NSP DEVELOPER ARRESALE PROGRAM PROCEDURES HERA 2301(c)(3)(B) purchase and rehabilitate homes and residential properties that have been abandoned or foreclosed upon, in order to sell, rent, or redevelop such homes and properties; Phase 1: Property Conveyance, Scope of Work and Contractor Selection The City will convey the property to the Developer immediately after the acquisition closing. Prior to closing, the Developer may chose to access the property (provided the seller gives permission) in order to complete a thorough Scope of Work. Developer will be given a copy of the City generated Inspection Summary form NSP1-180C-NLV to be used as a reference guide as to the items inspected by the City. In addition to the Inspection Summary, the developer will be provided a copy of the Environmental Review and appraisal conducted on the property along with its Covenants, Conditions and Requirements. 1. City will create a summary outline of repairs required to meet minimum code compliance (if code violations are discovered). Included in the summary outline will be the necessary repairs required to bring the property to HUD minimum property standards and identify property improvements. Also, the assessment of the property will identify key repair and replacement measures which will increase the energy efficiency and home performance of the property. This inspection summary document (form NSP1-180C-NLV) will be compared against the developers own property analysis (NSP1-182-NLV & Home Performance Energy Audit Report) to obtain the necessary scope of work and cost estimates needed to conduct rehabilitation on the property. A: Inspection Summary NSP1-180C-NLV B: Scope of Work and Cost Estimate-NSP1-182-NLV C: Home Performance Energy Audit Report 2. Developer to require that each housing unit is inspected by a Building Performance Analyst/Energy Auditor certified by HERS and RESNET (City will provide list of certified auditors to Developer) to evaluate the energy performance of the building and to determine the energy efficient activities that need to be accomplished in accordance with established program guidelines. A: Home Performance Energy Audit Report B: HomeFree Nevada HERS-BPI list as of 10/2009 3. Developer creates a scope of work and cost estimate to be utilized for property rehabilitation which is determined by the property inspection and energy audits conducted on the site, in accordance with local codes along with City rehabilitation 1
standards. Soliciting several bids alone is not a substitute for preparing an independent cost estimate. In addition, the developer will prepare a Rehabilitation/Construction draw request schedule to submit, along with the Scope of Work and Cost Estimate (NSP1-182- NLV), Home Performance Energy Audit Report, a preliminary ARResale Unit Project Budget (NSP1-220A-NLV), if applicable, contractor s agreements, and proof of Non-Debarred status to the City for review and approval. Should the City find it necessary to obtain clarification of the information submitted for approval for property rehabilitation by the developer or need additional information, form NSP1-181-NLV (Request for Additional Information) will be used. Once all submittal requirements have been met, and all approved rehabilitation items have been authorize by City staff, a City approved scope of work along with a Notice to Proceed (NSP1-186-NLV) will be given to the developer. At this time construction contracts can be signed and rehabilitation of the property may commence NOTE: Developer may select any non-debarred licensed General Contractor that demonstrates competence to undertake construction in conformance with the established Property Rehabilitation Standards and Guidelines. The Developer must verify that selected contractor(s) is not on the debarred list and Developer is to keep on file a certification of non-debarred status (NSP1-120-NLV) of all contractors. A. Request for Additional Information - NSP1-181-NLV B. Scope of Work/Cost Estimate form NSP1-182-NLV C. Notice to Proceed NSP-186-NLV D. ARResale rehabilitation Document Checklist NSP1-210-NLV E. Preliminary ARResale Unit Project Budget (NSP1-220A-NLV) F. Rehabilitation/Construction Schedule G. Construction and Draw Request Schedule H. Home Performance Energy Audit Report I. CNLV NSP Property Standards and Guidelines J. NSP Construction Standards Guide K. Home Performance Standards for Warm Climates L. Contractor s Agreements M. City Approved Scope of Work N. North Las Vegas Building Code O. North Las Vegas Planning and Zoning Ordinance North Las Vegas Building and Planning and Zoning codes may be accesses via the World Wide Web by pasting the following path to your browser at http://library.municode.com/index.aspx?clientid=16023&stateid=28&statename=nevada Phase 2: Rehabilitation Management The developer will have the responsibility for overseeing the entire rehabilitation process and will periodically (or as requested) provide the City with the necessary progress updates as well as make all necessary requests (e.g. Inspection, financial, administrative) to the City so as to ensure all program activities are 2
carried out in accordance with City of North Las Vegas Neighborhood Stabilization program regulations. 4. Rehabilitation activities will include construction oversight by the Developer. City is to be notified of pre-construction meetings and reserves the right to participate in those meetings and conduct routine site visits. A Status Report will be submitted by the developer at monthly or as requested, to the City detailing the individual progress of each property. All Rehab Activity will be inspected by the City as needed. Project monitoring will be conducted via desk top or on-site by City staff so as to ensure program compliance and identify any issues relating to the program process and to assist in creating a solution as needed. Developer may request, as desired, an intermediate progress inspection by the City to ensure rehabilitation work timeline+ is kept so as to avoid project delays. A. NSP Intermediate Inspection Request form NSP1-188-NLV B. ARResale/ARRental Monthly Status Report NSP-240-NLV 5. City is interested in any change orders between the contractor and Developer. If the change order reflects a change in the authorized scope of work, it will require City approval prior to implementing the change. FORM/DOCUMENTS USED FOR THIS PROCESS: A. Change Order Request form - NSP-187-NLV B. Revised Scope of Work/Cost Estimate form NSP1-182-NLV 6. When construction and rehabilitation is complete, Developer will schedule a punch list inspection with the NSP Program Administrator. In addition, an inspection by a Building Performance Analyst/Energy Auditor (certified by HERS and RESNET) will also be scheduled. A list of items to be corrected will be provided to the Developer and the contractor. Until punchlist items are corrected to the satisfaction of the Developer and the inspector, and required permits are issued, and the receipt of the revised Home Performance Energy Audit Report, the Developer will not be allowed to proceed to property disposition. 7. The City will progress pay the rehabilitation expenses upon receipt of the required documentation and Request for Payment forms; requests should not be submitted more often than twice monthly. Advances on work will not be approved. The City may retain 10% until the project is complete (disposition of the property). 8. Upon completion and prior to final payment, contractor shall provide Developer all warranties, as-built drawings, operation manuals, guarantees and release of liens. As part of NSP1 requirements, the developer must be in compliance with Section 3 of the Department of Housing and Urban Development Act of 1968. 3
A. A cover letter requesting reimbursement on Developer letterhead. Please indicate the dollar amount of request in this letter. B. A completed Request for Payment form (NSP1-231-NLV) with progress narrative. C. Contractor s invoice with percentage of work completed. D. Copies of checks and cancelled checks for payments made (front & back). In the case of wire transfers copy of the wire transfer entry and wire transfer receipt conformation. E. NSP1 Rehabilitation Punchlist- NSP1-183-NLV F. ARResale Project Completion Certification and Request for Inspection NSP1-236-NLV G. Final Home Performance Energy Audit Report H. HUD 2516 Contract and Subcontract Activity Phase 3: Applicant Eligibility/Disposition Once Rehabilitation has been completed, efforts to sell the property should be underway. Developer identifies a specific buyer for the completed unit and determines the buyer s eligibility for the program (24 CFR Part 5). The eligible homebuyer then purchases the home from the Developer. Intake and Eligibility 9. The Developer provides the list of the completed properties to a wait list of eligible participants and begins to market home to potential homebuyers and/or a realtor. The home is to be advertised at fair market value however it cannot be sold for more that the cost to acquire and rehab the property. The Developer is ultimately responsible for ensuring that the homebuyer is eligible for NSP. In the event that the homebuyer does not come already preapproved for NSP through one of the four NSP HAP Subrecipients, the Developer is responsible for determining eligibility of the potential homebuyer (see Hap Program Procedures for Subrecipients). If eligible, the Developer completes the intake process and forms including income worksheet (use Part 5 for income determination). The Developer s housing counselor assists homebuyer to determine down payment amount, approximate mortgage amount, and eligible direct homebuyer assistance available through NSP. A. HAP Program Procedures for Subrecipients B. NSP1-305-NLV HAP Intake Application Content Guide C. NSP1-306-NLV HAP Intake Application Required Certification Language D. NSP1-310-NLV HAP Income Worksheet and Instructions E. NSP1-311-NLV HAP Income Inclusions and Exclusions 4
10. Homebuyer that meets NSP program eligibility requirements makes loan application and arranges financing with lender. Developer may create list of preferred lenders and title companies through the issue of RFQ for the homebuyer to choose. Borrower may already be pre-qualified for mortgage financing and must have completed the required eight (8) hours of homebuyer education through a HUD-certified agency. A. List of preferred Lenders B. Current Certificate of Completion of Homebuyer Education C. 24 CFR Part 5, Income and Eligibility requirements 11. Developer provides City with an updated Project Budget, Purchase Agreement between the Developer and the homebuyer. Upon approval, City issues Developer a Notice to Proceed so as to move forward with the transaction. D. Current/Updated Project Budget NSP1-220B-NLV E. Purchase Agreement F. Disposition Notice to Proceed NSP1-286-NLV 12 Lender completes credit package and approves borrower for 1 st mortgage in conjunction with NSP funded loan if also utilizing direct homebuyer assistance. Homebuyer assistance to be determined based upon homebuyer eligibility requirements of the program up to a maximum amount of $25,000. Homebuyer assistance to be provided as a soft-second deferred loan at zero percent interest. The 1 st mortgage loan must be a traditional fixed-rate mortgage. Lender sends copy of complete credit package to Developer for review of program eligibility. 13 Developer submits a Loan Closing Document Checklist, Final Project Budget, Project Completion Document Checklist, confirmation of homebuyer eligibility, and closing date to City for set up two weeks in advance of closing. City to send funds for soft-second loan to Title Company prior to closing. Developer issues a commitment and provides to the homebuyer the Deed of Trust, Promissory Note, and Loan Agreement to be executed by homebuyer at closing. A. Loan Closing Document Checklist NSP1-225-NLV B. Commitment Letter C. Deed of trust D. Promissory Note E. Loan Agreement F. Project Completion Document checklist NSP1-235-NLV G. Final Project Budget NSP1-220B-NLV H. HUD-1 Settlement Statement 5
I. Current Property Appraisal 14 At closing, the direct homebuyer assistance (down payment assistance, principal buy-down and/or closing costs) funds are available as a deferred loan at zero percent interest for a period determined by the amount of direct assistance. The Homebuyer will complete the Loan Agreement with the Developer, Deed of Trust and Promissory Note naming the City of North Las Vegas as Beneficiary. 15 Title Company will issue check payable to the Developer for the sale price of the property this is program income and must be repaid to the City for use in other eligible NSP projects. The Developer is responsible for reviewing the closing package for compliance. 16 Upon disposition, project is complete. Developer submits Client Statistics Report to City. G. Homebuyer Statistics Report NSP1-250-NLV H. Copy of executed Loan agreement I. Copy of executed Deed of Trust J. Copy of executed Promissory Note 17 Developer requests final payment and the Project Delivery Fee as well as final payment for property rehabilitation are to be submitted to the City through the Request for Payment Form () and provides progress narrative with required documentation. K. NSP1 ARResale Project Completion Checklist - NSP1-235-NLV L. Final Project Budget NSP1-220B-NLV M. Request for Payment NSP1-231-NLV N. Progress Narrative and all required documentation O. Post-rehab Appraisal P. Final Purchase Agreement between Agency and Homebuyer Q. Homebuyer Certificate of Completion (8 hours HUD-certified counseling) R. HUD-1 Settlement Statement 6
RELEVANT DEFINITIONS: Abandoned. A home is abandoned when mortgage or tax foreclosure proceedings have been initiated and completed for that property, no mortgage or tax payments have been made by the property owner for at least 90 days, AND the property has been vacant for at least 90 days. Acquisition Costs. Acquisition costs that will be considered reimbursable at the time of sale cannot exceed the appraised market value conclusion determined of the home at the time of purchase. Acquisition costs include payment of any and all liens to obtain a clean title to the property, appraisals, hazmat reports, energy or BEPS audit reports, code compliance costs, work scope reports, systems performance analysis costs and other costs itemized in the Program Budget under Acquisition Delivery Fee (Exhibit B ). Area Median Income. Income limits are calculated by HUD in accordance with Section 3(b)(2) of the United States Housing Act of 1937, as amended. These limits are based on HUD estimates of median family income, with adjustments based on family size. These figures are updated on an annual basis and new limits will be utilized as published. These limits are available on the www.hud.gov website. See Exhibit D for HUD NSP Income limits as of April 2009. Areas of Greatest Need. City has geographically identified the locations of greatest need based on the areas with the greatest percentage of home foreclosures; areas with the highest percentage of homes financed by sub-prime mortgages and areas identified as likely to have a significant rise in the rate of home foreclosures. See Exhibit E for a list of all eligible locations for City NSP-assisted properties. Blighted. A structure is blighted when it exhibits objectively determinable signs of deterioration sufficient to constitute a threat to human health, safety and public welfare. Completed. A unit is considered completed once the construction/rehabilitation is 100 percent complete, the permit(s) have been finalized and issued by the Building Department, the unit has been sold to an eligible household, and the appropriate disposition documentation has been submitted to City. Continued affordability. The affordability of the homeownership housing units will be in accordance with the HOME program standards at 24 CFR 92.254. Using the HOME program affordability periods will provide for a minimum length of affordability; however, the City may require longer affordability periods that exceed the HOME program requirements as the NSP program evolves. Current market appraised value. The current market appraised value means the value of a foreclosed upon home or residential property that is established through an appraisal made in conformity with the appraisal requirements of the URA at 49 CFR 24.103 and completed within 60 days after an offer is made for the property by a grantee, Developer, or individual homebuyer. Delivery Fee. Proposed project delivery fee per housing unit as identified by the Developer and as detailed in the Program Budget (Exhibit B ). 7
Foreclosed. A property has been foreclosed upon at the point that under state or local law the mortgage or tax foreclosure is complete. HUD will not consider a foreclosure to be complete until after the title for the property has been transferred from the former homeowner under some type of foreclosure procedure or transfer in lieu of foreclosure, in accordance with state and /or local law. Housing Rehabilitation Standards. Rehabilitation standards require that all buildings assisted with NSP funds be brought up to City codes in effect at this time, that required building permits be obtained and that appropriate inspections be performed. NSP assisted properties involving rehabilitation must conform to the City NSP Construction Standard Checklist as well as the Home Performance Specifications for Warm Climates manual as adopted by City for use with NSP Acquisition Rehab Resale projects. Obligated. Funds are obligated for an activity when orders are placed, contracts are awarded, services are received that require payment by the unit of local government or Developer. Participant. The consumer that buys the home upon completion of rehabilitation by the Developer. Homebuyer must be eligible for the program as specified in Program Description (Exhibit A ). 8