(d) Termination of tenancy. The Owner shall be responsible for termination of tenancies, including evictions. However, conditions for payment of housing assistance payments for any resulting vacancies shall be as set forth in § 1277.103 (e) (3) (ii) .

(e) Maintenance, operation and inspections.—(1) Maintenance and operation. The Owner shall maintain and operate the project so as to provide Decent, Safe, and Sanitary housing and he shall provide all the services, maintenance and utilities which he agrees to provide under the Contract, subject to abatement of housing assistance payments or other applicable remedies if he fails to meet these obligations.

(2) Inspection. Prior to occupancy of any unit by a Family, the Owner and the Family shall inspect the unit and both shall certify, on the form prescribed by HUD, that they have inspected the unit and have determined it to be Decent, Safe, and Sanitary in accordance with the criteria provided in the prescribed form. HUD (or the PHA, as appropriate) will inspect or cause to be inspected each Contract unit and related facilities at least annually and at such other times (including prior to initial occupancy of any unit) as HUD (or the PHA) may determine to be necessary to assure that the Owner is meeting his obligation to maintain the units in Decent, Safe, and Sanitary condition and to provide the agreed upon utilities and other services. HUD (or the PHA) will take into account complaints by occupants and any other information coming to its attention in scheduling inspections.

(f) Units not decent, safe, and sanitary. If HUD (or the PHA, as appropriate) notifies the Owner that he has failed to maintain a dwelling unit in Decent, Safe, and Sanitary condition and the Owner fails to take corrective action within the time prescribed in the notice, HUD (or the PHA) may exercise any of its rights or remedies under the Contract, including abatement of housing assistance payments, even if the Family continues to occupy the unit. If, however, the Family wishes to be rehoused in another dwelling unit with Section 8 assistance and HUD (or the PHA) does not have other Section 8 funds for such purposes, HUD (or the PHA) may use the abated housing assistance payments for the purpose of rehousing the Family in another dwelling unit. Where this is done, the Owner shall be notified that

he will be entitled to resumption of housing assistance payments for the vacated dwelling unit if:

(1) The unit is restored to Decent, Safe, and Sanitary condition;

(2) The Family is willing to and does move back to the restored dwelling unit; and

(3) A deduction is made for the expenses incurred by the Family for both

moves.

(g) Reexamination of family income, composition, and extent of exceptional medical or other unusual expenses. Reexamination of Family income, composition, and the extent of medical or other unusual expenses incurred by the Family shall be made by the Owner at least annually (except that such reviews may be made at intervals no longer than two years in the case of elderly Families), and appropriate redeterminations shall be made by the Owner of the amount of the Family contribution and the amount of the housing assistance payment, all in accordance with schedules and criteria established by HUD.

(h) Overcrowded and underoccupied units. If HUD or the PHA, as the case may be, determines that a Contract unit assisted under this Part is not Decent, Safe, and Sanitary by reason of overcrowding, or that a Contract unit is larger than appropriate for the size of the Family in occupancy, housing assistance payments with respect to such unit will not be abated, unless the Owner fails to offer the Family a suitable unit as soon as one becomes vacant and ready for occupancy. In the case of an overcrowded unit, if the Owner does not have any suitable units or if no vacancy of a suitable unit occurs within a reasonable time, HUD (or the PHA) will assist the Family in finding a suitable dwelling unit and require the Family to move to such a unit as soon as possible. The Owner may receive housing assistance payments for the vacated unit if he complies with the requirements of § 1277.103 (e) (3) (i).

(i) Adjustment of allowance for utilities and other services. HUD or the PHA, as the case may be, shall determine, as part of its annual inspection and at such other times as it deems appropriate, whether an adjustment is required in the Allowance for Utilities and Other Services applicable to the dwelling units in the project, on grounds of changes in utility rates or other change of general applicability to all units in the project.

If HUD determines that an adjustment should be made, HUD shall prescribe the amount of the adjustment and direct the Owner to make promptly a corresponding adjustment in the amount of rent to be paid by the affected Families and the amount of housing assistance payment.

(j) Continued family participation. A Family must continue to occupy its approved unit to remain eligible for participation in the Housing Assistance Payments Program except that if the Family (1) wishes to vacate its unit at the end of the Lease term (or prior thereto but in accordance with the provisions of the Lease), or (2) is required to move for reasons other than violation of the Lease on the part of the Family, and if the Family wishes to receive the benefit of housing assistance payments in another approvable unit, the Family should give reasonable notice of the circumstances to HUD or to the PHA, as appropriate, so that HUD or the PHA may have the opportunity to consider the Family's request.

(k) Inapplicability of low-rent public housing model lease and grievance procedures. Model lease and grievance procedures established by HUD for PHAowned low-rent public housing are applicable only to PHA-Owner Projects under the section 8 Housing Assistance Payments Program.

(1) Reduction of number of contract units for failure to lease to eligible families. (1) If at any time, beginning six months after the effective date of the Contract, the Owner fails for a continuous period of six months to have at least 30 percent of the Contract units leased or available for leasing by Eligible Families, HUD (or the PHA at the direction of HUD, as appropriate) may on 30 days notice reduce the number of Contract units to not less than the number of units under lease or available for leasing by Eligible Families, plus 10 percent of such number, if the number is 10 cr more, rounded to the next highest number.

(2) At the end of the initial term of the Contract and of each renewal term, HUD (or the PHA at the direction of HUD, as appropriate) may, by notice to the Owner, reduce the number of Contract units to not less than (i) the number of units under lease or available for leasing by Eligible Families at that time or (ii) the average number of units so leased or available for leasing during the last year, whichever is the greatest number, plus

10 percent of such number, if the number is 10 or more, rounded to the next highest number.

(3) Any reduction pursuant to paragraphs (1) (1) or (1) (2) of this section shall not preclude subsequent restoration of contract units if contract authority is available and if HUD determines that the restoration is justified as a result of changes in demand and in the light of the Owner's record of compliance with his obligations under the contract.

§ 1277.219 HUD review of contract compliance.

HUD will review project operation at such intervals as it deems necessary to ensure that the Owner is in full compliance with the terms and conditions of the Contract. Equal Opportunity review may be conducted with the scheduled HUD review or at any time deemed appropriate by HUD.

§1277.220 PHA reporting

ments. [Reserved]

require

APPENDIX I-AGREEMENT TO ENTER INTO HOUSING ASSISTANCE PAYMENTS CONTRACT SUBSTANTIAL REHABILITATION PRIVATEOWNER OR PHA-OWNER PROJECT

Part 1

This Agreement to Enter into Housing Assistance Payments Contract ("Agreement") is made and entered into by and between the United States of America acting through the Department of Housing and Urban Development ("Government") and ("Owner").

Whereas, the Owner proposes to complete a housing project consisting of the substantial rehabilitation of certain projects and land as described in the approved Final Proposal; and

Whereas, the Owner and the Government propose to enter into a Housing Assistance Payments Contract ("Contract") upon the completion of said project for the purpose of making housing assistance payments to enable eligible lower-income families ("Families") to occupy units in said project;

and

Whereas, the Owner is also the rehabilitator, or, if the rehabilitator is other than the Owner, the rehabilitator's name is

Now Therefore, the parties hereto agree as follows:

1.1 Significant dates: Contents of Agreement. a. Time for Completion of Project. The time for completion of the project (see Section 1.2a) is calendar days after the effective date of this Agreement.

b. Date for Commencement of Work. The date for commencement of work (see Section 1.2b) is 19--.

c. Contents of Agreement. This Agreement consists of Part I, Part II, and the following exhibits:

Exhibit A: The approved Final Proposal, including, among other things, evidence of management capability, and, if required, the architect's certification, the Affirmative Fair Housing Marketing Plan, and management program;

Exhibit B: The Housing Assistance Payments Contract ("Contract") to be executed upon acceptable completion of the project; Exhibit C: The schedule of completion in stages, if applicable;

Exhibit D: The schedule of minimum rates of wages, if applicable; and

Additional exhibits: [Specify additional exhibits, if any. If none, insert "None."]

This Agreement, including said exhibits, comprises the entire agreement between the parties hereto, and neither party is bounu by any representations or agreements of any kind except as contained herein. Nothing contained in this Agreement shall create or affect any relationship between the Government and the lender or any contractors or subcontractors employed by the Owner in the completion of the project.

1.2 Schedule of Completion. a. Time for Completion. The project shall be completed in accordance with Section 1.4 no later than the end of the period stated in Section 1.1a, or in stages as provided for in Exhibit C which identifies the units comprising each stage and the date of commencement and time for completion of each stage. Where completion in stages is provided for, all references to project completion shall be deemed to refer to project completion and/or completion of any stage, as appropriate.

The

b. Timely Performance of Work. Owner agrees that no later than the date stated in Section 1.1b the work will be commenced and diligently continued. In the event the work is not commenced, diligently continued, and/or completed as aforesaid, the Government reserves the right to rescind this Agreement or take other appropriate action. The Owner shall report to the Government the date work was commenced and shall thereafter furnish the Government with periodic progress reports (quarterly unless more frequent reporting is required by the Government).

c. Delays. In the event there is delay in the completion due to strikes, lockouts, labor union disputes, fire, unusual delays in transportation, unavoidable casualties, weather, acts of God, or any other causes beyond the Owner's control, or by delay authorized by the Government, the time for completion shall be extended to the extent that completion is delayed due to one or more of these causes. No increase in the rents set forth in Exhibit B ("Contract Rents") may be granted on account of any such delays.

1.3 Rehabilitation period, a. Changes. The Owner shall submit for Government approval any changes from Exhibit A which will ma

terially reduce or alter his obligations or any changes which alter the design or materially reduce the quality or amenities of the project. The Government may condition its approval of such changes on a reduction of Contract Rents. If such changes are made without prior Government approval, the Government may determine that Contract Rents shall be reduced or that the Owner shall remedy the defects or deficiencies as a condition for acceptance of the project. Contract Rents may not be increased by reason of any changes or modifications.

b. Commencement of Marketing. The Owner shall commence and diligently continue marketing as soon as possible, but in any event no later than 60 days prior to the estimated completion date. The Owner shall notify the Government of the date of commencement of marketing. The Owner shall also comply with all reporting requirements under the Affirmative Fair Housing Marketing Regulations. Not later than 30 days prior to the estimated completion date and periodically thereafter, the Owner shall notify the Government of any units which he anticipates will be vacant on the effective date of the Contract. At the time the Contract is executed, the Owner shall submit a list of the dwelling units leased as of the effective date of the Contract and a list of the units not so leased, if any. The Owner will be entitled to housing assistance payments for any unleased units pursuant to Section 1.6b of the Contract only if he has fully complied with the requirements of this paragraph and the provisions of that Section.

c. Management Certification. Prior to acceptance of the project by the Government, the Owner shall certify in writing that there has been no change in the evidence of management capability or in the proposed management program (if one was required) specified in his Final Proposal other than changes approved in writing by the Government in accordance with paragraph a of this Section. d. Labor Standards Certification.1 Prior to acceptance of the project by the Government, the Owner shall certify in writing that he has complied with the provisions of Sections 2.6 through 2.11 of this Agreement, and that to the best of his knowledge and belief there are no claims of underpayment to laborers or mechanics in alleged violation of said provisions of the Agreement. In the event there are any such pending claims to the knowledge

1.4 Project completion. a. Conformance to Final Proposal. The completed project shall be in accordance with Exhibit A. The Owner shall be solely responsible for completion of the project.

b. Notification of Completion. The Owner shall notify the Government when the work

1 Strike this paragraph if the project involves fewer than nine Contract units. of the Owner or the Government, the Owner shall be required to place a sufficient amount in escrow as determined by the Government to assure payment thereof.

is completed and shall submit to the Government the evidence of completion described in paragraph c of this Section.

c. Evidence of Completion. Completion of the project shall be evidence by furnishing the Government with all of the following:

(1) A certification by the Owner that: (i) The property was treated and is in compliance with applicable HUD Lead Based Paint regulations 24 CFR 35,

(ii) If the property was constructed prior to 1950, the Family upon occupancy will receive the notice required by HUD Lead Based Paint regulations and procedures regarding the hazards of lead based paint poisoning, the symptoms and treatment of lead poisoning and the precautions to be taken against lead poisoning and that records showing receipt of such notice by each tenant will be maintained.

(2) A certificate of occupancy and/or other official approvals necessary for occupancy. (3) A certification by the Owner, which will be supported by the Owner's warranty in the Contract, that:

(i) All work has been completed in accordance with the requirements of this Agreement;

(ii) The project is in good and tenantable condition; and

(iii) There are no defects or deficiencies in the project except for ordinary punchlist items, or incomplete work awaiting seasonal opportunity such as landscaping and heating system test (such excepted items to be specified).

(iv) The project has been constructed in accordance with applicable zoning, building, housing, and other codes, ordinances or regulations, as modified by any waivers obtained from the appropriate officials.

(4) 2 A certification by the registered architect responsible for inspection of the work that such inspection was performed by him or under his supervision with the frequency and thoroughness required by the generally accepted standards of professional care and Judgment, and that to the best of his knowledge, belief, and professional judgment:

(i) All work has been completed in conformance with the certified working drawings and specifications for the project or approved changes thereto (such changes to be listed);

(ii) The project is in good and tenantable condition; and

(iii) There are no defects or deficiencies in the project except for ordinary punchlist items, or incomplete work awaiting seasonal opportunity such as landscaping and heating system test (such excepted items to be specified).

(iv) The project has been constructed in acordance with applicable zoning, building,

2 Strike this subparagraph (4) if the work is to be done other than in accordance with working drawings and specifications prepared and certified to by a registered architect.

housing, and other codes, ordinances or regulations, as modified by any waivers obtained from the appropriate officials.

d. Inspection. (1) Within ten working days of the receipt of the Owner's notification of project completion, the Government representative shall inspect the project and review the evidence of completion listed in paragraph c of this Section. Such inspection shall be sufficient to enable the Government inspector to state in his inspection report that he has inspected the observable elements and features of the project in accordance with professional standards of care and judgment and that, on the basis of such inspection, the project has been completed in accordance with the Agreement and, in particular, that there are no observable conditions inconsistent with the certifications of the Owner or the design architect (if required) or the inspecting architect (if required). As promptly as possible, the Government shall notify the Owner in writing as to whether or not the project has been completed in an acceptable manner.

(2) In the event the Owner disputes the Government's determinations, he may submit the controversy to third-party arbitration, at his expense, provided that the arbitration is advisory only.

e. Acceptance of Project. If the Government determines that the project is not acceptable under paragraph d(1) of this Section, the following shall apply:

(1) If the defects or deficiencies are only punchlist items or incomplete items awaiting seasonal opportunity, the project may be accepted and the Contract executed. If the Owner fails to complete such items within a reasonable time to the satisfaction of the Government, the Government may, upon 30 days notice, terminate the Contract or exercise its other rights under the Contract.

(2) If the defects or deficiencies are other than punchlist items or incomplete work awaiting seasonal opportunity, but the Government determines that (i) a certificate of occupancy and/or other official approvals necessary for occupancy has been issued (ii) the project is in good and tenantable condition, and (iii) the project has been rehabilitated in accordance with the applicable zoning, building, housing and other codes, ordinances or regulations, as modified by any waivers obtained from the appropriate officials, the project may be accepted after the Owner corrects the defects or deficiencies or the project may be accepted subject to a specified reduction of the Contract Rents as determined by the Government.

(3) If the Government determines that the project is not acceptable under paragraphs e(1) or e (2) of this Section, the Government shall determine: (1) whether the defects or deficiencies can be corrected and (ii) whether a reduction in Contract Rents will be required as a condition to acceptance of the project. If it is determined that the defects or deficiences can be corrected, the

Owner shall be notified of the Government's determination under (i) and (ii) of this subparagraph and, if he agrees to comply with the conditions, an agreement shall be entered into pursuant to which the defects or deficiencies will be corrected and the project then accepted. If the Owner is unwilling to enter into such agreement or if he fails to perform the agreement, the project shall not be accepted. Prior to execution of the Contract, the Government will verify that appropriate corrective action has been taken.

f. Completion in Stages. If the project is to be completed in stages, the procedures of this Section shall apply to each stage.

1.5 Execution of housing assistance payments contract. a. Time of Execution. Upon acceptance of the project by the Government pursuant to Sections 1.3 and 1.4, the Contract shall be executed first by the Owner and then by the Government.

b. Completion in Stages. If completion is in stages, the Contract shall be executed upon completion of the first stage, and the number and types of completed units and their Contract Rents shall be shown in Exhibit A-1 of the Contract. Thereafter, upon completion of each successive stage, the signature block provided in the Contract for that stage shall be executed by the Owner and the Government, and Exhibits A-2, A-3, etc., covering the additional units, shall become part of the Contract.

c. Unleased Units at Time of Execution. At the time of execution of the Contract, the Government shall examine the lists of dwelling units leased and not leased, referred to in Section 1.3b, and shall determine whether or not the Owner has met his obligations under that Section with respect to any unleased units. The Government shall state in writing its determination with respect to the unleased units and for which of those units it will make housing assistance payments pursuant to the Contract. The Owner shall indicate in writing his concurrence with this determination or his disagreement, reserving his rights to claim housing assistance payments for the unleased units pursuant to the Contract, without prejudice by reason of his signing the Contract.

d. Contract Rents. The Contract Rents by unit size, amounts of housing assistance payments, and all other applicable terms and conditions shall be as specified in the proposed Housing Assistance Payments Contract, except that in no case may the initial Contract Rents for units in projects financed with mortgages insured under the National Housing Act exceed the rents approved by the Government in connection with the mortgage insurance for such projects.

e. No Changes in Contract. Each party has read or is presumed to have read the proposed Contract. It is expressly agreed that there shall be no change in the terms and conditions of the Contract other than in accordance with Section 1.3a and paragraph d of this Section.

1.6 Government Assurance To Owner. The execution of this Agreement by the Government signifies that the faith of the United States is solemnly pledged to the payment of housing assistance payments pursuant to the Contract and that funds have been obligated by the Government for such payments. 1.7 Relocation requirements.3

[Alternative provisions-incorporate alternative 1 or 2, as applicable.]

Alternative 1-For projects which were without site occupants as of the date indicated in this alternative.

The Owner hereby certifies that the site of the project was without occupants as of the date of the Government notification to the Owner requesting the Owner to submit a Final Proposal.

Alternative 2-For projects which do not qualify for alternative 1.

a. Owner Compliance with Relocation Act. The Owner agrees to comply with the provisions of sections 202, 203, and 204 of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 and applicable Government regulations and requirements issued pursuant thereto.

b. Relocation Payments Other than by Owner. The Government has determined that satisfactory commitments have been made for the funding of relocation payments required by sections 202, 203, and 204 of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 as follows:

-

c. Relocation Payments by Owner. If paragraph b is inapplicable, the following shall apply:

(1) The maximum potential amount of all relocation payments as estimated by the Government is $_.

(2) The Owner has deposited this amount in an escrow account under the terms of which payments may be made only upon presentation of written authorization by the Government for the purpose of meeting relocation payments.

(3) The Owner hereby voluntarily undertakes liability for all relocation payments and agrees that if the funds in the escrow account shall prove to be insufficient to meet all such relocation payments he will deposit such additional amounts as the Government determines to be necessary for such purpose.

(4) When the Government determines that there is no longer any potential liability for relocation payments, any balance in the escrow account shall be paid to the Owner.

(5) The Owner agrees to hold harmless and to indemnify the Government for any costs incurred under sectoins 202, 203, and 204 of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 in connection with the relocation of site occupants, and the Owner further agrees that

3 Strike this Section in the case of a Private-Owner Project.