AGENDA#5g
MEMORANDUM
TO: Mayor and Town Council
FROM: W. Calvin Horton, Town Manager
SUBJECT: Information Report: Response to Petition Concerning Sewer Connections in the Purefoy Road Area
DATE: May 9, 2005
This memorandum reports on a request from Habitat for Humanity that the Town assist with the cost of connecting two homeowners to the sewer system adjacent to the Rusch Hollow subdivision. We believe it is appropriate for Habitat to pay these costs as reasonably related to its construction program.
BACKGROUND
On March 23, 2005, the Council held a public forum on the preliminary Budget and public hearings on the preliminary Community Development Program and HOME Program. At that meeting, Ms. Susan Levy, Executive Director of Habitat for Humanity of Orange County, Inc., requested assistance with connecting two homeowners with failed septic systems to the sewer system (Mr. Robert Campbell and Ms. Barbara Hopkins). These properties adjoin the Rusch Hollow subdivision under construction by Habitat for Humanity.
Ms. Levy also requested allowing the encumbrance of 2005-2006 Community Development activity funds proposed for sewer connection assistance prior to the start of the fiscal year in July 2005 to enable a third family (William and Topsy Woods) to connect to the sewer prior to the start of subdivision construction near that family’s home. Habitat for Humanity’s letter dated March 23, 2005 provides detail on these two requests (please see Attachment 1).
On April 11, the Town Manager met with Ms. Levy and learned that Habitat was connecting the two homes to sanitary sewer immediately, and modified the organization’s request to the Town. In a letter of April 11, 2005, Habitat requested that the Town reimburse Habitat for the cost of connecting the Hopkins property to the sewer, while Habitat assumes financial responsibility for connecting the Campbell residence to sewer (please see Attachment 2).
On April 25, we provided the Council with an information report on the status of stormwater/drainage issues (please see Attachment 3). At that time, we reported that Habitat had proceeded with installing sanitary sewer connections to serve the Campbell and Hopkins properties, as required by the County Health Department, to replace the failing septic fields.
DISCUSSION
Request for Sewer Assistance
Habitat for Humanity requests that the Town reimburse it for the cost of connecting the home of Ms. Barbara Hopkins to the sanitary sewer. The home is now connected to the sewer. The Town’s information report of April 25 (Attachment 3) concluded that the change in graded elevation of the Habitat site had resulted in the ponding of water on the property of Ms. Hopkins.
We understand from Ms. Levy that the costs of connecting the Hopkins home to the sewer will total to a maximum of $11,000.
This property owner would likely be eligible for assistance through the recommended activity for sewer connection assistance in the 2005-2006 Community Development Program (please see item # 7 on tonight’s agenda). After approval by the Town Council, the program year would begin after approval by the U.S. Department of Housing and Urban Development in July, 2005. We cannot use grant funds to reimburse an agency for previously incurred costs prior to program approval.
Another potential source of funds is the Town’s Housing Loan Trust Fund. Funds totaling $26,000 are budgeted in the current year for second mortgage assistance for lower income families. If the Council desired to provide funding, the Town could make a deferred loan to the owner of the property where the amount would be forgiven over a five or 10-year period depending on the actual amount of the loan, for each year of continued ownership of the property. This mechanism would be identical to that used with other sewer assistance provided through the Community Development program in the past, and contemplated for the new program in 2005-2006.
We do not recommend funding this request. We believe that Habitat for Humanity acted expeditiously in connecting both homes to the sewer to correct immediate public health and safety issues that appeared to some to be connected to their construction work. As a developer of property, we believe it is appropriate for Habitat for Humanity to bear the costs of connecting the homes of both Mr. Campbell and Ms. Hopkins to the sewer.
In addition, the only funding mechanism available to us would result in Ms. Hopkins needing to assume the financial responsibility of a deferred loan, which becomes a lien on her property. The other property owner paid for by Habitat would not have such a lien.
Request to Allow Early Encumbrance of Funds
Habitat for Humanity requests assistance for a third property (William and Topsy Woods). According to the March 23 letter (Attachment 1), Habitat requests the Town to allow the encumbrance of Community Development funds prior to the July start of the program year so that Habitat construction can begin near the property. The septic field of the Woods will be cut by construction on the Habitat site much as occurred with the Robert Campbell property. In this case, Habitat is aware of the issue prior to the start of work in that area of the site.
We do not recommend funding this request. As a developer of property, we believe it is appropriate for Habitat for Humanity to pay for the costs of connecting this home to the sewer. Although there is a procedure in the Community Development regulations for allowing “pre-award costs,” these procedures must be in compliance with environmental review requirements. We do not believe we can complete this review before July 1, or take on the additional staff work needed to meet the “pre-award costs” requirements of the regulations.
If the property owner applies for assistance and meets the guidelines of the 2005-2006 Community Development activity after the start of the fiscal year, and if work has not been authorized prior to any future Town approval, it would be possible that this work could be funded out of the new activity (should the Council authorize the program tonight in a later agenda item).
RECOMMENDATION
We recommend that the Council not reimburse Habitat for Humanity for the costs of connecting the property of Ms. Barbara Hopkins to the sewer system. In addition, we do not recommend pursuing early funding methods for the case involving the Woods’ property. It is possible for the property owner to apply for assistance after the start of the Community Development fiscal year in July, 2005.
ATTACHMENTS