The City of Springfield's Department of Planning and Development has a program to lend money at low interest to help rehabilitate houses in the central part of Springfield. The property owners use the loan funds to hire qualified contractors to carry out City-approved housing rehabilitation plans.
The City helps property owners contact general contractors by maintaining a list of licensed contractors who have shown an interest in bidding on City-financed rehabilitation projects.

Contractor Qualifications

As a lender, the City is concerned about contractor qualifications because the security of each loans depends on the market value of the rehabilitated property, which is affected by the quality of the contract work.
If you want to be on this list you will need to demonstrate financial responsibility, knowledge of the trades involved in rehabilitation work and skill in managing and supervising construction work. You must also authorize the City to check your credit history and look at some samples of your work. In addition, you must:

Show evidence of satisfactory liability insurance coverage and carry Worker's Compensation coverage where required by law.
Show ability to finance all project-related costs while progress payment and final payment requests are being processed.
Understand and agree to abide by all local ordinances, the Contract for Improvements and the Contractor Payment Procedure.
Not be previously disqualified by the U.S. Dept. Of Housing and Urban Development for violating federal labor or civil rights laws.

Being on the contractor list does not mean endorsement by the City, so you should have a list of local projects, including telephone numbers and addresses, you can give to property owners as references. Clear photographs of recent work also are helpful.

Bid Tours

The times and places of bid tours are included in announcements mailed out to all contractors on the City's current list. (Loan applicants may invite other contractors to bid, but those contractors still have to meet the same basic qualifications as those on the City's list.)
Normally only one bid tour will be conducted for each project, but you may make individual appointments with the property owner to bring subcontractors by the property and to discuss the project in more detail.

Work Writeups

Copies of the preliminary work writeup are handed out to the contractors attending the bid tour. To assist the property owner in evaluating bids, you must base your bid only on this dated version of the writeup. Minor changes and corrections will be taken care of later after a contractor has been selected.
If you find serious errors or omissions in the writeup, call them to the attention of the property owner and rehabilitation specialist during, or as soon as possible after, the bid tour. Clarifications or amendments can be mailed out to each of the contractors to ensure they are all still bidding on the same work.
Some work writeups will call for alternate bids. You should state these clearly in the space provided on the bid sheet in terms of the specific dollar amount that would be added or subtracted from your bid price for each alternate item.

You are encouraged to suggest other methods or materials you thing might be more satisfactory or cost-effective. These suggestions should be described and costed in side notes and not included in your basic bid. Changes in the plan can be negotiated later if you get the contract.
Some property owners may mention during a bid tour other work they would like to have done. If those items are not included in a written amendment to the writeup you should not include them in any written bid figure.

Bidding and Contract Award

In most projects you are allowed two weeks to prepare your bid. The bid should be submitted in a sealed envelope with the name and address of the borrower on the outside. Duplicate copies may be turned in to both the City representative and the property owner.
The owner may base his choice of a contractor on the bidders' references and qualifications as well as their bid prices. That is why it is important to spend time discussing the project and your previous projects with the owner before the bid deadline so both of you can be better acquainted. The owner also has the right to reject any and all bids.

Contracting

If your bid is accepted by the owner, a meeting will be schedule to finalize the work writeup and discuss special conditions affecting the work. Adjustments in the contract price may be negotiated as a result of mutually agreed changes in the writeup. The final writeup, or specifications, will be attached to a standard set of General Conditions, with the two parts becoming the Contract for Improvements. The signed contract commits the owner to the project and holds you responsible for its satisfactory completion.

Construction

A Notice to Proceed will be issued within 30 days after the owner's loan has been closed, normally as soon as you are ready to begin and you have furnished proof of insurance coverage and other information. You and your subcontractors should obtain building permits before starting work. A City representative will make timely inspections to see that the contract terms are being met. You should invite the City representative to make inspections at critical times before certain parts of the work are permanently covered up. You will have to call the Building Development Department to schedule electrical and plumbing inspections.
If there are disagreements between you and the owner about the quality of work or the terms of the contract, a City representative may be called on to help mediate.

Payment

You may invoice for progress payments, in proportion to the value of the work completed. Your invoice should list the items you have substantially completed and their value as a portion of the contract price. Major subcontractor and supplier bills related to that work must be listed on the invoice so they can be paid separately with three-party checks. The invoice should be signed by the owner before you turn it in to the City. A City representative will inspect the job and verify the value of the work completed. Ten percent of the requested payment will be retained until all work is finished to ensure project completion. A check for the balance will be drawn on the project account and issued in about a week, depending on when the pay request is received. In most cases the check will have to be endorsed by the owner before it can be cashed.

Project Closeout

After all finishing touches have been completed and the work passes final inspection, you must provide final lien waivers and sign an affidavit of payment of all project-related bills, before the check for the last payment (including the ten percent retainage) can be released.

Successful Rehab Contracting

To succeed in the rehabilitation contracting business, you need to learn how to perform the contract work efficiently despite the complexities and unknowns presented by existing structures. It is important to anticipate and control incidental operating expenses. You need to find reliable subcontractors and suppliers and adequately market your skills and services. You need to understand and cooperate with the paperwork requirements of the City rehab loan program.

Just as important, you need personal skills for working with property owners, employees, and others you will meet on the job. There are bound to be difficulties in any project. They are best worked through in an atmosphere of patience, openness, mutual respect and cooperation.

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