HomeMy WebLinkAboutPolicy - 2017 Long-Term Housing Affordability Policy LONG-TERM HOUSING AFFORDABILITY POLICY
PURPOSE: This policy establishes the acceptable strategies for ensuring long-term
affordability in all affordable housing programs supported by County financial resources.
TARGET POPULATION:
• Homeownership programs are targeted to families with incomes at or below 80% of
the HUD published area median income.
• Rental housing programs are targeted to families with incomes at or below 60% of
the HUD published area median income.
DEFINITIONS:
1. Affordable Housing-is defined as:
a. Owner-occupied housing for families with incomes at or below 80% of the
HUD published area median income and which the monthly housing costs
(including PITI, HOA dues and required fees) do not exceed 30 percent of
the gross monthly income of the purchaser(s), or
b. Rental housing for families with incomes at or below 60% of the HUD
published area median income and which the occupant pays no more than
30%of gross income for all housing costs including utilities.
2. First-Time Homebuyer or Qualified Buyer - A First-Time Homebuyer for the
purposes of this program is any low or moderate 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. The first-time homebuyer restriction may be
waived after a home is available for sale for 90 days and the home may be sold to a
Qualified Buyer, defined as a person who qualifies for affordable housing in
accordance with this Policy.
I. Impact Fee Reimbursement Program (last revised March 4, 1998.)
A. Owner-Occupied Housing
Any organization requesting impact fee reimbursement must certify in writing, that, for owner
occupied housing, it will remain affordable to the anticipated beneficiary or beneficiaries for a
period of a minimum of ninety-nine (99) years or longer depending upon the funding source.
This requirement will be secured by a Declaration of Restrictive Covenants.
B. Rental Housing
An organization requesting impact fee reimbursement for rental housing must certify that
the property will remain affordable for ninety-nine (99) years. The rental housing
certification must be secured by a Declaration of Restrictive Covenant requiring repayment
to Orange County of the impact fee if the rental housing does not remain affordable
during the period of affordability,which covenant will be further seemed by a note and deed
of trust. Evidence must be provided that agency and/or program guidelines are in place to
assure affordability compliance.
II. Land Trust Model
The Land Trust model utilizes a non-profit, community based organization known as a
Community Home Trust ("CHT") 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 CHT. The CHT conveys a leasehold interest in the land and improvements to the homebuyers
(lessees). The benefits of this model include the ability of the CHT to retain the affordability
of the home over successive generations of home buyers. The land lease gives the CHT 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 affordable for future residents.
III. New and Existing First-Time Homebuyer Programs
A. Period of Affordability
All properties supported by County financial resources for the purpose of facilitating
homeownership must be sold to households at or below 80% of area median income for a
minimum of ninety-nine (99)years from the date of initial assistance. Subsequent resales
are allowable to households earning up to 115%of area median income.
B. Right of First Refusal
A right of first refusal or right to purchase is accomplished by means of a Declaration of
Restrictive Covenants on the property purchased by the first-time homebuyer. Any
assignment, sale, transfer, conveyance, or other disposition of the Property or any part
thereof whether voluntarily or involuntarily or by operation of law ('Transfer") shall not
be effective unless and until the below-described procedure is followed.
If the original homebuyer or any subsequent qualified homebuyer ('Buyer")
contemplates a Transfer to an unqualified buyer, Buyer shall send to Orange County
and/or the sponsoring non-profit organization, not less than 90 days prior to the
contemplated closing date of the Transfer, a 'Notice of Intent to Sell." This Notice of
Intent to Sell shall be accompanied by a copy of a completed, fully executed bona
fide offer to purchase the Property on the then current North Carolina Bar Association
"Offer to Purchase and Contract" form. If Orange County and/or the sponsoring non-
profit organizations elects to exercise its said right of refusal, it shall notify the Buyer
of its election to purchase within 30 days of its receipt of the Notice and shall purchase
the Property or portion thereof within 90 days of the receipt of the 'Notice of Intent to
Sell." As between the County and the sponsoring non-profit organization, if both wish to
and have the means to exercise the right of first refusal, the sponsoring non-profit
organization shall have priority.
If neither Orange County nor the sponsoring non-profit organization advises the Buyer in
a timely fashion of its intent to purchase the Property, then the Buyer shall be free to
transfer the property in accordance with the Equity Sharing subsection of this policy.
C. Equity Sharing
All financial contributions provided by the County will be provided as a deferred second
loan secured by a forty (40) year Deed of Trust and Promissory Note, forgivable at the
end of 40 years. This Deed of Trust and Promissory Note shall constitute a lien on the
Property; subordinate only to private construction financing or permanent first
mortgage financing.
The 99 year period of affordability for each individual housing unit will be secured
by a declaration of restrictive covenants that will incorporate a right of first refusal
that may be exercised by a sponsoring non-profit organization and/or Orange County.
This declaration of restrictive covenants will be further secured by a deed of trust.
The non-profit organization and/or the County as applicable retains full responsibility
for compliance with the affordability requirement for assisted units throughout the
term of affordability, unless affordability restrictions are terminated due to the sale of the
Property to anon-qualified buyer.
If the buyer no longer uses the Property as a principal residence or is unable to continue
ownership, then the buyer must sell, transfer, or otherwise dispose of their interest in
the Property only to a qualified homebuyer, i.e., 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 ofHousing 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:
1) selling cost, 2) the unpaid principal amount of the original first mortgage and 3) the
unpaid principal amount of the initial County contribution and any other initial
government contribution secured by a deferred payment promissory note and deed of
trust) or "equity" will be divided 50/50 by the seller of the Property and the County. If
the initial County contribution does not have to be repaid because the sale occurs more
than forty years after the County contribution is made, then the seller of the Property and
the County will divide the entire equity realized from the sale.
Any proceeds from the recapture of funds under this provision will be used to
facilitate the acquisition, construction, and/or rehabilitation of housing for the purposes of
promoting affordable housing.
IV. Exceptions
A. The Board of Commissioners may reduce the required ninety-nine (99) year
affordability restriction to forty (40) years when:
i. The County's total financial contribution to the project is less than
fifteen percent (15%) of the total project cost; or
ii. The developer agrees to and develops at least thirty-five percent
(35%) of the project units as affordable units.
B. The Board of Commissioners may authorize the cancellation of restrictive
covenants upon a determination that:
i. A structure is in a state of disrepair such that the estimated cost to
repair the structure exceeds one hundred percent (100%) of the value
of the structure; and
ii. Redevelopment of the property is cost prohibitive; and
iii. Sale of the property is substantially unlikely to occur if the restrictive
covenants are not cancelled.
C. The Board of Commissioners authorizes the County Manager to approve
removal of properties from the affordable housing inventory in accordance with
the April 21, 2015 Interlocal Agreement for the Community Home Trust.
D. In the event an application for exception does not meet all of the required
elements to grant an exception pursuant to IV A — D above the Board of
Commissioners may examine each application individually and ascertain
whether the circumstances justify the granting of an exception. In such event the
Board of Commissioners may grant an exception upon making findings of fact
setting out all the relevant factors that reasonably and equitably justify such
exception to this policy.
V. Policy Review
This policy will be reviewed by County staff and officials within two (2) years of the
original approval date to ensure continued congruency with local affordable
housing programs.
Effective Date: April 3, 2000
Revised: June 6, 2000
Revised: February 21, 2017