AGENDA #1d
MEMORANDUM
TO: Mayor and Town Council
FROM: W. Calvin Horton, Town Manager
SUBJECT: Public Hearing: Preliminary 2004-2005 HOME Program
DATE: March 24, 2004
The purpose of tonight’s public hearing is to receive citizen comments on a proposed plan developed by the HOME Program Review Committee for use of HOME Program funds for fiscal year 2004-2005.
Funding
The U.S. Department of Housing and Urban Development has awarded the Orange County HOME Consortium $739,050 for fiscal year 2004-2005. In addition, the participating municipalities are required to contribute a 25% match of the grant funds after subtracting administration costs of $73,905. The total match requirement is $166,286. The Town’s contribution to the matching funds is 41% or $68,177. Orange County, Carrboro and Hillsborough will contribute $66,515, $23,280 and $8,314 respectively. Therefore, including program administration (allocated to the Orange County Department of Housing and Community Development), the Consortium would be planning activities, including administration, for a total of $905,336.
On October 23, 2000, the Council adopted a resolution to participate in a HOME Program Review Committee along with Orange County, Carrboro and Hillsborough. The purpose of this Committee is to allow elected officials to have more involvement in the development of the annual HOME Program plan and to review the progress of HOME-funded activities on a regular basis.
The Committee is comprised of one elected official from each participating government and the Manager or his designee. The Council appointed Council Member Edith Wiggins to represent the Town Council. Deputy Town Manager Florentine Miller and Community Development Coordinator Loryn Barnes also attend Committee meetings. Other representatives attending the meetings are: Orange County Commissioner Margaret Brown and Housing and Community Development Director Tara Fikes; Carrboro Alderman John Herrera and Community and Economic Development Director James Harris; and Hillsborough Commissioner Eric Hallman and Planning Director Margaret Hauth.
American Dream Downpayment Initiative Program
This year, in addition to HOME Program funding, the Consortium was awarded $54,145 of American Dream Downpayment Initiative (ADDI) funds. This is a new program signed into law on December 16, 2003, that provides funds for down-payment assistance, closing costs, and rehabilitation carried out in conjunction with an assisted home purchase for lower income households.
SUMMARY
HOME Program
The HOME Program Review Committee proposes the following use of 2004-2005 HOME Program funds:
Rental Assistance HOME Consortium $236,431
Property Acquisition Town of Chapel Hill
Transitional Housing Program $125,000
Habitat for Humanity (Winmore) $125,000
Second Mortgage Assistance EmPOWERment, Inc. $100,000
Habitat for Humanity $ 80,000
Down Payment Assistance Orange Community Housing and
Land Trust (Pacifica and Winmore) $140,000
Infrastructure Development Habitat for Humanity $ 25,000
Administration Orange County Housing $ 73,905
TOTAL $905,336
As in previous years, we propose to use funds available in the Housing Loan Trust Fund for the Town’s matching contribution of $68,177. There are currently funds available for this purpose. In future years, the Council will need to consider increasing funding for the Housing Loan Trust Fund or find additional funding sources in order to continue funding the HOME Program match.
American Dream Downpayment Initiative Program
The Committee proposes to use $54,145 to establish a County-wide second mortgage program.
BACKGROUND
The HOME Program was established to provide funding for various types of housing programs to benefit low-income families. This funding is in addition to the existing federal Community Development grants, rental assistance through the Section 8 Program and public housing operating and improvement funding. In 1992, Chapel Hill, Carrboro, Hillsborough and Orange County formed the Orange County HOME Consortium with Orange County acting as the lead entity. The Consortium was established as a local partnership to develop affordable housing.
Please see Attachment 1 for a summary of 2003-2004 HOME Program Activities.
The Consolidated Plan
On May 15, 2000, the Town and Orange County submitted to the U.S. Department of Housing and Urban Development a five-year Consolidated Plan covering fiscal years 2000-2001 through 2004-2005. The purpose of the Plan is to identify and prioritize housing and community development needs for Chapel Hill and Orange County. The Plan also suggests how the Town and the County will address needs over a five-year period. Next year, we will develop a new five-year plan covering fiscal years 2005-2006 through 2009-2010.
Each year, we are required to submit: (a) an annual Community Development plan approved by the Council; and (b) a HOME Program plan approved by the Council, the Orange County and Hillsborough Commissioners, and the Carrboro Board of Aldermen. The Plan must be submitted to the Department of Housing and Urban Development by May 14, 2004.
On February 2, 2004, the Council held the first public hearing to receive ideas from citizens about how funds should be used in five areas: the Capital Improvements Program, the Town Budget, the Community Development Program, the HOME Program and the Comprehensive Grant. On February 3, 2003, the Orange County Commissioners held a public hearing to receive citizen comments on how HOME Program funds could be spent.
Please see Attachment 2 for a summary of comments received at the public hearing and applications received for HOME Program funding.
For your reference, we have attached a list of eligible HOME Program activities (please see Attachment 3).
DISCUSSION
The HOME Program Review Committee proposes the following one-year plan for 2004–2005:
Rental Assistance: $236,431
The Committee proposes to use HOME funds to develop a small pilot program (four to five units) for Tenant-Based Rental Assistance in Orange County. We propose that the program would operate similar to the Section 8 Program and provide rent subsidies for eligible families with incomes at or below 50% of the area median income. Resembling the Section 8 Program, the subsidy would be calculated based on the tenant’s ability to pay and the fair market rent. The program would be administered by the Orange County Housing and Community Development Department.
Property Acquisition: $250,000
1. The Review Committee proposes to allocate $125,000 to the Town of Chapel Hill to assist in the purchase of a house for the Town’s Transitional Housing program for public housing residents. The program provides a stepping-stone for families between public housing and the private housing market.
2. The Review Committee proposes to allocate $125,000 to Habitat for Humanity to purchase five lots in the Winmore Subdivision in Carrboro. The funds would convert into second mortgages of $25,000 each to five low income first-time homebuyers when they purchase their homes. The homes would be purchased by households who have lived and/or worked in Orange County for at least one year prior to applying, and who earn less than 50% of the area median income.
Second Mortgage Assistance: $180,000
1. The Committee proposes to allocate $100,000 to EmPOWERment, Inc. to provide second mortgage assistance for first-time homebuyers earning less than 80% of the area median income. EmPOWERment would provide $10,000 to ten buyers throughout Orange County.
2. The Committee also recommends allocating $80,000 to Habitat for Humanity to provide deferred second mortgages for four homebuyers earning less than 50% of the area median income. Three of the homes would be located in the Richmond Hills Subdivision in Efland, and the fourth home is located on Cain Drive in Efland Estates where Habitat has previously built eight homes. Homes would be purchased by households who have lived and/or worked in Orange County for at least one year prior to applying.
Down Payment Assistance: $140,000
The Committee recommends allocating $140,000 to Orange Community Housing and Land Trust to provide downpayment assistance for seven first-time buyers in the Winmore ($70,000) and seven first-time buyers in the Pacifica development ($70,000), both located in Carrboro. The townhomes and condominiums, which are being developed by the private sector, would be placed in the Land Trust. Eligible applicants must be first-time homebuyers currently living or working in Orange County who earn less than 80% of the area median income.
New Construction (Infrastructure) $25,000
The Committee recommends allocating $25,000 to Habitat for Humanity to extend sewer service to a lot owned by Orange Community Housing and Land Trust on Crest Street in Carrboro. Habitat will build a home on the lot once the sewer extension has been completed. The home will be sold to a Habitat homebuyer using the land trust model, and the property will remain affordable for 99 years.
Administration: $73,905
The remaining $73,905 would be allocated to the Orange County Housing and Community Development Department for administration of the HOME program.
Housing projects funded with Orange County HOME Program funds are subject to the County’s 99-year long-term affordability policy, and must remain affordable for 99 years. Orange County records deed restrictions on the property with the Register of Deeds for affordable housing projects.
AMERICAN DREAM DOWNPAYMENT INITIATIVE PROGRAM
The Department of Housing and Urban Development has also informed us that the Consortium will receive $54,145 of American Dream Downpayment Initiative funds. This program, designed to be administered as part of the HOME Program, was signed into law on December 16, 2003. The goal of this program is to increase the homeownership rate, especially among lower income and minority households, and to revitalize and stabilize communities. Please see Attachment 4 for a summary of the program.
Funds can be used for downpayment, closing costs, and rehabilitation carried out in conjunction with the assisted home purchase. Under this program, assistance cannot exceed $10,000 or 6% of the purchase price of the home, whichever is greater. If funds are used for rehabilitation assistance, construction must be completed within one year of the home purchase.
The Committee proposes to use these funds to set up a County-wide second mortgage program. We will develop more specific guidelines and present them to the Council at its April 24, 2004 meeting.
All comments received during tonight’s public hearing and the comment period will be summarized and submitted with the Consolidated Plan to the Department of Housing and Urban Development. The Housing and Community Development Advisory Board reviewed the proposed plan on March 23, 2004. The Board’s recommendation will be distributed at tonight’s meeting.
We will submit a final recommended HOME Program plan to the Council for consideration on April 26, 2004. The governing boards of Orange County, Carrboro and Hillsborough will also consider the proposed plan prior to submitting the Consolidated Plan to the Department of Housing and Urban Development on May 14, 2004.
ATTACHMENTS
1. Summary of 2003–2004 HOME Program Activities (p. 7).
2. Summary of Applications for 2004–2005 HOME Program Funding (p. 9).
3. Eligible HOME Program Activities (p. 13).
4. Summary of American Dream Downpayment Initiative Program (p. 14).
2003-2004 HOME Program
Adopted by the Orange County HOME Consortium
(Orange County, Chapel Hill, Carrboro and Hillsborough)
The U.S. Department of Housing and Urban Development awarded the Orange County HOME Consortium $739,591 for fiscal year 2003-2004. In addition, the participating municipalities are required to contribute a 25% match of the grant funds after subtracting administration costs of $73,959. The total match requirement is $166,408. The Town’s contribution to the matching funds is 41% or $68,227. Orange County, Carrboro and Hillsborough will contribute $66,564, $23,297 and $8,320 respectively. Therefore, including program administration (allocated to the Orange County Department of Housing and Community Development), the Council would be planning activities, including administration for a total of $905,999.
The following HOME Program activities were approved by all four participating governments:
Comprehensive Rehabilitation: $277,040
Funds were budgeted to provide deferred loans to rehabilitate low- income owner-occupied housing in Orange County. The funds would be repaid to the HOME Program if home was sold or conveyed to heirs that do not meet the income guidelines of the program within the affordability period (typically twenty years). Homeowners with less than 50% of the area median income would be eligible for these loans. The program would be administered by the Orange County Department of Housing and Community Development. A portion of these units would be located in Chapel Hill.
Property Acquisition: $220,000
1. The Consortium budgeted $188,000 to Affordable Rentals, Inc. to purchase a duplex on Roosevelt Drive in Chapel Hill. According to information submitted in its application, the goal of Affordable Rentals, Inc. is to make possible an affordable and suitable place to live for residents of Orange County whose income is between 30% and 50% of the area median income. The non-profit organization intends to rent the property to persons earning between 30% and 50% of the area median income. The property would be maintained by Affordable Rentals and would be permanently affordable rental housing.
2. The Consortium also allocated $32,000 to the Town of Chapel Hill to assist in the purchase of a second house for the Town’s Transitional Housing program for public housing residents. The program would provide a stepping-stone for families between public housing and the private housing market. Funds would be used along with other money to purchase a house in Chapel Hill.
Second Mortgage Assistance: $225,000
1. The Consortium budgeted $150,000 to Habitat for Humanity to provide deferred second mortgages for ten homebuyers earning less than 50% of the area median income. The homes will be located in the Richmond Hills Subdivision in Efland.
2. The Consortium also allocated $75,000 for second mortgage assistance. Funds will be provided to qualified non-profit organizations for property acquisition and renovation of property for first time homebuyers earning less than 80% of the area median income. Properties will be located throughout Orange County.
Down Payment Assistance: $100,000
The Consortium budgeted $100,000 to Orange Community Housing and Land Trust to provide down payment assistance for ten first time homebuyers in the Greenway Condominiums project in the Meadowmont Development. The condominiums, which are being developed by the private sector, would be placed in the Land Trust. Eligible applicants must be first time homebuyers, currently living or working in Orange County who earn less than 80% of the area median income.
Operational Support: $10,000
Funds were budgeted to Orange Community Housing and Land Trust for costs related to developing the Greenways Condominium project. As a designated Community Housing Development Organization for the HOME Program, the Land Trust is eligible to receive funds for administration of a housing program.
Administration: $73,959
The remaining $73,959 was allocated to the Orange County Housing and Community Development Department for administration of the HOME program.
Summary of Comments and Applications
for 2004–2005 HOME Program Funding
The following comments were received at public hearings held by the Council on February 2, 2004 and the County Commissioners February 3, 2004:
1. Robert Dowling, Executive Director of Orange Community Housing and Land Trust requested second mortgage funds for two projects in Carrboro – Winmore and Pacifica (approximately $10,000 per unit for fourteen units). Mr. Dowling stated that it would take approximately $40,000 to make each unit in Winmore affordable, and that he would ask for Orange County Affordable Housing Bond funds for the balance. Mr. Dowling also stated that he supported Habitat for Humanity’s request for funds for Sunrise Road.
Comment: Orange Community Housing and Land Trust submitted an application for this project.
2. Alex Asbun, Executive Director of Affordable Rentals Inc. stated that the agency would request funds to purchase permanently affordable rental housing.
Comment: Affordable Rentals did not submit an application for funding.
3. Susan Levy, Executive Director of Habitat for Humanity stated that they planned to apply for HOME funds for development at Sunrise Road.
Comment: Habitat for Humanity submitted an application for this project.
4. Tom Tucker spoke on behalf of residents in the Rogers Road neighborhood. Mr. Tucker explained that residents were requesting extension of sewer service to Purefoy Road.
Town Staff Comment: An application was not submitted for this project. One of the Council’s proposed goals is to complete a Small Area Plan for the Rogers Road area in 2005. We recommend that this request be reconsidered in future years after more planning has been completed. A combination of Community Development and HOME Program funds may be appropriate.
The following agencies submitted applications for 2004-2005 HOME Program funding.
1) Chapel Hill Department of Housing
The Chapel Hill Department of Housing requests $125,000 of HOME Program funds to purchase a house for its transitional rental housing program for public housing residents. The program is a stepping-stone for families between public housing and the private housing market. Funds would be used to purchase a house in Chapel Hill that would be rented to a family currently residing in public housing.
Comment: The Review Committee recommends allocating $125,000 to the Chapel Hill Housing Department.
The Town has purchased one home on Merritt Mill Road using 2001-2002 HOME Program funds. In addition, the Town is in the process of identifying a second house for the program using $75,000 of 1997 Orange County Affordable Housing Bond funds, $28,117 of 2002-2003 HOME funds, and $32,000 of 2003-2004 HOME funds.
2) EmPOWERment, Inc.
EmPOWERment requests $100,000 for second mortgage assistance for first time homebuyers earning less than 80% of the area median income. EmPOWERment estimates that these funds could assist ten homebuyers, and the funds would be converted into deferred second mortgages to the buyers.
Comment: The Committee recommends allocating $100,000 for this activity. In 2002, the Consortium allocated $100,000 for this activity to be used by any qualified non-profit organization. Though funds have not yet been spent, EmPOWERment has identified properties to utilize a portion of these funds. In addition, in 2003 the Consortium allocated $75,000 to EmPOWERment for a Second Mortgage Assistance Program; funds have not yet been spent.
3) EmPOWERment, Inc.
EmPOWERment also requests $75,000 to purchase three condominiums in Orange County to use as affordable rental housing for three low income households earning less than 80% of the area median income.
Comment: The Committee does not recommend allocating funds for this activity. EmPOWERment has an outstanding allocation from fiscal year 2001 HOME Program that remains unspent to date.
4) Habitat for Humanity
Habitat requests $25,000 to extend sewer service to a lot owned by Orange Community Housing and Land Trust on Crest Street in Carrboro. Habitat will build a home on the lot once the sewer extension has been completed. The home will be sold to a Habitat homebuyer using the land trust model, and the property will remain affordable for 99 years.
Comment: The Committee’s recommendation includes $25,000 for this project.
5) Habitat for Humanity
Habitat for Humanity requests $80,000 of HOME Program funds provide four second mortgages; three of the homes are located in the Richmond Hills Subdivision in Efland; and the fourth home is located on Cain Drive in Efland Estates where Habitat has previously built eight homes. Homes will be sold to first time homebuyers earning less than 50% of the area median income. In addition, buyers must live and/or work in Orange County for one year prior to purchasing the home.
Comment: The Committee recommends allocating $80,000 for this project.
6) Habitat for Humanity
Habitat requests $125,000 to purchase five lots in the Winmore Subdivision in Carrboro. The funds would convert into second mortgages of $25,000 each to five low income first-time homebuyers when they purchase their homes. The homes would be purchased by households who have lived and/or worked in Orange County for at least one year prior to applying, and who earn less than 50% of the area median income.
Comment: The Committee’s recommendation includes $125,000 for this activity.
7) Habitat for Humanity
Habitat for Humanity requests $200,000 of HOME and/or Community Development funds for surveying, engineering and design, and infrastructure costs for the development of a 17 acre vacant tract of land on Sunrise Road.
Comment: The Committee does not recommend funding for this project at this time due to the lack of a proposed development plan with a projected number of units as well as the anticipated number of HOME-eligible beneficiaries.
8) Orange Community Housing and Land Trust
Orange Community Housing and Land Trust requests $70,000 for Downpayment Assistance to reduce the prices of seven Townhomes and condominiums in the Pacifica development in Carrboro. The townhomes and condominiums, which are being developed by the private sector, would be placed in the Land Trust. Eligible applicants must be first time homebuyers, currently living or working in Orange County who earn less than 80% of the area median income.
Comment: The Committee recommends allocating $70,000 for this request.
9) Orange Community Housing and Land Trust
The Land Trust also requests $100,000 to reduce the prices of seven Townhomes in the Winmore development in Carrboro. The townhomes, which are being developed by the private sector, would be placed in the Land Trust. Eligible applicants must be first time homebuyers, currently living or working in Orange County who earn less than 80% of the area median income.
Comment: The Committee recommends budgeting $70,000 for this project.
The HOME PROGRAM
In 1990, Congress enacted the HOME Investment Partnerships Act, better known as the HOME Program, in an effort to provide a new approach to housing assistance at the federal level. This federal housing block grant would afford state and local governments the flexibility to find a wide range of housing activities through creative and unique housing partnerships among states and localities, private industry, and nonprofit organizations.
In order to receive future HOME Program funds, each housing activity must fall in line with the following goals of the HOME Program:
1. To expand the supply of decent, safe, sanitary and affordable housing, with emphasis on rental housing, for very low- and low-income citizens;
2. To strengthen the abilities of state and local governments to design and implement strategies for achieving adequate supplies of decent affordable housing; and
3. To encourage public, private and nonprofit partnerships in addressing housing needs.
Eligible activities for HOME Program funding include (from the Federal Regulations):
· acquisition of property (including assistance to homebuyers)
· new construction
· reconstruction
· conversions
· moderate rehabilitation of non-luxury housing with suitable amenities
· tenant-based rental assistance
· relocation of displaced persons, families, businesses, or organizations
· site improvements, acquisition of vacant land and demolition (under special conditions)
· project soft costs
· operating expenses for community housing development organizations