7417.1 REV-1
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CHAPTER 12. PROJECT CONSTRUCTION AND COMPLETION
Section 1. Introduction
12-1. GENERAL. This chapter establishes the procedures for PHA
administration of the construction contract and the contract
of sale, inspections during construction, acceptance of the
construction work, and settlement upon project completion.
If assistance is required, the PHA should contact the AE Chief
or the designated construction analyst who will provide guidance
and assistance to the PHA. Except where otherwise specified,
the following terms are used throughout this chapter:
a. Contract. This term refers to the construction contract
(conventional) or the contract of sale (turnkey).
b. Contractor. This term refers to the general contractor
(conventional) or the developer (turnkey).
c. Construction. This term refers to new construction and
rehabilitation.
12-2. CONSTRUCTION CONFERENCE. A construction conference will be held
within ten (10) calendar days of execution of the contract by
the PHA and the contractor to discuss the public housing program
construction requirements. This is necessary to provide for the
timely construction of the proposed project by eliminating any
misunderstanding of the program regulations and procedures,
contract requirements, and the responsibilities of the PHA,
the PHA architect, the contractor, and the Area Office.
a. Participants. The AE Chief will coordinate the meeting
and will lead the discussion. The designated construction
analyst and representatives from the Labor Relations Staff
and the FHEO Division shall attend to discuss and answer
questions concerning their technical requirements. The MHR
shall also attend the meeting. The PHA Executive Director,
or designee, the PHA architect, and the contractor and any
subcontractors shall also attend the meeting.
b. Discussion Items. The PHA may submit a list of specific
discussion items (including items identified by the
contractor) to the construction analyst prior to the
date scheduled for the construction conference. In
addition to the items identified by the PHA, the following
should be discussed:
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(1) the content and requirements of the contract;
(2) the project construction and completion requirements
identified in this chapter;
(3) the PHA and contractor insurance requirements
identified in Chapter 3 (Section 3);
(4) the FHEO requirements identified in Chapter 3
(Section 4);
(5) the prevailing wage rate requirements identified in
Chapter 3 (Section 2); and
(6) the need for the PHA to promptly notify the construction
analyst of any problems being encountered so that
assistance may be provided by the Area Office staff
to keep project construction on schedule.
c. Minutes of Meeting. The construction analyst,
immediately following the construction conference, shall
prepare a summary of the items discussed at the meeting.
A copy of this summary shall be sent to each of the Area
Office participants and to the PHA.
12-3 thru 12-10. RESERVED.
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Section 2. Contract Administration
12-11. PUBLIC HOUSING AGENCY. The PHA pursuant to the ACC is responsible
for enforcing the PHA architect's contract and the construction
contract or contract of sale and for ensuring retention of all
contractual rights.
a. Contracting Officer. The PHA shall designate an employee
as its contracting officer. The scope and limitation of
the contracting officer's responsibility shall be identified
in writing and copies shall be provided to the PHA architect
and the contractor.
b. Contract Administrator. The PHA shall designate a qualified
professional to administer the contract. Unless otherwise
authorized by the Area Office, the PHA architect will be
designated as the contract administrator.
c. Start of Work. The PHA shall advise the AE Chief in writing
of the date that construction work begins. The PHA letter
shall also indicate for conventional projects that the
evidence of insurance (Chapter 3, Section 3) has been
received by the PHA and is in compliance with the construction
contract.
d. Reports. The PHA shall obtain the reports and construction
documents required by the contract and this chapter from the
PHA architect and contractor. A copy of these reports will
be retained by the PHA and, as required, a copy will be sent
to the AE Chief.
e. HUD Construction Forms. The PHA shall maintain a supply of
required HUD Forms for use by the PHA, the PHA architect,
and the contractor. An initial supply of HUD Forms will be
provided by the Area Office upon approval of the contract
(paragraph 12-13).
f. Construction Progress Meetings. The PHA Executive Director
shall meet with the PHA architect and the contractor on a
monthly basis. These meetings will be held to discuss
the progress of construction work, any problems or
deficiencies noted during inspection visits, overdue reports
and the construction schedule. The PHA shall prepare a
written record of the items discussed at each meeting and a
copy shall be placed in the PHA project construction file.
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g. Correction of Deficiencies. The PHA, upon being notified by
the PHA architect or the Area Office construction analyst
of construction deficiencies, shall promptly notify the
contractor in writing of the deficiencies observed. This
notification shall also advise the contractor that failure
to make timely corrections would be an infraction of the
contract and that the contractor is liable for any resulting
losses or delays.
12-12. PHA ARCHITECT. The PHA architect is responsible for ensuring
that the project is constructed in accordance with the construction
documents approved by the Area Office, as well as applicable State
and local requirements.
a. Basic Services. The PHA architect, as an agent of the PHA,
is responsible for providing the services identified in the
PHA architect's contract such as:
(1) making periodic site visits to determine the quality
and progress of work and compliance with the contract;
(2) advising the PHA of any deficiencies noted and preparing
a notification to the contractor to correct such work;
(3) preparing applicable change orders (conventional) to the
contract and submitting change orders to the PHA for
Area Office approval;
(4) for conventional projects, reviewing the contractor's
schedule for construction contract payments and
recommending payments to be made by the PHA in
accordance with the contract; and
(5) participating in the final inspection, identifying
punch list items and amounts to be withheld until such
work is corrected, and signing the project completion
documents.
b. Additional Services. The PHA architect's contract may
require the architect to employ representatives to provide
daily on-site supervision of work in progress. This
generally will be limited to projects with more than fifty
(50) units. In such instances, the number of on-site
inspectors specified in the PHA architect's contract shall
not exceed the following:
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(1) Projects of fifty (50) to one hundred (100) units: one
full-time inspector for the entire contract period; or
(2) Projects of more than one hundred (100) units: one
full-time "clerk of the works" for the entire contract
period and one full-time inspector for one-half of the
contract period.
c. Reports. The PHA architect shall prepare and promptly submit
the following reports to the PHA:
(1) Deficiencies: a written report of any deficiencies or
disputes that the PHA architect brought to the
contractor's attention but which the contractor has not
corrected or has refused to correct; and
(2) Construction Report: a Construction Report (Form HUD
5378) shall be prepared on the first and sixteenth day of
each month during the construction period -- from the
date of contract execution to final inspection.
12-13. AREA OFFICE. The Area Office is responsible for ensuring that the
PHA, in accordance with the terms of the ACC, is enforcing the
PHA architect's contract and the construction contract or
contract of sale, including the construction documents approved
by the Area Office.
a. General. The Area Office will provide technical assistance
and guidance to the PHA concerning contract administration
and enforcement, reporting, interpretation of construction
documents, and other related matters such as:
(1) PHA supervision of the PHA architect and contractor;
(2) completing standard HUD Forms;
(3) reviewing and approving change orders and revisions
to the construction documents;
(4) PHA acceptance of completed work; and
(5) procedures for resolving disputes and contract
enforcement by the PHA.
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b. HUD Construction Forms. As soon as the contract is approved by
the Housing Development Division Director, the PCR Unit shall
send a sixty (60) day supply of standard HUD Forms to the PHA.
(1) Turnkey Projects: The following HUD Forms shall be sent:
Number Title
* Form HUD 5372 Construction Progress *
Form HUD 5378 Construction Report
Form HUD 51002 Schedule of Change Orders
(2) Conventional Projects: The following HUD Forms as well as
the HUD Forms for turnkey projects shall be sent:
Number Title
* Form HUD 51000 Schedule of Amounts for Contract *
Payments
Form HUD 51001 Periodic Estimate for Partial
Payment
Form HUD 51003 Schedule of Materials Stored
(3) Site Visits. The construction analyst, designated by the
AE Chief all visit the construction site at least monthly
to evaluate project construction and PHA administration
activities. The construction analyst shall review such
matters as the following:
(1) general performance of the PHA in administering all
project related contracts in accordance with the ACC;
(2) PHA records to determine that required insurance
coverage is in force;
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(3) construction work, material, and equipment to determine
that the contract requirements are being met; and
(4) the contractor's payroll records, employment practices,
material invoices and project accounting records, to
ensure the contract requirements are being met.
d. Reports. The construction analyst, upon concluding each
site visit, shall discuss any observations or findings
with the PHA Executive Director or PHA architect and advise
the PHA to take necessary action to correct any deficiencies
that were observed. The construction analyst shall
subsequently prepare a HUD Representatives Trip Report
(Form HUD 5379) and submit it to the AE Chief and send a
copy to the PHA.
12-14 thru 12-20. RESERVED.
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Section 3. General Requirements for Project Construction
12-21. SUBCONTRACTORS. All contracts between the contractor and any
subcontractors shall contain the FHEO employment requirements
(Chapter 3, Section 4) and the prevailing wage rate requirements
(Chapter 3, Section 2). The contractor is responsible for
determining that potential subcontractors are not on the HUD
consolidated list of debarred, suspended or ineligible contractors.
12-22. CONTRACTOR PAYROLL. The contractor is responsible for paying
prevailing wage rates (Chapter 3, Section 2) to all employees
engaged in work under the contract and ensuring that any
subcontractors also pay prevailing wage rates.
a. Payroll Report. The contractor shall submit a certified
payroll report to the PHA each week during the contract period
--i.e., from execution of the contract to project completion
and acceptance by the PHA. A separate payroll report shall be
submitted for the contractor and subcontractor.
b. Payroll Forms. The contractor's report shall be submitted on
the Payroll Form (WH 347) and Statement of Compliance (WH 348).
Such forms can be obtained from the Government Printing Office,
Washington, D.C. 20402. The contractor may substitute
computer generated forms, instead of the Payroll Form (WH 347),
provided that all of the required information is included.
c. Retention. The PHA shall retain all payroll reports for three
years from the date of project completion and acceptance by the
PHA.
12-23. AS-BUILT DRAWINGS. The PHA shall be provided with a copy of the
as-built drawings for its project construction file upon project
completion. These drawings shall include all significant
deviations from the working drawings approved by the Field Office.
a. Responsibility. The as-built drawings shall be prepared as
follows:
(1) Turnkey projects: The turnkey developer is responsible
for preparing and submitting the as-built drawings to the
PHA.
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(2) Conventional projects: The general contractor is
responsible for providing all necessary information
to the PHA architect in order that the PHA architect
may prepare the as-built drawings.
b. Utilities. The proposed underground utility lines are
usually identified on the working drawings in diagram form.
The actual location of underground utilities shall be
recorded on the as-built drawings to indicate:
(1) the depth of underground lines from finished grade
and the distance from buildings;
(2) the depth from finished grade and the distance from
buildings of related underground work such as bands,
cleanouts, connections, branches, cutoffs and sewer
ends; and
(3) the invert elevations of the storm and sanitary sewer
systems.
c. Other. All significant deviations from the working drawings
shall be noted on the applicable architectural sheet.
Detailed descriptions and changes may be made to the
applicable sheet or a note may be made referring to
attachments, other sheets, or to change orders. Separate
attachments or drawings shall cross reference the related
architectural sheet.
12-24. PHA SUBMISSION OF CHANGE ORDERS. The PHA shall not order or
agree to any changes in the contract work without the prior
written approval of the Area Office. Changes in construction
work that are beyond the scope of the contract shall be limited
to work that is required to provide a necessity, appropriate
betterment, or equivalent, for the proposed project.
a. Limitation. Changes in work shall be authorized by the
Area Office only when such changes are clearly in the
interest of the PHA. Changes generally will be limited
to work required for the safety of the occupants or to
protect the structural soundness of the project. In
addition, the cost of such changes must be within the
applicable project prototype cost limit.
b. Preparation. Change orders shall be prepared by the following:
(1) Turnkey projects. The turnkey developer is responsible
for preparing and submitting change orders to the PHA.
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(2) conventional projects. The PHA architect is responsible
for determining whether a change is necessary and
preparing and submitting change orders to the PHA.
The general contractor is responsible for submitting
any information required by the PHA architect.
c. Content. Changes in contract work shall be documented by a
change order. A change order is a written agreement, executed
by all parties to the contract, which describes the changes
in work to be performed. Change orders shall be prepared
in the form prescribed by the Area Office and shall include
the following:
(1) a detailed description of the proposed change in work;
(2) a reference to the applicable working drawings and
specifications;
(3) a fixed price (credit, debit, or no change) for the
change in contract work;
(4) an estimate of any additional time required to complete
the work;
(5) the contractor's itemized breakdown of the cost of
materials and labor and, for conventional projects, an
itemized breakdown for any applicable subcontractors; and
(6) the change indicated on the architectural drawings, if
applicable.
d. Submission. A proposed change order shall be signed by
the PHA architect and by the contractor and the PHA. A
copy of each proposed change order and the supporting
documentation shall be submitted to the Area Office for
review and approval.
e. Numbering. The PHA shall assign a consecutive number to
each change order submitted to the Area Office. The prefix
"T" shall be used for turnkey projects and "G" for conventional
projects. However, for conventional projects having separate
trade contracts the following prefixes shall be used:
demolition (D); plumbing (P); heating (H); electrical (E);
and landscaping (L).
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f. PHA Register. The PHA shall maintain a separate change
order register for each project--i.e., on a project-by-project
basis. This is required to provide a permanent
record of all actions taken in connection with each project.
The register shall identify:
(1) the change order number;
(2) a brief description of the change;
(3) the cost of the proposed change;
(4) the date submitted to the Area Office;
(5) any critical deadline dates that must be met by the
Area Office;
(6) the date of Area Office approval or disapproval, and the
action taken; and
(7) the amount of any additional time required by the
contractor.
12-25. AREA OFFICE APPROVAL OF CHANGE ORDERS. The AE Chief is responsible
for coordinating the review and recommending approval (or
disapproval) of change orders by the Housing Director.
a. Standard Processing Time. The standard processing time (SPT)
is the number of calendar days from receipt of the proposed
change order by the PCR Unit and a decision by the Housing
Director. The SPT for Area Office review and action on a
change order is ten (10) calendar days.
b. AE Branch. The AE Chief, in order to recommend approval,
shall determine, with respect to the proposed change that:
(1) it is not within the scope of the contract;
(2) it is a necessity and in the interest of the PHA;
(3) it is consistent with the standards for the public
housing program;
(4) it cannot practicably be performed under a separate
contract after completion of the project; and
(5) any additional time required for the change is
reasonable.
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c. Cost Branch: The Cost Chief in order to recommend approval
shall determine and advise the AE Chief that:
(1) the fixed price for the change order is reasonable; and
(2) any additional costs can be approved based on the
project prototype cost limit.
d. Mortgage Credit Branch. The Mortgage Credit Chief shall
review the proposed change order to determine that any
additional costs can be made available from the contingency
account.
e. AHM Branch. Change orders that would affect project management
or maintenance operations (e.g., substitute materials or
equipment, changed utility combinations) shall be submitted to
the AHM Branch for review. The AHM Chief shall promptly submit
any recommendations to the AE Chief.
f. Legal Division The Area Counsel shall be requested to provide
assistance if there is reason to believe that a proposed
change is within the scope of the original contract, or to
correct work which is the responsibility of the PHA architect
or the contractor.
g. PHA Notification. The AE Chief, upon determining that the
change order is approvable, shall sign the change order as
the authorized Area Office official if signature authority
has been delegated by the Housing Director. If a change
order is disapproved, a letter shall be prepared for the AE
Chief's signature, if signature authority has been delegated,
advising the PHA of the reasons for disapproval.
12-26. TIME EXTENSIONS. The contractor is responsible for completing
the project within the time established in the contract.
Accordingly, the PHA shall not authorize any time extensions
without the prior written approval of the Area Office.
a. PHA Records. The PHA, upon project completion, shall
determine the number of calendar days and reasons for any
delays beyond the date established in the contract. The
PHA shall maintain a record of potential causes for delays
which will be used as the basis for granting time extensions
or for determining the amount of liquidated damages to be
assessed against the general contractor for conventional
projects (paragraph 12-46). The PHA shall maintain a record
of the following:
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(1) the daily temperature;
(2) the daily amount of precipitation;
(3) delays in obtaining labor and materials, including the
duration and reason;
(4) labor disputes or strikes, including the duration,
and the applicable construction trade;
(5) delays experienced by others in completing non-contract
public improvements (whether on-site or off-site); and
(6) other causes for delays, such as fires, floods, vandalism
or court orders.
b. Basis for Time Extensions. In order to be considered for
approval by the Area Office, requests for time extensions
must meet the following criteria:
(1) the contractor must have submitted a written notice to
the PHA within ten (10) calendar days of the start of
any delay;
(2) the severity and extent of adverse weather could not
have been reasonably foreseen by the contractor (normal
seasonal levels of rain, snow, cold, or heat should
have been considered by the contractor);
(3) the cause of the delay was beyond the contractor's
control; and
(4) any additional cost attributable to the delay is
being borne by the contractor.
c. Contractor Request. The PHA immediately upon receipt of
a contractor's notification of delay or request for time
extension shall send a letter of acknowledgement to the
contractor. The letter shall indicate:
(1) immediate attention will be given to the contractor's
request and that a "finding of fact" will be submitted
to the Area Office for consideration and approval; or
(2) the actual delay in the work is difficult to determine
and a "finding of fact" will be sent to the Area Office
for consideration and approval upon completion of work.
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d. PHA Finding of Fact. The PHA shall review its records to
ensure that the information provided by the contractor is
accurate, to determine the cause of the delay and the
extent that it was within the general contractor's
control, and the request meets the criteria established
in subparagraph b. The PHA, based on its review, shall
prepare a "finding of fact" with the assistance of the
PHA architect and PHA attorney and submit its recommendation
to the Area Office for approval.
e. Area Office Approval. The AE Chief shall review each PHA
"finding of fact". In order to recommend approval, the AE
Chief must determine that:
(1) the contractor's request, as documented by the PHA
"finding of fact," meets the requirements of
subparagraph b;
(2) the additional time requested by the contractor is
reasonable based on the nature and duration of the
delay; and
(3) if there is some question of the contractor's liability
for the delay, the PHA "finding of fact" shall be
reviewed in accordance with paragraph 12-27.
12-27. DISPUTES AND CLAIMS. The PHA shall promptly notify the Area
Office of any problems or disputes experienced during construction
which could result in a claim by the PHA architect or the
contractor. This may include claims for extra costs due to
delays, claims for time extensions or extra costs based on PHA
actions, or claims resulting from contract changes.
a. PHA Records. It is imperative that the PHA maintain a
complete written and dated record of any actions that may
result in a dispute or claim for damages. This is required
to protect the PHA interest during any litigation
proceedings that may subsequently arise. In such instances,
the PHA shall, at a minimum, maintain the following:
(1) a complete and detailed (daily job record;
(2) a disputes and claims file, cross-referencing other
pertinent files, for each dispute or claim, and
(3) any correspondence relating to the dispute, including
written minutes of any meetings, which identify
actions taken by the PHA, PHA architect or contractor
and decisions or agreements made concerning the dispute.
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b. Contractor Notice. The contractor must submit a written
notice of claim to the PHA within ten (10) calendar days
from the date of the incident on which the claim is based.
The contractor's initial notice must identify the nature and
scope of the claim, including extra costs sought by the
contractor. The contractor will subsequently be required to
submit a detailed description and supporting evidence for
the claim.
c. PHA Acknowledgement. The PHA immediately upon receipt of
a contractor's notice shall date stamp the notice and shall
send a letter to the contractor acknowledging receipt of the
claim. The PHA's letter shall also indicate:
(1) if the claim was filed within the ten (10) day period,
that the contractor is required to submit a detailed
justification for the claim; or
(2) if the claim was not filed within the ten (10) day period,
the contractor's claim is not eligible for consideration.
d. PHA Finding of Fact. The PHA shall review its records to
assure that the information provided by the contractor is
accurate. The PHA, based on its review of the contractor's
claim and its knowledge of the circumstances, shall prepare
a "finding of fact" with the assistance of the PHA architect
and PHA attorney and submit its recommendations for a
determination by the Area Office.
e. Area Office Approval. The AE Chief, in conjunction with the
Area Counsel, shall review the PHA "finding of fact" and
proposed disposition of the claim. In making this review,
consideration shall be given to the contractor's claim
and the PHA recommendations in light of the obligations
of both parties under the contract. Upon completion of
the review, the AE Chief shall prepare a letter for the
Housing Director's signature (with the concurrence of the
Area Counsel) instructing the PHA to promptly:
(1) notify the contractor of the PHA decision (as approved
by the Area Office);
(2) if applicable, request the PHA architect to prepare a
change order to reflect any modifications to the contract
as a result of the decision;
(3) notify the Area Office, if the Area Office decision is
not acceptable to the PHA; or
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(4) notify the Area Office, if the contractor does not
accept the decision (if court action is taken, the
PHA shall submit a copy of the contractor's assertions
to the Area Office).
12-28 thru 12-40. RESERVED.
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Section 4. Construction Requirements for Conventional Projects
12-41. CONSTRUCTION PROGRESS SCHEDULE. A construction progress
schedule shall be prepared to monitor construction activities
from the date specified in the "notice to proceed" through the
actual project completion date.
a. Contractor Schedule. The contractor shall prepare a
Construction Progress Schedule (Form HUD 5372) for each
project immediately after PHA issuance of a "notice to
proceed". The information shall be realistic and consistent
with the information provided by the general contractor on
the approved Schedule of Amounts for Contract Payments
(Form HUD 51000a). The contractor may substitute alternate
forms (e.g., tracings) provided that all information
identified on Form HUD 5372 is included.
b. PHA Approval. The PHA architect shall review the general
contractor's construction progress schedule to determine
that the scheduled dates and amount of work to be completed
are reasonable and consistent with the construction contract.
If acceptable, the PHA architect shall sign the schedule and
forward it to the PHA for approval. Upon approval by the
PHA, the approved construction progress schedule shall be
returned to the general contractor and a copy forwarded to
the AE Chief.
12-42. SCHEDULE OF AMOUNTS FOR CONTRACT PAYMENTS. The Schedule of
Amounts for Contract Payments (Form HUD 51000a) approved by
the Area Office is used by the PHA for making progress payments
to the general contractor.
a. Contractor Schedule Immediately after execution of the
construction contract, the general contractor shall prepare
a Form HUD 51000a. The completed form shall be sent to the
PHA to review and obtain Area Office approval.
b. PHA Review. The completed Form HUD 51000a shall be reviewed
by the PHA and the PHA architect to determine that the
scheduled work to be completed by the specified dates and
the amount of payment for such work is reasonable. If
acceptable to the PHA, the Form HUD 51000a shall be submitted
to the Area Office.
c. Area Office Approval. The AE Chief shall review the Form
HUD 51000a completed by the general contractor as well as
PHA recommendations. The AE Chief shall prepare a letter
for the Housing Director's signature advising the PHA that:
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(1) the Form HUD 51000a is either approved as submitted or
as modified by the Area Office;
(2) it should promptly send a copy of the approved Form
HUD 51000a to the general contractor for acceptance; and
(3) it is authorized to make progress payments to the
general contractor in accordance with paragraph 12-43.
12-43. CONTRACT PAYMENTS. The PHA is responsible for making progress
payments to the general contractor based on the Schedule of
Amounts for Contract Payments (Form HUD 51000a) approved by the
Area Office. Generally, progress payments for acceptable
work and materials delivered and stored on the site are made
at thirty (30) day intervals.
a. Area Office Approval. Area Office authorization of progress
payments, based on the approved Form HUD 51000a, is not
required. However, written Area Office approval is required
before any of the monthly retainage is advanced or before
final payment is made.
b. Contractor Request for Payment. The general contractor
must submit a request for payment on Periodical Estimate
for Partial Payment (Form HUD 51001) for each project. The
request shall be accompanied by the general contractor's
written designation of a certifying officer. In addition,
the general contractor must submit the following
documentation, if applicable, with each Form HUD 51001:
(1) Schedule of Change Orders, Form HUD 51002;
(2) Schedule of Materials Stored, Form HUD 51003; and
(3) Summary of Materials Stored, Form HUD 51004.
c. PHA Approval. The PHA shall review each general contractor
request and shall approve the advance if the following
conditions have been met:
(1) the general contractor request is consistent with
the approved Schedule of Amounts for Contract Payments
(Form HUD 51000a);
(2) the request does not include the amount to be retained
by the PHA pursuant to the construction contract;
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(3) the work covered by the payment has been performed in
accordance with the construction documents;
(4) the Form HUD 51001 has been properly executed and all
applicable supporting documentation submitted; and
(5) the general contractor has submitted all required reports
(e.g., payroll reports).
d. Distribution of Documents. The PHA shall retain the original
Periodical Estimate for Partial Payment (Form HUD 51001)
and any applicable supporting documentation for its project
file. A copy of the PHA approved forms shall be sent to the
AE Chief and to the general contractor.
12-44. PROJECT PHOTOGRAPHS. The PHA shall periodically take photographs
to illustrate the progress of construction work. In addition,
these photographs may be required to protect the PHA interest in
disputes relating to defective workmanship, cave-ins, or accidents.
a. Prints. Prints shall be at least five (5) inches by seven
(7) inches. Each print shall be identified as follows:
(1) project number and name;
(2) city and state;
(3) date photograph taken;
(4) description of view (e.g., block, street and special
features); and
(5) the camera position identified on a site diagram.
b. Site Diagram. The site diagram, prepared by the PHA
architect, shall be used to indicate camera positions. The
diagram shall be an eight by eleven inch (8" x 11")
photo reduction of the construction contract site plan showing
the PHA architect's name, the PHA, the project number, a
graphic scale, streets, and the North point.
12-45. SHOP DRAWINGS AND MATERIALS. Shop drawings and material samples
shall be prepared and submitted in accordance with the agreements
reached at the construction conference.
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12-35 10/80
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7417.1 REV-1
________________________________________________________________________
a. Contractor Submission. The contractor is responsible for
preparing and submitting shop drawings to the PHA architect.
The contractor's letter shall list the shop drawings being
submitted and state whether the shop drawings deviate from
the approved construction documents. Each shop drawing shall
include:
(1) a descriptive title and drawing number;
(2) a brief description of the work involved;
(3) the project number and name;
(4) the contractor's and any subcontractor's name; and
(5) evidence of the contractor's approval.
b. PHA Architect's Approval. The PHA architect shall review the
shop drawings to determine whether they are consistent with
the construction documents. The PHA architect shall require
that any corrections be made prior to approval. upon approval,
the PHA architect shall:
(1) sign and date each shop drawing and include the following
statement: "This shop drawing is approved, but the
general contractor shall verify and shall be responsible
for all related documents and job conditions on the work."
(2) send a letter to the general contractor indicating that
the shop drawing was approved and advising the contractor
that:
(a) "This approval of the enclosed shop drawing is
general and does not relieve the contractor of the
responsibility for adherence to the contract, nor
is the contractor relieved of the responsibility
for any error which may exist", and
(b) if applicable, "The modification shown on the
enclosed shop drawing is approved in the interest
of the PHA to effect an improvement for the project
and is ordered with the understanding that it does
not involve any change in the contract price or
time; it is subject to all contract stipulations.
and covenants; and it is without prejudice to any
and all rights of the PHA under the contract
and bond."
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10/80 12-36
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7417.1 REV-1
________________________________________________________________________
c. Distribution of Documents. The PHA architect shall
retain a copy of the approved shop drawing, and shall
forward a copy to the general contractor and the PHA.
d. Samples. The general contractor shall submit certificates,
material samples, and test results to the PHA architect
for approval. The PHA architect shall advise the general
contractor of the reasons for any disapproval and
request that another sample be submitted. Approved
samples and data shall be retained both at the PHA
office and the project office for comparison during
construction.
12-46. LIQUIDATED DAMAGES. The general contractor is responsible for
completing the project within the time established in the
construction contract unless time extensions are authorized in
accordance with paragraph 12-26. If the construction work is
not completed by the contract date, the general contractor shall
be liable for liquidated damages resulting from such unexcused
delays.
a. Finding of Fact. The PHA shall prepare a "finding of fact"
pursuant to paragraph 12-26 and shall submit it to the Area
Office for review and approval.
b. Amount of Damages. The PHA's "finding of fact" shall
identify the amount of liquidated damages to be assessed
against the general contractor and the basis used in
determining the amount. Liquidated damages shall be
assessed at the rate established in the construction contract
and shall be withheld from any payment due the contractor.
c. Area Office Approval. The AE Chief, in consultation with
The Area Counsel, shall review the PHA "finding of fact"
to determine whether the contractor is responsible for the
delay and the amount of damages established by the PHA
is reasonable. Upon completing this review, the AE Chief
shall prepare a letter for the Housing Director's signature
advising the PHA to:
(1) send a letter to the general contractor identifying the
amount of liquidated damages being assessed and the
reasons;
(2) send a letter to the general contractor's bonding company
identifying the amount of liquidated damages being
assessed on the general contractor; and
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12-37 10/80
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7417. 1 REV-1
________________________________________________________________________
(3) send copies of both letters to the AE Chief.
12-47. PARTIAL PROJECT ACCEPTANCE. The PHA, with Area Office approval,
may accept part of a project for occupancy prior to settlement.
a. Conditions. The PHA may not permit early occupancy unless
the following conditions are met:
(1) the dwelling units to be accepted (except punch list
items) have been completed and are ready for occupancy;
(2) the general contractor agrees to early occupancy and
completion of the punch list items;
(3) early occupancy will not inconvenience or represent a
safety risk to the occupants while the unfinished work
is being completed;
(4) the PHA has obtained occupancy permits from
the responsible local agency for each unit to be
accepted; and
(5) the PHA has executed an occupancy agreement with the
general contractor indicating that the PHA partially
accepts specified work provided that the contractor
accepts the responsibility to complete the project
by the established completion date.
b. Occupancy Agreement. The PHA shall submit the proposed
occupancy agreement to the Area Office for approval prior
to execution by the PHA.
c. Area Office Approval. The construction analyst shall review
the proposed occupancy agreement to determine whether
the conditions identified in subparagraph a have been
satisfied. Upon completion of this review, the construction
analyst shall prepare a letter for the AE Chief's signature
advising the PHA of the Area Office decision:
(1) if approvable, the letter shall:
(a) authorize the PHA to execute the occupancy
agreement; and
(b) request that a copy of the occupancy agreement
be submitted to the AE Chief after execution by
the PHA and the general contractor.
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10/80 12-38
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7417.1 REV-1
________________________________________________________________________
(2) if not approvable, the letter shall identify the
reasons for disapproval, including the work to be
completed or corrected prior to reconsideration
by the Area Office.
12-48 thru 12-60. RESERVED.
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10/80
12-39 thru 12-44
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7417.1 REV-1
________________________________________________________________________
Section 5. Project Completion and Final Inspection
12-61. GENERAL. The contractor is responsible for providing the PHA
with a forty-five (45) day written notice of the expected
date by which the project will be completed and ready for
final inspection. This section establishes the inspection
requirements which must be met prior to acceptance of completed
work and contract settlement (Section 6).
12-62. PHA ARCHITECT'S INSPECTION. The PHA architect shall schedule
with the contractor a date to inspect the project and prepare a
punch list of the incomplete work.
a. Content of Punch List. A separate punch list shall be
prepared for each building which identifies the:
(1) date of the inspection;
(2) name and title of the contractor representative;
(3) each incomplete or unsatisfactory work item; and
(4) specific location of each item of incomplete work.
b. Contractor Notification. The PHA architect shall send a
letter to the contractor which:
(1) transmits a copy of the punch list;
(2) advises the contractor to promptly correct each item
of incomplete or unsatisfactory work; and
(3) requests that the contractor promptly notify the PHA
of the date by which the corrective work will be complete
so that the PHA can schedule a final inspection prior
to contract settlement.
c. Deductions for Incomplete Work. The PHA shall consult with
the PHA architect to determine if it would be advantageous
to accept a project prior to final inspection. In such
instances, the PHA architect shall prepare a deductive
change order for Area Office approval prior to the final
inspection. The amount of deductions from the contract
price shall be based on current replacement cost for
correcting any incomplete or unsatisfactory work.
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12-45 10/80
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7417.1 REV-1
________________________________________________________________________
12-63. FINAL INSPECTION. A final project inspection shall be made
when all work is completed. Until the final inspection has been
made and approved by the Area Office, the PHA shall not advance
any of the retainage (conventional project) or make the final
payment to the contractor.
a. Inspection Date. Upon receipt of the contractor's notification
of the date when the corrective work will be completed,
the PHA shall schedule a final inspection. Each member of
the inspection team shall be given a fifteen (15) day
notification of the scheduled inspection date.
b. Inspection Participants. The final inspection shall be
conducted by:
(1) a PHA representative;
(2) the PHA architect;
(3) the AHM Chief, the AE Chief and the construction analyst;
and
(4) a contractor representative.
c. Inspection Conference. The inspection team shall meet after
completing the final inspection to determine whether:
(1) the work has been completed in accordance with the
construction documents;
(2) there are any minor items of incomplete or unsatisfactory
work (or seasonal work such as planting of shrubs
and lawns) and reach agreement on the items to be
included on the PHA architect's final punch list; or
(3) there are any major deficiencies which must be corrected
by the contractor so that another final inspection can
be made prior to contract settlement.
d. Inspection Report. The PHA architect shall prepare a final
inspection report and certificate of completion based on
the agreements reached at the inspection conference. The
certificate of completion will show the amount of payment
to be withheld for any incomplete work provided that such
work is not of a major nature requiring correction before
settlement.
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10/80 12-46
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7417.1 REV-1
________________________________________________________________________
e. Area Office Approval. The PHA shall submit a copy of the
PHA architect's final inspection report and the proposed
certificate of completion to the Area Office for approval.
The AE Chief shall review the PHA submission to determine
that the final inspection report is acceptable and, if
applicable, any amount to be withheld is sufficient to complete
the corrective work. If approvable, the AE Chief shall
prepare a letter for the Housing Director's signature
authorizing the PHA to accept the project and prepare for
settlement.
12-64 thru 12-70. RESERVED.
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12-47 thru 12-54 10/80
_____________________________________________________________________
7417.1 REV-1
________________________________________________________________________
Section 6. Contract Settlement
12-71. GENERAL. The PHA, upon receipt of written authorization from the
Area Office, shall notify the contractor to prepare for settlement.
The PHA shall also advise the contractor to submit the
documentation identified in this section for PHA and Area Office
approval prior to settlement.
12-72. SETTLEMENT DOCUMENTS. The contractor is responsible for preparing
and submitting the following to the PHA:
a. Conventional and Turnkey Projects. The following documents
are required for all projects, whether developed under the
conventional or turnkey method.
(1) a certificate of occupancy issued by the responsible
local agency for each building;
(2) two notarized originals of the contractor's release
and certification which indicates:
(a) the work was completed in accordance with the
construction documents (including change orders)
except any minor items identified on the
PHA architect's final inspection report;
(b) the total amount due the contractor and a
separately stated amount for each unsettled
claim against the PHA;
(c) the PHA is released of all claims, other than
those stated in the contractor's release; and
(d) wages paid to laborers or mechanics were
consistent with the wage rate requirements
of the contract, and there are no
outstanding claims for unpaid wages.
(3) an assignment of all guarantees and warranties to the PHA.
b. Conventional Projects. In addition to the documents
identified in paragraph a, the general contractor shall submit
a "final" Periodical Estimate for Partial Payment (Form
HUD 51001).
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12-55 10/80
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7417.1 REV-1
________________________________________________________________________
c. Turnkey Projects. In addition to the documents identified
in subparagraph a, the turnkey developer Shall submit the
following:
(1) the as-built drawings (paragraph 12-23);
(2) a copy of the receipt for real property taxes paid by
the developer during the construction period;
(3) the title binder, evidencing that good and marketable
title will be conveyed to the PHA; and
(4) a copy of the proposed deed.
12-73. PHA CONTRACT SETTLEMENT REPORT. The PHA in consultation with
the PHA architect and attorney shall review the contractor's
settlement documents and prepare a report on its findings.
a. PHA Review. The PHA shall review the construction documents,
the PHA records, and completed work, to determine whether
the contractor's statements concerning compliance with the
construction documents (including change orders) and identified
work to be completed are accurate.
b. PHA Report. Upon completing its review, the PHA shall prepare
a contract settlement report indicating PHA agreement
with the contractor's statements. The PHA report shall
also identify:
(1) the current status of any incomplete or seasonal work;
(2) any outstanding disputes or claims;
(3) any PHA exceptions to the contractor's settlement
documents; and
(4) the PHA attorney statement as to the adequacy of the
proposed deed and title information (turnkey projects
only).
c. Certificate of Completion. The PHA or PHA architect shall
prepare the proposed certificate of completion in the form
prescribed by the Area Office.
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10/80 12-56
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7417.1 REV-1
________________________________________________________________________
d. PHA Submission The PHA shall submit a copy of the following
to the Area Office for approval:
(1) all settlement documents identified in paragraph 12-72
for the applicable development method;
(2) the PHA contract settlement report; and
(3) the proposed certificate of completion.
12-74. AREA OFFICE REVIEW. The AE Chief is responsible for coordinating
the review and recommending approval of the certificate of
completion.
a. Standard Processing Time. The standard processing time (SPT)
is the number of calendar days from receipt of the settlement
documents and certificate of completion by the PCR Unit and
a decision by the Housing Director. The SPT for Area Office
review and approval (or disapproval) of the certificate of
completion is ten (10) calendar days.
b. AE Branch. The AE Chief in order to recommend approval must
determine that:
(1) all work has been completed in accordance with the
construction documents;
(2) the proposed certificate of completion is acceptable;
and
(3) the amount to be withheld from the contractor is
sufficient to complete any items on the PHA architect's
punch list, including seasonal work.
c. Legal Division. The Area Counsel, in order to recommend
approval, must determine and advise the AE Chief that:
(1) the contractor's release and certification is consistent
with the terms of the contract;
(2) for turnkey projects, the proposed deed and title
information is acceptable and are consistent with
the contract of sale; and
(3) for turnkey projects, the scheduled closing date.
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12-57 10/80
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7417.1 REV-1
________________________________________________________________________
d. Labor Relations Staff. The Labor Relations Staff,
in order to recommend approval, must determine and advise
the AE Chief that the contractor's wage certification is
acceptable.
e. PHA Notification. The AE Chief, upon determining that the
contract settlement documents are in order, must sign the
certificate of completion and submit it for the
Housing Director's signature. The original shall be
promptly sent to the PHA. If applicable, the PHA and
turnkey developer shall be advised of the scheduled closing
date.
12-75. PAYMENT OF CONTRACTOR. The PHA upon receipt of the approved
certificate of completion is authorized to make payment to the
contractor of the amounts approved by the Area Office. For
turnkey projects, payment shall be made at the closing of the
sale.
a. Contract Payment. The PHA payment to the contractor shall
be the amount specified in the certificate of completion
approved by the Area Office and shall not include any amount
to be retained for:
(1) warranty retainage or disputed items; and
(2) incomplete work, such as punch list or seasonal
items.
b. Final Payments. The PHA is not authorized to make final
payment of any amounts withheld without prior Area Office
approval. When punch list or seasonal work items are
completed, the PHA shall submit a revised certificate of
completion for Area Office approval.
12-76. TURNKEY CLOSING PROCEDURES. The closing for turnkey projects
shall take place in accordance with the following requirements:
a. Title Insurance. The PHA must obtain a title insurance
policy, or other title guarantee acceptable to the Area
Office, at closing. The title policy shall guarantee
that title is good and marketable and is free of any
mortgage, lease, lien or other encumbrances, such as use
or building restrictions, zoning ordinances, easements
or rights-of way which would affect the value or proposed
use of the site. In those instances where several
contiguous parcels are being acquired, a blanket title
insurance policy should be obtained for the entire site.
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10/80 12-58
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7417.1 REV-1
________________________________________________________________________
b. Curing Title Defects. The PHA attorney shall ensure that
any outstanding mortgages, leases, or liens have been cleared.
c. Settlement Record. The closing details for each transaction
shall be recorded in triplicate on the Real Estate Settlement
Record (Form HUD 51975) or a similar locally used and accepted
settlement record.
d. Deed Recordation. The PHA shall ensure that the deed is
promptly recorded by its attorney.
e. Declaration of Trust. The PHA shall execute and record the
Declaration of Trust (Form HUD 52190) prepared by the Area
Counsel. A copy of the executed Declaration of Trust shall
be returned to the Area Office as soon as it has been
recorded.
12-77. WARRANTY INSPECTIONS. The PHA is responsible for performing
required warranty inspections during the warranty period and
promptly notifying the contractor in writing to remedy any
defects.
a. Applicability. These requirements apply to projects developed
under either the conventional or turnkey method and include:
(1) manufacturer or contractor warranties on equipment
and systems; and
(2) contractor warranty on materials and workmanship.
b. Contractor Responsibility. The contractor, upon receipt
of PHA written notice, shall promptly remedy any
defects due to the use of faulty equipment or materials, or
poor workmanship. The contractor is also responsible for
paying for any damage to other work resulting from such
defects.
c. Warranty Period. The warranty period for all construction
work shall be at least 365 calendar days from the date
specified on the certificate of completion that is
applicable to the work in question or such longer period
otherwise specified in the construction contract.
d. PHA Inspection. The PHA shall inspect each dwelling unit
at least every three months during the warranty period.
If any deficiencies are noted, the PHA shall take prompt
action to protect its rights under the applicable warranty.
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12-59 10/80
_____________________________________________________________________
7417.1 REV-1
________________________________________________________________________
e. Final Inspection. The PHA shall schedule a final warranty
inspection prior to the expiration of the one-year warranty
period. The final inspection shall be performed by the PHA,
the PHA architect, and the AE Chief and the AHM Chief to
determine whether there are any deficiencies and whether such
deficiencies are the responsibility of the PHA or contractor.
12-78 thru 12-90. RESERVED.
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10/80 12-60 thru 12-66
_____________________________________________________________________
7417.1 REV-1 CHG-6
________________________________________________________________________
Section 7. Date of Full Availability
12-91. DEFINITION. The date of full availability (DOFA) is the last day
of the month in which all housing units in a project are available
for occupancy. A unit is considered available if an occupancy
certificate has been obtained from the responsible local agency.
It is not necessary for the purpose of establishing DOFA that
construction work such as landscaping and punch list items be
completed.
a. Turnkey Projects. DOFA shall be established as the last day of
the month in which settlement takes place.
b. Conventional Projects. DOFA shall be established as the last
day of the month in which substantially all units (e.g., 95
percent) are available for occupancy.
c. Acquisition Projects. DOFA shall be established as the last
day of the month in which settlement takes place. For
scattered site projects, DOFA shall be established as the last
day of the month in which substantially all the units (e.g., 95
percent) have been acquired by the PHA.
12-92. PHA REPORTING. The PHA is responsible for notifying the Field
Office when DOFA is achieved. It is critical that the PHA report
DOFA promptly, since DOFA establishes the date on which interest
* stops accruing toward the development cost of the project and *
serves as the basis for determining the End of the Initial
Operating Period.
* a. PHA Submission. The PHA shall submit for Field Office approval
two signed originals of the Notice of Date of Full Availability
(Form HUD-52423).
b. Delinquent PHA Submission. The construction analyst shall
periodically determine if there is any project, based on
occupancy agreements or construction progress reports, for
which DOFA has not been but should have been reported by the
PHA. If applicable, the construction analyst shall prepare a
letter for the Housing Development Division Director's
signature advising the PHA that:
(1) it appears, based on Field Office records, that DOFA has
been achieved;
(2) if DOFA has been achieved, the PHA must submit the
documents identified in subparagraph a within thirty (30)
calendar days of the date of the Housing Development
Division Director's letter;
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12-67 10/88
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7417.1 REV-1 CHG-6
________________________________________________________________________
(3) if DOFA has not been achieved, the PHA must submit an
explanation of the reasons for delay within thirty (30)
calendar days of the date of the Housing Development
Division Director's letter; and
(4) if the required information is not received by the thirty
(30) day deadline date, the Field Office will prepare and
execute the Form HUD-52423.
12-93. FIELD OFFICE REVIEW. The construction analyst shall review the PHA
submission (including delinquent submissions) to verify that
substantially all housing units were satisfactorily completed and
were available for occupancy on the date established by the PHA.
a. Approval. If the DOFA date is approvable, the construction
analyst shall prepare a letter, for the Housing Development
Division Director's signature transmitting a copy of the
approved Notice of Date of Full Availability (Form HUD-52423)
signed by the Housing Development Division Director. A copy of
the signed Form HUD-52423 shall be sent to the AHM Chief, the
Mortgage Credit Chief, the Regional Financial Management
Specialist, and the Assistant Secretary for Administration
(Attention: Office of Finance and Accounting).
b. Disapproval. If the DOFA date is not approvable, the
construction analyst shall prepare a letter for the Housing
Development Division Director's signature indicating that the
Form HUD-52423 was not approved, the reasons for disapproval,
and conditions which the PHA must meet before submitting a
revised Form HUD-52423 to the Field Office.
c. Unusual Conditions. The construction analyst, in consultation
with the designated MHR and Mortgage Credit Chief, shall review
any PHA submissions which indicate that DOFA will be delayed
because of unusual circumstances. For example, the PHA may be
experiencing difficulty in obtaining bids for rehabilitation of
scattered site housing or existing housing may not be available
to permit timely achievement of DOFA. In such instances,
consideration shall be given to establish a separate project
for all units that have been completed and to issue a Form
HUD-52423 for those units that have been acquired and are
available for occupancy. This action is necessary to stop the
accrual of interest and minimize the amount of the initial
operating deficit charged to the development cost of the
project.
12-94 thru 12-100. RESERVED.
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10/88 12-68 thru 12-74
_____________________________________________________________________
7417.1 REV-1
________________________________________________________________________
Section 8. End of Initial Operating Period
12-101. DEFINITION. The end of the initial operating period (EIOP)
is the last day of the first calendar quarter (March, June,
September, December) after DOFA, provided that ninety-five (95)
percent of the units are occupied. However, if ninety-five (95)
percent occupancy is not achieved, EIOP is automatically
established as the last day of the second calendar quarter after
DOFA.
12-102. PHA REPORTING. The PHA is responsible for promptly notifying
the Area Office of the EIOP date. It is critical that the PHA
report EIOP promptly, since EIOP establishes the day that the
project is eligible for operating subsidies.
a. Determination of Date. The PHA shall determine EIOP in
accordance with the following examples that are based on
the assumption that DOFA was established on November 30, 1980.
(1) Example 1. Ninety-five (95) percent occupancy is achieved
on February 10, 1981. In this example EIOP would be
established as march 31, 1981 -- the end of the first
calendar quarter after DOFA.
(2) Example 2. Ninety-five (95) percent occupancy is not
achieved by March 31, 1981 -- the end of the first
calendar quarter. In this example, EIOP would
automatically be established as June 30, 1981 -- the end
of the second calendar quarter after DOFA.
b. PHA Submission. As soon as EIOP is determined, the PHA
shall submit two signed originals of the Notice of End of
Initial Operating Period (Form HUD 52344) to the Area Office.
c. Delinquent PHA Submission. The AHM Chief shall determine
at the end of each calendar quarter if there are any projects
that have achieved DOFA for which EIOP has not been reported
by the PHA. If applicable, the AHM Chief shall prepare a
letter for the Housing Director's signature advising the
PHA that:
(1) the first calendar quarter has passed and the PHA
has not reported EIOP;
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12-75 10/80
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7417.1 REV-1
________________________________________________________________________
(2) the Area Office has prepared a Notice of End of
Initial Operating Period (Form HUD 52344) which must
be signed by the PHA and returned to the Area Office
within (30) calendar days of the date of the Housing
Director's letter; and
(3) if the signed Form HUD 52344 is not returned by the
thirty (30) day deadline date, the Area Office will
execute it on behalf of the PHA.
12-103. AREA OFFICE REVIEW. The AHM Chief shall review the PHA submission
(including delinquent submissions). If approvable, the
AHM Chief shall sign the Form HUD 52344 and return it to the PHA.
Otherwise, the AHM Chief shall contact the PHA to ascertain
the correct date. A copy of the signed Form HUD 52423 shall
also be sent to the Mortgage Credit Chief, the Regional Financial
Management Specialist, and the Assistant Secretary for
Administration (Attention: Office of Finance and Accounting).
12-104 thru 12-110. RESERVED
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10/80 12-76 thru 12-80
_____________________________________________________________________
7417.1 REV-1 CHG 3
________________________________________________________________________
Section 9. Actual Development Cost
12-111. PHA REPORTING. The PHA is responsible for promptly notifying
the Area Office when all project development activities are
completed and the PHA has made payment for all obligations
incurred in the development of a public housing project..
a. Reporting Date. The PHA shall submit its report as soon
as the actual development cost for the project is known.
However, unless written Area Office authorization is
obtained, the PHA report shall be submitted within
* twenty-four (24) months after DOFA. PHA requests for an *
extension shall be accompanied by a detailed explanation of
the reasons that are beyond PHA control (e.g., litigation
unresolved disputes, pending claims), justifying Area
Office approval of an extension.
b. PHA ADCC Submission. The PHA upon determining the actual
development cost for a specific public housing project
shall submit the following for Area Office approval:
(1) Actual Development Cost Certificate (ADCC),
Form HUD-52427;
(2) a copy of an Independent Public Accountant (IPA)
audit including comments on the ADCC;
(3) Statement of Actual Development Cost prepared on
* Form HUD-52484 (Development Cost Budget/Cost *
Statement); and
(4) if applicable, a detailed explanation of any actual
costs incurred that exceed the amount for any
development cost account (total) of the latest Area
Office approved development cost budget on Form
HUD-52484.
12-112. AREA OFFICE MONITORING. The Mortgage Credit Chief is
responsible for ensuring the timely development close-out of all
public housing projects.
a. Control Record. The Mortgage Credit Chief shall
establish a control record for all projects reaching
DOFA so that:
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12-81 7/82
HUD-Wash., D. C.
_____________________________________________________________________
7417.1 REV-1 CHG 3
________________________________________________________________________
* (1) each PHA shall be notified one year after DOFA to be *
prepared for an IPA audit and arrange for submission
of the ADCC by the deadline date;
* (2) the Assisted Housing Management (AHM) Branch shall be
notified to incorporate the project's costs in the
regularly scheduled biennial IPA audit. If the
project's costs cannot practicably be incorporated in
the regularly scheduled biennial IPA audit, then a
separate audit for purposes of the ADCC shall be
arranged to be completed in sufficient time to permit
the ADCC to be submitted within the deadline. The
cost of such an audit shall be included in the
development cost for the project; *
(3) the Regional Inspector General for Audit (RIGA) shall
be advised of all overdue ADCCs so that IPA audits
may be rejected if they fail to address ADCC audits
(see Handbooks in the 7476 series);
* (4) in those instances where the IPA auditor indicates
to the RIGA that it will not be possible to make a
final determination of Actual Development Cost for
purposes of the ADCC, the RIGA shall notify the
Housing Director. For projects that cannot be
audited, the Housing Director is responsible for
determining how many and which personnel will be
detailed to establish the actual TDC cost using the
actual cost in the latest approved development cost
budget, the funds advanced and the Housing Agency's
records of expenditures. The Housing Director is to
submit to the Area Office Manager for approval a
written recommendation of the amount to become the
actual development cost for each such project. If
the Area Office Manager does not agree with the
recommendation, the Regional Administrator is to be
advised. The Regional Administrator shall determine
whether or not Regional assistance can be provided. If
the Regional Administrator determines it appropriate,
Headquarters guidance and/or assistance shall be
requested; and *
(5) close-out actions for each project shall be closely
monitored and a quarterly report transmitted to the
Regional Project Financing Specialist and RIGA on all
projects that have achieved DOFA but ADCCs have not
been approved by the Area Office.
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7417.1 REV-1 CHG 3
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b. Delinquent ADCC Submission. Where a PHA has not submitted
an ADCC by the deadline date and has not requested an
extension, the Mortgage Credit Chief shall prepare a letter
for the Housing Director's signature advising the PHA that:
(1) the PHA has not submitted the ADCC by the required
date;
(2) the PHA must submit the documents identified in
subparagraph 12-111 within sixty (60) days or must submit
documentation justifying Area Office approval for an
extension within thirty (30) days;
(3) the PHA is not authorized to make payment after the
date of the Housing Director's letter for any PHA
obligations with respect to the project without
prior written Area Office approval;
(4) PHA requests to make payments must be accompanied by
a current Development Cost Budget (Form HUD-52484)
and an IPA audit;
* (5) in the event that the PHA fails to submit the budget
and audit, the Area Office shall arrange for the IPA
audit and shall charge it to the development cost for
the project; and
(6) if the documentation required by paragraph 12-111 is
not received within sixty (60) days or by the approved
extended date, the Area Office will use the development
costs (actual and committed) identified on the latest
approved Development Cost Budget/Cost Statement, Form
HUD-52484, as the basis for amending the ACC, the
Permanent Note, the Development Cost Budget and
approval of the ADCC and shall notify the PHA in
writing. *
12-113. AREA OFFICE REVIEW. Each PHA submission shall be reviewed to
determine that it is acceptable.
* a. Mortgage Credit Branch. In order to recommend approval
of the Statement of Actual Development Cost and the ADCC,
the Mortgage Credit Chief must determine that: *
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7417.1 REV-1 CHG 3
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(1) the actual costs incurred for each development
account (totals), do not exceed the amounts
identified on the latest Area Office approved
development cost budget, Form HUD-52484, and do not
exceed the amount of advances authorized by the
Area Office;
(2) all disputed, contingent or unliquidated items have
been satisfied;
(3) the amounts identified in Accounts 1450 thru 1475
are consistent with the construction documents
(including change orders);
(4) there is a zero entry for contract work in progress
(Account 1480); and
* (5) if applicable, the PHA's explanation of cost overruns
for each account justifies Area Office approval
but does not exceed the approved estimated TDC
specified in the ACC.
b. AHM Branch.
(1) in order to recommend approval of the ADCC, the AHM
Chief must determine that no development deficiencies
have been identified in the initial engineering
survey, in accordance with the procedures set forth
in the Project Management Handbook RHM 7460.1 SUPP 1,
or in subsequent operations which have not been
corrected. Development deficiencies are deficiencies
in a project that relate to errors or inadequacies
in the design or construction of a project which
become known before approval of the ADCC. Design
deficiencies result from the use of plans and
specifications that fail to meet HUD and other
applicable design standards in effect at the time
of project approval. Construction deficiencies
result from the use of improper construction methods
or materials, poor workmanship, or failure to complete
the project in accordance with HUD-approved plans.
(2) If the AHM Chief determines that there are uncorrected
development deficiencies, the AHM Chief shall not
recommend approval of the ADCC and shall provide to
the Chiefs, Multifamily Housing Programs, AE, and
Mortgage Credit, a written description of the
deficiencies and related cost estimates. Upon
correction of the deficiencies, the AHM Chief shall
recommend approval. *
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7417.1 REV-1 CHG 3
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* c. Area Office Approval. If the Statement of Actual
Development Cost and the ADCC are approvable, the
Mortgage Credit Chief shall recommend approval by signing
both documents, the AHM Chief shall recommend approval
by signing the ADCC; and the Housing Director shall
approve the ADCC and Statement of Actual Development
Cost by signing both documents.
d. PHA Notification. The Mortgage Credit Chief shall
prepare a letter for the Housing Director's signature
transmitting the approved ADCC and Statement of Actual
Development Cost to the PHA. The letter shall also
instruct the PHA to:
(1) if the project has been permanently financed through
the sale of bonds, deposit any excess development
funds in the advance amortization fund;
(2) if the project has not been permanently financed
through the sale of bonds, send any excess funds to
the Assisted Housing Accounting Division, OFA, in
Headquarters for application against outstanding
financing and:
(a) the PHA is not authorized to use these funds
for any purposes; and
(b) the Area Office will forward an amended ACC and
Permanent Note for PHA execution to reflect the
TDC amount identified on the ADCC.
e. ACC and Permanent Note Amendments. If the amount in the
approved ADCC differs from the TDC specified in the ACC
and the project is not permanently financed by bonds, the
Mortgage Credit Chief shall initiate amendments to the
ACC and the Permanent Note and either reserve additional
or recapture excess development funds. If the project
is permanently financed by bonds, the procedure is the
same except Permanent Notes are not required. In no
event shall the reserved funds be reduced for an amount
less than the amount required to pay the debt service on
the outstanding bonds. The current and appropriate AC
rate is used for the entire amount of the development
cost. *
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7417.1 REV-1 CHG 3
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* (1) When additional funds are required the PCR Supervisor
shall be requested to prepare a Project Accounting
Data (HUD-52540) and a notification letter shall be
signed by the Area Manager and processed by the
Regional Accounting Director. The Area Counsel
shall be requested to prepare an amended ACC and a
revised Permanent Note based on the approved ADCC
(a revised Permanent Note is issued only when the
project was not financed by New Housing Agency
Bonds). The amended ACC and Permanent Note shall be
forwarded to the PHA simultaneously for execution.
Upon receipt of the amended ADCC and Permanent Note
executed by the PHA, the Housing Director shall
execute them for HUD.
(2) When it is necessary to recapture excess funds, the
Area Counsel shall be requested to prepare an amended
ACC and a revised Permanent Note based on the approved
ADCC (a revised Permanent Note is issued only when
the project was not financed by New Housing Agency
Bonds). The amended ACC and Permanent Note shall be
forwarded to the PHA simultaneously for execution.
Upon receipt of the amended ACC and Permanent Note
executed by the PHA, the Housing Director shall
execute them for HUD. The PCR Supervisor shall then
be requested to prepare a Project Accounting Data
(HUD-52540) for the Area Manager's signature. The
Form HUD-52540 and a copy of the amended ACC shall
be transmitted to the Regional Accounting Director
for processing.
f. Distribution of Documents. The distribution of these
documents should be made in accordance with Chapter 7,
paragraph 7-115(b).
g. Incurring Additional Obligations. After HUD approval of
the ADCC, PHAs are prohibited from incurring additional
obligations of development funds without the prior written
approval of the Assistant Secretary for Housing. Approval
will be given in writing and a copy will be sent to the
Office of Finance and Accounting. In the event additional
development work is approved, the PHA shall be instructed
to submit revised Forms HUD-52427 and HUD-52484 (Statement
of Actual Development Cost) when work is completed. The
same general procedures as set forth in this Section
shall pertain to the processing of the revised forms. *
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7/82 12-86
| File Type | application/msword |
| File Title | 7417 |
| Author | BPS |
| Last Modified By | Arlette Annette Mussington |
| File Modified | 2010-10-28 |
| File Created | 2010-10-28 |