AGENDA #4c
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TO: |
Roger L. Stancil, Town Manager |
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FROM: |
J.B. Culpepper, Planning Director Loryn Clark, Housing and Neighborhood Services Coordinator |
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SUBJECT: |
Modifications to the Revolving Acquisition Fund |
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DATE: |
February 26, 2007 |
The purpose of this memorandum is to propose modifications to the Revolving Acquisition Fund that was established by the Town Council on January 28, 2002.
The attached resolution would: (1) change the name of the fund to the Affordable Housing Fund; and (2) allow the Fund to be used for the renovation of properties and subsidies to reduce the cost of housing to create affordable homeownership opportunities.
On January 28, 2002, the Council adopted guidelines for a Revolving Acquisition Fund (see Attachment 1). The Fund was created to: 1) provide non-profit affordable housing organizations a source of funds that could be accessed quickly to purchase properties that might otherwise be sold to non-lower income households or be used for relatively high cost rental housing; and 2) to preserve owner-occupied housing for affordable housing purposes.
The Revolving Fund was established with $150,000 from the Housing Loan Trust Fund. Funds received by the Council for payments in lieu of affordable housing are also directed to the Revolving Acquisition Fund. To date, the Council has received $278,500 for payments in lieu of affordable housing.
Orange Community Housing and Land Trust has used the Fund four times to purchase homes. Two of the homes purchased were part of the Culbreth Park program. The Land Trust currently has one outstanding loan for the acquisition of a townhouse on Legion Road, and anticipates purchasing two additional homes in Culbreth Park this year. There is approximately $363,000 on hand in this Fund.
We believe that the Fund could be more helpful in achieving the Council’s affordable housing goals if property renovation and permanent subsidies were eligible activities. Both activities would be consistent with the goals of the Fund, and would create affordable homeownership opportunities for households earning less than 80 percent of the area median income. We have previously used the Housing Loan Trust Fund for these activities, but the Fund Balance of the Housing Loan Trust Fund is quickly declining. A small amount (approximately $40,000 in 2006-2007) is budgeted for renovations and subsidies for affordable housing, and the majority of these funds have been allocated to the Land Trust to renovate one home. We recommend that the Council reserve the balance of the Housing Loan Trust Fund for the Town’s portion of the HOME Program match requirement. There are only enough funds in the Housing Loan Trust Fund to cover the Town’s match requirement for the next two years. We will return to the Council at a later date to discuss concerns about the Housing Loan Trust Fund.
We believe that it is important for non-profit organizations be able to access local funds that are more flexible than federal funds. We also believe that due to the possibility of a decrease in federal Community Development Block Grant and HOME Program funding, additional resources may be needed to help achieve the Town’s affordable housing goals.
We propose the following modifications to the Revolving Acquisition Fund.
We anticipate that homes will remain affordable to households earning less that 80 percent of the area median income as defined by the U.S. Department of Housing and Urban Development. If the future resale price of a home, as determined by a resale formula, is unaffordable to a household earning less than 80 percent of the area median income, before requiring repayment of the Town’s funds, we would ask the non-profit to consult with the Town Council for direction.
If the Council chooses to make these changes as proposed, funds used for property renovations or for permanent subsidies to reduce the sales price would not likely be returned to the Town. Depending on the opportunities that are available, these activities could spend the balance of the Fund, and monies would not be available for acquisition of properties. However, we believe that this proposed expansion of the allowable uses could be more helpful in achieving the Council’s affordable housing goals.
That the Council adopt the attached resolution to: (1) change the name of the fund to the Affordable Housing Fund; and (2) allow the Fund to be used for the renovation of properties and subsidies to reduce the cost of housing to create affordable homeownership opportunities.