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i TAR A OIT ATA ro
VROCASSING PROCEDURES
The Turnkey program was started by KUD on an experimental basis
in January of 1966. Its basic purpose is to permit better utilization of
the means and knowledge of private enterprise in er oductik public housing.
Under the Turnkey method, a developer or builder who owns a
site or an option, or can obtain one, may submit, in response to an
invitation from a Local Housing Authority (LHA), a proposal to build
housing ... for low income families. If the developer's proposal is acceptable
to the LHA and HUD, the LHA will enter into a Contract of Sale under which
the LHA agrees to purchase the completed development. “This contract will
be backed up by the financial assistance commitment of the United States
oz America, acting through HUD, to the LHA, and it will enable the developer
to secure commercial construction financing in his usual way.
At the National level, responsibility for this program is under
the Assistant Secretary for Renewal and Housing Assistance of HUD. Program
responsibility is further delegated to the Deputy Assistant Secretary for
Housing Assistance, the Head of the Housing Assistance Administration. The
urnkey Program is administered by the Director of the Production Division.
‘There are three program managers within this Division. who serve as liaison
officers between the HUD Regions and Headquarters for this and other public
housing programs adunistered by HUD.
At the Local level, there are generally only two participants:
The Local Housing Authexity and the private developer. The LHA's vary in
powers and structure:as they are established under the authority of Stace
egislation. \
The Tucnkey method encompasses only. the construction phase of
a low rent housing project. It has no direct bearing on the initial
application mace by.a community for low rent housing or -the management
and operation of a low rent housing project.
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The processing steps outlined below for a.turnkey project follow
the approval by HUD of a LHA's application for a low rent housing program:
a1 decision to construct proposed low rent
- If not already versed in the application of the Turnkey method,
the LHA consults with regional officiais, obtains sufficient information
equirements and procedures, and decides to pEecers by that method.
3. The LHA may request a preliminary loan from HUD to cover turnkey
exp 3; if approved by HUD, a loan contract is negotiated between
HUD and the LHA.
4. The LHA invites proposals from private developers for participation
in a ‘Turnkey project. This must be done by public advertisement
stating type of project desired, number of units, and other details of
the proposed project. The notice also must specify the federal
requirements that must be complied with.
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5. ‘The private developer(s) submits 3 copies of a proposal in response
to the. LHA's solicitation. ‘ ;
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6. The LHA sends two copies of all the proposals received to the
Regional Housing Assistance Office (HAO).
7. The LHA and HAO evaluate the proposals and come to a mutual
agreement of the developer to be chosen. This involves, among other
things, site evaluations made by the HAO Realty Officer.
8. The LHA notifies the developer of his tentative selection by letter.
9. The LHA contracts for two independent appeaisets of the site.
10. A Feasibility Conference is held in the HAO with the following
participants: the LHA representatives, the developer, his architect
and other associates, and HAO stafiz.
This conference has three primary purposes:
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(
) to negotiate the purchase price of the land;
(2) to discuss project design and HUD requirements;
(3) to set dates for:
(a) submission and review in the HAO of the
drawings and other dates reguired f
of Intent;
w by LHA and HAO of working drawings
and specifications; and
te) execution of Contract of Sale.
ii. After the Feasibility Confer¢nee has been held and an understanding
reached, the developer proceeds with the preparation of the material
required for the Negotiation Conference.
12. The developer submits his preliminary plans which are reviewed
by the LHA and HAO. The plans are discussed with the developer and.
his architect and any necessary changes are made..
13. The preliminary plans are submitted to two-individual cost
estimators employed for this purpose by the LHA.
14. The approved cost estimates are evaluated and considered by the
LHA and the HAO.
otiation Conference is held in the HAO with the developer
ciates, and LHA and HAO staffs participating. The purpose
erence is to negotiate a price for the improvements (the
land is already settled, step 10).
16. Following agreement at the Negotiation Conference, the LHA
prepares a Development Program on Form HUD-5080 and submits an
original and four copies to the HAO.’ The Development Program is a
statement of the developer's proposal and price as agreed upon and
approved at the Negotiation Conference.
17. The HAO approves the LHA Development Program and sends an annual
Contribution Contract List to the Céntral Office for its approval.-
The Central Offi ce approves the HAO submission authorizing HUD
n Annual Contributions Contract with the LHA and approval
of che Letter of Intent between the LHA and the Developer.
19. Following the HAO approval and LHA issuance of the Letter of
Intent, the developer prepares and submits working drawings and
specifications to the LHA.
20. The LHA reviews and approves the working drawings and submits them
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te, TA
ares HAO =
HAO reviews the working drawings, ‘discusses them
and developer, and, if neces schedules a me
which the LHA, the developer and his ciates will be
2. After peeeea of the ng drawings and specifications, the
LHA shall obtain: two updated 5 it ae review and evaluate
them in the same manner 2 i Rea and submit two copies
with the results of it uati HAO for review and approval.
ix review and evaluation of the approved,
jac the LUA and HAO agree on a price to be
fered t he de ie oe inclusion in the Contract of Sale,
nego the developer.
Upon agreement as to the price to be included in the Contract
ale, the LHA and HAO shall confer and prepare the Contract ‘of
which is then: executed by the developer, the LHA, and HUD.
The LHA selects an architect who is to perform inspection services
for the LHA in connection with-the project and executes a contract
with him.
The LHA notifies the general public by newspaper advertisement of
award of the Contract of Sale to the named déveloper, including
price he is to receive and a description of the project.
The Construction of the Turnkey project begins with sale to the
upon completion.
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hose resides >
If required, plans for the relocation of;\occupying the site are
prepared, and relocation assistance payments are made.
During construction of the project, the HAO observes and reviews
the activities of the LHA and its architect to ensure compliance in administration
and in inspection under the pertinent contracts. The HAO also reviews
construction operations and visits the site periodically to insure compliant
performance.
LHA's are encouraged by HUD to use Urban Renewal project land for
a Turnkey site. In this case, the Local Public Agency may sell such land
to a private developer.
Where it is economically feasible, the projects should be
so designed that individual units or groups of units could be sold to
individuals, or to groups under some form of condominium or cooperative
ownership.