§ 1-10 Construction Requirements: Payments.
RCNY § 1-10
(a)The plans, specifications, work write-ups or any description of work to be performed on a building subject to a loan under this program must be approved by the applicable office of the Agency prior to the commencement of any rehabilitation work or the closing of a mortgage loan for same. Such plans, specifications, work write-ups or other description of work must conform to the rehabilitation design standards of the Agency and must have been approved by the Department of Buildings, where applicable, or any other necessary governmental bureau or department.
(b)During the rehabilitation process the Agency's architects, engineers, rehabilitation specialists or officers and others designated by the Agency may conduct periodic inspections of the work. Copies of all plans, specifications, work write-ups or other description of work, with the Agency's approval stamped thereon, must be kept on the job site for the use of such Agency personnel.
(c)Requests for change-orders shall be in writing. Change-orders must be fully documented, showing original and revised cost estimates and reasons for such change-orders. Upon approval thereof, which shall also be in writing, the change shall be reflected in a revised trade payment breakdown.
(d)The Agency may require the deposit of loan advances in a separate escrow account, in a bank designated by the Agency, subject to withdrawal only upon the joint signatures of the borrower and a representative of the Agency. The Agency may further require that the owner deposit all or a designated portion of the rents collected from the multiple dwellings during the period of construction in such escrow account, or in a separate trust account under such terms and provisions as the Agency shall prescribe.
(e)Progress payments on work completed shall be made on the basis of sworn statements as herein provided, subject to review and approval by the Agency. At the time of each progress payment, the contractor, mortgagor or owner shall execute for the Agency a sworn statement that all bills due for labor, services rendered, and materials furnished in connection with the work to the date of payment are paid and that no liens have been filed, or if not paid, submit list itemizing the amounts due to creditors so as to insure a proper allocation of the payment to satisfy in full such unpaid items. Such statement shall reconcile requisitions with the trade payment breakdown previously submitted. The Agency reserves unto itself the right, at its discretion, to take proceeds of the loan and pay all verified delinquent claims for labor, materials or other services rendered. The Agency shall further withhold an amount equal to no less than ten percent of the total amount of each progress payment as a retention fund under the mortgage to assure satisfactory progress of the work. Such retention, or a portion thereof, may be released prior to the completion of the work upon written request by the owner or mortgagor with the approval of the Deputy Commissioner of the Agency; the retention on completed work may thus be reduced to five percent upon completion of fifty percent of the work. All of the retention remaining shall be released upon the completion of the work to the entire satisfaction of the Agency and other necessary state or municipal bureaus or departments, the presentation to the Agency of a permanent certificate of occupancy, where applicable, proof of payment for all labor and materials, a cost certification prepared and certified by an independent public accountant licensed by New York State, and also a sworn certificate disclosing any changes from the applicant's filing in accordance with 28 RCNY § 1-06(g) (Application Submission).
(f)The portion of the loan representing interest on advances during construction shall be adjusted upon completion of the rehabilitation as follows: If such portion shall be more than the amount required for interest on advances, the excess shall be credited to the mortgagor in reduction of the principal of the loan; if less than the amount required for such interest, the difference shall be deducted from the final payment of loan proceeds and paid over to the City of New York.
(g)Any income derived during any period of occupancy prior to commencement of debt service may be credited against the construction loan.
(h)Books and records of the contractor and of subcontractors relative to the rehabilitation shall be subject to audit by the Agency. All subcontracts shall be submitted to the Agency when executed and any interest between the mortgagor and the subcontractor shall be disclosed at that time.
(i)The aforementioned cost certification shall be provided on a form approved by the Agency and must include the following: (1) A certified list of the actual costs paid by the general contractor for materials and subcontract work under the general contract.
(2)A certified list of the actual costs for non-construction items as were approved by the Agency.
(3)Proof that all labor and materials included in the rehabilitation have been paid for.
(4)An opinion certifying as to the accuracy of the owner's costs statements by an independent certified public accountant.
