Moderate Rehabilitation Program Administrative Plan

Chapter 5:Completion of Rehabilitation

5.1 Certifications and Final Inspection

Owners will be required to contact the DND and the BHA at least one week prior to the completion of rehabilitation work. Once notified, DND will schedule a final inspection based on the estimated completion date and remind the Owner of the documents that he or she will be required to submit before final project approval. The BHA will require Owners to provide the following Owner certifications in accordance with 24 C.F.R. § 882.507(b) to evidence completion of the Unit(s):
 

(1)           A certificate of occupancy and/or other official approvals as required by the locality.

(2)          A certification by the Owner that:

         (i)           The Unit(s) has been completed in accordance with the requirements of the AHAP;

         (ii)          The Unit(s) is in good and tenantable condition;

         (iii)         The Unit(s) has been rehabilitated in accordance with the applicable zoning, building, housing and other codes, ordinances or regulations [9], as modified by any waivers obtained from the appropriate officials;

         (iv)          The Unit(s) are in compliance with part 35, subparts A, B, H, and R of 24 C.F.R.;

         (v)           Any Units(s) built prior to 1973 are in compliance with § 882.404(c)(3) and § 882.404(c)(4); and

         (vi)          If applicable, the Owner has complied with the provisions of the AHAP relating to the payment of not less than prevailing wage rates [10] and that to the best of the Owner’s knowledge and belief there are no claims of underpayment concerning alleged violations of said provisions of the AHAP. In the event there are any such pending claims to the knowledge of the Owner, PHA or HUD, the Owner will be required to place a sufficient amount in escrow, as determined by the BHA or HUD, to assure such payments.
 

The Owners will also be required to fill out an “Actual Cost and Rehabilitation Loan Certifications” form. See 24 C.F.R. § 882.507(c).
 

The DND and BHA will perform the final inspection of the Unit(s), reviewing all work items required by the AHAP and determining compliance with the HQS, applicable codes, and the Contract. The Owner and the contractor will be requested to accompany the DND and a BHA inspector so that remedies for deficiencies can be discussed and agreed upon immediately after the inspection. The DND and BHA will prepare a punch list of deficiencies and set a final completion date for these remaining items. Provided that all other requirements of the AHAP have been met, and which in any case do not affect the health or safety of the Tenant(s), will not prevent the acceptance of the Unit(s) and execution of the HAP Contract.
 

5.1.1 Procedure in Case of Items of Delayed Completion

If there are delays in correcting deficiencies which are documented in the final inspection, an escrow fund determined by the BHA to be sufficient to assure completion will be required, as well as a written agreement between the BHA and Owner specifying the schedule for completion. This written agreement would be included as an exhibit to the Contract. If the items are not completed within the agreed time period, the BHA shall evaluate the individual circumstances of the delay and may use its discretion to terminate the Contract or exercise other rights under the Contract. See 24 C.F.R. § 882.507(e)(2).
 

5.1.2 Procedure in Case of Other Deficiencies

If other deficiencies exist, the BHA will determine whether and to what extent the deficiencies are correctable, and whether the Contract Rents should be reduced. The Owner will be notified of any such decision. If the corrections required are possible, the BHA and the Owner must enter into an agreement for the correction for the deficiencies within a specified time. If the deficiencies are corrected within the agreed period of time, the BHA will accept the Units. Otherwise, the Unit(s) will not be accepted and the Owner will be notified with a statement of the reasons for non-acceptance.
 

5.2 Preparation and Execution of HAP Contract

The DND and BHA will review the Owner certifications immediately after the final inspection and compare the “Actual Cost and Rehabilitation Loan Certifications” form to the Final Feasibility Analysis and approved change orders (if any). If after the review and inspection, the DND finds that the Unit(s) comply with the AHAP, the Unit(s) will be accepted. See 24 C.F.R. §§ 882.507(e). Contract Rents will be recalculated if rents specified in the AHAP need to be adjusted in accordance with Chapter 12. See 24 C.F.R. §882.408(d).
 

The HAP Contract will be prepared and the Owner will execute the HAP Contract. BHA staff will explain how and when housing assistance payments will be made and answer any questions the Owner has regarding the HAP contract.
 

5.2.1 Effective Date of the HAP Contract

The effective date of the Contract will be no earlier than the final inspection which provided the basis for acceptance of the Unit(s). See 24 C.F.R. § 882.807(e).
 

5.2.2 Term of the HAP Contract

The Contract for any Unit rehabilitated in accordance with the Mod Rehab Program will be for a maximum initial term of 10 years. The Contract will give the BHA the option to renew the Contract for an additional 10 years. See 24 C.F.R. § 882.807(b).[11]
 

         (a) BHA Annual Review of HAP Contract
 

The BHA reviews Contracts on annual basis and determines whether or not Contracts should be renewed based on funding availability and Owner compliance with the contract.
 

5.2.3 Changes in Contract Rents from the AHAP

The Contract Rents may be higher or lower than those specified in the AHAP, as discussed in section 12.4 of this Administrative Plan. See 24 C.F.R. §§ 882.807(c) and 882.805(d).
 

5.2.4 Reporting Unleased Units at the Time of Execution

At least 120 days prior to the execution of the Contract, the Owner shall submit a list of dwelling Unit(s) they anticipate to be leased and not leased as of the effective date of the Contract. The Owner shall update the BHA if any changes in regards to the number of leased and unleased units as the effective date of the Contract approaches. See also 24 C.F.R. § 882.807(d).

 

 


 
[9] Including but not limited to the Uniform Federal Accessibility Standards, if applicable.  42 U.S.C. § 4151-4157
[10] See section 3.4.3 of this Administrative Plan for more information.
[11] Note that 10 years is the required time for a HAP Contract executed pursuant to 24 C.F.R. § 882, subpart H (the regulations for newer SRO projects). Previously, HAP Contracts had to be for a term of 15 years under 24 C.F.R. § 882.403(c), and such Contracts may still be in existence.

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