AGENDA #1

MEMORANDUM

 

TO:                  Mayor and Town Council

 

FROM:            W. Calvin Horton, Town Manager

 

SUBJECT:       Initial Public Forum on the Annual Budget, Capital Program, Use of Grants and Related Items and Potential Legislative Requests

 

DATE:             January 29, 2003

 

INTRODUCTION

 

The purpose of this memorandum is to provide background information for the Council’s public forum tonight.

 

We suggest that the Council receive comments tonight in a combined forum format in which citizens may make comments regarding any of the forum topics.

 

OVERVIEW OF THE BUDGET PROCESS

 

Through the Town's annual budget process, the Town Council makes decisions on the level and types of services provided to citizens with local, State and federal funds.

 

Adoption of a budget determines in many respects the level of resources to be available for Town services over the coming budget year. Normally, there are limited options for adding to the budget after it is adopted.

 

The budget process is both one of the most important functions and responsibilities of the Council and a key opportunity for citizens' participation in Town government.

 

BRIEF BACKGROUND

 

Process for Participation by Citizens

 

Additional public forums and hearings on the budget and related items will be held at 7:00 p.m. on:

 

March 26 -       Status report on development of a budget, preliminary capital program and proposed grant applications related to housing and community development.

 

May 14 -          Recommended budget for the service year beginning on July 1, 2003; use of transit grants; recommended fifteen-year capital program; potential Downtown Service District program.

 

Citizens may also make comments to the Mayor and Council by letter, fax, or e-mail at any time in the budget process.

 

Notices of the budget forum were published in the Chapel Hill News on January 22 and 26. We mailed or emailed notices to community groups on January 22.  An ad regarding Community Development funds was published in the January 15 edition of the Chapel Hill Herald.

 

TOPICS FOR THE PUBLIC FORUM AND HEARING

 

Information on each topic for the forums tonight is provided below.

Page	Topic
3	Annual Budget: preparing the budget for the service year beginning on July 1, 2003.
4	Capital Program: capital improvement needs for 2003-2018.
5	Community Development Grant: use of the 2003-2004 Community Development grant.
7	Housing Capital Fund Program : use of the 2003-2004 federal Housing Capital Fund Grant for public housing improvements, renovations and services to public housing residents.
8	HOME Grant: use of 2003-2004 federal HOME grant for housing and community development services in Chapel Hill and Orange County.
10	Transportation Grants: use of 2003-2004 federal and State grants for transit capital projects, operating costs and transportation planning.
10     11	Downtown Service District: potential changes in services and tax district boundary for the year beginning on July 1.   Legislative Proposals:  suggestions for legislation that might be sought in the 2003 session of the General Assembly.

 

MANAGER’S RECOMMENDATION

 

That the Council refer comments and questions to boards and commissions and to the Manager for consideration and recommendations in the budget process.

 

 

A.  Annual Budget for 2003-2004

 

This forum provides an opportunity for citizens to comment on any aspect of the Town's budget and budget documents, including services that should be added, eliminated or changed. The Town's 2003-2004 budget and service year will begin on July 1, 2003 in accord with State law.

 

In addition, we invite citizens' comments on the preliminary budget information for 2003-2004 included as Attachment 2.  This information provides an outline and summary of preliminary costs estimates for a base budget for 2003-04, and potential additional costs to the base budget considering information currently available.  Both the base budget and potential additions to the base are shown relative to total revenues estimated to be available in 2003-04 and the difference between estimated revenues and costs.

 

Purpose

 

The annual budget includes primarily operating costs for police and fire protection, street maintenance, refuse collection, various other public works services, parks and recreation, public transit, the public library, planning, building inspection, engineering, legal, and administrative services.

 

The annual budget includes one year's funding for cash-financed small projects such as sidewalks, greenways, street paving, etc., as well as debt service payments on other capital projects.

 

In addition to setting Town service levels and property tax rates, the Council makes decisions on whether to adjust or adopt service fees for refuse collection, recreation programs, transit, development review, inspections and other services as part of the budget.

 

Next Steps

 

On March 26^th, the Council will hold a public forum at which we will submit to the Council a status report on preparing the 2003-2004 budget.  After presentation of the report, the forum will provide an opportunity for comments and requests from citizens or community groups regarding the budget status report, or any aspects of the Town’s budget for 2003-04.

 

On April 28th, we will submit a recommended budget for the Council's consideration and invite comments by citizens at a public hearing scheduled for May 14th. The Council's adopted budget process includes consideration of adopting a budget on June 9th.

 

 

 

 

 

 

 

 

B.  2003-2018 Capital Program

 

The purpose of this forum is to receive citizens' suggestions and comments regarding capital projects in the next fifteen years.

 

Purpose

 

A capital improvements program is a plan for major projects and purchases including:

 

buying land for parks, open space or other Town services;

sidewalks;

streetscape;

bikeways;

greenways;

park improvements;

construction, renovation, expansion and improvement of Town buildings; and

road, bridge and related improvements.

 

Chapel Hill's capital programs have included a list of capital projects with cost estimates, a potential schedule and priorities for fifteen years, and existing or potential future funding methods for each project.

 

Funding sources may include current general revenues, money previously reserved for capital projects, grants, gifts and bond issues.

 

Many projects in the first year of the capital program normally are funded as part of the annual budget. Projects in the second through fifteenth years are normally not funded, although some may be financed through past bond issues, installment purchase contracts and other sources. Funding for most projects in the second through fifteenth years is considered in future annual processes.

 

Planning Process

 

Each year, the Town Council, citizens, boards and commissions, and staff consider the Town's capital project needs and possible funding sources for needed projects.

 

This process results in decisions by the Town Council regarding capital improvements that the Town may undertake as funding becomes available and is appropriated.

 

2003-2004 Funding

 

As indicated in the initial 2003-2004 budget information, we have assumed in our financial estimates that about $1.4 million may be allocated for capital projects.

 

 

 

2002-2017 Capital Program

 

A summary of the current capital program and long-range projections as adopted by the Council is attached as background information (please see Attachment 3).

 

Next Steps

 

On March 26^th, we will submit a preliminary capital program for fifteen years to the Council.  Attached are preliminary comments from several advisory boards that considered the Capital Improvements Program over the past month.  The Council normally refers the preliminary capital program to various Town boards for review and comment. We recommend that you do so this year.

 

A public forum to receive citizens' comments on the preliminary capital program is scheduled for March 26^th.

 

Various boards and commissions will make recommendations to the Council regarding capital projects.  We will submit a recommended capital program on April 28^th for a public hearing on May 14^th.

 

The Council normally adopts a Capital Improvements program in June as part of overall decisions on the budget. 

 

 

 C. 2003-2004 Community Development Grant

 

The purpose of this hearing is to receive citizens' comments on how the Town should use federal Community Development grant funds in 2003-2004.

 

All citizens' comments received in writing and at public hearings will be compiled and addressed in a Community Development plan to be submitted to the Department of Housing and Urban Development in May.

 

Please contact the Planning Department for an application for funding. 

 

Purpose

 

The Town receives a federal grant each year to benefit low- to moderate-income families through projects such as:

 

Housing repairs;

Property acquisition;

Neighborhood revitalization;

Capital improvements; and

After school programs.

 

Attachment 4 provides a summary of the ways in which Community Development grants can be used.

 

Estimated 2003-2004 Funding

 

The U.S. Department of Housing and Urban Development has informed us that the Town may receive $725,000 of Community Development funds for 2003-2004.

 

The 2002-2003 grant was $445,000. In addition, the Town budgeted $16,000 of Community Development program income for community development activities.

 

Current 2002-2003 Program

 

On April 24, 2002, the Council adopted a plan for using the 2002-2003 Community Development grant. The 2002-2003 plan focuses on public housing rehabilitation and neighborhood revitalization in the Northside and Pine Knolls neighborhoods.

 

Please see the attached summary of the Town’s 2002-2003 Community Development activities (Attachment 5).

 

2000-2005 Consolidated Plan with Orange County

 

In May 2000, the Town and Orange County submitted to the U.S. Department of Housing and Urban Development a 5-year consolidated plan addressing the housing and community development needs of Chapel Hill and Orange County, and prioritize these needs for use of Community Development and HOME funds.  A one-year Community Development plan was also included.  The purpose of the consolidated plan is to enhance coordination of community development and affordable housing programs between the Town and County.

 

On May 15, 2003, we will submit the 2003-2004 Community Development program approved by the Town Council, and the 2003-2004 HOME program approved by the Town Council, the Orange County Commissioners, and the Hillsborough and Carrboro Boards of Aldermen. 

 

 

Next Steps

 

On March 26^th, we will submit to the Council a proposed 2003-2004 Community Development Plan.  Citizens will have an opportunity to comment on the proposed plan at the public hearing scheduled for March 26^th.

 

We will also ask the Town’s Housing and Community Development Advisory Board to develop recommendations to the Council.

 

On April 28^th, we plan to recommend that the Council consider a 2003-2004 Community Development Plan. The Consolidated Plan is due to the Department of Housing and Urban Development by May 15, 2003.

 

 

D.  2003-2004 Housing Capital Fund Program

 

The purpose of this forum is to receive citizens’ comments on using the 2003-2004 Housing Capital Fund.

 

Purpose

 

The Town may use annual Housing Capital Fund Grants for renovating and otherwise improving public housing neighborhoods, and for services to public housing residents.

 

Federal rules give priority to work needed to meet requirements such as:

 

• testing for and removing or otherwise controlling lead-based paint;
• testing for and removing or otherwise controlling asbestos; and
• renovations to meet the needs of disabled citizens.

 

Estimated Grant for 2003-2004

 

The 2002-2003 grant was $ 585,065.  We have not received notice of the amount for the coming year, but estimate that it could be about the same as this year.  However, we recently received notification from the U. S. Department of Housing and Urban Development (HUD) that there may be a reduction in the 2003-2004 public housing operating subsidy.  Based on the information received, the 2003-2004 operating subsidy for the public housing program could be reduced by about $300,000. Although we have not yet received information from HUD regarding a potential reduction in capital grant funding, we believe the potential exists for capital funding to be reduced in order to provide more funding for housing operating subsidies in 2003-04.

 

Adoption of Plan for Using Housing Capital Grants

 

In April, 1998, the Council adopted a five-year plan for public housing improvements. This year, renovation of 15 units in the Pritchard Park neighborhood is expected to be completed, and renovation of 13 of the 26 units in the Airport Gardens neighborhood is expected to begin this fall.

  

Next Steps

 

We will submit an updated five-year plan for public housing improvements and a proposed plan for using the 2003-2004 Capital Fund Grant for citizens’ comments at the public hearing on March 26, 2003.

 

The Housing and Community Development Advisory Board and other interested boards will develop recommendations to the Council.   On April 28, we plan to recommend that the Council consider a 2003-2004 plan for using these funds.  A plan is due to the Department of Housing and Urban Development by June 1.

 

 

E.     HOME Program

 

The forum tonight provides an opportunity for citizens to comment on how to use 2003-2004 federal HOME program funds in Chapel Hill and Orange County.

 

Please contact the Planning Department or the Orange County Department of Housing and Community Development for an application for funding. 

 

Purpose

 

Congress established the HOME program in 1992 to fund various housing services to benefit low-income families. HOME funding is in addition to Community Development grants, federal rental assistance, and grants for public housing operations and improvements. 

 

Attachment 6 provides a summary of the ways under which HOME Program funds can be used.

 

2003-2004 Funding

 

The U.S. Department of Housing and Urban Development has informed the HOME Consortium that the 2003-2004 grant may be $752,000. There will be a local match requirement for these funds.  As in past years, we will propose to use funds from the Housing Loan Trust Fund for the Town’s portion of local match.  If this level of funding is received, we estimate that the Town’s share of the match may be approximately $69,600.

 

Orange County Local Governments' Consortium

 

In 1992, the governing boards of Carrboro, Hillsborough, Chapel Hill and Orange County formed a consortium to receive HOME funds. Orange County is the lead agency in administering the HOME program.

 

Current 2002-2003 HOME Program and Funding

 

In 2002-2003, the HOME program in Orange County totaled $663,217.  This amount includes the grant award, the local matching funds and funds reallocated from previous years. 

 

In accord with an agreement in signed in 2002, the local matching funds requirements (in accordance with 2000 Census population figures) are as follows:

 

 

 

 

Locality Share

·          Chapel Hill             41%

·          Orange County       40%

·          Carrboro                14%

·          Hillsborough             5%

 

This year HOME funds have been budgeted primarily for property acquisition and second mortgage assistance.  (Please see Attachment 7 for more detailed information.)

 

Next Steps

 

In 2000, the participating governments established a HOME Program Review Committee that consists of elected officials and staff representatives from Orange County, Chapel Hill, Carrboro and Hillsborough.  This Committee will prepare a proposed plan for using HOME funds.  On March 24^th, we will submit to the Council a proposed 2003-2004 HOME Program Plan.  The Council will hold a public hearing on the proposal on March 26^th.  On February 5^th, the Board of Orange County Commissioners will also hold a public hearing to receive citizen comment on the proposed plan.

 

We will ask the Town’s Housing and Community Development Advisory Board to make recommendations to the Council.

 

On April 28^th, we will ask the Council to consider a plan for use of this grant.

 

Approval by the governing boards of each locality in the Orange County HOME Consortium is required to submit a joint plan to the U.S. Department of Housing and Urban Development for use of the HOME funds.

 

Consolidated Plan with Orange County

 

As the lead agency of the consortium, Orange County compiles material and citizen comments from each locality, and submit the annual update to the 2000-2005 Consolidated Plan for Orange County to the U.S. Department of Housing and Urban Development.  The Consolidated Plan will include an update to the 5-year plan for addressing housing and community development needs in Orange County established last year, and a one-year spending plan for the use of HOME and Community Development funds.  The plan will be submitted to HUD on May 15, 2003.

 

 

F. 2003-2004 Public Transportation Grants

 

The forum tonight is an opportunity for citizens to comment on transit services and projects in 2003-2004 including the use of federal and State grants for transit operations, capital projects and transportation planning.

 

 

 

Purpose

 

Transportation services, projects and planning activities are intended to provide alternatives to the use of single-occupant vehicles, reduce traffic congestion, reduce air pollution and assist people with disabilities affecting their mobility.

 

Estimated Funding

 

For 2003-2004, federal funding for transit services is estimated to be about $932,000 and State funding is estimated to be about $1,574,000.

 

Sharing of Local Costs

 

The University and Towns of Carrboro and Chapel Hill have agreed to share the local cost for transit services. The cost-sharing formulas are set forth in separate contracts with the University and Carrboro.

 

2003-2004 Services

 

Chapel Hill Transit provides:

 

• fare free bus services on routes;
• E-Z Rider service for citizens with mobility impairments;
• shared ride service on evening and Sundays to complement bus service;
• feeder service to transport citizens between bus routes and areas which do not have enough demand to justify bus routes; and
• Tar Heel Express service between various parking lots in the community and events such as games and concerts on the UNC campus.

 

 

G.  Downtown Service District

 

The purpose of this forum is to receive comments and suggestions from downtown business people, property owners and other interested citizens regarding:

 

·        the use of Downtown Service District taxes in 2003-2004;

·        the scope of projects and programs in the service plan for the Downtown District.

 

Purpose

 

In 1989, the Council established a Downtown Service District in response to requests from several downtown businesses and property owners.

 

State law allows the Council to establish this service district and to apply a supplemental property tax to promote the economic vitality of downtown, enhance Town services in the downtown district, etc.

 

Most of the property in the Town Center-1 and -2 zones is in the district. Several properties used only for residential purposes are not in the service district.

 

Estimated Funding in 2003-2004

 

The present downtown district tax rate is 6.2 cents per $100 of value. This rate generates about $70,000 of revenue.

 

Downtown District Services

 

Currently, downtown district funds are allocated for marketing and promotion of downtown, operation of a Welcome Center, supplemental sidewalk cleaning, assistance and communication to downtown businesses.

 

The non-profit Chapel Hill Downtown Commission, Inc. is responsible for providing these services through a performance agreement with the Town.

 

Next Steps

 

We will develop recommendations for use of the downtown district funds and for any changes in the service plan as part of the budget process this spring.

 

The Council will hold an additional forum on March 26th and a public hearing on May 14th.

 

The Council normally adopts the downtown district tax rate in early June with the overall budget and makes decisions concerning services and the district boundary during June.

 

H. Potential Legislative Requests

 

Tonight’s forum is also an opportunity for citizens and Council Members to propose potential legislative requests for the upcoming 2003 legislative session of the North Carolina General Assembly. 

 

Next Steps

 

After hearing ideas from the public, the Council will have the opportunity to discuss these and any additional Council requests among themselves, and to share the ideas and requests with our local legislative delegation before submitting them for consideration by the General Assembly.

 

 

 

 

 

ATTACHMENTS

 

Budget

 

1.         Notice of January 29^th forums (p. 13).

2.               Updated budget and financial information dated January 17, 2003 (p. 15).

 

Capital Program

 

3.                 Summary of 2002-2017 capital program (p. 22).

 

Community Development

 

4.         National objectives of Community Development legislation and related list of services and projects which can be funded (p. 24).

5.              Summary of 2002-2003 Community Development activities (p. 25).

 

HOME Program

 

6.        Uses and Objectives of HOME Program funds (p. 28).

 

7          Summary of 2002-2003 HOME program (p. 29).

 

 

ATTACHMENT 1

 

 

PUBLIC FORUM ON TOWN BUDGET BY THE MAYOR AND TOWN COUNCIL OF CHAPEL HILL 7 p.m., Wednesday, January 29, 2003 Council Chamber, Town Hall 306 North Columbia Street

 

You are invited to express your views at a public forum by the Mayor and Town Council of Chapel Hill at 7 p.m. on Wednesday, January 29^th, regarding:

 

• Town services and projects for the budget for July 1, 2003 through June 30, 2004;

 

• Capital improvement needs for 2003-2018;

 

• How to use the 2003-2004 Community Development grant to address housing and other community needs of lower income households and areas;

 

• How to use the 2003-2004 federal Housing Capital Fund grant for improvements, renovations and related items in public housing neighborhoods;

 

• How to use the 2003-2004 federal HOME grant in Orange County to address housing needs of lower income households;

 

• How to use the 2003-2004 federal and State transit grants for capital projects, operating costs, and transportation planning; and

 

• The Downtown Service District boundary and services in the year beginning on July 1, 2003; and

 

• Potential Legislative requests to 2003 session of North Carolina General Assembly.

 

The forum on January 29th is an initial step in the Mayor and Council's process for developing the 2003-2004 budget and related items listed above.

 

An initial report by the Town Manager regarding the 2003-2004 budget is available for citizens to review in the Town Manager's and Clerk's offices in Town Hall and at the reference desk at the Chapel Hill Public Library.

 

 

 

 

 

Additional hearings and forums will be held on:

 

March 26 - (Status report on development of budget; preliminary 15-year capital

       program; use of Community Development, HOME and

       Comprehensive grants, etc.); and

 

May 14 -    (recommended budget and capital program).

 

 

If you would like to express your views in writing at any time, please feel free to send a letter to:

 

Mayor and Town Council

Town of Chapel Hill

306 North Columbia Street

Chapel Hill, NC 27516

 

You may also send a letter by fax to the Town at 919-967-8406 or by electronic mail to [email protected]. Town staff will forward your letter or comments to the Mayor and each Council Member.

 

If you would like to have additional information, please feel free to visit the Town Manager's Office at Town Hall, send a fax or e-mail as indicated above, or write to:

 

W. Calvin Horton, Town Manager

306 North Columbia Street

Chapel Hill, NC 27516

 

By phone:

Annual budget	Finance Department (968-2706)
Capital improvement program	Planning Department (968-2728)
Community Development grant	Planning Department (968-2728)
HOME grant	Planning Department (968-2728)
Transit grants	Transportation Department (968-2755)
Housing Capital Fund Grant for public housing renovations and related items	Housing Department (968-2850)
Downtown Service District	Manager's Office (968-2743)

 

 

 

                                                          ATTACHMENT 2

 

BUDGET ISSUES AND PRELIMINARY ESTIMATES FOR 2003-04 BUDGET

 

GENERAL FUND

 

Brief Update on Current Year Budget

 

• Revenue in current year is on target with budgeted amounts except for interest earnings expected to be lower than budget, but offset by estimated increases in other revenues, including property taxes.  Expenditures on target with projections enabling us to maintain a balanced budget this year and use $800,000 for next year, consistent with practice in previous normal years.

 

• We have received two full quarters of franchise tax revenue so that earlier conservative projections of additional revenue expected this year ($1,630,000) is on target and virtually assured.  To date, the Council has allocated $648,000 of this amount, and is scheduled is consider recommendations to allocate an additional $815,000 for capital improvements and $167,000 to help replenish debt service reserves on January 13.

 

• Based on latest information available from the State and the League of Municipalities, we believe there is a good possibility that no State revenue will be withheld this year, and that we should receive another $1 million dollars this year that the Council has not allocated.

 

• Potential uses of any additional revenues could include additional funds for costs required for planning the new Town operations center, reserving funds for new debt service on general obligation bonds to be sold later this year, increasing fund balance reserves or other uses as the Council may desire.

 

 

Overall Budget Issues for 2003-04

 

Key issues for the upcoming budget for 2003-2004 include:

 

·        Current economic conditions and uncertainty about the pace of an economic recovery.

 

·        Potential impacts on local government revenues of a projected State budget deficit of about $2 billion for 2003-04.

 

·         New debt service costs on the final phase bond sale for 1996 bond projects ($425,000).

 

·        The need for pay plan adjustments to maintain competitive compensation that continues to attract quality Town employees, based on prevailing wages in the Triangle labor market.

 

·        Projected potential increase of 20% in employee medical costs as this sector of the economy becomes less competitive and medical costs continue to rise.

 

·        Additional costs of planning the new Town operations center.

 

 

Assumptions and Preliminary Estimates of Major Revenues in the General Fund for 2003-2004

 

• There is still considerable uncertainty about the overall economy at the present time. 

 

• Because of the current forecast for a deficit of more than $2 billion for the 2003-04 State budget, there is also still considerable uncertainty about the impact this deficit could have on local government revenues next year.  However, based on State legislation adopted last year regarding the utility franchise tax revenues and authorization for the new half cent sales tax adopted by the County this year, our preliminary revenue estimates for 2003-04 are based on full receipt of State-shared revenues next year. 

 

• We note specifically that the potential exists for the General Assembly to make changes that could affect local revenues based on its review of the overall State budget during the upcoming session of the legislature.

 

 

With these basic assumptions, our preliminary estimates for major revenues for next year are as follows:

 

• A property tax base estimated at $4.24 billion next year, assuming about $80 million in growth over an estimated base this year of $4.16 billion.  Revenue on the estimated base would about $2l.2 million, with 1 cent of the tax rate generating about $424,000.

 

• Sales tax revenue of about $6.4 million (3.5% increase) from existing sales taxes, and estimated $1.2 million from the new ½ cent sale tax adopted this year.

 

• Franchise tax revenue of $2.1 million (assuming full receipt from State).

 

• Beer & Wine tax revenue of about $205,000, the same as in the current year (assuming full receipt from the State).

 

• Powell Bill funds for street maintenance totaling $1.4 million (decrease of 6% based on State budget decisions last year).

 

• Interest earnings of about $200,000 (based on interest rates continuing at low levels next year).

 

• State fire protection funds at same level as last year ($850,000).

 

• Other service charges, fees, permits, licenses and transfers at current levels.

 

In summary, we estimate total General Fund revenue of about $40.3 million, including normal use of $800,000 in fund balance as in past years (see Attachment 1).

 

 

General Fund Cost Issues and Preliminary Estimates for 2003-04

 

 

• Funding new debt service on final sale of 1996 bonds.

 

• Paying full year costs of pay increases authorized for only 7 months in 2002-03

 

• Providing funds for moderate increases in operating costs.

 

• Providing funds for a projected increase in medical insurance costs and workers compensation costs.

 

• Continuing adequate employee compensation adjustments to remain competitive in the Triangle labor market.

 

• Continuing funds for technology improvements

 

• Continuing funds for the recommended 15-year capital improvements plan.

 

 

Considering the issues noted above, attached is a summary of our preliminary cost estimates for a base budget for 2003-04, and estimates for potential additions to the base budget.

 

General Fund Conclusion

 

• The estimated base General Fund budget (excluding compensation adjustments and grants to other agencies) totals about $37.6 million and could be funded with estimated total revenues of $40.3 million, leaving a difference of about $2.7 million.

 

• Potential additions to the base budget, including compensation adjustments to remain competitive in the Triangle labor market, an allowance for moderate increases in operating costs, providing grants to other agencies at prior year levels, funding new debt service on 1996 bonds, and restoring funding for capital improvements at prior year levels would total about $3.5 million, and would require additional revenue of about $832,000 next year (see Attachment 2).

 

• 1 cent of the tax rate in 2003-04 is estimated to generate about $424,000 in revenue.

 

• The preliminary budget estimates do not include the cost of any new positions or potential new programs or services.

 

 

 

TRANSPORTATON FUND

 

Budget Issues and Preliminary Estimates for 2003-04

 

• A major issue for the Transportation Fund each year is the level of federal operating and capital grants and State operating assistance available for transportation services.

 

• The projected State budget deficit of $2 billion could impact the continued availability of State operating funds for next year (about $1.6 million in current year).

 

• Assuming the continuation of federal and State operating assistance at current levels ($932,000 and $1,574,000 respectively), continued participation by the University and Carrboro at current levels, and normal allocation of about $250,000 in fund balance, our preliminary estimate of total revenues available for next year would be about $9.7 million at the current property tax rate of 4.3 cents.

 

• Our preliminary estimate of costs to continue current routes and fare-free service and provide funding for compensation adjustments, expected medical and worker’s compensation increases, and matching funds for capital expenditures would total about $10.3 million next year.  Expenditures at this level could require additional Town revenue of about $350,000 for 2003-04.

 

 

OTHER FUNDS

 

• Initial review of parking revenues and parking activity for the Town’s off-street parking lots this year indicates that parking revenues would be adequate to cover parking expenses and debt service.  Based on interest rates in the current debt financing market, a potential refinancing of the existing Certificates of Participation for parking facilities could generate saving in annual parking debt service costs.

 

• For the Town’s public housing program, we have received notice from the Department of Housing and Urban Development (HUD) that the initial level of subsidy available for public housing operating costs could be reduced as much as 30% from the current subsidy level of about $1.1 million in the Housing operating budget.   Such a reduction would have a drastic impact on funding available for our current public housing programs.   We will keep the Council informed on this matter as the HUD budget process continues.

 

 

 

ATTACHMENTS

 

1. General Fund Preliminary Revenue Estimates for 2003-04 (p. 20).
2. General Fund Preliminary Cost Estimates for 2003-04 (p. 21).

 

 

       

 

Attachment 4

 

National Objectives of Community Development Legislation

 

Congress established the Community Development program in 1974 by consolidating a number of grant programs into one “block grant”.  The primary objective is:

 

            “development of viable urban communities, including decent housing and a suitable living environment and expanding economic opportunity, principally for persons of low and moderate-income.”  (Housing and Community Development Act of 1974)

 

To receive future Community Development Block Grant funds, Chapel Hill must certify that its overall program carries out this primary objective.  In addition, each Community Development Block Grant activity must:

 

1.     Benefit low- and moderate-income persons (80% of median income and below); or

2.     Aid in the prevention or elimination of slums and blight; or

3.     Treat urgent needs posing an immediate threat to public health and welfare.

 

Eligible activities for Community Development Block Grant funding

            (from Federal Regulations)

 

Community Development Block Grant funds may be used for the following types of activities (provided national objectives are also met): 

 

·        acquisition of property

·        disposition of property

·        public facilities and improvements

·        clearance, demolition and removal of buildings

·        site improvements

·        some public services (subject to some limits in regulations)

·        relocation

·        housing rehabilitation, preservation and code enforcement

·        economic development activities

·        planning and administrative costs

 

Alternatives that are generally not eligible include:

 

·        buildings used for the general conduct of government

·        new housing construction (allowed in special circumstances)

·        general government expense

·        political activities

·        purchase of equipment and personal property

·        operating and maintenance expenses

 

ATTACHMENT 5

 

2002-2003 Community Development Plan

 

Approved by the Chapel Hill Town Council on April 22, 2002

 

 

The U. S. Department of Housing and Urban Development awarded the Town $445,000 of Community Development funds in fiscal year 2002-2003.  The budget also includes $12,000 of program income received in the 2001-2002 program year.  We anticipate that we will receive an additional $4,000 of program income during 2002-2003 from repayment of mortgages and a small business loan.  Therefore, we propose activities for a total of $461,000. 

 

1.  Rehabilitation of Public Housing:   $170,000

 

The Council budgeted $115,000 of Community Development funds for the rehabilitation of twenty-six units at the Airport Gardens public housing community.   Community Development funds will be used for architectural work related to renovation.  The Council allocated $15,000 for a portion of the Assistant Housing Directors’ salary for oversight of the renovation project.  Housing Capital Grant funds will be used for renovation expenses for the community.  Proposed renovation work will include the abatement of lead-based paint and asbestos, replacement of windows and screens, replacement of interior and exterior doors, replacement of furnaces, replacement of floor tiles, replacement of bathtub liners and surrounds, bathroom fixtures, plumbing and electrical upgrades, interior and exterior painting, and drainage improvements to the site.   

 

The Council also budgeted $55,000 of Community Development funds to continue the public housing refurbishing program.  This program provides for repairs and limited modernization at public housing. 

 

2.  Neighborhood Revitalization:              $168,500

 

The Council budgeted $153,500 of Community Development funds to continue neighborhood revitalization activities; and $15,000 for staff costs related to the implementation of this program, especially for activities in the Sykes Street area. We will continue to concentrate use of funds in the in Northside, Pine Knolls, and public housing neighborhoods, with special emphasis on the Sykes Street area.  Funds could be used for second mortgage assistance, property acquisition or renovation, code enforcement, demolition of unsafe and un-repairable houses, public improvements, or community service activities.  Activities must serve households earning less than 70% of the HUD published area median income.  

 

The Council approved an increase in these funds this year to support improvements in the Sykes Street area of Northside.  We will maintain our efforts in this area by continuing interdepartmental effort with the Police Department, Planning, Inspections, and Public Works to improve the neighborhood environment.  We will continue to work with the residents of the Sykes Street neighborhood to determine the feasibility of and interest in building sidewalks in the area.  We will also continue to work with the residents to identify possible solutions for improving the Sykes/Nunn/Whitaker Street intersection.

 

The Council continued to authorize the Manager to approve specific projects for use of these funds.   We also recommend that the Council authorize the Manager to approve converting Neighborhood Revitalization funds into grants to Orange Community Housing and Land Trust as opportunities appear to achieve long term affordability for housing projects.

3.  Habitat for Humanity:             $17,000

 

The Council allocated $17,000 to Habitat for Humanity to acquire property adjacent to land Habitat currently owns on Rusch Road, off Rogers Road or for infrastructure improvements at this site.  Habitat intends to develop sixteen houses on the land for households earning less than 50% of the area median income.  Acquisition of the additional property would allow Habitat to develop a larger subdivision. 

 

4.  Community Services:  $30,500

 

The Council budgeted $30,500 for three community service activities that meet the Community Development regulations:

 

1. $13,500 to the Chapel Hill–Carrboro YMCA to continue operation of after school programs for children living in the Pine Knolls neighborhood and the South Estes Drive public housing community.   

 

2. $11,500 to the Orange County Literacy Council to continue to operate computer-based literacy programs for public housing residents and other lower income Chapel Hill residents.

 

3. We propose that the Council budget $5,500 to the Chapel Hill Police Department to sponsor a summer work program for youths living in the Pine Knolls, Northside and public housing communities.  The youths would work approximately twenty hours per week in various Town Departments including Police, Housing, Public Works, Parks and Recreation, Fire, Town Clerk and the Library.  

 

5.  Program Administration:   $75,000

 

The Council budgeted $75,000 for general administration of the Community Development program.   General administration expenses include: implementation, administration and monitoring of Community Development program activities, administration of the Housing Loan Trust Fund; coordination of efforts with non-profit organizations that receive Community Development funding from the Town; coordination of activities with the HOME Program Consortium; and coordination with the U.S. Department of Housing and Urban Development to achieve compliance with federal regulations. Funds will be used for a portion of the Community Development Coordinator’s salary, a portion of the Long Range Planning Coordinator’s salary, a portion of a part-time contract Community Development Program Monitor, and overhead costs.

 

As previously noted, we have included $15,000 of staff costs in the Neighborhood Revitalization budget to implement the program.  Federal Community Development regulations limit the amount of funds able to be charged to general administration of a Community Development program to 20% of the total grant plus program income (approximately $92,000 in 2002-2003).   By charging actual staff time spent on Neighborhood Revitalization activities to the program, we would not approach the limit of the Community Development general program administration cap.

ATTACHMENT 6

 

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; and

·        Operating expenses for community housing development organizations.

ATTACHMENT 7

 

 

2002-2003 HOME Program Plan

 

Adopted by Towns of Chapel Hill, Carrboro and Hillsborough and Orange County

 

Property Acquisition:                            $248,117

 

1. The Consortium budgeted $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 will be rented to clients earning less than 30% of the area median income. 

 

2. The Consortium budgeted $75,000 to Residential Services Inc. to purchase a house in Orange County for four individuals with autism.  

 

3. The Consortium budgeted $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. 

 

4. The Consortium also allocated $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 provides a stepping-stone for families between public housing and the private housing market.  Funds will be used to purchase a house in Chapel Hill.    

Down Payment Assistance:                   $77,000

The Consortium budgeted $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 will 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 Consortium budgeted $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 Consortium budgeted $100,000 of HOME Program funds to EmPOWERment, Inc. to provide second mortgage assistance to households throughout Orange County.  This program will serve households earning less than 80% of the area median income. 

 

2.           The Consortium also budgeted $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 will be located in Carrboro and one in Efland.  

 

Community Revitalization:                     $100,000

 

Funds were allocated to qualified non-profit organizations for property acquisition and renovation of property for first time homebuyers earning less than 80% of the area median income.  Properties will be located throughout Orange County.

 

Administration:                                   $48,100

 

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

 

NOTE:  Affordable 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.