CURRENT MARKET APPRAISALS: The appraisals are made in conformity with the appraisal requests of the URA at 49 CFR

24.103 and completed within 60 days prior to an offer made for the property by a grantee, Subrecipient Contractor,

developer, or individual homebuyer.

DAVIS BACON ACT: Federal Legislation requiring payment of prevailing wages for federally funded construction projects,

which with other related acts constitute Federal Labor Standards.

DEVELOPER: A nonprofit or for-profit organization that arranges and completes deals.

DIRECTOR: Director of the OC Community Resources, or designee.


ELIGIBLE AREA: A census block group in which at least 51 percent of the residents have incomes at or below 120 percent of

AMI (LMMA-Low-Moderate and Middle-Income Areas).

ELIGIBLE BORROWERS: Those persons who meet the demographic, geographic, and program requirements for NSP

assistance.

EQUITY : The value of a property less the amount of outstanding debt.

ERR - Environmental Review Record – this is the entire file containing all documents and findings pertaining to the


NEPA - National Environmental Policy Act – Federal legislation that establishes policy, sets goals and mandates the

protection of the environment.

CEQA - California Environmental Quality Act (CEQA)- This is the state equivalent to the National Environmental Policy Act.

A CEQA review is required if any State of California funds are included in the project budget. CEQA does not substitute for a

federal NEPA review but must be conducted as well as the NEPA tiered reviews. http://ceres.ca.gov/ceqa/ -- The

Guidelines are located at the following link: http://ceres.ca.gov/ceqa/sb226_guideline_updates.html

CHRIS - California Historic Resources Information System The California Historical Resources Information System

(CHRIS) includes the statewide Historical Resources Inventory (HRI) database and the records maintained and

managed, under contract, by eleven independent regional Information Centers (ICs). Government agencies seeking

information on cultural or historical resources should consult the Regional information center. A list of all Information

System Centers may be found at: http://ohp.parks.ca.gov/pages/1068/files/IC%20Roster.pdf

SHPO - State Historic Properties Office -- All rehabilitation or construction projects must meet the approval of this office

before the Environmental Review is cleared and a RROF is issued. http://ohp.parks.ca.gov/?page_id=1066

NOI - Notice of Intent After an environmental review is completed and a FONSI has been determined, this document is

published in the newspaper for 14 days to request public comment on the project.

RROF - Request Release of Funds The ER is submitted to HUD along with the NOIRRF and the public notice to demonstrate

there is no adverse impact to the environment as a result of the proposed project. If no public comments are received after

an additional 7 days, funds can be released for use by the project.

FONSI - Finding of No Significant Impact – A FONSI is issued after an Environmental Assessment is concluded and the

proposed project will not result in an action that will significantly affect the quality of life. If a FONSI is not issues, the

project developer must mitigate the impact of the project on the environment.

FORECLOSED: A home or residential property has been foreclosed upon if any of the following conditions apply:

The property’s current delinquency status is at least 60 days delinquent under the Mortgage Bankers of

America delinquency calculation and the owner has been notified of this delinquency, or

The property owner is at least 90 days delinquent on tax payments, or

Under state, local or tribal 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 grantee, contractor, subrecipient, or developer.

GRANTEE: A public agency recipient of NSP funds from HUD. In this case, The City of Merced.

http://ceres.ca.gov/ceqa/

http://ohp.parks.ca.gov/pages/1068/files/IC%20Roster.pdf

http://ohp.parks.ca.gov/pages/1068/files/IC%20Roster.pdf


HERA: The Housing and Economic Recovery Act of 2008, Title III (Section 2301) of which authorizes the Neighborhood

Stabilization Program.

HUD: United States Department of Housing and Urban Development

LMMI: Low-Moderate-and Middle-Income – Households with income below 120 percent of Area Median Income. Low

income households have incomes below 50 percent of AMI. Moderate income households have incomes between 50

percent and 80 percent of AMI and Middle income households have incomes between 80 percent and 120 percent of AMI.

LEAD-BASED PAINT: Requirements that are set forth in the Code of Federal Regulations, or 24 CFR 35, which sate that

federal dollars expended on houses built before 1978 must comply with lead safe procedures, including the performance

of a qualified risk assessment and forms of led removal and abatement. The requirements apply to the City of Merced

NSP.

MAXIMUM SALES PRICE: In compliance with HERA §2301(d)(2), the maximum sales price of a unit utilizing NSP funds shall be the lesser

of the cost to acquire and redevelop or rehabilitate the home or the after rehabbed appraised value.

NSP 3 ASSISTED UNIT A unit where NSP3 funds are used in the Acquisition, rehab or financing of the property.

NSP GRANTEE PERFORMANCE REPORT “GPR”: A project activity data document provided by the City to Contractor used to

monitor and track the performance of Contractor.

OBLIGATION The amounts of orders placed, contracts awarded, goods and services received, and similar transactions

during a given period that will require payment by the grantee (or contractors) during the same or a future period.

OMB: Federal Office of Management and Budget.

PROGRAM ADMINISTRATION: An activity relating to the general management, oversight, and coordination of community

development programs. Costs directly related to carrying out eligible activities are not included. )

PROJECT: Any site or sites, including buildings, and/or activities assisted with federal program funds.

PROGRAM INCOME: The gross income received by Contractor directly generated from the use of the CDBG/NSP funds.

REHABILITATION STANDARDS: Any NSP-assisted rehabilitation of a foreclosed-upon home or residential property shall be

to the extent necessary to comply with applicable laws, codes, and other requirements relating to housing safety, quality,

and habitability, in order o sell, rent, or redevelop such homes and properties.

RECAPTURE Repayment of Losses of NSP3 funds due to lack of performance with applicable review standards as defined in

this manual.

RESTRICTIVE COVENANT A limitation placed on a property that is recorded and attached to the deed, which may pass the

affordability requirement on to subsequent owners or require the subsidy to be repaid to the Grantee.

REUSE PLAN: This plan will detail the proposed uses of NSP Program Income and will confirm the jurisdiction’s required

compliance with state and federal regulations, including, but not limited to, environmental, labor standards, lead-based

paint, procurement, auditing, recordkeeping, fair housing, citizen participation, and reporting.

SUBRECIPIENT: a Public agency or nonprofit that administers program for grantees. This agency must follow NSP

regulations and policies established by Congress and a Grantee.


SUBSTANTIAL REHABILITATION Rehab costing more than 25K.

TARGET AREA: Those areas of identified in the NSP3 Substantial Amendment and Grant Agreement between HUD and the

Grantee.

TOTAL DEVELOPMENT COSTS (TDC): The sum of all costs for site acquisition, relocation, demolition construction and

equipment, interest and carrying charges.

VACANT: Vacant properties include both vacant structures (residential or commercial) and vacant land that are

unoccupied and not in use (free from any activity). The only types of vacant properties that are eligible for redevelopment

are vacant properties that were at one time developed. Vacant properties that are simply undeveloped or “greenfield”

sites are not eligible NSP properties.

VERY LOW INCOME: A family whose annual gross income does not exceed fifty percent (50%) of the median income for the

area (adjusted for family size).

WAGE DECISION: A schedule of prevailing wages for construction trades calculated for each City that is published yearly

and modified periodically by the U.S. Department of Labor.

ELIGIBLE ACTIVITIES

1. Eligible Use (A) - Establish Financing Mechanisms for Purchas and Redevelopment of foreclosed upon homes and

residential properties, including soft seconds, loan loss reserves and shared equity loans for income eligible

households.

2. Eligible Use (B) – Purchase and rehabilitate homes and residential properties that have been abandoned or

foreclosed upon, in order to rent, sell, or redevelop such homes and properties.

3. NSP Eligible Use (D) – Demolish blighted structures;

4. NSP Eligible Use (E) – Redevelop or Demolish vacant or foreclosed properties.

ELIGIBLE HOUSEHOLDS

DEFINITION OF ELIGIBLE FIRST TIME HOME BUYER (FTHB):

An eligible first time homebuyer means a household who:

a) Meets the income eligibility requirements below and;

b) Has not owned a home for three (3) years prior to application to the FTHB program and;

c) Is not currently on the title to any real property.

d) A First time homebuyer may also include a displaced homemaker or single parent.

e) Households who own a manufactured home that is not permanently affixed to the ground, may be eligible to apply

for this program if:

i) They do not own the land on which the manufactured home is located and

ii) The manufactured home is sold and/or the title is transferred prior to loan closing.

Low, moderate, and middle-income households may apply. IE: Households making less than 120 percent (120%) of area

median income. Eligible applicants will be selected on a first come first served basis subject to funding availability.


ATTACHMENTS


ATTACHEMENT 1- SAMPLE AFFORDABILITY COVENANT


Attachment 2: Lead Safe Housing Rule – Applicability Form

Lead Safe Housing Rule – Applicability Form

Address/location of subject property: ____________________________________________________________________

Regulation Eligibility Statements (check all that apply):

____ Property is receiving Federal funds.

____ Unit was built prior to 1978.

Note: If both Eligibility Statements above have been checked, continue with the Exemption Statements below. Otherwise,

the regulation does not apply, sign and date the form.

Regulation Exemption Statements [24 CFR 35.115] (check all that apply):

____ Emergency repairs to the property are being performed to safeguard against imminent danger to human life,

health, or safety, or to protect the property from further structural damage due to natural disaster, fire, or

structural collapse. The exemption applies only to repairs necessary to respond to the emergency.

____ The property will not be used for human residential habitation. This does not apply to common areas such as

hallways and stairways of residential and mixed-use properties.

____ Housing “exclusively” for the elderly or persons with disabilities, with the provision that children less than six

years of age will not reside in the dwelling unit.

____ An inspection performed according to HUD standards found the property contained no lead-based paint.

____ According to documented methodologies, lead-based paint has been identified and removed; and the property has

achieved clearance.

____ The rehabilitation will not disturb any painted surface.

____ The property has no bedrooms.

____ The property is currently vacant and will remain vacant until demolition.

If any of the above Exemption Statements have been checked, the Regulation does not apply. In all cases, sign and date the

form.

I, ________________________________, certify that the information listed above is true and accurate to the best of my (Printed

Name) knowledge.

_________________________________________ ________________________

Signature Date

_________________________________________

Organization


Lead Safe Housing Rule Checklist

for General Compliance Documentation

NSP staff should use this checklist as a guide for determining whether or not they are proceeding in a manner required by

the LSHR, and that they are maintaining documentation for each assisted project.

This document should be maintained in the project files for properties constructed before January 1, 1978, in order to

demonstrate general knowledge and compliance with basic LSHR requirements. Standard forms are available in the

Federal Register (FR), as indicated by the sources noted below. Citations from 24 CFR part 35 are also provided as

additional references.

____ Applicability Form [§35.115] – A copy of a statement indicating that the property is covered by or exempt from

Lead Safe Housing Rule. (*1)

(Note: (A) If the property is exempt, the file should include the reason for the exemption and no further

documentation is required; (B) if the property is covered by the Rule, the file should include the appropriate

documentation to indicate basic compliance, as listed below.)

____ Summary Paint Testing Report or Presumption Notice [§35.930(a)] – A copy of any report to indicate the presence

of lead-based paint (LBP) for projects receiving up to $5,000 per unit in rehabilitation assistance. If no testing was

performed, then LBP is presumed to be on all disturbed surfaces. (*2)

____ Risk Assessment Report [§35.930(c)(2)] – A copy of a report (in addition to the requirements of §35.930(a)) to

indicate any presence of lead-based paint hazards for projects receiving more than $5,000 per unit in

rehabilitation assistance. (*4)

(Note: If the property receives more than $25,000 in assistance, more stringent requirements apply, including

compliance with applicable state requirements, as appropriate. [See §35.930(d)].

____ Notice of Evaluation [§35.125(a)] – A copy of a notice demonstrating that an evaluation summary was provided to

residents following a lead-based-paint inspection, risk assessment or paint testing. (*3, *4)

____ Clearance Report [§35.930(b)(3)]– A report indicating a “clearance examination” was performed of the work-site

upon completion.

____ Notice of Hazard Reduction Completion [§35.125(b)] – Upon completion, a copy of a notice to show that a LBP

remediation summary was provided to residents. (*5)

Source: Federal Register (FR), 64 FR 50139-50231, published September 15, 1999 -- Requirements for Notification,

Evaluation and Reduction of Lead Based Paint Hazards in Federally Owned Residential Property and Housing Receiving

Federal Assistance. The appendices are on pages 50230-50231.

*1 LSHR Regulation Applicability Form (See Attachment B to this memorandum.)

*2 Appendix C--Sample Summary Presumption Notice Format

*3Appendix A--Sample Summary Inspection Notice Format

*4 Appendix B--Sample Summary Risk Assessment Notice Format

*5 Appendix D--Sample Hazard Reduction Completion Notice Format


ATTACHMENT 3 - 24 CFR Part 5 ANNUAL INCOME INCLUSIONS AND EXCLUSIONS

HOME & CDBG

Part 5 Inclusions

This table presents the Part 5 income inclusions as stated in the HUD Technical Guide for Determining Income and

Allowances for HOME Program (Third Edition; January 2005).

General Category (Last Modified: January 2005)

1. Income from

wages, salaries, tips,

etc.

The full amount, before any payroll deductions, of wages and salaries, overtime pay, commissions,

fees, tips and bonuses, and other compensation for personal services.

2. Business Income

The net income from the operation of a business or profession. Expenditures for business

expansion or amortization of capital indebtedness shall not be used as deductions in determining

net income. An allowance for depreciation of assets used in a business or profession may be

deducted, based on straight-line depreciation, as provided in Internal Revenue Service

regulations. Any withdrawal of cash or assets from the operation of a business or profession will

be included in income, except to the extent the withdrawal is reimbursement of cash or assets

invested in the operation by the family.

3. Interest &

Dividend Income

Interest, dividends, and other net income of any kind from real or personal property.

Expenditures for amortization of capital indebtedness shall not be used as deductions in

determining net income. An allowance for depreciation is permitted only as authorized in number

2 (above). Any withdrawal of cash or assets from an investment will be included in income, except

to the extent the withdrawal is reimbursement of cash or assets invested by the family. Where the

family has net family assets in excess of $5,000, annual income shall include the greater of the

actual income derived from all net family assets or a percentage of the value of such assets based

on the current passbook savings rate, as determined by HUD.

4. Retirement &

Insurance Income

The full amount of periodic amounts received from Social Security, annuities, insurance policies,

retirement funds, pensions, disability or death benefits, and other similar types of periodic

receipts, including a lump-sum amount or prospective monthly amounts for the delayed start of a

periodic payment (except for certain exclusions, listed in Income Exclusions, number 14).

5. Unemployment &

Disability Income

Payments in lieu of earnings, such as unemployment and disability compensation, worker's

compensation and severance pay (except for certain exclusions, listed in Income Exclusions,

number 3).

6. Welfare

Assistance

Welfare Assistance. Welfare assistance payments made under the Temporary Assistance for

Needy Families (TANF) program are included in annual income:

Qualify as assistance under the TANF program definition at 45 CFR 260.31; and


Are otherwise excluded from the calculation of annual income per 24 CFR 5.609(c).

If the welfare assistance payment includes an amount specifically designated for shelter and

utilities that is subject to adjustment by the welfare assistance agency in accordance with the

actual cost of shelter and utilities, the amount of welfare assistance income to be included as

income shall consist of:

the amount of the allowance or grant exclusive of the amount specifically designated for

shelter or utilities; plus:

the maximum amount that the welfare assistance agency could in fact allow the family for

shelter and utilities. If the family welfare assistance is reduced from the standard of need by

applying a percentage, the amount calculated under 24 CFR 5.609 shall be the amount

resulting from one application of the percentage.

7. Alimony, Child

Support, & Gift

Income

Periodic and determinable allowances, such as alimony and child support payments, and regular

contributions or gifts received from organizations or from persons not residing in the dwelling.

8. Armed Forces

Income

All regular pay, special day, and allowances of a member of the Armed Forces (except as provided

in number 8 of Income Exclusions).

PART 5 EXCLUSIONS

This table presents the Part 5 income exclusions as stated in the HUD Technical Guide for Determining Income and

Allowances for HOME Program (Third Edition; January 2005).

General

Category (Last Modified: January 2005)

1. Income of

Children Income from employment of children (including foster children) under the age of 18 years.

2. Foster Care

Payments

Payments received for the care of foster children or foster adults (usually persons with disabilities, unrelated to

the tenant family, who are unable to live alone).

3. Inheritance

and Insurance

Income

Lump-sum additions to family assets, such as inheritances, insurance payments (including payments under health

and accident insurance and worker's compensation), capital gains, and settlement for personal or property losses

(except for certain exclusions, listed in Income Inclusions, number 5).

4. Medical

Expense

Reimbursements

Amounts received by the family that are specifically for, or in reimbursement of, the cost of medical expenses for

any family member.

5. Income of

Live-in Aides Income of a live-in aide (as defined in 24 CFR5.403).


6. Income from a

Disabled

Member

Certain increase in income of a disabled member of qualified families residing in HOME-assisted housing or

receiving HOME tenant-based rental assistance (24 CFR 5.671 (a)).

7. Student

Financial Aid The full amount of student financial assistance paid directly to the student or to the educational institution.

8. "Hostile Fire"

Pay

The special pay to a family member serving in the Armed Forces who is exposed to hostile fire.

9. Self-

Sufficiency

Program Income

a. Amounts received under training programs funded by HUD.

b. Amounts received by a person with a disability that are disregarded for a limited time for purposes of

Supplemental Security Income eligibility and benefits because they are set aside for use under a Plan to

Attain Self-Sufficiency (PASS).

c. Amounts received by a participant in other publicly assisted programs that are specifically for, or in

reimbursement of, out-of-pocket expenses incurred (special equipment, clothing, transportation,

childcare, etc.) and which are made solely to allow participation in a specific program.

d. Amounts received under a resident service stipend. A resident service stipend is a modest amount (not to

exceed $200 per month) received by a resident for performing a service for the PHA or owner, on a part-

time basis, that enhances the quality of life in the development. Such services may include, but are not

limited to, fire patrol, hall monitoring, lawn maintenance, resident initiatives coordination, and serving s a

member of the PHA’s governing board. No resident may receive more than one such stipend during the

same period of time.

e. Incremental earnings and benefits resulting to any family member from participation in qualifying state

or local employment training programs (including training not affiliated with a local government) and

training of a family member as resident management staff. Amounts excluded by this provision must be

received under employment training programs with clearly defined goals and objectives, and are excluded

only for the period during which the family member participates in the employment-training program.

10. Gifts Temporary, nonrecurring, or sporadic income (including gifts).

11. Reparation

Payments

Reparation payments paid by a foreign government pursuant to claims filed under the laws of that government by

persons who were persecuted during the Nazi era.

12. Income from

Full-time

Students

Earnings in excess of $480 for each full-time student 18 years old or older (excluding the head of household or

spouse).

13. Adoption

Assistance

Payments

Adoption assistance payments in excess of $480 per adopted child.

14. Social

Security & SSI

Income

Deferred periodic amounts from supplemental security income and social security benefits that are received in a

lump sum amount or in prospective monthly amounts.

15. Property Tax

Refunds

Amounts received by the family in the form of refunds or rebates under state or local law for property taxes paid

on the dwelling unit.


16. Home Care

Assistance

Amounts paid by a state agency to a family with a member who has a developmental disability and is living at

home to offset the cost of services and equipment needed to keep this developmentally disabled family member at

home.

17. Other Federal

Exclusions

Amounts specifically excluded by any other Federal statute from consideration as income for purposes

of determining eligibility or benefits under a category of assistance programs that includes assistance

under any program to which the exclusions set forth in 24 CFR 5.609(c) apply. A notice will be

published in the Federal Register and distributed to housing owners identifying the benefits that qualify

for this exclusion. Updates will be published and distributed when necessary. The following is a list of

income sources that qualify for that exclusion:

The value of the allotment provided to an eligible household under the Food Stamp Act of 1977;

Payments to volunteers under the Domestic Volunteer Service Act of 1973 (employment through

AmeriCorps, VISTA, Retired Senior Volunteer Program, Foster Grandparents Program, youthful

offender incarceration alternatives, senior companions);

Payments received under the Alaskan Native Claims Settlement Act;

Income derived from the disposition of funds to the Grand River Band of Ottawa Indians;

Income derived from certain submarginal land of the United States that is held in trust for certain

Indian tribes;

Payments or allowances made under the Department of Health and Human Services’ Low-Income

Home Energy Assistance Program.

Payments received under the Maine Indian Claims Settlement Act of 1980 (25 U.S.C. 1721);

The first $2,000 of per capita shares received from judgment funds awarded by the Indian Claims

Commission or the U.S. Claims Court and the interests of individual Indians in trust or restricted

lands, including the first $2,000 per year of income received by individual Indians from funds

derived from interests held in such trust or restricted lands;

Amounts of scholarships funded under Title IV of the Higher Education Act of 1965, including

awards under the Federal work-study program or under the Bureau of Indian Affairs student

assistance programs;

Payments received from programs funded under Title V of the Older Americans Act of 1985 (Green

Thumb, Senior Aides, Older American Community Service Employment Program);

Payments received on or after January 1, 1989, from the Agent Orange Settlement Fund or any

other fund established pursuant to the settlement in the In Re Agent Orange product liability

litigation, M.D.L. No. 381 (E.D.N.Y.);

Earned income tax credit refund payments received on or after January 1, 1991, including

advanced earned income credit payments;

The value of any child care provided or arranged (or any amount received as payment for such

care or reimbursement for costs incurred for such care) under the Child Care and Development


Block Grant Act of 1990;

Payments received under programs funded in whole or in part under the Job Training Partnership

Act (employment and training programs for Native Americans and migrant and seasonal farm

workers, Job Corps, veterans employment programs, state job training programs and career intern

programs, AmeriCorps).

Payments by the Indians Claims Commission to the Confederated Tribes and Bands of Yakima

Indian Nation or the Apache Tribe of Mescalero Reservation;

Allowances, earnings, and payments to AmeriCorps participants under the National and

Community Services Act of 1990;

Any allowance paid under the provisions of 38 U.S.C. 1805 to a child suffering from spina bifida

who is the child of a Vietnam veteran;

Any amount of crime victim compensation (under the Victims of Crime Act) received through

crime victim assistance (or payment or reimbursement of the cost of such assistance) as

determined under the Victims of Crime Act because of the commission of a crime against the

applicant under the Victims of Crime Act; and

Allowances, earnings, and payments to individuals participating in programs under the Workforce

Investment Act of 1998.


ATTACHMENT 4 - Title 25 Section 6914 Gross Income Inclusions – For CalHome activities

“Gross income” shall mean the anticipated income of a person or family for the twelve-month period following the date of

determination of income.

“Income” shall consist of the following:

(a) Except as provided in subdivision (b), “Exclusions”, all payments from all sources received by the family head (even if

temporarily absent) and each additional member of the family household who is not a minor shall be included in the

annual income of a family. Income shall include, but not be limited to:

(1) The gross amount, before any payroll deductions, of wages and salaries, overtime pay, commissions, fees, tips

and bonuses;

(2) The net income from operation of a business or profession or from rental or real or personal property (for this

purpose, expenditures for business expansion or amortization of capital indebtedness shall not be deducted to

determine the net income from a business);

(3) Interest and dividends;

(4) The full amount of periodic payments received from social security, annuities, insurance policies, retirement

funds, pensions, disability or death benefits and other similar types of periodic receipts;

(5) Payments in lieu of earnings, such as unemployment and disability compensation, worker’s compensation and

severance pay;

(6) Public Assistance. If the public assistance payment includes any amount specifically designated for shelter and

utilities which is subject to adjustment by the public assistance agency in accordance with the actual cost of

shelter and utilities, the amount of public assistance income to be included as income shall consist of:

(A) The amount of the allowance or grant exclusive of the amount specifically designated for shelter and

utilities, plus

(B) The maximum amount which the public assistance agency could in fact allow for the family for shelter

and utilities,

(7) Periodic and determinable allowances such as alimony and child support payments, and regular contributions

or gifts from persons not residing in the dwelling;

All regular pay, special pay and allowances of a member of the Armed Forces (whether or not living in the dwelling) who is

head of the family or spouse.


Title 25 Section 6914 Gross Income Exclusions

(b) The following items shall not be considered as income:

(1) Casual, sporadic, or irregular gift items;

(2) Amounts which are specifically for or in reimbursement of the cost of medical expenses;

(3) Lump-sum additions to family assets, such as inheritances, insurance payments (including payments under health

and accident insurance and worker’s compensation), capital gains and settlement for personal or property losses;

(4) Amounts of educational scholarships paid directly to the student or to the educational institution, and amounts

paid by the government to a veteran for use in meeting the costs of tuition, fees, books and equipment. Any

amounts of such scholarships, or payments to veterans, not used for the above purposes of which are available for

subsistence are to be included in income;

(5) The special pay to a serviceman head of a family away from home and exposed to hostile fire;

(6) Relocation payments made pursuant to federal, state, or local relocation law;

(7) Foster child care payments;

(8) The value of coupon allotments for the purchase of food pursuant to the Food Stamp Act of 1964 which is an

excess of the amount actually charged the eligible household;

(9) Payments received pursuant to participation of the following volunteer programs under the ACTION Agency:

(A) National Volunteer Antipoverty Programs which include VISTA, Service Learning Programs and Special

Volunteer Programs.

(B) National Older American Volunteer Program for persons aged 60 and over which include Retired Senior

Volunteer Programs, Foster Grandparent Program, older American Community Services Program, and

National Volunteer Program to Assist Small Business Experience, Service Corps of Retired Executive (SCORE)

and Active Corps of Executives (ACE).


ATTACHMENT 5 - 24 CFR 5.609(b) and (c)

This table presents 24 CFR 5.609(b) and (c) Part 5 asset inclusions and exclusions as stated in the HUD Technical Guide

for Determining Income and Allowances for HOME Program (Third Edition; January 2005).

Statements from 24 CFR Part 5 – Last Modified: January 2005

Inclusions

1. Cash held in savings accounts, checking accounts, safe deposit boxes, homes, etc. For savings accounts, use the

current balance. For checking accounts, use the average 6-month balance. Assets held in foreign countries are

considered assets.

2. Cash value of revocable trusts available to the applicant.

3. Equity in rental property or other capital investments. Equity is the estimated current market value of the asset

less the unpaid balance on all loans secured by the asset and all reasonable costs (e.g., broker fees) that would be

incurred in selling the asset. Under HOME, equity in the family's primary residence is not considered in the

calculation of assets for owner-occupied rehabilitation projects.

4. Cash value of stocks, bonds, Treasury bills, certificates of deposit and money market accounts.

5. Individual retirement, 401(K), and Keogh accounts (even though withdrawal would result in a penalty).

6. Retirement and pension funds.

7. Cash value of life insurance policies available to the individual before death (e.g., surrender value of a whole life

or universal life policy).

8. Personal property held as an investment such as gems, jewelry, coin collections, antique cars, etc.

9. Lump sum or one-time receipts, such as inheritances, capital gains, lottery winnings, victim's restitution,

insurance settlements and other amounts not intended as periodic payments.

10. Mortgages or deeds of trust held by an applicant.

Exclusions

1. Necessary personal property, except as noted in number 8 of Inclusions, such as clothing, furniture, cars and

vehicles specially equipped for persons with disabilities.

2. Interest in Indian trust lands.

3. Assets not effectively owned by the applicant. That is, when assets are held in an individual's name, but the

assets and any income they earn accrue to the benefit of someone else who is not a member of the household

and that other person is responsible for income taxes incurred on income generated by the asset.

4. Equity in cooperatives in which the family lives.

5. Assets not accessible to and that provide no income for the applicant.

6. Term life insurance policies (i.e., where there is no cash value).

7. Assets that are part of an active business. "Business" does not include rental of properties that are held as an

investment and not a main occupation.


HOME MAXIMUM PURCHASE PRICE / AFTER-REHAB VALUE LIMIT

(HOME Program Limits as of 3/29/12)

CITY NAME One-Family

MERCED $358,383

CALHOME MAXIMUM SALES PRICE / VALUE LIMIT

For homes assisted with a CalHome Program loan, the maximum allowable sales price or the maximum after-rehab

value of a home shall be set at 100% of the current median sales price of a single family home in the City in which the

CalHome Program is located. This information may be obtained from sources including, but not limited to, Policy Map,

Data Quik, Realty Trac, or FHA 203(b) loan limits.

HOME SUBSIDY LIMITS PER UNIT – SECTION 221(d)(3) FOR MERCED (Limits are effective 5/8/12)

CITY NAME 0 Bedroom 1-Bedroom 2-Bedroom 3-Bedroom 4-Bedroom

MERCED $119,532 $137,026 $166,622 $215,555 $236,612

CURRENT INCOME LIMITS FOR THE AREA (FOR ALL PROGRAMS)

(Limits are effective 2/9/12)

Number of Persons in Household

1 2 3 4 5 6 7 8

80% of

AMI

$32,450 $37,050 $41,700 $46,300 $50,050 $53,750 $57,450 $61,150

HOME Program Income Limits http://www.hud.gov/offices/cpd/affordablehousing/programs/home/limits/income/

HOME Program Maximum Sales Price or After Rehab Value Limits

http://www.hud.gov/offices/cpd/affordablehousing/programs/home/limits/maxprice.cfm

HOME Program Maximum Subsidy Limits

http://www.hud.gov/offices/cpd/affordablehousing/programs/home/limits/subsidylimits.cfm

http://www.hud.gov/offices/cpd/affordablehousing/programs/home/limits/income/

http://www.hud.gov/offices/cpd/affordablehousing/programs/home/limits/maxprice.cfm

http://www.hud.gov/offices/cpd/affordablehousing/programs/home/limits/subsidylimits.cfm


STANDARDS FOR BEDROOM AND BATHROOM ADDITIONS TO ALLEVIATE OVERCROWDING

Maximum No. of

Persons in the

Household

Number of

Bedrooms

Number of

Bathrooms

1 SRO 1

1 0-BR 1

2 1-BR 1

4 2-BR 2

6 3-BR 2

8 4-BR 3

10 5-BR 3

12 6-BR 4

The chart above is used as a guide to overcrowding.

Opposite sex children under 6 years of age may share a bedroom, up to 2 children per bedroom.

Opposite sex children 6 years of age and older may have their own bedroom.

Children shall be permitted a separate bedroom from their parents.

Same sex children of any age may share a bedroom, up to 2 children per bedroom.

Adults not in a partner relationship may have their own bedroom.

4 or more people – a second bathroom may be added.

8 or more people – a third bathroom may be added.

Pursuant to Uniform Housing Code Section (UHC) 503.2, dwelling units and congregate residences shall have at

least one room which shall have not less than 120 square feet of floor area. Other habitable rooms, except

kitchens, shall have an area of not less than 70 square feet. Where more than two persons occupy a room used for

sleeping purposes, the required floor area shall be increased at the rate of 50 square feet for each occupant in

excess of two.

Same rules apply to mobile home units.


ATTACHMENT 6 - HOUSING REHABILITATION MARKETING PLAN

SUMMARY

The Sponsor will continue its efforts to market the Housing Rehabilitation Program in a manner that will reach all

community members.

All marketing related to the Housing Rehabilitation Program is publicized in both English and Spanish. All marketing

materials include information identifying the Sponsor’s commitment to fair housing laws and affirmative marketing policy,

and are widely distributed. Equal opportunity is emphasized in written materials and oral presentations. The Sponsor

identifying what marketing materials are used, and when and where they are distributed maintains a record.

Forms of marketing may include fliers, brochures, newspaper ads, articles and public service announcements. Fliers and

brochures are distributed at local government buildings, other public buildings and through the mail, as well as to

businesses that assist those not likely to apply without special outreach. Advertisements and articles are published in

newspapers that are widely circulated within the community.

Established working relationships with local lending agencies also aid in informing the public by facilitating the

distribution of informational fliers to households seeking financial assistance for repairs that are unable to obtain

conventional financing.

Informational meetings are offered to potential participants to explain Program requirements. Often, minimal formal

outreach efforts are required as the need for assistance generally exceeds funds available. However, marketing measures

are actively performed in order to maintain a healthy interest list.

Characteristics on all applicants and participants are collected and compared with the Sponsor’s demographics. Should the

Sponsor find that there are underserved segments of the population, a plan to better serve them will be developed and

implemented.

MARKETING FORMS

Fliers

Brochures

Newspaper Ads and Articles

Public Service Announcements

Public Informational Meetings

MARKETING VENUES

Local Government Buildings

Local Public Services Buildings

Private Businesses

Lending Agencies

Real Estate Offices

Newspaper

Radio

Mail


ATTACHMENT 7 - RESIDENTIAL ANTI-DISPLACEMENT & TEMPORARY RELOCATION

PLAN

The Housing and Community Development Act of 1974, as amended, and the National Affordable Housing Act of 1990,

require all grantees of Community Development Block Grant (CDBG) funds or Home Investment Partnership (HOME) funds

to follow a written Residential Anti-displacement and Relocation Assistance Plan (Plan) for any activities which could lead

to displacement of occupants whose property is receiving funds from these or other federal funding source. Having been

developed in response to both aforesaid federal legislations, this Plan is intended to inform the public of the compliance of

the CITY OF MERCED (Sponsor) with the requirements of federal regulations 24 CFR 570.606 under state recipient

requirements and Section 104(d) of the Housing and Community Development Act of 1974 and 24 CFR 92 of the HOME

federal regulations. The Plan will outline reasonable steps, which the Sponsor will take to minimize displacement and

ensure compliance with all applicable federal and state relocation requirements. The Sponsor’s governing body has

adopted this plan via a formal resolution.

This Plan will affect rehabilitation activities funded by the U.S. Department of Housing and Urban Development (HUD)

under the following Program titles: HOME, CDBG, Urban Development Action Grant (UDAG), Special Purpose Grants,

Section 108 Loan Guarantee Program, and such other grants as HUD may designate as applicable, which take place within

the Sponsor’s jurisdiction limits.

The Sponsor will provide permanent relocation assistance to all eligible “displaced” households either owner occupied or

rental occupied units which are permanently displaced by the housing rehabilitation Program (See Section E below.). In

addition, the Sponsor will replace all eligible occupied and vacant occupiable low income group dwelling units demolished

or converted to a use other than low income group housing as a direct result of rehabilitation activities. This applies to all

units assisted with funds provided under the Housing and Community Development Act of 1974, as amended, and as

described in the Federal Regulations 24 CFR 570.496(a), Relocation, Displacement and Acquisition: Final Rule dated July

18, 1990 (Section 104(d)) and 49 CFR Part 24, Uniform Relocation Assistance (URA) and Real Property Acquisition

Regulations Final Rule and Notice (URA) dated March 2, 1989.

All Sponsor Programs/projects will be implemented in ways consistent with the Sponsor’s commitment to Fair Housing.

Participants will not be discriminated against on the basis of race, color, religion, age, ancestry, national origin, sex, familial

status, or handicap. The Sponsor will provide equal relocation assistance available 1) to each targeted income group

household displaced by the demolition or rehabilitation of housing or by the conversion of a targeted income group

dwelling to another use as a direct result of assisted activities; and 2) to each separate class of targeted income group

persons temporarily relocated as a direct result of activities funded by HUD Programs.

A. Minimizing Permanent Displacement and Temporary Relocation Resulting from Housing Rehabilitation or

Reconstruction Activities

Consistent with the goals and objectives of activities assisted under the Act, the Sponsor will take the following steps to

minimize the displacement of persons from their homes during housing rehabilitation or reconstruction funded by

HUD Programs:

1. Provide proper notices with counseling and referral services to all tenants so that they understand their relocation

rights and receive the proper assistance. When necessary, assist permanently displaced persons to find alternate

housing in the neighborhood.

2. Stage rehabilitation of assisted households to allow owner occupants and/or tenants to remain during minor

rehabilitation.

3. Encourage owner investors to temporarily relocate tenants to other available safe and sanitary vacant units on the


project site area during the course of rehabilitation or pay expenses on behalf of replaced tenants.

4. Work with area landlords, real estate brokers, and/or hotel/motel managements to locate vacancies for

households facing temporary relocation.

5. When necessary, use public funds, such as CDBG funds, to pay moving costs and provide relocation/displacement

payments to households permanently displaced by assisted activities.

B. Lead Based Paint Mitigation Which Causes Temporary Relocation:

On September 15, 2000, the Final Rule for Lead Based Paint Hazard Control went into effect. Among other things, it

requires that federally-funded rehabilitation must use safe work practices so that occupants and workers can be

protected from lead hazards. At no time should the tenant-occupant(s) be present in work areas or designated

adjacent areas while LHC activities are taking place in any dwelling unit interior, common area, or exterior. As

such, occupants may not be allowed to remain in their units during the time that lead-based paint hazards are being

created or treated. Once work that causes lead hazards has been completed, and the unit passes clearance, the

occupants can return. The tenant-occupants may not reoccupy a work area or adjacent area until post-lead

hazard reduction clearance standards have been achieved and verified with laboratory results. The final rule

allows for certain exceptions: Programs:

1. The work will not disturb lead-based paint, or create dust-lead or soil-lead hazard; or

2. The work is on exterior only and openings are sealed to prevent dust from entering the home, the work area is

cleaned after the work is completed, and the residents have alternative lead free entry; or

3. The interior work will be completed in one period of less than 8-daytime hours and the work site is contained to

prevent the release of dust into other areas of the home; or

4. The interior work will be completed within five (5) calendar days, the work site is contained to prevent the release

of dust, the worksite and areas within 10 feet of the worksite are cleaned at the end of each day to remove any

visible dust and debris, and the residents have safe access to kitchen and bath and bedrooms.

If temporary relocation assistance is not provided because the Sponsor believes that the project meets one of the above

criteria, then proper documentation must be provided in the rehabilitation project file to show compliance. It is up to

the Sponsor to ensure that the owner occupant or tenant in the project does not get impacted by lead paint mitigation

efforts. In most cases where lead paint mitigation is taking place, occupants (tenants or owners) will be strongly

encouraged to relocate even for just a few days until a final lead clearance can be issued by a certified lead based paint

assessor. Occupants who are temporarily relocated because of lead based paint mitigation are entitled to the same

relocation assistance as those who are relocated because of substantial rehabilitation or reconstruction activities.

C. Temporary Relocation of Owner Occupants:

Owner occupants are not allowed to stay in units which are hazardous environments during lead based paint

mitigation. When their home is having lead based paint mitigation work done which will not make it safe to live in,

then they are eligible for temporary relocation assistance up to $5,000, which will be provided as a grant. In the same

way, a unit requiring substantial rehabilitation (with or without lead based paint mitigation) which will not allow the

family to access a bath or kitchen facility, or if the unit is being demolished and reconstructed, then the family will be

eligible for temporary relocation assistance up to $5,000, which will be provided as a grant.

The housing rehabilitation loan specialist and/or the rehabilitation construction specialist will complete a temporary

relocation assistance form (See Appendix C) to document that the owner occupant understands that they must


relocate during the course of construction and what expenses they wish to be reimbursed for as part of their

relocation. Relocation Assistance is a reimbursement of actual expenses and must be supported by invoices.

At the time of doing the work write-up, the Sponsor and Owner occupant will estimate the cost for temporary

relocation. If unforeseen circumstances make it appear that the estimated amount will not cover the cost of temporary

relocation, written change orders will be required. The change order will state the change and dollar value for the

change. The change order must be signed by both the contractor and the Owner occupant, and submitted to the

Program Operator for approval. If the change order exceeds the approved grant amount, a report and request for

additional Temporary Relocation grant funds may be presented to the Sponsor’s Loan Review Committee for approval

prior to the Program Operator signing-off on the change order.

D. Temporary Relocation of Residential Tenants:

If continued occupancy during rehabilitation is judged to constitute a substantial danger to health and safety of the

tenant or the public, or is otherwise undesirable because of the nature of the project, the tenant may be required to

relocate temporarily. The contract administrator or rehabilitation specialist will make determination of the need for

temporary relocation. The temporary relocation period will not exceed 180 days. All conditions of temporary

relocation will be reasonable. Any tenant required to relocate temporarily will be helped to find another place to live

which is safe, sanitary and of comparable value and they have the first right to move back into the original unit being

rehabilitated at the same rent or lower. He or she may move in with family and friends and still receive full or partial

temporary assistance based on eligible cost incurred. The housing rehabilitation loan specialist and/or the

rehabilitation specialist will ensure that each tenant-occupied unit under the Program will receive a General

Information Notice (GIN) (as soon as possible after a loan application is received) and the tenant will receive a Notice

of Non-displacement (after loan approval), and each tenant-occupied unit will have a temporary relocation assistance

form completed for them. (See Appendix C). These notices will document that each tenant understands what their

relocation rights are, and if they must relocate during the course of construction, that they receive the proper

counseling and temporary relocation assistance.

A tenant receiving temporary relocation shall receive the following:

1. Increased housing costs (e.g. rent increase, security deposits) and

2. Payment for moving and related expenses, as follows:

a. Transportation of the displaced persons and personal property within 50 miles, unless the grantee determines

that farther relocation is justified;

b. Packing, crating, unpacking, and uncrating of personal property;

c. Storage of personal property, not to exceed 12 months, unless the grantee determines that a longer period is

necessary;

d. Disconnection, dismantling, removing, reassembling, and reinstalling relocated household appliances and

other personal property;

e. Insurance for the replacement value of personal property in connection with the move and necessary storage;

f. The replacement value of property lost, stolen or damaged in the process of moving (not through the fault of

the displaced person, his or her agent, or employee) where insurance covering such loss, theft or damage is

not reasonably available;

g. Reasonable and necessary costs of security deposits required to rent the replacement dwelling;

h. Any costs of credit checks required to rent the replacement dwelling;

i. Other moving related expenses as the grantee determines to be reasonable and necessary, except the following

ineligible expenses:

1) Interest on a loan to cover moving expenses; or

2) Personal injury; or


3) Any legal fee or other cost for preparing a claim for a relocation payment or for representing the

claimant before the Grantee; or

4) Costs for storage of personal property on real property already owned or leased by the displaced

person before the initiation of negotiations.

E. Rehabilitation Activities Requiring Permanent Displacement

The Sponsor’s rehabilitation Program will not typically trigger permanent displacement and permanent displacement

activities fall outside of the scope of this plan. If a case of permanent displacement is encountered, then the staff

responsible for the rehabilitation Program will consult with Sponsor’s legal counsel to decide if they have the capacity

to conduct the permanent displacement activity. If local staff does not have the capacity, then a professional relocation

consultant will be hired to do the counseling and assistance determination and implementation. If local staff does wish

to do the permanent displacement activity then they will consult and follow the HUD Relocation Handbook 1378.

F. Rehabilitation Which Triggers Replacement Housing

If the Sponsor’s rehabilitation Program assists a property where one or more units are eliminated then under Section

104 (d) of the Housing and Community Act of 1974, as amended applies and the Sponsor is required to replace those

lost units. An example of this would be a duplex unit which is converted into a single family unit. In all cases where

rehabilitation activities will reduce the number of housing units in the jurisdiction, then the Sponsor must document

that any lost units are replaced and any occupants of reduced units are given permanent relocation assistance. (This

does not apply to reconstruction or replacement housing done under a rehabilitation Program where the existing

unit(s) is demolished and replaced with a structure equal in size without the loss in number of units or bedrooms.)

Replacement housing will be provided within three years after the commencement of the demolition or conversion.

Before entering into a contract committing the Sponsor to provide funds for an activity that will directly result in such

demolition or conversion, the Sponsor will make this activity public (through a noticed public hearing and/or

publication in a newspaper of general circulation) and submit to the California Department of Housing and Community

Development or the appropriate federal authority the following information in writing:

1. A description of the proposed assisted activity;

2. The location on a map and the approximate number of dwelling units by size (number of bedrooms) that will

be demolished or converted to a use other than as targeted income group dwelling units as a direct result of

the assisted activity;

3. A time schedule for the commencement and completion of the demolition or conversion;

4. The location on a map and the approximate number of dwelling units by size (number of bedrooms) that will

be provided as replacement dwelling units;

5. The source of funding and a time schedule for the provision of the replacement dwelling units;

6. The basis for concluding that each replacement dwelling unit will remain a targeted income group dwelling

unit for at least 10 years from the date of initial occupancy; and,

7. Information demonstrating that any proposed replacement of dwelling units with smaller dwelling units (e.g.,

a two-bedroom unit with two one-bedroom units) is consistent with the housing needs of targeted income

group households in the jurisdiction.

The Program Operator for the Sponsor is responsible for tracking the replacement of housing and ensuring that it

is provided within the required period. The Sponsor is responsible for ensuring requirements are met for

notification and provision of relocation assistance, as described in Section 570.606, to any targeted income group

displaced by the demolition of any dwelling unit or the conversion of a targeted income group dwelling unit to

another use in connection with an assisted activity.

G. Record Keeping and Relocation Disclosures/Notifications


The Sponsor will maintain records of occupants of federally funded rehabilitated, reconstructed or demolished

property from the start to completion of the project to demonstrate compliance with section 104(d), URA and

applicable Program regulations. Each rehabilitation project, which dictates temporary or permanent or replacement

activities, will have a project description and documentation of assistance provided. (See sample forms in HUD

Relocation Handbook 1378, Chapter 1, Appendix 11, form HUD-40054)

Appropriate advisory services will include reasonable advance written notice of (a) the date and approximate duration

of the temporary relocation; (b) the address of the suitable, decent, safe, and sanitary dwelling to be made available for

the temporary period; (c) the terms and conditions under which the tenant may lease and occupy a suitable, decent,

safe, and sanitary dwelling.

Notices shall be written in plain, understandable primary language of the persons involved. Persons who are unable to

read and understand the notice (e.g. illiterate, foreign language, or impaired vision or other disability) will be provided

with appropriate translation/communication. Each notice will indicate the name and telephone number of a person who

may be contacted for answers to questions or other needed help. The notices and process below is only for temporary

relocation. If permanent relocation is involved, then other sets of notice, noticing process, and relocation assistance must

be applied (See HUD relocation handbook 1378 for those forms and procedures) The Temporary Relocation Advisory

Notices to be provided are as follows:

1. General Information Notice: As soon as feasible when an owner investor is applying for Federal financing for

rehabilitation, reconstruction, or demolition, the tenant of a housing unit will be mailed or hand delivered a

General Information Notice that the project has been proposed and that the tenant will be able to occupy his or her

present house upon completion of rehabilitation. The tenant will be informed that the rent after rehabilitation will

not exceed current rent or 30 percent of his or her average monthly gross household income. The tenant will be

informed that if he or she is required to move temporarily so that the rehabilitation can be completed, suitable

housing will be made available and he or she will be reimbursed for all reasonable extra expenses. The tenant will

be cautioned that he or she will not be provided relocation assistance if he or she decides to move for personal

reasons. See Appendix A for sample notice to be delivered personally or by certified mail.

2. Notice of Non Displacement: As soon as feasible when the rehabilitation application has been approved, the tenant

will be informed that they will not be permanently displaced and that they are eligible for temporary relocation

assistance because of lead based paint mitigation or substantial rehabilitation, or reconstruction of their unit. The

tenant will also again be cautioned not to move for personal reasons during rehabilitation, or risk losing relocation

assistance. See Appendix B for sample notice to be delivered personally or by certified mail.

3. Disclosure to Occupants of Temporary Relocation Assistance: This form is completed to document that the

Sponsor is following its adopted temporary relocation plan for owner occupants and tenants. See Appendix C for

a copy of the disclosure form.

4. Other Relocation/Displacement Notices: The above three notices are required for temporary relocation. If the

Sponsor is attempting to provide permanent displacement assistance then there are a number of other forms

which are required. Staff will consult HUD’s Relocation Handbook 1378 and ensure that all the proper notices are

provided for persons who are permanently displaced as a result of housing rehabilitation activities funded by

CDBG or other federal Programs.


ATTACHMENT 8 - LETTER OF FUNDS AVAILABLE TO REHABILITATE PROPERTY

Dear ,

On (date) , (property owner) submitted an application to the for financial assistance to

rehabilitate the building which you occupy at (address) .

This notice is to inform you that, if the assistance is provided and the building is rehabilitated, you will not be displaced.

Therefore, we urge you not to move anywhere at this time. (If you do elect to move for reasons of your choice, you will not

be provided relocation assistance.)

If the application is approved and Federal assistance is provided for the rehabilitation, you will be able to lease and occupy

your present apartment (or another suitable, decent, safe and sanitary apartment in the same building) upon completion of

the rehabilitation. Of course, you must comply with standard lease terms and conditions.

After the rehabilitation, your initial rent, including the estimated average monthly utility costs, will not exceed the greater

of (a) your current rent/average utility costs, or (b) 30 percent of your gross household income. If you must move

temporarily so that the rehabilitation can be completed, suitable housing will be made available to you for the temporary

period, and you will be reimbursed for all reasonable extra expenses, including all moving costs and any increase in

housing costs.

Again, we urge you not to move. If the project is approved, you can be sure that we will make every effort to accommodate

your needs. Because Federal assistance would be involved, you would be protected by the Uniform Relocation Assistance

and Real Property Acquisition Policies Act of 1970, as amended.

This letter is important and should be retained. You will be contacted soon. In the meantime, if you have any questions

about our plans, please contact (name) , (title) , at (telephone number),

(address) .

Sincerely,

(name)

(title)


ATTACHMENT 9 – LETTER OF FUNDS AVAILABLE TO REHABILITATE PROPERTY (date)

Dear :

On (date) , we notified you that the owner of your building had applied for assistance to make extensive repairs to the

building. On (date) , the owner's request was approved, and the repairs will begin soon.

This is a notice of non-displacement. You will not be required to move permanently as a result of the rehabilitation. This

notice guarantees you the following:

1. You will be able to lease and occupy your present apartment [or another suitable, decent, safe and sanitary

apartment in the same building/complex] upon completion of the rehabilitation. Your monthly rent will remain

until after construction is completed. If increased after construction is done, your new rent and estimated average

utility costs will not exceed local fair market rents for your community. Of course, you must comply with all the

other reasonable terms and conditions of your lease.

2. If you must move temporarily so that the repairs can be completed, you will be reimbursed for all of your extra

expenses, including the cost of moving to and from the temporarily occupied unit and any additional housing costs.

The temporary unit will be decent, safe and sanitary, and all other conditions of the temporary move will be

reasonable.

Since you will have the opportunity to occupy a newly rehabilitated apartment, I urge you not to move. (If you do elect to

move for your own reasons, you will not receive any relocation assistance.) We will make every effort to accommodate

your needs. Because Federal assistance is involved, you are protected by the Uniform Relocation Assistance and Real

Property Acquisition Policies Act of 1970, as amended.

If you have any questions, please contact (name) , (title), at (phone #) , (address) . Remember; do not

move before we have a chance to discuss your eligibility for assistance. This letter is important to you and should be

retained.

Sincerely,

(name and title)


ATTACHMENT 10 – DISCLOSURE TO OCCUPANT OF TEMPORARY RELOCATION ASSISTANCE

DISCLOSURE TO OCCUPANT OF TEMPORARY RELOCATION ASSISTANCE

Top to be completed at time of loan application submittal or Home Visit

Property Address:

__ Rental Unit __Owner/Occupied Unit

The rehabilitation loan specialist working on behalf of the City/City of

has explained the temporary relocation services and assistance available under the current rehabilitation Program

relocation plan.

I/we have been advised that the City/City of rehabilitation construction specialist will inform me if I need to

be temporarily relocated and will to assist me with scheduling any necessary moves and answer any questions about

assistance as needed.

Acknowledged:

Occupant Signature Date Occupant Signature Date

Complete this at time of acceptance of Work Write Up with initials by occupant

The rehabilitation construction specialist for the City/City of

has explained the Rehabilitation Scope of Work for our house and I/we agree that it will:

____ Not require I/we to be relocated. (If initialed then STOP here and sign bottom.)

____ Yes, I/we need to be temporarily relocated. (Complete rest of form if initialed.)


Start date and duration of relocation:

____ Starting on or about we will move for all or part of the rehabilitation project.

Approximate length of temporary relocation: Number of days.

For temporary relocation, I/We elect to (check all that apply):

____ Relocate with friends and family.

____ Relocate into a suitable temporary housing unit identified by rehab specialist.

____ Relocate furnishings only into a temporary storage unit.

____ I/We have been told what our relocation assistance is and elect Not to be reimbursed for any eligible relocation

expenses.

____ I/We have been told what our relocation assistance is and want to be reimbursed for:

By signing, occupant(s) acknowledge receipt of copy of this form:

Occupant Signature Date Occupant Signature Date


ATTACHMENT 11 – PRESERVATION OF FINANCIAL INTEREST- LOAN POSITION

The City of Merced, hereafter called “Sponsor” has adopted these policies and procedures in order to preserve its financial

interest in properties, whose “Borrowers” have been assisted with public funds. The Sponsor will to the greatest extent

possible follow these policies and procedures but each loan will be evaluated and handled on a case-by-case basis. The

Sponsor has formulated this document to comply with state and federal regulations regarding the use of these public funds

and any property restrictions that are associated with them.

The Sponsor may, at its discretion, enter into an agreement with a third party to collect and distribute payments and/or

complete all loan servicing aspects of the Program. For CalHome, the Sponsor must obtain prior approval from HCD and

must provide HCD a copy of the contract.

The policies and procedures are broken down into the follow areas: 1) making required monthly payments or voluntary

payments on a loan’s principal and interest; 2) required payment of property taxes and insurance; 3) required Request for

Notice of Default on all second mortgages; 4) loans with annual occupancy restrictions and certifications 5) required

noticing and limitations on any changes in title or use of property; 6) required noticing and process for requesting a

subordination during a refinance; 7) processing of foreclosure in case of default on the loan; 8) the Sponsor as the Senior

Lien holder; 9) processing of demands and payoffs.

1. Loan Repayments:

The Sponsor will collect monthly payments from those borrowers who are obligated to do so under Notes that are

amortized promissory notes. Late fees will be charged for payments received after the assigned monthly date.

For Notes that are deferred payment loans; the Sponsor must accept voluntary payments on the loan. Loan payments will

be credited to principal. The borrower may repay the loan balance at any time with no penalty.

At time of completion, the funds expended on a housing unit will be compared to the Note amount. Any funds not

expended at completion will be considered a “principal reduction” and will be applied to the principal loan balance thereby

lowering the amount owed by the borrower. Borrowers will receive a closeout letter after the 30-day retention period

indicating the amount of their Note, the credit, and the ending balance on their loan. A copy of this credit along with the

final cost break-down will be retained in the borrowers file.

2. Payment of Property Taxes and Insurance:

As part of keeping the loan from going into default, borrower must maintain property insurance coverage naming the

Sponsor as loss payee in first position or additional insured if the loan is a junior lien. If borrower fails to maintain the

necessary insurance, the Sponsor may take out force placed insurance to cover the property while the Borrower puts a new

insurance policy in place. All costs for installing the necessary insurance will be added to the loan balance at time of

installation of Borrower’s new insurance.

When a property is located in a 100-year flood plain, the Borrower will be required to carry the necessary flood insurance.

A certificate of insurance for flood and for standard property insurance with an endorsement naming the City as additional

insured will be required at close of escrow. The Sponsor must verify the insurance on an annual basis.

Property taxes must be kept current during the term of the loan. If the Borrower fails to maintain payment of property

taxes, then the Sponsor may pay the taxes current and add the balance of the tax payment plus any penalties to the balance


of the loan. Wherever possible, the Sponsor encourages Borrower to have impound accounts set up with their first

mortgagee wherein they pay their taxes and insurance as part of their monthly mortgage payment.

Required Request for Notice of Default:

When the Borrower’s loan is in second position behind an existing first mortgage, it is the Sponsor's policy to prepare and

record a "Request for Notice of Default" for each senior lien in front of Sponsor’s loan. This document requires any senior

lien holder listed in the notice to notify the Sponsor of initiation of a foreclosure action. The Sponsor will then have time to

contact the Borrower and assist them in bringing the first loan current. The Sponsor can also monitor the foreclosure

process and go through the necessary analysis to determine if the loan can be made whole or preserved. When the Sponsor

is in a third position and receives notification of foreclosure from only one senior lien holder, it is in their best interest to

contact any other senior lien holders regarding the status of their loans.

3. Annual Occupancy Restrictions and Certifications:

On some owner-occupant loans the Sponsor may require that Borrowers submit utility bills and/or other documentation

annually to prove occupancy during the term of the loan. Other loans may have income and housing cost evaluations,

which require a household to document that they are not able to make repayments, typically every five years. These loan

terms are incorporated in the original note and deed of trust.

Continued residency is monitored annually for the term of the loan. Occupancy will be verified, reviewed and certified by

the submission of the following:

Proof of occupancy in the form of a copy of a current utility bill; and

Statement of unit's continued use as primary residence of the owner.

Declaration that other title holders do not reside on the premises;

Verification that Property Taxes are current; and

Verification of current required insurance policies.

4. Required Noticing and Restrictions on Any Changes of Title or Occupancy:

In all cases where there is a change in title or occupancy or use, the Borrower must notify the Sponsor in writing of any

change. Sponsor or its designated Loan Servicing Agent and borrower will work together to ensure the property is kept in

compliance with the original Program terms and conditions such that it remains available as an affordable home for low

income families. These types of changes are typical when Borrowers do estate planning (adding a relative to title) or if a

Borrower dies and property is transferred to heirs or when the property is sold or transferred as part of a business

transaction. In some cases the Borrower may move and turn the property into a rental unit without notifying the Sponsor.

Changes in title or occupancy must be in keeping with the objective of benefit to low-income households (below 80 percent

of AMI). Note – CalHome loans are not assumable.

Change from owner-occupant to owner-occupant occurs at a sale. When a new owner-occupant is not low-income, the

loan is not assumable and the loan balance is immediately due and payable. If the new owner-occupant qualifies as low-

income, the purchaser may either pay the loan in full or assume all loan repayment obligations of the original owner-

occupant, subject to the approval of the Sponsor’s Loan Committee (depends on the HCD Program). Note – CalHome loans

are not assumable.


If a transfer of the property occurs through inheritance, the heir (as owner-occupant) may be provided the opportunity to

assume the loan at an interest rate based on household size and household income, provided the heir is income eligible. If

the heir intends to occupy the property and is not low-income, the balance of the loan is due and payable. If the heir

intends to act as an owner-investor, and the loan was funded with CDBG funds, the balance of the loan may be converted to

an owner/investor interest rate and loan term and a rent limitation agreement is signed and recorded on title. All such

changes are subject to the review and approval of the Sponsor’s Loan Committee. Note – CalHome loans are not

assumable.

Change from owner-occupant to owner-investor occurs when an owner-occupant decides to move out and rent the

assisted property, or if the property is sold to an investor. If the owner converts any assisted unit from owner occupied to

rental, the loan is due in full.

Conversion to use other than residential use is not allowable where the full use of the property is changed from residential

to commercial or other. In some cases, Borrowers may request that the Sponsor allow for a partial conversion where some

of the residence is used for a business but the household still resides in the property. Partial conversions can be allowed if

it is reviewed and approved by any and all agencies required by local statute. If the use of the property is converted to a

fully non-residential use, the loan balance is due and payable.

For CalHome, the following transfers of interest shall not require the repayment of the CalHome Program loan:

1) transfer to a surviving joint tenant by devise, descent, or operation of law on the death of a joint tenant;

2) a transfer, in which the transferee is a person who occupies or will occupy the property, which is:

(i) a transfer where the spouse becomes an owner of the property;

(ii) a transfer resulting from a decree of dissolution of marriage, legal separation agreement, or from an incidental

property settlement agreement by which the spouse becomes an owner of the property; or

(iii) a transfer into an inter vivos trust in which the borrower is and remains the beneficiary and occupant of the

property.

5. Requests for Subordinations:

When a Borrower wishes to refinance the property, they must request a subordination request to the Sponsor. The

Sponsor will subordinate their loan only when there is no “cash out” as part of the refinance. Cash out means there are no

additional charges on the transaction above loan and escrow closing fees. There can be no third-party debt payoffs or

additional encumbrance on the property above traditional refinance transaction costs. Furthermore, the refinance should

lower the housing cost of the household with a lower interest rate and the total indebtedness on the property should not

exceed the current market value.

Upon receiving the proper documentation from the refinance lender, the request will be considered by the loan committee

for review and approval. Upon approval, the escrow company will provide the proper subordination document for

execution and recordation by the Sponsor.

6. Process for Loan Foreclosure:


Upon any condition of loan default: 1) non-payment; 2) lack of insurance or property tax payment; 3) change in title or use

without approval; or 4) default on senior loans, the Sponsor or its designated Loan Servicing Agent will send out a letter to

the Borrower notifying them of the default situation. If the default situation continues, the Sponsor may start a formal

process of foreclosure.

When a senior lien holder starts a foreclosure process and the Sponsor is notified via a Request for Notice of Default, the

Sponsor, who is the junior lien holder, may cancel the foreclosure proceedings by "reinstating" the senior lien holder. The

reinstatement amount or payoff amount must be obtained by contacting the senior lien holder. This amount will include all

delinquent payments, late charges and fees to date. Sponsor must confer with Borrower to determine if, upon paying the

senior lien holder current, the Borrower can provide future payments. If this is the case, then the Sponsor may cure the

foreclosure and add the costs to the balance of the loan with a Notice of Additional Advance on the existing note.

If the Sponsor determines, based on information on the reinstatement amount and status of borrower, that bringing the

loan current will not preserve the loan, then staff must determine if it is cost effective to protect their position by paying off

the senior lien holder in total and restructure the debt such that the unit is made affordable to the Borrower. If the Sponsor

does not have sufficient funds to pay the senior lien holder in full, then they may choose to cure the senior lien holder and

foreclose on the property themselves. As long as there is sufficient value in the property, the Sponsor can afford to pay for

the foreclosure process and pay off the senior lien holder and retain some or all of their investment.

If the Sponsor decides to reinstate, the senior lien holder will accept the amount to reinstate the loan up until five (5) days

prior to the set "foreclosure sale date." This "foreclosure sale date" usually occurs about four (4) to six (6) months from the

date of recording of the "Notice of Default." If the Sponsor fails to reinstate the senior lien holder before five (5) days prior

to the foreclosure sale date, the senior lien holder would then require a full pay off of the balance, plus costs, to cancel

foreclosure. If the Sponsor determines the reinstatement and maintenance of the property not to be cost effective and

allows the senior lien holder to complete foreclosure, the Sponsor's lien may be eliminated due to insufficient sales

proceeds.

7. Sponsor as Senior Lien holder

When the Sponsor is first position as a senior lien holder, active collection efforts will begin on any loan that is 31 or more

days in arrears. Attempts will be made to assist the homeowner in bringing and keeping the loan current. These attempts

will be conveyed in an increasingly urgent manner until loan payments have reached 90 days in arrears, at which time the

Sponsor may consider foreclosure. Sponsor’s staff will consider the following factors before initiating foreclosure:

1) Can the loan be cured and can the rates and terms be adjusted to allow for affordable payments such that

foreclosure is not necessary?

2) Can the Borrower refinance with a private lender and pay off the Sponsor?

3) Can the Borrower sell the property and pay off the Sponsor?

4) Does the balance warrant foreclosure? (If the balance is under $5,000, the expense to foreclose may not be

worth pursuing.)

5) Will the sales price of home "as is" cover the principal balance owing, necessary advances, (maintain fire

insurance, maintain or bring current delinquent property taxes, monthly yard maintenance, periodic inspections

of property to prevent vandalism, etc.) foreclosure, and marketing costs?


If the balance is substantial and all of the above factors have been considered, the Sponsor may opt to initiate foreclosure.

The Borrower must receive, by certified mail, a thirty-day notification of foreclosure initiation. This notification must

include the exact amount of funds to be remitted to the Sponsor to prevent foreclosure (such as, funds to bring a delinquent

BMIR current or pay off a DPL).

At the end of thirty days, the Sponsor should contact a reputable foreclosure service or local title company to prepare and

record foreclosure documents and make all necessary notifications to the owner and junior lien holders. The service will

advise the Sponsor of all required documentation to initiate foreclosure (Note and Deed of Trust usually) and funds

required from the owner to cancel foreclosure proceedings. The service will keep the Sponsor informed of the progress of

the foreclosure proceedings.

When the process is completed, and the property has "reverted to the beneficiary" at the foreclosure sale, the Sponsor

could sell the home themselves under a homebuyer Program or use it for an affordable rental property managed by a local

housing authority or use it for transitional housing facility or other eligible use. The Sponsor could contract with a local real

estate broker to list and sell the home and use those funds for Program income-eligible uses.

8. Process Demands and Payoffs:

Requests for demands and payoffs will be processed within the time frame allowed by law. Sponsor or its designated Loan

Servicing Agent is proficient in performing the related calculations. Reconveyance and lien releases would be prepared for

processing by a qualified Title Company.


ATTACHMENT 12 - FORECLOSURE POLICY

City of Merced As Junior Lien holder

It is the City of Merced’s (Sponsor’s) policy to prepare and record a "Request for Notice" on all junior liens (any lien after

the first position) placed on properties financed by a loan.

This document requires any senior lien holder to notify the Sponsor of initiation (recordation of a "Notice of Default") of a

foreclosure only. This is to alert the junior lien holder that they are to monitor the foreclosure with the senior lien holder.

When the Sponsor is in a third position and receives notification of foreclosure from only one senior lien holder, it would

be in their best interest to contact both senior lien holders regarding the status of their loans.

The junior lien holder may cancel the foreclosure proceedings by "reinstating" the senior lien holder. The reinstatement

amount must be obtained by contacting the senior lien holder. This amount will include all delinquent payments, late

charges, advances (fire insurance premiums, property taxes, property protection costs, etc.), and foreclosure costs (fees for

legal counsel, recordings, certified mail, etc.)

Once the Sponsor has the information on the reinstatement amount, staff must then determine if it is cost effective to

protect their position by reinstating the senior lien holder, keeping them current by submitting a monthly payment

thereafter, foreclosing on the property possibly resulting in owning the property at the end of foreclosure, protecting the

property against vandalism, and paying marketing costs (readying the home for marketing, paying for yard maintenance,

paying a real estate broker a sales commission).

If the Sponsor decides to reinstate, the senior lien holder will accept the amount to reinstate the loan up until five (5) days

prior to the set "foreclosure sale date." This "foreclosure sale date" usually occurs about four (4) to six (6) months from the

date of recording of the "Notice of Default." If the Sponsor fails to reinstate the senior lien holder before five (5) days prior

to the foreclosure sale date, the senior lien holder would then require a full pay off of the balance, plus costs, to cancel

foreclosure. If the Sponsor determines the reinstatement and maintenance of the property not to be cost effective and

allows the senior lien holder to complete foreclosure, the Sponsor's lien may be eliminated due to insufficient sales

proceeds.

Sponsor As Senior Lien holder

When the Sponsor is in a first position, or the senior lien holder, active collection efforts will begin on any loan that is 31 or

more days in arrears. Attempts will be made to assist the homeowner in bringing and keeping the loan current. These

attempts will be conveyed in an increasingly urgent manner until loan payments have reached 90 days in arrears, at which

time the Sponsor may consider foreclosure. Sponsor staff will consider the following factors before initiating foreclosure:

- Can the loan be cured (brought current or paid off) by the owner without foreclosure?

- Can the owner refinance with a commercial lender and pay off the Sponsor?

- Can the owner sell the property and pay off the Sponsor?

- Does the balance warrant foreclosure? (If the balance is under $5,000, the expense to foreclose may not be

worth pursuing.)

- Will the sales price of home "as is" cover the principal balance owing, necessary advances, (maintain fire

insurance, maintain or bring current delinquent property taxes, monthly yard maintenance, periodic

inspections of property to prevent vandalism, etc.) foreclosure, and marketing costs?


If the balance is substantial and all of the above factors have been considered, the Sponsor may opt to initiate foreclosure.

The owner must receive, by certified mail, a thirty-day notification of foreclosure initiation. This notification must include

the exact amount of funds to be remitted to the Sponsor to prevent foreclosure (such as, funds to bring a delinquent BMIR

current or pay off a DPL).

At the end of thirty days, the Sponsor should contact a reputable foreclosure service or local title company to prepare and

record foreclosure documents and make all necessary notifications to the owner and junior lien holders. The service will

advise the Sponsor of all required documentation to initiate foreclosure (Note and Deed of Trust usually) and funds

required from the owner to cancel foreclosure proceedings. The service will keep the Sponsor informed of the progress of

the foreclosure proceedings. When the process is completed, and the property has "reverted to the beneficiary" at the

foreclosure sale, the Sponsor would then contact a real estate broker to market the home.


ATTACHMENT 13 - CERTIFICATION OF OCCUPANCY

CITY OF MERCED

I/we declare as follows:

(Please Print Occupant’s Name(s))

That I/we am/are currently occupying as my/our principal place of residence the real

property commonly known as:

(Address)

(City, State, Zip code)

Daytime Phone Number:

Executed on______________________, 20____, at ___________________, CA

(Date) (City)

I/we declare under penalty of perjury that the foregoing is true and correct.

Signature(s) of all occupants:

Occupant: _______________________________________________________________

Occupant: _______________________________________________________________

Occupant: _______________________________________________________________

Occupant: _______________________________________________________________

Occupant: ___________________________________________________________


NSP Eligible

Uses

Eligible

PropertyEligible Activities Specific Activity

National

Objectiv

e

Meeting the

National Objective

(A)

Financing

Mechanism

AcquisitionAcquire a property and take no further action

except to rent or sell itLMMH

Rent or sell the residential

property to a family at or

below 120% AMI

Rehabilitation,

Homeownership

Assistance², Homebuyer

Counseling1

Rehabilitate a property that the grantee

acquired through tax foreclosure in the past.

NOTE: The grantee may not reimburse itself for

the cost of the property with NSP funds, but

can be repaid through sale proceeds

LMMH



below 120% AMI

Acquisition, Rehabilitation,

Homeownership


Counseling1

Acquire and Rehabilitate a property and rent or

sell itLMMH



below 120% AMI


Relocation, Homebuyer

Counseling1

Acquire and Rehabilitate a rental property that

has a Bona Fide Tenant and rent or sell itLMMH

Protect the tenant. Rent or

sell the residential property

to a family at or below 120%

AMIAcquisition, Rehabilitation,

Homeownership


Counseling1

Provide Financial Assistance to rehabilitate

and/ or acquire an NSP eligible home. This

assistance can be directly to the homebuyer or

other interested party

LMMH



below 120% AMI


Homeownership


Counseling1

Reconstruct a property on the footprint of the

original structure that was demolishedLMMH



below 120% AMI

Acquisition and Disposition

Purchase and briefly maintain an acquired

property in a static state until a beneficiary

occupies the property. Disposition can include

maintenance, marketing and closing costs.

_

Another action must be

taken for the property to

meet a National Objective

Clearance

Demolish a structure that meets the local

definition of "Blighted" when the grantee has

the legal authority to demolish these structures

LMMA

Remove a structure that

poses a detriment to the NSP

target area where at least

51% of the residents are at

or below 120% AMI

Clearance

The grantee demolishes a number of

structures that meet the local definition of

"Blighted" in a concentrated neighborhood

demolition plan.

LMMA

Improve a target area where

at least 51% of the residents

are at or below 120% AMI

through a comprehensive

plan to remove dangerous

or blighting structures.

Clearance

Demolish a structure that meets the local

definition of "Blighted" and with the intention

of carrying out another activity.

_




AcquisitionAcquire a property with the intent to demolish

with use D and then redevelop-




Acquisition, New

Construction,

Homeownership


Counseling1

Acquire vacant land and construct a new

structure on itLMMH



below 120% AMI

New Construction,

Homeownership


Counseling1

Reconstruct a new structure on the site of a

structure that the grantee demolishedLMMH



below 120% AMI

Acquisition, Construction of

Public Facilities

FOR NSP1 FUNDS ONLY:

Construct a public facility or improvementLMMA

The public improvement

must provide a benefits to

NSP target area where at

least 51% of the residents

are at or below 120% AMI

Disposition

Briefly maintain the property in a static state

until a beneficiary occupies the property, fund

expenses related to seller closing costs

_




Program

Administrati

on and

Planning

General Administration

Activities

General Management, oversight and

coordination (limited to 10% of total grant and

Program Income)

_

Does not need to directly

meet a National Objective,

because it will support an

activity that will.

Footnotes

This chart illustrates the most common NSP projects, sometimes composed of several eligible activities and sometime several eligible

uses. The chart aims to clarify the often-complex interplay among eligible properties, uses, and activities all of which must result in

activities that meet a national objective.

NOTE: All Activities in this eligible use finance activities in the categories

below. Follow the instructions for those activities.

1 All Prospective Homeowners need to receive at least 8 hours of housing Counseling

² Homeownership Assistance can only be provided directly to a homeowner

Abandone

d or

Foreclosed

Homes and

Residential

Properties

(B)

Acquisition

Rehabilitatio

n

Blighted

Homes and

Residential

Properties

("Blighted"

is defined

by state or

local law.)

(D)

Demolition

Demolishe

d or

Vacant

Properties

(E)

Redevelopm

ent

ATTACHMENT 14 - NATIONAL OBJECTIVES AND NSP

All NSP3 funded activities must meet HERA’s Low Moderate Middle Income (LMMI) National Objective, which means to

benefit LMMI households. LMMI Households are defined as households whose incomes do not exceed 120 percent of area

median income, adjusted for family size (measured as 2.4 times the current Section 8 income limit for households below

50% of the area median income, adjusted for family size. All households assisted using NSP3 funds shall have incomes,

which do not exceed 120 percent of area median income, adjusted for family size.


ATTACHMENT 15 – REHABILITATION CHANGE ORDER REQUEST

Perform Change Order Inspections & Estimates

Change Order and Contingency Inspections verify that it is necessary to modify the initial contract in one of three areas:

completion date, scope of work, or cost. All revisions require a cost reasonable estimate by the program or construction

manager.

Work Tasks

1. Inspect the job upon the receipt of a field order or informal request. Define with the contractor and the owner

the nature of the requested changes. Verify need and proposed solution. Verify quantities and methods. Draft a field

order if appropriate.

Field Order Rehabilitation Specialist

2. Prepare a change order, including scope of work, time revision and component by component estimate of a

reasonable cost using local cost data.

3. Negotiate the cost and time increase parameters with the contractor and owner. Determine if funds are

available with which to implement the Change Order. Recommend the owner’s verbal approval.

REHABILITATION SPECIALIST

4. Create the Change Order in Computer. Using the prepared form fill in: time changes, construction changes,

scope of work revisions and tradeoffs, and have both contractor and owner sign it. Then approve the Change

Order by affixing your signature.

Change Order Rehabilitation Specialist

5. Post the Change Order to the Housing Developer Profile and notify accounting of the budget revision.

Rehabilitation Specialist

Notes

• Administrative change orders. Even when no additional money is involved in a job change, a Change Order

must be executed. Each change to the scope of work or time to complete is a modification of the contract

and must be documented and approved.


ATTACHMENT 16 - City of Merced First Time Home Buyer Assistance Program

LENDER PROCESS Your client has been approved to participate in a City of Merced first time homebuyer assistance program. This program

will enable your client to acquire a loan from the City of Merced to help purchase their home. The home to be purchased

must be located within the city limits of Merced.

City of Merced Housing Division staff will prepare loan documents based on information that you provide to us about your

client. The loan documents include: loan agreement between the participant and the City of Merced, promissory note, truth

in lending disclosure statement, deed of trust, declaration of conditions, covenants, and restrictions, and disclosure

statement. Included in this packet are forms that we will need you to fill out for our use in preparing the City loan

documents.

The City loan documents will be sent to the title company to be signed at the same time as the primary loan documents.

After the City loan documents are signed at the title company by the participant, the documents are returned to the City of

Merced for routing to various City departments that need to sign as well. A check for the approved loan amount will be cut

by our Finance department after they receive proof that all the loan documents have been approved and signed. The City

process for routing the documents for signatures, and getting the check cut, can take between five and seven

business days. This is important for you to note in order to provide enough time for this process to take place to meet the

escrow closing deadline.

By giving you everything that is required up front, we hope that this will help you in understanding the first time home

buyer program and what we need from you. If you have any questions please call us anytime Monday through Friday

between the hours of 10:00 a.m. and 12:00 p.m. and 1:00 p.m. and 5:00 p.m.

Contact information:

City of Merced Housing Division

678 West 18th Street

Merced, CA 95340

(209) 385-6863

(209) 723-1780 Fax

[email protected]



CHECKLIST OF ITEMS NEEDED FOR CITY OF MERCED LOAN PROCESS

1. Primary Mortgage Lender Certification. This form is included in the packet.

The participant must provide 1% of their own funds toward the purchase of their home.

The participant has two weeks from the date of their approval letter from the City of Merced to provide this

to our office.

2. Primary Lender Certification of Borrower Eligibility. This form is included in the packet. The participant has two

weeks from the date of their approval letter from the City of Merced to provide this to our office.

3. Copy of the Sales Contract. The participant has 45 days from the date of their approval letter from the City of

Merced to provide this to our office. If the City doesn’t receive the sales contract within the 45-day period, the

participant’s application may be cancelled.

4. Copy of the Appraisal.

5. Preliminary Title Report.

6. Final Loan Approval Form. This form is included in the packet.

7. Escrow Information. This form is included in the packet.

8. Estimated Settlement Statement.

PRIMARY MORTGAGE LENDER CERTIFICATION FOR CITY OF MERCED FIRST TIME HOMEBUYER

ASSISTANCE PROGRAM

This is to certify that ___________________________________________ a commercial lending institution doing business in the state of

California has performed a due diligence analysis of “borrowers own funds” as presented by

______________________________________________________________, who wish to borrow funds through the City of Merced’s First Time

Homebuyer Assistance Program, and have found that the 1% of sales price being provided by borrowers meets the

accepted industry standards for such funds.

___________________________________________________ (Lending Institution) also certifies that the amount of the request “down

payment” as a portion of the funds requested from the City of Merced represents no more than 10% of the sales price.


By: ______________________________________________________

Date:_____________________________

CITY OF MERCED FIRST TIME HOMEBUYER PROGRAM PRIMARY LENDER CERTIFICATION OF BORROWER ELIGIBILITY

Name of Primary Lender:_________________________________________________________

Address:______________________________________________________________________

City:_____________________________________ State ___________ Zip _______________

Loan Officer: __________________________________________________________________

Telephone #: ______________________________________

E-Mail:

Borrower(s): __________________________________________________________________

Estimated Annual Income: _________________________________________

Maximum amount that can be borrowed from Primary Lender based on borrower income:____________

Financing program to be used: (1) FHA ______

(2) CHFA ______

(3) Fannie Mae ______

(4) Other: Please describe. _________________________

I certify that the financing program being used is not a subprime or interest only loan. ___________

Initials

Interest rate of First Mortgage: ____________ Term: ____________ ARM or Fixed: _________

If ARM, Please describe the terms (i.e., how the loan adjusts, and maximum interest rate at cap.)

_____________________________________________ _________________ (Signature of Loan Officer)

Date


FINAL LOAN APPROVAL FORM TO WHOM IT MAY CONCERN:

THE FOLLOWING INFORMATION IS NECESSARY AS A COMPONENT OF THE CITY OF MERCED GRANTING FINAL

APPROVAL OF ITS FIRST TIME HOME BUYER PROGRAM:

DATE:_______________________________________

MORTGAGE COMPANY NAME:_____________________________________________________________________________

ADDRESS:_______________________________________________________________________________________________

CITY / STATE / ZIP:__________________________________________TELEPHONE #:_______________________________

LOAN OFFICER: _______________________________PRIMARY LENDER’S LOAN AMOUNT $______________________

SALES PRICE: $_________________________________INTEREST RATE:____________________________________

TYPE OF LOAN: FINANCING PROGRAM TO BE USED:

FIXED:____________ FHA____________

ARM :_____________ CHFA___________

BUY DOWN:___________ OTHER: Please describe._________________________________

AMOUNT TO BE PAID BY BORROWER (ATLEAST 1% OF SALES PRICE): $______________________________________

AMOUNT OF CITY FUNDS REQUESTED: $_________________________

ITEMIZATION OF COSTS REQUESTED BY THE CITY OF MERCED:

(This should total the Amount of City Funds Requested above)

DOWN PAYMENT AMOUNT (CANNOT EXCEED 10% OF THE SALES PRICE) $________________________ LOAN ORIGINATION FEE: $_______________________ APPRAISAL FEE: $_______________________ CREDIT REPORT: $_______________________ PREPAID INTEREST: $_______________________ MORTGAGE INSURANCE PREMIUM: $_______________________ HAZARD INSURANCE PREMIUM: $_______________________ MORTGAGE INSURANCE: $_______________________ COUNTY PROPERTY TAXES: $_______________________ ESCROW FEES: $_______________________ DOCUMENT PREPARATION: $_______________________ TITLE INSURANCE: $_______________________ RECORDING FEES: $_______________________ OTHER:

FOR CITY OF MERCED USE ONLY OK FOR FINAL LOAN APPROVAL

DIRECTOR OF ECONOMIC DEVELOPMENT

HOUSING MANAGER

HOUSING FINANCE SPECIALIST

HOUSING PROGRAM SPECIALIST

City of Merced DRAFT NSP3 Policy and Procedure Manual

ESCROW INFORMATION

BORROWER(S) NAME:_____________________________________________________________________________

HOW TITLE IS BEING TAKEN:_______________________________________________________________________

PROPERTY ADDRESS:_________________________________________________APN #:_______________________

TITLE COMPANY:

ADDRESS: ________________________________________________________________________________________

CITY/STATE/ZIP:___________________________________TELEPHONE:____________________________________

ESCROW OFFICER: __________________________________________ESCROW#:

ESTIMATED LOAN DOCUMENT SIGNING DATE: _____________________________________

ESTIMATED CLOSING DATE:__________________________________


ATTACHMENT 17 - STANDARDS AND CODES RELATED TO CONSTRUCTION

PROPERTY STANDARDS (24 CFR 92.251)

Property standards are required in the HOME Program to achieve two major purposes:

1. Set a minimum standard for habitability/functionality, for purposes of inspecting and specifying necessary

improvements listed in the scope of work; and

2. Establish materials, methods, and standards for any work to be performed.

The property standards that are applicable to the City's HOME Program are described briefly below.

Housing Codes/Standards

1. Housing codes/standards specify the basic living and structural conditions for existing properties. They

are used to determine if an existing residence is habitable and identify health and safety conditions.

2. Housing codes/standards are used as the basis for initial inspections of existing properties to identify

needed repairs and appropriate improvements. Their purpose is to ensure that existing housing is not

occupied unless it is decent, safe, and sanitary.

3. Waivers can be requested for rehabilitation developments if structural constraints prohibit adherence to

the minimum design standards. Waiver requirements are detailed as part of the CITY 's Minimum Design

Standards.

Building Codes

1. Building codes are a series of requirements that specify how new construction or rehabilitation work is to

be carried out. They inform contractors about how to do the work and are used by inspectors to check

completed work.

a. The CITY building codes are mandatory citywide. The local government requires that, owners, and

developers comply with the building codes adopted in the City's jurisdiction.

2. A number of related codes, such as the fire code and plumbing code, are incorporated into the local

building codes.

3. Most work governed by building codes requires that licensed contractors obtain permits prior to starting

the work.

4. A building permit alerts building officials and inspectors to the fact that certain types of construction are

about to begin and completed work must be inspected to determine if it meets requirements.

Rehabilitation Codes


1. Rehabilitation codes provide specific guidance about applying building codes to guide repair, remodeling,

and rehabilitation of existing structures. Appendix J of the International Residential Code provides the

minimum requirements for existing structures being rehabilitated.

2. They serve the same purpose as building codes, but are moderated to be reasonable approaches to existing

conditions because it would be very expensive (perhaps impossible) to renovate an existing older building

to meet the same standards for new constructed buildings.

Rehabilitation Standards

1. A rehabilitation standard defines the quality of materials and workmanship that must be used when a

particular repair is made. Rehabilitation standards (sometimes called construction standards) speak to the

quality, durability, and aesthetics of the end product.

2. They define what methods and materials are eligible for HOME payment.

3. The CITY has adopted written rehabilitation standards for rehabilitation of owner-occupied units, single-

family and multi-family, whether the work is done by contractors, or nonprofits.


ATTACHMENT 18 - CITY OF MERCED HOUSING DIVISION HOUSING PROJECT CHECKLIST

PROJECT ADDRESS: _________________________________

ACTIVITY DESCRIPTION DATE COMMENTS

Application received from finance specialist

Meeting with homeowner

Property surveyed with building inspector

Termite/pest control survey (rehabilitation)

Survey letter mailed (A, B, C code items or

demolition)

Microfiche files searched for property history

and drawings

Property visited for work write up and

drawings

Environmental request (photo and age of unit)

submitted

Work write up/drawings started

Work write up/drawings approved by

homeowner

Drawings submitted for plan check and

approval

County Assessor Release Form signed by

Owner

County Assessor sign off (new homes)

Lead based paint contractor contacted

(rehabilitation)

Air pollution control district contacted (new

homes)

Lead Based Paint Test Completed; Results

Invitation for estimates mailed to contractors

Rehab Specialist creates project cost

estimate based upon work write-up and

lead/termite testing.

Check requested for PG&E (new homes)


ACTIVITY DESCRIPTION DATE COMMENTS

Relocation process started

Estimate opening

Estimate list and cost reasonable form

approved

Contractor selected by homeowner

Loan summary submitted to finance specialist

Loan documents signed

Homeowner relocated

Pre-job conference

Environmental report completed

Request sent to Engineering for elevation

certification (new homes)

School fee submitted to school

Permit fees submitted for processing

Building permit issued

Lead based paint contractor work started

Construction started

Lead based paint removal completed

Homeowner, contractor, and rehab specialist

meetings and change orders processed

See project log for specific dates and further

information.

Building inspections See project log for further information. Check

building file for complete inspection records

and dates. No checks given without Rehab

Specialist inspection and sign-off.

30-Day notice given for relocated homeowner

Final Inspection

Project final walk-through with homeowner

Project completed

Notice of completion signed


ATTACHMENT 19 - WORK WRITE UP AND REHABILITATION COST ESTIMATE

REQUIREMENT

NSP requires that properties to be assisted with the program’s funds meet local building and housing

standards. Additionally, NSP requires that grantees describe or reference rehabilitation standards for their

program. Merced has established written rehabilitation standards for the NSP. Further, the estimated purchase

price, carrying costs, and cost of rehabilitation cannot exceed $120,000 An estimated cost of repairs was provided

prior to gaining approval for purchase. The purpose of this step is to prepare a detailed work write up and cost

estimate.

PROCESS

Merced staff use the internal Design form to complete a Work Order/Service Ticket.

The Work Order/Service Ticket instructs staff of the Design and Construction Services office to complete a detailed NSP Home Inspection Report.

The NSP Home Inspection Report details both the Scope of Work and the dollar value of the rehabilitation associated with each line item in the Scope of Work.

Merced staff review the NSP Home Inspection Report to:

Confirm that the scope of work and estimate is in line with the initial estimate (initial estimates are captured on the NSP which is documented in the property file), and

Check that the total development costs associated with the property does not exceed Merced threshold of $120,000. Merced staff perform this check by adding

The offer price to

The cost of the rehabilitation as established in the Home Inspection Report and

Carrying costs associated with the property

If the sum total is below the City threshold of $148,000, Merced staff contact the Seller or the Seller’s agent to relay the appraised value and the Discount Purchase Price.

If the sum total is above the City threshold of $148,000, Merced staff will reject the purchase.

Merced staff place a copy of the NSP Home Inspection Report in the property file.

COST ESTIMATES

Cost estimates including overhead and profit will be performed on each NSP3 home, as follows:

1. Rehab cost estimates will be completed in a line-item, work write-up format with

one work item per line unless an alternative form of estimate is approved in writing by City;

2. Cost estimates for substantial rehabilitation will be based on take-offs from the

working drawings of the quantities of materials and labor required or compilations of costs for

similar and recently-built or renovated structures;

3. Site improvement cost estimates will be completed for each improvement and

based on take-offs of quantities of materials and labor required;


4. Construction work must be competitively bid. The cost estimate will be used to

determine the cost reasonableness of bids;

5. Work to be completed by Developer acting as general contractor. The cost

estimate for each NSP project must be reviewed by Merced to determine cost-reasonableness and

approved by Grantee. When approved, the cost estimate becomes a schedule of values that is used

by Grantee’s construction inspector to determine the value of work completed for the purpose of

approving draw requests.

6. Likewise, if a contractor has been simply designated and not selected through a

competitive bidding process, the price proposal of such contractor must be reviewed by Merced to

determine cost-reasonableness and approved by the City. When approved (and possibly amended

by Grantee), the price proposal becomes a schedule of values that is used by City’s construction

inspector to determine the value of work completed for the purpose of approving draw request.

7. The lowest bid will be awarded unless:

A. Bid is unreasonably below Rehab Specialist’s Estimated Cost

B. Contractor is already on an NSP awarded project

8. If the lowest bid is not awarded, documentation MUST be included in file.


PROGRAM INCOME PLAN INSTRUCTIONS

The City of Merced’s Grantee Agreement with HUD requires all sub-recipients to submit a Program Income Plan if

the sub-recipient wishes to receive and utilize Program Income generated by the activities of the City partners.

In order to facilitate quick submittal of a compliant sub-recipient Program Income Plans, Merced has developed a

set of checklists and certification forms for each type of allowable use of Program Income. These checklists and

certification forms are listed in the Table of Contents and are included in this document.

Begin by completing the Eligible Use Checklist.

Each eligible use has a corresponding set of certifications and documents that must be submitted in order for the

sub-recipients’ Program Income Plan to be reviewed and approved. The hyperlinks take the user to the correct

Certifications and Documents for the Eligible Activity.

The sub-recipient must submit a complete package, in electronic form, consisting of the following:

1. The Eligible Use Checklist, signed and dated

2. A Certification for each Eligible Use designated by the Sub-recipient, signed and dated

a. Only one certification for each Sub-recipient selected Eligible Use is required

3. A complete set of required documents for each Eligible Use designated by the sub-recipient

a. Only one set of documents for each Sub-recipient selected Eligible Use is required

Submit the complete package to ____________________ by e-mail by DATE. Submissions after DATE will be

automatically rejected. Incomplete submissions will be returned to the Sub-recipient.


ATTACHMENT 20 - CITY OF MERCED PROGRAM INCOME REUSE PLAN

NEIGHBORHOOD STABILIZATION PROGRAM INCOME REUSE PLAN

Grantee Telephone#: (209) 385-6863 Grantee E-mail: [email protected]

The purpose of this plan is to establish guidelines on the policies and procedures for the administration and

utilization of program income received as a result of activities funded under the Neighborhood Stabilization

Program (NSP).

Need for Plan Governing Reuse of NSP Program Income

NSP is authorized under Title Ill of Division B of the Housing and Economic Recovery Act of 2008 (HERA) and

under the heading of the Emergency Assistance for Redevelopment of Abandoned and Foreclosed Homes. HERA

provides under a rule of construction that, unless it is' otherwise stated, grants made under the NSP are

considered to be Community Development Block Grant (CDBG) funds.

This Reuse Plan is intended to satisfy the requirements specified in federal statute and regulation at Section

1040) of the Housing and Community Development Act ("the Act"), as amended in 1992 and 24 Code of

Federal Regulations (CFR) 570.489 (e)(3) and of Title Ill of Division B of HERA.

These statutory and regulatory sections permit the Grantee to retain NSP Program Income generated by eligible

NSP activities pursuant to HERA. The eligible NSP activities shall principally benefit low-, moderate-, and middle-

income (LMM!) individuals and families, and limited to only those activities as described in the Grantee's

Application and Exhibit B of the NSP Standard Agreement. Such activities may include:

A. Establish financing mechanisms for purchase and redevelopment of foreclosed-upon homes and

residential properties, including such mechanisms as soft-seconds, loan loss reserves, and shared-equity

loans for low- and moderate-income homebuyers.

B. Purchase and rehabilitate homes and residential properties that have been abandoned or foreclosed upon,

in order to sell, rent, or redevelop such homes and properties.

C. Establish land banks for homes that have been foreclosed upon.

D. Demolish blighted structures.

E. Redevelop demolished or vacant properties.

EXHIBIT A



Acceptance of the NSP Program Income Reuse Plan

The NSP Program Income Reuse Plan must detail the proposed uses of NSP Program Income and confirm the jurisdiction's required compliance with state and federal regulations.

The NSP Program Income Reuse Plan must be adopted by the ·local governing board only after

compliance with the Grantee's citizen participation process as specified in Federal Regulations at 24 CFR

570.486, Local Government Requirements.

The Grantee shall obtain the Department of Housing and Community Development's (Department)

written acceptance before taking any site-specific prohibitive choice limiting actions with any NSP

Program Income funded activity.

Program Income Defined

NSP Program Income is defined in federal regulation at 24 CFR 570.500(a) which specifies that the NSP

Program Income is the gross income received by the Grantee that has been directly generated from the use of

CDBG/NSP funds. There are limitations and requirements based on the NSP activity that generated the

program income and on the date the income is received. Examples of program income include:

• Payments of principal and interest on housing rehabilitation or business loans made using CDBG/NSP

funds,

• Interest earned on program income pending its disposition, net proceeds from the disposition by sale

or long-term lease of real property purchased or improved with CDBG/NSP funds,

• Income (net of costs that are incidental to the generation of the income) from the use or rental of real

property that has been acquired, constructed or improved with CDBG/NSP funds and that is owned (in

whole or in part) by the participating jurisdiction or subrecipient.

1. Program Income generated by activities carried out pursuant to Section 2301(c)(3)(B) and (E).

a. Program Income received before July 30, 2015, may be retained by the Grantee if it is treated as

additional CDBG/NSP funds and used in accordance with the requirements of Section 2301.

b. Program Income received on or after July 30, 2015, will be retained by the subgrantee and used

for activities similar to allowable activities that generated the program income.

Any program income received by the Grantee on or after July 30, 2015, that is generated by activities carried

out pursuant to Section 2301(c)(3)(B) and (E) (e.g., proceeds from the sale) and is not authorized to be

retained as described below must be remitted to the Department.

Any program income received by a NSP grantee on or after July 30, 2013, that is generated by

activities carried out pursuant to Section 2301(c)(3)(B) and (E) and that is in excess of the cost to acquire

and redevelop or rehabilitate an abandoned or foreclosed upon home or residential property may be

retained if the Department accepts a request to use the funds for other NSP purposes.

Note that no profit can be earned on the sale of an abandoned or foreclosed-upon home or residential

property to an individual as a primary residence; as provided under Section 2301(c)(3), the sale must be


in an amount equal to or less than the cost to acquire and redevelop or rehabilitate the home or

property up to a decent, safe, and habitable condition.

Example : Grantee acquires a foreclosed-upon multi-family residential property for

$100,000, spends $100,000 to redevelop the property, and sells the property for

$225,000. If the sale occurs on or after July 30, 2015, the amount to be remitted to the

Department or unit of general government is

$200,000 if the Department authorizes the profit of $25,000 to be used for other NSP

purposes, or $225,000 if the Department does not authorize such use.

c. Revenue received by a private individual or other entity that is not a subrecipient.

i. Any revenue generated by activities carried out pursuant to Section 2301(c)(3)(B) and

(E) that is in excess of the cost to acquire and redevelop (including reasonable

development fees) or rehabilitate an abandoned or foreclosed-upon home or residential

property must be provided to the state or unit of general local government and treated

as program income. The disposition of the program income by the state or unit of

general local government is governed by a. and b. above.

ii. Any 1 revenue that is generated by activities carried out pursuant to Section

2301(c)(3)(B) and (E) and is received on or after July 30, 2015, shall be provided to

the State and treated as program income. The disposition of the program income by the

state is governed by b. above.

iii. Example : A unit of general local government uses NSP funds to make a loan (or grant)

iv. to a developer to finance the acquisition and rehabilitation of a foreclosed upon

multi-family residential property. The developer uses $200,000 in NSP funds (loan or grant)

from the unit of general local government to pay the total costs of acquisition

and rehabilitation (including reasonable development fees) and

subsequently sells the property for $225,000. The developer is required to provide

$225,000 to the unit of general local government. (If the NSP funding was a loan, the sale

proceeds would be used to repay the NSP loan.) If the sale occurs on or after July 30, 2013,

the unit of general local government must remit $225,000 to the Department. If in this same

example, the developer received $100,000 of NSP funding and used $100,000 of its own

funds for eligible costs, the revenue to be provided to the local government would be

$125,000. ·

1. Not to be included

1. Not to be included

2. Program income generated by activities carried out pursuant to Section 2301(c)(3)(A),

(C) and (E). Program income received may be retained by the State or unit of general local

government if it is treated as additional CDBG/NSP funds and used in accordance with the

requirements of Section 2301. Revenue received by a private individual or other entity that is not a

subrecipient must be returned to the State.

Cash Management


1. All NSP Program Income must be disbursed for eligible NSP activities b e f o r e additional NSP funds

are made available to the Grantee for an advance or reimbursement.

a. All NSP Program Income generated by NSP-funded activities must be placed in a separate I\ISP

Program Income account.

b. The Grantee will be allowed to use the NSP Program Income to meet the used/obligated

milestones. Furthermore, any NSP Program Income funds that are not shown to be

used/obligated on the Grantee's next Quarterly NSP Program Income Report must be returned

to the Department.

2. Agreements with subrecipients and other entities. States and units of general local governments

must incorporate in subrecipient agreements such provisions as are necessary to ensure

compliance with the requirements of this paragraph, including the requirement that program

income be remitted to the Department. States, units of general local government, and subrecipients

must incorporate in agreements with private individuals and other entities that are not

subrecipients such provisions as are necessary to ensure compliance with the requirements

governing disposition of revenue generated by activities carried out pursuant to Section 2301(c).

General Administration Cost Limitation

The Grantee will be allowed general administrative costs of up to five percent (5%) of all NSP Program

Income expended during each fiscal year.

Activity Delivery (AD) Cost Limitation

The Grantee will be allowed activity delivery costs up to the percentage (%) of the total activity

expenditure amount. The maximum activity delivery percentage (%) for each activity is:

Financing Mechanisms Housing Acquisition Housing Rehabilitation Disposition (Rental, Sale) Land banking

Demolition


Direct and Indirect Administrative Costs (CDBG) up to 20 Percent (20%)

Financing Mechanisms up to 10 percent (10%)

Housing Acquisition up to 10 percent (10%)

Housing Rehabilitation up to 19 percent (19%)

Disposition (Rental, Sale) up to 10 percent (10%)

Landbanking up to 10 percent (10%)

Demolition up to 10 percent (10%)

Redevelopment (public facilities, public improvements)* up to 15 percent (15%)

*If complex labor standards are justified up to 15 percent (15%)

Redevelopment (public facilities, public improvements)* up to 15 percent (15%) *If complex labor standards are justified up to 15 percent (15%) Reuses of NSP Program Income

The Grantee will be allowed to use the earned NSP Program Income for eligible NSP activities in the areas of greatest needs listed in the Grantee's Application and in Exhibit B of the NSP Standard Agreement.

Any NSP Program Income funds that are not shown to be obligated on the Grantee's next Quarterly NSP

Program Income Report must be returned to the Department.

Program Income received on or after July 30, 2015, will be retained by the Grantee used for similar CDBG

Activites. All program income generated by activities funded by NSP grants must be placed in a separate

NSP program income account. (Do not commingle NSP Program Income funds with CDBG; program income

funds.)

Reporting

The Grantee shall comply with all NSP reporting requirements, including, but not limited to:

Section 3 Report

Wage Compliance Report (during construction

period) Final Wage Compliance Report

Funds Request Form Quarterly Performance and Expenditure Report quarter Quarterly NSP Program Income Report

by July 31 of each year October 31 and

April 30

thirty (30) days after c:onstruction is

completed as funds are needed

Due 15 days after the end of each

Due 15 days after the end of each quarter

City of Merced NSP Policy and Procedure Manual

The Quarterly NSP Program Income Report will detail all obligated program income receipts, expenditure amounts, and specific activity detail for all expenditures.

NOTE: Any NSP Program Income funds that are not shown to be obligated on the Grantee's next Quarterly NSP Program Income Report must be returned to the Department.

Federal Overlav Compliance The Grantee shall ensure that the use of NSP Program Income under this NSP Program Income Reuse Plan complies with all federal overlay requirements, including, but not limited to:

• Citizen participation • Environmental review • Equal opportunity

• Section 3 employment • Lead-based paint • Labor standards

• Acquisition and relocation • Procurement • Property management • Maintenance of adequate accounting and recordkeeping systems Revising This Plan The Grantee has the authority to amend this document with a properly noticed Council, public hearing, resolution, and acceptance by the Department.


ATTACHMENT 21 CITY OF MERCED SECTION 3 PLAN

To be inserted once approved by the City Council


ATTACHMENT 22

CPD Monitoring Checklists for CDBG found at:

http://www.hud.gov/offices/cpd/library/monitoring/handbook.cfm

http://www.hud.gov/offices/cpd/library/monitoring/handbook.cfm


ATTACHMENT 23 - ELIGIBLE USE CHECKLIST

The following are the Eligible Uses of Program Income as defined by MERCED’S Grantee Agreement with HUD.

Check all of the Eligible Uses that the Sub-recipient intends to use. For each Eligible use checked, there is a set of

certifications and supporting documents required.

Check Eligible Uses What to Submit

Administration: (Limited to 10% of program Income) Administrative Certifications

Activity A: Financing Mechanisms

Construction Loans Financing Mechanism Certifications -

Financing Mechanism Documents

First Mortgages Financing Mechanism Certifications -


Soft Second Mortgages Financing Mechanism Certifications -


Loan Loss Reserves Financing Mechanism Certifications -


Activity B: Acquisition – Rehabilitation - Disposition

Acquisition of Single Family Foreclosed Properties Acquisition Certifications – Acquisition

Documents

Acquisition of Multifamily Foreclosed Properties Acquisition Certifications – Acquisition

Documents

Rehabilitation or Reconstruction of Single Family

Properties

Rehabilitation Certifications –

Rehabilitation Documents

Rehabilitation of Multifamily Properties Rehabilitation Certifications –

Rehabilitation Documents

Disposition of rehabilitated single family properties Disposition Certifications – Disposition

Documents

Disposition of rehabilitated multifamily properties Disposition Certifications – Disposition

Documents

Activity C: Land Banks

Acquisition of Property Acquisition Certifications – Acquisition

Documents

Maintenance of Property Maintenance Certification –

Maintenance Documents


Disposition of Property Disposition Certifications – Disposition

Documents

Activity D: Demolition (Not Eligible)

Activity E: Redevelopment

Single Family new construction on vacant land New Construction on Vacant Land

Certifications - New Construction on

Vacant Land

Multifamily new construction on vacant land New Construction on Vacant Land

Certifications - New Construction on

Vacant Land

The sub-recipient agrees and understands that the Eligible Uses checked by the Sub-recipient represent the

entirety of what the Sub-Recipient may utilize Program income for during the term of LWCRA’s Grantee

Agreement with HUD.

The sub-recipient agrees and understands that failure to maintain the certifications, agreements and

understandings contained in this Program Income Plan shall constitute a breach of this Program Income Plan

by the sub-recipient.

The sub-recipient agrees and understands that should the sub-recipient breach this Program Income Plan,

Merced may impose conditions, suspend or terminate this Program Income Plan at Merced’s sole discretion

Signed

Name of Signer

Date

Sub-Recipient Name

PAGE 2 OF 2


Administrative Certifications

Initials Required Certifications

The sub-recipient agrees and understands that Administrative funds are subject to the Office of

Management & Budget Circular A-87 which requires funds be allocable; allowable and cost

reasonable. The sub-recipient certifies that the Sub-Recipient is in compliance with OMB Circular

A-87 and will remain in compliance with OMB A-87 throughout the term of the Program Income

Plan

The Sub-recipient agrees and understands that Administrative funds may not exceed ten percent

(10%) of Program Income received

The Sub-recipient agrees and understands that Administrative funds drawn from Program Income

must be expended and accounted for in support of eligible NSP activities

The Sub-recipient agrees and understands that Administrative funds drawn from Program Income

must be expended prior to any requests for Administrative funds from Merced

The sub-recipient agrees and understands that Administrative funds drawn from Program Income

must be accounted for in the next invoice for Administrative funds from Merced






Signed

Name of Signer

Date

Sub-Recipient Name

PAGE 1 OF 1


Financing Mechanism Certifications


The sub-recipient agrees and understands that Financing Mechanism funds are subject to the Office

of Management & Budget Circular A-87 which requires funds be allocable; allowable and cost



Plan

The Sub-recipient certifies that all loans shall be originated and held in the name of Merced

The Sub-recipient certifies that all payments made by recipients of loan funds, regardless of type,

are to be paid directly to LWCRA

The Sub-recipient agrees and understands that Financing Mechanism funds may only be utilized

within the designated service area of LWCRA

The Sub-recipient certifies compliance with RESPA

The Sub-recipient agrees and understands that activity delivery costs are limited to up to 8% of the

loan origination amount as shown on the HUD 1

The Sub-recipient agrees and understands that Merced shall receive a HUD 1 or a settlement

statement for construction loans at least seven (7) business days before closing on each loan

FINANCING MECHANISM DOCUMENTS

The following documents must be submitted with the Program Income Plan for Financing Mechanisms

Initials Documents Enclosed

Loan application for criteria for each type of loan

Underwriting criteria for each type of loan

Underwriting Procedure for each type of loan

Sample loan document for each type of loan naming Merced as Mortgager

Sample affordability covenant for each type of loan

Closing procedure for each loan type including the advance submission date of HUD-1 to Merced

Loan Servicing Plan

Statement of Loan Servicing Cost per loan




The Sub-recipient agrees and understands that Program Income must be expended and accounted

for in support of eligible NSP activities

The Sub-recipient agrees and understands that Program Income must be expended prior to any

requests for additional Loan funds from Merced

The sub-recipient agrees and understands that Program Income must be accounted for in the next

invoice for Loan funds from Merced






Signed

Name of Signer

Date

Sub-Recipient Name

PAGE 2 OF 2


Acquisition


The sub-recipient agrees and understands that Acquisition funds are subject to the Office of




Plan

The sub-recipient agrees and understands that properties acquired must meet the definition of

either abandoned or foreclosed in HERA §2301(c)(3)(B)

The sub-recipient agrees and understands that properties acquired must be at a discount to

appraised value as specified in HERA §2301(d)(1)

The sub-recipient agrees and understands that properties to be acquired must have a current

appraisal

The sub-recipient agrees and understands that all properties must have a complete NEPA prior to

Program Income being used to acquire the property




for in support of eligible NSP activities


requests for additional Acquisition funds from Merced


invoice for Acquisition funds from Merced

ACQUISITION DOCUMENTS


Acquisition Procedure







Signed

Name of Signer

Date

Sub-Recipient Name

PAGE 1 OF 1

REHABILITATION


The sub-recipient agrees and understands that Rehabilitation funds are subject to the Office of




Plan

The sub-recipient certifies that any rehabilitation of a foreclosed upon home or residential property

shall be to the extent necessary to comply 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.

The sub-recipient certifies that all single family homes will be rehabilitated or reconstructed to the

Green standard

The sub-recipient certifies continued compliance with the procurement policies and procedures as

defined by LWCRA in contracting for the rehabilitation or reconstruction of properties

The sub-recipient certifies continued compliance with the affirmative marketing plan of LWCRA

The Sub-recipient certifies continued compliance with Section 3, Davis Bacon and NEPA

The Sub-recipient certifies continued compliance with Fair Housing, Equal Employment

Opportunity; and Minority and Women Owned Business requirements

The Sub-recipient agrees and understands that activity delivery costs are limited to up to 19% of

the rehabilitation contract amount


for in support of eligible NSP activities as defined by this Program Income Plan


requests for additional Rehabilitation funds from Merced


invoice for any Rehabilitation funds from Merced


REHABILITATION DOCUMENTS


Procurement Procedure

Contracting Procedure

Construction Procedure (from Notice to Proceed to Draw of Retainage)

MBE/WBE marketing statement

Section 3 marketing statement

Equal Employment Opportunity statement






Signed

Name of Signer

Date

Sub-Recipient Name

PAGE 2 OF 2


Disposition


The sub-recipient agrees and understands that Disposition funds are subject to the Office of




Plan

The sub-recipient certifies continued compliance with the affirmative marketing plan of Merced

The sub-recipient certifies continued compliance with Fair Housing

The sub-recipient certifies that at disposition, all properties will meet the applicable codes and the

Green standard.

The sub-recipient certifies that at disposition, the sub-recipient will deliver all warranties to the

buyer.


sales price as contained in the HUD-1 Settlement Statement




requests for additional Disposition funds from Merced


invoice for any Disposition funds from Merced

DISPOSITION DOCUMENTS


Disposition Procedure






Signed

Name of Signer


Date

Sub-Recipient Name

PAGE 1 OF 1

MAINTENANCE OF PROPERTY


The sub-recipient agrees and understands that Disposition funds are subject to the Office of




Plan


The sub-recipient certifies continued compliance with Fair Housing

The sub-recipient certifies that all properties held in the Land Bank will be secured.

The sub-recipient certifies that all properties held in the Land Bank will be maintained


cost of the maintenance on a per property basis




requests for additional Maintenance funds from Merced


invoice for any Maintenance funds from Merced

MAINTENANCE DOCUMENTS


Maintenance Procedure

Maintenance Schedule (Sample)







Signed

Name of Signer

Date

Sub-Recipient Name

PAGE 1 OF 1


New Construction on Vacant Land


The sub-recipient agrees and understands that Rehabilitation funds are subject to the Office of




Plan

The sub-recipient certifies that construction on vacant land shall be to the extent necessary to

comply 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.

The sub-recipient certifies that all units will be constructed to the Green standard

The sub-recipient certifies continued compliance with the procurement policies and procedures as

defined by Merced in contracting for the construction of new housing on vacant land


The Sub-recipient certifies continued compliance with Section 3, Davis Bacon and NEPA

The Sub-recipient certifies continued compliance with Fair Housing, Equal Employment

Opportunity; and Minority and Women Owned Business requirements


Redevelopment contract amount




requests for additional Redevelopment funds from Merced


invoice for any Redevelopment funds from Merced

NEW CONSTRUCTION ON VACANT LAND DOCUMENTS


Procurement Procedure

Contracting Procedure

Construction Procedure (from Notice to Proceed to Draw of Retainage)

MBE/WBE marketing statement


Section 3 marketing statement

Equal Employment Opportunity statement






Signed

Name of Signer

Date

Sub-Recipient Name

PAGE 2 OF 2


ATTACHMENT 24 - CITY OF MERCED HOUSING DIVISION

PROPERTY ACQUISITION

APPRAISAL GUIDANCE Properties acquired using NSP will be purchased at a discount of at least 1% less than the current appraised

value of the home or residential property.

The City of Merced requires documentation to ensure the discount requirement is met including the address,

appraised value, purchase offer amount and discount amount for each property. The discount value calculation

may take into account the likely carrying costs of the mortgagee if it were to NOT sell the property to the

applicant. Carrying costs may include: taxes, insurance, maintenance, marketing, overhead and interest. An

appraisal must be submitted with the NSP3 application. Depending upon timing, the appraisal may subsequently

have to be updated

Appraisals are required on acquisitions of foreclosed properties and valued at over $25,000 and must be

completed within 60 days from the date of the final offer.

Merced may submit an offer to purchase contingent upon completion of an appraisal and or environmental

review.

For homebuyer programs, a post-rehabilitation appraisal is required to determine sales price.

The appraisal could be a combination pre- and post-rehabilitation appraisal.

Foreclosed properties with values less than $25,000 do not require an appraisal. Instead, a written market

valuation is required that is based on a review of available data and is made by a qualified person.

If NSP funds are used to acquire a foreclosed upon home or residential property, the grantee must ensure that

the purchase price includes a discount from the current market value established by an appraisal that meets

either the URA appraisal requirements of 49 CFR 24.103 or one of the other appraisal options specified in the

October 19, 2010 NSP Notice:

Option 1 – An appraisal meeting the URA appraisal requirements of 49 CFR 24.103;

Option 2 – An appraisal meeting the requirements of the Uniform Standards of Professional Appraisal Practice

(USPAP);

Option 3 – An appraisal meeting the requirements of the Federal Housing Administration (FHA) or a

Government-Sponsored Enterprise (GSE).

CURRENT AND COST REASONABLENESS REQUIREMENTS. The purchase price of foreclosed property

must be at a discount from the current market appraised value of the property. The appraisal must be

completed within 60 days of a final offer made for the property by the grantee. If closing does not take

place before the 60 days has expired, the grantee may obtain an update to the initial appraisal. This update

is not required to be a full appraisal and does not generally require an inspection of the interior of the

structure unless damage is visible.


In addition, if NSP funds are used to acquire properties, a grantee must also be guided by the applicable OMB

cost principles when considering the current market value of a property. A fundamental requirement in the OMB

Circulars is that costs charged to an NSP grant must be reasonable. Cost reasonableness takes into account

factors such as prudence, sound business practices, and arms length bargaining. Given these considerations,

reliance on an appraisal that is more than 120 days old at the time of closing would appear counter to the

current market appraisal and cost reasonableness requirements. Beyond 120 days, the grantee is advised to

obtain a new appraisal.

URA ACQUISITION REQUIREMENTS

The URA voluntary acquisition requirements (49 CFR 24.101(b)(1)-(5)) apply to anyone who uses NSP funds

to acquire real property including any Agency, nonprofit/for profit organization, or individual homebuyers

who use a federally-funded down payment or other financial assistance. This includes both foreclosed upon

residential properties subject to the NSP Appraisal Requirements and properties not subject the NSP

Appraisal Requirements. Any acquisition of real property for an NSP-assisted project which does not meet

the requirements of a voluntary acquisition under 49 CFR 24.101(b)(1)-(5) is subject to the requirements of

49 CFR part 24, subpart B, which includes rules governing appraisals and review appraisals, among other

acquisition-related requirements (see 49 CFR 24.102-108).

VOLUNTARY ACQUISITION OF PROPERTY SUBJECT TO NSP APPRAISAL REQUIREMENTS. To meet the voluntary

acquisition requirements, the owner of record must be notified in writing that Federal financial assistance

will be used in the transaction, what the market value of the property is believed to be, and that if

agreement cannot be reached through negotiation, the acquisition will not take place. Such notification is

not required to be made to Federal, State, or State Agencies (FHA, for example), if the purchaser cannot

acquire the property through condemnation (see 49 CFR 24.101(b)(3)). The specific URA voluntary

acquisition requirement that must be met vary depending on whether the buyer has the power of eminent

domain and will not use it (see 49 CFR 24.101(b)(1)(i)-(iv)) or 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). HUD has developed a number of sample

guidance forms to assist NSP grantees in meeting these requirements. The Guidance forms and other

information and resources are located

at: http://www.hud.gov/offices/cpd/library/relocation/nsp/index.cfm

VOLUNTARY ACQUISITION OF PROPERTY NOT SUBJECT TO NSP APPRAISAL REQUIREMENTS.

When acquiring property under NSP that does not meet the definition of “foreclosed” (generally, vacant or

abandoned which are not subject to the NSP discount requirements) but which meets the applicable URA criteria

for a voluntary acquisition under 49 CFR 24.101(b)(1)-(3), no specific URA appraisal requirement applies.

Nonetheless, grantees must have a reasonable basis for their determination of market value. See 49 CFR part 24,

Appendix A, § 24.101(b)(1)(iv) and (2)(ii). While making such a determination of market value does not require

an appraisal for these transactions, NSP grantees may still decide that an appraisal is necessary to support their

determination of the market value of these properties.

After a grantee has established an amount it believes to be the market value of the property and has



satisfied the applicable written disclosure requirements, when required under 49 CFR 24.101(b)(1) & (2), a

grantee may negotiate freely with the owner in order to reach agreement. When these transactions are

voluntary and accomplished by a willing buyer and a willing seller, negotiations may result in an agreement

for the amount of the original estimate, an amount exceeding it, or for a lesser amount. Although not

required by the URA regulations, it would be appropriate for grantees to apply the administrative

settlement concept and procedures in 49 CFR 24.102(i) to negotiate amounts that exceed the original

estimate of market value.

As with acquisitions subject to the NSP appraisal requirements, NSP grantees must also

abide by the cost reasonableness requirements of the CDBG program and 2 CFR part 225

(formerly known as OMB Circular A-87) when incurring costs under a federally funded

program. Grantees must be able to document the reasonableness of costs incurred (which

may include an appraisal or other documented determination of value as support). This is

especially critical in markets where values are still unstable and risk of overpayment is

greater.

A lenders appraisal may be acceptable as long as it complies with the October 19, 2010 NSP

Notice.


ATTACHMENT 25 - City of Merced Housing Division

Federal Procurement Checklist

Property Address: or

Project Name:

Grant:

Reviewed by: Date(s):

Note: If no Grant funds are used to pay for goods or services that are procured,

Federal Procurement Rules do not apply.

For each procurement process in which Grant funds are used, complete the appropriate sections of this checklist. These sections are used to:

1) Identify the type of procurement process used;

2) Evidence that proper process was followed based on the type of procurement; and

3) Confirm that the procurement file has all the proper documentation and grant-required language for each procurement process.

4) The procurement process is initiated by either the Housing Program Specialist or the Housing Rehabilitation Specialist; verified by the Development Manager; and clerical tasks are to be completed by the Secretary.

Note: Federal procurement standards do not apply to single-family homeowner rehabilitation programs where the homeowner selects the contractor.

A. Small Purchase Procurements: (Goods or services costing at least $5,000 but less than $100,000)

1. Is the project considered a small purchase?

[If no, skip to Section B.]

Yes No

2. Did the Rehabilitation Specialist obtain at least three written or oral bids?

How Many Bids were received? _________

_____ Information detailing whom the Housing Rehabilitation Specialist contacted including: Date Called, Name of Company, Person Contacted, Job Title, and Phone Number. Is contact information acquired is attached to this checklist?

Yes No


3. Development Manager will ensure the following are completed prior to the Request for Proposal being awarded:

A copy of the following: State License, City of Merced Business License,

Debarment Check, IRS W-9 Form, and Insurance documents.

Cost estimate for goods/services to be procured.

Documentation of price quotes received for items or services procured with

small purchase method.

Written justification of selection of vendor.

For consultant/contractor procurement, verification of consultant/contractor

eligibility (current State license, not on federal debarred list, proper insurance).

B. Request for Proposals (RFP) or Request for Qualifications (RFQ) Procurements (Exceeding $100,000): (Competitive Proposals; 24 CFR 85.36(d)(3))

(RFP is used for consultants and RFQ is used for Architects or Engineers)

1. Is the estimated project budget over $100,000?

[If no, skip to next section.]

Yes No




Cost estimate for services to be procured with RFP or RFQ.

A copy of the RFP/RFQ with all required language per Document Matrix.

Copy of Public Notices of the RFP/RFQ.

Mailing List of RFP/RFQ recipients.

Copy of all bids, proposals, and/or qualification statements received.

Copy of rating or scoring for each proposal. Justification and recommendation

for selection of consultant.

Verification of consultant/contractor eligibility (current State license, not on

federal debarred list, proper insurance).

Signed contracts and all approved amendments.


3. Proof of Public Notification:

Newspaper(s) item was published:_____________________

Date of Publication:_______________________

Yes No

4. Was the project eligible to use the City’s pre-qualified bidders list?

Date of last update:__________________

If no, explain:_______________________

__________________________________

Yes No

5. Was there an issue or dispute with the proposal?

What aspect of the proposal was the issue with:

in RFP/RFQ

in Contract language

other documentation

(specify)________________________

Yes No

6. Is there a conflict of interest involved in this transaction?

Explain:

How was the conflict resolved:

Yes No N/A

C. Competitive Sealed Bid/Invitation for Bids (IFB) Procurements: (Exceeding $100,000): (24 CFR 85.36(d)(2)) [This is the procurement method required for most

construction projects since a firm fixed price contract can be made and the selection of the successful

bidder can be made principally on the basis of price.]

1. Was there an Invitation for Bids?


Yes No





Cost estimate for services to be procured.

A copy of Competitive Sealed Bid/IFB Construction Bid Documents with all

required language per Document Matrix.

Copy of Public Notices in local papers and any public distribution system to

advertise the availability of the IFB with the deadline for submittal.

Copy of Mailing List used to distribute Competitive Sealed Bid/IFB.

List of bidders with bid amounts and selection for IFB. Justification is needed if

lowest bidder was not selected.

3. Proof of Public Notification:

Newspaper(s) item was published:_____________________

Date of Publication:_______________________

Yes No

4. Was the project eligible to use the City’s pre-qualified bidders list?

Date of last update:__________________

If no, explain:_______________________

__________________________________

Yes No

5. Did the IFB contain a statement of clearly defined deliverables?

Explain:

Yes No

6. Is there a conflict of interest involved in this transaction?

Explain:

How was the conflict resolved:

Yes

No

D. Noncompetitive Proposals (Sole Source/Single Bid Procurement): (24 CFR 85.36(d)(4)

Procurement through solicitation of a proposal from only one source, or after solicitation of a number of

sources, competition is determined inadequate.

1. Did the grantee use a noncompetitive procurement process?


Yes No





Cost estimate for services to be procured.

Evidence provided this procurement transaction was not feasible under other

procurement methods.

Documentation showing public exigency or emergency need for the item or

service did not permit a delay resulting from competitive proposals

Documentation demonstrating the item or service was available only from a

single source.

Documentation showing solicitation of a number of sources competition was

deemed inadequate

___ Number of Vendors Contacted, the list of vendors contacted and reason

they were deemed inadequate in the file.

Letter to Grant Representative, including applicable documentation, requesting

authorization to use this procurement method.

Response from Grant Representative granting authorization to use this

procurement method.


E. Verification of Proper Grant Language in Contracts and Agreements:

1. For each contract used for distribution of Grant funds, use the list below to verify that all required Grant language is included.

Scope of services to be provided, consistent with the State contract

Identification of intended beneficiaries, if applicable

Schedule for work completion

Budget and payment schedule

Provisions for termination for non or poor performance

Equal Opportunity language for all contracts

Equal Opportunity (Contracts over $10,000):

Complies with Executive Order11246 of September 1965, entitled “Equal

Employment Opportunity,” as amended by Executive Order 11375 of October 13,

1967, and as supplemented in Department of Labor Regulations (41 CFR

Chapter 60).

Nondiscrimination

Anti-lobbying

Conflict of interest

Provisions for maintenance of workers' comp, IRS W-9 Form, Insurance

Provisions for maintenance of unemployment disability and liability insurance, as

required

Provisions for records retention (min. 5 yrs.)

Provision permitting monitoring/auditing by HUD and HCD

Provision that a subrecipient or other governmental entity (OGE) is responsible for

compliance with all provisions delegated to it (including above items).

Prevailing Wage: Yes/No; Contract for labor compliance.

Contractors Debarment Language inserted with printout of status attached to the

contract.


CLERICAL CHECKLIST

Property Address or Project: Grant:

Vendor/Contractor: Prepared By:

24 CFR 85.36 – Procurement; the following provisions must be included: Yes No

Statement of Work: A description of the work to be provided, including a schedule and

budget. Including:

The purpose and nature of the services to be provided, including where they will be

offered;

The specific tasks to be performed (e.g., job training services, application intake for

rehab loans);

The specific quantifiable level of service that will be provided for each activity (e.g.,

25 job training participants each month, 15 rehab loan applications per month); and

The schedule for the performance of work with target levels of service indicated at

specific points in time.

Records and Reports - the specific records which must be maintained and reporting

requirements.

Program Income - whether program income received is to be returned to the recipient

or retained by the subrecipient. If the income will be retained, the specific activities for

which the funds shall be undertaken. Also, subrecipients must reduce requests for new

CDBG funds by the amount of program income on hand.

Uniform Administrative Requirements - compliance with all applicable uniform

administrative requirements under 24 CFR § 570.502 and 24 CFR § Part 84, and/or

Part 85, as applicable.

Other Program Requirements - compliance with all applicable “other federal”

requirements (e.g., Davis-Bacon, Flood Insurance, etc.).

Conditions for Religious Organizations - If applicable, the conditions governing the

use of funds by religious organizations.

Suspension and Termination - Suspension or termination may occur if the

subrecipient fails to comply with any term of the agreement, and that the agreement

may be terminated for convenience.

Reversion of Assets - Upon expiration of the agreement, any CDBG funds on hand as

well as any accounts receivable attributable to CDBG funds must be transferred to the

grantee. The agreement must also include the requirements covering the use of real

property acquired with CDBG funds.

Other Required Provisions - All additional contract requirements found in Chapter 12 -

Monitoring, 1. General Compliance Checklist.

Note: All items marked with a YES require documentation to be attached to this document.


Attachment 26 - Housing Division Property Acquisition Checklist

PROPERTY ADDRESS _________________________________________________

Estimated Acquisition and Rehabilitation $ _____________________________

NSP CHECKLIST TO PURCHASE A NSP 1 DWELLING

1. Agent & Housing Program Specialist locate an eligible NSP House.

o Ensure the property has been vacant for a minimum of 90 days.

o Staff verifies if the residence is NSP 1 eligible.

o Housing Rehabilitation Specialist Inspect house.

o Housing Rehabilitation Specialist Provides estimate for rehabilitation.

o Housing Program Specialist (HPS) checks cost of house and rehab to prepare

recommendation.

o HPS takes and Secretary creates a folder.

o Housing Finance Specialist reviews funds to ensure availability.

2. Agent and Housing Program Specialist work to submit offer to Bank.

“Purchase Price must be 1% below appraised value up to the agreed upon

purchase price.”

House disclosures reviewed prior to purchase to determine if any unexpected and

costly environmental issues might make the house ineligible for this program.

3. Housing Manager/Program Specialist Signs all Acquisition Required Documents –

Once Documents have been Signed:


o PDF and email agent

o Legal Service Request Form to City Attorney’s Office.

o Retain Original/Copied signed documents – Placed in file.

o File kept in housing drawer

4. After Offer has been accepted:

o HPS – Orders an NSP Compliant appraisal per HUD Guidelines

a. Staff contacts one of the approved appraisers for Merced.

b. Appraisal is requested within 60-days of the final offer

c. Staff provides the appraiser with information required to be included within

the appraisal and to ensure URA Compliancy.

d. Compliant with 49 CFR 24.103 and the agreed purchase price is 1% below

the appraised value.

o HPS - Sign addendum modifying purchase price

o Agent & HPS - Pest inspection reports - abate any issues and provide a pest

certificate stating the structure has been properly abated.

o Secretary - Certificate needs to be placed in housing folder

5. HPS - Environmental Clearance Documents are approved for property.

o House built pre- 1950 – Ensure Compliancy with SHPO

o House Built pre- 1978 – Lead Based Paint inspection is required

6. HPS and Secretary work with Title Company for anticipated end costs and closing date

7. Secretary - Send fund request to finance with closing date. Have check be made out for

highest anticipated cost. Make copy of check and place in housing folder


8. City Manager or designee- Sign Documents from Title Company processing

9. Secretary prepares ‘Certificate of Acceptance’ for approval by Clerks Office

10. Title Company picks up all forms to finalize purchase/acquisition

11. Secretary prepares check request for the amount specified on the HUD-1 Form

12. Contact Clerk’s office to ensure they have received grant deed and insurance

documents after the deed has been recorded.


ATTACHMENT 27 – JOB DESCRIPTIONS

BUILDING INSPECTOR II DEFINITION Under general direction, to conduct inspections of residential, commercial, or industrial building structures and installations in various states of alteration, construction, and repair; to determine that construction, alterations, and repairs are in compliance with City and Uniform Building Codes and ordinances; to enforce building and zoning codes and ordinances to answer questions regarding code enforcement and structural requirements for the public, architects, contractors. and engineers; and to do related work as required. DISTINGUISHING CHARACTERISTICS This is the fully experienced working level in the Building Inspector class series. Incumbents perform a wide range of building inspection and code enforcement duties in residential, commercial, and mobile home areas. They are required to possess substantial knowledge of the Uniform Building Code, Plumbing and Mechanical Codes, and the National Electrical Code. This class is distinguished from Building Inspector I by the fact that incumbents are expected to have greater knowledge of the requisite codes and be completely familiar with City code enforcement procedures and policies. It is distinguished from the Building Inspector III level by the fact that incumbents in the Building Inspector III class are assigned responsibility for an area of the more specialized inspections such as fire or the more complex commercial inspections. REPORTS TO Chief Building/Construction Project Official CLASSIFICATIONS SUPERVISED This is not a supervisory class. EXAMPLES OF -IMPORTANT AND ESSENTIAL DUTIES (The following is used as a partial description and is not restrictive as to duties required.) Conducts field inspections of residential, commercial, or industrial structures in varying states of construction, alteration, or repair; interprets applicable codes and ordinances for builders and home owners, ensuring compliance; checks the quality of materials and methods of construction for electrical, plumbin9, mechanical, framework, concrete, masonry work, lathing, plastering, tile work, roofing, etc.; inspects completed work, giving final approval; writes correction notices and follows-up to ensure required changes; makes a variety of inspections to ensure compliance with zoning laws and health and safety standards; may make inspections to determine causes of structural failures; inspects manufactured home installations; issues building permits; provides advice on construction


procedures and practices; may review grading plans as they pertain to lot grading; may inspect City buildings and structures. TYPICAL PHYSICAL REQUIREMENTS Frequently stand and walk; sit for extended periods; ability to walk in uneven terrain and on slippery surfaces; normal manual dexterity and eye-hand coordination; ability to crawl through various areas requiring movement on hands and knees; ability to climb, stoop, crouch, and kneel; lift and move objects weighing up to 50 pounds; corrected hearing and vision to normal range; verbal communication; use of office equipment, including computer, telephone, calculator, copiers, and FAX; operate an automobile. TYPICAL WORKING CONDITIONS Work is performed in office, outdoor, and driving environments; some assignments performed alone in remote locations; work is performed in varying temperatures; exposure to dust, chemicals, and gases; exposure to electrical currents; continuous contact with staff and the public. DESIRABLE QUALIFICATIONS Knowledge of: Practices, tools, equipment, and materials used in the general construction trades. Accepted safety standards and methods of building construction. Qualities of various construction materials. Building, zoning, and related codes and ordinances enforceable by the City. Principles of mathematics related to the building trades. Inspection methods and procedures. City code enforcement policies. Ability to: Perform a variety of building inspections, examining workmanship and materials, and enforcing requisite codes and ordinances. Use and apply a wide scope of inspection methods and techniques. Detect deviations from laws, regulations, and standard construction practices. Read, interpret, and explain building plans, specifications, and codes. Perform zoning enforcement inspections and investigations. Apply technical knowledge of building trades work. Make mathematical calculations quickly and accurately. Communicate effectively both orally and in writing. Provide advice on acceptable construction methods and practices. Enforce regulations with firmness and tact. Prepare clear and concise reports.


Represent the City Building Inspection functions in a courteous and professional manner. Establish and maintain cooperative working relationships. DESIRASLE QUALIFICATIONS (continued) Training and Experience: Any combination of training and experience which would likely provide the required knowledge and abilities is qualifying. A typical way to obtain the required knowledge and abilities would be: Graduation of high school. Education, training, and experience equivalent to a minimum of 18 months experience as a Building Inspector I with the City of Merced and possession of I.C.B.O. recognized certification preferably in building construction inspection. Special Requirements: Possession of an appropriate California Driver's License. Reference: City of Merced Personnel Rules and Regulations, Sections 5.05 and 5.07. The contents of this class specification shall not be construed to constitute any expressed or implied warranty or guarantee, nor shall it constitute a contract of employment. The City of Merced assumes no responsibility beyond the general accuracy of the document, nor does it assume responsibility for any errors or omissions in the information contained herein. The contents of this specification may be-modified or revoked without notice. Terms and conditions of employment are determined through a meet and confer process and are subject to the Memorandum of Understanding currently in effect.


DEVELOPMENT MANAGER

DEFINITION Under general direction, to plan, schedule, and manage a variety of projects related to the City's Redevelopment Agency, including the Economic Development Office to recruit and attract new businesses and industry to Redevelopment Areas and Enterprise Zones; to provide staff support for committees, boards, and commissions; and to do related work as required. DISTINGUISHING CHARACTERISTICS This is a specialized classification for positions that provide a variety of technical and professional staff assistance for City Redevelopment and Economic Development programs and projects. This class is distinguished from the Development Coordinator by the greater scope of responsibility for the entire Redevelopment Agency as opposed to one section of the Agency. REPORTS TO Assistant City Manager CLASSIFICATIONS SUPERVISED Development Coordinator, Development Associate, Planning Technician class, and Secretary class. EXAMPLES OF IMPORT ANT AND ESSENTIAL DUTIES (The following is used as a partial description and is not restrictive 'as to duties required.) Plans, organizes and manages the administration and operations of the Redevelopment Agency. Reviews proposals for Agency assistance to private entities for feasibility, market opportunity, economic factors and physical relationships of each proposal. Negotiates with persons and firms for purchase, sale and development or redevelopment of properties. Recruits, attracts and hosts new and expanding business and industry for the community, including all incentive areas. Attends meetings of legislative and advisory bodies to present facts, expert opinions, information and recommendations. Formulates, coordinates, schedules and reviews work of department staff. Trains and evaluates departmental employees.


EXAMPLES OF IMPORTANT AND ESSENTIAL DUTIES (Continued) Assists with the development and enhancement of the local labor force; Represents the City and the Department with citizens, community organizations, and other government agencies. Prepares and implements departmental budget. Recommends and implements disciplinary actions with review and approval of the Assistant City Manager. TYPICAL PHYSICAL REQUIREMENTS Frequently stand and walk; sit for extended periods; normal manual dexterity and eye-hand coordination; lift and move objects weighing up to 25 pounds; corrected hearing and vision to normal range; verbal communication; use of engineering and office equipment, including computer, telephone, calculator, copiers, and FAX. TYPICAL WORKING CONDITIONS Work is performed in an office and outdoor environment; frequent contact with staff and the public. DESIRABLE QUALIFICATIONS Knowledge of: Principles of public planning, redevelopment, and economic development. Budget development, administration, and expenditure control. Land and facility development and utilization. Data processing methods, equipment, a,nd principles. Program and facility planning and development. Laws, rules, regulations, and policies affecting Redevelopment and Economic Development Programs. Contract and grant development and administration. Uses of computers and computer applications in program and services development and evaluation. Principles of management, supervision, training and employee evaluation. Ability to: Plan, organize, and manage the functions and services of the City's Redevelopment and Economic Development Department. Plan, manage, and oversee a variety of projects and programs. Provide supervision, training, and work evaluations for assigned staff. Develop and administer grants. Gather, organize, and analyze data, preparing a variety of reports.


Use a computer and appropriate software in performing management and administrative responsibilities. Ability to: (CONTINUED) Effectively represent the City and the Department in contacts with the public, other City staff: and other government agencies. Establish and maintain cooperative working relationships. Training and Experience: Any combination of training and experience that would likely provide the required knowledge and abilities is qualifying. A typical way to obtain the required knowledge and abilities would be: Completion of the requirements for a Bachelor'S degree in urban planning, architecture, public administration, business administration, or a related field, and five years of progressively responsible experience in public planning, zoning, permitting, redevelopment, and economic development analysis, administration, enforcement, and consultation. Special Requirements: Possession of a California driver's license, issued by the Department of Motor vehicles. Reference: City of Merced Personnel Rules and Regulations, Sections 5.05 and 5.07. The contents of this class specification shall not be construed to constitute any expressed or implied warranty or guarantee, nor shall it constitute a contract of employment. The City of Merced assumes no responsibility beyond the general accuracy of the document, nor does it assume responsibility for any errors or omissions in the information contained herein. The contents of this specification may be modified or revoked without notice. Terms and conditions of employment are determined by City Management.


HOUSING FINANCE SPECIALIST Class Definition

Under general supervision, performs financial counseling, processing, implementing, and monitoring duties in applying for, obtaining and ensuring repayment of rehabilitation loans and/or grants in compliance with federal and state regulations.

Distinguishing Characteristics

This class is in the Housing Division of the Community Development Department and reports to Division Head. It is distinguished from the Housing Rehabilitation Specialist by the specialized duties in the financial area requiring training in finance and real estate rather than construction training or experience. This position does not exercise direct supervision but is required to coordinate activities with other specialists and may provide training in finance or real estate area to others.

Typical Tasks

Duties of this class include, but are not limited to, the following: Interviews and reviews application of prospective clients; verifies information on the application, including employment, existing debt and income, and analyzes data obtained. Provides extensive financial credit and loan procurement counseling to prospective (homeowners, developers, and investors) and current clients. Determines property values before and after rehabilitation through standard appraisal methods. Reviews existing pool of funding sources for possibility of obtaining grants and private sector funds. Evaluates preliminary title reports and determines security position and loan to value ratios for secured loans. Coordinates the financing packaging operations with other sections of the division, and assists in the planning and implementation of division-wide operational procedures. Prepares reports, legal documents and a variety of other forms related to loan and grant financing in compliance with federal and state regulations. Determines approval or denial of loan requests.


Searches and reviews property records. Prepares loan/grant package, records Deeds of Trust and Notice of Completion. Opens escrow, orders disbursements and certifies available funds. Establish and maintain files including payment history, monitors loan delinquency and takes appropriate action to keep accounts current. Determines necessity for foreclosure and processes disposition of real property. Performs related duties as required.

Knowledge, Skills and Abilities

Knowledge of: Real estate financing and transaction procedures; mortgage loan processing and collection procedures; low-income housing rehabilitation programs; modern office procedures, methods and practices; appraisal methods and practices; counseling techniques as applied to housing programs; proper grammar, spelling and usage; accounting and record keeping practices as applied to housing programs; computer usage and programs related to housing rehabilitation finance. Ability to: Interview prospective clients and obtain necessary data. Read, understand, and implement complex regulations concerning loans and grants. Evaluate applications, credit reports, title reports, and make decisions based on the evaluation. Present complex and difficult concepts in a clear, concise and understandable manner to clients who may have minimal education and/or verbal skills. Establish and maintain effective working relations with others. Perform computations in regard to real estate transactions. Apply good judgment in making decisions in accordance with a variety of federal, state and local laws, ordinances, regulations, policies and procedures.


Minimum Requirements

Sufficient education, training and experience to demonstrate the knowledge, abilities and skills listed above. Normally, the knowledge, skills and abilities would be obtained by completion of two years of college study in real estate, accounting, finance or a closely related field and two years of experience in real estate loans, loan collection, real estate escrow or real estate appraisal.

Special Requirements

Must possess a valid California driver's license at time of appointment. Must have or obtain prior to completion of probationary period a Finance Specialist Certification.

Desirable Qualifications

Bilingual - English/Spanish.

HOUSING PROGRAM SPECIALIST I/II/III Series

DEFINITION

BASIC FUNCTION: Under general direction, aids the Development Manager with housing,

community development projects. Prepares cost analysis, reports, and designs for special

projects; prepares environmental reports, public notices, and request for release of funds

on all HOME and CDBG funded projects, assist in preparing HUD annual reports and

conducting public meetings. Performs related responsibilities as required, under the

direction of the Development Manager.


DISTINGUISHING CHARACTERISTICS

Incumbents perform a variety of professional and technical assignments related to housing

and special projects funded by HOME, CDBG, or other funded housing projects.

REPORTS TO

Development Manager, or designee.

CLASSIFICATIONS SUPERVISED

Housing Program Specialist I/II are non-supervisory positions. Housing Program

Specialists III would supervise clerical staff at the discretion of the Development Manager.

EXAMPLES OF IMPORTANT AND ESSENTIAL DUTIES (The following is used as a

partial description and is not restrictive as to duties required.)

Establishing goals and objectives for City’s housing programs based on the Housing Element,

community involvement and housing, CDBG, HOME and health and safety laws. Establishes

work program and production goals for the unit to achieve objectives. Assists the with

designing housing programs to meet objectives by identifying resources available from housing

agencies and financial institutions. Assists with identifying and designating funding sources to

accomplish housing program objectives. Directs and monitors housing programs including

Community Development Block Grants, HOME Investment Partnership funds, CHDO, NSP and

special grant programs. Negotiates complex legal and financial agreements with public and

private housing providers for land acquisition, development and project financing to implement

Housing Element, CDBG, HOME and other project objectives. Monitors performance of housing

agreements for compliance with grant goals and objectives. Provides training to the

Administrative Technician. Ensures compliance with State and Federal laws for housing

programs. Oversees lead based paint evaluation program. Prepares annual reports for

grantee and other funding sources as required. Assists with preparation and monitoring of the

operating budget for the division. Provides training as needed. Serves as resource to City

Departments, Committees, Council, Planning Commission and community groups on housing

needs. Authorizes draws (IDIS & DRGR). Reviews HUD policy changes, updates and

recommends changes in local policies or procedures to maintain compliance. Performs other

related duties as assigned.

TYPICAL PHYSICAL REQUIREMENTS

Position in this class is typically situated in a standard office environment resulting in little

exposure to the weather and requiring no unusual physical abilities. However, verbal

communication; use of office equipment, including computer, telephone, calculator,

copiers, and FAX may be periodically required.


TYPICAL WORKING CONDITIONS

Work is performed predominantly in the office environment, may require minimal outdoor,

and driving working conditions; some assignments performed include contact with staff

and the public.

DESIRABLE QUALIFICATIONS

Knowledge of/Skill in/Ability to:

Principles and practices of housing production. Financial lending markets. Federal and State

laws and regulations related to housing grant programs, public real estate acquisition and

relocation for HOME and CDBG. Personal computer applications such as spreadsheets and

data bases. Project development, construction and rehabilitation processes and project

management. Plan, organize and evaluate housing programs to achieve objectives. Negotiate

real estate and financial agreements for housing. Prepare clear and concise reports for

Council, committees and grant agencies. Prepare and give effective presentations for Council,

committees and the public. Read, interpret and apply Federal and State regulations and laws

related to housing. Establish and maintain effective working relationships with governing

bodies, agencies, committees, financial institutions and the public. Demonstrate the ability to

self start, handle multiple tasks at one time and focus on objectives.

Level III:

Level III requires knowledge, skills, and the abilities as described above, but also includes

the ability to supervise staff including assigning, counseling, motivating, training,

and evaluating; and, prepare and monitor housing unit budgets.

Training and Experience:

Any combination equivalent to experience and education that could likely provide the required

knowledge, skill and ability is qualifying. A typical way to obtain the required knowledge, skill

and abilities would be:

Level I

One (1) year of increasingly responsible experience in the field of housing, HUD grants, real

estate or development. Associate’s Degree from an accredited two-year college with course

work in business administration, economics, planning and development, or training and

experience equivalent to three years working with housing programs.

Level II

Three (3) years of increasingly responsible experience in the field of housing, HUD grants, real

estate, or development. Bachelor’s Degree from an accredited college or university with major


course work in business administration, economics, planning and development, or training and

experience equivalent to Level I working with housing programs.

Level III

Five (5) years of increasingly responsible experience in the field of housing, HUD grants, real

estate, or development. Bachelor’s Degree from an accredited college or university with major

course work in business administration, economics, planning and development, or training and

experience equivalent to Level II working with housing programs. A Master’s Degree in Public

Administration or related field is preferred.

Special Requirements:

Possession of a valid California driver’s license.

Reference: City of Merced Personnel Rules and Regulations, Sections 5.05 and 5.07.

The contents of this class specification shall not be construed to constitute any expressed or implied

warranty or guarantee, nor shall it constitute a contract of employment. The City of Merced assumes no

responsibility beyond the general accuracy of the document, nor does it assume responsibility for any errors

or omissions in the information contained herein. The contents of this specification may be modified or

revoked without notice. Terms and conditions of employment are determined through a meet and confer

process and are subject to the Memorandum of Understanding currently in effect.

APPROVED DATE

Chairperson, Personnel Board

HOUSING REHABILITATION SPECIALIST II

DEFINITION Under general supervision, to provide a variety of professional and technical assistance for local property owners in the rehabilitation, demolition, or reconstruction of their homes; to develop and prepare environmental reports on HOME and CDBG funded projects; to perform inspections of housing rehabilitation projects; and to do related work as required. DISTINGUISHING CHARACTERISTICS This is the fully experienced journey level in the Housing Rehabilitation Specialist class series. Incumbents perform a variety of professional and technical assignments related to housing rehabilitation projects funded by HOME and CDBG. This level is distinguished from Housing Rehabilitation Specialist I, by the fact that incumbents perform a broader scope of assignments on a more independent basis utilizing technical knowledge and problem solving skills in complex situations.


REPORTS TO Chief Building/Construction Project Official CLASSIFICATIONS SUPERVISED This is not a supervisory class. EXAMPLES OF IMPORTANT AND ESSENTIAL DUTIES (The following is used as a partial description and is not restrictive as to duties required.) Meets with homeowners and explains the policies, procedures, and requirements for housing rehabilitation loans funded by HOME and CDBG; prepares bid packages for contractor solicitations to perform rehabilitation and construction work; reviews approved bids and develops contractor information for consideration by property owners; prepares detailed cost estimates, compiles bid data, and conducts bid tours; arranges and conducts pre-construction conferences between homeowners and contractors; designs single family unit floor plans and prepares working drawings and sketches for projects; inspects work in progress, prepares work write-ups, and initiates change orders; verifies and approves final work, ensuring that work has been completed in compliance appropriate codes and contract specifications; prepares environmental reports on HOME and CDBG projects; makes field inspections of dwellings of potential participants in the Housing Program; prepares miscellaneous housing activity maps; prepares brochures and handouts for the Housing Division; responds to public complaints regarding code violations; answers the telephone and works with people at a customer service counter, providing a variety of information and responding to inquiries about housing rehabilitation programs. TYPICAL PHYSICAL REQUIREMENTS Frequently stand and walk; sit for extended periods; ability to walk in uneven terrain and on slippery surfaces; normal manual dexterity and eye-hand coordination; ability to crawl through various areas requiring movement on hands and knees; ability to climb, stoop, crouch, and kneel; lift and move objects weighing up to 50 pounds; corrected hearing and vision to normal range; verbal communication; use of office equipment, including computer, telephone, calculator, copiers, and FAX; operate an automobile. TYPICAL WORKING CONDITIONS Work is performed in office, outdoor, and driving environments; some assignments performed alone in remote locations; work is performed in varying temperatures; exposure to dust, chemicals, and gases; exposure to electrical currents; continuous contact with staff and the public.


DESIRABLE QUALIFICATIONS Knowledge of: Policies, procedures, and requirements of the Housing Division. Procedures and requirements of HOME and CDBG funded housing rehabilitation programs. Practices, tools, equipment, and materials used in the general construction trades. Accepted safety standards and methods of building construction. Qualities of various construction materials. Building, zoning, and related codes and ordinances enforceable by the City. Principles of mathematics related to the building trades. Inspection methods and procedures. City code and enforcement policies. Ability to: Work with Housing Rehabilitation clients in the development and completion of housing rehabilitation and construction projects. Develop bid packages and evaluate contractor responses. Perform a variety of building inspections, examining workmanship and materials, and ensuring compliance with requisite codes and ordinances. Use and apply a wide scope of inspection methods and techniques. Detect deviations from laws, regulations, and standard construction practices. Estimate the cost of material and labor for potential rehabilitation work. Read, interpret, and explain building plans, specifications, and codes. Apply technical knowledge of building trades work. Develop floor plans and prepare working drawings. Make mathematical calculations quickly and accurately. Maintain accurate records and prepare reports.

DESIRABLE QUALIFICATIONS (continued) Ability to: (continued) Make independent decisions using good judgment and analysis. Work effectively with builders, contractors, other government agencies and private businesses and the general public. Communicate effectively both orally and in writing. Provide advice on acceptable construction methods and practices. Deal tactfully and courteously with the public and other staff when explaining the functions and policies of the Housing Division. Establish and maintain cooperative working relationships.


Training and Experience: Any combination of training and experience which would likely provide the required knowledge and abilities is qualifying. A typical way to obtain the required knowledge and abilities would be: Graduation from high school or equivalent, and two (2) years of college study in building construction inspection or a closely related field. Three (3) years of work experience in housing rehabilitation work at a level comparable to Housing Rehabilitation Specialist I with the City of Merced; or an equivalent combination of education and experience. Special Requirements: Possession of a valid California driver's license. Reference: City of Merced Personnel Rules and Regulations, Sections 5.05 and 5.07. The contents of this class specification shall not be construed to constitute any expressed or implied warranty or guarantee, nor shall it constitute a contract of employment. The City of Merced assumes no responsibility beyond the general accuracy of the document, nor does it assume responsibility for any errors or omissions in the information contained herein. The contents of this specification may be modified or revoked without notice. Terms and conditions of employment are determined through a meet and confer process and are subject to the Memorandum of Understanding currently in effect.

SECRETARY II DEFINITION Under general supervision, to coordinate and perform a variety of administrative support work for a major City work unit, board, or commission; to provide support for designated management and/or administrative staff; to perform difficult and specialized office support, information gathering, information preparation, and public relations assignments; and to do related work as required. DISTINGUISHING CHARACTERISTICS This is the second working level in the Secretary class series. Incumbents have responsibility for providing primary secretarial and administrative support for an assigned City work unit,service area, board, or commission. This level is distinguished from the next lower level of


Secretary I, by having a broader scope of administrative support responsibilities performed and the fact that the positions are assigned primary support responsibilities for a major work unit, board, or commission. It is distinguished from the Secretary ItIlevel by the fact that Secretary Ill's have overall administrative support responsibilities for one of the large City Departments (Le. Fire, Police, or Public Works). REPORTS TO Secretary III, or equivalent, and the Department Head in the Department to which the position is assigned. CLASSIFICATIONS SUPERVISED This is not a supervisory classification.

EXAMPLES OF IMPORTANT AND ESSENTIAL DUTIES (The following is used as a partial

description and is not restrictive as to duties required.) Has primary responsibility for secretarial and administrative support functions for an assigned City service atea, board, or commission; performs a variety of administrative support work for an assigned City management position(s); gathers information and performs special projects; performs fiscal support assignments; performs public information and relations assignments, including receiving office visitors and telephone callers, providing comprehensive information about Department policies, functions, and procedures; receives and handles public complaints; EXAMPLES OF IMPORTANT AND ESSENTIAL DUTIES (continued) develops and processes activity reports; develops information systems and prepares distributions of forms and public notices related to Department functions; schedules tours and demonstrations at City facilities; may provide explanations of City codes and ordinances; may maintain Department and/or work unit payroll information for submission to City Finance; maintains permit and insurance data; prepares and distributes bills related to Department functions; maintains and updates accounts receivable data; develops and prepares special reports; creates forms; may receive and distribute Department and/or work unit mail; types or uses a word processing program to prepare a variety of documents; may coordinate agenda preparation and prepare minutes of board and commission meetings; inputs data into computer records and generates reports; operates a variety of office equipment. TYPICAL PHYSICAL REQUIREMENTS Frequently stand and walk; sit for extended periods; normal manual dexterity and eye hand

coordination; lift and move objects weighing up to 25 pounds, corrected hearing and vision to normal range; verbal communication; use of office equipment, including computer, telephone, calculator, copiers, and FAX. TYPICAL WORKING CONDITIONS


Work is normally performed in an office environment; frequent contact with other staff and the public. . ... ~

DESIRABLE QUALIFICATIONS

Knowledge of: City and Department policies, rules, and. regulations. Procedures and functions of the service area to which assigned. Establishment and maintenance of files and information retrieval systems. Modern office methods and procedures. Fiscal record keeping methods and procedures. Proper English usage, spelling, grammar, and punctuation. Personal computers and software applications related to administrative support work.

Ability to: Maintain primary responsibility for the secretarial and administrative support work for the City service area, board, or commission to which assigned. Perform a wide variety of specialized office and administrative support work for an assigned Department and management/supervisory staff. Interpret, explain, and apply City and Department policies, rules, and regulations.

DESIRABLE QUALIFICATIONS (continued)

Ability to: (continued) Work with considerable independence and initiative while exercising good judgment in recognizing scope of authority. Gather, organize, analyze, and present a variety of data and information. Prepare clear, concise, and accurate records and reports. Prepare public relations and informational material. Use a personal computer and appropriate for software for word processing and administrative support work. Deal tactfully and courteously with the public, representatives of other agencies, and other City staff when explaining the functions and policies of the service area, board, commission, or Department where assigned. Establish and maintain cooperative working relationships.

Training and Experience: Any combination of training and experience which would likely provide the required

knowledge and abilities is qualifying. A typical way to obtain the required knowledge and abilities would be: Four years of increasingly responsible work experience performing a variety of office and administrative support work, including substantial experience in a position requiring frequent public/customer contact at a level equivalent to Secretary I with the City of Merced.


Special Requirements: Some positions may have additional Departmental requirements such as specific typing skills. Possession of a valid California Driver's License issued by the Department of Motor Vehicles. Reference: City of Merced Personnel Rules and Regulations, Sections 5.05 and 5.07. The contents of this class specification shall not be construed to constitute any expressed or implied warranty or

guarantee, nor shall it constitute a contract of employment. The City of Merced assumes no responsibility beyond the general accuracy of the document, nor does it assume responsibility for any errors or omissions in the

information contained herein. The contents of this specification may be modified or revoked without notice.

Terms and conditions of employment are determined through a meet and confer process and are subject to the

Memorandum of Understanding currently in effect.


ATTACHMENT 28 – SECRETARIAL DUTIES

The following are basic duties/protocol expected from all secretarial staff in the City of Merced Housing Division.

Customer Service Protocol:

1.When someone enters the office:

A. Always look up, smile, welcome them then ask how you can assist.

B. If the person needs a Housing Division staff member, ask them to wait while you see if they are

available. Ask for the visitor’s name and reason for visit.

C. Get up from your desk, walk to the staff member’s office, and quietly inquire if they can see the visitor

providing them information on the visit and person visiting.

D. NOTE: If the staff member already has a person in their office, tell the visitor the staff member is with

someone and ask the person if they had an appointment; if they’d like to wait; would they like to leave

their phone number for follow up.

If the person wants to wait, ask them to sit in one of the office visitor chairs. When the staff

member is available, walk to their office and inquire if they would like to meet with the person

in the outside office.

D. Once given direction, return to the person and provide the update.

2. If the visitor is a first time home buyer that is bringing you documentation, ask them to follow you to the

Housing Division Conference Room for privacy. Prior to leaving your desk, let the other Secretary know you are

leaving to the conference room and place your phone on transfer.

3. If a Housing Division Staff Member has a client in their office and the outside office area gets noisy, get up and

quietly close the Housing Staff Members’ door to provide privacy for that meeting.

Email Protocol:

1. When emailing or responding with email to outside departments, lenders, realtors, or the general public, on

items not considered routine, CC the Housing Manager. This does not include day to day routine emails. If

unsure, CC. This allows the Housing Manager to be aware of what is being requested by the public and internally.

2. Return emails the same day you receive them. If unable to obtain information requested, email the person and

let them know when you will get back to them. We represent the City and therefore need to be responsive in a

timely and courteous manner.

3. When out of the office, forward your emails to another Housing Division staff member and set you’re Out of

Office reply.

4. When you are going to be out of the office for a day or more, email Housing staff members you will be out with

starting and ending dates. In addition, give the email address of the person covering for you to ensure timely

response.


Phone Protocol:

1. Return phone calls the same day you receive them. If unable to obtain information requested, phone the

person and let them know when you will be able to provide the information. We represent the City and therefore

need to be responsive in a timely and courteous manner.

2. We are here to serve on behalf of the City of Merced. When we answer the telephone we do so in a professional

manner. In answering questions, we do so in a professional and courteous manner. We smile while on the phone

to reflect a pleasant tone. If a person becomes overly confused or combative, let them know in a calm voice you

are going to transfer them to your manager. Call the Housing Manager’s number, let the Manager know who is on

the call and what has taken place, then transfer.

3. When taking a call for another member of the Housing Division Team, ask who is calling, let them know you

will see if they are Available, then ask “can I tell them what this is regarding?” When you contact the Housing

Division staff member, let them know who is calling and what the caller wants and if they are available to take

the call. If yes, transfer. If no, use a City of Merced call pad to write down person, phone number and reason for

calling and let the person know no one is available at this time.

A. If this is an urgent matter – contact the Housing Manager if available; then Housing Specialist; then

Finance Specialist. If none of these are available, take information and try to make contact with one of

these staff members by cell phone.

B. If the person is seeking someone on vacation, make sure the Housing Manager or their designee

receives the message for follow up.

C. Always make sure someone gets the message by day’s end.

4. When you are going to be away from your desk for more than 10 minutes, transfer your phones.

A. Make sure to let the person you are transferring to know you are about to transfer

B. Make sure the same person knows where you are going and when you will return

C. Order of transfer – Secretary to Secretary; if one of the Secretarys is not available, Secretary to

Finance Specialist; if Finance Specialist and Secretary is not available, Secretary to Housing Specialist. If

all three are unavailable, Secretary to Housing Manager.

5. If you are the only person in the office answering telephones, stay until someone is available to relieve you or

transfer to another department on the third floor. Exceptions include breaks, restroom use, lunch, or end of the

day. If you must leave and have made arrangements for the phone to be answered, leave a note on the door with

time you are leaving and expected time of return. Make sure both doors are locked and the office secure prior to

departure.

6. When leaving on vacation, make sure to forward your phone to a member of the office staff. Use the same

priority list as noted in #4.

7. If you have told someone you will call them back today, call them back today. Remember, it is “the City” that

will be blamed for not getting back to them.

8. See Basic Telephone Skills for Etiquette Tips

Calendar Protocol:


1. When calendaring an event for others in the office, include date, time, attendees, place of meeting, and reason

for meeting.

2. When requesting time off, use the time-off request form. Once approved, list your day off on the Shared

Calendar. When listing, place your name and reason for day off: vacation, medical, personal.

3. If planning vacation time off, please submit your request at least one month in advance for scheduling

purposes.

Daily Office Routine:

1. If done updating a file, file it. Files are to be kept up to date on a daily basis and placed in the proper drawer.

Applications waiting to be completed fall into this category.

2. When completed with an assignment, please email the Housing Division Manager to let them know this task no

longer needs to be on the “to do” list.

3. If creating a form or flyer for the public, make sure to get it approved by the Housing Division Manager or

designee before releasing to the public.

4. New home and rehab project files are to be filed daily in the correct cabinet. Keep these files up to date and

only remove from drawers when in use or updating.

5. Disposition sheets are to be created when a bill comes in. Once the sheet is completed, process the invoice for

payment then file the copy. Disposition sheets MUST be kept up to date to ensure timely recording for each job.

5. Keep extra chatter to a minimum. This includes chatting with co-workers or associates.

6. Keep personal internet surfing to a minimum – during breaks or lunch is preferred.

7. Keep personal phone calls to a minimum. There are times when personal calls are necessary; but please keep

them brief.

8. Time cards and billing is to be signed by the Housing Division Manager prior to their being presented to the

Department Head.

Date:___________________________________________________________

I have read and understand the Housing Division Office Protocol Policy.

Name: _______________________________________________________________

Signature: _____________________________________________________________


ATTACHMENT 29 – ORGANIZATIONAL CHARTS

HOUSING DIVISION PROCUREMENT PROCEDURES

(Hazard Insurance & Flood Insurance)

City Manager Or Designee

Development Manager

- Reviews Procurement Process was followed according to guidelines. - Ensures compliancy.

Finance Specialist

- Assists Secretary as needed.

Secretary Or Designee

- Sends Escrow Instructions to Title Company requesting evidence of insurance listing the City as an additional loss payee on policy.

- Verify evidence of insurance has been received. - Add insurance information to database. - Monitor/Update insurance datable for the annual renewal of hazard insurance and, when applicable, flood insurance.

Economic Development Director Or Designee


REHABILITATION PROCESS


Development Manager

- Approves estimates, work write-ups, and contracts. - Reviews Budget Requests - Ensures Procurement Process was followed. - Reviews all contracts/agreements to ensure compliancy. - Verifies proper language is included in each contract before

being routed to the Attorney’s office.

Finance Specialist

- Ensures Grant Fund Availability for project.

- Reviews Budget Request. - Completes the “Notice of

Completion”

Secretary

- Files all documents related to the project. - Processes all budget request - Enters project cost on the Disposition sheets - Processes rehabilitation contract. - Distributes RFP/RFQ’s for the projects. - Processes all project related invoices.


- Reviews proposed

improvements presented

by Rehabilitation

Specialist with

Development Manager.


Housing Rehabilitation Specialist - Inspects and Takes Photos, discusses items

with Program Specialist and Development

Manager.

- Creates work write-up.

- Distributes RFP/RFQ to contractors.

- Manages job site and coordinates inspections

(Lead Based Paint/Pest)

- Final walk-through with Contractor.

- Informs Finance Specialist when the project is

completed.


PROCUREMENT PROCESS


- Reviews Agreement presented to Council.

- Signs/Executes

Agreements/Contracts

Development Manager

- Reviews Admin Reports being presented to Council - Reviews Budget Requests - Reviews Procurement Process was followed according to

HUD 24 CFR 85.36 guidelines. - Reviews all contracts/agreements to ensure compliancy. - Verifies proper language is included in each contract before

being routed to the Attorney’s office.

Finance Specialist

- Ensures Availability of funds.

- Reviews Budget Request

Secretary

- Sends Public Notices to Clerk’s office for posting. - Mails RFP’s, Letters to Agencies. - Sends completed contracts to various City

Departments. - Completes ‘Clerical Checklist’ to ensure compliancy. - Files all documentation in the project file.

Housing Rehabilitation Specialist

- Manages Small Purchase, RFP/RFQ Proposals,

Competitive Sealed Bids, and Non Competitive

Proposal Process.

- Inserts proper language into contract/agreement

(per verification checklist).


- Approves budget requests for

funding of Agreements/Contracts.

Housing Program Specialist - Manages Small Purchase, RFP/RFQ Proposals,

Competitive Sealed Bids, and Non Competitive

Proposal Process

- Inserts proper language into contract/agreement

(per verification checklist).


INCOME VERIFICATION CHART


Development Manager

- Approves File once Verified by Finance Specialist - Member of Loan Committee

Finance Specialist

-Ensures Income Information and Third Party Verification Information is Correct -Ensure compliance of File Part of Loan Committee

Secretary II

- Meet with Applicants -Assist Applicant with Application -Perform Third Party Verification -Ensure all documents in client folder -Responsible for Filing Documents -Organize Loan Committee Meeting -Perform Annual Insurance Verification


- N/A


Housing Rehabilitation Specialist - NA

Loan Committee - Review & Approve, Request Additional Info, or Deny loan

application


ACQUISITION PROCESS CHART


-Signs Documents

From Title

Development Manager

- Signs Purchasing Agreements - Reviews Acquisition with Staff - Reviews documents sent to City Attorney’s Office

Finance Specialist

- Ensures Availability of funds. - Reviews Budget Request

Secretary

- - Creates a File for acquisition - - Prepares Certificate of

Compliance - - Prepares Budget Request for

Check - - Contacts Title Company

Rehabilitation Specialist - Inspects House - Reviews Pest/Lead Inspection Reports - Upon Close of Escrow, make 3 sets of keys - Estimates Cost of Rehabilitation

Economic Development

Director Or Designee

-Reviews all budget

requests


- Locates Eligible of House - Request a NSP Compliant Appraisal

(Compliant w/ 49 CFR Part 24.103) - Prepares Environmental Documents - Works with Agent and the Seller (Bank) - Coordinates inspections - Prepares Insurance Request


ATTACHMENT 30 – DERTERMING INCOME ELIGIBILTY

Overview:

Income Eligibility ensures that all applicants served are eligible and receive the correct

amount of assistance without exceeding the 120% Merced County Median Income

Policy:

Determination Income Eligibility

Staff must assess applicants to determine eligibility for Neighborhood Stabilization

Program and calculate income when:

2. New application is submitted for federal/state funding

3. Application is more than six months old

Description:

Secretary II

All applicants are to meet with the Secretary II to receive overview of program, guidelines and

provided an application packet. The Secretary II is to work with the client through this and

the third party verification process ensuring all documents required are received and all

forms requesting third party verification are signed. If approved by Housing Finance

Specialist and Manager, Secretary II is to contact Loan Committee for final approval.

Once the approval process is complete, the Secretary II is responsible for ensuring all

documents are contained in the client’s folder and filed appropriately. Secretary II is also

responsible for annual verification of insurance.

Finance Specialist

Once third party verification and application have been completed, the Finance Specialist is to

review each applicant’s package to ensure compliance with NSP guidelines and that all

financial documentation is supported with third party verification. If satisfied, the Specialist is

to sign off on documents and provide to Housing Manager. If documentation is lacking, folder

is to be returned to Secretary II.


Housing Manager

Housing Manager will review all documentation provided and give approval to call the Loan

Committee for final loan approval.

Loan Committee

Members will be presented a written overview of the loan request. Names of person/s

applying and identifying information are not to be disclosed. Only financial need and ability

are to be presented during this portion of the agreement process. Secretary II will provide

agenda and give report on request. If questions or concerns arise that cannot be answered

during the Loan Committee meeting, the meeting may be adjourned until information is

obtained. Minutes are to be taken at each meeting and should be kept within the application

file.

Loan Committee members must include the Housing Manager, Finance Specialist, one

representative from a local lending institution and a representative from another City

department.

Procedure: Steps in Determining if the applicant is eligible for program

Assist applicant in completing application. Required documents and 3rd party verification

forms will be signed when application is completed.

Refer to: Income Calculation and Determination Guide for Federal Programs Chapter

General Requirements

Must collect and analyze appropriate income documentation paystubs, bank statements, IRA,

pension, disability, unemployment benefits, child support, dividends or interest on savings

and other miscellaneous sources of income for all household members to determine eligibility

for the program.

Refer to: Income Calculation and Determination Guide for Federal Programs Chapter 5

Calculating Adjusted Income.

1. Ask questions about other income sources or any other anticipated income changes, pay

raises, overtime, unborn children or family size.

2. Calculate applicants projected household income based upon documentation provided to

meet the required 120% Merced County Median Income adjusted for household size.

3. Staff is to closely review income verification information prior to requesting third party

verification. Staff is looking for inconsistencies and/or family members on IRS or bank

statements that may have been overlooked and should be counted in final assessment.


4. Once applicant meets application requirements, a letter of approval is to be sent and third

party verification started. Staff is to use all Third Party Verification Forms located in the

NSP Handbook.

5. Third party verification documentation is to be screened by Secretary II in charge of said

client. Verification and first approval is provided by Finance Specialist then the Housing

Manager. Final approval will be given by the Loan Committee. The Loan Committee is to

consist of the Housing Manager, Finance Specialist, one representative from a local lending

institution, and one person from an outside City department.

Assessing household income

1. Use gross income to determine income eligibility for farmers or people self employed.

2. Use annual income from the past 12 months when the household income fluctuates each

month due to seasonal changes.

3. Include all assets for the household, cash value, and if the asset earns income.

4. If cash value is greater than $5,000, calculate at 2% of the asset and compare actual asset

whichever is greater number and add to income.

Income Verification: Verifying applicant’s income

1. Must verify applicant’s income through other sources with appropriate third party

verification forms. Example: Contacting the employer to verify wages sending an

executed release form by fax or mail. Follow up if the agency is unresponsive and

document verification efforts in file.

2. Compare all verifications to previously submitted documents that it’s correct as

reported.

3. Provide third party verification and application to Housing Finance Specialist for

approval.

4. Housing Finance Specialist to provide third party verification and application to

Housing Manager for approval.

5. Once approved by Housing Finance Specialist and Manager, Secretary II to schedule a

meeting with Housing committee to approve or disapprove application.

6. Send applicant approval letter to those who qualify for program and give applicants

who aren’t income eligible a “Denial” letter. This letter is sent when applicants are

over-income and do not meet the NSP guidelines.