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Home My WebLink AboutApprove Section 3 - Labor Compliance Plan - HOME Program Reh 2000 Main Street. Huntington Beach,CA City of Huntington Beach /"Pzoac 7_0 is File #: 21-968 MEETING DATE: 12/21/2021 REQUEST FOR CITY COUNCIL ACTION SUBMITTED TO: Honorable Mayor and City Council Members SUBMITTED BY: Oliver Chi, City Manager PREPARED BY: Ursula Luna-Reynosa Director of Community Development Subject: Approve the Section 3-Labor Compliance Plan. HOME Program Rehabilitation Standards. and the Affordable Housing Program Underwriting and Subsidy Layering Guidelines Statement of Issue: The U.S. Department of Housing and Urban Development (HUD) requires the City to approve and adopt certain guidelines and standards related to City programs funded by Community Development Block Grant (CDBG) and HOME Investment Partnerships (HOME) funding. The guidelines prepared for the Section 3 Labor Compliance Plan. HOME Program Rehabilitation Standards. and the Affordable Housing Program will assist staff in complying with HUD standards and requirements when implementing Federally-funded City projects and programs. Financial Impact: There is no fiscal impact to approve and adopt the recommended actions Recommended Action: A) Approve and adopt the Section 3-Labor Compliance Plan, and. B) Approve and adopt the HOME Program Rehabilitation Standards, and. C) Approve and adopt the Affordable Housing Program Underwriting and Subsidy Layering Guidelines. Alternative Action(s): Do not approve the recommended actions above. However, the City would be out of compliance with HUD regulations and potentially subject to future audit findings. Analysis: BACKGROUND/DISCUSSION As a Federal entitlement city. the City of Huntington Beach annually receives approximately $1.2 million in CDBG funds and S600,000 in HOME funds to be used for activities/programs for low and moderate income individuals and families. CDBG and HOME funding has been provided for a variety City of Huntington Beach Page 1 of 3 Printed on 1 2/1 512 0 2 1 powerlA*Legstar" File #: 21-968 MEETING DATE: 12/21/2021 of activities including, but not limited to, the following: 1) development and preservation of affordable housing, 2) tenant rental assistance, 3) homelessness prevention services, 4) senior care and youth services, and 5) infrastructure improvement projects. In order for the City to receive these funds, the City is required by HUD to have adopted implementing guidelines and standards in place for CDBG and HOME-related programs. The City Council is being asked to consider approval of certain guidelines and standards related to labor compliance, City's housing rehabilitation program, and City funding underwriting criteria for an affordable housing project. The following sections briefly describe these implementing guidelines. Section 3-Labor Compliance Plan Section 3 is a provision of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701 u) that is regulated by the provisions of 24 CFR 75. Section 3 regulations ensure that employment and other economic opportunities generated by certain HUD financial assistance shall, to the greatest extent feasible, and consistent with existing Federal, State and local laws and regulations, be directed to low - and very low-income persons, particularly those who are recipients of government assistance for housing, and to business concerns which provide economic opportunities to low- and very low- income persons. The Section 3-Labor Compliance Plan outlines how the City and its subrecipients, contractors and subcontractors will comply with HUD's Section 3 requirements in implementing the City's CDBG and HOME programs. The City will, to the greatest extent feasible, ensure that employment and other economic opportunities are directed to low- and very low-income persons and to eligible businesses and requires the same of its contractors. For housing and community development financial assistance, the Section 3-Labor Compliance Plan applies to housing rehabilitation, housing construction, and other public construction projects that exceed $200,000 or more of housing and community development financial assistance from one or more HUD programs. For 2021-2022, the City has two projects that will meet the $200,000 criteria threshold: 1) Huntington Beach Senior Housing Project (HOME funds); and 2) ADA Curb Cuts in Maintenance Zone 5 (CDBG capital funds). Attachment 1 contains the Section 3-Labor Compliance Plan. HOME Program Rehabilitation Standards The HOME Program Rehabilitation Standards ("Rehab Standards") are designed to outline the requirements for building rehabilitation for all HOME-funded multi-family and single-family housing projects in the City. The Rehab Standards, though a requirement specifically to the development entity in direct receipt of HOME funding, are written to provide guidance to all relevant members of a project development team. The goal of the HOME Program is to provide functional, safe, affordable and durable housing that meets the needs of the tenants and communities in which the housing is located. The purpose of the Rehab Standards is to ensure that property rehabilitation puts each building in the best possible position to meet this goal over its extended life and that, at a minimum, all health and safety deficiencies are addressed. The Rehab Standards protocol will provide guidance and procedures that the City has established for determining the scope of work, and the materials and methods required City of Huntington Beach Page 2 of 3 Printed on 12/15/2021 ooweA028 Leg,star" File #: 21-968 MEETING DATE: 12/21/2021 to inspect a project. Attachment 2 contains the HOME Program Rehabilitation Standards. Affordable Housing Program Underwriting and Subsidy Layering Guidelines The City supports the acquisition, rehabilitation, and new construction of affordable rental housing for low , very low , and extremely low income households with its annual funding allocations from HOME funds and available local housing funds including, but not limited to: 1) former Redevelopment Agency housing set-aside funds (referred to as Low- and Moderate-Income Housing Asset Fund); and 2) the City's Housing Trust Fund, which includes housing in-lieu fees. HOME regulations require the City to identify minimum elements the City must consider and requires the City to establish specific guidelines against which affordable housing projects are to be evaluated. HOME regulations also require that the City conduct underwriting and subsidy layering reviews of each project prior to committing Federal assistance. The purpose of the Affordable Housing Program Guidelines is to describe the City's housing policy objectives, the range of affordable housing activities available to advance these objectives, and the manner in which transactions will be evaluated and selected for funding. The overall goal of these guidelines is to ensure prudent underwriting and subsidy layering review and to ultimately achieve compliance with applicable Federal, State, and City laws, ordinances, regulations, and policy objectives. The Affordable Housing Program Guidelines provides information on eligible activities and costs, eligible applicants, general project requirements, affordability, development requirements and other pertinent information relevant to the application for HOME-assistance and other City funding for the development of affordable housing. Currently, the City has one project that will be subject to the Affordable Housing Program Guidelines and that is the Huntington Beach Senior Housing Project (funded by HOME and City Housing Trust Funds). Attachment 3 contains the Affordable Housing Program Guidelines. Environmental Status: Pursuant to CEQA Guidelines Section 15378(b)(4), government fiscal activities that do not result in a physical change in the environment and do not commit the lead agency to any specific project, do not constitute a project. Therefore, these activities are exempt in accordance with CEQA Guidelines Section 15060(c)(3). Strategic Plan Goal: Non Applicable - Administrative Item Attachment(s): 1. Proposed Section 3-Labor Compliance Plan 2. Proposed HOME Program Rehabilitation Standards 3. Proposed Affordable Housing Program Underwriting and Subsidy Layering Guidelines City of Huntington Beach Page 3 of 3 Printed on 12/152021 o e,'" Lemstarf° ATTACHMENT # 1 I SECTION 3 LABOR COMPLIANCE PLAN GUIDELINES 24 CFR PART 75 CO\'INIUNII , DEVELOPMENT, DEPARTMENT December 2021 1031 Table Of Contents 1. Overview of Section 3 Requirements...................................................................................... 4 A. What is Section 3?........................................................................................................... 4 B. Purpose of the Section 3 Plan ......................................................................................... 4 C. Applicability.................................................................................................................... 4 11. Section 3 Coordinator............................................................................................................. 5 Ill. Employment, Training, and Contracting Goals................................................................. 5 A. Safe Harbor Compliance................................................................................................. 5 B. Safe Harbor Benchmarks ................................................................................................ 5 C. Certification of Prioritization of Fffort for Employment, Training, and Contracting .... 6 IV. Section 3 Eligibility And Certifications................................................................................ 7 A. Section 3 Worker and Targeted Section 3 Worker Certification .................................... 7 B. Projects Im'ohVing Multiple Sources of Fundine ............................................................ S C. Section 3 Business Concern Certification....................................................................... 9 V. Assisting Contractors with Achieving Section 3 Goals......................................................... 9 V1. Section 3 Outreach ............................................................................................................... 10 A. Outreach Efforts for Employment and Training........................................................... 10 B. Outreach Efforts for Contractina .................................................................................. I I VII. Section 3 Contracting Policy and Procedure.................................................................... 12 Vill. Section 3 Provisions/Contract Language ........................................................................ 13 IX. Reporting Requirements...................................................................................................... 13 A. Contractor Compliance Requirements.......................................................................... 13 B. Section 3 Cumulative Compliance Report.................................................................... 14 C. Reporting on Projects with Multiple Funding Sources................................................. 15 X. Effects of Noncompliance...................................................................................................... 15 X1. Internal Section 3 Complaint Procedure............................................................................ 15 Appendix A: Definitions 2 1 P a g e 1032 Appendix B: I9ultiple FUnding SOUrCCS Chart Appendix C: City oft-luntington Beach Section 3 Worker and Targeted Section 3 Worker Self-Certification Form Appendix D: City oft-luntington Beach Section 3 Business Concern Certification for Contracting Form Appendix F: FIUD Section 3 Affidavit Appendix F: Section 3 Worker and Targeted Section 3 Worker Outreach Log Appendix G: Section 3 Business Outreach Log Appendix FL HUD Section 3 Compliance Certification Appendix I: Section 3 Cumulative Compliance Report Appendix J: Frequently Asked Questions for Section 3 3 Page 1033 !. Overview of Section 3 Requirements A. What is Section 3? Section 3 is a provision of the blousing and Urban Development Act of 1968 (12 U.S.C. 1 701 u) that is regulated by the provisions of 24 CPR 75. Section 3 regulations ensure that employment and other economic opportunities generated by certain HUD financial assistance shall, to the greatest extent feasible, and consistent with existing Federal. State and local laws and regulations, be directed to low- and very low-income persons, particularly those who are recipients of government assistance for housing, and to business concerns which provide economic opportunities to low- and very low-income persons. B. Purpose of the Section 3 Plan This plan outlines how the City of Huntington Beach (City) and its subrecipients. contractors and subcontractors will comply with HUD's Section 3 requirements in implementing Huntington Beach's CDBG and HOME programs. The City of Huntington Beach will, to the greatest extent feasible, ensure that employment and other economic opportunities are directed to low- and very 10Av-income persons (Section 3 Workers and Targeted Section 3 Workers) and to eligible businesses (Section 3 Businesses) and requires the same of its contractors. The City of Huntington Beach Community Development Director may approve an amendment to the Section 3 Labor Compliance Plan and Guidelines ("Section 3 Plan") document as necessary when amending the plan is simply to ensure continued compliance with HUD's requirements and/or to reflect updated Section 3 guidance and outreach strategies. C. Applicability For public housing financial assistance, all funding is covered, regardless of the amount of expenditure or size of a contract. This plan applies to development assistance, operating funds. capital funds, and all mixed-finance development. For housing and community development financial assistance, this plan applies to housing rehabilitation, housing- construction, and other public construction projects that exceed S200,000 or more of' housing and conununity development financial assistance front one or more HUD programs. Applicability is determined at the project level. For projects funded with Lead and Hazard Control and Healthy Homes Programs, this plan applies to projects that exceed S 100,000. This plan also applies to projects that include multiple funding sources. Multiple funding source projects include projects funded with public housing financial assistance, housing and community development financial assistance for single or multiple recipients, and the Lead Hazard Control and Healthy Homes Program. 4 1 P a g e 1034 Section 3 requirements do not apply to: 1) Material Supply Contracts - § 75.3(b). 2) Indian zinc] Tribal Preferences - § 75.3(c), or 3) Other HUD assistance and other Federal assistance not subject to Section 3 §75.3 (d). However, for financial assistance that is not subject to Section 3, recipients are encouraged to consider ways to support the purpose of Section 3. 11 . Section 3 Coordinator The City of' Huntington Beach's Section 3 Coordinator serves as the central point of contact for Section 3 compliance for the City and its subrecipients, contractors, and subcontractors supporting the program. Subrecipients, contractors, subcontractors and others are encouraged to reach Out to Huntington Beach's Section 3 Coordinator, with questions regarding Section 3 compliance: Charles Kovac Housing i\9anager/Section 3 Coordinator Community Development Department City of Huntington Beach (714) 374-1519 Charles.Kovac cr.surfcity-hb.ora III. Employment, Training, and Contracting Goals A. Safe Harbor Compliance The Citv of Huntington Beach will be considered to have complied with the Section 3 requirements and met safe harbor, if they certify that they followed the required prioritization of effort and met or exceeded the Section 3 benchmarks. absent evidence of the contrary. Prior to the beginning of work, contractors. and subcontractors will be required to certify that they will follow the required prioritization of effort for Section 3 Workers.Targeted Section 3 Workers, and Section 3 business concerns as outlined below in section C. After completion of the project, on the Section 3 Cunnllatiye Compliance Report, contractors and subcontractors will be required to certify that they followed the prioritization ofeffort requirements. If the contractor and subcontractor does not meet the sate harbor requirements, they must provide evidence that they have made qualitative efforts to assist low and very low-income persons with employment and training opportunities. B. Safe Harbor Benchmarks The City of Huntington Beach has established employment and training goals that subrecipients. contractors, and subcontractors should meet in order to comply with Section 3 requirements 5 1 P a g e 1035 outlined in 24 CFR Part 75.19 for housing and community developmentfinancial assistance. The safe harbor benchmark goals are as follows: 1. Twenty-five percent (25%) or more of the total number of labor hours worked by all workers on a Section 3 project are Section 3 Workers. Section 3 Labor Hours =25% Total Labor Hours And - 2. Five percent (5%)or more of the total number of labor hours worked by all workers on a Section 3 project are Targeted Section 3 Workers, as defined at 24 CFR Part 75.21. Targeted Section 3 Labor Hours =5% Total Labor Hours HUD establishes and updates Section 3 benchmarks for Section 3 Workers and/or Targeted Section 3 Workers through a document published in the Federal Register, not less frequently than once every 3 years. Given that the Section 3 benchmarks are subject to change every three years or sooner, the City will review and update the Section 3 Plan every 3 years, as needed. It is the responsibility of contractors to implement efforts to achieve Section 3 compliance. Any contractorthat does not meet the Section 3 benchmarks must demonstrate why meeting the benchmarks were not feasible. All contractors submitting bids or proposals to the City of Huntington Beach are required to certify that they will comply with the requirements of Section 3. C. Certification of Prioritization of Effort for Employment, Training, and Contracting Employment and Training Under the City's Section 3 Program, contractors and subcontractors should make best efforts to provide employment and training opportunities to Section 3 Workers in the priority order listed below: 6 1 P a g e 1036 I. Section 3 workers residing within the service area or the neighborhood of the project, and 2. Participants in YouthBUlld programs. Contractors and subcontractors will be required to certify that they will and have made best efforts to follow the prioritization of effort requirements prior to the beginning of work and after work is completed. Contracting Under the City's Section 3 Program, contractors, and subcontractors nutst make their best efforts to award contracts and subcontracts to Section 3 BLIJIneSJ Concerns that provide economic opportunities to Section 3 Workers residing within the metropolitan area (or non-metropolitan county) in which assistance is located in the following order of priority (where, easible): I. Section 3 Business Concerns that provide economic opportunities to Section 3 Workers residing within the service area or the neighborhood of the project: and ? YouthBuild programs. Contractors and subcontractors will be required to certify that they will and have made best efforts to follow the prioritization of effort requirements prior to the beginning of work and after work is completed. IV. Section 3 Eligibility and Certifications Individuals and businesses that meet Section 3 criteria may seek Section 3 preference from the City of Huntington Beach or its contractors/subcontractors for training, employment, or contracting opportunities generated by CDBG and/or HUMS financial assistance. To qualify as a Section 3 Worker. Targeted Section 3 Worker. or a Section 3 Business Concern, each must self- certify that they meet the applicable criteria. Businesses who misrepresent themselves as Section 3 Business Concerns and report false information to the City of Huntington Beach may have their contracts terminated as default and be barred from ongoing and future considerations for contracting opportunities. A. Section 3 Worker and Targeted Section 3 Worker Certification A Section 3 Worker seeking certification shall submit self-certification documentation, see Appendix C, to the recipient contractor or subcontractor, that the person is a Section 3 Worker or Targeted Section 3 Worker as defined in 24 CFR Part 75. For the purposes of Section 3 Worker eligibility, the City will use individual income rather than family/household income to determine eligibility. The income limits will bedctermined annually using the guidelines published at 7 1 P a g e 1037 hops://www.hudeschan.,e.info/resource/3334/cdbl,-income-limits/ . Persons seeking the Section 3 Worker preference shall demonstrate that it meets one or more of the following criteria currently or when hired within the past five years. as documented: I. A low or very low-income resident (the worker's income for the previous or annualized calendaryear is below the income limit established by HUD); or 2. Employed by a Section 3 business- concern; or 3. A YouthBuild participant. Persons seeking the Targeted Section 3 Worker preference shall demonstrate that it meets one or moreof the following criteria: 1. Employed by a Section 3 Business Concern or 2. Currently meets or when hired met at least one of the following categories as documented withinthe past five years: a. Living within the service area or the neighborhood of the project, as defined in 24 CFRPart 75.5; or b. A YouthBuild participant. Section 3 Workers and Targeted Section 3 Workers who are seeking preference in training and employment may also submit the Section 3 Worker and Targeted Section 3 Worker Certification Form, (Appendix C), to the Huntington Beach Section 3 Coordinator. The Certification form can be found online at wwwsurfcity-hb.ore. Completed Certification forms will be retained by the Section 3 Coordinator in a Section 3 Worker/Targeted Section 3 Worker database and provide the contractor with a list of interested and qualified Section 3 Workers and Targeted Section 3 Workers and contact information. B. Projects Involving Multiple Sources of Funding In cases where Section 3 covered projects include multiple sources of finds, including public housing financial assistance and housing and community development assistance, the applicable PFIA will follow the definition of Targeted Section 3 Worker and priorities as outlined in subpart B of Pan 75. For housing andcommunity development financial assistance. the City of Huntington Beach will also follow subpart B of Part 75. In cases where Section 3 covered projects include multiple housing and development funding sources (financial assistance) from single or multiple recipients, the City of Huntington Beach will follow subpart C of Part 75. Refer to chart in Appendix B. 8 1 P a g e 1038 C. Section 3 Business Concern Certification The City of Huntington Beach should cncoura"c contractors and subcontractors to make best efforts to award contracts and subcontracts to Section 3 Business Concerns. Businesses that believe they meet the Section 3 Business requirements may self-register in the I-IUD Business registry, here: http:/Avsvw.hud.eov/Sec313iz. Businesses may seek Section 3 Business Concern preference by demonstrating that it meets one or more of the following criteria: I. At least 51 percent of the business is owned and controlled by low- or very low- income persons; or 2. At least 51 percent of the business is owned and controlled by current public housing residents or residents who Currently live in Section 8-assisted housing-, or 3. Over 75 percent of the labor howl performed for the business over the prior three- month period are performed by Section 3 Workers. Businesses that seek Section 3 preference shall certify, or demonstrate to the City of I-Iuntington Beach, contractors,or subconhactors, that they meet the definitions provided in the above. Businesses may demonstrate eligibility by submitting the Section 3 Business Concern Certifcatiar Form, located in Appendix D at the time of bid/proposal, along with a HUD Section 3 Affidavit, found in Appendix F. If the City of' Huntington Beach previously approved the Business Concern to be Section 3 certified, then the certification can be submitted along with the bid, as long as the form is submitted within the prescribed expiration date. yThe Section 3 Business Concern Certification Form will expire after 6 (six) months. Establishing a 6- month certification of eligibility period allows the City the ability to assess contractor performance to ensure the business is striving to meet the required goals. V. .Assisting Contractors with Achieving Section 3 Goals In an effort to assist contractors with meeting or exceeding the Section 3 goals, the City of Huntington Beach will do the following: I. Share Section 3 Labor Compliance Plan and Guidelines with contractors and subcontractors and explain policies and procedures. 2. Require contractors wishing to submit a bid/offer/proposal to attend pre-bid meeting. 3. Require contractor to sign the Section 3 Plan A/Jidavil at the pre-construction conference. The Affidavit. found in Appendix E. must be completed by the prime Contractor and submitted with the bid documents. Additional Affidavits must also be completed and submitted by all subcontractors prior to issuance of the Notice to Proceed- 9 1 P a g e 1039 4. Review Section 3 benchmarks and prioritization of effort with contractors and subcontractors to ensure that the goals are understood. It is not intended for contractors and subcontractors to terminate existing employees, but to make every effort feasible to meet Section 3 benchmark goals by utilizing existing qualified workforce and by considering qualified eligible Section 3 Workers and Targeted Section 3 Workers (per the prioritization of effort outlined in Section 111) before any other person, when hiring additional employees is needed to complete proposed work to be performed with HOME of CDBG funds. 5. At the time of bid, require the contractor to present a list of the number of total labor hours, Section 3 Worker labor hours, and Targeted Section 3 Worker labor hours expected to be generated from the initial contract and a list of projected number of available positions. to include job descriptions and wage rates. 6. Nlaintain a local Section 3 Worker/Targeted Section 3 Worker database and provide the contractor with a list of interested and qualified Section 3 Workers and Targeted Section 3 Workers and contact information. 7. Inform contractors about the HUD Section 3 Opportunity Portal https://hudapgs.hud.ao\'/OpgortunitvPortal/ S. Require contractors to notify Section 3 Coordinator of their interests regarding employment of Section 3 workers prior to hirinL,. 9. Encourage local businesses to register on the HUD Business Registry and direct Contractors to the HUD Section 3 Business Registry hops://www.hud.gov/section36usincssrcgistr�� 10. Leverage Huntington Beach's communication outlets (social media, website, etc.) to effectively communicate employment and contracting opportunities that arise. 11. Require contractors to submit a list of core employees (including administrative, clerical, planning and other positions pertinent to the construction trades) at the time of contract award. VI . Section 3 Outreach A. Outreach Efforts for Employment and Training [n order to educate and inform workers and contractors. Huntington Beach's Section 3 Coordinator will be prepared to provide training and technical assistance on a regular basis per program guidelines. When training opportunities are available, contractors and subcontractors should, to the greatest extent feasible: 1. Notify the Section 3 Coordinator when training opportunities are available. 101Page 1040 2. Provide information/handouts about Section 3 training opportunities to potential Section 3 Workers and Targeted Section 3 Workers. 3. Conduct an annual training for Section 3 Workers and Section 3 Business Concerns. Contractors and subcontractors should employ several active strategies to notify Section 3 Workers and Targeted Section 3 Workers of Section 3 job opportunities, including: I. Clearly indicating Section 3 eligibility on all job postings with the following statement: "This job is a Section 3 eligible job opportunity. We encourage applications from individuals that are low income and/or live in Public Housing and/or receive a Section S voucher." 2. Attaching the Section 3 Worker and Targeted Section 3 Worker Self-Certification Form in all job postings. 3. Working with the Section 3 Coordinator to connect Section 3 Worker and Targeted Section 3 Workers in the Huntington Beach database with opportunities and/or utilize the Section 3 Opportunity Portal to find qualified candidates. 4. Establishing a current list of Section 3 eligible applicants. 5. Contacting local community organizations and provide them with job postings for Section 3 eligible applicants. 6. Coordinating a programmatic ad campaign, which results in widespread job posting across diverse ad networks including: a. Advertising job opportunities via social media, including Linkedln and Facebook. b. Advertising job opportunities via Flyer distributions and mass mailings and posting ads in common areas of housing developments and all public housing management offices. c. Contacting resident councils, resident management corporations, and neighborhood community organizations to request their assistance in notifying residents of available training and employment opportunities 7. All efforts to notify and employ Section 3 workers and Targeted Section 3 workers ofjob opportunities should be documented on the .Section 3 H%orker and Targeted Section 3 6horker Outreach Log in Appendix F. B. Outreach Efforts for Contracting 11 Page 1041 When contracting opportunities arise in connection with the HOME or CDBG pro<aram, the City Of Huntington Beach will employ the following strategies to notify Section 3 Business Concerns of Section 3 contracting opportunities, including but not limited to: 1. Adding Section 3 language to all RFPs, procurement documents, bid offerings and contracts. 2. Coordinating mandatory pre-bid mectings to inform Section 3 Business Concerns of upcoming contracting opportunities. The Section 3 Coordinator will participate in these mectings to explain and answer questions related to Section 3 policy. 3. Advertising contracting opportunities in local comnumity papers and notices that provide general information about the work to be contracted and where to obtain additional information. d. Providing written notice of contracting opportunities to all known Section 3 Business Concerns. The written notice will be provided in sufficient time to enable business concerns the opportunity to respond to bid invitations. 5. Coordinating with the prime contractor to publicize contracting opportunities for small businesses. 6. Coordinating with the City of' Huntington Beach Community Enhancement Division (Housing) and all other business assistance agencies and contractor associations to inform them of contracting opportunities and request their assistance in identifying Section 3 business concerns. Could include local community development organizations, business development agencies (Chamber of Commerce). and minority contracting associations. 7. Connecting Section 3 business concerns with resources to support business development to assist in obtaining contracting opportunities (e.g., bonding and insurance assistance, etc.). Contractors will also be encouraged to collaborate with the City of Huntington Beach as subcontract opportunities arise in an effort to notify eligible Section 3 business concerns about the contracting opportunities. VIL Section 3 Contracting Policy and Procedure The City of Huntington Beach will incorporate Section 3 in its existing Procurement Policy and may adopt it Section 3 Contracting Policy and Procedure to be included in all procurements generated for use with HUD funding. This policy and procedure will contain requirements for making efforts to award contracts to Section 3 Business Concerns. All contractors/businesses seeking Section 3 preference must, before submitting bids/proposals to the City of Huntington Beach, be required to complete certifications, as appropriate. Such certifications shall be adequately supported with appropriate documentation as referenced in the 121Page 1042 Section 3 Business Concern Certification Form. V111. Section 3 Provisions/Contract Language ,I'he City of Huntington Beach will include standard Section 3 language in all of its contracts to ensure compliance with regulations in 24 CFR Part 75. The City will take appropriate actions upon finding that a contractor is in violation of 24 CFR Part 75 and does not knowingly contract with any contractor that has been found in violation of the Section 3 regulations. On a periodic basis the Section 3 Coordinator will audit Huntington Beach's contractors for compliance with the minimum Section 3 requirements outlined in the Section 3 Labor Compliance Plan & Guidelines. In addition, contractors and subrecipients are required to include language in all Section 3 covered contracts or agreements for subcontractors to meet the requirements of 24 CFR Part 75.19 for housing and community development financial assistance (HOME or CDBG). The prime contractor and all subcontractors will also be required to sign the HUD .Section 3 Compliance CerriJicatiota in Appendix II, which certifies that all Section 3 covered contracts will include the HUD Section 3 clause. The HUD .Section 3 Complirutce Certification must be signed prior to the notice to proceed. For businesses, noncompliance with HUD's regulations in 24 CFR part 75 may result in sanctions including suspension or withholding of contractor payments; termination of the contract for default, and debarment or suspension from future HUD assisted contracts. IBC. Reporting Requirements A. Contractor Compliance Requirements DUCIng construction, the contractor shall do the following: I. The contractor shall; to the greatest extent possible, employ Section 3 Workers for a minimum of hventy-five percent (25%) of the total number of labor hours worked by all workers on a Section 3 project. Contractor shall also employ Targeted Section 3 Workers for a minimum of five percent (5%) of the total labor hours worked by all workers. 'Ilie five percent (5%) is included as part of the twenty-five percent (25%) threshold. If the contractor fails to meet these work hour requirements. the contractor will be subject to sanctions including suspension or withholding of contractor payments (see section X. Effects of Noncompliance below), termination of the contract for default, and debarnent or suspension from future HUD assisted contracts. To avoid imposition of such sanctions, the contractor must demonstrate that it utilized its best efforts to achieve the Section 3 employment and contracting goals. The contractor may demonstrate best efforts by 131Page 1043 detailing all efforts made to hire Section 3 Workers and Targeted Section 3 Workers on the .Section 3 and Targeted.Section 3 141orker Outreach Log in Appendix F or to contract with Section 3 Business Concerns on the Section 3 Business Outreach Log in Appendix G. 2. The contractor shall submit the following documentation to the Huntington Beach Section 3 Coordinator at a date and time to be specified. • An executed HUD Section 3 Compliance Certificate Appendix H). This document is to be submitted prior to issuance of Notice to Proceed and becomes a part of the contractors contract with the City and required for each subcontractor. Must be completed by all contractors prior to the issuance of Notice to Proceed. • A .Section 3 6Vorker and Tageted Section 3 Worker Sell-Certrfication Dorm (Appendix C) for each employee working onsite for the prime contractor and each listed subcontractor. The form shall include the employee's name, address and individual income limit. This form will be used to determine if the employee is or qualifies as it Section 3 Worker or Targeted Section 3 Worker, or in situations of' subcontractors. whether they qualify as a Section 3 Business Concern. 3. Post public notices announcing HUD Section 3 Job and Contracting/Business Opportunities. The contractor shall post these notices at tire jobsite. 4. With each monthly invoice for payment, the contractor shall provide to the Section 3 Coordinator or designee, by the fifteenth (15th) calendar clay of the following month, contractor and subcontractor documentation to confirm compliance with Section 3 Worker and Targeted Worker requirements. These documents shall include. but not be limited to the Section 3 Cumulative Compliance Report (Appendix I) more fully described below. and certified payrolls for each person working on the Section 3 contract. 5. Submit other such documentation that the City may require to demonstrate the contractor's/subcontractor's compliance with Section 3 requirements. such as contact logs for Section 3 inquiries. B. Section 3 Cumulative Compliance Report For Section 3 covered contracts. contractors must submit the Section 3 Cumulative Compliance Report (Appendix 1) to the City of Huntington Beach's Section 3 Coordinator on it monthly basis. and at project completion. Reports are due on the 1 5`h day of each month for the previous month and should be submitted electronically to the Section 3 Coordinator. Charles Kovac, Housing Manager at Charles.Kovac a surfcity-hb.org . Once a project is completed, contractors must submit a final Section 3 Cumulative Compliance Report for the program year. Upon the completion of a project, Huntington Beach's Section 3 Coordinator will conduct a final review of the projects overall performance and compliance and will submit the Section 3 data into the Federal Integrated Disbursement and Information System 141Page 1044 (IDIS) to 1-IUD in order to complete the project in IDIS. C. Reporting on Projects with i\lultiple Funding Sources For Section 3 projects that include public housing financial assistance and housing and comnwnity development financial assistance. the City of Huntington Beach will report on the project as a whole and will identify the multiple associated recipients. For projects assisted with funding from multiple sources of housing and community development assistance that exceed the thresholds of S200.000 and S 100.000 for Lead Hazard Control and Healthy Homes Programs (LHCHH), the City will follow subpart C of Part 75 and will report to the applicable I-IUD program office, as prescribed by HUD. Note: LHCHH assistance is not included in calculating whether the assistance exceeds the S200,000 threshold. HUD public housing financial assistance and HUD 1OUSing and community development financial assistance is not included in calculating whether the assistance exceeds the LI-ICI S100._000 threshold. Refer to chart in Appendix B. X. Effects of Noncompliance 'Tile City 01' Huntingtoo Beach is committed to working with the contractor to meet the employment and contracting requirements. In this regard, the contractor shall include the Section 3 Coordinator in all meetings related to complying with the employment goals. Failure to meet these goals or to assist in the documentation of the contractor's best efforts to meet these goals, shall result in a penalty equal to ten percent (10%) of each subsequent invoice beyond any normal retention until the deficiency is corrected. Upon remediation of the deficiency, the penalty amount will be released to the contractor. In the event that the contractor fails to provide required documentation regarding both the twenty-five percent (25%) Section 3 Worker employment and five percent (5%) Targeted Section 3 Worker employment, the maximum penalty that may be assessed is ten percent (10%) of each subsequent progress payment invoice. Note: In the event a subcontractor fails to furnish the required documentation to the contractor, the contractor at its discretion shall withhold a penalty equal to ten percent (10%) of each invoice from that subcontractor. Upon remediation of the deficiency, the contractor shall release the penalty amount to the subcontractor. The maximum penalty that may be assessed against a subcontractor is ten percent (10%) of each subsequent invoice. XI. Internal Section 3 Complaint Procedure In an effort to resolve complaints generated due to non-compliance through an internal process, the City of 1-luntington Beach encourages submittal of such complaints to its Section 3 Coordinator as follows: 1. Complaints of non-compliance should be filed in writing and must contain the name of the 151Page 1045 complainant and brief description of the alleged violation of 24 CFR Part 75. 2. Complaints must be filed within thirty (A calendar days crier the complainant becomes aware of the alleged violation. 3. An investigation will be conducted if� complaint is found to be valid. The City of Huntington Beach will conduct an informal, but thorough investigation affording all interested parties, if any, an opportunity to submit testimony and/or evidence pertinent to the complaint. 4. The Citv of Huntington Beach will provide written documentation detailing the findings of the investigation. The City will review the findings for accuracy and completeness before it is released to complainants. The findings will be made available no later than thirty (30) days after the filing of complaint. If complainants wish to have their concerns considered outside of the City of Huntington Beach, a complaint may be filed with the Los Angeles Area Field Office at: U.S. Department of Housing and Urban Development C/O Robert DiGrccio, HUD Representative 300 North Los Angeles Street Suite 4054 Los Angeles, CA 90012 Complainants may be eligible to bring complaints under other federal laws. The U.S. Equal Employment Opportunity Commission (EEOC) is responsible for enforcing federal laws that make it illegal to discriminate against ajob applicant or an employee because of the person's race, color, religion, sex (including pregnancy), national origin, age (40 or older), disability or genetic information (medical history or predisposition to disease). For more inforiation about complainant rights, please contact EEOC at: www.EEOCgov . The Department of Labor Office of Federal Contract Compliance Programs (OFCCP) enforces, for the benefit ofjob seekers and wage earners, the contractual promise of affirmative action and equal employment opportunity required of those who do business with the Federal government. N,lore infuriation about the services they provide can be obtained at: http://www.doLgov/ofcc . 161Page 1046 Appendix A : Definitions "rhe terms HUD, Public housing, and Public Housing Agency (1'1 .4) are defined in 24 CFR part 5. The followin. definitions also apply to 24 CFR Part 75 FIUD's Economic Opportunities Rbr Losv- and Very Low-Income Persons: 1937 Act means the United States Housing Act of 1937, 42 U.S.C. 1437 ct seq. activities related to Public Housin. Contractor means any entity entering into a contract with: I. A recipient to perform work in connection with the expenditure of public housing financial assistance or for work in connection with a Section 3 project: or ? A subrecipient for work in connection with a Section 3 project. Labor hours means the number of paid hours worked by persons on a Section 3 project or by persons employed with funds that include public housing financial assistance. Low-income person means a person as defined in Section 3(b)(2) of the 1937 Act. at or below 80% AML Note that Section 3 worker eligibility uses individual income rather than family/household income. Nfaterial supply contracts means contracts for the purchase of products and materials, including, but not limited to, lumber, drywall, wiring, concrete, pipes, toilets, sinks. carpets, and office supplies. Professional services means non-construction services that require an advanced degree or professional licensing, including. but not limited to. contracts for legal services, financial consulting, accounting services, environmental assessment, architectural services. and civil engineering services. Public housingfrnancial assistance means assistance as defined in 24 CFR Part 75.3(a)(I). Public housing project is defined in 24 CFR 905.108. Recipient means any entity that receives directly from HUD public 110US1m financial assistance or housin. and community development assistance that funds Section 3 projects, including, but not limited to, any State, local government, instrumentality, PHA, or other public agency. public or private nonprofit organization. Section 3 means Section 3 of the Housing and Urban Development Act of 1963, as amended (12 U.S.C. 1701 u). 1047 Section 3 business concern means: I. A business concern meeting at least one of'the following criteria, documented within the last six-month period: a. It is at least 51 percent owned and controlled by low- or very low-income persons: b. Over 75 percent of the labor hours performed for the business over the prior three- month period are performed by Section 3 workers; or c. It is a business at least 51 percent owned and controlled by current public housing residents or residents who currently live in Section 8-assisted housing. 2. The status of a Section 3 business concern shall not be negatively affected by a prior arrest or conviction of its owner(s) or employees. 3. Nothing in this part shall be construed to require the contracting or subcontracting- of a Section 3 business concern. Section 3 business concerns are not exempt from meeting the specifications of the contract. Section 3 Coordinator is person tasked with overseeing all Section 3 responsibilities for the PHA/CD office. Section 3 project means a project defined in 24 CFR Part 75.3(a)(2). Section 3 worker means: I. Any worker who currently fits, or when hired within the past five years fit, at least one of the following categories, as documented: a. The worker's income for the previous or annualized calendar year is below the income limit established by I-IUD. b. The worker is employed by a Section 3 business concern. c. The worker is a YouthBuild participant. 2. The status of a Section 3 worker shall not be ncumfively affected by a prior arrest or conviction. 3. Nothing in this part shall be construed to require the employment of someone who meets this definition of a Section 3 worker. Section 3 workers are not exempt from meeting the qualifications of the position to be filled. .Section 8-assisted housing refers to housing receiving project-based rental assistance or tenant- based assistance under Section 8 of the 1937 Act. Service area or the neighborhood of the project meatus an area within one mile of'the Section 3 project or, if fewer than 5,000 people live within one mile of a Section 3 project. within a circle centered on the Section 3 project that is sufficient to encompass a population of 5,000 people according to the most recent U.S. Census. Small PHA means a public housing authority that manages or operates fewer than 250 public housing units. Subcontractor means any entity that has a contract with a contractor to undertake a portion of the 1048 contractor's obligation to perform work in connection with the expenditure of public housing financial assistance or for a Section 3 project. .Suhrecipient has the meaning provided in the applicable program regulations or in 2 Cl-R 200.93. Targeted Section 3 worker has the meanings provided in 24 CFR Part 75.1 1, 75.21, or 75.29, and does not exclude an individual that has a prior arrest or conviction. Very low-income person means the definition for this term set forth in section 3(b)(2) of the 1937 Act (at or below 50% ANII). YouthBuild programs refers to YouthBuild programs receiving assistance under the Workforce Innovation and Opportunity Act (29 U.S.C. 3226). 1049 Appendix B: Multiple Funding Sources Chart Definitions *Targeted Type of Financial Section 3 Assistance Workers Thresholds Prioritization Reporting PHA - must follow subpart B of Pan 75 PHA-must PHA - must Public Housing follow subpart B None follow subpart B HCD-may follow and Housing and of Part 75 Any amount of of Part 75 subpart B or C of Communih Part 75 Both - Must Development HCD-may PH assistance HCD-may report on project as Assistance follow subpart B triggers Section 3 follow subpart B a whole and or C of Part 75 or C of Part 75 identify the multiple associated recipients Must follow subpart C of Part 75 Multiple Sources Must report on of Housing and Exceeds$200,000 project as a whole Community Must follow for Section 3 Must follow and identify the Development subpart C of Part projects subpart C of Part multiple associated (single or multiple 75 LHCHHP 75 recipients recipients) exceeds$100.000 Must report to the applicable HUD program office,as prescribed by HUD 1050 Appendix C : Cite of Huntington Beach Section 3 Worker and Targeted Section 3 Worker Self-Certification Form This page left intentionally blank.] 1051 Section 3 Worker and Targeted Section 3 Worker 40 Self-Certification Form FY 2021/22 (Confidential) Employee Name: Employee Address: Employee Phone Number: The purpose of HUD's Section 3 program is to provide employment,training,and contracting opportunities to low-income individuals, particularly those who are recipients of government assistance for housing or other public assistance programs. Your response is voluntary, confidential, and has no effect on your employment. Eligibility for Section 3 Worker or Targeted Section 3 Worker Status A Section 3 worker seeking certification shall self-certify and submit this form to the recipient contractor or subcontractor, that the person is a Section 3 Worker or Targeted Section 3 Worker as defined in 24 CFR Part 75. A Section 3 worker may also provide a form to the Huntington Beach Section 3 Coordinator at Charles.Kovacla,surfcity-hb.org or by mail to Charles Kovac, 2000 Main Street, 51" Floor, Huntington Beach, CA 92648 to be included in the Section 3 Worker database. INSTRUCTIONS: Enter/select the appropriate information to confirm your Section 3 Worker or Targeted Section 3 Worker status. 1. Are you a resident of public housing or a Housing Choice Voucher Holder(Section 8)? Yes ❑ No ❑ 2. Are you a resident of the City of Huntington Beach? Yes ❑ No ❑ 3. In the field below, select the amount of individual income you believe you earn on an annual basis. Less than $75,300 ❑ More than S75,301 ❑ 4. In the fields below, select services you are able to provide: ❑ Accounting ❑ Architecture ❑ Asphalt/Paving ❑ Brick Masonry ❑ Carpentry ❑ Consulting ❑ Demolition ❑ Electrical ❑ Engineering ❑ General Contractor❑ HVAC ❑ IT ❑ Insulation ❑ Janitorial ❑ Landscaping ❑ Lead Hazard Control ❑ Maintenance ❑ Painting/Dry Wall ❑ Plumbing ❑ Roofing ❑ Security ❑ Signage/Graphics ❑ Steel Fabrication ❑ Other: 1052 pg. 1 Section 3 Worker and Targeted Section 3 Worker Self-Certification Form FY 2021/22 (Confidential) 5. 1 qualify as a: ❑ Section 3 Worker as defined under the Eligibility Guidelines on page 3 of this Certification. ❑ Targeted Section 3 Worker as defined under the Eligibility Guidelines on page 3 of this Certification. Employee Affirmation I affirm that the above statements are true, complete, and correct to the best of my knowledge and belief. 1 hereby certify, under penalty of law, that the following information is correct to the best of my knowledge. Print Name: Date Hired: Signature: Date: FOR ADMINISTRATIVE USE ONLY Is the employee a Section 3 Worker based on their self-certification? ❑ Yes ❑ No Is the employee a Targeted Section 3 Worker based on their self-certification? ❑ Yes ❑ No Was this an applicant who was hired as a result of the Section 3 project? ❑ Yes ❑ No If Yes, what is the name of the company? What was the date of hire? EMPLOYERS MUST RETAIN THIS FORM IN THEIR SECTION 3 COMPLIANCE FILE FOR 5 YEARS 1053 Section 3 Worker and Targeted Section 3 Worker Self-Certification Form FY 2021/22 (Confidential) Section 3 Income Limits & Eligibility Guidelines The worker's income must be at or below the amount provided below for an individual (household of 1) regardless of actual household size. FY 2021 Income Limit Area Income Limit. FY 202 Extremely Low $0 - $28,250 0-30% AMI Very Low Income S28,251 - $47,100 Santa Ana— Anaheim — Irvine, 31-50%AMI CA HUD Metro FMR Area Low Income 51-80%AMI $47,101 - $75,300 Moderate and Above > $75,301 >81%AMI Section 3 Worker Definition: • A low or very low-income resident (the worker's income for the previous or annualized calendar year is below the income limit established by HUD); • Employed by a Section 3 business concern; or • A YouthBuild participant. Targeted Section 3 Worker Definition (for public housing): • Employed by a Section 3 business concern; or • Currently meets, or when hired met, at least one of the following categories as documented within the past five years: o A resident of public housing; or o A resident of other public housing projects or Section 8-assisted housing; or o A YouthBuild Participant. Targeted Section 3 Worker Definition (for housing and community development): • Employed by a Section 3 business concern; or • Currently meets or when hired met, at least one of the following categories as documented within the past five years: o Living within the service area or the neighborhood of the project,as defined in 24 CFR Part 75.5 o A YouthBuild Participant. 1054 P6 3 Appendix D : City of Huntington Beach Section 3 Business Concern Certification for Contracting Form [This page left intentionally blank.] 1055 Section 3 Business Concern Certification for Contracting Form FY 2021/22 (Confidential) Instructions Enter the following information and select the criteria that applies to certify your business' Section 3 Business Concern status. Business Information Name of Business: Address of Business: Name of Business Owner: Phone Number of Business Owner: Email Address of Business Owner: Preferred Contact Information ❑ Same as above. Name of Preferred Contact: Phone Number of Preferred Contact: Type of Business (select from the following options) ❑ Corporation ❑ Partnership ❑ Sole Proprietorship ❑ Joint Venture Provided Services ❑ Accounting ❑ Architecture ❑ Asphalt/Paving ❑ Brick Masonry ❑ Carpentry ❑ Consulting ❑ Demolition ❑ Electrical ❑ Engineering ❑ General Contractor❑ HVAC ❑ IT ❑ Insulation ❑ Janitorial ❑ Landscaping ❑ Lead Hazard Control ❑ Maintenance ❑ Painting/Dry Wall ❑ Plumbing ❑ Roofing ❑ Security ❑ Signage/Graphics ❑ Steel Fabrication ❑ Other: Select from ONE of the following three options below that applies: ❑ At least 5 1% of the business is owned and controlled by low- or very low-income persons (refer to income guidelines on page 3 of this Certification). ❑ At least 51% of the business is owned and controlled by current public housing residents or residents who currently live in Section 8-asssited housing. ❑ Over 75%of the labor hours performed for the business over the prior three-month period are performed by Section 3 workers (refer to definitions on page 3 of this Certification). loss pg. 1 Section 3 Business Concern Certification { for Contracting Form F FY 2021/22 (Confidential) Business Concern Affirmation I affirm that the above statements are true, complete, and correct to the best of my knowledge and belief. I understand that businesses who misrepresent themselves as Section 3 business concerns and report false information to City of Huntington Beach may have their contracts terminated as default and be barred from ongoing and future considerations for contracting opportunities. I hereby certify, under penalty of law, that the following information is correct to the best of my knowledge. Print Name: Signature: Date: Certification expires within 6 months of the date of signature. •* Information regarding Section 3 Business Concerns can be found at 24 CFR Part 75.5. FOR ADMINISTRATIVE USE ONLY Is the business a Section 3 Business Concern based on their certification? ❑ Yes ❑ No EMPLOYERS MUST RETAIN THIS FORM IN THEIR SECTION 3 COMPLIANCE FILE FOR 5 YEARS 1057 Section 3 Business Concern Certification for Contracting Form FY 2021/22 (Confidential) Section 3 Income Limits & Eligibility Guidelines The worker's income must be at or below the amount provided below for an individual (household of 1) regardless of actual household size. Q 7Anaheim ai.i: GtExtremely Low $0- $28,250 0-30% AMIVery Low Income $28,251 - $47,100 Santa Ana — Irvine, 31-50%AMI CA HUD Metro FMR Area Low Income 51-80%AMI $47,101 - $75,300 Moderate and Above > $75,301 >81%AMI Section 3 Worker Definition: • A low or very low-income resident (the worker's income for the previous or annualized calendar year is below the income limit established by HUD); • Employed by a Section 3 business concern; or • A YouthBuild participant. Targeted Section 3 Worker Definition (for public housing): • Employed by a Section 3 business concern; or • Currently meets, or when hired met, at least one of the following categories as documented within the past five years: o A resident of public housing; or o A resident of other public housing projects or Section 8-assisted housing; or o A YouthBuild Participant. Targeted Section 3 Worker Definition (for housing and community development): • Employed by a Section 3 business concern; or • Currently meets, or when hired met, at least one of the following categories as documented within the past five years: o Living within the service area or the neighborhood of the project, as defined in 24 CFR Part 75.5 o A YouthBuild Participant. 1058 Appendix E : HUD Section 3 Affidavit [This page left intentionally blank.] 1059 HUD Section 3 Affidavit Must be completed by the prime contractor and submitted with bid documents. Must be completed and submitted by all subcontractors prior to issuance of Notice to Proceed. Your signature below indicates that you have received a copy of the City of Huntington Beach's Section 3 Labor Compliance Plan and Guidelines. 1, the undersigned Name of Officer or Authorized Agent of Company (Print Name) Signature Date Project Name: _ Company Name: Address: Street City State Zip Code Telephone Number: E-Mail Address: 1060 Appendix F: Section 3 Worker and Targeted Section 3 Worker Outreach Log [This page left intentionally blank.] 1061 Section 3 Worker and Targeted Section 3 Worker Outreach Log This form is provided as a tool to Contractors to record good faith efforts in contacting and outreaching to Section 3 and Targeted Section 3 Workers. Project Name: Compan% Name: Mode of Contact Contact Date/Time Company Contact Info. Person Results of Outreach Example: Example: Example: Example: Example: Example: 711121, City of Email(see (714) 123- Charles Spoke with Mr. Kovac regarding 11:30AM Huntington attached) 4567 Kovac, the need to hire two roofers who Beach Section 3 quafifv as Section 3 Workers. Mr. Coordinator Kovac provided 2 contacts for for HB persons with roofing experience. Called both persons to nodfv them ofjob opportunity and sent them lab apolicadons. 1062 Appendix G : Section 3 Business Outreach Log [This page left intentionally blank.] 1063 Section 3 Business Concern Outreach Log This form is provided as a tool to Contractors to record good faith efforts in contacting and outreaching to Section 3 Business Concerns. Project Name: Company Name: Node of Contact Contact DateiTime Company Contact Into. Person Results of Outreach Example. Example: Example: Example: Example: Example: 711121. ABC Email(see John@ABC John Doe. Email was sent to John Doe 11:30AM Contracting attached) Contracting. Owner contractor asking for their Co. com participation. Inquired about their service experience. John Doe sent me a listing of their completed projects. This contractor thinks they may qualify as a Section 3 business concern. We will include them as part o our team. 1064 Appendix H : HUD Section 3 Compliance Certification [This page left intentionally blank.1 1065 HUD Section 3 Compliance Certification Instructions. fhe HUD Section 3 Compliance Certification must be signed by prime contractor and all subcontractors prior to issuance of Notice to Proceed. The contract for this work will include the following clause(referred to as the HUD Section 3 clause): A. The work to be performed under this contract is subject to the requirements of Section 3 of the Housing and Urban Development Act of 1968, as amended, 12 U.S.C. 170lu (Section 3) as amended in the section 3 Final Rule on September 29,2020.The purpose of Section 3 is to ensure that economic opportunities,most importantly employment and training,generated by HUD-assisted projects covered by Section 3,shall,to the greatest extent feasible,be directed to low-income persons,particularly persons who are recipients of HUD assistance for housing or are residents of the project area/community in which the federal assistance is spent. Consistent with 24 CFR Part 75, the City of Huntington Beach shall refrain from entering into a contract with any contractor after notification is received from HUD that the contractor has been found in violation of the Section 3 regulations. The City will also review past performance of contractors on Section 3 projects in determining contract awards. B. The parties to this contract agree to comply with HUD's regulations in 24 CFR Part 75, which implement Section 3. As evidenced by their execution of this contract, the parties to this contract certify that they are under no contractual or other impediment that would prevent them from complying with the Part 75 regulations. C. The contractor agrees to send to each labor organization or representative of workers with which the contractor has a collective bargaining agreement or other understanding, if any, a notice advising the labor organization or workers' representative of the contractor's commitments under this Section 3 clause, and will post copies of the notice in conspicuous places at the work site where both employees and applicants for training and employment positions can see the notice. The notice shall provide the name and location of the person(s)taking applications for employment. D. The contractor agrees to include this Section 3 clause in every subcontract subject to compliance with regulations in 24 CFR Part 75, and agrees to take appropriate action, as provided in an applicable provision of the subcontract or in this Section 3 clause, upon a finding that the subcontractor is in violation of the regulations in 24 CFR Part 75. The contractor will not subcontract with any subcontractor where the contractor has notice or knowledge that the subcontractor has been found in violation of the regulations in 24 CFR Part 75. E. The contractor will certify that any vacant employment positions, including training positions,that are filled(1)after the contractor is selected but before the contract is executed, and (2) with persons other than those to whom the regulations of 24 CFR part 75 require employment opportunities to be directed, were not filled to circumvent the contractors obligations under 24 CFR part 75. l . The contractor understands that non-compliance and willful violation of HUD's regulations in 24 CFR Part 75 with respect to Section 3 and related regulations by itself, its sub-contractors and or lower tier contractors will result in corrective measures taken by the City of Huntington Beach to achieve compliance, including suspension or withholding of contractor payments. I,the undersigned on behalf of the company herby certify that 1 have received, read, and understand, the contents or the above stated"Section 3"clause. Signature Print Name Date Title(Officer or Authorized Agent) Company Name Address City State Zip Code 1066 Appendix l : Section 3 Cumulative Compliance Report This page left intentionally blank.1 1067 Section 3 Cumulative Compliance Report Indicate reporting period. ❑ Monthly: Invoice# Insert Month and Year ❑ Project Completion: Date of Project Completion Business Contact Information. Contractor Business Name Contact Name Phone Number Street City Zip Email Project Information. Project Name and Description Work/Project Start Date Work/Prcject End Date This form should be completed by all vendors, contractors and service providers who have a contract +cith the City of Huntington Beach that is subject to Section 3 requirements per 24 CFR Part 75. Complete this form in its entirety, and attach the followine supporting documentation: Section 3 Worker and Targeted Section 3 Worker Certification forms, payroll information supporting labor hour benchmark data, certification that you followed order of hiring priority, evidence of qualitative efforts made to comply with Section 3 and other supporting documents as applicable. You may attach a letter to this report if needed to further state your efforts, achievements or obstacles encountered. Submit this forth on the 15`s of each month for the previous month and at completion of your work. Questions and assistance with requirements and reporting can be sent to the City of Huntington Beach's Section 3 Coordinator, Charles Kovac, City of Huntington Beach, 2000 Main Street, 5th Floor, Huntington Beach,CA 92648 or by email at Charles.Kovac(a surfcity-hb.org GENERAL GUIDANCE AND DEFINITIONS Section 3 of the Housing and Urban Development Act of 1968 (codified at 12 U.S.C. 1701u and implemented at 24 CFR Part 75, hereinafter, "Section 3"), as amended, requires that economic opportunities, most importantly employment, generated by certain U.S. Department of Housing and Urban Development ("HUD") financial assistance shall be directed to low- and very low-income persons. 1068 Section 3 Cumulative Compliance Report particularly those who are recipients of government assistance for housing, or residents of the community in which the Federal assistance is spent. Section 3 Worker means: Any worker who currently fits or when hired within the past five years fit at least one of the following categories, as documented: 1. The worker's income for the previous or annualized calendar year is below the income limit established by HUD. (Note: Income is considered for the worker only and not based on household) 2. The worker is employed by a Section 3 business concern. 3. The worker is a YouthBuild participant. A Targeted Section 3 Worker for housing and community development financial assistance means: A Section 3 Worker as defined in 24 CFR Part 75.21, as may be amended from time to time, and means a worker documented through self-certification or other means acceptable to HUD, who is: 1. A worker employed by a Section 3 Business Concern; or 2. A worker who currently fits or when hired fit at least one of the following categories, as documented within the past five years: a. Living within the service area or the neighborhood of the project*, as defined in §75.5; or b. A YouthBuild participant. *Section 3 Coordinator will provide further guidance on the service area or the neighborhood of the project for the specific project. BENCHMARK GOALS 1. 25 percent or more of the total number of labor hours worked by all workers on the project are Section 3 Workers; and 2. 5 percent or more of the total number of labor hours worked by all workers on the project are Targeted Section 3 Workers. HUD INCOME LIMITS Low- and very low-income limits are defined in Section 3(b)(2) of the Housing Act of 1937 and are determined annually by HUD.These limits are typically established at 80 percent and 50 percent of the area median individual income. Most recent HUD income limits may be obtained from: CDBG Income Limits HUD Exchange . FY 2021 Sana Ana-Anaheim-Irvine CA HUD Metro FMR Area Very Low (50%) Income Limit for 1 Person No more than $47,100 Low (80%) Income Limit for 1 Person No more than $75,300 HIRING PRIORITIES Employment and training opportunities created by housing and community development programs shall be given to Section 3 Workers in the following order of priority: 1. Section 3 Workers residing within the service area or the neighborhood of the project; and 2. Participants in YouthBuild programs. 1089 pg. 2 Section 3 Cumulative Compliance Report COMPLIANCE REPORT Part 1. Workforce Composition Total number of ALL Total number of Section 3 Total number of Targeted Workers who worked on the Workers %rho worked on the Section 3 Workers who Project Project I worked on the Project Part H. Labor Hour Benchmarks(25% and 5% goals) Report labor hours worked on this Project broken down by ALL Workers, Section 3 Workers, and Targeted Section 3 Workers. Labor Hours on the Project Labor Hours on the Project Labor Hours on the Project for Targeted Section 3 for ALL Workers for Section 3 Workers Workers (includes existing and new hires who (includes existing and new hires who (includes existing and new hires who worked on the Project) worked on the Project) worked on the Project •Attach Certified Payrolls to support the data provided in this section. Part III. New Hire Data Did you hire Section 3 Workers and/or Targeted Section 3 Workers in relation to this contact? ❑ Yes ❑ No Did you follow the order of hiring priority when hiring new workers? ❑ Yes ❑ No List all new hires in relation to this contract. If reporting more new hires than able to list here,create an excel spreadsheet with the same columns and use that instead. 1070 Section 3 Cumuluthe Conipliance Report Total S3 Worker Hours Hire or Targeted Hiring New Hire Name Position Title Pay Rate Worked Date End Date Gender S3 Worker Priority Attach documents supporting the data provided in the table above and check the boxed below as applicable: ❑ Section 3 Worker Certification Forms for all New Hires (categorized by Section 3 Worker and Targeted Section 3 Worker) ❑ Supporting documents of efforts made to hire in the order of hiring priority, i.e., list of candidates who applied, City of Huntington Beach referral list, etc. ❑ Other documents, specify: Part IV. Subcontractors Did you have any subcontractors who performed work on this contract? ❑ Yes ❑ No If yes, complete the table below and attach this same report form for each of the subcontractors to identify their hiring and labor hours. Business Certification Subcontract (MBE,WBE, Subcontractor Name Trade Amount Start Date End Date SBE,Section 3 1071 Ask Section 3 Cumulative Compliance Report Part V. Qualitative Efforts (24 CFR Part 75.15) Check the boxes that apply to demonstrate your good faith efforts to satisfy your section 3 obligations. ❑ Engaged in outreach efforts to generate job applicants who are Targeted Section 3 Workers, including notifying Huntington Beach's Section 3 Coordinator,posting job openings at the job site,HUD Opportunity Portal, social media pages, contacting Resident Advisory Councils, and other platforms. ❑ Contacted agencies administering Orange County YouthBuild Programs,and requesting their assistance in recruiting Orange County YouthBuild Program participants for training opportunities and employment positions. ❑ Consulted with state and local agencies administering training programs, such as those funded through Workforce Investment Act, unemployment compensation programs, community organizations and other officials or organizations to assist with training and recruiting Section 3 Workers and Targeted Section 3 Workers. ❑ Held job fairs. ❑ Provided or connected Section 3 Workers and Targeted Section 3 Workers with assistance in seeking employment, including: drafting resumes, preparing for interviews, and finding job opportunities connecting residents to job placement services. ❑ Provided or referred Section 3 Workers to services supporting work readiness and retention (e.g., work readiness activities, interview clothing, test fees, transportation, childcare). ❑ Assisted Section 3 Workers to obtain financial literacy training and/or coaching. ❑ Engaged in outreach efforts to identify and secure bids from Section 3 Business Concerns. ❑ Provided technical assistance to help Section 3 Business Concerns understand and bid on contracts. ❑ Divided contracts into smaller jobs to facilitate participation by Section 3 Business Concerns. ❑ Provided bonding assistance, guaranties, or other efforts to support viable bids from Section 3 Business Concerns. ❑ Promoted use of Section 3 Business Registries designed to create opportunities for Section 3, disadvantaged and small businesses. Part VI. Notes and Comments (If needed, attach additional sheets) By signing below, 1 hereby certify and declare under penalty of perjury under the laws of the United States and the State of California that the information provided on this form, as well as all documentation provided in support thereof, are true and correct, and that 1 am authorized on behalf of the Company to make this certification. Furthermore. I certifi that I %ill maintain this documentation for the time period required for record retention in accordance with applicable program regulations or,in the absence of applicable program regulations,in accordance%ith 2 CFR part 200.1 "ill make these records available to the City of Huntington Beach and/or HUD upon request. Signature Name & Title Date 1072 Appendix J : Frequently Asked Questions for Section 3 [This page left intentionally blank.1 1073 FREQUENTLY ASKED QUESTIONS for SECTION 3 Published: March 25, 2021 The following is a guidance document published by the Depa nt rtme of!lousing caul Urban Development OJrce of b7eld Polio- and Managentenl Jor due pw7rose of providing answers to frequently asked gw-vions about Section 3 o0he HUD Act of 1968 (12 U.S.C,S� 1701 u) and its associated regulations (24 C.F.R. Part 75). This document is intended to provide guidance for Section 3 funding recipients, subrecil ients, contractors, subcontractors, workers, and other stakeholders. This guidance document covers questions in several topic areas and is divided into parts that contain questions on that part's topic. I. GENERAL QUESTIONS REGARDING SECTION 3: I. What is Section 3'? 2. What Do "Best Efforts" and "to the Greatest Extent Feasible" Mean? 3. What Does "Section 3 Worker' Mean? 4. What Does "Targeted Section 3 Worker" Mean? 5. What Does "Section 3 Business Concem" mean'? 6. 1-low are loin-income and very lose-income determined? 7. What is YouthBuild'? S. As a funding recipient, what are my Section 3 reporting goals'? 9. How does Section 3 differ from the Minority Business Enterprise/Women Business Enterprise programs? 10. What is a Section 3 project'? I I. Who is considered a recipient of Section 3 funding'? 12. What are funding thresholds and how do they apply to Section 3 covered financial assistance'? 13. Which recipient agencies (or sources of HUD financial assistance) are required to comply with Section 3'? 14. Can a non-profit organization be considered a business concern for the purposes of Section 3'? 15. What is a "Service Area" or "Neighborhood of the project`"? 16. What if my agency does not meet all benchmark goals for employment or contracting? 17. My agency has met all benchmark goals for employment and contracting, does this mean that we are considered in compliance with Section 3'? IL APPLICABILITY: I. What HUD assistance does Section 3 apply to'? 2. Do the requirements of Section 3 apply to grantees on a per project basis? 3. If a project is funded with non-HUD assistance, do the requirements of Section 3 still apply? 4. What rccordkeeping responsibilities do contractors/subcontractors have if they receive Section 3 covered contracts'? >. Do the Section 3 requirements apply to material only contracts'? 6. Do the Section 3 requirements apply to Section S project-based rental assistance contracts'? 7. Are maintenance projects covered by Section 3'? Section 3 Frequenth'A,ked Questions I 1074 S. Does the reduction and abatement of lead-based paint hazards constitute housing rehabilitation'? 9. Are demolition projects covered by the requirements of Section 3'? 10. Are professional service contracts required to be reported under Section T? 11. Does Section 3 apply to labor hours by a CDBG-Entitlement recipient? 12. Does Section 3 apply to labor hours by a Public Housing Authority'? M. CONSISTENCY WITH OTHER LAWS: 1. Are recipients required to comply with Federal/state/local laws in addition to Section 3 2. What is the relationship between Section 3 and Davis Bacon requirements'? 3. What does the new rule mean for Tribes and Tribally Designated Housing Entities'? IV. RECIPIENTRESPONSIBILITIES: 1. What are the responsibilities of recipient agencies under Section 3? 2. What are the reporting requirements for legacy contracts entered into under the old Part 135 rule'? 3. What are the reporting requirements for Section 3 projects for which assistance or funds are committed during the transition period'? 4. What is the reporting timeline for Public Housing Authorities and other recipients of public housing financial assistance'? 5. What are the reporting requirements for Public Housing Authorities and other recipients of public housing financial assistance during the transition period? 6. What are good strategies for targeting Section 3 workers and businesses? 7. Are funds provided to recipients so that they can comply with the requirements of Section 3? S. Are Section 3 workers or business concerns guaranteed employment or contracting opportunities under Section 3'? 9. Are recipients, developers, and contractors required to provide long- term employment Opportunities, and not simply seasonal or temporary employment? 10. When might a recipient agency be exempt from the quantitative reporting requirements of Section 3? 11. Are recipients required to request developers or contractors to make payments into Section 3 training or implementation funds? V. SECTION 3 CERTIFICATION: 1. How can a prospective Section 3 worker or business concern certify that they meet the eligibility requirements'? 2. What documentation must be maintained by 1-IUD recipients. contractors and subcontractors certifying that low- and very-low individuals and business concerns meet the regulatory definitions tinder Section 3? 3. What are examples of acceptable evidence to determine eligibility as a Section 3 worker'? 4. What are examples of acceptable evidence for determining eligibility as a Section 3 business concern? 5. Are all public housing residents considered Section 3 workers regardless of their income'? 6- Does qualifying as a Section 3 businesses mean that the business will be selected if it meets the technical requirements of the bid, regardless of bid price'? 7. Can contracting with MBE/WBE businesses count towards Section 3 benchmarks'? S. Does a business have to be incorporated to be considered a Section 3 eligible business'? V1. ECON0N41C OPPORTUNITIES NUMERICAL BENCHMARKS: section 3 Frequently Asked Questions 1075 I. How can low- and very low-income persons and businesses locate recipient agencies that are required to comply with Section 3 in their area? 2. How can I find Section 3 business concerns in my area? 3. Do the benchmark requirements only count toward new hires? 4. Should PI IA's report on staff hours? 5. What category of PHA Staff should be included? 6. Are recipient agencies required to meet the Section 3 benchmarks, or are they optional? 7. Will there be changes to the benchmark requirements'? S. What is considered "other" public construction'? 9. What is the meaning of the safe harbor determination? VI 1. SECTION 3 COMPLAINTS: 1. How should complaints be made? 2. Where else can I file complaints alleging denied employment and contracting opportunities'? 1. GENERAL QUESTIONS REGARDING SECTION 3: I. What is Section 3? Section 3 is a provision of the Housing and Urban Development Act of I968. The purpose of Section 3 is to ensure that employment and other economic opportunities generated by certain HUD financial assistance shall, to the greatest extent feasible, and consistent with existing Federal, State, and local laws and regulations, be directed to low- and very low-income persons, particularly those who are recipients of government assistance for housing, and to business concerns which provide economic opportunities to low- and very low-income persons. 2. What Do "Best Efforts" and "to the Greatest Extent Feasible" N7ean? "Best efforts" and "greatest extent feasible" are statutory terms, used in the statute in different contexts. As such, HUD uses both terns to track compliance, and there are many ways to interpret the language. Traditionally. HUD has used the terms interchangeably, as referenced in the statute, and will continue to be consistent with the statutory language. See 12 U.S.C. 1 701 u(b)-(d). These terms are integral to the statutory intent and provide flexibility, rather than administrative burden, to grantees or recipients of HUD funding. HUD acknowledges that some perceive "best efforts' to be the more rigorous standard, while others perceive "greatest extent feasible" to be the more rigorous standard. HUD has determined not to define the difference between these two terms but rather to increase the emphasis on outcomes as a result of these efforts. A recipient's reported results will be compared to the outconne metrics defined in the benchmark notice. HUD program staff will evaluate the level of effort expended by those recipients that fail to meet the benchmark safe harbor, and thus will ensure that the statutory terms are being properly enforced. I-IUD included a list ofexamples in the regulation at 24 CFR » 75.15 and 75.25. including engagement in outreach efforts to generate job applicants who are Targeted Section 3 section 3 Frequently Asked Questiuns i 1076 workers, providing training or apprenticeship opportunities, and providing technical assistance to help Section 3 workers compete forjobs (e.g.. resume assistance, coaching). 3. What Does "Section 3 Worker" [[Mean? A Section 3 worker is any worker who currently tits, or when hired within the past five ,years fit, at least one of the following categories, as documented: I. The worker's income for the previous or annualized calendar year is below the income limit established by I-IUD (see Question 6 ofthis part I of these FAQs, below): 2. The worker is cmployed by a Section 3 business concern (see Question 5 of part I, below): or 3. l-he worker is a YouthBuild participant. 4. What Does "Targeted Section 3 Worker" Mean? A Section 3 targeted worker for Public Housing Financial Assistance projects is a Section 3 worker who: (1) is employed by a Section 3 business concern; or (2) currently fits or when hired fit at least one of the following categories, as documented within the past five years: (i) A resident of public housing or Section S-assisted housing; (ii) A resident of other public housing projects or Section 8-assisted housing managed by the PHA that is providing the assistance, or (iii) A YouthBuild participant. A Section 3 targeted worker for Housing and Community Development Financial Assistance projects is a Section 3 worker who: (I) is employed by a Section 3 business concern: or (2) currently fits or when hired fit at least one of the following categories, as documented within the past five years- (i) Living within the service area or the neighborhood of the project, as defined in 24 CFR § 75.5: or (ii) A YouthBuild participant. 5. What Does "Section 3 Business Concern" mean? A Section 3 business concern is a business that meets at least one of the following criteria, documented within the last six-month period: 1. At least 5 1 percent owned and controlled by low- or very low-income persons: 2. Over 75 percent of the labor hours performed for the business over the prior three-month period are performed by Section 3 workers: or Section Freyuenth'Asked Questions J 1077 3. A business at least 51 percent owned and controlled by current public housing residents or residents who currently live in Section 3-assisted housing. 6. How are low-income and very low-income determined? Low- and very low-income limits are defined in Section 3(b)(2) of the Housing Act of 1937 and are determined annually by HUD. These limits are typically established at 80 percent and 50 percent of the area median individual income. HUD income limits may be obtained from: hops://wwa.huduscr.gov/portal/datasets/il.html. 7. What is Youth Build? Youth Build is a community-based pre-apprenticeship program that provides job training and educational opportunities for at-risk youth ages 16-24 who have previously dropped out of high school. YouthBuild participants learn vocational skills in construction, as well as in other in-demand industries that include health care, information technology, and hospitality. Youth also provide community service through the required construction or rehabilitation of affordable housing for low-income or homeless families in their own neighborhoods. The Division of Youth Services within the Employment and Training Administration's Office of Workforce Investment at the U.S. Department of Labor administers the YouthBuild program. Each year, more than 6.000 youth participate in approximately 210 Youth Build programs in more than 40 states. More information can be found here: hops://www.doLgov/agencies/eta/youth/vouthbuild. 8. As a funding recipient, what are my Section 3 reporting goals? Your Section 3 reporting goals depend on the type of assistance you are receiving, whether public housin(I financial assistance or housing and community development financial assistance. For public housing financial assistance, the benchmark for Section 3 workers is set at 35 percent or more of the total number of labor hours worked by all workers employed with public housing financial assistance in the PHA's or other recipient's fiscal year. The benchmark for Targeted Section 3 workers is set at 5 percent or more of the total number of labor hours worked by all workers employed with public housing financial assistance in the PHA's or other recipient's fiscal year. This means that the .i percent is included as part of the 2.5 percent threshold. For housing and community development financial assistance projects, the benchmark for Section 3 workers is set at 25 percent or more of the total number of labor hours worked by all workers on a Section 3 project. The benchmark for Targeted Section 3 workers is set at .i percent or more of the total number of labor hours worked by all workers on a Section 3 project. This means that the .i percent is included as part of the 2.5 percent threshold. 9. How does Section 3 differ from the i\1inority Business Enterprise/Women Business Enterprise programs? Section 3 is both race and gender neutral. The standards provided under this regulation are based on income-level and location. Section 3 regulations were designed to encourage recipients of HUD Section 3 Frequently.Asked Que Lions i 1078 funding to direct employment. training, and contracting opportunities to low-income individuals, and the businesses that employ these persons within their community regardless of race and/or gender. Minority Business Enterprise (MBE) means a business enterprise that is at least 51% owned and controlled by one or more minority or socially and economically disadvantaged persons. Such disadvantage may arise from cultural. racial, chronic economic circumstances or other similar causes. Women's Business Enterprise (WBE) is an independent business concern that is at least 5 1% owned and controlled by one or more women who are U.S. citizens or Legal Resident Aliens; whose business fonnation and principal place of business are in the U.S. or its territories; and whose management and daily operation is controlled by a woman with industry expertise. Section 3 standards are race and gender neutral. A minority and/or woman owned business enterprise must provide evidence that it meets at least one criterion of a Section 3 business concern outlined above in order to receive preference under Section 3. However, the Department anticipates that Section 3 will serve to support, and not impede, contract opportunities for minority business enterprises. The MBE designation may provide preferences promoted by other statutes and regulations, such as goals for MBEs and other socially and economically disadvantaged businesses. To learn more about the Minority Business Enterprise and Women Business Enterprise programs, please contact HUD's Office of Small and Disadvantaged Business Utilization at 202-708-1428, or visit their website, located at: Mips://wlvw.hud. ov/nroerun otlices/sdb. 10. What is a Section 3 project? Section 3 projects are housing rehabilitation, housing construction, and other public construction projects assisted under HUD programs that provide housing and community development financial assistance when the total amount of assistance to the project exceeds a threshold of 5200.000. The threshold is S 100.000 where the assistance is from the Lead Hazard Control and Healthy Homes programs, as authorized by Sections 501 or 502 of the Housing and Urban Development Act of' 1970 (12 U.S.C. 17017-1 or 1701z-2), the Lead-Based Paint Poisoning Prevention Act (42 U.S.0 4801 et seq.,; and/or the Residential Lead-Based Paint Hazard Reduction Act of 1992 (42 U.S.C. 4851 et seq.). (See Question 12 of this part I of these EAQs for more detail regarding Lead Hazard Control and Healthy Homes programs.) The project is the site or sites together with any building(s) and improvements located on the site(s) that are under common ownership, management, and financing. The requirements of Pan 75 apply to an entire Section 3 project, regardless of whether the project is fully or partially assisted tinder I-IUD programs that provide housing and conlnrtmity development financial assistance. 11. Who is considered a recipient of Section 3 funding? A recipient is any entity that receives directly from HUD public housing* financial assistance or housing and community development assistance that funds Section 3 projects, including, but not limited to, any State, local government, instrumentality, PHA, or other public agency. public or private nonprofit organization. It does not include contractors or any intended beneficiary under the I-IUD program to which Section 3 applies, such as a homeowner or a Section 3 worker. Section 3 rrequemh.Asked Questions M1 1079 12. What are funding thresholds and how do they apply to Section 3 covered financial assistance? Funding thresholds are minimum dollar amounts that trigger Section 3 requirements. There are no thresholds for public housing programs. The requirements of Section 3 apply to all programs receiving public housing financial assistance regardless of the amount of assistance received from HUD. Section 3 also applies to the entirety of a mixed-finance development project as described in 24 CFR 905.604, regardless of whether the project is fully or partially assisted with public housing financial assistance. Section 3 projects are housing rehabilitation, housing construction, and other public construction projects assisted under HUD programs that provide housing and community development financial assistance when the total amount of assistance to the project exceeds a threshold of S200.000 (Lead Hazard Control and Healthy Homes (LHCHH) assistance is not included in calculating whether the assistance exceeds the 5200,000 threshold)- The threshold is S 100,000 when the assistance is from the Lead Hazard Control and Healthy Homes programs, as authorized by Sections 501 or 502 of the Housing and Urban Development Act of 1970, the Lead-Based Paint Poisoning Prevention Act, and the Residential Lead-Based Paint Hazard Reduction Act of' 1992. Li-ICHH programs require Section 3 compliance if there is over 5100.000 of LI-ICI-11-1 funding for the project (neither HUD public housing financial assistance nor HUD housing and community development financial assistance is included in calculating whether the assistance exceeds the S 100,000 threshold). Recipients of LHCHH funding will also be required to comply with Section 3 regulations and report on the entirety of the project when the total amount of HUD housing and community development financial assistance to the project exceeds S200.000 (1-FICFII-1 funding is not included in calculating whether the total assistance exceeds the S200,000 threshold). or if anv public housing financial assistance is provided. 13. Which recipient agencies (or sources of HUD financial assistance) are required to comply with Section 3? For public housing financial assistance, Public Housing Authorities (PI-lAs), regardless of size or number of public housing units, are required to comply with Section 3 and its reporting requirements. However, small PHAs (fewer than 250 units) are permitted to report qualitatively as permitted under 24 CFR y 75.15(d). Some examples of those qualitative efforts are listed in the answer to Question 15. As previously stated, Section 3 also applies to projects with more than S200.000 in funding from housing and community development financial assistance programs. The following is a list of examples of such funds: • Community Development Block Grant (CDBG) • HOME Investment Partnership • Housing Trust Fund (HTF) • Neighborhood Stabilization Program Grants (NSP I, 2 S 3) • Housing Opportunities for Persons with AIDS (HOMIA) • Emergency Solutions Grants (ESG) • University Partnership Grants Section 3 Frequentis.Asked Questions 7 1080 • Economic Stimulus Funds • 202/8 1 1 Grants • Lead Hazard Control Grants (S 100.000 threshold-, see Question 12, above, in this part I of these FAQs) • Healthy Homes Production Grants ($100,000 threshold; sec Question 12. above, in this part 1) • Rental Assistance Demonstration (RAD) (see most recent RAD Notice, found through HUD's RAD website, www.hud.eov/rad/) *Note: The requirements of Section 3 typically apply to recipients of I-IUD funds that will be used for housing construction, rehabilitation, or other public construction. Contact Section' a hud.gov to determine applicability to a particular proJect/activity. 14. Can a non-profit organization be considered a business concern for the purposes of Section 37 Yes. A non-profit organization can be a business concern. Non-profit organizations must meet the criteria of a Section 3 business concern as defined at 24 CFR y 75.5 in order to receive Section 3 preference. See response to Question 5 above. 15. What is a "Service Area" or "Neighborhood of the project"'? "Service area" or the "neighborhood of the project" means an area within one mile of the Section 3 project or, if fewer than 5,000 people live within one mile of a Section 3 project, within a circle centered on the Section 3 project that is sufficient to encompass a population of 5,000 people accordinu to the most recent U.S. Census. 16. What if my agency does not meet all benchmark goals for employment or contracting' If reporting indicates that the agency has not met the Section 3 benchmarks, the agency most report in a method prescribed by MUD program offices on the qualitative nature of its activities and those its contractors and subcontractors pursued per 24 CFR § 75.15(b) and j 75.25(b). Such qualitative efforts may, for example, include but are not limited to the following: • Lngaged in outreach efforts to generate job applicants who arc Targeted Section 3 workers. • Provided training or apprenticeship opportunities. • Provided technical assistance to help Section 3 workers compete forjobs (e.g., resume assistance, coaching). • Provided or connected Section 3 workers with assistance in seeking employment including: drafting resumes, preparing for interviews, and finding job opportunities connecting residents to job placement services. • Held one or more job fairs. • Provided or referred Section 3 workers to services supporting work readiness and retention (e.g., work readiness activities, interview clothing, test fees, transportation, childcare). • Provided assistance to apply for/or attend community college, a four-year educational institution, or vocational/technical training. Section 3 Frequently Asked Questions N 1081 • Assisted Section 3 workers to obtain financial literacy training and/or coaching. • Engaged in outreach efforts to identify and secure bids from Section 3 business concerns. • Provided technical assistance to help Section 3 business concerns understand and bid on contracts. • Divided contracts into smallerjobs to facilitate participation by Section 3 business concerns. • Provided bonding assistance, guaranties, or other efforts to support viable bids from Section 3 business concerns. • Promoted use of business registries designed to create opportunities for disadvantaged and small businesses. • Outreach, engagement, or referrals with the state one-stop system as defined in Section 121(e)(2) of the Workforce Innovation and Opportunity Act 17. Nly agency has met all benchmark goals for employment and contracting, does this mean that we are considered in compliance with Section 37 Yes. Recipients will be considered to have complied with Section 3 requirements, in the absence of evidence to the contrary, if they meet all benchmark goals and certify compliance with prioritization requirements found in 24 CFR § 75.9 or §75.19. However, if subsequent HUD enforcement activities reveal that the recipient has failed to comply with the recipient responsibilities set forth at 24 CPR §75.13 or §75.23, this compliance determination may be rescinded. section 3 Frequently Asked Questions 9 1082 11. APPLICABILITY:/ 1. What HUD assistance does Section 3 apple to? Section 3 applies to both: a) Public Housing Financial Assistance— (i) Development assistance provided pursuant to Section 5 of the United States Housing Act of 1937 (the 1937 Act): (ii) Operations and management assistance provided pursuant to Section 9(c) of the 1937 Act: (iii) Development, modernization, and management assistance provided pursuant to Section 9(d) of the 1937 Act: and (iv) The entirety of a mixed-finance development project as described in 24 CFR 905.604, regardless of whether the project is fully or partially assisted with public housing financial assistance as defined in subsections (i) through (iii). b) Housing and Community Development Financial Assistance expended for housing rehabilitation, housing construction, or other public construction. See Question 92 below for applicability thresholds. 2. Do the requirements of Section 3 apply to grantees on a per project basis? Yes. for housing and community development financial assistance projects. Section 3 projects are housing rehabilitation, housing construction, and other public constriction projects assisted under HUD programs that provide hOUSnW and community development financial assistance when the total amount of assistance to the project exceeds a threshold of S200,000. The threshold is S100,000 where the assistance is from the Lead Hazard Control and Healthy Homes programs. See Question 12 of' part I of these FAQs. Section 3 applies to all public housing financial assistance funds, regardless of the amount of assistance from HUD. 3. If a project is funded with non-HUD assistance, do the requirements of Section 3 still apply? Section 3 applies to projects that are fully or partially funded with HUD financial assistance. Projects that are financed with state, local or private matching or leveraged funds used in conjunction with HUD funds are covered by Section 3 if the amount of HUD funding for the project exceeds the regulatory thresholds (listed in Section I, Question #I I). For RAD projects, Section 3 applies regardless of what money is used to pay for repairs. Per the RAD Notice. "While most RAD conversions do not utilize fimding covered by Section 3, HUD has established the alternative requirement that any Work required by the conversion after the RAD Closing that involves housing rehabilitation or housing construction is subject to the Section 3 requirements applicable to housing and community development activities as set forth in 12 U.S.C. 1701 u(c)(2) and (d)(2) and the regulations derived from such provisions except that, with the exception of transactions receiving HUD housing and community development assistance, such as CDBG (24 CFR part 570) or HOME (24 CFR part 92), first priority for employment and other economic Section 3 Frequenik.Asked Questions 10 1083 opportunities shall be given to residents ol'public housing or Section 8 assisted housing. Otherwise, the receipt of Section 8 rental assistance does not, in itself. trigger the applicability of Section 3." 4. What recordkeeping responsibilities do contractors/subcontractors have if they receive Section 3 covered contracts? Recordkeeping requirements for recipients are found at 24 CFR § 75.31. Recipients are required to maintain documentation to demonstrate compliance with the regulations and are responsible for requiring their contractors/subcontractors to maintain or provide any documentation that will assist recipients in demonstrating compliance, including documentation that shows hours worked by Section 3 workers. Targeted Section 3 workers, and any qualitative efforts to comply with Section 3. Examples of documentation can be found in 24 CFR §75.31. 5. Do the Section 3 requirements apply to material only contracts? No. Section 3 does not apply to material only contracts or those that do not require any labor. For example, a contract for office orjanitorial supplies would not be covered by Section 3. In this example, Section 3 would be encouraged but not required. However, a contract to replace windows that includes the removal of existing windows and the installation of new windows would be covered due to the involvement of labor. 6. Do the Section 3 requirements apply to Section 8 project-based rental assistance contracts? No. Section 8 project-based voucher or project-based rental assistance housing assistance payment contracts, are not covered by the statute, including properties converted through the Rental Assistance Demonstration (PAD). 7. Are maintenance projects covered by Section 3? Yes, but only for PII-1 funded programs administered by Public Housing Authorities. 8. Does the reduction and abatement of lead-based paint hazards constitute housing rehabilitation? No, reduction and abatement of lead-based paint hazards focuses on mitigating lead paint hazards only, not conducting general rehabilitation activities. 9. Are demolition projects covered by the requirements of Section 3? Yes. Recipients of assistance covered by Section 3 should, where feasible, comply with Section 3 benchmarks. Section 3 Frequent.'Asked Question% II 1094 10. Are professional service contracts required to be reported under Section 3? No, professional service contracts for non-construction services that require an advanced degree or professional licensing are not required to be reported as a part of total Section 3 labor hours. However, this exclusion does not cover all non-construction services. However, professional services staff labor hours are permitted to be reported and PHAs will be given credit for reporting opportunities created for professional services by including professional services labor hours in the numerator, and not in the denominator, of the reported outcome ratios. The reporting structure in the rule allows a recipient to count any work performed by a professional services Section 3 worker or"faracted Section 3 worker as Section 3 labor hours and as Targeted Section 3 labor hours (i.e., in the numerator of the calculation). even when the professional services as a whole are not counted in the baseline reporting (i.e., in the denominator of the calculation). The effect of this reporting structure is to give a recipient a bonus if they are able to report Section 3 hires in the professional services context. 11. Does Section 3 apple to labor hours by a CDSGEntitlement recipient? Yes. If the recipient intends to use its HUD grant to perforni housing construction, rehabilitation. or other public construction and the total FIUD assistance to the project exceeds S200,000, then Section 3 applies to the project. 12. Does Section 3 apply to labor hours by a Public Housing Authority? Yes. Section 3 applies to all Public Housing capital, operating, or development funds. Section 3 Frequently Asked Questions 12 1085 Ill. CONSISTENCY WITH OTHER LAWS: 1. Are recipients required to comply with Federal/state/local laws in addition to Section 3? Yes. Compliance with Section 3 shall be achieved, to the greatest extent feasible, consistent with existing Federal, state and local laws and regulations. Accordingly, recipients of Section 3-covered assistance are required to develop strategies for meeting both the regulatory requirements at 24 CPR part 75 and any other applicable statutes or regulations. 2. What is the relationship between Section 3 and Davis Bacon requirements? Compliance with Section 3 must be achieved consistent with the requirements of Davis-Bacon. Certain construction contracts are subject to compliance with the requirement to pay prevailing wages determined under the Davis-Bacon Act (40 U.S.C. 3141 et seq.) and implementing U.S. Department of Labor regulations in 29 CFR part 5. Additionally, certain HUD-assisted rehabilitation and maintenance activities on public housing projects are subject to compliance with the requirement to pad- prevailing wage rates. as determined or adopted by HUD. to laborers and mechanics employed in this work. (24 CPR 5 965.101). 3. What does the new rule mean for Tribes and Tribally Designated Housing Entities? After the Section 3 new rule went into effect on November 30, 2020, Tribes and Tribally Designated Housing Entities under the Indian Housing Block Grant and Indian Community Development Block Grant programs are no longer required comply with Section 3 requirements. The new rule at 24 CFR part 75 provides that contracts. subcontracts, grants, or subgrants subject to Section 7(b) of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 5307(b)) or subject to tribal preference requirements as authorized under 101(k) of the Native American Housing Assistance and Self-Determination Act (25 U.S.C. 41 1 1(k)) must provide preferences in employment, training, and business opportunities to Indians and Indian organizations, and are therefore not subject to the requirements of 24 CI'R Part 75. Section 3 Frequently Asked Questions 13 1086 IV. RECIPIENT RESPONSIBILITIES: I. What are the responsibilities of recipient agencies under Section 3? Recipients are required to ensure their own compliance and the compliance of their contractors/subcontractors with the Section 3 regulations, as outlined at 24 CFR part 75. These responsibilities include but are not limited to the following: Designing and implementing procedures to comply with the requirements of Section 3: Recipient agencies must take an active rule in ensuring Section 3 compliance. The first step is implementing procedures to ensure that all parties, including residents, bL1S111eSSCS, contractors, and subcontractors, comply with Section 3 and maintain records verifying that compliance. Facilitating the training and employment of Section 3 workers: The recipient agency must act as a facilitator, connecting Section 3 workers to training and employment opportunities. Facilitating the award of contracts to Section 3 business concerns: The recipient agency must also work to link developers and contractors with capable Section 3 business concerns. Additionally, recipient agencies, when necessary, may direct Section 3 business concerns to organizations that provide capacity-building training. Ensuring_ Contractor and Subcontractor Awareness of and Compliance with Section 3 Benchmarks and responsibilities: The recipient agency is responsible for ensuring that contractors and subcontractors are aware of', and in compliance with, Section 3 requirements. Ensuring Compliance and Meeting Numerical Benchmarks: Recipient agencies shall ensure compliance with Section 3 by assessing the hiring and subcontracting needs of contractors: re�'ularly monitoring contractor compliance; assisting and actively cooperating with the Secretary of HUD in obtaining the compliance of contractors; penalizing non-compliance;providing incentives for good performance; and refraining from entering into contracts with any contractor that previously failed to comply with the requirements of Section J. Reporting Requirements: Recipient agencies must document all actions taken to comply with the requirements of Section 3 and report these activities either through the Section 3 Performance Evaluation and Registration System (SPEARS), for Public Housing financial assistance, or any reporting system designated by program areas overseeing other funding. 2. What are the reporting requirements for legacy contracts entered into under the old Part 135 rule? On and after November 30, 2020. Section 3 regulations codified at 24 CFR Part 135 (the old rude) have not applied and will not apply to new grants, commitments, contracts, or projects. Contracts executed or projects for which assistance or funds were committed prior to November 30. 2020 are still required to adhere to the requirements of the old rule. Recipients of such assistance or funds will still be expected to maintain records of Section 3 statutory, regulatory, and contractual compliance but will no longer be required to report Section 3 compliance to HUD in SPEARS. Section t Frequently Asked Questions 14 1087 HUD does not require funding recipients to change or alter contracts that were in place prior to the new Section 3 requirements becoming effective on November 30, 2020. 3. What are the reporting requirements for Section 3 projects for which assistance or funds are committed during the transition period? Projects for which assistance or funds are committed between November 30, 2020 and July 1. 2021 are subject to the new Section 3 regulations found in 24 CFR part 75, and HUD expects that funding recipients will begin following this final rule's requirements for new grants, commitments, and contracts. Recipients will be expected to maintain records of statutory, regulatory. and contractual compliance with Section 3 for these projects but will not be required to report to HUD on the requirements found in 24 CFR pan 75. During the transition period between November 30, 2020 and July 1. 2021, recipients are expected to plan and revise processes, systems, and documents to comply with the new rule's requirements. During this time, funding recipients are still required to comply with Section 3's statutory requirements by ensuring that, to the greatest extent feasible, recipients continue to direct economic opportunities generated by certain HUD financial assistance to low- and very low-income persons and businesses that provide economic opportunities to low- and very low-income persons. Recipients and employers should use this time to update policies and procedures for tracking labor hours and other requirements to ensure compliance with the new rules for projects for which fluids are committed on or after July 1, 2021. 4. What is the reporting timeline for Public Housing Authorities and other recipients of public housing financial assistance? As of November 30, 2020, PHAs' requirement to report their Section 3 activities and efforts starts 60 days after the end of their first fiscal year that begins after July I. 2021. Please see the charts below for examples of PHA reporting schedules: Fiscal Year End New Reporting Period Begins New Reporting Period Ends 6/30/21 7/1/21 6/30/22 9/3 0/2 1 10/1/21 9/30/22 12/31/21 I/l/22 12/13/22 3/31/22 4/1/22 3/31/23 Section 3 Frequenth Asked Questions Is 1088 Section 3 Transition 11/30Rm0 7/7/M21 SO/1/2021 Ut/H722 E@2 ]/Y2@2 10/1/2072 rEl s/IRE W30FYE Reputvfg Period HE rra� First Reporting Period I12/31 franti:gn FLst Reputing Period EFYE rrar.Wnn First Pepprting Period 5. What are the reporting requirements for Public Housing Authorities and other recipients of public housing financial assistance during the transition period? All recipients of public housing financial assistance are required to follow the new Section 3 regulations found in 24 CFR part 75 beginning on November 30. 2020. and HUD expects that funding recipients and employers will begin following this final rule's requirements for new grants. commitments, and contracts on and after this date. Recipients will be expected to maintain records of' statutory, regulatory, and contractual compliance with Section 3 but will not be required to report in SPEARS on the requirements found in 24 CFR part 75 until the recipient's first full fiscal year after July 1. 2021. as indicated in Question 44 above. During the transition period between November 30, 2020 and a PHA or other recipient's required reporting start date, employers and grantees are expected to plan and revise processes, systems, and documents to comply with the new rule's requirements. During this time, PHAs and other recipients are still required to comply with Section 3's statutory requirements by ensuring that, to the greatest extent feasible, PHA's continue to direct economic opportunities generated by certain HUD financial assistance to low- and very low-income persons, tenants of public and assisted housing, and businesses that provide economic opportunities to low- and very low-income persons. 6. What are good strategies for targeting Section 3 workers and businesses? In order to successfully target Section 3 workers and businesses for employment and contracting opportunities, recipients must establish and maintain an effective Section 3 program. HUD has found that hiriru! a Section 3 coordinator or assigning one individual the responsibility of coordinating all Section 3 related activities is instrumental in reaching Section 3's employment and contracting goals. It is recommended that recipient agencies establish procedures to certify Section 3 workers and Section 3 business concerns for employment and contracting opportunities. Thereafter, they should maintain a list of eligible workers and businesses by skill, capacity or interest and contact them on a periodic basis when employment and contracting opportunities are available. Refer to the Section 3 regulations at 24 CFR § 75.I5(b) and j 75.25(b) for a listing of qualitative efforts. Section 3 Frequenllc Asked Questions 16 1089 7. Are funds provided to recipients so that they can comply with the requirements of Section 3? No. Funding has not been appropriated for Section 3 compliance. Section 3 requirements are only triggered when the normal expenditure of covered funds results in employment, training, or contracting opportunities. 8. Are Section 3 workers or business concerns guaranteed employment or contracting opportunities under Section 3? Section 3 is not an entitlement program; therefore, employment and contracts arc not guaranteed. Low- and very low-income individuals and Section 3 business concerns must be able to demonstrate that they have the ability or capacity to perform the specific job or successfully complete the contract that they are seeking. 9. Are recipients, developers, and contractors required to provide long- term employment opportunities, and not simply seasonal or temporary employment? Recipients, developers, and contractors are required, to the greatest extent feasible, to direct employment opportunities to low- and very low-income persons, including seasonal and temporary employment opportunities. Benchmark goals include the calculation of all Section 3 worker and Targeted Section 3 Worker labor hours as a percentage of all labor hours worked on a project. Recipients, developers, and contractors are encouraged to provide long-term employment to ensure that they meet the benchmark goals. 10. N'hen might a recipient agency be exempt from the quantitative reporting requirements of Section 3? A Small Public Housing Agency (less than 250 units) may elect to not report on labor hours. If the agency does elect not to report on labor hours, it is required to report solely on qualitative efforts as permitted in 24 CFR § 75.15(d). 11. Are recipients required to request developers or contractors to make payments into Section 3 training or implementation funds? No. Recipients are not required to request contractors to make payments into a fund. Section 3 Frequently Asked Questions 17 1090 V. SECTION 3 CERTIFICATION: 1. How can a prospective Section 3 worker or business concern certify that they meet the eligibility requirements? The individual or business nwst contact the agency or developer from which they are seeking employment or contracting opportunities (e.g... the PHA, city, or local government). They Should identify themselves as a Section 3 worker. Targeted Section 3 worker, or Section 3 business concern and provide whatever documentation that the recipient agency requires under their certification procedures. Prospective Section 3 workers and business concerns may self-certify that they meet the requirements as defined in the regulations. HUD recipients, contractors and subcontractors may also establish their own system to certify Section 3 workers and business concerns. 2. What documentation must be maintained by HUD recipients, subrecipients, contractors, and/or subcontractors certifying that Iow- and very-low individuals and business concerns meet the regulatory definitions under Section 3? There are many ways that a worker can be certified as either a Section 3 Worker or Targeted Section 3 Worker under 24 CFR part 75: For a worker to qualify as a Section 3 worker, one of the following must be maintained: (i) A worker's self-certification that their income is below the income limit from the prior calendar year: (i i) A worker's self-certification of participation in a means-tested program such as public housing or Section 8-assisted housing; (iii) Certification from a PHA, or the owner or property manager of project-based Section 8- assisted housing, or the administrator of tenant-based Section 8-assisted housing that the worker is a participant in one of their programs; (iv) An employer's certification that the worker's income from that employer is below the income limit when based on an employer's calculation of what the worker's wage rate would translate to if annualized on a full-time basis: or (v) An employer's certification that the worker is employed by a Section 3 business concern. (2) For a worker to qualify as a Targeted Section 3 worker, one of the following must be maintained: For Public Housing Financial Assistance projects: (i) A worker's self-certification of participation in public housing or Section 8-assisted housing programs: (i i) Certification from a PHA, or the owner or property manager of project-based Section 8- assisted housing, or the administrator of tenant-based Section 8-assisted housing that the worker is a participant in one of their programs: (iii) An employer's certification that the worker is employed by a Section 3 business concern: or (iv) A worker's certification that the worker is a YouthBuild participant. $eniun 3 Frequently Asked Questions 18 1091 For Housing and Community Development Financial Assistance projects: (i) An employer's confirmation that a worker's residence is within one mile of the work site or, if fewer than 5,000 people live within one mile of a work site, within a circle centered on the work site that is sufficient to encompass a population of 5,000 people according to the most recent U.S. Census; (ii) An employer's certification that the worker is employed by a Section 3 business concern: or (iii) A worker's self-certification that the worker is a YoUthBuild participant. The documentation must be maintained for the time period required for record retentions in accordance with applicable program regulations or, in the absence of applicable program regulations, in accordance with 2 CFR § 200.334, Retention Requirements for Records (\vww.ecfr.eov/cgi- bin/retrieveEC1=R'?n=sc2.1.200 1334), which provides for retaining records for at least three years, as described in detail in that regulation.. A PHA or recipient may report on Section 3 workers and Targeted Section 3 workers for five years from when their certification as a Section 3 worker or Targeted Section 3 worker is established. 3. What are examples of acceptable evidence to determine eligibility as a Section 3 worker? HUD does not prescribe that any specific forms of evidence to establish Section 3 eligibility. Acceptable documentation includes, but is not limited to the following: • Proof of residency in a public housing project: or • Evidence of participation in the YouthBuild program. 4. What are examples of acceptable evidence for determining eligibility as a Section 3 business concern? 1-IUD does not prescribe that any specific forms of evidence be required to establish Section 3 eligibility. The business seeking the preference must be able to demonstrate that they meet one of the following criteria: l. At least 51 percent owned and controlled by low- or very low-income persons: 2. Over 75 percent of the labor hours performed for the business over the prior three-month period are performed by Section 3 workers: or 3. A business at least 51 percent owned and controlled by current public housing residents or residents who currently live in Section 8-assisted housing. 5. Are all public housing residents considered Section 3 workers regardless of their income? No. To qualify as a Section 3 Worker, an individual must meet one 0f the following criteria: I. The worker's income for the previous or annualized calendar year is below the income limit established by HUD: 2. The worker is employed by a Section 3 business concern; or 3. The worker is a Youthl3uild participant. Section 3 Frequently Asked Queslions 19 1092 6. Does qualifying as a Section 3 businesses mean that the business will he selected if it meets the technical requirements of the bid, regardless of bid price? No. As provided in 2 CFR 200.318, contract awards shall only be made to responsible contractors possessing the ability to perform under the ternis and conditions of the proposed contract. In order to meet the requirements of Section 3 and Federal and state procurement laws, recipient agencies must develop procedures that are consistent with all applicable regulations. 7. Can contracting with MBE/'`CBE businesses count towards Section 3 benchmarks? It depends. Section 3 is race and gender neutral. Only MBEs/WBEs that meet the eligibility criteria as a Section 3 business concern set forth in the regulation can be counted towards the Section 3 labor hour calculation. 8. Does a business have to be incorporated to be considered a Section 3 eligible business? No. A Section 3 business concern can be any type of business, such as a sole proprietorship, partnership, or a corporation, properly licensed and nuctirn, all legal requirements to perform the contract under consideration. Section 3 FrequenflY Asked Questions zn 1093 VI. ECONOMIC OPPORTUNITIES NUMERICAL BENCHMARKS: 1. How can low- and very low-income persons and businesses locate recipient agencies that are required to comply with Section 3 in their area? To find local recipients' agencies, Section 3 residents or businesses should contact their local HUD office. To find your closest office, visit: www.hud.gov/IOcaIO ft Ices. 2. How can I find Section 3 business concerns in my area? Contact local recipient agencies to find Section 3 business concerns in your area. Section 3 business concerns that have registered in the Section 3 Business Registry are also available at: https://portalapps.hud.gov/Sec 3BusReg/BRecisuv/13Rel�istl��l lome. 3. Do the benchmark requirements only count toward new hires? No, the rule does not apply to only new hires, but if someone is currently on staff and qualities as a Section 3 resident under 24 CPR part 135, they will need to re-certify as either a Section 3 worker or Targeted Section 3 worker under 24 CFR part 75. 4. Should PHA's report on staff hours? Yes, but not all PHA staff qualify as Section 3 workers. Only PHA staff that meet the definition of a Section 3 worker or Targeted Section 3 worker would qualify to be counted toward total Section 3 or Targeted Section 3 labor hours. Once a PHA determines that a Section 3 worker or Targeted Section 3 worker is hired or currently employed, the PI-IA would just report those hours as the numerator over the total labor hours funded with public housing financial assistance as the denominator. 5. What category of PHA Staff should be included? Both salaried and hourly workers need to be reported. There is a limited good faith assessment exception for PHAs and other recipient employers of hourly and salaried workers that are not subject to requirements specifying time and attendance reporting and do not have systems already in place to track Tabor hours. This exception is to address employers that do not already track labor hours without making changes in time and attendance or payroll. 6. Are recipient agencies required to meet the Section 3 benchmarks, or are they optional? The Section 3 benchmarks are minimum targets that must be reached in order for the Department to consider a recipient in compliance. Recipient agencies are required to make best efforts, or to the greatest extent feasible, to achieve the benchmarks required for the number of labor hours performed by both Section 3 workers and Targeted Section 3 workers. If all agency fails to fully meet the Section 3 benchmarks, they must adequately document the efforts taken to meet the numerical goals (see Question #9 for a discussion of safe harbor.) Section 3 Frequently Asked Questions 21 1094 7. Will there be changes to the benchmark requirements? The Secretary of Housing and Urban Development is required in the Benchmark Notice published in the Federal Register to review and update the Benchmarks by Federal Register notice no less frequently than once every three years. S. What is considered "other" public construction? Other public construction includes infrastructure work. such as extending water and sewage lines. sidewalk repairs, site preparation, and installing conduits For utility services. 9. What is the meaning of the safe harbor determination? Recipients will be considered to have complied with the Section 3 requirements and mct the safe harbor, in the absence of evidence to the contrary, if they certify that they have Followed the required prioritization of effort and met or exceeded the applicable Section 3 benchmarks. If a recipient agency or contractor does not meet the benchmark requirements but can provide evidence that they have made a number of qualitative efforts to assist low- and very low-income persons with employment and training opportunities, the recipient or contractor is considered to be in compliance with Section 3, absent evidence to the contrary (i.e., evidence or findings obtained from a Section 3 compliance review). Section i Frequently Asked Questions 22 1095 V11. SECTION 3 COMPLAINTS: I. How should complaints be made? Complaints alleging failure of compliance with this part may be reported to the [IUD program office responsible for the public housing financial assistance or the Section 3 project, or to the local HUD field office. These offices can be found through the HUD website, www.hLid.eov/. 2. Where else can 1 file complaints alleging denied employment and contracting opportunities? You may be eligible to bring complaints under other federal laws. The U.S. Equal Employment Opportunity Commission (FEOC) is responsible for enforcing federal laws that make it illegal to discriminate against ajob applicant or an employee because of the person's race, color, religion, sex (including pregnancy), national origin, age (40 or older), disability or genetic information (medical history or predisposition to disease). For more information about your rights, please contact EEOC at: www.EEOC.gov. The Department of Labor Office of Federal Contract Compliance Programs (OFCCP) enforces, for the benefit ofjob seekers and wage earners, the contractual promise of affirmative action and equal employment opportunity required of those who do business with the Federal goverment. More information about the services they provide can be obtained at: littp://www.doLaov/ofcc mp/. Section 3 Frequently Asked Questium 23 1096 ATTACHMENT #2 HOME PROGRAM REHABILITATION STANDARDS COMMUNITY DEVELOPMENT DEPARTMENT DECEMBER 2021 1097 Table Of Contents Introduction .................................................................................................................................3 Purposeof Standards............................................................................................................... a Principal Regulations Governing Home Administrative Systems................................ 5 Workmanship.............................................................................................................................. 7 Materials & Equipment ............................................................................................................. 8 Energy Efficiency, Water Conservation & Recycled Materials...................................... 8 Health & Safety........................................................................................................................... 8 Repair / Replacement Standard of Major Systems........................................................... 9 LeadBased Paint....................................................................................................................... 9 Accessibility.............................................................................................................................. 10 DisasterMitigation................................................................................................................... 10 State and Local Code Compliance...................................................................................... 10 PropertyInspection................................................................................................................. I I Capital Needs Assessment ................................................................................................... I I Rehabilitation Construction Standards ............................................................................. 12 Attachment A: Federal Register ...................................................................................... 1 Attachment B: UPCS for Multi-Family Housing Checklist................................................ 1 Attachment C: UPCS for Single-Family Housing Checklist ............................................. 1 21Pag, c 1098 INTRODUCTION The City of Huntington Beach (City) is responsible for ensuring that housing assisted with HOME Investment Partnerships (HOME) funds comports with the City's written rehabilitation standards ("Rehab Standards") in connection with the City's property standards. The following protocol will provide guidance and procedures that the City has established for determining the scope of work, and the materials and methods required to inspect a project. At project completion, the useful life for each major system will be 15 and 5 years for, respectively, rental and owner-occupied units, and that, minimally, each unit would pass an inspection that addresses all of the inspectable items listed in the Federal Register notice setting forth the Physical Condition Scoring Process under HUD's Uniform Physical Condition Standards (UPCS) for public housing published pursuant to 24 CFR 5.705 [see Attachment A: Federal Register, Volume 77, Number 154, Public Housing Assessment System (PHAS): Physical Condition Scoring Notice and Revised Dictionary and Deficiency Definitions Notice.] Please note: Regardless of the standards set forth herein, all housing assisted by HOME monies must meet all applicable State and local codes, ordinances and requirements, as well as such other requirements HUD may establish. In the absence of State or local building codes, the housing must meet the International Existing Building Code or the International Code Council. Chief requirements for written HOME Standards are as follows: ► The City must establish and comply with its rehabilitation standards, which include requirements of applicable state and local codes. ► The City must establish written standards for methods and materials (which must address health and safety, habitability and functionality, useful life of major systems, lead-based paint, accessibility, disaster mitigation, and other improvements), work write-ups and cost estimates, and property inspection procedures to ensure that, at a minimum, all units pass an inspection that addresses all of the inspectable items under HUD's Uniform Physical Condition Standards (UPCS) notice, frequency of inspections; and payment schedule. ► A capital needs assessment is required for all multifamily rental projects of 26 or more total units. Discretionary housing improvements beyond those required to meet property standards may include modest amenities and aesthetic features, but not luxury improvements. 3111 1099 PURPOSE OF STANDARDS The HOME Investment Partnerships Program Written Rehabilitation Standards (known herein as the "Rehab Standards") are designed to outline the requirements for building rehabilitation for all HOME-funded multi-family and single-family housing projects in the City. The Rehab Standards, though a requirement specifically to the development entity in direct receipt of HOME funding, are written to provide guidance to all relevant members of a project development team. The goal of the HOME Program is to provide functional, safe, affordable and durable housing that meets the needs of the tenants and communities in which the housing is located. The purpose of the Rehab Standards is to ensure that property rehabilitation puts each building in the best possible position to meet this goal over its extended life and that, at a minimum, all health and safety deficiencies are addressed. If a project is out of compliance with the Rehab Standards, the developer/contractor shall bring to the attention of City staff the specific portion of the project which does not comply, stating the reasons for non-compliance. The Community Development Director or his/her designee will make a determination as to whether an exception or waiver to the Rehab Standards shall be granted. Note: At the time of publication and adoption of the Rehab Standards, the adopted codes referenced are believed to be those in force. As standards and codes change and are put into effect by the governing authorities having jurisdiction, the new standards and codes will apply in lieu of those referenced. These Rehab Standards provide three major types of information: • The identified hazardous and substandard conditions that must be corrected on a property receiving comprehensive housing rehabilitation; • The standard that each component of the property must achieve through assistance under the program; and • The minimum life expectancies for components addressed with the rehabilitation assistance. All work undertaken must meet or exceed applicable standards and all local codes. Where required, work must obtain a permit, associated inspections and approvals. Exceptions are not permitted for any hazardous condition. Variances from the standard are permitted upon documentation of the condition, and explanation of mitigating measures or circumstances, and authorization by Huntington Beach City staff. 4 1 P 1100 PRINCIPAL REGULATIONS GOVERNING HOME ADMINISTRATIVE SYSTEMS This attachment to the City's Affordable Housing Program Underwriting & Subsidy Layering Guidelines is prepared to establish protocols for fulfilling property standards requirements set forth under 24 CFR 92.251(b) for HOME activities restated as follows: (b) Rehabilitation projects. All rehabilitation that is performed using HOME funds must meet the requirements of this paragraph (b). (1 ) Rehabilitation standards. The participating jurisdiction must establish rehabilitation standards for all HOME-assisted housing rehabilitation activities that set forth the requirements that the housing must meet upon project completion. The participating jurisdiction's description of its standards must be in sufficient detail to determine the required rehabilitation work including methods and materials. The standards may refer to applicable codes or they may establish requirements that exceed the minimum requirements of the codes. The rehabilitation standards must address each of the following: (i) Health and safety. The participating jurisdiction's standards must identify life-threatening deficiencies that must be addressed immediately if the housing is occupied. (ii) Major systems. Major systems are: structural support; roofing; cladding and weatherproofing (e.g., windows, doors, siding, gutters); plumbing; electrical; and heating, ventilation, and air conditioning. For rental housing, the participating jurisdiction's standards must require the participating jurisdiction to estimate (based on age and condition) the remaining useful life of these systems, upon project completion of each major systems. For multifamily housing projects of 26 units or more, the participating jurisdiction's standards must require the participating jurisdiction to determine the useful life of major systems through a capital needs assessment of the project. For rental housing, if the remaining useful life of one or more major system is less than the applicable period of affordability, the participating jurisdiction's standards must require the participating jurisdiction to ensure that a replacement reserve is established, and monthly payments are made to the reserve that are adequate to repair or replace the systems as needed. For homeownership housing, the participating jurisdiction's standards must require, upon project completion, each of the major systems to have a remaining useful life for a minimum of 5 years or for such longer period specified by the participating jurisdiction, or the major systems must be rehabilitated or replaced as part of the rehabilitation work. (iii) Lead-based paint. The participating jurisdiction's standards must require the housing to meet the lead-based paint requirements at 24 CFR part 35. 5111 1101 (iv) Accessibility. The participating jurisdiction's standards must require the housing to meet the accessibility requirements in 24 CFR part 8, which implements Section 504 of the Rehabilitation Act of 1973 ( 29 U.S.C. 794). and Titles II and III of the Americans with Disabilities Act ( 42 U.S.C. 12131- 12189) implemented at 28 CFR parts 35 and 36, as applicable. Covered multifamily dwellings, as defined at 24 CFR 100.201 , must also meet the design and construction requirements at 24 CFR 100.205, which implements the Fair Housing Act ( 42 U.S.C. 3601- 3619). Rehabilitation may include improvements that are not required by regulation or statute that permit use by a person with disabilities. (v) [Reserved] (vi) Disaster mitigation. Where relevant, the participating jurisdiction's standards must require the housing to be improved to mitigate the impact of potential disasters (e.g., earthquake, hurricanes, flooding, and wildfires) in accordance with State and local codes, ordinances, and requirements. (vii) State and local codes, ordinances, and zoning requirements. The participating jurisdiction's standards must require the housing to meet all applicable State and local codes, ordinances, and requirements or, in the absence of a State or local building code, the International Existing Building Code of the International Code Council. (viii) Uniform Physical Condition Standards. The standards of the participating jurisdiction must be such that, upon completion, the HOME- assisted project and units will be decent, safe, sanitary, and in good repair as described in 24 CFR 5.703. HUD will establish the minimum deficiencies that must be corrected under the participating jurisdiction's rehabilitation standards based on inspectable items and inspected areas from HUD- prescribed physical inspection procedures (Uniform Physical Conditions Standards) pursuant to 24 CFR 5.705. (ix) Capital Needs Assessments. For multifamily rental housing projects of 26 or more total units, the participating jurisdiction must determine all work that will be performed in the rehabilitation of the housing and the long- term physical needs of the project through a capital needs assessment of the project. (x) Broadband infrastructure. For new commitments made after January 19, 2017 for a substantial rehabilitation project of a building with more than 4 rental units, any substantial rehabilitation, as defined in 24 CFR 5.100, must provide for installation of broadband infrastructure, as this term is also defined in 24 CFR 5.100, except where the participating jurisdiction b, 1Pa-, c 1102 determines and, in accordance with § 92.508(a)(3)(iv), documents the determination that: (A) The location of the substantial rehabilitation makes installation of broadband infrastructure infeasible; (B) The cost of installing broadband infrastructure would result in a fundamental alteration in the nature of its program or activity or in an undue financial burden; or (C) The structure of the housing to be substantially rehabilitated makes installation of broadband infrastructure infeasible. (2) Construction documents and cost estimates. The participating jurisdiction must ensure that the work to be undertaken will meet the participating jurisdiction's rehabilitation standards. The construction documents (i.e., written scope of work to be performed) must be in sufficient detail to establish the basis for a uniform inspection of the housing to determine compliance with the participating jurisdiction's standards. The participating jurisdiction must review and approve a written cost estimate for rehabilitation after determining that costs are reasonable. (3) Frequency of inspections. The participating jurisdiction must conduct an initial property inspection to identify the deficiencies that must be addressed. The participating jurisdiction must conduct progress and final inspections to determine that work was done in accordance with work write-ups. WORKMANSHIP • All work shall be performed in a professional, thorough, and workmanlike manner in accordance with industry practice and contractually agreed upon plans and specifications as well as subsequent mutually agreed upon change orders during the construction process. Developers and contractors will employ best practice industry standards relating to quality assurance to verify all work completed. • The quality and durability of the work shall meet or exceed the standards established by the construction industry and various trades. • By meeting the various code requirements as a minimum standard, together with the other standards herein or in attendant City policies, each building rehabilitation project is assured to be brought up to an acceptable level of rehabilitation. • Warranties shall be required per the standard construction contracts on all materials, equipment and workmanship. 7 1 P _ 1103 MATERIALS & EQUIPMENT • All materials and equipment shall comply with and be installed in accordance with the manufacturer's requirements and all applicable codes, standards, ordinances and regulations. If a discrepancy occurs between the requirements, the more stringent shall prevail. • Unless otherwise specified, all materials and equipment shall be of medium grade. • Economy grade materials and equipment are unacceptable. • All materials and equipment shall be new, in excellent condition, and delivered to the job in the manufacturer's original packaging. • The description of materials and equipment found in this document establish a minimum standard. • Discretionary property improvements beyond those required to meet property standards include modest amenities and aesthetic features that are in keeping with housing of similar type in the community and must avoid luxury improvements, e.g., airjet tubs, saunas, outdoor spas, and granite countertops (reference 24 CFR 92.251(b)(2)(viii)). ENERGY EFFICIENCY, WATER CONSERVATION & RECYCLED MATERIALS To the extent possible and practical, standard measures related to energy conservation, energy efficiency, water conservation and the use of recycled materials have been incorporated herein. Comprehensive rehabilitation of residential buildings up to three stories will be designed to meet the standard for ENERGY STAR Multifamily New Construction Program. HEALTH AND SAFETY If the housing is occupied at the time of rehabilitation, any life-threatening deficiencies must be identified and addressed immediately. See Attachment B: Uniform Physical Condition Standards for Multi-Family Housing Checklist, including the identification of life- threatening deficiencies in red for the property site, building exterior, building systems, common areas, and units. 1104 REPAIR I REPLACEMENT STANDARD OF MAJOR SYSTEMS • Owner-Occupied Housing. Each major system [structural support, roofing, cladding, and weatherproofing (e.g., windows, doors, siding, gutters), plumbing, electrical and heating, ventilation, air conditioning] is to have a required remaining useful life of at least five (5) years at the time the project is completed; major systems with a useful life of less than five (5) years after project completion must be rehabilitated or replaced as part of the rehabilitation activity to meet this requirement. • Rental Properties. The remaining useful life for each major system [structural support, roofing, cladding, and weatherproofing (e.g., windows, doors, siding, gutters), plumbing, electrical and heating, ventilation, air conditioning] of rental housing will be, minimally, fifteen (15) years after project completion for rental properties, or the major system must be rehabilitated or replaced to have a minimum useful life of fifteen (15) years. LEAD BASED PAINT • All housing built before 1978 must comply with 24 CFR Part 35 Subpart J and HUD's Lead Safe Housing Rule regarding the evaluation and control of lead-based paint hazards. HUD's regulations and guidelines are available at: https://www.hudexchange.info/programs/lead-based-paint/ . • All housing built before 1978 must comply with the EPA's Renovation, Repair, and Painting Rule, EPA's Lead Renovation, Repair, and Painting Rule (RRP) requires that firms performing renovation, repair and painting projects that disturb lead- based paint in homes, childcare facilities and pre-schools built before 1978 be certified by EPA, use certified renovators who are trained by EPA-approved training providers, and follow lead-safe work practices. The EPA's requirements are available at https://www.epa.gov/lead/lead-renovation-repair-and-painting- program. • When stabilization of surfaces containing LBP is impractical, the most affordable solution for abatement of the component will be chosen. Walls containing LBP may be covered with drywall or gutted and replaced with drywall. Trim and other wood or metal components containing LBP may be removed and replaced with similar materials. Lead-safe work practices must be followed, and only certified abatement contractors used to perform the work. 9ll' a = c 1105 ACCESSIBILITY The housing must meet the accessibility requirements in 24 CFR part 8, which implements Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794). Covered multifamily dwellings, as defined at 24 CFR 100.201, must also meet the design and construction requirements at 24 CFR 100.205, which implements the Fair Housing Act (42 U.S.C. 3601-3619). In sum: • Substantial Alterations—For substantial alterations (75 percent of replacement cost) of multifamily rental housing with 15 or more units a minimum of five percent of the dwelling units in the project (but not less than one unit) must be made accessible to individuals with mobility impairments, and an additional two percent at a minimum (but not less than one unit), must be accessible to individuals with sensory (hearing and vision) impairments. (See 24 CFR 8.22.) • Other Alterations—In multifamily rental housing projects of any size, all alterations must, to the maximum extent feasible, make the dwelling units accessible to and usable by individuals with disabilities, until a minimum of five percent of the dwelling units (but not less than one unit) are accessible to people with mobility impairments. Alterations to common spaces must, to the maximum extent feasible, make those areas accessible. (A recipient is not required to make an element accessible, if doing so would impose undue financial and administrative burden on the operation of the multifamily housing project (24 CFR 8.23(b)). DISASTER MITIGATION To the extent applicable/relevant, the housing must be improved to mitigate the impact of potential disasters (e.g., earthquakes, floods, wildfires) in accordance with State and local codes, ordinances, and requirements, or such other requirements that HUD may establish. STATE AND LOCAL CODE COMPLIANCE All work shall comply with all applicable California State and local codes, ordinances, and zoning requirements. The developer/contractor must demonstrate compliance with all State and local codes through project affiliation with professional design team drawing certifications (e.g., architectural design stamp) and/or other approved methods such as State inspector certification. The Rehab Standards are designed to meet or exceed the Uniform Physical Condition Standards (UPCS) and ensure that upon completion, the HOME-assisted project and units will be decent, safe, sanitary, and in good repair as described in 24 CFR 5.703. 1106 PROPERTY INSPECTION The City will inspect the property and prepare a work write-up for the project that describes the work needed to bring the project up to the City's Rehab Standards. The City will implement written construction progress inspection procedures (e.g., a description of how and by whom the inspections will be carried out) and detailed inspection checklists reflecting all aspects of the property standards. Upon project completion, all units are to pass an inspection that addresses all of the inspectable items included in HUD's Uniform Physical Condition Standards (refer to Attachment B: Uniform Physical Condition Standards for Multi-Family Housing Checklist and Attachment C: Uniform Physical Condition Standards for Single-Family Housing Checklist. CAPITAL NEEDS ASSESSMENT A CNA, prepared no longer than 18 months prior to the date of project approval, is required for all multi-family rental rehabilitation or acquisition/rehabilitation projects of 26 or more units, and for all projects in conjunction with Affordable Housing Tax Credits, regardless of the number of units. A CNA may be requested by the City of Huntington Beach for smaller projects if deemed necessary to properly underwrite the projects. Capital needs assessments performed for the same Project as a requirement of another funding source will be accepted in lieu of a specific CNA for the HOME project. Capital Needs Assessment (CNA) means a qualified professional's opinion of a property's current physical condition determined after a physical inspection of the interior and exterior of the units and structures. The physical inspection should include an interview with the onsite manager and maintenance personnel. This assessment should identify deferred maintenance, physical needs, remaining useful life, material building code violations that affect the property use, structural and mechanical integrity, and the future physical and financial needs. The assessment must include the cost of labor and materials identified in detail and the extent of future expenditures contemplated to ensure the costs will be addressed through operating and replacement reserves. Components which should be examined and analyzed in this assessment include but are not limited to: • Site, including topography, drainage, pavement, curbing, sidewalks, parking, landscaping, amenities, water, sewer, storm drainage, gas and electric utility lines. • Structural systems, both substructure and superstructure, including exterior walls and balconies, exterior doors and windows, roofing system and drainage. • Interiors, including unit and common area finishes (carpeting, vinyl or tile flooring, plaster walls, paint condition, etc.), unit kitchen finishes, cabinets and appliances, unit bathroom finishes and fixtures, and common area lobbies and corridors; and 1107 • Mechanical systems, including plumbing and domestic hot water, HVAC, electrical, lighting fixtures, fire protection, and elevators. REHABILITATION CONSTRUCTION STANDARDS ASBESTOS Minimum ✓ Non-friable intact Asbestos materials that are not creating a Standard hazard such as cementitious exterior wall shingles may be left intact and painted if appropriate. Asbestos-resilient floor tiles may be labeled as such and covered with underlayment and new resilient flooring. ✓ Friable asbestos components such as boiler or pipe insulation, badly deteriorated cementitious shingles or deteriorated flooring will be removed and, if necessary, replaced with non- hazardous materials. MOLD Minimum ✓ Any presence of mold is unacceptable and must be addressed Standard per the National Center for Healthy Housing guidelines in their Healthy Homes Issues: Mold publication (November 2011 ) https://nchh.org/resource-library/hud healthy- homes issues mold v4.pdf and pursuant to California Senate Bill No. 655 Housing Standards: Mold found at https://Ieginfo.legislature.ca.gov/faces/biIINavClient.xhtmI?bill id =201520160SB655 . ✓ All carpeting, drywall or other gypsum-based wall coverings or any other non-structural components with mold present will be removed and replaced. The National Center for Healthy Housing guidelines Healthy Homes Issues: Mold will be followed for remediation of structural components. 121 r : 1108 SITE Minimum ✓ All paving, landscaping and fencing shall be hazard-free. The Standard site shall be clean and free of debris, garbage, or other accumulations of site-stored items that create possibilities of pest infestation. ✓ All exterior property and premises must be maintained in a clean, safe, and sanitary condition. ✓ Replacement landscaping and grading must direct water away from structures. Paving ✓ All damaged or deteriorated paving shall be replaced or repaired (Driveways, as long as compliance with the minimum standard will be Patio Slabs, achieved. Walkways) ✓ All trip hazards shall be corrected. ✓ All new paving and walkways shall be constructed with concrete (2,000 pounds per inch or PSI @ 28 days). ✓ Driveways shall be placed a minimum of 4'/z inches thick and reinforced with wire mesh. Sawn expansion-contraction joints shall be placed every 8 feet in both directions. ✓ All paving and walkways shall be finished with a light broom texture. ✓ All patio slabs and walkways shall be placed a minimum of 3'/z inches thick and reinforced with wire mesh. Patio slabs shall have expansion-contraction joints shall be placed every 8 feet in both directions. ✓ Walkways shall have expansion-contraction joints placed every 4 feet. Landscaping & ✓ All dead landscaping shall be removed. All landscaping that is Irrigation damaging or could potentially damage the dwelling and/or accessories structures shall be removed. ✓ New irrigation controllers shall be weather, or sensor based and EPA Water-Sense qualified. ✓ All new irrigation systems shall be designed to minimize overspray onto non-landscaped surfaces. Fences, Walls & ✓ All damaged or deteriorated fences shall be replaced or repaired Gates as long as compliance with the minimum standard will be achieved. ✓ All new fences shall be constructed with 1 x 6 cedar boards or recycled materials. ✓ All new walls shall be constructed with 6x8x16 concrete block. Trash & Debris ✓ All trash and debris shall be removed. Materials that are hazardous (e.g., oil, old paint, cleaning products) shall be disposed of properly. . 131P :, ; 1109 PORCHES, STEPS, BALCONIES $ RAILING Minimum ✓ Safe and structurally sound. Standard Rehabilitation ✓ Porches, steps, balconies and railing that do not meet the minimum standard shall be replaced or repaired as long as the cost of the repair is practical and compliance with the minimum standard will be achieved. Concrete ✓ 2,000 PSI (minimum). Finishes ✓ Zero or low VOC primers, paint, and coatings. FOUNDATIONS Minimum ✓ Safe and structurally sound. Standard Rehabilitation ✓ Foundations that do not meet the minimum standard shall be replaced or repaired as long as the cost of the repair is practical and compliance with the minimum standard will be achieved ✓ If the project involves a gut rehab, raised foundations shall be completely insulated. Concrete ✓ 3,000 PSI (minimum). EXTERIOR WALLS Minimum ✓ Safe, structurally sound and weather tight. Standard Rehabilitation ✓ Exterior walls that do not meet the minimum standard shall be replaced or repaired as long as the cost of the repair is practical and compliance with the minimum standard will be achieved. ✓ Seal all joints. ✓ If the project involves a gut rehab, all exterior walls shall be insulated. EXTERIOR DOORS Minimum ✓ Safe, sound, weather-tight and in good working order. Standard Rehabilitation ✓ Exterior doors that do not meet the minimum standard shall be replaced or repaired as long as the cost of the repair is practical and compliance with the minimum standard will be achieved. New Doors ✓ EPA Energy Star qualified, zero or low VOC finish. New Hardware ✓ Reputable manufacturer, lifetime finish. GARAGE DOORS Minimum ✓ Safe, sound and in good working order. Standard ✓ Five or more years of practical utility. Rehabilitation ✓ Garage doors that do not meet the minimum standard shall be replaced or repaired as long as the cost of the repair is practical and compliance with the minimum standard will be achieved. 141Pa -, c 1110 WINDOWS Minimum ✓ Safe, sound, weather-tight and in good working order. Standard Rehabilitation ✓ Windows that do not meet the minimum standard shall be replaced or repaired as long as the cost of the repair is practical and compliance with the minimum standard will be achieved. New Windows ✓ Reputable manufacturer. ✓ EPA Energy . tar qualified. EXTERIOR PAINT Minimum ✓ Homes built before 1978 must comply with 24 CFR Part 35 Standard Subpart J and HUD's Lead Safe Housing Rule regarding the evaluation and control of lead-based paint hazards. ✓ All exterior paint shall be intact and corrosion free. Rehabilitation ✓ All surfaces to be painted shall be prepared properly. All loose material and peeling paint shall be removed. ✓ All holes and cracks shall be filled and finished so that they blend into the surrounding area. ✓ All stucco surfaces to be painted shall receive a complete and even coverage of stucco paint. ✓ All wood surfaces to be painted shall receive a complete and even coverage of flat exterior paint. ✓ Poor workmanship will not be tolerated. New Paint ✓ Reputable manufacturer. ✓ Medium to high grade. ✓ Zero or low VOC paint, caulking and fillers. WALLS, FLOORS AND CEILINGS Minimum ✓ Safe and structurally sound. Standard ✓ All plaster, drywall and paneling shall be safe and intact. Rehabilitation ✓ Walls, floors and ceilings that do not meet the minimum standard shall be replaced or repaired as long as the cost of the repair is practical and compliance with the minimum standard will be achieved. ✓ If the project involves a gut rehab, the attic, walls and floor on raised foundations shall be insulated. FLOOR COVERINGS Minimum ✓ Safe, sound and sanitary Standard Rehabilitation ✓ Floor coverings that do not meet the minimum standard shall be replaced or repaired as long as the cost of the repair is practical and compliance with the minimum standard will be achieved. nii Replacement ✓ Carpet & Pad (Reputable manufacturer, recycled materials). Floor Coverings ✓ Resilient Flooring (Reputable manufacturer, at least 10-year wear warranty). ✓ Ceramic Tile (Reputable manufacturer INTERIOR DOORS Minimum ✓ Safe, sound and in good working order. Standard ✓ Five or more years of practical utility. Rehabilitation ✓ Interior doors that do not meet the minimum standard shall be replaced or repaired as long as the cost of the repair is practical and compliance with the minimum standard will be achieved. Replacement ✓ Doors (Reputable manufacturer, Masonite, raised panel) Doors & ✓ Hardware (Reputable manufacturer, lifetime finish). Hardware INTERIOR PAINT Minimum ✓ Homes built before 1978 must comply with 24 CFR Part 35 Standard Subpart J and HUD's Lead Safe Housing Rule regarding the evaluation and control of lead-based paint hazards. ✓ All interior paint shall be intact, corrosion-free and sanitary. Rehabilitation ✓ All surfaces to be painted shall be prepared properly. All loose material and peeling paint shall be removed. ✓ All holes and cracks shall be filled and finished so that they blend into the surrounding area. ✓ All surfaces to be painted shall receive a complete and even coverage of flat paint (semi-gloss in kitchens, bathrooms, and laundry rooms). ✓ Poor workmanship will not be tolerated. New Paint ✓ Reputable manufacturer ✓ Medium to high grade. ✓ Zero or low VOC paint, caulking and fillers. KITCHEN CABINETS & COUNTERTOPS Minimum ✓ Cabinets shall be safe, sound, sanitary and in good working Standard order. ✓ Countertops shall be safe, sound, sanitary and waterti ht. Rehabilitation ✓ Cabinets and countertops that do not meet the minimum standard shall be replaced or repaired as long as the cost of the repair is practical and compliance with the minimum standard will be achieved. Replacement ✓ Reputable manufacturer Cabinets ✓ Solid hardwood face-frames, doorframes and drawer fronts. ✓ Metal and nylon drawer guides. ✓ Low or zero VOC adhesives and finishes. 161Page 1112 Replacement ✓ Reputable manufacturer Countertops ✓ 4" ceramic tile, 6" backsplash, bull-nose edge or similar as approved by City staff. KITCHEN FIXTURES, EQUIPMENT & APPLIANCES Minimum ✓ Safe, sound, sanitary and in good working order. Standard ✓ Faucets shall (at a minimum) be equipped with a low-flow aerator. Rehabilitation ✓ Kitchen fixtures, equipment and appliances that do not meet the minimum standard shall be replaced or repaired as long as the cost of the repair is practical and compliance with the minimum standard will be achieved. Replacement ✓ Reputable manufacturer Sinks ✓ 18 ua e minimum stainless steel. Replacement ✓ EPA Water-Sense qualified. Faucets ✓ Reputable manufacturer ✓ Brass construction, metal housing. Replacement ✓ Reputable manufacturer Disposals ✓ 'h HP motor (minimum). ✓ Stainless steel swivel lugs. Replacement ✓ EPA Energy Star qualified. Dishwashers ✓ Reputable manufacturer. Replacement ✓ EPA Energy Star qualified. Range Hoods ✓ Reputable manufacturer. Replacement ✓ Reputable manufacturer Ranges ✓ Pilot-free ignition. ✓ Four sealed burners. ✓ Self-cleaning oven with timer. Replacement ✓ Reputable manufacturer Cook Tops ✓ Pilot-free ignition. ✓ Four sealed burners. Wall Ovens ✓ Reputable manufacturer ✓ Pilot-free ignition. ✓ Self-cleaning oven with timer. BATHROOM FIXTURES & EQUIPMENT Minimum ✓ Safe, sound, sanitary and in good working order. Standard ✓ Faucets shall (at a minimum) be equipped with a low-flow aerator. ✓ Showerheads shall (at a minimum) be equipped with low-flow aerator. ✓ Five or more years of practical utility. nli) :1 1113 Rehabilitation ✓ Bathroom fixtures and equipment that do not meet the minimum standard shall be replaced or repaired as long as the cost of the repair is practical and compliance with the minimum standard will be achieved. ✓ Toilets that require more than 1.6 gallons per flush (GPF) shall be replaced regardless of their condition. Replacement ✓ Reputable manufacturer Sinks ✓ Cast iron, white enamel finish. Replacement ✓ EPA Water-Sense qualified. Faucets ✓ Reputable manufacturer ✓ Brass construction, metal housing. Replacement ✓ Reputable manufacturer Toilets ✓ EPA Water-Sense qualified 1 .28 GPF Replacement ✓ Reputable manufacturer Tubs ✓ Cast iron body, white enamel finish, slip resistant bottom. ✓ EPA Water-Sense ualified plumbing fixtures. Replacement ✓ Reputable manufacturer Combination ✓ Cast iron body, white enamel finish, slip resistant bottom. Tub-Showers ✓ 4" ceramic tile surround. ✓ Anodized aluminum doors with tempered glass. ✓ EPA Water-Sense qualified plumbing fixtures. Replacement ✓ Reputable manufacturer Showers ✓ 4" ceramic tile. ✓ Anodized aluminum doors with tempered glass. ✓ EPA Water-Sense qualified plumbing fixtures. Replacement ✓ Reputable manufacturer Medicine ✓ Steel body, beveled mirror door. Cabinets Grab Bars ✓ Solid backing, rated at 250 Ibs minimum. Towel Bars & ✓ Reputable manufacturer Toilet Paper ✓ Metal construction, polished chrome finish. Holders WATER SUPPLY, WASTE & VENT PIPING Minimum ✓ Safe, sound and leak-free. Standard Rehabilitation ✓ Water-supply, waste and vent piping that does not meet the minimum standard shall be replaced or repaired as long as the cost of the repair is practical and compliance with the minimum standard will be achieved. Replacement ✓ Copper, type "L". Water Supply Piping Replacement ✓ Schedule 40 ABS. Waste & Vent Piping 1114 WATER HEATERS Minimum ✓ Safe, sound and in good working order. Standard ✓ Five or more years of practical utility. Rehabilitation ✓ Water heaters that do not meet the minimum standard shall be replaced or repaired as long as the cost of the repair is practical and compliance with the minimum standard will be achieved. Replacement ✓ Reputable manufacturer. Water Heaters ✓ EPA Energy Star qualified. Tank ✓ 40- allon insulated tank. Replacement ✓ Reputable manufacturer. Water Heater ✓ EPA Energy Star qualified. Tank-Less ELECTRICAL SERVICE AND WIRING Minimum ✓ Safe, sound and in good working order. Standard ✓ 100-am ere minimum service. Rehabilitation ✓ Electrical service panels, breakers and wiring that do not meet the minimum standard shall be replaced or repaired as long as the cost of the repair is practical and compliance with the minimum standard will be achieved. ✓ Knob and tube wiring shall be replaced regardless of its condition. ✓ Overhead wiring from a dwelling to a detached garage or accessory building shall be installed underground regardless of its condition. Replacement ✓ Reputable manufacturer. Service ✓ 100-am ere (minimum). Replacement ✓ Romex (NM cable). Wiring ELECTRICAL SWITCHES, OUTLETS & LIGHTING FIXTURES Minimum ✓ Safe, sound and in good working order. Standard ✓ Light fixtures shall (at a minimum) be equipped with CFL bulbs. ✓ Exterior lighting fixtures used for security shall be equipped with a motion sensor. Rehabilitation ✓ Electrical switches, outlets and lighting fixtures that do not meet the minimum standard shall be replaced or repaired as long as the cost of the repair is practical and compliance with the minimum standard will be achieved. ✓ Outlets located within 6 feet of a source of water shall be ground fault protected. ✓ Exterior switches and outlets shall be weatherproof. Replacement ✓ U.L. approved. Switches & Outlets 19111 1115 Replacement ✓ Reputable manufacturer. Lighting Fixtures ✓ U.L. approved and EPA Energy Star qualified. HVAC Minimum ✓ Safe, sound and in good working order. Standard ✓ Five or more years of practical utility for homeowner housing, and 15 years for rental housing. Rehabilitation ✓ HVAC that does not meet the minimum standard shall be replaced or repaired as long as the cost of the repair is practical and compliance with the minimum standard will be achieved. ✓ Tune-up all HVAC equipment (as a minimum). ✓ Seal all ducts (as a minimum). ✓ All new HVAC equipment shall be sized properly. Furnaces ✓ Reputable manufacturer. ✓ EPA EnergyStar qualified. Central Air ✓ Reputable manufacturer. Conditioners ✓ EPA Energy Star qualified. Thermostats ✓ Reputable manufacturer. ✓ EPA Energy Star qualified. ✓ Programmable. NON-PERMITTED ADDITIONS AND CONVERSIONS Minimum ✓ Additions and alterations that were constructed without a Standard building permit and are clearly substandard shall be removed. ✓ Additions and alterations that were constructed without a building permit, but appear to be compliant, shall be inspected by the City's Building Official to determine if a building permit can be issued and they can be saved. ,a l P 1116 ATTACHMENT A Federal Register, Volume 77, Number 154 Public Housing Assessment Systems (PHAS): Physical Conditions Scoring Notice and Revised Dictionary and Deficiency Definition Notice 1117 D RECp�,oJ' z 19 y Lam/ �y FEDERAL REGISTER Vol. 77 Thursday, No. 154 August 9, 2012 Part II Department of Housing and Urban Development Public Housing Assessment System (PHAS): Physical Condition Scoring Notice and Revised Dictionary of Deficiency Definitions; Notice Ills 47708 Federal Register/Vol. 77, No. 154/Thursday, August 9, 2012/Notices DEPARTMENT OF HOUSING AND toll-free number). persons with hearing responses to public comments, is the URBAN DEVELOPMENT or speech impairments may access this same as the proposed notice published (Docket No.FR-5526-N-02] number through'17Y by calling the toll- for comment on October 13, 2011 (76 FR free Federal Relay Service at 800-877— 63640), including the point loss cap. Public Housing Assessment System 8339. Changes are made to the Dictionary. (PHAS): Physical Condition Scoring SUPPLEMENTARY INFORMATION: The proposed change to building Notice and Revised Dictionary of 1.'I'hr,Ortnber 13, 2ott Notice for exterior/windows, missing/deteriorated Deficiency Definitions Comment confk,seals,glazing compound requires conforming changes to two other AGENCY: Office of the Assistant On October 1:3, 2011 (76 FR 63640), deficiencies regarding windows. In the Secretary for Public,and Indian HUD publishers for public continent a deficiency for units, kitchen, range Housing, HUD. notice revising the scoring protocol for Hood/Exhaust Fans, Excessive Crease/ ACTION: Final Notice. the PHAS physical condition indicator Inoperable, which applies to hoth and making changes to the Dictionary of common areas and units, this Final SUMMARY: This notice provides Deficiency Definitions.The major notice, pursuant to public continent. additional information to public revision was the,addition of a point loss removes the note referencing this housing agencies (PHAS) and members cap, which limits the, amount by which deficiency as it health and safety hazard. of the public about HUD's process for a single deficiency in an inspectable lu response to a continent raising a issuing scores under the physical area could reduce the overall property possible inconsistency in terminology, Condition Indicator of the PHAS under score, in response to complaints by the, "site, fencing, and gates" deficiency the PI IAS Phvsical Condition Scoring I'HAs that there were,situations where and the "common area, pools,and process notice published on February the reduction front it single deficiency related structures" deficiency are now 23, 20'I t. In addition, this notice makes was so severe as to he unfair. both referenced as "pools and related changes to the Dictionary of Deficiency Inspectable areas include site, building structures (cummon areas)." The Definitions (Dictionary). This notice exterior, building system, common deficiencies for fences in this final follows a notice for comment that was areas,and dwelling units. Under the notice are for"non-security/non-safety published on October 13. 2011. and point loss cap proposed for comment, fences"and "security/safety fences." in makes additional changes to the the nlaxiuuun point deduction for single the deficiency for site,grounds. ponding Dictionary as a result of public deficiencies for the site is 7.5 points: for and site drainage, the severity level 2 comments. Because some of these the building exterior, building system, and 3 definitions are revised to state(for changes to the Dictionary affect the Item and common areas, 10 points each;and level 2) "al least 100 square feet"and Weights and Criticality Levels for the for dwelling units.5 points. Conforming (for level three) "over 100 square feet." inspectable items for which changes changes proposed to implement the In the deficiency for site, parking lots/ have been made. this notice republishes point loss cap are described in the driveways/roads, damaged paving, the entire Item Weights and Criticality October 1:3. 2011, notice: see 76 FR pursuant to a public comment, this final Levels table as well as the entire 636-11. notice adds a note clarifying that Dictionary as.Appendices. fit addition to the point loss cap, repaired or sealed cracks are not The process for issuing scores and the changes were proposed to the considered a deficiency. Likewise, this changes in this notice apply to the inspection sofhvare and to the final notice adds a similar note to the physical condition inspection process Dictionan,of Deficiency definitions. definition for damaged walls in for both multifamily and public housing The core functionality of the inspection conuuon areas and in units. properties. sofhvare has been modified to improve In the definition related to common DATES: Effective Dates: For public data collection. It employs a decision areas, ceiling, mold, this final notice housing properties, this notice is tree model that replaces the selection- revises the definition to read "Yell see effective September 10, 2012,and will based model of recording observed mold or mildew that may have been be applicable to PFIAs with fiscal years deficiencies. The inspection protocol caused by saturation or surface failure, ending on December 31, 2012,and remains unchanged,but tine overall or evidence of water infiltration or other thereafter. For multifamily housing system will include the changes made to moisture producing conditions." and properties assisted with project-based the Dictionary of Deficiency Definitions the title,of the definition is revised to Section 8 that is attached to the and the inclusion of it point loss cap conform. Similar deficiencv definitions structure, section 202 and section 811 determined at the inspectable area level. for common areas walls and floors and capital advances and loans for In the notice for continent, the unit ceiling, walls, and floors are supportive housing for the elderly and Dictionary of Deficiencies was proposed revised to conform. persons with disabilities,and for to be changed to introduce The deficiencv definitions regarding multifamily housing properties with clarifications.Technical modifications soft and hard floor coverings in mortgages insurer) or held by HUD or and clarifications were made to a dwelling units are revised in this final that are receiving insurance from HUD, number of deficiencies under notice to conform to the proposed as listed at 24 CFR 200.853(b). this inspectable items, including building definitions for floor coverings in notice is effective for all inspections exterior, building systenls, common common areas. Also, pursuant to a conducted on January 1. 2013 and areas, units, site,and health and safety. public comment, in the deficioncy for thereafter. The specific changes proposed are cunvnon areas, Doors, rot/deteriorated found at 76 FR 63648-63654 (October subfloor, the comment o❑ level 3 is FOR FURTHER INFORMATION CONTACT: 13 2011) revised to be consistent with other Claudia J. Yarns, Department of Housing similar notes instructing the inspector to and Urban Development,Office of II.This Final Notice notify the PHA of possible failure of the final public and Indian Housing, Real Estate This PHAS Indicator #1 item and recommend an engineering Assessment Center(REAL), 550 12th (physical condition) scoring notice. inspection. Street Sl1'.,Suite 100, Washington, DC except for the technical and conforming Because the conforming amendments 204'10 at 202-475-8830 (this is not a changes to the Dictionary stated in the occur throughout the Dictionary. the 1119 Federal Register/Vol. 77, No. 154/"Thursday, August 91 2012/Notices 47709 entire Dictionary is republished as efforts to streamline, rental housing methods to allow for non-REAC Appendix 2 to this notice. Appendix 1 programs through reducing phvsical inspections to be reported and recorded is the reviser) Item Weights and inspections. According to tho into REAC's database-. HUD is Criticality Levels table with the changes commenter, in July 2011, the While committed to continue this alignment that correspond to the changes in the House released am alignment report that effort after the final results,analysis and Definitions. provided a number of suggestions from report is sent to the White House. ❑I. The Public Comments industry stakeholders for reducing the Issue:Inconsistent inspections. A number of annual inspections of commenter submitted an example The public comment period for the multifamily properties receiving where a PI[A spent S20 million on a October 13. 2011 notice closed on multiple federal subsidies.The comprehensive modernization. vet "the November 14, 2011. By the close of the commenter stated that many of these property received an almost failing public comment period, HUD received housing programs have,a variety of score due to the incompetency of the continents from 8 commenters. physical inspection requirennents, inspector."This commenter stated that Commenters included public housing resulting in multiple inspections of a results are influenced unreasonably agencies (PHAs) and trade associations single property annually. According to because of intimidation of HUD Quality involved in public housing and real the commenter, the report suggested Assurance inspectors during random estate. Two of the commenters, in expanding use of REAC use of all inspections. addition to their comments on this Uniform Phvsical Condition Standards HUD Response:Each inspection is notice, re-submitted comments that (UPCS) for all inspections on federally- based on the Observations at the time it were originally submitted in 2004 in assisted properties or adjusting REAC's is conducted and thus it is aAvays a response to an earlier proposed revision input methods to allow for non-RE-AC possibility that improvements may not of the Dictionary of Deficiency inspections to be read' into the system be in place or items not functioning at ' Definitions (see 69 FR 12475 et seq., in order to create a systeni for that time. Because inspectors are to March 16. 2004).These comments are standardized comparison. On November record all observed deficiencies, indicated by"(2004)" after the. 7, the White House announced it was 11'hether or not a IIUD Quality r-onunent. moving Forward with it pilot program to Assurance(QA) inspector is on site A summary of the significant issues ons for during an inspection, in accordance reduce physistecal d, privinely-ow raised in the public comments, and with the UPCS inspection protocol, the fedr-rally-assisted, privately-owned IIl1D's responses, follows' multifamily properties in the states of inspector must call out and dive all A. Physical Inspections Wisconsin,'Michigan. Washington, deficiencies observed in the five Minnesota,Oregon and Ohio. A inspectable areas. If a multifamily Issue:Physical inspections generally. owner/PHA feels that a deficiency the A commenter stated that the physical commenter asked HUD to collaborate inspector called out and cited does not condition snoring process is with the Departments of Agriculture exist. the multifamily owner/PHA complicated and expensive to (USDA)and Treasury to ensure P ! should document and submit a request implement and does not adequately consistency among the physical � P 9 for a technical review as provided in L4 measure the condition of public housing inspection methodologies and protocols CFR 902.68 for public housing and 24 properties or the management of the for mixed-financed properties in the 1 P g- pilot program and any subsequent CPR 200.857(d) for multifamily housing, PHA. This commenter stated that the or request for a databaso adjustment as process is too complicated with overly national program. provided in 24 CFR 902.24 for public rigid rules,and HUD should focus on HUD Response:HUD agrees with the housing and 24 CFR 200.857(e) for adjustments that streamline and focus on streamlining the, physical multifamiy housing. simplify the system based on a risk inspection protocol for all federally With respect to the QA inspectors, nnanagennent approach. assisted housing programs. HUD is they are on site to ensure that the HUD Response:IIUD disagrees that working to pursue the alignment of the inspection is complete and valid and the process is too complicated and rigid. physical inspection process across that the contract Inspector conducts the The Uniform Physical Condition agencies as part of the Interagency inspection in accordance with the UPCS Standards (UPCS) inspection protocol Rental Policy Working Group which is protocol. Should a property fool that a was designed to be a uniform inspection the main source of information going to QA inspector exhibited undue pressure process and standard for HUD's and from the White I louse. '['his group, during the course of a n inspection, HUI) portfolio of assisted and insured represented by numerous Federal advises the multifamily owner/PHA to housing through equitable. fair and Agencies including the Departments of contact the Physical Inspection QA accurate assessments. Both the Agriculture.(USDA)and Treasury,seeks \tanager. applicable multifamily and public alignment of administrative Issue:A commenter stated that a housing regulations employ it risk based requirements of federal housing major concern is lack of consistency and approach with respect to the frequency programs to reduce administrative fairness by the contracted inspectors. of inspections based on the results the burden and to avoid unnecessary where some inspectors seem to be UPCS inspection. UPCS was designed to governmental cost. HUD can confirm knowledgeable and interested in assess the condition of the housing (i.e.. that inspections have begun in some of performing a true assessment of the decent,safe and sanitary and in good the states above with the inspections of physical condition of the PHA, while repair). Efficacy of management the other states being scheduled. TO others have poor attitudes, lack operations is assessed and measured ensure consistency in the inspection profess iona l isnn,and questionable under separately protocols under a process, HUD has suggested to Une abilities to perform the inspections. This separate PHAS indicator and under the working group that the UPCS inspuction commenter also stated that inspectors Office of Housing (HUD form 9834 protocol should be used for all do not appear to have it consistent set Manegunnent Review). inspections on federally-assisted of guidelines and are often "guided by Another conunenter stated that HUD properties in its current formal,or at personal and subjective" preferences. should ensure that the changes are least, investigate minor adjustments to This conpnpenter claims that each time a consistent with the Administration's the UPCS sofhvare while seeking PHAS inspection is carried out the 1120 47710 Federal Register/Vol. 77, No. 154/Thursday, August 0, 2012/Notices inspector concentrates on "a new issue to be present. The size of the To minimize,administrative burden, the deficiency of the day." The inspection assisted and insured property portfolio PHr1 could have the, option to decline process must be fair and consistent,as subject to UPCS inspection is large the reinspection for a large, score the physical inspection has the largest enough that there is no incentive for decrease if it believes it is accurate. influence on the overall PI[AS score. inspectors to cite deficiencies to ensure HUD Response:Since MUD began HUD Response:Over the past 12 their continued service. Nonetheless, if conducting UPCS inspections in 1998, rears, HUD has invested significant a nuultifarnily owner/PHA has a specific properties have received an exigent resources to assure consistent basis for concern about an inspector or health and safety report at the application of established standards, inspection they have the option to conclusion of each day of the inspection including a team of HUD "quality contact the REAC Technical Assistance end an overall physical inspection assurance" inspectors. While, always Center(TAC)at 1-888-245-1860. All report that identifies all deficiencies striving to continue to improve the such calls are referred to the Inspector observed after the inspection is scored. accuracy of its inspections. HUD Administration Division that As part of the new 4.0 software, that believes that the inspection process investigates the reported concern. physical inspection report will include provides a reasonable indication of the Issue:Improper focus. A commenter a location for each deficiency cited. All physical condition at the time of stated that the UPCS inspection criteria of this information,along with any inspection of each project. Of course. do not line up well with the priorities information noted by the property conditions can vary from year to year. of residents.The criteria force PHAs to representative that accompanies the As such. HUD trains all UPCS spend significant time and resources to inspector throughout the inspection, inspectors. Only those, individuals who correct deficiencies found in provides the, property with the meet specific knowledge and experience inspections, at the expense of other information necessary to submit an requirements to be UPCS inspectors enhancements that would improve appeal. participate in the UPCS training. The quality of life. for residents. By HUD disagrees that there should be an UPCS training which currently consists demanding a focus on individual automatic quality assurance re- of classroom and written testing deficiencies. UPCS scoring creates a inspection when the score changes by followed by field testing of actual barrier to allowing PI1As to pursue a 20 or more points from the previous inspections is being updated in 2012 to more holistic approach. For example, by inspection. The detonnination as to include it preliminary on line emphasizing fogged window panes,bent when FIUD will conduct a quality component. In 2012 HUD also will fences,and other items that do not assurance re-inspection after an utilize the Internet to deliver training present a health and safety risk. UPCS inspection has been conducted is based and provide update to inspectors using scores divert attention from larger-scale on the overall review of the inspection webcasts, Skype and Live Meeting. improvements like unit report, which review includes Through these training methods, reconfigurations, replacement of consideration of the change in the score participants will be able to ask obsolete but functional fixtures, and (either a decrease or increase) from the questions that can be addressed other efforts that improve overall previous inspection. In all instances immediately. livability. HUD considers input from the The Data Collection Device (DCD)4.o HUD Response:HUD disagrees that multifamily owner/PHA when making inspection software being released with the scoring is a barrier to multifamily the determination to do a quality this Notice is vet another way for HUD owners/PHAs pursuing a holistic assurance review,but the final to achieve even greater consistency approach to property management.The determination still rests with HUD. between inspectors and inspections. UPCS is comprehensive in scope, Issue:A commenter stated that HUD The 4.0 software enhances objectivity assessing the overall physical condition should address the disproportionate because it is uses it "decision tree" of the entire property. HUD defers to effect on scoring when there are fee model. Based on answers to questions, multifamily owners/PHAs on the buildings or units. the software guides the inspector in amenities and resident priorities they HUD ResponswThe point loss cap as recording the level of the observed wish to provide and pursue. described in the proposed notice that deficiency. Maintaining decent safe and sanitary will be implemented in the 4.0 software HUD asks multifamily owners/PHAs housing that is in good repair is not mitigates the disproportionate impact or that have concerns about air inspector's inconsistent with developing and effect on scoring for the five inspectable ability to contact the REAC Technical implementing modernization projects areas for properties with cite or fee Assistance Center at 1-888-245-4860. and capital improvement plans that buildings. Issue:A commenter stated that the contribute to livability. Issue:Tenant-caused issues and reduced inspection frequency for high- Issue:Suggestions for improving matters outside PHA's control. Soveral scoring properties creates a perverse inspections. A commenter stated that comnmmters stated that points should incentive for inspectors to note inspectors should be required to provide not be deducted for tenant-caused additional deficiencies and elevate documentation and evidence of all deficiencies or other matters stated to be severity levels to maintain demand for deficiencies recorded against a property. outside the,control of the PFIA. their services. This commenter stated which will encourage adherence to the A commenter stated that tenant- that it "has received several reports of Dictionary of Definitions by inspectors, caused deficiencies should not cause it irregularities in the baseline, inspection provide the PHA with information to reduction in the score where the tenants process" supporting this concern,and address the deficiency, and provide a have disobeyed rules or instructions suggests changes in inspector oversight factual hasis for appeals.This from the PI(A. Another commenter and the inspection protocol. commentor also stated that there should stated that a greater emphasis is placed HUD Response:HUD disagrees that be automatic quality control on the site in areas that have little to no the frequency of inspections influences reinspection when a score decreases by impact on the integrity of the units,and the number and severity level of 20 points or more from one inspection the residents' quality of living becomes deficiencies that inspectors cite. [IUD to the nest, in addition to the increasingly compromised. As funding review of thousands of physical reinspection when the score increases. is reduced, PHAs will have to choose inspection reports does not find this so as to be neutral with reinspections. whether to expend those funds to 1121 Federal Register/Vol. 77, No. 154/Thursday, August 9, 2012/Notices 47711 ensure that residents have safe, secure. With respect to the matter of appeals, inconsistent with UPCS. Inspections and decent affordable housing, or using through the technical review/database under UPCS, which was established in the funds to retain high performer adjustment process, HUD makes 1998 as a uniform inspection standard status. adjustments for deficiencies on public that is applicable to all project based A commenter stated that points property that is not controlled by the housing assistance, programs,are a should not be deducted where the PHA. Database adjustments may be snapshot of the time et which the tenant commits a lease violation that the made prior to or after the inspection and inspection was conducted. Under the PHA could not reasonably have once HUD approves a database applicable regulations, if the prevented, or where the tenant fails to adjustment. it is recorded in HUD's multifamily owner/PHA believes life report an issue,with the unit. This records. For all approved database inspector was in error or if there is an commenter stated that the most frequent adjustments, IIUD automatically adjusts objectively verifiable material error, of these are: tenant refuses to admit an the inspection by restoring points after after receipt of the inspection report the inspector:tenant created safety each subsequent inspection so that multifamily owner/PHA may file a violations that are not visible outside when the inspection report is issue.(], technical review or request for a the unit,such as trip hazards,tampering the multifamily owner/PHA does not database, adjustment,as applicable, with the call-for-aid feature.or furniture have to file another roc{nest, which may result in an improvement in too close to the healing source: HUD (Ines not consider appeals for the property's overall score. unreported damage since the last PHA tenant caused damage because under li. Point loss Cups inspection,such as physical damage to statute (See, e.g.. 42 U.S.C. 1437d(Q(1)) walls and cabinets, misplacing or and contract (e.g.. the ACC) such Issue:Point loss caps generally. damaging the basin plug, cracked or damage is the responsibility of the Several conmienters supported the removed plate covers, and damaged multifamily owner/1111A. Accordingly, general concept of point loss caps, but plumbing. At a minimum,appropriate fill[) reminds multifamfly owners/PIiAs stated that the point loss caps were still time should be given to remedy these to schedule regular housekeeping and too high, such that minor issues could issues and points"recaptured" preventative maintenance inspections still lead to disproportionate point accordingly. and ensure that a provision addressing reductions. One conunenter specifically A conunenter stated that PHAs should tenant caused damage issues is included mentioned the inspectable areas of site not be held accountable for tenant- in the lease. and building exterior. One conunentur a'eated deficiencies that cannot 6e As stated, the citation in the- stated that especially EHS issues would inspection serves to alert the PHA or be overrepresented 'In the score despite controlled by management,such as clocking egress by placement of owner to the existence of unreported the point loss caps. This commenter furniture or adding additional locks damage. stated that this is particulzu , true for after the PHA's inspection but before the Issue:Deferrer)maintenance plans scattered site developments,and for and seasonal issues. A conunenter such developments. the various sites REAL inspection. stated that PHAs should not be, should be treated like buildings and A conunenter stated that PHAs should penalized for deficiencies that are units and averaged for the number of not incur point deductions for matters scheduled for future maintenance or sites. One comnnenler stated that, while outside the control of the PHA, that are part of a deferred maintenance the point loss cap provides some relief including tenant-caused damage. plan due to weather or seasonal issues, to smaller PHAs, it "will not provide unreported damage,and deficiencies on as weather is beyond the control of a much, if any, relief to housing public property not controlled by the PHA. For instance, pooling of water on authorities and properties containing PHA.This commenter cites the lack of a site may not be fixable during%yfilter larger numbers of units." ability to appeal to HUD for these kinds when the ground is frozen. HUD Response:HUD disagrees that of cdefciencies. As an example, the HUD Response:HUD understands the point loss caps are too high.The commenter stated that in the case of budgetary constraints which are often point loss caps are based on statistical tenant-paid utilities. PHAs lose points the cause for deferring maintenance analyses of thousands of inspections when the utilities have been shut off items. However, part of good and HUD believes they are reasonable in and the PHA cannot shouv it has taken management is maintaining it mitigating the disproportionate, impart any action with the tenant to remedv the preventative maintenance schedule by of deficiencies on property scores. The situation. Where the shut-off occurred priority while considering the seasons) point loss cap is a buildings-driven shortly before the RGAC inspection, the that the work can take place. Since the concept—a concept based on the PHA has bad no time to take action, vet physical inspection of a unit is a number of buildings in a property, not it loses points with no appeal option. snapshot in time, if maintenance work the number of units in the property. HUD Response:The multifamily is planned but not yet begun at the time Therefore, there will be relief in the owner/PHA is udtinnately responsible for of the inspection, life physical condition inspection scores for all properties that the physical condition of to unit, and is recorded in the inspection report. are comprised of one or just a fay should enforce the appropriate Issue:A commenter stated that HUI) buildings. provisions of the lease or other should allow a specified time to correct Issue:Specific suggestions and directives if a resident does not comply physical deficiencies found during the concerns about point deductions. One with them.This includes a resident's inspection before points are deducted. commenter stated that point deductions failure to maintain the equipment(that This commenter stated that Section 8 should be proportional to how many of is leased with the unit) in acceptable and multifamily housing programs the items at issue there are on the condition, causing(dannage to the unit, under HQS allow 30 nays to correct property.This commenter cites an aftering the, unit or creating safety deficiencies.and 24 hours for life- exannple of a small PHA that lust 15.2 hazards. Further, if if resident causes threatening issues. points out of If possible, 20.2 for site(life damage and fails to report it, the citation HUD Response:The application of a to various deficiencies including health of the deficiency will alert the time delay in scoring in order to afford and safety violations for a missing water nlultifa nih, owner/PHA to the existence the owner an opportunity to correct or valve corer and a loose screw on a piece of the problenn. mitigate observed deficiencies is of playground equipment. '['III, valve 1122 47712 Federal Register/Vol. 77, No. -154/Thursday, August 9, 20'12/Notices cover should have, been considered in prevented or corected. I IUD should these are the appeals provided in the proportion to how many such covers ongage a third party to review appeals. PHAS rule. This notice does not make there were on the site.The health and allow for a more cost-effective anv changes to provide for appeals that safety deductions are the most documentation standard, and,at a would not result in a change of ..devastating" ones and are out of minimum,allow agencies to appeal any designation, nor is it within the scope proportion. The snoring system is deficiency that would have sufficient of this notice to do so. arbitrary and difficult to work with,and impact to make a difference in their HUD has several vears experience does not focus sufficiently on the units, overall PHAS score. While this may with appeals, and has found that the which is where the residents actually increase HUD costs, [he significance of mechanisms for technical reviews, live. physical inspection scores on housing database adjustments and appeals HUD Response,:Proportionality is one, authority funding and status warrants a provide sufficient recourse to a PHA of the equity principles built into the fair and meaningful process. where there are issues of record or fact scoring of all deficiencies. The A commenter stated that in cases in dispute so that there is not a need for proportionality applied to a single where PhlAs wish to appeal. the appeals a neutral third party hearing. observed deficiency is dependent upon should be heard by it neutral third party, Issue:Score adjustments. A the inspectable area in which the which is what [If 1As are required to do cornmenter stated that score inspectable item is located and the as to residents. The commenter also adjustments should be allowed when deficiency definition that corresponds stated that appeals should be allowed the PFIA can show that it had already to that specific,deficiency. In addition to even when they would not change the contracted with a third party or the application of the equity principle of overall designation of the agency. RFAC; scheduler) force account labor to do the proportionality, certain categories of scores are relied on by lenders, necessary repairs. In today's budget deficiencies result in larger point commissioners,and the general public environment, PHAs do not have the deductions due to the potential iulpact as measurements of the overall capacity to fix everything immediately. on residents,guests,and property staff. condition and performance of PHAs,so [IUD Response:HUD recognizes the Those categories of deficiencies are cite PHAs should he afforded the importance of prioritizing housing Level 3 deficiencies and all health and opportunity to appeal mistakes affecting repairs and encourages the owner to do safety deficiencies. Any health and those scores,regardless of whether it so in compliance with regulatory and safety deficiency on the site affects all would change the PI1A's overall statutory requirements. However, HUD property residents,guests,and staff and designation. Also,a change in score that does not consider a contract not yet in therefore results in a larger point loss affects the frequency of inspection,even force with work started or scheduled than, for example, a health and safety if it does not affect the overall force account labor as part of the score deficiency in one unit. In the situation designation, is material and should be as it would not be a credible inspection described by the commenter, the health able to be appealed. of the property at the time of the and safety deficiency of a missing cover HUD Response:FIUD does not agree inspection. Because the physical on site poses a personal injury risk and that the document requirements for inspection of a unit is a snapshot in creates opportunities for damage to a submitting tuchnir-al reviews are time, if maintunanre work is in progress building system.The health and safety excessive.The majority of items for during tho inspection of it unit, the deficiency of a missing cover oil tile site which technical reviews are submitted physical condition of the unit is affects all property residents,guests, require only a date/time-stamped recorded in the inspection report. and staff by, for example. posing a photograph taken during the inspection Issue: Underfunrling. A commenter personal injury risk and creating that clearly reflects the condition of the stated generally that given the backlog opportunities for damage to the building inspectable area/items cited as a of unnnet capital needs,along with system or posing a personal injury risk, deficiency.The other items for which a dramatic reductions in the Capital and therefore results in a larger point signed and dated letter from a local fire Fund, it is unfair to hold PflAs loss than, for example.it health and marshal or building code official is accountable, for the effects of these safety deficiency in one unit. required are often one-time letters that constraints, and scoring should take Regarding the issue of focus on the verify state and local aspects such as fire these factors into account. Another living units,as the scoring notice states, safety codes or ownership of fences and commenter stated that with no control of the five inspectable areas that sidewalks.To assist multifamily over funding levels for operating and comprise a I1PSC property inspection, owners/PHAs in preparing requests for capital,but fully accountable for the the dwelling unit inspectable area is technical reviews, FIUD has posted a condition of their properties. PHAs are accorded the greatest weight and carries standard submission form along with concerned about how to maintain their Ilse highest weight of 35 percent of the information and examples of required properties given anticipated cuts to total property score,of 100. daCunlents on the Well site. funding levels. Funding levels should C. Appeals and Adjustments Addition liv, the technical review be, taken into account in measuring the provisions in the applicable regulations performance of PHAs. Issue:Appeals process. Several (24 CFR part 200 for multifamily owners HUD Response:ITUD declines to commenters stater) that changes should and 24 CFR part 902 for PHAs) were not prorate these measures. Funding for all hit made to the appeals process. A part of the public comment solicitation multifmnily owners/Pil As is subject to commenter stated that the requirements and are outside the scope of this notice. the availability of appropriations and for technical reviews are excessive and Accordingly. HUD is not making any those, that make the, most effective and often require a great deal of time and changes to these provisions. efficient use of their available resources expense to get an error corrected. Section B(j)(2)(A)(iii) of the U.S. will, and should,score the most points Technical reviews also exclude many of Housing Act of 1937,42 U.S.C. on their physical inspections. the most common reasons a technical 1437d(j)(2)(A)(iii), provides only for the Issue:Suggestions for Coking funding review would be needed,such as appeal of designation (including mod- into account. A commenter suggested incorrect severity levels and troubled), the petition to remove a the following formula: REAC Score/ deficiencies cause(] by residents that the troubled designation, and the appeal of Average funding reduction over last 5 agency could not have reasonably a denial of such petition. Therefore years =adjusted REr\C score, be used to 1123 Federal Register/Vol. 77, No. 154/Thursday, August 9, 2012/Notices 47713 determine the phvsical assessment inspectors are working with the REAC safety issue, it is also recorded as poor score. physical inspection staff in planning a air quality. HUD Response:The UPCS inspection live demonstration that will be Issue:Proportionality. A conunenler protocol as designed assesses the announced as a wobcast. Skype or Live stater) that FIUD should reconsider the physical condition of HUI)assisted and Meeting that will include real time, proportionality of the weights for insured housing according to a uniform questions and answers. deficiencies, especially regarding sites, standard. As an engineering protocol E public, process reflect a more realistic approach to based on observations at the time of the addressing deficiencies considering the inspection, it is delinked from funding Issue:Public comment process. A overall contest and size of properties. considerations. This is to ensure that commenter urged HUD to engage the For example.,a small deficiency, such as each inspection is objective and industry in meaningful, informed,and ponding or a hole in a fence, will be verifiable without consideration of specific dialogue, before adding weighted in the same way over a small external factors. elements to the final notice, which were site versus a large site regardless of r not previously available, for comment acreage,square footage, or number of D. rAev Software and discussion. units, leading to disproportionate Issue:Softrvaregenerally. A HUD Response:This final notice is results. Because deficiencies are not commenter stated that providing within the, scope of the proposed notice, weighted in proportion to the size, of the inspectors with the database on which the public has had site, scores can be unreasonably adjustments prior to the inspection will appropriate, opportunity to comment. decreased and impact a PHA's ability to streamline the inspection process for all parties, saving inspectors time by qualify for additional fundin F. Deficiency Definitions HUD Response:Under UP ES there is eliminating those items from the list of Issue:Definitions generall}:A a single site for all of a development's inspectable items, reducing the burden commenter stater) that the updates are properties regardless of the sire of the on I IUD to correct the findings before "vrory minor and will not make much property or if the property is comprised scores are issued,and allowing PHAs to difference.' of scatterer] sites.The underlying basis maintain their focus on addressing valid HUD Response:HUD disagrees.The is that UPCS treats all deficiencies on findings. changes in the deficiency definitions in site as affecting all residents,guests, and [IUD Response:HUD agrees that pre,- this notice were designed to create staff on that site. IIUD appreciates the database adjustments are appropriate greater consistencv among inspectors. commenter's suggestion about weighting and stores approved pre-DBAs in the 'These definitional changes coupled deficiencies in proportion to the size of REAC system for local rode variances with the point loss cap scoring the property and will give this and other approved items not owned by enhancement will result in more suggestion Further consideration. the property such as fences or roads. accurate and equitable assessments of Issue:Subjecfivity of inspectors. A Due to the fact that the field office is the physical condition of[-IUD commenter stated that. due to potential required to verify a request for a properties. subjectivity of interpretation among database adjustment based on the Issue:Duplication. A conunenter inspectors, I IUD should re-evaluate the supporting documentation. the stated that HUD should limit duplicate impact of the new deficiencv definitions inspector cannot make an adjustment citations for a single item. For example, either through extensive field-testing or while on-site. While inspectors must a contiguous area of rtiold present on a an initial evaluation period to determine record the deficiencies in accordance wall and adjacent ceiling is counted as if they are objective,enough to ensure with the inspection protocol, the 2 deficiencies when "logic suggests that inspections are conducted in a standard inspection is adjusted automatically it should only be noted once."This manner. after submission to the REAC sesten commenter also stated that it is "double HUD Response:The revised and prior to final scoring. Guidelines jeopardy" to (in this example)also definitions will be implemented as part acid a standardized submission form to deduct for poor air quality resulting of the new DCD 4.0 software which uses establish approved pre-DBAs are posted from the moll]. In that case,only the a "decision tree"structure that HUD on the HUD Well site. most severe of the deficiencies related to believes will reduce the possibility of Issue:A commenter stated that HUD the same item should he- noted. wide variations due to subjectivity. should provide more information about FIUD Response:There is no Regarding testing. MUD has already the new sofhvare before implementing duplication in the example cited. Wails completed a number of field tests and it.and should field test the sofhvare and ceiling are separate and distinct the QA inspectors are conducting in thoroughly before rolling it out along inspectable items within a given house,testing. with the new definitions nationally.The inspectable area such as the unit. And, Issue:No points should be, rleducfed test should include different inspectors while they have some similar applicable- for cosmetic issues. A conunenler stated using the software on the same deficiencies, they also have different that PHAs should be scored on true properties to identify inconsistency and applicable deficiencies. As such in measures of livability rather than ensure objectivity before implementing accordance with the UPCS inspection cosmetic issues such as paint and tile, the final version. protocol, inspectors will record the and no points should be deducted for HUD Response:FIUD agrees with the observer) deficiency,as applicable, for cosmetic issues. Given tight budgets necessity for field testing the new each inspection item. Recording only with capital needs outstripping sof ware. HUD has already completed a one deficiencv would not he accurate resources, a PHA could be penalized for number of field tests addressing various and complete. Even a small amount of chousing to spend their capital funds on scenarios and the QA inspectors are mold or mildew can be potentially major systems, leaving insufficient conducting in house testing with mock dangerous,especially if it is allowed to funding to address cosmetic issues. inspections. FIUD is in the process of increase in size.The presence of mold Conversely, a P41A could receive a high developing web based demonstrations or mildew should be identified, and the score by focusing on surface issues for the various modules of the new cause should ho determined and while issues holow the surface, such as software that will be available on line in corrected. Because mold/mildmv has rot and mold,can have a severe impact. the near future. In addition, HUD QA been recognized as a serious health and This conunenler stated that a review of 1124 47714 Federal Regisler/Vol. 77, No. 154/'Thursday, August 9, 2012/Notices the most frequently cited deficiencies definitions for missing/deteriorated Units on I-IUD's Web site shows that at least caulking/seals/glazing compound for Issue:Units. 11VAC Systems, General it quarter are purely cosmetic, while common area windows and dwelling Rust/Corrosion. A connnenter stated many others are"likely cosmetic in unit windows are revised in this final that it disagrees with the proposed nature." notice, to reflect the same revisions definition of this deficiency (69 FIR HUD Response:Under UPCS, which contained in the proposed missing/ 12500) as "deterioration is defined as assesses the overall physical condition deteriorated caulking/seals/glazing rust and/or formations of metal oxides, of the entire property,the scoring compound in file building exterior Flaking or discoloration, or a pit or impact of each deficiency will vary deficiency definition. crevice."This proposed change dons not based on the item weight and criticality Issue:Buildin-exterior, eelin (needs r and severity levels of the deficiency. p b address how the HVAC system is aThe protocol establishes the relativeive paint. A cornmenter stated that no functioning: it only addresses the importance of one deficiency to points should be deducted for cosmetic presence of rust and corrosion. If the What the commenter refers too Paint issues, for this and similar equipment is working properly, there cosmetic are lower impact deficiencies deficiencies. should be no deficiency. This criterion and that is reflected in the points that MUD Response:The scoring of this is too subjective and gives the inspector are deducted. deficiency was not part of the public too much latitude (2004).This HUD posted the list of the most comment solicitation and this final commenter also stated that the frequently cited deficiencies for general notice makes no change to this item. definition of"rust or corrosion" informational purposes because they Building Systems including"pit or crevice" does not give span the various criticality and severity any parameters for the size of the pit or levels of the possible deficiencies in the Issue:Building systerns, exhaust crevice or extent of rust or corrosion UPCS protocol. However, a multifamily system, roof fans inoperable. A required, and so gives too much latitude owner/PHA's)lost portfolio management commenter stated that this definition to the inspector(2004). tool is the actual inspection reports and should be clarified so that it deficiency Another connmenter stated that no the deficiencies cited therein. would )le cited only when the points should be deducted when rust Issue:Specific deficiencies. equipment that is part of the exhaust does not indicate a structural problem Commenters raised issues with a system dons not function as intended. and does not impact the functionality. number of the specific deficiency HUD Response:The definition Consideration should be given to where definitions,and also reiterated their encompasses both the functional and the rust is located on the I IVAC system. continents on the 2004 proposer) non functional features because a non Another connmenter stated that only changes to the deficiencv definitions (69 functional deficiency can, over tinne, if (significant" deterioration should be PR 12474 et see ..%March 16. '2004). covered; minor instances that have no 1 not addressed, lead to a more serious Where a comment refers to the 2004 deficiencv that can contribute to wear effect on the functioning of the system proposed changes, the comment is and tear and affect the efficienv and should not be scored. This commenter identified as such and a citation is operation of the system.Citing all stated that this should be a no-score provided to the changes to which the deficiencies allows multifamily owners/ item according to discussions held in commenter refers. PHAs to take tinnily correction action. 2002. (2004) The definition remains unchanged. Another commenter stated that the Building Exterior g defined deteriorations—rust and/or Issue:Building exterior, windows, Issue:Building systerns, FIVAC. A formations of metal oxides, flaking, or missing/deteriorated caulk, seals, connnenter staled that this definition discoloration,or a pit or crevice trim glazing compound. A commenter stated could be read to give physical condition simply be cosmetic blemishes and not that this deficiency (69 FR 12479) inspectors leeway to cite any associated indicative of the functionality of and/or should be advisory only. not scored part of the I IVAC system, regardless of the need to repair the unit. This (2004). whether it applies to the, functionality of commenter slated that I1UD should FEUD Response:The proposed change the HVAC,as a "building system" specify that cosmetic blemishes which is to the,severity level of[he deficiemy. deficiency.This could result in a large do not affect the operation of the unit What was the Level 2 deficiency for physical condition score point Toss for may not be cited as deficiencies. building exterior, windows, missing/ something that may be a minor HUD Response:Because there is no deteriorated caulk, seals,glazing deficiency or repair. This cornmenter way to tell if the presence of rust and/ compound window is now the Level 1 stated that MUD should clarify that the or corrosion is affecting the deficiencv.The scoring of this deficiency would only apply to parts of functionality of a system, it is deficiency was not part of the public the HVAC that impact its functionality. considered a deficiency but it is only comment solicitation. HUD has retained HUD Response:I IUD disagrees recorded as it the scoring of this deficiency due to the because the associated parts that are Level 1 deficiency. The presence of potential deteriorating situation it addresser) in the, definitions are specific rust and/or corrosion makes the addresses. The definition as proposed to deficiencies. All deficiencies mmltifamily owner/PlfA aware of the remains unchanged. There are two other associated with the IIVAC.do not, potentially deteriorating situation. Rust deficiency areas regarding windows that necessarily. cause the HVAC not to is corrosive and if left untreated ran are revised to conform to the proposed function. For example, in the Boiler/ comprise the integrity of the building definition for Building Extoior— Pump/Cooling System Leaks (HVAC— envelop. The functionality of the FIVAC Windows—Missing/Deteriorate(I Building Systems) deficiency,coolant, system is addressed elsewhere in the Caulking/Seals/Glazing compound. water or steam escaping train the unit Dictionary. Both areas pertain to this deficiencv, casing and/or pump packing/system 'the objective measure for rust and/or one for common areas windows and the piping is clearly it deficiency and in fact corrosion is that they are easily other for dwelling unit windows. may he a I leallh and Safety deficiency observable. The definition for this Because these definitions are similar in and yet the HVAC may continue to deficiency has remained as proposed. the current Dictionary, the deficiency fimction. The scoring of this deficiency was not 1125 Federal Register/Vol. 77, No. 154/Thursday, August q, 2012/Notices 47715 part of the public comment solicitation. component of the call-for-aid syslem it inspectable item,but there are three, This final notice retains the scoring of must be, tested in a way that reflects levels of deficiency in this definition. If this deficiency due to the potential how someone laying on the floor in addressed at the earliest stages, tinmlr deteriorating situation it addresses. distress might pull the cord. If the corrective action could prevent a more Issue: Units, kitchen, Range Hood/ coiled or tied cord causes the system to serious problem from developing over Exhaust Fons, Excessive Grease/ fail when the cord is pulled,a time. Inoperable(applies to both common deficiency is cited. But, if the Issue:A commenter stated that no areas and units). A commenter stated components of the system function points should be deducted for damage that the proposed definition, which wlmn the cord is pulled, the call-for-aid to fences that do not affect the safety includes "grease or other barrier system functions as intended and there and security of the property. noticeably reduces." is too subjective is 110 deficiency. HUD Response:'l he,snoring of this (2004).This deficiency would permit an Site deficiency was not part of the, public inspector to snore a resident's continent solicitation. No change, is housekeeping skills, over which it PHA Issue:Site. Fencing and Gates— made in this final notico. has no control,as a physical defic[ancv, HoluslMissing Sections/Daruoged/ Issue:A conmrenter stated that thereby lowering the score. Further. Falling/Leaning. A commenter disagrees reference to swinuning pool enclosures reference to health and safety is with the proposer) Level 2 Comments in is inconsistent between this item and excessive and would penalize the PHA this section that adds reference to health one on the following page, referring to for the resident's housekeeping skills. and safety hazards to this deficiency 69 PR 12505 and 12506 (March 16. HUD Response:HUD agrees that this (2004). This proposal (toes not provide 2004), and asked: "is it Site, Fencing, definition should not refer to a health adequate parameters as to what ..poses and Gates, or is it Common Areas, Pools, and safety hazard and this notice it danger", therehv leaving the and Related Structures" (2004)? removes the reference.The multifamily designation of a health and safety HUD Response:HUD agrees that the owner/PHA is ultimately responsible for hazard too subjective. This commenter references in the notes should be the phvsical condition of a unit,and stated that the reference to health and consistent and this final notice changes should enforce the appropriate, safety hazards should be eliminated. the reference to "Pools and Related provisions of the lease if a resident does HUD Response:HUD has determined Structures (Common Areas)." HUD also not maintain the equipment (that is to retain the phrase "poses a danger" revises this notice so that the final leased with the unit) in acceptable even though it may be considered definitions are for"non-security/non- condition. subjective. It is impractical to include in safety fences"and "security/safety Issue: Units.call-for-air)inoperable. A the definition evervthing that could fences." commenter stated that resident pose a threat.The reference to health Issue:Site,grounds,pooling and site interference with the equipment should and safety will be retained because an drainage. A commenter stated that the be taken into account when finding a injury or bodily harm is a health and level 2 and 3 descriptions (69 FR 12508) deficienev. safety issue. HUD will enhance its "would he improved by adding 'at least HUD Response:HUD does not agree inspector training protocol to emphasize too square feet"' (200-1). that interference with the call-far-aid the following definition of security HUD Response:HUD agrees and the equipment should be taknl into account fencing: "Fencing that provides a closed Level 2 and 3 definitions are revised to by the inspector. The call-fur-aid as boundary by connections at all points. state "at least 100 square feet"and installed must serve its intended innlUding gates."This will ensure the .over 100 square feet" respectively. function (e.g.,a bell sounds an alarm, a inspector clearly understand the Also the language throughout the light is turned on, or off-site personnel difference between perimeter/border Dictionary is conformed to read "more notified when the system is activated). renting and security fencing. In than" where appropriate. The multifamily owner/Pf[A reviewing the proposed definition. HUD Issue:Site,parking lots/driveways/ responsibility for the phvsical condition observed that the reference in the notes roads, damaged paring. A convnenter of a unit and lease enforcement includes should he consistent and therefore this stated that the deficiency description a resident's interference with the call- notice revises the reference to"Pools (69 FR 12509)should rear) "also, for-aid. The citation of the deficiency and Related Structures (Common repaired/sealed cracks should NOT be alerts the multifatnity owner/PHA to the Areas)." HUD has also determined that considered a deficiency." (2004) existence of the prohleun with this the final definition will be for"non- HUD Response:HUI)agrees with the critical systenn. security/non-safety fences and commenter and this final notice adds Issue- -I,commenter stated that this "security/safety fences." the note."Repaired/sealed cracks definition (call-for-aid inoperable) Issue:Site. Fencing and Gates. A should not be considered a deficiency." should only require that the system commenter stated that this deficiency HUI7 will enhance its inspector training function as intended.This commenter should rover only "significant" rust or protocol to include the recognition of stated that deficiencies have been found deterioration,and only those instances repaired/sealed cracks and damage with because the cord was tied up and did of deterioration that actually impact the picture examples. not reach the floor,and this it is functionality of the fixture should be Issue:Site, arilku'oya. steps, chicks. inappropriate for HUD to penalize the scored. settlement, hearing. A commenter property for the resident's decision to HUD Response:The three levels of stated that the notes for deficienev (69 tie up the cord,as long as the item is this deficiency address what is FR 12516)should state that "repaired/ working. necessary for a deficiency to he present sealed cracks should NOT be considered HUD Response:HUD does not agree and are proportional. The presence of a deficiency." (2004) that this definition should only require rust and/or corrosion makes the HUD Response: HUD agrees and this that the system function as intended. A multifamily owner/PHA aware of a final notice adds this sentence,as itenn coiled or tied call-for-aid cord is not potentially deteriorating situation. 4 under the note. automatically a deficimncy—the system '['here is no way to tell if the presence Issue:Site, retaining well, rlamnged, components must also be tested. But of rust and/or corrosion does or will falling leaning. Commenter stated that because the pull cord is an integral affect the functionality of this this deficiency (69 FR 12515) refers to 1126 47716 Federal Register/Vol. 77, No. 154/"]hursday, August 9, 2012/Notices a deteriorating or damaged retaining The definition reads, "You see mold or the deficiency definitions for dwelling mall as defined, "but we do not see a mildow that may have been caused by unit ceiling, walls and floors have been definition of a damaged retaining wall." saturation or surface failure,or evidence revised to reflect similar revisions as (2004) What is the threshold for damage of water infiltration or other moisture those contained in the proposed ceiling toil retaining wall? IIUD has been producing conditions."This notice, common areas deficiency definition, taking these issues case-by-case under revises the title of this definition to though differences in the actual technical review, or relying on the, conform to the revised definition to definitions may be warranted. inspector's judgment, but this issue read. "Mold/mildew/Winer Stains/ Issue:Common areas, routes requires further study. Water Damage(Ceiling—Common obstructed or inaccessible to wheelchair. HUD Response:It is not practical to Areas)." A commenter stated that if the common include every possible type of damage HUD believes the use of"4 square area and route existed prior to these to a retaining wall that may occur. inches to one square foot" and "more requirements, no points should be Therefore. HUD does review this than 1 square foot" included in the deducted. deficiency on a case-by-case basis proposed definition, rather than the IIUD Response:The definition does through the technical review process to suggested -1-4 square feet" and "4 not impose new requirements.The ensure that multifamily owners/pl[As square feet." is more realistic given the, change simply adds the words "at least are not unduly penalized. HUI)also potential seriousness of the presence of one route" to the current definition considers this an important training mold/mildew. One square foot (144 clarifies that the inspector need only issue and emphasizes it by using a square inches) is an area that is 36 times verify one route, not all of them.The multitude of examples,and using color larger than the proposed 4 square definition remains as proposed in the pictures whenever possible, as part of inches,and 4 square feet is 4 times October 13, 2011 notice. the training.This final notice removes larger[ham 1 square foot. Because of the, Issue:Common areas. hard floor the phrase"as defined" from the, importance of the presence of mold/ covering, missing flooring/tiles. A definitions. mildew, HUD has determined to use the commenter stated that the thresholds fur Common Areas smaller areas as the minimum. this definition (69 FIR 12487) should be Even a small amount of mold/mildew returned to those agreed to at the 2002 Issue:Common areas,ceiling holes) can be potentially dangerous, especially meetings, that is, level one is 10-20 missing tiles, etc. A commenter stated if it is allowed to increase in size. The percent,and level 2 is 20-50 percent that in the 2004 notice(fig FE 12485)), presence of motel/mildew should be (2004). the Level 1 definition was proposed to identified, and the cause should be HUD Response:HUD has dotermined be revised to include a crank more than determined and corrected. The to retain the threshold language in the i/. inch .vide and it inches lung. This definition for this deficiency has proposed definition and use it consistent commenler slated that the Level 1 remained as proposed. application of percentages for all square definition should remain as before the '['here are two other deficiency foot items, when appropriate. For 2004 proposed revision.and the definitions regarding mold/mildew in example, the Sallie percentages are used material that was added to Level 1 common areas that this notice revises to for the,soft floor covering deficiency should be placed in the, Level 2 conform to the proposed definition for definition. HUD notes that the comment definition. "Ceiling—Water Stains/Water Damage/ for Level 3 is redundant and this final HUD Response:IIUD believes that Mold/Mildew (Common Areas)." One notice deletes- the comment. including cracks in the Level 1 pertains to mold/mildew on walls in There is one additional deficiency definition is less stringent than common areas, and the other is niolyd/ definition regarding hard Floor covering including cracks in the Level 2 mildew on Floors in common areas. in dwelling units that is revised in this definition,and has retained the Because of the similarities in the final notice to conform to the proposed proposed definition. definitions for mold/mildew, this notice definition for hard floor covering in Issue:Common areas, ceiling, mold. A makes a holistic change to mold/mildew common areas. The deficiency commenter stated that no points should in all locations where it can be recorded definition for hard floor covering in be deducted for superficial stains that (not just the definition for ceiling), dwelling units is revised in this final do not pose an imminent threat to though differences in the actual notice to reflect the same revisions health and safety. Another commenter definitions may be warranted. contained in the proposed hard floor in 2004 stated that in discussions held Therefore, the deficiency definitions for covering in common areas deficiency in 2002 on this deficiency(69 FR common areas walls and floors have definition. 12486). "we arrived" at a size area for been revised to reflect similar revisions Issue:Common areas, soft floor mold of 1-4 square feet.This has been as those contained in the proposed covering darnaged,floors. A conunanter reduced to 4 square inches-1 square "Ceiling—Water Stains/Water Daniage/ stated that the title of the, definition foot in the Level t definition, and in the Mold/Mildew (Common .Areas)" should be changed to include"carpet," Level 3 definition, to 1 square foot. This deficiency definition. In addition, there since that is all that is covered,and the definition should be returned to the are three deficiency definitions deficiency should raid: "vou see "agreed measures." regarding mold/mildew in dwelling daniaged or missing carpet."This PIUD Response:It is impractical to units that have been revised to conform deficiency should not be considered a include in the,definition how to identity to the proposed definition for"Ceiling— health an-d safety issue (2004). all possible conditions that niny have Water Stains/Water Damage/\Mold/ HUD Response.:The commenter is lead to a stain, but the presence of Mildew (Conrnon Areas)."They are incorrect that carpet is the only soft mold/mildew would clearly indicate it dwelling unit ceiling, walls,and Boors, flour covering (o.g., interlocking foam is more than superficial. Thus, this final The current deficiency definitions for tiles). IIUD has determined to retain the notice revises the wording of this the dwelling unit ceiling, walls and deficiency title to read "Soft Floor definition to clarify that the primary floors are similar to the current Covering Missing/Damaged (Floors— focus is the presence of niolyd/mildeol, deficiency definition for"Ceiling— Common Areas)" and the deficiency to as well as evidence of water infiltration Water Stains/Water Damage/Mold/ read 'You see damaged and/or missing or other moisture producing conditions. Mildew (Common Areas)."Therefore, soft floor covering." The changes to the 1127 Federal Register/Vol. 77, No. 154/"Thursday, August 9, 2012/Notices 47717 two floor covering deficiency definition Issue:Common areas, HVAG Noisy. I lealth and Safety titles move from a paradigm that solely Vibrating. Looking. A conunenter stated (slue:health and safety, nirqunlih•, describes the type of deficiencv in the that this definition includes examples of mold and milder•. Commenters stated title(missing or damaged flooring) to .,unusual vibrations, leaks, or abnormal that this item is a housekeeping issue,. one that includes the tape of floor noise"such as "screeching,squealing, covering generally (soft or hard) in tile,, banging,shaking,etc."This coutntenter and not a maintenance issue, and that title and describes the levels of slated that these examples add more mold oil a wall and adjacent ceiling deficiencies for that type of flooring. subjectivity than clarification to the should be considered 1 item, where it is The general description of the type of definition. As a result, properties may currently considered 2 items. floor covering in the title ensures that receive a citation for a non-existent A connienter also stated that in the definition is applicable to all types deficiency. This ronunentor stated that discussions held in 2002, it was agreed of soft and hard floor coverings the current definition should be that mold would have to cover 1-4 respectively. retained. square foot for a point deduction, which The titles to the two floor covering HUD Response:HUD disagrees. HUD has been reduced to 4 inches-1 foot, deficiencv definition now include the has included these illustrative examples and that this should be returned to the type of floor covering generally (soft or to provide information to assist the agreed measure (2004): another hard) in addition to the describing the inspector in identifying the types of couunontor stated that the minimum type,; of deficiency in the title (missing noises that may emanate from an HVAC should be 1 square foot before a defect or damaged flooring) without giving an unit. This definition only applies if is found. example of the type to ensure, the there is a noise, otherwise it is marked Another commenter stated that the definition is covers all types of soft and no observed deficiency and will not definition is too broad and could hard floor coverings respectively. result in a point deduction.The include situations where the residents Soft floor covering that is missing, has definition for this deficiency remained cause moisture damage by disabling the holes, tears or loose areas could be a as proposer]. room fail, lifestyle,or other causes tripping hazard, and therefore, is a Issue:Common areas. malls, outside the 13I1A's control. health and safetv issue. damaged. A conunenter stated that the HUD Response:It is almost There is one additional deficiency note under this deficiencv description impossible to determine if the presence definition regarding soft floor covering should state that repaired or sealed of mold/mildew is caused by resident in dwelling units that this notice revises cracks should not be recorded as a lifestyle and failure to ventilate to conform to the proposed definition deficiency(2004). Another conunenter properly. The n ultifamily owner/PHA for soft floor covering in common areas. stated that no points should be is ultimately responsible for the The deficiencv definition for soft floor deducted for cracks that are not a physical condition of it unit.and should covering in dwelling units has been structural deficiencv enforce the appropriate provisions of revised to reflect the same revisions HUD Response:This deficiency does the lease if a resident does not maintain contained in the proposed soft floor not address any threat to the integrity of the equipment (that is leased with the covering in the common areas the structure. Cracks that have been unit) in acceptable condition. deficiencv definition. repaired or sealed properly are no Wells and ceiling are separate Issue: (`.amnion areas,floors, rot/ longer a deficiency.and will not be deteriorated subfloor. A conlnlentor cited as a deficiencv. '['his final notice "rspectabte itens with similar and stated that the comment on level 3 adds a note to this definition: "Cracks different applicable deficiencies. As should be consistent with other similar that have been repaired or sealed such in accordance with the UPCS notes instructing the inspector to notify properly should not be considered a inspection protocol, inspectors will the Ill IA of possible failure, of the itern deficiency." The definition for this record the observed deficiency,as and recommend an engineering deficiencv has remained as proposed. applicable, for each inspection item. inspection (2004). This final notice, revises one additional Even a small amount of moldhnildew HUD Response:IIUD agrees,and this deficiency definition regarding damaged can le potentially dangerous,especially notice revises the language i❑ the Level walls in dwelling units to conform to if it is allowed to increase in size.The 3 comment to the suggested language. the proposed definition for damaged presence of mold/nildevc should be This change is consistent with language walls in common areas. The deficiencv identified.and the cause should be in other deficiency definitions. definition for damaged walls in determined and corrected. Because Issue:Another commenter stated that dwelling units is revised to reflect the mold/mildew has been recognized as a it is extremely concerned that HUD's same revisions contained in the serious health and safety issue, it is also note to "apply weight" to a suspect floor proposed damaged walls in common recorded as poor air quality. could result in injury to the inspector or areas deficiencv definition. As stated in I IUD's response to additional damage to the property. This Issue:Carnaron areas.graffiti. A comment on ceiling mold in common conunenter stated that HUD should conunenter stated that the deficiencv areas. HUD has determined the remove the "apply weight" note from description should note that "one measurements as proposed are more this definition. location" means"adjacent walls, doors, realistic given the potential seriousness HUD Response:By applying a ceiling,and/or floors" (2004). of mold/mildew. As such, the definition moderate amount of weight to the floor. HUD Response,":HUD believes the for this deficiency is made final as a noticeable deflection will be felt if proposed deficiency definition is more proposed. there is rot,decay, deterioration, and/or descriptive of the intent of the use of the In determining if other moisture damage.This is the most common way word "location" defined in the producing conditions are present. the to determine if there is a problem and definition as, — ' ' one general area in inspector will use common sense. It is it is used throughout the inspection a building such as one hallway in a 10 impractical to address how to identity industry. HUD will enhance its start' building or one flour of a stair-well all possible other moisture producing inspector training protocol to ensure in a 5 story building."The definition for conditions, but the presence of mold/ that this definition is adequatelv this deficiency has remained as mildew would clearly indicate that explainod and examples provided. proposed. something other than Nvater, if there is 1128 47718 Federal Register/Vol. 77, No. 154/'Thursday, August 9, 2012/1Nlotices no evidence of water infiltration, is stored near it gas furnace is an issue, but area. The number of inspectable items causing the,growth of mold/mildew. paper stored elsewhere is not. varies for each inspectable area, from 8 Issue:health and safety, air quality, HUD Response:The UPCS inspection to 17. Weights are assigned to each ite n sever odor detected. A commenter protocol is based on the, inspector's to reflect their relative importance and stated that it prefers the prior definition observations. It is neither practical nor are shown in the Item Weights and that required the inspector to make a prudent for the inspector to determine Criticality Levels tables.The tables refer judgment whether the odor presented a the content of containers,such as those to the weight of each item as the health risk. Another commenter stated listed in the proposed definition. nominal item weight. which is also that the proposed definition does not HUD believes examples are not known as the amenity weight. differentiate between an issue being necessary as this is covered in the Normalized area n"eight represents completely ignored and one that has just proposed definition by stating"rear a weights used with area scores to occurred. A time frame for addressing heat or electric source......This is an calculate project-level scores. The the problem is also absent. Also, a area that is extensively covered in the weights are adjusted to reflect the, commenter stated that this definition is inspector training. Just one instance of inspectable items actually present at the too vague. A property owner often has Flanlnlable materials igniting due to time of the inspection. These weights no control over situations when sewer improper storage is one instance- too are proportional,as follows: odors are detected—i.e., flooding, pipes many. The presence,of improperly For dwelling units, the area score is bursting, etc.—especially when these, stored flammable material should be the weighted average of sub-area scores incidents are not on the property. This identified and mitigated. The scoring of for each unit, weighted by the total of commenter stated that HUD should this deficiency was not part of the item weights present for inspection in clarify what it "health risk" from sewer Public comment solicitation. The each unit, which is referred to as the odors entails rather than have it blanket definition for this deficiency is made amenity weight. deficiency on anv odors detected. final as proposed. For common areas, the,area score is HUD Response:HUD has determined IV.The Revised Physical Inspection the weighted average of sub-area that the inspector should cite any strong Scoring Process common area scores weighted by the odor that can be detected during the total weights for items available for physical inspection. hence the proposed t. Definitions inspection (or amenity weight) in each definition removed the reference to The following are the definitions of residential building common area or health risk. As with other definitions, the terms used in the physical condition common building. Common buildings there is no distinction between what scoring process: refer to anv inspectable building that map be being ignored or what has just Criticality means one of five levels contains no dwelling units. All common buildings are inspected. occurred because the odor itself is what that reflect the relative importance of , Far building exteriors or building necessitates action by the multifamily the deficiencies for an inspectable item. owner/PHA.The nutltlfanlih, owner% Appendix 1 lists all deficiencies wish systems, the area scores are, weighted PHA cannot know that the odor their designated criticality levels, which averages of sub-area scores. detected by the inspector and cited in vary from 1 to .5. with 5 being the most • For sites, the area serer, is calculated as follows: (1)The amenity the inspection is note . werIfaf odor critical. Based on the, criticality level. Weights found on a site.. (2) minus unless it is illthe muted. mafter each deficiency has an assigned value deductions for deficiencies, and (3) investigation the molt he odor mover/ that is used in scaring.Those values are normalized to a 100-point scale. PHA determines that the actor does not as follows: Normalized sub-area weight means emanate from the property, the the weight used with sub-area scores to multifamily owner/PHA can, in Criticality Level Value compute an inspectable area score. accordance, with the applicable These weights proportional: regulations,submit a request for a Critical ............................... 5 5.00 g are Pro l I technical review or database adjustment Very Important .................. 4 3.00 • For dwelling units, the item weight to IIUD. But as with all other Important ........................... 3 2.25 of amenities available in the unit at the Contributes ....................... 2 1.25 time of inspection is the amenity deficiencies, if the cause of the odor is Slight Contribution ............ 1 0.50 weight. - due to a condition on the property, the For common areas, the common multifamily owner/PHA must take Based on the importance of the area amenit' weight is divined by a ar--lion to remedy the condition. The, deficiency as reflected by its criticality building's probability of being selected definition for this deficiency has value, points are deducted from the for inspection. All residential buildings remained as proposed. project score. For example,it (;logged with common areas may not be selected Neither the phvsical inspection drain in the kitchen is more critical than for inspection: however,all buildings snoring notice nor the Dictionary of a damaged surface on it countertop. with common areas are used to Deficiency Definitions addresses time Therefore, more points will be deducted determine the amenity weight. frames for correcting, remedying or for a clogged drain than for a damaged For building exterior and building mitigating deficiencies. Multifamily surface. systems, the building exterior or owners/I1HAs should refer to their Deficiencies refer to specific problems huifding system amenity weight is applicable program regulations air(] that are recorded for inspectable items, multiplied by the building's size other guidance. such as a hole in a wall or a damaged (number of units) and then divided by Issue:Health and safety,f7aaunah/e refrigerator in the kitchen. its probability of being selected for materials, improperly stored. A Inspectable area means any of the five inspection. commenter stated that "not all paint is major components of the project: site. For the site, there is no sub-area flarrunable(i.e., latex paint)and building exteriors,building systmms. score. For each project, there is a single therefore should be excluded from the common areas,and dwelling units. site. definition. Another commenter stated Inspectable items refer to walls, Note that dividing by a building's that a threshold should he included in kitchens.bathrooms, and other features probability of being selected for this definition. For example, paper that are inspected in am inspectable inspection is the same as multiplying by 1129 Federal Register/Vol. 77, No. 154/Thursday, August 9, 2012/Notices 47719 the, probability weight since the Project is used synonymously with severity,as described below. For probability weight is 1 divided by the the teen ..property." specific definitions of each severity probability of being selected for Severity means one of three levels that level, see the Dir-tionary of Deficiency inspection. reflect the extent of damage associated Definitions. Point loss cap is the maximum with each deficiency, with values Score means a number behveen 0 and number of points that a single assigned as follows: deficiency can count against the overall 100 that reflects the physical condition propertv score.The, point loss cap for Severity level Value of a project, inspectable area, or sub- each inspectable area is: area. A property score includes both an 3 ................._............................. 1.00 alphabetical and a numerical Maximum point 1 025 component.The number represents an ............... deduction fora . l overall score for the basic physical Inspectable area single den- ciency The Item Weights and Criticality condition of a property, including Levels tables show the severity levels points deducted for health and safety Site ............._..........I............ 7.5 that arc possible for each deficiencv. deficiencies other than those associated Building Extenor ................. 10.0 Baser] on the severity of each deficiency, with smoke detectors. The letter code, Building Systems ................ 10.0 the snore is reduced Points deducted - specifically indicates whether health Common Areas ................... 1 .0 5.0 are calculated by multiplying the item and safety deficiencies were,detected, as Dwelling Units ..................... weight by the, values for criticality and shown in the chart below: Health and safety deficiencies No health Life Fire safety Physical inspection score alphanumeric codes and safety Non-life threatening deficiencies threatening (LT)/exigent (NLT) health and No smoke Smoke safety detector detector (El problems problems a ............................................................................................................... X .................... .................... X .................... a. ............................................................................................................. X .................... ................ .................... X .... b ............................................................................................................... .................... X .................... X .............I...... b. ............................................................................................................. .................... X .................... .................... X c ............................................................................................................... .................... .................... X X .................... c. ............................................................................................................. .................... .................... X .................... X To record a health or safety problem, nominal weight of observable averages of the sub-area scores, where a letter is added to the project score (a, deficiencies by inspectable item for each the weights are based on the number of b,or c)and to note that one or more area/sub-area. The Dictionary of units in each building and on the smoke detectors is inoperable or missing Deficiency Definitions provides a building's probability of being selected an asterisk (`) is added to the project definition for the severitv of each for inspection. fit addition, the score. The project score for properties deficiency in each area/sub-area. calculation for criterion areas includes with LT deficiencies will have a "c" g Equity Principles the amenities existing in the residential . whether or not there also are NLT common areas and r-onunon buildings at doficiencies. In addition to determining the the time of inspection. .Sub-area means an area that will be appropriate relative weights, Differences between projects.'fhe- inspected for all inspectable areas consideration is also given to several scoring methodology also takes into except the site. For example, the issues concerning equity between account that projects have different building exterior for building "2" is a properties so that scores fairy assess all features and amenities. To ensure that sub-area of the building exterior area. types of properties: the overall score reflects only items that Likewise, unit "5" would be a sub-area Proportionality. The scoring are present to be inspected, weights to of the dwelling units area. Each methodology includes an important calculate area and project scores are inspectable area for each building in a control that does not allow•anv sub-area adjusted depending on how many items property is treated as a sub-area. scores to be negative. If a sub-area,such are actually there to be inspected. 1. Scoring Protocol as the building exterior for a given Point loss cop.The scoring building, has so many deficiencies that methodology further takes into account To generate accurate scores, the the sub-area score would be negative, that a single deficiencv can have inspection protocol includes a [he score is set to zero. This control disproportionate effects on scoring determination of the appropriate mechanism ensures that no single when there are relatively few buildings relative weights of the various building or dwelling unit can affect the or units that are inspected in a project. components of the, inspection; that is, overall score more than its TO mitigate any disproportionate which components are the most proportionate share of the whole. impact, the number of points deducted important, the next most important,and Configuration of project. The scoring from the project score for anv one so on. For example, in the building Methodology takes into account deficiency is capped. Point loss caps are exterior area,a blocked or damaged fire different numbers of units in buildings. set at the inspectable-area Level. escape is more important than a cracked To fairly score projects with different q. Deficiency Definitions window, which is more important than numbers of units in buildings, the area a broken light fixture. The Item Weights scores are calculated for building During a physical inspection of a and Criticality Levels tables provide the exteriors and systems by using weighted project, the inspector looks for 1130 47720 Federal Register/Vol. 77, No. 154/Thursday, August 9, 2012/Notices deficiencies for each inspectable item project has at least one smoke detector severe, if there are multiple deficiencies within the inspectable areas,such as the deficiencv, that part of the score. may be with the same level of severity) will walls (the inspectable item) of a identified as "risk;" for example, "93a, result in a point deduction. dwelling unit (the inspectable area). risk" for 93a'.and "71c, risk" for 71c`. A. Essential Weights and Levels on the observed condition, the 'There are six distinct letter grade Dictionary of Deficiencv Definitions combinations based un the HMS The process of scoring a project's defines up to the three levels of severity deficiencies and smoke detector physical condition depends on the for each deficiencv: Level I (minor), deficiencies observed: a, a', b. V. c.and weights, levels,and associated values of Level 2 (major),and Level 3 (severe). c'. For example: the following quantities: The associated values are shown in the • A score of 90c' means that the • Weights for the 5 inspectahle areas definition of"severity" in Section V.I. project contains at least one EHS (site,building exteriors,building A specific criticality level, with deficiency to be corrected, including at systems,common areas, and dlelling associated values as shown in that chart, least one smoke detector deficiencv, but ❑nits). is also assigned to each deficiencv.The is otherwise in excellent condition. • Weights for inspectable items criticality level reflects the importance • A score of 40b' means the project within inspectable areas (8 to 17 per of the deficiency relative to all other is in poor condition, has at least one area). possible observable deficiencies for the non-life threatening deficiency,and has • Criticality levels (critical. very inspectablo area. at least one missing or inoperable smoke inlportant, important, contributes,and 5. Health and Sofat}'Deficiencies detector. slight contribution) plus their associated • A score of 55a means that the values for deficiencies within arras The UPCS physical inspection project is in poor condition, even inspected. emphasizes health and safety (HMS) though there are no HMS deficiencies. • Severity levels (3, 2, and I)and deficiencies because of their crucial . A project in excellent physical their associated values for deficiencies. impact on the well-being of residents. A condition with no HMS rdaficiencies • Health and safety deductions subset of fI&S deficiencies is exigent mould have a score of goa to 100a. (exigent/fire-safety and non-life health and safety (EHS) deficiencies. threatening for all inspectable areas). 'These are life threatening(LT)and A. Scoring Process Elements point lass rap. rlrfinurl at the require immediate action or remedy. The physical condition scoring inspectable area level. EI IS deficiencies can substantialIv process is based on three elements 9, Normalized Area lfeights reduce the overall project score. As within each project: (1) Five inspectable noted in the definition for the word areas (site, exterior.systems,common Area weights are used to obtain a "score" in the Definitions section.all areas,and dwelling units): (2) weighted average of area scores. A H&S deficiencies are highlighted by the inspectable items in each inspectable project's overall physical condition addition of a letter to the numeric score. area:and (3) observed deficiencies. score is a weighted average of all The Itmn Weights and Criticality Levels inspectable area scores. The nominal i. Scoring Using tt Bighted avereges weights are.: tables list all HMS deficiencies with an g LT designation for those that are EHS The snore for a property is the deficiencies and all i\'LT designation for weighted average of the five inspectable Inspectable area Weight those that are non-life threatening. The area scorns, whore,area weights are (percent) LT and NLT designations apply only to adjusted to account for all of the Site ............................................ 15 severity level 3 deficiencies. inspectable items that are actually Building Exterior ....................... 15 To ensure prompt correction, remedy. present to be inspected. In turn,area Building Systems ...................... 20 or action to abate H&S deficiencies, the scores are calculated by using weighted Common Areas ......................... 1s inspector gives the project averages of sub-area scores (e.g., Dwelling Units ........................... 35 representative a deficiency report building area scores for a single building identifving every observed EHS or unit scores for a single unit) for all 'These weights are assigned for all deficiencv before the inspector leaves sub-areas within an area. inspections when all inspectable items the site. The project representative For all areas except the site, are present for each area and for each acknowledges receipt of the deficiencv normalized sub-area weights are building and unit. All of the inspectable report by signature. HUD makes determined using the size of sub-areas. items mae not be present in every available to all PHAs an inspection the items available for inspection,and inspectable area. When items are report that includes information about the sit -area's probability of selection missing in an area. the area weights are all of the H&S deficiencies recorded by for inspection. Sub-area scores are modified to reflect the missing items so the inspector. The report shows: determined by deducting points for that within that area they kill add up • The number of H&S deficiencies deficiencies, including H&S to 100 percent. Area weights are (EI41S and NI:T) that the inspector deficiencies, based on the importance recalculated when some inspectable observed: (weight) of tyre item, the criticality of the items are missing in one or more area(s). • All observed smoke detector deficiency.and the severity of the Although rare, it is possible that an deficiencies and deficiencv.The ulaxiuuun deduction for inspectable area could have, no • A projection of the total number of a single deficiency cannot exceed the inspectable items available; for example, I I&S problems that the inspector point cap for the inspectable area where there could be no conunon areas in the, potentially would see in an inspection the deficiency is observed and a sub- inspected residential buildings and no of all buildings and all units. area score-cannot be less than zero. common buildings. In this case, the If there are smoke detector Also, points will be deducted only for weight of the "common areas" would be deficiencies, the physical conditions one deficiency of the sanlo kind within zero percent and its original 15 percent score hill include an asterisk. However, a subarea. For example, if multiple weight would be equitably redistributed problems with smoke detectors do not deficiencies for broken windows are to the other inspectable areas. The 15 currently affect the overall snore. When recorded. only the most severe percent is redistributed by totaling the there is an asterisk indicating that the deficiency observer] (or one,of the most weights of other inspectable areas(15 + 1131 Federal Register/Vol. 77, No. 154/Thursday, August 9, 2012/notices 47721 15 + 20 + 35 =85)and dividing tile, The deductions for H&S for each points deducted is the ituni weight (15.5). weights of each by that amount (0.85, inspectable area;and multiplied by the c-rlliralit•weight(5). which is 85% expressed as it decimal). • The overall project score. multiplied by thu severity weight (1).which The modified weights are 17.6 percent. The Physical Inspection Report allows equals 77.5. 17.6 percent and '23.5 percent, zero the PHA and the project manager to see a this lilysub weight all lesub-area items. percent, and 41.2 percent for site, 16e magnitude of the points lost by the anu:uity weight far the sub-area adds to ! P building exterior,building systems, inspectable area and tile 100%. If missing/damaged/expired fire impact on the extinguishers is the only deficienry observed, common areas,and units, respectively, score of the flfiS deficiencies. the initial proportionato score for this sub- and they add up to too percent. 12. Examples of Physical Condition area(building systems in building one)is the 10. Area nn[/Sub-Area Scores Score Calrulutinns amenity score minus the deficie rm points. normalized to a 100-point basis.In this For inspectable areas with sub-areas The physical inspection scoring is instance the initial proportionate sub-area (all areas except sites), the inspectable deficiency based. All projects start with score is 100 — 77.5 =22.5 x.(too. 100)= area score is a weighted average of the 100 points. Each deficiencv observed 22.5.Because the point deduction for the sub-area scores within that area.The reduces the score by an amount sussing/damaged/expired fire extinguishers is 77.5,this deficiency accounts for 77.5% of scoring protocol determines the amenity dependent on the importance and the sub-area score. Additional deficiencies or weight for the site and each sub-area as severity of the deficiency-, the number of 1II S deficiencies would be calculated in the noted in Section VI.1 under the buildings and units inspected, the same manner and further decrease the sub- definition for normalized sub-area inspectable items actually present to be area score.and if the result is less than zero weight. For example,a property with no inspected,and the relative weights (a negative number)the score is set to zero. fencing or gates in the inspectable area between inspectable items and of the site would have an amenity inspectable areas. Element Associated value weight of 90 percent or 0.9 (100 percent -rho calculation of a physical 00.00 minus 10 percent for lack of fencing in(] condition score is illustrated in the Amenity score ........... 7.5 gates),and a single dwelling unit with examples provided below. The Deficiency points ... Calculation for the ins-i- 100.100.00 — 77.5=22.5 all items available for inspection, except examples go through a number of tint proportionate a call-for-aid would have an amenity interim stages in calculating the score, score. weight of 0.98 or 98 percent (100 illustrating how suh-area scores are Normalizing factor ... too. too= 1 percent minus 2 percent for lack of call- calculated for a single project• how the Normalized initial sub- 22.5 :x 1=22.5 for-aid). A call-for-aid is a systum sub-area scores are rolled up into area area score. designed to provide elderly residents scores, how the point cap is applied. the opportunity to call for help in the and how area scores are combined to Example N2.This example illustrates how event of an emergency. calculate the overall project score. One the building systems inspectable area score is The amenity weight excludes all particular rlrfiriencv, missing/damaged/ calculated from the sub-aroa scorn Consider a property with two buildings with the health and safety items. Each deficiency expired fire extinguishers, is carried foll(nving rhararteristics: as weighted and normalized are, through the example. • Building One(from example 41 above): Subtracted from the sub-area or site- As will be seen, the deduction starts — 28 units weighted amenity scare. Sub-area and as a percent of the sub-area. '['bell the — 100 percent amenity weight for items that site area scores are further reduced for area score is decreased considerably in are present to be inspected in building anv observed health and safety the final overall project score since it is systems deficiencies.'These deductions are taken average[[ across other sub-areas — Building systems sub-area score is 22.5 at the site,building, or unit level. At (building systems in the example)and points this point,a control is applied to then averaged across the Tice —- Building Two: units prevent a negative site,building, or unit inspectable areas. Last,as applicable. — 62 percent amenity weight for items that score.The control ensures that no single the points deducted (lire to the are present to be inspected in the building or unit can affect an area score observance of a particular deficiencv are building's systems more than its weighted share. reducers by the application of the point — Building systems sub-area score is 100.0 11. Overall Project Snore loss cap. Although interim results in tine points 1" examples are rounded to one decimal. The score for the building systems The overall project score is the only the final results are rounded for area is the weighted average of the weighted average of the five inspectable actual calculations- individual snores for each building's area scores,with the five areas weighted Following this section,another systems. Each building systems score is by their normalized weights. example is given specifically for public iwcighted by the number of units and the \orrnalizcd area weights reflect both the housing projects to show how project percent of the weight for iteuts present initial weights and the relative weights scores are rolled up into the PI1AS to be inspected in the building systems between areas of inspectable items physical indicator score for the PFIA as inspectable area. actually present. For reporting purposes, a whole. ']'be building systems area score is the number of possible points is the Example 91.*['his example illustrates how determined as follows. First, the unit nornalized area weight adjusted by the snore for a sub-area of building systems weighted average for each building is multiplying by 100 so that the possible is calculated based on the following features. computed by multiplying the number of points for the five areas add up to too. Consider a project for which the five units in the building by the amenity In the Physical Inspection Report for inspectable areas are present and during the %weight for that building. The unit each project that is sent to the, PHA, the inspection of a residential building with 28 weighted average for each building then units missing/damaged/expired lire is divided fi the total of the building following items are listed: )' g extinguishers a everits ore observed.This as a seven-ncv Normalized weights as the has a�everity level of 3.which has a severity. ``'eights for all buildings in the property "possible points" by area; weight of 1.00(see Item I of this section):a to determine the proportion of building • The area scores, taking into account criticality level of 5,which has a criticality weight for each building. Multiplying the points deducted for observed weight of 5 (see hem I of this section):and the proportion of building weight by the deficiencies: an item weight of 15.5.The amount of the initial sub-area score for the building 1132 47722 Federal Register/Vol. 77, No. 154/Thursday, August 9, 2012/Notices produces the building systems area building systems area score, for each In this example, the buildings systems score. The building systems area score building. area score for the property is 25.7. for the property is the sum of the. Number of Amenity Unit Building units weight = weighted average One ............................................................................................................................................. 28 1.00 28.0 Two ............................................................................................................................................. 2 .62 1.24 Total ..................................................................................................................................... 30 29.24 Sum of Proportion Unit weighted average + building = of building weights weight 28.0 ....................................__............. ............................................................................................................. 29.24 .958 1.24 ....................................__.......................................................................................................................... 29.24 .042 29.24 ................................................................................................................................................................. Proportion of building weight Initial sub- Building area score systems Area score .958 ................................................................................................................................................................... 22.5 21.5 .042 ................................................................................................................................................................... 100.0 4.2 25.7 As shown in the calculations above, #1) multiplied by the proportion of calculated in example n2)by the total the proportion of building weight building weight allocated to building number of units in the property.Normalizing allocated to building one is 95.8 io (28.0 one, or 77.5 x.958 = 74.2. the unit weighted average of amenity weights +29.24 = .958). A building systems area Example#3.'I'his example illustrates how for each building by multiplying by too score of Z5.7 indicates that the point the overall weighted average for the building results in the overall building systems deduction for the missing/damaged/ systems area amenity weight is calculated. weighted average amenity weight.In this expired fire extinguishers in building The unit weighted average of amenity weight example,the overall building systems one is 74.2 points: the number of points for each building is computed by dividing weighted average amenity weight for the deducted at the sub-area (from example the unit weighted average for the building(as property is 97.4. Overall Unit weight- building Unit weight- Total units _ ed average Normalized systems Building ed average + in property - of amenity to a 100 = weighted weights point basis average amenity weight One ............................................................................ 28.0 30 .933 100 93.3 Two ............................................................................ 1.24 30 .041 100 4.1 Total ................................................................... 29.24 .................... .................... .................... 97.4 Example 94.'['his example illustrates how —Score:25.7 points amenity weight for building systems the score for a property is calculated. —97.4 percent weighted average amenity that was Calculated in the three Consider a property with the following weight characteristics. All of the values are —Nominal area weight 20 percent examples above. presumed except for the values buildings • Common Areas The propertv score is determined as systems which were calculated in the —Score: 77 points follows.The amenity weighted average preceding examples. —20 percent weighted average amenity is computed by multiplying the nominal • Site weight area weight for the inspectable area (see —Score: 90 points —Nominal area weight: 15 percent Item 1 of this Section) by the amenity —67.5 percent w•ei•hied avers u:unenit. • Dwelling Units P 6 R —Snore:85 mints weight (presumed For the example.). weight —Score: weighted average amenitv weight Next, the amenity weighted averages for —Nominal area weight 15 percent —Nominal area weight: 35 percent the five inspectable areas are added to • Building Exteriors To calculate the property score, the determine the total adjusted height —Scora: 85 points —100 percent weighted average amenity adjusted area weights [oral] fire (80.5 in this example) to determine the weight inspectable arras are determined. The maximum possible points for the —Nominal area weight: 15 percent amenity weights for each of the five inspectable, area, each amenity weighted • Building Systems(from Examples 2 and inspectable areas shown in the table average is divider) by the total adjusted 3) below are all presumed, except for the weight and then multiplied by 100 to 1133 Federal Register/Vol. 77, No. 154/Thursdav, August 9, 20'12/Notices 47723 normalize the result. The sum of the five total number of possible points for the possible points, 99.9, was rounded to maximum inspectable area points is the property. In this example, the maximum 100. Nominal Amenity Amenity Total ad- Normalized Maximum..Inspectable area .. = weighted justed to 100 point = Possible area weight weight average weight scale area points Site ............................................. 15 0.675 10.1 80.5 100 12.5 Building Exterior ........................ 15 1.00 15.0 80.5 100 18.6 Building Systems ....................... 20 0.974 19.5 80.5 100 24.2 Common Areas .......................... 15 0.20 3.0 80.5 100 3.7 Dwelling Units ............................ 35 0.94 32.9 80.5 100 40.9 Total .................................... .................... .................... 80.5 ...............I.... ...............I.... 100.0 Before the final property score is systems is 10 points, this 18.0 point at the area level (41.3) by the proportion calculated, the points deducted for each deduction exceeds the cap. Therefore, of building weight for building one deficiency are checkers against the point the total points deducted due to the (.958),or 41.3 +.958=43.1. loss cap in the applicable inspectable missing/damaged/expired fire Third, the building ono, building area to assure that no single defir-ioncy extinguishers deficiency in building one sestems sub-area score is rer-alculet0d results in the deduction of too many is reduced to 10. by summing the building systems points. For the missing/damaged/ There are four steps to implement the deficiencies in building one. In mamplo expired fire extinguishers in building point deduction in the final score. First, 41, the missing/damaged/expired fire one, the points deducted under building the points lost at the area level are set. extinguishers is the only deficiency in systems will be the result of multiplying For this property, the building sestems this sub-area.Therefore. the Ike number of building sestems points points deducted due to missing/ recalculated sub-area score for building deducted for the deficiencv (74.2 as damaged/expired fire extinguishers is one building systems is the amenity determined in exanrple 42)by the set by dividing the point cap (10)by the score(100) minus the building systems proportion of total points allocated to proportion of total points allocated to sub-area deficiency points (43.1). or 100 the building systems inspectable area building systems (.242),or 10+.242 = - 43.1 = 56.9. (.242 from the table above). In this 41.3. The last step in the application of the example, the points deducted for this Second. the building systems sub-area point loss cap is the determination of deficiencv would be 74.2 x.242 = 18.0. weight for building one is set.This is the building sestems area score for the Because the point loss cap for building determined by dividing the points lost properh. Unit Sum of the Initial Building Building Number of Amenity = weighted + building x proper- = systems units weight average weights honate area score score One ............................................ 28 1.00 28.0 29.24 56.9 54.5 Two ............................................ 2 0.62 1.24 29.24 100.0 4.2 Total .................................... 30 ..................1. 29.24 .................... ..............I..... 58.7 The recalculated building systems adjusted amenity weight, and damaged/expired fire extinguishers area score is 58.7 points,and will be normalized to a '100-point basis, in order deficiency from exanrplo 41 in building rounded to 59.This area score is used to produce the possible points for the systeuvs impacts the overall property to calculate the overall property score. inspectable,area. The property score is score. In this example, the property The nominal possible points for each the suns of all weighted inspectable area score,of 78.9 is rounded to 79. inspectable area is multiplied by the scores for that property. The example amenity xyeight, divided by the total below reflects how the, missing/ Normalized Project Area Area to a 100 weighted Inspectable area points " score point = area scale scores Site ............................................................................................................ 12.5 90 100 11.2 Building Exterior ........................................................................................ 18.6 85 100 15.8 Building Systems ...................................................................................... 24.2 59 100 14.3 CommonAreas ......................................................................................... 3.7 77 100 2.8 DwellingUnits ........................................................................................... 40.9 85 100 34.8 Total ................................................................................................... 100.0 .................... .................... 78.9 1134 47724 Federal Register/Vol. 77, No. 1 fi4/'Thursday, August 9. 2012/Notices 13. Computing the PHA.S Physical units is 15.Thus,the sampling ratio for this Sampling probability= 1.00+((1.00 - Inspection Score project is the total number of dwelling units 1.00)x 0.50)= 1.00.The sampling weight for divided by the unit sample size,or 30+ 15 these buildings is 1. The physical inspection score for the = 2.This means that every second dwelling The single-family buildings each have a PI-IAS for a PHA is the weighted average unit will be selected.The number of sampling probability calculate(]as follows: of the PHA's individual project physical residential buildings to be inspected is the Sampling probability=0.40+((1.00 - inspection scores, where the weighs are minimum of 15 (the dwelling unit sample) 0.40)x 0.50)=0.70.TI a sampling weight of the number of units in each project and 2(the number of residential buildings). selected single-family buildings is t +0.70= divided by the total number of units in Thus,2 residential buildings will be 1.43. all projecis for the PIiA. inspected.Since both buildings have at least 1�, Arcessibiiity Questions Project 1 has a snore of 79 and 2 dwelling units.both buildings are certain has 30 units(from the example above) to be selected for inspection in Phase 1. Since IIUD reviews particular elements Project 2 has it score of 86 and has 600 all buildings were selected in Phase 1 of during the, physical inspection to units. sampling,Phase 2 is not invoked. Both dclennine possible indications of The overall PHAS score is computed as buildings will then have a selection noncompliance with the Fair liousing follows: probability of 1.00 and a sampling weight of c Score=179 x 30/(30+600)I +la6 x 600/ 1 A0. 504 of t U.S.C. 3801ation ) and section (3u+000)I Example 42.This example illustrates a 504 of the Rehabilitation Act of'19i9 (29 =3.76+83.81 project with some buildings selected in Phase U.S.C. 794). More specifically, during =87.57 that rounds to an overall physical 1.other buildings selected in Phase 2,and the physical inspection, the inspector inspection score of 86. sortie buildings that are not selected al all+ will record if: (1)There, is it wheelchair- The Project is comprised of 22 residential accessible route to and from the main 14. Examples of.Sampling lifeights far buildings.Two of Om buildings each have 10 ground floor entrance of the buildings Buildings dwelling units and the other 20 buildings aru inspected: (2) the main entrance for The determination of which buildings single-family dwelling units,fora total of 4o every building inspected is at least 32 will be inspected is it two-phase dwelling units(2 X10)+20=41).'1'he target iuchos wide, measured between the process. In Phase 1 of the process,all dwelling unit sample size fora project with dour and the opposite floor jamb: (3) common buildings and buildings that ao dwelling units is 16.al n sampling ratio there is an accessible route to all g b for this project is the lolal number of units contain sampled dwelling units that divided by the unit sample size,or 40+ 16 exterior common areas:and (4) for will be inspected are included in the =2.5. In accordance with the inspection nntlti-story buildings that are inspected, sampled buildings that will be protocol of inspecting the minimum of the the interior hallways to all inspected inspected. (Dwelling units are sampled dwelling unit sample(161 end the number of units and common areas are at least 36 with equal probabilities at random front residential buildings(22). 16 of the inches wide. 'These items are recorded. all buildings.) When all buildings in a residential buildings will he inspected for hilt do not affect the score,. sro eet are not selected in the building this project. ample through Phase 1, Phase 2 is used In Phase 1 of sampling.the two buildings IV. Environmental Review with 10 dwelling units are selected with This notice provides operating to increase the size of the building 1 P g certainty since each building has more than instructions and procedures in sample. In Phase'2, the additional 2.5 dwelling units. Each ofthe single-family p buildings that are to be included in the buildings has a 1 +2.5 or 0.40 probability of connection with activity, under the sample are selected with equal selection in Phase 1. Public liousing Assessment System probabilities so that the total residential Assume that both nmlti-unit buildings and regulations at 24 DFR part 9n2 that have, building sample size is the lesser of eight of the single-family buildings(10 previously been subject to the required either(1) the duelling unit sample size, buildings in all)are selected in Phase 1.This environmental review. Accordingly. or(2) the number of residential leaves 12 single-family buildings available under 24 C1 R 50.19(c)(4), this notice is buildings. for selection in Phase 2. Since 16 residential categorically excluded from To illustrate the process for sampling buildings will be inspected.the sample of 10 environmental review under the buildings, five examples are provided buildings selected in Phase I falls six National Environmental Policy Act of buildings short of a fill] sample.Therefore, below: buildings buildings will be selected in Phase 2. 19ti9 (4_ U.S.C. 43_1). E'.rnmple k/.'this example illustrates a Since Phase 2 sampling will select 6 of the Dated:July 26,2012. project with lire buildings for which both 12 previously unselected buildings,each Sandra B.Henriquez, buildings are sampled with certainty. building not selected in Phase 1 will have it Assistant Serretorp for Public.and Indian Building 1 has to duelling units and six in 12(0.50) probability of selection in Housing, 2 has 20 dwelling units, for a total Phase 2. of 30 dwelling units.The target duelling unit The two multi-unit buildings each have it Appendix 1: Item Weights and sample size fora project with 30 dwelling sampling probability calculated as follows: Criticalilies AREA-SITE Nominal Level Inspectable item it Observable deficiency Criticality H&S weight (percent) 1 2 1 3 Fencing and Gates ................ 10.0 Holes/Missing Sections/Damaged/Falling/Leaning (Non-se- 3 .... X .... ........ runty/Non-safety). 10.0 Holes/Missing Sections/Damaged/Falling/Leaning (Secu- 4 X X X NLT rity/Safety). Grounds ................................. 12.5 Erosion/Rutting Areas ...........__.......................................... 4 .... X X NLT 12.5 Overgrown/Penetrating Vegetation ...................................... 3 .... X X ......_ 12.5 Ponding/Sile Drainage ......................__......_...................... 4 .... X X ........ Health & Safety ........_........... 12.5 Air Quality-Sewer Odor Detected ...................._................ 3 .... .... X NLT 12.5 Air Quality-Propane/Natural Gas/Methane Gas Detected 5 .... .... X LT 1135 Federal Register/Vol. 77, No. 154/Thursdav, August 9, 2012/Notices 47725 AREA-SITE-Continued Nominal Level Inspectable item item Observable deficiency Criticality H&S weight (per(ent) 1 2 3 12.5 Electrical Hazards-Exposed Wires/Open Panels .............. 5 .... .... X LT 12.5 Electrical Hazards-Water Leaks oninear Electrical Equip- 5 .... .... X LT ment. 12.5 Flammable/Combustible Materials-Improperly Stored ...... 3 .... .... X NLT 12.5 Garbage and Debris-Outdoors .......................................... 3 .... .... X NLT 0.0 Hazards-Other ................................................................... 3 .... .... X NLT 12.5 Hazards-Sharp Edges ....................................................... 3 .... .... X NLT 12.5 Hazards-Tripping ............................................................... 3 .... .... X NLT 12.5 Infestation-Insects ............................................................. 3 .... .... X NLT 12.5 Infestation-Rats/Mice/Vermin ............................................ 3 .... .... X NLT Mailboxes/Project Signs ........ 1.0 Mailbox Missing/Damaged ................................................... 2 .... .... X ........ 1.0 Signs Damaged ................................................................... 2 X .... .... ........ MarketAppeal ....................... 8.0 Graffiti .................................................................................. 4 X X X ........ 8.0 Litter ..................................................................................... 4 .... X .... ........ Parking Lots/Driveways/ 8.5 Cracks/Settlement/Heaving/Loose Materials/Potholes ........ 4 .... X X ........ Roads. 8.5 Ponding ................................................................................ 4 .... X X ........ Play Areas and Equipment .... 12.5 Damaged/Broken Equipment ............................................... 3 X X X NLT 12.5 Deteriorated Play Area Surface ........................................... 3 .... X X ........ Refuse Disposal .................... 12.5 Broken/Damaged Enclosure-Inadequate Outside Storage 3 .... X .... ........ Space. Retaining Walls ...................... 10.0 Damaged/Falling/Leaning .................................................... 4 X .... X NLT Storm Drainage ..................... 12.5 Damaged/Obstructed ........................................................... 5 .... X X ........ Walkways/Steps .................... 12.5 BrokerVMissing Hand Railing .............................................. 3 .... .... X NLT 12.5 Cracks/Settlement/Heaving ................................................. 3 .... X .... ........ 12.5 Spalling ................................................................................ 3 X X .... ........ NOTE: 1) Nominal item weight assumes that all items for the Site are present. Item weights would be adjusted accordingly when items are not applicable (N/A). 2) The Health & Safety item assumes the highest item weight for a particular inspection. Nominally it is equal to 12.5%. 3)"X"in the level column indicates which levels are applicable. 4) Only level 3 is applied to H&S deficiencies. 5) In the H&S column, NLT is non-life threatening H&S and LT (life threatening) is exigent/fire safety (calling for immediate attention or remedy). AREA-BUILDING EXTERIOR Nominal Level Inspectable item item weight Observable deficiency Criticality H&S 1 2 3 (percent) Doors ..................................... 18.4 Damaged Frames/Threshold/Lintels/Trim ........................... 2 .... X X NLT 18A Damaged Hardware/Locks .................................................. 3 .... X X .......- 18.4 Damaged Surface(Holes/Paint/Rust/Glass) ....................... 4 .... X X ........ 18.4 Damaged/Missing Screen/Storrn/Security Door .................. 3 X .... X NLT 18.4 Deteriorated/Missing Caulking/Seals ................................... 4 .... .... X ........ 18.4 Missing Door ........................................................................ 5 .... .... X ........ FHEO ..................................... 0.0 FHEO-Main Entrance Less Than 32"Wide ...................... 5 .... .... X ........ 0.0 FHEO-Obstructed or Missing Accessibility Route ............ 5 .... .... X ........ Fire Escapes .......................... 18.4 Blocked Egress/ladders ...................................................... 5 .... .... X LT 18.4 Visibly Missing Components ................................................ 5 .... X LT Foundations ........................... 18.4 Cracks/Gaps ........................................................................ 5 .... X X ........ 18.4 Spalling/Exposed Rebar ...................................................... 4 .... X X ........ Health and Safety .................. 18.4 Electrical Hazards-Exposed Wires/Open Panels .............. 5 .... .... X LT 18.4 Electrical Hazards-Water Leaks on/near Electrical Equip- 5 .... .... X LT ment. 18.4 Emergency Fire Exits-Emergency/Fire Exits Blocked/Un- 5 .... .... X LT usable. 18.4 Emergency Fire Exits-Missing Exit Signs ......................... 3 .... .... X NLT 18.4 Flammable/Combustible Materials-Improperly Stored ...... 3 .... .... X NLT 18.4 Garbage and Debris-Outdoors .......................................... 3 .... .... X NLT 0.0 Hazards-Other ................................................................... 3 .... .... X NLT 18.4 Hazards-Sharp Edges ....................................................... 3 .... .... X NLT 0.0 Hazards-Tripping ............................................................... 3 .... .... X NLT 18.4 Infestation-Insects ............................................................. 3 .... .... X NLT 18.4 Infestation-Rats/Mice/Verm in ............................................ 3 _.. .... X NLT Lighting .................................. 11.5 Broken Fixtures/Bulbs .......................................................... 4 .... X X ........ Roofs ..................................... 18.4 Damaged/Clogged Drains ................................................... 5 .... X X ........ 18.4 Damaged Soffits/Fascia/Soffit Vents ...............I................... 4 X .... X ........ 1136 47726 Federal Register/Vol. 77, No. 154/'Thursday, August 9, 2012/Notices AREA-BUILDING EXTERIOR-Continued Nominal M23 Inspectable itObservable deficiency Criticality H&S weight 1 (Percent) 18.4 Damaged Vents ................................................................... 4 X .... X ........ 18.4 Damagedrrom Membrane/Missing Ballast ......................... 5 .... X X ........ 18.4 Missing/Damaged Components from Downspout/Guner .... 3 X X X ........ 18.4 Missing/Damaged Shingles ................................................. 5 X X X ........ 18.4 Pending ................................................................................ 4 .... .... X ........ Walls ...................................... 14.9 Cracks/Gaps ........................................................................ 5 .... X X ........ 14.9 Damaged Chimneys ............................................................ 4 X X X NLT 14.9 Missing/Damaged Caulking/Mortar ...................................... 4 X X .... ........ 14.9 Missing Pieces/Holes/Spalling ............................................. 4 .... X X 14.9 Stained/Peeling/Needs Paint ............................................... 3 X X .... ........ Windows ................................ 0.0 Cracked/Broken/Missing Panes ........................................... 3 X .... X NLT 0.0 Damaged/Missing Screens .................................................. 2 X .... .... ........ 0.0 Damaged Sills/Frames/LintelslTrim ..................................... 5 X X .... ........ 0.0 Missing/Deteriorated Caulking/Seals/Glazing Compound ... 5 X .... X ........ 0.0 Peeling/Needs Paint ............................................................ 2 X .... .... ........ Note: 1) Nominal item weight assumes that all items for the Building Exterior are present. Item weights would be adjusted accordingly when items are not applicable(NIA). 2) The Health& Safety item assumes the highest item weight for a particular inspection. Nominally it is equal to 18.4%. 3) "X" in the level column indicates which levels are applicable. 4) Only level 3 is applied to H&S deficiencies. 5) In the H&S column, NLT is non-life threatening H&S and LT (life threatening) is exigent/fire safety (calling for immediate attention or remedy). AREA-BUILDING SYSTEMS Nominal Level Inspectable item item Observable deficiency Criticality I H&S weight (percent) 1 2 3 Domestic Water ..................... 15.5 General Rust/Corrosion on Heater Chimney ...................... 2 .... .... X NLT 15.5 Leaking Central Water Supply ............................................. 4 .... .... X ........ 15.5 Misaligned Chimney/Ventilation System ............................. 5 .... .... X LT 15.5 Missing Pressure Relief Valve ............................................. 5 .... .... X NLT 15.5 Water Supply Inoperable ..................................................... 5 .... .... X NLT Electrical System ................... 15.5 Blocked Access/Improper Storage ...................................... 3 .... .... X NLT 15.5 Burnt Breakers ..................................................................... 4 .... .... X NLT 15.5 Evidence of Leaks/Corrosion ............................................... 5 .... .... X NLT 15.5 Frayed Wiring ...................................................................... 5 .... .... X ........ ................................................ 15.5 Missing Breakers/Fuses ...................................................... 5 .... .... X LT 15.5 Missing Covers .................................................................... 5 .... .... X LT Elevators 5.0 Inoperable ............................................................................ 5 .... .... X NLT Emergency Power ................. 2.0 Auxiliary Lighting Inoperable ............................................... 5 .... .... X ........ 2.0 Run-Up Records/Documentation Not Available .........._..... 4 .... X X ........ Fire Protection ....................... 15.5 Missing Sprinkler Head ........................................................ 5 .... .... X NLT 15.5 Missing/Damaged/Expired Extinguishers ............................ 5 X X X LT Health& Safety ..................... 15.5 Air Quality-Mold and/or Mildew Observed ........................ 3 .... .... X NLT 15.5 Air Quality-Propane/Natural Gas/Methane Gas Detected 5 .... .... X LT ................................................ 15.5 Air Quality-Sewer Odor Detected ...................................... 3 .... .... X NLT 15.5 Electrical Hazards-Exposed Wires/Open Panels .............. 5 .... .... X LT 15.5 Electrical Hazards-Water Leaks on/near Electrical Equip- 5 .... .... X LT ment. 15.5 Elevator-Tripping ............................................................... 3 .... X NLT 15.5 Emergency Fire Exits-Emergency/Fire Exits Blocked/Un- 5 X LT usable. 15.5 Emergency Fire Exits-Missing Exit Signs ......................... 3 .... .... X NLT 15.5 Flammable/Combustible Materials-Improperly Stored ...... 3 .... .... X NLT 15.5 Garbage and Debris-Indoors ............................................. 3 .... .... X NLT 15.5 Garbage and Debris-Outdoors .....___................................ 3 .... .... X NLT 0.0 Hazards-Other ................................................................... 3 .... .... X NLT 15.5 Hazards-Sharp Edges ....................................................... 3 .... .... X NLT 0.0 Hazards-Tripping ............................................................... 3 .... X NLT 15.5 Infestation-Insects ... ....... ............................................. 3 .__ .... X NLT 15.5 Infestation-Rats/Mice/Vermin ............................................ 3 .... .... X NLT HVAC ..................................... 15.5 Boiler/Pump/Cooling System Leaks .................................... 4 X .... X ........ 15.5 Fuel Supply Leaks ............................................................... 4 .... .... X NLT 15.5 General Rust/Corrosion ....................................................... 2 .... X X NLT 15.5 Misaligned ChimneyNentilation System ............................. 5 .... .... X LT Root Exhaust System ............ 15.5 Roof Exhaust Fan(s) Inoperable ......................................... 3 .... .... X ........ 1137 Federal Register/Vol. 77, No. 154/'1'hursdav, August 9, 2012/Nlotices 47727 AREA—BUILDING SYSTEMS—Continued Nominal Level Inspectable item item weight Observable deficiency Criticality H&S (percent) 1 2 3 Sanitary System .................... t5.5 1 Broken/Leaking/Clogged Pipes or Drains ........................... 15.5 Missing Drain/CleanouVManhole Covers ............................ 3 .... .... X ........ Note: 1) Nominal item weight assumes that all items for the Building System are present. Item weights would be adjusted accordingly when items are not applicable (N/A). 2)The Health& Safety item assumes the highest item weight for a particular inspection. Nominally it is equal to 15.5%. 3 "X' in the level column indicates which levels are applicable. 4 Only level 3 is applied to H&S deficiencies. 5 In the H&S column, NLT is non-life threatening H&S and LT (life threatening) is exigere fire safety (calling for immediate attention or remedy). AREA—COMMON AREAS Inspectable item Nominal Level ID cation item weight Observable deficiency Criticality H&S (percent) 1 2 3 Basement/Garage/Carport ..... 5 Ceiling—Bulging/Buckling ............................ ....... 4 .... .... X ........ 5 Ceiling—Holes/Missing Tiles/Panels/Cracks ....................... 4 X X X ........ 5 Ceiling—Peeling/Needs Paint .............................................. 1 X X .... ........ 5 Ceiling—Mold/Mildew/Water StainslWater Damage ........... 2 X .... X ........ 5 Doors—Damaged Frames/Threshold/Untels/Trim .............. 3 .... X X NLT 5 Doors—Damaged Hardware/Locks ..................................... 3 X X X ........ 5 Doors—Damaged/Missing ScreerVStomJSecurity Door ..... 4 X .... X NLT 5 Doors—Damaged Surface (Holes/Palnt/RusUGlass) .......... 3 .... X X 5 Doors—Deteriorated/Missing Seals(Entry Only) ................ 5 .... X 5 Doors—Missing Door ........................................................... 4 X X X ........ 5 Electrical—Blocked Access to Electrical Panel ................... 3 .... .... X NLT 5 Electrical—Burnt Breakers ................................................... 4 .... .... X NLT 5 Electrical—Evidence of Leaks/Corrosion ............................ 5 .... .... X NLT 5 Electrical—Frayed Wiring .................................................... 5 .... .... X ........ 5 Electrical--Missing Breakers ............................................... 5 .... .... X LT 5 Electrical—Missing Covers .................................................. 5 .... .... X LT 5 Floors—Bulging/Buckling ..................................................... 4 .... .... X ........ 5 Floors—Soft Floor Covering Damaged ............................... 4 X X X ........ 5 Floors—Hard Floor Covering Missing/Damaged Flooring/ 4 X X X ........ Tiles. 5 Floors—Peeling/Needs Paint ............................................... 1 X X .... ........ 5 Floors—Rot/Detedorated Subtloor ...................................... 4 .... X X ........ 5 Floors—Mold/Mildew/Water Stains/Water Damage ............ 2 .... X X ........ 5 Lighting—Missing/Damaged/Inoperable Fixture .................. 4 .... X X ........ 5 Outlets/Switches/Cover Plates—Missing/Broken ................ 3 X .... X LT 0 Smoke Detector—Missing/Inoperable ................................. 5 .... .... X LT 5 Stairs—BrokerVDamaged/Missing Steps ............................. 3 .... .... X NLT 5 Stairs—Broken/Missing Hand Railing .................................. 3 .... .... X NLT 5 Walls—Bulging/Buckling ...................................................... 4 .... .... X ........ 5 Walls—Damaged ................................................................. 3 X X X ........ 5 Walls—Damaged/Detedorated Trim ............................... .... 1 X X X ........ 5 Walls—Peeling/Needs Paint ................................................ 1 X X .... ........ 5 Walls—Mold/Mildew/Water Stains/Water Damage ............. 2 X .... X ........ 5 Windows--Cracked/Broken/Missing Panes ........................ 3 X .... X NLT 5 Windows—Damaged/Missing Screens ................................ 2 X .... .... ........ 5 Windows—Damaged Sills/Frames/Lintels/Trim ................... 4 X X .... ........ 5 Windows—Missing/Deteriorated Caulking/Seals/G lazing 5 X .... X ........ Compound. 5 Windows—Inoperable/Not Lockable .................................... 3 X .... X NLT 5 Windows—Peeling/Needs Paint .......................................... 1 X .... .... ........ 5 Windows—Security Bars Prevent Egress ........................... 5 .... .... X LT Closet/Utility Mechanical ....... 5 Ceiling—Bulging/Buckling .................................................... 4 .... .... X ........ 5 Ceiling—Holes/Missing Tiles/Panels/Cracks ...................... 4 X X X ........ 5 Ceiling—Peeling/Needs Paint .............................................. 1 X X .... ........ 5 Ceiling—Mold/Mildew/Water StainsWater Damage ........... 2 X _.. X ........ 5 Doors—Damaged Frames/Threshold/Lintels/Trim .............. 2 .... X X NLT 5 Doors—Damaged Hardware/Locks ..................................... 3 X X X ........ 5 Doors—Damaged/Missing Screen/Storm/Security Door ..... 3 X .... X NLT 5 Doors—Damaged Surface (Holes/Paint/Rust/Glass) .......... 3 .... X X 5 Doors—Deteriorated/Missing Seals (Entry Only) ................ 4 .... X 5 Doors—Missing Door ........................................................... 5 X X X NLT 5 Electricat—Blocked Access to Electrical Panel ................... 3 .... .... X NLT 5 Electrical—Bumt Breakers ................................................... 4 .... .... X NLT 1138 47728 Federal Register/Vol. 77, No. 154/Thursday, August 9, 2012/Notices AREA—COMMON AREAS—Continued Inspectable item Nominal Level location item weight Observable deficiency Criticality H&S (percent) 1 2 3 5 Electrical—Evidence of Leaks/Corrosion ............................ 5 .... .... X NLT 5 Electrical—Frayed Wiring .................................................... 5 .... X ........ 5 Electrical—Missing Breakers ............................................... 5 .... .... X LT 5 Electrical—Missing Covers .................................................. 5 .... .... X LT 5 Floors—Bulging/Buckling ..................................................... 4 .... .... X ........ 5 Floors—Soft Floor Covering Missing/Damaged .................. 4 X X X ........ 5 Floors—Hard Floor Covering Missing/Damaged Flooring/ 4 X X X ........ Tiles. 5 Floors—Peeling/Needs Paint ............................................... 1 X X .... ........ 5 Floors—Rot/Deteriorated Subfloor ...................................... 4 .... X X ........ 5 Floors—Mold/MildewAVater Stains/Water Damage ............ 2 .... X X ........ 5 Lighting—Missing/Damaged/Inoperable Fixture .................. 4 .... X X ........ 5 Outlets/Switches/Cover Plates—Missing/Broken ................ 3 X .... X LT 0 Smoke Detector—Missing/Inoperable ................................. 5 .... .... X LT 5 Stairs—Broken/Damaged/Missing Steps ............................. 3 .... .... X NLT 5 Stairs—Broken/Missing Hand Railing .................................. 3 .... .... X NLT 5 Walls—Bulging/Buckling ...................................................... 4 .... .... X ........ 5 Walls—Damaged ................................................................. 3 X X X ........ 5 Walls—Damaged/Deteriorated Trim .................................... 1 X X X ........ 5 Walls—Peeling/Needs Paint ................ _............................. 1 X X .... ........ 5 Walls—Mold/Mildew/Water Slains/Water Damage ............. 2 X .... X ........ 5 Windows—Cracked/BrokeNMissing Panes ........................ 3 X .... X NLT 5 Windows—Damaged/Missing Screens ................................ 2 X .... .... ........ 5 Windows—Damaged Sills/Frames/Lintels/Trim ................... 4 X X .... ........ 5 Windows—Missing/Deteriorated Caulking/Seals/Glazing 5 X .... X ........ Compound. 5 Windows—Inoperable/Not Lockable .................................... 3 X .... X NLT 5 Windows—Peeling/Needs Paint .......................................... 1 X .... .... ........ 5 Windows—Security Bars Prevent Egress ........................... 5 .... .... X LT Community Room .................. 10 Ceiling—Bulging/Buckling .................................................... 4 .... .... X ........ 10 Ceiling—Holes/Missing Tiles/Panels/Cracks ....................... 4 X X X 10 Ceiling—Peeling/Needs Paint .............................................. 1 X X .... ........ 10 Ceiling—Mold/Mildew/Water Stains/Water Damage ........... 2 X .... X ........ 10 Doors—Damaged FrameslThreshold/Lintels/Trim .............. 2 .... X X NLT 10 Doors—Damaged Hardware/Locks ..................................... 3 X X X ........ 10 Doors—Damaged/Missing ScreenJStomVSecurity, Door ..... 3 X .... X NLT 10 Doors—Damaged Surface (Holes/Paint/Rust/Glass) .......... 3 .... X X ........ 10 Doors—Deteriorated/Missing Seals (Entry Only) ................ 4 .... .... X ........ 10 Doors—Missing Door ........................................................... 5 X X X NLT 10 Electrical-—Blocked Access to Electrical Panel ................... 3 .... .... X NLT 10 Electrical—Burnt Breakers ................................................... 4 .... .... X NLT 10 Electrical—Evidence of Leaks/Corrosion ............................ 5 .... .... X NLT 10 Electrical-—Frayed Wiring .................................................... 5 .... .... X ........ 10 Electrical—Missing Breakers ............................................... 5 .... .... X LT 10 Electrical—Missing Covers .................................................. 5 .... .... X LT 10 Floors—Bulging/Buckling ..................................................... 4 .... .... X ........ 10 Floors—Soft Floor Covering Missing/Damaged ..... .._........ 4 X X X ........ 10 Floors—Hard Floor Covering Missing/Damaged Flooring/ 4 X X X ........ Tiles. 10 Floors—Peeling/Needs Paint ............................................... 1 X X .... ........ 10 Floors—Rot/Deteriorated Subfloor ...................................... 4 .... X X ........ 10 Floors—Mold/Mildew/Water Stains/Water Damage ............ 2 .... X X ........ 10 HVAC—Misaligned ChimneyNentilation System ................ 5 .... .... X LT 10 HVAC—Inoperable .............................................................. 5 .... .... X ........ 10 HVAC—NoisyNibrating/Leaking .......................................... 4 X .... .... ........ 10 HVAC—Convection/Radiant Heat System Covers Missing/ 2 .... .... X ........ Damaged. 10 HVAC—General Rust/Corrosion ......................................... 2 X X X ........ 10 Lighting—Missing/Damaged/lnoperable Fixture .................. 4 .... X X ........ 10 Outlets/Switches/Cover Plates—Missing/Broken ............. 3 X .... X LT 0 Smoke Detector—Missing/Inoperable ................................. 5 .... .... X LT 10 Stairs—Broken/Damaged/Missing Steps ............................. 3 .... .... X NLT 10 Stairs—Broken/Missing Hand Railing .................................. 3 .... X NLT 10 Walls—Bulging/Buckling ...................................................... 4 .... .... X ........ 10 Walls—Damaged ................................................................. 3 X X X ........ 10 Walls—DamagedlDeteriorated Trim .................................... t X X X ........ 10 Walls—Peeling/Needs Paint ................................................ 1 X X .... ........ 10 Walls—Mold/Mildew/Water Stains/Water Damage ....... 2 X .... X ........ ........................................... 10 Windows—Cracked/BrokerVMissing Panes ........................ 3 X .... X NLT 10 Windows—Damaged/Missing Screens ................................ 2 X .... .... ........ 1139 Federal Register/Vol. 77, No. 154/Thursday, August 9, 2012/Notices 47729 AREA—COMMON AREAS—Continued Inspectable item Nominal Level location item weight Observable deficiency Criticality H&S (percent) 1 2 3 10 Windows—Damaged Sills/Frames/Lintels/Trim ................... 4 X X .... ........ 10 Windows—Missing/Deteriorated Caulking/Seals/Glazing 5 X .... X ........ Compound. 10 Windows—Inoperable/Not Lockable .................................... 3 X .... X NLT 10 Windows—Peeling/Needs Paint .......................................... I X .... .... ........ 10 Windows—Securty Bars Prevent Egress ........................... 5 .... .... X LT Day Care ............................... 10 Ceiling—Bulging/Buckling .................................................... a .... X 10 Ceiling—Holes/Missing Tiles/Panels/Cracks ....................... 4 X X X ........ 10 Ceiling—Peeling/Needs Paint .............................................. 1 X X .... ........ 10 Ceiling—Mold/Mildew/Water StainsWater Damage ........... 2 X .... X ........ 10 Doors—Damaged Frames/rhreshold/Linfels/rrim .............. 2 .... X X NLT 10 Doors—Damaged Hardware/Locks ..................................... 3 X X X ........ 10 Doors—Damaged/Missing Screen/Storm/Secunty Door ..... 3 X .... X NLT 10 Doors—Damaged Surface(Holes/Paint/Rust/Glass) .......... 3 .... X X ........ 10 Doors—Deteriorated/Missing Seals (Entry Only) ................ 4 .... X 10 Doors—Missing Door ........................................................... 5 X X X ........ 10 Electrical--Blocked Access to Electrical Panel ................... 3 .... .... X NLT 10 Electrical—Burnt Breakers ................................................... 4 .... .... X NLT 10 Electrical—Evidence of Leaks/Corrosion ............................ 5 .... .... X NLT 10 Electrical--Frayed Wiring .................................................... 5 .... .... X ........ 10 Electrical—Missing Breakers ............................................... 5 .... .... X LT 10 Electrical—Missing Covers .................................................. 5 .... .... X LT 10 Floors—Bulging/Buckling ..................................................... 4 .... .... X ........ 10 Floors—Soft Floor Covering Missing/Damaged .................. 4 X X X ........ 10 Floors—Hard Floor Covering Missing/Damaged Flooring/ a X X X ........ Tiles. 10 Floors—Peeling/Needs Paint ............................................... 1 X X .... ........ W Floors—Rot/Deterioraled Subfloor .... ............................ 4 .... X X ........ 10 Floors--Mold/Mildew/Water Stains/Water Damage ............ 2 .... X X ........ 10 HVAC—Misaligned ChimneyNentilation System ................ 5 .... .... X LT 10 HVAC—Inoperable .............................................................. 5 .... .... X ........ 10 HVAC—NoisyNibrating/Leaking .... ............................... 4 X 10 HVAC—Convection/Radiant Heat System Covers Missing/ 2 .... .... X ........ Damaged. 10 HVAC—General Rust/Corrosion ......................................... 2 X X X ........ 10 Lighting—Missing/Damaged/Inoperable Fixture .................. 4 .... X X ........ 10 OufleWSwitches/Cover Plates—Missing/Broken ................ 3 X .... X LT 0 Smoke Detector—Missing/Inoperable ................................. 5 .... .... X LT 10 Stairs—Broken/Damaged/Missing Steps ............................. 3 .... .... X NLT 10 Stairs—BrokerdMissing Hand Railing .................................. 3 .... .... X NLT 10 Walls—Bulging/Buckling ...................................................... 4 .... .... X ........ 10 Walls—Damaged ................................................................. 3 X X X ........ 10 Walls—Damaged/Detenorated Trim ....................... ............ 1 X X X ........ 10 Walls—Peeling/Needs Paint ................................................ 1 X X .... ........ W Walls—Mold/Mildew/Water StainsiWater Damage ............. 2 X .... X ........ 10 Windows—Cracked/BrokerVMissing Panes ........................ 3 X .... X NLT 10 Windows—Damaged/Missing Screens ................................ 2 X .... .... ........ 10 Windows—Damaged Sills/Frames/Lintels/Trim ................... 4 X X .... ........ 10 Windows—Missing/Deteriorated Caulking/Seals/Glazing 5 X ._. X ........ Compound. 10 Windows—Inoperable/Not Lockable .................................... 3 X .... X NLT 10 Windows—Peeling/Needs Paint .......................................... 1 X .... .... ........ 10 Windows—Security Bars Prevent Egress ........................... 5 .... .... X LT FHEO ..................................... 0 FHEO—Multi-story Building Hallways/Common Areas 5 .... .... X ........ Less Than 36"Wide. 0 FHEO—Routes Obstructed or Inaccessible to Wheelchair 5 .... .... X ........ Halls/Corridors/Stairs ............. 10 Ceiling—Bulging/Buckling ............................................ _..... 4 .... .... X ........ 10 Ceiling—Holes/Missing Tiles/Panels/Cracks ....................... 4 X X X ........ 10 Ceiling—Peeling/Needs Paint .............................................. 1 X X .... ........ 10 Ceiling—Mold/Mildew/Water Stains/Water Damage .... 2 X .... X ........ ........................................... 10 Doors—Damaged Frames/Threshold/Lintels/Trim .............. 2 .... X X NLT 10 Doors—Damaged Hardware/Locks ..................................... 3 X X X ........ 10 Doors—Damaged/Missing Screen/Sform/Security Door ..... 3 X .... X NLT 10 Doors—Damaged Surface (Holes/Paint/Rest/Glass) .......... 3 .... X X ........ 10 Doors—Deteriorated/Missing Seals (Entry Only) ................ 4 .... X 10 Doors—Missing Door ........................................................... 5 X X X ........ 10 Electrical--Blocked Access to Electrical Panel ................... 3 .... .... X NLT 10 Electrical—Burnt Breakers .................................. ................ 4 .... .... X NLT 10 Electrical—Evidence of Leaks/Corrosion ............................ 5 .... .... X NLT 10 Electrical---Frayed Wiring .................................................... 5 .... .... X ........ 1140 47730 Federal Register/Vol. 77, No. 154/Thursday, August 9, 2012/,Notices AREA—COMMON AREAS—Continued Inspectable item Nominal Level location item weight Observable deficiency Criticality H&S (percent) 1 2 I 3 10 Electrical—Missing Breakers ............................................... 5 .... .... X LT 10 Electrical—Missing Covers .................................................. 5 .... .... X LT 10 Floors—Bulging/Buckling ..................................................... 4 .... .... X ........ 10 Floors—Soft Floor Covering Missing/Damaged .................. 4 X X X ........ 10 Floors—Hard Floor Covering Missing/Damaged Flooring/ 4 X X X ........ Tiles. 10 Floors—Peeling/Needs Paint ............................................... 1 X X .... ........ 10 Floors—RoUDeteriorated Subfloor ...................................... 4 .... X X ........ 10 Floors—Mold/Mildew/Water Stains/Waler Damage ............ 2 .... X X ........ 10 Graffiti .................................................................................. 4 X X X ........ 10 HVAC—Misaligned ChimneyNentilation System ................ 5 .... .... X LT 10 HVAC—Inoperable .............................................................. 5 .... .... X ........ 10 HVAC—NoisyNibraling/Leaking .......................................... 4 X .... .... ........ 10 HVAC—Convection/Radiant Heat System Covers Missing/ 2 .... .... X ........ Damaged. 10 HVAC—General Rust/Corrosion ......................................... 2 X X X ........ 10 Lighting—Missing/Damaged/Inoperable Fixture .................. 4 .... X X ........ 10 Mailbox—Missing/Damaged ................................................ 2 .... .... X ........ 10 OulleWSwitches/Cover Plates—Missing/Broken ................ 3 X .... X LT 0 Smoke Detector—Missing/Inoperable ................................. 5 .... .... X LT 10 Stairs—Broken/Damaged/Missing Steps ............................. 3 .... .... X NLT 10 Stairs—Broken/Missing Hand Railing .................................. 3 .... .... X NLT 10 Walls—Bulging/Buckling ...................................................... 4 .... X 10 Walls—Damaged ................................................................. 3 X X X ........ 10 Walls—Damaged/Deteriorated Trim .................................... 1 X X X ........ 10 Walls—Peeling/Needs Paint .............................. ................. 1 X X .... ........ 10 Walls—Mold/MildewAVater Stains/Water Damage ............. 2 X .... X ........ 10 Windows—Cracked/Broken/Missing Panes ........................ 3 X .... X NLT 10 Windows—Damaged/Missing Screens ................................ 2 X .... .... ........ 10 Windows—Damaged SillsJFrames/Lintels/Trim ................... 4 X X .... ........ 10 Windows—Missing/Deteriorated Caulking/Seals/Glazing 5 X .... X ........ Compound. 10 Windows—Inoperable/Not Lockable .................................... 3 X .... X NLT 10 Windows—Peeling/Needs Paint .......................................... 1 X .... .... ........ 10 Windows—Security Bars Prevent Egress ........................... 5 .... .... X LT 10 Pedestrian/Wheelchair Ramp .............................................. 3 .... X X ........ Health & Safety ..................... 10 Air Quality—Mold and/or Mildew Observed ........................ 3 .... .... X NLT 10 Air Quality—Propane/Natural Gas/Methane Gas Detected 5 .... .... X LT 10 Air Quality—Sewer Odor Detected ...................................... 3 .... .... X NLT 10 Electrical Hazards—Exposed Wires/Open Panels ........_.._ 5 .... .... X LT 10 Electrical Hazards—Water Leaks on/near Electrical Equip- 5 .... .... X LT ment. 10 Emergency Fire Exits—Emergency/Fire Exits Blocked/Un- 3 .... .... X LT usable. 10 Emergency Fire Exits—Missing Exit Signs ......................... 3 .... .... X NLT 10 Flammable/Combustible Materials—Impropedy Stored ...... 3 .... .... X NLT 10 Garbage and Debris—Indoors ............................................. 3 .... .... X NLT 10 Garbage and Debris—Outdoors .......................................... 3 .... .... X NLT 0 Hazards—Other ........................................................ .......... 3 ._. .... X NLT 10 Hazards—Sharp Edges ....................................................... 3 .... .... X NLT 0 Hazards—Tripping ............................................................... 3 .... X NLT 10 Infestation—Insects ............................................................. 3 .... .... X NLT 10 Infestation—Rats/Mice/Vermin ............................................ 3 .... .... X NLT Kitchen ................................... 10 Cabinets—MissinglDamaged .............................................. 2 .... X X ........ 10 Call for Aid—Inoperable ...................................................... 3 .... .... X NLT 10 Ceiling—Bulging/Buckling .................................................... 4 .... X 10 Ceiling—Holes/Missing Tiles/Panels/Cracks ....................... 4 X X X ........ 10 Ceiling—Peeling/Needs Paint ........ .......... ....... ................. 1 X X .... ... 10 Ceiling—Mold/Mildew/Water StainsrWater Damage ........... 2 X .... X ........ 10 Countertops—Missing/Damaged ......................................... 2 .... X .... ........ 10 Dishwasher/Garbage Disposal—Inoperable ........................ 2 .... X .... ........ 10 Doors—Damaged Frames(Threshold/LintelslTrim .............. 2 .... X X NLT 10 Doors—Damaged Hardware/Locks ..................................... 3 X X X ........ 10 Doors—Damaged/Missing ScreeNStorm/Security Door ..... 3 X .... X NLT 10 Doors—Damaged Surface (Holes/Paint/Rust/Glass) .......... 3 .... X X ........ 10 Doors—Deteriorated/Missing Seals (Entry Only) ............. .. 4 .... X 10 Doors—Missing Door ........................................................... 5 X X X ........ 10 Electrical—Blocked Access to Electrical Panel ..._........_.... 3 .... ._. X NLT 10 Electrical—Burnt Breakers ................................................... 4 .... .... X NLT 10 Electrical—Evidence of Leaks/Corrosion ............................ 5 .... .... X NLT 1141 Federal Register/Vol. 77, No. 154/Thursday, August 9, 2012/Notices 47731 AREA—COMMON AREAS—Continued Inspectable item Nominal Level location item weight Observable deficiency Criticality H&S (percent) 1 2 1 3 10 Electrical—Frayed Wiring ............................................ .._... 5 .... X 10 Electrical—Missing Breakers ............................................... 5 .... .... X LT 10 Electrical—Missing Covers .................................................. 5 .... .... X LT 10 Floors—Bulging/Buckling ..................................................... 4 .... .... X ........ 10 Floors—Soft Floor Covering Missing/Damaged .................. 4 X X X ........ 10 Floors—Hard Floor Covering Missing/Damaged Flooring/ 4 X X X ........ Tiles. 10 Floors—Peeling/Needs Paint ............................................... 1 X X .... ........ 10 Floors—Rot/Deteriorated Subtloor ...................................... 4 .... X X ........ 10 Floors—Mold/Mildew/Water Stains/Water Damage ............ 2 .... X X ........ 10 GFI—Inoperable .................................................................. 5 .... .... X NLT 10 HVAC—Misaligned Chimney/Ventilation System ................ 5 .... .... X LT 10 HVAC—Inoperable .............................................................. 5 .... .... X ........ 10 HVAC—NoisyNibrating/Leaking .......................................... 4 X .... .... ........ 10 HVAC—Convection/Radiant Heat System Covers Missing/ 2 .... .... X ........ Damaged. 10 HVAC—General Rust/Corrosion ......................................... 2 X X X ........ 10 lighting—Missing/Damaged/Inoperable Fixture ...............__ 4 .... X X ........ 10 Outlets/Switches/Cover Plates—Missing/Broken ................ 3 X .... X LT 10 Plumbing—Clogged Drains ................................................. 4 X .... X NLT 10 Plumbing—Leaking Faucet/Pipes ........................................ 3 X .... X NLT 10 Range/Stove--Missing/Damaged/Inoperable ...................... 3 X X X ........ 10 Range Hood/Exhaust Fans—Excessive Grease/Inoperable 2 X .... X ........ 10 Refrigerator—Damaged/Inoperable ..................................... 3 X .... X ........ 10 Sink—Missing/Damaged ...................................................... 5 X .... X NLT 0 Smoke Detector—Missing/Inoperable ................................. 5 .... .... X LT 10 Stairs—Broken/Damaged/Missing Steps ............................. 3 .... .... X NLT 10 Stairs—Broken/Missing Hand Railing .................................. 3 .... .... X NLT 10 Walls—Bulging/Buckling ...................................................... 4 .... .... X ........ 10 Walls—Damaged ................................................................. 3 X X X ........ 10 Walls—Damaged/Deteriorated Trim .................................... 1 X X X ........ 10 Walls—Peeling/Needs Paint ................................................ 1 X X .... ........ 10 Walls--Mold/Mildew/Water StainsWater Damage ............. 2 X .... X ........ 10 Windows—Cracked/Broken/Missing Panes ........................ 3 X .... X NLT 10 Windows—Damaged/Missing Screens ................................ 2 X .... .... ........ 10 Windows—Damaged Sills/Frames/Lintels/Trim ................... 4 X X .... ........ 10 Windows—Missing/Deteriorated Caulking/Seals/Glazing 5 X .... X ........ Compound. 10 Windows—Inoperable/Not Lockable .................................... 3 X .... X NLT 10 Windows—Peeling/Needs Paint .......................................... I X .... .... ........ 10 Windows—Security Bars Prevent Egress ........................... 5 .... .... X LT Laundry Room ....................... 10 Ceiling—Bulging/Buckling .................................................... 4 .... .... X ........ 10 Ceiling—Holes/Missing Tiles/Panels/Cracks ....................... 4 X X X ........ 10 Ceiling—PeelinglNeeds Paint .............................................. f X X .... ........ 10 Ceiling—Mold/Mildew/Water StainslWater Damage ... 2 X .... X ........ 10 Doors—Damaged Frames/Threshold/Lintels/Trim .............. 2 .... X X NLT 10 Doors—Damaged Hardware/Locks ..................................... 3 X X X ........ 10 Doors—Damaged/Missing ScreerVStorm/Security Door ..... 3 X .... X NLT 10 Doors—Damaged Surface (Holes/Paint/Rust/Glass) .......... 3 .... X X ........ 10 Doors—Deteriorated/Missing Seals (Entry Only) ................ 4 .... .... X ........ 10 Doors—Missing Door ........................................................... 5 X X X ........ 10 Dryer Vent—Missing/Damaged/Inoperable ......................... 3 .... .... X ........ 10 Electrical—Blocked Access to Electrical Panel ................... 3 .... .... X NLT 10 Electrical—Burnt Breakers ................................................... 4 .... .... X NLT 10 Electrical—Evidence of Leaks/Corrosion ............................ 5 .... .... X NLT 10 Electrical—Frayed Wiring .................................................... 5 .... X 10 Electrical—Missing Breakers ............................................... 5 .... .... X LT 10 Electrical—Missing Covers .................................................. 5 .... .... X LT 10 Floors—Bulging/Buckling ..................................................... 4 .... X 10 Floors—Soft Floor Covering Missing/Damaged .................. 4 X X X ........ 10 Floors—Hard Floor Covering Missing/Damaged Flooring/ 4 X X X ........ Tiles. 10 Floors—Peeling/Needs Paint ............................................... 1 X X .... ........ 10 Floors—Rot/Deteriorated Subfloor ...................................... 4 .... X X ........ 10 Floors—Mold/Mildew/Water Stains/Water Damage ............ 2 .... X X ........ 10 GFI—Inoperable .................................................................. 5 .... .... X NLT 10 HVAC—Misaligned ChimneyNentilation System ................ 5 .... .... X LT 10 HVAC—Inoperable .............................................................. 5 .... .... X ........ 10 HVAC—NoisyNibrating/Leaking .......................................... 4 X .... .... ........ 10 HVAC—Convection/Radiant Heat System Covers Missing/ 2 .... .... X ........ Damaged. 1142 47732 Federal Register/Vol. 77, No. 154/Thursday, August 0, 2012/Notices AREA—COMMON AREAS—Continued Inspectable item Nominal Level location item weight Observable deficiency Criticality H&S (percent) 1 2 3 10 HVAC—General Rust/Corrosion ......................................... 2 X X X ........ 10 Lighting—Missing/Damaged/Inoperable Fixture .................. 4 .... X X ........ 10 Outlets/Switches/Cover Plates—Missing/Broken ................ 3 X .... X LT 0 Smoke Detector—Missing/Inoperable ................................. 5 .... .... X LT 10 Stairs—Broken/Damaged/Missing Steps ............................. 3 .... .... X NLT 10 Stairs—BrokeNMissing Hand Railing .................................. 3 .... .... X NLT 10 Walls—Bulging/Buckling ...................................................... 4 .... .... X ........ 10 Walls—Damaged ................................................................. 3 X X X ........ 10 Walls—Damaged/Deteriorated Trim .................................... 1 X X X ........ 10 Walls—Peeling/Needs Paint ................................................ 1 X X .... ........ 10 Walls—Mold/Mildew/Water Stains/Water Damage ........ 2 X .... X ........ 10 Windows—Cracked/BrokeNMissing Panes ........................ 3 X .... X NLT 10 Windows—Damaged/Missing Screens ................................ 2 X .... .... ........ 10 Windows—Damaged Sills/Frames/Lintels/Trim ........ 4 X X .... ........ 10 Windows—Missing/Detenorated Caulking/Seals/Glazing 5 X .... X ........ Compound. 10 Windows—Inoperable/Not Lockable .................................... 3 X .... X NLT 10 Windows—Peeling/Needs Paint .......................................... 1 X .... .... ........ 10 Windows—Security Bars Prevent Egress ........................... 5 .... .... X LT Lobby ..................................... 5 Ceiling—Bulging/Buckling .................................................... 4 .... X 5 Ceiling—Holes/Missing Tiles/Panels/Cracks ....................... 4 X X X ........ 5 Ceiling—Peeling/Needs Paint .............................................. 1 X X .... ........ 5 Ceiling—Mold/Mildew/VVater Stains/Water Damage ........... 2 X .... X ........ 5 Doors—Damaged FrameslThreshold/LintelsfTrim .............. 2 .... X X NLT 5 Doors—Damaged Hardware/Locks ..................................... 3 X X X ........ 5 Doors—Damaged/Missing Screen/Storm/Security Door ..... 3 X .... X NLT 5 Doors—Damaged Surface (Holes/Paint/Rust/Glass) .......... 3 .... X X ........ 5 Doors—Deteriorated/Missing Seals(Entry Only) .............__ 4 .... X 5 Doors—Missing Door ........................................................... 5 X X X ........ 5 Electrical—Blocked Access to Electrical Panel ................... 3 .... .... X NLT 5 ElectricaHBumt Breakers ................................................... 4 .... .... X NLT 5 Electrical—Evidence of Leaks/Corrosion ............................ 5 .... .... X NLT 5 Electrical—Frayed Wiring .................................................... 5 .... .... X 5 Electrical-—Missing Breakers ............................................... 5 .... ... X LT 5 Electrical—Missing Covers .................................................. 5 .... .... X LT 5 Floors—Bulging/Buckling ..................................................... 4 .... .... X ........ 5 Floors—Soft Floor Covering Missing/Damaged .................. 4 X X X ........ 5 Floors—Hard Floor Covering Missing/Damaged Flooring/ 4 X X X ........ Tiles. 5 Floors—Peeling/Needs Paint ............................................... 1 X X .... ........ 5 Floors—Rot/Detedorated Subtloor ...................................... 4 .... X X ........ 5 Floors—Mold/Mildew/Water Stains/Water Damage ............ 2 .... X X ........ 5 HVAC—Misaligned ChimneyNentilation System ................ 5 .... .... X LT 5 HVAC—Inoperable .............................................................. 5 .... .... X ........ 5 HVAC—Noisy/Vibrating/Leaking .......................................... 4 X 5 HVAC—Convection/Radiant Heat System Covers Missing/ 2 .... .... X ........ Damaged. 5 HVAC—General Rust/Corrosion ......................................... 2 X X X ........ 5 Lighting—Missing/Damaged/Inoperable Fixture ..............__ 4 .... X X ........ 5 Outlets/Switches/Cover Plates—Missing/Broken ................ 3 X .... X LT 0 Smoke Detector—Missing/Inoperable ................................. 5 .... .... X LT 5 Stairs—Broken/Damaged/Missing Steps ............................. 3 .... .... X NLT 5 Stairs—Broken/Missing Hand Railing .................................. 3 .... .... X NLT 5 Walls—Bulging/Buckling ...................................................... 4 .... .... X ........ 5 Walls—Damaged ................................................................. 3 X X X ........ 5 Walls—Damaged/Detedorated Trim .......... 1 X X X ........ 5 Walls—Peeling/Needs Paint ................................................ 1 X X .... ........ 5 Walls—Mold/Mildew/Water StainsrWater Damage ............. 2 X .... X ........ 5 Windows--Cracked/8rokerdMissing Panes ........................ 3 X .... X NLT 5 Windows—Damaged/Missing Screens ................................ 2 X .... .... ........ 5 Windows—Damaged Sills/Frames/Lintels/Trim ................... 4 X X .... ........ 5 Windows—Missing/Deteriorated Caulking/Seals/Glazing 5 X .... X ........ Compound. 5 Windows—Inoperable/Not Lockable .................................... 3 X .... X NLT 5 Windows—Peeling/Needs Paint .......................................... 1 X .... .... ........ 5 Windows—Security Bars Prevent Egress ........................... 5 .... .... X LT Office ..................................... 5 Ceiling—Bulging/Buckling .................................................... 4 .... .... X ........ 5 Ceiling—Holes/Missing Tiles/Panels/Cracks ....................... 4 X X X ........ 5 Ceiling—Peeling/Needs Paint .............................................. 1 X X .... ........ 5 Ceiling—Mold/Mildew/Water Stains/Water Damage ........... 2 X .... X ........ 1143 Federal Register/Vol. 77, No. 154/Thursday, August 9, 2012/Notices 47733 AREA—COMMON AREAS—Continued Inspectable item Nominal Level location item weight Observable deficiency Criticality H&S (percent) 1 12 3 5 Doors—Damaged Frames/Threshold/Lintels/Trim .............. 2 .... X X NLT 5 Doors—Damaged Hardware/Locks ..................................... 3 X X X ........ 5 Doors—Damaged/Missing Screen/Storm/Security Door ..... 3 X .... X NLT 5 Doors—Damaged Surface (Holes/PainVRusVGlass) .......... 3 .... X X 5 Doors—Deteriorated/Missing Seals (Entry Only) ................ 4 .... X 5 Doors—Missing Door ........................................................... 5 X X X ........ 5 Electrical—Blocked Access to Electrical Panel ................... 3 .... .... X NLT 5 Electrical—Burnt Breakers ................................................... 4 .... .... X NLT 5 Electrical—Evidence of Leaks/Corrosion ......_.................... 5 .... .... X NLT 5 Electrical—Frayed Wiring .................................................... 5 .... X 5 Electrical—Missing Breakers ............................................... 5 .... .... X LT 5 Electrical—Missing Covers .................................................. 5 .... .... X LT 5 Floors—Bulging/Buckling ..................................................... 4 .... .... X ........ 5 Floors—Soft Floor Covering Missing/Damaged .................. 4 X X X ........ 5 Floors—Hard Floor Covering Missing/Damaged Flooring/ 4 X X X ........ Tiles. 5 Floors—Peeling/Needs Paint ............................................... 1 X X .... ........ 5 Floors—Rot/Deleriorated Subfloor ...................................... 4 .... X X ........ 5 Floors—Mold/Mildew/Water Stains/Water Damage ............ 2 .... X X ........ 5 HVAC—Misaligned Chimney/Ventilation System ................ 5 .... .... X LT 5 HVAC—Inoperable .............................................................. 5 .... .... X ........ 5 HVAC—Noisy/Vibrating/Leaking .......................................... 4 X 5 HVAC—ConvectioNRadiant Heat System Covers Missing/ 2 .... .... X ........ Damaged. 5 HVAC—GGeneral Rust/Corrosion ......................................... 2 X X X ........ 5 Lighting—Missing/Damaged/Inoperable Fixture .................. 4 _.. X X ........ 5 Oullets/Switches/Cover Plates—Missing/Broken .... 3 X .... X LT 0 Smoke Detector—Missing/Inoperable ................................. 5 .... .... X LT 5 Stairs—Broken/Damaged/Missing Steps ............................. 3 .... .... X NLT 5 Stairs—Broken/Missing Hand Railing .................................. 3 .... .... X NLT 5 Walls—BulgingBuckling ...................................................... 4 .... .... X ........ 5 Walls—Damaged ................................................................. 3 X X X ........ 5 Walls—Damaged/Detenorated Trim .................................... 1 X X X ........ 5 Walls—Peeling/Needs Paint ................................................ 1 X X .... ........ 5 Walls—Mold/Mildew/Water Stains/Water Damage ............. 2 X .... X ........ 5 Windows—Cracked/BrokeNMissing Panes ........................ 3 X .... X NLT 5 Windows—Damaged/Missing Screens ................................ 2 X .... .... ........ 5 Windows—Damaged Sills/Frames/LintelslTrim ................... 4 X X .... ........ 5 Windows—Missing/Deteriorated Caulking/Seals/Glazing 5 X .... X ........ Compound. 5 Windows—Inoperable/Not Lockable .................................... 3 X .... X NLT 5 Windows—Peeling/Needs Paint .......................................... 1 X .... .... ........ 5 Windows—Security Bars Prevent Egress ........................... 5 .... .... X LT Other Community Spaces ..... 5 Ceiling—Bulging/Buckling .................................................... 4 .... .... X ........ 5 Ceiling—Holes/Missing Tiles/Panels/Cracks ....................... 4 X X X ........ 5 Ceiling—Peeling/Needs Paint .............................................. 1 X X .... ........ 5 Ceiling—Mold/Mildew/Water Stains/Waler Damage ........... 2 X .... X ........ 5 Doors—Damaged Frames/ThresholdlLintels/Trim .............. 2 .... X X NLT 5 Doors—Damaged Hardware/Locks ..................................... 3 X X X ........ 5 Doors—Damaged/Missing ScreeNStomUSecurity Door ..... 3 X .... X NLT 5 Doors—Damaged Surface (Holes/PainVRust/Glass) .......... 3 .... X X 5 Doors—Deteriorated/Missing Seals(Entry Only) ................ 4 .... .... X ........ 5 Doors—Missing Door ........................................................... 5 X X X ........ 5 Electrical—Blocked Access to Electrical Panel .............. 3 .... .... X NLT 5 Electrical—Burnt Breakers ................................................... 4 .... .... X NLT 5 Electrical—Evidence of Leaks/Corrosion ............................ 5 .... .... X NLT 5 Electrical—Frayed Wiring .................................................... 5 .... X 5 Electrical—Missing Breakers ............................................... 5 .... .... X LT 5 Electrical--Missing Covers .................................................. 5 .... .... X LT 5 Floors—Bulging/Buckling ..................................................... 4 .... .... X ........ 5 Floors—Soh Floor Covering Missing/Damaged .................. 4 X X X ........ 5 Floors—Hard Floor Covering Missing/Damaged Flooring/ 4 X X X ........ Tiles. 5 Floors—Peeling/Needs Paint ............................................... 1 X X .... ........ 5 Floors—Rot/Detenorated Subtloor ...................................... 4 .... X X ........ 5 Floors—Mold/MildewANater Stains/Water Damage ............ 2 .... X X ........ 5 HVAC—Misaligned ChimneyNentilation System ................ 5 .... .... X LT 5 HVAC—Inoperable .............................................................. 5 .... .... X ........ 5 HVAC—NoisyNibrating/Leaking .......................................... 4 X .... .... ........ 5 HVAC—ConvectioNRadiant Heat System Covers Missing/ 2 .... .... X ........ Damaged. 1144 47734 Federal Register/Vol. 77, No. 154/Thursday, August 9, 2012/Notices AREA—COMMON AREAS—Continued Inspectable item Nominal Level location item weight Observable deficiency Criticality H&S (percent) 1 1 2 3 5 HVAC—General Rust/Corrosion ............................. ........... 2 X X X ........ 5 Lighting—Missing/Damaged/Inoperable Fixture .................. 4 .... X X ........ 5 Outlets/Switches/Cover Plates—Missing/Broken ................ 3 X .... X LT 0 Smoke Detector—Missing/Inoperable ................................. 5 .... .... X LT 5 Stairs—BrokerVDamaged/Missing Steps ..............I............1. 3 .... .... X NLT 5 Stairs—Broken/Missing Hand Railing .................................. 3 .... .... X NLT 5 Walls—Bulging/Buckling ...................................................... 4 .... .... X ........ 5 Walls—Damaged ................................................................. 3 X X X ........ 5 Walls—Damaged/Deteriorated Trim .................................... 1 X X X ........ 5 Walls—Peeling/Needs Paint ................................................ 1 X X .... ........ 5 Walls—Mold/Mildew/Water Stains/Water Damage ............. 2 X .... X ........ 5 Windows—Cracked/Broken/Missing Panes ........................ 3 X .... X NLT 5 Windows—Damaged/Missing Screens ................................ 2 X .... .... ........ 5 Windows—Damaged Sills/Frames/Lintels/Trim ................... 4 X X .... ........ 5 Windows—Missing/Deteriorated Caulking/Seals/Glazing 5 X .... X ........ Compound. 5 Windows—Inoperable/Not Lockable .................................... 3 X .... X NLT 5 Windows—Peeling/Needs Paint .......................................... I X .... .... ........ 5 Windows—Security Bars Prevent Egress ........................... 5 .... .... X LT Patio/Porch/Balcony .............. 5 Baluster/Side Railings—Damaged ...................................... 3 .... .... X ........ 5 Ceiling—Bulging/Buckling .................................................... 4 .... .... X ........ 5 Ceiling—Holes/Missing Tiles/Panels/Cracks ....................... 4 X X X ........ 5 Ceiling—Peeling/Needs Paint .............................................. 1 X X .... ........ 5 Ceiling—Mold/Mildew/Water Stains/Water Damage ........... 2 X .... X ........ 5 Doors—Damaged Framesffhreshold/LintelsrTrim .............. 2 .... X X NLT 5 Doors—Damaged Hardware/Locks ..................................... 3 X X X ........ 5 Doors—Damaged/Missing Screen/Storm/Security Door ..... 3 X .... X NLT 5 Doors—Damaged Surface (Holes/Paint/RusL/Glass) .......... 3 .... X X ........ 5 Doors—Deterioraled/Missing Seals(Entry Only) ................ 4 .... X 5 Doors—Missing Door ........................................................... 5 X X X ........ 5 Electrical—Blocked Access to Electrical Panel ................... 3 .... .... X NLT 5 Electrical—Burnt Breakers ................................................... 4 .... .... X NLT 5 ElecMcal—Evidence of LeakslCorrosion ............................ 5 .... .... X NLT 5 ElecMcal—Frayed Wiring .................................................... 5 .... .... X 5 Electrical—Missing Breakers ............................................... 5 .... ... X LT 5 Electrical--Missing Covers .................................................. 5 .... .... X LT 5 Floors—Bulging/Buckling ..................................................... 4 .... .... X ........ 5 Floors—Soft Floor Covering Missing/Damaged ................ 4 X X X ........ 5 Floors—Hard Floor Covering Missing/Damaged Flooring/ 4 X X X ........ Tiles. 5 Floors—Peeling/Needs Paint ............................................... 1 X X .... ........ 5 Floors—Rot/Deteriorated Subfloor ...................................... 4 .... X X ........ 5 Floors—Mold/Mildew/Water Stains/Water Damage ............ 2 .... X X ........ 5 Lighting—Missing/Damaged/Inoperable Fixture .................. 4 .... X X ........ 5 Outlets/Switches/Cover Plates—Missing/Broken ................ 3 X .... X LT 5 Stairs—Broken/Damaged/Missing Steps ............................. 3 .... .... X NLT 5 Stairs—Broken/Missing Hand Railing .................................. 3 .... .... X NLT 5 Walls—Bulging/Buckling ...................................................... 4 .... .... X ........ 5 Walls—Damaged ................................................................. 3 X X X ........ 5 Walls—Damaged/Deteriorated Trim .................................... 1 X X X ........ 5 Walls—Peeling/Needs Paint ................................................ 1 X X .... ........ 5 Walls—Mold/Mildew/Water StainslWater Damage ............. 2 X .... X ........ 5 Windows—Cracked/Broken/Missing Panes ........................ 3 X .... X NLT 5 Windows—Damaged/Missing Screens ................................ 2 X .... .... ........ 5 Windows—Damaged SillslFrames/Lintels/Trim ................... 4 X X .... ........ 5 Windows—Missing/Deteriorated Caulking/Seals/Glazing 5 X .... X ........ Compound. 5 Windows—Inoperable/Not Lockable .................................... 3 X .... X NLT 5 Windows—Peeling/Needs Paint .......................................... 1 X .... .... ........ 5 Windows—Security Bars Prevent Egress ........................... 5 .... .... X LT Pools and Related Structures 5 Pools—Damaged/Not Intact—Fencing or Gate(s) .............. 5 .... .... X .... 5 Pools—Inoperable ............................................................._ 2 .... .... X ........ Restrooms/Pool Structures .... 5 Call for Aid—Inoperable ...................................................... 3 .... .... X NLT 5 Ceiling—Bulging/Buckling .................................................... 4 .... .... X ........ 5 Ceiling—Holes/Missing Tiles/Panels/Cracks ....................... 4 X X X ........ 5 Ceiling—Peeling/Needs Paint .............................................. 1 X X .... ........ 5 Ceiling—Mold/MildewiWater Stains/Water Damage ........... 2 X .... X ........ 5 Doors—Damaged Frames/Threshold/Lintelsffrim .............. 2 .... X X NLT 5 Doors—Damaged Hardware/Locks ..................................... 3 X X X ........ 5 Doors—Damaged/Missing Screen/StornUSecurity Door ..... 3 X .... X NLT 1145 Federal Register/Vol. 77, No. 154/Thursday, August 9, 2012/Notices 47735 AREA—COMMON AREAS—Continued Inspectable item Nominal location item weight Observable deficiency Criticality H&S (percent) FLevo'- 2 3 5 Doors—Damaged Surface (Holes/Paint/Rust/Glass) .......... 3 .... X X ........ 5 Doors—Deteriorated/Missing Seals (Entry Only) ................ 4 .... X 5 Doors—Missing Door ........................................................... 5 X X X ........ 5 Electrical—Blocked Access to Electrical Panel ................... 3 .... .... X NLT 5 Electrical—Burnt Breakers ................................................... 4 .... .... X NLT 5 Electrical—Evidence of Leaks/Corrosion .............. .......... .. 5 .... .... X NLT 5 Electrical—Frayed Wiring .................................................... 5 .... .... X ........ 5 Electrical-—Missing Breakers ............................................... 5 .... .... X LT 5 Electrical—Missing Covers .................................................. 5 .... .... X LT 5 Floors—Bulging/Buckling ..................................................... 4 .... .... X ........ 5 Floors—Soft Floor Covering Missing/Damaged .................. 4 X X X ........ 5 Floors—Hard Floor Covering Missing/Damaged Flooring/ 4 X X X ........ Tiles. 5 Floors—Peeling/Needs Paint ............................................... 1 X X .... ........ 5 Floors—RoUDeteriorated Subfloor ...................................... 4 .... X X ........ 5 Floors—Mold/Mildew/Water Stains/Water Damage ............ 2 .... X X ........ 5 GFI—Inoperable .................................................................. 5 .... .... X NLT 5 HVAC—Misaligned Chimney/Ventilation System ................ 5 .... .... X LT 5 HVAC—Inoperable .............................................................. 5 .... .... X ........ 5 HVAC—Noisy/Vibrating/Leaking .......................................... 4 X .... .... ........ 5 HVAC—ConvectioNRadiant Heat System Covers Missing/ 2 .... .... X ........ Damaged. 5 HVAC—General Rust/Corrosion ......................................... 2 X X X ........ 5 Lavatory Sink—Damaged/Missing ....................................... 3 X .... X NLT 5 Lighting—Missing/Damaged/Inoperable Fixture .................. 4 .._ X X ........ 5 Outlets/Switches/Cover Plates—Missing/Broken ................ 3 X .... X LT 5 Plumbing—Clogged Drains ................................................. 5 X .... X NLT 5 Plumbing—Leaking Faucet/Pipes ........................................ 4 X .... X NLT 5 Restroom Cabinet—Damaged/Missing ............................... 2 X .... .... ........ 0 Smoke Detector—Missing/Inoperable ................................. 5 .... .... X LT 5 Shower/Tub—Damaged/Missing ......................................... 4 .... X X ........ 5 Stairs—BrokeNDamaged/Missing Steps ............................. 3 .... .... X NLT 5 Stairs—BrokerVMissing Hand Railing .................................. 3 .... .... X NLT 5 Ventilation/Exhaust System—Inoperable ............................ 4 .... X .... ........ 5 Walls—Bulging/Buckling ...................................................... 4 .... .... X ........ 5 Walls—Damaged ................................................................. 3 X X X ........ 5 Walls—Damaged/Deteriorated Trim .................................... 1 X X X ........ 5 Walls—Peeling/Needs Paint ................................................ 1 X X .... ........ 5 Walls—Mold/Mildew/Water Stains/Water Damage ............. 2 X .... X ........ 5 Water CloseVroilet—Damaged/CloggedlMissing ............... 5 .... X X ........ 5 Windows—Cracked/Broken/Missing Panes ........................ 3 X .... X NLT 5 Windows—Damaged/Missing Screens ................................ 2 X .... .... ........ 5 Windows—Damaged Sills/Frames/Lintels/Trim ................... 4 X X .... ........ 5 Windows—Missing/Deteriorated Caulking/Seals/Glazing 5 X .... X ........ Compound. 5 Windows—Inoperable/Not Lockable .................................... 3 X .... X NLT 5 Windows—Peeling/Needs Paint .......................................... 1 X .... .... ........ 5 Windows—Security Bars Prevent Egress ........................... 5 .... .... X LT Storage .................................. 5 Ceiling—Bulging/Buckling .................................................... 4 .... .... X ........ 5 Ceiling—Holes/Missing Tiles/Panels/Cracks ....................... 4 X X X ........ 5 Ceiling—Peeling/Needs Paint .............................................. 1 X X .... ........ 5 Ceiling—Mold/Mildew/Water StainsANater Damage ........... 2 X .... X ........ 5 Doors—Damaged Frames/rhreshold/Linteis/Tnm .............. 2 .... X X NLT 5 Doors—Damaged Hardware/Locks ..................................... 3 X X X ........ 5 Doors—Damaged/Missing Screen/Storm/Security Door ..... 3 X .... X NLT 5 Doors—Damaged Surface(Holes/Paint/Rust/Glass) .......... 3 .... X X ........ 5 Doors—Deteriorated/Missing Seals (Entry Only) ................ 4 .... .... X ........ 5 Doors—Missing Door ........................................................... 5 X X X ........ 5 Electrical-—Blocked Access to Electrical Panel ................... 3 .... .... X NLT 5 Electrical—Burnt Breakers ................................................... 4 .... .... X NLT 5 Electrical-—Evidence of Leaks/Corrosion ............................ 5 .... .... X NLT 5 Electrical—Frayed Wiring .................................................... 5 .... .... X 5 Electrical---Missing Breakers ............................................... 5 .... ... X LT 5 Electrical—Missing Covers .................................................. 5 .... .... X LT 5 Floors—Bulging/Buckling ..................................................... 4 .... .... X ........ 5 Floors—Soh Floor Covering Missing/Damaged .................. 4 X X X ........ 5 Floors—Hard Floor Covering Missing/Damaged Flooring/ 4 X X X ........ Tiles. 5 Floors—Peeling/Needs Paint ............... ..................... ......... 1 X X .... ........ 5 Floors—Rot/Deterioraled Sublloor ...................................... 4 .... X X ........ 1146 47736 Federal Register/Vol. 77, No. 154/9-hursdap, August 9, 2012/Notices AREA-COMMON AREAS-Continued Inspectable item Nominal Level location item weight Observable deficiency Criticality H&S (percent) I 1 1 1 2 3 5 Floors-Mold/MildewiWater Stains/Water Damage ............ 2 .... X X ........ 5 HVAC-Misaligned Chimney/Ventilation System ................ 5 .... .... X LT 5 HVAC-Inoperable .............................................................. 5 .... .... X ........ 5 HVAC-NoisyiVibrating/Leaking .......................................... 4 X 5 HVAC-ConvectioNRadiant Heat System Covers Missing/ 2 .... .... X ........ Damaged. 5 HVAC-General Rust/Corrosion ......................................... 2 X X X ........ 5 Lighting-Missing/Damaged/Inoperable Fixture .................. 4 .... X X ........ 5 Outlets/Switches/Cover Plates-Missing/Broken ................ 3 X .... X LT 0 Smoke Detector-Missing/Inoperable ................................. 5 .... .... X LT 5 Stairs-BrokeNDamaged/Missing Steps ............................. 3 .... .... X NLT 5 Stairs-BrokeNMissing Hand Railing .................................. 3 .... .... X NLT 5 Walls-Bulging/Buckling ...................................................... 4 .... .... X ........ 5 Walls-Damaged ................................................................. 3 X X X ........ 5 Walls-Damaged/Deteriorated Trim .................................... 1 X X X ........ 5 Walls-Peeling/Needs Paint ................................................ 1 X X .... ........ 5 Walls-Mold/Mildew/Water StainsiWater Damage ............. 2 X .... X ........ 5 Windows-Cracked/BrokeNMissing Panes ........................ 3 X .... X NLT 5 Windows-Damaged/Missing Screens ................................ 2 X .... .... ........ 5 Windows-Damaged Sills/Frames/Lintels/Trim ................... 4 X X ._. ........ 5 Windows-Missing/Deteriorated Caulking/Seals/Glazing 5 X .... X ........ Compound. 5 Windows-Inoperable/Not Lockable .................................... 3 X .... X NLT 5 Windows-Peeling/Needs Paint .......................................... 1 X .... .... ........ 5 Windows-Security Bars Prevent Egress ........................... 5 .... .... X LT Trash Collection Areas .......... 5 Chutes-Damaged/Missing Components ............................ 3 .... X .... ........ Note: 1) Nominal item weight assumes that all items for the Common Areas are present. Item weights would be adjusted accordingly when items are not applicable (N/A). 2)The Health& Safety item assumes the highest item weight for a particular inspection. Nominally it is equal to 10%. 3 "X" in the level column indicates which levels are applicable. 4;Only Level 3 is applied to H&S deficiencies. 5) In the H&S column, NLT is non-life threatening H&S and LT (life threatening) is exigent/fire safety (calling for immediate attention or remedy). AREA-UNITS Nominal Level Inspectable item item weight Observable deficiency Criticality H&S (percent) 1 1 2 3 Bathroom .............................. 15.0 Bathroom Cabinets-Damaged/Missing .............................. 2 X .... .... 15.0 Lavatory Sink-Damaged/Missing ....................................... 3 X .... X NLT 15.0 Plumbing-Clogged Drains _............................................... 5 X .... X NLT 15.0 Plumbing-Leaking Faucef/Pipes ........................................ 4 X .... X NLT 15.0 Shower/Tub-Damaged/Missing ......................................... 4 X X X NLT 15.0 Ventilation/Exhaust System-Inoperable ............................ 4 .... X .... 15.0 Water Closet/Toilet-Damaged/Clogged/Missing ............... 5 .... X X NLT Call-for-Aid ............................ 2.0 Inoperable ............................................................................ 3 .... .... X NLT Ceiling ................................... 4.0 Bulging/Buckling .................................................................. 4 .... X 4.0 Holes/Missing Tiles/Panels/Cracks ..................................... 4 X X X 4.0 Peeling/Needs Paint ............................................................ 1 X X .... 4.0 Mold/Mildew/Water Stains/Water Damage .......................... 2 X .... X Doors .................................... 4.5 Damaged Frames/Threshold/Lintels/Trim ........................... 2 .... X X NLT 4.5 Damaged Hardware/Locks .................................................. 3 X X X 4.5 Damaged/Missing Screen/Storm/Security Door .................. 3 X .... X NLT 4.5 Damaged Surface (Holes/PainURusUGlass) ....................... 3 .... X X 4.5 Deteriorated/Missing Seals(Entry Only) ............................. 4 .... .... X 4.5 Missing Door ........................................................................ 5 X X X NLT Electrical System .................. 10.0 Blocked Access to Electrical Panel ..................................... 3 .... .... X NLT 10.0 Burnt Breakers ..................................................................... 4 .... .... X NLT 10.0 Evidence of Leaks/Corrosion ............................................... 5 .... .... X NLT 10.0 Frayed Wiring ...................................................................... 5 .... X 10.0 GFI-Inoperable ............................................................._... 5 .... .... X NLT 10.0 Missing Breakers/Fuses ...................................................... 5 .... .... X LT 10.0 Missing Covers .................................................................... 5 .... .... X LT Floors .................................... 4.0 Bulging/Buckling .................................................................. 4 .... .... X 4.0 Hard Floor Covering Missing/Damaged Flooring/Tiles ....... 4 X X X 4.0 Mold/Mildew/Water Stains/Water Damage .......................... 2 .... X X 4.0 Peeling/Needs Paint ............................................................ 1 X X .... 4.0 Rot/Deteriorated Subfloor .................................................... 4 .... X X 1147 Federal Register/Vol. 77, No. 154/Thursday, August 9, 2012/Notices 47737 AREA-UNITS-Continued Nominal Level Inspectable item item weight Observable deficiency Criticality H&S (percent) 1 2 3 4.0 Soft Floor Covering Missing/Damaged ................................ 4 X X X Health & Safety .................... 15.0 Air Quality-Mold and/or Mildew Observed ........................ 3 .... .... X NLT 15.0 Air Quality-Sewer Odor Detected ...................................... 3 .... .... X NLT 15.0 Air Quality-Propane/Natural Gas/Methane Gas Detected 5 .... .... X LT 15.0 Electrical Hazards-Exposed Wires/Open Panels .............. 5 .... .... X LT 15.0 Electrical Hazards-Water Leaks on/near Electrical Equip- 5 .... .... X LT ment. 15.0 Emergency Fire Exits-Emergency/Fire Exits Blocked/Un- 5 .... .... X LT usable. 15.0 Emergency Fire Exits-Missing Exit Signs ......................... 3 .... .... X NLT 15.0 Flammable/Combustible Materials-Improperly Stored ...... 3 .... .... X NLT 15.0 Garbage and Debris-Indoors ............................................. 3 .... .... X NLT 15.0 Garbage and Debris-Outdoors .......................................... 3 .... .... X NLT 0.0 Hazards-Other ................................................................... 3 .... .... X NLT 15.0 Hazards-Sharp Edges ....................................................... 3 .... .... X NLT 0.0 Hazards-Tripping ............................................................... 3 .... .... X NLT 15.0 Infestation-Insects ............................................................. 3 .... .... X NLT 15.0 Infestation-Rats/Mice/Vermin ............................................ 3 .... .... X NLT Hot Water Heater ................. 10.0 General Rust/Corrosion ....................................................... 3 X X X NLT 10.0 Inoperable Unit/Components ............................................... 5 .... .... X NLT 10.0 Leaking Valves/Tanks/Pipes ................................................ 4 .... .... X 10.0 Misaligned Chimney/Ventilation System ............................. 5 .... .... X LT 10.0 Missing Pressure Relief Valve ............................................. 5 .... .... X NLT HVAC System ....................... 15.0 Convection/Radiant Heat System Covers Missing/Dam- 2 .... .... X aged. 15.0 General Rust/Corrosion ....................................................... 2 X .... .... 15.0 Inoperable ............................................................................ 5 .... .... X 15.0 Misaligned Chimney/Ventilation System ............................. 5 .... .... X LT 15.0 Noisy/Vibrating/Leaking ....................................................... 4 X .... .... Kitchen .................................. 15.0 Cabinets-Missing/Damaged .............................................. 2 .... X X NLT 15.0 Countertops-Missing/Damaged ......................................... 2 .... X .... NLT 15.0 Dishwasher/Garbage Disposal--Inoperable ........................ 2 .... X .... 15.0 Plumbing--Clogged Drains ................................................. 4 X .... X NLT 15.0 Plumbing-Leaking Faucet/Pipes ........................................ 3 X .... X NLT 15.0 Range Hood/Exhaust Fans-Excessive Grease/Inoperable 2 X X 15.0 Range/Stove-Missing/Damaged/Inoperable ...................... 3 X X X 15.0 Refrigerator-Missing/Damaged/Inoperable .......................... 3 X .... X NLT 15.0 Sink-Missing/Damaged ...................................................... 5 X .... X NLT Laundry Area(Roam) ........... 2.0 Dryer Vent-Missing/Damaged/Inoperable ......................... 3 .... .... X Lighting ................................. 2.0 Missing/Inoperable Fixture ................................................... 4 X X X NLT Outlets/Switches ................... 4.0 Missing ................................................................................. 3 .... X LT 4.0 Missing/Broken Cover Plates .............................................. 3 X .... X LT Patio/Porch/Balcony ............ 2.0 Baluster/Side Railings Damaged ......................................... 3 .... .... X Smoke Detector .................... 0.0 Missing/Inoperable ............................................................... 5 .... .... X LT Stairs ..................................... 2.0 Broken/Damaged/Missing Steps ......................................... 3 .... .... X NLT 2.0 BrokerVMissing Hand Railing .............................................. 3 .... .... X NLT Walls ..................................... 4.0 Bulging/Buckling .................................................................. 4 .... .... X 4.0 Damaged ............................................................................. 3 X X X 4.0 Damaged/Deteriorated Trim .....___...................................... 1 X X X 4.0 Peeling/Needs Paint ............................................................ 1 X X .... 4.0 Mold/Mildew/Water Stains/Water Damage .......................... 2 X .... X Windows ............................... 4.5 Cracked/BrokerVMissing Panes ........................................... 3 X .... X NLT 4.5 Damaged/Missing Screens .................................................. 2 X .... .... 4.5 Damaged Sills/Frames/LintelslTrim ..................................... 4 X X .... 4.5 Missing/Deteriorated Caulking/Seals/G lazing Compound ... 5 X X 4.5 Inoperable/Not Lockable ...................................................... 3 X .... X NLT 4.5 Peeling/Needs Paint ............................................................ 1 X .... .... 4.5 1 Security Bars Prevent Egress ............................................. 5 .... .... X LT Note: (1) Nominal item weight assumes that all items for the Units are present. Item weights would be adjusted accordingly when items are not applicable (N/A). (2)The Health & Safety item assumes the highest item weight for a particular inspection. Nominally it is equal to 15%. (3) "X'in the level column indicates which levels are applicable. (4) Only level 3 is applied to H&S deficiencies. (5) In the H&S column, NLT is non-life threatening H&S and LT (life threatening) is exigent/fire safety (calling for immediate attention or remedy). 1148 47738 Federal Register/Vol. 77, No. 154/"Thursday, August 9, 2012/Notices Appendix 2: Dictionary of Deficierow and/or out as well as fences around has grown in areas where it was not intended Definitions playgrounds.etc. to grow. 3. Fences less than 4 (eel in height are to Level of Deficiency Site Inspectable Items be addressed under non-security fences. Level I:,WA Items to inspect for"Site"are as follows: 4.Gates for swimming pool fences are Level 2:Vegetation is extensive and dense: • Fencing and Gates covered in another section, 'Pools and it is difficult to see broken glass, holes,and • Grounds Related Structures(Common Areas).— other hazards. • Mailboxes/Project Signs level of Deficient,•: -OR- • Market Appeal Level 1:A security/safety fence or gale Vegetation contacts or penetrates an • Parking Lots/Driveways/Roads contains small holes or related damage as unintended surface,such as buildings. • Play Areas and Equipmmil defined above(smaller than 12 inches by 12 gutters,fences/walls,roofs,HVAC units,et(:.. • Re(use Disposal inches)in Tess than 25% of the fence. but you see no visible damage. • Retaining Walls Level 2:A security/safety fence or gate -OR. • Storm Drainage contains small holes Or related damage as Extensive,dense vegetation obstructs the • Walkways/Steps defined above,(smaller than 12 inches by 12 intended path of walkways or roads,bill the inches)in more than 25% of the fence. path is still passable. Fencing and Grates(Site) Level 3:A security/safety fence or fence Level 3:Plants have visibly darnaged a Fence:A structure functioning as❑ section contains large holes or related component,area,or systen of the property or boundary or barrier.An upright structure damage as dufined above(greater than 12 have made them unusable/impassable. serving Co unclose.divide or protect an area. inches by 12 inches)or is missing a section. Ponding/Situ Dia[nago(Grounds—Site) Gate: A structured opening in a fence for Note,:if Ihu fence can causo injury or allow Deficiency:Water or ire has collected in a entrance or exit. bodily harm,record it under"Hazards depression or on ground where ponding was Note:'['his does not include swimming (Ph;allh and Safetv)." not intended. Pool fences orgates. Swimming pool fences Nate: and gales are covered under"Pools and Grounds(SRO ].This does not include detention/ Related Structures(Common Areas)." The improved land adjacent to or retention basins or pending on paved areas. This inspectable item can have the surrounding thn housing and related such as parking lots: following deficiencies: structures This does not include land not owned or under the control of the housing —"Storm Dr Drainage i( i basins an:covered in • Holes/Missing Sections/Damaged/Falling/ g "Storm Drainage(Site)." Leaning—Non-Security/Non-Safety provider. —Ponding on paved areas is covered in • Holes/Missing Sections/Damaged/Falling/ This inspectable hero can have the "Parking Lots/Driveways/Roads(Site)." Leaning—Security/Safety following deficiencies: 2. If there has been measurable Holes/Missing Sections/Damaged/Falling/ • Erosion/Rutting Areas precipitation(1/10 inch or more)during the Loaning—Non-security/Non-soh;tv(Fencing • Overgrown/Penetrating Vegetation previous 49 hours,consider the impact on and Gates—Site) • Ponding/Site Drainage the extent of the Ponding, Deficiency:A non-security/nou-safety(for tiros ion/Rutting Areas(Grounds—Site) 3. Determine that Ponding has occurred example,privacy/decorativ(?)fmu:e or gate is Deficiencv:Natural processes,weathering only when there is clear evidence of a rusted,deteriorated,uprooted,missing or erosion,or gravity,or man-made processes persistent or long-standing problem. contains holes, have caused either of these conditions: 14'r•el of I)efrriencv: Vole: Level l:N/A 1.Gates for srvirruning pool fences are �j action or removal of surface material. Level 2:Ali accumulation of water(3 to 5 covered in another section,"Pools and inches deep)affects the use of at least 100 Related Structures(Common Areas)." —Sunken trunks.nits.grooves.or square feet of the grounds,but the grounds depressions. are generally usable. . Fences designed for security/safety arc Vote:This does not include erosion/noting Level 3:There is an accumulation of more addressed under"Holes/Missing Sections/ from a defined storm drainage system or in Damaged/Falling/Leaning—Security/Safety g than 5 inches deep over 100 square(eel. a play area.These are covered i) these -OR- (Fencing and Gates—Sites)." sections"Storm Drainage(Site]"and"Play Accumulation has made a large section of Level of Def(ciencyr Areas and Equipment anent (Site:)." Level L N/A 1 I the grounds.more than 20%.unusable for its Level 2:A non-security•/non-safety fence or Le vet of Deficiencv: intended purpose. For example,pending has gate contains holes or deterioration/damage Level L N/A made a recreational rwhi unusable. in greater than 25% of a fence. Level 2:Erosion has caused surface Mailbexes/Protect Signs/site) Level 3: NIA material to collect. ]calling to a degraded Comment surface that would ]ikelp cause water to pool Mailbox is a public container where mail Level 2: If the non-security/non-safety in a confined area,especially next to is deposited for distribution and collection. fence poses an}•danger.note this as a health strictures.paved areas,or walkways. This does not include mailboxes owned and and safety issue under"Hazards(Health and -OR- maintained by the U.S. Postal Service.such Safety).•• A rat/groove is ri to it inches wide and 3 as the"Blue Boxes."Project signs are boards. Holes/MissingSections/Dams ed/Fa Ilia / to 5 inches deep. posters.or placards displayed in a public g g Level 3: Runoff has extensively displaced place to advertise,impart information.or Leaning—Security/Safety(Fencing and soil,which has caused visible damage or the give directions.This does not include signs Gates—Site) owned and maintained by the city. potential failure ofadjoining structures or Deficient:v:A security/safety(i.e., systems,such as pipes,pavements. This inspectable item can have the perimeter/security) fence or gate is rusted, foundations,building,etc. following deficiencies: deteriorated,uprooted or missing such that it .OR. • Mailbox Missing/Darnaged map threaten security,health or safety. Advanced erosion threatens the safety of • Signs Damaged Vohs: pedestrians or makes an area of the grounds Mailbox Missing/Damaged[Mailboxes/ 1. Do not evaluate the fence under this unusable. Project Signs—site) item if tilt,fence or gale is not designed for -OR- securitp/safety,such as keeping intruders or There is a nit larger than 8inches wide by Deficiency:The U.S. Postal Service children Out. Refer to"Holes/Missing 5 inches deep. resident/unit mailbox is either missing or so Sections/Damaged/Falling/Leaning—Non- damaged that it does not function properly. Secnrlty/Non-Safety(Fencing and Gates— Ovurgruwm/Penetrating Vegetation Note: Do not inspect commercial deposit Sites)." (Grounds—Site) boxes, Fed Ex, UPS.etc..or U.S.Postal 2.Security/safety fences include perimeter Deficiency:Plant life has spread to Service"blue boxes." fences that are designed to keep people in unarreplabb!:ryas, unintended surfaces,or Level of Defirionrr: 1149 Federal Register/Vol. 77, No. 154/Thursday, August 0, 2012/Notices 47739 Level 1:N/A Cracks/Settlement/Heaving/Loose Materials/ Damaged/Hroken Equipment(flay Areas and Level 2:N/A Potholes(Parking Lots/Driveways/Roads— Equipment—Site) Level 3:The U.S. Postal Service resident/ Site) Deficiency:Equipment is broken into unit mailbox cannot be locked. Deficiencv:There are visible faults in the pieces,shattered,incomplete,or inoperable. -OR- pavement: longitudinal.lateral,alligator,etc. Note:Ito not evaluate equipment that the The U.S. Postal Service resident/unit The pavement sinks or rises bemuse of the POA states have been withdrawn from mailbox is missing or so damaged that it does failure of sub-base materials. service,except when safety is still a concern, not function properly. Note such as sharp edges,dangerous lancing.etc. Signs Damaged (Mailboxes/Project Signs— 1. [)a riot include cranks on walkways/For example,if the POA removed the net and Site) Ste Its, hoop front a basketball backboard and the 2. For this to be a Level 2 deficiency,more backboard poses no safety hazards,it is not Deficiency:The pruja:1 sign is riot legible than 10%of the area must he imparted,for it deficiencv. or readable because of deterioration or example, too out of 1,000 square feet.'file Level of Defiriencv: damage. 10% level does not apply to Level 3 bevel l: You see that some of the Leval of Deficiency.: conditions. equipment.20% to 50%.does not operate as Level 1:'fhe sign is damaged,vandalized, 3. Relief joints are there by design:(to col it should,but poses no safety risk. or deteriorated,and cannot be read from a consider them cracks. Level 2: You see that most of the reasonable distance(for example, 20 feet). q. Repairod/sealed cracks should not be equipment,more than 50%.does riot operate considered a deficiency. as it should,but poses no safety risk. 1-rival 2:N/A considered When observing traffic ability,consider Level 3: You see,uyuipmmtt that poses a Level 3:N/A the[capacity to support people on foot.in threat to safety and could cause injure. ,Market Appeal(Sire] wheelchairs.and using walkers or canes,ear... and the potential for problems and hazards. Deteriorated eterorated Play Area Surface(Play Areas Evaluate only those areas or structures that Level of Deficiency: and 1 Pmeet—Site) are under the control of the housing provider. Level L N/A Deficiency:You see damage to a play area This inspectable hear can have the Level 2;Damaged pavement as defined surface caused by cracking.heaving.settling. following deficiencies: above greater than�/, inch,cracks, flooding,potholes,loose materials,erosion, • Graffiti seuleumnt.hinging/tilting,loose materials. rutting,etc. • Litter pot holes,or missing section(s)that affect Level of Deficiency: traffic ability over more than to% of the Level 1:N/A Graffiti(Market Appeal—Site) property s parking lots/driveways/roads. Level 2:20% to 50% of the total surveyed Deficiency:You see crude inscriptions or Note a deficiencv if you see cracks on more play area surface shorts deterioration. drawings scratched.painted,or sprayed on if than 10% of the payed area. Level 3:More than 50% of the surveyed building surface,retaining wall,or fence that Level 3:Damaged pavement as defined play area surface shows deterioration. the public can sae from 30 feet away. above has made a parking lot/driveway Cornatent: Now:There is a difference between art unusable/impassable or creates unsafe Level 3: If the plav area surface could cause forms and graffiti. Do not consider full wall conditions for pedestrians and vehicles. tripping or falling.you must manually record murals and other art (Drops as m(Tti. Comment: this deficiency under"I azards(I lealth and g Level 2:If the height differential is greater Safely).. Level of Deficicnry: than°/. inch,consider this a safety hazard. Refuse Disposal(Site) Level I: )'off see graffiti in 1 place. If the[condition of the surface[could[cause Level 2: You see graffiti in 2 to 5 places. tripping or falling,you must manually record Collection areas for trash/garbage common Level 3: You see,graffiti in 0 or more this deficiency under"Hazards(Health and pick-up. planes. Safety)." Broken/Damaged F-nclosum—Inadequate Litter(Market Appeal—Site) Pending(Parking Lots/Driveways/Roads— Outside Storage Space(Refuse Disposal— Site) Site) Deficiency:There is a disorderly De iciency:The outdoor enclosed area used accunml at ion of uhjects on the pro purty. Deficiencv:Water or ice has accu lituland f I I 1 in a depression on an othenvise fiat plane, as a trash/refuse site is: esNate:lju judge litter %'Oil Would trash. —Hroken or damaged, including its walls. Nate:lodge litter as you would judge the Note: 6� - conditiou of a city park in America. Do not 1.Consider the impart of any measurable —OR— in:lude these as litter: precipitation, 1/to inch or more.during ilia —Too small to properly store refuse until tact 0 hours. Note the deficiency club, if disposal. I. Litter left behind in the path of a recent there is clear evidence that the oodin is a garbage collection. flooding Note:"this does not include areas that are g' it persistent or tong-standing problenn. rim designed as trash/refuse enclosures,such 2. Litter that maintenance personnel are 2. For parking lots/driveways/roads only, as curb pick-up. collecting and removing during your note a deficiency if you see pending on more !.[noel of Deficiency: inspection. than el%oof thef paved area. Level 1: N/A Level o:Deficiency: Level of Deficiency: Level 2:A single wall or gale of the Level I:N/A Level 1:N/:A Level 2:You see excessive litter on the Level 2: Between 1 and 3 inches of water enclosure has collapsed or is leaning and is has accumulated,affecting the use of 5% or m danger of falling. properh'. g —OR— Level 3:N/A more of a parking lot/driveway/road.The Trash cannot be stared in the designated parking lot/driveway/road is passable. area because it is too smell to store refuse Lots/Driveways/Rands(Site) Level 3: More than 3 inches of water has accumulated making o% or more of a parking until disposal. An area for parking motorized vehicles g P' g Level 3: sal, begins at the curbside and includes all lot/driveway/road unusable or unsafe. parking lots.driveways or roads within the Plno Areas and Fquipment(Site) Hetnining(Falls(Site) property lilies that are under the control of A wall built to support or prevent the Ali outdoor area set aside recreation or advance of a mass of earth or water. the housing provider. plat,especially one containingrig equipment This inspectable item can have the such as seesaws and swings. Damaged/palling/Lanni rig(Retaining Walls— following deficiencies: This inspectable item can have the Site) • Cracks/Settlement/Heaving/Loose following deficiencies: Deficiency:A retaining wall structure is Materials/Potholes • Damaged/Hroken Equipment deteriorated,damaged.falling,or leaning. • Pending • Deteriorated Play Area Surface Level of Deficiency: 1150 47740 Federal Register/Vol. 77, No. 154/Thursday, August 9, 2012/Notices Level 1:A retaining will shows some signs missing sections)that affect more them 5% bevel 3:At least 1 entry door or fire/ of deterioration,damage, falling or leaning, of Ihu property's walkways/steps. emmrgency door is not funcinning or cannot but it still functions as it should,and it is not Level 3:N/A be locked because of damage to the frame. a safety risk. Comment: header,jamb,threshold,lintel,or trim. Level 2:N/A Level 2: If the++•a Ikways or steps could CornrnenG Level 3:A retaining wall is damaged and cause tripping or falling,eon must manually Level 3:If the condition is it Imalth and has failed or is it safety risk. record this deficiency under"Hazards safety concern,you must record it manually Storm Drainage(Site) (Health and Safety) •' under"Hazards (I'Io:dth and Safety).•• - Svslem used to collect and dispose of Spelling(Walkways/Steps—Situ) Damaged Hardware/Locks(Doors—Building fDe icimmv:A concrete,or masonry Exterior) surface ncnof(waler through the use of culverts,underground structures,or natural walkway is flaking,chipping,or crumbling, Deficiency:The attachments to a door that drainage features.e.g.,swales,dilutes,etc.. possibly exposing underlying reinforcing provide hinging,hanging,opening.closing, Damaged/Obstruch;d (Storm Drainages Situ) acaterud.This is a defect if 5%or more of or security are damaged or missing.These the property's walkways/steps are affected. include locks.panic hardware.overhead Deficiency:If the storm(rains are For example,Fitt square feet out of 1.000 door tracks,springs and pulleys,sliding door structurally unsound/damaged,are blocked/ square foul. tracks and hangers.and door closures. obstructed by accumulated debris,or present Note: ltlbell observing traffic-ability. Note: other safety hazards. consider the capacity to support people on 1. If a door is designed to have locks,the. Level of Deficienry: foot.in wheelchairs,and using g walkers, locks should work. Level l:N/A level of Deficiency: 2. If a door is not designed to have locks, Level '?:The system is partially blacked by Level 1:More than 5% of Ihe walkway/ do not record a deficiency for not having a a large quantity of debris,causing backup stops have small areas of spatting.4 inchus lock. into adjacent area(s). by 4 inches or less. Level of Deficiency: Level 3:The system is structurally Level 2:More than 51% of the walkway/ Level 1:N/A unsound/damaged ur complu:ely blocked,or steps have large areas of spilling.larger than Level 2:One floor does riot function as it a large segment of the system has failed 4 inches by 4 inch a es, nd this affects traffic should or cannot be locked because of 6ecauso❑ large quantity of debris has caused: ;ability. damage it)the door's hardware. —Backups into adjacent area(s). 1-uvel 3:N/A Level 3:One door's panic,hardware does —OR Building Exterior Inspectable Items not function as it should. —Runoffs into areas where runoffs are not —OR— intended. Items to inspect for"Huilding Exterior"are Ono entry door or fern/emergency door as follows: does not function as it should or cannot be lVolkou vs/Steps(Site/ • Doors locked beCallse of damage to the door's Passages for walking and the structures • FHEO/Uniform Federal Arrussibility hardware. that allow for changes in vertical orientation. Standards(UFAS) Comment: This inspectable item can have the • Fire Escapes Level 3:If the condition is a health and following deficiencies: • Foundations safety concern,you must record it manually • Broken/Missing Hand Railing • Lighting tinder'*Health and Safety:Hazards." • Cracks/Settlement/Heaving • Roofs Damaged Surface(Holes/Paint/Rust/Glass) • Spilling • Walls (Doors—Building Exterior) Broken/Missing Hand Railing(Walkwways/ • Windows Deficiency:Damage includes holes. Steps—Site) Donn(Building Exterior) peeling/cracking/no paint,broken glass,and Deficienry:The handrail is danmgud or Means of access to the interior of a significant rust. You see damage to the door missing. building or structure.Doors provide privacy. surface the:: Level of Deficiency: control passage,maintain security,provide -May affect either the surface protection or Level I:N/A fire and weather resistance. Includes entry to the strength of the door. Level 2:N/A maintenance areas.boiler and mechanical -OR- Level 3:The handrail for 4 or more stairs rooms,electrical vaults,storage areas,etc,. -May compromise building security. is missing,damaged.loose,or otherwise Note:This does not include unit floors. Level of Defiriency: unusable. Level l:NIA This ng deficiencies: a item can have the Level 2:Ono door has a hole or holes with Cracks/Settlement/Heaving(\\'alkways/ following defirienries: Steps—Site) a diameter ranging from c/ oleo to 1 inch. • Damaged Fmmos/Threshold/Lintels/"trim Level 3:One door has a hole or holes larger Deficiency: • Damaged Hardware/Locks than I inch in diameter,significant peeling/ —Visible faults in the pavement: • Damaged Surface(Boles/Paint/Rust/Glass) cracking/no paint,or rust that affects the longitudinal.lateral,alligator.etc. • Damaged/Missing Screen/Storm/Security integrity of the door sur(are,or broken/ —OR— Door missing glass. Dulerioratod/Missing Caulking/Seals -OR- failure of of sub-base.materials. • —Pavement that sinks or rises because of the Missing Door One entry door or firu/em n ergecy door has Note.: Damaged Prances/Threshold/Lintels/'('rim a hole or hales with a diameter ranging from t. Do not include cracks on parking lots/ (Doors—Building Exterior) '/. inch to I inch. drive+rays or roads. Defiriencv:You see a frame,header,jamb, Dmnaged/Missing Screen/Storm/Security 2. Fnr this to be a Level 2 deficiencv.5% threshold,lintel,or trim that is warped,split. Door(Doors—Building Exterior) of the walkways must be impacted, for cracked,or broken. Defiriencv:You see damage to surfaces. example, 50 out of 1.000 square feet. Note: If you see damage to a door's including screens.glass.frames.hardware, 3. Relief joints are there by design:do not hardware(locks,hinges,etc-.) record this and door surfaces. consider them cracks. under"Damage Hardware/Locks(Doors— Level of Deficiency: 4. Repaired/sealed cracks should not be Building Exterior)." Level 1:At least 1 screen door or storm considered a deficiency. Level of Deficiency: door is damaged or is missing screens or Level of Deficiency: Level 1:N/A glass,shown by an empty frame or frames. Level 1:N/A Level 2:At least 1 door is not functioning Level 2:N/A Level 2:Damaged,as defined above, is or cannot be locked because of damage to the Level 3:A security door is not functioning greater than 1p inch,hinging/tilting,or follow,header,jamb, threshold, lintel,or trim. or missing.('Missing"applies only if a 1151 Federal Register/Vol. 77, No. 154/Thursday, August 9, 2012/Notices 47741 security door that should be there is not Blocked Egress/Ladders(Fire Escapes— Level 2: You sea obvious.large spalled there.) Building Exterior) area(s)affecting 10% to 50% of any Deteriorated/Missing Caulking/Seals Deficiency::\uw pan of the fire escape, foundation wall. (Doors—Building Exterior) including ladders,is blocked,limiting or Level 3: You see obvious,significant restricting people from exiting. spalled area(s)affecting more than 50%of Deficiency:Sealant and stripping designed ate foundation wall. to resist weather or caulking is missing or Notes This includes fire escapes,fire -'OR- deteriomted. towers,and windows on the ground Boor You see Spalling that exposes any Note:This applies only to entry doors that that would be used in an emergency' reinforcing materiel,such is rebar or other. were designed with seals. If a door shows Level of Defirienrv: Comment: evidence that a seal ryas never tart n its level 1: N/A Level 3:If VOL] have.any doubt about the I I.evel 2: N/A design,do not record a deficiency. b severity of the problem,request an inspection level of Defirien Level 3: Stored items or other barriers ci. restrict 3 block people by a structu ral engineer. Level 1: N/:\ p 1de from exiting. Lighting(Building Exterior) Leval 2: NIA Visibly Missing Components(Fire Esrapes— Level 3:The seals/caulking is missing on Building Exterior) System to provide illumination of building 1 entry door,or they Lou so damaged that Deficiency:You see that any of the exteriors and surrounding grounds. Includes they do not function as they should, components that affect the function of the fixtures, lamps.stanchions,poles.supports, fire escape are missing. and electrical supply that me associated with Missing Door(Doors—Building Exterior) thu building itself. Level of Deficiency: Deficiency:\door is missing. Level 1:N/A Broken Fixtures/Bulbs(Lighting—Building Level of Deficiency: Level 2:N/A Exterior) Level 1:N/A Level 3: Yen see that any of the functional Deficiency:Includes broken fixtures and Level 2:N/A components that affect the function of the bulbs.This deficiency covers all or part of Level 3:A single missing building exterior fire escape.for example. I section of a ladder the lighting associated with the building, door. or a railing,is missing. including lighting attached to the building Comment rise(] to light the site. If you see lighting that Level 3: If the condition is a health and Foundations(Building Exterior) is not directly attached to it speciFI:building. safety concern,you must record it manually Lowest level stmctural wall or floor assign it to the nearest building. under"Hazards(I-l:althand Safety)." responsible for transferring the building's Note:If a damaged fixture or bulb presents FHEO/UFA•S(Buildin Fxlerinr) load to the appropriate footings and soil. a safety hazard.ram it as Level 3,and record g Materials nuav include concrete,stone, it manually as a health and safetv concern. This inspectable item can have the masonry and wood. '[']iis includes broken fixtures and bulbs that fallowing definleltnleS: This inspectable item can hove the could fall on pedestrians or Could lead to • Main Entrance Loss Than 32"Mde following deficiencies: electrocution. • Obstructed or Missing Accessibility Route • Cracks/Gaps Level of Deficiency: Main Entrance Less Than 32"]Vide(FFIFO/ - Spalling/Exposed Behar Level 1:N/A UFAS—Building Exterior) Cracks/Gaps(Foundations—Building Level 2:20% to 50% of the lighting Exterior) fixtures and bulbs surveyed are:broken or Deficiency:Verify that the main entraure missing,but this does not constitute an for each building inspected is at least 32" Deficiency:You see a split in the exterior obvious safety hazard. wide,measured from between the face of the of the lowest structural wall. Level 3:More than 50% of the lighting door and the opposite door stop. Note:Cracks that show evidence of water fixtures and or surveyed are broken or Level of Deficiency: penetration should he evalualed here. missing. Level 1:N/A Level of Deficiency: -OR- Level 2:NIA Level 1:N/A The condition constitutes an obvious safety Level 3:The distance between the face of Level 2:You see cracks more than % inch hazard. the door and the opposite doorstop is not a2" 'vide by '/•inch deep by 5 inches long. Comment: evide. -OR- Level 3:If the condition is it health and )'on see large pieces, for example.many safety concern,you must record it manually Obstructed or Missing Accessibility Route bricks,that are separated or missing from the under"Electrical I iazards(health and (FETED/UFAS—Building Exterior) wall(ir floor. Safetv)." Deficiency:Verify that there is an Level 3: You seu large cracks or gaps more accessible route to and from the main ground than'/n inch wide by'Yu inch deep by 6hoofs(Building Exterior) floor entrance for ever•building inspected, inches long,a possible sign of a serious Roof system consists of the structural deck, Accessible routes include level surface to the structural emblem. weathering surface.flashing. parapet.and door, ramps,etc. -OR- drainage system.Thev nrav be flat or pitched. Level of Deficiency: You see cracks that are the full dupth of the This inspectable item can have the Level 1:N/A wall,providing opportunity for water following deficiencies: Level 2:N/A penetration. • Damaged/Clogged Drains Level 3:There is riot an accessible route. -OR- • Damaged Soffits/Fascia You see sections of the wall or Boor that • Damaged Vents Fire:Escapes(Building Exterior) are broken apart. • Damaged/Torn Membrane/Missing Ballast All buildings must have,acceptable fire Comment: • Missing/Damaged Components from exits.This includes both stainvav access Level 3:If you have any doubt about the Downspout/Gutter doors and external exits.These can include severity of the problem.request an inspection • Missing/Damaged Shingles external fire escapes,fire towers,operable by a structural engineer. • Pending(Roofs) windows on the lower Boors with easy access Spalling/Exposed Behar(Foundations— Damaged/Clogged Drains(Roots—Building to the ground or a back door opening onto Building Exterior) Exterior) a porch with a stairway leading to the Deficiency:A concrete or masonry wall is Deficiency: Fhe drainage system does not ground. Baking,chipping.or crumbling.possibly effectively remove water.Generally,this This inspectable item can have the exposing underlving reinforcing material deficiency applies to Bat roofs. following deficiencies: (rebar). Nate: • Blocked Egress/Ladders Level of Deficiency: 1. This does not includu gutters and • Visibly Missing Components Level 1: N/A downspmns. For these,see"Missing/ 1152 47742 Federal Register/Vol. 77, No. 154/Thurstlay, August 0, 2012/Notices Damaged Components from Downspout/ Level ?: Ballast has shifted and no longer concrete,masonry block,brick,stone,good. Geller(Roofs—Building Exterior)." fractions as it should. glass block.Surface finish materials include 2. If there has been measurable Level 3:You see signs of damage,as metal,wood,yinvl,stucco. precipitation(1/10 inch or more)during the defined above,to the membrane that mat• Note:This does not include foundation previous 48 hours,consider the impact on result in water penetration. walls. the extent of the pending. Determine that Comment This inspectable item can have the pending has occurred only when there is Level 3:If the condition warrants Further clear evidence of a persistent or long- inspection.inspection ba a roofing specialist following deficiencies: standing problem. is recommended. • Cranks/Gaps Level of Deficiency: Missing/Damaged Components from • Damaged Chimneys Level 1:N/A Downspout/Gutter(Roofs—Building Exterior) ' Missing/Damaged Caulking/Mortar Level 2:You see debris around or in a • Missing pieces/Holes/Spalling drain,but no evidence of pending. Deficiency:Too see.that components of the , Stained/Peeling/Needs Paint OR drainage m system,including gutters, leaders, Cracks/Gaps rs( K Exterior)11'alls—Huildin The drain is danged or partially clogged downspouts,splashblor-ks,and drain I s with debris.but the drain systent still openings,are missing or damaged. Deficiency:You see a split.separation,or Functions and coil see no evidence of Note:This does not include clogged drains. gap in the exterior walls. pending. For clogged drains,see"Damaged/Clogged Note:If you see both cracks/gaps and Drains(Roofs—Building Exterior)." missing tier"es/holes/s allin do not record Level 3:The drain is 5e damaged or g 1 P g• clogged with d Level of Deficiency debris that the drain no longer : fimrlions,as shown by pending. built. If you see both deficiencies,record only 1 of the Level 1:SplashUlocks are missing or r -. damaged. Comment: Level of Deficiency- Level 2: You see that drainage system Level 3: If you have any doubt about the Level L N/A are missing or damaged.bill severity of the condition,an inspection bye there is no visible damage to the roof, Level 2:You see a rmrk or gap that is more roofing specialist is recommended. structure.exterior wall surface,or interior. than Me inch wide by '/"inch deep by 6 Damaged Soffits/Fascia/Soffit Vents(Roofs— Level 3: You see that drainage system inches Inng. Building Exterior) components are missing or damaged,causing -OR- Deficiency:You see damage to soffit,fascia. Visible damage to the roof,slnmture,exterior You see pieces, for example•many brinks, soffit cents,ur associated components that tt'+ill surface,or interior. that are separated from the wall. may provide opportunity for water \lissing/Daniagod Shingles(Roofs—Building LAwvl 3: )'oil see a large crack or gap that penetration or other damage from natural Exterior) is nmre than N.inch wide or deep and 6 elements. inches long, possibly a sign of a serious Deficiency:Shingles are missing in structural problem. Level of Ueficienct': P damaged,including marking,dynrping, Level 1:You see damage to soffits. Fascia -OR- rupote: and other deterioration. or soffit vents,but no obvious opportunities Note:A square is IUU square feet. You see a crack or gap that is the full depth for water penetration. Level of Deficiency of the wall,providing opportunity for water : Level 2:N/A Level 1:Up to 1 square of surface material Penetration. Level 3:Soffits, fascia or soft t cents that or shingles is missing or damaged from roof -OR- should be there are missing or so damaged areas you survey. You see sections of the wall that are broken that water penetration is visibly possible. Level 2:One to 2 squares of surface apart. Comment: material or shingles are missing or damaged Comment: Level 3: If you have any doubt about the from surveyed roof areas. Level 3: If you have any doubt of the severing of the condition.ao inspection by a Laval 3: More than 2 squares ofshingles severity of the condition.requust an roofing specialist is recommended. are missing or damaged from surveyed inspection by a structural engineer. Damaged Vents(Roofs—Building Exterior) reefing areas. Damaged Chinmeys(Walls—Building Deficiency:Damaged cents on or extending Comment: Exterior) through the roof surface or components are Level 3. If you have any doubt about the damaged or missing.Vents include ridge severity of the condition,an inspection by a Deficiency:The chinntey, including the roofing specialist is recommended. part that extends above the roo0ine.has vents,gable cents, plumbing vents.gas vents, separated from the wall or has cracks, and others. Pending(Roofs—Building Exterior) Spalling,missing pieces or broken sections Note:This does not include exhaust fans Dr.f iciencv:)'oil see evidence of areas of on the roof or soffit vents: (including chimney naps). standing water,such as roof depression. Level of Ueficienct': -Exhaust fans are covered under 'Roof mold ring,or effervescence water ring. Level 1:The chimney cap is either visibly Exhaust System(Building Systems)." Note: If there has been measurable loose or damaged. -Soffit vents are covered under"Damaged precipitation (1/10 inch or more)during the Level 2:The surface of the chimney shows Soffits/Fascia/Soffit\'ants(Roofs— previous 48 hours,consider the impact oil surface damage oil more than 1 pir"ce of ts:all, Building Exterior)," the,extent of the.pending. Determine that for example,a few bricks or a section of Level of Deficiency: parading Ills occurred only when there is Siding. Level 1:The vents are visiblv damaged,but clear evidence of a persisteu or long- OR do not present all obvious risk to promote standing problem. The surface of the nhinumy has holes that further roof damage. Level of Deficiency: offer.)an area larger than 4 inches by 4 Level 2:N/A Level l:N/A inches. Level 3:Vents are missing or so visibly Level 2:NIA Level 3: You see evidence of standing Level:3 fart or all of the chimney has damaged that further roof damage is possible. g visibly separated from the adjacent wall. Damaged/Torn Mmnhrane/\lissing Ballast "'afar on the roof,causing potential or visible .OK- (Roofs—Buildin Exterior) damage to roof surface or underlving g materials. There are cracked or fallen pieces or Deficiency:In the membrane or Bashing. Comment: sections. you see damage that is a rip or tear.including Level 3:If you have amv doubt of the -OR- punctures,holes,cracks,blistering,and severity of the condition.an inspection by it There is a risk that falling pieces could separated seams. PVC.ribber,bitumen,and roofing specialist is recommended. create a safety hazard. similar materials are all subject to tears and Coounent punctures. Wells(Building Exterior) Level :i:If the condition is a health and Level of Deficiency: The exterior enclosure of the building or safety concern,you must record it manually Level l:N/A structure. Materials for construction include under"Hazards(Health and Sa(etv)." 1153 Federal Register/Val. 77, No. 154/Thursday, August 9, 2012/Notices 47743 Missing/Damaged Caulking/Mortar(Walls— • Cranked/Broken/\Missing Panes —paint covering the window assembly or Building Exterior) . Darnaged/Missing Screens trim is cracking,Baking,or otherwise Deficiency:Caulking designed to resist • Damaged Sills/Frames/Lintels/Trinn failing. weather or mortar is missing or deteriorated. • Mussing/Deteriorated Caulking/Seals/ -OR- Note:This does not include caulking Glazing Compound —The window assembly or trim is not relative to doors and windows:they are l• Pecling/Needs rint painted or is exposed to the elements. covered in other areas.Address all other Cracked/Broken/\Missing Panes[Windows— Note:This does not include windows that were not intended to be painted. caulking here. Building Exterior) Level of Defir-ienci: Level of Deficiency: Deficiency:A glass pane is broken, Level 1:You see peeling paint or a window Level 1:Mortar is missing around a single trussing.or cracked. that needs paint. masonry unit. OR - Level of Doficiencyc Level 2:N/A Deteriorated caulk is confined to less than Level 1:A glass pane is cracked.but you Level 3:N/A see no short)edges. iL inches. Building Systems Inspectable Items Level 2:Morha is missing around more Level 2: N/A than 1 contiguous masonry unit. Level 3:A glass pane is missing or broken. Items to inspect for"Building Sysu;crrs"tire, as follows: -ON- Donagt,g Exterior) Screens(Wrindou•s . Domestic Water You sew deteriorated in surd caulking in an area Building Exterior) • Electrical Svstem longer l3: 1'_> inrhes. De iciencv:screens are punctured,turn, . Level 3:N/A f 1 • Elevators otherwise damaged,or missing. Eme ency Power Missing Pieces/Holes/Spalling(Walls— Level of Deficiency. . Fire Protection Building Exterior) Level 1-Three or more screens in 1 . HVAC Deficiencv:You see deterioration of the building are punctured,torn.otherwise . Roof Exhaust System exterior wall surface, including missing damaged,or missing. . Sanitan•System pieces,holes,or spalling.This may also be Level 2:N/A Domestic Water(Building Systems) attributed to: Level 3:N/A —Materials that are rotting. Damaged Sills/Frames/Lintels/Trim portion of the building system that -OR- (Windows—Building Exterior) provides potable water conditioning,heating, —A concrete,stucco,or masonry uvall that is and distribution.taking its source from Baking,chipping or crumbling. Deficiency:Window sills,frames,sash outside the;building and terminating in I,evel of Deficiency. lintels.or trim are damaged by decay,nisi, domestic plumbing fixtures.The system Level 1: N/A rot.corrosion.or other deterioration. tvpirally consists of ureter conditioners Level 2: You see that there is a missing Note: Damage does not include scratches (filters and softeners),water heaters,transfer piece.for example,a single brick or section and cosmetic deBciunries. and circulating punpps,strainers.connecting of siding,ora hole larger than '/:inch in Leave/of Deficiency. piping.fittings,valves and supports. diameter. Level 1: You see damage to sills,frames, Note:This does not include portion of -OR- lintels,or trim.but nothing is missing.The water supply that connects to the heating and You see deterioration that affects an area inside of the surrounding wall is not cooling systenn. Also,the delivery points of up to gr/e: inches by 11 inches. exposed. You see no impart on either the the system such as sinks and f niculs in units Level 3: You see deterioration that exposes functioning of the window or weather or comnpon areas. any reinforcing material(rebor). tightness. This inspectable itenn can have the -OR' Luvul 2:Sills, frannes, lintels.or trim are following deficiencies: )'oil see more than 1 missing piece, for missing or damaged.exposing the inside of General Rust/Corrosion on Beater Chimney example,a fuv bricks or a section of siding, the surrounding walls and compromising its Leaking Central Water Supply or holes that affect an area larger than W& weather tightness. Misaligned/Damaged Ventilation Svstem inches by 11 inches' Level 3:N/A Missing Pressure Relief Valve -DR- Water Supply Inoperable You see it hole of anv size that completely Missing/Deteriorated Caulking/Seals/Glazing penetrates the exterior mall. Compound(Windows—Building Exterior) General Rust/Corrosion on Heater Chimney Comment: (Domestic Water—Building Systems) Deficiency:h The caulk,seals or glazing Level 3:If you have any doubt about the compound that insists weather is missing or 17efiriencr:'fhe water heater chimney severity of the condition,request an deteriorated. shows evidence of Baking,discoloration, inspection by a structural engineer pitting,or crevices. Note. Level o De iciencl, Stained/Peeling/Needs Paint(Walls— 1.This also includes Thermo one or f f Building Exterior) insulated windows that Kaye failed. Level 1:N/A riencv:Point is cracking.flaking,or 2.Caulk and seals are considered to be 3 e Level :T Dei h f 8• K• Level 3:The flaking, hexer ation.n,i shows othern•ise deteriorated. Water damage or deteriorated when 2 or more seals for any evidence of Baking,discoloration,pitting,or related problems have stained the paint. window have lost their elasticih•. (If the seals crevices that may create holes that could Note:This does not include malls that are crunpble and Bake when touched,they have allow toxic gases to leak from the chimney. not intended to have paint,such as most lost their elasticity.) brick walls,etc. Level of Deficiency: Leaking Central Water Supply(Domestic Level of Deficiency: Level 1: Most of the window shows Water—Building Systems) Level 1: You observe that less than 50% of missing or deteriorated caulk,seals and/or Deficiency,:You set,water leaking from anv a single building exterior wall is affected. glazing compound,hilt there is no evidence water s'vstem component, including valve Level 2: You obsen•e that more than 50% of damage to the window or surrounding Ranges,stems,bodies,hose bibs,or any of a single building exterior wall is affected. sinmture. domestic water tank e its pipe or pill(! Level 3: N/A Level 2: NIA connections. Windows(Building Exterior) Level 3:There are missing or clutmiorated Netn: caulk,seals and/or glazing compound with 1.This includes both hot and cold water Windows"Vstems provide light,security, evidence of leaks or damage to the window swslenu,but does not include fixtures. and exclusio of exterior noise,dust,heat- or surrounding structure. Address fixtures in dwelling units or and cold. Frame materials include wood, common areas. aluminum,vinyl,eta Peeling/Needs Paint(Windows—Building 2.Some pumps and valves are designed to This inspectable item can have the Exterior) leak as a normal function,particularly in fire following deficiencies: Deficiency. pumps,water pressure pumps,and large 1154 47744 Federal Regisler/Vol. 77, No. 154/Thtlrsday, August 9, 2012/Notices circulating pumps,and should be considered Level of Deficiency. Missing Covers(E lec.tric al System—Building accordingly. I.uvel I:N/A Systems) Gavel of Deficiency. Level 2:N/A Defirienc 11'he cover is missing from any [,live] 1:N/A Level 3:One or more fixed items or items electrical device hoc.panel box.switch gear Level 2:NIA of sufficient size and\%eight impede access box.or control panel with exposed electrical Level 3:You see that water is leaking. to the building sesteur's electrical pane{ connections. Comment: during an emergency. Note.:If the accompanying PDA identifies Level 3: If leaking water is a health and Comment: abandoned wiring:capped wires do not pose safety concern(i.e.,is leaking on or near Level 3:If the condition is a health and it risk,therefore,do not record this as a electrical equipment),you must record it safety concern, you must record it manual]v deficiency. manually under"Electrical Hazards(Health under'•Flanunahle Materials(health and Gavel of Deficiency: and Safety)... Safety).'• Level 1:N/A Misaligned Chinmey/Ventilation System Burnt Breakers(Electrical System—Building Level 2:N/A (Domestic[later—Building Systems) Svstems) Level 3:A cover is missing,which results Deficiency:The ventilation system on a - in exposed visible electrical connections. as fired or oil-fired water heater is plastic y, Breakers have carbon on the misaligned. plastic body,or the plastic body is melted Elevators(Building Syslorns) misaligned. and scarred Vertical conveyance system for moving Level of Defirienct^.Level I:NIALevel of Defir-ienr-v: personnel,uquipmunt.mmurials,household Level 2:N/A Level 1: N/:\ goods,etc. Level 3: You see any misalignment that Level 2: N/A inoperable Elevators(Elevators—Building nlav cause improper or dangerous venting of LCVUI 3: YOU sea;anv carbon residue. Systems) exhaust gases. nlelled breakers,or mr.ing scars. Deficiency: Missing Pressure Relief Valve(Domestic Evidence of Leaks/Corrosion(lilmctrical -The elevator will not ascend or descend. Water—Building Systems) System—Building Systmns) -OR- Deficiencv:The pressure relief valve on the Deficiency:You see liquid stains, rust -The elevator door will not open or close. central hot water heating system is missing marks.or other signs of corrosion on -OR- or does not extend to the floor. electrical enclosures or hardware. -The elevator door opens when the cab is not Level of Deficiency Note:Do not consider surface rust it there. Level 1:N/A deficiencv if it does not affect the condition Note!:Some elevators are designed/ Level 2:N/A of the electrical enclosure. programmed for special applications, for Level 3:There is no pressure relief vahe. Uwel of Deficiencv: example.stopping at every Boor. For these -OR- Level 1:N/A special cases,the elevator is serving its The pressure relief valve(Ines not extend Level 2:N/A designed purpose and is therefore not to the Boor. Level 3:Anv corrosion that affects the deficient. condition of the components that tarn, Level of Deficiency- Level 1:N/A Building Systems) current. Level 2:NIA Deficiencv:Water is not available. :OR•stains or rust an the interior of Level 3:The,elevator does not function at Level of Deficiency: - all. Level 1:N/A electrical enclosures. -OR- Level 2:NIA :Oft•CVIdCI1CL•of water[L'ak$111 the The elevator doors open when the call is Level 3:There is no running water in anv enclosurevevidence de hardware. not there. area of the:building. Electrical System(Building Svstenls) Frayed Wiring(Electrical System—Building Emergency Power(Building Systems) Systoms) Standby/backup equipment intondod to Portion of the building system that safely supply illumination or power or both, provides electrical power throughout the Deficiencv:You see nicks,abrasions,.or building. Including equipment that provides fraying of the insulation flint expose wres o tngey or generator sot)during utility control, protection,metering,and service. that conduct current. I Nole: Do not consider this a deficiency for This inspectable item can have the Not(!: that does not include transformers or following deficiencies: metering that belongs to the providing utility: wires not inimulod m be insulated,such as oquipmmol that is part of any emergency grounding wires. • Auxiliary Lighting Inoperable Irvel o e c-iencyr • Run-Up Records/Documuntation Not pourer generating system: cl terminal f Di f equipment such as"receptacles.switches,or Level I:N/A Available panel boards that are located in the units or Level 2:N/A auxiliary Lighting Inoperable(Emergency common areas. Level 3: You see any nicks,abrasions.or Power—Building Svstems) This inspectable item can have the fraying of the insulation that expose anv Deficiencv:Emergency lighting that following deficiencies: conducting wire. provides illumination during power outages • Blocked Access/Improper Storage Continent: does riot function as it should. • Burnt Breakers Level 3:If the condition is a health and level of Deficiency: • Evidence of Leaks/Corrosion safety concern.you must record it manually Level 1:N/A • Frayed Wiring under"Electrical Hazards(Health and Level 2 N/A • Missing Breakers/Fuses Safety)." Level a: Auxiliary lighting(toes riot • Missing Covers Missing Breakers/Fuses(Electrical System— function. Blocked Access/Improper Storage(Electrical Building Systems) Run-Up Records/Documentation Not System—Building Svstenls) Deficiencv:In a panel board,main panel Available(Emerge ic} Power—Building Deficiency:A fixed obstruction or item of board,or other electrical box containing Svstems) sufficient sin:and weight that can delay or circuit breakers,you see an open circuit Deficiencv:Records art!not properly prevent access to any panel board or main breaker position that is not appropriately maintained or available. power switch in an emurgency. blanked off. Level of Deficiencv: Note: If the panel hoard or main power Level of Deficiency: Levu[ I:N/A switch is locked but authorized personnel Level 1: N/A Level 2:Current records,from the[list 12 can quickly gain access,do riot record it as Level 2: N/A months,are lost,but older records are a deficiency. Level 3: YOU see an open breaker port. properly maintained and available. 1155 Federal Register/Vol. 77, No. 154/Thursday, August 9, 2012/Noticos 47745 Level 3:No records are available. • Fuel Supply Leaks Note.:This does not include elements Fire Protection(Buifrling SysGrrns/ • `lisaligned Chimney/Ventilation System related to the HVAC system. • General Rust/Corrosion Roof Exhaust Fans Inoperable(Roof Exhaust Building System designed to minimize the Boiler/Pump/Cooling System Leaks(HVAC— System—Building Systems) effects of a fire. May include the billowing:fire walls and doors,portable fire fn Building Svstens) De iriecy:The ventilation system/root extinguishers,and permanent sprinkler Deficiency:Coolant.water or steam is exhaust fans to exhaust air from building systems. escaping from unit rasing and/or pump areas,such as kitchen.bathroom,etc..does Note:This does not include fire detention, packing/syslenn piping. not function. alarm,and control devices. Note: Note: This inspectable item can have the 1.This does not include fuel supply leaks. 1.The inspector shall determine if the Fans following deficiencies: See"Fuel Supplv Leaks(FIVAC—Building are event activate( •for example,fire,tirnec • Missing Sprinkler Head Systems)." etc. If so.there is no defariencv. • \lissing/Damaged/Expired Extinguishers 2. Do not include steam escaping from 2. "Missing"only refers to the case where Missing Sprinkler Hand(Fire Protection— pressure relief valves. there were fans to begin with.If a fan was g'I 3. If water containment and curb is not included in the design,do not record if Building Systems) provided,do not record as deficiency if there deficiency for not having ono. Deficiency:You see that a sprinkler head, is standing water. Level of Defiriency:: or its components.connected to the central 4.Condensation or swatting is not to be Level 1:N/A fire protection system is either missing, confused with leaking. Level 2:N/A visibly disabled, painted over,hlocked.or bvel of Deficienr.v: Level 3:The roof exhaust fan unit does not capped. Level 1:Coolant,water,or Steen) is function, is damaged to the point of being Note:Components include test plugs, escaping from unit casing and/or pump inoperable,or is missing. drains,and test fillings. packing/system piping. Sanitary System(Building Systems) betel of Deficiency- Level 2:N/A Portion of the building system that Level l:NIALevel 3::Contort).water or steam is leaking Level 2:N/A from unit rasing and/or pump packing/ provides for the disposal l waste products Level 3:Any sprinkler head is missing, system piping to the point that the system or with discharge to the local sewage system. ( Loops should be shut down. Can include sources such ai domestic. visible disabled.painted over,blocked,or p � plumbing fixtures. Floor drains.and other capped. Comment: area drains.Consists of Boor drains and Level 3:If the condition is a health and (Fire Protection—/Expired Extinguishers traps,collection sumps,sewage ejectors. (Fire Protection—Building Systems) safety concern,you must record it manually sewage pumps.collection piping,fittings. under"Hazards(Health and Su(ety)." valves and supports. Deficiency:A Should be,portable fire extinguisher is Fuel Supply Leaks(MAC—Building Note:This does not include site sterna not where it should be, n damaged,d. the Systems) drainage.Refer to"Sterna Drainage(Site)." extinguisher certification has expired. Note: Deficiency:'There is evidence that fuel is This inspurtablo item inn have the I.This includes missing/damaged fire escaping from a fuel storage lank or fuel line. following deficiencies: hoses where there are fire cabinets. bevel of Deficiency: • Broken/Leaking/Clogged Pipes or Drains 2. For buildings with nmidliple fire control Level 1: N/A (Sanitary System) systems,sly nd pi lies,Sprinklers,etc.,5% or Level 2: N/A • :rlissing Drain/Cleanoul/hlanholu Covers less of the extinguishers for if given building Level 3:Any amount of fuel is leaking from Broken/Leaking/Clogged Pipes or Drains may bu missing,damaged,and/or expired. ba the supply tank or piping. (Sanitnn•System—Building Systems) Such rases do not record as a deficiency. General Rust/Corrosion(liV4yC—Building 3.If the inspection to is missing Burin Deficiency:)'off see that a drain is clogged P g g g Systems) or that components of the sanitary systeni are the RF:AC inspection,the accompanying POA Deficiency:The equipment or associated leaking. may produce proof that the fire extinguisher and ducting tr.e el n certification is current. If you see such proof, piping g'haws evidence of f f Deficiency: do not record a defriency for a missing tag. Baking.discoloration,pitting,or crevices. Level 1:N/A Level of Deficiency: Level of Deficiencv: Level 2:N/A Level L:For it building with only 1 fire Level 1:N/A Level 3:you see active leaks in or around control system,5% or less of the fare Level _: You see significant formations of the system components. extinguishers are missing damaged,or metal oxides,significant flaking, -OR- expired. discoloration.or the development of a You see evidence of standing water, Level 2: For all buildings,5% to 10% of noticeable pit or crevice. puddles.or ponding.a sign of leaks or the fire extinguishers are missing damaged. Level 3:The equipment or piping does not clogged drains. or expired. g n function because of this condition. Missing Drain/Cleaoul/Manhole Covers Level For all buildings,more than Comment 10% Level 3:If the condition is a health and (Sanimn•System—Building Systems) of the fire extinguishers are missing. safety concern.von must record it ender Deficiencv:You see that a protective cover damaged,or expired. "Hazards(Health and Safety)." is missing. -OR- Note.:This also includes rovers you see There is not an opurable/nan-expired fare Misaligned Chimney/Ventilation System while walking the site. extinguisher on each Boar. (H\AC—Building Systems) Level of Deficiency: IiNAC(Building Systems) Defici micy:The exhaust system on a gas Level 1:N/A fired.oil fared,or curl unit is misaligned. Level 2:N/A Portion of the building system that Level of Deficiency: Level 3:A protective:rover is missing. provides the ability to heat or cool the air [Level 1: N/A Comment: within the building. Includes oquipuaeut Level 2:N/A Level 3:If the condition is a health and such as boilers,burl urs,furnaces, fuel Level 3: You see a misalignment of an safety concern,von must record it manrally supply, hot water and steam distribution, exhaust system on a gas fired,oil fired(it Mal under"Air Qualitv(Health and Safety)." centralized air conditioning systems,and unit that causes improper or dangerous associated piping.filters,and equipment. venting of gases. Common Areas Inspectable Items Also includes air handling equipment and The locations of items to inspect for associated ventilation ducting. Hoof Exhaust System(Building Systems) "Common Areas"are as follows: This inspectable item can have the The system used to primarily exhaust stale • Basement/Garage/Carport. following deficiencies: air from the building.Primarilv from the —Basement:the lowest habitable story of a • Boiler/Pump/Cooling System Leaks kitchen and bathroom areas, building,usually below ground level. 1156 47746 Federal Register/Vol. 77, No. 154/Thursday, August 9, 2012/Notices —Garage:a building or plying of a building in Call-for-Aid—Inoperable(Common Areas) representative:that an inspection by a which to park a car. System to summon help. May be visual, Professional engineer is suggested. —Carport:a roof projecting from the side of audible,or both.May he activated manually Mold/M i Id mvAVa tar Stains/Water Damage a building or Gee standing.used to shelter ar aulomatiraliv when pre-programmed (Ceiling—Common Areas) an automobile. conditions are met. • Closet/Utility/Mechanical—an enclosed Deficiency:The system does net function Dr:ficienr,t•:You see mold or milduu•that room or closet housing machines and/or as it should. may have been caused by saturation or surface failure.,or evidence of water equipment that service the building. Note.:Inspector should verify that the Gall- infiltration or other moisture producing • Community Room—meeting plane used by fur-Aid only alerts local entities Ion-sitel conditions. members of a community for social, prior to testing, Level of Deficiency: cultural,or recreational purposes. Level of Defiriencl. Level 1:On 1 ceiling,you see evidence of • Day Care place that provides daytime Level 1:N/:1 mold or mildew,such as n darkened area, supervision,training,and medical services Level 2:N/A over a large area (more than 1 square foot but for preschool children or for the elderly. Level 3:The system does not function as less than 4 square feel). You mac or mac not • halls/Corridors/Stairs—passageevav in a it should. see water. building,which organizes its rooms, Ceiling(Connnon Areas) Level 2:,WA apartments and staircases. Level 3:On 1 ceiling,you estimate that a • Kitchen—a place where food is cooked or •flnu visible overhead structure lining the f very large area(snore than t square fool)of inside of a room or area. Prepared:the facilities and equipment used This inspectable item can have the its surface.has been substantially saturated in undrvring and placing food. or damaged by mold or mildew•.The ceiling following deficiencies: • and lin} Room—place place and/or soiled clothes surface may have failed. and linens are washed and/or dried. Bulging/Buckling • I,obbv—a foyer.hall,or waiting room at or Holes/\lisping Tiles/Panels/Cracks Areas) eangheeds Paint (Ceiling�lommon near the entrance of a building • M Peeling/Needs l eew/ll'aler Stains/Water Damage Areas) • OfficL a plane in which business, • feeling/Needs Paint Defirirnrv:)'oil see paint that is peeling. professional.or clerical activities are Bulging/Buckling[Ceiling—Commmn Areas) cracking, flaking or otherwise deteriorated on conducted. DeJicienrv:A ceiling is bowed,deflected, ceilings in common areas. • Other community spaces. sagging,or is no longer aligned horizontally Level of De-firiency: • Patio/Porch/Balcony—covered entrance to to the extent that ceiling failure is possible. Level I: You see paint that is peeling, a building,usually with a separate roof or lxval of Deficiency: cracking,Baking or otherwise deteriorated on a recreation area that adjoins common Level 1:N/A 1 to 4 ceilings in common areas. areas. Level 2:N/A Level 2: You see more than 4 ceilings in • Pools and Relaters Structures—swinnniu Level 3: You see bulging,buckling,sagging. common areas that have paint that is peeling, g alignment. g' cranking,flaking or otherwise deteriorated,or Pools and related structures including or a lack of horizontal alignment. fencing.etc. Comment: need paint. • Restrooms/Pool Structures—a room Level 3: If you as an inspector have Level 3:N/A equipped with a water closet or toilet.tub concerns about the possibility of failure, Chafes Dmnnged/Sfissing Components and/or shower,sink,cabinet(s)and/or inform the property representative that an (Common.Arens) closet; this includes locker rooms or inspection by a professional engineer is bathhouses associated with swim ming suggested. Drfici<au:y:The structure that directs garbage into the appropriate storage container Pools. Holes/Afissing'files/Panels/Cracks(Ceiling— is missing or damaged.This includes the • Storage—a room in which items are kept Common Areas) Thule.chute door.and other components. for future usu' Defiricnr_v: Note: Do not evaluate the door that leads • Trash Collection Areas—collection areas —The ceiling surface has punctures that may to the trash room. for trash/garbage common pick-up' or may not penetrate completely. Level of Deficiency: The items within locations to be inspected -OR- Level is N/A for"Common Areas"are lister(below. —panels or tiles are missing or damaged. Level 2:Garbage has backers all into Baluster/Side Railings—Danmged ICmnrnon Level of Deficienrv: chutes,because the collection structure is Areas) Level 1:)'oil see small holes that are no missing or broken.Compactors or larger than a sheet of paper,8Ya inches by 11 components,Chute,chute door,and other Ueficiency:'I'Inu baluster arsine railing on inches. (.onnponents,have failed. the exterior improvement is loose.damaged -OR- Level 3: N/A or missing, limiting the safe use of this area. No hole or crack pmuarttes the area above. Level of Ueficianr.}e -OR- Countertops—:Ilissing/Darnagad(Cornmmn Level 1:N/A You see that no more than:3 tiles or petals :Lens) Level 2:N/A are missing. DeJicienrv:A flat work surface in a kitchen Level 3:The baluster or side rails enclosing -OR- often integral to lower cabinet space is the area are loose,danpaged,or missing, You see a crack more than bh inch wide missing or deteriorated. limiting the safe use of this area. and 11 inches long. Level of Deficiently: Cobinets-1lissing/Dnmaged(Common Level 2: You see a hole that is larger than Level 1:NIA Arens) a sheet of paper.81A inches by 11 inches,but Level 2: 20%or more of the countertop it does not penetrate the area above. Yon working surface is missing,deteriorated,or Deficiency:Cabinets are missing or the cannot see through it. damaged below the laminate and is not a laminate is separating.This includes cases. .OR- sanitary surface on which to prepare food. boxes,or pieces of furniture with drawers, You see that more than 3 tides or panals are Level 3:NIA shelves,or doors, primarily user(fer storage-, missing. Dislcns nher/Cnrba e Disposal—Inoperablen mounted on walls or floors. Level 3: )'oilsee a hole or crack that g Level of Ueficiencl': penetrates the area above. You can sea (Common Areas) Level 1:N/A through it. Deficiency:A dishwasher or garbage Level 2: You see that 101% to 50% of the Cornrnents: disposal. if provided,does not function. cabinets,doors,or shelves are missing or the Level 3:If a hole or(.rack is a health and Level of Deficiency: laminate is separating. safety concern.you must record it manually Level 1:N/A Level 3: You see that more than 50% of the under"Hazards(Health and Safety)." Level 2:The dishwasher or garbage cabinets,doors,or shelves are missing or the If you as an inspector have concerns about disposal noes not function. laminate is separating. the possibility of failure, inform the property Level 3:N/A 1157 Federal Register/Vol. 77, No. 154/Thursday, August 9, 2012/Notices 47747 Doors(Common Arens) -OR- You estimate that more than 5o%of the Means of access to the interior of a unit. A restroom door,entry door,or fire door doors are missing. Doors provide privacy and security,control that requires locking cannot he locked Comment: passage,provide fire and weather resistance. because of damage to the door's hardware.. Level 3: If the condition is a health and This inspectahle item ran have the Damaged/Missing Screen/Storm/Security safety concern,you must record it manually following deficiencies: Door(Doors—Common Areas) under'I Lizards(Health and Safer•)." • Damaged Frmes/Threshol(i/Lintels/1'rim Deficiency.Visible damage to surfaces Orrer Vent—Afissing/DOnargerf/hmpemhle • Damaged Harti Larks • Damaged/Afissing including screens,glass. Frames, hardware, !Comm A on rens) ng SrreunlStonn/Srcori[y Door and door surface. Deficicncv:'fhere is nn adequate way to • Damaged Surface—(Ilolus/Paint/Rust/ Level of Deficiency: vent heat and lint to the outside. Glass) Level 1:One or more screen/storm doers Level of Deficienci • Deteriorated/Missing Seals(Entry Only) has damage or door is missing screens/glass Level 1:N/A • Missing Door as evidenced by empty frame. Level 2:N/A Level 2:NIA Level 3:The dn.er cent is missing or you Damaged Frnmes/'fhreshold/Lintels/Trim Level 3:A single security door is see that it is not functioning because it is (Doors—Common Areas) inoperable or missing.(Missing only applies blocked. Drver exhaust is not effectively Deficiency:You see a frame,header,jamb• to those situations where a security door is vented to the outside. threshold,lintel,or trim that is warped,split. supposed to be present but is observed not cracked,or broken. to be there.) Electrical(Common Arms) Note:If you see damage to a door's Portion of the common area that safely hardware,(locks,hinges•etc..)record this Demurs--ged Surface(Holes/Faint/Rust/Glmzsl provides electrical rower throughout the (Doors—Common Areas) P } 6 under"Damage Flarfi{vare/Locks(Doors— building. Including equipment that provides Common Areas)." Deficient}':'['his includes holes,purling/ control,protection,metering,and snn•ire. Level of De irienc}.; cracking/no paint,broken glass,and f ']'his inspectable item van have the I,ecel 1:N/A significant rust You sea damage,to the door following defirianries: Level 2:At least 1 door is not functioning surface that: • Blocked Access to Electrical Panel or cannot ba locked beConS0 of damage to the —Mav affect either the surface protection or • Burnt Breakers frame.header,pinch,threshold, lintel,or trim. the strength of the door. • Evidence of Leaks/Corrosion Level 3:At bast 1 restroom door,entn• -OR- • Frayed Wiring door•or fire is not functioning or cannot he —May compromise building security. \li' g Breakers locked because of damage to the frame, Note:If the door is a restroom, fire door, • Missing Covers header.jamb,threshold,lintel,or trim. or entry door,this is a Level 3 deficiency. Comment: Leave/of Deficiency: Blocked Access to Electrical Panel Level 3:If the condition is a health and Level 1:NIA (Electrical—Common Areas) safety concern,you must record it manually Level 2:One door his a hole or holes with Deficiency:A fixed obstruction or item of under"Flazards(Flealth cold Safety)." a diameter ranging from i inch to 1 inch. sufficient size and weight ran delay or Damaged hardware/Locks(Doors—Common Level 3:One.door has a hole or holes larger prevent access to arc panel board switch in Areas) than 1 inch in diameter.significant peeling/ an emergency. cracking/no paint rust that affects the Note: If you see an item that is easy to Deficiency:The attachments to it door that integrity of the floor surface,or broken/ remove.like a picture.do not note this as a provide hinging,hanging,opening.closing, missing glass. defirienre. Or security;err,damaged or missing.These Comment: Level of Deficiency: include locks,panic hardware,overhead Level 3: If the condition is a health and Level 1:;N/A door tracks,springs and pulleys,sliding door sa(rr,concern, you must record it manually Level 2:N/A tracks and hangers,and door closures. under"Flaza rcis(Flealth and Safety)." Level 3:One or more fixed items or items Note' ofsufficient size and weight can impede 1. ]fit dour is designed to have a lock.the Dewriorated/Missing Seals(Entn•Only) 6 P lock should work. If a door is designed (Doors—Common Areas) access to the unit's electrical panel during an without locks.do riot record it as a Defirienrr.'I'he seals and stripping arround emergency. deficiency. the entry door(s)to resist weather and fire are Burnt Breakers(Electrical—(common Areas) 2. If a lock has been renamed from an damaged or missing. Deficiency:Breakers have carbon on the: interior door,do not record this as a Note:This defect applies Only to eniry plastic body,or the plastic body is melted deficiency. doors that were designed with seals. If;]door and scarred. 3. 504 units have had locks removed. shows evidence that a seal was never part of Level of Deficiency: Before you start the inspection,you should its design,do not record it as a deficiency. Level 1:N/A Ili!given a list of units relative to the UFAS. Level of Deficiency: Level 2:N/A Do not record these missing locks as Level 1:N/A Level 3: You see arc carbon residue. deficiencies. Level 2:N/A melted breakers,or arcing scars. Level of Derficienev: Level 3:Thu seals are missing on I entry Evidence o(Leaks/Corrosion (Electrical— floor,or I:Acloset door duns not function as door,or thev are so darnaged that they do not Common Areas) it should because of damage, in the door's function as they should. hardware. Missing Door(Doors—Coon A Deficiency:You see liquid stains,rust g mm Areas)-OR- marks,or other signs of corrosion on A closet door that requires locking cannot Defiriency:A door is missing. electrical enclosures or hardware. be locked because of damage:to the door's Note: If a restroom door,entry door,or fire Note:Do riot consider surface nest a hardware. door.record this as a Level 3 deficiency. defariencc if it does not affect the condition Level 2:A door does not function as it Level of Deficienry: of tine electrical enclosure. should because of damage to the door's Level 1: A door is missing,but it is not a level of Deficiency: hardware. restroom door,entry door,or fire door. Level 1:N/A -OR- Level 2:Two doors or up to 50% of the Level 2:N/A A door that requires locking cannot be doors are missing,hilt they are not restroom Level 3:Anv corrosion that affects [lie locked because of damage to the door's (lours,enin•doors,or fare doors.and the condition of the components that carry hardware. condition prrsenls no hazard. current. Level 3:A restroom dour,entry door,or Love)3: A restroom door,entry door,or -OR- fire door(IOUs not function as it should fire door is missing. - Any stains-or rust on the interior of because of darrago to the door's hardware. -OR- eloctrical enclosures. 1158 47748 Federal Register/Val. 77, No. 154/Thursday, August U. 2012/Notices -OR- Level 1:NIA Peeling/Nerds Paint(Floors—Counnun Any evidence of water leaks in the Level 2:NIA Areas) enclosure or hardware. Level 3:The common mess are either Deficiency:For floors that are painted,you Fraved!firing(Electrical—Common Areas) Obstructed or are not accessible by see paint that is peeling.cracking,flaking,or Deficiency:You see nicks,abrasions,or wheelchairs. otherwise deteriorated. fraying of the insulation that expose wires Floors(Common Arens) Level of Deficiency: that conduct current. Level 1:The area affected is more than 1 Note.: Do not consider this a defiriencv for The visible horizontal surface system square foot,but less than 4 square feet. within a room or area underfoot the Level 2:Thu area affected is more than 4 virus not intended to he insulated,such as horizontal division between !2 stories of a square feet. b groundinga- Of Defies.Deficirnr,y�' str acre. Level 3:N/A cvrl of Level I:NIA This inspectable item ran have the Rot/Deteriorated Subfloor(Floors—Common Level 2:NIA following deficiencies: Areas) Level 3: You see any nicks,abrasions,or • Bulging/Buckling • hard Floor Covering Missin /Dania ed Deficiency:The subfloor has deco,% Or is (raying of the insulation that expose arc g' g g decaying. conducting wire. Flooring/Tiles Vote: Comment: • Mold/Mildew/Wafer Sams/Water Damage 1. If there is any doubt,apply weight to Level 3:If the condition is a health and • Peeling/Needs Paint detect noticeable deflection. safety concern.you must record it manually • Rol/Detmiorated Suhfloor 2.This hype of defect topically occurs in under"Electrical Hazards(Ilea)th and • Soft Floor Covering Damaged kitchens and hathrooms. Safety).•' Bulging/Buckling(Floors—Common Areas) Level of Deficiency: Missing Breakers(Electrical—(:ommon Level 1:N/A Areas) Defig,orr.s The Boor al aligned h deflected, Level 2:Evidence of small an;as of rot, 1 sagging, f is is longer aligned horizontally. to 4 square feet. Deficiency:In a panel bared,main panel Level of Deficiency: l board,or other electrical box that contains Level t:N/:\ Level:3: F•.vicdenr:u of large areas of rat,more circuit breakers/hoses,you see an open Level 2: N/A than 4 square feet, circuit breaker position that is net Comment: circuit iatelybreaker position that Level 3:You see bulging,buckling.sagging. Level:3:If coil as an inspector have Or a problem with alignment. concerns about health and safety.informs the level of Deficiencwc Comment Level 1:N/A property representative that an inspection by Level 2:N/A Level 3:If Vol) have any doubt about the a professional engineer is suggested. Level 3:You see an open breaker port. severity of the condition.request an Soft Floor Covering Missing/Damaged inspection be a structural engineer. (Floors—Common Areas) Missing Covers(Electrical—Conmmu Areas) Hard Floor les(Fl taii-C Missing/Damaged red De irienrv:You see damn ed and/or Deficiency:The cover is missing from any Flooring/Tiles(Floors—C;nnunon Areas) f g electrical device box.panel box,switch gist missing soft Moor covering. box,control panel,etc., with exposed Deficient:You see that hard flooring, Level of Deficirnr:v: electrical romatctions. terrazo.hardwood,ruramic rile,sheet vinyl, Level 1: You estimate that 5% to 10% of Vote: If an accompanying POA has vinyl tiles,or other similar flooring material, any single floor covering has stains,surface identified abandoned wiring,capped wires is missing a section(s'). is damaged,or burns,shallow ruts,small holes,tears,loose do not pose a risk. Do not record this as a presents a tripping or cutting hazard, areas,or exposed seams.The covering is fully deficiencv. associated with but not limited to, holes or functional,and Haire is no safety hazard. Len•el of Deficiency: delamination. Level 2: You estimate that 10% to 50% of Level 1:N/A Level of Deficiency: anv single floor covering has stains,surface Level 2:NIA Level 1: For any single floor surface,you burns,shallow cuts,small holes,tears,loose Level 3:A toyer Is missing,and you see, sea deficiencies in areas of the floor surface. areas,or exposer) seams.The cohering is fully exposed electrical connections. You estimate that .5% to 10% of the floor is functional,and there is no safety hazard. affected,and there are no sa(ev problems. Level:3:You estimate that more than 50% FIfEO/ilFAS(Common Areas) affected, 2: 1 all estimate that 10% to 50% of of any single floor covering is damaged. This inspectable item can have ihu any single floor surfacu is affected,bill then: -OR- following deficiencies are no safet problems. Damage to the soft floor covering esposus • Multi-Story Building Hallways/Common Level 3: You estimate that more than 50% the underlying material. Areas Less Than 32"!Vide of any single floor surface:is affected by Level Corporeal: • Routes Obstructed or Inaccessible to I deficiencius. Level 3: If this condition is a health and 11'heelchair safety concern.Von must record it manually -(7R under••Flazarrls(health and Safety).- Multi-Story Building Hallways/Conunon The condition causes a safety problem. Areas Less Than 3W Wide(FHEO/UFAS— Molri/Maldive/11'ater Stains/Water Damage CFI—Inoperable(Common Arens) Coalition Areas) (Floors—Common Areas) Deficiencv:The GFI does not function. Deficiency:For multi-stun,buildings that Deficiency:You see mold or mildew that Vote:To dearmine whether the GFI is are inspected,verify that the interior functioning,you must press the self-test may have been caused by saturation or 6utinn in the GFI unit. halheays to the inspected units and common surface failure or evidence of water areas;treat least 36'•wide. Level of Deficiency: Level of Deficiency: infiltration or other moisture producing Level 1:N/A conditions. Level 2: N/ALevel 1: N/A Level o De irienc Love! Z: N/A Level f y' Level 3:The GFI dogs net function. Level 3:The interior hallways are loss than Level 1:NIA Comment: 36"wide. Level 2:On I floor,you see evidence of Level 3:If this condition is a health and mold or mildewy.such as a darkened area, safety concern,you must record it under Routes Obstructed or Inaccessible to over a large area(4 square inches to I square "Electrical Hazards(Health and Safety).- Wheelchair(FhEO/UFAS—Common Areas) foot).You may or may not see water. Deficiency:Verify that at least 1 route to all Level 3:On 1 floor,you ultimate that a Graffiti(Common Arens) outside common areas is accessible to Very large area(more than 1 square foot)of Deficiency:You see crude inscriptions or wheelchairs(i.e.,there are curb ruts,ramps, its surface,has been substantially saturated drawings scratched,painted.or sprayed on and sufficient (36")width). or damaged by mold,or mildew.The floor an interior building surface at i location.A❑ Level of Deficiency: surface may have failed. interior surface includes but is not limited to 1159 Federal Register/Vol. 77, No. 154/Thursday, August 9, 2D1'2/notices 47749 walls,doors,ceiling,and floors.A location cooling it should.The system does riot Mailboxes—Missing/Donmged(Common is defined as I general area in a building such respond +shun the controls are engaged. Areas) as I hallway in a 10 story building or I Moor Comment: Deficiency:The U.S. Postal Service of a stairwell in a 5 story building. Level 3: If this condition is a health and resident/unit mailbox is either missing or so Note:There is a difference between art safety concern.;-air must record it manually damaged that it does not function properly. forms and graffiti. if there by design in under"Hazards(Health and Safety)." Note: Do not inspect commercial deposit accordance with proper authorization,do not r hoses, FedEs, UPS.etc.,or U.S. Postal consider full wall murals and other art forms Misaligned Chimney/\untilation System raffiti. (li V:1C—C:nmmnn Areas) Service"blue hoses." as K Level of Deficiency: Level of Deficiencx Deficiency:The exhaust systern un a gas, Level 1:N/A Level 1: You see graffili on an interior oil fired.or coal unit is misaligned. Level 2:N/A surface at 1 location in the same building. level of Deficiency: Level 3:The U.S. Postal Service resident/ Level 2: You see graffiti at 2 to 5 locations Level 1:NIA unit mailbox cannot he locked. on interior surfaces in the same building. Level 2:N/A -OR- Level 3:You see graffiti in 6 or more Level 3:YOU see ant'unisaligunnmt of an The U.S. Postal Service residua/unit locations on interior surfaces in the same exhaust systern on a gas fired,nil fired or coal mailbox is missing. building, unit that may cause improper or dangerous OurblLs/Su•itr:hrs/Cover PIaV!s—,1lissing/ NVAC(Couunon Arens) venting of gases Broken(Common Arens) System to provide heating,cooling and Noisy/Vibrating/Leaking(HVAC—Common The receptacle connected to a power ventilation to the unit.*['his does not include Areas) supply or method to control the Flow of building boating or cooling systern Defirirncr:The FI1rAC distribution electricity. Included are 2 and 3 prong deficiencies such as boilers,chillers, components,including tans,are the source of Oealets,ground fault interrupters, pull cords, circulating pumps.distribution lines, fuel unusual vibrations, leaks,or abnormal noise. 2 and;1 polo switches and dinnmer switches. supply.etc..,or occupant owned or supplied Defirienrya Examples may include,but are not limited to. heating sources. screeching,s uealin banging,slinking utr,. —The Flush plate that cowers the opening This inspectable item can have the g' 9 g' K g" g' around a switch or outlet is damaged Or followingdeficiencies: Level ofDefiriency: 8 Level l:The FIVAC system shows signs of missing. • Convention/Radiant Heat System Covers -OR- Missing/Damaged abnormal vibrations,other noise,Or leaks _A switch or outlet is missing. • General Rust/Corrosion when engaged.The system still provides enough herein or cooling to maintain if Level of Defiriency • Inoperable 8 8 KLevel 1: An outlet or switch has a broken • xlisaligned Chimney/Ventilation System minimum temperature range in the major rover plate over a junction box,but it ones • Noisy/\'iterating/Leaking living areas, not result in exposed wiring. Convection/Radiant (feat System Covers Level 2,N/A Level 2:N/A Missing/Damaged(HVAC—Common Areas) Level 3.N/'\ Level 3: An outlet or switch is missing. Deficiency:A rower on the convection/ Lnyotory Sink—Damaged/Missing(Common -OR- radiant heat system is missing or damaged, Arens) A rover plate is missing or broken, which could cause a burn or related injury. resulting in exposed wiring. Level of Deficiency: I Defiriency:A sink,faucet,or accessories are missing.damaged,or not functioning. Pedestrian/lPheelchnir Romp/Common Level 1:N/A Note:If you see that a stopper is missing Arras) Level 2:N/A from a common area,do not record this as Deficiency:A pedestrian walkway or Level 3:At least 1 cover is missing or a deficiency. wheelchair ramp is damaged or does not substantially damaged,allowing contact with Level of Deficiency: function as it should. heating/surface elements or associated fans. Level 1:you see extensive discoloration or Level of Deficiency: Cerement cracks in Oyer 50%of the hasin,but the sink Level 1:N/A Level it When the system is operational Can be used. Level 2:A walkway or rannp shows signs during c inspection and you see a level 3 of deterioration and requires repair,but it can deficiency.a real-time hazard exists,you Level _:TheNIA be used by people on fool,fit wheelchairs,or must record it nanualh•under"Hazards Level 3:The sink or associated hardware have(ailed or are missin The sink cannot using walkers. A (Health and Safetvl." K� Level 3:A walkway or ramp is damaged General Rust/Corrosion(HVAC—Common be used. and cannot be used by people on foot,in Areas) Lighting—.11issing/DOmaged/Inopemble wheelchairs,or using walkers. Defiriencp:'I'he equipment or associated Fixture JConunon Arens) Plumbing(Common Areas) piping/ducting shows evidence of flaking, Deficiency:Lighting fixture is damaged. This inspectable item ran have the oxidation,discoloration, pitting.or crevices. not functional.or missing. following deficiencies: Level of Deficiency: Nate:To consen'e energy during daytime • Clogged Drains Level I: You see superficial surface rust. or in lovw-use areas,many facilities use significant fornations of • Leaking Faucet/Pipes Level 2: You see si 8 alternate lights that are triggered by either a Clogged Drains q medal oxides flaking,or discoloration,or a sensor or a timer. If woo see these kinds of (Plumbic —(.;rumen Areas) pit or crevice. lights,ask the accompanying POA to verify Ueficiencr•:Water does not drain Level 3: Because of this condition,the that these conservation systems are in place. adequately from the shower,sink, till),or equipment or piping does not function. Level of Deficiency: basin. Inoperable(FIVAC—Common Areas) Level 1: N/A Level of Deficiency: Deficiency:The heating.cooling,or Level 2: 20% to 50%of the permanent Levcl 1: Water does nor drain finely,but ventilation system does not function. lighting fixtures are missing or damaged to the fixture,can be used. r the point where they(10 col function.This Level 2:N/A ,Vote:If the Ii1 AC system does not operate f Uwul 3:The drain is completely clogged or because of seasonal conditions,do not record results in inadequate lighting in the cununon has suffered extensive deterioration.The this as a deficiency. area(s). Level of Defiriency: Level 3: More than 50%of the permanent fixture cannot he used. Level I:N/A lighting fixtures are missing or damaged to Leaking Faucet/Pipes fill it mill rig—Common Level 2:NIA the point where they do not function.This Areas) Level 3:The HVAC system does not results in inadequate lighting in the common Deficiency:You sue that the sink(ariCel Or function; it does not provide the heating or area(s). piping is leaking. 1160 47750 Federal Register/Vol. 77, No. 154/Thursday, August 9, 2012/Notices Level of Defrciency: Level 3: If you think this condition is a 2."Missing"means that evidence suggests Level l: You seen leak or drip that is health and safety concern,record it under that unauthorized personnel have runtoved a contained by the basin and pipes,and the "Hazards(Health and Safety)." hardwired smoke,detector that should he Faucet can be used. Ifefrigemfor—Darnaged/lnopernblr.(Conmimr there. Level 2: N/A :I revs) 3. If 2 or more,snmku detectors an:on the Level 3: YOU see a steadv leak that is same level in visible proximity.at least 1 of adversely affecting thu surrounding area. Defiriencv:The refrigerator is missing or the smoke detectors must (unction as it -OR- does not cool adequately to store food safely. should. The laurel/pipe cannot be used. level of Deficiency" Level of Ofifiriency: Level I:The refrigerator has an uxcessive Love] L N/A Pools and Related Structures(Connnon accumulation of ica Level 2:NIA Amos) -OR- Leval 3:A single smoke detector is missing This inspectable item has the following The seals around the doors are or does not function as it should. deficiencies: deteriorated. Level 2:N/A Sfnirs/lfand Hailings Damaged(Common • Damaged/Nat Intact Fencing/Gales(s) Level 3:The refrigerator is missing. Areas) • Irreparable -OR- Series of 4 or more steps or flights of steps Damaged/Not Intact Penciug/Gate(s)(Pools The refrigerator does not cool adequately joined by landings connecting levels of a and Related Structures--Common Areas) for the safe storage of food. common area. Includes supports,frame. Deficiency:)'oil see that fencing and/or a fiestroom Cabinet—DnrnngedGlfissirrg treads,handrails. gate(s)around the swinuning pool is (Common Areas) '['his inspectable item can have the damaged, following deficiencies: Deficiency:You see damaged or missing Let el of Deficienr.v: • Broken/D issing /and R g Steps cabinets,vanity tops,drawers,shelves.doors, Level 1:N/A medicine cabinets,or vanities. BrokmilMissing Flmul Railing Level 2:N/A Level cf Deficiency: Broken/Damaged/Missing Steps(Stairs/Eland Level 3: You see anv damage that could Leval 1: you see danmged or missing Railings Damaged—Common Areas) compromise the integrity of the fence and/or cabinets,vanity tops,drawers.shelves,doors, Deficiency:The horizontal tread or stair gate(s). medicine cabinets or vanities that are not surface is damaged or missing. Inoperable(Fools and Related Structures— functioning as they should for storage or their Level of Deficiency: Common Areas) intended purpose. Level L:N/A Deficiency:The pool was not in operation Level 2:N/A Level 2:N/A during the inspection. Level 3:NIA Level 3:A step is broker or missing. Note.: If the pool is open for the season,it Shmcer/Tut, Dauragerl/.Vi.ssing(Common Broken/Missing Band Railing(Stairs/Band should be operational.If ilia pool is closed :bens) Railings Damaged—Common Areas) for the season.do not record this is a Deficiency:The shower,tub,or Deficienry:The handrail is damaged or deficiency. components are damaged or missing. missing. Level of Uefirienry: Note:A missing stopper in a common area Level of Deficiency: Level 1: \/A is not a deficiency. Level 1:N/A Level 2:N/A Level of Deficiency: Level 2:N/A Level 3:The pool is not operational. Level 1 N/A Level 3:The handrail for 4 or more stairs -(-1R- Level 2:11he shaver or tub can he usud,but is either missing,danmged, lousu,or You see unsafe conditions at the,pool/pool you sea cracks or ustmuive discoloration in otherwise unusable. area that could cause an iojun'. more than 50%of the basin. Level 3:The shower or tub cannot be used VentilalionlExhou.sr System—fnoperable. Range finope ble fC nnu or,Areas) for (Common Areas) Grensr/Inoperable(Common Areas) (or any mason.The sharer,tub,laurels, drains,or associated hardware is missing or Deficienct^'I'ho apparatus used to exluursl Deficiency'I'he apparatus that draws out has failed. air has failed. cooking exhaust door not function as it \ale:If there was never a bathroom fan,do Should. Sink—:1fissing/Drmraged(Common Areas) riot record this as it defiriencv. Level of Deficiency: Deficiency:A sink.faucet.or accessories Uwe/of Deficiency: Level 1:An arcunudalion of dirt,grease,or are missing,damaged,or not functioning. Level 1:N/A other barrier noticeably reduces Ilia free Note: If a stopper is missing,do not record Level 2:r1n exhaust (rat is not functioning. passage of air. it as a deficiency. "OR- Lerel 2:N/A Level of Deficiency: A bathroom window cannot be opened. Level 3:The exhaust fan does not function. Level 1: You see extensive discoloration or Level 3:N/A -OR- cranks in 5e% or more of the basin,hot the 1'ou estimate that the Flux.rnav be sink and hardware can still he used to Walls(Common Arens) completely blocked. prepare food. The enclosures of units and rooms. Level 2:N/A Materials for construction include concrete. [Common even Areas):Missing/Dnrnagrd/Inopertrblc Level 3:The sink or hardware is either masonry block,brick,wood,glass block, missing or not functioning. plaster,sheet-rock.Surface finish materials Deficiency:The unit is missing or Smoke Detector—Missin /Ino emble include paint or wall coverings. damaged. (Connnon.-bens] g P This inspectablo Rant can have the Level of Deficiency: following deficiencies: Level 1:The operation of doors or drmvers Sensor to detect the presence of smoke and , fill lging/Buckling is impeded,but the stove is functioning. On activate an alarm. A1av be flattery operated or , Damaged gas ranges,flames are not distributed equally hard-wired to electrical system. Mav provide , Damaged/Dcteriorated'I7im The pilot light is out on 1 or more burners. visual signal,audible signal.or both. . Dolma eildew/Water Stains/l\'tiler Derange. Level 2:One burner is not functioning. Deficiency: I eeling/Needs Paint Level 3:The unit is missing. —:\smoke detarmr will not articale. g-OR- -OR- in Bulb� g/Burklin (Walls--Common Areas) Two or more burners art,not functioning. —A hardwired smoke detector is missing. Deficiency:A wall is bowed,deflected, -OR- Note: sagging,or is no longer aligned horizontal[%. The oven is not functioning. 1. If n smoke detector is them. it must Level of Deficianr.o- Comment: function as it should. Level 1:N/A 1161 Federal Register/Vol. 77, No. 154/'Thursday, August 9, 2012/Notices 47751 Level 2:N/A \told/Mildew/1Vatrr Stains/Water Damage Leval L You Sara orarked window pane. Level 3:You see bulging,buckling,sagging, (Walls—Common Areas) Level 2:N/A or a lark of horizontal alignment. Deficiency:You see mold or mildew that Level 3:You see that a glass pane is broken Continent: may have been caused by saturation or or missing from the window sash. Level 3:If you have any doubt about the surface failure or evidence of water Daunaged/Missing Screens(Windows— severity of the condition,request an infiltration or other moisture producing Common Areas) inspection by a structural engineer. conditions. Deficiency:Screens are punctured,torn, Ix w.l of Deficiency: Damaged (1\'alls�:ommgn Areas) otherwise damaged,or missing. Level 1:On 1 wall, you sea kn are of Level of Deficienct•: Deficiency:You see cracks and/or mold or mildew.such as a darkened area punctures in the wall surface that may or over a large area (i square inches to I squnre. Level t:One or more screens)in a may not penetrate completely. P:unels or tiles foot). You may or may not see wamr common area are punctured,torn,otherwise may be missing or damaged. Level 2:N/A damaged,or missing. Note: Level 3:On 1 wall,wgu estimate that a ver• Level Z:NIA 1.This does not include small holes from large area(more than 1 square foot)of its Level 3:N/A hanging pictures,etc, surface has boon suhstantially saturated or Damaged Sills/Frames/Lintels/'Prim 2.Control joints/construction joints should damaged by mold,or mildew.The tell (Windows--Common Areas) not be recorded as a deficiency. surface may have failed. Ueficienn•:The sill,frames,sash lintels or 3.Cracks that have been repaired or sealed Peeling/Needs Paint (Walls—Common Areas) trim are damaged by decay,rust.rot. properly should not be considered a Deficiency:Paint is peeling,cranking. corrosion,or other deterioration. deficiency. flaking,or otherwise deteriorated. Note:Damage does not include scratches Le.re/of Defiriencta Note: Before the inspection starts,you and cosmetic.deficiencies. Level 1:In a wall,you find a hole,crack, should be given a list of UFAS buildings/ Level of Deficiency: missing tile nr panel.or other damage that is units. For the buildings/items on this list,do Level 1:)'mu see damage to sills,frames, between 1 square inch and 81h inches by 11 not record as deficiencies anw superficial sash lintels or trim,bill nothing is missing. inches and does not penetrate the adjoining surface/paint damage caused by wheelchairs. The inside of the surrounding wall is not room/area. You cannot see through it to the walkers,or medical devices. exposed. You see❑e impact on either the adjoining area. Level of Deficiency: operation or functioning of the window or on -OR- Level 1:The affected area affected is 1 to its weather tightness. You fund a crack greater than 1/8 inch wide 4 square feet on 2 or more walls. Level 2:Sills,frames,sash lintels,or trim and at least I I inches long. Level 2:The affected area is more than 4 are missing or damaged enough to expose the Level 2: In a wall.woo find a hole.missing square feet on any wall or walls. inside of the surrounding walls and file or panel.or other damage that is larger Level 3:N/A compromise its weather tightness. than a sheet of paper.Wh inches by 11 Water Closet/'I'gilel—Unmaged/Clogged/ Level 3:NIA inches,and does not penetrate the adjoining Missing(Common Arens/ Inoperable/Not Lockable(Windows— room. You cannot see through it to the Common Areas) adjoining area. Deficiency::\ water closet/toilet is g damaged or missing. Deficiency::\windowcannot 6e opened or Level 3:YOU find a hole of an}•size that Ixrel of Deficiency: closed because of damage to the frame,faulty penetrates an adjoining room. )'oil can see Level 1:N/A hardware,or another cause. through the hole. Level 2:Fixture elements,seat, flush Note.: -OR- handle,cover etc..are missing or damaged. 1.If a window is not designed to lock.do 'five or more walls have Level 2 holes. .OR- nut record this as a deficiency. Comments: The toilet seat is cranked,or the hinge is 2.Windows that are accessible from the Level 3: If a hole or crack is a health and broken, outside, for example.a ground level window. safety concern,you must record it nnanually Level 3:The bowl is fractured or broken must be lockable. under"Hazards(Bealth and Safetvi. and cannot retain water. Level of Deficiency: If ceu as an inspector have concerns about -OR- Level 1: A window is not functioning,but the possibility of failure, inform the property 'file water closet/milet is missing, can he secured. Other windows in the representative that an inspection by a -OR- inmmdiate area are, functioning. professional engineer is suggested. There is a hazardous condition. Level 2:N/A Damaged/Deteriorated Trim (%Veils— -OR- Level 3: A window is not functioning and Common Areas) The water closet/toilet cannot be flushed, cannot be secured. In the immediate area, because of obstnction or another defect. there are no other windows the are Deficiency:Cove molding,chair rail,hose functioning properly. molding,o other decorative trim is darns IYindou•s(Common Arens)ed r g Missing/Deteriorated Caulking/Seals/Glazing or has decayed. Window systems provide light.security, Compound(Windows—Common Arras) Note: Before the inspection starts,you and exclusion of exterior noise.,glare,dust, should be given it list of UFAS buildings/ heal.and cold. Prime materials include Deficiency:The caulk,seals or glazing units.For the buildings/units on this list.(10 ++'god.alumlnunn,and vinyl. compound that resists weather is missing or This inspectable item ran have the deteriorated. not record superficial surface/paint damage caused by wheelchairs,walkers,or medical following deficiencies: Note:: devices as a deficiency. • Cracked/Broken/Missing Panes 1.This includes Thortnopane and • Danm cd/ g, insulated windows that have failed. Level of Deficiency: g Missin Scruons •�,Caulk and soils are considered to he Level 1: You see small areas of Damaged Sills/Frames/Lintels/'Prim deteriorated when 2 or more seals for any deterioration in the trim surfaces,and you • Inoperable/Not Lockable window have lost their elastirin•. (If the seals estimate that 5% to 10%of the wall area is • Missing/Deteriorated Caulking/Suals/ affected. Glazing Compound crumble and flake when touched,Ihey have. Peeling/Needs faint lost their elastiritv.) Level 2: You see large areas of deterioration Level aJ Deficiency: in the trim surfaces,and VOL]estimate that • Security Bars Prevent Egress Level I:Most of the window shows 10% to 50% Of the wall area is affected. Cracked/Broken/Missing Panes(Windows— missing or deterioratud caulk,seals and/or Level 3: YOU see significant areas of Common Areas) glazing compound.but there is no evidence detmoration in the wall surfaces,and you Deficiency:A glass pion is cracked, of damage to the window or surrounding cslimato that more than 50% o(the wall area broken,or missing from the window sash. structure. is affected. Level of Deficiency: Level 2:NIA 1152 47752 Federal Register/Vol. 77, No. 154/•1-hursday, August 9, 2012/Notices Level 3:There art•-missing or deteriorated Level of Deficiencv: Note: caulk,seals,and/or glazing compound with Level 1: You sue danutged or missing 1. If a resident has blocked an exhaust fan Evidence of Teaks or th nage to the window cabinets,vanity tops,drawers,shelves,doors, but it can function properly.du nut record or surrounding structure. medicine cabinets or vanities that are not this as a deficiencv. Peeling/Needs Paint (Windows—Common functioning as they should for storage or their Z. If a resident has disconnected a fan. Areas) intended purpose. consider it functional if it ran be Level 2: N A immediately reconnected for your inspection. Deficiency:Paint covering the window Level 3: N/:\ 3. If lhure m•ae never a bathroom fan,do not assembly or trim is peeling,cracking, flaking, Lavatory Sink—Damaged/Missing record this as a deficiency. or otherwise failing. (Bathroom—Unit) Level of Deficiency: Level of Deficiency. Level 1: You see paint that is peeling, Deficiencv:A basin(sink)is missing or Level 1: N/A cracking,flaking or othonvise failing,or a shores signs of deterioration or distress. Level 2:An exhaust fan is not functioning. window that needs paint. Note: If you see the stopper near the sink -OR- Level 2:N/A area,do not record it as it defirienrv. A bathroom window cannot be opened. Level 3:N/A Level of Deficiency- - Level 3:WA Securitv Bars Prevent Egress(Windows— Level 1:The sink can be used,but you see Water Closet/Toilet—Damaged/Clogge(l/ Conunon Areas) dither of these: Missing(Bathroom—Unit) —"There are cracks or ostensive discoloration Deficiency:A water closet/toilet is Deficiencv:Exiting or egress is severely in more than 50%of the basin: limited or impossible because security bars -OR- damaged or missing. are darns ed or improperly constructed or Level of Deficiencv: g -A stopper is missing. Level 1:A4d installed. Security bars that are designed to Level_>: N/A open should open. If they do not open, Level 2:Fixture elements,seen,flush record a deficiency. Level 3:The sink cannot be used,because handle,cover etc.,are missing or damaged. Note:Inspector should verify that the the sink or associated hardware is missing or -OR- security bars if opened do not activate an has failed. The toilet seat is cracked.or tho hinge is alarm that would alarm or sunmton outside Plumbing—Cloyed Drains(Bathroom—Unit) broken. authorities(police,etc.). Deficiencv:)Pater does not drain Level 3:The bowl is fractured or broken Le. el of Deficiencv: adequately in the shower,tub,or basin(sink). and cannot retain water. Level 1:N/A Level of Deficiencyy.: -OR- Luvel 2:N/A Level is )Pater does not drain Geoly,but The water closet/toilet is missing. Level 3:Exiting or egress is severely the fixtures can be used. -OR. limited or impossible because security bars Level 2:N/A There is a hazardous condition. are damaged,improperly constntcted/ Level 3:The fixtures are not usable, -OR- installed,or security bars that are designed because the drain is completely dogged or 'Fhe Water closet/toilet cannot be Flushed, to open cannot be readily opened. shows extensive deterioration. because of obstruction or another defect. )roil Inspectable Items Plumbing—Leaking Faucet/Pipes Call-for-Aid—Inoperable(Unit) Items to inspect for"Unit"are as follows: (Bathroom—Unit) System to surnmon help. May be visual, • Bathroom Deficiencv:You see that it basin,shower, audible,or both.\lav be activated manually • Call-for-:lid water closet.tub faucet,or associated pipes or automatically when pre-programmed • Ceiling are leaking water. conditions are met. • Doors Level of Deficiency: Deficiencv:'fhe system does not function. • Electrical System Level 1: You seen leak or drip that is Note.: Inspector should verify that the Call. • Floors contained by the basin,and the faucet or pipe for-Aid only alerts local entitit!s for-site) • lira )Pater Heater can be used prior to testing. • I1VAC Systunt Level 2:N/A Level of Deficiencv: • Kitchen Level 3: You see,it steady leak that is Level 1:N/A • Laundry Area adversely affecting the area around it. Level 2:Nh\ • Lighting -UK- Level 3:The system does not function. • oulluls/Switches The faucet or pipe cannot he used. • Patio/Porch/Balcony Shower/"Rrb—Damaged/Missing Coiling(Unit) • Smoke Detector (Bathroom—Unit) The visible overhead stnmtum lining the • Stairs inside of a room or area. • Walls Deficiency:The shower,tub,or This inspectable item can have the • Windows components are damaged missing.This deficiencies: includes associated hardwaa re,such its grab following de Bathroom(Unit) bars,shower doors,etc. • Bulging/Buckling Note: • holes/Missi jig Tiles/Panels/Cracks A room equipped with o water dose)or L This does not include leaking faucets • Peeling/Needs Paint toilet,tub and/or shower,sink,cabinet(s) and pipes. • \Iold/Mildew/%Vater Stains/1\'ater Damage and/or closet.This inspectable item can have 2.If you see the stopper near the shower/ Bulging/Buckling(Ceiling—Unit) the following deficiencies: tub area,do not record it as a deficiency. • Bathroom Cabinets—Damaged/Missing Level of Deficiency: Deficiency:The ceiling is bo[ved,defected. • Lavatory Sink—Damaged/Missing Level 1: A stopper is missing. sagging,or is no longer aligned horizontalty • Plumbing—Clogged Drains Level 2:The shower or tub can be used,but to the extent that ceiling failure is possible. • Plumbing—Leaking FauceUPipes coil see cracks or extensive discoloration in Level of Deficienry • Shower/Tub—IJamaged/Missing more than 50%of the basin. Level 1:N/A • Ventilation/Exhaust System—Inoperable Level 3:The shower or tub cannot he used Level 2:N/A • Water Closel/•I'oi let—Damaged/Clogged/ for any reason.Thu shower,tub, faucets, Level 3: You see bulging,buckling,sagging, Missing drains,or associated hardware is missing or or o problem with alignment. Bathroom Cahinots—Damaged/Missing has Failed. Comment: Level 3: If you as an inspector have (Bathroom—UniU Ventilation/Exhaust System—Inoperable concerts about the possibility of failure. Deficiency:You see damaged or missing (Bathroom—Unit) inform the property representative that an cabinets.vanity tops-,drawers,shelves,doors. Deficiencv:The apparatus used to exhaust inspection by a professional engineer is medicine cabinets,or vanities. air has failed. suggested. 1163 Federal Register/Vol. 77, No. 154/'Thursday, August 9, 2012/Notices 47753 Boles/Missing'I'iles/Panels/Cracks(Ceiling— • Damaged Hardware/Locks Damaged Surface(Holes/Paint/Rust/Glass) Unit) • Damaged Surface(Boles/Paint/Rust/Glass) (Doors—Unit) Deficiency— • Damaged/Missing Screen/Storm/Security Deficiency:This includes holes, peeling/ -The ceiling surface has punctures that may Door cracking/no paint,broken glass and ay-may not penetrate r"ompletch. • Deteriorated/Missing Seals(Gntry Only) significant mist. tbu see damage to the door .OR- • Missing Door surface that: -Panels or tiles are missing or damaged. Damaged Frames/T1lFesh0I d/Lintels/'['rim —btav affect either the surface protection or Gavel of Deficiency: (Doors—Unit) the strength of the door. Level 1: You see small holes that are no Deficiency:You see a Game, header,jamb, -OR- larger than a sheet of paper,61h inches by 11 threshold, lintel,or Trim that is warped,split, —Nlav compromise building security. inches- cracked.or broken. Nute:If the door is a bathroom door or -OR- Note: If you see damage to a door's entry door,this is a Level 3 deficiency. No bole(it crack penetrates the area above. hardware.(Iocks,hinges,etc..) record this I evel of Deficiency: -OR see That tit)more than 3 tiles or panels under"Danage Hardware/Locks(Doors— Level 1: N/A You Unit)." Level 2:One interior door,not a bathroom are missing. level of Defirienr"y; or entry door,has a hole or holes with a OR Level 1: N/A diameter ranging from I inch to 1 inch. 1'ou see a ln more than V.inch wide Level '2: At least I door is not functioning Level 3:One door has a hole or holes larger and I 1 inchess loong. or cannot be locked because of damage to the than 1 inch in diameter,significant peeling/ Level L: You see a hole that is larger than frame,header,jamb,threshold,lintel,or trinL cranking/no paint,nest that affects the i sheet of gene rate81h inches by 11 inches,but Level 3:At least I bathroom door or entry integrity of the door surface,or broken/ it loos not penetrate lhr,area above. You cannot see through it. door is not functioning or cannot be locked missing glass. -OR- because of damage to the frame,header, -OR- )'oil see that more,than 3 tiles or panels are jamb,threshold, lintel,or trim. If a bathroom door or entry door has Level Comment 2 damage. missing. Level 3: If the condition is a health and Comment: -OR You see a crack more than '/x inch o"ide safeh�concern.you must record it manually Level 3:If the condition is a health and and I 1 inches long, under"Hazards (Health and Safety).-' safetv concern,you must record it manually Level 3: You see a hole that penetrates the Damaged Hardware/Locks(Doors—Unit) under"Hazards(Health and Safety)." area above. You can see through it. Damaged/Missing Srroen/Storm/Security Deficiency:The attachments to a door that Cwnment: Door(Doors—Unit) Level 3: If a hole or crack is a health and provide hinging,hanging opening,closing, surface protection,or security are damaged or Defirionrv:You sec damage to surfaces. safety concern,you must record it manually missing.'These include locks, panic including screens,glass.frames.hardware, under"Hazards(Health and Snfetv)." hardware.overbuad door trunks,springs and and door surfaces. Peeling/Needs paint (Ceiling—Unit) pulleys,sliding door tracks and hangers,and Level of Deficiency: Deficient': door closures. Level I: At least 1 screen floor or storm Note: door is damaged or is missing screens or —You see paint that is peeling,cranking, lass,as shown by an empty frame or frames. Baking.or otherwise deteriorated. 1. If a door is k. I designed do to have i lock,the g 1 -OR- lock should work. If a door is designed Level 2: Ur\ without locks,do not record it as a Level 3:A security door is not functioning —You sec a surface;that is not painted. or missin Level of Deficiency: deficiency g. Level 1:The affected area is larger than I 9. If a lock has been removed from an Comment: interior door.do not record this as a Level 3:"Missing"applies only if a square foot.but smaller than 4 square feet, deficiency. security door that should be there.is not Level 2:The affected area is larger than 4 there. square feet. 3. 504 units have had locks removed. Level 3:N/A Before eou start the inspection."on should Deteriorated/Missing Seals(Rnuv Ondv) be gi%all a list of❑ells relative in UFAS.Do (Doors—Unit) Mold/Mildew/Water Stains/Water Damage not record these missing locks as Defir"iwrcr:"I'he seals and stripping around (Ceiling—UniQ deficiencies. the entry door(s)to resist weather and fire are Deficiency:Toil see mold or mildew that 4. For public housing, if a lock on a damaged or missing. may have been caused be saturation or bedroom door is missing or damaged,do not Note:This defect applies only to emry surface failure or evidence of water record it as a deficiency. doors that here designed with seals. If a door infiltration or other moisture producing Gruel of Deficiency° shows evidence that it seal was never part of conditions. Level 1:A closet door does not function as its design,do not record it as a drficiuucy. Gavel of Defirie"ncy: it should because of damage,to the door's Gruel of Defiri<:icy: Level 1:Oil L rciliug,you see evidence of hnrdivare. Level 1:N/A mold or mildew,such as a darkened area, -OR- Level 2:N/A over a large area(4 square inches to 1 square A closet door that requires locking cannot Level 3:The seals are missing on 1 entry foot). You may or may not see water. be locked because of damage to the door's long or they are so damaged that they do not Level 2:NIA hardware. function as they should. Level 3:On 1 ceiling,you estimate that a Level 2:A door,other than a closet door. Missin Door(Doors—Unit) large area(more than I square foot)of noes not function as it should because of g its surface has been substantially saturated or damage to the door's hardware. Deficiency:A door is missing. damaged by mold or mildew.'['be ceiling -OR- Note: surface may have failed. A door,other than a closet door,that 1.If a bathroom or entry,door is missing, Doors(Unit) requires locking cannot be locked because of record this as a Level 3 deficiency. damage to the door's hardware. 2.If a bedroom door has been removed to Means of access to the interior of a unit. Level 3:A bathroom door or entry door improve access for an elderly or handicapped room within the unit,or closet. Doors does not function as it should because of resident,do not record this as a defncienc_v. provide privacy and serurily.control damage to the door's hardware. Level of Deficiency-: passage,provide fire and weather resistance. -OR. Level is A door is missing,but it is not a This inspectable item can have the A bathroom door or emry door that bathroom door or entry door. following deficiencies: requires locking cannot be locked because of Level 2:Two doors or up to 50% of the • Damaged Frames/Throshold/Lintels/Prim damage to the door's hardware. doors are missing.but they are not bathroom 1164 47754 Federal Register/Vol. 77, No. 154/Thursday, August 9, 2012/Notices doors or entry doors,and the condition Note.:Do not consider this a deficiency for Level 3:If vuu have any doubt about the presents nu hazard. Wire's that are not intended to bu insulated, severity of this condition,request an Level 3: A bathroom door or entry door is such as grounding wires. inspection by a stociural engineer. missing. Level of Deficiencv: Fled Flour Covering Missing/Damaged -(JR- Level 1:NIA Flooring/Tilus (Floors—Unit) You cstirnme that more than 50%of the Level 2:N/:1 unit doors,not including bathroom doors and Level 3: You sue any nicks,abrasions,(IFDeficiencv:You see that hard flooring, entry doors,are missing. trailing of the insulation that expose any terrazzo,hardwood,ceramic tile,sheet vinyl, vinyl tiles,or other similar Alluring material, Electrical Svstern(Unit) conducting wire., is missing section(s),is missing,or presents Comment; a tripping or rutting hazard,associated with Portion of pothe unit that safely provides Level n If the condition is a d it ru :Ind but not limited to holes or delaminatimr. electrical power throughout the building. Safi;ty rmncent,you must n;rmn1 it manmdh• Level of Deficiencv: Includes equipment that provides control, under"Electrical hlarards(Fleallh and Level 1: For any single floor surface,you protection,metering,and service. Safet)." see deficiencies in areas of the floor surface. followingg duficieu:y: This i (iL abdu item can have Ibc GFI—Inopumbde(Electrical System—Unit) You estimate that 5% In 10% of floor is • Blocked Access to Electric Panel Deficiency:The CH does not function, affected.and there are no sa(ut'problems. • Burnt Breakers Note:To determine whether the GFI is Level 2: You estimate that 16% to 50%of functioning.you must press the self-test any single floor StlrfaCe is affected.but there • Evidence of Leaks Corrosion button in the CFI unit. are no safety problems. sbull; Frayed Wiring Level 3: You estimate that Inure than 50% • GFI Inoperable Leave/of Defirirnry: P Level 1:N/:\ of any single floor surface is affected by Level • Missing Breakers/Fuses Level 2:N/A I deficiencies. Missing Covers -OR- Blocked t: GFI rides not function.nclion. Blocked Across to Electrical Panel(lilertrical Comment: The condition causes a safety problem. Scsimn—Unit) Level 3: If this condition is a health and Meld/Mildew/Water Stains/Water Damage Deficienc}•:A fixed obstruction or item of safety concern.you Most record it under (Floors—Unit) sufficient size and weight can delay or "Electrical Hazards(Health and Safety)." Deficiency:Toll see mold or mildew that pmyent access to any panel board switch in Missing Breakers/Fuses(Electrical System— nmv have been caused by saturation or an emergency. Unit) surface failure or evidence of water Note:If see an item that is easy to Deficiency:In a panel board,main panel infiltration or other moisture producing remove,liken picture,do not note this as a r-mu itions. board,or otter electrical box that contains deficient Level of Deficiency: herel of Deficiencv: circuit breakers/hoses,you see an open Level 1:N/A Level 1:NIA Level breaker position that is not Level 2:On 1 floor, you see evidence of appropriately blanked-off. Level 2: Level of Deficiency: mold or milder, 4 square as a darkened area, One Level 3:One or more fired item(s)of over a large area H squar;inches to 1 square sufficient size and weight can impede Level access l 1.NIAfoot). You may or may not see water. to the unit electrical panel during an Level 2:N/A Level 3:On 1 floor you estimate that a emergence. Level 3:You see an open breaker port. ven•large area(more than 1 square foot)of Burnt Breakers(Electrical System—Unit) Missing Covers(Electrical System—Unit) its surface has been substantially saturated or Deficiency:The rover is missing from any damaged by mold or mildew.The floor Deficiency:Breakers have carbon on the electrical device box.panel box,switch gear surface may have failed. plastic body,or the plastic body is melted box control panel.etc..with exposed Peeling/Needs Paint(Floors—Unit) and scarred. electrical connections. Letel of Deficiencv Level of Deficiency: Deficiency:For Floors that are painted.you Level 1:N/A Level 1: N/A see paint that is peeling,cracking, flaking,or Level 2:N/A otherwise deteriorated. ' Level 3: You sea any carbon residua, Level 2: N/A Level of Deficiencv: melted breakers,or arcing scars. Level 3:A cover is missing,and you see Level 1:The area affected is more than 1 Evidence of Leaks/Corrosion(Electricalexposed electrical connections. square toot.but less than 4 square feet. System—Unit) Floors(Unit/ Level 2:The area affected is more than 4 : u see stains, The visible horizontal surface syyslum square feet. Deficiency Yo liquid tins, rust Level 3:N/A marks,or other signs of corrosion on within a room or area underfoot:the electrical r;nclosures or hardware.. horizontal division between 2 stories of a Rot/Deteriorated Suhfloor(Floors—Unit) Note:Do not consider surface rust a structure. Deficiency:The subfloor has decayed or is defciencv if it does not affect the condition This inspectable item can have the decaying. of the electrical enclosure. following deficiencies: Now: Lard of Deficiency: • Bulging/Buckling 1. Inhere is ally doubt,apply weight to Level 1:N/A • Bard Floor Covering Missing/Danutgud detect noticeable deflection. Level 2:N/A Flooring/riles 2.This type of defect typically occurs in Level 3 Anv corrosion that affects the. • Meld/Mildmv/Water Stains/Water Damage kitchens and bathrooms, condition of lice Components that carry • Peeling/Needs Paint Level of Deficiencv: rluririral rurn:nt. • Rot/Deteriorated Subfloor Level 1:N/A -OR. • Soft Floor Covering Damage Level 2:YULI see,small areas of rot or Any stains or rust on the interior of Bulging/Buckling(Floors—Unit) spongy flooring that is more than 1 square electrical enclosures. foot,but less than 4 square feet. -OR- Deficiency:A floor is bowed,deflected. Level 3:You see large areas of rot,more An evidence of water leaks in the sagging,or is tit)longer aligned horizontally. than 4 square feet,and applying weight mnclosure mr hxrdwam. Level of Deficiency: causes noticeable deflection. Level 1:NIA Continent: Frayed Wiring(Electrical Silstem—Unit) Level 2:NIA Level 3:If you as an inspector have Deficiency:You see nicks.abrasions,or Level 3:You see bulging.buckling,sagging, concerns about the health and safety,inform fraying of the insulation that expose wires or a lack of horizontal alignment. the property representative that an inspection that conduct current. Cornment: by a professional engineer is suggested. 1165 Federal Register/Vol. 77, No. 15d/Thursday. August 9, 2012/Notices 47755 Soft Floor Covering Missing/Damage Misaligned Chimnec/Ventilation System (flot Note:If the IIVAC systenr does not operate (Floors—Unit) Water Heater—Unit) because of seasonal conditions,do not record Deficiency:You see damaged and/or Deficient),:The exhaust systenr on a gas this as a deficiency. missing soft floor covering, fired or oil fired unit is misaligned. Lr'ye/of Defirienrv: bwel of Defirienc). Level of Deficiency: Level 1:N/A Level 1: You estimate that only 5% to 10% Level 1:,1/A Level 2:N/A of any single soft floor covering has stains. Level 2:N/A Level:3:The IIVAC system does not surface burns,shallow cuts.small holes, Level 3. You see tiny misalignment of an function;it does not provide the heating or tears,loose areas.or exposed seams.The exhaust system on a gas fired or oil fired unit cooling it should.The system does not covering is fully functional,and there is no that may cause improper or dangerous respond when the controls are engaged. safety hazard venting of gases. Comment: Level 2:You estimate that 10% to 50% of Nlissing Pressure Relief Valve(Hot Water Level 3:If this condition is a health and any single soft floor covering has burn marks, Beater—Unit) safety concern,you must record it manually cuts,trials,holes,or large sections of exposed Deficiency:The pressure relief valve on the under Hazards(Health and Safety)." seams that expose the underlying material. unit water heating system is missing or does Misaligned Chinumy/Ventilation System There is no safety hazard. not extend to the floor. (HVAC—Unit) Level 3:You estimate that more than 50% Level of Deficiency: Deficienrv:The exhaust system on either a of any single soft floor covering is damaged. level 1:N/A as,oil fired,or coal unit is misali ned. .UR_ Level 2:N/A K Level of Deficiency: g Damage to the soft floor covering exposes Level 3:You see that the pressure relief Level 1:N/A the underlyingmaterial. salve on the unit water heating system is (, either missing or does not extend to the floor. Level 3:N/:1 Comment Level 3: You see any misalignment of an Level 3:If this condition is a health and HVAC System(Unit) exhaust system on a gas fired,oil fired or coal safety concern.you must record it manually Svstelli to provide heating,cooling and unit that may cause improper or dangerous under"I lazards(Health and Safe v)._ ventilation to the unit.This does not include venting of gases. Hot Water Heater(Unit) building heating or cooling system Noisy/Vibrating/Leaking(HVAC—Unit) This inspectable itern ran have the deficiencies such as boilers.chillers. Deficiency—The HVAC distribution following deficiencies: circulating pumps,distribution lines,fuel components.including fans.one the source of supply.etc..or occupant owned or supplied unusual vibrations, leaks.or abnormal noise. • General Rust/Corrosion heating sources. Examples may include,but are not limited to, • Inoperable lves/T nks/Pienis This ng decider item can have the screechin squealing.hanging,shaking,etc. • Leaking\'elves/Tanks/Pipes following deficiencies: K•� l K• K K�� K� • Misaligned Chimney/Ventilalion System • Convection/Radiant Heat System Covers Level of Deficiency: • Missing Presser(,Relief Valve Missing/Dmnaged Level I:The HV:1C system shows signs of • General Rust/Corrosion abnormal vibrations.other noise,or leaks General Rust/Corrosion(Hot Water Heater— when engaged.The system still provides unitl • Inoperable enough heating or cooling to maintain a • Misaligned Chinmey/Ventilation System Deficienr,:The equipment or associated Noisy/U(.brating/Leaking minimum temperature range in the major • piping/darting shoves evidence of flaking. living areas. oxidation,discoloration, pitting,or crevices. Convocation/Radiant I[(.at System Covers Level 2:NIA Level of Deficiency: Missing/Damaged (HVAC—Unit) Level 3:N/A Level 1: You see superficial surface rust. Deficiency:A cover on the convection/ Kitchen(Unit) Level 2: You see significant formations of radiant h(ai system is missing or damaged, metal oxides.flaking,discoloration.or a pit which could curse a burn or related injury. A place where food is cooked or prepared. or crevice. Level of Deficiency: The facilities and equipment used in Level 3:Because of this rendition,the Level L N/A preparing and serving food. equipment or piping does not function. Level 2:N/A This inspectable item ran have the Inoperable Unit/Components(I for Water Level 3:At least 1 cover is missing or following deficiencies: Heater—Unit) substantially damaged,allowing contact with • Cabinets—\4issing/Damaged heating/surface elements or associated fans. • Countertops—\iissing/Damaged Deficiency:Hot water supply is not Continent: • Dishwasher/Garbagu Disposal—temperable available,because the system or systan Level 3:When the system is operational • Plumbing—Clogged Drains components have malfunctioned. during an inspection and you sue it Level 3 • Plumbing—Leaking Faucets/Pipes Level of Deficiency: defiriencv,a real-time hazard exists.you • Rangy;Floods/Exhaust Fans—Excessive Level 1:NIA [trust record it manually under"Hazards Grease/Inopmable Level 2:NIA (h(althand Safety)." • Range/Sto%-L\Iissing/Damaged/ Level 3:After running,water from the hot General Rust/Currusion flIVAC—UniQ Inoperable water taps is not wannor than room Deficiency:You see a component of the • Refrigerator—\lissing/Damaged/I noperah le temperature. systenr with deterioration front oxidation or • Sink—\lissing/Damaged Leaking Valves/Tanks/Pipes(I lot Water corrosion of system parts. Deterioration is Cnbmels—Mlssltlg/UerllagL•(I (Kitchen—Unit) Heater—Unit) defined as rust and/or formations of metal Defiriency:Cabinets are missing or the De iciencv:You see water leasing from ant, oxides,flaking,or discoloration,or a pit or f g Laminate is separating.This includes cases, hot water system component, including valve crevice. boxes,or pieces of furniture vvith drawers, flanges,stems,bodies.domestic hot water Level of DefYou sue(ic shelves,or doors, primarily used For storage. took,or its piping. Leval 1: You sue deterioration from rust mounted on walls or floors. ff Level o De iriencv: and corrosion on the HVAC units in the dwelling unit.'rhu systenr still provides Lere1 of Defirienry: Level I: N/Aenough heating or caroling. Level 1: NWA Level 3:N/eA Level 2: N/A Level 2: You sue that tf1'% to 50% of the Level You saw water Iwrking' Level 3: N/A cabinets,doors,or shelves art,missing or the. Comment: laminate is separating. Level 3:If this condition is it health and Inoperable(I fVAC—tJnit) Level 3: You see that more than 50% of the safety concern,you must record it manually Defic•ienrv:The hunting,cooling,or cabinets,doors.or shelves are missing or the under••Hazards(f[calth and Safety)." yentilalion system dous not function. laminate is separating. 1166 47756 Federal Register/Vol. 77, No. 154/Thursday. August 9, 2012/Notices Clnmterteps—Missing/Dtunaged (Kitchen— Continent: electricity. Includes 2 and 3 prong outlets, Unit) Level 3: If this condition is if health and ground fault interrupters,pull cords,2 and Deficiency:A flat work surface:in a kitchen safety concern,you must record it manually 3 pole:switches and dimmer switches. often integral to lower cabinet space is under'9iazards(Health and Safety)." This inspectable item call have the missing or deteriorated. Refrigerator—\lissing/Damaged/Inoperable following deficiencies: Level of Deficiency: (Kitchen—Unit) • Missing Level It N/A • Missing/Broken Cover Plates Level 2:20`M or more of the counterto Deficiencyroo;l The refrigerator is missing or p does not cool adequately for the safe storage Jlissing(Outlets/Switches—Unit) working surface is missing,deteriorated,or of food. damaged below tire laminate and is riot a Level of Defieiency: missin Deficiency:An outlet,switch or both are sanitary surface:on which to prepare food. Level 1:The refrigerator has an excessive g Level 3:N/Ag Nnte,: does not apply to empty accumulation of ice. junction box boxes that were riot intended In Dishwasher/Garbage Disposal—Inoperable -OR- contain an outlet or switch. (Kitchen—Unit) The seals around the doors are Level of Deficiency: Deficiency:A dishwasher or garbage deteriorated. Level 1:NA disposal,if provided,does riot function. Level 2:N/A Level 2:NIA Level of Deficiency: Level 3:The refrigerator is missing. Level 3:An outlet,switch or both fire, Level 1:N/A -OR- missing. Level 2:The dishwasher or garbage The refrigerator does not cool adequately Comment disposal does not function. for the safe storage of food. Level 3:If this condition is a health and Level 3:N/A Sink—Missing/Damaged (Kitchen—Unit) safely concern,you must record it manually Plumbing—C.Ingged Drains(Kitchen—Unit) Deficiency:A sink,faucet,oraccessories under 'Eluctrical Hazards(Health and Deficiency:The,water does riot drain are missing,daniaged or not functioning. Safety)." adequately Note: If a stopper is missing,do not record Missing/Bitiken Cover Plates(Outlets/ Level of Deficiency: it as a deficiency. Switches—Unit) Level 1:The basin does not drain freely. Level of Deficiency: Deficiency:The(lush plate used to cover Level 2:,WA Level 1:)'on sue extensive discoloration(It the opening around a switch or outlet is Level 3:Tlie-drain is completely clogged or cracks in 50% or more of the basin,but the damaged or missing. has suffered extensive deterioration, sink and hardware can still be used to Letvel of Deficiency: Plunibing—Leaking FaufeLS/Pipes(Kitchen— prepare, food. Level 1: An outlet or switch has if broken Unit) Level 2:NA cover plate over a junction box,but this does Level 3:The sink or hardware is either not cause wires to be.exposed. Deficiency:You sec that it basin faucel or missing or not functioning. Level 2:NIA drain connections leak. Level 3: A cover plate:is missing.which Level of Deficiency: Lmindry Area/Hoorn—Diver Vent:\lissing/ causes wires to he exposers. Level 1:You see a leak or(trip that is Dantoged/inopenrble(Unit) contained by the basin or pipes,and the Place where soiled clothes and linens.ire Patio/Porch/Balcony—Baluster/Side. Bnilings faucet is functioning as it should. washed and/or dried. Damaged(Unit) Level 2:N/.4 Deficiency:Inadequate means is availahle Adjoining patio,porch or balcony. Level 3:You see a steady leak that is to vent accumulated heat/lint to the outside. Deficiency:A baluster or side railing on the having an adverse affect on the surrounding The driver vent is missing,damaged or porch/patio/balcony is loose,damaged or area,and the faucet or pipe is not usable. inoperable. does not function,which limits the safe use Range Hood/FSlrati5t Fans—F-xcessive Level of Deficiency: of this area. Grease/Inoperable(Kitchen—Unit) Level 1:NIA Level of Deficiency: Deficiency:The apparatus that draws out Level 2:N/A Level 1:N/A cooking exhaust does not function. Level 3: Dryer vent is missing,damaged or Level 2:N/A Level of Deficiency: is visually determined to be inoperable Level 3:The baluster or side rails enclosing Level 1:An accumulation of dirt.grease or (blocked).Driver exhaust is not effectively this area are loose.damaged or missing, other barrier noticeably reduces the free voluted to the outside. limiting the safe use of this area. passage of air. Lighting—Missing/Inoperrble(Unit) Smoke Dute.ctor—Jlissing/lnopemble(Unit) Level 2.N/ASvstem to provide illumination to a room Sensor to detect the presence of smoke and Level 3:The exhaust fan does not huuaioo' or area.Includes fixtures,lamps,and activate en alarm. May be batten•operated or OR You estimate that the flue may be supporting accessories. hard-wired to electrical system. Mav provide completely blocked. Deficiency:Alighting fixture is missing or visual signal,audible signal or both. does not function as it should.The Deficiency:A smoke detector will not Range/Stove—Missing/Damaged/Inoperable malfunction may be in the total system or activate or is missing. (Kitchen—Unit) components,excluding light births. Note: Deficiency:The unit is missing or Level of Deficiency: 1.There must he al beast 1 smoke detector damaged. Level 1:In 1 room in a unit,a permanent on each level. Note: Before the iuspaction starts.you lighting fixture is missing of not functioning. 2. If 2 or more smoke duluctors are on the should be given a list of units under UFAS. and no other switched light source is same level in visible proximity,at least I of Do not record these disconnected or partially functioning in the room. the smoke detectors must function as it disconnected rugus/stoves as a deficiency. Level 2:In 2 rooms,a permanent lighting should. Level of Deficiency: fixture is missing or not functioning,and no Level of Deficiency: Level 1:The operation of flours or drawers other switched light source is functioning in Level 1: NIA is impeded.but the slove is functioning.On the rooms. Level 2: N/A gas ranges, flames are not distributed equaIIV. Level:3:In more than 2 rooms,a permanent Level 3: A single smoke detector is missing The pilot light is out on 1 or more burners. light fixture is missing or not functioning, or does riot function its it should. Level 2:One burner is not functioning. and no other switched light sources are Stairs(flint) Level 3:The unit is missing. functioning in the roosts. -OR- Series of 4 or more steps,or flights of steps, Two or more burners are not functioning. Outlets/Switches(Unit/ joined by landings connecting levels of a -OR- The receptacle connected to a power unit. Includes supports.frame,treads and The oven is not functioning. supply or method to control the flow of handrails. 1167 Federal Register/Vol. 77, No. 154/Thursday. August 9, 2012/Notices 47757 This inspectable item can have the than a sheet of paper,8 '/rz inches by it Level 3: NIA following deficiencies: inches.and does not penetrate the adjoining r. loa room. You cannot see through it to the It,uucs((fait) • Broken/Ilamaged/Missing Steps g • Broken/Missing Hand Railing adjoining area. Window systems provide light,security, Broken/Damaged/Missing Steps (Stairs— Level 3: you find a hole of any size that and exclusion of exterior noise,dust, heal. Unit) penetrates an adjoining room. You can see and cold.Frame materials include wood, through the hole. aluminum and vinyl. IAafiriem.,v:The horizontal tread or stair -OR- This inspectable item can have the surface is damaged or missing. 'rive or more walls have Level 2 holes. following deficiencies: Level of Deficiency: Comments: • Cracked/Broken/Missing Panes Level 1:N/A Level 3:If a hole or crack is a health and • Damages/Missing Screens Level 2:N/A , Damaged Sills/Frames/Lintels/Trim safetyH concern,you must record it manually Level 3:A step is broken or missing. under" azards(Health and Safely).•' • DamageInoperabballot Lockable Broken/Missin c Hand Railing(Stairs—Unit) If you as an inspector have concerns about 6 8 Missing/Deteriorated Caulking/Seals possibility of failure, ,inform the properly Deficiency:The handrail is damaged or infor • Puehng/Needs Paint missing. representative that inspection .- Egress a , Security Bars Prevent E 1,evol of Deficient}- professional engineerer is suggested. g Level 1:N/A Damaged/Deterioraed Trim(Walis—Unit) Cracked/Broken/\lissing Panes(Windows— Level 2:N/A Deficiency:Core molding,chair rail.ease Unit) Level 3:'rho handrail for 4 or more stairs molding or other decorative trim is damaged Deficiency:A glass pane is cracked,broken is either missing,damaged,loose or or has decayed. or missing from the window sash. otherwise unusable. Note:Before the inspection starts,you Level of Deficiency: Yells(Unit) should be given a list of UFAS buildings/ Level 1: You see a cracked window pane. units. For the buildings/units on this list,do level 2.N/A The enclosure of the units and rooms. not record superficial surface/paint damage Level 3: You see that a window pane is Materials for construction include concrete, caused by wheelchairs,walkers or medical broken or missing from the window sash. masonry block.brick,wood,glass blank, devices as it deficiency. Damaged/Missing Screens(Windows—Unit) plaster and sheet-ruck. Surface finish Level of Defiriency: materials include paint and wall coverings. Level 1: You see small areas of Deficimicy:Screens are punctured,torn, This inspectable item can have the deterioration in the trim surfaces,and you otherwise damaged•or missing. following deficiencies: estimate that 5% to 10% of the wall area is Let el of Deficienrrr • Bulging/Buckling affected. Level L One or more screens)in it unit are • Darnaged Level 2: You see large areas of deterioration punctured,torn.otherwise damaged.or • Damaged/Deteriorated Trim in the trim surfaces,and coil estimate that missing' • Mold/Mildew/Water Stains/Water Damage 10% to 50%of the wall area is affected. Level 2:N/A • Peeling/Needs Paint Level 3: You see significant areas of Level 3:NIA Bulging/Buckling(Walls—Unit) deterioration in the wall surfaces,and eau Damaged Sills/Frames/Lintels/Trim estimate that more than 50% of the call area (Windows—Unit) Drfirienr.}•::\wan is Wowed,deflected, is affected. sagged or is no longer vertically aligned. Deficiency:'rho sill, frames,sash lintels or bwol of Defirienry: Mold/Mildew/Water Stains/Water Damage trim are damaged by decay, rust. rot, Level 1:N/A (Walls—Unit) corrosion,urother deterioration. Level 2:NIA Deficiency:You see mold or mildew that Note: Damage does not include snatches Level 3: )'on sue bulging,buckling,sagging. max,have been cursed by saturation or all[]cosmetic deficiencies, or that the wall is no longer vertically surface failure or evidence of water Uvel of Deficiency: aligned. infiltration or other moisture producing Level 1: You see damage to sills, frames. Comment: renditions. sash lintels or trim,but nothing is missing. di f th ins ide o e surrounding Level:3:((you have any daunt snout the Level of Defiricnct': The 8 wall is not severity of the condition.request an Level 1:On l wall,you see evidence of exposed. You see no impact on either the inspection by a strurturnl engineer. mold or mildew,such as a darkened area, operation or functioning of the window or on Damaged (Walls—Unit) over a large area(4 square inches to 1 square its weather tightness. foot). You may or may not see t.pater. Leval 2:Sills,frames,sash lintels.or trim Deficiency:)'oil see cracks and/or Level 2:N/A are missing or damaged enough to expose the punctures in the wall surface that mac or Level 3:On 1 wall,you estimate that a core inside of the surrounding walls and may not penetrate completely. Panels or tiles large area(more than 1 square font)of its Compromise its weather tightness. may be missing or damaged. surface has been substantially saturated or Level 3:N/A Note: w damage(] by mold,or milde .The wall I.This aloes not include small holes g Inoperable/Nut Lockable(Windows—Unit) created by hanging pictures,etc. surface mac have failed' Deficiency:A window cannot be opened or 2.Control joints/construction joints should Peeling/Needs ['aim(Walls—Unit) closer]because of damage to the frame.faulty riot be recorded as a deficiency. Deficiency: hardware or another cause. 3.Cracks that have been repaired or sealed —Paint is peeling,cracking. Baking or Note: properly should not he considered it otherwise deteriorated. 1. If a window is not designed to lock do defirienrv. -OR- not record this as a deficiency. Level of Deficiency: —A surface is riot painted. 2. Windows that are accessible from the Level 1:In a wall,you find a hole.crack. Note: Before the inspection starts,you outside,for example,it ground level window, missing tile or panel,or other damage that is should be given a list of UFAS buildings/ must be lockable. between 1 square inch and 81/e inches by 11 units. For the buildings/items on this list,do Lewd of Deflclenry: inches.The hole(Ines not penetrate the not record as deficiencies any superficial Level 1: A window is riot functioning and adjoining room/area. You cannot see through surface/paint damage caused by wheelchairs, can lie secured. Other windows in the it to the adjoining area. walkers or medical devices. inimudiate area are functioning. -OR- level of Deficiency: Level 2: N/A You find a crank greater than 1/8 inch wide Level 1:The affected area affected is more Level 3:A window is not functioning,bill and at least 11 inches long. than 1 square foot but less than 4 square feet. cannot be secured. hi the immediate area. Level 2: In a wall,you find a hole,missing Level 2:The affected area is more than 4 there are no other windows that are tile or panel.or other damage that is larger square feet. functioning properly. 1168 47758 Federal Register/Vol. 77, No. 154/Thursday, August 9, 2012/Notices Missing/Deteriorated Caulking/Seals/Glazing • Server Odor Detected Blocked/Unusable(Emergency/Fire Esits— Conrpound(Windows—Unit) l lold and/or Mildew Observed(Air I lealth and Safetu9 Deficiency:The caulk,seals or glazing Quality—Health and Safety) Deficiency:The exit cannot be used or exit compound that resists weather is missing or Deficiency:You see mold or mildew or is limited because a door or window is nailed deteriorated. shut,a lock is broken,panic-hardware is Note: evidence of water infiltration or other chained,debris,storage or other conditions. 1.This includes Thennopane and moisture producing conditions. Missing Exit Signs(Emergency/Fire Exits— insulated windows that have failed. Note: If the area has at least 1 square foot health and Safety) 2.Caulk and seals are considered to be of mold or mildew,record it as a deficiency. deteriorated when 2 or more seals for any Propane/Natural Gas/Methane Gas Detected Deficiency: window have lost their elasticity.(If the seals (Air Quality—liealth and Safety) —Exit signs that clearly identify ail crumble and flake when touched.they have emergency exits are missing. lost their elasticity.) Deficiency:)'On detect strong propane, -OR- Level of Deficiencta natural gas,or methane gas odors that could: —There is no adjacent or other internal Level 1-Most of the window shows —Poxu a risk of explosion/fire. illumination in operation on or near the missing or deteriorated caulk,seals and/or —Pose a health risk if inhaled. sign. glazing compound but there is no evidence Sower Odor Detected(Air Qualih•-1-lealih sof tructure.damage to the window or surrounding Flmm�urhle/C.'omhusfihle,\fnturinls— mul Safety) Improperly Stored(Idenith and Safety) st Level 2:N/A Deficienev:)'on detect sewer odors. Any substance that is either known to be Level 3:There are missing or deterioratud combustible or flammable or is stored in a caulk,seals and/or glazing rompuund with Electrical ffuznrds(11nalth and Safetrd container identifying it as such. evidmu:u of leaks or damage to the window Any hazard that poses a risk of electrical Deficiency:Flammable materials or or surrounding stucture. fires,electrocution or spark/explosion. combustible materials are improperly stored Peeling/Needs faint(Windows—Unit) The following deficiencies can be noted: near a heat or electrical source,causing the Deficiency:Paint covering the window • Exposed Wires/O aeu Panels potential risk of fire or explosion. f g P 1 Nth::Flammable or combustible materials assembly or trim is cracking.flaking or • Water Leaks On or Near Electrical may include,but are not limited to,gasoline, otherwise failing. Equipment paint thinners.kerosene,propane, paper. Level of Deficienev: Exposed Wires/Open Panels(Electrical boxes,etc.. Level 1:You see peeling paint or a window Hazards—Health and Safety) a and Dehri.s/Health and Sn ety) that needs paint. Garbage f Level 2:NIA Deficiency:You see exposed bare wires or Accumulation of garbage and debris Level 3:N/A openings in electrical panels. exceeding the capacity of the storage area or Security Bars Prevent Egress(Windows— Note: not stored in an area sanctioned for such use. Unit) 1. If the accompanying property The following deficiencies can be noted: representative has identified abandoned • Indoors Deficiency:Exiting or egress severely wiring,capped wires do not pose a risk and • Outdoors limited or impossible because security bars should not be recorded as a deficiency.'("hey Indoors(Garbage and Debris—[ and are damaged or improperly constnrcled or - g installed.Security liars that are designed to must he enclosed in a junction box as defined Safety) open should open. If they do not open, in Note 2,below. Deficiency: record a deficiency. 2. if the capped wires are not properly —Too much garbage has gathered.more than Note:Inspector should verify that the enclosed in a junction box.record as a the planned storage capacity, security bars if opened do not activate an deficiency. .OB. alarm that would alarm or summon outside Water leaks On or Near Electrical Equipmanl —Garbage has gathered in an area dial is not authorities(police,etc.). (Electrical Ilazards—Health and Safmv) sanctioned for staging or storing garbage or Level of Deficiency: debris. Level 1:VIA Deficienev:You see water leaking, Note:This duos not include garbage and Level '2:NIA puddling or pending on or imnmdiatel_v near debris improperly stored outside. For this Level 3:Exiting or egress is severely any electrical apparaurs.This could pose a deficiency.see"Outdoors(Garbage and limited or impossible.because security bars risk of fire,eluc-trocution or explosion. Debris—hlealth and Safutv)." are damaged,improperly conthat re deli Elevnlor—Tripping(Health and Safety) Outdoors(Garbage,and Debris—Health and installed,or securi t}•bars that ore designed to open cannot he readily opened. Vertical conveyance system for moving Safety) Personnel,equipmt en materia Is,household Deficiency: Health and Safety Inspectable Items goods,err.. —Too much garbage has gathered: more than Items to inspect for"Health and Safety" Deficiency:An elevator is misaligned with the planned storage capacity. are as follows: the floor by more than 3/4 inch.The elevator -OB- • Air Qrmlit% does not level as it should,which causes a ---Garbage has gathered in an area not • Electrical Hazards tripping hazard. sanctioned for staging or storing garbage or • Elevator debris. • Emergency/Fire Exits Emergency/Fire Exits(Health and Snfefv) Nete::This does not include garbage • Flammable Materials All buildings must have acceptable fire improperly stored indoors. For this • Garbage and Debris exits that are also properly marked and deficiencv,see"Indoors(Garbage and • Hazards Debris—Health and Safety)." operational.This includes fire louvers. • Infestation stairway access doors and external exits. Hazards(Health and Safely) Air Quality(Health and Safety) These can include operable windows on the Physical hazards that pose risk of bodily Indoor/outdoor spaces must he free from lower floors with easy access to the ground injury. high levels of sewer gas,fuel gas,mold, or a back door opening onto a porch with a The following deficiencies can be noted: mildew or other harmful pollutants. In stairway leading to the ground. . Sharp Edges must have adequate ventilation. Nule:'['his rues not apply to individual • Tripping The following defciencies can he noted: mots. • Other Ilazards • Mold and/or Mildew Obsen•ed The following deficiencies can be noted: Deficiency:If you see any general defects • Propane/Natural Gas/Melhanu Gas • Blocked/Unusablu(Emergency/Fire Exits) or hazards that pose risk of bodily injury,you Detected • Missing Exit Signs must note them. 1159 Federal Register/Vol. 77, No. "154/Thursday, August 9, 2012/Notices 47759 Sharp Edges(1!llzrds—Fleallh and SaCet}') Infestation 111volth and Safety) Z. If VOL]see baits.traps•and sticky boards Deficiency:You sue ally physical defect Presence of rats,or severe infestation by that show no presence of insects,do not that could cause cutting or breaking human mice or insects such as roaches or termites. record this as a deficiency. skin or other bodily harm,generally in The following deficiencies can be noted: Rats/Mice/Vermin(Infestation—livalth and commmnly used or traveled areas. Safety) Tripping(Hazards—Fleallh and Safely) • Insects ,. • Rats/Jlirv;/\Groin Deficiency:)'on see evidence of rats or Deficiency:You see any physical defect Insects(Infieslatinn—Health and Saretvl mice sightings.rat or mouse holes,or That poses a tripping risk,generally in droppings. walkways or other traveled areas.Typically. Deficiency:You sue evidence of infestation Note: the defect must present al least a Ihree- of insects,including roaches and ants, quarter inch deviation. throughout a unit or room,especially in food t.This dues not include infestation from Note:This does nol include tripping preparation and storage areas. insects. For this deficiency,see"Insects hazards from elevators that du not level (Infestation—livalth and Sa&atv)." properly. For this deficiency,see•'Elevator Not"' 2. If you see baits•turps.or sticky boards Tripping(livalth and Safety)." i.This does not include infestation from that show no presence of vernin,do riot rats/mica. For this deficiency,sae"Rats/ record this as a deficiency. Other Hazards(Ffazanls—Health and Safety) Mire/Vermin(Infestation—Health and Note: "Other"includes hazards that are not Safety)." FIR Dec.Z012-19335 Filed 8-8-12:8J5 mml specifically defined elsewhere. BILLING CODE 421a-61-E 1170 ATTACHMENT B Uniform Physical Condition Standards for Multi- Family Housing Checklist 1171 Uniform Physical Condition Standards for Nlultifamily Housing Rehabilitation —Requirements for Site Inspectable Item Observable Deficiency Present? Yes No Fencing and Gales Damaged/Falling/Leaning Holes 1'%'llssing Sections Grounds Erosion/Rutting Areas Overgrown/Penetrating Vegetation Ponding/Site Drainage Health & Safety Air Quality- Sewer Odor Detected Air Quality- Propanc/Natural Gas/Methane Gas Dctected Electrical Hazards - Exposed Wires/Open Panels Electrical Hazards - Water Leaks on/near Electrical Equipment Flammable Materials - Improperly Stored Garbage and Debris-Outdoors Hazards-Other I lazards- Sharp Edges Hazards- Tripping Infestation -Insects Infestation - Rats/Mice/Vermin Mailboxes/Project Signs Mailbox Missing/Damaged Signs Damaged Parking Lots/Driyeways/Roads Cracks Ponding Potholes/Loose Dlaterial Senlement/l-leaving Play Areas and Equipment Damaged/Broken Equipment Deteriorated Play Area Surface Refuse Disposal Broken/Damaged Enclosure-Inadequate Outside Storage Space Retaining Walls Damaged/Falling/Leaning Storm Drainage Damaged/Obstructed Walkways/Steps Broken/.lissine Hand Railing Cracks/Settlemem./Hcaying Spalling/Exposed rebar Page 1 1 1172 Uniform Physical Condition Standards for Multifamily Housing Rehabilitation —Requirements for Building Exterior Present? Inspectable Item Observable Deficiency Yes No Doors Damaged Frames/Threshold/Lintels/frim Damaged Hardware/Locks Damaged Surface(Boles/Paint/Rusting/Glass) Damaged/Missing Screen/Stomi/Security Door Deteriorated/Missing Caulking/Seals Missing Door Fire Escapes Blocked Egress/Ladders Visibly Missing Components Foundations Cracks/Gaps Spalling/Exposed Rebar Health and Safetv Electrical I Lizards - I-xposed Wires/Open Panels Electrical Hazards -Winer Leaks on/ncar Electrical E ui➢nenl I:mer_enev Fire Exits - Fmrr_ency/Fire Exits Blocked / Unusable Emergency Fire Exits - Missing Exit Signs Flanunable/Combustible Materials- Improperly Stored Garbage and Debris-Outdoors Hazards - Other I-lazards -Sharp Edges I lizards -Tripping Infestation - Insects Infestation - Rats/Mice/Vermin Lighting Broken Fixtures/Bulbs Roofs Damaged Soffits/Fascia Damaged Vents Damaged/Clogged Drains Damagcd/Tom Membrane/Alissing Ballast Missing/Damaged Components front Downspout/Gutter Missing/Damaged Shingles Ponding Walls Cracks/Gaps Damaged Chimneys Missing/Damaged Caulking/Mortar %lissing Pieces/Boles/Spalling Stained/Peeling/Needs Paint Windows Broken/Missing/Cracked Panes Damaged Sills/Frames/Lintels/Trim Damaged/Missing Screens \lissing/Deteriorated Caulking/Seals/Glazing Compound Peeling/Needs Paint Securing Bars Prevent Egress Page 12 1173 Uniform Physical Condition Standards for Multifamily Housing Rehabilitation —Requirements for Building Svstems Inspectable Item Observable Deficiency Present? Yes No Domestic Rater Leaking Central Water Supply Missing Pressure Relief Valve Rust/Corrosion on Heater Chimnev Water Supply Inoperable Electrical System Blocked Access/Improper Storage Burnt Breakers Evidence of Leaks/Corrosion Frayed Wiring :Missing Brcakcrs/Fuses Missing Outict Coccrs Elevators Not Operable Emergency Power Auxilian, Lighting Inoperable(if applicable) Fire Protection :\Missing Sprinkler (lead ::\Missing/Danlaged!Expircd Extinguishers Health S Safety Air Quality- Mold and/or AMildew Observed Air Quality - Propanc/:ANatural Gas/Methane Gas Detected Air Quality- Sewer Odor Detected Electrical I lazard;- Exposed Wires/Open Panels Electrical IFLizards- Water Leaks on/near Electrical Lquipment Elevator-Tripping Emergency Fire Exits - Emergency/Fire Exits Blocked/Unusable Emergency Fire Exits - Missing Exit Signs Flammable Materials - Improperly Stored Garbage and Debris- Indoors I Iazards -Other Hazards- Sharp Edges Hazards—Tripping Hazards Infestation - Insects Infestation - Rats/Mice/Vennin IIVAC Boiler/Pump Leaks Fuel Supply Leaks General Rust/Corrosion Misaligned Chinincv/Vcmilation Svslem Roof Exhaust System Roof Exhaust Fan(s) Inoperable Sanitary System Broken/Leaking/Clogged Pipes or Drains Missing Drain/Cleanout/Manhole Covers Page 13 1174 Uniform Physical Condition Standards for Multifamily Housing Rehabilitation —Requirements for Common Areas Inspectable Item Present? Observable Deficiency Location Yes No Basement/Carage/Car Baluster/Side Railings - Damaged port Closet/Unlit•/Mechani Cabinets- NMissimt/Damaeed cal Community Room Call for Aid- Inoperable Halls/Corridors/Stairs Ceiling- Holes/Missing Tiles/Panels/Cracks Kitchen Ceiling- Peeling/N'ceds Paint Laundry Room Ceiling-Water Stains/Water Damage/Mold/Mildew Lobby Countenops - Missing/Damaged Office Dishwasher/Garbage Disposal - Inoperable Other Community Doors- Damaged Frames/Fhreshold/Llntels/rrinl Spaces Patio/Porch/Balcony Doors- Damaged Ilardware/Locks Restrooms Doors - Damaged Surface(I-loles/Pain/RusdGlass) Storage Doors - Damaged/Missing Screen/Storm/Security Door Doors- Deteriorated/Missing Seals(Entry Only) Doors - Missing Door Dryer Vent-Jlissing/Damaged/Inoperable Electrical - Blocked Access to Electrical Panel Electrical- Burnt Breakers- Electrical - Evidence of Leaks/Corrosion L'Icctrical - Fravcd Wiring Electrical - Missine Breakers Electrical - Missing"Covers Floors - Bulging/Buckling Floors - Floor Covering Damaged Floors -Missing Floor/files Floors - Peeling/Needs Paint Floors - Rot/Deteriorated Subfloor Floors - Water Stains/Water Damage/\Mold/\Mildew GPI - Inoperable Graffiti I I VAC-Convection/Radiant Heat System Covers Missine/Darnaeed I VAC - General Rust/Corrosion IIVAC- Inoperable IIVAC- Misaligned Chimne.vNentilation Svaem HVAC - Noisy/Vibrating/Leaking Lavatory Sink - Damaged/Missing Lighting- Missing/Damaged/Inoperable Fixture Mailbox - Missing/Damaged Outlets/Switches/Cover Places - \living/Broken Pedestrian/Wheelchair Ramp Plumbing -Clogged Drains Plumbing - Leaking Faucet/Pipes Page14 1175 Inspectable Item Present' Location Ohservable Deficiency Yes No Range Hood/Exhaust Fans - Excessive Greased noperable Range/Store- Missing/Damaged/Inoperable Refrigerator- Damaged/Inoperable Restroom Cabinet- Damaged/Missing Shower/Tub- Damaeed/Missing Sink -Missing/Damaged Smoke Detector- %lissing/Inoperable Stairs - Broken/Damaged/ lissing Steps Stairs - Broken/Missing Band Railing Ventilation/lixhaust System - Inoperable Walls- Bulging/Buckling \Valls- Damaeed \\'ally- Damaeed/Deteriorated Trim Walls- Peeling/Needs faint Walls - Water Stains/\Pater Damage/Mold/Mildew Water Closet/toilet- Damaged/Clogged/Missing Windows - Cracked/Broken/Missing Panes Windows - Damaged Windowsill Windows - Inoperable/Not Lockable Windows- Missing/Deteriorated Caulking/Seals/Glazing Compound Windows - Pecling/Needs Paint Windows - Security Bars Pteyent Egress Health S Safety Air Quality- Nlold and/or:Mildew Observed Air Quality- PropaneiNamnd Gas/:\iethanc Gas Detected Air Quality- Sewer Odor Detected Electriril I-lazanls - Exposed \Pires/Open Panels Electrical I kizaids - Water Lcaks on/near Electrical Equipnx•nt Emergency Fire Exits - Emergency/Dire Exits Blocked/Unusable Emergency Fire Exits - Missing Exit Signs Flammable/Combustible Materials- Improperly Stored Garbage and Debris - Indoors Garbage and Debris -Outdoors Hazards - Other Hazards - Sharp Edges Hazards -Tripping Infestation - Insects Infestation - Rats/Micc/Vennin Pools and Related Fencine- Damaged/Not Intact tructures Prash Collection Areas Chutes - Damaged/Nlissing Components Page 15 1176 Uniform Physical Condition Standards for Multifamily Housing Rehabilitation —Requirements for Unit Inspectable Item Observable Deficiency Present? Yes i\u Bathroom Bathroom Cabinets - Darn aged/%Iissing Lavatory Sink - Damaged/NMissing Plumbing-Clogged Drains, Faucets Plumbing- Leaking Faucet/Pipes Shower/Tub- Damaged/Missing Ventilation/Exhaust System—Absendlnoperable Water Closet/Toilet - Damaged/Clogged/Missing Call-for-Aid (if Inoperable applicable) Ceiling Bulging/Buckling/Leaking Holes/Missing Tiles/Panels/Cracks Peeling/Needs faint Water Stains/Water Damage/Mold/Mildew Doors Damaged Frames/Threshold/Lintels/Tritn Damaged Hardware/Locks Dania ged/\tissing Screen/Storm/Security Door Damaged Surface - Itoles/Pain[/Rusting/Glass/Rot(ing Deteriorated/Missing Seals(Entry Only) Missing Door Electrical System Blocked Access to Electrical Panel Burnt Breakers Evidence of Leaks/Corrosion Fraved Wiring GFI - Inoperable Missing Breakers/Fuses \Missing Covers Floors Bulging/Buckling Floor Covering Damage .Missing Flooring Tiles Peeling/Needs Paint Rot/Deteriorated Subfloor Water Stains/Water Damage/\lold/,\Mildew Health S Safety Air Quality- Mold and/or Mildew Observed Air Quality- Sewer Odor Detected Air Quality - Propanei N'arual GaS/\'ICIhanC Gas DC[CC[ed Electrical lia aids- I''xposed Wires/Open Panels Elecrical I lazards- Waicr Leaks on/near Electrical Equipmenl Emergency Fire Exits- Enicruenrv/Fire Exitsl3locked/Unusable Emergency Fire Exits - Missing Esit Signs Flammable Materials - Improperly Stored Garbage and Debris- Indoors Garbage and Debris-Outdoors Page 16 1177 Inspectable Item Observable Deficiency Present? Yes No Hazards- Other Hazards - Sharp Edges I lazards-Tripping Infestation - Insects Infestation - Rats/Mice/Vermin Hot Water Heater Misaligned Chinnlev/Ventilation System Inoperable Unit/Components Leaking Valvcs7ranks/Pipes Pressure Relief Valve Missing Rust/Corrosion HVAC System Convection/Radiant I leat System Covers Missing/Damaged Inoperable \lisaliuned Chimney/Ventilation System Noisy/Vibrating/Leaking Rust/Corrosion Kitchen Cabinets- Missing/Damaged Countertops- Missing/Damaged Dishwasher/Garbage Disposal - Inoperable Plumbing-Clogged Drains Plumbing- Leaking Faucet/Pipes Range I lood/Exhaust Pans - Excessive Grease/Inoperable Range/Stove- Nlissing/Damaged/Inoperable Refrigerator-Dl iss ing/Damaged/Inoperable Sink-Damaged/Missing Laundry Area (Room) Dryer Vent- \9issing/Damaged/Inoperable Lighting Nlissing/Inoperable Fixture outlets/Switches Missing Missing/Broken Cover Plates Patio/Parch/Balcony Baluster/Side Railings Damaged Smoke Detector Alissing/Inoperable Stairs Broken/Damaged/.Missing Steps Broken/Missing Band Railing Walls Bulging/Buckling Damaged Damaged/Deteriorated Trim Peeling/Needs Paint Water Stains/Water Damage/Mold/Mildew Vindo%%s Cracked/Broken/Missing Panes Damaged Windowsill \lissing/Deteriorated Caulking/Seals/Glazing Compound Inoperable/Not Lockable Peeling/Needs Paint Securiry Bars Prevent Egress Page 17 1178 ATTACHMENT C Uniform Physical Condition Standards for single- Family Housing Checklist 1179 Uniform Physical Condition Standards for Single Family Housing Rehabilitation —Requirements for Site Inspectable Item Observable Deficiency Present? Yes \o Fencing and Gates Damaged/Falling/Leaning Holes Missing Sections Grounds Erosion/Rutting Areas Overgrown/Penetrating Vegetation Ponding/Site Drainage(affecting Unit) Health & Safety Air Quality- Sewer Odor Detected Air Quality- Propanc/Natural Gas/Mcthane Gas Detected Electrical Hazards - Exposed Wires/Open Panels Electrical Ilazards - Water LcaAs on/ncar Electrical Equipment Flammable J4ateriils- Improperly Stored g Garbae and Debris -Outdoors Play Equipment— Broken or Damaged Hazards—Other(e.g.. outbuildings) I lazards -Sharp Edges Hazards -Trippinc Infestation - Insects Infestation - Rats/Mice/Vermin Mailboxes/Project I Mailbox Missing/Damaged Sins Signs Damaged Driveways Cracks Potholes/1_oose Material Settlement/Hcaving Retaining Walls Damaged/Falling/Leaning Storm Drainage Damaged/Obstructed Walkways/Steps Broken/Missing Band Railing Cracks/Settlement/1 Ieaving Spilling I 1180 Uniform Physical Condition Standards for Single Family Housing Rehabilitation —Requirements for Buildinp_ Exterior Inspectable Item Observable Deficiency Present? Yes No Doors Damaged I-rames/Thresltold/LintelsrPrin1 Damaged Hardware/Locks Damaged Surface(Holes/Paint/Itusting/Glass) Damaged/Missing Screen/Storni/Security Door Deteriorated/\Missing Caulking/Seals Missing Door Foundations Cracks/Gaps Spalling/Exposed Rebar Health and Safety Flectrical Hazards - Exposed Wires/Open Panels f_lectrical Hazards - Water Leaks on/near Electrical Equipment Flammable/Combustible Materials - Improperly Stored Garbage and Debris - Outdoors Hazards- Other Hazards- Sharp Fdges Hazards-Tripping Infestation - Insects Infestation- Rats/.Mice/Vermin Lighting Broken Fixtures/Bulbs Roofs Damaged Soffits/Fascia Damaged Vents Damaged/Clogged Drains Danlaged/rom Membrane/Missing Ballast Missing/Damaged Components from Downspout/Gutter Missing/Damaged Shingles Ponding Walls Cracks/Gaps Damaged Chimneys Missing/Damaged Caulking/Mortar Missing Pieces/holes/Spalling Stained/Peeling/Needs Paint Windows Broken/t\Missing/Cracked Panes Damaged Sills/Frames/Lintels/Trin1 Damaged/Missing Screens Missing/Deteriorated Caulking/Seals/Glazing Compound Peeling/Needs Paint Security Bari Prevent Egress 7 1181 Uniform Physical Condition Standards for Single Family Housing Rehabilitation —Requirements for Unit Inspectable Item Present?Observable Deficiency Yes No Bathroom Bathroom Cabinets- Damaged/Missing Lavatory Sink - Damaged/Missing Plumbing-Clogged Drains Plumbing- Leaking FauceVPipes Showedfub- Damaged/busing Ventilation/Exhaust System—Inoperable(if applicable) Water Closetfroilet - Damaged/Clogged/blissing Ceiling Bulging/Buckling Moles/b9issine Tiles/Panels/Cracks Peeling/Needs Paint Water Stains/Water Damage/Mold/blildew• Doors Damaged hrantesrrhreshold/Lintels/"I-rim Damaged Hardware/Locks Damaged/Missing Screen/Stonn/Security Door Damaged Surface- I Ioles/Paint/Rusting/Glass Deteriorated/Missing Seals(Entry Only) Missing Door Llecirical System Blocked Access to Electrical Panel Burnt Breakers Evidence of Leaks/Corrosion Frayed Wiring GI-I - Inoperable bossing Breakers/Fuses Missing Covers Floors Bulging/Buckling Floor Covering Damage Missing Flooring Tiles Peeling/Needs Paint Rot/Deteriorated Subfloor Water Stains/Water Damage/Mold/Mildew Health & Safety 1 Air Quality- Mold and/or Mildew Obsen•ed Air Quality- Sewer Odor Detected Air Quality- Propane/Natural Gas/.Methane Gas Detected Eleciricd Ilazards- I_xposed Wires/Open Panels Electrical Ilazards - Water Leaks on/near Electrical Lc ui nment Flammable Materials - Improperly Stored Garbage and Debris - Indoors Garbage and Debris - Outdoors Ilazards-Other Ilazards- Sharp Edges Ilazards-Tripping Infestation - Insects Infestation - Rats/,\9ice/Vermin blot Water heater Inoperable Unit/Components 3 1182 Inspectable Item Observable Deficiency Present? }'es No Leaking Valves/Tanks/Pipes Pressure Relief Valve Missing I Rust/Corrosion HVAC System Inoperable I I Misaligned Chinincy/Ventilation SYAcru Noisy/Vibrating/Leaking I Rust/Corrosion Kitchen Cabinets-Missing/Damaged Countertops- .Missing/Damaged Dishwasher/Garbage Disposal — Leaking/Inoperable Plumbing -Clogged Drains Plumbing- Leaking I--aucet/1'ipes Ranee HoocilEshaust Fans - Excessive Grease/Inoperable I I I Ranee/Stove - Missing/I)anlaged/inoperable Refrigerator-.Missing/Damaged/Inoperable Sink- Damaacd/\1issing I Laundry Area Dryer Vent- Missing/Damaged/Inoperable (Room) Lighting Missing/Inoperable Fixture Outlets/Switches \9issing Missing/Broken Cover Plates Patio/Parch/Balcony Baluster/Side Railings Damaged Smoke Detector Missing/Inoperable Stairs Broken/Damaged/.Missing Steps Broken/Missing Hand Railing Walls Bulging/Buckling Damaged Damaged/Deteriorated Trim Peeling/Needs Paint Water Stains/Water D:inage/Mold/Mildew Window's Cracked/Broken/i\1issirig Panes Dam aged/Rotting Windowsill 9issing/Deteriorated Caulking/Seals/Glazing Compound Inoperable/Not Lockable Peeling/Needs Paint Securitv Bars Prevent Egress 4 1183 ATTACHMENT #3 City of Huntington Beach Affordable Housing Program Underwriting and Subsidy Layering Guidelines December 2021 1184 Table of Contents SECTION I. INTRODUCTION.................................................................................................... 4 Affordable Housing Program Guidelines................................................................................. 4 Underwriting ........................................................................................................................... 4 SubsidyLayering Review ....................................................................................................... 5 SECTION II. AFFORDABLE HOUSING PROGRAM GUIDELINES ........ ................................. 7 Eligible Activities & Costs ....................................................................................................... 7 EligibleApplicants .................................................................................................................. 9 Minimum Project Requirements.............................................................................................10 IneligibleCosts......................................................................................................................11 General Project Requirements ..............................................................................................11 Affordability Requirements.....................................................................................................13 Site Selection And Neighborhood Compatibility.....................................................................15 Development Requirements ..................................................................................................16 LoanProcess ........................................................................................................................17 Reporting...............................................................................................................................18 Monitoring .............................................................................................................................19 Default Actions And Sanctions ..............................................................................................19 SECTION III. UNDERWRITING GUIDELINES..........................................................................22 Federal and Other Regulations..............................................................................................22 MarketAssessment...............................................................................................................28 Assessing Developer Capacity..............................................................................................29 ProjectRisk ...........................................................................................................................31 SECTION IV. SUBSIDY LAYERING GUIDELINES ..................................................................42 Cost Allocation Process.........................................................................................................44 SECTION V. DISCLAIMERS ....................................................................................................51 ATTACHMENT A: Sample Market Assessment ATTACHMENT B: Developer Capacity and Qualification Questionnaire ATTACHMENT C: Develoment History ATTACHMENT D: HOME Underwriting and Financial Analysis Temaplate Tables ATTACHMENT E: CPD Notice 15-11 ATTACHMENT F: Step-by-Step Standard Method Process Chart & Example ATTACHMENT G: Step-by-Step Proration Method Process Chart & Examples ATTACHMENT H: Step-by-Step Hybrid Method Process Chart & Example 2 1 P a g e 1185 3 1 P a g e 1186 SECTION I. INTRODUCTION The City of Huntington Beach, Community Development Department (City or CDD) supports the acquisition, rehabilitation, and new construction of affordable rental housing for low-, very low-, and extremely low-income households with its annual funding allocations from the U.S. Department of Housing and Urban Development's (HUD) HOME Investment Partnerships Program (HOME) and available local housing funds including, but not limited to: 1) former Redevelopment Agency housing set-aside funds (referred to as Low- and Moderate-Income Housing Asset Fund); and 2) the City's Housing Trust Fund, which includes housing in-lieu fees. HOME regulations, as amended, require the City to identify minimum elements the City must consider and requires the City to establish specific guidelines against which affordable housing projects are to be evaluated. HOME regulations also require that the City of Huntington Beach conduct underwriting and subsidy layering reviews of each project prior to committing federal assistance. Affordable Housing Program Guidelines The purpose of the Affordable Housing Program Guidelines is to describe the City of Huntington Beach's housing policy objectives, the range of affordable housing activities available to advance these objectives, and the manner in which transactions will be evaluated and selected for funding. The overall goal of these guidelines is to ensure prudent underwriting and subsidy layering review and to ultimately achieve compliance with applicable Federal, State, and City laws, ordinances, regulations, and policy objectives. The Affordable Housing Program Guidelines, more fully explained in Section II below, provides information on eligible activities and costs, eligible applicants, general project requirements, affordability, development requirements and other pertinent information relevant to the application for HOME-assistance for the development of affordable housing. Underwriting Underwriting is more than a technical requirement, and the term itself is used in several different ways. Depending on the context, underwriting is sometimes used in a limited fashion to refer primarily to the financial review of a potential transaction. Other times, the term underwriting is narrowly understood as a check the box set of static technical reviews resulting in a determination that a project does or does not meet a certain formula. In both cases, these uses of the term are too limited. In practice, underwriting is a reflexive process. Every project involves risk, and even the best project can fail due to unforeseen factors. The goal of underwriting is to both identify and mitigate risk across a series of perspectives. In other words, the underwriting process is not an up or down review, but it often changes the project itself by imposing requirements to improve viability. 4 1 P a g e 1187 In this sense, the City's approach to underwriting is informed not only by traditional lending perspectives and minimum requirements of the HOME program, but a holistic approach to balancing the various risks inherent in any real estate transaction and the public purposes the City seeks to support — not the least of which is producing safe, decent, affordable housing that will be an enduring community resource. Subsidy Layering Review The City of Huntington Beach has adopted layering review guidelines included herein in compliance with HOME Investment Partnerships Act (HOME) requirements in HUD Notice CPD 15-11 issued December 22, 2015 entitled "Requirements for the Development and Implementation of HOME Underwriting and Subsidy Layering Guidelines", which supplanted the prior CPD Notice-98-01. The intent is to "Ensure that the level of HOME investment does not exceed the amount that is necessary to provide quality affordable housing that is financially viable." Additionally, the City is required under Section 212(f) of the Cranston-Gonzalez National Affordable Housing Act of 1990 (NAHA), as amended, to certify that it will not invest any more HOME funds in combination with other governmental assistance than is necessary to provide quality affordable housing that is financially viable for the HOME affordability period (24 CFR 92.252). The 2013 HOME Final Rule reiterates this requirement (24 CFR 92.250(b)) that projects be evaluated according to written underwriting and subsidy layering guidelines for all HOME activities to determine the appropriate HOME investment. That is: Before committing funds to a project, the participating jurisdiction must evaluate the project in accordance with guidelines that it has adopted for determining a reasonable level of profit or return on owner's or developer's investment in a project and must not invest any more HOME funds, alone or in combination with other governmental assistance, than is necessary to provide quality affordable housing that is financially viable for a reasonable period (at minimum, the period of affordability in § 92.252) and that will not provide a profit or return on the owner's or developer's investment that exceeds the participating jurisdiction's established standards for the size, type, and complexity of the project. The participating jurisdiction's guidelines must require the participating jurisdiction to undertake: 1. An examination of the sources and uses of funds for the project and a determination that the costs are reasonable; and 2. An assessment, at minimum, of the market conditions of the neighborhood in which the project will be located, the experience of the developer, the financial capacity of the developer, and firm financial commitments for the project. The City asserts that: 5 1 P a g e 1188 1. Prior to the commitment of funds to a project, the project is to be evaluated based upon the City's layering guidelines; and 2. It will not invest any more HOME funds in combination with other governmental assistance than is necessary to provide affordable housing. The City's layering review guidelines will also determine the level of HOME funds to be used in a project absent other governmental assistance'. In the event that additional sources of funds not initially contemplated are infused, the City may opt to update the evaluation. The City's intent is to implement general underwriting tenets, consistent with HUD Notice CPD 15-11, to "ensure that the amount of HOME assistance is the amount of warranted assistance necessary for a project to be financially feasible based upon the various HOME covenants and restrictions to be put in place." ' The term"governmental assistance"refers to any loan, grant, guarantee, insurance payment, rebate, subsidy, credit, tax benefit or any other direct or indirect assistance from a federal,state or local government used for a specific housing project. 6 1 P a g e 1189 SECTION II. AFFORDABLE HOUSING PROGRAM GUIDELINES The City of Huntington Beach provides financing for a range of housing programs and activities utilizing funds from different sources including Federal HOME and CDBG funds; former Redevelopment Agency housing set-aside funds (referred to as Low- and Moderate-Income Housing Asset Fund); and the City's Housing Trust Fund, including housing in-lieu fees. While each funding source is subject to specific regulatory restrictions and requirements, these general affordable housing guidelines will specifically cover those associated with the federal HOME Investment Partnership Act funds (HOME). Eligible Activities & Costs The following activities and costs are eligible to be carried out by the City of Huntington Beach to facilitate the preservation of existing or creation of new affordable housing. New Construction HOME funds may be used for new construction of both rental and ownership housing. Any project that includes the addition of dwelling units outside the existing walls of a structure is considered new construction. Rehabilitation This includes the alteration, improvement, or modification of an existing structure. It also includes moving an existing structure to a foundation constructed with HOME funds. Rehabilitation may include adding rooms outside the existing walls of a structure, but adding a housing unit is considered new construction. Reconstruction This refers to rebuilding a structure on the same lot where housing is standing at the time of project commitment. HOME funds may be used to build a new foundation or repair an existing foundation. Reconstruction also includes replacing a substandard manufactured house with a new manufactured house. During reconstruction, the number of rooms per unit may change, but the number of units may not. NOTE: Replacing a manufactured housing unit with a stick-built unit is considered a homebuyer activity even if the applicant/beneficiary owns the lot and existing manufactured unit. Conversion Conversion of an existing structure from another use to affordable residential housing is usually classified as rehabilitation. If conversion involves additional units beyond the walls (envelope) of an existing structure, the entire project will be deemed new construction. Conversion of a structure to commercial use is prohibited. 7 1 P a g e 1190 Site Improvements Site improvements must be in keeping with improvements to surrounding standard projects. They include new, on-site improvements (sidewalks, utility connections, sewer and water lines, etc.)where none are present. They are essential to development or repair of existing improvements. Building new, off-site utility connections to an adjacent street is also eligible. Off-site infrastructure is not eligible as a HOME expense, but may be eligible for match credit. Example: Infrastructure, such as sewer and water lines in a public street in front of a HOME-assisted property, cannot be paid for with HOME funds. However, the connections that run from the HOME-assisted property to the street are eligible HOME costs since they are essential to the property. Acquisition of Property Acquisition of existing standard property, or substandard property in need of rehabilitation, is eligible as part of either a homebuyer program or a rental housing project. After acquisition, rental units must meet HOME rental occupancy, affordability and lease requirements. Acquisition of Vacant Land HOME funds may be used for acquisition of vacant land only if construction will begin on a HOME project within 12 months of purchase. Land banking is prohibited. Demolition Demolition of an existing structure may be funded through HOME only if construction will begin on the HOME project within 12 months. Relocation Costs The Uniform Relocation Act and Section 104(d) (also known as the Barney Frank Amendments) apply to all HOME-assisted properties. Both permanent and temporary relocation assistance are eligible costs. Staff and overhead costs associated with relocation assistance are also eligible. Refinancing HOME funds may be used to refinance existing debt on single-family, owner-occupied properties in connection with HOME-funded rehabilitation. The refinancing must be necessary to reduce the owner's overall housing costs and make the housing more affordable. Refinancing for the purpose of taking out equity is not permitted. HOME may also be used to refinance existing debt on multi-family projects being rehabilitated with 8 1 P a g e 1191 HOME funds, if refinancing is necessary to permit or continue long-term affordability, and is consistent with the City's-established refinancing guidelines. Initial Operating Reserve HOME funds may be used to fund an initial operating deficit reserve for new construction and rehabilitation projects for the initial rent-up period. The reserve may be used to pay for project operating expenses, scheduled payments to a replacement reserve and debt service for a period of up to 18 months. Project-Related Soft Costs These must be reasonable and necessary. Examples of eligible project soft costs include: • Finance-related costs. • Architectural, engineering, and related professional services. • Tenant and homebuyer counseling provided the recipient of counseling ultimately becomes the tenant or owner of a HOME-assisted unit. • Project audit costs. • Affirmative marketing and fair housing services to prospective tenants or owners of an assisted project; and • City staff costs directly related to projects (not including TBRA). Eligible Applicants • For-profit, non-profit and quasi-public developers with a documented capacity to construct (or rehabilitate) and operate multifamily housing that benefit extremely low to low-income households. • Developer/applicants and their team members must be in good standing with the City on all previous grants, loans or loan commitments. • Developer/applicants must affirm that there are no defaults or negative collection actions relating to any financial obligation, either to the City of Huntington Beach or to any other public agency or private lender. • Applicant cannot be on any local, state or federal debarment list. 9 1 P a g e 1192 • No applicant, developer or contractor with compliance issues outstanding with the City or other public agencies can participate. • The developer/applicant cannot have any outstanding tax liens on any properties owned and operated by the applicant. • The City may seek references from other lenders, partners, or public agencies with which the applicant has done business. Minimum Project Requirements • Located in the City of Huntington Beach city limits. • Project must consist of three or more residential units unless otherwise approved by City. • All new construction housing projects constructed with HOME funds must meet all applicable State and local codes, ordinances, and zoning requirements. HOME- assisted new construction projects must meet State or local residential and building codes, as applicable or, in the absence of a State or local building code, the International Residential Code or International Building Code (as applicable to the type of housing) of the International Code Council. The housing must meet the applicable requirements upon project completion. New construction housing projects must also meet all HUD requirements of 24 CFR Part 92.251 (a)(2). • Acquisition and rehabilitation or rehabilitation projects must: ✓ Meet the City of Huntington Beach's Rehabilitation Standards which address standards in the areas of: health and safety; major systems; lead-based paint; accessibility; disaster mitigation; State and local codes, ordinances, and zoning requirements; Uniform Physical Condition Standards; applicability of a Capital Needs Assessment; and broadband infrastructure. ✓ Have amenities that will allow it to compete effectively in the local market area as determined by City. ✓ Upon completion, pass the UPCS. ✓ Complete a third-party Capital Needs Assessment2 as necessary. 2 For multifamily rental housing projects of 26 or more total units, the participating jurisdiction must determine all work that will be performed in the rehabilitation of the housing and the long-term physical needs of the project through a capital needs assessment of the project. 101Page 1193 • Acquisition ONLY projects must meet the City of Huntington Beach's Rehabilitation Standards as described above and have amenities that will allow it to compete effectively in the local market area as determined by City. • Project must meet HUD environmental review requirements. Ineligible Costs Project components may be deemed non-essential elements by City and therefore removed from the total project cost. Such items may include, but are not limited to, the following: • Carpeting for kitchens, bathrooms or patios • Window treatments • Dumbwaiters • Greenhouses, hot tubs or whirlpool baths • Mobile homes • Outdoor fireplaces or hearths • Swimming pools or swimming pool decks (except repair of existing) • Tennis courts • Other items deemed to be a luxury General Project Requirements The following are general project requirements for all applicants seeking funding from the City of Huntington Beach for housing-related projects. Site Control Project applicants must have control of any site that will receive City funding for acquisition, rehabilitation and new construction activities. To document site control one of the following must be submitted: a deed or other proof of ownership; an executed lease agreement; an executed contract of sale; or an executed option to purchase or lease. Please keep in mind URA regulations apply and must be followed or applications cannot be considered for funding. 111Page 1194 Appraisal A property appraisal may be required for projects that will receive City funding for acquisition, rehabilitation, or new construction. An appraisal cannot be more than 1 year old unless the appraisal has been accepted by the California Tax Credit Allocation Committee (CTCAC) as part of a tax credit application submittal. The appraiser must be a certified appraiser. The City reserves the right to require an appraisal on completed activities. Reasonable Costs The City is responsible for ensuring that the costs are reasonable by examining the sources and uses for each project. Assessment may include comparison to similar projects within the local market, market trend analysis, survey of industry participants, City housing-related experience, and other third-party sources. Work Write-Ups For acquisition of existing buildings (not slated for demolition) and rehabilitation, City must approve work write-ups (i.e., plans and specifications) to determine compliance with the City's Rehabilitation Standards. The project cannot be bid and work cannot begin until approval from City is received. Cost Estimate For acquisition of existing buildings (not slated for demolition) and rehabilitation, City must approve written cost estimates to ensure that the costs are reasonable. The project cannot be bid and work cannot begin until approval from City is received. Procurement Applicants must comply with all applicable federal, state and City procurement requirements. The developer shall ensure that all contracts are awarded in a fair, open and competitive manner. Executed copies of all contracts shall be forwarded to City along with documentation concerning the selection process. Debarment and Suspension Developers, contractors or subcontractors working on a City funded project cannot be located on a federal, state or local debarment or suspended list. Prior to awarding a contract, the developer must secure approval from City to ensure that the proposed contractor is eligible. Davis Bacon Weekly Payrolls 121Page 1195 If applicable, Davis Bacon payrolls must be submitted weekly on the most current Department of Labor form. Affirmative Marketing Developers must create an affirmative marketing plan to further the City's commitment to non-discrimination and equal opportunity housing. Affirmative marketing consists of actions to provide information and otherwise attract eligible persons in the housing market area to the available housing without regard to race, color, national origin, gender, religion, familial status, disability, sexual orientation, gender identity, or marital status. Records should be maintained describing actions taken by the developer to affirmatively market units. Documentation is required by the Fair Housing Act and the City will review the documentation at each monitoring visit, but may request to review the documentation annually. Waiver Requests City acknowledges that each project may face unique site, design, financing, population or market constraints for which full compliance may be difficult or impossible. It is intended that such unique constraints are identified during the design process and that the applicant may request a modification or waiver to specific standards and requirements, which will be reviewed on a case-by-case basis to determine whether specific standards should be modified or waived for reasons and purposes acceptable to the City. Requests for modification or waiver to specific standards must be in writing and document the applicant's need and unique situation. When such modifications or waivers are granted, additional requirements may be imposed by City. Affordability Requirements Assisted Units Projects may have a mix of HOME-assisted units and non-HOME assisted units. Assisted units may be fixed or Floating. HOME units shall not be isolated within a specific area or areas of the development. The HOME units shall be scattered throughout the development and be of the same quality and have the same proportional mix of square footage and bedroom size as non-HOME units. Affordability Period Income and rent restrictions are required for all HOME-assisted units for period of time known as the "affordability period." The affordability period is enforced using a legally binding restrictive covenant that assures that a specified number of units meet certain affordability restrictions for the specified period of affordability. This requirement will be satisfied by a Regulatory Agreement that will be prepared by or deemed acceptable by the City and then recorded with the Orange County Recorder's Office. All debt 131Page 1196 instruments secured by the subject property must be subordinate to the Regulatory Agreement. HOME Required Affordability Periods Activity Average Per Minimum Unit Affordability Period Rehabilitation or Acquisition of Existing < $15,000 5 Years $15,000-$40,000 10 Years Housing > $40,000 15 Years Refinance of Rehabilitation Project Any Dollar Amount 15 Years New Construction or Acquisition of New Any Dollar Amount 20 Years Housing All other funding, including local funds, will require a minimum of 55 years of affordability. The affordability period begins upon issuance of a Certificate of Completion by the City or by other triggers (e.g., percentage of lease-up) deemed appropriate by the City. The affordability period will remain in effect per the affordability term identified in the recorded Regulatory Agreement. Income Determination Method A developer/applicant for a project must determine income eligibility of each household using the appropriate methodology from either HUD, CTCAC, or State of California- Department of Housing and Community Development depending upon the source of the funds. • Income Recertification Schedule ✓ The developer/applicant must adopt a schedule for annual recertification of income and a copy must be provided to the City. Income can be recertified on the anniversary of the original income evaluation, at lease renewal, or on an annual schedule whereby all tenants are recertified during the same month. ✓ Recertification of income eligibility must be conducted by collecting source documentation annually. Occupancy & Rent Restrictions • General Restrictions: Income limits for housing projects are calculated according to the actual number of household members as residents are identified. Occupancy limits must comply with HUD and HCD standards. ✓ Rent restrictions are strictly enforced during the affordability period. 141Page 1197 ✓ All new tenants must meet the income limits established by City per HUD, CTCAC or HCD standards depending upon the source of funds. ✓ If a tenant pays utilities, the maximum allowable rents must be reduced by the amount of the applicable utility allowance as established by HUD and the Orange County Housing Authority. • HOME Assisted Units ✓ For households at 50% AMI or less, tenant rent must be the lowest of 30% of adjusted income, Low HOME rent or Fair Market Rent (FMR) ✓ For households between 51% and 60% AMI, tenant rent must be the lowest of 30% adjusted income, High HOME rent or FMR. ✓ Occasionally, units can serve households up to 80% AMI. Site Selection and Neighborhood Compatibility Site Design Principles The determination of the site location is a very important part of the project preparation process and should not be overlooked. A well-chosen site location can significantly increase the success of the project. Issues to consider include orientation, access to transit, and proximity to community amenities (commercial, social services, education, parks, and healthcare facilities). Affordable Multi-Unit Family and Senior Housing Concentration Policy Affordable housing opportunities should be available to residents throughout the City of Huntington Beach. The City strongly discourages the concentration of affordable housing units within neighborhoods and promotes housing choice throughout the City. Proximity to Site Amenities Developments should be located on sites within a 2-mile radius of social, recreational, commercial, educational and health facilities and services. A map identifying the development site and the location of supporting services is required. The service must be identified by name on the map. All services must exist or be under construction. Connectivity Requirements and Proximity to Transportation 151Page 1198 A site should be located within one mile of a transit stop. A map showing the walkable route to the bus stops is required. Zoning The City's Zoning and development plan requirements should be the first consideration when finding a suitable location. Contact the Community Development Department offices to determine the correct zoning for multi-family, duplex, or single-family homes. Development Requirements Minimum Units The minimum unit size for a multi-family development is three units. Single family units may be considered. Zoning Code Compliance All acquired property must conform, at minimum, to prevailing building standards and Zoning Code of the City of Huntington Beach. For projects which incorporate rehabilitation or new construction, the completed project must conform to these standards prior to final disbursement of awarded funds. Capital Needs Assessment For the acquisition of existing structures (not slated for demolition) and rehabilitation projects, a Capital Needs Assessment (CNA) per the Uniform Physical Condition Standards (UPCS) must be completed. The CNA must identify the useful life of major systems to include structural support, roofing, cladding, weatherproofing (windows, doors, siding, gutters), plumbing, electrical, heating, ventilation and air conditioning. If the remaining useful life is less than the affordability period, a replacement reserve as well as a replacement schedule is required to ensure the items can be adequately maintained and addressed throughout the affordability period. The CNA must be conducted by a qualified third party that is independent of the developer. Sustainability and Energy Efficiency Designing and locating affordable housing with sustainable design and green building in mind will ensure efficient land use, reduce energy costs and add to the appeal of the property. It is important to the City that housing positively contributes to the environmental health of our residents and neighborhoods by decreasing energy and water usage, reducing operating and maintenance costs, and improving the efficiency and longevity of the building system. Construction projects of new and existing buildings must be designed and constructed to be energy and water efficient, reducing tenant costs while improving the structure's sustainability. 161Page 1199 • Appliances, mechanical systems, windows, doors, insulation must meet Energy Star standards. • Toilets, faucets, shower heads must meet state volume standards. Accessible and Adaptable Units Financial assistance may not be provided for the acquisition or development of multi- family units that will not allow a portion of the units to be made accessible to persons with disabilities. Occupancy of Accessible Dwelling Units Policy Owners/managers of projects that have accessible units should ensure that information regarding the accessible units reaches individuals with disabilities. Additionally, owners/managers should take non-discriminatory steps to maximize the utilization of accessible units by qualified individuals with disabilities. This can be done by maintaining a waiting list for accessible units and offering vacant accessible units to applicants in the following order: 1. To a current occupant of another unit in the same property or other comparable property within the owner/manager's control, who has a disability requiring the accessibility of the vacant unit and who currently occupies a unit that does not have the accessibility features. 2. To a qualified applicant on the waiting list who has a disability requiring the accessibility features of the vacant unit. 3. To a qualified applicant who does not have a disability requiring the accessibility features of the unit; however, the owner/manager may incorporate language in the lease that the applicant will agree to move to a non-accessible unit when one becomes available. Loan Process Documents Once applicants have been notified of loan approval, the City will provide applicants a copy of the draft loan documents for review and comment. A City loan agreement includes: • Affordable Housing Agreement • Loan Agreement 171Page 1200 • Promissory Note • Deed of Trust • Regulatory Agreement (land use and affordability restrictions) • Developers that are required to comply with the Davis Bacon or State of California prevailing wage regulations as a condition of the commitment, must schedule a pre-construction meeting to ensure the development team and contractor understand the prevailing wage monitoring and include the appropriate provisions in the construction contracts. Loan Funding In preparation for loan funding, City staff will perform the following: • Verification of closing conditions: review all pre-funding conditions of the Loan Agreement to ensure that the developer has complied with conditions and provided necessary documentation. • Schedule the closing: developer will be responsible for scheduling the closing, collecting and reviewing the final loan documents and working with City staff to set a closing date. • Loan funding: prior to disbursement of loan funds, the developer must comply with all conditions set forth in the Affordable Housing or Loan Agreement and provide City with the following: ✓ Certified copies of executed loan documents ✓ Proof of current property tax payments ✓ Proof of insurance meeting City insurance requirements ✓ Title insurance meeting City standards ✓ Proof of compliance with prevailing wage requirements, if applicable Reporting Developers, as stated in the loan agreements, will be required to make periodic reports to the City regarding project financials, project cash flow, and developer's compliance with applicable requirements of City and other funding. The required reports shall provide information on the beneficiaries (homebuyers, renters, special needs populations) of 181Page 1201 federal funding and the financial condition of the project. If developers have not responded timely to the City's requested annual or periodic reporting, the project will be found in default of the City loan and developer contractual obligations. Reporting to demonstrate compliance with the terms of the loan agreement will include: ✓ Annual Audited Financial Statements and other financial reports to show project cash flow and developer's compliance with applicable requirements of the HOME or other funding source ✓ Quarterly Performance Reports (October, January, April, and July of each year) ✓ Tenant Information Report if City funds were used in the creation of the City's loan ✓ A-133 Audit if the developer received more than $500,000 in total federal funds ✓ The assisted units are being property managed/operated. ✓ The assisted units are being affirmatively marketed per Fair Housing Act requirements. Monitoring After a project has been completed and all funds have been drawn, the developer will submit annual reports in compliance with the funding agreement or loan covenant. Delinquent reporting will result in the suspension of further disbursement of awarded funds. Periodic site reviews will be conducted by appointment to confirm the extent of work to be completed, to monitor progress, and to ensure work has been completed in accordance with project plans, City building code, the construction contract and all plans and specifications provided within the program application. During the monitoring process an analysis of randomly selected client files will confirm compliance with resident eligibility and documentation standards. A written summary will be sent to the developer within thirty days of the site review. A determination of noncompliance will be communicated to the developer in writing with the required corrective actions and the cure period. Non-compliance will result in the suspension of further disbursement of awarded funds and ineligibility for future funding. Default Actions and Sanctions The City retains the right to determine in its sole decision, whether a default has taken place in a City funded project. The City may exercise default actions if the City determines that the default or violation(s) of the terms and conditions of the executed agreement has 191Page 1202 or may take place by the developer of the project. A default or violation may be facilitated as the result of an action or inaction taken by the project developer, organization, agency, contractor, individual or duly appointed representative of the developer or developer's project. A default or violation may include, but may not be limited to the following: • Developer or developer's project fails to adequately address the applicable local, state or federal rules and/or regulations governing the acquisition, construction and/or initial occupancy requirements of the project. • Any breach of any provision contained in the loan document. • If City program funds are used for any purpose other than authorized in the City program agreement. • The appropriate proportion of assisted units are not maintained for the term of the loan. • There is a change in use of the property prior to repayment of the HOME loan without City review and written approval. • Developer fails to respond to the City, HUD's or IRS requests for occupant and rental information during the life of the loan. • Property is not maintained in compliance with the City's Rehabilitation Standards or Code or federal Uniform Physical Conditions Standards. • Developer fails to comply with information submitted by the developer to the City through the project selection process. • Developer or developer's project violates local, state or federal law. • Developer or developer's project fails to maintain adequate documentation in support of project requirements. Default sanctions available to the City may include, but are not limited to any one or any combination of the following: • Call the project note due and payable in accordance with the terms and conditions of the note. • Call the note due and payable for the full amount of the City funds provided to the project. • Temporarily suspend the project until corrective action is taken. • Terminate the agreement and associated documents with the project. 201Page 1203 • Request a review or investigation by local or federal authorities, if applicable. • Debar or suspend the project organization or individual from consideration of any future funding opportunities from the City. 211Page 1204 SECTION III. UNDERWRITING GUIDELINES In reviewing applications for HOME assistance, as required by 24 CFR §92.250(b) and prudent business practices, the City's underwriting framework includes, but is not limited to, evaluations of: • Regulatory requirements applicable to the project, including compliance with affordability period restrictions, property standards, and cross-cutting federal requirements. • Market risk, including whether sufficient demand exists for the project, the anticipated lease-up period, and whether general economic conditions and other competition supports ongoing viability (see Attachment A: Market Assessment). • Developer risk, focusing on whether the owner/developer (including but not limited to the underlying owners of special-purpose and/or single-purpose entities) has/have the technical capacity to develop and operate the project and the financial capacity to safeguard public funds and backstop the project in the event of poor financial performance (see Attachment B. Developer Capacity & Qualifications Questionnaire and Attachment C: Development History). • Project risk (or financial underwriting), testing the economic and financial projections for the transaction including both sources and uses as well as ongoing operating assumptions. This includes confirmation that all sources of project financing are available, commercially reasonable, and have been appropriately maximized prior to awarding HOME assistance (see Attachment D: HUD HOME Underwriting and Financial Analysis Template Tables). In addition to the above, the City will, at a minimum, also perform a collateral evaluation and assess environmental conditions to determine that the proposed project is suitable and viable for a project requesting HOME assistance from the City of Huntington Beach. Federal and Other Regulations The City of Huntington Beach will be responsible for administering HOME-funded housing projects in compliance with other Federal rules as outlined below; however, owners, developers, Community Housing Development Organizations (CHDO's), and other nonprofits should also be made aware of these cross-cutting requirements in order to ensure a project or activity's compliance. Therefore, any proposal/application submitted for funding consideration must comply with all state and federal regulations related to the construction, rehabilitation or provision of housing. Non-Discrimination and Equal Access 221Page 1205 No person in the United States shall on the grounds of race, color, national origin, religion or sex be excluded, denied benefits or subjected to discrimination under any program funded in whole or in part by HOME funds. Consequently, the City of Huntington Beach will take measures to ensure non-discriminatory treatment, outreach and access to program resources. This applies to employment and contracting, as well as to marketing and selection of program participants. Fair Housing and Equal Access • Title VI of the Civil Rights Act of 1964, as amended (42 U.S.C. 2000d et seg.): 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 . • Fair Housing 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): 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): Prohibits age discrimination in programs receiving Federal financial assistance. Age Discrimination Act regulations may be found in 24 CFR Part 146. Affirmative Marketing The City of Huntington Beach must adopt affirmative marketing procedures and requirements for all housing with five or more HOME-assisted units (except for TBRA programs). Affirmative marketing plans must include this information: • Methods for informing the public, owners, and potential tenants about fair housing laws and Huntington Beach's policies (for example: use of the Fair Housing logo, or equal opportunity language). 231Page 1206 • Description of what owners and/or the City of Huntington Beach will do to affirmatively market housing assisted with HOME funds. • Description of what owners or the City of Huntington Beach will do to inform persons not likely to apply for housing without special outreach. • Maintenance of records to document actions taken to affirmatively market HOME- assisted units and to assess marketing effectiveness. • Description of how efforts will be assessed and what corrective action will be taken when requirements are not met. Handicapped Accessibility • Americans with Disabilities Act (ADA) (42 U.S.C. 12131: 47 U.S.C. 155, 201 , 218. and 225): 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: 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 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. Under Section 504, recipients and subrecipients are defined more broadly than under the HOME program. Section 504 recipients and subrecipients include any entity that receives Federal funding (for example, a subrecipient or CHDO). Employment and Contracting The following cross-cutting regulations pertain to employment and contracting opportunities, including equal opportunity, labor requirements, and contracting/procurement procedures. Equal Opportunity 241Page 1207 • Equal Employment Opportunity, Executive Order 11246, as amended: Prohibits discrimination against any employee or applicant for employment because of race, color, religion, sex or national origin. Provisions to effectuate this prohibition must be included in all construction contracts exceeding $10,000. Implementing regulations may be found at 41 CFR Part 60. • Section 3 of the Housing and Urban Development Act of 1968 as amended by the Housing and Community Development Act of 1992: Section 3 contributes to the establishment of stronger, more sustainable communities by ensuring that employment and other economic opportunities generated by Federal financial assistance for housing and community development programs are, to the greatest extent feasible, directed toward low- and very low-income persons, particularly those who receive government assistance for housing. Section 3 applies to training or employment arising in connection with HUD-funded housing rehabilitation, housing construction, or other public construction projects, and any contracting opportunities arising in connection with both public housing and other Section 3 projects. These opportunities are, to the greatest extent feasible, required to be given to low- and very low-income persons and business concerns that provide economic opportunities to low- or very low-income persons. The new Section 3 Final Rule regulations can be found at 24 CFR Part 75. • Minority/Women's Business Enterprise: Under Executive Orders 11625, 12432 and 12138, the City of Huntington Beach must prescribe procedures acceptable to HUD for a minority outreach program to ensure the inclusion, to the maximum extent. Labor Requirements • Davis-Bacon and Related Acts (40 USC 276(A)-7): Ensures that mechanics and laborers employed in construction work under Federally assisted contracts are paid wages and fringe benefits equal to those that prevail in the locality where the work is performed. 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. This Act applies to the construction of housing (rehabilitated or new) that contains 12 or more HOME-assisted units. • Contract Work Hours and Safety Standards Act, as amended (40 USC 327-333): 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 provides for the payment of liquidated damages where violations occur. This act also addresses safe and healthy working conditions. This Act applies to the construction of housing (rehabilitated or new) that contains 12 or more HOME- assisted units. • Copeland (Anti-Kickback) Act (40 USC 276c): Governs the deductions from paychecks that are allowable. Makes it a criminal offense to induce anyone 251Page 1208 employed on a Federally assisted project to relinquish any compensation to which he/she is entitled, and requires all contractors to submit weekly payrolls and statements of compliance. • Fair Labor Standards Act of 1938, as amended (29 USC 201, et. seg.): 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. Contracting and Procurement Practices • Procurement: Huntington Beach will follow procurement standards at 24 CFR 85.36. For nonprofit organizations receiving HOME funds (other than CHDOs undertaking set-aside projects) the procurement requirements at 24 CFR Part 84 apply. • Conflict-of-interest: The HOME Program regulations require that Huntington Beach and its subrecipients (including CHDOs that are acting as subrecipients) comply with two different sets of conflict-of-interest provisions. The first set of provisions comes from 24 CFR Parts 84 and 85. The second, which applies only in cases not covered by 24 CFR Parts 84 and 85, is set forth in the HOME regulations at 24 CFR Part 92.356. • Debarred contractors: HOME funds may not be used to directly or indirectly employ, award contracts to or otherwise engage the services of any contractor or subrecipient during any period of debarment, suspension or placement of ineligibility status. Huntington Beach will check all contractors, subcontractors, lower-tier contractors and subrecipients against the Federal publication that lists debarred, suspended and ineligible contractors. Environmental Requirements For environmental review purposes, Huntington Beach is the "responsible entity" (RE) referred to in 24 CFR Part 58, Environmental Review Procedures for Entities Assuming HUD Environmental Responsibilities. In this capacity, Huntington Beach will be responsible for ensuring that the environmental review process is satisfied before non- exempt HOME funds are committed to specific project site. Once a proposal has been received by the City, the project must be in compliance with all federal environmental regulations. During the review period, neither an applicant nor any participant in the development process, including public or private non-profit or for- profit entities or any of their contractors may commit or expend any funds, including Local Funds (non-HUD funds), or undertake any activities having either an adverse environmental impact or limitation on the choice of reasonable alternative. 261Page 1209 Site and Neighborhood Standards Huntington Beach will promote great choice of housing opportunities for all housing provided through the HOME program. Specific rules are as follows: • HOME-provided housing must be suitable from the standpoint of facilitating and furthering full compliance with Title VI of the Civil Rights Act - 1964, the Fair Housing Act and Executive Order 11063. • The Final Rule requires only new construction rental projects to meet site and neighborhood standards from 24 CFR 983.6(b), which places limiting conditions on building in areas of "minority concentration" and that are 'racially mixed." • Huntington Beach will maintain records that document the results of the site and neighborhood standards review. Lead-Based Paint • Title X of the 1992 Housing and Community Development Act (24 CFR Part 35): Huntington Beach will comply with Title X of the 1992 Housing and Community Development Act (24 CFR Part 35) for all units in a project assisted with HOME funds. Subparts of 24 CFR Part 35 that apply to HOME assisted housing include: ✓ Subpart A: Disclosure ✓ Subpart B: General Requirements and Definitions ✓ Subpart J: Rehabilitation ✓ Subpart K: Acquisition, Leasing, Support Services, and Operations ✓ Subpart M: Tenant-Based Rental Assistance ✓ Subpart R: Methods and Standards for Lead-Based Paint Hazard Evaluation and Reduction Relocation • Uniform Relocation Act: HOME projects involving rehabilitation, conversion or demolition may be subject to the provisions of the Uniform Relocation Act, 271Page 1210 Identity of Interest Transactions Identity of interest refers to situations where the owner, developer or project sponsor control or own the services to be provided in a project, including, but not limited to the general contractor, subcontractor, property manager or other service provider. A declaration of subcontractors or suppliers for which there is an identity of interest through joint ownership with the owner or developer must be declared in the application for funding to City. Failure to declare an identity of interest situation may deem a project ineligible. Market Assessment All HOME assistance project applications must include a market study prepared in a manner consistent with these underwriting guidelines. Market studies must be less than three months old at the time of application for HOME assistance. The City of Huntington Beach reserves the right to request an updated market study, if required. Proposed rent levels must be supported by the applicant's market study and be within regulatory limits. Applicants may choose to use the Market Assessment form provided in Attachment A, or may use their own template. At a minimum, the market study should demonstrate the following: • All units, including any market rate units as well as any units with income/rent restrictions imposed by other programs such as Low-Income Housing Tax Credits (LIHTC), the Low- and Moderate-Income Housing Asset Fund, or the City's Affordable Housing Trust Fund must demonstrate viability within the primary market area taking into account any known rent concessions being offered by competing properties. • Achievable occupancy rates, based on a comparison of comparable properties in the primary market area, must be at or above 95% (physical occupancy). • Capture and absorption rates must be realistic and achievable. For projects not meeting these standards, the City, in its sole discretion, may also consider the following: • For projects targeting special needs populations (e.g., homeless households, domestic violence victims, veterans, or other specific subpopulations), the City may accept higher capture rates if data from the local Continuum of Care and/or service providers specializing in the targeted populations (e.g., VA service centers) suggests an adequate pipeline of eligible renters exists and will be consistently referred to the development. • For existing projects being rehabilitated, the City will consider the recent operating history of the project in terms of actual rents charged/received, eligibility of in-place 281Page 1211 tenants, and the like for evidence that the development's projections are supported by actual performance. Assessing Developer Capacity In addition to assessing a project's financial stability and gauging the minimum HOME subsidy (discussed later in these Guidelines) to ensure a project's feasibility, the City is also to assess an entity's financial ability to develop and operate a project. The City is to only fund housing projects in which the developer has demonstrated development experience. The City will review a developer's capacity in light of the developer's operational capacity, development history, and financial soundness. Current Operational Capacity The developer is to provide documentation demonstrating paid staff has sufficient knowledge, skills and development experience to complete the proposed affordable housing project. The City will determine if the use of volunteers and board members or consultants are the basis for the determination of development capacity. In requiring paid employees, the City will not prohibit a developer from employing an individual who is an independent contractor and using that contractor's experience as the basis for the demonstrated capacity determination. Developer is to complete and submit the Developer Capacity and Qualifications Questionnaire in Attachment B. The City will also review the capacity of the development team including, but not limited to, the general contractor, architect, engineer, market analyst, management company, accountant, attorney, and any other specialized professionals or consultants, as applicable. As a whole, the development team should have the skills and expertise necessary to successfully complete and operate the development. Insomuch as possible, the development team should have worked successfully on other projects in the past. That is, while a developer may identify new development team members from project to project, an entirely new team may present added risk. In no case, may any owner/developer/applicant or any member of the development team be a suspended, debarred, or otherwise excluded party. Development History The developer is to provide documentation about prior development experience for comparable projects. Relevant developments would have to do with projects of similar size, scope and level of complexity as the proposed project. Developer must complete the Development History Table in Attachment C. Financial Capacity 291Page 1212 Developers must also demonstrate the financial capacity to support the proposed project both during construction and lease-up as well during ongoing operations. This includes not just that the applicant has sufficient financial resources, but that it has adequate financial systems in place to appropriately manage project funding, accurately account for all project costs, and provide reliable reporting to the City and other project funders. At minimum, and as applicable, the City will review audited financial statements, contingent liabilities, interim financial statements, and individual personal financial statements to ensure that: • The primary development entity's most recent audit demonstrates compliance with Generally Accepted Accounting Principles (GAAP) and does not express material weaknesses in the entity's system of internal controls or financial management systems; and • Financial ratios and trending are acceptable. Identity of Interest Relationships & Costs Applicants must disclose all identity of interest relationships/contracts and/or costs involved in a transaction, including during the development period and following completion of the project. The City reserves the right to review any such costs further to ensure they are reasonable and consistent with the costs expected from arms-length relationships. An Identity of Interest (whether or not such term is capitalized) is any relationship based on family ties or financial interests between or among two or more entities involved in a project-related transaction which reasonably could give rise to a presumption that the entities may not operate at arms-length. The City will take a broad approach to defining identities of interest and expects all applicants to err on the side of disclosure. That is, if there is any question about whether an identity of interest may exist, the relationship should be disclosed and explained to the City. Beyond this general definition, an identity of interest relationship will be deemed to exist if: 1 . An entity, or any owner of any direct or indirect ownership interest in such entity, or any family member of any such owner is also an owner, through a direct or indirect ownership interest, or an officer, director, stockholder, partner, trustee, manager, or member of the counterparty; or 2. Any officer, director, stockholder, partner, trustee, manager, member, principal staff, contract employee or consultant of an entity, or any family member of thereof, is an owner, through any direct or indirect ownership interest, or an officer, director, stockholder, partner, trustee, manager or member of the counterparty. 301Page 1213 For purposes of this definition, family member means the spouse, parents or stepparents, children or stepchildren, grandparents or step-grandparents, grandchildren or step- grandchildren, aunts, uncles, parents-in-law, and siblings-in-law (or their children or stepchildren). It also includes any other similar relationship established by operation of law, including but limited not to guardianship, adoption, foster parents, domestic partnerships, and the like. Project Risk As noted in the Introduction, the City views underwriting as more than just the financial review of a project. However, a review of the underlying financial assumptions and project risk is still a critical and core part of underwriting. In reviewing projects and as a public funder, the City of Huntington Beach must balance two potentially competing perspectives. Projects must be viable, that is, they must have sufficient allowances for all costs to maximize the chances the project can meet or exceed its financial projections and thereby succeed in the marketplace. In otherwords, the project must represent a safe investment. However, taken to an extreme, a safe or overly conservative projection can also result in a project that is over-subsidized and risks providing excessive returns to the owner/developer. As a steward of very limited HOME funding for affordable housing, the City also must ensure that costs are reasonable, they represent a "good deal' to the public, and returns to the owner/developer are fair but not excessive. In seeking to balance these perspectives, the City will evaluate the development proforma provided by the developer to determine whether the development costs are necessary and reasonable using the attached HUD HOME Underwriting and Financial Analysis Template tables (Attachment D: HUD HOME Underwriting and Financial Analysis Template Tables) or comparable information. In general, for projects requesting LIHTC, HOME funds, or other City-related housing funds (e.g., Housing Trust Fund), the financial underwriting will follow HUD and CTCAC standards. In the event that a project contains both HUD and CTCAC funding, the financial underwriting will comply with CTCAC standards. In evaluating the financial analysis tables, the City has established the following review factors and principals. Development Costs In general, the City will review the entire project budget to confirm all costs are reasonable and the budget is sufficient to complete and sustain the project. All line items, whether or 311Page 1214 not paid directly with HOME funding, must be necessary and reasonable. The City will consider the cost of both specific line items as well as the total development cost on a per unit and per square foot basis, comparing costs to other projects from the City's portfolio. Selected Development Cost Items • Acquisition: Acquisition costs must be supported by an independent third-party appraisa13 prepared by a state-licensed appraiser. The purchase price must be at or below the as-is market value of the property. In the event an applicant has previously purchased land prior to submitting a development application to the City, the project budget may only reflect the lesser of the actual purchase price or the current as-is market value. Standard closing costs from the acquisition may be included; acquisition reimbursement isgoverned by HOME regulations. Applicants who purchased property prior to submitting an application to the City, or following environmental releases under NEPA but prior to closing, may not charge or include financing costs associated with interim financing, whether from third-party or related lenders. • Collateral Evaluation: For all projects, whether new construction or rehabilitation, the loan to cost and loan to value ratios must be appropriate and acceptable to the City. • City Soft Costs: The development budget for each project must include an allowance for the City's internal project-related soft costs as specified in these policies. Similar to lender due diligence or lender legal costs, the inclusion of soft costs allows the City to recoup its staff and overhead costs directly related to carrying out the project as permitted by 24 CFR 92.206(d)(6). These costs will be included in the HOME assistance and will be drawn directly from HUD by the City rather than via payment requests from the project owner. • Construction Interest: Any budgeted line item for construction interest must be supported by developer-prepared cash flow projections, modeling the actual expenditure of development costs and the anticipated pay-in of equity, HOME assistance, and other construction period sources. For projection purposes, only 3 Appraisals should be prepared for and addressed to the City of Huntington Beach, Community Development Department. Appraisals, at a minimum, should include the following values: (a) for rehabilitation projects: as-is, after- rehabilitation cost approach, and after-rehabilitation income approach: (b) for new construction projects: land value, after-construction cost approach based on plans and specifications,and after-construction income approach based on the project's projections.The City's thorough review of an appraisal includes determination of appropriate Loan to Value and Loan to Cost limits. 321Page 1215 interest from the date of initial closing through the end of the month in which the building(s) are placed in service (i.e., approved for occupancy) may be included as construction interest. Additional interest following that date and prior to the conversion to (or closing on) permanent debt must be separately itemized and modeled. In most cases, this should be included in the lease up reserve noted in the Reserves Section. • Contractor Fees: Contractor fees are limited as a percentage of net construction costs as further identified below. Net construction costs exclude the contractor fees, any budgeted contingency, if applicable, and (even if otherwise included in the construction contract) permits and builder's risk insurance. ✓ Contractor Profit: 3% of direct construction costs ✓ General Requirements/General Conditions: 6% of net construction costs. General requirements include on-site supervision, temporary or construction signs, field office expenses, temporary sheds and toilets, temporary utilities, equipment rental, clean-up costs, rubbish removal, watchmen's wages, material inspection and tests, all of the builder's insurance (except builder's risk), temporary walkways, temporary fences, and other similar expenses. ✓ Contractor Overhead: 3% of direct construction costs. With prior approval of the City, contractor fees may vary from the limits above provided that the gross contractor fees do not exceed 12% of net construction costs. • Contingencies: Applicants should include a contingency (inclusive of hard and soft costs) related to the amount of risk involved with the project. The contingency will be measured as a percentage of hard costs(including the construction contract plus any separate contracts for off-site work but excluding contractorfees). ✓ New construction projects should include a contingency of 5% to 10% of hard costs. ✓ Acquisition/rehabilitation projects, including adaptive reuse projects, should include a contingency of up to 10% of hard costs; the City may consider a higher contingency based on thesize and complexity of the rehabilitation or adaptive reuse. The City may consider higher contingencies based on identified risk factors such as the known need for environmental remediation or poor subsurface soils. • Developer Fees: Developer fees are intended to compensate a developer for the time and effort of assembling a project, overseeing the development team, and 331Page 1216 carrying a project to fruition. Developer fees are also intended to compensate for the risk inherent in the development process, including that not every potential project proves viable and that developers must necessarily advance funds for their own operating costs and various third-party predevelopment costs prior to closing (or in some cases for projects that never proceed). Therefore, the City allows the inclusion of developer fees as follows: ✓ For projects requesting HOME funds and LIHTC: The LIHTC Developer Fee Schedule will be used (http://www.treasurer.ca.gov/ctac/) ✓ For projects requesting HOME funds and no LIHTC: Developer's fees for properties that have not been occupied as residential rental housing at any time during the year preceding the date of the option, purchase contract, or deed for the subject property, which is furnished with the initial application with respect to site control: Identity of Interest Does Not Exist Identity of Interest Does Exist The Developer's Fee included in Property Costs The Developer's Fee included in Property Costs and Adjusted Basis must be less than or equal to and Adjusted Basis must be less than or equal to 15% of Adjusted Basis the lesser of 15% of Adjusted Basis" or 19% of Adjusted Basis" minus Builder's Profit. Developer's fees for properties that have been occupied as residential rental housing at any time during the year preceding the date of the option, purchase contract, or deed for the subject property, which is furnished with the initial application with respect to site control: Identity of Interest Does Not Exist I Identify of Interest Does Exist Acquisition The Developer's Fee included in the Property The Developer's Fee included in the Property Costs and Adjusted Basis must be less than or Costs and Adjusted Basis must be less than or equal to 10% of Acquisition Adjusted Basis". equal to 10% of Acquisition Ad usted Basis". Substantial Rehabilitation The Developer's Fee included in the Property The Developer's Fee included in the Property Costs and Adjusted Basis must be less than or Costs and Adjusted Basis must be less than or equal to 13%of Substantial Rehabilitation Adjusted equal to the lesser of 13% of Substantial Basis". Rehabilitation Adjusted Basis" or 16% of Substantial Rehabilitation Adjusted Basis" minus Builder's Profit. "Adjusted Basis, which by definition, excludes land and any other costs which are not capitalized and depreciated, andwhich, for the purposes of the Developer's Fee formulas provided above also excludes property costs in excess of the City property cost limits, and the Developer's Fee itself. The maximum Developer's Fee is further limited to the amount of Developer's Fee that is actually paid, orotherwise earned or recognized as income, from one unrelated individual, entity, or both to another individual, entity, or both as compensation for the work, costs and risks associated with the developmentof 341Page 1217 a property. The equations used to determine the maximum amount of Developer's Fee apply to the total of the amounts listed in the application for Developer's Fee, and to any separately listed Consultant's Fees or other costs relating to the development work and costs associated with the development of a property. Additional Developer Fee information: "Double dipping" the Developer's Fee is not permitted. For projects requesting multiple sources from the City (e.g., LIHTC and HOME assistance), the combined Developer Fee must be within the developer fee schedule, as noted herein. => The developer fee schedule, as noted herein, provides a calculation for the maximum allowable developer fee. The maximum allowable developer is not a guaranteed amount. During underwriting, the City will determine an appropriate and acceptable developer fee. Reserves: Capitalized reserves to facilitate the initial start-up and to protect the ongoing viability of the project will include the following: ✓ Deficit Reserve: The City anticipates that in most cases, developments with predicted deficits during the affordability period would not be funded. However, in the event a development's long-term operating proforma projects actual cash deficits during the affordability period, an operating deficit reserve must be included in the development budget in an amount sufficient, taking into account any interest on reserve balances, to fully fund all predicted deficits through the affordability period. ✓ Lease-Up Reserve: A lease-up reserve intended to cover initial operating deficits following the completion of construction but prior to breakeven operations may be included. Any such reserve must be based on lease-up projections/cash-flow modeling and the lease-up (or absorption) period identified in the project's market study. In evaluating the appropriateness of any lease-up reserve, the City will consider whether the development budget includes specific line items for other start-up expenses that otherwise are typically part of the ongoing operating budget for a development. This may include budgets for marketing, working capital, etc. ✓ Operating Reserve: If required by the City, an operating reserve in an amount acceptable to theCity, anticipated to be six (6) months of underwritten operating expenses, reserve deposits, andamortizing debt service, must be included in the development budget. The operating reserve is intended as an unexpected "rainy day" fund and will only be accessible after a project has achieved 35IPage 1218 stabilized occupancy. ✓ Replacement Reserve: A capitalized replacement reserve may be included in the development budget. The capitalized replacement reserve should be funded at (i) an amount that realistically covers the cost of replacing covered items; and (ii) for rehabilitation projects, the amount determined by a capital needs assessment approved by the City. An expensed replacement reserve, as outlined in the Operating Costs section, must be included in the development budget. ✓ Preservation Reserve: Following the completion of construction, at a minimum and if required by the City, project owner shall make annual deposits and/or annual contributions of 50% of surplus cash to a preservation reserve. ✓ Other: The City may consider other specialized reserves as appropriate based on unique featuresof the project and/or requirements of other funding sources. These may include special security reserves, supportive service reserves, or transition reserves for projects with expiring project- based rental assistance contracts, etc. Operating Revenues The City will review an applicant's projection of operating revenues to ensure they are reasonable and achievable both initially and throughout the affordability period. In evaluating operating revenues, the City will take into account the (i) project-specific market study; (ii) actual operating performance from other comparable projects including those from the applicant's existing portfolio of real-estate owned; and/or (iii) data available from comparable projects in the City's portfolio. For purposes of the long-term operating proforma, operating revenue projections cannot be increased by more than 2% per year. Operating expenses projections cannot be increased bymore than 3% per year. The City reserves the right to stress proposals for underwriting purposes to assess the impact of lower inflationary increases, such as modeling the impact of only 1% rent increases for the first three to five years of a project's affordability period. • Rents: All rents should be supported by the market study and within regulatory limits. • Non-Rental Revenue: Non-rental revenue must be fully explained and conservatively estimated. In general, no more than $60 per-unit, per-year may be budgeted in "other revenue" including that from tenant fees (such as fees for late payment of rent, nonsufficient funds, laundromat fees, pet fees, interest on operating account balances, etc.). Exceptions may be considered by the City based on the operating history of an acquisition/rehabilitation project, normalized operations, or other comparable properties in the same market area. 361Page 1219 Vacancy Total economic vacancy includes physical vacancy (a unit is unrented), bad debt (a unit is occupied but the tenant is not paying rent), concessions (a unit has been leased for less than the budgeted rent), and loss to lease (a pre-existing lease is less than the most recently approved annual rent but will be adjusted upward at renewal). In all cases, based on the market study or other data available to the City, the City reserves the right to require higher vacancy projections. This may include higher vacancy rates for small developments (e.g., less than 20 units) where standard percentage assumptions about vacancy may not be appropriate. Minimum allowances for vacancy must include: • 5% for projects where all units are supported by a project-based rental assistance contract with aterm equal to or in excess of the affordability period (e.g., project- based Section 8); or • 7% for all other projects. Operating Costs The City will review an applicant's projection of operating expenses to ensure they are reasonable and adequate to sustain ongoing operations of the project throughout the affordability period. In evaluating a proposed operating budget, the City will compare the project's costs to (i) actual operating expenses of comparable projects in the applicant's existing portfolio of real-estate owned (insomuch as possible, comparable projects will be in the same vicinity and operated by the same management company); and/or (ii) actual operating expenses of other comparable projects in the City's portfolio. For purposes of the long-term operating proforma, operating expenses, including reserve deposits, will be inflated at no less than 3% per year. The City reserves the right to stress proposals for underwriting purposes to assess the impact of higher operating cost factors, such as modeling the impact of higher inflation rates in general for specific items of cost (for example, assessing the impact of high rates of increase for insurance or development paid utility costs). Selected Items of Operating Cost • City Compliance Monitoring Fee: Pursuant to 24 CFR §92.214(b)(1)(i), the City may assess an annual Compliance Monitoring fee. The operating budget for each project must include an allowance for the City's Compliance Monitoring Fee as negotiated between the City and the developer. 371 Page 1220 • Property Management Fees: A realistic property management fee should be included. In the event an excessive management fee is proposed, the City will lower it. • Property Taxes: Applicants must provide detailed explanations of property tax projections and, as applicable, provide documentation that any anticipated partial or full exemptions or payments in lieu of taxes (PILT) have been approved by the appropriate tax assessor. The City, at its option, may require confirmation from the tax assessor of the applicant's projection. • Replacement Reserve Deposits: Unless otherwise approved by the City, the operating budget must include minimum replacement reserve deposits of: ✓ New Construction: $300 per-unit, per-year ✓ Rehabilitation: The greater of (i) $350 per-unit, per-year; or (ii) a higher amount established by aCapital Needs Assessment (CNA) approved by the City. Note: The City will reserve the right within a project's transactional documents to require periodic Capital Needs Assessments (CNA's) for all projects and to adjust ongoing replacement reserve deposits based on the results of the CNA and other factors to ensure that the replacement reserve is sufficient to address all anticipated needs for the project's affordability period or the term of the City loan, whichever is longer. Items Payable only from Surplus Cash Certain costs, sometimes identified by project owners as operating costs cannot be included in the operating budget and will only be payable from surplus cash (aka cash flow). These include: • Incentive Management Fees payable in addition to the allowable management fees noted above,whether paid to related party or independent third-party management fees. • Asset Management Fees payable to any investor, general or limited partner, or member of theownership entity. • Deferred Developer Fees • Operating Deficit Loan Payments made to any related party including any investor, 381Page 1221 general or limited partner, or members of the ownership entity. • Other payments to investors, general or limited partners, or members of the ownership entity, however characterized, including but not limited to negative adjustors, yield maintenance fees, etc. Ongoing Economic Viability The City will review the ongoing economic viability of all projects, taking into account long- term projections of revenues and expenses. Projects must demonstrate they can be expected to remain viablefor at least the affordability period, taking into account trending assumptions noted above, as well as any other changes in operating revenues or expenses that can reasonably be anticipated based on other information available to the City or other project funders. In particular, the City will review the debt coverage ratio and operating margin as outlined below. • Debt Coverage Ratio: Projects must demonstrate a minimum debt coverage ratio (DCR) (DCR is Net Operating Income divided byamortizing debt service) of 1 .0 through the affordability period. • Operating Margin: In addition to considering the DCR, the City will review the operating margin (surplus cash divided by total operating expenses and amortizing debt service). The operating margin must remain at an achievable and realistic amount. Other Funding Sources Prior to committing HOME funds, all other funding sources necessary for a project must be identified, committed in writing, and consistent with both the City's underwriting requirements and the affordability restrictions of the HOME program. In general, developers must make all reasonable efforts to maximize the availability of other funding sources, including conventional mortgage debt and tax credit equity (as applicable), within commercially available and reasonable terms. Additionally, restrictions or limitations imposed by other funding sources cannot (i) conflict with any applicable HOME program requirements; and (ii) in the discretion of the City, create undue risk to the City. Senior Mortgage Debt Any amortizing mortgage debt that will be senior to the City's HOME loan must: • Provide fixed rate financing. 391Page 1222 • Have a term equal to or in excess of the HOME affordability period. The affordability period will generally be 15 years beyond the date of project completion for HOME rehabilitation projects, 20 years for HOME new construction projects, and a minimum of 55 years for all LMI Housing Asset or Housing Trust Funds projects. In practice, the date of project completion will not be the same as placed in service date for tax purposes, but for most projects will occur prior to permanent loan conversion following property stabilization. Insomuch as possible, the first mortgage should have the longest amortization period available but cannot balloon prior to the expiration of the affordability period; and • As applicable, allow the HOME covenant running with the land (i.e. the deed restrictions imposing the HOME affordability requirements) to be recorded senior toall other financing documents such that the HOME covenant is not extinguished in the case of foreclosure by a senior lender. Tax Credit Equity Projections of tax credit equity must be documented by letters of intent or other similar offers to participate in the transaction by the proposed tax credit investor. Prior to committing HOME funds, the applicant must provide the proposed limited partnership agreement or operating agreement, as applicable, documenting the terms of the equity investment, including the pay-in schedule. The City will review proposed equity pricing and pay-in schedule against information from other projects in the region to assess whether the pricing and terms are reasonable. Deferred Developer Fee It is common for projects to include deferred developer fees as a financing source. The City will generally require that: • Projections of surplus cash available (after any cash-flow contingent payment due the City) be sufficient to repay the deferred fee within 15 years (notwithstanding other waterfall provisions inthe partnership or operating agreement, the City will assume that all surplus cash distributions will be credited against the developer fee); • Following the initial application to the City, the level of deferred developer fee will remain fixed(in nominal dollar terms) in the event city underwriting identifies cost reductions, increases in other funding sources, or other changes that result in a net reduction of the gap to be filled with HOME assistance; and • Any net savings (or increased funding sources including but not limited to upward adjusters for tax credit equity) at project completion and cost certification will be used in equal parts to reduce the deferred developer fee and the City's permanent 40IPage 1223 HOME loan. In the event savings are sufficient to eliminate the deferred fee in this manner, any remaining net savings will be used to further reduce the HOME loan, or in the sole discretion of the City,to increase the operating reserve or preservation reserve. Exceptions and Interpretation The City of Huntington Beach has developed these guidelines for several reasons. Not only are they required by HUD as partof the City's role in awarding HOME assistance, but more generally they are intended to provide clarityto applicants on what the City expects and transparency about the rules of the road. However, the City recognizes that it cannot pre-emptively identify every possible special circumstance that may warrant an exception to its general requirements, nor can it identify every possible loophole whereby a creative presentation of costs or other projections might undermine the general need to balance viability and reasonable risk to the City and public benefit. Consequently, the City reserves the right to waive specific underwriting criteria for specific projects when, in its judgment, the purposes of the HOME program can be better achieved without taking on undue risk. When waiving any given requirement, the City may impose additional special conditions or business terms that are not otherwise typically applied to all projects. For administrative ease, the City may also align its underwriting standards with those required by other public funders involved in a given transaction, particularly if those standards are more restrictive or conservative than the City's. However, the City retains the right, in its sole discretion, to decide whether to accept alternative standards. The City also reserves the right to reject any element of a transaction that, despite not being specifically prohibited, was not anticipated by these guidelines or such an element or business term otherwise creates unacceptable risks, excessive returns to the owner/developer, or otherwise undermines the public purposes of the HOME program. Insomuch as is reasonable, the City will update and clarify these guidelines over time to account for exceptions, waivers, or additional restrictions it imposes. 411Page 1224 SECTION IV. SUBSIDY LAYERING GUIDELINES HOME regulations at 24 CFR 92.250(b) requires the City as a participating jurisdiction to conduct a "subsidy layering" review for projects receiving multiple governmental assistance sources of funds. The HOME Final Rule states that: Before committing funds to a project, the participating jurisdiction must evaluate the project in accordance with guidelines that it has adopted for this purpose and will not invest any more HOME funds, in combination with other governmental assistance, than is necessary to provide affordable housing. This subsidy layering review includes these key components when determining and documenting the appropriate level of HOME assistance. • Maximum per unit subsidy limits. Pursuant to Section 92.250, the maximum amount of HOME funds that may be invested on a per-unit basis in affordable housing may never exceed the per unit dollar limits for elevator-type projects that apply to the area in which the housing is located. In this regard, HOME regulations stipulate at 24 CFR 92.250 (a) that the maximum per unit subsidy limits are controlled by the following limitation: The total amount of HOME funds and ADDI funds that a participating jurisdiction may invest on a per-unit basis in affordable housing may not exceed the per-unit dollar limitations established under section 221(d) (3) (ii) of the National Housing Act (12 U.S.C. 17151(d) (3) (ii)) for elevator-type projects that apply to the area in which the housing is located. These limits are available from the Multifamily Division in the HUD Field Office. If the participating jurisdiction's per-unit subsidy amount has already been increased to 210% as permitted under section 221(d)(3)(ii) of the National Housing Act, upon request to the Field Office, HUD will allow the per-unit subsidy amount to be increased on a program-wide basis to an amount, up to 240% of the original per unit limits. When determining the subsidy, HOME funds may only pay the actual costs of HOME-assisted housing, using either a prorating cost allocation approach or by a unit-by-unit standard cost allocation approach. If the units in a project are comparable (e.g.. size, features, and number of bedrooms), then the actual costs can be pro-rated to the total HOME-eligible development costs. This approach allows HOME funds to pay the pro-rated share of the HOME-assisted units. When units are not comparable, the City must allocate the HOME costs on a standard unit-by-unit basis, charging only actual costs to the HOME Program. ° • Cost allocation (§92.205(d)): The HOME Program permits the funding of one or more units in a project, including mixed-income and mixed-use properties. Cost allocation requirements, more fully described below, affect project underwriting by See CPD Notice 16-15. 'Allocating eligible costs and identifying HOME-assisted units in multi-unit HOME rental and homeownership development projects.' 421Page 1225 dictating either the maximum amount of HOME investment the City may provide, or the minimum required number of units that must be designated as HOME- assisted. • Written agreements: A written agreement must be executed prior to disbursing HOME funds to any entity, including developers and owners of rental housing (24 CFR 92.504). The written agreement must incorporate the project and financing terms that result from the underwriting process. • Commitment: HOME monies cannot commit funds to a project until all necessary financing is secured, the underwriting and subsidy layering has been completed, HOME funds must be committed within 24 months of the grant award and construction can be expected to begin within 12 months (24 CFR 92.2). • HOME deadlines: The HOME program imposes several additional regulatory deadlines that may affect the underwriting process, including: ✓ Project completion: A project must complete the projects within four years of the date funds are committed to the project. This necessitates that the underwriting analysis and project plan must ensure that funds are available and construction is scheduled within this timeframe (Sections 92.205(e)(2) and 92.2). ✓ Lease-up: The City must carefully assess the market study and the project plan to ensure that there is documentation of sufficient demand for the proposed units. The City must report status and marketing efforts to HUD, if a HOME-assisted unit is not occupied by an eligible tenant within six months following project completion. If the HOME-assisted unit remains unoccupied at 18 months after the project completion date, the City will be required to repay the HOME funds (24 CFR 92.252) ✓ Property standards: Underwriting must ensure that all costs are eligible and the resulting housing units will meet the established property standards at project completion (24 CFR 92.251(b)(1 )(ix)). ✓ Rents/utility allowance: The underwriting process must cap HOME-assisted units at HUD published rent limits and demonstrate that the project will be financially viable on this basis (24 CFR 92.252(a)). ✓ Affordability period: Underwriting must ensure the Project remains financially viable and the assisted units meet the property standards and affordability requirements for not less than the applicable affordability period, beginning at project completion (§92.252(e), §92.254(a)(4)). 431Page 1226 Cost Allocation Process The City of Huntington Beach may use one of three methods for conducting the required cost allocation: the Standard Method, the Proration Method, and the Hybrid Method. The Standard Method of cost allocation can be used in all projects, whether or not the units are comparable in terms of size, quality, and amenities. Alternatively, the Proration Method and the Hybrid Method may only be used if the units are comparable. Regardless of the method used, the cost allocation process involves six basic steps. Step 1 - Determine unit comparability and select the cost allocation method. If the project contains units of the same basic size, configuration, and amenities—for example, all units are two-bedroom, two-bathroom units of 1 ,000 square feet with identical finishes—then the units are comparable. However, most projects contain a mix of unit configurations, sizes and types that vary at least by bedroom count. Even so, it may be that within unit types individual units are comparable to one another, despite minor variances in configuration. Therefore, the City will organize the units into a list of unit types that identifies and classifies groups of comparable units. The City will consider the following features of the units: • Configuration: It is not required that unit layout/configuration be exact. Small variations in space and layout are acceptable if the key features — number of bedrooms, bathrooms, and total rooms — are identical. • Size: Within each unit configuration, unit size can be considered comparable if the square footage is within a small variance of the average square footage of all such units. • Amenities and finishes: The City will compare the cost and quality of amenities, finishes, fixtures, and appliances. If the planned HOME-assisted units will have fewer or lower quality amenities or finishes than the unassisted units of the same unit type, then the units are not comparable. • Rents: Units with same configuration, size, amenities and finishes should have roughly the same market value. Once the City has determined whether the units are comparable, it will select the appropriate method of cost allocation. • The Standard Method- When HOME-assisted and non-assisted units in a project are incomparable, the City will base the HOME subsidy upon the actual costs for the HOME units. The City designates the HOME-assisted units, prepares a pro forma for the assisted units, and monitors each unit's costs. Common costs (e.g., roofing courtyard, manager's office) attributable to HOME-assisted units are determined by calculating the total square feet in HOME units as a percentage of 441Page 1227 the total square feet in the project. HOME funds can pay for that percentage of the common costs that can be attributed to the HOME portion of the project. • The Proration Method - When prorating costs, the minimum number of HOME units is equal to the ratio of the HOME assistance to the total eligible development costs (acquisition, development hard costs to construct or rehabilitate, project soft costs, and excluding relocation costs) multiplied by the total number of units in the project. This approach allows all project costs to be distributed among all sources of funds, provided that the HOME share does not exceed the maximum per unit subsidy limits under Section 221 (d) (3) of the National Housing Acts • The Hybrid Method - This is a variation on the Proration Method, so it is only permitted for projects with comparable units. The Hybrid Method allows the City to determine the cost of HOME-assisted units by prorating the HOME eligible development costs for each unit type. In following the Hybrid Method, the City will use a proposed number of HOME-assisted units to determine the cost of those HOME units. Step 2 - Select either the proposed amount of HOME investment or proposed number of HOME units from project underwriting. Cost allocation is based on the proposed amount of HOME investment and/or the proposed number of HOME-assisted units as determined through preliminary project underwriting. The City will perform a cost allocation using the proposed amount of HOME investment to determine the minimum required number of HOME-assisted units. Or, if the proposal specifies the number of HOME-assisted units that the project can support, then the City will perform a cost allocation to determine the maximum permissible amount of HOME investment. Step 3 — Calculate the estimated costs of the HOME units based on the preliminary budget. After determining the method of cost allocation and the proposed HOME investment or proposed HOME units, the next step is to calculate the Cost of HOME Units by following the steps for either the Standard, Proration, or Hybrid Method. Standard Method (see Attachment F: Step by Step Standard Method Process Chart & Example): 1 . Calculate the Base Project Cost: Subtract from the project's total development cost any ineligible costs, costs associated with unit-specific upgrades, and relocation costs associated with complying with the URA that will be paid for with HOME funds. See complete list of ineligible items in Attachment E: CPD Notice 15-11. s The published HOME subsidy limits under the Section 221 (d) (3) mortgage units for elevator projects may not be adjusted subsequent to initially funding a project. 451Page 1228 2. Calculate Base Cost per Square Foot: Divide the Base Project Cost by the gross residential square footage of the project to arrive at the Base Cost per Square Foot (Base Cost/Sq. Ft). 3. Calculate Individual Unit Cost: Multiply each HOME-assisted unit's square footage by the Base Cost/Sq. Ft. For example, if Unit 101 is 700 square feet, and the project's Base Cost/Sq. Ft. is $125, then the Individual Unit Cost of Unit 101 is $87,500. (700 sq. ft. x $125/sq. ft. _ $87,500) 4. Determine the Number of HOME-assisted Units: The City will perform the cost allocation using the proposed amount of HOME investment and will indicate a specific number of HOME-assisted units for each unit type. The City will ensure that there are enough HOME-assisted units so that the total of the Individual Unit Costs added together is equal to or exceeds the proposed amount of HOME investment. If the City has chosen to pay for relocation costs exclusively with HOME funds, then the sum of the Individual Unit Costs must be equal to or exceed the proposed HOME investment minus the relocation costs. If the City performs cost allocation using a proposed number of HOME-assisted units, then the City can skip this fourth step. 5. Calculate Cost of the HOME Units: Add the Individual Unit Costs of all HOME- assisted units to calculate the Subtotal Cost of HOME Units. If the City has chosen to pay for all relocation costs with HOME funds, then the relocation costs must be added back into the total at this point. The result is the Cost of the HOME Units. Proration Method (HOME investment known, solve for units) (see Attachment G: Step by Step Proration Method Process Chart & Examples): 1. Base Project Cost: Subtract from the project's total development cost any ineligible costs and relocation costs associated with complying with the URA that will be paid for exclusively with HOME funds. Follow the guidance under the Standard Method for calculating the Base Project Cost. However, unlike the Standard Method, with the Proration Method there is no need to review or exclude unit-specific upgrade costs because units are comparable. 2. Calculate Base Cost per Square Foot: Divide the Base Project Cost by the gross residential square footage of the project to arrive at the Base Cost per Square Foot (Base Cost/Sq. Ft). 3. Calculate the HOME Share Ratio (HOME investment known, solve for units): The HOME share ratio is the share of eligible project costs to be paid by HOME based on the share of HOME-assisted units. When the proposed HOME investment is known, the HOME share ratio is expressed as: 46iPage 1229 HOME Share Ratio = HOME Investment- URA Costs Assigned Exclusively to HOME Base Project Cost 4. Apply the HOME Share Ratio: Multiply the HOME share ratio by the number of units in each unit type. The result, which must be rounded up to the next whole number, is the minimum number for that unit type that must be HOME-assisted. For example, if the HOME share ratio is 13% and the 30-unit project has 10 comparable one-bedroom units and 20 comparable two-bedroom units: • 13% of the one-bedroom units is 1.3, which is rounded up to 2 HOME- assisted one-bedroom units; and 13% of the two-bedroom units are 2.6, so 3 two-bedroom units must be HOME-assisted. 5. Calculate Cost of the HOME Units: Multiply the Base Cost./Sq. Ft. by the average square footage of each unit type, and then multiply that number by the number of HOME-assisted units for that unit type. The result is the HOME Cost by Unit Type. For example, if there will be 2 one-bedroom HOME units, the average one- bedroom unit is 700 sq. ft., and the Base Cost/Sq. Ft. is $125 then the cost of those two HOME units is $175,000. (2 units x 700 sq. ft./unit x $125/sq. ft. _ $175,000) Sum the cost for each Unit Type to calculate the Subtotal Cost of HOME Units. Then add back any relocation costs that are being paid for exclusively with HOME funds. The result is the Cost of the HOME Units. Proration Method (number of units known, solve for amount of HOME investment) (see Attachment G: Step by Step Proration Method Process Chart & Examples): If the proposed number of HOME units is known, the City may use the Proration Method when all units are the same type or if the share of proposed HOME units within each unit type is identical as described in Step 1. 1. Base Project Cost: Subtract from the project's total development cost any ineligible costs and relocation costs of complying with the URA that will be paid for exclusively with HOME funds. Follow the guidance under the Standard Method for calculating the Base Project Cost. However, unlike the Standard Method, with the Proration Method there is no need to review or exclude unit-specific upgrade costs because the units are comparable. 2. Calculate the HOME Share Ratio (units known, solve for HOME investment): The HOME share ratio is the share of eligible project costs to be paid by HOME based on the share of HOME-assisted units. When the proposed number of HOME units is known, the HOME share ratio is expressed as: 471Page 1230 HOME Share Ratio = HOME Units / Total Units 3. Apply the HOME Share Ratio: Multiply the HOME share ratio by the Base Project Cost to determine the Subtotal Cost of HOME Units (this amount excludes any relocation costs paid for exclusively with HOME funds). 4. Calculate Cost of the HOME Units: Add back any relocation costs that are being paid for exclusively with HOME funds. The result is the Cost of the HOME Units. Hybrid Method (number of units known, solve for amount of HOME investment) (see Attachment H: Step by Step Hybrid Method Process Chart & Example): If the proposed number of HOME units is known, but the share of proposed HOME units within each unit type is not identical as described in Step 1 , then the City may use the Hybrid Method. 1. Base Project Cost: Subtract from the project's total development cost any ineligible costs and relocation costs of complying with the URA that will be paid for exclusively with HOME funds. Follow the guidance under the Standard Method for calculating the Base Project Cost. However, unlike the Standard Method, with the Proration Method there is no need to review or exclude unit-specific upgrade costs because the units are comparable. 2. Calculate Base Cost per Square Foot: Divide the Base Project Cost by the gross residential square footage of the project to arrive at the Base Cost per Square Foot (Base Cost/Sq. Ft). 3. Calculate the HOME Square Footage by Unit Type: For each unit type, multiply the average square footage by the number of HOME units in that unit type (to determine the HOME Square Footage by Unit Type. For example, if 2 one-bedroom/one-bath HOME units are proposed for a project and the average square footage of all of the one-bedroom/one-bath units is 700 square feet, then the HOME Square Footage for the one-bedroom/one-bath unit type is 1,400 sq. ft. (2 units x 700 sq. ft.=1400 sq. ft.). 4. Calculate the HOME Cost by Unit Type: For each unit type, multiply the HOME Square Footage by Unit Type by the Base Cost per Square Foot to determine the HOME Cost by Unit Type. 5. Calculate Cost of the HOME Units: Sum the HOME Cost by Unit Type for all unit types to determine the Subtotal Cost of HOME Units (this amount excludes any relocation costs paid for exclusively with HOME funds). Then add back any 481Page 1231 relocation costs that are being paid for exclusively with HOME funds. The result is the Cost of the HOME Units. Step 4 — Calculate the maximum subsidy limit. In addition to the required cost allocation, the HOME investment is also restricted by HOME maximum per-unit subsidy limits identified in the HOME regulations at §92.250(a). After calculating the Cost of the HOME Units in Step 3, the City will calculate the Maximum Project Subsidy based on the per-unit subsidy limits. The maximum per-unit subsidy limits vary based on the number of bedrooms in a unit. The City will contact the Los Angeles HUD Field Office to obtain the maximum per-unit subsidy limits in effect at the time of project commitment. To calculate the Maximum Project Subsidy, multiply the maximum per-unit subsidy limit for each unit type by the number of HOME-assisted units of that type. If the project has multiple unit types, sum the maximum subsidies for each unit type. The result is the Maximum Project Subsidy. Step 5 — Determine the maximum HOME investment. The Maximum HOME Investment allowed is the lesser of three amounts: (1) the funding gap as determined in the project's underwriting, (2) the Cost of HOME Units, or (3) the Maximum Project Subsidy. The City of Huntington Beach cannot invest more HOME funds in any project than as described below: • Funding Gap: The needed amount of HOME investment, determined during the City's required underwriting and subsidy layering review under §92.250(b). This is the amount necessary to produce affordable housing that is financially viable for the period of affordability. In most cases, this was the initial input for the cost allocation analysis identified in Step 2. • Cost of HOME Units: The eligible cost of the HOME units as required by §92.205(d)(1). This number is the result of either the Standard Method, Proration Method, or Hybrid Method in Step 3; or • Maximum Project Subsidy: The Maximum Project Subsidy is based on the maximum per-unit subsidy limits established under §92.250(a). This is the result of calculations in Step 4. Step 6 — Finalize the project underwriting based on HOME investment and the number and type of HOME units. At this point, the City can evaluate whether the amount of HOME assistance, or any other form of assistance, exceeds the amount the City feels is necessary to make the project work. The City must determine if the costs are reasonable, conclude if the assistance is 491Page 1232 warranted, and that the amount of HOME assistance needed will be used on program- eligible costs or activities. If the total amount of HOME assistance and other sources exceeds the amount determined necessary to make the project feasible and viable for at least the affordability period, the City will consider: • Reducing the amount of HOME assistance. • Increasing the number of HOME assisted units in the project or lowering the target income levels and rents to be charged; and/or • Imposing loan terms that bring the rate of return into line with standards. The City will consider denying HOME assistance if the developer is unwilling to make reasonable adjustments or to limit its return/costs in compliance with underwriting guidelines or if it appears that HOME funds are not needed to close a financing gap. While the City will identify the amount of subsidy needed through gap and other project analysis, the City will also determine that the amount of HOME assistance needed will be used on program-eligible costs or activities. 501Page 1233 SECTION V. DISCLAIMERS The City of Huntington Beach reserves the right to fund projects at a lower amount than requested, and the right to deny applications that are not consistent with the City's Consolidated Plan or Annual Action Plan goals and policy direction. The City is under no obligation to consider or fund any proposed project that does not demonstrate compliance with national objectives and eligible activities or local program requirements and does not assist in meeting the City's affordable housing policy goals and/or objectives. The City reserves the right to determine project eligibility and select the funding source to be used for any proposed project. Funding decisions will be based on City staffs initial evaluation of a variety of factors in a developer's proposal with final funding approval to be considered by the City Council. Factors include the following: 1. Operational and management capacity of the developer 2. Financial capacity 3. The project's potential for transformative impact on the residents and surrounding community 4. Repayment of funds borrowed from City (either HUD, Local Funds, tax credits) 5. Whether the request for funding is for a project that has been previously awarded City funds 6. Dedication of other sources of public and private investment 7. City will consider how the City programs can best maximize the effect of the funding The Affordable Housing Program Underwriting and Subsidy Layering Review Guidelines are not intended to address every circumstance that may be encountered in the development process, nor are they a verbatim restatement of all regulatory requirements. Omission of any federal or local regulatory requirements does not relieve the City or the applicant from their respective obligations that may be required by the funding source. Once a loan agreement has been executed between the City and applicant for the purpose of developing rental housing according to these guidelines, in case of any conflict between the program guidelines and the loan agreement, the terms of the loan agreement shall prevail. The City program guideline changes as a result of federal, state or local regulatory or legal requirements may be implemented immediately by the Community Development Director. 511Page 1234 Revision of the program guidelines usually occurs annually; however, additional revisions and waivers of any provisions described in these guidelines can be initiated by the Community Development Director at any time as long as such revisions or waivers are not in direct conflict with HUD requirements. While stakeholder outreach is the goal of City, such revisions may occur without notice and are applicable to all pending and future development proposals. Developer applicants are responsible for complying with any changes. 521Page 1235 ATTACHMENT A: Sample Market Assessment 1236 MARKET ASSESSMENT Project Name: Developer: Date: Please provide these minimum components as a Market Assessment for the proposed project. Minimum Components A brief description of the market area, including a map delineating the market area from which potential renters are expected to come. • Definitions of the Primary (PMA) and Secondary Market Areas (SMA) (including a radial map delineating the areas) and an explanation of the basis for the boundaries of the PMA and SMA. • A scaled for distance map of the suggested market area that identifies the proposed development, the comparable rental developments and location amenities, including the closest transportation linkages, shopping and schools. • A description of the site characteristics including its size, shape, general topography and vegetation and proximity to adverse conditions. • Photographs of the site and neighborhood. For non-senior housing projects, an analysis is provided about the employment and economy of the primary market area to give an understanding of the overall economic health of the PMA. The analysis should include for instance, employment growth in comparison to the larger geographic area, the availability of affordable housing for employees of businesses and industries that draw from the PMA and commuting patterns for workers. Demographic information provided for both the PMA and the SMA. • Population Trends: ✓ Total Population. ✓ Population by age group. ✓ Number of elderly and non-elderly. • Household Trends: ✓ Total number of households. ✓ Household by tenure; that is, the number of owner and renter households by elderly and non-elderly. ✓ Average household size. ✓ Renter households by number of persons in the household. 1237 • Income Trends: Estimate of household incomes by household size and by tenure. Elderly proposals should reflect the income distribution of elderly households only. The market study is to define and justify the Absorption Rate for the project, which considers such factors as the overall estimate of new household growth, the available supply of competitive units, observed trends in absorption of comparable units, and the availability of subsidies and rent specials. Market Rate Comparables: • The market study is to identify what market rate developments are currently available to serve the target market in the PMA, and provide sufficient information on existing developments • The analysis is to include information on all rental developments that can be considered currently available to serve the target population in the PMA as well as planned rental developments in the PMA that could also serve the target population and are expected to be placed in service during the two years. To be completed by Huntington Beach staff. Project Market Assessment Yes No Conclusions What is the demand for rental ❑ ❑ housing? Has a need for the type and number of housing units been convincingly demonstrated? Does the market assessment clarify that multifamily housing supply and demand is balanced, there is a need for additional housing or that the market is overbuilt? Will developer be able to lease-up ❑ ❑ the planned rental units within the timeframe specified in the project pro-forma? The market study adequately assesses potential unit adsorption. 1238 Will the infusion of a HOME subsidy make the project competitive? How is the market area defined? ❑ ❑ What are the advantages and ❑ ❑ disadvantages regarding the site's location? What do key indicators tell us ❑ ❑ about, for example, timing/lease- up, likely tenants and whether vacancy rates are increasing, stable, or declining? Will the development adversely ❑ ❑ impact existing affordable housing developments? I find that the Developer and/or City has adequately examined neighborhood market conditions and, based on this assessment, there is adequate need for the project. Staff Reviewer: Signature Date 1239 ATTACHMENT B: Developer Capacity and Qualification Questionnaire 1240 DEVELOPER CAPACITY AND QUALIFICATIONS What role, if any, will the developer or its affiliate have in the nonprofit organization ship Own Develop Sponsor entity? (Check one) ❑ ❑ ❑ Name of Developer Mailing Address Contact Phone No. Title Fax No. TIN/EIN E-Mail Type of Organization (check one) ❑ Individual ❑ General Partnership ❑ Corporation ❑ Limited Partnership ❑ Limited Liability Corporation Number of completed projects in which developer(s) or its affiliate is the managing general partner/managing member. Comments: Of this number, how many completed projects of comparable size and type of development (viz., rental or nonprofit organization ship, new construction or acquisition/rehabilitation). Comments: Number of projects currently under construction. 1241 Comments: Can the developer(s) obtain 100% payment and performance bonds for constructing the subject development? NOTE: If developer is involved in more than one project recommended for Yes ❑ No ❑ funding, it must be able to obtain bonds for all projects. Comments: Has the developer(s) (or any of its principals and affiliates) ever had a limited denial of participation from HUD or been debarred, suspended or voluntarily excluded from participation in any federal Yes ❑ No ❑ or state program? If yes, explain. Comments: Has your organization had any audit findings and, if so, are any still open and unresolved? Yes ❑ No ❑ Comments: The City is to evaluate the developer's capacity to complete a rental housing project as evidence by the developer's knowledge, skills, and experience necessary to undertake eligible projects of the same size, scope and level of complexity as the activities for which HOME funds may later be reserved or committed. Check all that apply: Project Related Activities Capacity? Staff Name &Title Conduct market/needs analyses ❑ and conceptual project design Choose and negotiate purchase ❑ of a suitable site Select and work with architects ❑ and other consultants Understand and comply with ❑ entitlement process, e.g., 1242 planning, zoning and building requirements Create a development pro forma ❑ and operating budget Establish rents or sales prices ❑ Identify financing sources and ❑ apply for financing Comply with other lender ❑ requirements Deal with community concerns ❑ Comply with CEQA and NEPA ❑ requirements Choose and work with ❑ construction contractors Manage the construction ❑ process Choose and work with a ❑ management agent Successfully market a project ❑ Comply with HOME program requirements, construction ❑ closeout and long-term obligations 1243 Percent of Type Full Time Time spent of or Part on HOME Staff` Employee Name Title Time" Projects 1 W-2 employee, 2 1099 independent contractor, 3 Future W-2 employee, 4 Future 1099 independent contractor, 5 consultant, 6 future consultant, 7 other * 'Staff Development Experience • Full time or part time employment — Provide a payroll report or a W-4 or a W-2. • Contracted staff— Provide a contract for employment and a W-9 and 1099 (at the end of a year). • Consultant - Provide a consultant contract Resumes Attach resumes of all key staff that have experience relevant to project development and management. 1244 ATTACHMENT C: Development History 1245 Development History (Comparable Projects) 1 2 3 4 Type of Type of Size of Financing and Date of Name and Address of Project Project Construction Project Subsidies Completion 1 - Type of project: rental, homeownership, commercial, or mixed use. 2 - Type of construction: substantial rehab, moderate rehabilitation, new construction, or financial restructuring. 3 - Number of affordable units & the number of unrestricted units. 4 - Type of financing or subsidy and the lender or agency involved 1246 ATTACHMENT D: HUD HOME Underwriting and Financial Analysis Template Tables 1247 HOME Investment Partnerships Program ("HOME") Multi-Family Underwriting Template U.S. Department of Housing and Urban Development Office of Community Planning and Development Project Information _ Project Name: Address: Developer: Date of Analysis: City: State: Development Type: NOTES ON KEY HOME REQUIREMENTS AND THIS TEMPLATE This HOME Multi Family Underwriting Template is Intended to assist In planning multi-family affordable rental housing, not single-family affordable housing. Typical users will be Participating Jurisdiction(PI) underwriters,Community Housing Development Organization(CHDO)underwriters,and underwriters for other developers of HOME- assisted affordable rental housing projects. This template supports normal underwriting tasks such as review of development costs and review of operating revenues and expenses,but also includes features that help the user determine the appropriate amount of HOME assistance as well s the Annecric,atp mhoand m of HOME-a -feel 1 nits Users may find It helpful to review the HOME Underwriting and Subsidy layering Notice,CPO IS- 11. This template does not cover all elements of the Notice requirements. The U.S. Department of Housing and Urban Development and ICE International assume no liability for the use,functionality,or content of this template. This template is for draft calculations only. All inputs,outcomes,and calculations should be Independently verified. This template does not automatically cap rents at HOME levels. Each user must do this,as applicable,on the Rents and Income tab. This template does not include cost allocation which must be completed separately by the PJ to allocate costs and designate the number of HOME units. Users should refer to the guidance provided in CPD Notice 16-15 and utilize the HOME cost allocation tool available at the following links: hops://www.hudexchange,info/resources/documents/Notice-CPD-16-15-Allocating- E log I ble-Costs-and-Identifying-HOME-assisted-Units-in-Multi-Unit-HOME-Rental-and- Homeownership-Development-Projects.pdf,and hops.//Www.hudexchange.info/resource/5190/home-cost-allocation-tool/for guidance on allocating costs and determinino maximum investment and minimum HOME units." HOME PJs must conduct a subsidy layering analysis prior to commitment of HOME funds. S407 Ce Dackground are data err, , f40,700 Cei15 wllh white background are formulas Do not change formulas(many of them track to otter formulas) Q Nut,boxes like this contain guidance(place the mouse pointer over the question mark) Ir r..e Q,Calll-10 S tn0 Sm.a.. • "I -41. ll Irad n,,ralP t.P 7f„r^ ler,19 curl the!a" The Role of HOME Funds in a Development Project In rental housing development projects, HOME funds typically serve as"gap financing" -funds provided when the contributions of private lenders and other funding resources are not sufficient to cover the cost of developing and leasing-up the project. PI and non-profit staff are often called upon to determine the appropriate amount of HOME funds required to"fill the gap"in order to make the project feasible,while ensuring the project is not over subsidizedand that HOME funds are used only for HOME-eligible expenses. While HOME funds are an indispensable resource for many affordable housing projects,they come with requirements that can also influence a project's finances. To ensure that a portion of the housing units created when HOME funds are invested will remain available to low-income and very low-income households, rents for these units are limited for a specified period to affordable levels appropriate to the project geographic area. These HOME rent limits may impact the amount of income generated by the property,which in turn can influence the amount and availability of private and other public funding resources for the project. '2CE HOME Investment Partnerships Program ("HOME") Multi-Family Underwriting Template U.S, Department of Housing and Urban Development Office of Community Planning and Development Multi-Family Underwriting Underwriting is the process of determining the financial feasibility and the terms of a project. The objective of underwriting Is to determine whether the ongoing revenues from a property will be sufficient to cover construction and operating costs to ensure that property will be sustainable for the specific period of affordability. There is no one"right"way to do underwriting. However, across all approaches,there are some common elements: • Review of costs for constructing the project in order to determine both reasonableness and eligibility. • Review of the sources of financing for the project. • Review the projected profitability and financial health of the project. Introduction to this Template The HOME Multi-Family Underwriting Template is composed of several interrelated Excel tabs, which are accessible by tabs found at the bottom of the Excel screen. Open the Template In Excel and look along the bottom of the screen. You will see a set of tabs reading: •Intro •Requirements •Rents and Income •Development Costs •Repl Reserve •cons(schedule •tIHTC Basis •Operating Expenses •First Mortgage Sizing •Sources and Uses •pro Forma Assumptions •Operating Pro Forma •Administrative Record •Summary Microsoft Excel and This Template This template is provided in Excel 2007 format. Two versions are available. One is macro-enabled (an.xlsm file); this version includes radio buttons that will allow the user to hide and reveal columns and rows used for supporting calculations,and helpful features such as automatically providing the appropriate number of columns on the Operating Pro-Forma tab. If you are using the.xlsm format,be sure to always save the file in.xlsm format(if you save it in.xlsa format,you will lose all of the macros). In the.xlsm format, if you click on a radio button labeled'Hide Columns or Hide Rows',the template will hide the rows Or columns that hold supporting calculations. A radio button labeled 'Reveal columns or'Reveal rows will reveal(un-hide)the supporting calculations. For users whose information technology policies do not allow enabled macros,this template is also available in a non-macro-enabled format(an,xlsx file). This template also contains two forms of protection. The first is worksheet(tab)protection (formula cells are lacked to prevent accidental damage to formulas). The second is workbook protection(which prevents accidental deletion of tabs). However, if you need to make custom modifications to this template, you can do so by entering the password(the password is a single Upon completing this tab,proceed to the Requirements tab. I[49 Requirements HOME and Other Affordable Housing Enter data in green cells only Requirements The HOME Program, as well as other affordable housing programs(e.g., Low-Income Housing Tax Credits or the Community Development Block Grant), are designed to provide effective resources for housing development, while ensuring that use of public funds results in increased availability of affordable housing. To meet the latter objective, the HOME Program and other affordable housing programs impose requirements and restrictions, such as maximum subsidies, maximum rents for units reserved for affordable housing,and affordability periods during which units must remain affordable. Note that some mdividual units may be subsidized using both HOME funds and funds from another affordable housing program. For the purposes of this Template, consider those units to be HOME-assisted units. Use this worksheet to enter(or change)the following: Area Median Incomes,rents, utility allowances,the HOME period of affordability, and HOME per-unit investment limits. Project Name - : 0 Units 4 Person AMI at 100%AMI © HOME Investment Limits HOME Per Una Limit 0 Bec., HOME per Una Limo 1 BMroom HOME per Unit LMK-2 Bedroom. HOME per Una UmK 0 Bedroom HOME per Jnd UmK 4 aearoom HOME per uok Ui n-5 Bearporn s0 same as 4BR limit; HOME Rent Limits(monthly, Including rent and tenant-paid utilities) Low 0 BitLow 1 SR Low 2 OR Low 3 BR Low 4 BR Low 5 OR Hi hO SR High 1 SIR High 2 SR High 3 SR High 4 OR High S OR © HOME Utility Allowances(monthly) 0 OR 1 BR 2 BR 3 SR 4 BR 5 OR Q HOME Affordability Period HOME-Eligible Rental Activity(select one) Average Per-Unit HOME Subsidy(select one) See the Note below HOME Required Affordability Period(in years) 20 (Advisory information only.) BP)'s Required Affordability Period(in years) (Must be at least as long as HOME requirement.) PI's Affordability Period in Compliance with HOME Program' En[ MiSsin Enter PTs Affordability Period Note.the Template, a.tes unperwmten HOME oHay of 50 per unit. See tM Sourcn arM Uses arm Remy anp Income tab, Printed 10/8/2021 1250 Requirements HOME and Other Affordable Housing Enter data In green cells only Requirements 7 Market Rents(the rents that these units could achieve without rent or income restrictions) Market Rents monthl rent onl n n n -paid utilities L O Bit 1 BR 2 BR 3 BR 4 BR FAA" On the Rents and Income tab, for each unit type you will be able to select the most restrictive rent limit(for example, High HOME or Market or Project Based Section 8)and a set of utility allowances. You will also be able to underwrite,for each unit type, less than 100%of the applicable rent limit(for example, you can underwrite 95%of the High HOME rent Instead of 100%if you choose). Below are several sections in which you can enter the gross rents(rent plus tenant-paid utilities)and utility allowances for affordable housing programs other than HOME. Examples might include Low Income Housing Tax Credit(LIHTC)units restricted at 600/0 AMI rents, LIHTC units restncted at 50%AMI rents, CDBG units, and project-based Section 8 units. If multiple programs use the same ur.I t,, a'h wane, for ,a,nle LIHTC 50' and 50%and 400/a AMI),you might choose to enter the utility >Ilnm>nrac nnly nnro,n rhn mrt�-. Gross Rents and UtllRy Allowances for Other Affordable Housing Program 01 Othe� A`is+Cable Housing Program Name of AMI A%`1 v^a d•r•ap af..r• Gross Rent Limits Poi monthl 0 BR 1 BR 2 BR 3 OR 4 BR 5 BR Utilit Allowances for (monthly) C BR 1 BR 2 BR 3 BR 4 BR 5 BR Gross Rents and Utility Allowances for Other Affordable Housing Program s2 Other Affordable Ho,.. �eI LIHTC 60 AM! 60% of AMI pf AMI Gross Rent Limits for LIHTC 60 AMI monthl 0 BR 1 BR 2 OR 3 BR /8R 5 BR Utility,Allowances for LIHTC 60 AMI (monthly) 0 BR 1 OR 2 BR 3 BR 4 BR 5 6R Gross Rents and Utility Allowances for Other Affordable Housing Program a3 Other Affordable Housing Program Name of AMI If AMI rents are applicable) Gross Rent Limits for month O BR 1 BR 2 BR 3 BR 4 BR 5 BR Utility-Allowances for (monthly) BR 2 BR 3 OR 4 BR r 0 BR 1 5 6R Printed 10/B202' 1251 HOME and Other Affordable Housing Enter data in green cells only Requirements Gross Rents and Utility Allowances for Other Affordable Housing Program Ito Other Affordable Hoos.ry Program Name of AMl VI AMI rents are applicable) Gross Rent Limits for monthly O BR 1 BR 2 OR 3 OR 4 OR 5 OR U[Ili Allowances/or monthl 0 BR 1 6R 2 OR 3 8R 4 BR 5 SR Gross Rents and Utility Allowances for Other Affordable Housing Program sS Other Affordable Housing Program Name r —1 Gross Rent Limits formonthl 0 OR 1 OR 2 OR 3 OR 4BR S BR Utillt I Allowances for monthl O BR 1 BR 2 BR 1 3 SR 4 OR 5 BR Gross Rents and Utility Allowances for Other Affordable Housing Program 96 Other Affordable Housing Program Name Cr 25%1 of AMI(d AMI rents are applicable) Gross Rent Limits for Other 2 monthl 0 OR 1 BR 2BR 3 OR 4 BR 5BR UtilityAllowances for OMer 2 monthly) O SR 1 8R 2BR 3BR 4 SR S BR Gross Rents and Utility Allowances for Other Affordable Housing Program A7 Other Affordable Housing Program Name _ of AMI(d AMI rents are applicable) Gross Rent Llmfts for monthl 0 OR 1 BR 2 OR 3 OR 4 aR � 5 OR� Utill Allowances for monthl 0 BR 1 8R 2 BR 3 OR 4 OR S OR Gross Rents and UtilityAllowances far Other Affordable Housing Program #8 � 7 Other Affordable Housing Program Nam, Requirements HOME and Other Affordable Housing Enter data in green cells only Requirements Gross Rent Limits for (monthly 0 OR 1 BR 2 SR 3 BR 4 SR 5 6R Utility Allowances for (monthly) 0 BR 1 BR 2 BR 3 OR 4 OR 5 OR Upon completing this tab, proceed to the Rents and Income tab. O BR I BR 2 BR 3 SR 4 BR S BR of AMI 20% 50 $0 $0 so so $0 20% 25% s0 $0 $0 $0 s0 so 25% 30% 50 $0 $0 $0 s0 so 30% 35% so $0 s0 s0 $0 s0 35% 40% s0 $0 $0 s0 s0 50 40% 45% s0 $o $0 50 So so 45% 50% $0 $0 $0 s0 50 s0 50% 55% s0 $0 $0 so So 50 55% 60% so $0 $0 s0 so So 60% 80% s0 s0 s0 $0 $o $0 80% 100% So s0 s0 s0 $0 $o 100% 120% so so s0 $0 $0 $0 120% WA NIA Printed 10/8l2021 1253 Rents and Income Enter data in green cells only v'•:.+...," r:•,^ r . -.,. -f,ow ena Hiyn HUNIL units Vie mix of,.HTC aria CJEG a,,ol marhel rate units and square to each unit type NW use tree fronesheet to select Ne maAmvn fares that ell be ugerwnnen for each unit type.and to select wlity allowances Also use this A to Omer any other for enuet suctf as mmrneraa revenue or arrset late fees IMomubon for nu 1w M units,Low HOME units.High HOME units.LIHTC units units.mallet rate ants square footage urfdervrrinen rants underwritten utility albwarvoes and underwnnM oMx revenue vell tarty forward from Ihs wwkshe rest of the template Square Gross Rent, Monthly Net Rent After Unit T Underwritten Number of Utilities, Yore Rent Level Units Footage per per unit, w per unit, Per Unit per month Allo Iowanance month Total O 0 NA s0 Annual Gross Potential Rent 0 Rent Loss Vacan ♦ Bad Debt♦ Concessions Rue Lsaa Ratm HOME Market Rate Other (AS%N WR) Units Units Affordable Rent Loss year 1(Lease- U Sta blitzed Rent Loss Rate (affer Year 1) Other Revenue Laundry and Other per month per month per month per month per month per month Total Other Revenue per month Pnnlea 1082021 1254 Di,."menl Cann Development Costs Enter data in green cells only Project Name - : 0 Units Cost Per Cost Per Cott Amount Unit Square Comment Foot A I i n La'c need data need data E. need data 1 need data need data I need data I Ske work Coss loot Included in construction cwtrsct) m III m C ea,a,ceneed data need data Ste A m I v n need data need Oata Off-Siteh re lot HOME h l l _ m v nn n need data need data n r n E,i(HOME L - n neeo 04tt, n t _ c'st•�c o^EQ. ^.em :nor-H ME Chtli I m r need data 1 need d to need data to need data I need a _ ii Ste Work ln , r tl n r n need data n to _ n n re (HOME elo,tse wtion) need data need data r m n no^ -OvF P ?on need data need data N w Con n r data need data Rehabiltat,or need data need data General Reawnnents rei:O data need data m rt�d data Budder Profit n data PerforManCe BondPrern,ij, n data r"d data Construction n In n n ee data need data reed data need data n dt t Architectural and Enqineen nq Fees _ need data need data _ need data need data eed t to need data need data _ Other Owner Costs to . Attgr4e4 m,IWneed data Owne,q F fin ntco •n a i Other Owner Oroan,zational ExMnvmneed data Mark n data Sur,ey need data need data I Appr,iW1 FM n data ata nvir nm n need data need data - N meet need data new data need data neecl data Tap Fm and Jr,caa F need data data Buildingrmr n FM need data need data Fm n data need data q ,B n q .t n ❑ t tt CW Cortnq,%, need Catoncro data need data need data need data darn .Interim Ftnmci - - - rn n"(1 data Meer_ - - -- - need data neec "r" n w o need data need CSJ Loan m m n F need data need data n r n n n F data a h r n r n F neat data n nrccO data need data rVe ardR (for the conscct,on l n need data need data nced data need data ---- - _ need data need a Permanent Financing need data need Jtan Fran,mg F need dataneed data rl Fee need data need data FM need data need data �rdiro (for rranent firarcin,j n I�Salce Esm., need data need data n"O data n data need data need data uevelnpors Fee need data need data .Imbal ProjectnZ Reserves dat d to t need data need data need data I need data I - Pnntad 10,&2]21 1255 I need(MU I now date I P ,QS=, 1256 ProlAdminl r i n and Management Costs r•et < Ma�ayument need data need dad need 0 to need Data fir_— n ✓r-s w Er_ - need d2t need Oata --- - need d ta Ineed a to need data I need data need dataneed data Other Develo meet Cos ricto data eed data _ d to need data need data need data I need data -- need data I need data need data I need data Total Development Costs fO Construction Interest CalS ry ton F w Amht Mnn ( n r O n IMorths Constn .n After Completion Av n m Ime,est on fl Oi dur,no constr,,Ct.on 0 n nr m Om funds, n n nn 0 Construction intenest after m l n 0 Totill 0 Motu: ConstruRlon Contingency is 0% General Requirement,is 0%of Construction costs Budder's Overhead is 0%of construction costs Budder Profit is 0%of cons"alon costs Developers Fee is 0%of total development cost(excluding developer fee and initial reserves) Later m this template,you will calculate the maximum allowable HOME investment at,the minimum required number of HOME-assisted units. These calculations take place on the Cost Allocation tab. For these calculations,you deed to have Odentlfied any development costs that are not HOME-elg,b a Ust [he Oneiig�ble costs here(these costs can be funded from other Sources Of funds,but cannot be funded by HOME). Costs that Are Not HOME-Eligible S :e ;roo' p. m Ayw,e Fly%. n ME c -•able' 0 m i l Olberalung Reserve inchH M - li l 0 initial Service Reserve n HOME li I 0 Initiai kepiai,,l R HOME b l I 0 Other M - her HOME-Inelloble Otter HOME-Inellialble Other HOME-Inellotble Cost 1 so Ted Mon fOMEEVp Cod 0 Upon completing this tab, proceed to the Repl Reserve tab Pnnled 10B2021 1257 Replacement Reserve Enter data in green cells only Project Name - : 0 Units For HOME rental projects r .. . y rehabilitation, Section 92.250(b)(1)of the HOME Final Rule requires the P)to estimate Me long term capital needs of the pio)ect and to determine a replacement reserve funding approach Mat will allow 100%of estimated long term capital needs--over the HOME period of affordablbty to be funded from the replacement reserve. If the prefect has 26 total units or more,the PJ must require a capital needs assessment Theo requirements most be included In the PJ's underwriting standards for rental projects involving rehati huanon There is n0 similar requirement for new construction rental g0)eC[5,but R would be a best prMtice for P)s to include a similar requirement in the P)'s un lerwnting standards for new construction rental projects This work5heet will allow the user to determine an annual replacement reserve deposit Mat will satisfy,the 92.250(b) requirement, plus a higher annual reserve deposit that will be adequate over Me long term(Including the years after completion or The HOME Period of affordability). l CON '* lIIL Driveways dyi and Pdlkinq AledS(resurfacing) Drivewa s and Parkin Areas(totaling) Other Site 1 Other Site 2 Other Site) Windows a rl r W Its t EKterlor Walls 2 Exterior Painting her Eaten r 1 Other Evterior 2 Roofing Gutters Interior FI nn Til< Imenor Fl nn Kitchen Cabinets and Bath vanities Counter Tops and Sinks(kitchens and Baths) Refrigerators Ranges Exterior Doors Elevators Unit Heatmei System Unit Cooling System Unit Hot Water Heating System Other Interior I Other Interior 2 other Interior 3 Comment on capital needs estimate Reserve Deposit Adequate During the HOME Period of Affordability(Out likely to be inadequate[hereafter): For a typical rental project. an annual replacement reserve deposit in the amount described below would satisfy the 92.250(b) requirement so long as(t)the annual deposit is increased each year for inflation and(2)Mere are no high-cost systems Mat will require replacement early in the HOME period of affordability. If either condition(1)or condition(2)cannot be satisfied, the PJ will nrred to make a more sophisticated computation,using a capital needs assessment or using a spreadsheet that is similar to Those used in prepanng capital needs assessments. Similarly, a more sophisticated computation should be used if the PJ intends to utilize a large Initial reserve deposit and a smaller annual deposit P)s should rote Mat minimum compliance with the 92.250(b)requirement will rwt generally result in a replacement reserve that will be adequately funded over Me Iona t0®: see the additional discussion in the next section. Over Me HOME affordability period' e DIV/01 Reserve Deposit Adequate Over The long Term: For a typical rental poJeet,an annual replacement reserve deposit in the amount described below would be adequate to fund all long term capital needs so long as(1)the annual deposit is Increased each year for inflation and(2)Mere are no high-cost systems that will require replacement early in the life of the Project. I/either condition(1)or condition(2)cannot be satisfied,the PJ will need to make a more sophisticated computation, using a capital needs assessment or using a spreadsheet that is similar to those used in preparing capital needs 1—1..Innn 1n— eDIV/01 Upon completing this tab,proceed to the Corisf Schedule tab 1258 Construction Schedule Enter data In green cells only Preiea Name- :O Units the HOME Final Rule deMltlon of rommRment 51ROnes that II a Project IIW Wes rehabilitation or new rMSIruRIM,e construction sUedule Is rectulrM at or Wore the time W hie commitment. Monoraily,mnArvRlm must as sNMulte to dart within wit,months aw.b Me commnRRnt date,and mnssructbn must be sCaduleel to b[cnmplR[d within four yeeR anb the ca mmitmmt data tar I lwa Intended HOME Commitmeru Dole 0 ad •thwal wro mu c.rwe hanwaee. w .mv/p 2. a re•I owdo ee. Imual Gov.Date w •orvni •prvroi ep/w/a n.nuction to Dal .brv/o 4 ne F.I./o, sadmmurawl w.w , II 1 ra •pIV'M ler".W.Om 1-proex, II ;3 •pivlm pwMx re,1-1 !a First auudmc e.ccmml pale so all coral acted.ea•.no. Ulf aeudled Comdetim Date nmie.ement of Sustammn Occucem, 0 Closina of pbmandet Finance. 0 vyol viol wvyoi •aee.acy of he Development Budget and an d ne donee Increases to E.penerce cot a ;,mat m[s to see tin of onay m starting The micron n unanuelprese ncelau.m deMapmenl cost;lo Ne Otent et. Ntr zponsa has to seek additional funcand iv,apo The derreliner I"(w ven--I k e Inor lready den defabout the development pional epout avao of farb contlnpeaf allowances, and about N!developer lee(wNtn--If rw(ahClCy d[IMed--can proNde additional ability IO ellsvb coil m0laL5). The risk of Nit ngeases is hamt sigmnGznt easy in the de+eloprtRnl proema. Once the plans and spbinceuons are Cpnplette Me mere Is a him n.[d Im.Nnvrv.l.contra.,mars.,a lower ns:nl mereases In Ddig ass. However,than v mere i;a pertormence pond,ME,Is wn the m l of hard mil Inc:eaaer due to charge orders. THE msk of Increaser In=Nsn depends. how many of the sort NRs are sugEa to firm nwhirprea,contracts.Constructlon cen.Interest cents will run over budge whenever cOrmtrualon takes longer than anbo.ted. Even If More Is no mmtrvRlon loan or bnMge loan,additgnal mnssrul.. time typically results In IncaeeYd sett cars m some sr.. Beier-n we•woat.as lie.atww e•de,Mope, p.ax.u! =iv ,wd.n..wr....-1—cow war ,m reae—cm e.we a•.H.u Consmaetion to Start Within Twelve Months. The HOME Final Rule cellmnon of cummrtm.t specner that construction must Be Sanduled to steed within twelve months after the date Or the written agreement obwlen Me of and the project seal E,mn.re indicates that the Orlimary re' of delay in YaRlrg mnSINRi.are(1)mantlOpated Mereal in development NR requiring InvmYE spufces N NMs;(2)unanticipated dif'imlhl In fnaluln,ram HOME source Of hinds;and(3)unannocated M.freut<s am,i.mg,bindle,pbmin aN pNer.titlements. Wwi 1—onew Nn tea.0..M N Pe(H rC corn•cep or(a ce OvHcl.a rot he IWiry kiwrL•1 n H.operaaa E.pnm up 12✓9 LIHTC B. LIHTC Basis Enter data in green cells only Project Name - : 0 Units This tab is useful for projects that will have Low Income Housing Tax Credits(LIHTCs). The purpose of this tab is to make a rough estimate of LIHTC equity,which you can use to compare to the developer's estimate. If the rough estimate here is materially different from the developer's estimate, you should ask the developer for an explanation. To enter(or change)the number of LIHTC units, use column P of the Rents and Income tab. LIHTC Eligible Basis Acquisition Construction Estimated LIHTC Eligible Basis From 'Development Costs' page $0 s0 Less any amounts not eligible as a result of a qrant or other ineli ible source of funds (enter as negative amounts): Ineligible LIHTC Eligible basis $0 $0 Applicable Fraction by Units: 0.00% Total LIHTC Units - (from the Rents and Income tab) Total Units - (from the Rents and Income tab) Applicable Fraction by Square Feet: 0.000/0 Square feet of total LIHTC Units - (from the Rents and Income tab) Square feet of total Units - (from the Rents and Income tab) Use This Applicable Fraction: 0.000/0 lowest of the two methods LIHTC Calculation Acquisition Construction Eligible Basis $0 $0 Applicable Fraction $0 s0 0.00% Basis Boost Factor $0 $OO Credit Factor 0 0 Annual Credits $0 $0 LIHTC Equity Price(per dollar) 50.000 0 Estimated LIHTC Equity s0 $0 Total Estimated LIHTC Equity $0 Pro osed LIHTC Ed ui $0 Upon completing this tab,proceed to the Opemnng Expenses tab. Pnnlod 1alal2p21 1260 t ..t ml F 4+n.xea Operating Expenses Enter data in teas oral Project Name - : 0 Units Eapma AMBLIM Coat Nonthly cost Per Unit Par Cammeit Year Administrative/Management Expenses Management Fee $Q so Management Administrative Payhbl Costs jQ O Renting/Advertising/Marketing Expenses j0 0 Legal Fees 0 0 accounting/Audit Fees 0 so Telephone 0 $0 Once Supplies 0 0 PI Momtonng Fee(d any) 0 0 0 N 0 40 Operations and Maintenance Expenses Security 0 $0 Operabons and Ma-ntenance Payroll Costs 0 s0 Repairs Supplies 0 s0 Repairs Contracts O $0 Elevator(r any) $0 0 Other MechannAi Egwpmen[ 0 0 interior Painting 0 $0 Extentnnahn $0 0 lawn and Landscape $0 0 Garbage Removal $Q 0 snow Removal 0 SiO Resident$ervke Cost p0 Q so 0 0 UUlitlas Paid by the Property Electricity 0 0 Natural Gas,Oil,Other Fuel O $0 Sewer and Water so so 0 0 Tax"/Insurance/Other Expenses Real Estate Taxes $0 $0 Payroll Taxes 10 Other Taxes and Licenses 0 0 Property Insurance $0 0 Workers Compensation Insurance $0 Health Insurance/Other Employee Benehts 0 0 0 0 O TOTAL OPERATING EXPENSES so I0 0 Reserve for Replacement Oepcs.[ I so I $Q TOTAL EXPENSES PLUS RESERVE 0 1O $O SU\TOTAL ADMINISTRAT7VEEXPENSE$ NiSO 0 SU\TOTAI O\M EXPENSES 0 0 O SUBTOTAL OWNER PAID UTILITIES 0 so $O SU{TOTAL TAXES/INSURANCE/OTMER so so $O TOTAL OPERATING EXPENSES 0 s0 0 Upon co,noehng this tab, proceed to the First Mortgage Strang tab Prmiad 10 a 2I21 1261 First Mortgage Sizing and Enter data In green cells only Junior Loan Characteristics Project Name - : 0 Units Net Operating Income Summary Other Market Annual HOME Units Affordable Units Gross Potential Rents $0 $0 $0 $0 Rent Loss $0 $0 $0 $0 Other Income $0 Effective Gross Income $0 Total Operating Expenses $0 Replacement Reserve Deposit $0 Net Operating Income (NOI) $0 Ca italization Rate and Value Ca italization Rate Calculated Market Value $0 (NOI.Capitalization Rate) Lender's Appraised Value for the Pro'ect Value of Project at Sale" (Year of sale is year) If Value of Project at Sale Is left blank,the Template will use the Capitalization Rate to determine the Project's value when sold. in this Template! First Mortgage means a rived-rate,fixed-payment,sell-amortizing loan(without balloon payments). Amortizing Second Mortgage means a junior fined-rate,flied-payment,self-amortizing can(without balloon payments). Deferred Payment Loan means a ban Nat will receive no payments during its term. Custom Loan means any other type of loan(i.e.,with some payments but not fixed-payment/self-amortizing). First Mortgage Characteristics Minimum Debt Service Coverage Maximum Loan to Value Interest Rate 0.00000% Annual P+I as%of loan amount Mortgage Insurance Premium 0,00000% Annual MIP as%of loan amount Loan Term ears First M rt n r For each loon tied ,the Template asks'I.this can funded by the HOME program?'. The Template uses your answers to calculate the total amount of proposed HOME funding,recognizing that you may be planning multiple types of HOME funding(for example,a first mortgage loan with required monthly payments plus a soft second mortgage loan with payments limited to a store of cash now). Later,on the Sources and Uses tab,you will verify that the proposed total HOME funding does rot timed the project's funding gap. First Mortgage Loan Amount Maximum Loan Amount by LTV $0 (Lender's value x maximum LTV) Maximum Loan Amount by DSC 0 (NOI+DSC+(PI factor- HIP factor]) Calculated Maximum Loan Amount $0 (Lesser of the two limitations above) Lender's Proposed Loan Amount Is this loan funded by the HOME program? Calculated MOn[hl P+I+MIP Pa meet $0.00 (This total is sometimes referred to as the'debt service'payment) Debt Service Coverage(DSC)Is the ratio of Net Operating Income to the Ist mortgage debt service payment(P+I+MIP). If the ratio is below 1.0 It means that there Is mot enough NOI to cover the debt service payment,and the proposed project will not be viable unless the first mortgage debt service Payment can be reduced(for example,by utilizing more HOME funds so that the first mortgage loan amount can be reduced). The HOME underwriter will want to consider whether to require DSC that is higher than required by the first mortgage lender. In general,the higher the DSC,the less risk that the project will have negative cash flow because of a future revenue or expense Problem. However,a high DSC may indicate that the first mortgage loan amount can be Increased(without endangering the finances of the project)which would allow HOME funding to be decreased. Estimated Debt Service Coverage DSC Ratio 0.00 1262 First Mortgage Sizing and Enter data In green cells only Junior Loan Characteristics Project Name - : 0 Units First Mortgage Lender Origination and Finam:nq Fees Points Ori ination and Financing Fees of the loan amount Calculated Origination and Financing Fees $0 Amount entered on Development Costs tab 0 Characteristics of Amortizing Second Mortgage Loan Amortizing Second Mortgage Loan Amount Is this loan funded by the HOME program? Amortizing Second Mortgage Source Interest Rate Loan Term ears Calculated Monthly P+I Payment $0.00 Final year of Operatinq Pro Forma 0 (from Pro Forma Assumptions page) Characteristics of Deferred Payment Loan #1 Name of Deferred Pa ment Loan of l Loan Amount for Is this loan funded by the HOME program? Lenderfor Interest Rate for Loan Term(Maturity)for A deferred loan is one with do Payments due until maturity Characteristics of Deferred Payment Loan #2 Name of Deferred Payment Loan >2 Loan Amount for Is this loan funded by the HOME program? Lender for Interest Rate for Loan Term(Maturity)for A deferred loan is one with no payments due until maturity Characteristics of Custom Loan #1 Name of Custom Loan a 1 Loan Amount for Is this loan funded by the HOME program? Lender for Interest Rate for Loan Term(Maturity)for A custom loan has Payments prior to maturity but is not a normal fixed rate amortizing loan. Enter the annual payments for this loan directly on the Operating Pro Forma tab. Characteristics of Custom Loan #2 Name Of Custom Loan 42 Loan Amount Custom loan 1 Is this loan funded by the HOME ro ram? Custom Loan 1 Source Custom Loan i Interest Rate Custom Loan 1 year of Maturity A custom loan has payments prior to maturity but is not a normal fixed rate amortizing loan. Enter the annual payments for this loan directly on the Operating Pro Forma tab. Upon completing this tab,proceed to the Sources and Uses tab. 1263 sources and Uses Sources and Uses of Funds Enter data in green cells only Project Name - : 0 Units In this template, the underwriter enters all proposed Sources of Funds (including HOME) on this tab (other than those that were already entered on the First Mortgage Sizing tab). The Uses of Funds are repeated below (from the Development Costs tab). Then the template verifies whether the Sources and Uses are in balance; be sure that Sources and Uses are balanced before moving forward. If there are insufficient Sources, potential solutions include deferring a greater portion of the developer fee, increasing HOME funding, and obtaining increased funding from some other source. If there are excess Sources, the HOME underwriter should consider reducing the proposed HOME funding. P)s must perform cost allocation separately from this tool to verify that the proposed amount of HOME funding is within the allowable maximum HOME investment. Sources of Funds Amount HOME? Comment First Mortgage Loan (proposed amount $0 0 Amortizing Second Mortgage Loan $0 0 $0 0 $0 0 $0 0 $0 0 Deferred Developer Fee Developer Cash Investment Tax Credit Equity (proposed amount Total Sources of Funds s0 Total HOME Funding $O Developer Investment for Financial Analysis So (used in Operating Pro Forma for IRR, etc.) Uses of Funds Total Development Cost Amount Comment Acquisition Costs 0 Site Work Costs $0 Construction I Rehabilitation Costs S0 Architectural Engineering Costs 0 Other Owner Costs $0 Construction Interest $0 Other Interim Financing Costs $0 Permanent Financing Costs s0 Developer's Fee $0 Initial Project Reserves SO WPro"ec[ Mana ement Costs S0 Other Develo ment Costs so Total Uses of Funds 0 Subsidy layering gap (before HOME funding) $0 (Total Uses of Funds minus Total Sources of Funds other than HOME) Pnnted 10/82021 1264 Sources and Uses by Month Enter data m green cells only Project Name - : O Units ponce of Cmeuuc4sl U—"tent Laen Q ulnorp Alb compel. Development Costs(Uses of Funds) I Total t 11e.eA f +Ie11N a Uenuf• 11eMt1 a 11stAft s IMYk ACVw>glon Co so to w w w to to _ w +a so fo So fo fo so w f0 tc so so to to flto Work Costs(cot lneluJW/n construction C—&—t _ so i w to fo fo to to so Site Remedlapon to so w to w $o to so Improvementsto to w so so w w fo so so so to w w w Iw S'e'N"k:^ 'e dId I ron5t^ n c]^.•d- $0 to tP fo so w w w m '..., to so sa so tc so w so so w w so so w w fo _ to to so so se w w fo to so so so to so w s w $0 so so so to so so too s to to to $o w so too to w $o w to _ so $o w to fo $o so to fo $o w so to so w to .ATcbRectura.end Engmeennq Fees _ f0 s0 to so sa w w so fo fa i w so so so w w w w to to to so w so to w w to to w so to 01ner owner casts $o w w w to so w to to sa w to to so w w _ w w w w w w V w _ to w so fo so so s: so w so w w 1. w o w w t0 to so so w w to to so so w +o so w w Appra,sal F _ w w so w so w .0 +o E,,,,t,l SWde, w w so so so so w w CapitalNeeds Assessment _ +u w so to so w +o so w so w so so so .0 w IA2 F F _ so +0 to to So to sJ so §udding Perm Perrnits andF w so so so so so w so i F to to to ro so so to w sollc _ +o 1 fo 1 w So I so +o so w to so w w w 1 to sa w to so w to so to t0 In erlm fin anunQEosts(ertlu�nq_Inter - - w so to so w w to so so tc 40 so so w so to - - n F so so to so w w w to n F _ w to w w w so so w Other n n FM so w to w w w $o t0 lto�Costs f Issuame +0 so so w w w w to Title And R f r th n loacJ w It so so w w so I. so w so sa w so +o so w s0 w so w so so Cledit Report o w so w w w 40 so f, n G to so w 10 so so to to F sc to so so tc w so so Other r F 1- so w to w So s0 to 'f . +: so 1. so to w to w Lnn T . fc W 10 so f0 4o 40 sa w so so to so w so so tc to so so so to .0 to fc so so 10 to to so to Init,al Rent up R,ael-,e n M M li fa fo w 10 fo fo soW.22 r n R M toR N M L I fo to so to s0 w sor P I ^•P M M li so so so to t0 so so fc soto so w fo fo w so Ported 101t1Q011 1265 56U By Monm Pro ect Name - : 0 Units mamet,Q Y , s: sa w w w w w w w w so so w so FuMituM.fi n sa so 1 w w w 1 w so n n w w w 1 w 1 w so w so w w sU w w w w w w w I w w w so w o $o so so w w w a w so sa w w w 1 w 1 w to so w so w sa w w w w w w sc w w w w w w 1 0 1 so 1w w w w w TOM Devokomont Coats(TDCl Iw w w w w w w w TDC Excluding Construction Interest w w w w w w w w soieeea of funOs rwr /nnit�or� ssuwna IYwle] IYala] Mao♦ NMta sl��• fl M n [ so w Am so $o sc w w w so w w w w w so w w w so w w w o w w w w w w w w w w w so w w 0w w w w 10w w w w w sa so w w w u sY w so w w w w 10 to so w so w w w w to w w w w so w o so I so 0 1w1 w so w w Total Sources Betom Construction loan Iw w w w w w es w Construction loan Draw Needed Boom In w w w w w w w w w of , Tn� w w w w w w Plus Interest (ToW Interest at immedsate ncMt)l a wIto 1 w 1 w 1 go w 1 w 1 w 1 w 1w w w Constn¢tion,n[ertst estimate from[kvelopment Cous so Construction m[ertst estimate Fran EaaarleA Sources w U p tawm1 1266 Key Assumptions Enter data in green cells For Operating Pro Forma only Project Name - : 0 Units HOME Affordability Period DO years Go to the Requirements tab to adjust the HOME affordability period Switch HOME unit rents to market after: Dyears For units originally at HOME rents, the Operating Pro Forma uses HOME rents during this period, and market rents thereafter Other Affordable Housing Affordability Period Other Affordable Housing Affordability Period years Switch 'Other Affordable' unit rents to market after: years For units originally at LIHTC/ Other Affordable rents, the Operating Pro Forma uses restricted rents during this period, and marke Inflation / Trending Assumptions Total Rent increase / rent trending assumptions: HOME-assisted units required Market Rate units required Other affordable units required Other income trending assumption required Operating Expense Increase per Year required Len th of Pro Forma Years to Sale* years required Years to Sale is used by the Template to determine the final year of the Pro-Forma. Use one of the two radio buttons below, to set the number of years in the Operating Pro Forma tab. Debt Service Coverage Ratio In year 2 (first stabilized year) 100.00 In year 5 100.00 In year 10 100.00 In year 15 100.00 In year 20 100.00 Upon completing this tab, proceed to the Operating Pro Forma tab. 1267 op.wtr Pm F. Operating Pro-Forma ' xxxx" indicates that the columns should be widened. Project Name - : 0 Units The only data entry cells on this tab are for payments on any *custom loans' (see rows 31 and 32). PROJECT TIMELINE rwt rw1 I Yw1 J Twa Yws Yws Yw2 Yws Ywr Ywsr Ywls Ywt1 Ywls Yw14 YwM G+ow Pppna4 Rw110PR1 Pro . I,paE.Cp MTCR W s0 W so so so k W s0 s0 W W s0 s0 W bs1M R.nb so W W 10 W W W W so so so W W so to Oaw Albm.ob R.R so so W W so W W 10 so so s0 so 10 W W 0mu Pa Rw, so is N 1r N N N N N N N N N N N ER.JM Orow amamr iEdi Rol.non. Vavay iau $0 W so W W so W so so W so W s0 so so arr R.wa. 10 W so so W W W so so to W W W to so ER.M Grow Mawr M N N N N N N N N N N N N N N Ears.W 11. Ka..RO)N.W. s1. .Ea.s SC W W W W W W W W W to so W W W oP.r...ast.a..a.Ea.aa W W to W W W W W W W W W W W W U P.Eh Pa W W W W to W W W W W W W W W W T�E, W W W W W W W W W so W so W W W Tar Erw.. N N N N N N N N N N N N N N N wp,vwa R...o.wa W W W W W W W W W W W W W W W 1r opwaft.w.. N N N M N N N N N N N N N N N o s... Er.MW",O.d S.ww W W W W W W W W W W W W W W W lamer sbrpy.DO s..n W W W W W W W W W W W W W W W �paP,aa,lwipw W W W W W W W W W W W W W W W o.raw Pam"2ls Pryor W W W W W W W W W W W W W W W ow s.aso to 10 so so so so to so to a ow s.o Ca nm V o.w r..R.l Can Eb. W W W W W W W W W W W W W W W W W W W W W W W W W W W W W W ,M Can R.aa W W W W W W W W W W W W W W W Developer Return on Eau Eaulty MA,there Is no developer investment m vs os n os os f os a Es a 0% os os n os Pmrdvoe MCy.rv.Ea FtW to W W W W W W W W W W W W W W MOiF-hep VYwp WXMlOq.Wrq Iriconw..neynw M IYw,h ow.d Palo Debt at Year End Ewwryp R.,w.q W W W W W $o W W W W W W W W W s.mu lrliy.R.a..v W W W W W W W W W so W W W W W 1MP F,, Es,Ra— W W W W W W W W W W W W W W W OM..a P.^wr for 2 R.n..q W W W W W W W W W W W W W W W PWW,aB•202, 1268 0p *V Pm F. Operating Pro-Fol PROJECT TIMELINE Ywa YwtY I Ywa I Ywa T Yws Ywll Yw1I I Yw11 I Ywfl I Vwx I Yw11 I YwIY I LtirH I -'Nai I_ Cea.PpbM.l R.w(OPR)Pl oR . HOtE,C IHTC Rmb $0 a SD a a a s0 a a a a a a a a WMIRmb so so a a a a a a a so a so so a so Orb ARaSYb Rmb a $0 so a a a so a a a to a so a a cr P. ft Pw a a a a a a a a a a a a a a a ERwLn 01...InwmF(EO!)P..N.bww Vwacytm so so s0 a a a a a a a a a a a a Orb R..bhw so a s0 s0 a N a a a $0 a a a a a EnwM ao..bmm. a a a a is a a a a it a a a a a E. r Rw OpyMN e.wie(R01)" Mmepmbr Ewwbw so so so $0 to a a a a a a a a a a Opw..s Mw.eoaoEm so a a s0 i0 a so a a a a a a a a u Pae by pw" $0 a a a a a W so so s0 a s0 s0 a a T�ebr.NXb ERb... so s0 a a s0 a so a s0 w s0 so a a a T"6pwM.r a a a a a a a a a to a a 10 a a RBOm Re Do" s0 s0 a SO s0 so s0 ill $0 so s0 a so s0 a " Inc.nx a a a a a a a a a a a a a a a DW SwO. FN uwq.p.DeM Swvb a a a a a s0 10 a a a a a a a a S M vm.DW seven $o so a so $o $0 a a so m $O so a a a oobn F&M"l M P"d s0 so a $D a a s0 a a s0 s0 so a s0 a DeMar P"rt 2l Peet so so so SD a s0 so a s0 s0 s0 a a SD a DO Sww6 m in to so to to 10 to so so to so so so so DW SaMn so so so so to so so so so 12 IQ so so I so Call Flw DW S. ) C Fb a so so s0 a a a a a a a s0 a $D f0 PmpwO.ft.pm wry sale a so a a a a a a 10 a a a m a a ew CM Reim a a $0 a a a a a SD a a a to so a DevelO r Return on E uit PmlOtl Vahe DweOm Caple.t..on RBb so a So a a a a a a a a a so a a WTE.holm vane I-IN f0.1 xw OPnw� Debt at Year End F..IMYVepe Rwm a a a a so a $0 so s0 a s0 a so a a Se MAg Rwnw.rq a a a SD a s0 $0 SO a s0 s0 a a a s0 DoM W Pa"W Mln 1 Pe^wrq a a a s0 a so so $0 a a a so a a a Cblanb P.ynbq lon 2 a a a a $0 m so so a $0 $0 a s0 a a 1269 -- Funding Sources Amount. Comment - � Alul,.n •SICunJM rt deioan l Sii _J 0 _ so so 0 Deferred Develoftr Fee so v Debve r GSM Investment so SO ~ Tax Crldtt Egu amount 0 _ so So so so so 0 real Lpercea e/Fpnes o Dewbpmrtt Uses; ARWWt CWMIMt Aa_nmo�costs SD Stte won Costs so ConshucMon Renabibtahon Costs 0 Amh,tw..l I Enauum,.m Costs 0 Other Owner Costs 0 Consim ion Interest so Omer Intenm Finance Costs 0 Permanent F.rusmon,COSTS 0 Develo es Fee SO In'hal Pro sct Reserves 0 Pro a Me ment Costs 0 Other De .,o ment Costs to Total Uf of PUMS --— Total Rents Unit Types Number of Units (Year 1,wMmRt vacancy) 0 R.. 0 Mane,0.ete uPrts - 0 _ so Other ARwdable Unes D 0 Total 0 s0 r 'e Income _ er 10 nOMFCDBG::i 0 0 0 SJ 0 0 Mane!P.-. 0 0 0 0 0 0 0 0 0 0 0 0 Oren Polentinl arm 0 0 D 0 Vecanc 0 0 0 0 0 0 other P•.. 0 0 0 0 0 0 E aotive Gro..mron�a• 0 0 Total E.;, 0 0 0 0 0 0 "O ratio Income Tobl Debt Sen�ce 0 0 0 0 0 0 GM Flow After Debt Service $0 , Year 30 faah On Gsh 0.0% 0 0% [RR(Y"r 1 tll ah YM M pro)M) ro inve5[m!!n 1270 ATTACHMENT E: CPD Notice 15-11 Requirements for the Development and Implementation of HOME Underwriting and Subsidy Layering Guidelines 1271 u[v:� t° U.S. Department of Housing and Urban Development Conmmnit)' Planning and Development Special Attention of: Notice: CPD-15-1 1 CPD Division Directors All HOME Coordinators Issued: December 22, 2015 All HOME Participating Jurisdictions Expires: This NOTICE is effective until it is amended, superseded, or rescinded Cross Reference: 24 CFR Part 92 Subject: Requirements for the Development and Implementation of HOME Undenyriting and Subsidy Layering Guidelines Table of Contents 1. PURPOSE................................................................................................................................ . If. APPLICABILITI'................................................................................................................... . Ill. BACKGROUND ..................................................................................................................... 3 A. STATUTORY AND REGULATORY REQUIEv1ENTS ..............................................3 B. RELATED HOME REQUIREMENTS..........................................................................3 IV. UNDERWRITING POLICIES AND PROCEDURES .......................................................6 V. MARKET ASSESSNIEN'1'..................................................................................................... 7 VL DEVELOPER CAPACITY ASSESSDMEN'l.........................................................................9 A. EXPERIENCE...............................................................................................................9 B. FINANCIAL CAPACITY.............................................................................................9 VIL PROJECT REVIEW ............................................................................................................ 10 A. SOURCES AND USES STATENIENT....................................................................... 10 B. OPERATING PRO FORNIA........................................................................................ 14 C. SALES PLAN — HOMEBUYER PROJECTS ............................................................ 15 D. RETURN TO DEVELOPER....................................................................................... 16 Vill. ESTABLISHING THE LEVEL. OF HOiIE SUBSIDI' (SUBSIDI' LAYERING) ........ 18 IX. SELF-SUSTAINING INVEST.N9ENT ................................................................................ 19 X. DOCUi\IENTING COMPLIANCE .................................................................................... 20 1272 I. PURPOSE The purpose of this Notice is to provide guidance to HOME participating jurisdictions (PJs) in the development and implementation of written subsidy layering and underwriting guidelines in accordance with the HOME regulations at 24 CFR Part 92. A PJ is required to develop and use such guidelines to evaluate and ensure that the level of HOME investment does not exceed the amount that is necessary to provide quality affordable housing that is financially viable. II. APPLICABILITY The underwriting and subsidy layering requirements at §92.250 are applicable to projects for which HOME funds are committed on or after August 23, 2013. This Notice is applicable to all rental projects developed in whole or in part with HOME assistance. For projects which are only partially funded by HOME, the PJ must assess the financial viability of the entire project, not just the HOME-assisted units. This Notice is also applicable to HON1&assisted projects which seek to develop and sell units to homebuyer", whether scattered site or within a designated subdivision or target area. The regulations at §92.2 define a HOME_ "project" as a site or sites together with any building under common ownership. management. and financing and assisted as a single undertaking. The project includes all the activities associated with the site and building. While the underwriting requirements of Part 92 generally apply to all HOME-assisted projects. there are some activities for which not all elements of the underwriting analysis are required: • For direct homebuyer assistance which is not part of a HOME-funded development activity and for homeowner rehabilitation assistance activities when the HOME loans are amortirini-,, the general project underwriting and subsidy layering requirements of §92.250 will apply. Section §92.254(f) requires a PJ to develop underwriting standards as part of the program policies for direct homebuyer assistance. Under §92.3, the requirements at §92.254(t) are applicable to projects for which HOME funds are committed on or after January 24. 2014. • For HOME-funded direct homebuyer assistance that is not part of a HOME-funded development activity, the underwriting guidelines at §92.254(0(1) apply, but: o A market analysis is not required: and o An evaluation of developer capacity is riot required. • For homeowner rehabilitation activities: o Underwriting the homeowner's ability to make mortgage payments is required only if the HOME-funded rehabilitation loan is an amortizing loan: Page 2 of 20 1273 o A market analysis is not required: and o Evaluation of developer capacity is not required as a developer is not involved. Ill. BACKGROUND For purposes of the HOME program, underwriting involves the analysis of project assumptions and risks to determine if the public investment is reasonable and the project can be expected to meet all applicable program requirements during the period of affordability. Subsidy layering is a component of project underwriting, which involves assessing whether the proposed level of HOME assistance is appropriate given the level of project investment by other financing sources. This notice covers both the HOME underwriting requirements and the subsidy layering analysis, which forms the basis for the detailed evaluation of the prudent investment of HOME funds. A. STATUTORY AND REGULATORY REQUIREMENTS Section 212(f) of the Cranston-Gonzalez National Affordable Housing Act of 1990 (NAHA), as amended, requires a PJ to certify that it will not invest any more HOME funds in combination with other governmental assistance than is necessary to provide quality affordable h0usin1 that is financially viable for the period of affordability required in §92.252 or §92.254. The 201 3 HOME Final Rule ('HOME Rule") establishes the requirements for underwriting guidelines to govern the PJ's decision regarding investment of HOME funds in all projects: • §92.250(b) requires the PJ to adopt and evaluate projects according to written underwriting and subsidy layering guidelines for all HOME activities to determine the appropriate HOME investment. These guidelines must require the examination of project sources and uses, cost and profit reasonableness, market demand, developer experience and capacity, and financial commitments. • In addition, §92.254(f) requires the PJ to adopt and follow written underwritingo standards for assistance to homebuyers, including analysis of housing and family debt, monthly family expenses, assets available to acquire the housing. resources needed to sustain homeownership, including the terms of planned mortgages. B. RELATED HOME REQUIREMENTS In addition to the requirements stated at §92.250 and §92.254. there are several other types of requirements which affect the underwriting of HOME-assisted projects that must be taken into account when determining and documenting the appropriate level of HOME assistance. 1) Maximum per unit subsidy, limits (§92.250): The amount of HOME funds that a PJ may invest on it per-unit basis in affordable housing may never exceed the per unit dollar limits for elevator-type projects that apply to the area in which the housing is located. For information on maximum per unit subsidy limits. see CPD Pagc 3 of 20 1274 Notice. 1 5-003 or successor notices. These limits will vary by the number of bedrooms in a unit: a published listing is available from the HUD Field Office. The maximum subsidy limits apply to all HOME-assisted units. Under no circumstances may the level of per unit HOME investment exceed the maximum subsidy limits: therefore. underwriting cannot be completed without knowledge of these limits. Also, §92.205(c) imposes a minimum subsidy of$1,000 per unit. 2) Cost allocation (§92.205(d)): The HOME Program permits the funding of one or more units in a project, including mixed-income and mixed use properties. However. HOME funds may only be used to pay eligible costs for HOME- assisted units. When a PJ designates fewer than 100%n of a project's units as HOME-assisted, the PJ must calculate the eligible costs that are allocable to the assisted units and may only pay the actual costs related to those HOME-assisted units, capped by the maximum subsidy limits described above. Thus, cost allocation requirements affect project underwriting by dictating either the maximum amount of HOME investment a PJ may provide, or the minimum required number of units that must be designated as HOME-assisted. 3) Written agreements (§92.504): A PJ must execute a written agreement before disbursing HOME funds to any entity, including developers and owners of rental and homebttver housing. The written agreement must capture the project zinc] financing terms that result from the underwriting process. 4) Commitment (§92.2): HOME funds are not committed to an identifiable project until the parties execute a legally binding written agreement. A PJ cannot commit funds to a project until all necessary financing is secured, the underwriting and subsidy layering described in this notice has been completed, and construction can be expected to begin within 12 months. The commitment date is cspecially important because all HOME funds must be committed within 24 months of the Brant award (§92. 92500(d)(I)(B)). Thus, the PJ must have an efficient process for soliciting and reviewing proposed projects. For information on maximum per unit subsidy limits, sec CPD Notice 1 5-09 or successor notices. 5) HOME deadlines: The HOME_ program imposes several additional regulatory deadlines that may affect the underwriting process: o Acquisition/demolition (§92.2: When reviewing the development and marketing- plan submitted by the applicant, the PJ must ensure that any acquisition of standard housing will occur within six months of the contract or purchase agreement date, and construction, or demolition of the property is scheduled or reasonably can be expected to start within 12 months of the agreement date. o Project completion (§92.205(e)(2), §92.2): The PJ must complete the projects within four years of the date funds are committed to the project. Therefore, the underwriting analysis and project plan must ensure that funds are available and construction is scheduled within this timefratne. Paec 4 ol'20 1275 o Lease-up (§92.252): If a HOME-assisted unit is not occupied by an eligible tenant within six months following project completion, the PJ must report status and marketing efforts to HUD. If the unit remains unoccupied at 13 months after the project completion date. HUD will require the PJ to repay the HOME funds. Thus, the PJ must carefully assess the market study and the project plan to ensure that there is documentation of sufficient demand for the proposed units. o Homebuyer unit sale (§92.254(a)(3)): For homebuyer development projects subject to the HOME Rule, if there is no ratified sales contract within nine months of the construction or rehabilitation completion, the ownership unit must be converted to HOME-assisted rental housing pursuant to §92.252. For homebuyer development projects subject to the 2012 or 2013 Appropriations requirements (P.L. 1 12-55) and (P.L. 1 13-6), there must be a ratified sales contract within six months of the construction or rehabilitation completion. As a component of the underwriting process, the PJ must carefully review the project development, market study and sales plan submitted by the developer to ensure that there is sufficient demand for the homeowner units to meet these timelines. 6) Property standards (§92.251): All properties assisted with HOME funds are subject to minimum property standards at project completion. In addition. rental projects are subject to property standards throughout the affordability period. When reviewing a budget as part of the project underwriting. the PJ must ensure that all costs are eligible and the resulting housing units will meet the established property standards. In addition, for projects that provide 26 or more units the PJ must complete a capital needs assessment (§92251(b)(I)(ix)). 7) Rents/utility allowance (§92.252(a)): HUD publishes the maximum rent that may be charred in HOMGassisted units, depending on the number of bedrooms and project location. HOME rent limits include either actual utilities or it utility allowance. The underwriting process must cap HOME-assisted units at these rent limits and demonstrate that the project will be financially viable on this basis. 8) Affordability period (§92.252(c), §92.254(a)(4)): rW HOME-assisted rental and homebuyer projects are subject to an affordability period. depending on the type and amount of investment. As a part of the underwriting process for rental projects, a PJ must ensure that projects will remain financially viable and the assisted units will meet the property standards and affordability requirements for not less than the applicable affordability period, beginning at project completion. Page 5 of 20 1276 IV. UNDERWRITING POLICIES AND PROCEDURES Under the provisions of§92.250(b) of the HOME Rule, a PJ may not invest any more HOME funds, alone or in combination with other governmental assistance, than is necessary to provide quality affordable hOtSing that is financially viable through the affordability period (see §§92.252 or 92.254). In addition, the PJ must ensure that the return to the owner or developer is reasonable and does not exceed the PJ's established standards based on the size, type and complexity of the project. To implement this requirement, the HOME Rule requires that develop and use written guidelines to underwrite each project. As previously mentioned, the PJ's underwriting and subsidy layering policies and procedures must, at a minimum, include: • An examination of the sources and uses of funds for the proposed project and a determination that all project costs are reasonable; • An assessment of'the current market demand in the area where the project will be located: • An assessment of the experience and the financial capacity of the developer or rental project owner: and. • An assessment of the firm written financial commitments for the project. The PJ is required to evaluate a project using its underwriting and subsidv layering guidelines before committing HOME funds and is responsible ensuring that underwriting is revised in response to any changes that may occur in the project budget. The PJ must be able to demonstrate it has independently evaluated the project budget. financing and development schedule. To confirm that this has occurred, the PJ is required to certify in HUD's Integrated Disbursement and Information System (IDIS) that it has followed its underwriting and subsidy layering standards before making a commitment of HOME funds. It is important that a PJ re- check and update the project underwriting at: • Initial Closing or construction start, since construction costs at the time of project application typically are estimates instead of firm bids and contracts; Before HOME_ funds, in addition to the original commitment, are awarded to the project during development (e.g. in response to a change order or other changes in project costs). • Construction completion or final draw, when final sources and uses can be verified: While a PJ is ultimately responsible for the project underwriting, it may permit a subrecipient. State recipient or contractor working for the PJ to perform underwriting functions or services. However, the PJ must retain full review authority and must certify in IDIS to the use of its underwriting standards. The use of subrecipients, State recipients, or contractors does not relieve the PJ of its responsibility to provide for proper levels and types of investment with HOME funds. The PJ may also choose to review the underwriting of other lenders. However, the PJ must still Page 6 of 20 1277 make and document its own determination that the project meets HOME requirements, is compliant with the PJ's written underwriting and subsidy layering standards, is a reasonable investment, and is likely to remain financially viable throughout the HOME affordability period. Although a project that combines HOME and LIHTC funding may have been underwritten by the state credit allocating agency, the PJ must still review and document compliance with its own underwriting and subsidy layering guidelines. The PJ may choose to review the state tax credit allocating agency's evaluation (of whether there are excess tax credits) to help ensure that HUD subsidies are not greater than necessary to provide affordahlc housing when combining HOME assistance with Tax Credits. V. 19ARKET ASSESSMENT Before committing funds to a project, the HOME Rule at §92 250(b)(2) requires a PJ to assess "the current market demand in the neighborhood in which the project will be located." To meet this requirement, a PJ must develop and follow procedures to review it project proposal against current market data to address two key issues: pricing and absorption. A PJ must have written underwriting guidelines for assessing and documenting the demand for the type and number of all housing units being developed, not just those designated as HOME- assisted. The PJ must determine whether the project can be expected to be rented or sold to within the regulatory time frames and at the cost or price estimated by the developer. Timely occupancy of HOME units by eligible tenants is critical to comply with statutory requirements as well as the sale and rental occupancy deadlines established in the regulations_ It is important to note that the market assessment required under the HOME Rule at §92.250(b)(2) differs from the needs analysis conducted for the purposes of the Consolidated Plan required by HUD at 24 CFR Part 91. The Consolidated Plan describes the general characteristics of the PJ's housing market. The HOME market assessment seeks to quantify and document demand for a specific project — that is, what is it prospective renter or buyer- willing to pay to rent or buy the unit, in this location, with these amenities, and the size of the pool of'� potential tenants or buyers? The cost of a market assessment may be charged as an administrative or project delivery cost. The market assessment can take different forms, including independent market studies. waiting lists and other market information assembled by the applicant, or market data compiled by the PJ. A PJ is not required to pay for an external, independent market study or to perform a full, formal market study. The scope of the assessment should be relative to the project scope. The PJ's underwriting guidelines must establish standards for demonstrating the evidence of current market demand that applicants nwst provide and the documentation to be used when the PJ completes an in-house analysis. HUD recognizes that data .mailability varies by geographical area. Consequently. a PJ must establish in its policies the data sources and age of the data that will be acceptable for its assessment. In all cases, however, the market analysis for a project should: Page 7 of 20 1278 • Evaluate general dernographic, economic, and housing conditions in the comununity. • Delineate the market area by identifying the geographic area from which the majority of a projects tenants or buyers are likely to come. This may or may not coincide with census tract or neiehborhood boundaries. • Quantify the pool of eligible tenants or buyers in terms of household size, age, income, tenure (homeowner or renter), and other relevant factors. Not all residents of the market area are potential or likely tenants or buyers of any given project. • Analyze the competition by evaluating other housing opportunities with an emphasis on other affordable rental developments or sales opportunities in the market area, including those financed through either the HOME program or other federal programs. • Assess the market for the planned units and determine if there is sufficient demand to sell the HOME-assisted housing within nine months of construction completion (§92.254(a)(3)) or to rent the HONIE-assisted housing within 18 months of project completion (§92.252). • Evaluate the effective demand and the capture rate, usually expressed as a percentage (the project's units divided by the applicant pool). The capture rate is the percentage of likely eligible and interested households living nearby who will need to rent units in the proposed project in order to fully occupy it. The lower this rate, the more likely a project is 10 succeed. • Estimate the absorption period. Plan how many units can be successfully leased or sold each month and how long it will take to achieve initial occupancy/sale of the HOME units and stabilized occupancy for the project as a whole. In some cases, other fenders play require independent market studies. A PJ may accept the independent market study prepared for another funder if the study meets the requirements outlined in the PJ's underwriting standards. However, the PJ mast review any market studies or assessments and make its own conclusions about the likelihood of project success. The PJ may not simply accept the conclusion of another source as its sole evidence of market demand. Independent or third party market studies are not required by the HOME regulations, and, in a few circumstances, may not be practical or cost-effective: • Market studies may not be cost effective for smaller developments. For example, for existing projects where tenants are already HOME-cli,ible and rents are already within program limits, simplified or in-house market assessments may be more appropriate. • Assessments for projects serving special needs can often he completed using primary data from service providers whose existing client base will form the primary pool of potential tenants. Page S of 20 1279 VI. DEVELOPER CAPACITY ASSESSMENT The HOME Rule specifies two elements of underwriting analysis related to the developer— (I ) the experience and the capacity of the developer (including the entity staff and project leant) to implement the project and (2) the fiscal soundness of the developer to meet its financial obligations and risks of the project. The PJ must establish policies and procedures by which they will determine what constitutes acceptable experience and financial capacity based on the size, scope, and complexity of the project, and the process by which they will make and document this determination. It is important to note that these capacity requirements apply to all developers of rental and homebuyer housing seeking HUME assistance, includim-, CHDOs and other nonprofit developers. A. EXPERIENCE A PJ must assess the experience of the developer by determining whether the developer has the technical and managerial experience, knowledge, and skills to successfully complete the development. When assessing the developer's experience, the PJ should consider both prior experience and the current capacity of the organization. In considering this, the PJ must take into account: • The corporate or organizational experience of the development entity: • The experience of the staff assigned to the project and overall quality of the development team: and • The prior experience of the individuals compared to their roles in the proposed project. For rental projects, a developer/owner needs specific skills and capacity including property management, asset management, service provision (as applicable), and special financing skills. For homebuyer projects, the development team must demonstrate its capacity to market and sell the units. This may involve the addition of a realty professional to the team, or evidence that in-house staff have the capability to oversee the advetlising, unit showing, intake, and processing of potential buyers. For CHDO projects, the PJ must certify that the CHDO has paid staff with experience relevant to the proposed project and role of the CHDO. B. FINANCIAI: CAPACITY A PJ must also examine whether the developer has the financial capacity necessary to complete the proposed project. The PJ needs to determine whether the developer has: • Adequate financial management systems and practices: and • Sufficient financial resources to carry the project to completion or through initial lease-up, as the case may be. Page 9 of 20 1280 When determining whether the developer has the financial capacity to undertake the project, the PJ should examine financial statements and audits to determine the developer's net worth, portfolio risk, pre-development funding, and liquidity. Developers with limited financial resources should only be considered for projects where cash needs will not exceed the developers net or liquid assets. Some HOME developers may be subject to specific financial requirements. For instance, CHDOs and nonprofit subrecipients must have financial accountability standards consistent with 2 CFR 200.302 ("Financial Management") and 2 CFR 200.303 ("Internal Controls"). Other public entities seeking HOME funds as owners or developers of affordable housing may also be subject to the provisions of 2 CFR part 200 ('Uniform Administrative Requirement, Cost Principles, and Audit Requirements for Federal Awards") or other state and local requirements. VIL PROJECT REVIEW Before committing HOME funds, a PJ ntnst evaluate a proposed project to ensure that funds are invested such that the project is likely to succeed over time. To verify this, a PJ must assess all of the assistance that has been, or is expected to be. made available to that project. The PJ should take into account all the factors relevant to project feasibility, which may include, but are not limited to: total development costs and available funds: impacts of HONE restrictions such as eligible costs. maximum subsidy limits, cost allocation. and rent/utility allowance limitations: rates of return to owners, developers, sponsors, or investors: resale or recapture limitations for homebuyer projects and the long-term needs of rental projects and tenants. There are two types of documents which a PJ must review in order to assess and underwrite a project: • A sources and uses statement: and • An operating pro-forma. For homebuyer development projects, the pro-forma will take the form of a sales and revenue plan. A. SOURCES AND USES STATEMENT The HOME Rule requires a PJ to examine the development budget, commonly referred to as the "Sources and Uses' statement. A PJ's underwriting guidelines must require completion of a Sources and Uses statement, typically submitted by a developer as part of its application to the PJ. The PJ must also identify the types of documentation necessary to verify the sources and uses indicated. The Sources and Use.,, of Funds statement must list: • All Sources (both private and public) of funds with dollar amount(s) and timing of availability for each source, and • All Uses of funds (for example acquisition costs, site preparation and infrastructure costs, rehabilitation/or construction costs, financing costs, professional fees, developer fees and other soft costs) associated with the project. Page 10 of 20 1281 1) Sources Both the definition of commitment in §92.2 and the project evaluation requirements in §92.250 require that a PJ determine that financing sources are in place before it can commit HOME funds to a project. Consequently, the PJ should request the following for all project sources: • Firm commitment letters with all terms and conditions for all mortgages. grants, bridge (interim) loans and investment tax credits (historical, low-income, if applicable): • If the applicant is a partnership or limited liability corporation, a copy of the partnership agreement or operating agreement, which will indicate the cash contributions by the partner(s) or member(s): and • If equity is committed by the developer or owner(s), evidence of available equity funds. As part of the project sources review, the subsidy layering analysis requires a PJ to determine that the total amount of HOME assistance is reasonable and necessary. The questions that the PJ should assess when evaluating sources include: • Are total fandirtg sources adequate and timely in their availabiliy to cover development costs at all phases of the development —acquisition, corasty-uction/rehabilitcatiora, and permanent loan' Before committing HOME funds. a PJ must determine that all necessary financing is available to cover reasonable costs of development. PJs must review any conditions the developer must meet in order to draw funds and the schedule upon which funds will be available. The availability of sources should match the project's timeline and allow the PJ to anticipate when and for which items it will disburse HOME funds. The PJ should also review the commitment and availability of permanent funding sources, the repayment terms of which need to be incorporated in the Ion_ term operating projections. • Are the other fivading sources compatible with I1OME, or do thev contain different requirements that affect the structure of the project, including unit mix. and are these differences accommodated in the project plan? In its review of written commitments for other funding sources, the PJ must determine whether there are provisions that: (1) conflict with HOME requirements: or (2) are not reflected in the project plan. The availability of sources should match the project's timeline and allow the PJ to anticipate when and for which items it will disburse HOME funds. • Are the fivading sources firmly committed' The PJ must have assessed all firm written financial commitments to ensure that the\, are in fact firm commitments that are consistent with the PFs underwriting of the project. Firm commitments must be non-speculative sources identified and secured in the amount necessary to complete the project. It is not necessary that financing sources have "closed" or Page I of20 1282 been disbursed. Documentation of firm financing- can include award letters, offer letters. final term sheets, or other commitments which are conditioned upon the receipt of HOME funds. But, these may not include automatic self-expiring clauses or highly conditioned language and must have all substantial terms tired to a specific project. In the case of projects with LIhITC, the project must have received a reservation from the Housing- Credit Allocator (e.g., State Housing Finance Agency) and be able to provide a good faith offer of equity investment from an investor prior to the issuance of a HOME commitment. 2) Uses Uses are the project costs that are budgeted to be paid during- the development phase. A PJ must review all costs of the project because the determination of the amount of HOME assistance needed is based on the gap between uses and other sources. Even costs not being paid with HOME funds must be necessary and reasonable, as the inclusion of excessive costs inflates the apparent need for public subsidy in a project. In its review of the Sources and Uses statement, a PJ should assess the detailed breakdown of costs, including- all hard and soft costs of the project, and review documentation or explanations of the basis of the calculation. PJs should require applicants to provide project budgets in sufficient itemized detail to evaluate not only the sufficiency of the budget but also to evaluate whether project costs are reasonable both on a line item basis and in the aggregate. If the documentation is not adequate and does not support the costs as stated, the PJ should request additional documentation, a second opinion and/or reference from the appropriate source (i.e., another construction cost estimator, another architect or lawyer), or deny the project HOME funding-. Note that for projects with tax credits to be sold. the proceeds from the sale of these credits must be identified as a source of funding. The PJ will need to request and review documentation for all line item costs in the budget, including: • Acquisition documentation, such as purchase agreement, option or closing statement and appraisal or other documentation of value: • Construction cost estimate, construction contract or preliminary bid(s): • Contracts, quotes or other agreements substantiating key professional costs and the basis for estimating other soft costs and working capital items, including capitalized reserves: • Agreements governingo the various reserves which are capitalized at closing (to verify that the reserves cannot be withdrawn later as fees or distributions), • A third-party appraisal (to substantiate the value of the land and the value of the property after rehabilitation or the structure being built): PaL,e 12 of 20 1283 • If LIHTC are utilized, documentation on the syndication costs (legal, accounting. tax opinion, etc.) from the organization/individual who will syndicate and sell the offering to ensure that the project can support the fees necessary to syndicate/fund the project. • Note that for homebuyer projects, some of the costs — such as realty fees, closing costs and some of the developer fees— will not be incurred until the closing and might be paid Out of closing; proceeds. Also, since the development phase loans such as construction loans are repaid at time of sale from sales proceeds, the estimation of the period to sell and close on the units is an essential part of the analysis. Again, this is affected by the ready presence of buyers under agreement or in the counseling/screening pipeline. A PJ should make certain that the developer has projected interim financing interest and carrying costs to reflect the expected project absorption. The PJ's review of project uses needs to address the following questions: • Are all of the proposed costs of development "necessca-v and reasonable" in compliance with OXIB cost principles container/in 2 CFR part 200" Costs are considered `'necessary' if they are required to implement the project in full compliance with all program standards. According to 2 CFR part 200. a cost is reasonahle if it `does not exceed that which would he incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost.' The determination of reasonable cost should include the followine factors: o Costs of comparable projects in the same geographical area o "I'hc qualifications of the costs estimators for the various budget line Items o Comparable costs published by recognized industry cost index services. • Are the proposed costs sufficient to achieve all program requirements, including property standards, to provide quality housing for at least the affordability period? PJs must ensure that the project budget is adequate to meet and maintain the property standards of §92.251 and all other HOME and cross-cutting federal requirements that apply to its development. The completion of a capital needs assessment or estimate of the propertys useful life is essential to this analysis in rehabilitation projects. • Are the costs proposed to be paid with HOMEfitnds eligible under the HOME rule? Refer to the HOME rule at §92.206 for additional guidance on eligible costs. Page 13 of 20 1284 B. OPERATING PRO FORMA The PJ must require the rental project applicant to furnish an operating pro forma (project income and expense statement) projected for the HOME period of affordability at a minimum. The PJ's underwriting and subsidy layering guidelines will need to establish mininwm criteria for the content and/or format of the pro-forma. A PJ nwst evaluate the reasonableness of the financial assumptions of the project to establish minimum total per unit operating costs. To do so. the PJ should evaluate the sufficiency of both specific line item and total operating costs. A PJ should also ensure that long-term operating projections over the period of affordability are based on reasonable assumptions and demonstrate that project can cover expenses and debt service throughout the affordability period. It is imperative that the PJ scrutinize the pro forma consistent with its written guidelines and to ensure the cash flow projections are realistic in light of economic conditions. The cash flow projections should be neither unduly conservative nor overly optimistic. It is the PJ's role to balance the need for public subsidy to make the project viable while safeguarding the investment of HOME funds in the project by ensuring that projected income and expenses are reasonable, and provide resources that are sufficient for the property's upkeep and planned capital repairs during the affordability period. Long-term operating projections should be based on reasonable assumptions about how revenues and operating costs are expected to change over time, and demonstrate the project is expected to operate within normal operating parameters throughout the affordability period. A PJ should assume that operating costs increase at a faster rate than revenues. 1) Projected Income Operating revenues must be based on achievable rent levels, reasonable vacancy and collection loss, and conservative estimates of non-residential sources of incomes. • In most projects, non-residential revenue from fees/late charges, commercial income, interest, laundry/vending, or other similar sources likely will be modest, therefore should he projected conservatively. • Even in strong rental markets. HUD recommends setting initial rents somewhat below program limits or projected market rents because HOME rents may not increase as rapidly as market rents. • Vacancy projections should reflect local market conditions and account for both physical vacancy and collections loss. • The rate of projected growth for rental income and other revenues should be appropriate to the local market and regulatory limits. Page 14 of 20 1285 • In projects with deeply targeted rents, lower than average rates of revenue increase should be used, as utility allowances will surpass rent increases.Net Operating Income (gross revenue minus operating expenses) should be sufficient to cover debt service obligations and mandatory replacement reserve funding and generate reasonable but not excessive Cash Flow throughout the period of affordability. If deficits are projected, the HOME subsidy may be increased to reduce amortizing debt and the deficit reserves might be funded from other- sources. 2) Pro,jected Expenses All operating costs must be in sufficient detail to compare line items against properties that are similar in physical type and size, so that the PJ may determine whether the planned expenditures are sufficient and reasonable. The operating budget should include general management expenses, maintenance and operating costs, any project paid utilities, taxes, insurance premiums, and adequate deposits to replacement reserves. In most cases, evaluation of total operating costs should be summarized in "per unit per year' amounts rather than as a percentage of projected revenue. • Most operating costs (e.g. water/sewer rates or lawn mowing) do not vary based on how much tenants are paying in rent. Whenever possible. the PJ should compare against other projects in the property manager's portfolio or the neighborhood. • Management and other fees to the owner should be reasonable in the local market. • The identity of interest (also referred to as related party) relationships with contracted property management, repair/rehabilitation contractors, or other project vendors must be disclosed. • Minimum replacement reserve deposits should be specified based on the characteristics of each project. Reserve needs may vary based on the type of physical product, the target population, and whether the building is newly constructed or rehabilitated. • Any debt service or other funding/reserve requirements related to 'secondary' financing in mixed financed deals, if applicable. • Cash flow should be evaluated both as a "debt coverage ratio" and as it percentage of operating costs and debt service. C. SALES PLAN - HOMEBUYER PROJECTS In lieu of an operating pro-forma, a PJ must request a sales plan from homebuyer developers (which may also be evaluated as a component of the market assessment). This sales plan Should indicate the developer's anticipated cash flow and timing of when and how units will be sold. A PJ should evaluate the sales plan for: Page IS of 20 1286 • Timelines: Analyze the speed that the developer anticipates selling homes. Is this realistic given the market? o Overall supply in the market and how many months of supply that represents (a 4 —6 month supply is often considered a stable market.) A PJ should also examine listing times, and the foreclosure and shadow (delinquent but not foreclosed) inventories. o Other affordable homeownership options already available, including projects in the pipeline. o The price, location, amenities and financing of units that are most directly comparable with the housing proposed. Pricing needs to be competitive and locational factors can offset the program advantages. • Casli low: A PJ should analyze the developers intended plans for use of the sales revenues. o Is the developer counting on obtaining previous sales revenues before they begin construction on the next for-sale unit? If yes, does this cause concerns for the HOME timeliness requirements for the entirety of the project? How is the project affected if the first units are slow to sell or sell at a lower price than anticipated? o As discussed further below. is the anticipated return to the developer from the sales revenue reasonable or should the PJ require some of these proceeds be returned to the PJ as program income? D. PROFIT AND RETURNS TO DEVELOPER The HOME regulations at (§92.250(b) require that any profit or return on the owner's or developer's investment will not exceed the PJ's established standards. This analysis includes profit that is projected to flow to the developer as operating cash flow from rental projects, sales proceeds from homebuyer units (if not considered as program income by the PJ) and any other professional fees being paid to the developer or related entities. The PPs underwriting "uidelines nwst include a standard for determinin- a limit for overall returns and cash flow distributions to ensure that owners do not receive excessive gains/profits from the project as a result of HOME and other public subsidies. Developers and owners may financially benefit from HOME-assisted projects in several ways: • Developer Fees: These are fees charged by the developer as a part of the project cost to compensate for the risk, time and effort to build and sell or lease the property. Developer fees are allowed under the HOME program, but the PJ must review these fees and determine that they are reasonable. A PJ may set limits on the developer fee that differ from other funding sources (e.g. LIHTC underwriting standards). A P1 Pagc 16 of 20 1287 should establish developer fee schedules or ranges that reflect the local market and consider the following: o The scope and complexity of the project being developed: o The size of the project: o The relative risk the developer is taking; o The costs a developer will incur from the fee as compared to those being charged as project costs; o The fees that are regularly and customarily allowed in similar programs and projects; and, o Other fees the project is generating for the developer and its related entities. • Sales revenues: Developers of for-sale properties may keep some or all of the sales proceeds, as deemed reasonable by the PJ. • Cash-Flow: Assuming that the rental property is properly structured and financed, successfully attracts residents. and is effectively managed: the project likely will have net cash-flow after the payment of debt service. Cash-flow is distributed to the owner and/or investors as a return on their original investment. • Tax Benefits: Rental owners and/or investors can also benefit from tax savings—a reduction in the income taxes they owe due to tie losses or tax credits. • Equity Appreciation: Over time, the value of the rental project sponsor/owner's ownership share in the project will increase as debt financing is paid down (due to the portion of debt service that is applied to the loan principal), and depending on market conditions, the property appreciates in value. • Identity of Interest (101) Roles: Some developers may also own construction companies and if this company is used for the HOME project, the construction firm may earn reasonable profit and overhead as a component of the development hudget. If the rental property owner also operates a property management company contracted to service the property, the developer may earn fees from those activities. These and other 101 contracts require additional scrutiny by the PJ to make sure that they are clearly disclosed, priced at arms-length rates, and subject to cancellation if the 101 contractor does not provide acceptable service. The PJ should also consider how the sales revenues will be distributed, especially if the HOME assistance was provided as a grant to the developer or if the unit sells for more than the development cost. Prof-it from rental project operations must be analyzed and determined to be reasonable. The simplest evaluation is the cash flow return on the investment. The cash-on-cash rate of return Pace 17 of 20 1288 simply measures the annual cash-flow that is distributed to an investor as a percentage of the fluids invested (Annual Cash Flow/Equity Invested = X%). An evaluation of what constitutes an acceptable rate of cash-on-cash return depends upon the perceived level of risk in the project (is cash flow actually going to be there) and the level of return available in other investments (e.g., what is the going rate on lower risk investments such as Treasuries). Another approach to assessing developer profit is to assess the Internal Rate of Return (IRR). IRR expresses all future benefits (cash. tax savings, and profit from sale of property) as an interest rate that the owner or sponsor is determined to be earning as a percentage of total cash invested in the project. The IRR technique adjusts for differences in timing and differences in amounts of future benefits and reduces the entire stream of benefits (initial investment, annual cash flow, expected future resale/refinancing proceeds) to a single interest rate. For project where developers do not actually invest equity into a project (other than that from the syndication of tax credits)., returns may be evaluated against guidelines on reasonable per-unit per-year cash flow allowances, and can be controlled by: requiring annual installment payment on HOME loans: requiring reduced rents on affordable units to serve lower-income tenants, or other means. A PJ should establish standards related to the use and distribution of project cash flow, including payment to reserves, payment of related party fees (c.g.. asset management fees, investor service fees, incentive or performance fees) to the developer or owner, and the relative priority of distribution for net cash flow. VIII. ESTABLISHING THE LEVEL OF HOME SUBSIDY (SUBSIDY LAYERING) The analysis to determine the amount of investment needed to make a project feasible is sometimes referred to as "gap analysis", as it is used to determine the gap between approved costs (Uses) and available financing and other subsidies (Sources). The gap is influenced by many factors, some of which can be modified prior to commitment, including: • Level of physical improvements: • Rent levels and affordability: • Income levels being served (e.g., a target population of 60 percent of median income could require less assistance than if the target population is below 30 percent of area median income): and • Payment terms of all funding, includina, HOME and other public funding. In addition to conducting the subsidy layering review described above, before committing HOME funds to a project to help fill the financing gap, the PJ should: • Evaluate Debt Capacity. Make sure that the lender's financing terms are reasonable zinc] comparable to those available from other lenders. Page 18 of 20 1289 o Are other lenders willing to finance at a hither loan to value ratio (LTV)? o Are other lenders willin- to finance at a lower debt coverage ratio (DCR)'? o Is the interest rate competitive with what other lenders are willing to offer? • Evaluate Equity Contributions. Evaluate the full spectrum of returns that are accruing" to owners and investors. If it appears that the project is returning a higher level of return than is warranted given project risk and market conditions, then the PJ can require additional equity investment (or reduce the level of HOME assistance). Also, evaluate the calculations of tax credit basis and market price to determine if the projected amount of tax credit equity is reasonable. If the total amount of HOME assistance and other sources exceeds the amount that the PJ determines is necessary to make the project feasible and viable for at least the affordability period, the PJ may consider: • Reducing the amount of HOME assistance: • Increasing the number of HOME assisted units in the project or lowering the target income levels and rents to be charged: and • Imposing loan terms that bring the rate of return into line with standards. The PJ should deny HOME assistance if the applicant refuses to make reasonable adjustments or to limit its return/costs in compliance with underwriting guidelines or if it appears that HOME funds are not needed to close a financing gap. While a PJ will identify the amount of"subsidy needed through gap and other project analysis, the PJ must also determine that the amount of HOME assistance needed will be used on program-eligible costs or activities. As noted above. HOME funds are capped by two important measures: • Total HOME-eligible costs allocable to assisted units: and • The maximum subsidy as permitted by regulation for the assisted units (based on unit size). IX. UNDERWRITING TO PROMOTE SELF-SUSTAINING PROJECTS HUD encourages the PJ to build into its underwriting and subsidy layering procedures underwriting principles that promote long-term financial viability and self-sustaining operations For assisted projects during their HOME affordability periods. Whether a project can remain viable and self-sustaining over time partly will depend on whether the project: • Can accommodate moderate "income shocks" such as an increase in vacancy: • Can accommodate moderate "expense shocks" such as an increase in utility rates: and Page 19 of 20 1290 • Can self-fund its major repairs and replacements (`capital needs") from a combination of its Reserve funds, its cash flow, and future refinancing. To do so, the PJ, the owner or sponsor, and any other subsidy providers need to approach the underwriting process in a way that helps to assure: • Gross potential rents that are actually achievable, takin.- into account location, design, and intended resident population. • An allowance for rent loss (vacancy, bad debt. and concessions) that reflects the likely lon-teen average the property can be expected to achieve. • Underwritten operating expenses that are likely to be adequate to allow a competent management agent to operate the property successfully, in a typical year. • Trending factors for income and expenses that are reasonable and prudent. • Sufficient debt service coverage to allow the property to survive income and expense shocks. Reserve funding that, when combined with reasonably foreseeable future cash flow and reasonably foreseeable future refinancing potential, will be adequate to meet the property's capital needs over the HOME affordability period. Y. DOCUMENTING COMPLIANCE The HOME regulations require a PJ to develop and follow procedures for documenting all elements of the required underwriting and subsidy layering analysis—e.g., who submits the documentation, when it was submitted, etc. (92.505(a)(3)(iii)). Each project file must contain the required project evaluation, demonstrating that the PJ's guidelines have been applied to the project. In order to document compliance with this requirement, the PJ must affirmatively review and approve the underwriting and subsidy layering analysis with dated signatures. The written agreement must reflect- project underwriting. If changes are made to underwriting or subsidy layering during the development period, the PJ must update its written agreement and project file documentation. Page 20 of 20 1291 ATTACHMENT F: Step-by-Step Standard Method Process Chart 8 Standard Method Example 1292 Step bx, Step Standard Nlethod Process Chart Step I: Determine Standard Method Comparability fi Can aHvgln use, must use if units are not comparable Select ,Method Step 2: Proposed Underwriting provides Proposed HOME Investment (e.g.. funding gap)or identifies Investment or Units Proposed Number of 11OMF. Units Step 3. Designate Dollars known, solve for units Units known, .solve for dollars HOME Units and Calculate Costs (I. Calculate Base Project Cost Calculate Rase Project Cost • Start w/Total Dev. Cost Stan wffotal Dew. Cost • Subtract Ineligible Dev. Costs Subtract Ineligible Dev. Costs • Subtract the Cost of Upgrades in Subtract the Cost Upgrades in Unassisted Units Unassisted Units • Subtract relocation costs Subtract relocation costs Result= Base Project Cost Result= Base Project Cost • Base Project Cost/Gross Res Sq. Ft. Base ['reject Cost/Gross Res Sq. Ft. Result= Base Cost per Sq- Ft. Result = Base Cost per Sq. Ft. (2. Calculate Individual Unit Cost Calculate Individual Unit Cost • Unit sq. ft. S Base Cost/Sq. Ft Unit sq. ft. S Base Cost/Sq. Ft Result = Individual Unit Cost Result= Individual Unit Cost (3. Designate HOME, Units If units are known from the outset, the PJ • Specify the number of HOME- can skip this step assisted units • Add the Individual Unit Costs Result= Subtotal Cost of IIONIE Units • Subtotal must equal or exceed the Proposed IIOME Investment— relocation cosy (4. Calculate Cost of HOME Units Calculate Cost of I10:ME Units • :Idd back relocation costs to the Add the Individual Unit Costs Subtotal Cost of HOME Units Result = Subtotal Cost of HOME Units • Add!Jack relocation costs Result=Cost of i IONIE Units Result =Cost of HOME Units Step 4: Calculate Calculate Maximum Project Subsidy Limit :\laxiinu n Project • identify I10ME-designated units by number of bedrooms Subsidy Based on Limits • Apply applicable max. per-unit subsidy to each HOME unit • Add max per-unit subsidy for all HOME units Result =Maximum Project Subsidy Limit Step 5. Detenmine Maximum 110:�i E Investment is the lesser of: Maximum HOME Proposed HOME Investment(Front Step 2, if provided) Investment • Cost of 1 10AIE units(From Step 3) • Maximum Project Subsidy(From Step 4) Step 6: Finalize Apply :Maximum HOME Investment and Unit Designations to underwriting Analysis. Underwriting then recheck Underwriting 1293 Standard Method Example Example: Standard Method Step 1: Determine Comparability, Select Method Units are NOT comparable. Must use Standard Method. Gross Residential Square Footage 42,000 sq. ft. Step 2: Proposed HOME Investment or Proposed HOME Units Proposed HOME Investment Not provided Developer has proposed designating six (6) HOME units—units 101, 103, 202, 203, 305, &306. Step 3: Calculate the Cost of HOME Units Total Development Costs 6,800,000 Remove Ineligible Development Costs (e.g., swimming pool, car ports, & syndication fees) (682,000) Remove Cost of Unit Specific Upgrades in unassisted units(e.g. fireplace,Jacuzzi I (600,000) tub, high end finishes Remove URA Relocation Expenses (to be added back to HOME Cost) (150,000) Base Project Cost 5,368,000 Base cost per square foot, includes common costs (Base Project Cosl/Gross 127.81 Residential Square Footage) —Designate HOME Units& Calculate Individual Unit Cost Unit Description Unit Sq. Ft. Base Individual Unit CostlSq. Ft. Cost 101 1 Bit B base 700 127.81 89,467 103 3B/26 base 1,200 127.81 153.372 202 1B/18 base 800 127.81 102,248 203 2611.5B base, accessible 1,000 127.81 127,810 305 26/2B base 1,100 127.81 140,591 306 313/213 base 1,260 127.81 161,041 Subtotal Cost of HOME Units 774,529 Add back Relocation Expenses(excluded from Base Project Cost above) 150,000 Cost of HOME-assisted Units I 924,529 I Step 4: Calculate Maximum Project Subsidy Unit Size Maximum Per- Number Total HOME Subsidy Unit Subsidy Units Maximum 1-Bedroom Limit 150,000 2 300,000 2-Bedroom Limit 165,000 2 330,000 3-Bedroom Limit 180,000 2 360,000 Subtotal 990,000 Step 5: Maximum HOME Investment (lesser of Proposed HOME investment (e.g., 924,529 fun din a , Cost of HOME Units, or Max. Project Subsidy) 1294 ATTACHMENT G: Step-by-Step Proration Method Process Chart 8 Proration Method Examples 1295 Step by Step Proration Method Process Chart Step I: Determine Proration Method Comparability& Max only he used ifunits are comparable Select Method Step 2: Proposed Either provides Proposed HOME Investment (e.g.. funding gap)or identifies Proposed Investment or Units number of HOME units Step 3: Determine Dollars known, solve jar units Units known, ,solve far dollars Number of HOME Units and Calculate Costs (I. Calculate Base Project Cost Calculate Base Project Cost • Stan %vfl'otal Dcv. Cost • Start w/Total Dev. Cost • Subtract Ineligible Dev. Costs • Subtract Ineligible Dev. Costs • Subtract relocation costs • Subtract relocation costs Result= Base Project Cost Result = Base Project Cost • Base Project Cost/Gross Res. Sq. Ft. Result= Base Cost per Sq. Ft (2. Calculate HOME Share Ratio Calculate HOME Share Ratio • HOME Share=(1IOME Investment- IiONME Share = I10ME Units/Total relocation costs)lBase Project Cost Units Result = HOME Share Ratio Result= HOME Share Ratio (3. Apply HOME Share Ratio Apply HOME Share Ratio • Apply HOME Share Ratio to each Apply HOME Share Ratio to Base unit type and round up to whole Project Cost number (4. Calculate Cost of I10.NIE Units Calculate Cost of HOME Units • For each unit type. multiply avg. sq. • Adel hack relocation costs ft. by Base Cost per Sq. Ft. by number of FIOM1: units • Sum HOME Cost by Unit Type • Add back relocation costs Result=Cost of I10\1E Units Result= Cost of IiOME Units Step 4: Calculate Calculate Maximum Project Subsidy Limit Project Subsidy Limit . IdentiN the number of HON1E-assisted units by number of bedrooms • Apply applicable max. per-unit subsidy to each HOME unit • Add max per-unit subsidy for all HOME units Result =Maximum Project Subsidy Limit Step 5. Determine Maximum HOME Investment is the lesser of: Maximum HOME Proposed HOMME Investment(From Step 2, if provided) Investment • Cost of HOME units(From Step 3) • Maximum ['reject Subsidy(Front Step 4) Step 6: Finalize Apply Maximum HOME Investment and Unit Designations to Underwriting Analysis, Underwriting then recheck Undenwritin 1296 Proration A9ethod Examples Example: Proration Method (dollars known, solve for units) Step 1: Determine Comparability, Select Method Three unit types, all units within each type are comparable and no HOME units identified. May use Proration Method. Unit Type #of Units Avg. Sq. Footage 1-Bed/1-Bath 10 900 2-Bed/1.5-Bath 20 1,100 3-Bed/2-Bath 10 1,275 Gross Residential Square footage 43,750 sq. ft. Step 2: Proposed HOME Investment or Proposed HOME Units Proposed HOME investment(preliminary gap identified) 800,000 Proposed number of HOME Units not identified Step 3: Calculate the Cost of HOME Units Total Development Costs 6,050,000 Remove Ineligible Development Costs (e.g., swimming pool, car ports, & syndication fees) 682,000 Remove URA Relocation Expenses(to be added back to HOME Cast) - Base Project Cost 5,368,000 Base Cost per Square Foot, includes common costs (Base Project Cost/Gross Residential 122.70 Square Footage) Apply the HOME Share Ratio and Assign HOME Units HOME Share Ratio HOME Investment/Total Base Project Cost 14.903% Determine the number and typa of HOME Units I Unit Type #of Units HOME Share Min. #of Number of HOME Units HOME Units after Rounding Up 1-Bed/1-Bath 10 14.903% 1.490 2 2-Bed/1.5-Bath 20 14.903% 2.981 3 3-Bed/2-Bath 10 14.903% 1.490 2 I Calculate HOME Costs by Unit Type Unit Type Avg. Sq. Ft. Base Cost/Sq. Ft. 11 #of HOME HOME Cost by Unit Units Type 1-Bed/1-Bath 900 122.70 2 220,860 2-Bed/1.5-Bath 1,100 122.70 3 404,901 3-Bed/2-Bath 1,275 122.70 2 312,885 Subtotal Cost of HOME Units 938,646 Add Back URA Relocation Expenses - Cost of HOME Units 938,646 Step 4: Calculate Maximum Project Subsidy Unit Size Maximum Per- Unit #of HOME Maximum HOME Subsidy by Unit Subsidy Units Size 1-Bedroom 150,000 2 300,000 2-Bedroom 3-Be dro 1 :000 3 495,000 om 180 2 360,000 Total 1,155,000 Step 5: Maximum HOME Investment (lesser of Proposed HOME investment (e.g., funding gap), Cost of HOME Units, or Max. Project Subsidy) 800,000 1297 Example: Proration Method (units known, solve for dollars) Step 1: Determine Comparability, Select Method of Cost Allocation Three unit types, all units within each type are comparable and HOME share of type is equal ay use Proration Method. Total#of #of HOME HOME Share of Units Units Unit Type Description Avg. Sq. Ft. Type 10 2 1-Bed/1-Bath 900 20.00% 20 4 2-Bed/1.5-Bath 1,100 20.00% 10 2 3-Bed/2-Bath 1,275 20.00% Gross Residential Square footage 43,750 sq. ft. Step 2: Proposed HOME Investment or Proposed HOME Units Proposed HOME Investment Not provided Developer has proposed seven (8) HOME units— two one-bedroom, four two-bedrooms, and two three-bedrooms Step 3: Calculate Cost of HOME Units Total Development Cost 6,050,000 Remove Ineligible Development Costs (e.g., swimming pool,car ports, & syndication fees) I (682,000) Remove URA Relocation Expenses(to be added back to HOME Cost) I - Base Project Cost I 5,368,000 Apply the HOME Share Ratio HOME Share Ratio (HOME Units/Total Units) 20.00% Subtotal Cost of HOME Unit(HOME Share Ratio x Base Project Cost) 1,073,600 Add Back URA Relocation Expenses - Cost of HOME Units 1,073,600 Step 4: Calculate Maximum Project Subsidy Unit Size Maximum Per-Unit Number of HOME Maximum HOME Subsidy Subsidy Units by Unit Size 1-Bedroom 150,000 2 300,000 2-Bedroom 165,000 4 660,000 3-Bedroom 180,000 2 360.000 Total 1,320,000 Step 5: Maximum HOME Investment (lesser of Proposed HOME investment (e.g., funding a , Cost of HOME Units, or Max. Project Subsidy) 1,073.600 1298 ATTACHMENT H: Step-by-Step Hybrid Method Process Chart Hybrid Method Example 1299 Step by Step Hybrid il7ethod Process Chart Step I: Determine hybrid .Method Comparability R Select Can be used if units are not comparable, but the share of HOME units within each unit Method tv to is not identical Step 2: ['reposed Number of Underwriting identifies Proposed Number of HOME Units HOME Units Step 3: Determine Number of Units known, solve for dollars HOME Units and Calculate Costs (1, Calculate Rase Project Cost • Start wflbtal Dev. Cost • Subtract Ineligible Dev. Costs • Subtract relocation costs Result=Base Project Cost • Base Project Cost/Gross Res Sq. Ft. Result= Base Cost per Sq. Pt. (2. Calculate HOME Square Footage by Unity Type • For each unit type. multiply Avg. Sq. Ft. by number of HOME units Results= HOMESquare Footage by Unit Type (.3. Calculate I10NIE Cost by Unit Type • For each unit type, multiply HOME Sq. Ft. by Unit Type by Base Cost per Sq. Ft. Results= I10M17 Cost by Unit'ry e (4. Calculate Cost of HOME Units • Sum I-10\lL Cost by Unit Type for each unity type Result= Subtotal Cost of I10,M8 Units • Add back relocation casts Result=Cost of HOME Units Step 4: Calculate Maximum Calculate Maximum Project Subsidy Limit Project Subside Based on Identify the number off 10MEassisted units by number of bedrooms Limits Apply applicable max. per-unit subsidy to each fIOME unit • Add max per-unit subsidy for all IiOME units Result= iNlaxinmon Project Subsidy Limit Step 6. Detemnine Maximum Maximum HOME Investment is the lesser of: HOME Investment • ['reposed HOME Investment(From Step 2, if provided) • Cost of HOME units(Prom Step 3) • ,Masinuun Project Subsidy(From Step 4) Step 6: Finalize Underwriting Apply Maximum HOME Investment and Unit Resignations to Underwriting Analysis, then recheck Under writin>; 1300 HN,brid Method Example Example: Hybrid Method Step 1: Determine Comparability, Select Method Three unit types, all units within each type are comparable, but the HOME share of unit type is not a ual. May use H brid Method. #of HOME Avg. Sq. HOME Share of Total#of Units Units Unit Type 11 Ft. Unit Type 10 2 1-Bed/1-Bath 900 20.00% 20 3 2-Bed/1.5-Bath 1,100 15.00% 10 2 3-Bed/2-Bath 1,275 20.00% Gross Residential Square Footage 43,750 sq. ft. Step 2: Proposed HOME Investment or Proposed HOME Units Proposed HOME investment Not provided Developer has proposed seven (7) HOME units— two one-bedroom, three two- bedrooms, and two three-bedrooms Step 3: Calculate the Cost of HOME Units Total Development Costs 6,050,000 Remove Ineligible Development Costs (e.g., swimming pool, car ports, & syndication (682,000) fees) Remove URA Relocation Expenses(to be added back to HOME Cost) - Base Project Cost I 5,368,000 Base cost per Square Foot, includes common costs(Base Project Cost/Gross Residential I 122.70 Square Footage) Calculate HOME Sq are Footage by Unit Type I Unit Type #of HOME Units Avg. Sq. Ft. HOME Sq. Ft. by Unit TY2e 1-Bed/1-Bath 2 900 1,800 2-Bed/1.5-Bath 3 1,100 3,300 3-Bed/2-Bath 2 1,275 2,550 Calculate HOME Cost by Unit Type Unit Type HOME Sq. Ft. by Base HOME Cost by Unit Type Unit Type Cost/Sq. Ft. 1-Bed/1-Bath 1,800 122.70 220,860 2-Bed/1.5-Bath 3,300 122.70 404,910 3-Bed/2-Bath 2,55011-1-22.70 312,885 Subtotal Cost of HOME Units 938,655 Add back Relocation Expenses (excluded from Base Project Cost above) Cost of HOME Units 938.655 Step 4: Calculate Maximum Project Subsidy Unit Size Maximum Per- Number of Maximum HOME Subsidy Unit Subsidy HOME Units by Unit Size 1-Bedroom 150,0001 2 300,000 2-Bedroom 165,000 3 495,000 3-Bedroom 180,000 2 1 360,000 Total I 1,320,000 Step 5: Maximum HOME Investment (lesser of Proposed HOME investment(e.g., funding I 938,655 gap), Cost of HOME Units,or Max. Project Subsidy) 1301