Cal. Code Regs. Tit. 25, § 8092 - Construction Requirements

(a) The department shall review and underwrite project plans and specifications to ensure the following objectives:

(1) The rental housing development shall have a minimum useful life at least equal to term of the loan;

(2) Maintenance, repair, and replacement costs shall be minimized during the useful life of the rental housing development through use of durable, low maintenance materials and equipment and design features that minimize wear and tear.

(3) Operating costs shall be minimized during the useful life of the rental housing development.

(4) Tenant security shall be enhanced through features such as those designed to prevent or discourage unauthorized access and to allow for ready monitoring of public areas.

(5) Unit sizes, amenities, and general design features shall not exceed the standard for new developments rented at or below the market rent in the area of the project, and unit density shall not be substantially less than the average for new developments with such units.

(b) The sponsor shall ensure that the construction work for the project shall be performed in a competent, professional manner at the lowest reasonable cost consistent with the project's scope, design and locality and not in excess of the total funds available. The sponsor may demonstrate the reasonableness of the proposed cost by soliciting written bids based on a bid package distributed to potential contractors located in the general area of the rental housing development or by the use of other methods which adequately demonstrate to the department's satisfaction that the costs are reasonable. Such bid package or other method shall include at a minimum:

(1) complete plans and specifications for the work; and

(2) a full description of the program requirements for construction, including the required provisions of the construction contract.

(c) The sponsor shall enter into a written contract with the selected contractor. The contract shall be subject to the prior approval of the department to determine compliance with program requirements.

(d) The construction contract shall be a completely integrated agreement containing all the understandings, covenants, conditions and representations between the parties and, at a minimum, contain provisions which:

(1) require that the contractor complete the work in accordance with the plans and specifications approved by the department and applicable local, state and federal laws, regulations and building codes and standards;

(2) require the contractor to proceed with and complete the work in accordance with the schedule for work approved by the department;

(3) specify a total contract price consistent with the project budget approved by the department;

(4) provide for a method of payment to the contractor consistent with program requirements which shall include progress payments and retentions;

(5) require that the contractor provide a payment bond securing payment to persons providing goods or services to the project and a performance bond securing faithful completion of the work. Each bond shall be in an amount equal to 100 percent of the total contract price and include the department as a dual obligee. The department shall waive the payment and performance bond requirements, or reduce their scope, upon the sponsor's either:

(A) providing alternative security for payment and performance under the construction contract which is substantially equivalent to the bond requirements; or

(B) demonstrating that the bonds, or the full amount thereof, are not necessary to protect the interests of the department and ensure completion of the work;

(6) permit the sponsor and the department and their designated agents and employees the right to inspect the project site and all books, records and documents maintained by the contractor in connection with work;

(7) require the contractor to provide insurance coverage consistent with the program requirements and other applicable law;

(8) obligate the contractor to warrant the work for a period not less than one year;

(9) require that the contractor pay all amounts when due for labor, work performed under subcontract, or materials, supplies and equipment provided to the project;

(10) provide for the assignment of the construction contract to the department upon sponsor's breach of the Development Agreement;

(11) require that the contractor comply with state prevailing wage law, as set forth in Labor Code section 1720 et seq., where program funds are provided as construction financing.

(12) include such special conditions applicable to the construction contract as may have been imposed in connection with the department's approval of the project for funding.

Notes

Cal. Code Regs. Tit. 25, § 8092

Note: Authority cited: Section 50771.1, Health and Safety Code. Reference: Section 50771.1, Health and Safety Code.

1. New section filed 12-29-89 as an emergency; operative 12-29-89 (Register 90, No. 3). A Certificate of Compliance must be transmitted to OAL within 120 days or emergency language will be repealed by operation of law on 4-30-90.
2. New section refiled 4-26-90 as an emergency; operative 4-26-90 (Register 90, No. 23). A Certificate of Compliance must be transmitted to OAL within 120 days or emergency language will be repealed by operation of law on 8-24-90.
3. New section refiled 8-27-90 as an emergency; operative 8-27-90 (Register 90, No. 42). A Certificate of Compliance must be transmitted to OAL by 12-26-90 or emergency language will be repealed by operation of law on the following day.
4. New section refiled 12-19-90 as an emergency pursuant to Health and Safety Code section 50771.3; operative 12-19-90 (Register 91, No. 4). A Certificate of Compliance must be transmitted to OAL by 4-18-91 or emergency language will be repealed by operation of law on the following day.
5. Certificate of Compliance as to 12-19-90 order transmitted to OAL 1-4-91; disapproved by OAL 2-4-91 (Register 91, No. 13).
6. New section refiled 2-20-91 as an emergency; operative 2-20-91 (Register 91, No. 13). A Certificate of Compliance must be transmitted to OAL by 6-17-91 or emergency language will be repealed by operation of law on the following day.
7. Certificate of Compliance as to 6-14-91 order including amendment of subsection (d) transmitted to OAL 5-15-91 and filed 6-14-91 (Register 91, No. 38).