A RESOLUTION MODIFYING THE REVOLVING ACQUISITION LOAN FUND (2007-03-26/R-6)
WHEREAS, on January 28, 2002, the Town Council established a Revolving Acquisition Loan Fund to preserve owner-occupied housing in Chapel Hill for affordable housing purposes; and
WHEREAS, additional funds are needed to help achieve the Council’s affordable housing goals;
NOW, THEREFORE, BE IT RESOLVED by the Council of the Town of Chapel Hill that the Council changes the name of the Revolving Acquisition Loan Fund to the Affordable Housing Fund.
BE IT FURTHER RESOLVED by the Council of the Town of Chapel Hill that the guidelines of the Affordable Housing Fund will be as follows:
The Affordable Housing Fund may be used to:
1. Provide loans to non-profit organizations to be used to purchase existing properties. Funds may be used in the following manner:
a. To exercise the Town’s right of first refusal on existing properties;
b. To provide funds to non-profit organizations to purchase properties within the Chapel Hill city limits, especially in the Northside and Pine Knolls neighborhoods and in situations where the Town has a right of first refusal. Funds may be used for acquisition costs, first options, or earnest money. Funds used for first options shall be structured as a loan to the non-profit agency and must be repaid to the Town upon sale of the property to a qualified buyer. If the non-profit agency does not purchase the property, the funds must be repaid to the Town by the non-profit agency.
2. To provide funds to non-profit organizations to be used to renovate properties and prepare them for sale to qualified households earning less than 80 percent of the area median income; and
3. For homeownership assistance to reduce the sales price of new and existing homes so that they will become more permanently affordable.
Properties must be sold to qualified households earning less than 80 percent of the median income by household size as determined by the U. S. Department of Housing and Urban Development. Homebuyers must live or work in Orange County for one year prior to using the Fund.
Funds provided for acquisition of property shall be used to provide interest-free financing to qualified non-profit organizations. Funds shall be repaid to the Town upon sale of the property to a qualified homebuyer within 180 days of purchase.
Organizations using the Affordable Housing Fund for acquisition of property shall execute a Promissory Note and Deed of Trust to the Town for the amount of the loan. Organizations shall also execute a Performance Agreement with the Town for the use of funds. Upon sale of the property to a buyer, the Town’s funds shall be repaid and the Promissory Note and Deed of Trust will be cancelled.
Funds provided for renovation expenses or to reduce the sales price of homes will be provided as a grant as long as the property is owned by an eligible household, earning less than 80 percent of the area median income. If the future resale price of the home, as determined by a resale formula, is unaffordable to a household earning less than 80 percent of the area median income, then before taking any action, the non-profit will consult with the Town Council.
Upon sale of the property to a qualified buyer, Buyers are required to execute documents that: (1) require that the property be used as the Buyers primary residence; and (2) provide a right of first refusal to the Town or a designated non-profit agency.
Restrictive covenants and other related instruments must be provided which will provide, to the extent legally possible, that the properties remain affordable permanently.
BE IT FURTHER RESOLVED that any program income from the sale of homes acquired shall be returned to the Affordable Housing Fund to finance future eligible projects.
BE IT FURTHER RESOLVED that the Council authorizes the Town Manager or his designee to approve specific requests for acquisition of property in accordance with the Affordable Housing Fund guidelines.
BE IT FURTHER RESOLVED that Council approval is required for requests for housing renovation or homeownership assistance in excess of $40,000.
This the 26th day of March, 2007.