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HomeMy WebLinkAboutAgenda - 03-04-1998 - 9ai ,~ ORANGE COUNTY BOARD OF COMMISSIONERS Action Agenda Item No. Q-Q ACTION AGENDA ITEM ABSTRACT Meeting Date: March 4, 1998 SUBJECT: Impact Fee Reimbursement Policy for Affordable Housing DEPARTMENT: Housing and Community Development PUBLIC HEARING: (Yll~ ~: '', ~:;>L{L BUDGET AMENDMENT: (Y/1~ ~<: ATTACHMENT(S): Revised Policy County Attorney Statement INFORMATION CONTACT: Taza L. Fikes TELEPHONE NUMBERS: - - ezt. 2490 Hillsborough 732-8181 Chapel Hill 968-4501 Durham 688-7331 Mebane 227-2031 PURPOSE: To approve a revised Impact Fee Reimbursement Policy for non-profit housing development agencies. BACKGROUND: On November 1, 1995, the BOCC approved a policy for impact fee reimbursement to local non- profit organizations meeting the established criteria. The eligibility criteria includes only non-profit housing organizations producing single family housing for first-time homebuyers at or below 80% of azea median income. Since adoption, the interest in reimbursement of fees paid for rental property developed for low income families has become more visible. In order to address rental housing development within the reimbursement policy, on April 1, 1997, the BOCC considered a policy revision to enable the BOCC to consider reimbursement requests from non-profit organizations developing rental property on a case by case basis. At that time the Boazd asked for. the following additional information. A,i - - -. 1. Defini " A$ordability -Affordable housing is defined as rental housing for which the occupant pays ~ nwre than 30% of gross income for all housing costs, including utilities; or owner-occupied housing which can be purchased for no more than 2. S times annual family income. 2. Define Special Needs Populations -Special needs populations refer to such groups as: the disabled including the physically handicapped; mentally ill; the elderly; persons living with AIDS; substance abusers; and the homeless. 3. Will establishing criteria for reviewing of rental housing developments create an "entitlement policy"? -See County Attorney s Statement a =+, 4. Investigate the pros and cons of adding rental housing to the policy. Are we setting a ` precedent? -See County Attorney's Statement RECOMMENDATION(S): The Manager recommends approval of a revised Impact Fee Reimbursement Policy for non-profit housing development agencies. 1 POLICY FOR IMPACT FEE REIMBURSEMENT n^~T FOR AFFORDABLE HOUSING Elitribility Criteria: 1. 1~-~01(c)(3) non-profit organization which (1) develops __~~___ `cz:__j affordable housing for first-time homebuyers with incomes at or below 80~ of the HUD published area median income for the Raleighf-Durhamf--Chapel Hill, North Carolina MSA, or (a) develops affordable rental housing for persons with incomes at or below 60`k of the HUD published area median income for the Raleigh/Durham - Chapel Hill, North Carolina MSA. 2. Affordable Housing is defined as (1) owner-occupied housing which can be purchased for no more than 2.5 times annual family income, or (Z) rental housing for which the occupant pays no more thaw 309k of gross income for all housing costs, including utilities. 3. ~ An organizatione• requesting impact fee reimbursement must certify in writing that, for owner-occupied ~e housing, it will remain affordable to the anticipated beneficiary or beneficiaries for a period of a~~~ a minimum of twenty (20) years or at least as long as reQuired by applicable HUD policy. For rental housing, the certification period is ninety-nine (99) years. The rental housing certification must be secured by a "deed covenant," recjuiring repayment to Orange County of the impact fee if the rental housing does not remain affordable during the period of affordability, which covenant will be further secured by a cote and deed of trust. Evidence must be provided that agency and/or program guidelines are in place to assure affordability compliance. Procedure• 1. An organisatioa recuesting impact fee reimbursement must anticipate reimbursement needs for a gives fiscal year and submit a reQuast for fee reimbursement at the time for submissioa of the County's annual budget, non-departmental funding reQtsests. Further, at no time should an organisation presume impact fee reimbursement, and in particular, psesume a lump sum reimbursement paymeat or tota~ntisbursemeat payments in one fiscal year. Therefore, the c~-r o! impact fees should be considered when developing hout#;1Cevelopment projects and should be included in all gram loan applications. Written request for impact fee reimbursement should be submitted to the Orange County Housing and Community Development Department prior to the anticipated date the building permit will be obtained. The request should include all information necessary for a determination of eligibility, including so much of the following that is pertinent: a description of the anticipated beneficiary (homeowner or tenant), a detailed i~~~=r~••~' '~~••-~ construction budget, a~ an estimated completion date, the house selling price or the proposed rent schedule, including utility costs. 3 .~ If funding is unavailable in the current fiscal year budget, the Housing and Community Development Director will notify '; the non-profit organization. If funding is unavailable, the 4 application for reimbursement will be considered in the next fiscal year. Applicatioas will be considered on a first in, first out basis with uafunded applications carrying over from tfscal year to fiscal year unless withdrawn. ~'~ ~~e-a~~ ~e-~~h~z-~o~e~~-:~=~~a~ee-g~aee~xa~}1 ~..^a.. ides-~re~-€e~ t-~~s-pe~e~e- 2. Requests will be reviewed within 15 working days and the Housing and Community Development Director will make a recommendation to the County Manager €~~b•ieT=~ re;:--ana a~p~e~a-~. The recommneadation of the Housing and Community Development Director will be based on whether or not the application satisfies the eligibility criteria, includes all of the information required by this Procedure and whether or not the project budget is adequate for the proposed housiag project. 3 . The #i~ra~ fee-i-ere~i~be Manager' s recommendation to the Board of County Commissioners, for or against reimbursement, will be conveyed to the applicant in writing by the Manager within 15 working days after the re~R^-~~~e~e ^a. Manager receives the recommendation of the Housing and Community Development Director. The recommendation of the Manager will be based on the recommendation of the Housing and Community Development Director AND whether or not there are adequate funds budgeted in the current fiscal year to reimburse the applicant for impact fees paid by the applicant. 4. If the Manager's recommendation is favorable, the item will be placed oa the aext Board of County Commissioners agenda for its consideration. If the board decisioa is favorable, f~~s-;z~1- ;c ~'~ ^~~'~'~••`^a '-^ the non-profit organization will be reimbursed for ~F~ the impact fee that it has paid §~ ~~~=c=~~==t=='~- ==---j 5. The Housing and Community Development Director will communicate the decision to the Planning Department and the Finance Department. 6. The non-profit organization is responsible for providing writt~3n-notice, including documentation, of impact fee payment-to;the Housing and Community Development Department. After notification, the Finance Department will be asked withh €ve-worl~ing days to prepare a check for the organization. 7 . Al l funding •~ ~-' a , ~ ~ ^~ ^ decisions by the Board of County Commissioners will be good for a period of six months from the date of approval. If the building permit is not obtained within that time period, the organization must reapply for funding. Effective: July 1, 1995 Approved: November 1, 1995 Revised: April 1, 1997; March 4, 1998 * Revisions in bold lsg-12\impfee.pol LAW OFFICES COLEMAN, GLEDHILL & HARGRAVE A PROFESSIONAL CORPORATION 129 E. TRYON STREET P. O. DRAWER 1529 HILLSBOROUGH, NORTH CAROLINA 27278 919.732.21% FROM THE DESK OF FAX 919-732-7997 GEOFFREY E. GLEDHILL February 24, 1998 Margaret Brown, Chair Moses Carey, Jr. Bill Crowther Alice Gordon Stephen Halkiotis Orange County Board of Commissioners Post Office Box 8181 Hillsborough, North Carolina 27278 RE: Impact Fee Reimbursement Policy Dear Board Members: Last year, the Board considered expanding its impact fee reimbursement policy related to affordable housing to include rental housing. I have been asked to present pros and cons of such a policy expansion. I have enclosed a copy of my June 26, 1996 letter to the Board as background for your consideration of the policy expansion. The conclusion of that June 26, 1996 letter is that spending County money on a project which will directly benefit families or persons of low to moderate income over a sustained period of time satisfies the public purpose requirement for spending County money. A policy which reimburses school impact fees for projects exclusively committed to renters with incomes at or below 60% of the HUD published area median income (thy Raieigh/Durham/Chapel Hill metropolitan statistical area total median family inc ashes that public purpose. The enclosed chart may help you see the population at which®>~usement policy is aimed. The obvious firsti: "pro" of making impact fee reimbursements available to such rental projects is that it will arguably increase the number of affordable housing units available and arguably make those housing units more affordable. Requiring the units in the project to remain affordable for a significant length of time assures the availability of affordable housing for the period of affordability. A "con" is that the housing may not remain affordable in perpetuity and that at some point the housing units may be rented at market rates. The question becomes whether the County's investment in impact fees is sufficiently "amortized" over the period of required 4 '4 ' Board of Commissioners Page 2 February 24, 1998 6 affordability. To further insure affordability for the desired length of time it is possible to develop an agreement or land covenant secured by a note and deed of trust which will require repayment of the impact fee for any unit that does not remain affordable for the covenanted period of time. Whether the obligation to repay the impact fee could be enforced if there's a need to enforce it will depend on whether there is equity in the housing project and whether the County, at that time, has the will to enforce the reimbursement requirement. Establishing a policy for reimbursement of impact fees to rental housing projects has the potential to be perceived as an entitlement. That is, once the standards for reimbursement are established, they become the benchmark for projects seeking reimbursement. Since the amount of money involved in impact fees is significant, it is reasonable to assume that all new affordable housing projects, whether home ownership or rental, will meet Orange County's impact fee reimbursement standards. This fact may be perceived to be a "con." It will cost the County money. And, there is no rational way that I can think of to distinguish among the qualifying projects. In order to avoid the impact fee reimbursement policy from being perceived to be an entitlement program, the policy must limit reimbursements solely to the County's annual appropriations for reimbursement. The appropriation limitation limits the County's annual expenditure for impact fees. I think it is very important that all reimbursement requests, both home ownership and rental, be treated first in, first out. Those that cannot be funded in the fiscal year in which the application is made will be held until they are either withdrawn or ultimately funded in a subsequent fiscal year, again on a first come, first served basis. This means that Orange County's standards for reimbursement will determine the universe of applicants. The tighter the standards, the fewer the applicants. The converse is also true. The standards proposed in the rental policy under consideration are parallel to those for home ownership affordable housing. They could be tighter for both home ownership and rental. For example, the Town- of Carrboro has a policy for waiving permit fees. A copy is enclosed. This policy ig' more narrow than the County's impact fee policy and would, by and large, result in fewer Caaia permit. fee waivers than County impact fee reimbursements. The "con" of limiting rei~etnents as Carrboro has, is that otherwise affordable housing units may not be built or theme may= not be as many built. For example, not all Habitat for Humanity housing projects would qualify under the Carrboro fee waiver policy. Eliminating a Habitat house from school impact fee reimbursement consideration based on the fact that no federal, state or local money is used to fund the project or the fact that the project is not necessary to implement the HOME program may lessen the number of Habitat houses that can be constructed and, therefore, may not be the kind of distinguishing characteristics that the Board would want to make in deciding whether to reimburse impact fees. The Board also sought some clarity as to what special needs populations are. A definition is provided as part of the abstract for the impact fee reimbursement policy revision. Providing reimbursement for special needs population housing is not addressed separately in the Board of Commissioners Page 3 February 24, 1948 7 recommended policy. This is so principally because, although definable, this housing may not be readily identifiable as a class large enough to include in a policy. Assuming that the Board has an interest in, from time to time, reimbursing impact fees for housing for a special needs population that does not meet the affordable housing definitions recommended, it can handle the request on a case by case basis and outside the policy with the only criterion being that the reimbursement satisfy the public purpose requirement for spending County money. The Board makes similar determinations annually when it considers funding requests from outside agencies. Very truly yours, HILL & HARGRAVE, P.C. GEG/lsg Enclosures xc: Tara Fikes John M. Link, Jr. lsg-12 boardimp.ltr =~~ ..:;~` 8 _ POLICY FOR IMPACT FEE REIMBURSEMENT FOR AFFORDABLE HOUSING (Based on 1998 Data) HOME OWNERSHIP Raleigh-Durham-Chapel Hill, North Carolina Metropolitan Statisti- cal Area Total Median Familv Income Maximum Home Purchase Family Price to Income Homeowner 8( 0~) Family family of 4 $54,700 $43,760 $109,400 " family of 3 49,200 39,360 98,400 family of 2 43,800 35,040 87,600 family of 1 38,300 30,640 76,600 RENTAL HOUSING Raleigh-Durham-Chapel Hill, North Carolina Metropolitan Statisti- Family cal Area Total Median Income Familv Income 60~ Maximum Housing cost to Family (included.: rent, heat, electric, water and sewer utilities) oer month family of 4 $5,4,700 $43,760 $820.50 family of 3 49,200 39,360 738.00 family of 2 43,800 35,040 657.00 family of 1 38,300 30,640 574.50 ~n~~ LAW OFFICES COLEMAN, GLEDHILL & HARGRAVE A PROFESSIONAL CORPORATION 129 E. TRYON STREET P. O. DRAWER 1529 HILLSBOROUGH. NORTH CAROLINA 27278 919.732.2196 FAX 919.732-7997 Moses Carey, Jr., Chair Bill Crowther Alice Gordon Stephen Halkiotis Don Willhoit Orange County Board Post Office Box 8181 Hillsborough, North June 26, 1996 of Commissioners Carolina 27278 FROM THE DESK OF GEOFFREY E. GLEDHILL RE: Impact Fee Exemption or Reimbursement Requests by First Centrism Corporation Dear Board Members: In letters to John Link and Tara Fikes, Mr. Jerry A. Lohla, Executive Vice President of First Centrism Corporation, makes the case for exemption or refund of school capital impact fees for an apartment complex planned to be built in Carrboro. The apartment complex is presented as a rental, affordable housing project for seniors. The request seeks exemption or refund of $186,000. The impact fee for the Chapel Hill-Carrboro School District approved by the Board of Commissioners on June 3, 1996 no doubt makes this request one for exemption or refund of $369,000 in impact fees. Exemption: The impact fee is based on the Orange County Educational Facilities Impact Fee Ordinance and is a fee charged on all new residential dwelling units located within Orange County. That-ordinance>provides no exception for residential dwelling units regardless of ownership, whether to be used for home ownersh~g,or rental, affordability or classification of the resident pogs~].aetion of the dwelling unit. In other words, an apartment co~~"e~t developed to be rented to persons over 62 years of age who meet affordability requirements is not exempt under the Impact Fee Ordinance. That Ordinance would have to be amended to permit an exemption for this classification of residential dwelling or any other. 9 The Impact Fee Ordinance provides a process for review of the assumptions which form the basis for the fee and its amount. That process is described in Section 5F. The Board of County Board of Commissioners 10 Page 2 June 26, 199b__ Commissioners>are directed in that Section to review a report (known as the Technical. Report) annually to determine "if, within each benefit area (school district), all areas of new construction are being benefitted by the fees." If the Board of Commissioners determines areas of new construction are not being benefitted, then it is empowered to adjust the impact fee accordingly. The County has gone through such an annual adjustment process, concluding most recently with the May 28, 1996 public hearing and adoption of revisions to the Impact Fee Ordinance on June 3, 1996. It is my opinion that this adjustment process can happen more often than annually and that the Board _ could direct such a review at any time. Following any such review a report would be prepared and presented to the Board of Commissioners. The Board could then call for a public hearing to consider changes in the Impact Fee Ordinance. Prior to the hearing the Board must cause notice of the hearing to be published once a week for two calendar weeks.- The first publication can be not less than 10 days nor more than 25 days before the date fixed for the hearing. As you know, the impact fee is supported by the Technical Report. Originally, it included in its analysis all existing housing, derived from the latest census data. That data was updated in an August 8, 1995 study focusing only on new housing units. This study resulted in new student generation rates which were in part the basis for the increase in the Chapel Hill- Carrboro School System impact fee from $1,500 to $3,000 approved on June 5, 1996. All new residential housing units, including for example those in the Carol Woods Retirement Center, were included in the data base for the purpose of calculating the student generation rate presented in the August 8, 1995 report and used in the Technical Report calculation of the permissible impact fee. Any decision to exclude classifications of housing because of an actual or perceived.lesser impact on the school - capital needs would call for a recalculation of the student generation rate and the"Technical Report. Further;~s~a€f analysis of this seniors-only affordable housing project could result in a conclusion that some of that work could-b~ avcri.ded, at least for the purpose of determining whether this classification of housing should be exempt from school capital impact fees. Among the things that staff will look at will be: (1) the period of affordability and seniors- only limitation compared with the period the housing could impact school capital needs; (2) the ability to "buy out" the project limitations (affordability and seniors-only) and convert the project to a "market one." Board of Commissioners Page 3 - June 26, 1996 Reimbursement: A decision by the Board to reimburse the impact fees for this housing project is less legalistic and would not require the analysis or the time that would be involved for an ordinance amendment. Presently Orange County has a policy permitting reimbursement of educational impact fees paid for housing units constructed by nonprofit corporations for home ownership by persons meeting an affordability test. These reimbursements are predicated on (1) a qualified applicant (nonprofit), (2) long term affordability and (3) Orange County using its general fund revenue to satisfy a public purpose that is deemed as important as the educational impact fees. The line drawn by the Board concerning this policy can be redrawn. Its -- present location is analogous to the property tax exemption made for property used for charitable purposes. That tax exemption has two features. The entity seeking exemption must be qualified and the use of the property must qualify. A qualifying entity is a nonprofit corporation. A qualifying use is-affordable housing. Since the impact fee is not a tax, Orange County is not bound by the line drawn in the property tax laws, drawn for exempting property taxes. On the other hand, before the County can spend general fund money, it must do so for public purposes. Article V, Section 2(1} of the North Carolina Constitution provides that "[t]he power of taxation shall be exercised in a just and equitable manner, for public purposes only." "The power to appropriate money frorre the public treasury is nq greater than the power to levy the tax which put the money in the treasury. Both powers are subject to the constitutional proscription that tax revenues may not be used for private individuals or corporations, no matter how benevolent." [Citation omitted.] 11 The definition of a public purpose is an evolving and perhaps expanding one. The government may "experiment with new modes of dealing with old evils, except as prevented by the ~ - Constitution." [Citation omitted.] Most recently we saw evidence of the North Carolina Supreme Court's view of the expanding d~~~.nition of public purposes in the Mareadv case. The Supreme Cou,-approved public money being spent for industrial recruitment~:~ed generally economic development. Some of the language in that decision, although not related to affordable housing or this affordable housing project, suggests to me that the line on reimbursing impact fees could be redrawn to include the First Centrum project. I have enclosed a copy of the Mareadv decision for your review. And, as we know, public money is spent on affordable housing projects and programs at the federal, state and local level. Unlike fee exemption, fee reimbursement requires a source of funds. That is, the fee must be collected and deposited in the Board of Commissioners Page 4 - June 26, 199¢ trust fund created for the administration of the impact fee. The reimbursement must come from the County's general fund. In this case, the amount of money in question is $369,000 (123 units x $3,000 per unit). Very truly yours, GEG/lsg Enclosure xc: John M. Link, Jr. lsg-5 gegimp.mem ~- COLEMAN,,,GLEDHILL & HARGRAVE, P.C. edhill 12 r~u/! Eiil~S~ 13 •. 2.0 ORGANIZATIONS AFFECTED All departments and divisions 3.0 REFERENCES 4.0 OF LICY The Town of Carrboro in its desire. to ftu-tlicr affordable housing opportunltics hereby establishes a Permit Fee Waiver Policy. This policy was adopted by the Carrboro Board of Aldermen on February 11, 1997. 5.0 AEFINITION~, Affordable housing is defined as: I. A dwelling unit that can be pure6aaed by families or persons with incomes that arc less khan 80% of the median income for_Orange County as reported by the_US Dept. of Housing and Urban Development arxd w~ie`rc ~i"e` ioial-monthly housing cost (including mortgage payments, utilities, taxes, and insurance) will not exceed 30% of _ their total monthly income. 2. A dwelling unit that can be rented by fanulies or persons with incomes that arc less than 609s of the median income for Orange County as reported by the US Dept, of Housirr~~and Urban Development and where the total monthly housing cost (inel~rettt paytrtents, utilities,~taxes, and insurance) will not exceed 30 % of their total t~ income: 6.0 PROCEDURE Subject to budgetary constraints, the Boazd of Aldermen may consider granting a fee waiver (excluding engineering fees) for affordable housing projects that are no being developed on property owned directly or indirectly by the Town of Carrboro that can clearly demonstrate compliance with the following criteria: ~,I. The fee waiver will directly benefit families or persons of low to modecatc income over a sustained period of time, 1.0 PURPOSE - To establish fees waiver policy for land use and building permit~q ~74/ltl/1'~7( 1L: 31 7+7%GO~ /fir ~ urn i ur ~,r,t;i:n~ru rH~c u3 14 rage z ar Z , StAndard I aficy No. 540-1 2. Tl~e project is_.direct(y funded by a Federal, State, or l.,ocal unit of government specifically to provide tow and moderate income opportunities; and 3. The need and bencfrt will be realized by the community as a whole if the fee waiver is granted; and 4. The project would not be affordable but for the granting of a fee waiver; and 5. The project is necessary to implement a component specified in the Consolidated flan for Housing and Community Development in Oranac County NC as required by the HOME program administered ttuough Orange County. " ~,, pTr