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HomeMy WebLinkAboutAgenda - 11-15-2016 - 7-d - Cancellation of a Declaration of Restrictive Covenants 1 ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: November 15, 2016 Action Agenda Item No. 7-d SUBJECT: Cancellation of a Declaration of Restrictive Covenants DEPARTMENT: Housing, Human Rights & Community Development ATTACHMENT(S): INFORMATION CONTACT: Declaration of Restrictive Covenants Audrey Spencer-Horsley, (919) 245- November 9, 2016 Memo from Robert 2490 Dowling PURPOSE: To consider cancelling the declaration of restrictive covenants on real property (a single family home) located at 305 Pleasant Drive, Carrboro, NC. BACKGROUND: Housing projects that are funded with Orange County HOME Program funds are subject to the County's 99-year long-term affordability policy. Community Home Trust (CHT), formerly known as Orange County Housing and Land Trust (OCHLT), is requesting to sell one of the affordable homes out the housing portfolio. The home, located at 305 Pleasant Drive, Carrboro, NC was purchased by OCHLT in June 2000 and renovated in 2002 using $30,000 of HOME funds. The property was then sold to a low-income homebuyer. CHT re-purchased the home from the owner in 2014 and has determined that it is not in a suitable condition to convey to a new buyer without extensive renovations. CHT estimates that it will take more than $100,000 to remodel the home. The declaration of restrictive covenants will need to be cancelled in order for CHT to provide clear title. The property will be sold on the private market. The attached memorandum from CHT Executive Director Robert Dowling provides additional background information. FINANCIAL IMPACT: Up to $30,000 in net proceeds will be returned to the HOME program. SOCIAL JUSTICE IMPACT: The following Orange County Social Justice Goals are applicable to this item: • GOAL: FOSTER A COMMUNITY CULTURE THAT REJECTS OPPRESSION AND INEQUITY The fair treatment and meaningful involvement of all people regardless of race or color; religious or philosophical beliefs; sex, gender or sexual orientation; national origin or ethnic background; age; military service; disability; and familial, residential or economic status. 2 • GOAL: ENSURE ECONOMIC SELF-SUFFICIENCY The creation and preservation of infrastructure, policies, programs and funding necessary for residents to provide shelter, food, clothing and medical care for themselves and their dependents. RECOMMENDATION(S): The Manager recommends that the Board approve the cancellation of the Declaration of Restrictive Covenants on real property located at 305 Pleasant Drive, Carrboro, NC. 3 ({Q FILED llv 07 MAR 2003, at 04:48:12pm Book. 2916, Page 531 - 538 Joyce H. Pearson Registez of Deeds, Orange County, N. C. BOOK PAGE 2916 531 Prepared by: Geoffrey E.Gledhill,Attorney at Law,P.O,Drawer 1529, Hillsborough,NC 27278 After recording return to: Geoffrey E.Gledhill,Attorney at Law 13-41,9- to-15.� DECLARATION OF RESTRICTIVE COVENANTS THIS DECLARATION OF RESTRICTIVE COVENANTS (Declaration), dated March 7 2003, by ORANGE COMMUNITY HOUSING AND LAND TRUST, a North Carolina non-profit housing organization and land trust, and its successors and assigns(hereinafter referred to as `OCHLT"'),is given as a condition precedent to the award of Orange County Housing Trust Fund tends to OCHLT by Orange County,North Carolina RECITALS: WHEREAS. OCII.T submitted a request dated May 21, 2002 for the reallocation of $30.000 from the Orange County Housing Trust Fund to assist in the acquisition/rehabilitation of property targeted for inclusion in the land trust;and WHEREAS, on June 4, 2002 the Orange County Board of Commissioners approved the May 21 2002 request and reallocated $30,000 as a grant to OCHLT for the aforementioned purpose:and WHEREAS, on July 1,2002, OCHLT proposed to utilize this funding for the property the organization owns located at 305 Pleasant Drive in Carrboro, NC, which property is hereinafter refer red to as the"Property" and which property is more specifically defined in EXHIBIT A;and WHEREAS. OCHL I plans to rehabilitate the dwelling located on the Property for the benefit of a first-time homebuyer earning less than 80% of the HUD area median income as defined in the July 1, 2002. OCHLT proposal, which proposal is incorporated by reference into this Agreement, and hereinafter referred to as"the Project." The Project proposal is on file in the office of the Orange County Department of Housing and Urban Development;and WHEREAS, a first-time homebuyer for the purposes of'this program is defined as 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 rehabilitation;and WHEREAS, the Property will be held by OCTILI,ensuring affordability of the home for at least 99 years:,and WHEREAS, Orange County requires and OCHLI agrees to the requirement, as a condition precedent to the awarding of Orange County Housing Trust Fund funds, that OCHLT 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 Declaration of Restrictive Covenants Page 1 4 1300K PAGE 2916 532 for the purpose of enforcement of the affordability requirements of the Orange County Housing Trust Fund 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 her eby acknowledged, OCHLT 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 OCTILT SECTION 1 REPRESENTATIONS, COVENANTS AND WARRANTIES OF OWNER OCHLT hereby represents, covenants and warrants as follows: a Subject to the requirements of the DEVELOPMENT AGREEMENT (Exhibit B hereto) and this Declaration, OCHLT 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(0(3) of the Internal Revenue Code, or to Orange County, but OCHLT shall notify in writing and obtain the agreement 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. OCHLT agrees that County may void any sale, transfer, or exchange of the Property or any portion of the 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 b. OCTILT will, at the time of execution, delivery and recording of this Declaration, have good and marketable title to the Property, flee and clear of any lien or encumbrance (except encumbrances created pursuant to this Declaration or other encumbrances permitted by Orange County) c. OCHLT 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 the recordation of this Declaration OCHLT shall comply with all covenants herein This Declaration shall terminate ninety-nine years after the Project completion date The Project Declaration of Restrictive Covenants Page 2 5 ROOK PAGE 2916 533 completion date is the closing date of the purchase by a qualified buyer of the housing unit. The housing unit is defined in Section 4 of this Declaration SECTION 3 RECORDING AND FILING; COVENANTS TO RUN WITH THE LAND a Upon execution of this Declaration by OCHLT, OCHI,T shall cause this declaration and all amendments hereto to be recorded and filed in the Office of the Register of Deeds of Orange County OCHLT shall pay all fees and charges incurred in connection therewith. b OCHLT intends, declares and covenants 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 OCHLT, its successors in title and all subsequent owners of the Property; (2.) are not merely personal covenants of OCHLT; and (3) shall bind OCHLT (and the benefits shall inure to Orange County and any prospective owner of the Property) and its successors and assigns during the term of this Declaration OCHLT 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 OCHLI to rerecord this Declaration periodically and no less often than one day less than every 30 years from the Project completion date for the purpose of renewing the rights of first refusal in the Property or portion thereof' including any leasehold interest in the Property or portion thereof', Orange County retains the right to, periodically and every 30 years after the first recording of a ground lease, the form of which is Exhibit C hereto, 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 § 4713-4 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 3 of this Declaration that the 99 year duration of this Declaration of Restrictive Covenants be accomplished and that OCIILT and Orange County will do what is necessary to ensure that the same is not extinguished by N C Gen. Stat § 41-29 or any comparable law purporting to extinguish, by the passage of time, preemptive rights in the Property and 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. OCHLT and Orange County agree to do what each must do to accomplish the 99 year duration of this Declaration of Restrictive Covenants. SECTION 4 ENFORCEMENT OF AFFORDABLE HOUSING REQUIREMENTS A. Upon the Project completion date, OCHLI will convey a housing unit to a qualified homeowner The housing unit will consist of a 99 year ground lease (renewable for an additional Declaration of Restrictive Covenants Page 3 6 BOOK PAGE 2916 534 99 years) to the housing unit and a warranty deed to the improvements on the leased premises The ground lease, the form of which is Exhibit C hereto, provides for the long term affordability (at least 99 years) of the housing unit and provides remedies to insure the long term affordability of the housing unit.. OCHLT hereby declares and covenants, on behalf of itself and all future owners of the Property, including OCHLT, that, during the term of this Declaration, Orange County is a third party beneficiary of and successor to each and every remedy intended to insure the long term affordability of the housing unit that is provided for in the housing unit ground lease and may, in the event of the failure or default of the Lessor in the housing ground lease to insure the long term affordability of the housing unit as provided for in the ground lease, exercise all rights and remedies available to the Lessor in the ground lease for that purpose B.. OCHLT covenants that it will not knowingly take or permit any action that would result in a violation of the affordability requirements of the DEVELOPMENT AGREEMENT and this Declaration Orange County, together with OCIILT, may execute and record any amendment or modification of this Declaration necessary to insure the successful completion of the Project and the long term affordability (at least 99 years) of the housing unit and such amendment or modification shall, to the extent permitted by law, either relate back to the date of recording of this Declaration or not as necessary to carry out the intent of this Declaration, and be binding on third parties granted rights under this Declaration OCHLT expressly covenants and agrees to rerecord this Declaration periodically and no less often than one day less than every 30 years from the Project completion date for the purpose of renewing the Lessor's option to purchase and right of first refusal,that are contained in the housing unit ground lease. C OCHLT acknowledges that the primary purpose for requiring compliance by OCHLT with restrictions provided in this Declaration is to assure compliance with the long term affordability requirements of the Orange County Housing Trust Fund Program, AND BY REASON THEREOF, OCHLT, IN CONSIDERATION FOR RECEIVING ORANGE COUNTY HOUSING TRUST FUND PROGRAM FUNDS FOR IHE 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 OCHLT'S OBLIGATIONS UNDER THIS DECLARATION IN A STATE COURT OF COMPEIENT JURISDICTION, WITH VENUE IN ORANGE COUNTY.. OCIILT hereby further specifically acknowledges that the beneficiaries of OCHLT's obligations hereunder cannot be adequately compensated by monetary damages in the event of any default hereunder.. 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 OCIILT.. 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 Declaration of Restrictive Covenants Page 4 7 BOOK PAGE 2916 535 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 herein 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: To the County: Orange County do Housing and Community Development Department P O. Box 8181 Hillsborough,NC 27278 ATTN: Director ii To OCHLT: Orange Community Housing and Land Trust 104C Jones Ferry Road Carrboro,NC 27510 ATTN: 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, OCHLT has caused this Declaration to be signed by its duly authorized representatives, on the day and year first above written. ORANGE COMMU i . Hf UJS ■ AND LAND TRUST By a =�' . Kunc,President ATTEST: � c,4 _ Secretary NORTH CAROLINA ORANGE COUNTY I, /4/0004 X41'14 , Notary Public in and for the above named County and State, do hereby certify that on this day personally appeared before me miNri 'f frJ`I ierwith whom I am personally acquainted, who, being by me duly sworn, says that he/she is Secretary and that Wayne T Kuryii. is President of Orange Community Housing and Land Trust, 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 and attested to by its Secretary.. �/ Witness my hand and notarial seal, this the .7 __day of%2�1 G1 _, .of . Declaration of Restrictive Covenants Page 5 • 8 BOOK PAGE 2916 536 f , ft ► otaty Pu is My commission expires: 7,74, a......___.... �.,�W..._�., . ��_.r.._._.. lsg:orangecounty\OCHLT restr Soy ys=`o. OFFICIAL SEAL North Carolinas Orange County 1; MICHAEL D. LEVINE NOTARY PUBLIC Declaration of Restrictive Covenants Page 6 9 4u1tt Q BOOK PAGE tiff 2916 537 17 ' 52 k°''t ov' Joyce H. Pearson Register of Deeds Orange County North Carolina State of North Carolina,County of Orange The foregoing certificate/s of Michael D.Levine,Notary/Notaries Public for the Designated Governmental units is/are certified to be correct. See filing certificate herein. This day March 7,2003 JOYCE H. PEARSON, REGISTER OF DEEDS By: ,y Deputy !. : Register of De•ds 10 BOOK PAGE 2916 538 EXHIBIT A-Property Description Beginning at an existing iron in the southwestern corner of the intersection of Pleasant Drive and Crest Street thence along the right-of-way of Pleasant Drive South 44 degrees 14' 05" West 52 40 feet to iron stake, a control corner,thence along the line of the Fitch Lands North 45 degrees 39'00" West 152 30 feet to a point thence a new line North 43 degrees 14' 24"East 51 66 feet to a point in the right-of- way of Crest Street thence along the margin of the right-of-way of Crest Street South 46 degrees 55' 35" East 153 21. feet to the point and place of BEGINNING and being 7,947 square feet according to the survey entitled "Property of Mark A. Hoffman and Maureen A Driscoll" prepared by Dale D Faulkner, RI,S, June 7, 1994 Also, BEING ALL of Lot 2 of the property of TIMOTHY N GALLIHER and ANITA S. GALLTHER according to that certain plat and survey thereof as recorded in Nat Book 49, Page 168, Orange County registry. PIN#: 9778-99-1075 TM#: 7 94,A 9A 11 Date: November 9, 2016 UNi/OOaiiia0000i/iial J1fr f ai/ To: Chair McKee and the Orange County Board of Commissioners ��t From: Robert Dowling, Community Home Trust Executive Director d d Re: Selling 305 Pleasant Drive out of our inventory, , In October 2014, the board of Community Home Trust approved selling the Home Trust home located at 305 Pleasant Drive in Carrboro out of our inventory of affordable homes. We purchased the home from the prior owner in August 2014 because we determined the home would be too expensive to renovate. BOARD OF DIRECTORS This home was the first home brought into the newly formed community land trust in June 2000. The original owner sold it back to us in June 2002 and complained Jennifer Ferris about the high heating and cooling costs. We then renovated the home, using President $30,000 of HOME funds and sold it again in March 2003. That owner remained in Emily Hinkle the home until August 2014. Vice President We purchased the home because we could not expect the homeowner to correct Gordon Merklein the many deficiencies that would need to be addressed (most of which existed in Secretary 2003). The deficiencies were identified in the inspection report we commissioned from a licensed home inspector in May 2014. The major work identified in that Ken Reiter report includes the following: Treasurer • Need to upgrade the electrical system George Barrett • Raise the back part of the house off the ground • Remove the giant oak tree that looms over the home David Brehmer • Remove the interior chimney and make repairs to roof and flooring Kathleen Ferguson • Evaluate structural integrity of foundation • Remove or rebuild staircase to code Sally Greene • Evaluate plumbing upgrades Kelley Gregory We estimated this work would cost more than $100,000. Since we already had Debra Ives about $157,000 invested in the home ($30,000 of which was HOME funds), I recommended to the Home Trust board that we sell the home out of our inventory. Michelle Johnson At the October 2014 Home Trust board meeting, the board discussed my request Jim Merritt to sell the home. The board recognized that investing an additional $100,000 (or more) of subsidy in one home was not a good investment or a good use of scarce Ava Miles subsidy funds. After much discussion, the board approved selling the home. Charles Mills Before initiating the sale of the home, we approached the Carrboro Board of Penny Rich Aldermen, who asked us to delay selling the property until they had an opportunity to assess the situation more thoroughly. In the spring and summer of 2015, the Executive Director Town of Carrboro staff inspected the property and determined that renovations Robert Dowling would cost approximately $75,000. The Town did not opt to invest that money into the home and the Town Manager gave us permission to sell the home out of the inventory in August 2015. P C� 1ROx 2315,Chapel Hill, NC 27515 1 9119967 11545 JIU i u?01 � �/( q">i"fld� f N!IIPUP w "ii ........ ..... ..... ..... ..... ..... ...... ......... ......... ......... ......... d!llubJQ>G�a.ii rQ�uOrr>d'�'>rurlaW[AA ju! 12 Prior to selling the home, the Town of Carrboro required that we record a new plat, indicating the home would no longer be affordable. We commissioned an engineer to provide Carrboro with a revised plat in late 2015 (at a cost of about $1000). We then began working with County staff to cancel the restrictive covenants that were placed on the home in 2003. Similar to our experience in Carrboro, the County staff were reluctant to release an affordable home from the inventory. Due to the expected costs of renovating the house, County staff suggested moving a house from County-owned land in Hillsborough to Pleasant Drive. This plan was perfectly acceptable to CHT if the County was willing to bear all the costs. As it turned out, the costs involved in razing the house at 305 Pleasant, moving a house from Hillsborough and renovating that house were more than the County thought should be spent on one home. It was then, in late August, that we were told we could sell the home. In October, we executed a listing agreement with a Realtor to sell the home out of our inventory. On October 22nd the home was placed under contract with a buyer. The due diligence period for this contact expires on November 14th and closing is scheduled for November 23rd Timeline Summary 2014 • CHT buys home in August for $120,679 • Renovation costs estimated at $100,000 • CHT board approves selling home in October 2015 • Carrboro asks us to reconsider selling • Carrboro staff evaluates home • They estimate renovation costs of$75,000 • Carrboro Town Manager approves selling home in August 2016 • County staff suggest moving home from Hillsborough in April • County determines costs are too high to move home in August • CHT hires a Realtor in September • Home is placed under contract for $179,000 in October • Closing expected on November 23, 2016 • County to receive $30,000 of HOME funds from closing proceeds