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HomeMy WebLinkAboutAgenda - 10-20-1998 - 10bORANGE COUNTY BOARD OF COMMISSIONERS Action Agenda Item No. io -6 ACTION AGENDA ITEM ABSTRACT Meeting Date: October 20, 1998 SUBJECT: Housing Bond Program Policy DEPARTMENT: Housing and Community Development PUBLIC HEARING: (Y/1~ BUDGET AMENDMENT: (Y/1~ ATTACHMENT(S): Proposed Policy Implementation Schedule INFORMATION CONTACT: Tara L. Fikes TELEPHONE NUMBERS: - -ext. 2490 Hillsborough 732-8181 Chapel Hill 968-4501 Durham 688-7331 Mebane 227-2031 PURPOSE: To receive a report from the Housing Bond Policy Task Force. BACKGROUND: In November 1997, Orange County voters approved a $1.8 million dollar housing bond issue. Funds are to be used for affordable housing initiatives in three areas: land acquisition, housing development, and homeownership programs. This is the first housing bond issue approved in the County. Since the program is new, the first step towards program implementation was the development of program policies that would govern the expenditure of bond funds. On Apri17, 1998, the Boazd of County Commissioners appointed a Housing Bond Policy Task Force with membership from a representative of the following entities. 1. EmPOWERment, Incorporated 2. Habitat for Humanity 3. Inter-Faith Council for Social Service 4. Joint Orange-Chatham Community Action 5. Knolls Development Association 6. Northside Community Association 7. L. Lane Sarver, Incorporated 8. Orange Community Housing Corporation 9. Orange Congregations in Mission 10. Orange County Disability Awazeness Council l l .Orange-Person Chatham Mental Health 12. Orange County Manager's' Office 13. Town of Chapel Hill Manager's Office 14. Town of Carrboro Manager's Office 15. Town of Hillsborough Manager's Office 16. UCC Living Centers, Inc. 17. Hillsborough Affordable Housing Corporation (At the first meeting of the Task Force, the Carr Court and Lloyd Street Neighborhood Associations expressed an interest in participating in the group as well.) The Task Force has held seven (7) meetings since April and has developed the attached Housing Bond Policy for Board consideration and approval. The Chair of the Task Force, Keith Cook, will be in attendance to formally present the Policy to the BOCC. 2 For the information purposes, and in consideration of the date of completion of the Housing Bond Policy, the Implementation Schedule presented at the April 7, 1998 meeting has been adjusted accordingly and is included in with this abstract. RECOMMENDATION(S): The Manager recommends receiving the report as information. 3 Orange County Housing Bond Policv Established September 1998 This document outlines the policies governing the expenditure of 1997 Affordable Housing Bond funds. Only non-profit entities will be eligible to apply for funding under the County's bond program. Non-profits may partner with for-profit entities to develop projects, however, in those cases, the non-profit must have the controlling majority in the project (more than 50% interest). A. Loan Program Types Developers and projects would be selected on a Request for Proposal basis subject to established evaluation criteria and targeting goals. The following programs would be implemented using funds from the voter-approved housing bonds and other available resources. Examples of other available resources include: the Community Development Block Grant (CDBG) Program, HOME Investment Partnerships Program, NC Housing Finance Agency Programs, as well as local general fund contributions. Existing Housing Programs - Target Funding: 33% or $594,000 a. Affordable Housing Loan Program The focus of this homeownership program would be direct assistance to eligible borrowers. An eligible homeowner is one that has not owned a home in the past three (3) years. Income-eligible borrowers would be pre- qualified for first and second mortgages by a local housing non-profit agency with the cooperation of local lenders. All prospective homebuyers would have to complete acounty-approved homebuyer education program prior to receiving approval to participate in the program. The County would provide a "pre-commitment" letter to the borrower, who could then purchase a standard home available on the market that they could afford and that sold for less than the FHA maximum sales price for this area. The eligible borrower must provide a minimum of $750 cash contribution to this transaction. b. Rehabilitation of Substandard Housing -Second Mortgage This program would provide direct assistance to eligible homeowners and 501(c)(3) non-profit organizations which own rental property for rehabilitation of units with code violations. c. Community Revitalization Loan Program This program would provide assistance with the purchase and rehabilitation of existing property by first-time homebuyers. The guidelines governing this program will be in accordance with the existing County and Town of Chapel Hill Programs with the same name. 3 09/24/98 4 d. Acquisition for Low Income Rental Housing Funds would be used to assist local 501(c)(3) organizations purchase and, if necessary, renovate available property for lease to low income Orange County residents. e. Urgent Repair Program The program would be used to provide funds for home repairs that eliminate potential life or safety threats to low-income homeowners and/or enable the elderly and disabled to remain in their homes by providing essential accessibility modifications. 2. New Construction Programs - Target Funding: 67% or $1,206,000 a. New Construction -Second Mortgage Assistance may be provided to non-profit housing developers of new construction projects for first-time homebuyers and/or renters. A Builder Participation Agreement would set aside a funding allocation for second mortgages to developers/homebuyers in a specific project. For rental projects, the use of federal income tax credits and Section 8 certificates and vouchers must be utilized if available. b. Land Acquisition This program would enable a local 501(c)(3) non-profit organization to acquire and hold available land suitable for affordable housing development. The land would subsequently by developed by any non- profit organization with a sound, site-specific, development proposal within eighteen months. Actual construction must occur within three (3) years of the original application date. The bond money investment for land purchase would remain with the land as a second mortgage with deed restrictions. B. Income Targeting The recommended income categories include: a. Families with incomes below 25% of area median income; b. Families with incomes below 26-50% of area median income; c. Families with incomes below 51-80% of area median income; 4 09/24/98 5 C. Evaluation Criteria The evaluation criteria below will be used in reviewing and ranking housing bond fund proposals. Additional guidelines may need to be added to these in the actual solicitation package depending upon the location and nature of the project. Affordability (30 points) The degree to which the proposed project would serve those with incomes below the maximum and the period of time over which the project would remain affordable to that income group. a. Income targeting - 20 points - If the project is designed to serve households earning less than 50% of the area median income, the full 20 points will be awarded. - If the project serves household earning less than 60% of the area median income, 15 points will be awarded. - If the project serves household earning less than 70% of the area median income, 10 points will be awarded. - If the project serves household earning less than 80% of the area median income, 5 points will be awarded. - (BONUS) If 100% of the units in a project serves households earning less than 25% of the area median income, 5 points will be awarded. b. Affordability -10 points - If the project is designed to remain affordable for over 40 years, the full 10 points will be awarded. The period of affordability will be reinforced by deed restrictions. - If a project is designed to remain affordable for 31 - 40 years, five points will be awarded. The period of affordability will be reinforced by deed restrictions. 5 09/24/98 I1. Leveraging (20 points) 6 k The degree to which the proposed project includes funding from other sources and minimizes County Bond funds required, given the income groups served. All outside funding sources must be committed within six (6) months of the date of the project proposal. - If 90% of total project cost is financed by outside sources and 10% is financed by bond funds, the fu1120 points will be awarded. - If 80% of total project cost is financed by outside sources and 20% is financed by bond funds, 18 points will be awarded. - If 70% of total project cost is financed by outside sources and 30% is financed by bond funds, 16 points will be awarded. - If 60% of total project cost is financed by outside sources and 40% is financed by bond funds, 14 points will be awarded. - If 50% of total project cost is financed by outside sources and 50% is financed by bond funds, 12 points will be awarded. - If 40% of total project cost is financed by outside sources and 60% is financed by bond funds, 10 points will be awarded. - If 30% of total project cost is financed by outside sources and 70% is financed by bond funds, 8 points will be awarded. - If 20% of total project cost is financed by outside sources and 80% is financed by bond funds, 6 points will be awarded. - If 10% of total project cost is financed by outside sources and 90% is financed by bond funds, 4 points will be awarded. - If a project is funded 100% with bond funds, 0 points will be awarded. I11. Design (10 points) The quality of the design of the site plan and housing units, with respect to attractive appearance, functionality, and compatibility with the surrounding area. - If the project is designed to be energy efficient according to the NC Housing Finance Agency Energy Efficiency Criteria, 5 points will be awarded. - If the project fits well into the surrounding area in terms of building style, design, and materials, 5 points will be awarded. 6 09/24/98 7 - (BONUS) If the project meets the accessibility needs of persons with disabilities, 5 points will be awarded. IV. Community Sponsorship /Support (10 points) The degree to which the sponsoring organization demonstrates plans for strong community participation throughout the development of a project. - If the applicant coordinated its application with other. organizations to compliment and/or support the proposed project, 4 points will be awarded. - If the applicant involved the intended beneficiaries of the project in the development of the application, 2 points will be awarded. - If the applicant demonstrates that it has been actively involved, or if not currently active, the steps it will take to become actively involved in the Community's Consolidated Planning process to identify and address a housing need /problem that is related in whole or part, directly or indirectly to the proposed project, 2 points will be awarded. - If the applicant developed or plans to develop linkages with other activities, programs or projects related to the proposed project (i.e. support services) to coordinate its activities so solutions are holistic and comprehensive, 2 points will be awarded. - (BONUS) If the applicant will involve persons with disabilities in the development and operation of the project, 2 points will be awarded. V. Project Feasibility (15 points) The degree to which the project has the following characteristics: cohesiveness; timeliness with regard to construction scheduling; zoning requirements; innovation; and completeness of the proposal submitted for review. - Minimum requirements include site control and a complete application. - If everything is in place (commitment letter, proper zoning, site control, complete project proposal, the full 15 points will be awarded. - If all funding is in place, 10 points will be awarded. - If proper zoning is in place, 5 points will be awarded. - (BONUS) If the applicant has contractor commitments and necessary building permits, 5 bonus points, will be awarded. 7 09/24/98 8 VI. Developer ExQerience (15 points) The scope, extent and quality of the Sponsor's experience in housing or related services to those proposed to be served by the project and the scope of the proposed project (i.e. number of units, services, relocation costs, development, and operation) in relationship to the Sponsor's demonstrated development and management capacity, as well as its financial management capability. This includes the Sponsor's utilization of minority and women-owned businesses, and other allied small businesses in the planning and development of the project. Partnerships by local organizations will be encouraged. The amount of experience of the project sponsor and the proposed development team in carrying out similar projects in a successful fashion, particularly with respect to reasonably meeting project budgets and timetables on such projects. This would include review of the organization's track record in handling projects which used town or county local funds and/or funds awarded to the local governments in Orange County by the federal or state government. In the case of rental projects, the amount of experience the project sponsor and management company have in managing low income housing including an adequate management plan for dealing with special population needs and special community needs. The minimum acceptable number of points is 60 with points awarded from five of the six evaluation categories. D. Project Review and Selection A County Committee will evaluate project proposals and make funding recommendations to the County Manager. The County Committee would include the: Assistant County Manager (Human Services); County Engineer; Finance Director; Housing and Community Development Director; and the Planning Director. In addition, local planning department personnel from the planned project's jurisdiction will be invited to review proposals, as well as a member of the Orange County Housing Coalition who is unassociated with any existing housing non-profit organization. All housing bond projects must be approved by the Board of County Commissioners. Project proposals recommended for funding by the staff committee, with the concurrence of the County Manager, will be placed on a regular Board of County Commissioners meeting agenda for their consideration. 8 09/24/98 9 E. Program Monitoring and Reporting ABODE, the Coalition for Housing Diversity in Orange County will review the bond program at least semi-annually to monitor the housing bond program, raise policy issues with staff, and receive information. At the end of each year of program implementation, an Annual Report will be prepared detailing a review of the past year's bond program activities. The review of past activities will be conducted by local staff and members of the Orange County Housing Coalition Steering Committee. The annual report will include a review of past year activities, a current market analysis and recommended program priorities for the coming year. This information would be made available to all County residents and formally presented to the Orange County Board of Commissioners during a regularly scheduled meeting. 9 09/24/98 10 ORANGE COUNTY HOUSING BOND PROGRAM PROPOSED IMPLEMENTATION SCHEDULE This implementation schedule is based on a Request for Proposal process for ident~ing housing bond projects. This is the process used by other local jurisdictions in the state with housing bond programs. I. BOND POLICY COMMITTEE This committee establish policies governing the expenditure of bond funds for housing programs. Issues to be addressed include: Eligible Program Types; Income Targeting; Long-Term Affordability; and Project Evaluation Criteria including Maximum Leveraging. Apri17, 1998 July, August, September 1998 October 1998 BOCC appoints Committee Committee Work Committee presents policy recommendations to BOCC. November 1998 BOCC approves Housing Bond Policy II. REQUEST FOR PROPOSALS Interested persons, including non-profit organizations and private developers, interested in utilizing bond funding for specific housing projects will be invited to submit a funding proposal to the County for review and approval. November, December 1998, January 1999 Request for Proposal Guidelines will be developed by County staff. February, March, Apri11999 Request for Proposal Invitation Period/Submission III. COUNTY REVIEW OF PROPOSALS A County staff committee will evaluate project proposals and make funding recommendations to the County Manager. The Staff committee would include the: Assistant County Manager (Human Services); County Engineer; Finance Director; Housing and Community Development Director; and the Planning Director. It may also be necessary to consult with local planning department personnel in other county jurisdictions depending on the location of the proposed project. IV. FINAL APPROVAL All housing bond projects must be approved by the Board of County Commissioners. Project proposals recommended for funding by the staff committee, with the concurrence of the County Manager, will be placed on a regular Board of County Commissioners meeting agenda for their consideration. Begin program implementation in Summer 1999. 10/8/98