AGENDA #1d

MEMORANDUM

TO: Mayor and Town Council

FROM: W. Calvin Horton, Town Manager

SUBJECT: Public Hearing: Preliminary 2006-2007 HOME Program

DATE: March 22, 2006

PURPOSE

The purpose of tonight’s public hearing is to receive citizen comments on a proposed plan developed by the HOME Program Review Committee for use of HOME Program funds for fiscal year 2006-2007. The Committee is comprised of one elected official and the Manager or his designee(s) from each participating government.

INTRODUCTION

Funding

The U.S. Department of Housing and Urban Development has awarded the Orange County HOME Consortium $665,560 for fiscal year 2006-2007. In addition, the participating municipalities are required to contribute a 25 percent match of the grant funds after subtracting administration costs of $66,556. The total match requirement is $149,751. The Town’s contribution to the matching funds is 41 percent or $61,398. As in previous years, funds are available in the Housing Loan Trust Fund for the Town’s match contribution. Orange County, Carrboro and Hillsborough will contribute $59,900, $20,965 and $7,488 respectively. The Consortium also proposes to allocate $135,272 of program income for eligible activities. Therefore, including the grant funds including program administration allocated to the Orange County Department of Housing and Community Development ($665,560), the required local match ($149,751), and program income ($135,272), the Consortium would be planning activities for a total of $950,583.

The Committee also proposes to reallocate $100,000 of funds previously allocated to the Town of Hillsborough for property acquisition for Infrastructure Development for a joint affordable housing project with Habitat for Humanity in the Fairview neighborhood in Hillsborough.

HOME Program Review Committee

On October 23, 2000, the Council adopted a resolution to participate in a HOME Program Review Committee along with Orange County, Carrboro and Hillsborough. The purpose of this Committee is to allow elected officials to have more involvement in the development of the annual HOME Program plan and to review the progress of HOME funded activities on a regular basis. On February 13, 2006, the Council appointed Council Member Laurin Easthom to represent the Town Council.

SUMMARY

HOME Program

The HOME Program Review Committee proposes the following use of 2006-2007 HOME Program:

1. Homeownership Assistance	Orange Community Housing and
	Land Trust (Waterstone)	$120,000

	EmPOWERment, Inc.
	(Northside and Pine Knolls)	$159,000

2. New Construction	Habitat for Humanity
	(Fairview)	$240,000

	Habitat for Humanity
	(Purefoy Drive)	$250,000

3. Acquisition	Chrysalis Foundation	$100,027

4. Operational Support	Orange Community Housing and
	Land Trust	$ 15,000

5. Administration	Orange County Housing	$ 66,556
TOTAL		$950,583

As in previous years, we propose to use funds available in the Housing Loan Trust Fund for the Town’s match contribution of $61,398. There are currently funds available for this purpose.

BACKGROUND

The HOME Program was established to provide funding for various types of housing programs to benefit low-income families. This funding is in addition to the existing federal Community Development grants, rental assistance through the Section 8 Program and public housing operating and improvement funding. In 1992, Chapel Hill, Carrboro, Hillsborough and Orange County formed the Orange County HOME Consortium with Orange County acting as the lead entity. The Consortium was established as a local partnership to develop affordable housing.

Please see Attachment 1 for a summary of 2005-2006 HOME Program Activities.

Relationship to the Consolidated Plan

In May 2005, the Orange County HOME Consortium consisting of the Town, Orange County, Carrboro and Hillsborough submitted a new Consolidated Plan to the U.S. Department of Housing and Urban Development covering fiscal years 2005-2006 through 2009-2010. The Plan identifies and prioritizes the housing and community development needs for Chapel Hill and Orange County, and suggests how the Town and the County will address the needs over a five-year period.

The Annual Update to the Consolidated Plan will include a 2006-2007 Community Development and HOME Program Plan, establish priorities for use of funds, and a description of housing and community development initiatives and programs in Orange County. The Community Development Plan is approved by the Council and the HOME Program Plan is approved by the governing bodies of the HOME Program Consortium: the Council, the Orange County and Hillsborough Commissioners, and Carrboro Board of Aldermen. We will prepare a draft Annual Update to the Consolidated Plan for the Council’s consideration on April 24, 2006.

Public Participation

On January 25, 2006, the Council held the first public hearing to receive ideas from citizens about how funds should be used in five related areas: the Town Budget, the Capital Improvements Program, the Community Development Program, the HOME Program and the Comprehensive Grant. On February 9, 2006, the Orange County Commissioners held a public hearing to receive citizen comments on how HOME Program funds could be spent and affordable housing needs in general.

Please see Attachment 2 for a summary of applications and comments received at the public hearing and applications received for HOME Program funding.

For your reference, we have attached a list of eligible HOME Program activities (Please see Attachment 3).

DISCUSSION

The HOME Program Review Committee proposes the following one-year plan for 2006–2007:

1. Homeownership/Downpayment Assistance: $279,000

The Review Committee proposes to allocate funds to the following agencies for homeownership assistance:

$120,000 of HOME funds to the Land Trust to assist first time homebuyers earning less than 80 percent of the area median income to purchase affordable townhomes in the Waterstone development in Hillsborough. Each unit would receive a $5,000 subsidy. Funds would be provided as a grant to the Land Trust.

$159,000 to EmPOWERment to provide deferred second mortgages to first time homebuyers in the Northside and Pine Knolls neighborhoods.

2. New Construction : $490,000

The Committee recommends allocating $490,000 to Habitat for Humanity for two projects:

$240,000 to construct 12 single family homes for purchase by households earning 50 percent of the area median income or below in the Fairview neighborhood in Hillsborough. This would be a joint project with the Town of Hillsborough.

$250,000 to develop affordable housing units in the Purefoy Road neighborhood located off of Rogers Road for households earning between 30 percent and 80 percent of the area median income.

3. Acquisition: $100,000

The Committee recommends allocating $100,000 to the Chrysalis Foundation to acquire and renovate (or build new) four small apartments for the purpose of providing permanent housing to homeless disabled adults.

4. Operational Support: $15,000

The Committee recommends allocating $15,000 to Orange Community Housing and Land Trust for administrative expenses related to its HOME Program funded projects. As a designated Community Housing Development Organization for the HOME Program, the Land Trust is eligible to receive funds for administration of a housing program.

5. Administration: $66,556

The remaining $66,596 would be allocated to the Orange County Housing and Community Development Department for administration of the HOME program.

Housing projects funded with Orange County HOME Program funds are subject to the County’s 99-year long-term affordability policy, and must remain affordable for 99 years. Orange County records deed restrictions on the property with the Register of Deeds for affordable housing projects.

NEXT STEPS

All comments received during tonight’s public hearing and the comment period will be summarized and submitted with the Consolidated Plan to the Department of Housing and Urban Development. The Housing and Community Development Advisory Board will review the proposed plan on March 28, 2006. We will provide the Board’s recommendation to you on April 24, 2006.

We will submit a final recommended HOME Program plan to the Council for consideration on April 24, 2006. The governing boards of Orange County, Carrboro and Hillsborough will also consider the proposed plan prior to submitting the Consolidated Plan to the Department of Housing and Urban Development on May 15, 2006.

ATTACHMENTS

1. Summary of 2005–2006 HOME Program Activities (p. 6).

2. Summary of Applications and Comments for 2006-2007 HOME Program Funding (p. 7).

3. Eligible HOME Program Activities (p. 9).