AGENDA #7c
MEMORANDUM
TO: Mayor and Town Council
FROM: W. Calvin Horton, Town Manager
SUBJECT: Recommended 2003-2004 HOME Program
DATE: April 28, 2003
The attached resolution would:
(1) Approve a plan for use of $905,999 of 2003-2004 HOME Program funds; and
(2) Authorize this plan to be incorporated into the Annual Update to the 2000-2005 Consolidated Plan developed with Orange County, Hillsborough and Carrboro for submittal to the U.S. Department of Housing and Urban Development on May 15, 2003.
On March 26, 2003, the Council held a public hearing on a preliminary proposal for use of HOME Program funds. We do not propose any changes to the proposal that was presented to the Council on March 26, 2003.
Funding
The U.S. Department of Housing and Urban Development has awarded the Orange County HOME Consortium $739,591 for fiscal year 2003-2004. In addition, the participating municipalities are required to contribute a 25% match of the grant funds after subtracting administration costs of $73,959. The total match requirement is $166,408. The Town’s contribution to the matching funds is 41% or $68,227. Orange County, Carrboro and Hillsborough will contribute $66,564, $23,297 and $8,320 respectively. Therefore, including program administration (allocated to the Orange County Department of Housing and Community Development), the Council would be planning activities, including administration for a total of $905,999.
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.
RECOMMENDED PLAN
The HOME Program Review Committee proposes the following use of 2003-2004 HOME Program funds:
Comprehensive Rehabilitation $277,040
Property Acquisition Affordable Rentals $188,000
Town of Chapel Hill
Transitional Housing Program $ 32,000
Second Mortgage Assistance Habitat for Humanity $ 150,000
Qualified Non-profit Agencies $ 75,000
Down Payment Assistance Orange Community Housing and
Land Trust $100,000
Operational Support Orange Community Housing and
Land Trust $ 10,000
Administration Orange County Housing and Comm.Dev. $ 73,959
TOTAL $905,999
As in previous years, we propose to use funds available in the Housing Loan Trust Fund for the Town’s match contribution of $68,227. There are currently funds available for this purpose. We note that the Town’s match contribution has increased by over $20,000 due to increase in this year’s grant.
In future years, the Council will need to consider increasing funding for the Housing Loan Trust Fund or finding additional funding sources in order to continue funding the HOME Program match.
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 affordable housing throughout Orange County. In the first year, the Consortium received funds 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 2002-2003 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: (a) an annual Community Development plan approved by the Council; and (b) a HOME Program plan approved by the Council, the Orange County and Hillsborough Commissioners, and the Carrboro Board of Aldermen. The Plan must be submitted to the Department of Housing and Urban Development by May 15, 2003.
On January 29, 2003, 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 4, 2003, the Orange County Commissioners held a public hearing to receive citizen comments on how HOME Program funds could be spent. On March 26, 2003, the Council held a second public hearing on a preliminary recommendation for the HOME Program.
Please see Attachment 2 for a summary of comments received at the public hearings and applications received for HOME Program funding.
DISCUSSION
The HOME Program Review Committee proposes the following one-year plan for 2003–2004:
Comprehensive Rehabilitation: $277,040
The Committee proposes to use funds to provide deferred loans to rehabilitate low- income owner-occupied housing in Orange County. The funds would be repaid to the HOME Program if home was sold or conveyed to heirs that do not meet the income guidelines of the program within the affordability period (typically twenty years). Homeowners with less than 50% of the area median income would be eligible for these loans. The program would be administered by the Orange County Department of Housing and Community Development. A portion of these units would be located in Chapel Hill.
Property Acquisition: $220,000
1. The Committee proposes to budget $188,000 to Affordable Rentals, Inc. to purchase a duplex on Roosevelt Drive in Chapel Hill. 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.
2. The Review Committee also proposes to allocate $32,000 to the Town of Chapel Hill to assist in the purchase of 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 along with other money to purchase a house in Chapel Hill.
The Town has purchased one home on Merritt Mill Road with the 2001-2002 HOME Program funds. We note that $75,000 of 1997 Orange County Affordable Housing Bond funds was allocated to the Town for this purpose. The Orange County Board of Commissioners has asked that the Town meet with the County’s Affordable Housing Advisory Board to discuss this program before funds are released. In addition, $28,117 of 2002-2003 HOME funds is currently available for this program. The proposed funds ($32,000) could be combined with the other money to purchase a house.
Second Mortgage Assistance: $225,000
1. The Committee proposes to budget $150,000 to Habitat for Humanity to provide deferred second mortgages for ten homebuyers earning less than 50% of the area median income. The homes would be located in the Richmond Hills Subdivision in Efland.
2. The Committee also recommends allocating $75,000 of funds for second mortgage assistance. Funds would be provided 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 could be located throughout Orange County.
Down Payment Assistance: $100,000
The Committee proposes to budget $100,000 to Orange Community Housing and Land Trust to provide down payment assistance for ten first time homebuyers in the Greenway Condominiums project in the Meadowmont Development. The condominiums, which are being developed by the private sector, would be placed in the Land Trust. Eligible applicants must be first time homebuyers, currently living or working in Orange County who earn less than 80% of the area median income.
Operational Support: $10,000
Funds would be provided to Orange Community Housing and Land Trust for costs related to developing the Greenways Condominium project. As a designated Community Housing Development Organization for the HOME Program, the Land Trust is eligible to receive funds for administration of a housing program.
Administration: $73,959
The remaining $73,959 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.
RECOMMENDATIONS
Housing and Community Development Advisory Board Recommendation: On April 22, 2003, the Housing and Community Development Advisory Board voted 4-1 to recommend the preliminary 2003-2004 HOME Program Plan to the Town Council. The Board also urges the Council to recommend that the Board of Orange County Commissioners release the $75,000 of 1997 Affordable Housing Bond Funds allocated for the Transitional Housing Program. (Please see Attachment 3)
Manager’s Recommendation: That the Council adopt the attached resolution approving the following 2003-2004 HOME Program Plan:
Comprehensive Rehabilitation $277,040
Property Acquisition Affordable Rentals $188,000
Town of Chapel Hill
Transitional Housing Program $ 32,000
Second Mortgage Assistance Habitat for Humanity $150,000
Qualified Non-profit Agencies $ 75,000
Down Payment Assistance Orange Community Housing and
Land Trust $100,000
Operational Support Orange Community Housing and
Land Trust $ 10,000
Administration Orange County Housing and Comm.Dev. $ 73,959
TOTAL $905,999
ATTACHMENTS
1. Summary of 2002-2003 HOME Program funding (p. 8).
2. Summary of Requests for 2003–2004 HOME Program Funding (p. 10).
3.
Summary of Housing and Community Development Advisory Board
Action (p. 13) .
A RESOLUTION APPROVING THE ACTIVITIES OF THE 2003–2004 HOME PROGRAM (2003-04-28/R-8)
WHEREAS, the Council of the Town of Chapel Hill held two public hearings to receive citizen comments and proposals regarding the use of $739,591 of federal HOME Program funds, and $166,408 of local matching funds for a total of $905,999;
NOW, THEREFORE, BE IT RESOLVED that the Council of the Town of Chapel Hill approves the following activities to be carried out by the members of the Orange County HOME Consortium in 2003-2004:
Comprehensive Rehabilitation $277,040
Property Acquisition Affordable Rentals $188,000
Town of Chapel Hill
Transitional Housing Program $ 32,000
Second Mortgage Assistance Habitat for Humanity $ 150,000
Qualified Non-profit Agencies $ 75,000
Down Payment Assistance Orange Community Housing and
Land Trust $100,000
Operational Support Orange Community Housing and
Land Trust $ 10,000
Administration Orange County Housing and Comm.Dev. $ 73,959
TOTAL $905,999
BE IT FURTHER RESOLVED that the Council authorizes this plan to be incorporated into the Annual Update to the 2000-2005 Consolidated Plan developed with Orange County, Hillsborough and Carrboro for submittal to the U.S. Department of Housing and Urban Development on May 15, 2003.
This the 28th day of April, 2003.
Summary of 2002-2003 HOME Program
(Adopted by the Chapel Hill Town Council, Orange County Board of Commissioners, Carrboro Board of Aldermen, and the Hillsborough Board of Commissioners)
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.
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.
Summary of Comments and Applications
for 2003–2004 HOME Program Funding
The following comments were received at public hearings held by the Council on January 29 and March 26, and the County Commissioners February 4, 2003:
1. Alex Asbun, Director of Affordable Rentals, Inc. requested HOME funds to purchase units in Orange County for affordable rental housing. Mr. Asbun stated that he would develop a more specific proposal and submit an application.
2. Robert Dowling, Executive Director of Orange Community Housing and Land Trust requested second mortgage funds for two projects in Carrboro (approximately $10,000 -$12,000 per unit). Mr. Dowling stated that he would develop a more specific proposal and submit an application. [NOTE: Orange Community Housing and Land Trust decided not to submit funding requests for these projects. The organization revised its request and submitted an application for second mortgage assistance for the Greenway Condominium project in Meadowmont.]
3. Chris Moran, Executive Director of the Interfaith Council asked the County to develop a plan to end homelessness and that the County lift the moratorium on the Section 8 program.
4. Jack Chestnut, representing Carol Woods asked the County to consider developing housing for senior citizens.
5. At the March 26 public hearing, Mark Chilton, Executive Director of EmPOWERment, Inc. commented that the preliminary HOME Program Plan included three separate line items for second mortgage assistance. Mr. Chilton suggested combining these funds so they could be used by all eligible non-profit organizations.
The following agencies submitted applications for 2003-2004 HOME Program funding.
1) Affordable Rentals, Inc.
Affordable Rentals, Inc. submitted two requests: one to use $188,000 to purchase a property on Roosevelt Drive, and a second for $174,000 to purchase a triplex on Forsyth Drive. The properties 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 $188,000 to Affordable Rentals to purchase one house. We recommend funding one project with the group at a time.
3) Chapel Hill Department of Housing
The Chapel Hill Department of Housing requests $125,000 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 that would be rented to a family currently residing in public housing.
Comment: The Review Committee recommends allocating $32,000 to the Chapel Hill Housing Department. Funds could be used in conjunction with $75,000 of 1997 Orange County Affordable Housing Bond funds, and $28,117 of 2002-2003 HOME Program funds allocated to the Town to acquire a house for the Transitional Housing Program. Therefore a total of $135,117 would be available to purchase a house. The Committee also discussed the possibility of using HOME funds as a down payment and using private financing to secure the balance of the acquisition cost thus being able to purchase more houses.
Town Staff Comment: We have concerns about whether the approach of obtaining private financing is workable because the Town would need to guarantee payments on any such loan in the event rent was not timely received from the tenant or the property was vacant.
4) EmPOWERment, Inc.
EmPOWERment requests $250,000 for second mortgage assistance activities that would assist EmPOWERment and other non profit organizations with acquisition and rehabilitation of existing properties in Orange County. Properties would be sold 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 $75,000 for this activity. Currently $100,000 of 2002-2003 Community Revitalization funds is available. Funds could be used by a qualified 501(c) (3) non-profit organization.
5) Habitat for Humanity
Habitat for Humanity requests $150,000 of HOME Program funds provide ten second mortgages to buyers in the Richmond Hills Subdivision in Efland. Homes will be sold to first time homebuyers earning less than 50% of the area median income.
Comment: The Committee recommends allocating $150,000 for this project.
6) Orange Community Housing and Land Trust
The Land Trust requests $100,000 to provide down payment assistance for ten first time homebuyers in the Greenway Condominiums project in the Meadowmont Development. The condominiums, which are being developed by the private sector, would be placed in the Land Trust and sold to first time homebuyers, currently living or working in Orange County who earn less than 80% of the area median income.
Comment: The Committee recommends budgeting $100,000 for this project.
7) Orange Community Housing and Land Trust
Funds would be provided to Orange Community Housing and Land Trust for costs related to developing the Greenways Condominium project. As a designated Community Housing Development Organization for the HOME Program, the Land Trust is eligible to receive funds for operational support.
Comment: The Committee recommends budgeting $10,000 for this request. We note that funds must be used in conjunction with a HOME funded project such as the request for assistance for the Greenway Condominium project.
8) Weaver Community Housing Association
Weaver Community Housing Association requested $270,000 of HOME Program funds to acquire and rehabilitate five three bedroom apartments for cooperative units at the Cedar Rock Apartment complex in Carrboro. According to the organization, a “cooperative unit” is a habitable space that includes private sleeping space and shared access to living, dining, bath, kitchen and community facilities.
Comment: The Committee does not recommend funding for this project at this time. The Committee members generally supported the concept of cooperative housing, but felt that more education is needed about this innovative model.