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Homes and Community Renewal

2010-B-03: New Regulations - 75% Contract Payment Advance

To: All Housing Companies
     Owners, Managing Agents and Site Managers

From: Robert Damico, Downstate Director
          Housing Management Bureau

Date: May 7, 2010

Subject: New Regulations - 75% Contract Payment Advance

Herein is a clarification of the above payment approval procedure in accordance with the newly revised regulations for housing companies organized under Articles II and IV of the Private Housing Finance Law.

Section 1728-4.3. Purchases and contracts of $100,000 or more

(e) Proof of progress payments with supporting documentation evidencing the propriety of such payment, including sign offs by any design professional retained by the housing company, shall be made available to the division on request, provided, however, that:

(1) no more than seventy-five percent of the full contract may be paid without prior division approval; and

(2) the division must approve any final payment.

The housing company can submit a check for 75% of the contract price to DHCR along with the HM-23: Award of Contract and contract package. When the contract is approved, DHCR would countersign the check and return it to the housing company with the approved HM-23, who would then deposit the check in their operating account. The housing company would then be able to make progress payments as the requisitions from vendors are submitted, without waiting for prior DHCR approval.

Once payments are made, the supporting paperwork and a copy of the check would be forwarded to DHCR for our records. Once the 75% advance is exhausted, subsequent payments will require prior DHCR approval. All change orders still require prior DHCR approval in accordance with Section 1728-4.3. (d), as do payments that include work under the change order.

Since the 75% is being issued up front, DHCR will encumber only the remaining 25% and any additional money attributed to change orders as the contract progresses.

Remember, where an individual housing company is deemed to require additional supervision, DHCR can utilize alternative procedures per Section 1728-4.8, such as where all payments require prior DHCR approval. Please contact your assigned Housing Management Representative for any additional clarifications.

- Robert Damico

Last updated on 05/07/10