[Added 2-27-2023 by Ord. No. 15-2023]
A.
This Rehabilitation Program Operating Manual has been prepared to
assist in the administration of the Borough of Madison Rehabilitation
Program. It will serve as a guide to the program staff and applicants.
B.
This manual describes the basic content and operation of the program,
examines program purposes and provides the guidelines for implementing
the program. It has been prepared with a flexible format allowing
for periodic updates of its sections, when required, due to revisions
in regulations and/or procedures.
C.
This manual explains the steps in the rehabilitation process. It
describes the eligibility requirements for participation in the program,
program criteria, funding terms and conditions, cost estimating, contract
payments, recordkeeping and overall program administration.
D.
The following represents the procedures developed to offer an applicant
the opportunity to apply to the program.
A.
It is unlawful to discriminate against any person making application
to participate in the rehabilitation program or rent a unit with regard
to race, creed, color, national origin, ancestry, age, marital status,
affectional or sexual orientation, familial status, disability, nationality,
sex, gender identity or expression or source of lawful income used
for mortgage or rental payments.
B.
For more information on discrimination or if anyone feels they are
a victim of discrimination, please contact the New Jersey Division
on Civil Rights at 1-866-405-3050 or http://www.state.ni.us/lps/dcr/index.html.
A.
Categories of participants. Both owner-occupied and renter-occupied
housing units are eligible to receive funding for rehabilitation,
provided that the occupants of the units are determined to be low-
or moderate-income households. Owners of rental properties do not
have to be low- or moderate-income households. If a structure contains
two or more units and an owner, who is not income eligible, occupies
one unit funding may be provided for the rehabilitation of the rest
of the units if income-eligible households occupy those units. Rents
must be affordable to low- or moderate-income households.
B.
Income limits for participation.
(1)
The occupant of the unit must have incomes that fall within the income
guidelines established for Morris County by the Department of Community
Affairs (DCA). These limits are revised annually as DCA figures become
available.
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Affordable Housing Regional Gross Income Limits by Household
Size
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|---|---|---|---|---|---|
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Income Type
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1 Person
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2 People
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3 People
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4 People
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5 People
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Median*
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$80,634
|
$92,154
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$103,673
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$115,192
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$124,407
|
|
Moderate
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$64,507
|
$73,723
|
$82,938
|
$92,154
|
$99,526
|
|
Low
|
$40,317
|
$46,077
|
$51,836
|
$57,596
|
$62,204
|
|
Very-low
|
$24,190
|
$27,646
|
$31,102
|
$34,558
|
$37,322
|
|
*
|
If your income is at median income or over, you do not qualify
for this program.
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(2)
We count all income that is derived from any asset you have. If you
have a home that has a mortgage, we input interest to come to a value
of the asset.
C.
Program area. This is a municipal-wide program. The rehabilitation
property must be located in Madison.
D.
Certification of substandard.
(1)
The purpose of the program is to bring substandard housing up to
code. Substandard units are those units requiring repair or replacement
of at least one major system. A major system is any one of the following:
(a)
Roof.
(b)
Plumbing (including wells).
(c)
Heating.
(d)
Electrical.
(e)
Sanitary plumbing (including septic systems).
(f)
Weatherization (building insulation for attic, and crawl space,
siding to improve energy efficiency, replacement storm windows and
storm doors and replacement windows and doors).
(2)
Code violations will be determined by an inspection conducted by
a licensed inspector.
A.
Program financing. Up to $15,000 per unit may be available for improvements
to eligible owner-occupied and renter-occupied units.
B.
Owner-occupied affordability controls. On owner-occupied units, the
controls on affordability will be in the form of a lien.
C.
Renter-occupied affordability controls. For rental units, the controls
on affordability shall be in the form of a ten-year deed restriction
and may also include a lien. If a unit is vacant upon initial rental
subsequent to rehabilitation, or if a renter-occupied unit is rerented
prior to the end of controls on affordability, the deed restriction
shall require the unit to be rented to a low- or moderate-income household
at an affordable price and affirmatively marketed pursuant to the
N.J.A.C. 5:97-9. Rents in rehabilitated units may increase annually
based on the standards in N.J.A.C. 5:97-9.
D.
Program affordability controls. Ten-year controls on affordability
on both owner-occupied units and rental units are required through
a recorded deed restriction.
E.
Subordination policy. There is a charge for the subordination. All
subordinations must be requested in writing to clerk@rosenet.org 60
days in advance. There will be a $500 charge. The municipality may
agree to subordination of a loan if the mortgage company supplies
an appraisal showing that the new loan plus the balance on the old
loan does not exceed 95% of the appraised value of the unit.
A.
Eligible improvements.
(1)
Housing rehabilitation funds may be used only for repairs or system
replacements necessary to bring a substandard unit into compliance
with municipal health, safety and building codes, applicable code
violations, as well as any other cosmetic work that is reasonable
and deemed necessary or is related to the necessary repairs. At least
one major system must be replaced or included in the repairs, which
include one of the following:
(a)
Roof.
(b)
Plumbing (including wells).
(c)
Heating.
(d)
Electrical.
(e)
Sanitary plumbing (including septic systems).
(f)
Smoke detectors, carbon monoxide detectors.
(g)
Weatherization (building insulation for attic, exterior walls
and crawl space, siding to improve energy efficiency, replacement
storm windows and storm doors and replacement windows and doors).
(2)
The related work may include, but not be limited to, the following:
(a)
Interior trim work.
(b)
Interior and/or exterior doors.
(c)
Interior and/or exterior hardware.
(d)
Interior stair repair.
(e)
Exterior step repair or replacement.
(f)
Porch repair.
(g)
Wall surface repair.
(h)
Exterior rain-carrying system (leaders and gutters).
(i)
Electronic appliances may be replaced, if determined unsafe.
B.
Ineligible improvements. Work not eligible for program funding includes,
but is not limited to, luxury improvements (improvements which are
strictly cosmetic), additions, conversions (basement, garage, porch,
attic, etc.), repairs to structures separate from the living units
(detached garage, shed, barn, etc.), furnishings, pools and landscaping.
The replacement or repair of other appliances is prohibited. Rehabilitation
work performed by property owners shall not be funded under this program.
C.
Rehabilitation standards. Upon rehabilitation, housing deficiencies
shall be corrected, and the unit shall comply with the New Jersey
State Housing Code, N.J.A.C. 5:28. For construction projects that
require the issuance of a construction permit pursuant to the Uniform
Construction Code, the unit must also comply with the requirements
of the Rehabilitation Subcode (N.J.A.C. 5:23-6). In these instances,
the more restrictive requirements of the New Jersey State Housing
Code or the Rehabilitation Subcode shall apply. For projects that
require construction permits, the rehabilitated unit shall be considered
complete at the date of final approval pursuant to the Uniform Construction
Code.
D.
Certification of standard. All code deficiencies noted in the inspection report must be corrected and rehabilitated units must be in compliance with the standards proscribed in Subsection C above upon issuance of a certificate of completion or occupancy. The licensed inspector must certify any structure repaired in whole or in part with rehabilitation funds to be free of any code violations.
E.
Emergency repairs. A situation relating to a safety and/or health
hazard for the occupants would constitute an emergency. A municipal
inspector will confirm the need for such work. In emergency cases,
the formal solicitation process will not be followed. A minimum of
three estimates will be obtained when possible, for the emergency
work.
A.
Application/interview.
(1)
Property owners interested in participating in the housing rehabilitation
program may submit applications to the program staff. Applications
are available at the following locations:
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Borough of Madison
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Hartley Dodge Memorial
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50 Kings Road
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Madison, NJ 07940
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www.rosenet.org
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(2)
Upon request, the program staff will mail an application to an interested
property owner. If after the program staff reviews the application
and owner-occupant appears to be income eligible, an interview will
be arranged with the applicant. At the time of the interview, the
applicant must present required documentation. Applicants for rental
rehabilitation funding must provide a list of tenants and the rents
paid by each. The program staff will contact the tenants to provide
evidence of income eligibility of the occupants of the units. Applications
will be processed in the order of receipt.
B.
Income eligibility and program certification.
(1)
For the households seeking a determination of income eligibility,
both owner-occupants and renter-occupants, all wage earners 18 years
of age or older in the household must submit appropriate documentation
to document the household income, as further described below.
(2)
Property owners of both owner-occupied and renter-occupied units
must submit the following documentation:
(3)
If after review of the income documentation submitted, an applicant
is determined to be ineligible, the applicant will receive a letter
delineating the reasons for the determination of ineligibility. An
applicant may be determined ineligible if the applicant's or each
tenants' income exceeds DCA income limits or, for owner-occupied units,
if the carrying costs of the unit which will include taxes, mortgage,
insurance exceed DCA's criteria less than 33% of gross income for
families, less than 40% of gross income for seniors. The program staff
will arrange for a title search of all properties entering the program.
(4)
After the initial interview and the program staff has substantiated
that the occupant is income-eligible, and the title search is favorable,
the eligible certification form will be completed and signed. Upon
confirmation of income eligibility of the applicant or the applicant's
tenants, the program staff will send a letter, including the eligible
certification form, to the applicant certifying the applicant's and
or tenant's eligibility. Eligibility will remain valid for six months.
If the applicant has not signed a contract for rehabilitation within
six months of the date of the letter of certifying eligibility, the
applicant will be required to reapply for certification.
C.
Housing inspection/substandard certification. Once determined eligible,
the program staff will arrange for a qualified, licensed, housing/building
code inspector to inspect the entire residential property. Qualified
inspector will inspect the house, take photographs, and certify that
at least one major system is substandard. All required repairs would
be identified.
D.
Ineligible properties.
(1)
If after review of the property documentation submitted and the inspection
report and/or work write-up an applicant's property is determined
to be ineligible, the program staff will send a letter delineating
the reasons for the determination of ineligibility. An applicant's
property may be determined ineligible for any one of the following
reasons:
(a)
Title search is unfavorable.
(b)
Property does not need sufficient repairs to meet eligibility
requirements.
(c)
Real estate taxes are in arrears.
(d)
Proof of property insurance not submitted.
(e)
Property is listed for sale.
(f)
Property is in foreclosure.
(g)
Total debt on the property will exceed the value of the property.
(2)
The municipality may disqualify properties requiring excessive repairs
to meet municipal housing standards. The estimated or bid cost of
repairs must exceed 50% of the estimated after-rehabilitation value
of the property for the municipality to exclude the property.
(3)
If after review of the property documentation submitted and the inspection
report and/or work write-up an applicant's property is determined
to be eligible, the inspector will then certify that the dwelling
is substandard by completing and signing the certificate of substandard
form and submitting this to the program staff.
E.
Cost estimate.
(1)
The program staff will prepare or cause to be prepared a work write-up
and cost estimate. This estimate will include a breakdown of each
major work item by category as well as by location in the house. It
will contain information as to the scope and specifics on the materials
to be used. A cost estimate will be computed and included within the
program documentation. The program staff will review the preliminary
work write-up with the property owner.
(2)
Only required repairs to units occupied by income-eligible households
will be funded through the housing rehabilitation program.
F.
Contractor bidding negotiations. After the unit and the unit occupant
have been certified as eligible, the program staff will then review
bids. The lowest responsible trade contractor shall then be selected.
If the property owner wishes to use a contractor other than the lowest
responsible bidder, the property owner shall pay the difference between
the lowest bid price and the bid price of the selected contractor.
G.
Contract signing/preconstruction conference.
(1)
Program staff will meet with the property owner to review all bids
by the various trades. This review will include a final work write-up
and cost estimate. The contractor agreement will be prepared by the
program staff, as well as the property rehabilitation agreement covering
all the required terms and conditions.
(2)
The program staff will then call a preconstruction conference. Documents
to be executed at the preconstruction conference include contractors
agreement(s), right of entry document, a restricted covenant, mortgage
and mortgage note. The property owner, program staff representative,
contractor and bank representative will execute the appropriate documents
and copies will be provided as appropriate. A staff member will outline
project procedures to which property owner must adhere. A proceed
to work order, guaranteeing that the work will commence within 15
calendar days of the date of the conference and be totally completed
within 90 days from the start of work, will be issued to each contractor
at this conference.
H.
Progress inspections. The program staff will make periodic inspections
to monitor the progress of property improvements. This is necessary
to ensure that the ongoing improvements are in accordance with the
scope of work outlined in the work write-up. It is the contractor's
responsibility to notify the Building Inspector before closing up
walls on plumbing and electrical improvements.
I.
Change orders. If it becomes apparent during the course of construction
that additional repairs are necessary or the described repair needs
to be amended, the program staff will have the qualified professional(s)
inspect the areas in need of repair and prepare a change order describing
the work to be done. The applicant and the contractor will review
the change order with the program staff and agree on a price. Once
all parties approve of the change order and agree on the price, they
will sign documents amending the contract agreement to include the
change order. Additionally, if the applicant is not funding the additional
cost, new financing documents will be executed reflecting the increase.
J.
Payment schedule. The contract will accept progress payments. The
contractor will submit a payment request. The applicant will sign
a payment approval if both the applicant and Housing/Building Inspector
of Madison Affordable Housing are satisfied with the work performed.
The municipality will then release the payment. Final payment will
be released once all final inspections are made and the program staff
receives a property owner sign-off letter.
K.
Appeal process. If an applicant does not approve a payment that the
Housing/Building Inspector has approved, the disputed payment will
be appealed to the Borough of Madison for a hearing. Borough of Madison
will decide if the payment shall be released to the contractor, or
the contractor must complete additional work or correct work completed
before the release of the payment. The Borough of Madison decision
will be binding on both the applicant and the contractor.
L.
Final inspection. Upon notification by the contractor that all work
is completed, a final inspection shall be conducted, and photographs
taken. The program staff, the property owner, and the necessary contractors
shall be present at the final inspection to respond to any final punch
list items.
M.
Record-restricted covenant and mortgage documentation. Program staff
will file the executed restricted covenant and mortgage with the County
Clerk.
N.
File closing. After the final payment is made, the applicant's file
will be closed by the program staff.
A.
Complete a household eligibility determination form.
(1)
The program staff shall require each member of an applicant household
who is 18 years of age or older to provide documentation to verify
their income, pursuant to the Uniform Housing Affordability Controls
at N.J.A.C. 5:80-26.1 et seq. (except for the asset test), Asset Test,
N.J.A.C. 5:80-26.16(b)3, which provides that if an applicant household
owns a primary residence with no mortgage on the property valued at
or above the regional asset limit as published annually by DCA, a
certificate of eligibility shall be denied by the administrative agent,
unless the applicant's existing monthly housing costs exceed 38% of
the household's eligible monthly income. Income verification documentation
should include, but is not limited to, the following for each and
every member of a household who is 18 years of age or older:
(a)
Four current consecutive pay stubs (including both the check
and the stub), including bonuses, overtime or tips, or a letter from
the employer stating the present annual income figure or if self-employed,
a current certified profit and loss statement and balance sheet.
(b)
Copies of federal and state income tax returns for each of the
preceding three tax years. A Form 1040 Tax Summary for the past three
tax years can be requested from the local Internal Revenue Service
Center or by calling 1-800-829-1040.
(c)
A letter or appropriate reporting form verifying monthly benefits
such as:
(d)
A letter or appropriate reporting form verifying any other sources
of income claimed by the applicant, such as alimony or child support
- copy of court order or recent original letters from the court or
education scholarship/stipends - current award letter.
(e)
Current reports of savings and checking accounts (bank statements
and passbooks) and income reports from banks or other financial institutions
holding or managing trust funds, money market accounts, certificates
of deposit, stocks or bonds (in brokerage accounts - most recent statements
and/or in certificate form - photocopy of certificates).
(f)
Evidence or reports of income from directly held assets, such
as real estate or businesses.
(g)
Interest in a corporation or partnership - federal tax returns
for each of the preceding three tax years.
(2)
Current reports of assets - market value appraisal or realtor comparative
market Analysis and bank/mortgage co. statement indicating current
mortgage balance. For rental property attach copies of all leases.
(3)
The following is a list of various types of wages, payments, rebates
and credits. Those that are considered as part of the household's
income are listed under Income. Those that are not considered as part
of the household's income are listed under Not Income.
(a)
Income.
[1]
Wages, salaries, tips, commissions.
[2]
Alimony.
[3]
Regularly scheduled overtime.
[4]
Pensions.
[5]
Social security.
[6]
Unemployment compensation (verify the remaining number of weeks
they are eligible to receive).
[7]
TANF.
[8]
Verified regular child support.
[9]
Disability.
[10]
Net income from business or real estate.
[11]
Interest income from assets such as savings, certificates
of deposit, money market accounts, mutual funds, stocks, bonds.
[12]
Imputed interest (using a current average annual
rate of 2%) from non-income-producing assets, such as equity in real
estate. Rent from real estate is considered income, after deduction
of any mortgage payments, real estate taxes, property owner's insurance.
[13]
Rent from real estate is considered income.
[14]
Any other forms of regular income reported to
the Internal Revenue Service.
(b)
Not income.
[1]
Rebates or credits received under low-income energy assistance
programs.
[2]
Food stamps.
[3]
Payments received for foster care.
[4]
Relocation assistance benefits.
[5]
Income of live-in attendants.
[6]
Scholarships.
[7]
Student loans.
[8]
Personal property such as automobiles.
[9]
Lump-sum additions to assets such as inheritances, lottery winnings,
gifts, insurance settlements.
[10]
Part-time income of dependents enrolled as full-time
students.
[11]
Court ordered payments for alimony or child support
paid to another household shall be deducted from gross annual income.
|
To calculate income, the current gross income of the applicant
is used to project that income over the next 12 months.
|
(c)
Student income. Only full-time income of full-time students
is included in the income calculation. A full-time student is a member
of the household reported to the IRS as a dependent who is enrolled
in a degree seeking program for 12 or more credit hours per semester;
and part-time income is income earned on less than a thirty-five-hour
workweek.
(d)
Income from real estate.
[1]
If real estate owned by an applicant for affordable housing
is a rental property, the rent is considered income. After deduction
of any mortgage payments, real estate taxes, property owner insurance
and reasonable property management expenses as reported to the Internal
Revenue Service, the remaining amount shall be counted as income.
[2]
If an applicant owns real estate with mortgage debt, which is
not to be used as rental housing, the administrative agent should
determine the imputed interest from the value of the property. The
administrative agent should deduct outstanding mortgage debt from
the documented market value established by a market value appraisal.
Based on current money market rates, interest will be imputed on the
determined value of the real estate.
B.
Records documenting household composition and circumstances. The
following are various records for documenting household information:
C.
Certify the income eligibility. Certify the income eligibility of
low- and moderate-income households by completing the application
form. Provide the household with the original and keep a copy in the
project files.
D.
Appeals process - income eligibility. Appeals from all decisions
of an administrative agent shall be made in writing to;
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Borough of Madison
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Rehabilitation Program Appeal
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50 Kings Road
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Madison, NJ 07940
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A.
Contractor Selection. Contractors must apply to the program staff
to be placed on the preapproved contractors list. Contractors seeking
inclusion on the list must submit references from at least three recent
general contracting jobs. Contractors also must submit documentation
proving financial stability. Contractors must carry workmen's compensation
coverage and liability insurance of at least $100,000/$300,000 for
bodily injury or death and $50,000 for property damage. Only licensed
tradesmen will be permitted to perform specialty work such as plumbing,
heating and electrical.
B.
Number of proposals required. A minimum of three general contractors
from a list of preapproved contractors. The approved work write-up
will be submitted to the selected contractors by the program staff.
Contractors must visit the property and submit bids by stated deadline.
The contract will be awarded to the lowest bidder, provided that the
Housing/Building Inspector or the professional who drafted the work
write-up certify that the work can be completed at the price bid and
that the bid is reasonably close to the cost estimate.
C.
Contractor requirements. Upon notification of selection, the contractor
shall submit all required insurance certification to the program staff.
A contract signing conference will be called by the program staff
to be attended by the property owner and contractor. At the time of
agreement execution, the contractor shall sign a certification of
work schedule prepared by the program staff.
A.
Files to be maintained on every applicant.
(1)
The program staff will maintain files on every applicant. If an applicant's
application is approved, the file will contain at a minimum:
(2)
Files of applicants approved for the program will also contain the
following additional documentation:
(3)
For properties determined eligible for the program where the applicants
choose to continue in the program, the files shall contain the following:
(a)
Work write-up/cost estimate.
(b)
Copies of bids.
(c)
Applicant/contractor contract agreement.
(d)
Recorded mortgage/lien documents.
(e)
Copies of all required permits.
(f)
Contractor requests for progress payments.
(g)
Progress payment inspection reports.
(h)
Progress payment vouchers.
(i)
Change orders (if needed).
(j)
Final inspection report.
(k)
Photographs - after.
(l)
Certification of completion.
(m)
Certification of release of contractor's bond.
B.
Rehabilitation log. A rehabilitation log will be maintained by the
program staff that depicts the status of all applications in progress.
C.
Monitoring. For each unit the following information must be retained
to be reported annually:
(1)
Street address.
(2)
Block/lot/unit number.
(3)
Owner/renter.
(4)
Income: very-low/low/mod.
(5)
Final inspection date.
(6)
Funds expended on hard costs.
(7)
Development fees expended.
(8)
Funds recaptured.
(9)
Major systems repaired.
(10)
Unit below code and raised to code.
(11)
Effective date of affordability controls.
(12)
Length of affordability controls (years).
(13)
Date affordability controls removed.
(14)
Reason for removal of affordability controls.
