ATTACHMENT 2

 

AGENDA #7d

MEMORANDUM

 

TO:                  Mayor and Town Council

 

FROM:            W. Calvin Horton, Town Manager

 

SUBJECT:       Request from EmPOWERment, Inc., Inc. for 503 Sykes Street

 

DATE:             January 14, 2002

 

The attached resolution would authorize: (1) EmPOWERment, Inc., Inc. to use $35,000 of Community Development Neighborhood Revitalization funds to acquire 503 Sykes Street; and (2) authorize conversion of the Town’s funds into a grant to Orange Community Housing and Land Trust upon sale of the house to a qualified homebuyer.

 

BACKGROUND

 

EmPOWERment, Inc., Inc. has submitted a request for the Town to assist with the purchase of a house located at 503 Sykes Street, adjacent to a house currently under renovation at 501 Sykes Street (please see Attachment 1).

 

Since January 2001, the Town has been working with EmPOWERment, Inc., Inc. and Orange Community Housing and Land Trust, the UNC Department of City and Regional Planning, and neighborhood residents to implement a strategy for revitalizing the Sykes Street area.   To date, EmPOWERment, Inc. has purchased and renovated two properties in the study area and is in the process of negotiating with property owners to acquire and renovate additional properties. 

 

The Council has previously authorized the Manager to approve Neighborhood Revitalization projects.  In addition, the Council specifically authorized acquisition of 501 Sykes Street and placing that house in the Land Trust (see separate agenda item tonight requesting a budget amendment).  In the case of the request concerning 503 Sykes Street, we have determined that Council approval is required to convert the Town’s funds into a grant and authorize its property to be placed in the Land Trust.

 

THE PROPOSAL

 

EmPOWERment, Inc. Inc. has requested $35,000 of Community Development Neighborhood Revitalization funds to help with the acquisition of property located at 503 Sykes Street (please see attached proposal). EmPOWERment, Inc. intends to purchase and renovate this house.  Total acquisition and renovation costs are anticipated to be about $118,500.  EmPOWERment, Inc. will work with Orange Community Housing and Land Trust to identify a buyer for this property.  EmPOWERment, Inc. would sell the property for $83,000 to a first time homebuyer earning less than 70% of the area median income.  Upon sale, EmPOWERment, Inc. would transfer the land to the Land Trust and the Town’s funds used for acquisition of the property would be converted into a grant to the Land Trust.

 

DISCUSSION

 

EmPOWERment, Inc. has requested use of Community Development Neighborhood Revitalization funds to assist with the acquisition of this property.   As required by federal Community Development regulations, an appraisal has determined that the fair market price for this property is $72,000.  EmPOWERment, Inc. has entered into a contract with the owner to acquire the property for this amount.

 

EmPOWERment, Inc. estimates that the total acquisition and renovation costs would be $118,500.  EmPOWERment, Inc. has secured a bank loan for $83,500 and asks that the Town provide $35,000.  Once acquired and renovated, EmPOWERment, Inc. would work with the Land Trust to sell the property to a lower income household for $83,500.

 

Upon sale of the house to a qualified homebuyer for $83,500, EmPOWERment, Inc. would transfer the underlying land to the Land Trust.  These funds would be repaid to EmPOWERment, Inc. to pay off its bank loan.  The Town’s funds ($35,000) would be converted into a grant to the Land Trust and funds would not be returned to the Town.  The Land Trust would continue to use the Town’s funds to keep the house more permanently affordable.

 

The Town would enter into a Performance Agreement with the Land Trust to stipulate that the property would always have to be used for affordable housing purposes and serve families earning less than 80% of the area median income. 

 

We believe that acquiring this property is consistent with the strategy presented to the Council by the Sykes Street Steering Committee and would enhance the Town’s current efforts in the Sykes Street area.  However, we also recommend that implementation of this request be contingent upon EmPOWERment, Inc. successfully accomplishing the recombination of property described in Agenda Item 7c.

 

We also note that EmPOWERment, Inc.’s budget proposal includes a development fee of $5,000 ($3500 to EmPOWERment, Inc. and $1500 to the Land Trust).   Based on information received from other agencies, we have determined that this is a reasonable fee based on the total budget (4% of total budget). 

 

RECOMMENDATION

 

We recommend that the Council adopt the attached resolution that would authorize:

1.      EmPOWERment, Inc. to use $35,000 of Community Development Neighborhood Revitalization funds to acquire 503 Sykes Street; and

2.      Conversion of the Town’s funds into a grant to the Land Trust upon sale of the house to a qualified homebuyer.

 

ATTACHMENTS

 

1.  Request from EmPOWERment, Inc., Inc. (p.4).

 

 

 

A RESOLUTION AUTHORIZING EMPOWERMENT, INC. TO USE $35,000 OF COMMUNITY DEVELOPMENT NEIGHBORHOOD REVITALIZATION FUNDS TO ACQUIRE 503 SYKES STREET (2002-01-14/R-12d)

 

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

 

WHEREAS, EmPOWERment, Inc. has requested use of Community Development funds to acquire 503 Sykes Street; and

 

WHEREAS, EmPOWERment, Inc. has also requested that the Town’s funds be converted into a grant to Orange Community Housing and Land Trust; and

 

NOW, THEREFORE, BE IT RESOLVED, by the Council of the Town of Chapel Hill that the Council authorizes:

 

1.       EmPOWERment, Inc. to use $35,000 of Community Development Neighborhood Revitalization funds to acquire 503 Sykes Street; and

2.      Conversion of the Town’s funds into a grant to Orange Community Housing and Land Trust upon sale of the house to a qualified homebuyer.

 

BE IT FURTHER RESOLVED that the Council authorizes the Manager to enter into a Performance Agreement with EmPOWERment, Inc. for this project.

 

BE IT FURTHER RESOLVED that the implementation of this resolution is contingent upon EmPOWERment, Inc. completing a recombination of property in the area such that the property lines are adjusted to result in lots conforming to the Town’s Development Ordinance for 501 and 503 Sykes Street.

 

This the 14th day of January, 2002.