AGENDA #7b

MEMORANDUM

 

TO:                  Mayor and Town Council

 

FROM:            W. Calvin Horton, Town Manager

 

SUBJECT:       Amendment to Performance Agreement with EmPOWERment, Inc. for Renovation of 501 Sykes Street

 

DATE:             January 14, 2002

 

The attached resolution would amend the Town’s Performance Agreement with EmPOWERment, Inc. for the renovation of 501 Sykes Street as follows:  (1) increase the renovation budget to $40,436; and (2) extend the Time of Performance to renovate and sell the property until June 30, 2002.

 

BACKGROUND

 

On February 28, 2000, the Council authorized the acquisition of 501 Sykes Street in the Northside neighborhood.  At that time, the Council stipulated that the property would be placed in the Land Trust.  In November 2000, the Town purchased 501 Sykes Street using $55,000 of Community Development Neighborhood Revitalization Funds. 

 

In February 2001, the Town entered into a Performance Agreement with EmPOWERment, Inc. to use an additional $30,000 of Community Development Neighborhood Revitalization funds to renovate the house.  The Performance Agreement also states that EmPOWERment, Inc. would work with the Land Trust to renovate and sell the property to a first time homebuyer earning less than 70% of the area median income. The Performance Agreement expired on June 30, 2001.  However, renovation of the house is not complete and EmPOWERment, Inc. has not yet identified a buyer for this property. 

 

THE PROPOSAL

 

In a letter dated December 4, 2001, EmPOWERment, Inc. requested that the Town increase the renovation budget to $40,436 and extend the June 30, 2001 deadline stipulated in the Performance Agreement to June 30, 2002 (Please see Attachment 1).

 

DISCUSSION

 

EmPOWERment, Inc. experienced delays during the renovation of this property due to financing issues.  EmPOWERment, Inc. has resolved its financing issues and renovation of the property is nearly complete.  EmPOWERment, Inc. has produced documentation to verify the increase in renovation expenses.  In addition, we have performed site inspections to confirm that the appropriate percentage of work under the current contract has been completed.  Based on documentation provided by EmPOWERment, Inc., we believe that the increase in budget is justified. 

 

Once renovation is complete, EmPOWERment, Inc. will work with the Land Trust to sell the property for approximately $70,000 to a household earning less than 70% of the area median income.  If the budget increase were approved, the Town’s total investment in this project including acquisition and rehabilitation would be $95,436 (acquisition - $55,000; rehabilitation - $40,436). 

 

Upon sale to a buyer the Town would be repaid approximately $70,000 of the total cost of $95,436.  These funds could be used for future Community Development projects.  The balance of $25,436 would become the Town’s permanent investment in the project and would be converted into a grant to the Land Trust.  A grant would enable the house to be more permanently affordable to lower income households in the future.  We note that the grant amount would represent the estimated value of the land underlying the house. 

 

RECOMMENDATION

 

We recommend that the Council amend the Town’s Performance Agreement with EmPOWERment, Inc. for the renovation of 501 Sykes Street to: (1) increase the budget to $40,436; and (2) extend the Time of Performance to renovate and sell the property until June 30, 2002. 

 

ATTACHMENT

 

1.      Letter from Mark Chilton to Mayor and Town Council (p. 4).

 

 

 

 

 

 

 

A RESOLUTION AMENDING THE TOWN’S PERFORMANCE AGREEMENT WITH EMPOWERMENT, INC. FOR THE RENOVATION OF 501 SYKES STREET (2002-01-14/R-12b)

 

WHEREAS, the Town has an ongoing interest in community development activities in Chapel Hill; and

 

WHEREAS, on February 28, 2000, the Council authorized acquisition of 501 Sykes Street for affordable housing purposes; and

 

WHEREAS, on October 31, 2000, the Town used $55,000 of Community Development Neighborhood Revitalization Funds to purchase 501 Sykes Street; and

 

WHEREAS, on February 1, 2001, the Town entered into a Performance Agreement with EmPOWERment, Inc. budgeting $30,000 of Community Development Neighborhood Revitalization Funds to renovate a house located at 501 Sykes Street; and

 

WHEREAS, on December 4, 2001, EmPOWERment, Inc. requested an amendment to the Performance Agreement for 501 Sykes Street;

 

NOW, THEREFORE, BE IT RESOLVED by the Council of the Town of Chapel Hill that the Council amends its Performance Agreement with EmPOWERment, Inc. for the renovation of 501 Sykes Street as follows:

 

(1)    The Time of Performance shall be extended until June 30, 2002;

(2)    The Budget shall be increased to $40,436.

 

BE IT FURTHER RESOLVED that the Council authorizes the Manager to execute an amended Performance Agreement with EmPOWERment, Inc. to reflect the extension of the Time of Performance and the increase in budget. 

 

This the 14th day of January, 2002.