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Board of Directors Marceia Blake Gordon Merklein Michael Hansen Jim Tucker Mary Bratsch Robert Dowling Funding Provided by: Town of Chapel Hill PO Box 307 104 Jones Ferry Road Suite C Carrboro, NC 27510 919.967.1545 Fax 919.968.4030 |
Date: October 23, 2008
To: Mayor Foy and the Chapel Hill Town Council From: Robert Dowling, Executive Director Re: Quarterly status report for the quarter ended September 30, 2008
The quarter was highlighted by five activities:
Selling five homes – Our sales team sold five homes in the quarter, including three existing Land Trust properties in Vineyard Square. As a result of stagnant HUD income limits, each of these Vineyard Square homes required additional subsidy at resale. The subsidy, totaling $44,000 for the three homes, was provided by the Town of Chapel Hill. Two new homes were added to the Land Trust inventory; one was built in Northside by Empowerment, Inc. The other is our green home in Carrboro.
Our first green home – In August we closed on the sale of a wonderful home on Broad Street in Carrboro. Built by Synergy Builders, this home incorporates System Vision standards, which include a heating and cooling guarantee. We used more durable materials in this home, such as hardwood flooring, which increased our construction costs. However, in the long-term we expect it will be less expensive to own and operate than our typical property.
New office space – In order to accommodate our expected growth in 2009 and beyond, we recently agreed to rent additional office space in the same building we have occupied since 1997. We feel fortunate that we won’t have to pack up and move our offices to another location. We expect to hire a bookkeeper, an operations manager and a funds development officer in the coming months.
Working with developers - During the quarter we worked with the Woodmont developer to help craft an affordable housing plan that was acceptable to the Town Council. We did the same with the developers of The Butler, a condominium development in Carrboro that was approved by the Aldermen in September. We also worked with the developers of Residences at Grove Park to modify their earlier affordable housing proposal to the Council. Lastly we worked with the East 54 developers to modify their Phase II affordable housing proposal.
New auditors - To comply with Sarbanes-Oxley legislation, the board determined we should change auditing firms. Our audit was completed in August by new auditors, who spent a great deal of time understanding our business and documenting our procedures and processes. Audits have become more rigorous in recent years and require more staff time throughout the year. The auditors recommended that we hire a part-time bookkeeper to better manage our increased accounting requirements.
There are now 138 homes in the Land Trust. Another 158 units have been approved by the local governments of Chapel Hill, Carrboro and Hillsborough. It appears that many of the approved developments will be delayed due to the financial and housing crisis. As a result, the volume of housing that we will be expected to sell in 2009-10 will be reduced. However we expect our resale activity to remain consistent. In fiscal year 2007-08, 11 Land Trust homeowners resold their homes. Thus far in 2008-09 we have had 3 re-sales and 5 other Land Trust homes are currently on the market. Hence, I expect our resale activity in the current fiscal year to exceed that of 2007-08. We can also expect our volume of resales to increase as our inventory increases.
Lastly, although our homes have had a lower rate of foreclosure than the overall market, the banking and financial crisis is having an impact on our homeowners. More homeowners than usual are late in their payments to the bank or their homeowner associations. One homeowner is teetering on the brink of foreclosure. We have had just two homeowners who had to be spared from foreclosure, and in both instances we intervened to accommodate both the lenders and the homeowners. Our ability to intervene is important to the success of this model because it gives confidence to our lenders that Land Trust loans are relatively safe. However, it is inevitable that we will have increased threats of foreclosure as we grow our inventory – particularly if the economic climate continues to worsen.
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