Neighborhood Stabilization Program

Appendix 14

NEIGHBORHOOD STABILIZATION PROGRAM

PRE-CONSTRUCTION AGENDA

Development Name:

Location:

Census Tract:

The purpose of this pre-construction conference is to highlight and coordinate the activities primarily involved during the construction phase of the project. It also gives a chance to delineate the responsibilities of the various entities involved, outline the procedures involved and to clarify any questions relating to the construction phase.

This pre-construction conference only touches some of the activities involved and is not to be construed as superseding the Contract Documents or regulations. In all cases the Contract Documents or regulations will prevail.

Most of the items covered in this pre-construction agenda are spelled out in the Contract Documents. Because few people read the documentation thoroughly, it is necessary to cover items that seem to repetitively cause construction disruptions and delays.

Pre-construction Agenda NSP Page 1 of 14 April 30, 2010 Appendix 14

PRE-CONSTRUCTION PREVIEW

Because of what is being experienced with both new and old projects, it is necessary to discuss some of the problems to prevent or minimize their reoccurrence.

Owners and Contractors need to closely follow the drawings and specifications; do not guess on what to do. Any discrepancies need to be pointed out to the Project Professional.

CONTRACT DOCUMENTS AND DOCUMENTATION

1. It is advised to all those involved from the inception of the project not to lose sight that:

a. Many documents contain the standard penalty clause that could implicate anyone “who knowingly and willfully falsifies, conceals or covers up a material fact or makes misrepresentations, etc.” may be subject to penalties.

b. Documentation is contained that could implicate anyone who violates the “Copeland Anti-Kick Back Act.”

c. Other agency (federal, state, or local) requirements that have an applicability to the project, whether referenced or documented such as OSHA, EPA, U. S. Department of Labor, U. S. Department of Housing and Urban Development (HUD), West Virginia Development Office (WVDO), West Virginia Housing Development Fund (WVHDF), State Health Department, Department of Natural Resources, Fire Commissioner, etc., may have similar penalties for violations.

d. The above (except “Other agency”) and others are included in the Contract Documents.

2. This pre-construction conference is part of the HUD Neighborhood Stabilization Program (NSP)/Permanent Lender’s documentation of verifying responsibilities, establishing procedures and clarifying any questions relating to the construction phase of the project.

3. Design, codes and NSP design criteria responsibilities are the Project Professional’s responsibility.

4. Codes and NSP design criteria--any noncompliance or omission found in the Contract Documents or otherwise will need to be correctly installed in the construction.

5. Do all sheets of the drawings and the first and last page of the project manual have the West Virginia Seal of the Project Professional? Yes No

6. All sheets of the drawings are to be witnessed by all entities concerned in the project.

7. The first and last pages of the project manual are to be witnessed by all entities concerned in the project. Both this and the above are usually accomplished at the end of the pre-construction conference.

GENERAL REQUIREMENTS

1. Beginning date of construction or effective date: , 2 . Ending date of construction or completion date of contract: , 2 . Completion time for this contract is consecutive calendar days.

2. The retainage shown in the project manual: %.

3. Are liquidated damages included in the contract? Yes; $ per day No

4. Have the applicant and other entities as required under the NSP furnished certification (Form HUD ______, “Certification Regarding Debarment, Suspension & Other Responsibility Matters--Primary Covered Transactions”) that they have not been debarred and will not do business with any person or entity appearing on the debarred list? (document attached) Yes No

5. Has WVDO furnished the Subrecipient HUD Form ______, “Certification Regarding Debarment, Suspension, Ineligibility and Voluntary Exclusions--Lower Tier Covered Transactions”, for the Subrecipient to obtain executed copies for himself from his contractors, subcontractors, and suppliers? (document attached) Yes No

6. Have identity of interest statement(s) been executed? Yes No

WVDO’S/PERMANENT LENDER’S STATURE IN PROJECT

1. WVDO’s/Permanent Lender’s primary concern in reviews--federal and NSP regulation compliance.

2. The project is expected to be constructed according to the Contract Documents.

3. Change orders not only affect the construction, but also invalidate the appraisal upon which the loan was approved.

4. WVDO’s/Permanent Lender’s role is protecting the Government’s security, and is not a direct enforcing agency. The Project Professional and Owner should directly enforce noncompliance.

5. WVDO’s/Permanent Lender will not become involved as a mediator, judge or legal authority in any construction related disputes, determining the progress of the work, resolving payment complaints, charges of violations by other agencies, etc.

INSURANCE--WORKERS’ COMPENSATION--TAXES--BONDS

1. Is the Contractor/Builder providing Builder’s risk insurance? Yes No

Is it “All Risk” insurance? Yes No

2. Does the Builder’s risk insurance have 100% coverage on property insurance? Yes No

3. Is the Owner also carrying property insurance? Yes No

4. Does the Project Professional feel the coverages are sufficient? Yes No

5. Are Performance and Payment Bonds being used? Yes No

6. Is the surety listed in the latest Treasury Circular #570 revision? Yes No

7. Is the agent licensed in West Virginia? Yes No

8.Is a Letter of Credit being used? Yes No

CONTRACTOR’S RESPONSIBILITIES

1. Responsible for any Use and Sales Tax, local and other taxes (certificate of payment or a release should be furnished to WVDO/Permanent Lender prior to loan closing).

2. Responsible for any Workers’ Compensation requirements. The construction inspector assigned to this project will be tracking who completes each trade on the job site. A form has been developed to assist the inspector in providing this information (attached). In a timely fashion, the general contractor will provide a list of all subcontractors as and when they come under contract throughout the construction process and the documentation necessary for the inspector to complete a tracking form. This form shows the name and address of each subcontractor and what trade they are responsible for during the construction period, the name of the company’s owner, the contractor’s license number and expiration date, and the Workers’ Comp certificate number and six-month term dates. If the general contractor is responsible for a specific trade, the inspector will note this information. This information will be on file in the construction inspection binder for the project.

PAYMENTS BY INTERIM LENDER

1. The Interim Lender is advised of the additional risk involved if the Builder is unable to provide or the Interim Lender does not require a payment and performance bond. The Interim Lender is not permitted to make disbursements for more than 90% of the value of the acceptable work in place; also, that they assume the responsibility of monitoring payments payable by the Subrecipient.

2. In the case of rental rehabilitation, the permanent guarantee may not go into effect until the lender has provided WVDO with copies of rent rolls showing occupancy levels at 90% for 90 days. The minimum level of occupancy is to be set for each transaction. In general, minimum level of occupancy means at least 90% occupancy for three months at the pro forma assumptions for rent and debt service coverage. In lieu of meeting the minimum level of occupancy, Subrecipients may establish an additional conversion reserve and provide a schedule for funding it at a level acceptable to the WVDO prior to the closing of the construction loan. The additional conversion reserve will be at least 2% of the appraised value of the project or 2% of the total development cost, whichever is greater. This cash contribution is an additional amount, over and above the required initial operating and maintenance reserve contribution that is described in Paragraph 3.10 C. If tax credits are used in conjunction with the

NSP, the Subrecipient must meet any occupancy requirements in the tax credit partnership agreement before the permanent guarantee is issued.

3. The Interim Lender is advised that WVDO will not issue a Loan Note Guarantee until the project is complete, ready for occupancy, evidence furnished that all bills have been paid for work, and all inspections have been completed.

4. The Subrecipient should furnish the Permanent Lender (through any Interim Lender) the following before Permanent Lender closes the loan:

a. Project Professional’s statement certifying full payment at or prior to loan closing (RD Form 1924-10 may be used).

b. Attorney’s statement certifying full payment at or prior to loan closing (RD Form 1924-10 may be used).

c. If contract is used, “Certificate of Contractor’s Release” (RD Form 1924-9) at or prior to loan closing.

d. Any other requirements contained in loan agreements.

CIVIL RIGHTS AGENDA

1. RD Form 400-1, “Equal Opportunity Agreement”--Owner (attached)

2. RD Form 400-4, “Assurance Agreement”--Owner (if receiving interest credit) (attached)

3. RD Form 400-6, “Compliance Statement”--Contractor (attached)

4. Equal Employment Opportunity Requirements apply to any contract, subcontract, or lower tier of subcontracts in excess of $10,000.

5. “Explanation of Specifications and Notice for Affirmative Action to Ensure Equal Employment Opportunity”

6. “Explanation of Time Tables”

7. Notice to proceed must be executed as it is a trigger date for the above requirements as well as for the general conditions.

PROJECT PROFESSIONAL’S RESPONSIBILITIES

1. Shall ensure compliance with West Virginia State Fire Code and Fire Commissioner’s requirements such as construction limitations, fire and safety alarm equipment, etc.

2. Shall ensure compliance with the requirements of the State Health Department and State Department of Natural Resources for water and sewerage systems.

3. Shall ensure that the project is in compliance with the Uniform Federal Accessibility Standards (UFAS).

4. Provides services and inspections to assure that the work is proceeding in accordance with the Contract Documents and in accordance with the Contract between the Project Professional and Owner.

5. Project Professional to sign all change orders, pay estimates, inspection reports, etc.

6. Shall from observation determine the reasonable amounts due the Contractor and certify such amounts on the payment applications.

7. Shall be the interpreter of the requirements of the Contact Documents where there is a question as to any installation of materials, products, equipment, etc., needing clarification.

8. Shall make visual inspections of footing trenches before footings are poured to assure that soil bearing, reinforcing, etc., are properly prepared for footings to be poured.

9. Shall furnish Interim Lender and Permanent Lender with one (1) direct copy of all inspection reports and any tests ordered for the project. The Project Architect’s comments are to accompany the test reports submitted.

10. Shall coordinate any change order approvals with the Owner, Contractor, any Interim Lender, Permanent Lender, and WVDO.

11. Issue a dated statement certifying substantial completion of the project before WVDO and Permanent Lender are requested to conduct a pre-final inspection (can be on AIA form or letter).

12. Projects are to be 100% complete before any loan is closed. If there are any items that are seasonal in nature and money is escrowed, the Project Professional must return when the work is being accomplished to assure that the work is in compliance with the Contract Documents.

13. Project Professionals are not to use field orders or supplemental instructions for changes in construction. Only change orders will be used.

14. Must return to accomplish the 11-month warranty inspection.

15. Before a final inspection is scheduled with Permanent Lender and WVDO, the Project Professional must submit its final inspection punch list along with a statement saying that all of the items have been completed.

CONTRACTOR’S RESPONSIBILITIES

1. Must comply with Contract Documents except where otherwise approved by change orders.

2. Must comply with the Immigration Reform and Control Act of 1986 that prohibits the employment of illegal entrants or aliens.

3. No individual, firm or person representing a firm that has been debarred from participation in any government assisted program will be employed by the Owner, Architect, any tiers of subcontractors, material suppliers, equipment lessor or other entity providing work, materials, equipment, products or services for the project. Verified through Department of Labor’s website, www.wpls.gov, by on (date) (attached)

4. Form RD 400-3, “Notice to Contractors and Applicants” regarding nondiscrimination must be completed prior to start of construction (attached). Must post Nondiscrimination and Equal Employment Opportunity posters conspicuously at the site.

5. Obtain certifications for any materials, products and equipment not readily identifiable as approved by HUD or its authorized agencies. A file should be maintained at the construction site of Manufacturers’ Instructions, Materials Release Bulletins, and use of Materials Bulletins for construction materials used on the project.

6. Submit monthly applications and related certifications for payment to reflect the actual work incorporated in the construction and for materials owned and properly stored on the site.

7. Submit “Release of Claimants and Invoices” (except when Performance and Payment Bonds are furnished) with each application for payment or such documentation as required by any Interim Lender when interim funds are used for construction.

8. Must fill out RD 1924-19, “Builder’s Warranty from Contractor” at or before final payment. Contractor should obtain warranties from subcontractors for its protection.

9. Shall maintain three (3) as-built sets of as-built drawings showing any changes of installation or construction varying from that contained on the signature sets. The three (3) as-built sets will be distributed to the Permanent Lender, WVDO, and the Owner.

10. Stakes outlining the metes and bounds of the project must be accurately set before construction starts and verified prior to final inspection. Permanent Lender should verify their location in respect to the buildings, amenities, etc. See Article 2.1.3 in Modifications.

11. Must provide the Owner bond coverage or an irrevocable letter of credit to cover the warranty period for not less than 2½% of the construction cost prior to loan closing. Surety must be listed in Treasury Circular 570 (latest revision). Agent must be registered in West Virginia and have a power of attorney to issue bond from the surety. Permanent Lender will be named as co-obligee.

EVALUATION AND INSPECTIONS OF CONSTRUCTION

1. Evaluation of the value of work will be made monthly on a day coordinated between the Project Professional, WVDO, Subrecipient, Contractor, Interim Lender, and Permanent Lender ( ).

2. Evaluations will be based on the work incorporated in the construction and materials owned by the Contractor and properly stored on the site. Invoices showing Contractor’s Ownership must accompany the pay application to honor payment.

3. Applications for payment are to be presented on AIA Forms 702 and 703 in the format sample contained in the project manual.

4. Monthly notarized applications for payment certified by the Owner, Contractor, and Project Professional must be provided at each evaluation inspection.

5. The application for payment will be analyzed. If comparable with scheduled values and all work and materials are satisfactory, the application for payment will be approved. If not comparable or any faulty workmanship or materials are found, it will be adjusted downward accordingly if the corrections are not complicated. Otherwise, the application may have to be reworked and resubmitted.

CHANGE ORDERS

1. No changes are to be made in the construction without issuance of a change order approved by the Project Professional, Owner, Contractor, Interim Lender (if applicable) Permanent Lender, and WVDO. Processing change orders are in the same order as shown above. 2. All change orders must be reduced to writing with justification and submitted in sequential order as the changes occur. Change orders for work and materials installed during construction but not submitted until toward the end of construction will not be honored.

3. All change orders must have justification with the appropriate information. One example is unit prices are to be used in lieu of lump sum prices.

4. Time change orders involving delays must be submitted in writing within 72 hours; otherwise, they may not be valid. Weather change orders must be for extreme weather conditions experienced over and above that normally experienced for the particular area.

SUBSTITUTION OF MATERIALS

1. No substitutions of construction materials are to be made unless approved by change orders.

2. Substitution of construction materials must be justified for reasons other than lower costs.

3. Substitution of “specified like-brand items” such as plumbing fixtures and fittings, appliances, electrical fixtures, etc., is at the discretion of the Subrecipient and the Project Professional. These substitutions must meet or exceed the same quality and performance specifications as the products given as a standard.

MATERIALS--EQUIPMENT--WORKMANSHIP

1. All materials must be new and identifiable as acceptable by one or more of the following: a. Visual identification (lumber--pressure treated, etc.) b. Materials Release Bulletins c. Use of Materials Bulletins d. Manufacturers’ instructions issued under a Federal Standard acceptance

2. All products must be approved by proper authorized agencies:

a. Gas equipment (American Gas Association) b. Electrical equipment (Underwriters Laboratories) c. Cabinets and vanities (NKCA, ANSI or other authorized administrator’s label affixed when removed from carton) d. Windows and doors (AAMA or NWMA) e. Carpet (ETL, MEA, ALI) must be properly identified with barcodes f. Carpet padding must be properly identified with barcodes g. Bath receptors (ANSI) h. Air conditioners (A/C and REF Institute)

3. Workmanship must be of a quality that reflects journeyman quality work of the various trades.

4. Some general construction certifications are to be furnished USDA RD before final closing.

a. Termite Certificate (solutions--locations--amounts) b. Insulation Card & Certificate c. Any tests performed during this contract

REMINDER AND CLARIFICATIONS OF ITEMS CAUSING INTERRUPTIONS DURING CONSTRUCTION

1. A copy of all warranties for products must be inserted in a manual that accompanies the “as-builts” (i.e., windows, oven, refrigerator, etc.).

2. One copy of all product manuals (instructions) shall be included in the manual (i.e., heating and cooling system, oven, refrigerator, septic plants, etc.).

3. Cabinets and vanities must have a factory-applied label on each vanity front and kitchen front when removed from the carton. This is best done before all cabinets are removed from the truck.

4. Carpeting must be properly identified with barcodes; otherwise it is not acceptable to WVDO.

5. Flashing used in brickwork must be Nervostral or equal. 6-mil plastic is not acceptable.

6. Hot water P/T relief valves are to be piped individually for each water heater and not combined with other heaters.

7. Architect’s comments are to be included with the compaction and concrete tests. Tests should be reacted to immediately.

8. Any person contracting with nonresident contractors may be liable for his taxes unless they obtain a release from the West Virginia Tax Department. Contractors using out-of-state subcontractors should also obtain releases to avoid being liable for nonpayment by their subcontractors.

9. Weep holes are to be installed when brick is laid (no drilling of holes).

10. All hot water and drain lines at all handicapped-accessible sinks must be scald proof.

11. No stapling of roof sheathing or roof shingles.

12. All framed walls anchored in concrete floors are to be fastened with power- driven fasteners. Cut nails are not permitted.

13. Consult with landscaping firm early to determine whether plantings specified are those that will remain healthy and survive in the area or whether stronger brands of planting are recommended. Change orders will be needed if changes are to be made.

14. Mold prevention methods at job site.

SIGNATURES OF PRE-CONSTRUCTION ATTENDANCE

Subrecipient/Representative

Contractor

Interim Lender

Project Architect

West Virginia Development Office

Other Title

Pre-construction Agenda NSP Page 14 of 14 April 30, 2010