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(a) Cost estimates, construction contract and contractors.
(1) Scope of work and cost estimates. Applicants shall be required to submit estimates showing the nature and cost of each item of the rehabilitation or improvement. The Department may require the applicant to submit more than one estimate per trade and may prescribe forms on which such estimates shall be prepared or summarized. The plans, specifications, work write-ups or any other description of work to be performed must be approved by the Department prior to the commencement of any rehabilitation work or the making of a loan for same. The technical specifications shall conform to the standards established by the Department and where applicable, shall be subject to the approval of the Department of Buildings or other governmental agencies having jurisdiction.
(2) Approval of construction contract. The specifications approved by the Department shall be made part of the written construction contract between the owner and the general contractor, and such construction contract shall be subject to the written approval of the Department. If a general contractor is not engaged, the owner shall enter into a written construction contract with each subcontractor. The pertinent specifications approved by the Department shall be made a part of each such contract and each such contract shall be subject to the written approval of the Department.
(3) Contractors. The Department reserves the right to disapprove any contractor or subcontractor because of previous violation of statutes, rules or regulations relating to discrimination, standards of employment or labor standards, or because of inefficiency, abandonment of duties, or disregard for creditors on prior jobs performed under this Program or other programs of the City.
(b) Payment of loan proceeds.
(1) Periodic inspections. While rehabilitation is in progress the Department's personnel may conduct periodic inspections of the work and materials.
(2) Progress payments. Progress payments for work completed shall be made on the basis of sworn statements as hereinafter provided, subject to review, inspection and approval by the Department. At the time of each progress payment, the borrower and the general contractor, if a general contractor has been engaged, or other contractor, shall execute and submit to the Department a sworn statement, in form specified by the Department, certifying that there has been compliance with all labor standards pursuant to 28 RCNY § 2-06(d), that payment has been made or will be made from the proceeds of such progress payments for all labor and services rendered and materials furnished in connection with the work to the date of payment and that any liens placed against the premises subsequent to the closing of the loan have been paid, bonded or otherwise discharged. In the sole discretion of the Department, progress payments shall be made payable directly to the owner, directly to the contractor, or jointly to the owner and contractor.
(3) Retention. The Department shall withhold an amount equal to ten percent (10%) of the total amount of each approved progress payment to create a retention fund to assure satisfactory progress and completion of the work. Up to fifty percent (50%) of such retention may be released upon the completion of at least fifty per cent (50%) of the work upon written request by the borrower and approval by the Department. The remainder of the retention funds shall be released upon:
(i) completion of the work to the full satisfaction of the Department;
(ii) issuance of approvals by governmental agencies having jurisdiction, including, where applicable, a certificate of occupancy or of completion by the Department of Buildings; and
(iii) proof of payment for all labor and materials provided in connection with the rehabilitation or improvement. In lieu of subparagraph (ii) above, the Department in its discretion may accept from an architect registered with the State of New York or a professional engineer licensed by the State of New York, a certification that the completed work complies with the requirements of the particular governmental agencies having jurisdiction thereof and that applications seeking the approval of certification of such agencies have been properly filed with or submitted to such agencies.
(4) Escrow provisions. The Department may require the deposit of loan advances in a separate escrow account, in a bank designated by the Department, subject to withdrawal only upon the joint signatures of the borrower and a representative of the Department. The Department may further require that the owner deposit in such escrow account, or in a separate trust account in such bank under such provisions as the Department shall prescribe, all or a designated portion of the rents collected from the multiple dwelling during the period of construction.
(5) Failure to complete work. If the borrower for any reason fails to diligently pursue or timely complete the rehabilitation to the full satisfaction of the Department, the Department may, after written notice to the borrower, enter upon the premises, effect the completion of the rehabilitation and charge the cost thereof to the borrower.
(6) Adjustments for interim interest. Any 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 borrower 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 advance of loan proceeds due borrower and paid to the City.
(c) Non-discrimination and affirmative action.
(1) Compliance. The owner and any contractor or subcontractor engaged in connection with the rehabilitation or improvement must agree as a condition of such engagement to comply with all applicable federal, state and local statutes, rules and regulations relating to discrimination and standards of employment. The owner shall not exclude any person, including prospective tenants, from participation in, deny any person the benefits of, or subject any person to discrimination under this Program on the grounds of race, color, national origin, creed, age, sex, or sexual orientation. If an owner, contractor or subcontractor fails to comply with the provisions of this paragraph (1), the Department, in its discretion, may, in addition to or as an alternative to any other remedies reserved to the City or the Department in the loan documents, withhold progress payments to the owner or disapprove the contractor or subcontractor for future work under this Program or other programs of the Department.
(2) Books, records and inspections. In order to assure strict compliance with this subdivision (c), all contractors and subcontractors will be required to sign an agreement, in form specified by the Department, to make their books and records available for inspection by representatives or agents of the Department. In order to determine such compliance the Department reserves the right to interview or confer with any employee at any time, on a rehabilitation site or in the office of the contractor or subcontractor.
(d) Labor standards.
(1) Compliance with labor standards. The owner and any contractor or subcontractor engaged in connection with the rehabilitation or improvement must agree as a condition of such engagement to comply with all applicable federal, state and local statutes, rules and regulations relating to labor standards, including the payment of prevailing wage rates.
(2) Enforcement. Each contractor and subcontractor shall be required to submit to the Department for review, copies of their weekly payrolls and such other documentation and reports as may be required by the Department. If the contractor engages a subcontractor, the contractor shall be obligated to obtain such required documentation and reports from the subcontractor. All books and records of the owner, contractors, subcontractors, laborers and materialmen involved in the rehabilitation shall be made available to representatives or agents of the Department and other governmental agencies having jurisdiction, for review or audit. The above parties may be required to submit to oral examination under oath. Such examination may include, but is not limited to, the performance and quality of the work, any and all matters pertaining to the loan and compliance with applicable statutes, rules and regulations.
(a) Power to inspect and investigate.
(1) Covenant on inspection and investigation. No loan shall be made unless the owner covenants in writing that so long as any part of the loan shall remain unpaid:
(i) All persons operating or managing the multiple dwelling will permit the duly authorized officers, employees, agents or inspectors of the Department to enter in or upon and inspect such multiple dwelling at all reasonable hours; and
(ii) The Department by its duly authorized representatives shall have full power to investigate into and order the owner of the multiple dwelling to furnish such reports and information as the Department may require concerning the rehabilitation or improvement and the management of the multiple dwelling, and shall have full power to audit the books of the owner with respect to such matters.
(2) Nature of inspection. In addition to any other inspections authorized by law, the Department may make periodic inspections of the building so long as any monies remain unpaid on the loan. Such inspections shall be for the purpose of inspecting the condition and maintenance of the building, including its utilities, fixtures and equipment. Copies of any inspection reports shall be made available to the owner with recommendations for corrective measures where necessary. Representatives of the Department may periodically visit the building for the purpose of conferring with tenants and, where necessary, serving as a liaison or intermediary on landlord-tenant problems.
(b) Annual statement of income and expenses.
(1) No loan shall be made unless the owner covenants in writing that so long as any part of the loan shall remain unpaid the owner shall submit to the Department annually, in such form as shall be approved by the Department, a statement of the income and expenses of such multiple dwelling. The statement of income shall include, but is not limited to, the monthly rent of each residential apartment and the rent controlled or rent stabilized status of each unit.
(2) The annual statement shall cover the twelve month period ending June 30th or such other period approved by the Department, and shall be submitted within ninety days after the close of such period. The Department, in its discretion, may require submission of statements of income and expenses on a more frequent basis.
(3) On five days' notice, the books and records of the owner relative to the premises shall be made available to representatives or agents of the Department for review, examination or audit.
(c) Failure to comply with regulations. Upon failure or refusal of an applicant, owner or mortgagor to comply with this chapter (and all applicable rules and regulations promulgated by the governmental authority providing funds for the rehabilitation or improvement), such applicant, owner or mortgagor in addition to the imposition of any civil or criminal penalties provided by law, may be disqualified by the Department from applying for or receiving a loan under this Program or other programs of the Department for up to three (3) years following the date of any such refusal or failure. These rules and regulations shall be enforceable by the governmental authority providing funds for the rehabilitation or improvement as well as by the City.
(d) Waiver. The Department may waive any of this chapter where the nature of the rehabilitation or improvement or other circumstances warrant such exception. Any waiver to be effective shall require the written approval of the Commissioner or his designee and shall include a specific statement of the reason(s) for such waiver.