HomeMy WebLinkAboutP-0291 - Housing - Orange County Housing Bond PolicyPOLICY FOR INSERTION INTO THE POLICY MANUAL
MEETING DATE: 06-02-2004
EFFECTIVE DATE: 06-02-2004
NUMBER: P-0291
REVISIONS: Sept 1998 Established
Approved: December 15, 1998
Amended: Apri12001
Amended: October 2002
Amended: June 2, 2004
POLICY: Orange County Housing Bond Policy
Orange County Housing Bond Policy
Established: September 1998
Approved: December 1 S, 1998
Amended: April 2001, October 2002, and June 2004
This document outlines the policies governing the expenditure of 2001Affordable Housing Bond
funds and fixture bond programs.
I. INTRODUCTION
Separate Funding Pools Strategy: Separate Request for Proposals (RFPs) will be issued
simultaneously for four types of projects: 1) homeownership, 2) special needs, whether
ownership or rental, 3) non-special needs rental/ cooperative housing and 4) land banking.
Within each category, no distinction should be made between new construction and
rehabilitation. The RFP closing dates and award dates will also be the same.
20% of the expected $1.3 million that will be made available in the first round of 2001 bond
fiznding will be designated for the homeownership pool, 20% will be designated for the special
needs pool, 40% will be designated for the non-special needs rental/cooperative housing pool,
and 20% will be designated for land banking.
Allocation of Funds: If funds for any pool are not fully allocated in the initial round, an extension
period of 60 days will be granted for the submission of additional RFPs for that specific project
type. This extension period will begin the day following the BOCC's vote on awarding bond
funds. During this extension period new applications will be received; in addition, applicants
who did not score the required 60 points may revise their applications and reapply during the
extension period. If, after this extension period and corresponding funding decisions, there are
still funds remaining in either the Home Ownership, Non-Special Needs Rental, Special Needs
and/or Land Banking pool(s), the Project Review and Selection (PRS) committee will make a
recommendation to the County Manager for the disposition of remaining fiznds.
Eligible Applicants: Only non-profit entities will be eligible to apply for fiznding 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). Preferences will be given to non-profit organizations based in Orange
County and/or organizations currently providing affordable housing to residents of Orange
County.
Request for Proposals: Prospective developers will be required to submit an application once
the Orange County Department of Housing and Community Development announces a Request
for Proposals. The applications will be scored according to the established evaluation criteria and
targeting goals explained herein. All applicants must attend apre-application conference with
representatives of the Project Review and Selection Committee. Additionally, a model
application will be available for all applicants.
Project Review and Selection: A County Committee will evaluate project proposals and make
funding recommendations to the County Manager. The Project Review and Selection (PRS)
Committee will be composed of up to two members of the Board of County Commissioners, up
to three members of the Affordable Housing Advisory Board (AHAB), three Orange County
employees (from among the Orange County Assistant County Manager for Human Services,
Planning Director, Finance Director, and County Engineer) and one employee from each of the
Chapel Hill, Carrboro, and Hillsborough planning departments. The Orange County Director of
Housing and Community Development will also serve as a member of the PRS Committee. The
Board of County Commissioners will appoint the members of the PRS Committee.
AHAB appointments will be for the period of each phase of funding and appointees are not to
have been affiliated with eligible applicants within the last 12 months. "Affiliation" includes
involvement as a volunteer, member of the staff, board, or board committee, or of a funding
agency.
After the PRS Committee has completed application review, the applicant will have the
opportunity to discuss the application with PRS Committee and before the Committee makes
funding recommendations to the Board of County Commissioners (BOCC).
The Board of County Commissioners must approve all housing bond projects. Project proposals
recommended for funding by the PRS committee, with the concurrence of the County Manager,
will be placed on a regular Board of County Commissioners meeting agenda for their
consideration.
Eligible Proiects: Both Existing Housing and New Construction projects are eligible activities
for funding, as are mixed-tenure projects, i.e. homeownership and rental, homeownership and
special needs rental, etc. The property on which the project is located must be within the
boundary of Orange County. For the Land Banking category, eligible properties are parcels of
land within the boundary of Orange County. Production ofnon-traditional housing types -- such
as duplexes, single room occupancy (SROs), group homes, and transitional housing - is also
encouraged. Eligible projects are described in Attachment 1. If a prospective applicant is
considering a project that is not included in the list of eligible projects, then the applicant should
request apre-application conference with the Director of Housing and Community Development
and the Chair of the PRS Committee to determine how the project will be evaluated by the
current criteria.
Minimum Score: All projects that score above 60 points under the Evaluation Criteria are
eligible to receive funding. The PRS Committee will review and score the application. The score
of 60 must be derived from points earned in each evaluation category
Project Completion: All Existing Housing Program activities should be completed within three
years of funding award. All New Construction program activities should begin within three years
of funding award. Project initiation for new construction and land banking is defined as the
acquisition of a building permit. All land banking projects should be initiated within five years
of funding, with a progress report to the Commissioners within three years of the funding award
and annually thereafter. If the project is not initiated in a timely manner, the land will revert to
Orange County. Any requests for time extensions will be granted at the discretion of the Board
of County Commissioners and must be submitted at least six months prior to the deadline date.
County initiated acquisitions/activities are exempt from the project completion requirement.
Reporting Requirements: Bond fund recipients will be required to submit status reports to the
County. (See Attachment 2).
Leveraging Requirements: Projects that do not leverage other financial resources will not be
funded. 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, private bank financing, equity
contributions from the end-user and/or the developer, and philanthropic funds.
Long Term Affordability Requirements: All projects must meet the County's Long-Term
Housing Affordability Policy. See Attachment 3.
II. EVALUATION CRITERIA (for all categories except Land Banking)
Threshold Requirements
1. The applicant can demonstrate site control and zoning compliance.
2. The project is located in Orange County.
3. The application must be complete.
A. Income Targeting (25 points)
Household Income Ran a Points to be Awarded
< 30 % of Area Median Income 25
< 60 %, but >= 30 % of Area Median Income 20
< 80 %, but >= 60 % of Area Median Income 15
Note: For projects serving mixed-income ranges, a corresponding weighted average of
points will be awarded.
B. Leveraging (20 points)
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 twelve (12) months of the date of the funding award. Any requests for time
extensions will be granted at the discretion of the BOCC and must be submitted at least three (3)
months prior to the deadline date.
Percent Funded b Bonds Points to Be Awarded
60 - 80 % 3
40-59% 6
20-39% 9
10 - 19 % 12
< 10 % 15
Other Criteria Points to Be Awarded
1. The project pays property taxes 2
2a. The project repays the bond funds -principal only 2
2b. The project repays the bond funds -both principal and
interest 3
C. Design (15 points)
The design of the site plan and housing units with respect to accessibility, maintenance,
functionality and quality of appearance in terms of compatibility with that of neighboring
housing.
Building Design
Maximum Points
Scorin Criteria to be Awarded
1. The project exceeds the NC Housing Finance Agency Energy 3
Efficiency Criteria (Attachment 4)
2. The project is accessible to needed services for the target 2
population such as healthcare, schools or public transportation
3. The project provides for handicap accessibility and/or utilizes 3
the principles of Universal Design in the building design. (See
Attachment 5 for further details).
4. Additional points maybe awarded for meeting aspects 2
associated with functionality and maintenance. (Details must be
provided by applicant)
Community Design
Scorin Criteria Maximum Points
to be Awarded
5. The project contributes to a mix of housing within an existing 2
nei hborhood
6. Additional points maybe awarded for criteria associated with 3
building appearance, quality of construction, compatibility with
surrounding housing, ability to foster a sense of a secure
community, and contributes to neighborhood revitalization.
(Details must be provided by applicant)
D. Community Sponsorship /Support (10 points)
This section evaluates the degree to which the sponsoring organization demonstrates plans for
strong community participation throughout the development of a project.
Maximum Points
Scoring Criteria to be Awarded
1. The applicant can submit evidence that the application was 2
coordinated with other organizations to complement and/or
support the proposed project (please be explicit).
2. The applicant involved the intended beneficiaries of the 2
ro~ect in the Tannin rocess.
3. The intended beneficiaries currentl live in Oran e Count 2
4. The applicant can demonstrate that the organizations has been
actively involved, or describes the steps it will take to become 2
actively involved in the Community's Consolidated Planning
process to identify and address a housing need or problem that is
related in whole or part to the proposed project.
5. The applicant has developed, or describes the plans to develop 2
linkages with other community activities, programs or projects
related to the proposed project (i.e. support services) to
coordinate its activities so solutions are holistic and
comprehensive. Written documentation such as a Memorandum
of Understanding must be included in the application.
E. Project Feasibility (15 points)
Project feasibility is the degree to which the project is judged to have a likelihood of successful
completion, addressing such elements as zoning, site control, construction schedule, and funding.
The proposal should be complete and present a budget that is reasonable and is based on
reasonable assumptions.
Maximum Points
Scoring Criteria to be Awarded
1. The applicant can demonstrate zoning compliance, and a 4
timel construction schedule that is feasible.
2. Funding (other than bond funding) is in place at the time of
application 4
3. The applicant's proposal is complete and presents a proposed
project budget that is reasonable and is based on reasonable 7
assumptions. The budget should also include consequences of
reduced fundin from the requested amount of bond fundin .
F. Developer Experience (15 points)
Developer experience is judged based on the scope, extent and quality of the applicant'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 applicant's demonstrated development and management
capacity, as well as its financial management capability. This includes the applicant'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 will also be considered. 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. This also includes preferences for applicants based in Orange County and/or
organizations currently providing affordable housing to residents of Orange County.
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) must be demonstrated.
Maximum Points
Scoring Criteria to be Awarded
1. Experience of the applicant in carrying out projects of 5
comparable scope and nature (e.g., new construction, rental
housing, rehabilitation, etc.) to that proposed, and has met
regulatory compliance for prior projects
2. Applicant has proposed a team with demonstrated 5
development, managerial, and financial management
ca abilities in rior ro'ects
3. Applicant has successful record of meeting proposed 5
bud ets and timetables
Conditional Approval
All awards will be subject to conditions that must be satisfied before the disbursement of bond
funds.
III. LAND BANHING POLICY (Addition -June 2004)
Threshold Requirements
For an application to be considered, the applicant must:
1) The application must be complete.
2) Demonstrate exclusive site control for at least ninety days after application.
3) Demonstrate that the intended use of the property conforms to the applicant's strategic plan
and geographic focus area.
4) Include a resolution authorizing this land acquisition by applicant's governing board,
5) Present a land purchase budget that lists the other amounts and sources of funding required to
complete the purchase of property, including all transactions costs and applicable fees,
6) Provide a location map.
7) List the current tax value of property and the current property tax, and
8) Include a proposed schedule for bringing the project on-line, including critical next steps
such as pre-development planning and fundraising, as well as a plan for the management and
maintenance of the property until construction begins.
9) The property must be located in Orange County.
A. Pre-Development Due Diligence (50 points total)
The applicant must demonstrate the suitability of the site for residential development. The
following considerations must be addressed for the proposal to be considered:
Scoring Criteria
1. Planning and Zoning: Does the project conform to the governing jurisdiction's planning,
zoning, and subdivision requirements for this parcel? If not, what is required to
accomplish this? (15 points total)
2. Utilities: Are utilities (water, sewer, electricity, natural gas, phone, etc) available at the
site now or in the respective utilities capital improvement plan to be provided at the site
in the future? Is the property within the current water and sewer service area? (Are public
water and sewer permissible and available?) What is the estimated cost of providing the
utilities? What are the possible funding sources? If public and water services are not
available, has the County Department of Health conducted a soil and site evaluation at
the property for on-site septic services? What was the result of the evaluation and was the
project approved for development by the Department of Health? If the property is a
platted lot, has a well improvement permit been obtained? (15 points total)
3. Site Conditions: What are the open-space requirements and the topographic, geologic,
soil, wetlands, and/or other special features or conditions that circumscribe the
development of this parcel? What is the likely effect of such features and conditions on
the ability to develop the site? Based on these conditions or constraints, is this an
appropriate site for development? (20 points total)
B. Project Feasibility (30 points total)
Scoring Criteria
i. The applicant must submit a sketch plan that includes the findings of the due
diligence as well as a proposed lot layout with dimensions. (10 points total)
ii. Anon-binding, but professionally competent project feasibility budget must be
submitted using the following worksheet. (Use current dollars, not inflation-
adjusted dollars). (10 points total)
Total Acrea e
Pro'ected # of units
Pro'ected type and tenure of units
Pro'ected income tar etin distribution
COST ESTIMATES Total Per Unit
Requested land banking award
Total land cost
of total land cost from bond funds*
Soft Costs
Infrastructure Costs
Subtotal/Developed Lot Costs
of total develo ed lot costs from bond funds
Unit(s) Construction Costs
Other Costs ( lease specif )
Total Costs
* Leveraging is required. This percentage must be less than 100% for the project to be eligible
for a Land Banking award.
3. Anon-binding, but reasonable project timeline must be submitted using the following
worksheet: (10 points total)
Be innin Ex ected Com letion Date
Land Ac uisition
Pre-develo ment planning
Infrastructure installed
Construction
Final project completion
C. Other Attributes (20 points total)
Scoring Criteria
1. Is the parcel eligible for Affordable Housing planning and zoning incentives and/or
bonuses, special districts, etc. of the governing jurisdiction? If so, what is their projected impact
on the future development? (5 points total)
2. What are the "smart growth" attributes of the site location? Relevant considerations
include ease of access to jobs, schools, transit, shopping, etc. (10 points total)
3. Are there any other significant site attributes or other qualities that warrant consideration
and special attention? (5 points total)
Conditional Approval
All awards will be subject to conditions that must be satisfied before the disbursement of bond
funds.
At a minimum, all projects will require an appraisal, title opinion, a site inspection, and survey,
as well as a Phase I environmental report, before the award can be granted.
ATTACHMENT 1 -- ELIGIBLE PROJECTS
It is the intention of the BOCC that a wide range of projects is eligible for bond funding,
including projects ofmixed-tenure nature, i.e. mixing different housing types together in one
project. Production ofnon-traditional housing types -- such as duplexes, single room occupancy
(SROs), group homes, and transitional housing - is also encouraged. If a prospective applicant is
considering a project that is not included in the list of eligible projects, then the applicant may
discuss the proposed project in apre-application conference with the Director of Housing and
Community Development and the Chair of the PRS Committee to determine how the project will
be evaluated by the current criteria. All projects must be located within Orange County.
The following housing programs are also eligible for funding.
Existing Housing Programs
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.
Rehabilitation of Substandard Housing -Second Mortgage: This program would provide
direct assistance to eligible homeowners and 501(c)(3) non-profit organizations that own rental
property for rehabilitation of units with code violations.
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.
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.
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.
New Construction Programs
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.
ATTACHMENT 2 -- PROGRAM MONITORING AND REPORTING
All housing bond recipient agencies are required to file semi-annual project reports with the
Orange County Department of Housing and Community Development beginning six months
after the BOCC approves the award and ending with a final project report no later than two (2)
months after project completion. These reports will involve the completion of a standardized
form that is intended both to collect baseline information on each phase of every project (pre-
development, development, and marketing) as well as to provide an opportunity for self-
reporting on the particular details of each project.
The Affordable Housing Advisory Board will 1) review the bond program semi-annually to
monitor the housing bond program, raise policy issues with staff and the BOCC, and receive
information, 2) maintain a database to facilitate the dissemination and analysis of housing bond-
related information, and 3) prepare a Housing Bond Annual Report which will be made available
to all County residents and formally presented to the Orange County Board of Commissioners
during a regularly scheduled meeting.
ATTACHMENT 3 -- LONGTERM HOUSING AFFORDABILITY POLICY
Purpose: This policy establishes the acceptable strategies for ensuring long-term
affordability in all affordable housing programs supported by County financial resources.
Target Population:
Homeownership programs are targeted to families with incomes at or below 80% of the HUD
published area median income.
Rental housing programs are targeted to families with incomes at or below 60% of the HUD
published area median income.
Definitions
Affordable Housing - is defined as (1)owner-occupied housing which can be purchased for no
more than 2.5 times to 3.0 times the total annual family income, or (2) rental housing for which
the occupant pays no more than 30% of gross income for all housing costs including utilities.
First-time homebuyer/Qualified buyer - A first-time homebuyer for the purposes of this
program is any low income household that has not owned a home within the past three (3) years
including households living in manufactured housing not permanently affixed to a foundation, or
owner-occupants of homes not feasible for renovation.
I. Impact Fee Reimbursement Program (existing policy last revised March 4, 1998.)
A. Owner-Occupied Housing
Any organization requesting impact fee reimbursement must certify in writing,
that, for owner occupied housing, it will remain affordable to the anticipated beneficiary
or beneficiaries for a period of a minimum of ninety-nine (99) years or longer depending
upon the funding source. This requirement will be secured by a Declaration of
Restrictive Covenants.
B. Rental Housing
An organization requesting impact fee reimbursement for rental housing must
certify that the property will remain affordable for ninety-nine (99) years. The rental
housing certification must be secured by a Declaration of Restrictive Covenant requiring
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
note and deed of trust. Evidence must be provided that agency and/or program guidelines
are in place to assure affordability compliance.
II. Land Trust Model
The Land Trust model utilizes anon-profit, community based organization known as a
Community Land Trust (CLT) whose purpose is to acquire land and make it available to
individual families and others, such as cooperatives, through along-term lease for a term
up to 99 years. The leaseholders or homebuyers do not hold title to the land -the title is
retained by the CLT -they own the improvements or housing units/structures on the land.
The benefits of this model include the ability of the CLT to provide first-time
homeownership opportunities for the initial buyer as well as protection of affordability
for future residents in the sale of buildings and other improvements on the land. The
land lease gives the CLT the first option to purchase the home, when and if it is sold, at
an affordable price set by a resale formula. The resale formula gives homeowners a fair
return for their investment, while keeping the price of the housing units/structures
affordable for future residents.
III. New and Existing First-Time Homebuyer Programs
A. Period of Affordability
All properties supported by County financial resources for the purpose of facilitating
homeownership must remain affordable to families at or below 80% of median income
for a minimum of ninety-nine (99) years from the date of initial assistance.
B. Right of First Refusal
A right of first refusal or right to purchase is accomplished by means of a Declaration of
Restrictive Covenants on the property purchased by the first-time homebuyer. 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.
If the original homebuyer or any subsequent qualified homebuyer ("Buyer")
contemplates a Transfer to a non low-income household as defined herein, Buyer shall
send to Orange County and/or the sponsoring non-profit organization, 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 and/or the
sponsoring non-profit organizations elects to exercise its said right of refusal, it shall
notify the Buyer 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." As between the County and the sponsoring non-profit organization, if
both wish to and have the means to exercise the right of first refusal, the sponsoring non-
profit organization shall have priority.
If neither Orange County nor the sponsoring non-profit organization advises the Buyer in
a timely fashion of an intent to purchase the Property, then the Buyer shall be free to
transfer the property in accordance with the Equity Sharing subsection of this policy.
C. Equity Sharing
All financial contributions provided by the County will be provided as a deferred
second loan secured by a forty (40) year Deed of Trust and Promissory Note, forgivable
at the end of 40 years. This Deed of Trust and Promissory Note shall constitute a lien on
the Property; subordinate only to private construction financing or permanent first
mortgage financing.
The 99 year period of affordability for each individual housing unit will be
secured by a declaration of restrictive covenants that will incorporate a right of first
refusal that may be exercised by a sponsoring non-profit organization and/or Orange
County. This declaration of restrictive covenants will be further secured by a deed of
trust.
The non-profit organization and/or the County as applicable retains full
responsibility for compliance with the affordability requirement for assisted units
throughout the term of affordability, unless affordability restrictions are terminated due to
the sale of the Property to anon-qualified buyer.
If the buyer no longer uses the Property as a principal residence or is unable to
continue ownership, then the buyer must sell, transfer, or otherwise dispose of their
interest in the Property only to a qualified homebuyer, i.e., aloes-income household, one
whose combined income does not exceed 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, to use as their principal residence.
However, if the property is sold during the term of affordability to anon-qualified
homebuyer to be used as their principal residence, 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. If
the initial County contribution does not have to be repaid because the sale occurs more
than forty years after the County contribution is made, then the seller of the Property and
the County will divide the entire equity realized from the sale.
Any proceeds from the recapture of funds under this provision will be used to
facilitate the acquisition, construction, and/or rehabilitation of housing for the purposes of
promoting affordable housing.
IV. Policy Review
This policy will be reviewed by County staff and officials within two (2) years of
the original approval date to ensure continued congruency with local affordable
housing programs.
Effective Date: Apri13, 2000
Revised: June 6, 2000