Notice Section 1.4.A.14 Davis-Bacon prevailing wages
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Davis Bacon Wages on Post-Closing Refinance
In RAD for PHAs (RAD 1), are Davis Bacon requirements applicable for a post-closing refinance?Davis Bacon requirements are applicable for all construction or repair work on projects that are initiated within eighteen (18) months after the effective date of the RAD PBV or PBRA HAP contract. This applies even if the owner is utilizing another funding source (e.g., a FHA-insured HUD 223(f) loan) that does not require the use of Davis-Bacon wages.
Post-Closing Procurement Rules
What procurement rules is a PHA subject to after the RAD conversion?All construction or repair work on projects that are initiated within eighteen (18) months after the effective date of the HAP contract are subject to the Labor Standards Addendum to the HAP Contract. Also, see sections 1.4.A.14 and 1.4.A.15 of the RAD Notice for requirements on Davis-Bacon wages and Section 3 requirements for initial rehabilitation work identified in the RCC. After this work is completed, PHA’s should be mindful of state, local, and PHA-wide procurement rules that still could apply even though the property has converted through RAD. Also, PBRA properties must follow federal requirements on obtaining bids if the owner is requesting a withdrawal from the replacement reserve in advance of the work being done; this would not apply to a reimbursement.
Submission of Certified Payrolls for Davis Bacon
For RAD transactions subject to Davis Bacon, where should the PHA/owner submit certified payrolls?Certified payrolls should be submitted to the HUD Labor Relations Specialist with jurisdiction for the applicable region. Please see HUD Handbook 1344.1 Rev 2 Chapter 4, which establishes the requirement for submission of the certified payrolls (Link: http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/handbooks/sech/13441)
Davis Bacon and Section 3 Applicability
What is the trigger for Davis-Bacon and Section 3 under a RAD conversion?Davis-Bacon and Section 3 are triggered by any any rehabilitation or new construction performed as part of the “Year One” repair schedule defined by the RPCA, Financing Plan and Rad Conversion Commitment. In addition, and substantial repairs undertaken prior to conversion (i.e., pre-conversion rehabilitation with Capital Funds).
RAD Procurement Rules after CHAP-Issuance
What are the PHAs' procurement rules following award of the CHAP? Are the PHA's RAD post-award development activities exempted from HUD PHA procurement rules (e.g. Part 85) ? The RAD FAQs provides guidance on pre-award procurement requirements but not after the CHAP issuance.Public housing procurement rules apply until the RAD closing has occurred. [Updated 7.29.13]
RAD Conversion Development Costs
The Notice provides that a PHA may use up to $100,000 in pre-development funds without prior HUD approval. We anticipate spending about $300,000 in architectural work, due diligence, legal, etc. prior to financial closing. Can the PHA put in these additional funds? Would they need to seek approval from their Transaction Manager?If the PHA needs to spend more than $100,000 in pre-development costs, it can do one of the following: (1) request approval from HUD to exceed this amount, which would need to follow the normal public housing (24 CFR part 85) procurement rules, unless the PHA submitted a good-cause waiver, or (2) use non-public housing funds for these purposes, which would then be reimbursed at closing, if necessary. [Updated 7.29.13]
Federal Bidding & Procurement Requirements for Selection of Development Team
Are there any federal bidding or procurement requirements for the selection of developer or development partners (investors, lenders, contractors, architects/engineers, legal, consultants, etc.) associated with a public housing conversion and the completion of initial repairs?PHAs must comply with conflict of interest requirements in the respective Project-Based Rental Assistance (PBRA) and Project-Based Voucher (PBV) programs. Additionally, PHAs must comply with any state and local requirements as well as any requirements established by the lenders or funders. Otherwise, the RAD program does not impose any federal bidding or procurement requirements in the selection of developer or development partners. Aside from the issue of selection of developer or development partners, public housing conversions may be subject to subsidy layering review (see Section 1.5.A of the Notice) as well as Davis-Bacon and Section 3 (see Sections 1.6.D.3 and 1.7.C.2). Additionally, with respect to pre-development costs, Section 1.5.A of the Notice reads: Prior to the approval of a project’s Financing Plan, a PHA may expend up to $100,000 in public housing program funds in related pre-development conversion costs per project. Predevelopment funds may be used to pay for materials and services related to proposed development and may also be used for preliminary development work. Public housing program funds spent prior to the effective date of the HAP are subject to public housing procurement rules. These rules continue to apply. [Updated 7.29.13]