AGENDA #7
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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: |
Response to Petition from the Pines Community Center |
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DATE: |
October 22, 2007 |
The purpose of this memorandum is to respond to a petition from the Pines Community Center regarding the release of the Town’s lien on property the Center owns on Park Road (please see Attachment 1).
We recommend that the Council take no action at this time.
On February 7, 1995 the Town entered into a Performance Agreement with the Pines Community Center to provide a $115,000 loan from the Town’s Housing Loan Trust Fund to acquire approximately nine acres of property located off Park Road. It was the intent that the Pines Community Center would purchase the property to provide homeownership opportunities to twenty Chapel Hill families at or below 60% of the area median income by household size.
The Agreement contemplated that this loan would be paid off in increments as the Center completed homes and transferred them to individual homebuyers, and that the entire loan would be paid back in a maximum of four years.Per the terms of the Agreement, upon sale of one lot (104 Park Road), the Pines Community Center repaid the Town $5,750 (one twentieth of the loan).In addition, as the result of the sale of approximately six acres of the land to First Baptist Church and Manley Estates in 2000, the Pines Community Center repaid an additional $55,000 to the Town.The current balance of the loan is $54,250.This loan is secured by a Deed of Trust on the approximately three acres remaining after six acres were sold to the Church.
In February 2006, the Council received a petition from the Pines Community Center asking the Town to forgive the balance of a loan owed to the Town for the acquisition of property located on Park Road in the Pine Knolls neighborhood.The Council took no action at that time.
On October 8, 2007, the Council received a petition from the Pines Community Center again requesting that the Town forgive its lien on this property.
In response to the Center’s October 8 request, we reviewed current Town policy, documentation provided by the Pines Community Center, and our files and identify the following issues for the Council’s consideration.
1. Release of the Town’s Lien on Park Road Property
The Center has asked the Town to release a lien on approximately three acres on Park Road so that it may be used to secure funds from a bank in order to construct a sanitary sewer line to serve this property. The lien is related to the remaining amount owed to the Town’s Housing Loan Trust Fund.The Center has offered that the Town could transfer this lien to the Pine Knolls Community Center on Johnson Street and release the lien on the Park Road property so that they may proceed with the loan process.Transferring the lien to another property may decrease the Town’s ability to encourage that affordable housing is built on the Park Road site.Further, we do not have documentation of the value of the Johnson Street property or any other liens secured by that property to determine if the there is sufficient unencumbered equity in this property to protect the Town’s investment in the event the lien were transferred.
2. Auction of Lots and Timing
We understand that the Center would like to auction two lots on Park Road to the highest bidder to generate start-up funds for an Orange County Boys and Girls Club.We have determined that the lots must first be created before they can be auctioned or sold.Based on the plans for this property, the Center must first submit to the Town an application for a minor, or possibly a major, subdivision.At minimum, this process could take several months.
3. Guidelines of the Housing Loan Trust Fund
The Council provided funds to the Pines Community Center from the Housing Loan Trust Fund to purchase this property with the intent that it be used for affordable housing purposes.As mentioned above, the Center intends to auction of two lots (that are not yet created) for sale to the highest bidder.We do not know how the future owners of these properties would develop these lots.The Council would need to decide if the First Baptist Church/Manley Estates affordable housing development and the Pines Community Center’s proposed future development on the remaining property would meet the affordable housing requirement and goals of the Housing Loan Trust Fund.
We recommend no action at this time.Release of the Town’s lien would not allow the Pines Community Center to move forward with its plans as proposed.We will remain in contact with Dr. Parrish to determine if other possibilities exist so the Pines Community Center can move forward with its plans. If the Center obtains the necessary approvals to subdivide this property, we could return to the Council at that time to discuss options regarding the Town’s lien.