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HomeMy WebLinkAbout2004 S Housing - Consolidated Housing Plan Annual Update/HOME Program Signed Agreement with Chapel Hill,S'- ~-o ~ NORTH CAROLINA ORANGE COUNTY DEVELOPMENT AGREEMENT This is an AGREEMENT between ORANGE COUNTY, a general local governmental unit of the State of North Carolina, (hereinafter referred to as the "County") and the TOWN OF CHAPEL HILL, a general local governmental unit of the State of orth Carolina hereinafter referred to as the "Town"). The effective date of this agreement is WITNESSTH WHEREAS, the Orange County HOME Consortium has designated $125, 000 in Orange FY 2004-2005 HOME funds for the purpose of conveying these funds to assist with the acquisition of one dwelling unit in Chapel Hill to develop a proposed transitional housing plan; and WHEREAS, the County is the lead entity of the Orange County HOME Consortium, so designated in an agreement dated July 1, 2005 and as such is the lead entity in a representative capacity for all members of the Orange HOME Consortium for the purposes of carrying out the HOME Program in accordance wit the Title II of the Cranston-Gonzalez National Affordable Housing Act (Pub. L. 101-625), (42 U.S.C. 3535(d) et. seq.) (hereinafter referred to as the "Act"), and as further defined in the Federal Program Requirements provided by the U.S. Department of Housing and Urban Development; and WHEREAS, the Town intends to lease the unit to a current public housing family with a rent paying ability of at least $450 per month and with incomes not exceeding 50% and below of median income as described in the Town's FY 2004 - 2005 HOME Application which is hereby incorporated into this Agreement, and hereinafter referred to as "the Project". NOW, THEREFORE, in consideration of the mutual covenants, promises, and representations contained herein, it is agreed between the parties hereto as follows: 1. Project Activities 1.1 The Town shall acquire the dwelling unit defined in the Project, obtain all permits and licenses necessary to rehabilitate the unit in the Project if necessary, and ensure compliance with all applicable building and zoning ordinances as well as Section 8 Housing Quality Standards (HQS). 1.2 Financial assistance in the amount of $125,000 for the dwelling unit in Federal HOME Program funding will be provided in the form of a deferred loan with a forty (40) year loan term, forgivable at the end of 40 years. A Deed of Trust and Promissory Note will secure the HOME Program investment. This Deed of Trust and Promissory Note shall constitute a lien on the Property, subordinate to the Declaration of Restrictive Covenants described in paragraph 4 of this Agreement, with the County as the secured party/beneficiary. The County agrees to subordinate its Deed of Trust lien to a lien securing private, first-time permanent financing obtained by the Town, at the time of purchase. 1.3 The period of affordability will be 99 years and will be secured by a Declaration of Restrictive Covenants that will incorporate a right of first refusal that maybe exercised by the Town and/or Orange County. 1.4 ~ The Town shall make certain that the seller is aware of their rights under the federal Uniform Relocation Act prior to completing the sale of the property. The seller must also complete a Lead Based Paint Disclosure Form if the property was built prior to 1978. 1.5 The property to be acquired must have a value that does not exceed 95% of the area median purchase price for that type of housing. Value must be established by one of the following methods: i. An appraisal by a qualified appraiser. ii. Tax assessments may be used to establish value, but only if they are current and can be computed at 100% of market value. 1.6 An annual rental operations budget must be submitted to the County each year at least sixty days prior to the July 1 beginning date for the fiscal year. Further, not more than 90 days after the end of each fiscal year, the Town must furnish to the County an annual accounting of income and expenses for each dwelling unit. The operating assumptions allowed at the time of initiation of this project including reasonable rent increases will be acceptable for future budgets and reports. Any excess cash flow must be returned to the County within 90 days of the end of the fiscal year for deposit into the local HOME Program Trust Fund for use in fixture affordable housing projects. 1.7 The Town agrees to lease the Property to families whose income does not exceed 50% of the area median income by family size, as determined by the U.S. Department of Housing and Urban Development and as amended from time to time. Monthly rents must be established in accordance with the HOME Program guidelines. Residential leases will not exceed one year in term and may be renewed. The Project must not cause displacement of existing tenants. 1.8 The Town is responsible for verifying the income of prospective tenants and maintaining eligibility data. The Town shall maintain tenant files as part of its Books and Records as required and for the period of time required by Section Sc. of this Agreement. The Town must provide the County an initial occupancy report verifying the income eligibility of all tenants at the time of initial lease-up. Each year thereafter the Town must furnish the County with an annual report on the project by July 31 of each year certifying that all Page 2 tenants earn less than 80% of the area median income by family size, as determined by the U.S. Department of Housing and Urban Development and as amended from time to time. 2. Time for Commencement and Completion. In addition, the Town agrees to furnish to the County a copy of its annual audit, performed by a certified public accountant within 90 days of the end of the fiscal year of expenditure of the HOME Program Funding. The Project Completion Date must not exceed December 1, 2005 and is the date the property is acquired, rehabilitated if necessary, and occupied by aloes-income family. In the event that the Town is unable to proceed with any aspect of the Project in a timely manner, and County and the Town determine that reasonable extension(s) for completion will not remedy the situation, then the Termination of Agreement provisions of this Agreement (Section 6.a.) shall pertain. The Town may, at its option, submit a written request for a delay of completion for County approval. The County may, at its option, approve any delay in the completion date or declare the Town in default. The Town shall monitor the constructed unit for affordability for the period of affordability -ninety-nine (99) years. Final contract completion date shall be the latest end date of all assisted unit affordability periods. 3. Affordability Requirement. The unit must remain affordable for a period of ninety-nine years. The Town retains full responsibility for compliance with the affordability requirement for assisted unit, unless affordability restrictions are terminated due to the sale of the Property to anon-qualified buyer in which event the Resale Provisions of Section 4 of this Agreement pertain. The Town shall assure compliance with affordability of the assisted unit by having recorded a "Declaration of Restrictive Covenants" (EXHIBIT A) on the Property. This Declaration shall constitute and remain a first lien on the Property during the period of affordability. It is further the responsibility of the Town to rerecord the Declaration of Restrictive Covenants no later than one day before the expiration of 30 years of the date of the purchasing the property in the event that the Town is still the owner of the dwelling unit at the time of the rerecording. County retains the right to periodically and every 30 years after the first recording of the Declaration of Restrictive Covenants on the Property to register, with the Register of Deeds of Orange County, a notice of preservation of the Restrictive Covenants on the Property as provided in North Carolina General Statute § 47B-4 or any comparable preservation law in effect at the time of the recording of the notice of preservation. It is the intent of this Section of this Agreement that the 99 year affordability requirement contained herein be accomplished and that the Town and the County will do what is necessary to ensure that the same is not extinguished by the Real Property Marketable Title Act or any comparable law purporting to extinguish, by the passage of time, non possessory interests in real property. Both the Town and County agree to do what each must do to accomplish the 99 year affordability requirement. Page 3 4. Resale Provisions. The Town shall assure compliance with affordability of assisted unit through the Declaration of Restrictive Covenants. The Declaration of Restrictive Covenants shall include at least the following elements in their resale provisions for the Improvements: 4.1 If the buyer no longer-uses the Property as rental property or is unable to continue ownership, then the buyer must sell, transfer, or otherwise dispose of their interest in the Property only to an agency with similar interest in affordable housing and serve families with incomes not exceeding 80% of the area median household income by family size, as determined by the U.S. Department of Housing and Urban Development at the time of the transfer. The non-profit fund, foundation, or corporation of like purposes must have established its tax-exempt status under Section 501 (c)(3) of the Internal Revenue Code. 4.2 However, if the property is not sold, transferred, or otherwise disposed to an agency with similar interest in affordable housing during the term of affordability, the Right of First Refusal provision of the County's Long-Term Housing Affordability Policy must be followed and the net sales proceeds (sales price less: (1) selling cost, (2) the unpaid principal amount of the original first mortgage and (3) the unpaid principal amount of the initial County contribution and any other initial government contribution secured by a deferred payment promissory note and deed of trust) or "equity" will be divided 50/50 by the seller of the Property and the County. 4.3 The resale provision shall remain in effect for the full affordability period - 99 years. 5. Miscellaneous Provisions. a. Termination of Agreement. The full benefit of the Project will be realized only after the completion of the affordability periods for all properties constructed with funds that provide an affordable unit to low-income families. It is the County's intention that the full public benefit of this project shall be completed under the auspices of the Town for the assisted unit as follows: In the event that the Town is unable to proceed with any aspect of the Project in a timely manner, and County and the Town determine that reasonable extension(s) for completion will not remedy the situation, then the Town will retain responsibility for requirements for any dwelling unit assisted and County will make no further payments to the Town. ii. In the event that the Town, prior to the contract completion date, is unable to continue to function due to, but, not limited to, dissolution or insolvency of the organization, its filing a petition for bankruptcy or similar proceedings, or is adjudged bankrupt or fails to comply or perform with provisions of this agreement, then the Town shall, Page 4 upon the County's request, convey to the County the properties assisted with funds. Conveyance shall be at the sole discretion of County and on a dwelling unit by dwelling unit basis. Conveyance of properties shall be on the terms set forth herein: Conveyance of properties shall occur within thirty (30) days of County and the Town's agreement of the Town's inability to continue as a viable organization. The Town shall convey the subject properties to the County by general warranty deed, free and clear of all liens and encumbrances of record except those which create a beneficial interest in County (Declaration of Restrictive Covenants and Deed of Trust). b. Default, Remedies. This Agreement maybe terminated by anon-defaulting party upon an event of default hereunder, after written notice thereof and thirty (30) days grace period in which the defaulting party may act to cure. As used herein, the term "an event of default" shall mean and refer to a failure or act of omission by either party with respect to any undertaking, obligation, covenant or condition as set forth in this Agreement. With respect to any event of default, the non-defaulting party may exercise any right available to it at law or in equity with respect to such default. c. Books and Records. The Town shall maintain records of its grant requirements under this contract for a period of not less than five (5) full fiscal years following the contract completion date. The Town shall provide access to records and financial statements, as necessary, to provide effective .monitoring and evaluation of project performance. Additionally, the Town shall submit a copy of its annual audit to the County. Upon reasonable advance notice, County or its authorized representatives may from time to time inspect, audit, and make copies of any of the Town's records that relate to this contract. If any audit by County discloses that payments to the Town were in excess of the amount to which the Town was entitled under this contract, the Town shall promptly pay to County the amount of such excess. If the excess is greater than 1 % of the contract amount, the Town shall also reimburse County its reasonable costs incurred in performing the audit. ii. The Town shall maintain files of all tenants, regardless of length of occupancy, residing in the assisted unit. Documentation shall verify eligibility for federal assisted housing at the point of initial tenancy and every subsequent year thereafter for the period of affordability. Information maintained shall include: tenant income level; name of family members; ethnic data; family type - e.g. female head of household; disability status; and monthly rent. iii. The Town shall maintain records verifying the affordability of the assisted unit. Page 5 d. Notices. Any Notice shall be in writing and shall be given by depositing the same in the United States mail, post-paid and registered or certified, and addressed to the party to be notified, with return-receipt requested, or by delivering the same in person to an officer or principal of such party. Notice deposited in the mail in the manner here in above described shall be effective upon mailing. For purposes of Notice, the addresses of the parties shall, unless changed as hereinafter provided, be as follows: i. To the County: Orange County c/o Housing and Community Development Department P.O. Box 8181 Hillsborough, NC 27278 ATTN: Director ii. To The Town: Town of Chapel Hill Department of Housing 317 Caldwell Street Chapel Hill, NC 27516 ATTN: Executive Director Either the County or the Town may change the person or address to which any future Notice shall be given as herein provided. e. No Assignment. No transfer or assignment of the interest of the Town in this Agreement shall occur without the prior written consent of the County; neither may the Town assign this Agreement without the prior written consent of County. f. Conflict of Interest. The Town agrees to abide by the provisions of 24 CFR 570.611 with respect to conflicts of interest, and covenants that it presently has no financial interest and shall acquire any financial interest, direct or indirect, that would conflict in any manner or degree with the performance of services required under this Agreement. The Town further covenants that in performance of this Agreement no person having such a financial interest shall be employed or retained by the Town hereunder. These conflicts of interest provisions apply to any person who is an employee, agent, consultant, or elected official or appointed official of the County, or any designated public agencies or subrecipients that are receiving funds under the HOME Investment Partnership Program. g. Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and there respective successors and assigns. h Indemnification. To the extent legally possible, the Town shall indemnify and hold County, its officers, agents, and employees, harmless from and against any and all claims, actions, liabilities, costs, including attorney fees and other costs of defense, arising out of or in any way related to any act or failure to act by the Town, its employees, agents, officers, and Page 6 contractors in connection with this contract. In the event any such action or claim is brought against County, the Town shall, upon County's tender, defend the same at the Town's sole cost and expense, promptly satisfy any judgment adverse to County or to County and the Town jointly, and reimburse County for any loss, cost, damage, or expense, including attorney fees suffered or incurred by County. i. Subcontracting. The Town shall not subcontract work under this contract, in whole or in part, without the County's prior written approval. The Town shall require any approved subcontractor to agree, as to the portion subcontracted, to comply with all applicable federal, state, and local laws, rules, ordinances, and regulations at all times and in the performance of the work and to comply with all applicable obligations of the Town specified in this contract. Notwithstanding County's approval of a subcontractor, the Town shall remain obligated for full performance of this contract and County shall incur no obligation to any subcontractor the Town shall to the extent permitted by law, indemnify, defend, and hold County harmless from all claims of its contractors. j. No Joint Venture or Agency. The County and the Town each agree and acknowledge that nothing contained herein or otherwise, including, without limitation, any act of the County or the Town under this Agreement, shall be deemed or construed to create any relationship of joint venture, partnership or agency between the parties. k. Effect of Waiver or Forbearance. No failure by the County to insist upon the strict performance of any term or condition of this Agreement, or to exercise any right or remedy upon the breach by the Town of any of its obligations, agreements, or covenants hereunder, shall be a waiver of such affected term or condition or of such breach; nor shall any forbearance by the County to seek a remedy for any breach by the Town be a waiver by the County of its rights and remedies with respect to that or any other breach. 1. Governing Law. This Agreement shall be construed in accordance with and governed by the laws of the State of North Carolina. Any litigation arising out of this Agreement shall be brought in courts sitting in North Carolina, with venue in Orange County. m. Severability. The provisions of this Agreement are independent of and separable from each other, and no provision shall be affected or rendered invalid or unenforceable by the fact that for any reason any other provision may be invalid or unenforceable in whole or in part. If any provision of this Agreement or the application thereof to any person or circumstances shall, to any extent, be or become invalid or unenforceable, the remainder of this Agreement, or the application of such provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each provision of this Agreement shall be valid and be enforced to the fullest extent permitted by law. The County and the Town agree to substitute for such provision of this Agreement or the application thereof determined to be invalid or unenforceable, such other provision as most closely approximates, in a lawful manner, such invalid, illegal or unenforceable provision. If the County and the Town cannot agree, they shall apply to a court of competent jurisdiction to substitute such provision as the Page 7 court deems reasonable and judicially valid, legal and enforceable. Such provision determined by the court shall automatically be deemed part of this Agreement ab initio. n. Equal Opportunity. The Town shall not discriminate against any employee or applicant for employment because of race, color, religion, sex, national origin, political affiliation or belief, age, handicap, or familial status in the implementation of this Project. o. Headings. Headings are for convenience only and shall not be used to interpret or construe its provision. p. Gender; Singular and Plural. As used herein, the neuter gender includes the feminine and masculine. The masculine includes the feminine and neuter, and the feminine includes the masculine and neuter and each includes a corporation, partnership or other legal entity when the context so requires. The singular number includes the plural and vice versa, whenever the context so requires. q. Recording. The parties hereto agree that upon notice to the other and at its own cost and expense, a party may record this Agreement in the Office of Register of Deeds for Orange County. r. Compliance with Laws. To the extent applicable, each party hereto agrees to comply with all laws, ordinances and regulations affecting the Property from and after the date hereof. Without limiting the generality of the foregoing, the Town shall comply with all federal, state and local laws, regulations and ordinances applicable to the expenditure of funds provided by the County, to purchase and develop the Property. s. Publicity; Signage. The Town agrees to provide such publicity with respect to the County's participation in the development of the Property, as the County shall reasonably require. Any Signage at the Property shall acknowledge the County's role and contribution. t. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute on and the same instrument. u. No Third Party Rights. The parties hereto covenant and agree that nothing contained in this Agreement or any act by the County or the Town shall be deemed or construed by the parties or any third party to create any relationship of third party beneficiary, including third party principal or agent, or to create any right, claim or cause of action against the County, the Town or any of their respective officers, agents or employees by any third party. v. Performance of Government Functions. Notwithstanding anything in this Agreement which may be to the contrary, nothing contained in this Agreement shall in any way stop, limit or impair the County from exercising or performing any regulatory, policing or governmental powers or functions with respect to the Property including, without limitation, inspection of the Property in the performance of such functions. Page 8 IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have set their hands and seals on the day and year first above written. COUNTY OF ORANGE, NORTH CAROLINA John ink, Jr., ounty Manager ATTEST: Donna Baker Clerk to the Board of Commissioners Appro d as to form and legality eoffr 1 11, County Attorney This document has been preaudited in accordance with the N.C. Local Government and Fiscal Contro Act. ~~1~--1 ,Kenneth Chavious, Finance Director TOWN OF CHAPEL HILL, NORTH CAROLINA ATTEST BY TO CLERK: TOWN CLERK Town Clerk attests date this the ~c~ 2 ~`' Approved as to Form and Authorization ~, TOV ATTO Y day of `-~'Q'~M~3~'g,, 2005. This instrument has been pre-audited in the manner required by the Local Government Budget and Fiscal Contrgl A t. r v---- FIN E DIRECTOR HOUSING DEPART ENT DIl2ECTOR Page 9 Exhibit A Prepared by: Geoffrey E. Gledhill, Attorney at Law, P.O. Drawer 1529; Hillsborough, NC 27278 After recording return to: Coleman, Gledhill, Hargrave & Peek, P.O. Drawer 1529; Hillsborough, NC 27278 DECLARATION OF RESTRICTIVE COVENANTS THIS DECLARATION OF RESTRICTIVE COVENANTS (Declaration), dated by the Town of Chapel Hill, North Carolina for itself and its successors and assigns (Owner), is given as a condition precedent to the award of Federal HOME Investment Partnership Program funds by Orange County, a body politic and corporate, a political subdivision of the State of North Carolina, together with any successor to its rights, duties, and obligations. RECITALS: WHEREAS, the Orange County HOME Consortium has designated $125,000 in FY 2004-2005 HOME funds for the purpose of conveying these funds to assist with acquisition of one dwelling unit in Chapel Hill hereinafter referred to as the "Project", which property is more particularly described in Exhibit A attached hereto and made a part of this Declaration (hereinafter referred to as the "Property"); and WHEREAS, Orange County is the lead entity of the Orange County HOME Consortium, so designated in an agreement dated July 1, 2005 and as such is the lead entity in a representative capacity for all members of the Orange HOME Consortium for the purposes of carrying out the Page 10 HOME Program in accordance wit the Title II of the Cranston-Gonzalez National Affordable Housing Act (Pub. L. 101-625), (42 U.S.C. 3535(d) et. seq.) (hereinafter referred to as the "Act"), and as further defined in the Federal Program Requirements provided by the U.S. Department of Housing and Urban Development; and WHEREAS, the Town of Chapel Hill intends to purchase one dwelling unit located at 110-A Weatherstone in Chapel Hill (herein after referred to as the "Property"), and described in EXHIBIT A attached hereto and incorporated herein; and WHEREAS, the Town intends to lease the unit to current public housing family with a rent paying ability of at least $450 per month and with incomes not exceeding 50% and below of median income as described in their FY 2004 - 2005 HOME Application which is hereby incorporated into this Agreement as Exhibit B, and hereinafter referred to as "the Project"; NOW, THEREFORE, in consideration of the promises and covenants hereinafter set forth and of other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Owner intends, declares, and covenants that the regulatory and restrictive covenants set forth herein governing the use, occupancy, and transfer of the Property shall be and are covenants pertaining to the Property and running with the land for the term stated herein and are binding upon all subsequent owners of the Property and for such term, except as specifically provided herein, and are not merely personal covenants of Owner. SECTION 1 REPRESENTATIONS, COVENANTS AND WARRANTIES OF OWNER Owner hereby represents, covenants and warrants as follows: a. It is contemplated that the Property and the Project will be used, during the ninety-nine years after Project Completion (defined as the last of the following events: the Property is acquired, rehabilitated, if necessary, and occupied by aloes-income family), for rental housing to families earning up to 50% of HUD area median income. In the event Owner sells, transfers or exchanges the Property or any portion of the Property, the following shall pertain: 1. Subject to the requirements of the DEVELOPMENT AGREEMENT (Exhibit C hereto), the Federal HOME Investment Partnership Program and this Declaration, Owner may sell, transfer, or exchange the Property to anon-profit fund, foundation, or corporation of like purpose which is organized and operated exclusively for charitable and educational purposes and which has established its tax exempt status under Section 501 (c)(3) of the Internal Revenue Code, or to Orange County; provided, however, Owner shall obtain the written agreement, in form satisfactory to Orange County, of any buyer or successor or other person acquiring the Property or any interest therein, that such acquisition is subject to the requirements of this Declaration and to the requirements of the DEVELOPMENT AGREEMENT and the Federal HOME Investment Partnership Program. Owner agrees that County may void any sale, transfer, or exchange of the Property or any portion of this Property if the Page 11 buyer or successor or other person fails to assume in writing the requirements of this Declaration and the requirements of the DEVELOPMENT AGREEMENT and the Federal HOME Investment Partnership Program. 2. Any assignment, sale, transfer, conveyance or other disposition of the Property or any part of the Property other than as described in subparagraph 1 above, whether voluntary or involuntary or by operation of law shall be subject to the provisions of SECTION 4 of this Declaration. b. Owner will, at the time of execution, delivery and recording of this Declaration, have good and marketable title to the Property, free and clear of any lien or encumbrance (except encumbrances created pursuant to this Declaration or other permitted encumbrances). c. Owner warrants that it has not and will not execute any other declaration with provisions contradictory to, or in opposition to, the provisions hereof, and that in any event, the requirements of this Declaration are paramount and controlling as to the rights and obligations herein set forth and supersede any other requirements in conflict herewith. SECTION 2 TERM OF DECLARATION a. This Declaration, and the Terms of Affordability specified herein, apply to the Property immediately upon recordation, and Owner shall comply with all restrictive covenants herein. This declaration shall terminate ninety-nine .years after Project Completion, unless Orange County and Federal HOME Investment Partnership Program affordability restrictions are terminated due to the sale of the Property to anon-qualified buyer as provided herein. SECTION 3 RECORDING AND FILING; COVENANTS TO RUN WITH THE LAND a. Upon execution of this Declaration by Owner, Owner shall cause this declaration and all amendments hereto to be recorded and filed in the Office of the Register of Deeds of Orange County. b. Owner intends, declares and covenants, on behalf of itself and all future Owners of the Project during the term of this Declaration, that this Declaration and the covenants and restrictions set forth in this Declaration regulating and restricting the use, occupancy and transfer of the Property (1) shall be and are covenants running with the land, encumbering the Property for the term of this declaration, binding upon Owner's successors in title and all subsequent Owners of the Property; (2) are not merely personal covenants of Owner; and (3) shall bind Owner and its respective successors and assigns during the term of this Declaration. Owner hereby agrees that any and all requirements or privileges of estate are intended to be satisfied, or in the alternate, that an equitable servitude has been created to insure that these restrictions run with the Property. For the term of this Declaration, each and every contract, deed or other instrument hereafter executed conveying the Property or portion thereof shall expressly Page 12 provide. that such conveyance is subject to this Declaration, provided; however, the covenants contained herein shall survive and be effective regardless of whether such contracts, deed, or other instrument hereafter executed conveying the Property or portion thereof provides that such conveyance is subject to this Declaration. It is further the responsibility of Owner to rerecord the Declaration of Restrictive Covenants no later than one day before the expiration of 30 years of the date of its sale of each of the dwelling units in the event the purchaser of the Property from Owner is still the owner of the dwelling unit at the time of the re-recording. Orange County retains the right to periodically and every 30 years after the first recording of the Declaration of Restrictive Covenants on the Property to register, with the Register of Deeds of Orange County, a notice of preservation of the Restrictive Covenants on the Property as provided in North Carolina General Statute § 47B-4 or any comparable preservation law in effect at the time of the recording of the notice of preservation. It is the intent of this Section of this Declaration that the 99 year affordability requirement contained herein be accomplished and that Owner and Town of Chapel Hill will do what is necessary to ensure that the same is not extinguished by the Real Property Marketable Title Act or any comparable law purporting to extinguish, by the passage of time, non possessory interests in real property. Both Owner and Town of Chapel Hill agree to do what each must do to accomplish the 99-year affordability requirement. SECTION 4 ENFORCEMENT OF AFFORDABLE HOUSING REQUIREMENTS A. Rights of Refusal a. Grant and Effect. Orange County is granted a right of first refusal to purchase the Property as described in this Section. Any assignment, sale, transfer, conveyance, or other disposition of the Property or any part thereof whether voluntarily or involuntarily or by operation of law ("Transfer") shall not be effective unless and until the below- described procedure is followed. b. Right of First Refusal. If Owner contemplates a Transfer to other than an agency with similar interest in affordable housing (The non-profit fund, foundation, or corporation of like purposes must have established its tax-exempt status under Section 501 (c)(3) of the Internal Revenue Code.) and to serve families with incomes not exceeding 50% of the area median household income by family size, as determined by the U.S. Department of Housing and Urban Development at the time of the transfer, Owner shall send to Orange County, at the address noted in the Notice section of this Declaration, not less than 90 days prior to the contemplated closing date of the Transfer, a "Notice of Intent to Sell." This Notice of Intent to Sell shall be accompanied by a copy of a completed, fully executed bona fide offer to purchase the Property on the then current North Carolina Bar Association "Offer to Purchase and Contract" form. If Orange County elects to exercise its said right of refusal, it shall notify the Owner of its election to purchase within 30 days of its receipt of the Notice and shall purchase the Property or portion thereof within 90 days of the receipt of the "Notice of Intent to Sell." Page 13 c. Sales After Failure to Exercise Rights of Refusal If Orange County does not advise Owner in a timely fashion of an intent to purchase the Property, then Owner shall be free to Transfer the property in accordance with this Section. d. Assi ability., Orange County may assign its right of first refusal without Owner's consent. B. Resale Provisions a. If the Owner no longer uses the Property as affordable rental property, then Owner must sell, transfer, or otherwise dispose of their interest in the Property only to an agency with similar interest in affordable housing and to serve families with incomes not exceeding 50% of the area median household income by family size, as determined by the U.S. Deparhnent of Housing and Urban Development at the time of the transfer. The non-profit fund, foundation, or corporation of like purposes must have established its tax- exempt status under Section 501 (c)(3) of the Internal Revenue Code. b. However, if the property is not sold, transferred,. or otherwise disposed of to an agency with similar interest in affordable housing during the term of affordability, the net sales proceeds (sales price less: (1) selling cost, (2) the unpaid principal amount of the original first mortgage and (3) the unpaid principal amount of the initial County contribution and any other initial government contribution secured by a deferred payment promissory note and deed of trust) or "equity" will be divided 50/50 by the seller of the Property and the County. c. The resale provisions shall remain in effect for the full affordability period - 99 yeazs. C. Owner covenants that it will not knowingly take or permit any action that would result in a violation of the affordability requirements of Orange County or of the Federal HOME Investment Partnership Program. Orange County, together with Owner, may execute and record any amendment or modification of this Declazation and such amendment or modification shall be binding on third parties granted rights under this Declaration. D. Owner acknowledges that the primary purpose for requiring compliance by Owner with restrictions provided in this Declaration is to assure compliance with the affordability requirements of Orange County and the Federal HOME Investment Partnership Program, AND BY REASON THEREOF, OWNER IN CONSIDERATION FOR RECEIVING FEDERAL HOME INVESTMENT PARTNERSHIP PROGRAM FUNDS FOR THE PROPERTY HEREBY AGREES AND CONSENTS THAT ORANGE COUNTY SHALL BE ENTITLED, FOR ANY BREACH OF THE PROVISIONS HEREIN, AND IN ADDITION TO ALL OTHER REMEDIES PROVIDED BY LAW OR IN EQUITY, TO ENFORCE BY SPECIFIC PERFORMANCE OWNER'S OBLIGATIONS UNDER THIS DECLARATION IN A STATE COURT OF COMPETENT JURISDICTION, WITH VENUE IN ORANGE COUNTY. Owner hereby further specifically acknowledges that the beneficiaries of Owner's obligations hereunder Page 14 cannot be adequately compensated by monetary damages in the event of any default hereunder. E. This Declaration may be enforced by Orange County or its designee in the event Owner fails to satisfy any of the requirements of this Declaration by proceedings at law or in equity against any person or persons violating or attempting to violate any covenant. If legal costs are incurred by Orange County, such legal costs, including attorney fees and court costs (including costs of appeal), are the responsibility of, and maybe recovered from the Owner. SECTION 6 MISCELLANEOUS a. Severability. The invalidity of any clause, part, or provision of this Declaration shall not affect the validity of the remaining portions thereof. b. Notices. Any Notice shall be in writing and shall be given by depositing the same in the United States mail, post-paid and registered or certified, and addressed to the party to be notified, with return-receipt requested, or by delivering the same in person to an officer or principal of such party. Notice deposited in the mail in the manner hereinabove described shall be effective upon mailing. For purposes of Notice, the addresses of the parties shall, unless changed as hereinafter provided, be as follows: To the County: Orange County c/o Housing and Community Development Department P.O. Box 8181 Hillsborough, NC 27278 ATTN: Director ii. To Town of Chapel Hill: Town of Chapel Hill Department of Housing 317 Caldwell Street Ext. Chapel Hill, NC 27516 ATTN: Executive Director c. Governin Law. This Declaration shall be governed by the laws of the State of North Carolina and, where applicable, the laws of the United States of America. Page 15 IN WITNESS WHEREOF, the Owner has caused this Declaration to be signed by its duly authorized representative, on the day and year first above written. TOWN OF CHAPEL HILL, NORTH CAROLINA By:zT r ,_ u ,~ /LO ~c.~~ Town Manager ATTEST: NORTH CAROLINA ORANGE COUNTY do her person the Ch foregoi atteste My commission expires: l 010 orangecountykleclartownofchapelhill.doc I, ~~et~i e. /'• ~-Ce~f~"` ,Notary Public in and for t e above named County and State, eby certify that on this day personally appeared befor m ~ ith whom I am ally acquai to ~ who, being by me duly sworn, says and that is apel Hill own~anager, and that by authority duly given and as the act of the corporatio , th ng instrument was signed in its name by its Town Manager, sealed with its corporate seal and d to by its ~fts~ ~~_ . Witness my hand and notarial seal, this the ~~' day of 20~ Notary Public ~~~~~~\\~rs` ~ I iA aa~//~~~~ \ ~ ......... o /~ ~~i~pZAAy~~ *% ~ ~. • .- y o: Pue~-~G •2~: ~~~ii d~9 a tr o u~ ~~~,~ ~~/!II 1111111\\ 2 EXHIBIT A PROPERTY DESCRIPTION Being all of Unit 10-A Building No. 10, Weatherstone Condominiums, according to Plat Book 38, Page 15 Orange County Registry to which plat reference is hereby made for a more particular description of the property conveyed. Together with all rights and easements appurtenant to said unit including an undivided percentage interest as Tenant in Common and to the common areas and facilities, said percentage being more fully defined and described in that certain Declarations unit ownership and exhibits and by-laws attached thereto or referred to therein, and recorded on July 1, 1981 in Book 366, Page 544 as amended by instrument recorded October 16, 1981 in Book 375, Page 6 and by instrument recorded December 15, 1981in Book ,Page ,Orange County Registry, and by instrument recorded January 7, 1985, in Book 397 Page 573, Orange County Registry, to which reference is made for a more particular description. And further subject to the rights, duties, obligations and restrictions created by that Declaration of Covenants, Conditions and restrictions recorded in Book 366, Page .544, as amended, including but not limited to, the obligations to pay assessments for the maintenance and operation of the condominium which maybe levied against the unit. PIN: 9880-65-3807.021 TBML: 7.17H..36 EXHIBIT B Town of Chapel Hill FY 2004 - 2005 HOME Application, by reference. Application for 2004-2005 Town of Chapel Hill Community Development Block Grant (CDBG) Program and/or Orange County HOME Program PART 1 STANDARD APPLICATION ~ L`APPLiCANT INFORl~1ATION NAME OF APPLICANT: Chapel Hill Housing Department CONTACT PERSON: Ron Gallerani, Resident Services Officer Address (no P.O. boxes): 317 Caldwell Street Mailing Address (if different City: Chapel Hill State: NC Zip: 27516 County: Orange Federal ID#: 56-6001199 E-mail address: rgallerani@townofchapelhill.org Phone: 919-968-2850 Fax: 919-932-2935 Type of Applicant (Check all that apply) ^D Applicant is an existing entity ^ Corporation ^ General Partnership ^ Limited Partnership ^ Limited Liability Company ^ Joint Venture ^For-Profit ^Non-Profit ~ Local Housing Authority D Municipality ^ Individual(s) ^ CHDO ^ Current Owner ^ Proposed Owner ^ Developer ^ Contractor ^ Other: (specify) If a non profit organization please submit a copy of your 501 (c) (3) documents and a current list of all Board members. 1 II. REQUEST AMOUNT OF REQUEST: $ 125,000 SOURCE: ^Community Development Block Grant HOME CJLand Acquisition ^Property Acquisition Acquisition and Rehabilitation ^Rehabilitation Only PURPOSE: ^Second Mortgage Assistance ^Economic Development ^Public Infrastructure Improvement ^Community Service ^Other: (specify) II [: PROJECT NAIYIEAND LOCATION ~~ Project Name: Transitional Housing Program Project Address: 317 Caldwell Street City: Chapel Hill County: Orange Zip: 27516 Census Tract #: N/A Tax Map Number (if applicable): N/A Target geographic area of project (if applicable): Chapel Hill IV. PRC)<fECT DESCRIPTION. For all projects, please attach to this page a thorough description of the project including: population served, geographic area served, schedule for completing the project, and how Community Development / HOME funds will be used. If applying for funds to purchase property, please provide an appraisal or information about the assessed value of the property, and pictures of the property. In addition, please provide details about the goals of the project, timeline for completion, benchmarks for determining.success of the project, partnerships with other agencies, how the project meets the priorities of the Consolidated Plan, and how the project meets the CDBG National Objectives and / or goals of the HOME Program. Information about the Consolidated Plan and the CDBG and HOME Programs are attached. 2 Transitional Housing Program Description Program Purpose Overview The overall purpose of the Transitional Housing Program (THP) is to prepare public housing families in Chapel Hill and Carrboro for the move from conventional public housing to private market housing. Public housing as established under the Housing Act of 1937 is a way of providing decent, safe, and sanitary housing for individuals who are excluded from the private housing market because of their low-income status. The primary objective of the Housing Act of 1937 is to provide low- income families with affordable housing by charging the family not more than thirty percent (30%) of adjusted household income for rent and utilities. The Act envisioned that families' incomes would increase to a level whereby they could afford private market housing. Thus, these families would move out of public housing, making way for other low-income families. Some public housing families' household incomes have increased to a level or an amount where their public housing rents are almost comparable to private market rents. However, these families continue to live in public housing.- Under the THP public housing families are provided low cost rental housing and supportive services to support their successful transition from conventional public housing to private market housing. Participation in the THP is limited to public housing families with a rent paying ability of at least four hundred and fifty dollars ($450.00) per month. Families selected will be required to participate in budgeting and financial management sessions. The maximum time allowed in the program is five (5) years. At the end of the five-year period, families must leave the program and move into private market housing. Families remaining in the transitional house after the five-year period will begin to pay market rate rent. The benefits of the THP for participants include: A) Family's rent will not increase although family's income may increase and B) Twenty percent (20%) of the monthly rent will be deposited into a savings account. In regard to the latter, the amount in the savings account can only be used when families leave the program and for down payment on a home or rental security costs. HOME Program Funds Use The requested HOME Program Funds will be used to purchase and, if necessary, rehabilitate a house in the Chapel Hill area. The house will serve as a home for a participant in the THP. The purchase and use of houses outside conventional public housing is essential to the success of the program. February 27, 2004 Page 2 The Housing Department constantly searches for properties to be used in the THP. The 2004- 2005 HOME Program Funds will be used to purchase a third home by June 2005. (Presently, the Housing Department has purchased one house and is in the process of securing funds for the purchase of a second house.) Depending on its condition and to the degree of any rehabilitation necessary, the plan is for the house to be ready for use (i.e. the house being ready for move in by a participant) in the THP by September 2005. Geographical Area and Population (s Served The Transitional Housing Program serves public housing residents of the Chapel Hill and Carrboro area and targets families with incomes less than 60% of the area median. Program Description The goals of the THP are: 1) To purchase ten homes over the course of 5 years in the Chapel Hill area to serve as transitional homes; and 2) To coordinate a network of support services (e. g. homeownership classes, financial -counseling, job skills enhancement, and maintenance education) by partnering with local agencies that will prepare participants for the move to private market housing. The Housing Department has designed a program that provides a supportive environment that fosters a transition to private market housing for public housing residents. Goal 1-the purchase of homes outside conventional public housing neighborhoods-allows the Housing Department to be more creative with its rent policy. In conventional public housing, the Housing Department is restricted by regulations in regard to rent amounts and use. The use of houses outside conventional public housing will allow the Housing Department to use collected rent in several creative ways: 1) Eighty percent (80%) of the rent collected each month will be returned to the HOME Program and requested to be used to purchase new houses for the program in the future; 2) Twenty percent (20%) of the collected monthly rent will be put into a savings account for the THP participant; and 3) the Transitional Housing Program will be exempt from the conventional public housing policy where there is an increase in rent with an increase in income. Several benefits result from these creative uses of rent, both for the program itself and for its participants. First, the program is self-supporting: Eighty percent (80%) of each house's monthly rent is put back into purchasing additional houses for the program, increasing revenue that will defray the cost of purchasing subsequent houses. Second, participants use the money in their savings account toward transition expenses to the private market. Third, exemption from the conventional public housing rent policy provides an opportunity for participants to save money because their rent will not increase. Below are tables demonstrating the (estimated) financial benefits to the program and participants: Transitional Housing Program Description February 27, 2004 Page 3 Amount of Revenue Collected From 80% of Rent from 3 Houses and Returned to HOME Program Amount of RentlHouse Monthl Yearl 5 Years* $566.00 (Paid by current $453.00 $5,436.00 $27,180.00 program participant) $ 545.00 (Average between $436.00 $5,232.00 ,$26,160.00 $450.00 and $640.00)* $ 545.00 (Average between $436.00 $5,232.00 $26,160.00 $450.00 and $640.00) Totals $1,325.00 $15,900.00 $79,500.00 Amount of Participant Savings From 20% of Rent Amount of Rent Monthl Yearl 5 Years $450.00 $90.00 $1,080.00 $5,400.00 (Minimum Required) $640 $128.00 $1,536.00 $7,680.00 (Highest rent paid currently in housing) *Participants paying rent of $450.00 and above are eligible for the program; currently $640.00 is the highest paid rent in public housing. Presently, 9 public housing residents are eligible for the program. **Five years is the maximum time a participant can remain in the program. In regard to the self-supporting aspect, with the acquisition of 10 houses, it is conceivable that the revenue collected over one year might range between $43,200 and $61,440 (based on the minimum rent requirement and current highest rent paid in public housing); and, over five years it might range between $216,000 and $307,200. Transitional Housing Program Description February 27, 2004 Page 4 In addition to the financial benefits, participants benefit from the collaborative partnerships between local agencies (e.g. Women's Center and Orange Community Housing Corporation). As part of the THP's lease agreement, program participants agree to work with local agencies in order to prepare for the move to private market housing. The core curriculum consists of homeownership, family finances, career development; and basic home maintenance classes. Outcomes The Transitional Housing Program addresses several housing priorities identified in the Consolidated Plan for the Housing and Community Development Programs and provides viable long-term strategies and solutions to pressing housing issues. First, the Transitional Housing Program will result in the purchase of houses that will be available for rent to low and moderate-income families. In addition to purchasing homes, funds from the HOME Program will also be used to rehab, if necessary, the homes in order for them to pass all housing code standards. Second, the houses will provide opportunities for affordable housing in the Chapel Hill area. As part of the THP, the houses will serve as tools in the education and preparation of future homebuyers and owners and others entering the private housing market. Third, as more houses are purchased for the THP, the rents paid will provide aself-sustaining base of funds that will in turn assist in maintaining quality, affordable housing for the Chapel Hill area. This strategy will have twofold benefits:. l} It will reduce the dependency on external funds to keep the program solvent, and 2) It will maintain a core of quality, affordable rental housing for low to moderate-income people. The Transitional Housing Program provides the Chapel Hill area with quality rehabbed rental housing affordable to low and moderate-income families. In addition, the THP fosters greater economic independence and economic opportunities for low and moderate-income families. Timetable for Spending Funds and ReachingGoal HOME Program funds will be spent by September 2005. The goal is to purchase a house and make any needed renovations and repairs in order for it to meet all housing code standards. To this end, the process will include reviewing possible properties (4-5 months--seeking and choosing the "right" or an appropriate house), purchasing the selected property (1-2 months completing the legal work), and rehabilitating the property (2-3 months-bringing the house up to living standards). V. 1NC()~~IE TARGETING Please indicate the number and ercenta a of units set aside for each income cate o irl the table below Descri tion # of Units (Individuals % of Total Activi will serve households at 60-80% of median income 1 100 Activity will serve households at 30-59% of median income 0 0 Activity will serve households earning below 30% of median income 0 0 Total Units: 1 100 `'i. APPLICANT EX1E'EI2IENCF, Please attach a description of the mission, management structure, and staffing of your organization. Explain your organization's experience and ability to implement, administer and manage the project for which you have applied for funding. The description should include a description and status of current projects utilizing federal, state and local funds. .VII: PROJECT DETAiL Applicants proposing affordable housing projects should complete Part 2 of this application. Applicants proposing non-housing projects only need to complete the Standard Application. All applicants must sign the attached Certifications. 3 Applicant Experience l~erience Developing Affordable Housing, The Town of Chapel Hill's Department of Housing has extensive experience in the management and development of affordable housing in Orange County. Since 1987 the Department of Housing has owned and managed the 336 public housing apartments in Chapel Hill and Carrboro. The Housing Department's mission is to provide safe, decent, and affordable rental housing for residents of Chapel Hill and Orange County. The Department of Housing also assisted in the development of the following affordable housing projects: • The Tandler neighborhood consists of thirty-four single-family homes located on Merritt Mill and Legion Roads in Chapel Hill. The development was constructed with two-and three-bedroom affordable homes for families who lived and worked in Chapel Hill. • The Culbreth Park neighborhood consists of thirty single-family homes located on Culbreth Road in Chapel Hill. This development was also designed for families who lived and worked in Chapel Hill. • The Rainbow Heights neighborhood consists of twelve duplex apartments located on Airport Road in Chapel Hill. This development is the latest public housing neighborhood constructed in the Town of Chapel Hill. • Most recently, a Transitional Housing Program designed to prepare public housing families for the move from conventional public housing to private market housing. The Program combines moving public housing families into houses outside conventional public housing and coordinating a supportive network of resources. Currently, there is one house and it is located on S. Merritt Mill Road in Chapel Hill. Management and Development Team Tina Vaughn, Executive Director, has sixteen (16) years of professional experience in the affordable housing field. She has been the executive director of the Chapel Hill Housing Department since 1987. Prior to her service with the Housing Department, she was the Town of Chapel Hill's Human Services Coordinator. She has a Masters' Degree in Public Administration from North Carolina Central University. Glenn Davis, Assistant Director, has over twenty (20) years of professional experience in the housing and community development fields. He has served as assistant director of the Chapel Hill Housing Department since 1987. In this position, he ensures that all maintenance activities are performed in a timely manner and that housing codes and standards are maintained: Prior to working at the Housing Department, he worked at the Orange County Housing and Community Development Department. He has a Bachelor's of Art degree in Public Administration from North Carolina Central University and a Masters' Degree in City and Regional Planning from the University of North Carolina Chapel Hill. Applicant Experience Page 2 Jacqueline Thompson, Housing Officer II, has over fifteen (15) years of professional experience in housing. She has served as Housing Officer II since 1997. Prior to working with Housing Department, she worked for the City of Jacksonville in Onslow County. She is a Certified Public Housing Manager. Ron Gallerani, Residents Services Officer, has worked in human services for over ten (10) years. He has served in this position for over two years. Before joining the Housing Department, he had worked for several agencies and organizations in the public health and community action fields. His work has included on-on-one case management as well as community capacity building programs and efforts. From these various positions, Mr. Gallerani has gained extensive experience working with community residents, agency professionals, and academicians. He is also a Certified Public Housing Manager. EXHIBIT C Development Agreement betwe n Orange County and the Town of Chapel Hill dated ~ , by reference.