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HomeMy WebLinkAbout2001 S Housing - EMPOWERMENT INC HOME Program Second Mortgage Assistance O�F 1,4 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 Carolina non-profit housing organiza io (hereinafter referred to as "EmPOWERment"). The effective date of this agreement is 3 Z007, WITNESSTH WHEREAS, the Orange County HOME Consortium has designated $30,250 in FY 2000 HOME funds and $69,750 in FY 2001 HOME funds for the purpose of providing second mortgage assistance for up to eight (8) low and moderate income families assisted in their housing search by EmPOWERment, Inc. WHEREAS, the County is the lead entity of the Orange County HOME Consortium, so designated in an agreement dated July 1, 1997 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, EmPOWERment intends to assist eight low and moderate income, first- time homebuyers earning up to 80% of HUD area median income purchase existing housing in the County as described in their HOME Program Proposal dated February 23, 2001 which is hereby incorporated into this Agreement, and hereafter referred to as "The Project" included as EXHIBIT A; and WHEREAS, a first-time homebuyer for the purposes of this program is defined as any household earning up to 80% of HUD area 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. 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. EmPOWERment assist 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 locate first-time homeownership opportunities among the existing housing stock. 1.2 The HOME funding provided by the County will be provided as a deferred second mortgage to the individual families at the time of purchase. The HOME Program investment 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 Property, 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 to a lien securing other private, first-time permanent financing acquired by the homebuyer. 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 may be exercised by EmPOWERment and/or Orange County. 1.4 EmPOWERment and/or its buyers shall be responsible for securing permanent mortgage financing for the homes. 1.5 EmPOWERment is responsible for verifying the income of the homebuyers, explaining the second mortgage 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. Time for Commencement and Completion. In addition, EmPOWERment 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 is the closing date of the purchase by a qualified buyer of the last of the eight units to be purchased. In the event that EmPOWERment is unable to proceed with any aspect of the Project in a timely manner, and County and EmPOWERment 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. EmPOWERment 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 EmPOWERment in default. EmPOWERment shall monitor the purchased units 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. 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 2 Resale Provisions of Section 4 of this Agreement pertain. EmPOWERment shall assure compliance with affordability of assisted units by having recording, at the time it sells each of the eight (8) dwelling units, 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 its sale of each of the eight dwelling units in the event the homeowner purchasing the property from EmPOWERment 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 § 47134 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 putporting 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. 4. Resale Provisions. EmPOWERment shall assure compliance with affordability of assisted units 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 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. 4.2 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 50150 by the seller of the Property and the County. 3 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 provide affordable units 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 EmPOWERment for the assisted units as follows: i. In the event that EmPOWERment is unable to proceed with any aspect of the Project in a timely manner, and County and EmPOWERment determine that reasonable extension(s) for completion will not remedy the situation, then EmPOWERment will retain responsibility for requirements for any dwelling units assisted and County will make no further payments to EmPOWERment. ii. In the event that EmPOWERment, 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 EmPOWERment shall, 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 EmPOWERment's agreement of EmPOWERment's inability to continue as a viable organization. EmPOWERment shall convey the subject properties to 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 may be terminated by a non-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. EmPOWERment shall maintain records of its grant requirements under this contract for ninety-nine (99) years following the contract completion 4 date or until the last of the housing units that are part of the Project is sold to a nonqualified buyer, whichever first occurs. i. EmPOWERment shall ensure access to records and financial statements, as necessary, to provide effective monitoring and evaluation of project performance. Upon reasonable advance notice, County or its authorized representatives may from time to time inspect, audit, and make copies of any of EmPOWERment's records that relate to this contract. If any audit by County discloses that payments to EmPOWERment were in excess of the amount to which EmPOWERment was entitled under this contract, EmPOWERment shall promptly pay to County the amount of such excess. If the excess is greater than 1% of the contract amount, EmPOWERment shall also reimburse County its reasonable costs incurred in performing the audit. ii. EmPOWERment shall maintain files of all buyers, regardless of length of occupancy, residing in assisted units. Documentation shall verify eligibility for federal assisted housing, at the point of initial closing on the unit, and every subsequent buyer thereafter for the period of affordability. Information maintained shall include buyer income level, ethnic data, female head of household, and disability status and Property and Improvement purchase price. iii. EmPOWERment shall maintain records verifying the affordability of the assisted units. 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 EmPOWERment: EmPOWERment, Inc. 109 N. Graham Street, Suite 200 Chapel Hill,NC 27516 ATTN: Executive Director Either the County or EmPOWERment may change the person or address to which any future Notice shall be given as herein provided. 5 e. No Assignment. No transfer or assignment of the interest of EmPOWERment in this Agreement shall occur without the prior written consent of the County; neither may EmPOWERment assign this Agreement without the prior written consent of County. f. Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns. g. Indemnification. To the extent legally possible, EmPOWERment 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 EmPOWERment, its employees, agents, officers, and contractors in connection with this contract. In the event any such action or claim is brought against County, EmPOWERment shall, upon County's tender, defend the same at EmPOWERment's sole cost and expense, promptly satisfy any judgment adverse to County or to County and EmPOWERment jointly, and reimburse County for any loss, cost, damage, or expense, including attorney fees suffered or incurred by County. h. Subcontracting. EmPOWERment shall not subcontract work under this contract, in whole or in part, without County's prior written approval. EmPOWERment 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 obligations of EmPOWERment specified in this contract. Notwithstanding County's approval of a subcontractor, EmPOWERment shall remain obligated for full performance of this contract and County shall incur no obligation to any subcontractor EmPOWERment shall indemnify, defend, and hold County harmless from all claims of its contractors. 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. 6 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 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 EmPOWERment cannot agree, they shall apply to a court of competent jurisdiction to substitute 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, handicap, or familial status in the implementation of this Project. 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, partnership 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 ordinances 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 Property 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. 7 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 party. U. Conflict of Interest. EmPOWERment agrees that it presently has no financial interest and shall not acquire any financial interest, direct or indirect, which would conflict in any manner or degree with the performance of services required under this Agreement. EmPOWERment further covenants that in the performance of this Agreement no person having such financial interest shall be employed or retained by EmPOWERment hereunder. These conflict of interest provisions apply to any person who is an employee, agent, consultant, officer, or elected official or appointed official of EmPOWERment, or any designated public agencies or subrecipients that are receiving funds under the HOME Investment Partnership Program. 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. 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 (SEAL) i John ink, Jr., ounty anager ATTEST: Beverly A. Foyihe Clerk to the Board of Commissioners Ap*ffre m and legalit , e County Attorney This document has been preaudited in accordance with the N.C. Local Government and Fiscal Contr ct. Kenneth Chavious, Finance Director NORTH CAROLINA ORANGE 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 John M. Link, Jr. is the County Manager of Orange County, NC, 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 knows 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 County Manager of Orange County, NC 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 ,'9-5 day of�20 a Z- Notary Pub4Tc My commission expires: 9 EmPOWERment, Inc. SEAL t�iyiw.v► S- �fsa,� esident ATTEST: Secretary NORTH CAROLINA ORANGE COUNTY Ira.•- L. e..rt r�, , Notary Public in and for the above named County and State, do hereby certify that on this day personally appeared before me aw.-M..w (-4,cnm with whom I am personally acquainted, who, being by me duly sworn, says at he is Secretary and thatywia..$.r-"►a&,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 13 day of"7"� 20 a?. Notary Public My commission expires: a 66 10 Exhibit A Em meat INC. Reclaiming the POWER of our Communities 80AM of DRECTM February 23, 2001 Tara Fikes vwian S.Foushx,Pzesidmt Orange County Housing and Nwd i*Cm==%iy Community Development Sty Edward,Vice President Hillsborough, NC 27278 15h* Feanivan,Secretary Dear Ms. Fikes, 11bjd S&W Ng*&vdsadAaaa&*w J_Stein,T EmPOWERment, Inc. proposes that the HOME consortium allocate$50,000 for CA,Cmwm S=wFw=damma EmPOWERment homebuyers to use as soft second mortgages on ro ye properties outside the Barbara Brown Chapel Hill Township(le in Hillsborough and rural, unincorporated Orange County). EmPOWERment has had great success assisting low-income first time homebuyers who Jane Fay are purchasing their first home on the open real estate market. By packaging small second N Aa` mortgages with USDA Rural Development(Farmer's Home) loans, we have been able to &Lmn Headen Afirtir&wc assist 10 homebuyers using just$50,000. Z AVd SA-tNesgbtrdL _4----* , Y 91 N„ With$50,000 EmPOWERment would propose to assist 8-10 more homebuyers in areas other than Chapel Hill,Carrboro and their suburbs. While we are eager to work in the STAFF Chapel Hill Carrboro area as well(and we are submitting an application for money for that Marx Calton purpose), USDA loans are not available in the more urbanized areas.of Orange County. maxecinc Mitch-4 Dindar As a part of this proposal, we would be using the HOME funds exclusively as assistance for c r first time homebuyers making less than 80%of area median income. Our experience has Terry Cave been that most of these homebuyers will make closer to 60%of AMI. In principle,a$5,000 soft second mortgage could assist a first time homebuyer making as little as 33%of AMI Jeff c2iok through this proposal. Attached you will find two spread sheets which illustrate typical deals 1 that we have done in the past using this method. Fabian L Faeactgton -xa:4aa to tD Leveraging USDA funds with HOME money gets our community a great bang for its buck and we hope that you will look upon this application favorably. Sincerely, AJ)DRESS 109 N.G=bam Street Suite 200 Mark Chilton C upel FUL NC 27516 Phone:(919)967-TM 1 F=(919)96740710 empow com Orange County, NC b•• Applications are due February 23, 2001. Please mad to: Tara Fikes, Orange County Housing and Community Development Department,PO Box 8181,Hillsborough,NC 27278 APPLICANT INFORMATION .1. Lead Organization: 2. Partner Organization (if any): 3. Address: 200 4_ Phone: 7- 5. E-Mail: mar _c����on lr,o ate'(. ca.-j 6. Contact Mc-.v-t,- C�,,;(}�,-� 7. Federal I.D.# PROPOSED PROJECT 8. Please attach a brief description of the proposed project,including an explanation of how funds will be used for and the specific population and/or area that will benefit from this project Two important criteria for judging applications will be the degree to which projects satisfy HOME Program goals as-well as the priorities of the Consolidated Plan for Housing and Community Development Programs in Orange County (see following pages for descriptions). ADDITIONAL INFORMATION 9. Is organization operated as a profit or nonprofit agency? N, n,x-Pro4;'- If nonprofit,please submit copy of 501(C)(3)documentation and.a current list of Board members. —� 10.Amount of funds requested: 4.S U i QPd 11. Total project costs: ���_1� `jOC�_�Ci -iG 1��,�� ai �eT Please attach project budget, including sources you intend to apply for and uses. 12. Are all funding commitments in place for the project? No, L):S v R c.-,m m fs CA "5&- Please attach commitment letters, if available._ .;"._., , " C"s'� u�y`.g 13. Number of people to be servers. 5 °-/v -Fro.rw,i 1,a.� 14. If a housing project,number and type of units created: 15. If project targets beneficiaries of a certain income 1ev 1,please describe: ra.OA�Ike's X36° I l�` b/ +- 4 -Ks 6U t I l7� Q IV"-ke 1 T s-6-1"'e)leI "-p 16. Int is the timetable for project completion? r`ss, -P�z�,�,:,�1� s. .-5 j�� � s 0 o m c o m m t: E 0 o n E L m o E a O of s w 6fa E Co :. N c m � � m a) 2 w tm o � � E Q y O - ❑ M !n ❑ U O) c .�+ cn m 3 co E cm 0 7 cm CD co v a O C m C CD C cn C C) O w CD E dco E cCD w a m 00 00 °o O O O O m O O ( C) 0 0 0 0 0 0 0 •a. psi o di E = 0 N c7 l O) L r C7 O N O N W CV 669 h 03. N V). 033. N m 0 � � 2 m C w m w (D E c cm m O ❑ C O p to p m a V V V C LL 4. N to N v C1 c� V v Q C t it-y t o tr0 q1 a' fo CL C) �+ . p O p +�'' 7 ❑ CJ T -W 0 C m X r N F- Z a 2 0 1- d1 In m G. F- 1- U. L ° 0 0 w ui = m c m R m ° E v ° � m o cm a m w E v c �Q w to mC E O O 4) � v Q Q - _ C O E o w m 3 R tm c rn 4 Y m H E m m >. Q- v C m O O O w p N O cn a O w a N E cuwi w v o m c o ° o o ° ° o ua ° o to y ° ° ° ° O m v o ° CD ° ° o CD 0 � ° O c ch t Ld W .- a ao N O O w E ° ° Q9, T 03. 6% o N 4s � � O C4 6% N h Q 2 O -p co � m w m .. m t cc 2 m E c a m O 0 ca 7 tm cm co E r _ V O V C C N w° O p C d m c d i N V 0 C a CL m w ..0 d)CD w E o � a w 3o a . `�° c � � '� 0 0 -13_ INTERNAL REVENUE SERVICE DEPARTMENT OF THE TREASURY DISTRICT DIRECTOR P. O. BOX 2508 CINCINNATI, OH 45201 Employer Identification Number: Date: OCT 2 4 ISM 56-1965772 DLN: 17053261065006 EMPOWERMENT INC Contact Person: 705 A WEST ROSEMARY ST D. A. DOWNING CARRBORO, NC 27510 Contact Telephone Number: (513) 684-3957 Accounting Period Ending: December 31 Foundation Status Classification: 509(a) (1) Advance Ruling Pe_iod Begins: March 27, 1996- Advance Ruling Period Ends: December 31, 20o0 _ Addendum Applies: No Dear Applicant: Based on information you supplied, and assuming your operations will be as stated in your application for recognition of exemption, we have determined you are exempt frcim federal income tax under section 501 (a) of the Internal Revenue " Code as an organization described in section 501(c) (3) . Because you are a newly created organization, we are not now making a final determination of your foundation status under section 509(a) of the Code. However, we have determined that you can reasonably expect to be a publicly supported organization described in sections 509 (a) (1) and 170(b) (1) (A) (vi) Accordingly, during an advance ruling period you will be treated as a publicly supported organization, and not as a private foundation. This advance ruling period begins and ends on the dates shown above. Within 90 days after the end of your advance ruling period, you must send us the information needed to determine whether you have met the require- ments of the applicable support test during the advance ruling period. If you establish that you have been a publicly supported organization, we will classi- 4y you as a section 509(a) (?) or 509(a) (2) organization as long as you continue to meet the requirements of the applicable support test. 'If you do not meet the public support requirements during the advance ruling period, we will classify you as a private foundation for future periods. Also, if we classify you as a private foundation, we will treat you as a private foundation from your beginning date for purposes of section 507 (d) and 4940. Grantors and contributors may rely on our determination that you are not a private foundation until 90 days after the end of your advance ruling period. If you send us the required information within the 90 days, grantors and contributors may continue to rely on the advance determination until we make a final determination of your foundation status. If we publish a notice in the Internal Revenue Bulletin stating that we Letter 1045 (DO/CG) -2- EMPOWERMENT INC will no longer treat you as a publicly supported organization, grantors and contributors may not rely on this determination after the date we publish the notice. In addition, if you lose your status as a publicly supported organi- zation, and a grantor or contributor was responsible for, or was aware of, the act or failure to act, that resulted in your loss of such status, that person may not rely on this determination from the date of the act or failure to act. Also, if a grantor or contributor learned that we had given notice that you would be removed from classification as a publicly supported organization, then that person may not rely on this determination as of the date he or she acquired such knowledge. If you change your sources of support, your purposes, character, or method of operation, please let us know so we can consider the effect of the change.on your exempt status and foundation status. If you amend your organizational' document t or bylaws, please send us a copy of the -amended document or bylaws. Also, let us know all changes in your name or address. As of January 1, 1984, you are liable for social- security taxes under the Federal Insurance contributions Act on amounts of $100 or more you pay to each of your employees during a calendar year. You are not liable for the tax imposed under the Federal Unemployment Tax Act (FUTA) . organizations that are not private foundations are not subject to the pri- vate foundation excise taxes under Chapter 42 of the Internal Revenue Code. , However, you are not automatically exempt from other federal excise taxes. If you have any questions about excise, employment, or other federal taxes, please let us know. Donors may deduct contributions to you as provided in section 170 of the Internal Revenue Code. Bequests, legacies, devises, transfers, or gifts to you or for your use are deductible for Federal estate and gift tax purposes if they meet the applicable provisions of sections 2055, 2106, and 2522 of the Code. Donors may deduct contributions to you only to the extent that their contributions are gifts, with no consideration received. Ticket purchases and similar payments in conjunction with fundraising events may not necessarily qualify as deductible contributions, depending on the circumstances. Revenue Ruling 67-246, published in Cumulative Bulletin 1967-2, on page 104, gives guidelines regarding, when taxpayers may deduct payments for admission to, or other participation in, fundraising activities for charity. You are not required to file Form 990, Return of Organization Exempt From Income Tax, if your gross receipts each year are normally $25,000 or less. if you receive a Form 990 package in the mail, simply attach the label provided, check the box in the heading to indicate that your annual gross receipts are normally $25, 000 or less, and sign the return. if you are required to file a return you must file it by the 15th day of the fifth month after the end of your annual accounting period. We charge a penalty of $10 a day when a return is filed late, unless there is reasonable Letter 1045 (DO/CG) -3- EMPOWERMENT INC cause for the delay. However, the maximum penalty we charge cannot exceed $5, 000 or 5 percent of your gross receipts for the year, whichever is less. We may also charge this penalty if a return is not complete. So, please be sure your return is complete before you file it. You are not required to file federal income tax returns unless you are subject to the tax on unrelated business income under section Sil of the code. If you are subject to this tax, you must- file an income tax return on Form 990-T, Exempt Organization Business Income Tax Return. In thin letter we arc not determining whether any of your present or proposed activities are unre- lated trade or business as defined in section 513 of the Code. You need an employer identification number even if you have no employees. If an employer identification number was not entered on your application, we will assign a number to you and advise you of it. Please use that number an all returns you file and in all correspondence with the Internal Revenue Service. Since you have not indicated that you intend to finance your activities with the proceeds of tax exempt bond financing, in this letter, we have not determined the effect of such financing on your tax exempt status. if we said in the heading of this letter that an addendum applies, the addendum enclosed is an integral part of this letter. Because this letter could help us resolve any questions about your exempt status and foundation status, you should keep it in your permanent records_ If you have any questions, please contact the person whose name and telephone number are shown in the heading of this letter. Sincerely yours, District /6 000 Z e0l "'7f Director Enclosure(s) ; Form 872-C Letter 1045 (DO/CG) F. 872-C , Consent Fixing Period of Limitation Upon a,B No 1645 Assessment of Talc Under Section 4944 of the _ fte„ July 1994 Internal Revenue Code ' To be UNW with Form 1023.swat 0"Wenwp d 1.4 Trwery iA duplicate. Lownst Revenue A "Ge (.See instructions on reverse side.) Under section 6501(cX4) of the internal Revenue Cade, and as part of a request filed with Form 1023 that tt organization named below be treated as a publicly supported organization under section 170(b)(1)(A)(v) or sectic 509(a)(2)during an advance ruling period, ftP : mt . .Inr.,....................... ..... .......... ._., ._.......------ D . . . ..... .. t �n�of A ,n as „ , 0 istrict Director of Internal Revenue, or and the Assistant 705 A West ...............•--..�96?��:Y.-��1s6�1~...5�6��K}�Qa..IY�. . 1 ................. ,street city or town,state,and Z1P code) (Employee Plans and Exempt Organizations) Consent and agree that the period for assessing tax (imposed under section 4940 of the Code) for any of the S tax years in the advance ruling period will extend 8 years, 4 months, and 15 days beyond the end of the first tau year. However, if a notice of deficiency in tax for any of these years is sent to the organization before the period expires, the time for making an assessment will be further extended by the number of days the assessment is prohibited, plus 60 days. Ending date of first tax year .127-3179.6 ....... pucnM.day aid y* j- Name of organization (as shown in organizing document) Date Mward ~ Officer or bustee having ty to sign !� Signature 00 ~' �-` ` Title ► For IRS use only District Director or Assistant Commissioner(Employee Plans and Exempt Organizations) Date C. Ashley Bullard, District Director B ► roup Manager For Paper”Reduction Act Notice,see page t of the Form 1=huftictions. cat.No.isoma Exhibit A Em - ment INC. Reclaiming the POWER of our Communities. BOARD OF DIRECTORS February 23,2001 Tara Fikes Vivian S.Fonshee,President Orange County Housing and Nwf&Qi a c°"""""`yAi0i6a= Community Development Stepney Edwards,Vice President Hillsborough, NC 27278 Mr'd-9 Barb-S&P Matthew Feamngton,Secretary Dear Ms. Fikes, Ilo,yd Sdret Nsi�bbai5nsd.4variaoiox . Jane Stein,Trenu= EmPOWERment, Inc. proposes that the HOME.consortium allocate$50,000 for caar Cmmm s"u`Fwxdadw EmPOWERment homebuyers to use as soft second mortgages on properties in the Chapel Barbara B=wn Hill and Carrboro areas. EmPOWERment has had great success using HOME and CDBG CmrcarrtN= aaae sdarroa money to make home ownership available to first time homebuyers. Our work in Chapel 1 Fay Fur Hill and Carrboro has been primarily focused on rehabilitation of existing homes. We would Nartbdde CowrmxxityAtradaAiar propose to continue this work(as well as our acquisition-only assistance). Susan xeaden Mcnickwe LloydsdrsRobiin R= adAuodaliox EmPOWERment would use the Consortium's funds to assist homebuyers with soft second Robin iyA mortgages. These funds would not be acquisition assistance for EmPOWERment, but Natbnde Cwernrxxuy.9tradaJioa rather they would be-a pool of money available for our homebuyers to use in purchasing STAFF either an EmPOWERment house or one that is for sale on the private market. Mark Chilton Dhvdar Our experience has been that-homebuyers in Chapel Hill and Carrboro require anywhere from$10,000 to$25,000 in assistance, therefore we believe that we can assist 2-5 families Maxeeine Mucha' (depending on their incomes and house prices). This is notably less bang-for-the-buck than T=Y cam our similar proposal relating to areas outside Chapel Hill and Carrboro, however we feel P*IYM-W that the need is great throughout the county and that the realities of the market place in Jeff caiola Southern Orange County do not allow us to be more optimistic about the impact that Brcdxsr,Maaugcr $50,000 could have. Fabian L.Farrington ,gcnrA„r to Aw Dardar Attached is a spread sheet which illustrates a typical acquisition assistance scenario. Obviously,each case will differ a bit and it is impossible to predict the exact details. We feel that this is a strong proposal which would allow EmPOWERment homebuyers a ADDIM great deal of flexibility and access to the Chapel Hill and Carrboro real estate markets. We hope that the HOME consortium will look favorably upon this proposal. 109 N.Gcaham Stmt Suite 200 Sincerely, Chapel HiIk NC 27516 Phone:(919)967-8779 F empowecme��967�dSPrin&com Mark Chilton Orange County, NC Applications are due February 23, 2001. Please mail to: Tara Fikkes,Orange County Housing and Community Development Department,PO Box 8181,Hillsborough,NC 27278 APPLICANT INFORMATION 1. Lead Organization: EM PC WaTR wvdx�'� Inc. 2. Partner Organization if any): ): 3. Address: r c>rw� J St' 200 4.. Phone: 9 1 cr-24 7- 5. E-Mail: Al C�i 1-6, ? k'10- cam'(.Ca r+-7 6. Contact PPtc_,rL_ G,,;I n 7. Federal I.D. #: PROPOSED PROJECT 8. Please attach a brief description of the proposed project,including an explanation of how funds will be.used for and the specific population and/or area that will benefit from this project. Two important criteria for judging applications will be the degree to which projects satisfy HOME Program goals as well as the priorities of the Consolidated Plan for Housing and Community Development Programs in Orange County (see following pages for descriptions). ADDITIONAL INFORMATION 9. Is organization operated as a profit or nonprofit agency? If nonprofit,please submit copy of 501(C)(3) documentation and a current list of Board members. 10. Amount of funds requested: 0,000 11. Total project costs: '.�t� `' i��^C?c=' z-5 �+ �,000 Please attach project budget,including sources you intend to apply for and uses, 12. Are all funding commitments in place for the project? &- (uap__ cczs Please attach commitment letters,if available.. 13.Number of people to be served: 2-5'-Fig tl i�s (µ- 12 to le) 14. If a�housing project,number and_type of punts created: Z J �S�lCI'tG'. 'f•G�a�_� �V �t'�i' ��'G� l.Ls-t t T 5- 15. If project targets beneficiaries of a certain income level,please describe: 90% "T /gym{ W c 11 P l= t'b . �k t Is—•= r 16. What is the timetable for project completion? 5 C 0 .Q U `m c .0 Gs � m o C � t N U U E c m mrn c E ® ,� Q D N Go O c� 0 69 w c v Gs C rn c `o m .�� E `m m w Um m -o CL c m C m m „ C mo"d m a r w o � U o E w a m A E r E cr � O ° 0 00 °00 O c°h, O0 V* C CD 00 00 0 � Lr, o o ehoc 6 co cn Go CA ti T-- 69 a v6690 I 69 N 6i! E9 N 69 eH h w m O 66x3 a CD �' y = aci E c c00 m m O N 2 co N E C C w M N 4- G C N'C O C14 m 0 U m p 3 a m m a ° N a o t� @m V- o N v� ?' `° a am. ti CL m m m c ` c 1- �' t`C N � w E ^ = c m i° o ° m 0 t o o p p a 0 m = 0 p C � � 0 `o a = v f- wmcnm a. FT- t- u.. INTERNAL REVENUE SERVICE DEPARTMENT OF THE TREASURY DISTRICT DIREC'T'OR P: 0. BOX 2508 CINCINNATI, OR 45201 Employer Identification Number: Date: OCT 24 56-1965772 DLN: 17053261065006 EMPOWERMENT INC Contact Person: 705 A WEST ROSEMARY ST D. A. DOWNING CARRBORO, NC 27510 Contact Telephone Number: (513) 684-3957 Accounting Period Ending: December 31 Foundation Status Classification: 509 (a) (1) Advance Ruling Pe.:iod Begins: March 27, 1996 Advance Ruling Period Ends: December 31, 2000 . _ Addendum Applies: No Dear Applicant: Based on information you supplied, and assuming your operations will be as stated in your application for recognition of exemption, we have determined you are exempt from federal income tax under section 501(a) of the Internal Revenue Code as an. organization described in section 501 (c) (3) . Because you are a newly created organization, we are not now making a final determination of your foundation status under section 509(a) of the Code. However,' we have determined that you can reasonably expect to be a publicly supported organization described in sections 509 (a) (1) and 170(b) (1) (A) (vi) . Accordingly, during an advance ruling period you will be treated as a publicly supported organization, and not as a private foundation. This advance ruling period begins and ends on the dates shown above. Within 90 days after the end of your advance ruling period, you must send us the information needed to determine whether you have met the require- ments of the applicable support test during the advance ruling period. If you establish that you have been a publicly supported organization, we will classi- fy you as a section 509(a) (I) or 509(a) (2) organization as long as you continue to meet the requirements of the applicable support test. If you do not meet the public support requirements during the advance ruling period, we will classify you as a private foundation for future periods. Also, if we classify you as a private foundation, we will treat you as a private foundation from your beginning date for purposes of section 507(d) and 4940. Grantors and contributors may rely on our determination that you are not a private foundation until 90 days after the end of your advance ruling period. If you send us the required information within the 90 days, grantors and contributors may continue to rely on the advance determination until we make a final determination of your foundation status. If we publish a notice in the Internal Revenue Bulletin stating that we Letter 1045 (DO/CG) EMPOWERMENT INC will no longer treat you as a publicly supported organization, grantors and contributors may not rely on this determination after the date we publish the notice. in addition, if you lose your status as a publicly supported organi- zation, and a grantor or contributor was responsible for, or was aware of, the act or failure to act, that resulted in your loss of such status, that person may not rely on this determination from the date of the act or failure to act. Also, if a grantor or contributor learned that we had given notice that you would be removed from classification as a publicly supported organization, then that person may not rely on this determination as of the date he or she acquired such knowledge. If you change your sources .of support; your purposes, character, or method of operation, please let us know so we can consider the effect of the change on your exempt status and foundation status. If you amend your organizational document or bylaws, please send us a copy of the amended document or bylaws. Also, let us know all changes in your name or address. As of January 1, 1984, you are liable for social security taxes under the Federal Insfurance Contributions Act on amounts of $100 or more you- pay to each of your employees during a calendar year. You are not liable for the tax imposed under the Federal Unemployment Tax Act (FUTA) . Organizations that are not private foundations are not subject to the pri- vate foundation excise taxes under Chapter 42 of the Internal Revenue Code. However, you are not automatically exempt from other federal excise taxes. If you have any questions about excise, employment, . or other federal taxes, please let- us know. Donors may deduct contributions to you as provided in section 170 of the Internal Revenue Code. Bequests, legacies, devises, transfers, or gifts to you or for your use are deductible for Federal estate and gift tax purposes if they meet the applicable provisions of sections 2055, 2106, and 2522 of the Code. Donors may deduct contributions to you only to the extent that their contributions are gifts, with no consideration received. Ticket purchases and similar payments in conjunction with fundraising events may not necessarily qualify as deductible contributions, depending on the circumstances. Revenue Ruling 67-246, published in Cumulative Bulletin 1967-2, on• page 104, gives guidelines regarding when taxpayers may deduct payments for admission to, or other participation in, fundraising activities for charity. You are not required to file Form 990, Return of Organization Exempt From Income Tax., if your gross receipts each year are normally $25,000 or less. if you receive a Form 990 package in the mail, simply attach the label provided, check the box in the heading to indicate that your annual gross receipts are normally $25,000 or less, and sign the return. If you are required to file a return you must file it by the 15th day of the fifth month after the end of your annual accounting period- We charge a penalty of $10 a day when a return is filed late, unless there it reasonable Letter 1045 (DO/CG) -3- EMPOWERMENT INC cause for the delay. However, the maximum penalty we charge cannot exceed $5,000 or 5 percent of your gross receipts for the year, whichever is less. We may also charge this penalty if a return is not complete. -So, please be sure your return is complete before you file it. You are not requ.ired to file federal income tax returns unless you are subject to the tax on unrelated business income under section 511 of the Code. If you are subject to this tax, you must file an income tax return on Form 990-T, Exempt Organization Business Income Tax Return,. In this letter we arc not determining whether any of your present or proposed activities are unre- lated trade or business as defined in section 513 o€ the Code. You need an employer identification number even if you have no employees. if an employer identification number was not entered on your application, we will assign a number to you• and advise you of it. Please use that number on all returns you file and in all correspondence with the Internal Revenue Service. Since you have not indicated that you intend to finance your activities with the proce4ds of tax exempt bond financing, in this letter, we have not determined the effect of such financing on your tax exempt status. If we said in the heading of this letter that an addendum applies, the addendum enclosed is an integral part of this letter. Because this letter could help us resolve any questions about your exempt status and foundation status, you should keep it in your permanent records . If you have any questions, please contact the person whose name and telephone number are shown in the heading of this letter. Sincerely yours, District Director Enclosure(s) : Form 872-C Letter 1045 (DO/CG} ten" $72-C Ass Consent Fixing Period of Limitation Upon OM9 No.1545-MG Assessment of Tax Under Section 4940 of the iRev.Juiy 1M Internal Revenue Code To be uasd rriltf Form ion Submit 0"WW e 4 of u»T1"2xy In duplicate. ire •s«v�= (See instructions on reverse side.) Under section 6501(c)(4) of the Internal Revenue Code, and as part of a request filed with Form 1023 that th organization named below be treated as a publicly supported organization under section 170(bX1)(A)(vi) or sectio 509(a)(2) during an advance ruling period, 3W--? mtz, il}rt.... ... ......... t>:iraet Hams of organiatian as:'now►,in argara�nQ doeenq r bistrict Director of Internal Revenue, or 705 A Wes and the Assistant ................ Commissioner (Number,stntst city or towy%state,and ZIP code) (Employee Plans and Exempt Organizations) Consent and agree that the period for assessing tax (imposed under section 4940 of the Code) for any of the 5 tax years in the advance ruling period will extend 8 years.4 months, and 15 days beyond the end of the first taa yea However, if a notice of deficiency in tax for any of these years is sent to the organization before the period expires, the time for making an assessment will be further extended by the number of days the assessment is prohibited, plus 60 days. Ending date of first tax year .12-.3179-6 ........ ONantA dai..aW year] i i Name of organization(as shown in organizing document) Date F61ward Cha= Officer or trustee having typo p Signature ► Title li"Board Chair For IRS use only District Director or,Assistant Commissioner(Employee Plans and Exempt Organizations) Date C. Ashley Bullard, District; Director By }► roup Manager For Paporwvo&Reduction Act Notice,see page 1 of the Forth 1=Instructions. Cat No. 169050 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 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 $30,250 in FY 2000 HOME funds and $69,750 in FY 2001 HOME funds for the purpose of providing second mortgage assistance for up to eight (8) low and moderate income families assisted in their housing search by EmPOWERment, Inc. hereinafter referred to as the "Project"; and WHEREAS, the Project will be carried out at properties located in Orange County, the particular property of which that pertains to their Declaration is more particularly described in Exhibit A attached hereto and made a part of this Agreement (hereafter referred to as the "Property"); and WHEREAS, the County is the lead entity of the Orange County HOME Consortium, so designated in an agreement dated July 1, 1997 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 11 of the Cranston-Gonzalez National Affordable Housing Act (Pub. L. 101-625), (42 U.S.C. 3535(4) 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, 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 area 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 Declaration of Restrictive Covenants Page 1 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 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 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 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. Declaration of Restrictive Covenants Page 2 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. 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 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 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 property. Both Owner and Orange County agree to do what each must do to accomplish the 99-year affordability requirement. Declaration of Restrictive Covenants Page 3 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 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 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 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 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. advises the Buyer in a timely fashion of intent to purchase the Property, then the Buyer shall be free to Transfer the property in accordance with this Section. d. Assignability. 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 Declaration of Restrictive Covenants Page 4 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 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 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 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 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. 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: Declaration of Restrictive Covenants Page 5 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, Inc.: EmPOWERment, Inc. 109 N. Graham Street, Suite 200 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 WITNESS WHEREOF, the Owner has caused this Declaration to be signed by its duly authorized representative, on the day and year first above written. EmPOWERment,Inc. (SEAL) President ATTEST: Secretary NORTH CAROLINA ORANGE COUNTY 1, 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 2002. Notary Public My commission expires: Declaration of Restrictive Covenants LM I - Page 6