Construction Requirements and Payment of Loan Proceeds.
28 RCNY § 2-06
in effect§ 2-06 Construction Requirements and Payment of Loan Proceeds.
(a) Cost estimates, construction contract and contractors.
(1) Scope of work and cost estimates. Applicants shall be required to submit estimates showing the nature and cost of each item of the rehabilitation or improvement. The Department may require the applicant to submit more than one estimate per trade and may prescribe forms on which such estimates shall be prepared or summarized. The plans, specifications, work write-ups or any other description of work to be performed must be approved by the Department prior to the commencement of any rehabilitation work or the making of a loan for same. The technical specifications shall conform to the standards established by the Department and where applicable, shall be subject to the approval of the Department of Buildings or other governmental agencies having jurisdiction.
(2) Approval of construction contract. The specifications approved by the Department shall be made part of the written construction contract between the owner and the general contractor, and such construction contract shall be subject to the written approval of the Department. If a general contractor is not engaged, the owner shall enter into a written construction contract with each subcontractor. The pertinent specifications approved by the Department shall be made a part of each such contract and each such contract shall be subject to the written approval of the Department.
(3) Contractors. The Department reserves the right to disapprove any contractor or subcontractor because of previous violation of statutes, rules or regulations relating to discrimination, standards of employment or labor standards, or because of inefficiency, abandonment of duties, or disregard for creditors on prior jobs performed under this Program or other programs of the City.
(b) Payment of loan proceeds.
(1) Periodic inspections. While rehabilitation is in progress the Department's personnel may conduct periodic inspections of the work and materials.
(2) Progress payments. Progress payments for work completed shall be made on the basis of sworn statements as hereinafter provided, subject to review, inspection and approval by the Department. At the time of each progress payment, the borrower and the general contractor, if a general contractor has been engaged, or other contractor, shall execute and submit to the Department a sworn statement, in form specified by the Department, certifying that there has been compliance with all labor standards pursuant to 28 RCNY § 2-06(d), that payment has been made or will be made from the proceeds of such progress payments for all labor and services rendered and materials furnished in connection with the work to the date of payment and that any liens placed against the premises subsequent to the closing of the loan have been paid, bonded or otherwise discharged. In the sole discretion of the Department, progress payments shall be made payable directly to the owner, directly to the contractor, or jointly to the owner and contractor.
(3) Retention. The Department shall withhold an amount equal to ten percent (10%) of the total amount of each approved progress payment to create a retention fund to assure satisfactory progress and completion of the work. Up to fifty percent (50%) of such retention may be released upon the completion of at least fifty per cent (50%) of the work upon written request by the borrower and approval by the Department. The remainder of the retention funds shall be released upon:
(i) completion of the work to the full satisfaction of the Department;
(ii) issuance of approvals by governmental agencies having jurisdiction, including, where applicable, a certificate of occupancy or of completion by the Department of Buildings; and
(iii) proof of payment for all labor and materials provided in connection with the rehabilitation or improvement. In lieu of subparagraph (ii) above, the Department in its discretion may accept from an architect registered with the State of New York or a professional engineer licensed by the State of New York, a certification that the completed work complies with the requirements of the particular governmental agencies having jurisdiction thereof and that applications seeking the approval of certification of such agencies have been properly filed with or submitted to such agencies.
(4) Escrow provisions. The Department may require the deposit of loan advances in a separate escrow account, in a bank designated by the Department, subject to withdrawal only upon the joint signatures of the borrower and a representative of the Department. The Department may further require that the owner deposit in such escrow account, or in a separate trust account in such bank under such provisions as the Department shall prescribe, all or a designated portion of the rents collected from the multiple dwelling during the period of construction.
(5) Failure to complete work. If the borrower for any reason fails to diligently pursue or timely complete the rehabilitation to the full satisfaction of the Department, the Department may, after written notice to the borrower, enter upon the premises, effect the completion of the rehabilitation and charge the cost thereof to the borrower.
(6) Adjustments for interim interest. Any portion of the loan representing interest on advances during construction shall be adjusted upon completion of the rehabilitation as follows. If such portion shall be more than the amount required for interest on advances, the excess shall be credited to the borrower in reduction of the principal of the loan; if less than the amount required for such interest, the difference shall be deducted from the final advance of loan proceeds due borrower and paid to the City.
(c) Non-discrimination and affirmative action.
(1) Compliance. The owner and any contractor or subcontractor engaged in connection with the rehabilitation or improvement must agree as a condition of such engagement to comply with all applicable federal, state and local statutes, rules and regulations relating to discrimination and standards of employment. The owner shall not exclude any person, including prospective tenants, from participation in, deny any person the benefits of, or subject any person to discrimination under this Program on the grounds of race, color, national origin, creed, age, sex, or sexual orientation. If an owner, contractor or subcontractor fails to comply with the provisions of this paragraph (1), the Department, in its discretion, may, in addition to or as an alternative to any other remedies reserved to the City or the Department in the loan documents, withhold progress payments to the owner or disapprove the contractor or subcontractor for future work under this Program or other programs of the Department.
(2) Books, records and inspections. In order to assure strict compliance with this subdivision (c), all contractors and subcontractors will be required to sign an agreement, in form specified by the Department, to make their books and records available for inspection by representatives or agents of the Department. In order to determine such compliance the Department reserves the right to interview or confer with any employee at any time, on a rehabilitation site or in the office of the contractor or subcontractor.
(d) Labor standards.
(1) Compliance with labor standards. The owner and any contractor or subcontractor engaged in connection with the rehabilitation or improvement must agree as a condition of such engagement to comply with all applicable federal, state and local statutes, rules and regulations relating to labor standards, including the payment of prevailing wage rates.
(2) Enforcement. Each contractor and subcontractor shall be required to submit to the Department for review, copies of their weekly payrolls and such other documentation and reports as may be required by the Department. If the contractor engages a subcontractor, the contractor shall be obligated to obtain such required documentation and reports from the subcontractor. All books and records of the owner, contractors, subcontractors, laborers and materialmen involved in the rehabilitation shall be made available to representatives or agents of the Department and other governmental agencies having jurisdiction, for review or audit. The above parties may be required to submit to oral examination under oath. Such examination may include, but is not limited to, the performance and quality of the work, any and all matters pertaining to the loan and compliance with applicable statutes, rules and regulations.
Source: City of New York, Charter, Administrative Code and Rules (American Legal Publishing XML export, codelibrary.amlegal.com)URL: https://codelibrary.amlegal.com/codes/newyorkcity/latest/NYCrules/0-0-0-53653Fetched: 10/24/2026