Box 5, Folder 1, Document 52

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Box 5, Folder 1, Document 52

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Ma rch 18, · 1969
The Turnkey program was started by HUD on a n experimental -b ·a sis
in January of· 1966 .
Its basic purpose is co permit better utilizat i on of
the means and knowledge of priva t e enterprise in producing public hous~ng .
Under the Turnkey method, a dC!ve loper or builder who ovms a
site or an option , or can obt ain one, may submit, in r e sponse ta an
invit ation from a Local Hou sing Authority (LHA ), a propo s a l to buil d
hous ing . . • for low income f amilies.
If the developer's proposal is a ccep table
to the LHA and HUD, the LHA ·will enter into a Contract
of
c he LHA agrees to purchase the comple t ed development.
This contra ct wi:l
Sale und er which
be ba~ked up by the financial a ssist an ce corru~itmcnt of t he United States
of Americ a , a ct ing through HUD? · to the LHA, and it will enable the dev.::.loper
-c o secur e · cormner cial construc tion financing in hi s usual way .
At the National lev el, responsibility for this progr am is und e r
t:he Assistant Se cr etary f or Renewal and Housing Ass is tance of HUD.·
Program
res p ons i bility is further delegated to the Deputy As sistan t Secret~ry for
Housing Assistanc e , the Head of the Hou~ing Assistance Administrati on.
~~e
Turnkey Program is administered by the Direc tor of t he Production Div isio~ .
.
.
There are three program managers ~ ithin this Div i sion who serve as liaison
of fi cers between the HUD Re gions a nd Headquarters f or this and other public
housing programs administered by HUD.
At t he Local level, ther e are general ly only two participants:
The Local Housing Authority and the privat != dev el op er .
T:-.e LHA 1 s vary in
powers and structure as they are establ istc~ ~~d e ~ the authority of s~ a ~2
encblin3 legislation.
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The Tur,1key n echod en c omp asse s only the construct ion phc::se 0f .
a low ren t housing project .
It h a s no dire ct bearing on the initial
appli c a tion mace by a community f a:::- low rer.t housing or -the management
and ope ration of a l ow ren t hou s i ng proje ct.
Th e pro c essing steps outl ined below for a .turnk ey p:.coject follow
t he approval by HUD of ·a LHA 1 s app~i cation for a low rent hou~ing pro gram:
1 . The LHA makes the initial decision to construct proposed low rent
housing by the Turnkey method .
2 . If not alre a dy versed in t he &ppli cation of the Turnkey method ,
the LHA consults with region a l officials, obtains sufficient inform~ti on
on requirements and procedures, a nd decides to proceed by that method .
3.
The LHA ma y request a pre liminary lo a n f rom HUD to cover turnkey
expens e s; if appr oved by HUD , a loan con tract is negotiated bet~een
HUD and t he LHA .
4. Th e LHA i nvites pr op osals from private developers fo r par ticipation
in a Turnk ey p r o ject. Th is mu 3 t be don e by public adver tisemen t
st a ti~g cype of proje ct desired, number o f u nits, and othe r deta ils o f
·t h e p:::-op osed project . The noti c e als o mus t specify the federal
r equirements that must be complied with .
5. ~h e private developer(s) sub~its 3 cop ies of a proposal in response
co t he LHA 1 s solicitation.
6 . The LHA send s tw o co pies of all the proposa ls received to th e
Re g i ona l Hou sing Assistan ce Office (HAO) .
7. Th e LHA and HAO eval u a t e t h e prop o sa ls and c ome to a mutual
a gre ement of the developer to be chosen. This involve s , among other
things, sice evaluations made by th e HAO Realty Officer.
8.
The LHA notifies the developer of his tentative selection by letter.
9.
The LHA contra cts f or tw o independent appraisals of the site.
10. A Fe a si6ility Conference is held in the HAO with the following
partici pan ts : t h e LHA r ep res e n ta tive s , the deve1op er, his architect
and otte r as soci a t e s, and HAO st af f.
·
Thi s conference has three p ri~ary ? Urp o ses:
( 1)
to ne gotiate the pu rc h ase price o: the land;
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(2) to discuss proje ct des i gri and HUD requirements;
(3) to s e t d~tcs for :
(.:1) submission and review in the 1-IAO of the preliminary
d ~wings and ot her d~tes required for the Letter
of Intent ;
(b) a :-1egot i a ti cn Conference; .
(c) exe cu tion of the Letter of Intent ;
(d ) ;.;ubmission and review by LE.A and HAO of working drawings
and specifications; and
te) e xe cut ion of Con t ract of Sale.
11 . Af ter the Fe~sibility Conference has been held and an understanding
reached, the developer proc eeds with the preparation of t h e matirial
required for the Negoti~ti on Conferenc e .
12 . The devel oper sub~its his preliminary plans which are reviewed
by the LHA and HAO. The p l ans are dis cussed with the developer and.
his ar chite ct and any n e cessary change s are made • .
13. The prel i minary plans are sub~i tted to two -individual cost
estimators err.p loyed f or this purpose by the· LHA.
14 . The appr oved cos t estima tes are evaluated and considered by t he
LHA and t he HAO.'
15 . The ~egoti a tion Conference i s held in the HAO with t he developer
and his asso c iates , and LHA and HAO staff s part icip a tin g . The p~rp ose
of the confir ence is to ne s otiate a price f or the improvements (the
price of the land is already set tl ed , step 10).
16 . Fol l owing agreement at che Ne gotiat ion Conference, t he 'LHA
prepares a Development Pro gram on Form HUD-5080 and submits an
original and fou r copies to the HAO. The Dev e lopment Program is a
statement of the developer ' s pr oposal and pri c e as agreed upon and
approved at t he Negotiation Confe~ence .
17 . The RAO approves the LHA Development Program and sends an annua l
Contribution Cont ract List to the C~ntral Offi ce for .its appr o~a1; .
18 . The Ce ntral Office a~proves the HAO subrnis~ion authorizing RUD
e;~e cut ion of an Annual Contributions Contract viith the LHA and approval
of :.h e Let t er of Intent between the LHA and the Developer . ·
19. Following the 1-L-\O approva l and LHA is suanc e of the Letter of
l nt2nt, the dev el oper prepares and submits working drawings a~d
specifications to t he LHA.
20. The LHA rev iews and approves the .wo:::-king drawings and subr..its them
to t.::e HAO.
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21 . The HAO reviews the working d= awing~ , ·discusses them with Lh em ,
t h e LHA , and developer, a~d , i f n e ce ssary, schedules a meeting a t
w~ i ch the LHA, the develo~er and hi s associates will be present.
..
22 . Af ter a pprov2l of t he wo= k ing d=awings and specifications, the
LHA s h.:, ll obtaintwo upd2ted cost esr:irnates , review and evalua te
t h em in the same manner as the first e~timates , and submit two copies
with the results of its eva luation to the HAO for review and approval.
23 . On the basis of · t h ei:..: review and evaluation of the approved,
upda ted cost estinates, the L}li\. and EAO agree on a price to be
of f ered to the developer for inclu s ion in the Contract of Sale,
and negotiate that price with the develop er.
24.
Upon agreement as to the price to be included in the Contract
of Sale, the LHA and HAO shall confer and prepare the Contract ·of
Sale, wh ich is theru executed by the developer, the LHA, and HUD .
25. The LHA selects an architect who ' is to perform inspection ser~ices
for the LHA in connection with-the project and executes a contract
with him .
26.
The LHA notif i e s t he general pub l ic by newsp a per advertisement of
the award of the Con tra ct of Sale to . the named developer , including
the price he is to receive and a description of the project .
The Construction of the Turnkey project begins with sale to the
LHA upon completion.
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I f required, plans for the relocation ofAoccupying the site are
prepared, and relocation assistance payments are made.
During construction of the project, the HAO observes and reviews
t he a ctivit i e s of the LHA and its archite ct to ensure compliance in administration
and in inspection under the pertinent contracts.
The HAO also reviews
cons truction opera tions and visits the site periodically to insure c9mpliant
p e.:- f; ormance.
LHA 1 s are encouraged by HUD to use Urban Renewal project land _for
a Turnkey s i te.
In this case, the Local Public Agency may sell such l and
t o a pr -i va t e dev e loper .
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lfuere it is economically feasible, the projects should be
.
so design ed that individua l units or groups of units could be sold to
i~dividuals, or to groups under some form of condominium or cooperative
ownership .
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