AGENDA #4e

 

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:             June 24, 2002

 

The purpose of this memorandum is to respond to a request submitted by EmPOWERment Inc. to amend the Town’s Performance Agreement with EmPOWERment, Inc. for the renovation of 501 Sykes Street (please see Attachment 1). 

 

The attached resolution would amend the Town’s Performance Agreement with EmPOWERment, Inc. for the renovation of 501 Sykes Street to extend the Time of Performance to renovate and sell the property until December 31, 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 to use an additional $30,000 of Community Development Neighborhood Revitalization funds to renovate the house.  The Performance Agreement also states that EmPOWERment 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.  At that time, renovation of the house was not complete and EmPOWERment or the Community Land Trust in Orange County had not yet identified a buyer for this property. 

 

On January 14, 2002, the Council adopted a resolution increasing the renovation budget from $30,000 to $43,600, and extending the June 30, 2001 deadline stipulated in the Performance Agreement to June 30, 2002 (please see Attachment 2). The Council approved use of Community Development Neighborhood Revitalization funds for this request. 

 

Upon sale to a buyer the Town would be repaid approximately $70,000 of the total cost of $98,600.  These funds could be used for future Community Development projects.  The balance of $28,600 would become the Town’s permanent investment in the project and would be converted into a grant to the Land Trust. This amount would represent the estimated value of the land underlying the house.  A grant would enable the house would be more permanently affordable to lower income households in the future. 

 

Last year we conducted detailed monitoring review with EmPOWERment to evaluate the organizations performance on projects funded by the Town’s Community Development program.  The organization’s financial and administrative procedures were reviewed in detail.  We determined then that EmPOWERment was generally in compliance with the Town’s Performance Agreements.  We have continued to monitor the organization and we have made several recommendations for improving the organization’s overall performance and compliance with federal and Town regulations. 

 

DISCUSSION

 

To date, the Town’s total investment in this project including acquisition and rehabilitation is $98,600 (acquisition-$55,000; rehabilitation-$43,600).  EmPOWERment has not yet been reimbursed for all renovation costs for this project.  

 

As stated in the attached letter from Director Mark Chilton, EmPOWERment experienced delays during the renovation of this property due to changes in personnel.  According to EmPOWERment, renovation is almost complete and construction is expected to be complete by the June 30 deadline; however, additional time will be needed to market and sell the house. 

 

The Community Land Trust in Orange County has begun marketing this home for sale.  EmPOWERment will continue to 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. 

 

Status of Project

 

This property has been under construction since February 2001.  To date, we have reimbursed EmPOWERment $38,222 for renovation expenses using Community Development Neighborhood Revitalization funds.  EmPOWERment has informed us that they will soon be scheduling a final inspection for the property with the Town’s Inspections Department.  Our review of a recent private inspection ordered by the Community Land Trust in Orange County indicates that there are a number of minimum housing code violations that must be completed before the Town issues a certificate of occupancy.   Correction of the violations could take EmPOWERment beyond the June 30 deadline for completing renovations. We will continue to closely monitor EmPOWERment’s renovation of this property.  Monitoring includes submitting monthly reports until the property is renovated and sold and on-site visits to review the quality of the renovation work.   We believe that it is reasonable for EmPOWERment and the Land Trust to work together to identify a buyer by December 31, 2002.

 

RECOMMENDATION

 

We recommend that the Council amend the Town’s Performance Agreement with EmPOWERment, Inc. for the renovation of 501 Sykes Street to extend the Time of Performance to renovate and sell the property until December 31, 2002.   Any further time extensions would be subject to Council approval.

 

ATTACHMENT

 

1.      June 14, 2002 Letter from Mark Chilton to Mayor and Town Council (p. 5).

2.      January 14, 2002 Memorandum to the Mayor and Town Council (p. 6).

 

 

 

 

 

 

 

A RESOLUTION AMENDING THE TOWN’S PERFORMANCE AGREEMENT WITH EMPOWERMENT FOR THE RENOVATION OF 501 SYKES STREET (2002-06-24/R-3)

 

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 requested an amendment to the Performance Agreement for 501 Sykes Street; and

 

WHEREAS, on January 14, 2002, the Council authorized an amendment to the Town’s Performance Agreement with EmPOWERment for the renovation of 501 Sykes St. to extend the time of Performance until June 30, 2002, and to increase the renovation budget to $43,600;

 

WHEREAS, on March 5, 2002, the Town entered into an amended Performance Agreement with EmPOWERment to reflect this change;

 

WHEREAS, on June 14, 2002, EmPOWERment requested an amendment to the Performance Agreement to extend the time of performance;

 

NOW, THEREFORE, BE IT RESOLVED by the Council of the Town of Chapel Hill that the Town’s Performance Agreement for 501 Sykes Street is amended to extend the time of performance to renovate and sell the house until December 31, 2002.

 

BE IT FURTHER RESOLVED that the Council authorizes the Manager to execute an amended Performance Agreement with EmPOWERment to reflect the extension of the time of performance.

 

This the 24th day of June, 2002.