AGENDA #1d

 

MEMORANDUM

 

TO:                  Mayor and Town Council

 

FROM:            W. Calvin Horton, Town Manager

 

SUBJECT:       Proposed 2002–2003 HOME Program

 

DATE:             March 26, 2002

 

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 2002-2003.

 

INTRODUCTION

 

Funding 

 

The U.S. Department of Housing and Urban Development has awarded the Orange County HOME Consortium $481,000 for fiscal year 2002-2003.   In addition, the participating municipalities are required to contribute a 25% match of the grant funds after subtracting administration costs of $48,100.  The total match requirement is $108,225.  The Town’s contribution to the matching funds is 41% or $44,372.  Orange County, Carrboro and Hillsborough will contribute $43,290, $15,152 and $5,411 respectively.  Therefore including program administration (allocated to the Orange County Department of Housing and Community Development), the Council will be planning activities for a total of $663,217.

 

HOME Program Review Committee

 

On October 23, 2000, the Council passed 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 Committee is comprised of one elected official from each participating government and the Manager or his designee.  The Council appointed Council Member Edith Wiggins to represent the Town Council.  Assistant Town Manager Florentine Miller and Community Development Coordinator Loryn Barnes also attend Committee meetings. Other representatives attending the meetings are:  Orange County Commissioner Margaret Brown and Housing and Community Development Director Tara Fikes; Carrboro Alderman Mark Dorosin and Community and Economic Development Director James Harris; and Hillsborough Commissioner Kenneth Chavious and Planning Director Margaret Hauth.

 

SUMMARY

 

The HOME Program Review Committee proposes the following use of 2002–2003 HOME Program funds:

 

Property Acquisition                             OPC Mental Health Assoc.                              $  75,000                                                                     Residential Services                                          $  75,000

                                                            Affordable Rentals                                            $  70,000

                                                            Chapel Hill Department of Housing                   $  28,117

 

Down payment Assistance                    Orange Comm. Housing & Land Trust  $  77,000

 

New Construction                                Habitat for Humanity                                         $  50,000

 

Second Mortgage Assistance                EmPOWERment Inc.                                       $100,000

                                                            Habitat for Humanity                                         $  40,000

 

Community Revitalization                      All Nonprofit agencies                          $100,000

 

Administration                          Orange County Housing and Comm.Dev.          $  48,100

 

                        TOTAL                                                                                                $663,217        

 

As in previous years, we propose to use funds available in the Housing Loan Trust Fund for the Town’s matching contribution.  There are currently funds available in the Housing Loan Trust Fund for this expense.

 

BACKGROUND

 

The HOME Program was established to provide nationwide 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 low-cost housing.  That year, the Consortium received $803,600 through the State’s HOME Program. 

 

Since 1995, the Consortium has received funds directly from the Department of Housing and Urban Development through the federal HOME Program.   Please see Attachment 1 for a summary of federal HOME Program funding.

 

Please see Attachment 2 for a summary of 2001-2002 HOME Program Activities.

 


The Consolidated Plan

 

On May 15, 2000, the Town and Orange County submitted to the U.S. Department of Housing and Urban Development a five-year Consolidated Plan covering fiscal years 2000–2001 through 2004–2005.  The purpose of the Plan is to identify and prioritize housing and community development needs for Chapel Hill and Orange County.   The Plan also suggests how the Town and the County will address needs over a five-year period. 

 

Each year, we are required to submit an annual Community Development plan approved by the Council and HOME Program plan approved by the Council, the Orange County Commissioners, and the Hillsborough and Carrboro Boards of Aldermen.  The Plan must be submitted to the Department of Housing and Urban Development by May 15, 2002.  

 

Public Participation

 

On January 29, 2002 the Council held the first public hearing to receive ideas from citizens about how funds should be used in five areas: the Capital Improvements Program, the Town Budget, the Community Development Program, the HOME Program and the Comprehensive Grant.  On February 5, 2002, the Orange County Commissioners held a public hearing to receive citizen comments on how HOME Program funds could be spent.

 

Please see Attachment 3 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 4).

 

DISCUSSION

 

The HOME Program Review Committee proposes the following one-year plan for 2002–2003:

 

Property Acquisition:                                        $248,117

 

  1. The Committee proposes to budget $75,000 to the Orange-Person-Chatham Mental Health Association to acquire and if necessary, renovate properties for its clients with severe disabilities.  The property would be rented to clients earning less than 30% of the area median income.  In 1999, 2000, and 2001, Orange Person Chatham Mental Health Association was awarded $60,000, $120,000, and $58,625 of HOME Program funds.  The agency has entered into a Development Agreement with Orange County for the 1999 and 2000 funds, and expects to spend funds very soon.

 

  1. The Committee proposes to budget $75,000 to Residential Services Inc. to purchase a house in Orange County for four individuals with autism.   Residential Services was also awarded $100,000 of 2001 HOME Program funds to purchase property to be made available to the developmentally disabled.

 

  1. The Committee proposes to budget $70,000 to Affordable Rentals to purchase a duplex on McMasters Street in Chapel Hill currently owned by EmPOWERment.  According to information submitted in its application, the goal of Affordable Rentals, Inc. is to make possible an affordable and suitable place to live for residents of Orange County whose income is between 30% and 50% of the area median income.  The non-profit organization intends to rent the property to persons earning between 30% and 50% of the area median income.  The property would be maintained by Affordable Rentals and would be permanently affordable rental housing. 

 

  1. The Review Committee also proposes to allocate $28,117 to the Town of Chapel Hill to purchase a second house for the Town’s Transitional Housing program for public housing residents.  The program would provide a stepping-stone for families between public housing and the private housing market.  Funds would be used to purchase a house in Chapel Hill.  We note that $100,000 of 2001-2002 HOME Program funds and $75,000 of 1997 Orange County Affordable Housing Bond funds were budgeted for this project.  The Town has entered into a Development Agreement with Orange County for the 2001-2002 HOME Program funds and expects to purchase a house for the program soon.   We also note that the proposed 2002-2003 HOME funds could be combined with the Orange County Affordable Housing Bond Funds to purchase a house.

  

Down Payment Assistance                                $77,000

 

The Committee proposes to budget $77,000 to Orange Community Housing and Land Trust to provide down payment assistance for fifteen first time homebuyers in Vineyard Square (formerly called The Homestead), and seven             homes in the Larkspur subdivision, both in Chapel Hill.  Homes in both developments, which are being developed by the private sector, would be placed in the Land Trust.   The homes would be sold to first time homebuyers, currently living or working in Orange County who earn less than 80% of the area median income.

 

New Construction:                                         $50,000

 

The Committee proposes to budget $50,000 of HOME Program funds to Habitat for humanity to partially fund the construction of infrastructure for a development on Rusch Road.  Habitat intends to construct twelve single family homes, and three duplex rental units on the site. 

 

Homebuyer Assistance:                                     $100,000

 

1.           The Committee proposes to budget $100,000 of HOME Program funds to EmPOWERment, Inc. to provide second mortgage assistance to households throughout Orange County.  Eligible activities must serve households earning less than 80% of the area median income. 

 

2.           The Committee also proposes to budget $40,000 to Habitat for Humanity to provide deferred second mortgages for three homebuyers earning 50% of the area median income.   Two of the homes would be located in Carrboro and one in Efland.  

 

Community Revitalization:                                 $100,000

 

Funds would be provided to a qualified non-profit organization for property acquisition and renovation of property for first time homebuyers earning less than 80% of the    area median income.  Properties could be located throughout Orange County.

 

Administration:                                                  $48,100

 

            The remaining $48,100 would be allocated to the Orange County Housing and Community Development Department for administration of the HOME program.

 

We note that 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.   

 

NEXT STEPS

 

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 is scheduled to review the proposed plan on March 26, 2002.  We will forward the Board’s recommendation to the Council on April 22, 2002.

 

We will submit a final recommended HOME Program plan to the Council for consideration on April 22, 2002. 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 15, 2002.

 

ATTACHMENTS

 

1.     Summary of HOME Program funding since 1995 (p. 6).

2.     Summary of 2001–2002 HOME Program Activities (p. 7).

3.     Summary of Applications for 2002–2003 HOME Program Funding (p. 9).

4.     Eligible HOME Program Activities (p. 13).


 ATTACHMENT 1

 

 

Summary of Federal HOME Program Funding Since 1995

 

 

·        In 1995-96, the Consortium received $368,000 from the federal HOME Program and $132,000 of State HOME funds.  The four municipalities contributed a total of $112,500 in matching funds.  The Town contributed $46,125 (41%) of this local match.  

 

·        In 1996-97, the Consortium received $386,000 of federal HOME funds.  The municipalities contributed a total of $96,500 in matching funds; the Town contributed $39,565 of this amount. 

 

·        In 1997-98, the Consortium received $379,000 of federal HOME Program funds.  As a result of Hurricane Fran in September 1996, the local match was waived for counties that were declared a disaster by a Presidential declaration.

 

·        In 1998, the Consortium received $403,000 of HOME Program funds.  The municipalities contributed $90,675 in matching funds for the program; Chapel Hill contributed $37,177. 

 

·        In 1999, the Consortium received $437,000 of federal HOME Program funds.  The municipalities contributed $98,325 in matching funds for the program. The Town contributed $40,313 of this amount.

 

·        In 2000, the Consortium received $438,000 for fiscal year 2000-2001.   The municipalities contributed $98,550 in matching funds for the program.   The Town’s contribution to matching fund was $40,406.

 

·        In 2001, the Consortium received $483,000 for 2001-2002.  The municipalities contributed a total of $108,675 in matching funds.  The Town’s contribution to the matching funds was $44,557.

 

 

 

 


ATTACHMENT 2

 

Summary of 2001-2002 HOME Program

(Adopted by the Chapel Hill Town Council, Orange County Board of Commissioners, Carrboro Board of Aldermen, and the Hillsborough Board of Commissioners)

 

The Consortium budgeted $343,625 to the following agencies for property acquisition/ rehabilitation activities:

 

  1. The Town of Carrboro will purchase three two-bedroom units in Abbey Court (Old Well).  The properties will be renovated and sold to first-time homebuyers or made available as rental units for families earning less than 80% of the area median income.

 

  1. The Town of Chapel Hill was budgeted $100,000 for a Transitional Housing program for public housing residents.  The program will provide a stepping-stone for families between public housing and the private housing market.  Funds will be used to purchase a house in Chapel Hill.

 

  1. Orange Person Chatham Mental Health Association was allocated $58,625 to acquire and if necessary, renovate properties for its clients with severe disabilities.  The property will be rented to clients earning less than 30% of the area median income. 

 

  1. EmPOWERment, Inc. was allocated $50,000 to acquire low-cost condominiums in Orange County. 

 

The Consortium allocated $130,000 of funds for Land Acquisition to the following agencies:

 

  1. Residential Services, Inc. would use $100,000 to develop a continuing care facility that would allow senior citizens to live as independently as possible.  A site for the facility has not yet been identified. 

 

  1. The Orange Community Housing Corporation would use $30,000 to purchase land to build two homes on Dillard Street in Carrboro. 

 

The Consortium budgeted $112,500 of funds for new construction activities to the following agencies:

 

  1. The Orange Community Housing Corporation will use $80,000 to assist with the construction of thirty-two affordable condominiums in Meadowmont.  The condominiums will be sold to first time homebuyers earning less than 80% of the area median income.  Funds will be used for site development expenses.   In another document, we also recommend budgeting $80,000 of Community Development funds for this project in 2001-2002.

 

  1. Habitat for Humanity was allocated $20,000 to pay for costs related to the extension of sewer to a lot in Carrboro owned by the Community Land Trust in Orange County, and $12,500 to assist with the development of lots in the Richmond Hill Subdivision in Efland.  Habitat intends to build houses that would be sold to lower income family earning less than 50% of the area median income.  

 

The Consortium budgeted $100,000 of 2001-02 HOME funds for homebuyer assistance to EmPOWERment, Inc. to provide second mortgage assistance to households throughout Orange County.  Eligible activities must serve households earning less than 80% of the HUD published area median income. 

 

The Consortium budgeted $9,050 of funds for rehabilitation to the following agencies:

 

  1. EmPOWERment, Inc. will use $4,525 to upgrade the electrical and heating system in a house that it will renovate for a first-time homebuyer.

 

  1. Orange County Housing and Community Development will also use $4,525 for the comprehensive rehabilitation program to renovate properties throughout Orange County. 

 

The remaining $48,300 was allocated to the Orange County Housing and Community Development Department for administration of the HOME program.   

 

 

 
ATTACHMENT 3

 

Summary of Comments and Applications

for 2002–2003 HOME Program Funding

 

The following comments were received at public hearings held by the Council on January 29 and the County Commissioners February 5, 2002:

 

1)      Susan Levy, Executive Director of Habitat for Humanity requested $200,000 of HOME funds to partially fund construction of infrastructure for a subdivision it plans to build on Rusch Road in Chapel Hill.

 

2)      Robert Dowling, Executive Director of Orange Community Housing and Land Trust, requested $77,000 of HOME Program funds for down payment assistance for twenty-two first time homebuyers in the Larkspur and Vineyard Square (formerly The Homestead).  Households would earn less than 80% of the median and the homes would be placed in the Land Trust.

 

3)      Nancy Milio, representing Affordable Rentals, Inc., requested that the Council focus HOME Program funds on affordable rental housing. 

 

4)      Chris Moran, Executive Director of the Inter Faith Council, requested that HOME funds be targeted for those earning less than 30% of the area median income and to serve the needs of the homeless population. He also suggested using funds for rental assistance and that more Section 8 vouchers should be made available.

 

5)      Karen Dunn, representing Orange Person Chatham Mental Health Association, requested funds to renovate apartments and build single room occupancy units for its clients. 

 

The following agencies submitted applications for 2002-2003 HOME Program funding. 

 

1)      Affordable Rentals, Inc.

 

Affordable Rentals, Inc. requests $70,000 to purchase a property on McMasters Street currently owned by EmPOWERment.  The property would be made available as permanently affordable rental housing for households earning between 30% and 50% of the area median income. 

 

Comment:  The HOME Program Review Committee proposes to allocate $70,000 for this project.


2)  Affordable Rentals, Inc.

 

Affordable Rentals, Inc. also requests $70,000 to purchase and rehabilitate seven condominium units in Abbey Court in Carrboro.   Units would be rented to households earning between 30% and 50% of the area median income.

 

Comment:  The HOME Program Review Committee does not propose funding for this activity at this time.  Because this is a new organization, we recommend funding one project with the group at this time and evaluating its progress. 

 

3) Chapel Hill Department of Housing

 

The Chapel Hill Department of Housing requests $90,000 of HOME Program funds to develop a transitional rental housing program for public housing residents.  The program would be a stepping-stone for families between public housing and the private housing market.  Funds would be used to purchase a house in Chapel Hill. 

 

Comment:  The Review Committee recommends allocating $28,117 to the Chapel Hill Housing Department.  Funds could be used in conjunction with $75,000 of 1997 Orange County Affordable Housing Bond funds allocated to the Town to acquire a house for the Transitional Housing Program. 

 

4)      EmPOWERment, Inc.

 

EmPOWERment requests $150,000 to provide subordinate mortgages on properties in Orange County.  EmPOWERment requests that the program have flexibility with respect to lien position (i.e. it should be allowable for the funds to be used as third or lower position mortgages).   EmPOWERment intends to assist ten to fifteen first time homebuyers with this fund.

 

Comment:  The Committee recommends allocating $100,000 to EmPOWERment for this activity.

 

5)      EmPOWERment, Inc.

 

EmPOWERment also requests $100,000 for community revitalization funds to assist EmPOWERment with acquisition and rehabilitation of existing properties in Orange County.  Properties would be resold to households earning less than 80% of the area median income, and the funds would be converted into deferred second mortgages to the buyers. 

 

Comment:  The Committee recommends allocating $100,000 for this activity.   Funds could be used by a qualified 501(c) (3) non-profit organization. 

 

6)  EmPOWERment, Inc. on behalf of the Carrboro/Chapel Hill Cooperative Housing Association

 

EmPOWERment and the Cooperative Housing Association request $100,000 of HOME Program funds to acquire and rehabilitate a house in Carrboro or Chapel Hill to develop an affordable housing co-op for very low-income senior citizens. 

 

Comment:  The Committee does not recommend funding for this project. The Committee members supported the model of cooperative housing, it does not appear that there is a strong organizational structure in place to manage this project.  

 

7) Habitat for Humanity

 

Habitat for Humanity requests $150,000 of HOME Program funds to partially fund the construction of infrastructure for its Rusch Road subdivision in Chapel Hill.   Habitat intends to construct twelve detached single family homes and three duplex rental units on the site. 

 

Comment:  The Committee recommends allocating $50,000 for this project. 

 

 8) Habitat for Humanity

 

Habitat also requests a $40,000 of HOME Program funds to provide deferred second mortgage assistance for three Habitat homebuyers earning less than 50% of the area median income.  Two of the homes would be located in Carrboro and one would be located in Efland. 

 

Comment:  The Committee recommends allocating $40,000 for this activity.

 

9)  Orange Community Housing and Land Trust

 

The Land Trust requests $77,000 to provide down payment assistance to twenty two households that will purchase homes in the Larkspur and Vineyard Square (formerly The Homestead) developments in Chapel Hill.  Homes would be sold to first-time homebuyers earning less than 80% of the area median income.   All homes would be placed in the land trust.

 

Comment:  The Committee recommends budgeting $77,000 for this project.

 

10)  Orange-Person-Chatham Mental Health Association

 

Orange-Person-Chatham Mental Health Association requests $200,000 to acquire and, if necessary, renovate four to six properties in Orange County to be rented to its clients with severe disabilities earning below 30% of the area median income.

 

Comment:  The Committee recommends allocating $75,000 for this project.

 

11) Residential Services, Inc.

 

Residential Services, Inc requests $75,000 of HOME Program funds to purchase a house in Orange County to provide affordable housing to four adults with autism.  Residential Services estimates that the project will benefit individuals earning less than 30% of the area median income. 

 

CommentThe Committee recommends allocating $75,000 for this project.

   

The following applications were also submitted for funding but have been determined to be ineligible for funding under the HOME Program Guidelines:

 

1)      First Baptist Church and Manley Estates requested $33,000 of HOME Program funds to expand its existing parking lot to accommodate twenty additional parking spaces. 

 

2)      EmPOWERment, Inc., on behalf of the Carrboro/ Chapel Hill Cooperative Housing Association requested $58,500 to refinance an existing loan it currently has on property it owns on Hillsborough Road in Carrboro.

 

3)      EmPOWERment requested $15,000 for capacity building that would provide funds for staff development and training for agencies that receive HOME Program funding.

 

4)      EmPOWERment requested $15,000 for a housing counseling program.

 

5)      Affordable Rentals requested $45,000 for operational expenses. 


ATTACHMENT 4

 

The HOME Program

 

 

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

·        administration / planning

·        operating expenses for community housing development organizations