HomeMy WebLinkAbout11-102 R J
Resolution No. 11-102
RESOLUTION
APPROVING CHANGE ORDERS NO. 1 AND NO. 2 FOR THE
CONTRACT WITH J & B BUILDERS, INC.
FOR RENOVATION OF NEIGHBORHOOD STABILIZATION
PROGRAM (NSP) PROPERTY
(463 E. Chicago Street)
WHEREAS,the City of Elgin has heretofore entered into a contract with J&B Builders,Inc.
for renovation of Neighborhood Stabilization Program (NSP) property located at 463 E. Chicago
Street; and
WHEREAS, it is necessary and desirable to modify the terms of the contract as is described
in Change Orders No. 1 and No. 2, attached hereto.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
ELGIN, ILLINOIS,that Sean R, Stegall, City Manager, be and is hereby authorized and directed to
execute Change Orders No. 1 and No. 2,copies of which are attached hereto and made a part hereof
by reference.
s/David J. Kaptain
David J. Kaptain, Mayor
Presented: June 8, 2011
Adopted: June 8, 2011
Vote: Yeas: 6 Nays: 1
Attest:
s/Jennifer Quinton
Jennifer Quinton, Acting City Clerk
1 \,v ¢F F
L�''.1 ,'LCity of Elgin Change Order
ELGIN,ILLINOIS
PROJECT NO. 1005
CHANGE ORDER NO. 1
CONTRACT: J& B Builders, Inc. for renovation of 463 E. Chicago Street, Elgin, Illinois.
SCOPE: Per Attachment A dated 4/14/2011.
REASONS FOR CHANGE:
• The circumstances said to necessitate the change in performance were not reasonably foreseeable
at the time the contract was signed;
• The change is germane to the original contract as signed; and
• The change order is in the best interests of the City of Elgin and authorized by law.
SUMMARY OF CHANGES IN CONTRACT AMOUNT: Per Attachment A.
ORIGINAL CONTRACT AMOUNT: $228,706.53
CHANGE ORDER No. 1
See Attachment A See Attachment A
TOTAL FOR CHANGE ORDER NO. 1: $ 14,628.70
PREVIOUS CHANGE ORDER(S):
Change Order No. $None
TOTAL OF PREVIOUS CHANGE ORDERS: $ - 0 -
TOTAL REVISED CONTRACT AMOUNT: $243,335.23
The original amount of the contract with J & B Builders, Inc. is $228,706.53. Change Order No. 1 totals
$14,628.70 per Attachment A, will increase the original contract amount by a total of$14,628.70, that
sum representing 6.3% of the original contract amount. The new contract amount, inclusive of change
orders number 1 is $243,335.23.
OTHER CONTRACT PROVISIONS: All other contract provisions
CHANGE ORDER No. 1
Agreed to this 25th day of May, 2011.
Recommended by:
PURCHASING DEPARTMENT
By: RuthAnne K. Hall,
Title: Budget&Purchasing Officer
Date: 574., , / i
Signa : _ 141/ rsaK
��1
Accepted by:
J& B BUILDERS,INC.
Party of the Second Part(Contractor)
By: tjube $alyeVs
Title: 17121-etc- n
Date: 5/2� //
Signature: P (
J
Approved by:
CITY OF ELGIN
Party of the First Part(Owner)
By: Sean R. Stegall
Title: City Manager
Date: June 8, 2011
Signature:
F:\Legal Dept\forms\Change Order-NSP-463 E Chgo-No.1.doc
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J&B Builders, Inc.
2000 West Main Street,Unit H
St.Charles,IL 60174
Phone:630-587-9900 Fax:630-587-8566
Change Order
Date: 4/14/2011 Change Order#: 1 Project#: 1005
Project Address: 463 E.Chicago Street
Client: City of Elgin
General Description of Change: Misc.Changes due to site conditions after demo
Detailed Description of Change Cost
Additional framing in kitchen required due to modification of layout and existing joist size/lengths,
fir ceiling down to match LVL depth $1,313.00
Additional framing in basement required due existing framing conditions-install new LVL's and cut
out existing beam for stairway clearance $785.00
Credit for elimination of 2 piers and steel in basement -$450.00
Additional pier in basement required for framing $180.00
Four additional piers installed at front porch-no existing piers $720.00
Additional framing at front porch for existing floor framing. Price includes labor and materials. $320.00
Supply and install two headers-One in back above existing window in kitchen where new LVLs
were installed,and one at front bay $385.00
Credit for elimination of back stairway and kitchen plan revision(based on credits/adds listed
below) -$803.00
Eliminate Back Stairs:(credits)
Eliminate 20'long wall
Eliminate carpenter built stairs
Eliminate carpet on stairs
Eliminate one upper and lower cabinet with countertop
Eliminate one door with hardware(door was salvaged,but new hardware)
Eliminate one door at top of stair(new door with hardware)
Eliminate 2 switches and 2 lights
New Pantry&Kitchen Layout:(adds)
Build new 11'long wall
New double pantry doors with hardware
New shelving-55'linear feet with brackets/install
Additional tile flooring in stair area
Add one light
Install drip edge around exterior perimeter of house ` $3,600.00
Upgrade back door to include glass panel $120.00
Install drain along front of garage due to existing grade conditions to eliminate flow of water into
garage $525.00
Pour additional concrete to extend width of driveway in order to access third car bay,only included
driveway width for 2 garage bays. $700.00
Attachment A
. ,
Remove portion of foundation wall due to deterioration. Form and pour new area of foundation
wall $600.00
Supply and install two new doors on first floor-Bid drawings indicated existing double french door
was to be separated and used in two new door locations. Double door could not be reused. Three
additional doors were replaced on second floor since new doors would be installed throughout
house except at those 3 rooms. No additional charge for the doors at those 3 rooms. $387.40
Replace window on 2nd floor bedroom with new window sized to meet egress codes. Price includes $945.20
Remove deteriorated garage roof framing and reframe garage roof. Price includes all labor and
materials $5,318.40
Remove rotted garage wall framing and jamb material. Replace with new materials $422.50
Bathroom Tub Walls and Shower Walls(includes labor and materials)
Upgrade hall bathroom from linoleum to ceramic tile(laundry room to remain ceramic tile per bid
documents,upgrade all bathrooms from 12"x12"to octagonal with dot $2,212.20
Electrical Fixtures -$1,346.00
Countertops
Install cultured marble vanity tops with integral sink in 2nd floor hall bathroom and master
Credit Amount: -$1,722.00
Porches-Changes from Bid Documents and Sketch provided by Allen Pepa Architects dated
2/21/11
Provide and install 10 decorative trim pieces approximately 11 1/2"long by 6 1/2"tall similar to
sketch provided by Allen Pepa Architects dated 2/2/11 at top of columns. (see attached
picture)Porch skirt boards changed from original bid documents. 1"x4"vertical skirt boards will be
installed per the sketch by Allen Pepa Architects dated 2/2/11 -no additional cost. $416.00
Total $14,628.70
Change to contract schedule(working days): TBD
Original Contract Sum: $228,706.53
Net Change by Previous Change Orders: $0.00
Contract Sum Prior to this Change Order: $228,706.53
Increase or Decrease by this Change Order: $14,628.70
New Contract Sum: $243,335.23
Percentage of increase from original contract amount: 6.3%
Client approves the change described above and its cost. By signing this change order,
Client agrees to pay for this change on or before closing.
Client Date Contractor Date
4 / � of ejc
\'� .� City of Elgin Change Order
ELGIN,ILLINOIS
PROJECT NO. 1005
CHANGE ORDER NO.2
CONTRACT: J&B Builders, Inc. for renovation of 463 E. Chicago Street,Elgin, Illinois.
SCOPE: Per Attachment A dated 05/16/2011.
REASONS FOR CHANGE:
• The circumstances said to necessitate the change in performance were not reasonably foreseeable
at the time the contract was signed;
• The change is germane to the original contract as signed; and
• The change order is in the best interests of the City of Elgin and authorized by law.
SUMMARY OF CHANGES IN CONTRACT AMOUNT: Per Attachment A.
ORIGINAL CONTRACT AMOUNT: $228,706.53
CHANGE ORDER No. 2
See Attachment A $ 3,799.00
CHANGE ORDER NO. 2 ADDITIONAL $ 4,442.95
CONTINGENCY (to be utilized only
in the event as determined necessary
by the city)
TOTAL FOR CHANGE ORDER NO. 2: $ 8,241.95
PREVIOUS CHANGE ORDER(S):
Change Order No. 1 $14,628.70
TOTAL REVISED CONTRACT AMOUNT: $251,577.18
The original amount of the contract with J & B Builders, Inc. is $228,706.53. Change Order No. 2 and
previous Change Order No. 1 total $22,870.65, will increase the original contract amount by a total of
$22,870.65, that sum representing 10% of the original contract amount. The new contract amount, inclu-
sive of all change orders is $251,577.183.
OTHER CONTRACT PROVISIONS: All other contract provisions remain the same.
l I
CHANGE ORDER No.2
Agreed to this 25th day of May,2011.
Recommended by:
PURCHASING DEPARTMENT
By: RuthAnne K. Hall,
Title: Budget&Purchasing Officer
Date: rj'(26,/ {�
Signature:+ • ) ru_q(8-za
i
Accepted by:
J& B BUILDERS,INC.
Party of the Second Part(Contractor)
By: !lulls & fyci>
Title: P €Sldcar
Date:
Signature: lau— trOf, -
Approved by:
CITY OF ELGIN
Party of the First Part(Owner)
By: Sean R. Stegall
Title: City Manager
Date: June 8, 2011
Signature:
F:\Legal Dept\forms\Change Order-NSP-463 E Chgo-No.2.doc
J&B Builders, Inc.
2000 West Main Street,Unit H
St.Charles, IL 60174
Phone:630-587-9900 Fax:630-587-8566
Change Order
Date: 5/16/2011 Change Order#: 2 Project#: 1005
Project Address: 463 E.Chicago Street
Client: City of Elgin
General Description of Change: Flooring&Garage Siding
Detailed Description of Change Cost
Option#5:Remove and replace wood flooring with stain on site wood in living room,entry hall,
family room and office entry hall(all non tiled areas on 1st floor except for office. Bid documents
included carpet in office). Install carpet over existing flooring materials at second floor hallway
(from stairs to master bedroom suite entry door).
Tear out existing wood flooring. Install 2 1/4"x 3/4"select and better red oak,sand,stain and
finish flooring with two coats Bona Novia poly floor finish. Install carpet and padding at second
floor hallway over existing flooring materials. Credit provided for refinishing of existing wood
floors per bid documents. $3,627.00
Replace missing and remove/replace rotted siding on garage. Siding supplied by the City of Elgin.
$172.00
Total $3,799.00
Change to contract schedule(working days): TBD
Original Contract Sum: $228,706.53
Net Change by Previous Change Orders: _ $14,628.70
Contract Sum Prior to this Change Order: $243,335.23
Increase or Decrease by this Change Order: $3,799.00
New Contract Sum: $247,134.23
Client approves the change described above and its cost. By signing this change order,
Client agrees to pay for this change on or before closing.
Client Date Contractor Date
Attachment A
ELGIN
THE CITY IN THE SUBURBS"
AGENDA ITEM: G
MEETING DATE: May 25, 2011
ITEM:
Change Order for the Neighborhood Stabilization Program (NSP) Properties at 463 and 457-59
E. Chicago Street
($47,824)
OBJECTIVE:
Provide additional funding to complete the renovation of the NSP properties at 463 and 457-59
E. Chicago Street.
RECOMMENDATION:
Approve change orders to complete the renovation of the properties in the amount of$47,824.
BACKGROUND
The city was granted $2,159,623 in Neighborhood Stabilization Program (NSP) funds from the
U. S. Department of Housing and Urban Development (HUD) through the Housing and Econom-
ic Recovery Act of 2008. NSP funding was eligible for five types of activity:
• Establishment of financing mechanisms, such as down-payment assistance, for the pur-
chase and redevelopment of foreclosed residential properties.
• Acquisition and rehabilitation of abandoned and foreclosed residential properties with
the aim of restoring them to residential use.
• Creation of land banks for homes that have been foreclosed on.
• Demolition of blighted structures.
• Redevelopment of demolished or vacant properties.
At the direction of the city council, the staff utilized the funding for the acquisition and rehabili-
tation of abandoned and foreclosed residential properties with the aim of restoring them to
residential use. It should be noted that the city is not alone in this focus. A study prepared by
Harriet Newburger of the Federal Reserve Bank of Philadelphia showed that of the 90 direct
and indirect NSP grantees they surveyed, more than 90 percent included a component for ac-
quisition and rehabilitation. In addition, the NSP requires that the use of all funds must be uti-
lized for individuals and families whose income does not exceed 120 percent of the area me-
dian income and not less than 25 percent of funds are to be used for the purchase and redeye-
lopment of abandoned or foreclosed upon homes or residential properties that will be used to
house individuals or families whose incomes do not exceed 50 percent of the area median in-
come. Lastly, the NSP requirements state that communities should give priority to those neigh-
borhoods with the greatest percentage of foreclosures, with the highest percentage of homes.
In Elgin, the geographic area selected consists of census tracts that the city and HUD identified
as "areas of greatest need." These are areas where there is a high incidence of foreclosures,
areas that experienced a high rate of sub-prime mortgages or areas expected to experience a
rise in foreclosure rates. To date, the city has purchased eleven foreclosed homes. Four have
been awarded to Habitat for Humanity of the Northern Fox Valley, one has been demolished,
four have been bid out for rehabilitation, and two homes are pending renovation. Below is a
table identifying the properties.
25%Low Income Set-aside Purchase Rehab Cost Reappraised
w/HFH Neighborhood Price* Price
1 355 Moseley SWAN $64,900 $66,826 TBD
2 485 E.Chicago Street GPA $81,180 $72,327 TBD
3 108 - 110 S. Channing Street GPA $84,900 $77,490 TBD
4 511 Washburn SWAN $62,000 $41,660 TBD
$292,980 $258,303
City of Elgin Rehabilitations
_5 318 South Street NWNA $83,900 $197,045.53 $202,500
6 162 Summit NENA $64,900 $178,925.00 $125,000
7 463 E. Chicago Street GPA $68,250 $228,706.53 $210,000
8 315 Jewett SWAN $95,000 TBD TBD
9 457 E. Chicago Street GPA $79,900 $249,533.29 $215,000
10 212 Franklin Street NENA $78,400 TBD TBD
$470,350 $854,210.35 $752,500
City of Elgin Demolitions
11 209 Franklin (Demolition) NENA $49,900 $16,499
OPERATIONAL ANALYSIS
Two of the properties currently being renovated by the city, 463 and 457-59 E. Chicago Street,
will require change orders to the original bid amount to complete the work. The contractor who
was awarded the bid for both the properties is J&B Builders, Inc. (J&B). Founded in 1994, J&B is
a family-owned company and has been awarded NSP renovations in both Elgin and Aurora.
They have shown a true commitment and understanding of the tenets of the NSP program of
providing a stimulus to the local community. In their work in Elgin, over 95 percent of their con-
tract has gone to local providers in the Fox Valley and they have engaged local tradesman pro-
viding over 60 jobs in Elgin for the homes that they are renovating.
The original bid for the renovation at 463 E. Chicago Street was $228,706.53. Staff is requesting
ra change order for the property in the amount of $22,870.65. This represents a ten percent in-
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crease in the contract cost. The project is 80 percent complete and it is anticipated that staff
and the contractor have identified all of the change orders necessary. However, as is the case
with any complete renovation of a historic home, staff believes it is prudent to provide addi-
tional funding to complete the project within the next 30 days. Any funds not expended at the
close of the project will be returned to the NSP Fund to be used toward the next home renova-
tion.
To date, staff has identified additional costs in the amount of $18,427.70. These costs are pri-
marily associated with reframing of the garage roof, replacement of missing architectural ele-
ments on the exterior, modifications to the original bid documents to address building code re-
quirements and installation of new hardwood flooring in the first floor. In respect to the re-
framing of the garage roof, the original bid documents did not identify a cost for the secondary
structure on the property due to an error by the original architect hired to complete the plans.
Upon examination of the structure, the roof was found to be structurally unsound based on its
original construction. J&B worked with the city building department to identify the most cost
effective means of addressing the issue.
In addition, as part of the initial interior and exterior demolition, several structural deficiencies
were uncovered that were otherwise concealed by walls, flooring and exterior additions. For
example, a section of the chimney chase and structural supports for the second floor were dis-
covered missing in the initial stage of the interior demolition of a rear staircase and a hole in
the foundation was uncovered when the rear porch addition was removed.
In regards to the flooring, bid specifications had identified the original hardwood flooring con-
cealed beneath the carpet as capable of being refinished. Upon exposing the original hardwood
flooring, post interior framing and finishing, the existing flooring is deemed not salvageable and
the recommendation has been made to replace the flooring. As the initial scope of work origi-
nally included hardwood floors on the first floor and carpeting on the second floor, staff has
included that in the change order in the amount of $3,627. The cost associated takes into ac-
count the labor cost associated with the removal of the existing hardwood flooring. However,
the scope could be reduced to provide for carpeting throughout the first floor at a cost of$341.
Lastly, as the property is located in a local historic district, the exterior renovation is required to
conform to the Elgin Design Guideline Manual. Therefore, any missing architectural features
that are uncovered (e.g., a drip edge) must be replaced. It should be noted that included in the
change order are credits to the original contract in the amount of$14,628.70. These credits are
associated with changes made on site with staff and J&B to help identify cost savings and con-
trol the overall cost of the project.
The original bid for the renovation at 457-59 E. Chicago Street was $249,533.29. Staff is re-
questing a change order for the property in the amount of $24,953.30. This represents a ten
percent increase in the contract cost. The project is 80 percent complete and it is anticipated
that staff and the contractor have identified all of the change orders necessary. However, as is
the case with any complete renovation of a historic'home staff feels that it is prudent to pro-
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vide additional funding if necessary to complete the project within the next 30 days. Any funds
not expended at the close of the project will be returned to the NSP Fund to be used toward
the next home renovation.
To date, staff has identified additional costs in the amount of $18,916.53. These costs are pri-
marily associated with structural reframing of the second floor; tuck pointing and parging of the
interior basement foundation wall; replacement of missing architectural elements on the exte-
rior; modifications to the original bid documents to address building code requirements; and,
installation of new hardwood flooring in the first floor. With respect to the structural reframing
of the second floor, after the interior demolition was completed, it was discovered that the
southeast corner of the second floor was structurally compromised. Floor joists were not run-
ning perpendicular and tying into the structure of the home, rather, they were running parallel
to the structure, which resulted in the southeast corner being cantilevered over the rear of the
home without proper support. In the basement, clear identification of the level of deterioration
of the east foundation wall was not provided on the bid documents as access to the area was
limited and has been made more accessible in the reframing of the basement.
Bid specifications also identified the original hardwood flooring concealed beneath the carpet
and laminate flooring for refinishing. Upon exposing the original hardwood flooring, post inte-
rior framing and finishing, over 75 percent of the flooring was missing and only subflooring re-
mained. As the initial scope of work originally included hardwood floors on the first floor and
carpeting on the second floor, staff has included that in the change order in the amount of
$1,471. As there is minimal existing hardwood flooring to remove, the increased cost is reduced
in comparison to the property at 463 E. Chicago Street. However, the scope could be reduced
to provide for carpeting throughout the first floor at a cost of$478.
Lastly, as the property is located in a local historic district, the exterior renovation is required to
conform to the Elgin Design Guideline Manual. Therefore, any missing architectural features
that are uncovered (e.g., the drip edge, window sills, gable vent) should be replaced. It should
be noted that included in the change order are credits to the original contract in the amount of
$9,550.53. These credits are associated with changes made on site with staff and J&B to help
identify cost savings and control the overall cost of the project.
In addressing these change orders and the overall renovation of the NSP properties, staff has
provided ongoing construction management for the program. It should be noted that all of the
contractors involved in the renovation of the NSP properties, including J&B, have proven to be
exceptional partners in renovating these historic homes. Given the task of de-converting these
historic homes and completing gut rehabs, it was inevitable that adjustments would need to be
made to bid specifications. Time and time again, the contractors worked with the city to ad-
dress the concerns with the most cost effective and quality solutions.
4
In communicating with other neighboring communities that have been awarded NSP funding
(Aurora, Kane County, Cicero, and Joliet), staff has found that one of the best practices that has
been identified was providing for a construction contingency ranging from 10 to 15 percent of
the total cost of the contract. Staff chose not to award a contingency amount with the contract
and, as a result, has worked with the contractors to provide onsite construction management
and identify cost savings. As is indicated in the change orders submitted by J&B, the total net
credit for the change orders submitted is $24,179.23.
INTERESTED PERSONS CONTACTED
None.
FINANCIAL ANALYSIS
HUD guidelines mandate that grantees of NSP funds obligate and expend the proceeds within
specific timeframes. Grantees are required to obligate all NSP funds within eighteen months of
receipt. The city satisfied this requirement in September 2010. Additionally, the city is required
to disburse 100 percent of the amount that is equal to or greater than the initial allocation of
NSP funds by March 2013. The original $2,159,623 granted to the city has been allocated to the
following program areas:
Amount
Program Area Allocated %of Overall Funding
Moderate middle income pur- $1,357,426 63%
chase, rehab and resell
Low income purchase, rehab and 549,026 25%
resell
Homebuyer counseling program 37,548 2%
NSP Administration 215, 623 10%
$2,159,623 100%
HUD guidelines also require that at least 25 percent of the NSP funds be allocated to low or ex-
tremely low income families. The city has met this stipulation through its partnership with Habi-
tat for Humanity of the Northern Fox Valley. The remaining 75 percent could be and was allo-
cated to the acquisition and rehabilitation of abandoned and foreclosed residential properties
with the goal of restoring them to residential use. Of this remaining 75 percent, a maximum of
10 percent could be and was allocated to NSP administration costs. To date, the city has re-
ceived reimbursement of $78,752 for NSP administration related costs. Staff recommends that
a portion of the outstanding NSP administration allocation be temporarily reallocated to the
moderate middle income purchase, rehab and resell program area to provide the financing ne-
cessary to fund the requested change orders totaling$47,823.95. The proceeds from the sale of
the four NSP properties currently under rehab by the city will be used to reimburse the admin-
istration program allocation and fund the rehabilitation of the remaining two homes.
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•
BUDGET IMPACT
rin
FUND(S) ACCOUNT(S) PROJECT AMOUNT AMOUNT
#(S) BUDGETED AVAILABLE
CDBG 230-0000-791.78-02 155200 $2,080,154 $47,824
LEGAL IMPACT
None.
ALTERNATIVES
Modify the change of scope for the flooring alternatives for the subject properties to remove
the specification of hardwood flooring and install carpeting instead. Installing carpeting rather
than hardwood flooring at 457-59 E. Chicago Street will save $993 and $3286 for the property
at 463 E. Chicago Street. The total savings is $4279.
NEXT STEPS
1. Complete the renovations at 463 and 457-59 E. Chicago Street.
r 2. Market the homes through a licensed realtor identified through the city's request for
proposal for real estate services for NSP.
3. Sell the homes.
4. Complete the NSP program by March 2014.
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Originators: RuthAnne K. Hall, Budget & Purchasing Officer
Jennifer Fritz-William, Historic Preservation Planner
Final Review: Colleen Lavery, Chief Financial Officer
William A. Cogley, Corporation Counsel/Chief Development Officer
Richard G. Kozal, Assistant City Manager/Chief Operating Officer
Approved:
Sean R. Stegall, City Manager
ATTACHMENTS
A. Acquiring Privately Held REO Properties with Public Funds: The Case of the Neighborhood
Stabilization Program by Harriet Newburger, Federal Reserve Bank of Philadelphia
B. Change Order for 463 E. Chicago Street
C. Change Order for 457-59 E. Chicago Street
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Acquiring Privately Held REO Properties with Public Funds:
The Case of the Neighborhood Stabilization Program
by Harriet Newburger'
Federal Reserve Bank of Philadelphia
The Neighborhood Stabilization Program • Acquisition and rehabilitation of abandoned
(NSP) was authorized by the Housing and or foreclosed residential properties with the
Economic Recovery Act of 2008 for the stated aim of restoring them to residential use
purpose of assisting states and local govern- • Creation of land banks for homes that have
ments redevelop abandoned and foreclosed been foreclosed on
homes and residential properties.Its establish- • Demolition of blighted structures
ment was an acknowledgment that the negative • Redevelopment of demolished or vacant
effects of the foreclosure crisis are not limited properties.
to households that lose their homes and the
banks and investors that own these mortgages, Effective implementation of several of the items
but also spill over to the jurisdictions and
neighborhoods where foreclosed properties on this list requires that jurisdictions, or the
entities and individuals with whom they part-
are located.The U.S. Department of Housing nered,8 have access to REO properties.Further,
and Urban Development (HUD)was assigned since REO properties have commonly changed
responsibility for the program,which was ini- hands through private-market transactions,it is
tially funded at $3.9 billion.' HUD allocated important that jurisdictions and their partners
program monies directly to states and to cer- understand and be able to carry out the steps
tain Community Development Block Grant involved in these transactions.
entitlement communities,' based on the mag-
nitude of the foreclosure problems faced,using This article focuses on the challenges faced
a formula that incorporated several indicators by NSP grantees in purchasing privately-held
of such problems.4 States, in turn, developed REO properties within program parameters
systems to distribute their allocations among that require, for example, that grantees acquire
their jurisdictions,' thereby creating a group of properties at a discount from market value.
indirect grantees.'Within grantee jurisdictions, We use quantitative and qualitative survey
funds were to be targeted to areas with the data collected from program administrators of
worst problems. All grantees, whether funded more than 90 direct and indirect NSP grant-
directly or indirectly,were required to obligate ees;9 these data were gathered as part of a
all funds within 18 months of the date that project on the planning and early implementa-
HUD released these monies.' tion of NSP undertaken by researchers in the
Federal Reserve System's Community Affairs
NSP funding could be used for five types offices. REO acquisition is explored primarily
of activities: in the context of acquisition and rehabilitation
• Establishment of financing mechanisms, (A&R), the NSP-eligible activity most fre-
r such as down-payment assistance, for the quently included in these grantees'NSP plans.
purchase and redevelopment of foreclosed
residential properties
Federal Reserve Banks of Boston and Cleveland and the Federal Reserve Board 101
The Context: Grantee Acquisition Competition from the private sector. The
and Rehabilitation Activities10 required discounts were soon dropped to 1 per-
More than 90 percent of the surveyed pro- cent for individual purchases and no aggregate
gram administrators indicated that their NSP discount requirement." However,the compara-
program included an A&R component. Many tively high discount in HUD's initial regulations
reported this activity was the most necessary in suggests the belief at that time that acquisition of
dealing with the impact of the foreclosure cri- REO properties would be relatively easy:If,for
sis.More specifically,some indicated that A&R example,there was little private-sector demand
was best suited to deal with the single-family for these properties,then one might expect that
properties and blighted stock that comprised the institutions that held them would be Will-
a large share of their communities'foreclosure ing to sell the properties at a discount. This
inventory, while other respondents viewed may have been the case when NSP legislation
A&R as a means to restore older housing was written.What NSP grantees found as they
stock or to increase the community's supply of began to implement their programs, however,
affordable housing. was often quite different.Instead of undertaking
activities that the private sector had opted out
Although about three-quarters of grantees had of—as often happened with publicly sponsored
at least some past experience with A&R activi- redevelopment and rehabilitation efforts—many
ties, about half of grantees indicated that their grantees found themselves in competition with
NSP acquisition and rehabilitation activities private-sector investors, a phenomenon that
constituted a new program.Almost a third more was widespread across different types of hous-
indicated that at least some of their A&R activi- ing markets with different underlying sources
ties were new." Yet, despite the role of A&R of foreclosure problems.Moreover,NSP grant-
activities in almost all respondents' programs, ees often found themselves at a disadvantage in
along with the stringent timeframe of the the competition.
Neighborhood Stabilization Program, five to
seven months into their A&R activities, only Locating REO stock. At the most basic level,
53 percent of grantees had purchased at least many grantees cited problems in identifying
one property for rehabilitation. This suggests REO properties.In part,this may have reflected
the possibility that many respondents encoun- a lack of experience with REO acquisition, or
tered difficulties in their attempts to complete start-up problems with new forms of acquisition
REO transactions. programs,as statistics presented in the previous
section suggest.Even grantees with considerable
Challenges to Acquiring REO acquisition experience may have been inexperi-
Properties from the Private Sector enced in acquiring REO properties,and lacked
Success in implementing A&R activities under channels of communication with the entities that
held them.Adding to the difficulty in identify
NSP required success in accessing REO prop
ing a potential pool of properties,any individual
erties. NSP grantees and their partners had to
be able to identify REO properties and to nego lender might have relatively few REO holdings
tiate purchase prices below properties' market in a particular community.However,many NSP
values," as required by the legislative language grantees felt that their difficulties went beyond
for NSP.Congress left it to HUD to specify the such logistical problems; rather, they sensed
size of the price discount,which HUD initially REO holders' reluctance to work with them.
set at 5 percent for individual purchases,with a Grantees cited a need for greater transparency
required 15-percent aggregate discount for the concerning who held the properties.They also
believed that these holders should release more
entire portfolio purchase.
properties for purchase. One grantee reported
that asset managers at national-level banks were
often uncooperative; another cited a similar
problem with local banks.
102 REO and Vacant Properties:Strategies for Neighborhood Stabilization
•
a
I
Making the deal: Hurdles posed by federal reluctant to sell at below-market prices. One
requirements. Reluctance on the part of REO grantee noted that banks were reluctant to sell
holders to work with NSP grantees and their even at market value if that was less than the
partners probably did not arise simply because outstanding loan amount. Another grantee
private investors provided an alternative pur- suggested that the discount itself was not the
chaser for their properties, but also because problem,since REO purchasers tend to buy at
REO holders often preferred the terms on a discount; rather, the heavy-handedness with
which they dealt with these private investors. which the discount requirement was imposed
Unlike NSP grantees, private investors often in NSP was the problem. Some program
paid in cash.Furthermore,NSP grantees were administrators noted that REO holders'lack of
subject to a wide range of federal require- knowledge and understanding of NSP regula-
ments that made them slower than their private tions added to grantees'difficulties in acquiring
competitors in responding to opportunities, such properties. The task of educating REO
narrowed the range of properties that they holders, one pointed out, might have been
could consider, and limited the amount that assigned to HUD,but instead had fallen to the
they could pay.14 In some cases, these require- grantees themselves.
ments also caused extra work for the entity
holding the REO property. Other obstacles.The competitive disadvantage
caused by federal NSP requirements was exac-
Among the federal regulations,one stipulating erbated by local requirements and practices.
that a property receive an environmental review For example, one grantee noted that a con-
before a grantee or one of its partners could servative approach to property acquisition by
purchase it was cited particularly frequently his community's legal department had slowed
by program administrators as a deterrent to the implementation process. In another corn-
property acquisition. A number of grantees munity, stringent local standards for publicly
complained that, because holders of REO financed rehabilitation put the grantee at a
property would not allow for contingencies in potential disadvantage to a private investor,who
purchase contracts, a potential purchase might did not have to incur the costs associated with
be lost to an investor during the time it took those standards and might therefore be willing
to complete the review. Two other require- to pay more for the property.Indirect grantees,
ments—one concerning protection of tenants because they received funds from their states,
living in a property at the time it was foreclosed might face additional requirements, developed
on,and another requiring that for a property to by the state NSP program, that could further
be classified as "abandoned"it must have been delay the property acquisition process.
vacant for at least 90 days (among other con-
ditions)—required certification and paperwork In addition to the challenges facing grantees
from the property holder in order to qualify for in navigating private REO channels,problems
purchase with NSP funds. Property holders sometimes arose when grantees tried to acquire
often did not know whether these requirements foreclosed properties held by the Federal
had been met and, in the case of the 90-day Housing Administration (FHA). In part, this
vacancy requirement, a number of grantees occurred at least initially because of differences
noted that the property holders were slow to in the way particular requirements—such as
return paperwork. environmental review—were implemented. In
addition, FHA regulations might affect how
The requirement that properties be bought at an NSP grantee looking to purchase FHA
a 1-percent discount from market value,while properties could design its program.Two NSP
much less onerous than the 15-percent aggre- grantees complained that FHA field staff had
gate discount initially included in program not made it easy to learn about the agency's
regulations, was still problematic for a num- REO assets. 4111)
ber of grantees, who noted that banks were
Federal Reserve Banks of Boston and Cleveland and the Federal Reserve Board 103
•
tems
Responding to the Challenges community hired realtors to identify any poten-
In response to the widespread difficulties tially eligible property within its jurisdiction
NSP grantees encountered in their attempts below a specific,relatively high,price.In effect,
to acquire REO property, HUD and, in some marketplace realities—particularly in the con-
cases,other entities such as state and local gov- text of a short program timeline—meant that
ernments, made changes to the framework in in a number of cases,NSP grantees needed to
which NSP operated,while NSP grantees made revise their goals.
adjustments to their programs. For example,in
addition to decreasing the size of the required Implications for Policymakers
discount in purchase price soon after the pro- As a number of grantees noted, start-up prob-
gram got underway, HUD also broadened the lems are a feature of any new program. In
definitions of"foreclosed"and"abandoned"used the case of the Neighborhood Stabilization
in determining whether a property was suitable Program, these typical start-up issues were
for purchase with NSP funds.15 At the local level, exacerbated by the program's short timeline,by
certain regulations were adjusted for purposes of its designation by HUD's Inspector General as
implementing NSP in some jurisdictions. a high-risk program, and by frequent changes
to HUD regulations. Certainly, balancing the
Grantees also identified steps that hold- need for quick action (as was the case in sta-
ers of REO properties might take to increase bilizing neighborhoods affected by foreclosure)
grantees' ability to purchase suitable proper- with sufficient time for communities to move
ties, including arrangements for "first looks" along a learning curve for a new,complex,and
at properties, multiple-lender registries, and risky undertaking is a topic that deserves con-
allowing for contingencies in contracts. The sideration independent of the specifics of any
National Community Stabilization Trust was particular program. However, many of the
established specifically to implement a num- issues that have arisen in the implementation
ber of these steps; as that organization got of NSP are specifically related to program sub-
off the ground, some NSP administrators stance.Two such issues arise from the role that
reported that it had become an effective chan- acquisition of REO properties from the private
nel for indentifying REO properties. (See also sector played in program implementation;both
in this publication "Acquiring Property for have implications for policymakers.
Neighborhood Stabilization: Lessons Learned
from the Front Lines,"by Craig Nickerson.) First,we discuss the need for greater awareness
of private market conditions and concerns in
Meanwhile, many grantees, faced with the designing a program where the public—private
18-month deadline for obligating NSP funds interface is critical. It is important to remem-
and uncertain about the likelihood or timing of ber that NSP is a statutorily mandated federal
changes to program regulations or the easing of program and, as with many such programs,
other problems,took a number of steps they felt legislative language and requirements do not
were critical if they were to meet their goals. always reflect the practicalities of program
They paid more—often considerably more— implementation. While the agencies charged
for properties than they had planned.They also with developing regulations to make programs
bought properties that had greater rehab costs operational may attempt to better account for
than anticipated,because of investors'tendency real-world considerations, as HUD did when
to get the REO properties in better physical it required that NSP funds be obligated rather
condition.These higher costs obviously reduced than spent within an 18-month period,an agen-
the number of properties overall that could cy's ability to do so is ultimately constrained
be restored with NSP funding. In some cases, by legislation. HUD was further constrained
grantees decreased (and, in at least one case, by the very short period it was allowed to get
abandoned) their targeting in order to increase the program underway.16 Many of the steps
the size of their potential purchase pool. One suggested below as means for building greater
104 REO and Vacant Properties:Strategies for Neighborhood Stabilization
I
awareness of private-market conditions may rehabilitation,but where investment is justified
not have been feasible,given the period allotted by social,if not private,benefits.Public and pri-
for the program. vate investment would complement each other
in this circumstance. In a third scenario, pub-
Based on our survey of program administra- lic and private investors might purchase very
tors,federal policymakers and program officials similar properties. This raises the interesting
might have taken some additional steps in question of whether similar public and pri-
designing and implementing the program to vate purchases can lead to different long-term
help overcome private REO holders' reluc- outcomes for properties and neighborhoods,
tante to participate. For example, background taking into account differences in the scale
research on the REO market,including how it of rehabilitation; the buyer/renter status of
works and how it changes over time,would have post-rehabilitation occupants; and the condi-
been useful." Consultation with REO holders tions—such as pre-purchase counseling—that
of different types (lenders and servicers with some homebuyers must meet.
a national market, local banks, GSEs) while
developing the regulations could have eased The particular scenarios that occur are very
program implementation, to the extent that likely to depend on the underlying nature of
such consultation is allowable.18 A number of the housing market; one might expect the first
grantees suggested it would have been useful if example to occur in older communities with
HUD had provided education about the NSP declining population, while the second would
program to REO holders.In addition,technical be more likely in communities where popu-
assistance to NSP jurisdictions on operating in lation growth would be expected to push up
this part of the private housing market might housing prices within a relatively short period
have lessened some of their start-up problems. of time. By better understanding when the
Finally, while many of these suggested steps actions of private-market investors are likely to
focus on ways to facilitate interactions between promote neighborhood stabilization and when
NSP grantees and the private sector, better these actions are likely to undermine it, poli-
coordination with other federal programs, cymakers will be better able to target limited
particularly FHA,is also needed. public funds in the future.
At a broader level, policymakers may want to Harriet Newburger is a research advisor in the
consider the roles played by public and private Community Affairs Department of the Federal
investors in markets where both are active. In Reserve Bank of Philadelphia,focusing on research
particular,one would like to know whether the and outreach responses to the foreclosure crisis. She
role of the private investor supports or conflicts formerly taught in the economics department at
with the neighborhood stabilization process. Bryn Mawr College, after serving as a research
For example, investors might buy cheap prop- economist in HUD's Office of Policy Development
erties, make very superficial repairs, rent the and Research. Dr. Newburger has also been a
properties out for a few years, and then walk Senate fellow on the Joint Economic Committee,
away when they were no longer profitable.Such where she worked on housing issues. Her research
activity is clearly very different from that envi- has focused recently on FHA and the Neighborhood
sioned for NSP. On the other hand, investors Stabilization Program and,earlier,on low-income
might buy the "best"foreclosed properties, do homeownership, including housing search, spatial
limited rehabilitation as needed,and then rent mobility, the incidence of foreclosure and sheriff's
them out and maintain them until the hous- sales,and discrimination in the housing market.She
ing market rebounds and the properties can be received a PhD in economics from the University of
sold for a profit.In this scenario,NSP grantees, Wisconsin Madison.
by plan—or by necessity if private investors are
more adept at getting the best properties 4411111)
—
might purchase properties that need more
Federal Reserve Banks of Boston and Cleveland and the Federal Reserve Board 105
•
Endnotes 11Grantees often had more than one A&R component in
1 This article has its origins in a research project on the their NSP programs.
Neighborhood Stabilization Program jointly undertaken 12In this article we do not consider the process by which
by researchers across the Federal Reserve System's Corn- "market value"is set,although we note that determining
munity Affairs departments.The author would like to this in the context of a"post-bubble"housing market may
acknowledge the contributions of Fed colleagues who, be problematic.
through their extensive fieldwork for the project and as
authors of a report on the project as a whole,have sup- 13The regulation implementing this change was published
ported the writing of this article.Dan Gorin and Karen in the Federal Register in mid-June 2009, about three
Leone de Nie deserve particular recognition. months after HUD signed agreements with direct grant-
ees. Difficulty in acquiring property at the higher dis-
t A second round of funding,$2 billion,was included in count rate was one of several factors cited for the change;
the American Recovery and Reinvestment Act of 2009. another was the potential negative impact on neighbor-
The successive rounds of funding are commonly known hood house prices if NSP properties were purchased at
as NSP 1 and NSP 2. Although both programs oper- prices below market value.
ate under the umbrella of the Community Development la
Some of these requirements were associated with NSP
Block Grant Program, some program requirements, as
In this in particular,some with federal housing and community
well as the method for allocating funds, differ.
development programs more broadly and,in at least one
chapter, we confine discussion to the NSP 1 program,
which we refer to simply as NSP. case,protection of tenants living in properties that were
foreclosed on,the requirement applied to anyone under-
3 The Community Development Block Grant Program taking the relevant housing market activities.In addition
provides annual funds for community development ac- to requirements affecting the ease with which REO prop-
tivities to larger cities and urban counties on an entitle- erties could be acquired,grantees identified a number of
ment basis. other problematic requirements associated with the pro-
In developing the formula, HUD incorporated—but gram. Several grantees also noted that HUD's frequent
did not limit itself to—criteria specified in the program's changes to the regulations added to the difficulty of im-
enabling legislation. plementing NSP.Finally,because HUD's Inspector Gen-
eral had designated NSP as a high-risk program,and thus
5 Some states awarded funds to nongovernment entities as one that would receive particular scrutiny, a number of
well as to local governments. grantees felt particular pressure to ensure that they were
6 A direct grantee is also allowed to receive indirect fund in compliance with all regulations,a factor that may have
fund-
ing,depending on the way a state sets up its allocation affected the speed of implementation in some cases.
system.As NSP was implemented by HUD,only entitle- 15HUD also issued frequent clarifications of regulations.
ment communities whose formula allocation would be at For example,it clarified the situations in which grantees
least $2 million received direct grants; not surprisingly, could enter into conditional contracts for purchase of a
states like Florida, where the crisis has been most property prior to completion of an environmental review.
sever
rect
er
tes,
ing
some
ewithhave
large many
utmberssrof entitlementacommunitie 16HUD's frequent changes and clarifications to its initial
have very few. States received a minimum allocation of NSP regulations likely reflect the short period given to
$20 million.Once designated,direct grantees(states and the agency in NSP's enabling legislation to get the pro-
some Community Development Block Grant Program– gram underway.
entitlement communities) had to submit an application 17Of course, the REO market, and the private housing
describing their NSP programs to HUD and gain market more generally,have been changing rapidly since
approval for them before actually receiving funding,while the legislation mandating NSP was put into place;it is
candidates for indirect funding submitted applications to unlikely that all of the changes could have been antici-
their states. pated or that it would be possible to respond to all them
7 Based on the release date, funds must be obligated by in a manner that did not itself cause some disruption in
September 2010.Under the terms of HERA, all funds program implementation.But a better understanding of
were to he used within 18 months,hut HUD regulations the REO market by both HUD and its grantees,along
softened this provision to an 18-month obligation re- with better tracking of market changes,might nonethe-
quirement. less have smoothed the implementation process.
s The term"partner"is used broadly here.It includes not 15We note that such consultation would likely have been
only nonprofit and for-profit organizations, but also useful not only on acquisition provisions,but also on pro-
homebuyers who,under the terms of a number of NSP visions related to homebuyer aids,such as down-payment
plans developed by funded jurisdictions, identify fore- assistance or assistance with rehabilitation.For example,
closed properties for purchase and come to the jurisdic- banks that tightened lending standards in response to the
tion for purchase or rehabilitation assistance. crisis may be leery of providing mortgages to buyers when
a large part of the down payment does not come from
9 The sample was not chosen to be statistically representa- the buyers'own resources or when the house for which
tive of all NSP grantees. However, the communities in the mortgage is provided needs considerable repair work.
the sample show considerable variation along the dimen-
sions of region,size,and jurisdiction type.
1°A copy of the data collection protocol is available from
the author.A full report on the research project and its
findings will be available in a report scheduled for com-
pletion later this year.
106 REO and Vacant Properties:Strategies for Neighborhood Stabilization
J&B Builders, Inc.
2000 West Main Street,Unit H
St.Charles,IL 60174
Phone:630-587-9900 Fax:630-587-8566
Change Order
Date: 4/14/2011 Change Order#: 1 Project#: 1005
Project Address: 463 E.Chicago Street
Client: City of Elgin
General Description of Change: Misc.Changes due to site conditions after demo
Detailed Description of Change Cost
Additional framing in kitchen required due to modification of layout and existing joist size/lengths,
fir ceiling down to match LVL depth $1,313.00
Additional framing in basement required due existing framing conditions-install new LVL's and cut
out existing beam for stairway clearance $785.00
Credit for elimination of 2 piers and steel in basement -$450.00
41111)
Additional pier in basement required for framing $180.00
Four additional piers installed at front porch-no existing piers $720.00
Additional framing at front porch for existing floor framing. Price includes labor and materials. $320.00
Supply and install two headers-One in back above existing window in kitchen where new LVLs
were installed,and one at front bay $385.00
Credit for elimination of back stairway and kitchen plan revision(based on credits/adds listed
below) -$803.00
Eliminate Back Stairs: (credits)
Eliminate 20'long wall
Eliminate carpenter built stairs
Eliminate carpet on stairs
Eliminate one upper and lower cabinet with countertop
Eliminate one door with hardware(door was salvaged,but new hardware)
Eliminate one door at top of stair(new door with hardware)
Eliminate 2 switches and 2 lights
New Pantry& Kitchen Layout: (adds)
Build new 11'long wall
New double pantry doors with hardware
New shelving-55'linear feet with brackets/install
Additional tile flooring in stair area
Add one light
Install drip edge around exterior perimeter of house $3,600.00
Upgrade back door to include glass panel $120.00
Install drain along front of garage due to existing grade conditions to eliminate flow of water into 4111)
garage $525.00
Pour additional concrete to extend width of driveway in order to access third car bay,only included
driveway width for 2 garage bays. $700.00
a •
Remove portion of foundation wall due to deterioration. Form and pour new area of foundation
wall $600.00
Supply and install two new doors on first floor-Bid drawings indicated existing double french door
was to be separated and used in two new door locations. Double door could not be reused. Three
additional doors were replaced on second floor since new doors would be installed throughout
house except at those 3 rooms. No additional charge for the doors at those 3 rooms. $387.40
Replace window on 2nd floor bedroom with new window sized to meet egress codes. Price includes $945.20
Remove deteriorated garage roof framing and reframe garage roof. Price includes all labor and
materials $5,318.40
Remove rotted garage wall framing and jamb material. Replace with new materials $422.50
Bathroom Tub Walls and Shower Walls(includes labor and materials)
Upgrade hall bathroom from linoleum to ceramic tile(laundry room to remain ceramic tile per bid
documents,upgrade all bathrooms from 12"x12"to octagonal with dot $2,212.20
Electrical Fixtures -$1,346.00
Countertops
Install cultured marble vanity tops with integral sink in 2nd floor hall bathroom and master
Credit Amount: -$1,722.00
Porches-Changes from Bid Documents and Sketch provided by Allen Pepa Architects dated
2/21/11
Provide and install 10 decorative trim pieces approximately 11 1/2" long by 6 1/2"tall similar to
sketch provided by Allen Pepa Architects dated 2/2/11 at top of columns. (see attached
picture)Porch skirt boards changed from original bid documents. 1"x4"vertical skirt boards will be
installed per the sketch by Allen Pepa Architects dated 2/2/11 -no additional cost. $416.00
Total $14,628.70
Change to contract schedule(working days): TBD
Original Contract Sum: $228,706.53
Net Change by Previous Change Orders: $0.00
Contract Sum Prior to this Change Order: $228,706.53
Increase or Decrease by this Change Order: $14,628.70
New Contract Sum: $243,335.23
Client approves the change described above and its cost. By signing this change order,
Client agrees to pay for this change on or before closing.
Client Date Contractor Date
•
J&B Builders, Inc.
2000 West Main Street,Unit H
St.Charles,IL 60174
Phone:630-587-9900 Fax:630-587-8566
Change Order
Date: 5/16/2011 Change Order#: 2 Project#: 1005
Project Address: 463 E. Chicago Street
Client: City of Elgin
General Description of Change: Flooring&Garage Siding
Detailed Description of Change Cost
Option#5: Remove and replace wood flooring with stain on site wood in living room,entry hall,
family room and office entry hall(all non tiled areas on 1st floor except for office. Bid documents
included carpet in office). Install carpet over existing flooring materials at second floor hallway
(from stairs to master bedroom suite entry door).
Tear out existing wood flooring. Install 2 1/4"x 3/4" select and better red oak,sand, stain and
finish flooring with two coats Bona Novia poly floor finish. Install carpet and padding at second
floor hallway over existing flooring materials. Credit provided for refinishing of existing wood
floors per bid documents. $3,627.00
Replace missing and remove/replace rotted siding on garage. Siding supplied by the City of Elgin.
$172.00
Total $3,799.00
Change to contract schedule(working days): TBD
Original Contract Sum: $228,706.53
Net Change by Previous Change Orders: $14,628.70
Contract Sum Prior to this Change Order: $243,335.23
Increase or Decrease by this Change Order: $3,799.00
New Contract Sum: $247,134.23
Client approves the change described above and its cost. By signing this change order,
Client agrees to pay for this change on or before closing.
Client Date Contractor Date
I op
J&B Builders, Inc.
2000 West Main Street,Unit H
St.Charles,IL 60174
Phone•630-587-9900 Fax 630-587-8566
Change Order
Date: 4/14/2011 Change Order#: 1 Project#: 1004
Project Address: 457 E.Chicago Street
Client: City of Elgin
General Description of Change: Misc.due to existing field conditions found after demo
Detailed Description of Change Cost
Revised Framing for 2nd Floor including materials,steel flitch plates,additional framing and
demolition labor,additional dumpster fees for extra demolition,additional drywall work,decrease
size of countertop(credit),eliminate one sink and faucet,decrease size of cabinet,eliminate one
sink and faucet rough in,add door for new linen closet including hardware/casing,box out LVL's in
ceiling to look like decorative beams per Architect's drawings
$8,202.53
Reuse existing front -$735.00
Cut in and install drip edge around perimeter of house with metal flashing $3,600.00
Porch Framing-Four additional concrete piers for rear porch,credit to eliminate cap for foundation
wall,three additional piers for front porch,supply and install new porch floor framing at front porch
$566.00
Basement Work-New steel beam and columns in basement,two new concrete pier pads in
basement,labor to install steel beam and columns,fill in doorway in foundation wall with concrete
(doorway provided access to other side of basement),saw cut new doorway in to other side of
basement so access is located beneath main house,additional dumpster fees for concrete removed
$2,395.00
Eight new doors-existing door conditions did not allow for us to reuse/salvage the existing doors
$1,296.00
Upgrade flooring in back entry hall,mudroom,office entry and powder room to 12"x12"ceramic
tile with durock underlayment from linoleum. Upgrade 2nd floor hall bathroom floor and master
bathroom floor to 2"x2"octagonal white tile with black dot with durock underlayment from
linoleum. Install 2"x6"subway wall tile with decorative black liner border at 2nd floor bathrooms.
Tile to extend from tub to shower base to ceiling along perimeter of tub/shower base $3,784.00
Install"K"style gutters in lieu of half round -$2,880.00
Install laminate countertops(standard colors)in lieu of solid surface,install cultured marble vanity
tops with integral bowl in 2nd floor bathrooms in lieu of granite tops with undermount sink
-$1,779.00
Electrical Fixtures-Allowance included$100 per fixture,actual cost for fixtures selected -$1,732.00
Appliances-Allowance included$7,000.00. Slide in range with downdraft in lieu of cook top with
wall oven in order to provide full height pantry cabinet. -$3,167.00
Total $9.550.53
Change to contract schedule(working days): TBD
Original Contract Sum: $249,533.23
Net Change by Previous Change Orders: $0.00
Contract Sum Prior to this Change Order: $249,533.23
Increase or Decrease by this Change Order: $9,550.53
New Contract Sum: $259,083.76
Client approves the change described above and its cost. By signing this change order,
Client agrees to pay for this change on or before closing.
Client Date Contractor Date
a •,
J&B Builders, Inc.
2000 West Main Street,Unit H
St.Charles,IL 60174
Phone:630-587-9900 Fax:630-587-8566
Change Order
Date: 5/16/2011 Change Order#: 2 Project#: 1004
Project Address: 457 E.Chicago Street
Client: City of Elgin
General Description of Change: Flooring,Basement Repairs,Exterior Siding
Detailed Description of Change Cost
Flooring Changes from original bid due to Existing Floor Conditions: $1,471.00
Entry Foyer&Hallway: Tear out existing flooring and prep for new wood flooring. Install 2 1/4"
x 3 1/4"select and better red oak. Sand,stain and finish flooring with three coats Bona Novia
waterbased floor finish(or equal). Credit provided for refinishing wood.
1st Floor Living Room/Dining Room:Bid documents designate to repair wood/infill. There is no
designation to install carpet,refinish or to install any other type of flooring material. I had included
in my bid to refinish the room. Credit provided for the refinishing that I had budgeted.
Additional cost to install carpet and padding over existing wood.
2nd Floor Hallway:Install carpet and pad materials over existing flooring materials. Credit
provided for refinishing floors.
4111)Basement Work:
Chip and grind out joints in approximately 100 If of foundation wall. Tuckpoint joints on interior $5,400.00
and exposed foundation walls. Apply wire mesh fabric and trowel a mortar coating over interior
foundation walls. Patch areas of foundation walls where needed on walls that are in good condition
Install Concrete in Dirt Areas of Basement Only:Remove sections of basement floor and patch $960.00
concrete. Level crawl space floor and visqueen.
Exterior Siding:
The siding that was located between the additions that were removed was rotted. Remove existing $1,242.00
rotted siding and replace with new siding.
The vent on the front gable of the house was discovered when we removed the asphalt roofing from $293.00
the exterior of the house. Provide and install a new cedar vent.
Total $9,366.00
Change to contract schedule(working days): TBD
Original Contract Sum: $249,533.23
Net Change by Previous Change Orders: $9,550.53
Contract Sum Prior to this Change Order: $259,083.76
Increase or Decrease by this Change Order: $9,366.00
New Contract Sum: $268,449.76
Client approves the change described above and its cost. By signing this change order,
Client agrees to pay for this change on or before closing.
Client Date Contractor Date 411)
4. ,v
A
E LG N
THE CITY IN THE SUAt.li'V E3(3
DATE: June 16, 2011
TO: RuthAnne Hall, Budget and Purchasing Officer
FROM: Jennifer Quinton, Acting City Clerk
SUBJECT: Resolution No. 11-102, Adopted at the June 8, 2011, Council Meeting
Enclosed you will find the agreement listed below. Please distribute this agreement to the other
party and keep a copy for your records if you wish. If you have any questions please feel free to
contact our office 847-931-5660 and we will do our best to assist you. Thank you.
• Resolution 11-102 Adopted Approving Change Orders No. 1 and No. 2 for the Contract
with J & B Builders, Inc. for Renovation of Neighborhood Stabilization Program (NSP)
Property (463 E. Chicago Street)