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Replacement Reserve Escrow Disbursement Process Training. April 2012. CHFA – The Connecticut Housing Finance Authority 999 West Street, Rocky Hill, CT 06067. Replacement Reserve Escrow Revision: Intent. Goals: Reduce the time between review and approval for owners

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replacement reserve escrow disbursement process training

Replacement Reserve Escrow Disbursement Process Training

April 2012

CHFA – The Connecticut Housing Finance Authority

999 West Street, Rocky Hill, CT 06067

replacement reserve escrow revision intent
Replacement Reserve Escrow Revision: Intent
  • Goals:
    • Reduce the time between review and approval for owners
    • Establish a formalized process for review of various projects
    • Eliminate capital replacement review on HUD insured properties
replacement reserve escrow revision outcome
Replacement Reserve Escrow Revision: Outcome
  • Eliminates Technical Services review for properties w/o CHFA debt
  • Eliminates CHFA reviews for HUD insured properties
  • Created Appendix G to CHFA Standards of Design and Construction – establishing classifications for review certifications
  • Created Capital Improvements Guidelines (CIG)
  • Revised the Replacement Reserve Policy
  • Created Capital Improvement Schedule
no chfa financing
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
hud insured projects
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 of design construction
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)
section 00054 appendix g
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).
classification a
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
classification b
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
classification c
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
capital improvement guidelines
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
replacement reserve observations
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.
capital improvement schedule
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

process forms
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
classification a scenario 1
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

classification a scenario 2
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

classification b scenario 3
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

classification b scenario 4
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

classification c scenario 5
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

classification c scenario 5 continued
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
owner benefits
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
conclusion
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