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If HUD determines that an adjustment 10 percent of such number, if the numshould be made, HUD shall prescribe the ber is 10 or more, rounded to the next amount of the adjustment and direct the highest number. Owner to make promptly a correspond- (3) Any reduction pursuant to paraing adjustment in the amount of rent to graphs (1) (1) or (1) (2) of this section be paid by the affected Families and the shall not preclude subsequent restoration amount of housing assistance payment. of contract units if contract authority is

(j) Continued family participation. A available and if HUD determines that Family must continue to occupy its ap- the restoration is justified as a result of proved unit to remain eligible for par

changes in demand and in the light of ticipation in the Housing Assistance Pay

the Owner's record of compliance with ments Program except that if the Family (1) wishes to vacate its unit at the end

his obligations under the contract. of the Lease term (or prior thereto but $ 1277.219 HUD review of contract in accordance with the provisions of the compliance. Lease), or (2) is required to move for

HUD will review project operation at reasons other than violation of the Lease

such intervals as it deems necessary to on the part of the Family, and if the

ensure that the Owner is in full compliFamily wishes to receive the benefit of

ance with the terms and conditions of housing assistance payments in another approvable unit, the Family should give

the Contract. Equal Opportunity review reasonable notice of the circumstances to

may be conducted with the scheduled HUD or to the PHA, as appropriate, so

HUD review or at any time deemed apthat HUD or the PHA may have the op- propriate by HUD. portunity to consider the Family's

8 1277.220 PHA reporting require request.

ments. [Reserved] (k) Inapplicability of low-rent public

APPENDIX I-AGREEMENT TO ENTER INTO housing model lease and grievance pro

HOUSING ASSISTANCE PAYMENTS CONTRACT cedures. Model lease and grievance pro

SUBSTANTIAL REHABILITATION PRIVATEcedures established by HUD for PHA

OWNER PHA-OWNER PROJECT owned low-rent public housing are appli

Part 1 cable only to PHA-Owner Projects under the section 8 Housing Assistance Pay- This Agreement to Enter into Housing Asments Program.

sistance Payments Contract (“Agreement") (1) Reduction of number of contract

is made and entered into by and between the units for failure to lease to eligible fam

United States of America acting through the

Department of Housing and Urban Developilies. (1) If at any time, beginning six ment (“Government") and months after the effective date of the

("Owner"). Contract, the Owner fails for a continu- Whereas, the Owner proposes to complete ous period of six months to have at least a housing project consisting of the substan80 percent of the Contract units leased tial rehabilitation of certain projects and or available for leasing by Eligible Fam

land as described in the approved Final Proilies, HUD (or the PHA at the direction

posal; and

Whereas, the Owner and the Government of HUD, as appropriate) may on 30 days

propose to enter into a Housing Assistance notice reduce the number of Contract

Payments Contract ("Contract”) upon the units to not less than the number of completion of said project for the purpose units under lease or available for leasing of making housing assistance payments to by Eligible Families, plus 10 percent of

enable eligible lower-income families such number, if the number is 10 cr more,

("Families") to occupy units in said project;

and rounded to the next highest number.

Whereas, the Owner is also the rehabili(2) At the end of the initial term of the

tator, or, if the rehabilitator is other than Contract and of each renewal term, HUD the Owner, the rehabilitator's (or the PHA at the direction of HUD, as

is appropriate) may, by notice to the Own

Now Therefore, the parties hereto agree as

follows: er, reduce the number of Contract units

1.1 Significant dates: Contents of Agreeto not less than (i) the numbes of units ment. a. Time for Completion of Project. The under lease or available for leasing by time for completion of the project (see SecEligible Families at that time or (ii) the

tion 1.2a) is calendar days after the ef

fective date of this Agreement. average number of units so leased or

b. Date for Commencement of Work. The available for leasing during the last year, date for commencement of work (see Section whichever is the greatest number, plus 1.2b) is

19-..

name

c. Contents of Agreement. This Agreement terially reduce or alter his obligations or any consists of Part I, Part II, and the follow- changes which alter the design or materially ing exhibits:

reduce the quality or amenities of the projExhibit A: The approved Final Proposal, ect. The Government may condition its apincluding, among other things, evidence of proval of such changes on a reduction of management capability, and, if required, the Contract Rents. If such changes are made architect's certification, the Affirmative Fair without prior Government approval, the Housing Marketing Plan, and management Government may determine that contract program;

Rents shall be reduced or that the Owner Exhibit B: The Housing Assistance Pay- shall remedy the defects or deficiencies as a ments Contract ("Contract") to be executed condition for acceptance of the project. Conupon acceptable completion of the project; tract Rents may not be increased by reason

Exhibit C: The schedule of completion in of any changes or modifications. stages, if applicable;

b. Commencement of Marketing. The OwnExhibit D: The schedule of minimum rates er shall commence and diligently continue of wages, if applicable; and

marketing as soon as possible, but in any Additional exhibits: (Specify additional event no later than 60 days prior to the exhibits, if any. If none, insert "None.") estimated completion date. The Owner shall

This Agreement, including said exhibits, notify the Government of the date of comcomprises the entire agreement between the mencement of marketing. The Owner shall parties hereto, and neither party is bound also comply with all reporting requirements by any representations or agreements of any under the Affirmative Fair Housing Marketkind except as contained herein. Nothing ing Regulations. Not later than 30 days prior contained in this Agreement shall create or to the estimated completion date and periaffect any relationship between the Govern- odically thereafter, the Owner shall notify ment and the lender or any contractors or the Government of any units which he ansubcontractors employed by the Owner in ticipates will be vacant on the effective date the completion of the project.

of the Contract. At the time the Contract is 1.2 Schedule of Completion. a. Time for executed, the Owner shall submit a list of Completion. The project shall be completed the dwelling units leased as of the effective in accordance with Section 1.4 no later than date of the Contract and a list of the units the end of the period stated in Section 1.1a, not so leased, if any. The owner will be enor in stages as provided for in Exhibit C

titled to housing assistance payments for which identifies the units comprising each any unleased units pursuant to Section 1.6b stage and the date of commencement and of the Contract only if he has fully complied time for completion of each stage. Where

with the requirements of this paragraph and completion in stages is provided for, all refer- the provisions of that Section. ences to project completion shall be deemed

c. Management Certification. Prior to acto refer to project completion and/or com- ceptance of the project by the Government, pletion of any stage, as appropriate.

the Owner shall certify in writing that there b. Timely Performance of Work. The

has been no change in the evidence of manOwner agrees that no later than the date agement capability or in the proposed manstated in Section 1.1b the work will be com- agement program (if one was required) specmenced and diligently continued. In the

ified in his Final Proposal other than changes event the work is not commenced, diligently approved in writing by the Government in continued, and/or completed as aforesaid, accordance with paragraph a of this Section, the Government reserves the right to rescind d. Labor Standards Certification. Prior to this Agreement or take other appropriate acceptance of the project by the Government, action. The Owner shall report to the Gov

the Owner shall certify in writing that he has ernment the date work was commenced and complied with the provisions of Sections 2.6 shall thereafter furnish the Government through 2.11 of this Agreement, and that to with periodic progress reports (quarterly un

the best of his knowledge and belief there are less more frequent reporting is required by no claims of underpayment to laborers or the Government).

mechanics in alleged violation of said proc. Delays. In the event there is delay in

visions of the Agreement. In the event there the completion due to strikes, lockouts, la- are any such pending claims to the knowledge bor union disputes, fire, unusual delays in

1.4 Project completion. a. Conformance to transportation, unavoidable casualties,

Final Proposal. The completed project shall weather, acts of God, or any other causes be- be in accordance with Exhibit A. The Owner yond the Owner's control, or by delay au

shall be solely responsible for completion of thorized by the Government, the time for

the project. completion shall be extended to the extent b. Notification of Completion. The Owner that completion is delayed due to one or shall notify the Government when the work more of these causes. No increase in the rents set forth in Exhibit B ("Contract 1 Strike this paragraph if the project inRents") may be granted on account of any volves fewer than nine Contract units. such delays.

of the Owner or the Government, the Owner 1.3 Rehabilitation period. a. Changes. The shall be required to place a suficient amount Owner shall submit for Government approval in escrow as determined by the Government any changes from Exhibit A which will ma- 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 tenant. able 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 knowl. edge, 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,

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 rehabilitateci 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

? 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.

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 i.

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:

Owner shall be notified of the Government's determination under (1) 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.

c. Relocation Payments by Owner. If paragraph bis 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.

the Government shall have the right to be reimbursed for any such costs by withholding from housing assistance payments payable to the Owner.

EFFECTIVE DATE. This Agreement shall be effective as of the date of execution by the Government.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement in in four original counterparts. WARNING: 18 U.S.C. 1001 provides, among other things, that whoever knowingly and willfully makes or uses a document or writing containing any false, fictitious, or fraudulent statement or entry, in any matter within the jurisdiction of any department or agency of the United States, shall be fined not more than $10,000 or imprisoned for not more than five years, or both.

United States of America
Secretary of Housing and

Urban Development
Ву.

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limited to, development and implementation of an affirmative action plan for utilizing business concerns located within, or owned in substantial part by persons residing in, the area of the project; the making of a good faith effort, as defined by the regulations, to provide training, employment, and business opportunities required by section 3; and incorporation of the "section 3 clause" specified by section 135.20(b) of the regulations and paragraph d of this Section in all contracts for work in connection with the project. The Owner certifies and agrees that he is under no contractual or other disability which would prevent him from complying with these requirements.

c. Compliance with the provisions of section 3, the regulations set forth in 24 CFR, Part 135, and all applicable rules and orders of the Secretary issued thereunder prior to approval by the Government of the application for this Agreement, shall be a condition of the Federal financial assistance provided to the project, binding upon the Owner, his successors and assigns. Failures to fulfill these requirements shall subject the Owner, his contractors and subcontractors, his successors, and assigns to the sanction specified by this Agreement, and to such sanctions as are specified by 24 CFR Section 135.135.

d. The Owner shall incorporate or cause to be incorporated into any contract or subcontract for work pursuant to this Agreement in excess of $50,000 cost, the following clause: "EMPLOYMENT OF PROJECT AREA RESIDENTS AND

CONTRACTORS "A. The work to be performed under this Agreement is on a project assisted under a program providing direct Federal financial assistance from the Department of Housing and Urban Development and is subject to the requirements of section 3 of the Housing and Urban Development Act of 1968, as amended, 12 U.S.C. 170lu. Section 3 requires that, to the greatest extent feasible, opportunities for training and employment be given lower-income residents of the project area, and contracts for work in connection with the project be awarded to business concerns which are located in, or owned in substantial part by persons residing in, the area of the project.

“B. The parties to this Agreement will comply with the provisions of said section 3 and the regulations issued pursuant thereto by the Secretary of Housing and Urban Development set forth in 24 CFR, Part 135, and all applicable rules and orders of the Department issued thereunder prior to the execution of this Agreement. The parties to this Agreement certify and agree that they are under no contractual or other disability which would prevent them from complying with these requirements.

"C. The contractor will send to each labor organization or representative of workers with which he has a collective bargaining

PART II 2.1 Training, employment, and contracting opportunities for businesses and lowerincome persons. a. The project assisted under this Agreement is subject to the requirements of section 3 of the Housing and Urban Development Act of 1968, as amended, 12 U.S.C. 17010. Section 3 requires that, to the greatest extent feasible, opportunities for training and employment be given lower-income residents of the project area and contracts for work in connection with the project be awarded to business concerns which are located in, or owned in substantial part by persons residing in, the area of the project.

b. Notwithstanding any other provision of this Agreement, the Owner shall carry out the provisions of said section 3 and the regulations issued pursuant thereto by the Secretary of Housing and Urban Development set forth in 24 CFR, Part 135 (published in 38 Federal Register 29220, October 23, 1973), and all applicable rules and orders of the Secretary issued thereunder prior to the execution of this Agreement. The requirements of said regulations include, but are not

4 Strike this Section if the Contract Rents under the proposed Housing Assistance Payments Contract, over the maximum term of said Contract, are $500,000 or less.

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