AGENDA #8
MEMORANDUM
TO: Mayor and Town Council
FROM: W. Calvin Horton, Town Manager
SUBEJCT: Response to Request from Habitat for Humanity
DATE: February 14, 2005
The purpose of this memorandum is to respond to a request from Habitat for Humanity to modify the terms of a loan between the Town and Habitat for the acquisition of property on Sunrise Road (Please see Attachment 1).
Adoption of the attached Resolution would authorize the modification of the terms of a Performance Agreement between the Town and Habitat for Humanity to extend the repayment date of a loan for the acquisition of property on Sunrise Road from February 28, 2005 to February 28, 2006.
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 (Please see Attachment 2). The Town entered into a Performance Agreement with Habitat for these funds on February 12, 2003 (Please see Attachment 3). These funds were provided for the acquisition of the property. 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.
THE REQUEST
In a letter dated January 11, 2005, Susan Levy, Executive Director of Habitat for Humanity requested that the Town extend the contract time period and consider converting the $50,000 acquisition loan into a deferred payment loan that would be transferred to the future homebuyers upon sale of the homes. Habitat has submitted a concept plan to the Town for the development of fifty homes on this property, and is working on a formal development application for submittal to the Town.
DISCUSSION
The current Performance Agreement permits Habitat to use the Town’s loan for up to two years from the date of the Agreement. It also states that on February 28, 2005 the loan will be repaid in full to the Town. The memorandum to Council of November 25, 2002 stated that the Council could authorize contract extensions, and the resolution authorized the Town Manager to execute the contract based on the information in the memorandum. Therefore, it is appropriate for the Council to consider requests for amendments to this Agreement.
We believe that it is premature to grant Habitat’s request to convert the Town’s loan into deferred loans to the future buyers of the homes that will be built. Habitat has not submitted a formal application for development. We recommend that the Council consider Habitat’s request to convert the funds into deferred loans for the homebuyers if a development application is approved.
We recommend extending the term of the Performance Agreement for an additional year to February 28, 2006. This extension would allow Habitat sufficient time to complete the development application process.
1. January 11, 2005 letter from Habitat for Humanity to the Town Manager (p. 4).
2. November 25, 2002 Memorandum to the Mayor and Town Council (p. 5).
3. February 12, 2003 Performance Agreement between the Town and Habitat for Humanity
(p. 55).
A RESOLUTION AUTHORIZING A MODIFICATION TO THE TERMS OF A PERFORMANCE AGREEMENT BETWEEN THE TOWN AND HABITAT FOR HUMANITY FOR A LOAN FOR THE ACQUISITION OF PROPERTY ON SUNRISE ROAD (2005-02-14/R-13)
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, the Town entered into a Performance Agreement with Habitat for Humanity on February 12, 2003, to provide $50,000 from the Town’s Housing Loan Trust Fund to Habitat for the acquisition of a 16-acre parcel of property off of Sunrise Road; and
WHEREAS, the Agreement stipulates that on February 28, 2005, the loan will be repaid in full to the Town of Chapel Hill; and
WHEREAS, the Agreement stipulates that the loan may be extended in whole or in part for additional periods upon written request to and agreement by the Town Manager. The Town Manager may approve the request if it conforms to Habitat’s plans for developing this property, or the Town Manager may refer the request to the Town Council, at his discretion;
NOW, THEREFORE, BE IT RESOLVED by the Council of the Town of Chapel Hill that the Council authorizes the Town Manager to execute an amendment to the Performance Agreement that would amend Section 3. Terms to read:
“Habitat may have use of this loan for a period of up to three years from the date of this Performance Agreement. On February 28, 2006, the loan will be repaid in full to the Town of Chapel Hill.
The loan may be extended in whole or in part for additional periods upon written request to and agreement by the Town Manager. The Town Manager may approve the request if it conforms to Habitat’s plans for developing this property, or the Town Manager may refer the request to the Council, at his discretion.
There will be no interest charged on the loan.
The Town’s loan is for the purpose of acquisition of property. Subordination of this loan is subject to approval by the Town Manager.”
This the 14th day of February, 2005.