Appendix 1-1

7485.3 G

PART 968-PUBLIC HOUSING

MODERNIZATION

Subpart A-General

Sec.

968-101 Purpose and applicability.

968.102 Special requirements for Turnkey III developments.

968.103 Allocation of funds under section 14.

968.104 Reserve for emergencies and disasters.

968.105 Definitions

968.108 Displacement, relocation, and real property

acquisition.

968.110 Other program requirements.

968.112 Eligible costs.

968.115 Modernization and energy conservation standards.

968.120 Force account.

375

COPIES OF THE ABOVE SECTIONS OF THE 1996 SECTION OF THE 24 CFR WERE

INCLUDED HERE STARTING ON PAGE 376.

Appendix

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7485.3 G

APPENDIX 1-2 CIVIL RIGHTS REQUIREMENTS

1\. For Public Housing, refer to 24 CFR Part 5 and \'968.110(a).

2\. For Indian Housing, refer to \'950.115(a) for the Indian Civil

Rights Act, \'950.115(b) for the applicability of certain civil

rights acts, \'950.115(d) for disability requirements, and

\'950.115(e) for minority and women\'s business enterprise

opportunity.

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7485.3 G

APPENDIX 1-3 LEAD-BASED PAINT (LBP) POISONING PREVENTION

The HA shall comply with the LBP Poisoning Prevention Act (42 U.S.C.

4821-4826) and HUD implementing regulations (24 CFR Part 35). The HA

was required to conduct LBP testing of all family developments built

before 1978 by December 6, 1994, and then to abate where the level of

lead in paint exceeds the standard provided in the LBP Poisoning

Prevention Act or established by the Secretary. Further, the

Department strongly recommends that the HA use the Guidelines for the

Evaluation and Control of LBP Hazards in Housing, published in July

1995, to assist with the identification of its LBP needs. Refer to

\'968.110(k) or 24 CFR Part 950, Subpart H.

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7485.3 G

APPENDIX 1-4 DISPLACEMENT, RELOCATION AND ACQUISITION

1\. Minimizing Displacement and Temporary Relocation.\*

a\. Displacement. Consistent with the other goals and

objectives of the CGP, the HA shall assure that it has taken

all reasonable steps to minimize the displacement of persons

(families, individuals, businesses, nonprofit organizations,

and farms) as a result of CGP-funded acquisition,

rehabilitation, or demolition.

b\. Temporary Relocation. The HA shall assure that it has taken

all reasonable steps to accomplish the modernization work

with residents-in-place. The Department is very concerned

about the length of time that it takes HAs to modernize

units. This time may be shortened to the extent that

relocation is minimized and HAs are able to complete

rehabilitation work in a time period comparable to the

private sector. Where temporary relocation is necessary due

to the type or scope of the modernization (e.g., LBP

abatement), the HA shall minimize the time between moving

persons out of the units to be modernized and the start of

the modernization work, as well as the time between the

completion of the modernization work and moving persons back

into the completed units. Such approach reduces the risk of

vandalism to the units.

\*Note: HAs are encouraged to explore ways in which

residents may be employed in any relocation activities that

become necessary, such as contracting with resident-owned

businesses to move residents.

2\. Assistance for Persons Who Must Move, But are Not Displaced

(Temporary Relocation and Moves Within the Development). Persons

who are not displaced, but must move temporarily (e.g., to permit

rehabilitation) or move permanently within the same

development/site, are entitled to reimbursement for all

reasonable out-of-pocket expenses incurred. The HA shall provide

temporary housing which is suitable, decent, safe and sanitary at

the same cost on a nondiscriminatory basis for a person who is

moved temporarily from the development/site and is offered the

opportunity to return to the same development/site, although not

necessarily the same building/unit.

a\. Provision of Notice. The HA shall provide appropriate

advisory services, including reasonable advance written

notice to affected persons of. (1) the date and approximate

duration of the temporary relocation; (2) the suitable,

decent, safe, and sanitary unit to be made available for the

temporary, period; (3) the terms and conditions under which

the person may lease and

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Appendix 1-4

7485.3 G

occupy a suitable, decent, safe, and sanitary unit in the

development following completion of the CGP-funded activity;

and (4) whether the cost of the move will be paid for by

direct payment or reimbursement under subparagraph b,

including any eligible incidental costs under subparagraph

c\.

b\. Direct Payment or Reimbursement. The HA shall either: (1)

undertake the move itself, using force account labor, a

resident-owned business, or a moving company, and therefore

be directly responsible for all actual reasonable moving and

related expenses; or (2) reimburse persons for all

reasonable out-of-pocket expenses incurred in connection

with the temporary move. In the latter case, the HA shall

not make fixed payments for moving expenses since such

payments are not representative of actual reasonable costs.

c\. Incidental Costs. Incidental costs shall include utility

deposits if required at the temporary housing, and telephone

installation and cable TV hook-up at the temporary housing

and the newly rehabilitated development if the person

previously had a telephone and cable TV. If the newly

rehabilitated development now has tenant-purchased rather

than HA-furnished utilities, which require utility deposits,

the HA shall not pay for the new utility deposits since they

are required to be paid by any person currently living in a

development which is being converted to tenant-purchased

utilities or by any new person moving into such development.

The HA should work with the utility company to ensure that

residents who are unable to pay the entire utility deposit

up-front receive a payment plan from the utility company.

d\. Cost of Temporary Housing. When it is necessary to

temporarily house persons in units other than public

housing, rents paid by the HA shall not exceed Section 8

Fair-Market Rents, except as may be approved by the FO.

When a decent, safe, and sanitary public housing unit of

suitable size and location becomes available, the person

must agree to move into the unit or assistance shall

terminate.

3\. Assistance in Place. Where persons are not required to move, but

are unable to use their kitchens for a short period of time or be

in their units during the day due to modernization activities,

the HA may use CGP funds for meal vouchers where the HA can

document, and maintain such documentation on file, that the cost

of the meal vouchers is less than the cost of temporary moves.

4\. Assistance for Displaced Persons. A displaced person, defined in

paragraph 7 of this Appendix, shall be provided relocation

assistance at the levels set forth in Chapters 1 through 6 of

Handbook 1378,

2

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7485.3 G

Tenant Assistance, Relocation and Real Property Acquisition;

also, Real Property Acquisition; also, see Section 9 of Chapter 8

of that Handbook which implements the Uniform Relocation Act

(URA) and other relocation policies.

a\. Relocation Notices to Families or Individuals. The HA shall

provide written notices (general information notice and

notice of eligibility for relocation assistance), as set

forth in paragraph 2-3 of Handbook 1378. Each notice shall

be personally served or sent by certified or registered

first-class mail, return receipt requested, and documented

in the HA\'s files. Each notice shall be written in plain,

understandable language. Persons who are unable to read and

understand the notice (e.g., illiterate, foreign language,

or impaired vision) must be provided with appropriate

translation/communication and counseling. Each notice shall

indicate the name and telephone number (including the TTY

number or a TTY Relay Service) of a person who may be

contacted for answers to questions or other needed help.

b\. Relocation Advisory Services. The HA shall provide

relocation assistance advisory services, as set forth in

paragraphs 2-4, 2-5 and 2-6 of Handbook 1378, and properly

coordinate relocation activities, as set forth in paragraph

2-5 of Handbook 1378. The HA shall not require any person

to move unless it has provided at least one referral (where

possible, three or more) to a comparable replacement

dwelling (CRD), as set forth in paragraph 1-6 of Handbook

1378\.

c\. Payments for Moving and Related Expenses.

\(1\) Person (Family or Individual). The payment options are

set forth in paragraph 3-2 of Handbook 1378. In

summary:

\(a\) The HA may, at its discretion, elect to perform

the move itself, using force account labor or a

moving company (possibly resident-owned), at no

cost to the person being displaced. In such case,

the HA also shall pay for the incidental moving

costs, as described in paragraph 2c of this

Appendix, and provide the person with an allowance

of \$50.

\(b\) If the HA does not elect to perform the move

itself, the person shall have the option-to elect

either a payment for actual reasonable moving and

related expenses (see paragraph 3-2a of Handbook

1378\) or the applicable fixed moving expense and

dislocation allowance (see paragraph 3-2b of

Handbook 1378) indicated in a schedule, which is

published

3

Appendix 1-4

7485.3 G

periodically in the Federal Register by the

Department of Transportation and available from

the FO.

\(2\) Business or Nonprofit Organization. A business or

nonprofit organization may have payment options.

Such entity is eligible for a payment for actual

reasonable moving and related expenses (see

paragraph 4-2 of Handbook 1378). If it chooses

this option, it also may be eligible for payment

for reestablishment expenses (see paragraph 4-3 of

Handbook 1378). Paragraph 4-5 of Handbook 1378

describes those businesses/nonprofit organizations

which may qualify to choose a fixed payment in

lieu of the payments under paragraphs 4-2 and 4-3

of Handbook 1378.

d\. Replacement Housing Assistance. It is expected that most

persons displaced from a dwelling will be provided the

opportunity to relocate to another public housing unit that

qualifies as a CRD. This will satisfy the basic replacement

housing requirements of the URA and, ordinarily, no

additional cash replacement housing assistance would be

necessary. If the HA does not provide referrals to

comparable subsidized housing, the person will be entitled

to cash assistance sufficient to rent a CRD on the private

market for up to a 42-month period. The person may use the

cash payment to rent or buy a replacement dwelling. If the

person rents a replacement dwelling, the payment shall not

exceed the amount needed to rent the decent, safe and

sanitary dwelling to which the person relocates. At its

discretion, the HA may provide a rental assistance payment

in monthly installments. If the person elects to buy a

decent, safe and sanitary replacement dwelling, the HA shall

provide the payment in a lump sum amount. The requirements

governing replacement housing assistance are set forth in

paragraph 3-4 of Handbook 1378.

5\. Real Property Acquisition Requirements. The acquisition of real

property with CGP funds is subject to the URA and the

requirements set forth in Chapter 5 of Handbook 1378.

6\. Appeals. A person who disagrees with the HA\'s determination

concerning whether the person qualifies as a \"displaced person,\"

or the amount of the relocation assistance for the which the

person is eligible, may file a written appeal of that

determination with the HA. A low-income person who is

dissatisfied with the RA\'s determination on his/her appeal may

submit a written request for review of that determination to the

FO. The procedures for filing and reviewing appeals are set

forth in paragraph 1-33 of Handbook 1378.

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Appendix 1-4

7485.3 G

7\. Definition of Displaced Person. Each \"displaced person\" is

eligible for relocation assistance as set forth in paragraph 4 of

this Appendix. The term \"displaced person\" is generally

described in paragraph 1-8 of Handbook 1378; \'968.108 or \'950.117

provides the following guidance.

a\. The term \"displaced person\" includes, but may not be limited

to:

\(1\) The person who moves permanently from the

development/site after the initiation of negotiations,

if the move occurs before the person is provided

written notice offering the opportunity to lease and

occupy a suitable, decent, safe, and sanitary dwelling

in the same development/site, under reasonable terms

and conditions, upon completion of the activity.

Reasonable terms and conditions include a monthly rent

and estimated average monthly utility costs that do not

exceed the total tenant payment, as determined under

\'913.107; or

\(2\) The person is required to relocate temporarily from the

development/site, but does not return to the

development/site, if either: (a) the person is not

offered payment for all reasonable out-of-pocket

expenses incurred in connection with the temporary

relocation, including the cost of moving to and from

the temporarily occupied unit and any increased housing

cost; or (b) other conditions of the temporary

relocation are not reasonable; or

\(3\) The person is required to move to another unit in the

same development/site, if either: (a) the person is not

offered reimbursement for all reasonable out-of-pocket

expenses incurred in connection with the move; or (b)

other conditions of the move are not reasonable; or

\(4\) The person, including a person who moves before the

initiation of negotiations for the CGP-funded activity

that the HA or HUD determines was displaced as a direct

result of acquisition, rehabilitation, or demolition

for the CGP-funded activity.

b\. Notwithstanding the provisions of subparagraph a, a person

does not qualify as a \"displaced person\" and is not entitled

to relocation assistance at URA levels, if:

\(1\) The person is excluded under paragraph 1-8c of Handbook

1378; or

\(2\) The person has been evicted for serious or repeated

violation of the terms and conditions of the lease or

occupancy

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Appendix 1-4

7485.3 G

agreement, violation of applicable Federal, State or

local/tribal law, or other good cause, and the HA

determines that the eviction was not undertaken for the

purpose of evading the obligation to provide relocation

assistance; or

\(3\) The person moves into the property after the HA\'s

submission of the Annual Statement and, before signing

a lease and commencing occupancy, was provided written

notice of the CGP-funded activity, its possible impact

on the person (e.g., that the person may be displaced

or temporarily relocated) and the fact that the person

would not qualify as a \"displaced person as a result of

the CGP-funded activity; or

\(4\) The relocation is determined to be a \"general transfer\"

in accordance with applicable Public and Indian Housing

Program policies. The HA shall not use CGP funds to

pay for reasonable out-of-pocket expenses for general

transfers. To minimize disputes regarding eligibility,

HA records shall state the cause of general transfers.

c\. The HA may ask HUD at any time to determine whether a person

qualifies as a displaced person or would be covered by this

paragraph.

8\. Definition of Initiation of Negotiations. For purposes of

determining the formula for computing the replacement housing

assistance to be provided to a person who is displaced by

rehabilitation or demolition, the term \"initiation of

negotiations\" means 45 calendar days before either the issuance

of the invitation for bids or the start of force account work for

the CGP-funded activity.

9\. Recordkeeping Requirements. The HA shall maintain records in

sufficient detail to demonstrate compliance with applicable

policies, as set forth in Chapter 6 of Handbook 1378.

10\. Costs of Assistance. Costs of required relocation assistance

under this Appendix are eligible CGP costs in the same manner and

to the same extent as other CGP costs. Such costs also may be

paid for with funds available from other sources.

11\. Technical Assistance. The HA shall direct all questions on

relocation to the FO Public or Indian Housing (PIH) staff for

appropriate coordination with Community Planning and Development

(CPD). PIH will refer questions regarding relocation under the

URA to the Relocation/Realty Specialist in CPD and regarding

equal opportunity and fair housing to the Equal Opportunity

Specialist in Fair Housing and Equal Opportunity.

6

Appendix 1-5

7485.3 G

APPENDIX 1-5 ENVIRONMENTAL COMPLIANCE

1\. General Compliance. Before approving CGP funds, HUD will comply

with all applicable requirements of 24 CFR Part 50, implementing

the National Environmental Policy Act (NEPA) of 1969 (42 U.S.C.

4321 et seq.), and related requirements of 24 CFR 50.4,

pertaining to related environmental laws, Executive Orders and

HUD standards. Refer to paragraph 7-4A of this Guidebook.

\[\'968.110(c) or \'950.120(a)\]

2\. Coastal Barriers. In accordance with the Coastal Barriers

Resources Act (16 U.S.C. 3501), no financial assistance under the

CGP shall be made available within the Coastal Barrier Resources

System. \[\'968.110(m) or \'950.120(h)\]

3\. Expediting Review. Each development included on the Annual

Statement and the Five-Year Action Plan must have a current

environmental review completed and on file. To expedite the

review process, the FO is encouraged to use existing

environmental reviews where developments have been funded in

prior years and update them as necessary. The following guidance

is provided to assist the FO in completing the environmental

reviews in a timely fashion for areas where it has shown to be

time-consuming:

a\. Historic Preservation. Before taking any action with the

State Historic Preservation Office (SHFO), the FO shall make

a determination of applicability for each development:

\(1\) If the work being funded is limited to internal repairs

or in-kind repairs and the building is not listed on

the National Register of Historic Places, historic

preservation under the 106 process is not generally

required. In some cases, interior work may be

applicable (e.g., antebellum staircases). The 106

process is required where external repairs or

improvements are contemplated.

\(2\) Where exterior improvements are contemplated and the

106 process has been completed within the past five

years and a determination was made previously that the

building is not an historic structure and that there

are no historic structures in the area, the FO shall

simply notify the SHPO of the location of the

development, the nature of the rehabilitation proposed,

and that there has been no significant change in the

area and, therefore, of HUD\'s finding that there is

nothing historic and that HUD will proceed if there is

no written objection within 10 working days.

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Appendix 1-5

7485.3 G

\(3\) If a previous review revealed historic properties in

the area, or if the development itself is historic, the

FO shall determine if the proposed activities will have

an effect on the historic property. Where the FO has

determined that there is no effect, the FO shall notify

the SHPO in writing of the determination. After the

SHPO indicates no objection, the FO may proceed to

grant approval.

\(4\) If the FO determines that there is an effect, and or an

adverse effect, additional requirements and time may be

necessary to determine compliance with 24 CFR Part 50.

In such case, the FO shall proceed with further

processing, including fund reservation, subject to the

following restriction: the HA may not obligate funds

for the activity or activities in question until the FO

has complied with all requirements of 24 CFR Part 50.

At that time, the FO shall notify the HA in writing

that HUD has complied.

\(5\) If no previous 106 review has been conducted on the

development and the activities proposed are subject to

the 106 process, the FO shall proceed to follow the 106

process.

b\. Floodplain/Wetlands Management. Compliance with Executive

Orders 11988 and 11990 and 24 CFR Part 55, which is

applicable to new construction, substantial improvements,

and landscaping and grading activities, requires the

completion of the \"eight-step process\" outlined in 24 CFR

Part 55. However, if a previous review has been conducted,

the FO may reference the previous review and the consistency

of the activity with the previous review. The FO shall

amend this review as necessary (e.g., changes made in the

last year to the floodplain or wetlands maps for this

development area). If no previous review exists for

floodplains, the eight-step process must be completed,

unless a letter of map amendment or a letter of map revision

excluding the site is obtained from the Federal Emergency

Management Administration.

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Appendix 1-6

7485.3 G

APPENDIX 1-6 ADMINISTRATIVE REQUIREMENTS

1\. The HA shall comply with the Uniform Administrative Requirements

for Grants and Cooperative Agreements to States and Local

Governments, as set forth in 24 CFR Part 85, except as specified

in: \'968.135 and \'990.201 for PHAS; and \'950.120(f) for IHAs.

2\. The CGP is excluded from the requirements of Executive Order

12372 on Intergovernmental Review of Federal Programs and HUD

implementing regulations (24 CFR Part 52) because the program

involves financial transfers for which HUD has no funding

discretion or direct authority to approve specific sites of

projects.

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Appendix 1-7

7485.3 G

APPENDIX 1-7 INSURANCE

1\. Flood Insurance. The HA shall comply with all applicable

requirements of the Flood Disaster Protection Act of 1973 (42

U.S.C. 4001 et seq.) and HUD implementing regulations (24 CFR

Part 50). The HA shall certify that the development to be

modernized is not located in an identified special flood hazard

area, or if the development is located in such an area, the HA

shall maintain on file a copy of the flood insurance policy

obtained by the HA, or the HA shall certify that the special

flood hazard area has been identified for less than one year and

the community in which the development is located is not

participating in the National Flood Insurance Program. A

development located in a special flood hazard area of a community

that has been formally notified of the area for more than one

year, but is not participating in the National Flood Insurance

Program, is not eligible for CGP funding until the community

participates in the program. \[\'968.110(d) or \'950.120(b)\]

a\. If a development is located in an identified special flood

hazard area and the community is participating in the

National Flood Insurance Program, the HA shall obtain flood

insurance coverage for each affected building in an amount

equal to its replacement cost after the proposed

modernization (less estimated land cost) or to the maximum

limit of coverage made available with respect to that

particular type of property under the National Flood

Insurance Act of 1968, whichever is less. For each affected

building in Lanham or Public Works Administration

developments, the HA shall obtain flood insurance coverage

in an amount equal to its full insurable value after the

proposed modernization (less estimated land cost) or to the

m@mum limit of coverage made available with respect to that

particular type of property under the National Flood

Insurance Act of 1968, whichever is less. The HA shall

continue to carry the required flood insurance after

completion of the modernization. Flood insurance premiums

are not eligible CGP costs because they are ongoing

operating costs, except under Account 1406, Operations.

b\. If the proposed modernization program involves new

construction or substantial improvements of an existing

structure, as defined in 44 CFR Part 60, the HA shall comply

with the requirements on elevation and flood proofing.

2\. Lead-Based Paint (LBP) Liability Insurance. Refer to \'965.215

and \'950.195, regarding the minimum insurance requirements that

must be in place before beginning any work for the testing,

abatement, clean-up and disposal of LBP. LBP insurance costs are

eligible CGP costs.

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Appendix 1-7

7485.3 G

3\. Other Insurance.

a\. Review of Existing Coverages.

\(1\) The HA is required to have in effect: (1) workers\'

compensation insurance; (2) property insurance; (3)

commercial general liability insurance; (4) automobile

liability insurance for both HA-owned and non-owned

automobiles; and (5) a fidelity bond. In many

instances, the additional exposures created by the

modernization activities can be insured by either an

endorsement to the existing policy or a letter from the

insurance broker/company, acknowledging that the

existing policy as written is broad enough to include

the additional exposure.

\(2\) Following HUD approval of the Annual Statement, the HA

shall notify the insurance broker/company in writing of

the modernization activities and request written advice

concerning what steps, if any, need to be taken to

ensure proper coverage. The HA\'s letter shall describe

the modernization activities in sufficient detail to

allow the insurance/broker company to decide what

coverage would be adequate. This description shall

include the type and cost of work to be performed, the

nature of any structural alterations, and the

involvement of HA employees in the work.

b\. Property Insurance. In addition to the general requirements

set forth in subparagraph a1, the following special

requirements apply to property insurance:

\(1\) Where the modernization work is to be performed by

contract and is insured under the HA\'s existing policy,

the HA shall include notice to prospective bidders of

this coverage in the bid documents so that this cost-

savings may be reflected in the bid amounts.

\(2\) If the existing policy cannot be endorsed to include

the modernization activities because of substantial

structural alterations, the HA shall obtain a builder\'s

risk policy on a \"100% Completed Value\" basis either

directly or through the contractor. This policy shall

remain in effect through substantial completion of the

modernization work, at which time the coverage shall be

transferred to the HA\'s existing policy.

c\. Commercial General Liability. Under no circumstances shall

the HA assume the liability of the contractor under a \"Hold

Harmless\" or contractual liability agreement.

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Appendix 1-7

7485.3 G

d\. Contractor Insurance.

\(1\) Required Insurance. Before beginning work, the

contractor and each subcontractor shall furnish the HA

with certificates of insurance showing that the

following insurance is in force and will insure all

operations under the contract. All insurance shall be

carried with companies which are financially

responsible and rated B+VI or higher by the A.M. Best

Co. or equivalent and authorized to do business in the

State in which the development is located. Contractor

insurance shall include:

\(a\) Workers\' Compensation, in accordance with State or

Territorial Workers\' Compensation laws, for all

employees engaged under the modernization

contract.

\(b\) Commercial General Liability which is

comprehensive general liability insurance with

bodily injury and property damage. The minimum

amount of required coverage is \$500,000 per

occurrence.

\(c\) Automobile Liability on owned, non-owned and hired

motor vehicles used on or in connection with the

site(s) for a combined single limit for bodily

injury and property damage of not less than

\$500,000 per occurrence.

\(d\) Builder\'s Risk.

\(i\) This insurance is needed only for

construction of a new building or a major

addition to an existing building. If the

contract involves installing equipment or

materials in an existing building, the

contractor should have in effect an

\"installation floater.\" Before beginning

work, the contractor shall furnish the HA

with a certificate of insurance evidencing

that a builder\'s risk (property) is in force.

The builder\'s risk insurance shall be for the

benefit of the contractor and the HA as their

interests may appear and each shall be named,

in the policy or policies as an insured.

\(ii\) The contractor is not required to carry

builder\'s risk insurance on: excavations,

piers, footings or foundations until such

time as work on the superstructure is

started; or work which does not

3

Appendix 1-7

7485.3 G

involve structural alterations or additions

and where the HA\'s existing policy will

provide coverage.

(iii)Policies shall furnish coverage at all times

for the full replacement cost of all completed

construction, as well as materials in place

and/or stored at the site(s), whether or not

partial payment has been made by the HA. The

contractor may terminate this insurance on

buildings taken over for occupancy by the HA

as of the date the buildings are taken over.

\(2\) Expiration or Cancellation. If any insurance is

due to expire during the construction period, the

contractor (including any subcontractors, as

applicable) shall not permit the coverage to lapse

and shall furnish evidence of coverage to the HA

and its contracting officer. All certificates of

insurance, as evidence of coverage, shall provide

that no coverage may be canceled or non-renewed by

the insurance company until at least 30 calendar

days prior written notice has been given to the HA

or its contracting officer.

c\. Noncompliance. The HA shall monitor the insurance policies

obtained by all contractors and subcontractors to ensure

that the coverage required by the modernization work is kept

in force until the contractor\'s work is accepted by the HA.

The HA shall notify the contractor to stop work if the

required insurance coverage is not in force at the time the

work begins or if the coverage expires before the work is

accepted. The HA also shall notify the contractor that any

such work stoppage is an infraction of the contract and that

the contractor is liable for any losses or delays.

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7485.3 G

APPENDIX 1-8 PREVAILING WAGE RATES

1\. Legislative Provisions. Section 12(a) of the Act contains

prevailing wage requirements and Section 12(b) contains volunteer

labor provisions. These requirements and provisions may not be

waived. \[\'968.110(e) and (f) or \'950.120(c) and (d)\]

a\. Cross-References. Refer to HUD Handbook 1344.1 REV-1, CHG-1,

Federal Labor Standards Compliance in HUD Programs; Labor

Relations Desk Guide LR-II, Labor Standards Administration

and Enforcement Guidelines for HUD Program Participants;

Labor Relations Letters LR-93-019, LR-95-01, LR-96-01. In

addition, Labor Relations Letters, Desk Guides and other

helpful tools are available on the World Wide Web HUD Home

Page at [http://www.hud.gov/.](http://www.hud.gov/)

b\. Application of Prevailing Wage Rates. Construction work

under the CGP is subject to either Department of Labor

(DOL)-determined (Davis-Bacon and Related Acts) prevailing

wage rates or HUD-determined prevailing wage rates,

depending on the nature of work that is performed.

Therefore, the nature of the work must be determined before

a further determination can be made as to whether the

contract is covered by a DOL- or HUD-determined prevailing

wage requirement and a wage schedule can be issued.

Note: For ease in reference, this Appendix will frequently

use the terms \"CGP projects\" or \"CGP work\". Unless

otherwise specified, these terms shall mean all CGP-eligible

activities, all Comprehensive Improvement Assistance Program

(CIAP) activities, and any work paid for with operating

funds which is not routine maintenance.

c\. HA Request. At least 45 calendar days in advance of bid

solicitations or, where the HA intends to use force account

labor, 30 calendar days before commencement of CGP work, the

HA shall request in writing a wage rate determination from

the appropriate HUD Labor Relations Staff. The request

shall include a description of work which is sufficiently

detailed to allow for a correct determination by HUD as to

the nature and scope of the work to be performed. At a

minimum, the request shall include:

\(1\) the number of buildings and the number of stories in

each building;

\(2\) the number of units involved;

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\(3\) the total estimated cost of the work;

\(4\) the specific work that is to be performed, including

whether repair, replacement or new installation; what

building or unit equipment, fixtures, finishes, or

materials will be involved; what activities will

involve which building(s) or unit(s); and

\(5\) the construction trade classifications for which wage

rates are needed.

2\. Determination of Nature and Scope of Work. After any necessary

consultation, with Office of Public Housing (OPH)/Office of

Native American Programs (ONAP) Staff, the Labor Relations Staff

shall evaluate the proposed work and determine whether such work

is nonroutine maintenance (subject to HUD-determined wage rates)

or a betterment or improvement or reconstruction or remodeling

(subject to Davis-Bacon rates determined by the DOL). In order

to perform the evaluations necessary to reach this determination,

i.e., the extent, scope and context of the proposed work, it may

be necessary to review the CGP program budget(s) and/or contract

specifications.

a\. Characterization of Work. As defined in paragraph 1-6,

nonroutine maintenance includes work items that ordinarily

would be performed on a regular basis and that have become

substantial because they have been put off. Nonroutine

maintenance may include replacement of equipment and

materials rendered unsatisfactory because of normal wear and

tear by items of substantially the same kind. Although

nonroutine maintenance is a form of construction work, it

does not include work that constitutes reconstruction, a

substantial improvement in the quality or kind of original

equipment and materials, or the initial installation of

equipment or fixtures, or remodeling that alters the nature

or type of housing units. Additionally, the abatement of

asbestos or lead-based paint or suspected lead-based paint,

and repainting or encapsulation does not constitute

nonroutine maintenance.

b\. Substantiality. Often HUD decisions regarding the nature of

work must distinguish between nonroutine maintenance and

other, seemingly similar work that, because of

substantiality, constitutes \"reconstruction, remodeling or

repair of existing buildings,\" terms which are used in the

Act specifically to characterize work that is subject to

Davis-Bacon wage rates. The Labor Relations Staff shall

carefully consider the proposed work against criteria

involving not only \"normal wear and tear\" and \"replacement

with substantially the same kind,\" but also the extent or

magnitude of the work in terms of whether the work

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7485.3 G

amounts to remodeling or reconstruction. The tests that are

applied measure the extent of the project (e.g., what

portion of the unit(s), building(s), or equipment), the

nature and scope of construction work that is involved, and

whether the finished work represents a significant change,

betterment, improvement, or addition.

c\. Replacement with Items of Substantially the Same Kind.

Replacement of materials or equipment that is outdated or

otherwise unsatisfactory may include the replacement of

nearly any component of a unit or building. Such items may

include windows, doors, cabinets, carpeting, floor or wall

tile, shower doors, appliances, electrical or other

fixtures, water heaters, air conditioners, or interior or

exterior finishes. For example:

\(1\) Replacing a single kitchen cabinet or all of the

cabinet doors or, in isolation, even replacing all of

the cabinets in an entire project, can be considered

nonroutine maintenance. However, where such

replacement is performed as a part of, or in

conjunction with, overall remodeling of the kitchen(s)

or unit(s), taken in context, it involves substantial

construction work and is viewed as reconstruction.

\(2\) Patching or repairing a roof, or patching or repairing

drywall. This type of work, because of its character,

is viewed as nonroutine maintenance, even where there

are several roofs or walls to be repaired. However,

replacing a roof in its entirety or nearly so, or

replacing or encapsulating entire interior wall

systems, because of the scope of the work, are

appropriately characterized as reconstruction.

\(3\) Other issues that are considered include whether the

replacement (or other work) involves a change in the

type or nature of what is being replaced (e.g., a

change from standard electrical receptacles to ground

fault interrupter receptacles) or whether structural or

other modifications are necessary to accommodate the

replacement (e.g., wiring modifications, gas or

electric conversions, widening or moving doors or

passages, or walls or other partitions). These

characteristics are indicative of reconstruction or

remodeling, not nonroutine maintenance.

Note: The very act of replacing outdated materials or

equipment should always result in an improved unit(s) or

building(s), if only because the replacement materials or

equipment will be newer and in better condition. This

improved condition should not be

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7485.3 G

confused with \"improvement\" or \"betterment\' that is

associated with \"reconstruction and remodeling.\"

d\. Betterments and Additions. Betterments and additions refer

to replacements or alterations which materially enhance the

character or type of the premises. Examples include the

conversion of units to accommodate physically disabled

residents or combining smaller units to create larger units

with more bedrooms. The nature of these activities is such

that, in most cases, significant construction will be

involved and the work will result in a substantial

improvement. Consequently, the work is viewed as

reconstruction or remodeling.

3\. Davis-Bacon Wage Rate Determination Decisions. Where it has been

determined that the proposed work constitutes a major repair,

improvement or reconstruction, or is construction work that

otherwise does not meet the definition of nonroutine maintenance,

the Labor Relations Staff shall issue the current, applicable

Davis-Bacon wage rate determination decision.

4\. Wage Determinations for Nonroutine Maintenance. Where it has

been determined that the proposed work is nonroutine maintenance,

the Labor Relations Staff shall issue a Nonroutine Maintenance

wage rate determination to the HA either on an annual basis or on

a project (case-by-case) basis. Nonroutine Maintenance wage

determinations for CGP or other nonroutine maintenance should not

be confused with the HUD-determined maintenance wage rates (Form

HUD-52158) issued annually to the HA.

a\. Annual Nonroutine Maintenance Wage Rate Determinations. The

HA that anticipates a significant amount of nonroutine

maintenance work may request from HUD an annual Nonroutine

Maintenance wage rate determination. To request an annual

determination, the HA shall forward to HUD a list of the

trade or construction work classifications that will be

needed, accompanied by a recommended schedule of wage rates

and appropriate supporting documentation.

\(1\) Timing of Request. Requests for annual Nonroutine

Maintenance wage rate determinations shall be submitted

concurrently with the HA\'s recommendation for its

annual Routine Maintenance wage determination. The

Labor Relations Staff shall review the submission and,

if acceptable, issue an annual Nonroutine Maintenance

wage rate determination with the HA\'s annual Routine

Maintenance wage rate determination.

\(2\) Advance Consultation. Because of the range of data

sources and considerations that are involved in wage

rate determinations for nonroutine maintenance (see

paragraph

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7485.3 G

5), the HA is encouraged to consult with the Labor

Relations Staff before submitting this request.

\(3\) Application to Specific Contracts or Work Orders. The

HA that has an annual Nonroutine Maintenance wage rate

determination is not permitted to apply or otherwise

use such determinations without the prior approval of

HUD. The HA shall request a wage rate determination

from the Labor Relations Staff for each contract or

work order. Where the work is found to be nonroutine

maintenance, HUD will advise the HA in writing to use

the annual Nonroutine Maintenance wage rate

determination.

b\. Project Nonroutine Maintenance Wage Rate Determinations.

Where the HA has not requested or received an annual

Nonroutine Maintenance wage rate determination, HUD will

determine prevailing nonroutine maintenance wage rates on a

case-by-case basis and will issue a project Nonroutine

Maintenance wage rate determination for the proposed work.

5\. HUD-Determination of Prevailing Nonroutine Maintenance Wage

Rates. The Labor Relations Staff may draw upon existing wage rate

schedules, i.e., the current HA maintenance wage rate

determination (HUD-51258), the Davis-Bacon residential wage

determination, and/or survey data or other pertinent information,

in order to determine the appropriate wage rates for nonroutine

maintenance work. Since nonroutine maintenance is construction

work, the HUD-52158 maintenance classifications and wage rates

are not applicable by virtue of definition. However, in certain

cases, the HUD-52158 classifications and/or wage rates may be

used. The following paragraphs describe how certain HUD-52158

classifications and/or wage rates may be used, and the steps that

should be taken where such use is not possible. The Labor

Relations Staff may use any one of the following methods or a

combination of methods, provided that the wage rates, including

fringe benefits, bear a reasonable relationship to each other

with respect to the skills and requirements of the various

classifications which are needed for the work in question.

a\. Wage Rates Based on HA Maintenance Wage Rate Determinations.

\(1\) Construction Trade Classifications. Where the HA\'s

current Maintenance wage rate determination (HUD-52158)

contains the construction trade classifications (i.e.,

Maintenance Carpenter, Maintenance Painter, Maintenance

Plumber, etc.) which generally correspond to the trade

classifications required for the proposed work, the

applicable trade classifications and corresponding

hourly rates, plus the

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7485.3 G

monetized value for any prevailing fringe benefits, may

be issued by HUD for the nonroutine maintenance work.

Where the HA\'s current HUD-52158 does not contain the

specific construction trade classification(s) required

for the proposed work, the Labor Relations Staff may

conform the work to another trade classification on the

HUD-52158, provided that the classifications involve

comparable work and/or levels of skill. For example,

ff the CGP work requires a Drywall Hanger, and the

HUD-52158 does not have a Drywall Hanger, but does have a

Carpenter classification with an hourly wage rate of

\$10 (basic) plus \$4 (fringe benefits), because the work

and skills are comparable, the CGP Drywall Hanger can

be conformed to the Carpenter\'s wage rate. The

Nonroutine Maintenance wage rate determination win

reflect a Drywall Hanger work classification and a wage

rate of \$10, plus \$4 fringe benefits.

\(2\) Other HA Maintenance Classifications. Where the HA\'s

current HUD-52158 does not contain the specific trade

classification(s) required for the CGP work, and where

conformance to another trade classification is not

possible, the Labor Relations Staff may consider the

wage rates established for other maintenance positions

(e.g., Maintenance Mechanic). Such consideration is

possible only where the maintenance position involves

significant construction skills and responsibilities.

The Labor Relations Staff shall compare the position

description for the maintenance position to the

construction trade classification required for the

proposed nonroutine maintenance work. Where it can be

readily demonstrated that the skills and duties of the

maintenance position involve a significant portion of

construction activities which are comparable to the

needed trade classification, the Labor Relations Staff

may use the maintenance position wage rate (including

any fringe benefits) for the CGP construction trade

classification. Using the above Drywall Hanger

example, the Nonroutine Maintenance wage rate

determination will, likewise, reflect the Drywall

Hanger work classification and whatever wage rates that

correspond to the comparable maintenance position.

b\. Data or Survey-Based Classifications. Where the HA\'s

current HUD-52158 does not contain the specific construction

trade classifications required for the CGP work, and where

conformance or comparability to a maintenance classification

is not possible, the Labor Relations Staff will request wage

payment data and recommended rates from the HA. In

developing a recommendation for the CGP wage rates, the HA

may use any relevant data or

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7485.3 G

information, including data collected or used during the

annual maintenance wage process. If additional data

collection is necessary, the HA may conduct a limited survey

of construction contractors or other employers who perform

similar work in the locality. Where a limited survey is

used, the wage rate for each classification must be based on

wage payment data collected from at least three employers.

For example, if the CGP work will require a Plumber and a

Electrician, the HA shall collect data from at least three

employers who perform plumbing work and data from at least

three employers who perform electrical work. If an employer

performs both plumbing and electrical work, that employer

can be a data source for both classifications.

c\. Davis-Bacon Residential Wage Decisions. In evaluating the

available data, the HA or HUD may take into consideration or

use the current DOL Davis-Bacon residential wage

determination decisions. While nonroutine maintenance

clearly is not covered by Davis-Bacon wage requirements as a

matter of statute, in some cases, the wage rates contained

in the Davis-Bacon wage decision may reasonably reflect the

rates which are prevailing for nonroutine maintenance work.

In using Davis-Bacon wage rates, generally only residential

classifications and wage rates would be appropriate for

nonroutine maintenance in residential units, regardless of

the number of stories in the buildings where the work will

be performed. However, if the nonroutine maintenance work

will be performed in other than residential space (i.e, HA

offices or maintenance buildings), the residential Davis-

Bacon wage rates shall not be used for that work.

d\. Issuance of the Nonroutine Maintenance Wage Determination.

The Labor Relations Staff shall review the data and/or

recommendations provided by the HA and issue the Nonroutine

Maintenance wage rate determination reflecting the required

construction trade work classifications and prevailing wage

rates. HUD Nonroutine Maintenance wage determination

decisions shall be issued on Form HUD-52160 and shall bear

the signature of the Director of Labor Relations.

6\. Use and Effectiveness of Prevailing Wage Determinations.

a\. Davis-Bacon wage rate determinations may be modified or

superseded, and, in the case of project decisions, may

expire. Such determinations are effective as described in

the DOL Regulations at 29 CFR 1.6 and Handbook 1344.1 REV-1,

CHG-1.

b\. Annual Nonroutine Maintenance wage rate determinations shall

be

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7485.3 G

after such effective period the determination will expire.

Such determinations may not be used for specific contracts

or work orders without prior HUD approval (see paragraphs 1

and 4).

C. Project Nonroutine Maintenance wage rate determinations

shall be project-specific; i.e., applicable only to the

nonroutine maintenance work for which it was requested.

Unless otherwise specified, the wage determination shall be

effective for 180 days after the date it is issued.

d\. A wage determination shall be \"locked-in\" and shall remain

in effect for the duration of the project on the date that

bids are opened (for contracts entered into pursuant to

competitive bidding), provided that the contract is awarded

within 90 days after bid opening or on the date construction

starts, whichever occurs first.

7\. Additional Classifications and Wage Rates. The HA may request an

additional classification and wage rate for any class of laborer

or mechanic that is not listed on the HUD Annual or Project

Nonroutine Maintenance wage determination and that is to be

employed on nonroutine maintenance work. The request shall

identify the needed classification and a recommended wage rate

(including fringe benefits, ff appropriate) and must be

accompanied by supporting documentation. HUD will review the

request and documentation and will issue appropriate additional

classification(s) and wage rate(s) as an addendum to the

Nonroutine Maintenance wage determination. Unless otherwise

specified, the additional classification(s) and wage rate(s)

shall be effective, retroactively, to the date of the original

wage determination and shall expire with the original wage

determination, accordingly.

8\. Force Account. HA employees engaged in the performance of

modernization-funded (or modernization-eligible) construction

work are entitled to receive not less than the HUD-determined or

Davis-Bacon wage rate, as applicable, for the type of work they

actually perform.

9\. Contracts for Construction. The HA shall ensure that the

specifications for each contract for construction contains a copy

of the wage rate determination (HUD-determined or Davis-Bacon) as

issued to the HA by HUD. Such specifications must also contain

the appropriate Federal labor standards provisions set forth in

Form HUD-5370. Unless otherwise approved in advance by the Labor

Relations Staff, each contract for construction shall contain

only one wage rate determination.

10\. Enforcement. Prevailing wage rate requirements (Davis-Bacon wage

rates and HUD-determined wage rates) applicable to CGP projects

shall

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7485.3 G

be enforced in accordance with appropriate DOL and HUD

regulations, HUD Handbook 1344.1 REV-1, CHG-1, Federal Labor

Standards Compliance in HUD Programs, and Labor Relations

Desk Guide LR-II, Labor Standards Administration and

Enforcement Guidelines for HUD Program Participants.

11\. Special Employment Classifications and Wage Rates. The HA may

establish wage rates for approved and bona fide job training

programs, including Step-Up programs, to significantly enhance

efforts to provide residents with long-term employment

opportunities. Additionally, the administrative flexibility

available in these programs may prove valuable to the HA and its

contractors in meeting area employment and contracting

obligations under Section 3 of the Housing and Urban Development

Act of 1968, as amended (see HUD implementing regulations at 24

CFR Part 135), and significantly enhance the Department\'s overall

economic empowerment objectives for public housing residents.

Also refer to paragraph 2-9 on funding and eligible costs

relating to the development and implementation of job training

programs.

12\. Step-Up Apprenticeship Partnerships. The HA is encouraged to

consider Step-Up apprenticeship as a means of promoting both

resident self-sufficiency and Section 3 job training and

employment and contracting objectives. Step-Up is based upon

local needs, resources and partnerships to provide access for

residents and other low-income persons to apprenticeship and

career opportunities in a variety of occupations and job sites,

including maintenance, nonroutine maintenance and construction

work subject to Federal prevailing wage rates. Local Step-Up

program design is tailored specifically to the locality and is

highly flexible. HAs interested in developing a Step-Up program

should contact the HUD Headquarters Labor Relations Staff at

(202)708-0370.

a\. Apprentices and Trainees. Apprentices and trainees may be

employed by the HA or its contractors in positions that are

subject to Federal prevailing wage rates (i.e., maintenance,

nonroutine maintenance, development) and may be compensated

at less than the prevailing wage rate for their craft or

work classification, provided that they are registered in a

job training program which has received the prior approval

of the Director of Labor Relations having jurisdiction for

the HA.

\(1\) Pre-Approved Programs. Some apprentice or trainee

programs may have already been registered or received

certification by the DOL, Bureau of Apprenticeship and

Training (BAT), or by a State apprenticeship agency.

In such cases, the HA need only provide a copy of the

program to HUD with evidence of registration or

certification. Such programs will be

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7485.3 G

approved by HUD for maintenance wage purposes with no

further review required. All apprenticeship and

trainee programs for construction work subject to

Davis-Bacon wage rates shall be approved in advance by

the BAT or State agency.

\(2\) HUD-Approved Programs. The HA wishing to establish

maintenance or nonroutine maintenance apprentice or

trainee classifications and wage rates shall submit a

description of the proposed program to the Labor

Relations Staff for review and approval of wage rates.

The description shall include:

\(a\) Target positions and job titles;

(b The training curriculum, including on-the-job

training and any classroom instruction to be

provided, including the number of hours dedicated

to each;

\(c\) The proposed wage rates over the course of the

training period;

\(d\) The organizations or institutions that will

provide the training;

\(e\) The supervision to be provided and the ratio of

journeyworkers to apprentices/trainees during on-the-job

training;

\(f\) Where HA workers are represented under a

collective bargaining agreement or memorandum of

understanding, evidence of consultation with

authorized employee representatives;

\(g\) A specific plan for final job placement of

participants, either for positions within the HA

or with outside agencies or firms or resident

management corporations (RMCs); and

\(h\) A statement as to how HA residents will

participate in the training program.

Note: HUD shall evaluate the program against the

objectives and standards of the \"National

Apprenticeship and Training Standards for the Building

Maintenance Repairer,\" which is sponsored by the

National Association of Housing and Redevelopment

Officials (NAHRO) and certified by the U.S. Bureau of

Apprenticeship and Training. Programs that are

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7485.3 G

found to be substantially similar to these national

standards may be approved for routine and/or nonroutine

maintenance activities.

\(3\) Approval of Program and Apprentice/Trainee

Classifications, Wage Rates, and Ratios. Where a

maintenance or nonroutine maintenance apprenticeship or

trainee program is found acceptable for HUD-determined

wage purposes, the Director, Labor Relations Staff,

shall issue a written approval of the program to the

HA. The apprentice/trainee classifications, wage rates

and ratios of apprentices/trainees to journeyworkers

shall be specified within the approved program

standards.

13\. Volunteers and Other Donated Labor.

a\. Volunteers. Section 955 of the National Affordable Housing

Act of 1990 created Section 12(b) of the Act, which exempts

bona fide volunteers from the wage provisions at Section

12(a). This exemption applies to volunteers who would

otherwise be covered by the DOL (Davis-Bacon) wage rates, or

technical, maintenance or nonroutine maintenance wage rates

applicable to laborers and mechanics, architects, technical

engineers, draftsmen, and technicians (planners, surveyors,

etc.) and who may perform services for a HA or RMC or other

contractor without compensation, provided that such

individuals are not otherwise employed in the development or

operation of the project. Such individuals shall be

considered volunteers only when their services are offered

freely and without pressure or coercion, directly or

implied, from an employer. Volunteers may receive paid

expenses, reasonable benefits, or a nominal fee to perform

the services for which they volunteered, but in no case

shall such benefits be construed in any way as paid

compensation. Any such payments shall be approved in

advance by HUD. The HA is encouraged to consult with the

Labor Relations Staff before using volunteers on projects

covered by Federal prevailing wage requirements. Refer to

24 CFR Part 70 for further guidance.

b\. Waiver to Permit Donated Labor by HA Residents. HA

residents who are employed by an RMC in the operation of a

project or development may donate a portion of their labor

to the RMC, provided that a written waiver is obtained in

advance from HUD (see 24 CFR 70.5). The HA shall submit a

waiver request in writing to the Labor Relations Staff and

shall be specific as to the name of each participating

resident and the number of hours each will donate. The

donation of any labor is subject to the terms and conditions

of any applicable collective bargaining agreement.

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7485.3 G

c\. Recordkeeping. The HA and the RMC shall maintain careful

records of all volunteers and donated labor for

administrative and monitoring purposes. Such records should

include the name of each volunteer or donator, the type of

work or services performed, the dates and number of hours of

volunteer or donated work or services, and an accounting of

any expenses, benefits or fees provided. These records

should be preserved by the HA or RMC for a period of at

least three years following completion of the

volunteer/donated work.

14\. Preemption of State Prevailing Wage Requirements. Prevailing

wage rates determined under State or tribal law are inapplicable

under the circumstances set forth in \'965.101 or \'950.172(b).

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APPENDIX 1-9 AUDITS

Under the Single Audit Act of 1984 (31 U.S.C. 7501-7507), the HA which

receives CGP assistance shall comply with the audit requirements of 24

CFR Part 44 and any other expanded audit requirements as HUD may

require. The Secretary of HUD, the Inspector General of the

Department of HUD, and the Controller General of the United States

shall have access to all books, documents, papers, or other records

that are pertinent to the activities carried out under this Handbook

in order to make audit examinations, excerpts, and transcripts. Due

to the flexible nature of the CGP, HAs, residents and community

members are advised that a comprehensive, well-conducted audit may

serve as a primary tool in assuring that all modernization funds are

used effectively. \[Sec. 14(e)(4)(C)\]; \[\'968.145(b) or \'950.622(b)\]

1