AGENDA #1d
MEMORANDUM
TO: Mayor and Town Council
FROM: W. Calvin Horton, Town Manager
SUBJECT: Public Hearing: Preliminary 2005-2006 HOME Program
DATE: March 23, 2005
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 2005-2006. The Committee is comprised of one elected official and the Town Manager or his designee(s) from each participating government.
Funding
The U.S. Department of Housing and Urban Development has awarded the Orange County HOME Consortium $707,949 for fiscal year 2005-2006. In addition, the participating municipalities are required to contribute a 25% match of the grant funds after subtracting administration costs of $70,795. The total match requirement is $159,287. The Town’s contribution to the matching funds is 41% or $65,308. Orange County, Carrboro and Hillsborough will contribute $63,715, $22,300 and $7,964 respectively. The Committee also proposes to reallocate $111,660 of residual funds from previous years. Therefore, including program administration (allocated to the Orange County Department of Housing and Community Development), and residual funds, the Consortium would be planning activities, including administration for a total of $978,896.
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 Council appointed Mayor pro tem 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 Valerie Foushee, Assistant County Manager Gwen Harvey, 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.
SUMMARY
HOME Program
The HOME Program Review Committee proposes the following use of 2005-2006 HOME Program:
1. Rental Assistance HOME Consortium $127,102
2. Property Acquisition Town of Hillsborough $100,000
Chrysalis Foundation (OPC Mental Health) $100,000
3. Second Mortgage
Assistance Orange Community Housing and
Land Trust (Northside and Pacifica) $115,000
Habitat for Humanity (Richmond Hills) $ 80,000
EmPOWERment, Inc. (Davie Rd.) $ 75,000
4. Pre-Development Habitat for Humanity (Sunrise Ridge) $ 70,000
InterFaith Council
Men’s Residential Center $ 75,000
5. New Construction Habitat for Humanity (Rusch Hollow II) $100,000
6. Rental Assistance Weaver Community Housing Assoc. $ 26,000
7. Homeownership
Assistance Orange County (Individual Development
Account Program) $ 25,000
8. Operational Support Orange Community Housing and
Land Trust $ 15,000
9. Administration Orange County Housing $ 70,794
TOTAL $978,896
As in previous years, we propose to use funds available in the Housing Loan Trust Fund for the Town’s matching contribution of $65,308. There are currently funds available for this purpose.
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 2004-2005 HOME Program Activities.
The Consolidated Plan
This year, the Orange County HOME Consortium consisting of the Town, Orange County, Carrboro and Hillsborough is required to submit a new Consolidated Plan to the U.S. Department of Housing and Urban Development covering fiscal years 2005-2006 thorough 2009-2010. The purpose of the Plan is to identify and prioritize the housing and community development needs for Chapel Hill and Orange County, and to suggest how the Town and the County will address the needs over a five-year period.
As the lead entity of the HOME Consortium, Orange County has hired a consultant to develop the Plan. To date, the consultants have held four focus group meetings to receive input from affordable housing and community service providers, citizens, and government staff on how to prioritize the affordable housing and community development needs in the County. Comments from these sessions will be incorporated into the Consolidated Plan.
The Plan will include a 2005-2006 Community Development and HOME Program Plan, establish priorities for use of funds, and a description of housing and community development initiatives and programs in Orange County. The Community Development Plan is approved by the Council and the HOME Program Plan is approved by the governing bodies of the HOME Program Consortium: the Council, the Orange County and Hillsborough Commissioners, and Carrboro Board of Aldermen. The consultant will prepare a draft Consolidated Plan for the Council’s consideration on May 9, 2005.
On January 26, 2005, the Council held the first public hearing to receive ideas from citizens about how funds should be used in five related areas: the Town Budget, the Capital Improvements Program, the Community Development Program, the HOME Program and the Comprehensive Grant. On February 15, 2005, 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 2005-2006:
1. Rental Assistance: $127,102
The Committee proposes to use HOME funds to continue a small program 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.
2. Property Acquisition: $200,000
The Committee proposes to allocate funds to the following agencies to acquire property:
3. Second Mortgage Assistance: $270,000
The Review Committee proposes to allocate funds to the following agencies for second mortgage assistance:
The Committee recommends allocating funds to the following agencies for pre-development costs:
· $70,000 to Habitat for Humanity for pre-development costs for a 17-acre vacant tract of land on Sunrise Road. Funds would be used for expenses such as surveying, engineering and design costs related to submitting a development application to the Town of Chapel Hill. Habitat intends to build no more than 68 homes on the site (maximum number of homes permissible under the current zoning) that would be available to first time homebuyers earning less than 60% of the area median income.
· $75,000 to the InterFaith Council for Social Service for pre-development costs related to development of a Residential Center for homeless men. The Center would offer emergency and longer-term housing, and provide services for homeless citizens.
The Committee recommends allocating $26,000 to the Weaver Community Housing Association to provide short-term rental assistance for tenants of cooperative housing in the County. The County will work with the Association to design a program that complies with HUD regulations.
The Committee recommends allocating $25,000 as the local match for the County-wide individual development account (IDA) program funded through the County’s State Community Development Block Grant. This program provides a dollar for dollar match up to $1,000 for participants that are able to save funds to purchase their first home.
8. Operational Support: $15,000
The Committee recommends allocating $15,000 to Orange Community Housing and Land Trust for administrative expenses related to its HOME Program funded projects. 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.
9. Administration: $70,794
The remaining $70,794 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.
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 22, 2005. 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 May 9, 2005. 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 13, 2005.
ATTACHMENTS
1. Summary of 2004–2005 HOME Program Activities (p. 7).
2. Summary of Applications for 2005–2006 HOME Program Funding (p. 9).
3. Eligible HOME Program Activities (p. 12).
The following activities were approved by the Council and Boards of the participating members of the HOME Consortium (Chapel Hill, Carrboro, Hillsborough and Orange County):
Rental Assistance: $236,431
Funds were allocated to develop a small pilot program (four to five units) for Tenant-Based Rental Assistance in Orange County. The program will operate similarly 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 will be calculated based on the tenant’s ability to pay and the fair market rent. The program will be administered by the Orange County Housing and Community Development Department.
Property Acquisition: $250,000
1. $125,000 allocated 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. $125,000 allocated to Habitat for Humanity to purchase five lots in the Winmore Subdivision in Carrboro. The funds will convert into second mortgages of $25,000 each to five low income first-time homebuyers when they purchase their homes. The homes will 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. $100,000 allocated to EmPOWERment Inc. to provide second mortgage assistance for first time homebuyers earning less than 80% of the area median income. EmPOWERment will provide $10,000 to ten buyers throughout Orange County.
2. $80,000 allocated 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 will 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 will 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 Consortium allocated $140,000 to Orange Community Housing and Land Trust to provide down payment 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, will 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 Consortium allocated $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 was 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.
HOME Program Review Committee Report
for 2005-2006 HOME Program Funding
1) Chrysalis Foundation for Mental Health
The Chrysalis Foundation for Mental Health requests $200,000 of HOME Program funds to purchase property and construct a permanent supportive housing project. The Foundation intends to develop a permanent housing project that focuses on serving the homeless in Orange County with particular emphasis on addressing chronic homelessness. Though the project is in the early stages of development, a specific site has not yet been located.
Comment: The Committee’s recommendation includes $100,000 for this project.
2) EmPOWERment, Inc.
EmPOWERment, Inc. submitted three requests for funding:
Comment: The Committee recommends allocating $75,000 for the Davie Road project.
Comment: The Committee does not recommend allocating additional funds for second mortgage assistance. EmPOWERment has an outstanding allocation of funds for second mortgage assistance from fiscal year 2004-2005 that remains unspent to date ($100,000). WE do not recommend allocating additional funds at this time.
Comment: This is not an eligible use of HOME Program funds therefore it is not included in the Plan.
3) Town of Hillsborough
The Town of Hillsborough requests $100,000 of HOME Program funds to purchase and renovate a house in the Fairview neighborhood in Hillsborough. The Town would work with a local non-profit organization to renovate and sell the property to a first-time homebuyer earning less than 80% of the area median income.
Comment: The Committee recommends allocating $100,000 for this project.
4) Habitat for Humanity
Habitat for Humanity submitted three requests for funding:
· $80,000 for second mortgage assistance for four homebuyers in the Richmond Hills subdivision. The houses would be sold to first-time homebuyers earning less than 60% of the area median income.
Comment: The Committee recommends allocating $80,000 for this request.
· $70,000 for pre-development costs for the Sunrise Ridge development located on Sunrise Road. Habitat intends to build no more than sixty-eight homes on this site.
Comment: The Committee’s recommendation includes $70,000 for this request.
· $200,000 of Community Development or HOME Program funds for pre-development and infrastructure costs for Phase II of the Rusch Hollow Subdivision on Rusch Road in Chapel Hill.
Comment: The Committee’s recommendation includes $100,000 for this request. The Town’s preliminary Community Development recommendation also includes $100,000 for this project so the request would be fully funded.
5) InterFaith Council for Social Services
The InterFaith Council submitted an application requesting $250,000 of HOME Program funds for pre-development costs for a residential center for homeless men. The Center would offer emergency and longer-term housing services, and provide services for shelter residents. The InterFaith Council has not yet identified a site for this facility.
Comment: The Committee’s recommendation allocates $75,000 for this request. In addition, the preliminary Community Development Program also includes $25,000 for this request.
6) Orange Community Housing and Land Trust
The Land Trust submitted three requests for funding. Eligible applicants for the Land Trust’s programs must be first-time homebuyers, currently live or work in Orange County, and earn less than 80% of the area median income:
· $100,000 to reduce the prices of newly constructed or renovated homes in the Northside Neighborhood. Funds would be used to purchase, demolish or rehabilitate (if necessary or appropriate), and/or reduce the prices of houses. The funds would be converted into a grant to the Land Trust. The Land Trust intends to sell the homes to households earning between 50% and 80% of the area median income. The Land Trust anticipates that $50,000 of a subsidy (Community Development, HOME or a combination of both) is needed to make each home permanently affordable.
Comment: The preliminary HOME Program plan includes $100,000 for this request. The Land Trust also submitted a separate request for $100,000 of Community Development funds for this project. The preliminary Community Development plan also includes $100,000 for this request. Funding this request would be consistent with the Town’s efforts to revitalize the Northside neighborhood, and increase the number of affordable housing units in Chapel Hill.
· The Land Trust requested $15,000 to reduce the price of three townhomes in the Pacifica Development in Carrboro. Funds would be converted into second mortgages for the future buyers.
Comment: The preliminary plan includes $15,000 for this request.
7) Weaver Community Housing Association
Weave Community Housing Association requests $26,000 of HOME Program funds for an emergency renal assistance program for its tenants. The organization that provides affordable, cooperatively-run housing, would use funds to assist its tenants in need with up to two months of rental assistance and up to six months of utility assistance based on need. This temporary assistance would allow tenants time to recover if they encounter a difficult financial situation.
Comment: The Committee recommends allocating $26,000 for this project. The County staff would work with the organization to develop a program that complies with federal regulations.
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