AGENDA #4f
MEMORANDUM
TO: Mayor and Town Council
FROM: W. Calvin Horton, Town Manager
SUBEJCT: Response to Request from Habitat for Humanity Regarding Extension of Loan Terms
DATE February 27, 2006
PURPOSE
The purpose of this memorandum is to respond to a request from Habitat for Humanity to modify the terms of a loan between the Town and Habitat for the acquisition of property on Sunrise Road (please see Attachment 1).
This memorandum also responds to a petition received by the Council on February 13, 2006 from the Sunrise Coalition stating its support for a one year extension to this loan (please see Attachment 2).
Adoption of the attached resolution would authorize modification of the terms of a Performance Agreement between the Town and Habitat for Humanity to extend the repayment date of a loan for the acquisition of property on Sunrise Road from February 28, 2006 to February 28, 2007.
On November 25, 2002, the Council adopted a resolution to provide up to $50,000 from the Housing Loan Trust Fund to Habitat for Humanity for either an extended option or to assist with the acquisition of the Sunrise Road property. The Town entered into a Performance Agreement with Habitat for these funds on February 12, 2003. The terms of this loan required repayment by February 28, 2005. These funds were provided for the acquisition of the property. Habitat executed a Deed of Trust and Promissory Note to the Town for these funds. Orange County provided the balance of funds, $250,000, to purchase this property. Habitat purchased the 16-acre site on February 27, 2003.
On February 14, 2005, the Council adopted a resolution to extend the repayment date of a loan for the acquisition of property on Sunrise Road from February 28, 2005 to February 28, 2006 (please see Attachment 3).
THE REQUEST
In a letter dated January 28, 2006, Susan Levy, Executive Director of Habitat for Humanity requested that the Town extend the contract time period and consider converting the $50,000 acquisition loan into a deferred payment loan that would be transferred to the future homebuyers upon sale of the homes. Habitat has submitted a revised Concept Plan to the Town for the development of the property, including newly acquired property on Ginger Road, and is working on a formal development application for submittal to the Town.
DISCUSSION
The resolution approved by the Council on February 14, 2005 extended the loan until February 28, 2006. The memorandum to Council of November 25, 2002 stated that the Council could authorize contract extensions, and the resolution authorized the Town Manager to execute the contract based on the information in the memorandum.
As reported to the Council on the February 14, 2005, we believe that it is premature to grant Habitat’s request to convert the Town’s loan into deferred loans to the future buyers of the homes that will be built. Habitat has not submitted a formal application for development. We recommend that the Council consider Habitat’s request to convert the funds into deferred loans for homebuyers if a development application is approved.
We recommend that the Council adopt the attached resolution extending the term of the Performance Agreement for an additional year to February 28, 2007. This extension would allow Habitat time to pursue the development application process.
1. January 18, 2006 letter from Habitat for Humanity to the Town Manager (p. 4).
2. Petition from Sunrise Coalition (p. 5).
3. February 14, 2005 Memorandum to the Mayor and Town Council (p. 6).