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HomeMy WebLinkAbout2001 S Housing - Public Housing Agency (PHA) Plan Section 8 Existing Housing Program/'~ ~~_~,o i ~~~ 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 EmPOWERment, Inc., a North Cazolina nonprofit corporation (hereinafter referred to as"EmPOWERxnent"). The effective date of this Agreement is January 18, 2001. WITNESSETH WHEREAS, the Orange County HOME Consortium has designated approximately $100,000 in FY 2000 HOME funds for the purpose of supporting the purchase, rehabilitation, and/or new construction of housing in Orange County; and WHEREAS, the County is the lead entity of the Orange HOME Consortium, so designated in an agreement dated July 1, 1999, and as such is the lead entity in a representative capacity for all members of the Orange HOME Consortium for the purposes of canying out the HOME Program in accordance with the Title II of the Cranston-Gonzalez National Afforda.ble Housing Act (Pub. L. 101-625), (42 U.S.C. 3535(d.) ~. ~.) (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 Orange County Board of County Commissioners approved the Community Revitalization Loan Fund Program Guidelines on April 11, 2000 which is hereby incorporated into this agreement as Exhibit A; and WHEREAS, EmPOWERment, Inc., is a local non-profit housing corporation interested in serving as the sponsor, developer, and/or advocate for potential first-time homebuyers; NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the parties hereto do agree as follows: 1. a. EmPOWERment agrees to acquire; rehabilitate, if necessary; and resell available property in the form of single family dwellings; condominiums, and/or townhouses located in Orange County to eligible first-time homebuyers; and/or act as an agent for persons wishing to receive second mortgage assistance under this program. b. EmPOWERment agrees to abide by the Community Revitalization Loan Fund Program Guidelines dated April 2000 in the implementation of this program. c. Upon receipt of a request for HOME funds under this program, the County shall review all submitted documentation within ten (10) working days and provide in writing a preliminary response to the request. If the response is favorable and no further documentation is necessary, the County will notify EmPOWERment in writing of the date funds will be available. If the County requests additional information, the request for information must be satisfied in full before the written notification of funding availability. Any new submission of material will trigger the ten (10) working days response timeframe outlined above. d. EmPOWERment shall sell the newly constructed dwelling units to qualified buyers whose income is up to 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 sale. e. The HOME funding provided by the County will be provided as a deferred second mortgage transferable to the individual families at the time of sale to them. The bond investrnent will be 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 Properry, second only 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 on the Property to a lien securing private construction fmancing acquired by EmPOWERment in order to complete the project. f. At the time of closing of the sale of a dwelling unit to a homebuyer, EmPOWERment shall repay the County the amount of the HOME Program investment in the form of a credit to the homebuyer. The credit to the homebuyer shall be documented by a Promissory Note from the homebuyer to the County which note shall be secured by a Deed of Trust on the Property naming the County as beneficiary. The County agrees to subordinate its Deed of Trust lien to a lien securing private permanent financing acquired by the homebuyer. e. The period of affoxdability will be 99 years and will be secured by a Declaration of Restrictive Covenants that will incorporate a right of first refusal that may be exercised by EmPOWERment and/or Orange County. f. EmPOWERment is responsible for soliciting buyers for the dwelling units constructed on the Property. EmPOWERment and/or its buyers shall be responsible for securing permanent mortgage financing for the homes acquired under this program. g. EmPOWERment is responsible for verifying the income of the homebuyers, explaining the Program to potential homebuyers and certifying by written documentation signed by the homebuyer that the program requirements have been fully explained. EmPOWERment shall maintain purchaser files as part of its Books and Records as required and for the period of time required by Section 6.c. of this Agreement. 2. In the event property is acquired for rehabilitation and resale without identifying a prospective homebuyer, EmPOWERment agrees to identify a qualified buyer and complete the sell of the property to the homebuyer within one hundred twenty days (120) days of the da.te of acquisition of the property by EmPOWERment. Failure to abide by this provision will constitute an Event of Default as defined in Paragraph 6b. of this agreement. 3. The County and EmPOWERment agree to comply with the Act, its regulations and Federal Program Requirements in the purchase and sale of the Property. The County and EmPOWERment further agree to comply with the provisions of the Funding Approval and HOME Partnership Agreement dated August 1, 2000 and hereby incorporated into this Agreement. 4. Affordability Requiremen~ Each unit must remain affordable for a period of ninety- nine years. EmPOWERment retains full responsibility for compliance with the affordability requirement for assisted units, unless affordability restrictions are terminated due to the sale of the Property to a non-qualified buyer in which event the Resale Provisions of Section 5 of this Agreement pertain. EmPOWERment shall assure compliance with affordability of assisted units by having recording, at the time it sells a dwelling unit, a"Declaration of Restrictive Covenants" (EXHIBIT B) 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 EmPOWERment to rerecord the Declaration of Restrictive Covenants no later than one day before the expiration of 30 years of the date of sale of each dwelling unit in the event the homeowner purchasing the property from EmPOWERment is still the owner of the dwelling unit at the time of the re-recording. 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 EmPOWERment 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 EmPOWERment and County agree to do what each must do to accomplish the 99 year affordability requirement. 5. Resale Provisions. Habitat shall assure compliance with affordability of assisted units through the Declaration of Restrictive Covenants. The Declaration of Restxictive Covenants shall include at least the following elements in their resale provisions for the Improvements: 5.1 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., a low-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. 5.2 However, if the property is sold during the term of affordability to a non-qualified homebuyer, the Right of First Refusal provision of the New and Existing First- Time Homebuyer Program portion 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. 5.3 The resale provision shall remain in effect for the full affordability period - 99 years. 6. Miscellaneous Provisions. a. Termination of Agreement. The obligations of the parties hereunder and the specific obligation of EmPOWERxnent to acquire; rehabilitate, if necessary; and resell available property in the form of single family dwellings; condominiums, and/or townhouse located in Orange County to eligible Orange County residents shall terminate upon the completion of the sale of the Property to a homebuyer. Continuing obligations of the homebuyer shall be contained in the note and deed of trust to be recorded at the time of closing of the sale of the Property. Notwithstanding the foregoing, the parties hereto may terminate this Agreement at any time by a mutual agreement to that effect in writing. b. Default, Remedies. This Agreement may be terminated by a non-defaulting party upon an event of default hereunder, after written notice thereof is given giving the defaulting party thirty (30) days in which to cure the default. As used herein, the term "an event of default" shall mean and refer to a breach of any of the terms of this Agreement including a failure to meet the time limitations contained in this Agreement and a failure to act as required by this Agreement by either party with respect to any undertaking, obligation, covenant or condition as set forth in this Agreement which the defaulting party has not cured. 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. Each party sha11 keep and maintain books, records and other documents relating directly to the receipt and disbursement of grant funds and the fulfillment of this Agreement. Each party agrees that any authorized representative of the County, the State, the U.S. Department of Housing and Urban Development and Comptroller General of the United States shall, at all reasonable times, have access to and the right to inspect, copy, audit and examine all of the books, records and other documents relating to the grant and the fulfillment of this Agreement for a period of three (3) years following the completion of the Project. d. Conflict with HOME Agreemen~ Notwithstanding anything herein to the contrary, the parties hereto acknowledge the due execution of a HOME Program Agreemettt between the County and the U.S. Department of Housing and Urban Development and agree that any conflict between the provisions, requirements, duties or obligations of this Agreement and the HOME Agreement shall be resolved in favor of the HOME Agreement. e. 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 EmPOWERment: EmPOWERment, Inc. 109 N. Graham Street. Chapel Hill, N.C. 27516 ATTN: Director Either the County or EmPOWERment may change the person or address to which any future Notice shall be given as herein provided. f. No Assignment. No transfer or assignment of EmPOWERment's interest in this Agreement shall occur without the prior written consent of the County. g. Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns. h. Entire Agreement; Modification. This Agreement, with all exhibits and attachments hereto, constitutes the entire agreement between the County and EmPOWERment. No modification or amendment to this Agreement shall be binding upon either party unless made in writing and executed by each party. i. No Joint Venture or Agency. The County and EmPOWERment each agree and acknowledge that nothing contained herein or otherwise, including, without limitation, any act of the County or EmPOWERment under this Agreement, shall be deemed or construed to create any relationship of joint venture, partnership or agency between the parties. j. 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 EmPOWERment 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 EmPOWERment be a waiver by the County of its rights and remedies with respect to that or any other breach. k. 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. 1. 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 EmPOWERment agree to subsritute 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 EmPOWERment cannot agree, they shall apply to a court of competent jurisdiction to substiiute such provision as the 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. m. Equal Opportunity. EmPOWERment shall not discriminate against any employee or applicant for employment because of race, color, religion, sex, national origin, political affiliation or belief, age, or handicap. n. Headings. Headings are for convenience only and shall not be used to interpret or construe its provision. o. 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, parknership or other legal entity when the context so requires. The singular number includes the plural and vice versa, whenever the context so requires. p. 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. q. 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, EmPOWERment shall comply with all federal, state and local laws, regulations and ~rdinances applicable to the expenditure of funds provided by the County, to purchase and develop the Property. r. Publicity; Signage. EmPOWERment 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 Properry shall acknowledge the County's role and contribution. s. 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. t. No Third Party Rights. The parties hereto covenant and agree that nothing contained in this Agreement or any act by the County or EmPOWERment 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, EmPOWERment or any of their respective officers, agents or employees by any third P~'h'• u. 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. 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 (SEAL) , ~____~ y-,/~ ~~1 Stephen H. Halkiotis, Chair Orange County Board of Commissioners ATTEST: - Beverly A. ythe Clerk to the oard of Commissioners NORTH CAROLINA OR.ANGE COUNTY This is to certify that on this day personally came before me Beverly A. Blythe, with whom I am personally acquainted, and being by me duly sworn, says that Stephen H. Halkiotis, is the Chair of the Orange County Board of Commissioners, and that she the said Beverly A. Blythe, is the Clerk to the Board of Commissioners of the County of Orange, the body politic and corporate named within and which executed the foregoing instrument; that she lrnows the common seal of said County; that the seal affixed to said instrument is said common seal; that the name of Orange County was subscribed thereto by the said Chair of the Orange County Board of Commissioners and that the said Chair of the Orange County Board of Commissioners and said Beverly A. Blythe subscribed their names hereto and said common seal was affixed, all by order of the Board of County Commissioners of Orange County and that said instrument is the act and deed of Orange County. Witness my hand and notarial seal, this the ~~day of ~ 2001. Notary Pu c My commission expires: lU ~ ~ ~7" EmPOWERment, Inc. (SEAL) . , resident Board of Directors ATTEST: , ecre y Board of Directors NORTH CAROLINA ORANGE COUNTY I, ~e ~~ri VC ~~ 01 ti , Notary Public in and for the above named County and State, do hereby certify at on this day personally appeared before me ~~¢J~~,~ ~n~ ti, with whom I am personally acquainted, who, being by me duly sworn, says that he is Secretary an that V'; v;ti, J; ~i~,~~ ~ c is President of EmPOWERment, Inc., a North Carolina corporation, and that by authority duly given and as the act of the corporation, the foregoing instrument was signed in its name by its President, sealed with its corporate seal and attested to by its Secretary. Witness my hand and notarial seal, this the ~S 1, day of ,~~ p~,r,~ 2001. ~ ~ N b' My commission expires: ~ a ~ ~6 Ezhibit A COMMITNITY REVITALIZATION LOAN FUND PRO ~RA GUIDELINE Purpose: To provide funds for the acquisition and/or rehabilitation of existing housing in Orange County for resale to very low and low-income families. The program will operate in tandem with a local 501(c)(3) non-profit organization sponsoring, developing, or serving as an advocate for the potential homebuyer. Eligible Activities: Funds appropriated under this program may be used for the acquisition and/or residential property rehabilitation of existing dwelling units situated within Orange County suitable for resale to low and moderate income families qualifying under the provisions of this program. The property must have an anticipated life of at least 20 years after rehabilitation. The acquisition of property must not cause displacement of any resident family. Also, if federal money is used for the property acquisition will be considered a voluntary transaction and the seller must waive their rights under the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (URA). The seller will provide a waiver form for signature. Period of Affordability: All properties assisted under this program must remain affordable to families at or below 80% of inedian income for a minimum of ninety-nine (99) years from the date of initial assistance. Eligible Property Owner: The prospective property owner must meet three key eligibility criteria. • Income Requirements The total annual family income must be 80% or less of the HIJD published median income for the Raleigh-Durham-Chapel Hill Metropolitan Statistical Area (MSA). Total annual family income shall be defined in accordance with the current HUD Section 8 Existing Housing Program definition of annual income. • Principal Residence The prospective buyer must use the property as his/her principal residence. This 744 requirement will be incorpora.ted into all program loan documents. The property may not be rented during the 99-year afforda.bility period. • Residency Requirement The prospective buyer must live or work in Orange County for at least one year prior to purchasing a home under this program. Further, the prospective buyer must be residing in the property to be rehabilitated, or if purchased or constructed, occupy the property when the acquisition/rehabilitation is complete. Eligible Property Types: Single family dwelling (one unit) Condominium unit Townhouse Cmmrevgd.doc 04/11 /00 Loan Limitations All loans provided under this program should not exceed 30% of the house sales price. The loan shall be either a deferred payment loan or an amortized loan over a period of forty (40) years. The loan shall be secured by a Deed of Trust and Promissory Note subordinate only to the first mortgage loan. Primarily, loan refinancing to lower interest rates and for home improvements will be reviewed by the County. Refinancing for debt consolidaxion will not be permitted. The loan may not be refinanced or assumed without the prior consent of the County. There should be no additional encumbrances against the property during the term of the Loan without the prior consent of the County. Reca~ture/Resale Provisions 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 period of affordability will be 99 years and 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. The non-profit organiza.tion 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 a non-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 the Property only to a qualified homebuyer, i.e., a low-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 a non-qualified homebuyer, the Right of First Refusal provision of the New and Existing First-Time Homebuyer Program portion of the County's Long-Term Housing Affordability Policy must be followed and the net sales proceeds (sales price less selling costs and 1 st mortgage payof fl or "equity", after repayment, if required by the Note and Deed of Trust, of the initial County contribution, 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. 2 cmmrevgd.doc 04/11/00 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. Pro~erty Standards All prospective property must be inspected for health and safety defects prior to purchase. The initial assessment is the responsibility of the sponsoring non-profit entity. At a minimum, the property must meet the HUD Section 8 Housing Quality Standards (HQS) at the time of initial occupancy. If the dwelling fails to meet Section 8 Housing Quality Standards (HQS) and repairs are necessary; the sponsor is responsible for ensuring that the work is done properly. If the residential property rehabilitation is financed by the loan, progress payments will be processed for rehabilitation work with evidence that the work completed has been done satisfactorily. The sponsor must make this certification. In the event that the work certified as complete required the sponsor to obtain a building permit, certification must include evidence that the applicable Building Inspections Departrnent has approved the work. Any representative of Orange County, Carrboro, Chapel Hill, or Hillsborough reserves the right to inspect the rehabilitation work in process when the sponsor requests partial payments. The final rehabilitation payment will be made when all repair work has been inspected by the appropriate Building Inspections Department to certify conformance with local building codes and minimum housing codes. The Orange County Housing and Community Development Department will certify conformity with the Section 8 Housing Quality Standards. In the event that property rehabilitation is not necessary, the sponsor will certify that the dwelling meets Section 8 Housing Quality Standards (HQS) prior to the disbursement of loan funds. Environmental Re~irements Environmental review will begin at the time that the initial request for loan funds is submitted to the County. Each property must be assessed by the County and the sponsoring non-profit organization to determine the sensitive aspects of the natural environment that might be impacted by this project or activity. Developers/Sponsors of acquisition-rehabilitation projects will be encouraged to create environmentally sound and resource efficient residential buildings using an integrated approach known as "green building". Green buildings promote resource conservation, including energy efficiency, renewable energy, and water conservation features. Further, deconstruction methods will be considered to capture the greatest possible amount of materials for reuse in this or other projects. cmmrevgd.doc 04/11 /00 Further, HLTD requires that all prospective property and proposed rehabilitation work must be assessed to determine any potential environmental impacts to the community. Specifically, each properiy must be assessed to determine historic significance by collaborating with the local Historic Properiy Commission or the State Department of Cultural History. If the property is of historic significance, the applicable guidelines of the local or state governments must be followed in the acquisition/rehabilitation project. The CounTy will have primary responsibility for completing this task but may solicit the assistance of the sponsor as necessary. Pro~~ Values The value of identified property to be acquired by a homebuyer must have a value that does not exceed 95% of the area median purchase price for that type of housing. HUD makes purchase value limits available to all participating jurisdictions each year. The before and after rehabilitation value must be established by: • An appraisal by a qualified independent appraiser; • Tax assessments may be used to establish value, but only if they are current and can be computed at 100% of market value. • Transfer of property that includes rehabilitation requires an appraisal. Values established will be reviewed by qua.lified review appraiser at the expense of the County. If the review appraiser does not accept an appraisal, it will be necessary to obtain a second full appraisal. The property sales price cannot exceed the established property value. Re~onsibilities of the 501(~,~31 Non-Profit Organization The organization sponsoring, developing, or serving as an advocate for the potential homebuyer must provide: 1. A detailed description of the loan fund request; 2. Certification that the buyer meets all eligibility criteria;* 3. Evidence that primary financing has been obtained by the homebuyer; * 4. A Certification signed by the sponsor and the homebuyer applicant that the program guidelines have been fully explained; * 5. Copies of all building inspection reports; 6. Statement of property value; 7. If applicable, a Development Budget identifying the sources and use of all funds in the project; 8. An Opinion on Title of the security property from an attorney licensed to practice law in the State of North Carolina; and an 9. Estimated Settlement Statement. q cmmrevgd.doc 04/11/00 In the event property is acquired for rehabilitation and resale without identifying a prospective homebuyer, the non-profit sponsor must agree to identify a qualified buyer and complete the sell of the property to the homebuyer within one hundred twenty days (120) days of the date of acquisition of the property. Submission Re~uirements No facsimiles of submitted documentation will be accepted. To receive preliminary commitment, the following information must be submitted in original form. 1. A detailed description of the loan fund request; 2. Certification that the buyer meets all eligibility criteria; 3. Evidence that primary financing has been obtained by the homebuyer; 4. Results of the initial building assessment; 5. Statement of property value; and 6. If applicable, a Development Budget identifying the sources and use of all funds in the project. Upon receipt and favorable review of these documents, the County will begin the environmental review process and request the review appraisal at this time. The sponsor will be ttotified that this process has begun and will be given an estimated time of completion. Once this process is complete and the County has determined that the project is eligible for loan funding, the County may issue a preliminary commitrnent with final commitment issued upon receipt and review of the all of the items identified above under the Submission requirements. In the event that the project is determined to be non-feasible, the sponsor will be notified in writing with the reasons for the deternunation. Original: August 1997 Revised: January 2000 Approved: April 11, 2000 cmmrevgd.doc 04/11/00 Exhibit B DECLARATION OF RESTRICTIVE COVENANTS THIS DECLARATION OF RESTRICTIVE COVENANTS (Declaration), dated , by EmPOWERment, Inc. 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 polirical subdivision of the State of North Carolina, together with any successor to its rights, duties, and obligations. RECITALS: WI~REAS, the Orange County HOME Consortium has designated approximately $100,000 in FY 2000 HOME funds for the purpose of supporting the purchase, rehabilitation, and/or new construction of housing in Orange County; and WHEREAS, the County is the lead entity of the Orange HOME Consortium, so designated in an agreement dated July 1, 1999, 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 with the Title II of the Cranston-Gonzalez National Affordable Housing Act (Pub. L. 101-625), (42 U.S.C. 3535(d.) et. e~c .) (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, EmPOWERment, Inc., is a local non-profit housing corporation interested in serving as the sponsor, developer, and/or advocate for potential first-time homebuyers; WHEREAS, a first-time homebuyer for the purposes of this program is defined as any household earning up to 80% of HUD azea median income 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 rehabilitation. WHEREAS, Orange County requires and Owner agrees to the requirement, as a condition precedent to the awarding of HOME Investment Partnership Program funds, that Owner execute, deliver and record this Declaration in the Office of the Register of Deeds of Orange County in order to create certain covenants pertaining to the Property and running with the land for the purpose of enforcement of the affordability requirements of the HOME Investment Partnership Program. 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 aclaiowledged, 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. Declazation of Restricrive Covenants Page 1 Exhibit B 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, for owner-occupied housing to families earning up to 80% 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 B hereto), the Federal HOME Investment Partnership Program and this Declaration, Owner may sell, transfer, or exchange the Property to a non-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 ttus 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 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 encuxnbrances). 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 Federal HOME Investment Partnership Program affordability restrictions are terminated due to the sale of the Property to a non-qualified buyer as provided herein. Declararion of Restrictive Covenants Page 2 Exhibit B 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. The Owner shall pay all fees and charges incurred in connection therewith. 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 the benefits shall inure to the County and any past, present or prospective owner of the Property) 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 altemate, 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 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 5 dwelling units in the event the homeowner purchasing 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 Orange 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 properly. Both Owner and Orange County 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 and EmPOWERment, Inc. each are herein 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 Declaration of Restrictive Covenants Page 3 Exhibit B 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. Ri~ht of Fi t Re ~cal_ 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 EmPOWERment, Inc., at the addresses noted in the Notice section of this Declaration, not Iess 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 Ora.nge County or EmPOWERment, Inc. 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 Orange County and EmPOWERment, Inc., if both wish to and have the means to exercise the right of first refusal, EmPOWERment, Inc. shall have priority. c. Sales After Failure to Exercise Rights of Refusal. If neither Orange County nor EmPOWERment, NC, Inc. advise 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 this Section. d. Assignabilit~, Orange County and EmPOWERment, NC, Inc. each may assign their said rights of first refusal, one to the other, without the Buyer's consent. B. Resale Provisions a. 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., a low-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. b. However, if the property is sold during the term of affordability to a non-qualified homebuyer, the Right of First Refusal provision of the New and Existing First-Time Homebuyer Program portion 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 Counry contribution and any other initial government contribution secured by a deferred payment promissory note and deed of trust) or "equity" will be divided SO/50 by the seller of the Property and the County. c. The resale provisions shall remain in effect for the full affordability period - 99 years. C. Owner covenants that it will not knowingly take or permit any action that would result in a violation of the affordability requirements of the Federal HOME Investment Partnership Declaration of Restrictive Covenants Page 4 E~chibit B C. Owner covenants that it will not knowingly take or permit any action that would result in a violation of the afFordability requirements of the Federal HOME Investrnent Partnership Program. Orange County, together with Owner, may execute and record any amendment or modification of this Declaration 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 the Orange County 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 T'HE 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 OR.ANGE COiJNTY. Owner hereby further specifically acknowledges that the beneficiaries of Owner's obligations hereunder 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 may be recovered from the Owner. SECTION 6 MISCELLANEOUS a. Severabilitv. The invalidity of any clause, part, or provision of this Declaration shall not affect the validity of the remaining portions thereof. b. No ' e 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: i. To the County: Orange County c/o Housing and Community Development Department P.O. Box 8181 Hillsborough, NC 27278 ATTN: Director Declararion of Restrictive Covenants Page 5 Exhibit B ii. To EmPOWERment, Inc.: EmPOWERment, Inc. 109 N. Graham Street Chapel Hill, NC 27516 ATTN: Executive Director c. Governing 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. IN WIT'NESS WHEREOF, the Owner has caused this Declaration to be signed by its duly authorized representative, on the day and year first above written. (SEAL) EmPOWERment, Inc. President ATTEST: Secretary NORTH CAROLINA ORANGE COUNTY I, , Notary Public in and for the above named County and State, do hereby certify that on this day personally appeared before me with whom I am personally acquainted, who, being by me duly sworn, says that he is Secretary and that is President of EmPOWERment, Inc., a North Carolina corporation, and that by authority duly given and as the act of the corporation, the foregoing instrument was signed in its name by its President, sealed with its corporate seal and attested to by its Secretary. Witness my hand and notarial seal, this the day of 2001. My commission expires: Notary Public Declaration of Restricrive Covenants Page 6