Completion of Work Required. Except as provided in §B of this regulation, payments shall be made only for work completed. Payments may not be made for material delivered to the site but not incorporated into the project. Advances. For loans under Regulation .05 of this chapter, there may be an advance or down payment in an amount which does not exceed 10 percent of the rehabilitation costs, if required by the contract for the rehabilitation. For loans under Regulation .07 of this chapter, the Program may advance to a nonprofit organization or local government 10—90 percent of the acquisition and rehabilitation costs. The percentage of costs advanced shall be in the sole discretion of the Department, taking into account experience managing construction or rehabilitation projects and disbursing funds. Progress Payments. Progress payments may not be made until the borrower has delivered satisfactory evidence, such as receipts or bills, of the amount of the payment requested. Progress payments may not be made without an inspection to verify completion of the work, except at the discretion of the Program. At a minimum, however, the Program or its approved agents shall verify completion of the work before disbursing the final payment, as described in §G of this regulation. If a request for payment is refused, the Program shall notify the borrower. The determination of the Program as to percentage of work completed is final. The Program shall give the borrower written notice of its determination of the percentage of work completed. Joint Payee Checks. Payments of draws shall be made by a joint payee check issued to the borrower and contractor unless an alternative payment method is approved by the Program Director. Effect of Arrearage. Loan funds may not be disbursed if there is any arrearage of interest payments or escrows required by the loan documents. Retainage. For all projects for which the borrower is responsible for project inspections, the Program shall retain loan proceeds equal to not more than 10 percent of the contract proposal costs until final payment. For any other project, the Program, at its discretion, may elect to retain loan proceeds equal to not more than 10 percent of the contract proposal costs until final payment, taking into consideration: The type of project; The contractor's experience; and Other factors the Program considers relevant. The retainage shall be released at final payment upon verification that all contracted rehabilitation items are complete and acceptable to the Department. In addition to standard retainage, if the Program receives written notice that subcontractors, materialmen, or suppliers have not been paid for work done or material supplied to and for the project, and all loan funds have not yet been disbursed, the Program shall retain an amount equal to the lesser of all funds not yet disbursed and the amount sufficient to satisfy the claims until satisfactory evidence of satisfaction and release by the subcontractors, materialmen, or suppliers is presented. The contractor shall promptly pay or bond any liens established. Final Payment. Final payment shall be made as follows: The borrower shall submit to the Program a certificate of completion, executed by the borrower and contractor, certifying that all work: Has been completed in accordance with the contract documents; Was performed in a workmanlike manner; and Was in accordance with all applicable planning, zoning, and building codes, and other applicable laws. Upon final inspection and receipt and approval of the certificate of completion, final payment shall be processed. If, in the opinion of the Program, the contractor has satisfied the contract and the borrower has refused to request or release the final payment, then the Program may follow the procedure described below: The Program may require the borrower to explain in writing within 10 days why the Program should not make direct payment to the contractor; If the borrower responds within the 10-day period and requests a meeting, the Program Director shall hold a meeting at which the borrower shall present objections to requesting or releasing the final payment; and The Program, in its discretion, may then approve direct payment to the contractor or the borrower. Closeout Procedures. After final payment is made, the Department shall reconcile all receipts and disbursements and prepare a close-out statement.