040-22 - Kitsap County Consolidated Housing Auth. - ContractDocuSign Envelope ID: 1BE16717-1BD5-4A24-ADBF-30886FC79CBA
AFFORDABLE HOUSING SERVICES AGREEMENT
Contract No. 040-22
This Affordable Housing Services Agreement ("Agreement") is entered into by and between
Kitsap County Consolidated Housing Authority dba Housing Kitsap, a Washington Housing
Authority, and the City of Port Orchard, a Washington State municipal corporation (hereinafter
the "City" and collectively the "Parties").
I. RECITALS
A. Housing Kitsap is a Municipal Corporation - Housing Authority formed under RCW 35.82.210
organized and existing under the laws of the State of Washington; and
B. The City of Port Orchard is a Washington municipal corporation organized and existing under
the Washington State Constitution and the laws of the State of Washington, and particularly
those set forth at RCW Title 35A; and
C. In the 2019 legislative session, the Washington state legislature passed SHB 1406 (codified at
RCW 82.14.540), which created a sales tax revenue sharing program that allows the City to
access a portion of state sales tax revenue (hereinafter, the "Funds") to make local investments
in affordable housing over a 20-year term; and
D. The City is committed to utilizing this funding source to assist the citizens of Port Orchard by
investing in programs that commit to providing housing assistance for those below the 60%
median income level; and
E. Housing Kitsap operates a Housing Rehabilitation Program to provide loans and grants to low-
income households to assist with the rehabilitation of existing affordable housing units (the
"Program"); and
F. Housing Kitsap desires to partner with the City to provide loans and grants to low-income
households in the City of Port Orchard for the rehabilitation of existing affordable housing;
and
G. The City desires to engage Housing Kitsap to perform the public services described herein and
undertake the use of the City's Funds for the affordable housing purposes;
NOW, THEREFORE, in consideration of the foregoing, and in consideration of the premises,
terms and conditions set forth below, it is hereby agreed as follows:
II. AGREEMENT
1. Affordable Housing Services, The City desires to engage Housing Kitsap's Program by
utilizing Funds allocated to the City pursuant to SHB 1406 to assist low-income households
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in the City of Port Orchard with grants for the rehabilitation of existing, affordable housing.
Consistent with this goal, the parties agree to the following performance obligations:
A. City's Duties. The City shall provide to Housing Kitsap the Funds in an amount up
to $41,700 for the term of this Agreement, contingent on the terms and conditions
herein. The City shall have no additional payment obligations to Housing Kitsap
beyond this allocation, and all funding is conditioned on Council appropriation.
i. Upon receipt of a complete invoice in a form acceptable to the City, the
City shall issue payment within thirty (30) days of receipt.
B. Housing Kitsa 's Duties. Housing Kitsap shall utilize the Funds for the Program,
as set out on Exhibit A hereto. In utilizing the Funds and administering the
Program, Housing Kitsap shall comply with all applicable state and local laws, and
shall exclusively utilize the Funds to provide for the rehabilitation of affordable
housing to benefit to those City of Port Orchard residents with an 0-60% of the
Area Median Income (AMI). Additional parameters for the Program are attached
hereto as Exhibit A.
i. Invoices shall be submitted monthly to the City, evidencing and
documenting that the requested payment was used for the public services
described herein and authorized by the City Council. Such documentation
shall evidence that the beneficiaries of the funding are Port Orchard
residents with a 0-60% of the Area Median Income (AM1), and that the
funding is used for the rehabilitation of units of affordable housing.
ii. Housing Kitsap shall keep cost records and accounts pertaining to this
Agreement available for inspection by City representatives for three (3)
years after final payment.
iii. Housing Kitsap will provide a detailed invoice including monthly program
activity, direct program staff time and indirect salary expenses as defined
in the Central Services Cost Allocation Plan. Direct staff and indirect cost
to the program shall not to exceed 10% of Funds.
2. Duration. This Agreement will commence upon mutual execution of this Agreement and will
expire on December 31, 2022, unless earlier terminated in accordance with the terms of this
Agreement.
3. Termination. The City may terminate this Agreement with or without cause upon thirty (30)
days' advance written notice to Housing Kitsap and all work shall cease upon termination. In
the event of termination, Housing Kitsap may submit for payment from the Funds for all work
performed prior to termination, and the City have no obligation to provide Funds to Housing
Kitsap for any remaining, post -termination work. Upon termination or expiration of the
Agreement, all unused Funds shall be returned to the City.
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4. Insurance.
A. Housing Kitsap shall procure and maintain for the duration of the Agreement,
insurance against claims for injuries to persons or damage to property which may
arise from or in connection with the performance of the work hereunder by
Housing Kitsap, its agents, representatives, or employees.
B. No Limitation. Housing Kitsap's maintenance of insurance as required by the
agreement shall not be construed to limit the liability of Housing Kitsap to the
coverage provided by such insurance, or otherwise limit the City's recourse to any
remedy available at law or in equity.
C. Minimum Scope of Insurance. Housing Kitsap shall obtain insurance of the types
described below:
I. Automobile Liability insurance covering all owned, non -owned, hired and
leased vehicles. Coverage shall be written on Insurance Services Office
(ISO) form CA 00 01, or a substitute form providing equivalent liability
coverage. If necessary, the policy shall be endorsed to provide contractual
liability coverage.
2. Commercial General Liability insurance shall be written on ISO occurrence
form CG 00 01, or a substitute form providing equivalent liability coverage
and shall cover liability arising from premises, operations, independent
contractors and personal injury and advertising injury. The City shall be
named by endorsement as an additional insured under the Housing Kitsap's
Commercial General Liability insurance policy with respect to the work
performed for the City.
3. Workers' Compensation coverage as required by the Industrial Insurance
laws of the State of Washington.
D. Minimum Amounts of Insurance. Housing Kitsap shall maintain the following
insurance limits:
1. Automobile Liability insurance with a minimum combined single limit for
bodily injury and property damage of $1,000,000 per accident.
2. Commercial General Liability insurance shall be written with limits no less
than $1,000,000 each occurrence, $2,000,000 general aggregate.
3. Employer's Liability each accident $1,000,000, Employer's Liability
Disease each employee $1,000,000, and Employer's Liability Disease —
Policy Limit $1,000,000.
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E. Other Insurance Provisions. The insurance policies are to contain, or be endorsed
to contain, the following provisions for Automobile Liability and Commercial
General Liability insurance:
1. Housing Kitsap's insurance coverage shall be primary insurance as respect
the City. Any insurance, self-insurance, or insurance pool coverage
maintained by the City shall be excess of Housing Kitsap's insurance and
shall not contribute with it.
2. The City will not waive its right to subrogation against Housing Kitsap.
Housing Kitsap's insurance shall be endorsed acknowledging that the City
will not waive their right to subrogation. Housing Kitsap's insurance shall
be endorse to waive the right of subrogation against the City, or any self-
insurance, or insurance pool coverage maintained by the City.
3. Housing Kitsap's insurance shall be endorsed to state that coverage shall
not be cancelled by either party, except after thirty (30) days prior written
notice by certified mail, return receipt requested, has been given to the City.
If the General Liability coverage is written on a "claims made" basis, then
a minimum of a three (3) year extended reporting period shall be included
with the claims made policy, and proof of this extended reporting period
provided to the City.
F. Acceptability of Insurers. Insurance as provided by Housing Authority Risk and
Retention Pool.
G. Verification of Coverage. Housing Kitsap shall furnish the City with original
certificates and a copy of the amendatory endorsements, including but not
necessarily limited to the additional insured endorsement, evidencing the insurance
requirements of Housing Kitsap before commencement of the work.
5. Indemnification
A. Housing Kitsap does hereby agree to save harmless and defend the City from all
claims and liability due to the acts, errors or omissions of Housing Kitsap, its agents
and/or employees, except for claims caused by the sole negligence of the City.
Such indemnity will include, but not be limited to, all out-of-pocket expenses
incurred by the City, including attorney's fees, in the event Housing Kitsap fails or
refuses to accept the tender of any claims brought against the City, the basis for
which are acts, errors or omissions of Housing Kitsap, its agents and/or employees.
B. The foregoing indemnity is specifically and expressly intended to constitute a
waiver of each Housing Kitsap's immunity under Washington's Industrial
Insurance Act, RCW Title 51, as respects the City only, and only to the extent
necessary to provide the indemnified party with a full and complete indemnity of
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claims made by the indemnitor's employees. The parties acknowledge that these
provisions were specifically negotiated and agreed upon by them.
6. Entire Agreement / Amendments. This Agreement, together with any attachments or addenda,
represents the entire and integrated Agreement between the Parties hereto, and supersedes all
prior negotiations, representations, or agreements, either written or oral. It is mutually agreed
and understood that no amendment of any of the terms of this Agreement will be valid unless
made by written instrument properly signed by both Parties.
7. Notices. Except as otherwise identified in this Agreement, any notices required to be given
by the City to Housing Kitsap, or by Housing Kitsap to the City, will be in writing and
delivered to the Parties at the following addresses:
Housing Kitsap City of Port Orchard
Heather Blough, Executive Director Robert Putaansuu, Mayor
2244 NW Bucklin Hill Road 216 Prospect Street
Silverdale, WA 98383 Port Orchard, WA 98366
8. Compliance with Laws. Housing Kitsap will comply with all federal, state and local laws,
rules, regulations and ordinances applicable to the performance of this Agreement, including
without limitation all those pertaining to the COVID-19 pandemic, wages and hours,
confidentiality, disabilities and discrimination, including but not limited to the Americans with
Disabilities Act and all regulations interpreting or enforcing such Act.
9. Maintenance and Audit of Records. Housing Kitsap will maintain books, records, documents
and other materials relevant to its performance under this Agreement, which sufficiently and
accurately reflect any and all direct and indirect costs and expenses incurred or paid in the
course of performing this Agreement. These records will be subject to inspection, review and
audit by the City, the Washington State Auditor's Office, and authorized federal agencies.
Both Parties will retain all such books, records, documents and other materials as required by
the Washington State Records Retention policy as established by the Secretary of State. In
the event the City receives a public records request for records pertaining to this Agreement
and/or the Program, Housing Kitsap agrees to assist the City, at Housing Kitsap's sole cost, to
meet the City's obligations under the Public Records Act, Ch. 42.56 RCW, at KH's sole cost.
10. Reporting. Housing Kitsap will submit to the City a detailed accounting of the use of the
Funds by Housing Kitsap with monthly invoices. Housing Kitsap will assist the City by
providing any information needed for the City to compile and submit the reports required to
by the State of Washington under RCW 82.14.540(11).
11. Waiver Limited. A waiver of any term or condition of this Agreement must be in writing and
signed by the waiving Party. Any express or implied waiver of a term or condition of this
Agreement will apply only to the specific act, occurrence or omission and will not constitute
a waiver as to any other term or condition or future act, occurrence or omission.
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12. Default / Dispute Resolution. If either Housing Kitsap or the City fails to perform any act or
obligation required to be performed by it hereunder, the other party will deliver written notice
of such failure to the non -performing party. The non -performing party will have thirty (30)
days after its receipt of such notice in which to correct its failure to perform the act or
obligation at issue, after which time it will be in default ("Default") under this Agreement;
provided, however, that if the non-performance is of a type that could not reasonably be cured
within said thirty (30) day period, then the non -performing party will not be in Default if it
commences cure within said thirty (30) day period and thereafter diligently pursues cure to
completion.
In the event a default continues and/or any dispute arises (for anything other than non-
payment) between the Parties, either party may request in writing that the issue be resolved by
mediation. If the parties are unable to resolve the dispute within ninety (90) days, then either
party will have the right to exercise any or all rights and remedies available to it in law or
equity. In any suit or action instituted to enforce any right granted in this Agreement, the
substantially prevailing party shall be entitled to recover its costs, disbursements, and
reasonable attorneys' fees from the other party.
13. Venue and Choice of Law. Any action at law, suit in equity, or other judicial proceedings for
the enforcement of this Agreement or any provision thereof will be instituted only in the courts
of the State of Washington, Kitsap County. It is mutually understood and agreed that this
Agreement shall be governed exclusively by the laws of the State of Washington, both as to
interpretation and performance.
14. Assignment and Subcontracting_ Housing Kitsap may not assign, transfer, delegate,
subcontract or encumber any rights, duties, or interests accruing from this Agreement without
the express prior written consent of the City, which consent may be withheld at the sole
discretion of the City.
15. Severability. If any term or provision of this Agreement should be held to be invalid or
unconstitutional by a court of competent jurisdiction, such invalidity or unconstitutionality
will not affect the validity or constitutionality of any other term or provision of this Agreement,
and this Agreement will be construed in all respects as if such invalid or otherwise
unenforceable term or provision was omitted.
16. Independent Contractor. Housing Kitsap is and will be at all times during the term of this
Agreement an independent contractor. Nothing in this Agreement will create an
employee/employer relationship between the Parties.
17. Independent Parties. The Parties to this Agreement, in the performance of it, will be acting in
their individual capacities and not as agents, employees, partners, joint ventures, or associates
of one another. The employees or agents of one party will not be considered or construed to
be the employees or agents of the other party for any purpose whatsoever.
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18. Counterparts. This Agreement may be executed by the Parties using duplicate counterparts.
19. Filing. In accordance with RCW 38.34.040, this Agreement will be filed with the Kitsap
County Auditor or listed on the web sites of the parties prior to its effective date.
20 . Disclosure. The parties understand that the City's Mayor is, by virtue of his position, a
member of the KCCHA governing board. The parties understand and agree that the Mayor will
act on behalf of the City at all times during the term of this Agreement and will not act on behalf
of KCCHA or its Board. The Mayor will have no fiduciary duties with respect to KCCHA's
interests under this Agreement and the Mayor's sole fiduciary duty shall be to the City. The parties
agree that the Mayor's involvement in this Agreement is not a conflict of interest for either party.
FOR HOUSING KITSAP
Adopted thi Z Z day of �t _ y1 , 20 Z Z
xecutive recta r
FOR THE CITY OF PORT ORCHARD
Adopted this 22 day of Few, 2022
LPDoc uSlgned by:
t yf
PIA�t�Ua.SUU - -
Erna rem .
Robert , taansuu, Mayor
ATTEST/AUTHENTICATED:
EDoakpglgned by:
R 0JAU40-
�4J C
Brandy Wallace, MMC, City Clerk
APPROVED AS TO FORM:
DaauBianad py:
Charlotte A. Archer, City Attorney
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EXHIBIT A — SCOPE OF WORK AND FUNDS ALLOCATION
Housing Kitsap shall utilize the funds for its Home Rehabilitation Program, consistent with the
Housing Kitsap Home Rehabilitation Program Plan and Operations Manual attached hereto.
Funds shall be used for grants to accomplish affordable housing rehabilitation, to benefit
households with an 0-60% of the Area Median Income (AMI). Documentation evidencing all
expenditures by Housing Kitsap that meet these criteria shall be provided to the City with each
submitted invoice.
ATTACHMENT - Housing Kitsap Home Rehabilitation Program Plan and Operations
Manual
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HOUSING KITSAP
HOME REUTABILITATION PROGRAM
PLAN AND OPERATIONS MANUAL
(Revised Dec 2021)
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INTRODUCTION...... .................................... .......... -- .................................................. 4
I. PROGRAM PLAN......................................................................................................5
1. HOUSING REHABILITATION PROGRAM ............................. ............5
A. HOME REHABILITATION FINANCING - OWNER OCCUPIED
.....5
B. LOAN REQUIREMENTS.......................................................................6
2. HOME REPAIR AND HANDICAP ACCESS GRANTS ...........................8
3. NONDISCRIMINATION...........................................................9
4. MARKETING/OUTREACH.......................................................10
II. PROGRAM OPERATION......................................................................I.................10
1. BASIC FUNCTIONS....................................................................................10
2. ORGANIZATION & STAFFING.................................................................I
I
III. THE REHABILITATION PROCESS......................................................................12
1. GENERAL DESCRIPTION..........................................................................12
2. STEP-BY-STEP INSTRUCTIONS .............................................
13
REHAB PROCESS CHART ..................................................
14
VERIFICATIONS REQUIRED...............................................15
BID CONTRACTING REQUIREMENTS...................................15
APPLICATION..................................................................15
HOME REHABILITATION BRIEF..........................................17
HOME REPAIR GRANTS.....................................................18
B. INSPECTION, DRAFT WORK LIST & PRELIMINARY COST
ESTIMATE.......................................................................19
C. PROJECT SELECTION .... ....................................... ,............
19
D. FINAL REHABILITATION PLAN/WORK LIST ..........................20
E. SOLICITATION OF BIDS/CONTRACTOR SELECTION...............22
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TABLE OF CONTENTS
F. LOAN PACKAGE.....................................................................................23
G. LOAN CLOSING......................................................................................24
H. CONTRACT EXECUTION AND NOTICE TO PROCEED ...................25
I. REHABILITATION WORK.....................................................................26
J. LOAN CLOSE OUT ...................................... .......................................... -27
K. WALK AWAY POLICY.........................................................27
L. LIMITED WARRANTY..........................................................29
M. LOAN PORTFOLIO MANAGEMENT.........................................30
N. SUBORDINATION...............................................................31
O. LOAN MODIFICATION.........................................................32
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INTRODUCTION
The preservation of existing affordable housing is critical to the provision of reasonable cost
housing very low income households. It is also a necessary element in any plan to revitalize
older deteriorated neighborhoods. Housing is not a static asset which can be built and then
ignored. Ongoing maintenance, repairs, and occasional refurbishing of the basic systems (roof,
electrical, plumbing, foundation, etc.) must be combined with adapting or remodeling of the
house to fit changing conditions and energy efficiency needs (rising energy costs, higher
electrical use, etc.).
Housing rehabilitation is both simple and complex. It is not a high technology area which needs
a highly educated engineer just to understand the concepts. Everyone has lived in some type of
housing and we all know how to complete basic building maintenance and repair. However,
implementation of a public neighborhood rehabilitation program includes the responsibility for
wise use of public funds, detailed housing inspections and conditions analysis, development of
individual rehab plans, reviewing and verifying financial applications, verifying ownership and
title documents, reviewing construction bids, conducting loan closings, monitoring construction
work, servicing loans, mediating disputes, advising and educating homeowners in the loan and
construction process, advising small contractors, and communicating the program to potential
applicants.
To effectively implement a neighborhood rehabilitation program, clear program goals, objectives
and policies must be adopted, clear management responsibility and authority must be established,
and the program staff must have a cross-section of generalist abilities and detailed technical
knowledge. Underestimating the complexities of housing programs combined with poor
planning, inappropriate or unclear assignment of responsibilities, and poor staff selection or
training has resulted in many ineffective public neighborhood rehabilitation programs.
This workbook is divided into three parts. Part I includes the program guidelines, including
program goals, objectives, policies and standards. Part II includes information on the program
operation and organization. Part III includes a description of the rehabilitation process with
detailed implementation instructions and forms for use in each step of the rehabilitation process.
M
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I. PROGRAM PLAN
1. HOME REHABILITATION PROGRAM
GOALS AND OBJECTIVES: The goal of the Home Rehabilitation Program is to assist in the
preservation and revitalization of older neighborhoods throughout Kitsap County and to improve
the quality of housing available to households with very low incomes. The program objectives
are:
1. Provide most of the public assistance to the lowest income households, disabled and veteran
populations and elderly population. Partnerships with other local agencies will be a priority;
2. Assist in the basic rehabilitation of as many housing units as possible;
3. Concentrate the public resources in correcting health and safety hazards, eliminating
neighborhood blighting conditions, and completing energy conservation improvements;
4. Encourage community and government agency partnerships;
5. Encourage property owners to use private resources wherever possible in completing their
building rehabilitation work;
6. Incorporate energy efficient measures (when rehab price and scope allows) like, 90% or
greater efficient furnace, energy star fixtures, Low E windows, increased insulation, low
flow plumbing fixtures, low voltage high efficiency ventilation fans, etc.
The HOUSING REHABILITATION LOAN is the primary tool available to assist owners in
rehabilitating their properties.
A. HOME REHABILITATION FINANCING - OWNER OCCUPIED
ELIGIBLE HOMEOWNERS: These loans are available to homeowners within the following
limits (Table 1). The income eligibility will be determined by using the "DETERMINING
INCOME AND ALLOWANCES FOR HOME PROGRAM MANUAL, specifically using the 24
CFR Part 5.609 method.
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1. The income level of the household is below the following levels, this program targets very -
low and extremely low income levels:
TABLE 1
HUD Income Eligibility Limits for 2021
Income Family Size
Level 1 2 3 4 5 6 7 8+
Very $32,950 $37,650 $42,350 $47,050 $50,850 $54,600 $58,350 $62,150
Low
These income eligibility limits will be updated annually using Department of Housing and Urban
Development Income: Determined by HUD, 24 CFR Part 5.609 Annual Income/Assets
Worksheet income limits. Present annual income shall include the gross income of all
permanent household members at the time the application is submitted. The actual annual
income of the applicant must be considered rather than an annualization of the present weekly or
monthly income. All support payments, benefit payments and interest income must be included
in determining eligibility for a loan and the applicable income category. Self employed
applicants will be reviewed on a case by case basis to determine eligibility and income category.
2. Loans are available to assist very low and extremely low households County -wide outside
of the City of Bremerton.
3. Maximum loan amount will be $35,000.
4. Grant and loans will be determined by the need in the home or property. Manufactured
homes
on leased property will be granted and manufactured homes on land or homes on land will be
loans.
B. LOAN REQUIREMENTS —
ELIGIBILITY: Only buildings which need the correction of health and safety hazards,
elimination of exterior blighting conditions, provision of handicapped access, or cost effective
energy conservation improvements are eligible for housing rehab loans.
LOAN DOCUMENTS AND SECURITY: A Promissory Note will be used to document the
loan. A Deed of Trust will be recorded on the property being rehabilitated as security for the
loan. When a public loan is combined with a private loan, the public loan security may be
subordinated to the private loan.
SUBORDINATION: At the Borrower's request, the Home Rehabilitation Program may
subordinate to a refinance, upon approval of the Program Director, on a first mortgage if the
Borrower is seeking a lower interest rate and lower monthly payments with no cash taken out on
their first mortgage, and there is not enough equity in the home to payoff the rehabilitation loan.
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ELIGIBLE REHABILITATION WORK:
Health and safety hazards should take priority. Health and safety hazards are conditions
which do not meet the minimum standards contained in the Uniform Housing Code or other
life safety codes, or handicapped access as defined in the Americans with Disabilities Act
(ADA), plus any immediate lead -based paint hazard.
2. Cost effective energy conservation work will be completed if loan funds after correction of
health and safety hazards have been financed.
3. Elimination of exterior blighting work should be completed if loan funds are available after
correction of health and safety hazards and cost effective energy conservation work has been
finished.
4. Building conservation work may be included if the owner is eligible for borrowing enough
funds to complete the correction of all the health and safety hazards and cost effective
energy conservation work and elimination of exterior blighting conditions and additional
loan funds are available upon approval of the Program Director.
RESTRICTIONS ON THE WORK WHICH CAN BE FINANCED:
First priority of the rehabilitation loan funds should be used in correcting health and safety
hazards, completing cost effective energy conservation improvements and elimination of
exterior blighting conditions.
2 Wood stoves financed with housing rehab funds must be energy efficient and certified.
Their cost should not exceed the cost of a standard product.
Carpeting financed through the program, must be standard, good quality carpet which is
long lasting and easy to maintain and must meet green label plus.
4. Additions are not eligible except where required to alleviate an overcrowded condition as
defined in the Uniform Housing Code.
5. Non -essential luxury improvements, area rugs, furniture, non -essential appliances, cosmetic
improvements are not eligible rehabilitation costs.
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Exterior improvements:
a. must be compatible with and enhance the original character of the building and site;
b. cannot remove or alter historic material or distinctive architectural features;
c. must repair deteriorated architectural features wherever possible;
d. shall be completed in a manner which retains the essential form and integrity of the
existing structure; and
e. the State Historic Preservation Officer (SHPO) must be contacted if the building is 45
years or older.
OTHER ELIGIBLE LOAN COSTS: Title insurance information, document recording and
necessary architectural or engineering fees are eligible loan costs.
METHODS FOR COMPLETING THE REHABILITATION WORK: Utilization of one
contractor under one contract for all the work is the method preferred for completing the
rehabilitation work. This method has been selected because of the need for a fixed maximum
cost on each loan and a fixed time limit for completing the rehabilitation of each house. The
Program Staff reserves the right to solicit additional contractors based upon performance and/or
availability of contractor.
All work must be completed by an annual contracted registered, insured, and bonded contractor..
The contractor must also not be debarred from or listed on the Excluded Parties List System
(EPLS), Federal debarment. The contractor must be an equal opportunity employer and reach out
to small, minority and women -owned subcontractors and suppliers.
2. HOME REPAIR AND HANDICAP ACCESS GRANTS
GOALS AND OBJECTIVES: The goal of the Home Repair and Handicap Access Grant is to
provide grants for housing repairs and removal of architectural barriers for those in mobile
homes on leased land and must be qualified, Very Low-income households. The program
objectives are:
Preservation of affordable housing;
2. Priority given to the very low elderly, disabled and veteran populations;
3. Provide most of the public assistance to the lowest income households;
4. Concentrate the public resources in correcting health and safety hazards, eliminate
deteriorated conditions; and remove architectural barriers to handicap access; and
Encourage reinvestment in the older neighborhoods of Kitsap County.
ELIGIBLE HOMEOWNERS: These grants are available to homeowners within the following
limits:
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1. The present annual income level of the household is the Very Low income limits shown in
Table 1. Present annual income shall include the gross income of all permanent household
members at the time the application is submitted. The actual annual income of the applicant
must be considered rather than only an annualization of the present weekly or monthly income.
All support payments, benefit payments and interest income must be included in determining
eligibility for a loan and the applicable income category. Self employed applicants will be
reviewed on a case by case basis to determine eligibility and income category.
2. The house may be located throughout the Kitsap County outside of the city of Bremerton.
3. The homeowner must have been the owner and occupant of the house where work is needed
for a period of one or more years.
GRANT AMOUNTS AND TERMS: The maximum available emergency grant is $18,500.
ELIGIBLE WORK: Elimination of health and safety hazards, energy efficiency and
architectural barriers to handicap access.
GRANT REQUIREMENTS:
GRANT DOCUMENTS AND SECURITY: A Grant Agreement will be used to document the
grant.
OTHER ELIGIBLE GRANT COSTS: Title check costs, and necessary engineering fees are
eligible costs.
METHODS FOR COMPLETING THE REHABILITATION WORK: Utilization of one
contractor under one contract for all the work is the method preferred for completing the
rehabilitation work. This method has been selected because of the need for a fixed time limit for
completing the rehabilitation of each house. The Program Staff reserves the right to solicit
additional contractors based upon performance and/or availability of contractor.
All work must be completed by an annual contracted registered, insured, and bonded contractor..
The contractor must also not be debarred from or listed on the Excluded Parties List System
(EPLS), Federal debarment. The contractor must be an equal opportunity employer and reach out
to small, minority and women -owned subcontractors and suppliers.
3. NONDISCRIMINATION
Federal regulations prohibit discrimination against certain protected classes. State and local
requirements, as well as PHA policies, can prohibit discrimination against additional classes of
people.
The Home Rehabilitation Program shall not discriminate because of race, color, sex, religion,
familial status, age, disability or national origin (called -protected classes).
The Home Rehabilitation Program will not use any of these factors to:
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Deny to any family the opportunity to apply for housing, nor deny to any qualified applicant the
opportunity to participate in the Home Rehabilitation Program;
Provide housing that is different from that provided to others;
Subject anyone to segregation or disparate treatment;
Restrict anyone's access to any benefit enjoyed by others in connection with the housing
program;
Treat a person differently in determining eligibility or other requirements for admission;
Steer an applicant or tenant toward or away from a particular area based on any of these factors;
Deny anyone access to the same level of services;
Deny anyone the opportunity to participate in a planning or advisory group that is an integral part
of the housing program;
Discriminate in the provision of residential real estate transactions;
Discriminate against someone because they are related to or associated with a member of a
protected class;
Publish or cause to be published an advertisement or notice indicating the availability of housing
that prefers or excludes persons who are members of a protected class.
4. MARKETING/OUTREACH
The Home Rehabilitation Program strives to serve the maximum numbers of very -low income
households within our service area. All outreach material is targeted to those agencies and
information referral services that have contact and on -going access to very low income clientele.
The Program Staff will provide brochures and applications and will work with local agencies and
community groups such as Kitsap Community Resources, USDA -Rural Housing Services,
Kitsap Housing Coalition, Asset Building Coalition of Kitsap, Housing Resource Board of
Bainbridge Island, State of Washington, Department of Social and Health Services etc. Due to
the length of the Wait List, the Program does not consistently advertise in the local newspaper
publications.
II. PROGRAM OPERATION
1. BASIC FUNCTIONS
The basic functions which are provided by the Home Rehabilitation Program are as follows:
Provide program information and communication to the community and potential
applicants;
2. Housing inspections, technical advice, review of contractor qualifications and monitoring
of construction work;
Application and financial review, loan review and approval, loan processing, loan servicing
and loan draw processing;
4. Accounting support;
5. Program management including maintaining a reasonable production level, resolving
disputes; completing program reports, training staff, troubleshooting and other miscella-
neous functions.
IN
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2. ORGANIZATION AND STAFFING
The Home Rehabilitation Program is operated by the Kitsap County Consolidated Housing
Authority d/b/a Housing Kitsap. Staff includes, Program Director, Program Coordinator and
Construction Manager.
The Program Director is responsible for overall policy issues, review and approval of the
operations manual and review of all exceptions to approved guidelines and process. He/She is
responsible for developing, revising and monitoring the general program operation. The
Program Director supervises all program operations.
The Program Coordinator processes the loan application; prepares the loan package; closes
loans; and provides loan servicing. This work includes, but is not limited to, maintaining
accurate records and files on each applicant and providing the clerical, typing, scheduling and
bookkeeping support services along with the Finance Department staff person for the program;
providing general program information in response to phone and walk-in requests; assisting
owners, contractors and rehabilitation staff in scheduling needed appointments; conducting loan
application interviews, obtaining information verification, closing loans and maintaining the
financial records on each approved loan; servicing loans on completed projects; preparing
monthly activity reports, contacting each social service group that provides services to low
income Kitsap County residents; preparing newspaper advertising on program; and presenting
program information at community group meetings.
The Construction Manager provides technical services to the owner and contractor; prepares the
bid package; processes the draws; provides troubleshooting assistance on technical problems
which occur in the rehab process; and monitors the work process. The work of the Construction
Manager includes, but is not limited to, completing detailed initial building inspections,
inspection reports, preliminary work lists, heat loss analyses, and general cost estimates;
producing the complete final work lists, and soliciting and reviewing bids; conducting a pre -
construction conferences; monitoring the rehabilitation work; completing final inspections;
scheduling and assisting in the distribution of program information to each target area household
and property owner.
The Home Rehabilitation Program office is located at 345 6"' Street, Suite 100, Bremerton, WA
98337. The office is open from 8:00 a.m. to 4:30 p.m. during normal work days.
Community Information: News releases or brochures shall be issued periodically on the
program. Information will be distributed throughout the County and/or mailed to potential
applicants. The community information effort is to communicate with people who need
assistance at a pace which provides a reasonable flow of applications either through
advertisement and/or community partners. If the Wait List is long, the Program will hold off on
advertisement.
III. THE REHABILITATION PROCESS
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1. GENERAL DESCRIPTION
The housing rehabilitation process requires the Program Staff to work in a complex process,
advising participants with diverse interests and fulfilling many functions not usually expected of
public employees. The initial Program Staff function is to communicate the details of the
rehabilitation process and requirements to the individual applicant. The Program Staff must be
able to advise the owner, review the feasibility of the application and make a preliminary
determination of the eligibility. When an application appears to qualify on a financial basis, the
Program Staff completes an independent and objective review of the conditions of the housing
unit and what repairs and improvements are needed.
After the preliminary review and approval, the Program Staff role shifts to technical advisor for
the owner. In the process of developing the final rehabilitation plan, the Program Staff needs to
provide advice and technical assistance needed by the owner in matching the housing
improvement needs with the available resources while meeting the Program requirements.
The Program Staff will select a contractor, and writes the planned work for conformance with
program requirements, the contractor (to insure that he or she is properly licensed and registered)
and the bid (for the reasonableness of the price and the potential for satisfactory completion of
the work within the available resources). Once a workable package is prepared, the Program
Coordinator submits a package to the Program Director for project approval.
Throughout the remainder of the rehabilitation process, the Program Staff shifts from role to
role: owner, advisor, public reviewer for conformance with Program requirements, loan officer
and mediator of disputes. The Program Staff prepares all loan documents, conducts a loan
closing and records all loan documents in conformance with local, state and federal laws and
regulations. The Program Staff reviews the proposed final construction documents for
conformance with Program and loan requirements and then advises the owner on the contract
execution. During the construction process, the Program Staff needs will be available to conduct
project inspections on the appropriateness of the work being completed. As loan officer, the
Program Staff reviews the work completed in response to requests for loan draws. Once the
work has been fully completed, the Program Staff reviews the rehabilitated building for
conformance with all of the Program standards and the approved rehabilitation plan.
After the housing has been rehabilitated, the Program Staff can provide additional valuable
assistance through follow-up, information and advice on periodic maintenance schedules and
warranty repairs needed.
2. STEP-BY-STEP INSTRUCTIONS AND FORMS
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The best assurance of providing a successful rehabilitation process resulting in improved housing
units at a reasonable production level with a minimum of disputes is to have a well defined, easy
to understand process, which clearly identifies each participant's roles and responsibilities. In the
following pages, the process is outlined in the steps. The title of the person who is usually
assigned the lead responsibility for the successful completion of a step is listed after the heading
for each step. Within the description of each step, the work objective is given and a
chronological work description is provided in a cookbook format. At each point where a
standard form or letter is needed the number of the appropriate form or document is listed in
parentheses. The standard forms and sample documents are included at the end of each step
description. The rehabilitation process is a legal and financial process which must be properly
documented and implemented. The steps described and forms included in this workbook are
organized and provided with the objective of reducing the paperwork and process to the
minimum required to provide a good quality product for participants in a reasonable amount of
time.
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THE REHAB PROCESS
Submit
application
` I
Perform
Renovation
Inspect
Progress
and
Approve
Determine
Application
Etigibilily
Bid Project
and Select
Contractor
Approve
8 Change
Orders and
Progress
Payments
14
Verity
t7wnersr►ip I
Income
Taxes
Insuran<:e
start
Environrrie
r�tal
i
Reviev.,
I
i�
Inspect
Property
Create
Work List
and Cost
Estimate
Sign Final
Conlracis
Record
Deed
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VERIFICATIONS REQUIRED FOR HOME REHABILITATION LOANS
1. Application: Fully completed & signed application.
2. Income: Determined by HUD, 24 CFR Part 5.609 Annual Income/Assets Worksheet.
Written employer verification or three of the most current pay stubs, current award letters
for SSA or SSD and last year's Income Tax Return (two year's tax returns if self-
employed).
3. Proof of Ownership: Last recorded Deed showing applicants ownership or mobile home
vehicle registration.
4. Assessed value plus 25% of estimated rehab cost of county assessor records.
7. Loan Security: Promissory Note and Deed of Trust.
HOME REHABILITATION LOAN PROGRAM
BID/CONTRACTING REQUIREMENTS
BIDS: Must advertise the contract for bid in a local paper of general circulation or through
the State website for Small Works Contractors. Should obtain 2 to 3 or more written
bids using Program bid forms. Utilization of one contractor under one contract for all
the work is the method preferred for completing the rehabilitation work. This method
has been selected because of the need for a fixed maximum cost on each loan and a
fixed time limit for completing the rehabilitation of each house. The Program Staff
reserves the right to solicit additional contractors based upon performance and/or
availability.
CONTRACT: Program standard form with up to four partial payments plus final.
APPLICATION
Responsible: Program Coordinator
In the application process, the interested owner/potential applicant should be provided with
overview information on the rehabilitation process, the processing time frame, the eligibility
requirements, the work which can be financed, and other specific program requirements. The
program needs to obtain a detailed application with information on the property to be
rehabilitated and information on the applicant's income and expenses. The property ownership,
income information provided will need to be verified before a loan is closed.
l . Provide people who contact the Program with information on the program, eligibility
requirements and priorities and an appropriate application form.
2. For people interested in submitting an application for a home rehabilitation loan, review the
application to the extent they have been able to complete it, including information on:
a. Property location;
b. Recent income (pay, Social Security, etc.) for owner occupants;
c. General description of rehab work needed on property;
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d. Loan, mortgage or real estate contracts; and
e. Ownership information.
3. Assist the applicant in completing the detailed application form.
4. Review the appearance of eligibility of the applicant (property location, ownership,
occupancy, indebtedness, income, etc.).
a. Owner occupied:
1) Very low income: Review the income information and location of the property to
insure that the property is within the County program area.
5. if the applicant appears to be ineligible for a loan, carefully explain to the applicant the
reasons for ineligibility.
6. If the applicant appears to be eligible for rehabilitation assistance, review with the owner the
appropriate detailed program description CDBG Owner Occupied Housing, and review the
process and requirements of the rehabilitation program with the applicant. Specifically
review:
a. The assistance to be provided by the program (detailed inspection, draft work list,
general cost estimate and a work plan, and contractor selection and construction
monitoring);
b. The work requirements and restrictions: all health and safety hazards must be repaired;
all cost effective energy conservation work must be included in the work to be done,
the majority of the funds must be used for health and safety repairs and energy
conservation work; limitation of modernization work; and non -essential or luxury
improvements cannot be completed with the public loan funds;
c. Maximum loan amounts, interest rates, if applicable, and repayment terms;
d. Loan documents and security requirements;
e. The process and probable time frame for loan and work approval.
Set-up a case file on the applicant including the name, address and appropriate dates.
An Environmental Review must be performed on each rehabilitation project. Check the
location of the property in relation to flood plains and age of the structure for historic
significance. Submit the Environmental Review form to CDBG for approval.
10. Check contractor debarment on the Excluded Parties List System (EPLS), Federal
debarment.
11. If the financial and ownership information indicates insurmountable problems, cancel the
inspection and review the reason for the disqualification of the application with the Program
Director. Send the owner a formal application rejection letter and right to appeal.
12. If the project appears to be feasible, give the Construction Manager the case file including
inspection forms and a note on the scheduled inspection time.
THE HOME REHABILITATION PROGRAM
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WHAT IS IT?
The Home Rehabilitation Program provides assistance for the rehabilitation of owner occupied
housing. The intent of the program is to assist in the provision of safe housing, affordable to
very low income people and to assist in the preservation of affordable housing and improvement
of older residential neighborhoods.
WHO IS ELIGIBLE FOR ASSISTANCE?
Owner occupied housing occupied very low income households county -wide outside of the city
of Bremerton.
WHAT ARE THE TERMS OF ASSISTANCE FOR OWNER OCCUPIED HOUSING?
The rehabilitation assistance is provided as a loan at zero interest, deferred for 20 years with no
required monthly payments for low and very low income owners.
WHAT TYPE OF WORK CAN BE FINANCED?
Basic health and safety problems and, as appropriate, barriers to handicapped accessibility.
Exterior deterioration and cost effective energy conservation work to be completed where
feasible. A majority of the rehabilitation costs must be in basic repairs, elimination of the
exterior deterioration and cost effective energy conservation improvements. Limited general
improvements to make a building more livable may be eligible for financing.
Grant and loans will be determined by the value in the home or property. Manufactured homes
on leased property will be grants and manufactured homes on land or homes on land will be
loans. Grants may be given to mobile homeowners on owned land if there is an emergency repair
due to health and safety, electrical, plumbing or leaking roof at the discretion of the Program
Director on a case by case basis.
HOW DOES THE LOAN AND REHABILITATION PROCESS WORK?
The building rehabilitation process is cautious and detailed, including a detailed property
inspection, condition analysis and cost estimate; analysis of project feasibility; verification of
ownership, income eligibility; development of a detailed rehabilitation plan and solicitation of
contractor bids by the staff; loan closing and contract execution; and disbursement of loan funds
on the basis of the work which has been completed. The Program Staff will assist you in
preparing for the rehabilitation of your house and in monitoring the work.
FOR MORE INFORMATION, PLEASE CALL (360) 535-6100
The Home Rehabilitation Program is an equal opportunity lender.
THE HOME REHABILITATION PROGRAM
HOUSING REPAIR GRANTS
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ELIGIBLE HOMEOWNERS: These grants may be available to homeowners with mobile
homes on leased land including disabled people, veterans or elderly as a priority that fall under
50% of the median income ( SEE TABLE # 1) for Kitsap County. Grants may be given to
mobile homeowners on owned land if there is an emergency repair due to health and safety at the
discretion of the Program Director on a case by case basis. This income eligibility will be
determined by using the "DETERMINING INCOME AND ALLOWANCES FOR HOME
PROGRAM MANUAL, specifically using the 24 CFR Part 5.609 method.
1. The house may be located within the Kitsap County outside of the city of Bremerton.
2. The homeowner must have been the owner and occupant of the house where work is needed
for a period of one or more years.
GRANT AMOUNTS AND TERMS: The maximum available Emergency Grant is $20,000.
ELIGIBLE WORK: Elimination of health and safety hazards and architectural barriers to access
by the handicapped.
GRANT REQUIREMENTS
GRANT DOCUMENTS: A Grant Agreement will be used to document the grant.
OTHER ELIGIBLE GRANT COSTS: Title information costs and necessary engineering fees are
eligible grant costs.
METHODS FOR COMPLETING THE REHABILITATION WORK: Utilization of one
contractor under one contract for all the work is the method preferred for completing the
rehabilitation work. This method has been selected because of the need for a fixed time limit for
completing the rehabilitation of each house. The Program Staff reserves the right to solicit
additional contractors based upon performance and/or availability of contractor.
All work must be completed by an annual contracted registered, insured, and bonded contractor..
The contractor must also not be debarred from or listed on the Excluded Parties List System
(EPLS), Federal debarment. The contractor must be an equal opportunity employer and reach out
to small, minority and women -owned subcontractors and suppliers.
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B. INSPECTION, WORK LIST & PRELIMINARY COST ESTIMATE
Responsible: Construction Manager
During the initial inspection, the existing housing conditions need to be documented in a detailed
format which is easy for the owner to understand. In addition, all of the basic information
needed in planning the home repairs should be gathered at this time, as needed (room sizes,
window sizes, photographs, etc.). A preliminary Work List and general cost estimate are needed
to make a preliminary determination on the feasibility of a housing rehabilitation loan.
Call to scheduled inspection.
2. Conduct a complete housing inspection utilizing the inspection forms in the inspection:
a. Indicate all health and safety hazards, including exterior building deterioration
problems;
b. Indicate the condition of all items listed on the inspection form;
c. List all repairs and improvements which appear to be advisable to complete during
rehabilitation;
d. List all special concerns or plans which the owner and/or occupant has for each area of
the house; and
e. Take all measurements needed to prepare a Cost Estimate, an Estimate of Value. Take a
picture of each exterior elevation and special conditions or problem areas.
3. Within a short time after the inspection has been conducted, review the field inspection
notes and complete a full inspection report and preliminary Work List.
4. Complete a preliminary Cost estimate/Value worksheet.
5. Any homes built prior to 1978 will get tested for lead hazards. If lead is present or presents a
hazard it must be stabilized. HUD Form lead safe housing check -list should be used and the
owner will be given a Protect Your Family From Lead In Your Home pamphlet.
C. PROJECT SELECTION
Responsible: Program Coordinator
The basic determination of eligibility for project participation and the approximate dollar amount
must be made at this time. This decision needs to be a careful balancing of need, public
objectives and protection of public funds. All applications must be evaluated on the basis of
established and objective standards which are consistently applied to all applications.
1. Review the feasibility of eligibility based on the additional information provided by the
Detailed Home Inspection Report and the Preliminary Cost Estimate/Value worksheet.
2. Owner Occupied: The home must be owner occupied. The Program Staff recognizes that
people who have variable and unpredictable income or potential for large and unpredictable
medical expenses (disabled/elderly/veteran people), people who have recently started a new
job, people with poor credit records and very low income people will not be able to use
private financing sources.
3. If the owner appears to qualify for the rehabilitation program, schedule an appointment with
the owner, the Program Coordinator and the Construction Manager to review the
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preliminary determination of the maximum loan amount for which the applicant has
qualified, the detailed home inspection report, the general cost estimate and the instruction
sheets for preparing a work write-up. Request the owner to bring any additional financial or
ownership verifications needed. However, income can be verified through copies of income
tax returns, award letters, paycheck stubs or employer records. Self-employed applicants
must provide copies of the most recent years of income tax returns.
4. If the owner is not approved the rehabilitation program due to eligibility, the project exceeds
the amount per project or the Walk Away Policy, review the application with the Program
Director and then send the applicant a letter stating the specific reasons for disqualification
and his or her right of appeal.
5. Review the project selection decision and maximum loan amount with Program Director.
6. In the preliminary review appointment, carefully review the inspection report and pre-
liminary work list, the work options and the cost estimates. Ask the owner to review the
preliminary work list to provide the basis for the final rehabilitation plan.
D. FINAL REHABILITATION PLAN/WORK LIST
Responsible: Construction Manager, Program Coordinator
During this step, the Program Staff will develop a specific housing rehabilitation plan which is
feasible to complete within the loan funds available and which meets the program requirements.
The plan must include specific work and material descriptions, which will enable the Program
Staff to solicit a complete bid. This work description will also be the basic document in the
construction contract.
Provide owners with a copy of the Loan Agreement.
2. Review the Work List which has been prepared by the Program Staff.
3. Prepare revised cost estimate based on the final rehabilitation plan and the selected method
for completing the work. If the revised cost estimate substantially exceeds the maximum
potential loan amount, the Construction Manager will revise the Work List, as needed, to
reduce the cost of the work, but must address all health and safety issues. Cost reductions
should be approached by first selecting less expensive repairs or material; second (if
needed), by eliminating some or all modernization and general improvements work; and
finally (if still needed), by cutting the exterior deterioration and building conservation
improvements. If justified and needed, the Program Director at its discretion may increase
rehabilitation amount. Correction of all health and safety hazards and any immediate lead -
based paint hazards must always be completed.
4. Review the final Work List to assure that health and safety hazards indicated in the detailed
inspection report will be corrected and that any historic conditions will be met. If all
hazards will be corrected, have the work list typed in final form, if needed.
REHABILITATION LOAN PROGRAM
COMPLETING A FINAL REHAB PLAN
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(WORK LIST)
IDENTIFYING PROBLEMS:
Review the detailed inspection report and list any problems you now have with the building
which are not indicated on the inspection report. The list of problems needs to be prioritized
according to the following categories:
1. HEALTH AND SAFETY HAZARDS -- potential fire hazards, faulty wiring, leaking
plumbing, unsafe stairways, lead, leaking roofs, settling foundations and other hazards.
2. ENERGY CONSERVATION PROBLEMS -- those conditions (furnace, insulation, etc.)
which, if corrected, will reduce future heating and operating cost to the owner or occupants.
3. EXTERIOR DETERIORATION AND BUILDING CONSERVATION PROBLEMS -
roofs, gutters, exterior painting and other areas which are in poor condition but not
hazardous, which if corrected now will improve the neighborhood appearance and save
maintenance and repair costs.
4. COSMETIC PROBLEMS -- cosmetic improvements cannot be paid for with public
rehabilitation loan funds.
The Construction Manager will review the inspection report, identifying additional problems.
PREPARE A WORK LIST:
The Construction Manager will develop a detailed list of the work which will be done on your
home.
The Program Staff will review the Work List on what work can be financed with a rehab loan:
Health and safety hazards, immediate lead -based paint hazards and exterior building
deterioration should be corrected.
2. Cost-effective energy conservation work should be completed, if possible.
3. The majority of the rehabilitation costs should be spent in correcting health and safety
hazards and doing work which will reduce the long-term maintenance & operating costs of
your house.
4. Exterior deterioration should be corrected if possible. Modernization work is limited.
5. Improvement of the site and accessory buildings cannot exceed 10% of the project costs.
6. The cost of wood stoves cannot exceed 10% of the loan amount, unless it is the primary
source of heat.
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7. The cost of purchasing and installing wood stoves is limited to standard quality appliances
necessary for normal household operations.
8. The cost of cosmetic work to simply change the appearance of the building cannot be paid
for with public rehab loan funds.
9. The purchase of furniture, area rugs, carpet (except attached wall to wall carpet) CANNOT
be financed with a rehab loan.
10. The purchase or installation of non -essential or luxury items CANNOT be financed with a
rehab loan.
11. All manufacturers, including, but not limited to, Puget Sound Energy, Natural Gas and
product rebates from materials, fixtures and appliances installed in the rehabilitation will be
returned to the Home Rehabilitation Program and applied to the loan of the owner. If funds
are granted, the rebate will be recycled back into the Program and used as Program Income.
The final rehab plan Work List will be developed by the inspection report. Through adding to or
changing the Work List, the Construction Manager can develop a final plan which includes
EVERY WORK ITEM which will be done (replace front door hardware with new entrance
lockset and dead bolt lock, install bath fan, etc.). The plan needs to indicate the LOCATION of
each work item (northwest bedroom, east living room wall, etc.); and the QUALITY LEVEL
(panel door to match existing doors, etc.). The Construction Manager also needs to select and
indicate in the work list, where possible, the COLORS, PATTERNS, etc., for floor coverings,
light fixtures, paints.
The final Work List is the full listing of all the work to be done on your building. IF IT IS NOT
WRITTEN IN THE WORK LIST AND CONTRACT, THE WORK WILL NOT BE DONE.
E. SOLICITATION OF BIDS/CONTRACTOR SELECTION
Responsible: Construction Manager
In this step, the Construction Manager will select a contractor who will complete the work within
the available funds for the best value considering price, quality of work and ability to complete
the work within the time required. Utilization of one contractor under one contract for all the
work is the method preferred for completing the rehabilitation work. This method has been
selected because of the need for a fixed time limit for completing the rehabilitation of each
house. The Program Staff reserves the right to solicit additional contractors based upon
performance and/or availability of contractor. The Program Staff will solicit bids through an
annual procurement process. The program must review the selected bid and contractor to ensure
that a reasonable price will be paid and the selected contractor is licensed, bonded, and insured,
and able to satisfactorily complete the work. Since the rehabilitation process requires many
compromises to be made and results in personal inconveniences to the occupant, it is important
that the owner has a personal commitment to the contractor selected. The primary role of the
Program is to review the selected contractor for acceptability based on program standards and
requirements.
All work must be completed and contracted to a registered, insured, and bonded contractor. The
contractor must not be debarred from or listed on the Excluded Parties List System (EPLS),
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Federal debarment. The contractor must be an equal opportunity employer and reach out to
small, minority and women -owned subcontractors and suppliers.
I . The Construction Manager will determine that the bid is within the maximum approvable
loan amount, review the following items with the owner:
a. the final work list;
b. the final cost estimate;
c. instructions for soliciting bids;
d. bid/construction contract forms;
e. general conditions
f. general construction standards;
g. contractor's qualification statement forms; and
h. a compilation of bids.
The Construction Manager will solicit contractors annually by utilizing the MRSC Roster in
accordance with RCW 39.04.155.
LOAN PACKAGE
Responsible: Program Coordinator
This step consists of the formal loan application and the preparation of the legal loan documents.
The final loan review and approval is completed at this time.
1. Review the verifications, title information, household profiles, rehabilitation costs, estimate
of value, and maximum loan amount to verify the applicant's eligibility for a loan.
2. Review the loan costs (title costs, rehab costs, change order contingency amount up to 10%
of the initial rehab costs, taxes, insurance) and establish the maximum required loan amount
and completing a work list and cost estimate and a Loan Agreement (on housing rehab
loans). The actual amount distributed on a loan cannot exceed the Promissory Note amount
unless a full new loan package is prepared, a new loan review is completed, and a new loan
Promissory Note has been signed.
If the required loan amount and terms are not feasible within adopted program policies or
within limits, which could be recommended to the Program Director, return the bid to the
Construction Manager to make, with the assistance of the selected contractor, the necessary
work and cost reductions.
4. Compile the final documents, and review it with the Program Director. The documents
include:
a. the loan application;
b. title information;
b. verification of income; Using 24 CFR Part 5.609 method. Annual Income/WorkSheet;
d. house photographs;
e. final bid proposal;
f. compilation of bids, if applicable;
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g. after -rehab market analysis;
h. loan agreement with the final work list attached.
Program Director reviews all final loan packages for conformance with adopted program
policies and applicable laws and regulations and approves, revises or rejects the final
package.
6. Proceed with loan closing.
G. LOAN CLOSING
Responsible: Program Coordinator
This step is primarily a legal process, which must be completed in a careful and detailed manner.
The final loan preparation must be completed at this time, loan funds drawn down, loan closing
conducted and the rehabilitation contract awarded.
As soon as the loan is approved, schedule the loan settlement (schedule one hour to insure
that all questions can be answered) and complete the following items:
a. Order a title search to verify the ownership;
b. Prepare the loan documents -- a Disclosure Statement, a Promissory Note, Deed of
Trust, and a Notice of Opportunity to Rescind -- in conformance with final approved
loan amounts and terms; or prepare a Grant Agreement; and
c. Have the Construction Manager prepare the Schedule for Work Completion and
Progress Payment Inspection Form, if applicable.
2. On the scheduled closing date, conduct the loan closing:
a. Carefully explain and review with the owner and obtain the applicant(s)' signatures on
the Disclosure Statement, Loan Agreement, the Promissory Note, the Deed of Trust,
and the receipt of Notice of Opportunity to Rescind. Carefully explain that, if they
have concerns about the loan, they may put the loan on hold by returning the rescission
within 3 working days;
b. Provide the owner with a copy of the Disclosure Statement, Notice of Opportunity to
Rescind, Promissory Note and loan payment notification;
c. Review the status of the construction contract(s); and
3. Record the Deed of Trust upon completion of the home rehabilitation.
4. Make a copy of the following items for the file:
a. the inspection report;
b. the final work list;
c. site visit inspection forms; and
d. bid contract and Notice to Proceed.
H. CONTRACT EXECUTION AND NOTICE TO PROCEED
Responsible: Program Coordinator, Construction Manager
The requirements of the contract documents, the construction time frame and the responsibilities
of the various participants must be carefully reviewed at this stage. This review will reduce the
number of misconceptions, misunderstandings and conflicts which will occur in the construction
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process. The major concerns which must be reviewed with the contractor are the standards
which must be used in the work to qualify for a contract payment, how and when they get paid
and, how changes in the work are to be proposed and approved. The major concerns, which
must be reviewed with the owner, are the actual work to be completed, the time frame for the
work, how to prepare for and facilitate the contractor's work, and the owner's responsibility in
monitoring the work.
1. If the rehabilitation work includes complex code interpretations, schedule a building and
work review with the contractors, and appropriate agencies (Fire, Building, Planning, etc.).
2. As soon as the Schedule for Work Completion and Equal Opportunity Certification have
been filled out by the contractor and reviewed and approved by the owner and Construction
Manager, schedule a pre -construction conference with the contractor and the owner.
At the pre -construction conference, the owner, the contractor and the rehab specialist will:
a. Review the following items:
(1) The schedule for the contractor to be in the home;
(2) The contractor's access to the building;
(3) The occupancy during construction;
(4) When and what furniture needs to be moved;
(5) Storage of valuables;
(6) The selection of light fixtures, cabinets, floor coverings, paint colors and other
finish materials;
(7) The work to be completed and the construction standards;
(8) The conditions and times of loan draws and payments to the contractor;
(9) The need for permits and lien waivers; and
(10) The process for proposing and approving changes in the work.
b. Execute the Construction Contract, and attach the final work list and drawings;
c. Provide the contractor with Lien Release form;
d. Provide the owner with a copy of the Construction Contract.
4. Take photographs of the before rehab building conditions.
Make copies of the Schedule for Work Completion, the Bid/Contract and the Notice to
Proceed for the working files.
L REHABILITATION WORK
Responsible: Contractor, Program Construction Manager
During this step, the primary responsibility of the Program Staff is to assure that the contracted
work has been performed according to the contract documents before loan draws are approved.
In addition, the Program Staff provides technical advice as needed by the owner or contractor.
To successfully resolve disputes between the owner and contractor, it is essential for the staff to
maintain the position of an objective third party who is utilizing the written contract documents
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to interpret the work requirements and standards. The Program Staff will become ineffective if
he/she becomes the personal advocate for the owner or contractor. The contract is between the
owner and contractor. The public program must assure that the funds are being properly utilized
to pay for the contracted work which has been performed to the program standards.
Provide advisory inspections to the owner and contractor on an as -needed basis. Fill -out a
site visit form unless the Schedule for Work Completion is being completed.
2. To process loan draws, the Construction Manager must:
a. Review the contractor's or supplier's invoice. The invoice should list his/her name and
address, the address of the rehabilitation project, the amount of work completed or
supplies provided, as of a specified date, and the amount of payment requested;
b. Inspect the work using the Work List which were prepared and approved before the
work began to verify the amount of work completed and the amount of the eligible
progress payment;
c. Verify that all required permits have been obtained before the first payment is
approved, and verify that only the final permit inspection remains before the 80% draw
is approved and 10% retention at all times until completion and satisfaction of Lien
Release;
d. Take photographs of the work in progress; and
e. Sign the appropriate inspection approval form and submit the draw request to the
finance department for payment approval as soon as the above conditions have been
satisfied.
3. To process a loan draw, the Program Coordinator must:
a. Verify that the Construction Manager has approved the draw for Work Completion;
b. Verify that the appropriate invoices have been received and adequate loan funds are
available; and
c. Before approving the first draw, verify that the Deed of Trust has been signed, and
adequate insurance is in place.
4. Have all loan draw checks made out to the borrower and supplier or contractor and attach
check stub to voucher for the loan file. Enter each draw on the checklist and wall chart.
Review all proposed changes in the Construction Contract and Work List. All changes must
be in writing or an approved Change Order form. The rehab specialist must review and
approve each change order for the appropriateness of the work and costs. All changes must
be processed by written Contract Change Order. Changes which would result in total loan
disbursements exceeding the Promissory Note amount cannot be approve unless a full new
loan package is prepared and the property owner signs a new Promissory Note and
Disclosure Statement for the revised loan amount.
6. On final inspection, complete an inspection if any work remains to be completed or
corrections are needed. When all work has been satisfactorily completed, fill out the Final
Inspection form . In completing the final inspection, review the original inspection report to
determine that all health and safety hazards have been eliminated, review the Construction
DocuSign Envelope ID: 1BE16717-1BD5-4A24-ADBF-30886FC79CBA
Contract/Work List to determine that all contracted work has been completed and obtain
copies of all permits, showing final approval by the appropriate inspector and owner. Take
photographs of the completed project.
7. Review the contractor's final invoice, the complete the Lien Release. Submit the Final
Inspection form with the completed invoice to the finance department for processing the
final payment.
J. LOAN CLOSE OUT
Responsible: Program Coordinator
This is the clean-up step. The final accounting of loan funds and the owner's evaluation of the
program are the major items to be completed.
After all rehabilitation work has been completed and approved, review the final inspection
report(s), the contractor supplied and executed Lien Release.
2. Process the final draw of loan funds.
3. Unutilized loan funds shall be shown as a reduction in the outstanding principal amount of
the loan.
4. Review the loan file to insure that all final documents have been obtained:
a. the final inspection report;
b. change orders;
c. signed off permits;
d. lien waivers; and
e. the original executed Promissory Note and recorded Deed of Trust.
K. WALKAWAY POLICY
Responsible: Program Director, Program Coordinator, Construction Manager
Providing Rehabilitation Services in a safe and effective manner, without undue hazards to
household members, our staff, or contractors is the focus of creating the following "Walk Away
Procedures for Rehab Jobs".
The following components may affect the completion of Rehab Services on your dwelling.
• Structural conditions
• Health and safety conditions
• Miscellaneous conditions
Structural Conditions
Major foundation repair or replacement
Major plumbing repairs
Extensive door or window replacement
Major electrical repairs
1. Knob and tube replacement
2. Breaker panel replacement
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Major framing repairs
Broken roof trusses
Major repairs to ceilings, floors, walls
Health and Safety
Health and Safety issues are interrelated to structural issues on many occasions. The following
list represents several of those conditions that have been noted in the past. The list by no means
represents all unsafe conditions.
• Rodent infestation (mice, rats, skunks, raccoons etc.).
• Insect infestation (termites, roaches, hornets, etc.).
• Dangerous animals
Unsanitary living conditions
• Water and/or sewage backup (broken, disconnected pipes, poor drainage, etc.).
• Unsafe storage of flammable or other dangerous materials (gasoline, propane, garbage,
etc.).
• Carbon monoxide from heating sources or appliances that cannot be replaced.
• Debris or odors left behind as a result of animals and/or humans.
• Un-vented combustion space heaters and/or appliances.
Excessive mold
• High level of asbestos
Miscellaneous
Every circumstance that justifies walking away cannot always be defined. The following list
identifies several of those conditions. This list by no means represents all conditions that may
warrant Housing Kitsap to deny applicant of services.
Owners attempting to use the program solely for improvement purposes.
Owner has not authorized rehabilitation of property.
• Structure is scheduled for demolition or removal from property.
• Structure is unfit for human habitation.
• Structure is for sale.
• Illegal activities or the suspicion of illegal activities including Illegal drugs, the use, sale,
or manufacturing of.
Property is currently vacant.
Inaccessibility or inadequate access.
Inappropriate storage (attic or crawl spaces being utilized for storage).
Cost of repairs is beyond scope of Rehabilitation program funding.
Domestic issues and/or the use/threat of violent or abusive behavior.
Not located within Housing Kitsap's service territory.
Guidelines For Notification
In many situations all that may be needed is for the applicant/owner to have ample time to
correct
the deficiencies that have been identified by the Construction Manager. With that in
perspective, the following steps have been identified to help assist the parties involved with the
completion of rehabilitation services. This process will be identified as "Delay of Service
Notification".
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1. Hazard(s) or condition(s) may be identified by any of the following individuals or agencies;
Energy Technician, Contractor, Property Owner, Utility Representative, or other
governmental agencies. Pictures (optional) and field notes will be placed in the job file for
further docurnentation or hazard(s).
2. Housing Kitsap will notify the property owner and or occupants involved of the hazard or
situation that requires the necessity to issue the "Delay of Service Notification".
• All parties involved will be notified.
• This will include verbal confirmation and written at the time of property evaluation to all
parties involved.
I=01uIIIDo11V.%�,R,711elMA
Responsible: Construction Manager
The Contractor hereby guarantees the Owner the construction performed on that certain
structure to be free from defects in material and workmanship for a period of one year from the
date of commencement of use, substantial completion or date of notice of completion, whichever
is the first to occur:
This Limited Warranty applies and is limited as follows:
1. To the property only as long as it remains in the possession of the original Owner named
Above.
2. To the construction work that has not been subject to accident, misuse or abuse.
3. This Limited Warranty only applies to the workmanship and materials supplied and
performed by this contractor.
4. To the construction work that has not been modified, altered, defaced, or had repairs made
or
attempted by others.
5. That Contractor be immediately notified in writing within ten (10) days of first knowledge
of
defect by owner or his agent.
6. That Contractor shall be given first opportunity to make any repairs, replacements or
corrections to the defective construction at no cost to owner within a reasonable period of
time.
7. Under no circumstances shall contractor be liable by virtue of this warranty or otherwise for
damage to any person or property whatsoever for any special, indirect, secondary or
consequential damages of any nature however arising out of the use or inability to use
because of the construction defect.
M. LOAN PORTFOLIO MANAGEMENT
Responsible: Program Coordinator
1. Annual Loan Portfolio Review
a) Follow "CDBG Borrower Verification Process" flowchart, including:
• Review of loan terms and conditions
• Review of Assessor's parcel search website
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• Review of Auditor's Public Records
• Verification of taxpayer mailing address
• Review of utilities records for site address
b) Determine outcomes of Annual Loan Portfolio review
1. Loan is Valid
0 Continue deferment
2. Borrower Default
• Loan has expired, request write-off
3. Property Transfer or Change in Use — Loan due in full
Send Letter notification that loan is due in full
• Borrower pays off loan via 1) Lump Sum or 2) Payment Plan
• Consider foreclosure proceedings or collection agency if no response or cannot repay
Il. Loan Modification Policy and Procedures for Defaulted Loans
a. Housing Kitsap will consider loan modification to extend deferment period for loans or to
establish a payment plan for borrowers who 1) reside full-time in the home for which the
loan was provided, and 2) qualify at 80% of area median income or less (based on HUD
guidelines) at the time modification is requested.
b. Housing Kitsap will consider loan modification to establish a payment plan for loans for
borrowers who 1) reside full-time in the home for which the loan was provided, and 2) earn
in excess of 80% of area median income (based on HUD guidelines) at the time
modification is requested.
II1. Steps for Loan Modification
a. Continued Deferment:
• Staff revises Promissory Note and Deed of Trust to reflect additional years of deferment
• Additional deferment years are determined on a case by case basis
• Borrower must agree to the changes and sign revised documents
• Borrower must agree to pay the cost of recording and reconveyance fees for the revision,
either as cash or as an addition to the loan amount owed
• Staff records revised Deed of Trust
• Staff requests reconveyance on old Deed of Trust
b. Payment Plan:
• Staff works with borrower to set up a payment plan acceptable to both parties
Staff revises Promissory Note and Deed of Trust to reflect years of deferment equal to the
length of the payment plan
Promissory Note to include terms of Payment Plan
• Borrower must agree to the changes and sign revised documents
• Borrower must agree to pay the cost of recording and reconveyance fees for the revision,
either as cash or as an addition to the loan amount owed
• Staff records revised Deed of Trust
• Staff requests reconveyance on old Deed of Trust
DocuSign Envelope ID: 1BE16717-1BD5-4A24-ADBF-30886FC79CBA
Housing Kitsap issues an annual statement to borrower of amount owed after payments
are applied
If Borrower does not adhere to payment plan, loan defaults and Housing Kitsap may
begin foreclosure proceedings
1V. Policy and procedures for loan forgiveness and write-off
a. Loan Forgiveness
• Applicable to loans that are 20 years or more and/or past recoverable period (statute of
limitations)
• Must be approved via Board action
• When applicable, staff will present loans for forgiveness annually for Board action to
forgive the loan(s), if any
• Adjust Portfolio assets for financial reporting
• Staff initiates reconveyance of title or Quit Claim Deed, collect reconveyance fee from
Borrower when possible
b. Loan Write-off
• Applicable to defaulted loans
• Staff will provide summary of defaulted loans (if any) to finance in end of year reporting
• Adjust Portfolio assets for financial reporting
• Loans that meet the 20 year obligations convert to grants and write off loans
c. Year-end report of accurate loan portfolio assets to finance
• Listing of loans outstanding
Detail of payoffs, defaults, and forgiveness
• Summary of activity and balances at 12/31
N. SUBORDINATION OF LOANS
Responsible: Program Coordinator and Program Director
The Home Rehabilitation Program may allow a debt which has priority, to take second position
behind another debt under the following conditions:
• This loan is a rate reduction, no cash back to Borrower; Housing Kitsap will allow
reasonable closing costs as provided in HUD-1
• Review Good Faith Estimate and HUD-1 Settlement Statement prior to closing and a
copy of the final HUD I Settlement Statement provided to this office upon closing
• Lender to prepare subordination agreement
• Copy of recorded subordination agreement
• Copies of pay stubs, current tax return, and award letters of all household members
Housing Kitsap listed as second mortgagee with Homeowners Insurance
O. LOAN MODIFICATION
Responsible: Program Coordinator and Program Director
The Home Rehabilitation Program may modify loans terms and conditions to facilitate transfer
of ownership to family member if they meet the loan criteria for low income eligiblity
requirements.
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Left intentially blank.
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DocuSign Envelope ID: 1BE16717-1BD5-4A24-ADBF-30886FC79CBA
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