HomeMy WebLinkAboutLong Term Housing Affordability PolicyLong-Term Housing Affordability Policy
Pose:
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This policy establishes the acceptable strategies for ensuring long -term affordability in all
affordable housing programs supported by County financial resources.
Tar=t Population:
Homeownership programs are targeted to families with incomes at or below 80 %® of the
HUD published area median income.
Rental housing programs are targeted to families with incomes at or below 60 % of the
HUD published area median income.
Definitions
Affordable Housing — is defined as (1) owner - occupied housing which can be purchased for no
more than 2.5 times to 3.0 times the total annual family income, or (2) rental housing for which
the occupant pays no more than 30 % of gross income for all housing costs including utilities.
First -time homebuyer /Qualiled buyer - A first-time homebuyer for the purposes of this
program is any low income household that has not owned a home within the past three (3) years
including households living in manufactured housing not permanently affixed to a foundation, or
owner- occupants of homes not feasible for renovation.
1, Impact Fee Reimbursement Program (existing polio Iasi revised March 4, 1998)
A. Owner - Occupied Housing
Any organization requesting impact fee reimbursement must certify in writing,
that, for owner occupied housing, it will remain affordable to the anticipated beneficiary
or beneficiaries for a period of a minimum of twenty (20) years or longer depending upon
the funding source. This requirement will be secured by a Declaration of Restrictive
Covenants.
B. Rental Housing
An organization requesting impact fee reimbursement for rental housing must
certify that the property will remain affordable for ninety -nine (99) years. The rental
housing certification must be secured by a Declaration of Restrictive Covenant requiring
repayment to Orange County of the impact fee if the rental housing does not remain
affordable during the period of affordability, which covenant will be further secured by a
note and deed of trust. Evidence must be provided that agency and/or program
guidelines are in place to assure affordability compliance.
ORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: April 4, 2000
Action Agenda
Item No. - q
SUBJECT: Long -Term Housing Affordability Policy
DEPARTMENT: Housing/Community Dev. PUBLIC HEARING: (Y /N) No
ATTACHMENT(S):
Long Term Housing Affordability Policy
Letter from EmPOWERment, Inc.
INFORMATION CONTACT:
Tara L. Sikes, ext 2490
TELEPHONE NUMBERS:
Comparison Statement Hillsborough
732 -8181
Chapel Hill
968 -4501
Durham
688 -7331
Mebane
336 - 227 -2031
PURPOSE:
To approve a Long -Term Housing Affordability Policy that will ensure long -term housing affordability
with County affordable housing projects.
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On December 7, 1999, the County Attorney and the Housing Community Development Director
presented a report regarding long - term housing affordability that included several potential strategies that
could be utilized with future County affordable housing projects. Since that time, the Board has indicated
an interest in adopting specific strategies for ensuring long -term affordability for the County's programs.
The attached Policy includes speck strategies that may be utilized for both rental and owner - occupied
affordable housing projects that receive financial contributions from the County, These strategies are
designed to promote the Commissioners' interest in retaining these properties in the County's
affordable housing inventory.
After the Board's initial discussion, the local non - profit, EmPOWERment, Inc., expressed concerns
regarding the equity sharing proposal included in the attached Policy. Their concerns are detailed in the
attached February 7, 2000 letter.
In an effort to illustrate the details of the equity sharing proposals, included with this abstract is a
"Comparison Statement" comparing the County's current equity sharing proposal and the one proposed
by EmPOWERment.
FINANCIAL IMPACT:
None.
RECOMMENDATION (S):
The Manager recommends approval of the Long Term Housing Affordability Policy.
Ii. Land Trust Model
The Land Trust model utilizes a non - profit, community based organization known as a
Community Land Trust (CLT) whose purpose is to acquire land and make it available to
individual families and others, such as cooperatives, through a long -term lease for a term
up to 99 years. The leaseholders or homebuyers do not hold title to the land - the title is
retained by the CLT - they own the improvements or housing units /structures on the land.
The benefits of this model include the ability of the CLT and housing ownership and
protection of affordability for future residents in the sale of buildings and other
improvements on the land. The land lease gives the CLT the first option to purchase the
home, when and if it is sold, at an affordable price set by a resale formula. The resale
formula gives homeowners a fair return for their investment, while keeping the price of
the housing units /structures affordable for future residents.
tit. New and Existing First -Time Homebuyer Programs
A. Right of First Refusal
A right of first refusal or right to purchase is accomplished by means of a Declaration of
Restrictive Covenants on the property purchased by the first -time homebuyer. Any
assignment, sale, transfer, conveyance, or other disposition of the Property or any part
thereof whether voluntarily or involuntarily or by operation of law ( "Transfer ") shall not
be effective unless and until the below- described procedure is followed.
If the original homebuyer or any subsequent qualified homebuyer ( "Buyer")
contemplates a Transfer to a non low - income household as defined herein, Buyer shall
send to Orange County and/or the sponsoring non -profit organization, not less than 90
days prior to the contemplated closing date of the Transfer, a "Notice of Intent to Sell."
This Notice of Intent to Sell shall be accompanied by a copy of a completed, fully
executed bona fide offer to purchase the Property on the then current North Carolina Bar
Association "Offer to Purchase and Contract form.. If Orange County and/or the
sponsoring non - profit organizations elects to exercise its said right of refusal, it shall
notify the Buyer of its election to purchase within 30 days of its receipt of the Notice and
shall purchase the Property or portion thereof within 90 days of the receipt of the
"Notice of Intent to Sell." As between the County and the sponsoring non - profit
organization, if both wish to and have the means to exercise the right of first refusal, the
sponsoring non - profit organization shall have priority.
If neither Orange County nor the sponsoring non- profit organization 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.
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B. Equity Sharing
All financial contributions provided by the County will be provided as a deferred
second loan secured by a forty (40) year Deed of Trust and Promissory Note, forgivable
at the end of 40 years. This Deed of Trust and Promissory Dote 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 nonprofit organization and/or the County as applicable retains full
responsibility for compliance with the affordability requirement for assisted units
throughout the term of affordability, unless affordability restrictions are terminated due
to the sale of the Property to 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 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,
However, if the property is sold during the term of affordability to a non - qualified
homebuyer to be used as their principal residence, the net sales proceeds (sales price less
selling costs and 1s` mortgage payoff) or "equity", after repayment, if required by the
Note and Deed of Trust, of the initial County contribution, will be divided 50150 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.
Effective Date: April 3, 2000