Box 5, Folder 1, Document 52

Box 5, Folder 1, Document 52

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 koeneeity 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.
rey

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:

ony

(

) 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;

(b) a Negotiation Conference;
(ce) execution of the Letter of Intent;
(d) submission and review by LEA and HAO of working drawings

and specifications; and
te) execution of Contract of Sale.

ii. After the Feasibility Conference 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.

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re evaluated and considered by the

otiation Conference is held in the HAO with the developer
ciates, and LHA and HAO staffs participating. The purpose

rence is to negotiate a price for the improvements (the
land is already settled, step 10).

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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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and develop
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LHA shall obtain: two
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Upon agreement as to
ale, the LHA and HAO s
which is then: execu
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the developer

the LHA
oe inclusion in the Contract of Sale,

ted by the developer, the LHA,

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schedules a
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HAO for review and approval.

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eview and evaluation of
d HAO agree on

the approved,
price to be

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the developer.

the price to be included in the Contract
hall confer and prepare the Contract ‘of
and HUD.

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
award of
price he

otifies the
he Contr

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Cc acc

upon completion.

is to receive and

general public by newspaper advertisement of
of Sale to the named déveloper, including
description of the project.

The Construction of the Turnkey project begins with sale to the

. *\oiwe
hook residents

If required, plans for the relocation of \occupy ing the site are

repared, and relocation assistance payments are made.
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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

a Turnkey site. In this case,

to a private developer.

by HUD to use Urban Renewal project land for

the Local Public Agency may sell such land
Where it is economically feasible, the projects should be

so designed that individual units or
individuals, or to groups under some

ownership.

groups of units could be sold to

form of condominium or cooperative