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Replacement Reserve Escrow Disbursement

Process Training

April 2012

CHFA – The Connecticut Housing Finance Authority999 West Street, Rocky Hill, CT 06067

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Replacement Reserve Escrow Revision: Intent

Goals: 1. Reduce the time between review and

approval for owners2. Establish a formalized process for review of

various projects3. Eliminate capital replacement review on

HUD insured properties

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Replacement Reserve Escrow Revision: Outcome

1. Eliminates Technical Services review for properties w/o CHFA debt

2. Eliminates CHFA reviews for HUD insured properties

3. Created Appendix G to CHFA Standards of Design and Construction – establishing classifications for review certifications

4. Created Capital Improvements Guidelines (CIG)5. Revised the Replacement Reserve Policy6. Created Capital Improvement Schedule

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No CHFA Financing

Technical Services’ review will not be required for properties that do not have CHFA financing. Examples:

DECD transferred grants Certain TCAP, Exchange CDBG Grants, Green Retrofit Program

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HUD Insured Projects

Eliminates CHFA reviews for HUD insured properties

CHFA will rely on HUD authorizations for

project review and escrow disbursement.

9250 will be acceptable verification

Electronic copies will be acceptable

CHFA Standards ofDesign & Construction

Goal: Develop affordable, safe housing, with as much quality, energy efficiency, durability, comfort, air quality, and environmental sustainability as the marketplace, resources and need will permit. Volume I – Project Planning and Technical Review

Process Volume II – Health, Safety and Sustainability

Standards and Guidelines Volume III – Appendices CHFA Capital Improvement Guidelines (CIG)

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Section 00054 & Appendix G

Volume I – Section 00054: Capital Improvements – Repairs/Replacements/Installations References Appendix G and Capital Improvement Guidelines

(CIG) Written description of review/approval process

Appendix G: CHFA Capital Improvement Project Classifications for Repairs/Replacements/ Installations Classifications A, B.1 & B.2 and C Project classifications describe the level of required

certification of conformance to CHFA Standards for repairs/replacements/installations, as determined by the complexity and costs of the project(s).

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Classification A

If the Owner will be completing “A” projects, the Owner may certify that work has been completed according to CHFA Standards of Design and Construction

Examples: Carpet, Storm Doors, Appliances

Owners must submit Request for Pre-Approval (HM 6-21) if ≥$10,000

Owners must submit Request to Release Escrow Funds (HM 6-24) for reimbursement

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Classification B

If the Owner will be completing “B” projects B.1: Less than 20K – Owner may self-certify B.2: Greater than or equal to 20K – A Building Design

Professional (BDP) must determine scope of work and certify completion

Examples Roofing/Siding/MEP Repairs/Replacements BDPs: CT-licensed/insured Building and/or Home Inspector,

HUD-approved Inspector, insured FHA 203K Compliance Consultant, Architect, Professional Engineer, Licensed Environmental Consultant, or Approved Vendor

Owners must submit Request for Pre-Approval (HM 6-21) if ≥$10,000

Owners must submit Request to Release Escrow Funds (HM 6-24) for reimbursement

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Classification C If the Owner will be completing “C” projects Tech Services (TS) review and acceptance of scope, final bid

documents and contract required Examples: Site utility work, structural repairs and heat/smoke/fire

detection/suppression/elevator repairs May require a Field Observer (determined by TS) Building Design Professional certification required

BDPs: CT-licensed/insured Building and/or Home Inspector, HUD-approved Inspector, insured FHA 203K Compliance Consultant, Architect, Professional Engineer, Licensed Environmental Consultant, or Approved Vendor

Owners must submit Request for Technical Services Review and Approval (HM 6-21TS)

Owners must submit (HM 6-21) & (HM 6-24) as required under Classification A & B

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Capital Improvement Guidelines “CIG” – created to assist Owners, Property

Managers, Developers and internal CHFA staff Provides general guidelines for repair and replacement

projects identified in Appendix G Divided into three sections (Classifications A, B &C)

with specific project examples Includes documentation requirements Includes “Questions to Consider” – suggested related

issues and conditions References to related Standards section(s) Energy-efficient measures and suggestions Project-specific questions and related issues to consider

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Replacement Reserve Observations

Observation and verification policy change: Observations will occur as determined by scope of work and

may include one or more observations by Building Design Professional (Classification B) and or Technical Services (Classification C).

Asset Management will observe a sampling of the work completed or items purchased at the next scheduled site visit.

Asset Management reserves the right to require observations prior to release of funds for any reason.

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Capital Improvement Schedule

Capital Improvement Schedule (HM 6-xx) submitted with annual budget

For owners to estimate when work will be completed throughout fiscal year…

…and costs associated with the work Provides Asset Management, Finance and Technical Services

with a schedule to forecast potential workload demands Standardized for potential electronic analysis via MFaSys Owners may revise during fiscal year

Y:\Common Area\TSAM Committee Items\Capital Improvement Schedule.xls

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Process & Forms

Technical Services Review and Approval (HM6-21TS) - NEW Escrow Release Pre-Approval (HM6-21) - Revised Request To Release Escrow Funds (HM6-24) - Slight

Revision Authorization to Release Escrow (HM6-20) - Revised Replacement Reserve Descriptive Codes (HM6-22) - Slight

Revision Residual Receipts & General Operating Descriptive Codes

(HM6-23) – No Change Escrow Disbursement Policy - Revised Capital Improvement Schedule (HM 6-xx) - NEW

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Classification A: Scenario 1 Owner intends to install 30 storm doors. The

total cost is less than $10,000. Storm doors are on Capital Improvement

Schedule submitted with annual budget. Owner does not need to seek pre-approval. Following completion of installation, the

Request to Release Escrow Funds is submitted.

Y:\Common Area\TSAM Committee Items\Sample Forms for PP\PP Scenario 1.xls

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Classification A: Scenario 2 Owner intends to rehab 4 kitchens by replacing

cabinets and plumbing for $15,000. Owner reviews Appendix G to determine certification

requirements. Project falls under Classification A; Owner can certify

but must obtain Asset Management pre-approval. Owner submits Escrow Release Pre-Approval form

with Recommended Vendor, Scope of Work, and 3 quotes attached.

Asset Manager gives pre-approval; Owner completes work and submits HM 6-24.

Y:\Common Area\TSAM Committee Items\Sample Forms for PP\PP Scenario 2.xls

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Classification B: Scenario 3 The community building roof needs replacing at a

total cost of $9,000. Owner reviews Appendix G to determine certification

requirements and the guidance provided in the CIG. Project falls under Classification B.1; Owner or Building

Design Professional (BDP) must certify. Owner completes work and submits HM 6-24.

Y:\Common Area\TSAM Committee Items\Sample Forms for PP\PP Scenario 3.xls

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Classification B: Scenario 4 Owner intends to pave entire parking area at a cost of $50,000.

Owner reviews Appendix G to determine certification requirements and the guidance provided in the CIG.

Project falls under Classification B.2 Owner retains BDP to certify compliance with Standards, scope

of work & construction Owner submits Escrow Release Pre-Approval form (HM 6-

21) with Scope of Work and 3 quotes attached. Pre-Approval form must be signed by Owner and BDP

Asset Manager gives pre-approval; Owner completes work and submits HM 6-24.

Y:\Common Area\TSAM Committee Items\Sample Forms for PP\PP Scenario 4.xls

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Classification C: Scenario 5 Owner intends to replace a boiler at a cost of $50,000.

Owner reviews Appendix G to determine certification requirements and the guidance provided in the CIG.

Project falls under Classification C Owner retains BDP to certify compliance with Standards,

scope of work & construction TS/AM & BDP meet and review proposed scope Technical Services requires at least a 2 week turnaround

time for review of plans and specs Owner submits CHFA Technical Services Review & Approval

form (HM 6-21TS) with scope of work, plans, drawings Asset Manager sends to Technical Services for review

Y:\Common Area\TSAM Committee Items\Sample Forms for PP\PP Scenario 5.xls

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Classification C: Scenario 5 Continued

Technical Services communicates directly with BDP during the review process

Technical Services signs off and notifies Asset Management

Owner obtains 3 quotes and submits Escrow Release Pre-Approval (HM 6-21) to Asset Manager

Technical Services reviews and accepts Asset Manager approves and notifies Owner to

proceed Owner completes work and submits HM 6-24

Owner & BDP sign HM 6-24 for certification of standards

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Owner Benefits

More direct input and control of construction project

Compresses timeline by eliminating CHFA review time for Classifications A & B

Defines Capital Improvement process For HUD insured properties, eliminates review

and inspection, shortening the escrow release time

Consolidates escrow disbursement processes Provides clear & direct guidelines for specific

projects

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Conclusion

No Technical Services Participation: Properties with no CHFA funding HUD Insured Developments All projects under Classifications A & B

Technical Services Participation: Any projects under Classification C CNA Review Loans, Refinancing, Workout and Preservation Environmental Testing Review Emergency Participation Any Asset Management inquiries

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Questions & Comments