Community Development Corporation Purchase Rehabilitation Program

Cleveland Action to Support Housing will work with community development corporations (CDC) to assist with the purchase and rehabilitation of blighted properties. This strategy will encourage the revitalization of City of Cleveland neighborhoods through renovation and increasing housing opportunities for low and moderate income families through implementation of the purchase, rehabilitation, and resale program.

The CDC will document the feasibility and viability of the proposed purchase. The CDC Project Manager and the Cleveland Action to Support Housing Construction Specialist will meet on site to do a joint inspection and to share ideas on the scope of rehabilitation and design. Based on that inspection specifications and cost estimates are developed by the Construction Specialist;

• The CDC will submit a loan package to include a purchase agreement or option on the property, sources and uses for the project, appraisal based on after rehabilitation appraisal, latest audit, financial statements, and marketing plan;
• All relevant documents will be sent by email to specific participating lending institutions, including Key Bank, Dollar Bank, Huntington National Bank, Third Federal Savings and Loan, Fifth Third Bank, First Merit Bank and ParkView Federal;
• Lenders may make offers to finance the project with conditions and it will be up to the CDC to determine the financing package they wish to accept;
• When the financing is agreed upon the lender will deposit with Cleveland Action to Support Housing the amount needed for the purchase and rehabilitation of the unit. At that time Cleveland Action to Support Housing will deposit with that lending institution a compensating balance to reduce the rate to the Cleveland Action to Support Housing current rate;
• Cleveland Action to Support Housing will provide construction management services to include on site inspections based on trade activity, meetings with contractions and the CDC, and weekly reports to the CDC;
• Architectural drawing modifications and change orders will be reviewed by the project team consisting of the Construction Specialists, the contractor, and CDC representatives;
• The CDC will be responsible for the marketing of the properties for sale.

Fees for the project are 1% of the funds borrowed.

Specifications, Cost Estimates & Obtaining Bids from Contractors
While at the property, it is our job to ensure there are not severe health and safety violations which are not scheduled for repair. Based on this visit to the property, the Construction Specialist will develop specifications for the work to be completed and cost estimates.

Everyone is different as to when they begin to get estimates from contractors on the work to be completed. Some people get estimates from contractors before they complete the application. Others wait until they know they are approved.

Contractor Criteria
All contractors must be licensed to work in the City of Cleveland. Additionally, contractors must be bonded and provide proof of liability insurance and workman’s compensation insurance.

The CDC will receive three copies of the specifications. Each contractor, bidding on the project, should receive a copy of the specifications. The contractor will fill in the price for each of the specifications. The contractor should return the bid to the CDC. If contractors delay in returning bids, the construction process will be slow. Contracts prepared by the contractor should not be signed. When the contractor or contractors have been chosen, please notify the Construction Specialist of the decision. The CDC may not wish to bid the project and choose one contractor. This is acceptable as long as the contractor understands that they must comply with our qualification policy and bid according to the prepared specifications and cost estimates.

If you are interested, you can request the Cleveland Action to Support Housing General Specifications and you can also review the City of Cleveland Building Code at http://caselaw.com/clevelandcodes/

Contracts
With the funds safely deposited with Cleveland Action to Support Housing, we will prepare the contracts for the work to be completed. The Construction Specialist has reviewed the contractor’s bids. It is our job to ensure you are receiving work that meets or exceeds our quality standards and that the CDC is being charged a fair price. Prior to the contracts being signed, the credentials of the contractor are verified. Permits are also requested from the City. The contracts are between our organization and the CDC’s contractor or contractors. Contracts will not be prepared unless the owner, the Construction Specialist, and the contractor agree and understand a set of specifications and cost estimates. All of the contracts must be reviewed and signed by the CDC, the contractor and the Executive Director of Cleveland Action to Support Housing. All four (4) copies of the contract, as well as, the Pre-Construction Report must be signed. The Cleveland Action to Support Housing Construction Specialist is the witness to the contractor’s signature. When the contracts are signed a proceed order is issued to the contractor to begin work. Work cannot begin prior to the contractor receiving the proceed order. Along with the contracts are three copies of the Escrow Agreement, which will also have to be signed.

Payments to Contractors
Cleveland Action to Support Housing is the escrow agent for the bank and the owner of the property and is therefore responsible for the disbursement of funds on the project. The Construction Specialist may use discretionary judgment to determine the eligibility of a contractor for a partial payment. The total amount of funds available per draw will be based on the percentage of work completed, as determined by the Construction Specialist. All payments must be approved by the owner.

The contractor is to call the Construction Specialist at least 48 hours prior to requesting the final payment. The 48 hours is necessary for the Construction Specialist to schedule an inspection of the work with the homeowner.

Partial payments will be granted according to job size and dictated by seasonal weather. A 10% retainer will be held, when disbursing funds on a partial payment and only released when the “Certification of Completion is signed by the homeowner.

Each time a partial payment is requested, the contractor is to present the following documentation:

• An invoice for the amount due;
• Lien waivers may also be required as a condition for the payment.
• Copies of all work related permits;
• Rough or final verification by the City of Cleveland on the work completed on the mechanicals.

Beside the inspection with the CDC, the contractor is to present the following documentation for the final payment.

• An invoice for the amount due;
• A copy of every permit secured on the job;
• An affidavit stating all labor and materials have been paid for in full;
• Lien waivers may also be required as a condition of payment.
• If not previously requested, signed verification of the mechanical final by all City of Cleveland inspectors involved in the project;

With the homeowner’s approval on the "Certificate of Completion" and receipt of all documentation, as listed above, payments will be processed within 5 working days. When the project is completed, we will ask the CDC to complete a short customer satisfaction survey for our records.