TO: W. Calvin Horton, Town Manager
FROM: Roger Waldon, Planning Director
SUBJECT: Ability of Small Contractors to Bid on Rehabilitation Work Using Federal Funds
DATE: April 2, 2003
The purpose of this working paper is to respond to a petition raised at the public hearing on January 29, 2003, regarding the 2003-2004 Community Development program.
At the January 29, 2003 public hearing, Ms. Delores Bailey, representing the Northside Community Association, requested that the Council allocate 2003-2004 Community Development funds for the renovation of owner-occupied homes in the Northside neighborhood.
Mr. John Hill, a local contractor, asked the following questions related to how the rehabilitation program would operate:
1. Will funds go to owners or to organizations?
2. Will home owners choose contractors or will they be selected by others?
Mr. Hill stated that he is a small contractor with insurance and wanted equal opportunity to bid on these projects.
DISCUSSION
The preliminary 2003-2004 Community Development program presented to the Council at the public hearing on March 26, 2003 includes $150,000 for the renovation of owner-occupied homes in the Northside neighborhood. The memorandum includes a prelminary recommendation that the Town contract with Orange County Department of Housing and Community Development to oversee the rehabilitation work. Town staff would be responsible for the administrative portion of the program (i.e. qualifying households).
If the Council approves funds for this use, we expect that the program would operate similarly to the Comprehensive Rehabilitation program funded through the HOME Program. Currently Orange County’s rehabilitation staff prepares cost estimates and work write-ups for projects. Through the sealed bid process, the County requests bids from contractors for the renovation work. According to State law, if total renovation cost exceeds $30,000, only licensed general contractors may bid on the project. This limitation does not exist if total renovation cost is less than $30,000. Contractors eligible to bid on renovation projects must be approved by the Orange County Department of Housing and Community Development to verify the contractor’s ability to complete a project (i.e. reference check and verification of credentials and insurance).
If a rehabilitation program is approved by the Council at its April 28, 2003 meeting, funds would be provided as a deferred second mortgage to the property owner, and would be repaid if the home was sold or conveyed to heirs that do not meet the income guidelines of the program within the affordability period (typically twenty years). The Town would pay contractors directly on behalf of the property owner when work was satisfactorily completed and approved by the County’s rehabilitation staff.