5.9.3 Firm Commitment Application

A. The Lender shall submit final drawings, specifications and costs analyses and unsigned contract agreements similar to applications for new construction except as follows:

1. Form of Drawings and Specifications Matched to Scope of Work. The Borrower’s architectural, engineering, and cost exhibits for substantial rehabilitation must be based on due diligence studies and examination of existing conditions. Because existing conditions vary widely, the extent and form of drawings and specifications (plans and specs) will also vary. For substantial rehabilitation, plans and specs should be prepared and submitted in the same manner as for new construction.

2. Lender Construction Analyst’s Review Reports. The Construction Analyst should specifically determine whether the scope of work documented in the plans and specs adequately addresses the existing conditions and deficiencies including life safety deficiencies and accessibility violations. All the proposed work must be described adequately with a level of detail that describes measurable quantities, specified quality or performance standards, precise locations of work, and is both actionable and amenable to inspection of completed work.

3. Final Scope of Work Summary.[15] The Construction Analyst must prepare a final Scope of Work Summary that concisely and descriptively itemizes all the improvements that the Project Architect has designed and proposed to do as prescribed in the final plans and specs.

4. Building and Unit Areas and Counts. Building and unit area and unit count breakdowns by buildings as well as the project totals should be recorded as a schedule (table) of buildings and units in the drawings prepared by the Project Architect in accordance with Appendix 5, Section A.5.5. These counts and areas should also be entered in the CNA e-Tool. An approved CNA prepared in the CNA e- Tool creates a permanent electronic record of this information and should be inclusive of all the proposed improvements.

5. Operation and Maintenance Plans. For projects that contain lead-based paint (LBP), asbestos, or have ongoing risks such as radon that may require permanent installation of ventilation, detection, or alarm devices, the Borrower or Project Architect is responsible for engaging the services of qualified abatement contractor(s) to prepare a scope of work for the abatement or mitigation. Where the scope of abatement work consists of permanent enclosure or encapsulation or ongoing monitoring, but not removal, a qualified consultant or abatement contractor(s) must also prepare, separate from the

15 Previously referred to as “Detailed Work Write-Up”.

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scope of abatement work, an Operations and Maintenance (O&M) Plan. The O&M Plan must describe ongoing maintenance procedures to be followed for as long as the hazard remains in place. All abatement work and ongoing maintenance activities for radon, LBP, asbestos, and/or any other hazards shall conform to the requirements described in Chapter 9. At the time the CNA is submitted in the CNA e-Tool, any O&M plans should be attached with the submission. A condition shall be attached to the Firm Commitment requiring that the Borrower operate and maintain the property consistent with the referenced O&M plan(s) for the duration of the insured mortgage.

6. Davis-Bacon Wage Standards and the CNA e-Tool. For substantial rehabilitation, the future replacement costs of the components and systems estimated in the CNA e-Tool for the purposes of financial planning are not subject to wage decisions. On the other hand, the summation of costs in the standard trade breakdown in General Contractors estimate (form HUD-2328) should be based on the contractor’s use of the prevailing wage decision. The Lender’s Construction Analyst’s detailed estimate (form HUD-92326) and comparison of estimates (form HUD-92331-B), together with the architectural and cost portions of form HUD-92264 signed by the Construction Analyst, should also reflect the use of the prevailing wage decision. These forms should be part of the Construction Analyst’s cost analysis report.

7. Project Architect’s Certification. For applications proposing substantial rehabilitation, the Project Architect’s certification (Appendix 5, Section A.5.8.1) should be submitted.

8. Construction documents, certifications, and studies. The construction documents (plans and specs), Project Architect’s certification, due diligence, engineering, and related studies, if any, and the Lender Construction Analyst’s cost package is submitted in the same manner as for new construction.

9. Historic Preservation. Consultation with the State Historic Preservation Officer (SHPO) is required as part of HUD’s determination of whether the property is a historic property or is in a designated historic district, and whether there will be adverse effects to a historic property. The SHPO consultation must be completed no later than the submission of an application for Firm Commitment. (See Chapter 9).

10. Environmental Review. See Chapter 9 for environmental review requirements.