12.17.5 Change Orders

A. Changes in the repairs and alterations work items, including associated cost changes, must be submitted to Lender and HUD for review and approval.

1. Changes prior to endorsement must be handled as follows:

   • For non-LIHTC projects, a revised CNA e-Tool must be submitted to HUD for review and approval to issue an amendment to the Firm.

• For new LIHTC projects, revised plans and specifications and form HUD-2328 must be submitted to HUD for review and approval to issue an amendment to the Firm.

• In all cases, the changes must be reflected in a revised Repair Escrow Agreement (form HUD92476.1M).

2. Changes after endorsement must be handled as follows:

   • Changes that result in increased costs must be funded by the Borrower at the time the change order is approved and the Repair Escrow Agreement (form HUD-92476.1M) must be revised reflecting the addition of funds.

• The Repair Escrow Agreement amount must not be reduced for change orders that result in cost reduction.

• For non-LIHTC projects, approved changes after endorsement do not need an amended CNA eTool. The changes in cost and scope may be shown as annotated and initialed changes to the list(s) of repairs and alterations. A revised Lender’s 223(f) repairs & Alterations Worksheet should reflect any cost changes.

• For new LIHTC projects, approved changes should be reflected in a revised form HUD-2328 and revised plans and/or specs to the extent required by the nature of the change.

• The assurance of completion should not be used as a source of funding for change orders prior to completion of all repairs and alterations.

  • When an Architect is engaged and the changes are minor with no changes in cost and time, Architect's Supplementary Instructions (ASI) may be used without a Change Order Request submission to HUD. The Architect must forward a copy to the HUD Inspector and Lender after issuance for confirmation that the changes are not material.

• In all cases, Lenders must ensure that any change order(s) or other addition to cost do not result in a total cost of repairs and alterations exceeding the cost threshold that defines substantial rehabilitation.

3. Change orders must be formatted as follows:

   • When a Project Architect is involved, AIA G701 is to be used;

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• When no Architect is involved, a written request in a format similar to form HUD-92437 Request for Construction Changes on Project Mortgages may be submitted. form HUD-92437 may be used as a general guide, but the actual form must not be used.

4. Contractor and Project Architect (if employed) must sign all change order requests.

5. Borrower and Lender must review and sign the change order request and provide an updated list of repairs describing all changes to HUD for review and approval.

6. Change order work may proceed once approved.