AGENDA #4f
MEMORANDUM
TO: Mayor and Town Council
FROM: W. Calvin Horton, Town Manager
SUBJECT: Rental License Program Fee Exemption for Subsidized Housing
DATE: August 25, 2003
The attached resolution would exempt non-profit organizations that offer low-income subsidized rental housing from the rental license fee, but not from the other requirements of the Rental Licensing Program.
BACKGROUND
The Town Council established the Rental Licensing Program on April 8, 2002, and there are currently 7,508 units actively licensed. Of these rental units some are subsidized to be available to low-income tenants.
The U.S. Department of Housing and Urban Development (HUD) requires that a certain percentage of admissions each year into a location that is subsidized must meet a percentage of the average median income. In addition to that requirement the operator has to arrange the rent for each tenant based solely on a percentage of that tenant’s adjusted income. There are also subsidies available for utilities that are taken out of the final determination of the rent. The owner/operators have no way to recover any additional fees other than to request to be reimbursed through the annual budget request which may or may not be granted.
As a department policy, rental units operated by non-profit organizations that provide subsidized, affordable housing for low to moderate incomes have not been asked to pay the rental license fee to date.
DISCUSSION
There are currently 13 locations in Chapel Hill in addition to public housing requiring low-income occupancy and offering rent subsidized by government support. Twelve of the following thirteen properties are managed by non-profit organizations, one is partnered with a non-profit organization, and four are subsidized by HUD as designated by the 202 and 236 section numbers below:
|
aNNUAL RENTAL LICENSE COST OF SUBSIDIZED UNITS |
||
|
LOCATION |
SUBSIDY |
# OF UNITS |
|
Adelaide Walters |
Section 202 |
24 / $240.00 |
|
Manley Estates |
Section 202 |
40 / $400.00 |
|
Chase Park |
Section 236 |
40 / $400.00 |
|
Elliott Woods |
Section 236 |
39 / $390.00 |
|
Overlook Apartments |
Section 811 |
13 / $130.00 |
|
Dobbins Hill |
LIHTC |
55 / $550.00 |
|
Johnson Street, 128 |
Community Development Block Grant Program |
1 / $10.00 |
|
Roberson Street, 219 North |
Community Development Block Grant Program |
1 / $10.00 |
|
Knolls Street, 216 |
Community Development Block Grant Program |
1 / $10.00 |
|
North Graham Street, 225 |
Community Development Block Grant Program |
1 / $10.00 |
|
North Graham Street, 227 |
Community Development Block Grant Program |
1 / $10.00 |
|
Johnson Street, 112 A&B |
Community Development Block Grant Program |
2 / $20.00 |
|
Johnson Street, 114 A&B |
Community Development Block Grant Program |
2 / $20.00 |
|
TOTAL |
|
220 / $2,200.00 |
Please see Attachment 1 for a description of these programs.
The previous chart lists the current locations that would qualify for this fee exemption which would total 220 units at $2,200.00. The 2002-03 budget included the costs of $68,000, with revenues of $77,000. The program is self supporting and can afford the loss of funds by non-profit, government subsidized organizations.
We have discussed the rental license fee with representatives from each agency that operates the affordable rental units listed above. The agencies have informed us that because Federal regulations or local Performance Agreements restrict the amount of rent that can be charged, the rental license fee would have to be paid out of the agency’s operating budget. Because these agencies are operating on a limited budget, we believe that paying the rental license fee could cause some agencies a financial hardship.
We propose that rental dwelling units that are subsidized by government programs specifically provided for affordable housing purposes be exempt from the fee. We further suggest that the agencies be required to continue to participate in the Rental Licensing Program and maintain their licenses. This policy would be consistent with the Council’s policy of charging no development application fees for projects meant to produce subsidized housing.
RECOMMENDATION
We recommend that the Council adopt the following resolution that would amend the rental license fee schedule to exempt organizations that can document that they are non-profit and offer low-income, government subsidized, rental housing in Chapel Hill while they maintain their active Rental Licensing Program licenses.
ATTACHMENTS
1. Description of Affordable Housing Programs (p. 4).
A RESOLUTION AMENDING THE GUIDELINES OF THE RENTAL LICENSING PROGRAM (2003-08-25/R-7)
WHEREAS, on April 8, 2002 the Town Council of the Town of Chapel Hill adopted guidelines for a rental licensing program and revised Chapter 9 of the Code of Ordinances to establish a program for the licensing of residential rental properties; and
WHEREAS, the rental licensing program currently applies to all rental properties in Town; and
WHEREAS, non-profit operators of government subsidized affordable housing have requested exemption from paying the rental licensing fee;
NOW, THEREFORE, BE IT RESOLVED by the Council of the Town of Chapel Hill that the Council exempts non-profit organizations that offer low-income government subsidized rental housing from the rental license fee.
BE IT FURTHER RESOLVED that the agencies will be required to maintain an active rental license and conform with all applicable ordinances.
BE IT FURTHER RESOLVED that to qualify for the fee exemption, agencies will be required to document that they are non-profit and offer low-income, government subsidized, rental housing in Chapel Hill.
This the 25th day of August, 2003.
Description of Affordable Housing Programs
The Section 202 HUD program provides direct government loans to private non-profit corporations, and cooperatives, developing housing for the elderly. Both Manley Estates and Adelaide Walters are subsidized by the Section 202 program and are operated by non-profit organizations.
The Section 236 HUD program provides FHA mortgage insurance as well as interest rate subsides to make rents affordable to low-income tenants. Both Chase Park apartments and Elliott Woods apartments are subsidized by the Section 236 program and are operated by non-profit organizations.
The Section 811 HUD program provides capital grant financing and rental assistance for housing for the handicapped in group homes and individual living apartments. The Overlook Apartments complex is subsidized by the Section 811 program and is operated by a non-profit organization.
The Low Income Housing Tax Credit (LIHTC) option provides an annual tax credit to investors of housing provided that it complies with low-income occupancy restrictions by limiting rent based upon total household income. Dobbins Hill dwelling units are subsidized via this credit option.
The seven locations listed by street address on the table within the attached memorandum are operated by EmPOWERment, Inc., a local non-profit organization. The Town of Chapel Hill Community Development Block Grant Program and the Orange County HOME Program provided funds to EmPOWERment to purchase these properties on the condition that they be used for affordable housing purposes. Performance agreements stipulate that rents cannot exceed the Section 8 limits.