Program Guidelines for the Commercial Rehabilitation and Façade Improvement Program

Program Guidelines for the Commercial Rehabilitation and Façade Improvement Program I. PROGRAM OVERVIEW A. Applicability: These guidelines apply to all applicants wishing to use federal Community Development Block Grant (CDBG) funds to renovate commercial building façades and/or rehabilitate commercial property to correct interior code violations. B. Introduction: The ERA commercial rehabilitation and façade improvement program is intended to improve the exterior image and address building code violations in commercial buildings. The program objectives are to encourage private investment in commercial properties and revitalize commercial properties of targeted neighborhoods and business districts. The program is funded through a combination of Community Development Block Grant ( CDBG ), private, and other funding sources. C. Program Eligibility: 1. Ownership. To be eligible for Façade Improvement/Commercial Rehabilitation Program funds, the applicant must own, in fee simple, the property to be improved. If the applicant is a tenant, written permission from the property owner is required. 2. Target Areas. ERA recognizes the importance of concentrating public investment in targeted geographic areas based upon considerations of need, leverage with other investments, and collective impact. The target areas are determined by ERA in consultation with the City of Erie, and other funding partners. The targeted areas are publicly announced when seeking program participants and may be specifically defined in contracts with funding partners. The Redevelopment Authority typically does not consider projects located outside the target areas at the present time. 3. Other Considerations: a) Prior Ownership/Occupancy Period. There is not a minimum ownership period required to participate, however, to formally express interest in the program, the inquirer should at least have an option or contract to purchase the property. The applicant may be a tenant only with the property owner s agreement and only with a lease agreement equal to or longer than the term of the loans. The property must be owned for five years after improvements take place or else repayment of some or all grant and loan funds will be required. b) Ineligible Properties. Government-owned buildings, gas stations, and places of worship are not eligible. Also, property types specifically prohibited by the CDBG program are not eligible for this program. c) Prior Grants Assistance. If the property has received public assistance for commercial or façade rehabilitation within the last five (5) years, it shall be 1

ineligible for this program unless the ERA Board grants a waiver approved by DECD Director. d) Historic Clearance. The State Historic Preservation Officer (SHPO) with the Pennsylvania Historical & Museum Commission s (PHMC) Bureau of Historic Preservation requires that the Redevelopment Authority send photos and information regarding the property to determine the building s historical significance. If the building does have historical significance, the SHPO may make recommendations and even require changes to architectural plans. e) Applicant History. ERA will not consider applicants with delinquent taxes, unpaid public liens, unaddressed property code violations and owners of blighted properties not actively working to cure blighted conditions. D. Amount and Type of Assistance: 1. Funding. Maximum funding for a single project is $50,000 of combined loan and grant, regardless of the combination of proposed façade improvements or code corrections proposed. The minimum funding for a single project is $15,000. In consultation with DECD Director, the ERA Board may grant exceptions to these limits. Smaller maximums may be set for a given program year by the Executive Director considering demand, needs, and funding availability. 2. Uses of Funds. The funds provided will be used for construction costs only, unless otherwise approved by the Executive Director. 3. Loans and Grants. Funding provided to each project through this program will typically be part forgivable loan (often referred to as a grant ), and part traditional loan. The ratio of grant to loan is typically 50/50. An owner s cash contribution to construction costs reduces the amount of loan so the overall ratio remains 50% grant and 50% owner cash plus loan. Example $60,000 project 50% $10,000 owner cash $20,000 ERA Loan 50% $30,000 "Grant" a) Grants are technically forgivable loans at zero-percent interest and are forgiven after five (5) years from the date of completion. The Redevelopment Authority secures the forgivable loan by placing a mortgage on the property. Each year, twenty percent (20%) of the loan is forgiven; after five years, nothing is owed. b) Traditional loans are for five years, at five percent (5%) interest, compounded quarterly, and amortized over five years. Payments are due to ERA quarterly. c) If the building is sold during the first five years following completion of the rehabilitation, the property owner will be required to pay back the entire principle due on the loan along with the un-forgiven part of the forgivable loan. Transferring the property to the property owner s parent, child, or spouse does not require repayment, provided the recipient continues to own the property and fulfill the program requirements. Transferring the property to an entity in which the original owner (or 2

the owner s parent, spouse, or child) has at least a 51% ownership interest, provided the recipient continues to own the property and fulfill the program requirements. Repayment may also be waived in consideration of exceptional circumstances. Determination of what constitutes exceptional circumstances is at the sole discretion of the ERA Board in consultation with DECD Director. E. Required Match. In addition to repayment of loans described above, the applicant is required to provide the following: 1. Bidding Documents. The applicant is responsible to provide bidding documents suitable for publicly bidding the project. Architectural fees for preparing drawings, specifications, bid forms, etc. are the responsibility of the owner. Unless the owner proposes using forms of contract approved by the Construction Specification Institute (i.e. AIA or EJCDC), then ERA will provide copies of acceptable construction contracts. 2. Advertising Costs. The owner is responsible for direct costs in advertising for bids. 3. Costs Exceeding Funds Committed. If the cost of the project exceeds funding ERA originally committed to the project, whether at the original bid or by change order, ERA may be able to provide additional funds. ERA will not provide additional funds above the program limit of $50,000. However, availability of funds above the original funding commitment is not guaranteed, and the applicant would then be required to pay for those costs exceeding original funding committed, reduce the project scope (e.g. eliminate bid alternatives or line items), or re-bid the project. 4. In-Kind Match/Donated Materials/Donated Labor. ERA will not consider or accept in-kind match, donated materials, or donated labor as a substitute for loans. However, concurrently contracted work may be considered, (assuming all labor and wage regulations are duly observed.) F. Description of Eligible Work 1. Facades. Eligible project elements to be funded as façade improvements include: Exterior painting. Removing inappropriate or incompatible exterior finishes and materials (false fronts, such as aluminum panels). Restoring exterior finishes and materials such as cornices. Installation of safety glass. Recessing / reconfiguring of existing doors and entrances. Repairing or replacing existing storefront window systems. Signs attached to building (new, repairing, replacing and removing). Exterior building and sign lighting, display area lighting. Awnings; new, repairs or replacement of existing. Items that will NOT be included are: Sidewalks and curb cuts Street trees 3

Light posts Street furniture such as benches and planters Roof replacement Parking 2. Code Corrections. CDBG funds used for interior commercial rehabilitation must correct building code violations. The City of Erie's Code Enforcement Officer must document such violations. The only code violations that can be funded by the CDBG are interior violations. The CDBG program will not fund exterior code correction work. Under the Commercial Rehabilitation Program, any system that is using CDBG funds must be brought up to current code. For example, if wiring is being brought up to code a panel box that is not meeting code must be brought up to code as well. II. APPLICATION A. Application Forms and Application Checklist. Application Form is available from the ERA office or on-line at www.redeveloperie.org (See Appendix A). Application Checklist will provide applicant with information regarding application process and required documentation for application. (See Appendix B) B. Project Design. Applicants must have a Pennsylvania registered architect or engineer sign plan drawings. The cost of an architect and/or engineer will not be reimbursed from the grant funds, but may be used towards the required project match. A design professional is not required at the time of application. C. Application process. The Redevelopment Authority will accept applications for this program during publically announced times. The application process will be announced in the targeted area by mailings, announcements at public meetings, on the ERA website, or by other means. Applications will be reviewed and ranked by ERA and others selected by ERA. Criteria will include local match, impact, local historic significance, and leveraging of additional public and private investment. 1. Applicant shall submit a "Letter of Interest" (Appendix C) to ERA. These letters will be considered by ERA, which will notify senders of its expectation of its ability to fund the project. This notification is not a commitment, but rather, a statement that the project appears to be eligible and funding is possible within a reasonable period of time. 2. Applicant provides the following to ERA: a. A proposed scope of work, preliminary cost estimates and necessary sketches. (A design professional is recommended but not required for the preparation of the application), b. The Informational Statement and Applicant Certification (Appendix D), c. The Statement of Disclosure (conflict of interest) form (Appendix E), 4

d. Copy of the deed e. Proof taxes, MUNISCO are current f. ERA reviews and ranks applications, then sends commitment letters to top projects. III. PROJECT ADMINISTRATION A. Post Application Process 1. SHPO Compliance. ERA shall submit photos and data on the property to the State Historic Preservation Office (SHPO) so that it may be determined if the property is deemed historic or significant, or of interest. If the State deems the property as of historic interest, the owner shall provide a scope of work, details as to replacement items, design and details as to any changes to the property specifications and drawings, so that ERA may submit these for additional historic review. The architect must certify consistency with the Secretary of the Interior's Standards for Rehabilitation, if the property is deemed of interest by SHPO. 2. Pre-Bid conference with the City of Erie. The applicant, architect/engineer, and ERA will meet, prior to advertising for bid, with the DECD staff, Coordinator of Community Initiatives, and the City s Labor Compliance Officer to review various bidding and contracting requirements. ERA submits a pre-bid packet, including: Request for Wage Determination form, Response to Request, Request for Approval form, draft advertisement, draft contracts, MBE & WBE contractors and vendors list, and the labor compliance reports and forms packet. The owner or architect/engineer must supply data on what trades will be used. 3. Wage Determination. The City s Labor Compliance Officer will obtain the wage rates and provide them to the other parties. These wage rates shall be made known to the bidders in the specifications. There is a rate for each type of labor, trade. Wage rates must be confirmed before advertising for bids. NOTE: The owner should be aware that Davis-Bacon wage requirements will apply to other improvements done by the owner even when not part of the facade project, if these are done too close in time (one year before and one year after) with the facade project. The owner must discuss other recent part or planned work with the EEO Officer. Upon approval of the project by the City Department of Economic and Community Development, ERA will notify applicant that bids can be sought for the proposed work. 4. Conflicts of Interest. If there is any potential conflict of interest between the contractor and ERA, the City of Erie Department of Economic and Community Development staff, elected City Officials, and the applicant, then that must be reviewed. A potential conflict might lead to contractor ineligibility. 5. Advertisement for Bids. The project must be advertised a total of two times. The ads must appear in two consecutive weeks. The bid opening must be at least 10 days from the date the ad first appears in the newspaper. The form of advertisement must be 5

approved by the City of Erie. Applicant is to pay 100% of cost of advertising. The solicitation of advertisement must include the following: This is a Federal Assisted Project and is subject to coverage under the Davis-Bacon and related Acts when applicable, 40 D.S.C., 276A to 276-5. Also, provisions relating to Equal Employment, specifically Executive Order 11246, as amended. The appropriate forms applicable to the above shall be completed and supported by documentation or the bid or offer or shall be deemed non-responsive. All bid packages must disclose the Davis-Bacon requirement and the actual rates applicable to this project. A. Bid and Pre-Construction Phase 1. Sealed bids will be opened at the Redevelopment Authority office. 2. Bids must include bid form, required city forms (A-1, B-1, and C-1), bid security, and a copy of the wage determination used in the bid. 3. With City approval of submitted forms, ERA will issue a notice of award to the lowest responsible bidder. 4. The contractor must provide performance and payment security (e.g. a bond) for projects where an individual contractor contract equals or exceeds $30,000. 5. A pre-construction meeting will be scheduled with ERA, the applicant/project sponsor, project architect/engineer, contractor, and the City of Erie. The meeting will cover required reporting such as certified payroll submissions, applications for payment, and other issues. 6. Prior to Notice to proceed, the owner must: execute the mortgage and note for the loan, and provide a check for the owner s share of construction costs, if any. 7. With City concurrence, ERA will issue a Notice to Proceed after the preconstruction meeting. No work begun before issuance of the Notice to Proceed will be paid. Notice to proceed requires furnishing payment and performance security, mechanic s lien waiver, signature of contracts, proof of insurance adding ERA as an additional insured, and other documents ERA may require. A. Construction Phase 1. Onsite Notices. The contractor must post the Notice to all Employees Working on Federal Projects, the Project Wage Rate Sheet, and the wage determination. 2. Applications for payment. The ERA will accept applications for payment on the standard forms (AIA or EJCDC) on a monthly basis. Contractors may request up to three (3) draw payments for completed work items. The Project Architect/Engineer must approve the work and sign the form. The ERA will submit a requisition to the City of Erie, which issues payment of CDBG funds to ERA for payment to the contractor. 3. Certified Payrolls. The contractor must submit a signed certified payroll each week. Payrolls must be received by the ERA by Monday of each week. General contractors are responsible for the payroll submittals of their subcontractors. The certified payrolls will be monitored by the City of Erie EEO officer. 4. Change Orders. Changes to the original agreement must be presented by the contractor to the Redevelopment Authority, in writing and must contain the item or 6

items that are being changed, the cost and the cost difference, if any. Work done by a contractor that is outside the work write-up, without an approved change order, will result in non-payment for that work. 5. Time of Performance. Each contract must stipulate the time in which the work must be completed. If the time of performance is not adhered to, liquidated damages or other recourse provided by the agreement will be followed. Ninety (90) days is typically an acceptable time from the notice to proceed to substantial completion. 6. Building Permits. The contract should require all building permits must be obtained and paid for by the contractor. The building permits must be posted at the project site. 7. Inspections. In addition to inspections required by building permits, ERA reserves the right to conduct periodic quality inspections of the work. 8. Project Closeout. Upon completion of all work specifications by the contractor to the satisfaction of the Redevelopment Authority, the City of Erie Building Code Inspector, and the project applicant, a contract can be considered closed. The project can also be closed out in the event of contractor or participant default. If in the event that the Redevelopment Authority declares default then the contract between the Contractor, the Participant and the Redevelopment Authority is considered null and void and written notice will be provided to the contractor. IV. OTHER FEDERAL REQUIREMENTS A. ERA will ensure that David-Bacon wage rates are utilized.[any project in excess of $2000.00] B. ERA complies with 24 CFR Part 92.356 Conflict of Interest. C. ERA will not do business with any contractor that is listed on HUD s list of debarred contractors D. ERA will conduct required historic and other reviews required for each project. 7

Appendix A Façade Program /Application 1. Applicant Name: Address: City, State, ZIP: Phone Number: _ 2. Property Address: 3. Owner of Record (Name on Deed): 4. EIN: DUNS: 5. Approximate Date of Construction: 6. Do you own the building? (Provide copy of current lease along with written permission if you do not own the building) 7. Number of Stories: 8. Number of Businesses located in building: 9. Number of Apartments located in building: 10. Other current uses or tenants: 11. Current Use: 12. Current Tenants: 13. Identify the scope of the work, each type of work to be completed, and estimated cost. Include storefront, signage, lighting, painting, windows, doors, brickwork, etc. Attach separate paper if necessary. 8

14. Attach photographs of the building s exterior. 15. Attach preliminary sketch of proposed renovations. 16. When would the project begin and what is the estimated duration of the work? 9

Commercial Facade Checklist for applicant reference (To be completed by the Erie Redevelopment Authority) Appendix B Address of building Owner Name If applicant is a tenant and not the realty owner, the realty owner must still sign all legal documents including the agreement, note, mortgage, and agree to the work specifications Applicant's name Phone Address Realty owners, if the applicant is not realty owner Applicant's Name Phone Address Architect Firm Address Phone Original signature of all owners listed on the deed (unless authorized rep. of: corp. or limited partnership) on page 10 of the Informational Statement and Applicant Certification Original signature by realty owner's spouse listed on informational statement if spouse is not on the deed. Complete and return the Statement of Disclosure and state if any part owner is related Disclose names of all part owners in partnerships, corporations Statement of Disclosure, ERA seeks opinions on clearances Copy of current deed (fee simple\title) Proof taxes are current Proof Munisco bills are current Proof of fire insurance Disclosure of filed liens, mortgages on realty and amounts Disclosure of liens other than filed liens Owner must hire a licensed architect if property is deemed historic by SHPO, or if real changes are to be made to the structure 10

List the type(s) of use. (Retail, office, wholesale, warehouse, industrial, residential) Does the building also have apartments or residential space? Would the facade work include window or door work near the apartments? Would the facade work include scraping, sanding, or cleaning of exterior paint? ERA takes photos of building, submits to PHMC/SHPO for state historic review -- State response may take 30 days. Date Sent to PHMC Date response received If SHPO deems the property to be of interest, owner's architect prepares design and reviews specs as to compliance with Secretary of the Interior's Standards. If SHPO has interest, ERA submits architect's design and specs to SHPO and others for review. (Adjustments might be required) If SHPO has interest, architect certifies that work progress and final work meet SHPO requirements Owner's plans and specs (bid package) given to the ERA Date of Submittal by ERA Response by City Meeting with EEO Officer to seek Davis-Bacon wage rates for construction ERA approval of specifications ERA has section to place in specs regarding funder, owner, contractor relations, how project will proceed, and requirements of contractor, work requirements, payment requirements ERA issues notice to proceed to advertise bids Contractor proof of insurance (required by ERA) Comprehensive public liability insurance of not less than $300,000/ $500,000 for bodily injury, death, $50,000/ $100,000 in the event of property damage arising out of contractor's work; Workmen's compensation insurance 11

Contractor bonding requirement if job over $30,000 Potential conflict of interest/ clearance for contractor? Advertise for bids Bid opening ERA staff reviews bids and acceptability of prices ERA added to fire insurance as mortgage lien payee Contractor bond or letter of credit for full value of contract Proof of contractor insurance Closing All owner funds (match) placed in ERA escrow account Owners sign 5-year note and ownership agreement, mortgage, and other documents ERA files mortgage at Courthouse Pre- construction meeting on EEO, Davis- Bacon with City ERA and City issues notice to proceed All work done must be per specs approved by ERA and all work must comply per EEO or ERA shall not fund and ERA can recover any public funds disbursed. Architect inspects work, approves contractor payment, submits AIA forms, work done to spec contractor pays out before reimbursement, provides proof Architect certifies work as being done to spec and to historic standards if SHPO showed interest in property ERA pays only for work actually completed ERA staff inspects and reviews billings also and signs off and building owner does the same EEO Officer signs off before payment is made ERA pays using owners' funds first Note: when payment is with CDBG funds, expect possible 3 week delay after EEO sign off and 20% retainage held back on progress payments. Architect or building owner approves change orders, but all change orders are contingent on ERA final approval. Final payments require 100 % completion, lien waiver sign offs by all subs, sign offs by architect and architect historic compliance sign off, building owners, ERA staff, EEO sign off Building owner remains owner for 5 years or repays CDBG funds, also maintains the property. If facade space was vacant, ERA checks to see an eligible use moves in within one-year (or owner defaults). 12

Appendix C To: Erie Redevelopment Authority 626 State Street, Room 107 Erie, PA 16501 Letter of Intent Please be informed that I, as a property owner or business owner intend to begin and complete a façade renovation project. A. Project Location and Match Requirements Little Italy Commercial Corridor Parade Street between 6 th Street and 26 th Street Downtown Improvement District B. Major Façade Improvements Historic Building Corner Building Non- Historic On my business located at: It is my understanding that the rehabilitation shall be based upon property design, mutually agreeable to the Erie Redevelopment Authority and myself. If I do not own the building, I will receive written permission from the owner to make any improvements on the property. _ Signature _ Mailing Address Company Name Phone 13

Appendix D FIVE-YEAR OWNERSHIP AGREENMENT FOR THE CITY OF ERIE CDBG FAÇADE PROGRAM This Agreement entered into between (a) the Redevelopment Authority of the City of Erie as under Contract and acting on behalf of the City of Erie, hereinafter called the City of Erie, and (b) the participant of the City of Erie CDBG Facade Renovation Program, hereinafter called the OWNER, is to ensure that any building rehabilitated/restored with CDBG Funding will be owned by the Applicant for a period of not less than five (5) years from the original grant award and local match payment. It is understood by the OWNER that pro-rated share of the loan/grant amount received for improvements will be forgiven each year over the five (5) year period until a zero balance is reached at the end of the fifth year. Under the Agreement, if the OWNER sells his property before the end of the fifth year, any balance remaining based on a pro-rated share would have to be paid back to the City within one (1) month from the date of the sale. This requirement can be waived only in the case of business financial hardship or death. In the case of financial hardship where the property is sold within five (5) years from the original local match payment/grant award, the OWNER will be required to show mitigating circumstances and/or financial hardship causing the sale, along with financial records showing no profit above the local dollar matching requirement has been made through the sale of the rehabilitated/restored property. In cases where there is a profit made beyond this amount (original local match), then the property owner will be required to repay any balance of the grant award remaining based on the depreciation schedule, and pro-rated from the date of the sale. In accordance with HUD Community Development Block Program regulations and conditions listed under this Agreement, as owner of the building located at _, I agree to maintain ownership or the property for a period of not less than five (5) years from the date of my first local grant match payment which was, and will inform the Redevelopment Authority of the City of Erie of any plans for early sale of the above listed property due to financial hardship. Address of Realty Being Assisted Realty Owner (Type or Print Name) Signature of Realty Owner Redevelopment Authority of the City of Erie Michael Lorei 14

Appendix E Disclosure Statement Please state below if you are related by family or household, or have any business relations with the staff or Board of Directors of the following agencies. 1. Redevelopment Authority of the City of Erie (you must also answer relative to persons who left within one year) No Yes, Please Explain_ 2. City of Erie Department of Economic and Community Development No Yes, Please Explain_ 3. City of Erie, including elected officials No Yes, Please Explain_ 4. Pennsylvania Department of Community and Economic Development (DCED) No Yes, Please Explain_ 5. U.S. Department of Housing and Urban Development (HUD) No Yes I herby certify that the above information is true and correct to the best of my knowledge. _ Applicant/Owner _ Applicant/Owner 15