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HomeMy WebLinkAboutAgenda - 12-01-1998 - 10dORANGE COUNTY BOARD OF COMMISSIONERS 1 Action Agenda Item No. /A.,d ACTION AGENDA ITEM ABSTRACT Meeting Date: December 1, 1998 SUBJECT: Affordable Housing -Land Trust Implementation Task Force Report DEPARTMENT: Housing and Community Development PUBLIC HEARING: (Y/l~ No BUDGET AMENDMENT: (Y/N) IVY ATTACHMENT(S): Report INFORMATION CONTACT: Tara L. Fikes TELEPHONE NUMBERS: - -ext. 2490 Hillsborough 732-8181 Chapel Hill 968-4501 Durham 688-7331 Mebane 227-2031 PURPOSE: To approve the Land Trust Implementation Task Force's recommendation for implementing a community land trust in Orange County. BACKGROUND: The. Land .Trust Implementation Task Force was formed in December .1996 by the Chapel Hill Town Council and has been meeting since November 1997 to determine how a land trust could be established in Orange County. The Committee consists of residents of Chapel Hill, Carrboro, and Orange County. After much deliberation as well as technical assistance from the Institute for Community Economics, anon-profit organization that provides on-going assistance to new and existing organizations free of charge, the Task Force has developed its recommendation for a County-wide land trust. In summary, the group recommends that a 501 (c)(3) non-profit organization should be created that would contract with the Orange Community Housing Corporation to serve as administrator of the land trust. This organization would not have an independent paid staff, but a Board of Directors to develop policy and procedures for the land trust and seek new opportunities for the land trust. This report has been presented to the Chapel Hill Town Council and the Carrboro Board of Alderman which have accepted the recommendations of the Task Force as detailed on page 6 of the report. The Task Force Report will be presented to the BOCC by Alison Weiner, Implementation Task Force Chair. RECOMMENDATION(S): The Manager recommends approving the recommendations of the Land Trust Implementation Task Force regarding the implementation of a community land trust in Orange County. ATTACHMENT 1 Monday 26 October 1998 TO: Chapel Hill Town Council FROM: CHAPEL HILL LAND TRUST IMPLEMENTATION TASK FORCE RE: Task Force Final Report Following is our report regarding the establishment of a community land trust. We appreciate this opportunity to present our report and recommendations. We believe the establishment of a community land trust can significantly contribute to increasing the amount of affordable and diverse housing in our county. Alison Weiner, Chair Flicka Bateman, Chapel Hill Town Council The Hon. Michael R. Nelson, Town of Cariboro Robert Dowling, Orange Community Housing Corporation Susan Levy, Habitat for Humanity Myles Presley, EmPOWERment Curt Coomes, N. C. Low Income Housing Coalition Josh Gurlitz Madeline Jefferson Sharon Knuth Shirley Marshall . Rev. James Pike 2 3 EXECUTIVE SUMMARY OF TASK FORCE RECOMMENDATIONS What is a Community Land Trust (CLT)? • Primarily, a CLT is a tool that allows for the long-term affordability of housing, by owning the land upon which the housing is built. The purchasers of the homes sign a land lease agreement with the CLT and pay a nominal lease fee each month. • The CLT is governed by a volunteer board of directors that includes residents of the land trust, interested members of the community, and professionals that can provide expertise to the mission and tasks of the CLT. Advantages of a CLT • Provides Chapel Hill and Orange County with another means of creating affordable, diverse and stable housing, both rental and home-ownership. • Offers leaseholders full rights of privacy and security through a 100-year renewable lease that can be transferred to their heirs. • Keeps housing affordable for future generations by controlling the price owners receive when they sell their homes (use of a resale formula). Disadvantages of a CLT Homeowners do not own the land and do not receive the full appreciation of their homes when they sell. Hence, a primary means. of wealth accumulation is denied them. The 100-year lease implies a perpetual commitment to administer the terms of the lease. Recommendation for Creation of CLT • Establish a new 501(c)3 organization with a volunteer Board of Directors that establishes policy. • Contract with Orange Community Housing (OCHC) to perform the administrative tasks, particularly the long-term relationship tasks. This will require additional resources from government over time. • The CLT will not generally be responsible for the purchase of land. The developer (whether Habitat, OCHC or another non-profit) will typically perform those tasks. 4 Report of the CHAPEL HILL LAND TRUST (IMPLEMENTATION TASK FORCE 26 October 1998 Definition of a Community Land Trust (CLT) A CLT is a private non-profit membership organization, made up of concerned citizens, created to acquire and hold land for future generations. • A CLT protects the community's long term interest by continuing to own land while conveying the long-tens use of the land to individuals, cooperatives or other entities. • A CLT offers lease holders full rights of privacy and security through a 100- year renewable lease that can be transferred to their heirs. • A CLT can be established with new or existing housing or a combination of both. • A CLT keeps housing affordable for future generations by controlling the price owners receive when they sett their homes. Why have a CLT? • A CLT would provide Orange County with another tool for creating affordable, diverse and stab{e housing, no matter if it is rental or home-ownership. • A CLT would provide a resource that does not presently exist in Orange County and, at the same time, collaborate with existing organizations. The difference between existing affordable housing efforts and what a land trust offers is the involvement of residents and concerned citizens. Residents are the heart of the community land trust. As a membership organization with members drawn from the land trust leaseholders and the wider community, as well as a Board of Directors composed of the same, a CLT can provide greater local control over land and housing ownership. A CLT offers more than a developer who builds a house and then moves on to the next project. The CLT is a steward of the land it holds, a committed partner in how the land is used and cared for. As it partners with residents who lease the land, the CLT provides support with regard to the property, helping homeowners to be good homeowners while helping to keep housing affordable on a long-term basis. Addressing CLT issues In August, the Task Force held a work session with John. Davis., a CLT consultant with Burlington Associates in Burlington, Vermont. Following John's suggested list of issues to be addressed, we present our responses thus far. 1. Defining "Community" (territory) The CLT should serve Orange County and al{ jurisdictions within it. Why should the governments within and of the. County support and participate in a county wide community land trust? The Towns of Chapel Hill and Carrboro have each been actively exploring the potential for a land trust and other solutions for creating affordable housing. Orange County has passed its first housing bond. Because of the strong and active relationships between these governments, it makes sense to create an organization .that will serve county-wide, not only for convenience, but to support the creation of long term affordable and diverse housing throughout the County, which will benefit ALL citizens of the county. 2. Creating the Corporation We discussed three different structural approaches for establishing a CLT. All of these approaches will require allocation of additional resources. 1. CLT as a subsidiary of an existing non-profit organization One of the key aspects of the CLT is that its Board includes owners of CLT homes. Often, CLT owners make up about one-third of the Board members. An existing non-profit would need to reorganize its board, as well as revise its mission and objectives, in order to accommodate this provision. 2. CLT as a new corporation which handles all tasks itself Starting a new organization from scratch will require funding for staff, office space, and equipment and will take some time to get off the ground due to inexperience and no track record. 3. CLT as a new corporation which contracts- some or all of its work with other organizations Starting a new 501(c)3 organization with a Board of Directors made up of a diverse representation of the County community which 6 collaborates with existing organizations and governments to execute tasks will more effectively use existing resources and will require less additional resources and less start-up time than Approach #2. We recommend a structure which is a hybrid of No. 1 and No. 3: A CLT as a new corporation which contracts with a single organization to administer the tasks of the organization. In this case, Orange Community Housing Corporation will serve as the administrator for the CLT. It is important that the efforts of the CLT do not compete with other affordable housing efforts. Rather, it will seek to co{laborate with other groups. 2. Choosing Roles {and roles of partners) The Board of Directors will be responsible for establishing the policies of the CLT. Orange Community Housing Corporation will administer the tasks. The Board will contract with OCHC to perform the administrative tasks. Development of land and housing, as well as the marketing and selling of homes, wil! be done either by OCHC or other housing developers. The Board and OCHC will be responsible for education and outreach. TASK FORCE RECOMMENDATIONS 1. It is understood that the establishment of a CLT is a long term commitment to the community and the residents it serves. 2. A CLT should be established to serve all of Orange County. 3. The CLT will be anon-profit 501(c)3 membership organization that will have a volunteer Board of Directors. It will not have staff initially but will contract Orange Community Housing Corporation to implement its tasks. 4. The initial Board of Directors for the CLT shall include potential homeowners, community members, and a representative from each of the governments within the County. 5. The initial tasks of the land trust will be implemented as follows: Policy: Board of Directors Administration: OCHC Pre-development and development of {and and housing: non-profit housing developers Education and Outreach: Board of Directors and OCHC 6. The first project will be Scarlette Drive in Chapel Hill. With the assistance of the Town of Chapel Hill, the pre-development of Scarlette Drive is presently being carried out by Orange Community Housing Corporation. Committing the project to the CLT can be included in this phase, and can provide a great start for the implementation of the CLT. 7. The Board will work closely with the staff of al{ participating governments and the emerging county housing coalition to develop future land trust projects. 8. The Task Force, having completed its work, with the consent of the Town Council, wilt become the Steering Committee for the CLT. This committee will. be responsible for developing expertise on the CLT model and for organizing the CLT, developing the Bylaws, Articles of Incorporation, Lease and Resale Formula and educating the private and public sectors. 9. Upon acceptance of the Task Force recommendations, the participating governments shall make staff, facilities, and resources available, as they are able, at the request of the CLT Steering Committee. 10. Include the CLT in the revised Chapel Hill Comprehensive Plan and Shaping Orange County's Future proposal 8 Tasks for a Community tend Trust 1. Organizational development • Incorporation of 501(c)3 organization • Establish Board of Directors 1. Establish an ongoing process for identifying potential building sites 2. Once a site is found it must be optioned (requires funding) and evaluated: • Assess topography • Address infrastructure issues: water and sewer availability; suitability for septic • Current zoning/determine possible uses • Determine worth of property based on probable use (consult with possible developers) • Other due diligence tasks such as environmental assessment 4. If land looks viable: • Make offer; negotiate with seller; execute option on behalf of Trust • Hire professionals for appraisal and title search • Secure funding commitments} to execute purchase • Trust must have capacity to apply for funding 5. If land is purchased /donated: • Hire attorney to handle closing, transfer title of the property to the land trust (if property is donated) • Pay for title insurance, legal fees and property taxes • Obtain general liability insurance • Have someone able to execute closing documents 6. While land is held: • Pay taxes and insurance • Take care of any necessary maintenance on the property • Meet with potential developers of the property. Work with Board of Directors to generate RFP for developing the land, then evaluate proposals, make recommendation to Board and have agreement written by an attomey detailing the nature of the contract~between the land trust and the developer. 9 7. While housing is being developed: • Outreach to community-at-large, and potential homeowners • Sales and marketing effort, or training of realtor • Role of land trust during construction to ensure quality of product? • Secure attorney stipulation letters from would-be homebuyers • Assist prospective homebuyers with financing, both private and public 8. When housing is held by leaseholder/homeowner: • Pay taxes and insurance on land; collect ground tease fees. • Work with homeowners to maintain homes • Serve as a 'backstop' to prevent foreclosure • Annual tax preparation -work with auditors • Educating community about land trusts (potential buyers) • Educating .realtors, bankers, Board of Directors, etc. • Implement buy-back provisions; use of resale formula • Work with homeowners on improvements (what is allowed and what counts toward recapture} • With townhomes there is an additional layer of organization -additional explaining and working with owners to understand responsibility sharing • Provide staff support to the CLT board 9. When housing on leased land is to be resold: • Inspect units • Maintain waiting fist of pre-qualified buyers • Calculate resale price • Market units • Educate would-be homebuyer Other considerationslcosts: Additional resources for the administering agency may be necessary