March 2019

1. Understanding the Supplemental FundRECONSTRUCTION, REHABILITATION, ELEVATION AND MITIGATION (“RREM”) PROGRAM AND LOW-TO-MODERATE INCOME (“LMI”) HOMEOWNER REBUILDING PROGRAM March 2019

2. What is the Supplemental Fund? • Funding source designed to eliminate financial barriers preventing applicants from completing construction • Supplements grant award with additional reasonable and necessary funding to complete the project

3. What Will It Fund? • Only fund eligible scope work above the Program cap of $150,000 • May not exceed value of the Program-calculated unmet need • Cannot be used for any upgrades

4. Eligibility • Existing applicant in the RREM or LMI Program • Project currently in the construction phase with: • Remaining unfinished Program scope work • Grant award of $150,000 • Program-calculated unmet need • Supplemental Fund can only disburse funds to projects that can be completed

5. Program-Calculated Unmet Need • Program-calculated unmet need is based on: • Total Development Cost (“TDC”) • Duplication of Benefits (“DOB”) • Existing RREM or LMI Program grant award of $150,000 • Program-calculated unmet need is: TDC value $300,000 - DOB value $100,000 - Program grant award $150,000 = Program-calculated unmet need $ 50,000 • It is not the amount of funds that may be required to fund an applicant’s construction contract

6. Program-Calculated Unmet Need (cont.) • Applicants must have a grant award at the Program cap of $150,000 to have a Program-calculated unmet need • Applicants without a Program-calculated unmet need can request a scope adjustment to demonstrate their need for additional funds

7. Where is the Program-Calculated Unmet Need? • Program-calculated unmet need was listed on page 2 of your Exhibit 1 Award Calculation as “Unmet Need”

8. Baseline Site Inspection • Prior tothe Supplemental Fund application period, applicants will receive a Baseline Site Inspection (“BSI”) to gauge construction progress • BSI will be similar to the Initial Site Inspection (“ISI”) • ISI determined the Estimated Cost to Repair (“ECR”) • BSI will determine: • Scope work completed from the ECR; • Scope work remaining from the ECR; and • Additional eligible work not already captured in the ECR (processed as a scope adjustment) • Any scope work remaining and additional eligible work (processed as a scope adjustment) will be calculated using 2019 Xactimate pricing

9. Scope Adjustments • Defined as changes to scope intended to cover unanticipated costs that occur after development of the ECR • Common reasons for scope adjustments: • Costs identified via engineering/architectural analysis; • Township permitting/zoning requirements; and • Construction change orders • Additional eligible work not already captured in the ECR found during the BSI will be processed as a scope adjustment

10. Eligible vs. Ineligible Scope • Eligible scope is work considered reasonable and necessary to complete construction according to Program standards • Ineligible scope is work not considered reasonable and necessary to complete construction according to Program standards, examples include: • Upgraded items; • Bulkheads; and/or • Solar Panels • For a list of ineligible items, please refer to the Ineligible Costs List

11. Application • Applicants will apply for the Supplemental Fund online • Applicants requiring assistance can visit the Housing Recovery Center to complete the application • As part of the application process, applicants will be required to submit: • Copy of their executed construction contract(s), inclusive of a contractor-developed payment schedule with dates • Documented changes in DOB not previously submitted to the Programs • Proof of non-Program funding (DOB and/or “contract gap” funds) available to complete the project

12. Proof of Non-Program Funding:Duplication of Benefits (“DOB”) • Programs will assume that applicants utilized their DOB to fund their Work in Place (“WIP”) • If after deducting the value of WIP from the DOB, the Programs find that DOB funds remain, then applicants will be required to submit proof of or usage of DOB funds equaling that remaining value DOB value $50,000 - WIP value $40,000 = Non-Program funding value $10,000

13. Proof of Non-Program Funding:Contract Gap • Applicants may have executed construction contracts for total amounts greater than the Program-calculated value of eligible scope items • Such a difference is known as a “contract gap” • A contract gap is determined by subtracting the Program-calculated value of contract-listed eligible scope items from the actual contract price for the construction project

14. Proof of Non-Program Funding: Contract Gap (cont.) • Applicants with a contract gap will be required to submit proof of available personal funds equaling their contract gap prior to being approved for Supplemental Funds Contract $250,000 - TDC value $220,000 = Non-Program funding value $ 30,000

15. Conditional Approval • Applicants will receive Conditional Approval if they do not have: • Executed construction contract; or • Unable to provide proof of available funds • Construction contract must be submitted within ninety (90) days of Conditional Approval • Proof of available funds, inclusive of any funds necessary to fill the contract gap, must be submitted within ninety (90) days of Conditional Approval

16. Terms and Conditions • Applicants will be required to sign a Supplemental Fund amendment to their existing grant award and a mortgage lien • Supplemental Fund acts as a 0% interest forgivable loan after five (5) years • Applicants are required to maintain the property as their primary residence for five (5) years • Five (5) year period begins upon Program-review of Certificate of Occupancy (“CO”) and required closeout documentation • If an applicant fails to maintain the property as their primary residence for the full five (5) years, partial repayment will be required • Repayment of Supplemental Funds will be based on a prorated residency requirement with 20% of the loan forgiven per each full year of residency • Applicants must submit a CO or Program-approved equivalent no later than January 1, 2021

17. Order of Funding • All grant funds must be disbursed – including retainage that will be released as a regular construction disbursement – and non-Program funds must be spent on the project before any Supplemental Funds can be disbursed

18. Payment Process • Like the revised payment process, applicants are not limited to a specific number of payment requests • Supplemental Fund payments will be made after work is completed with submission of an unpaid invoice and all required supporting documentation • Project Managers will confirm the completed work during site inspections in accordance with the contractor-developed payment schedule or once every forty-five (45) days upon applicant request

19. Payment Process (cont.) • Applicants will be required to sign a Payment Acknowledgement form attesting that they are satisfied with the work and will pay their contractor within ten (10) days of receipt of Program funds • If applicants do not pay their contractor within the ten (10) day period, they may be withdrawn from the Programs for non-compliance and subject to return all disbursed Program funds

20. Declaration of Covenant and Mortgage Lien • Applicants are required to honor the Declaration of Covenants and Restrictions (“DOC”) which places limitations on the property • DOC is filed in the land records office in each county where the property is located • Programs will file a mortgage lien in the land records office in each county where the property is located • Mortgage lien and DOC removed after five (5) year residency requirement by the county upon direction from the Programs

21. Failure to Finish Construction • Some applicants may, ultimately, be unable to reach the point in construction in which to request disbursement of obligated Supplemental Funds • Not all applicants approved for Supplemental Funds may receive funding in the end

22. Q&A • If you have questions specific to your individual file, please contact your Housing Advisor