AGENDA #4e
MEMORANDUM
TO: Mayor and Town Council
FROM: W. Calvin Horton, Town Manager
SUBJECT: Budget Amendment for Habitat for Humanity
DATE: May 24, 2004
The attached ordinance would budget $30,000 from the Housing Loan Trust Fund to Habitat for Humanity approved by the Council on May 10, 2004, for pre-development costs for the Sunrise Road project.
DISCUSSION
On May 10, 2004, the Council approved a resolution to budget $30,000 from the Housing Loan Trust Fund to Habitat for Humanity, Orange County in fiscal year 2003-2004 for pre-development costs for the Sunrise Road project (please see Attachment 1). Habitat intends to incur costs for this project before the end of the fiscal year.
RECOMMENDATION
That the Council adopt the attached ordinance budgeting $30,000 from the Housing Loan Trust Fund to Habitat for Humanity, Orange County in fiscal year 2003-2004 for pre-development costs for the Sunrise Road project.
ATTACHMENTS
1. May 10, 2004 Memorandum to Mayor and Town Council (p. 3).
AN ORDINANCE TO AMEND “THE ORDINANCE CONCERNING APPROPRIATIONS AND THE RAISING OF REVENUE FOR THE FISCAL YEAR BEGINNING JULY 1, 2003” (2004-05-24/O-4)
BE IT ORDAINED by the Council of the Town of Chapel Hill that the Budget Ordinance entitled “An Ordinance Concerning Appropriations and the Raising of Revenue for the Fiscal Year Beginning July 1, 2003” as duly adopted on June 9, 2003 and the same is hereby amended as follows:
AGENDA #5k
MEMORANDUM
TO: Mayor and Town Council
FROM: W. Calvin Horton, Town Manager
SUBJECT: Response to Request from Habitat for Humanity
DATE: May 10, 2004
The purpose of this memorandum is to respond to a petition from Habitat for Humanity submitted to the Council on April 26, 2004, requesting $60,000 from the Housing Loan Trust Fund for pre-development costs for the Sunrise Road development (please see Attachment 1).
We recommend that the Council take no action.
An alternative would be for the Council to adopt the attached Resolution to budget funds to Habitat for Humanity for this request.
THE REQUEST
At a public hearing on March 24, 2004, a representative from Habitat for Humanity requested funds from the Housing Loan Trust Fund in the current year for pre-development costs for the Sunrise Road project. In a follow-up letter dated April 5, 2004, and presented to the Council on April 26, 2004 from Susan Levy, Executive Director of Habitat for Humanity, requested a $60,000 grant from the Housing Loan Trust Fund for pre-development costs for the Sunrise Road project. Habitat expects to begin incurring expenses for this project in May 2004.
BACKGROUND
On November 25, 2002, the Council adopted a resolution to provide up to $50,000 from the Housing Loan Trust Fund to Habitat for Humanity for either an extended option or to assist with the acquisition of the Sunrise Road property. These Town funds were provided for the acquisition of the property and Habitat executed a Deed of Trust and Promissory Note to the Town for these funds. Orange County provided the balance of funds, $250,000, to purchase this property. Habitat purchased the 16-acre site on February 27, 2003.
On May 12, 2003, the Council endorsed seventeen suggested goals and principles developed by the Mayor’s Committee on a Proposed Habitat Development (please see Attachment 2). The Committee met with representatives from Habitat and representatives from the surrounding neighborhoods, walked the site, and sponsored two community meetings to hear comments about this property and possible development plans.
Since the suggested goals and principles were adopted, Habitat’s Board of Directors has been working with a design team and some residents of the adjacent neighborhoods to develop design options for the site. According to the information submitted, the Habitat Board is consulting with the Board of Orange Community Housing and Land Trust and will decide on a concept plan to be submitted to the Town later this spring. Please see Attachment 3 for an explanation of the process for consideration of development applications.
DISCUSSION
Potential Funding Sources
Community Development Program
Use of Community Development funds for pre-development costs is not an eligible activity under the Community Development program.
Housing Loan Trust Fund
The Town Council established the Housing Loan Trust Fund in 1973, using revenue sharing funds, to assist low-income families with the purchase of a new home or to renovate an existing home. Use of the Housing Loan Trust Fund for pre-development costs for projects to be developed for the purpose of providing rental or owner-occupied projects is an eligible use of the Housing Loan Trust Fund if the project:
(1) is located within the Chapel Hill Planning Jurisdiction; and
(2) will benefit households earning less than 80% of the HUD published area median income.
The proposed Sunrise Road project would meet these eligibility criteria to receive assistance from the Housing Loan Trust Fund. Guidelines would allow funds to be provided as a grant.
HOME Program
Use of HOME Program funds for predevelopment costs is an eligible HOME Program activity. However, when evaluating this request during the HOME Program budget deliberations, the HOME Program Committee did not recommend funding for this project because of the lack of a proposed development plan with a projected number of units as well as the anticipated number of HOME-eligible beneficiaries. The 2004-2005 HOME Program Plan allocating funds was adopted by the Council on April 26, 2004, and will soon be adopted by the Orange County, Carrboro and Hillsborough. Once a plan was developed, this project could be considered for future HOME Program funding.
Analysis of Funding Sources
As mentioned above, the Housing Loan Trust Fund was established using revenue sharing funds, and the Fund does not receive an annual allocation. The Fund is periodically replenished when loans are repaid, such as from owners of Culbreth Park and Tandler homes who received second mortgage assistance from the Town.
In accordance with policy established by the Council, the Town has been using these repayments to repurchase property and issue permanent grants to Orange Community Housing and Land Trust on various properties in Culbreth Park so that they will remain more permanently affordable. The Town also uses funds to provide second mortgages and grants to the Land Trust for houses in the Northside neighborhood.
The Fund has previously been used to provide pre-development grants to Habitat for Humanity for the Rusch Hollow and New Homestead Place projects and to First Baptist Church for its Manley Estates senior citizen rental housing project. Funds provided as grants are not repaid to the Town.
In January 2002, the Council appropriated $150,000 of the Fund to establish the Revolving Acquisition Fund. At that time, we informed the Council that the fund balance of the Housing Loan Trust Fund not appropriated for specific activities in that budget year was approximately $250,000. We also recommended a residual reserve of $100,000 to account for future anticipated recurring expenditures such as the Town’s local match for the HOME Program and to provide a cushion for unanticipated expenditures.
As of June 30, 2005, taking into account the estimated 2004-2005 Housing Loan Trust Fund budget including the HOME Program match, the Fund balance would be approximately $116,000.
The available fund balance may not be sufficient to pay the Town’s portion of future HOME Program matches. We believe that it is important for the Town to continue to participate in the HOME Program and therefore we recommend that the Council reserve funds for the Town’s portion of the match in the future, in the Housing Loan Trust Fund. Please see Attachment 4 for a more detailed analysis of the Housing Loan Trust Fund.
If the Council chooses to issue this loan it would be consistent with following statements in the Comprehensive Plan: the goal to increase the availability of well-designed, affordable, safe, and sanitary housing for all citizens of Chapel Hill; the objective of increasing the availability of quality housing affordable to all citizens who live and work in Chapel Hill; and the strategy of working with housing providers to aggressively develop affordable housing in Chapel Hill. If the Council chooses to fully fund this request, there would be insufficient funds available for the Town’s portion of the estimated HOME Program match in 2005-2006.
RECOMMENDATION
We offer the Council the following options for consideration:
Option A
The Council could take no action. We believe there are insufficient funds available in the Housing Loan Trust Fund to respond to this request and to continue reserving funds for the annual HOME Program match.
Option B
The Council could adopt the attached resolution to allocate funds from the Housing Loan Trust Fund in the current fiscal year for pre-development costs for the Sunrise Road project in the 2003-2004 fiscal year.
We recommend that the Council reserve funds for the annual HOME Program match from the Housing Loan Trust Fund. Therefore, we recommend Option A, that the Council take no action.
ATTACHMENTS
1. April 5, 2004 Request from Habitat for Humanity (p. 6).
2. May 12, 2003 Memorandum to the Mayor and Town Council from the Mayor’s Committee on a Proposed Habitat Development (p. 8).
3. Process for Consideration of Development Applications (Excerpt from November 25, 2002 Memorandum to the Mayor and Town Council) (p. 22).
4. Analysis of the Housing Loan Trust Fund (p. 23).
A RESOLUTION BUDGETING $ 30,000 FROM THE HOUSING LOAN TRUST FUND TO HABITAT FOR HUMANITY, ORANGE COUNTY, IN FISCAL YEAR 2003-2004 FOR PRE-DEVELOPMENT COSTS FOR THE SUNRISE ROAD PROJECT (2004-05-10/R-9)
WHEREAS, the Town has an ongoing interest in the development of affordable housing in Chapel Hill; and
WHEREAS, a goal in the Town’s Comprehensive Plan is to increase the availability of well-designed, affordable, safe, and sanitary housing for all citizens of Chapel Hill; and
WHEREAS, a strategy in the Comprehensive Plan to achieve this goal is to work with housing providers to aggressively develop affordable housing in Chapel Hill; and
WHEREAS, Habitat for Humanity has requested funds from the Housing Loan Trust Fund for pre-development costs for the Sunrise Road project;
NOW, THEREFORE, BE IT RESOLVED by the Council of the Town of Chapel Hill that the Council budgets $30,000 from the Housing Loan Trust Fund to Habitat for Humanity, Orange County in fiscal year 2003-2004 for pre-development costs for the Sunrise Road project.
BE IT FURTHER RESOLVED that the Council authorizes the Manager to execute a Performance Agreement with Habitat for use of funds for pre-development costs for the Sunrise Road project.
This the 10th day of May, 2004.