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HomeMy WebLinkAboutAgenda - 03-16-2004-8gORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: March 16, 2004 Action Agenda Item No. SUBJECT: Housing Bond/HOME Programs-Transitional Housing Program DEPARTMENT: Housing/Comm. Development PUBLIC HEARING: (Y/N) No ATTACHMENT(S): INFORMATION CONTACT: Development Agreement Tara L. Fikes, ext. 2490 TELEPHONE NUMBERS: Hillsborough 732-8181 Chapel Hill 968-4501 Durham 688-7331 Mebane PURPOSE: To authorize the execution of a Development Agreement by the County Manager with the Town of Chapel Hill for the acquisition of rental property. BACKGROUND: The Chapel Hill Department of Housing has recently initiated a Transitional Housing Program designed to help public housing families make the transition from public housing to the private housing market. In this program, the Department of Housing will purchase an existing single family dwelling in Chapel Hill and lease that unit to a family while it work towards homeownership through budget counseling, homeownership and debt management services. The family is given five (5) years to complete the program and, at the end of the five-year period, the participant would have saved funds for a down payment on a house. The Town purchased its first home using $100,000 in HOME Program funds in August 2002. The family leasing this property has a goal of becoming homeowners at the end of the five-year period or sooner. It is presently involved in financial counseling as well as homeownership education and is making exceptional progress toward achieving self- sufficiency. The Affordable Housing Advisory Board recently received an update on the program and considers the program to be an important component of our local affordable housing initiatives. In May 2001, the Town of Chapel Hill requested $100,000 in housing bond funding to assist with the acquisition of another single family dwelling for this program. In June 2001, the BOCC awarded $75,000 in bond funds to the project. Additionally, in 2002 and 2003, approximately $28,117 and $32,000 in HOME Program funds were approved for this Transitional Housing Program as well.. The Chapel Hill Department of Housing intends to combine the HOME funds and Bond funds for a total budget of $135,117 for the purchase of one dwelling unit. A Development Agreement must be executed between the County and the Town of Chapel Hill that secures and governs the bond funds and the HOME Program funding. A 2 Development Agreement has been developed by County staff for review by the Board and the County Attorney. FINANCIAL IMPACT: Bond funds awarded to this project represents an expenditure of $75,000 of the $1.8 million dollar Affordable Housing Bond approved in November 1997. Additionally, approximately $28,117 and $32,000 in FY 2002 and 2003 HOME Program funds respectively has been allocated to the Transitional Housing Program. RECOMMENDATION(S): The Manager recommends authorizing the execution of a Development Agreement by the County Manager with the Town of Chapel Hill for the acquisition of rental property after the County Attorney has reviewed and approved the Agreement. 3 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 the TOWN OF CHAPEL HILL, a general local governmental unit of the State of North Carolina hereinafter referred to as the " Town"). The effective date of this agreement is WITNESSTH WHEREAS, the County, in the implementation of the Orange County Affordable Housing Bond Program solicited applications for funding from interested non-profit organizations; WHEREAS, the Town of Chapel Hill Department of Housing submitted an application for Housing Bond funding dated May 30, 2001 for $100,000 for the acquisition of one dwelling unit in Chapel Hill to develop a proposed transitional housing that was approved by the Board of County Commissioners on June 19, 2001 awarding $75,000; and WHEREAS, the Town intends to lease the unit to current public housing family with a rent paying ability of at least $450 per month and with incomes not exceeding 50% and below of median income; and WHEREAS, RSI agrees to utilize bond funds provided by the County for the purpose of acquiring one dwelling unit for transitional housing as described in their bond application dated May 29, 2001 which is incorporated by reference as EXHIBIT A to this Agreement, and hereinafter referred to "the Project". 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 The Town shall acquire the dwelling unit defined in Project, obtain all permits and licenses necessary to rehabilitate the unit in the Project if necessary, and ensure compliance with all applicable building and zoning ordinances as well as Section 8 Housing Quality Standards (HQS). 1.4 Financial assistance in the amount of $75,000 for the dwelling unit for a total of $75,000 in Orange County Housing Bond funds will be provided in the form of a deferred loan with a forty (40) year loan tern, forgivable at the end of 40 years. The Housing Bond investment will be secured by a Deed of Trust and Promissory Note. This Deed of Trust 4 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 partylbeneficiary, The County agrees to subordinate its Deed of Trust lien to a lien securing private, first-time permanent financing obtained by the Town, at the time of'purchase. 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 the Town and/or Orange County. 1.4 An annual rental operations budget must be submitted to the County each year at least sixty days prior to the July 1 beginning date for the fiscal year. Further, not more than 90 days after the end of each fiscal year, the Town must furnish to the County an annual accounting of income and expenses for each dwelling unit. The operating assumptions allowed at the time of initiation of this project including reasonable rent increases will be acceptable for future budgets and reports. 1.5 The Town agrees to lease the property to families whose income does not exceed 50% of the area median income by family size, as determined by the U.S. Department of Housing and Urban Development and as amended from time to time. Monthly rents must establish in accordance with HOME Program guidelines. Residential leases will not exceed one year in term and may be renewed. The Project must not cause displacement of existing tenants. 1.6 The Town is responsible for verifying the income of prospective tenants and maintaining eligibility data, The Town shall maintain tenant files as part of its Books and Records as required and for the period of time required by Section 5c. of this Agreement. The Town must provide the County an initial occupancy report verifying the income eligibility of all tenants at the time of initial lease-up. Each year thereafter the Town must furnish the County with an annual report on the project by July 31 of each year certifying that all tenants earn less than 80% of the area median income by family size, as determined by the U.S. Department of Housing and Urban Development and as amended from time to time. 2. Time for Commencement and Completion. In addition, the Town 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 must not exceed December 1, 2004 and is date the property is acquired, rehabilitated if necessary, and occupied by a low-income family. In the event that the Town is unable to proceed with any aspect of the Project in a timely manner, and County and the Town 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. The Town may, at its option, submit a written request for a delay of completion for County approval. The County may, at its option, 5 approve any delay in the completion date or declare the Town in default. The Town shall monitor the constructed unit 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. The unit must remain affordable for a period of ninety-nine years. The Town retains frill responsibility for compliance with the affordability requirement for assisted unit, unless affordability restrictions are terminated due to the sale of the Property to a non-qualified buyer, in which event the Resale Provisions of Section 4 of this Agreement pertain, The Town shall assure compliance with affordability of the assisted unit by having recorded 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 the Town to rerecord the Declaration of Restrictive Covenants no later than one day before the expiration of 30 years of the date of the purchasing the property in the event that the Town 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 the Town and the County will do what is necessary to ensure that the same is not extinguished by the Real Property Marketable Title Act or any comparable law purporting to extinguish, by the passage of time, non possessory interests in real property. Both the Town and County agree to do what each must do to accomplish the 99 year affordability requirement. 4. Resale Provisions. The Town shall assure compliance with affordability of assisted unit 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 rental property or is unable to continue ownership, then the buyer must sell, transfer, or otherwise dispose of their interest in the Property only to an agency with similar interest in affordable housing and serve families with incomes not exceeding 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. The non-profit fund, foundation, or corporation of like purposes must have established its tax-exempt status under Section 501 (c)(3) of the Internal Revenue Code. 6 4.2 However, if the property is not sold, transferred, or otherwise disposed to an agency with similar interest in affordable housing during the term of affordability, the Right of First Refiisal provision of the County's Long-Term Housing Affordability Policy must be followed and the net sales proceeds (sales price less: (1) selling cost, (2) the unpaid principal amount of the original first mortgage and (3) the unpaid principal amount of the initial County contribution and any other initial government contribution secured by a deferred payment promissory note and deed of trust) or "equity" will be divided 50/50 by the seller of the Property and the County. 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 unit 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 the Town for the assisted unit as follows: i. In the event that the Town is unable to proceed with any aspect of the Project in a timely manner, and County and the Town determine that reasonable extension(s) for completion will not remedy the situation, then the Town will retain responsibility for requirements for any dwelling unit assisted and County will make no further payments to the Town. ii. In the event that the Town, 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 the Town 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 the Town's agreement of the Town's inability to continue as a viable organization. The Town shall convey the subject properties to the 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 7 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. The Town shall maintain records of its grant requirements under this contract for a period of not less than five (5) full fiscal years following the contract completion date. The Town shall ensure access to records and financial statements, as necessary, to provide effective monitoring and evaluation of project performance. Additionally, the Town shall submit a copy of its annual audit to the County. Upon reasonable advance notice, County or its authorized representatives may from time to time inspect, audit, and make copies of any of the Town's records that relate to this contract. If any audit by County discloses that payments to the Town were in excess of the amount to which the Town was entitled under this contract, the Town shall promptly pay to County the amount of such excess. If the excess is greater than 1% of the contract amount, the Town shall also reimburse County its reasonable costs incurred in performing the audit. ii. The Town shall maintain files of all tenants, regardless of length of occupancy, residing in the assisted unit. Documentation shall verify eligibility for federal assisted housing at the point of initial tenancy and every subsequent year thereafter for the period of affordability. Information maintained shall include: tenant income level; name of family members; ethnic data; family type - e.g. female head of household; disability status; and monthly rent. iii. The Town shall maintain records verifying the affordability of the assisted unit. 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: To the County: Orange County c/o Housing and Community Development Department RO. Sox 8181 Hillsborough, NC 27278 ATTN: Director 8 ii. To The Town: Town of Chapel Hill Department of Housing 317 Caldwell Street Chapel Hill, NC 27516 ATTN: Executive Director Either the County or the Town may change the person or address to which any future Notice shall be given as herein provided. e. No Assignment. No transfer or assignment of the interest of the Town in this Agreement shall occur without the prior written consent of the County; neither may the Town assign this Agreement without the prior written consent of County. f. Conflict of Interest. The Town agrees to abide by the provisions of 24 CFR 570.611 with respect to conflicts of interest, and covenants that it presently has no financial interest and shall acquire any financial interest, direct or indirect, that would conflict in any manner or degree with the performance of services required under this Agreement. The Town further covenants that in performance of this Agreement no person having such a financial interest shall be employed or retained by the Town hereunder. These conflicts of interest provisions apply to any person who is an employee, agent, consultant, or elected official or appointed official of the County, or any designated public agencies or subrecipients that are receiving funds under the HOME Investment Partnership Program. g. Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and there respective successors and assigns. h Indemnification. To the extent legally possible, the Town 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 the Town, its employees, agents, officers, and contractors in connection with this contract. In the event any such action or claim is brought against County, the Town shall, upon County's tender, defend the same at the Town's sole cost and expense, promptly satisfy any,judgment adverse to County or to County and the Town ,jointly, and reimburse County for any loss, cost, damage, or expense, including attorney fees suffered or incurred by County. i. Subcontracting. The Town shall not subcontract work under this contract, in whole or in part, without the County's prior written approval. The Town 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 applicable obligations of the Town specified in this contract. Notwithstanding County's approval of a subcontractor, the Town shall remain obligated for full performance of this contract and County shall incur no obligation to any subcontractor the Town shall to the extent pennitted by law, indemnify, defend, and hold County harmless from all claims of its contractors. 9 j. No Joint Venture or Agency. The County and the Town each agree and acknowledge that nothing contained herein or otherwise, including, without limitation, any act of the County or the Town under this Agreement, shall be deemed or construed to create any relationship of joint venture, partnership or agency between the parties. k. 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 the Town 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 the Town be a waiver by the County of its rights and remedies with respect to that or any other breach. 1. 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. M. Severability. The provisions of this Agreement are independent of and separable from each other, and no provision shall be affected or rendered invalid or unenforceable by the fact that for any reason any other provision may be invalid or unenforceable in whole or in part. If any provision of this Agreement or the application thereof to any person or circumstances shall, to any extent, be or become invalid or unenforceable, the remainder of this Agreement, or the application of such provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each provision of this Agreement shall be valid and be enforced to the fullest extent permitted by law. The County and the Town 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 the Town 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. n. Equal Opportunity. The Town 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. o. Headings. Headings are for convenience only and shall not be used to interpret or construe its provision. p. 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. 10 q. 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. r. 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, the Town 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. S. Publicity; Signage. The Town 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. t. 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.. III No Third Party Rights. The parties hereto covenant and agree that nothing contained in this Agreement or any act by the County or the Town 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, the Town or any of their respective officers, agents or employees by any third party. 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. I1 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) John M. Link, Jr., County Manager ATTEST: Donna Baker Clerk to the Board of Commissioners Approved as to form and legality Geoffrey Gledhill, County Attorney This document has been preaudited in accordance with the N.C. Local Government and Fiscal Control Act. Kenneth Chavious, Finance Director NORTH CAROLINA ORANGE COUNTY This is to certify that on this day personally came before me Donna Baker, with whom I am personally acquainted, and being by me duly swom, says that John M. Link, Jr. is the County Manager of Orange County, NC, and that she the said Donna Baker, 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 Donna Baker subscribed their names hereto and said common seal was affixed, all by order of the Board of County Commissioners of Orange County and that said instrument is the act and deed of Orange County. Witness my hand and notarial seal, this the day of 20 Notary Public My commission expires: 12 Town of Chapel Hill (SEAL) W. Calvin Horton, Town Manager ATTEST: This is to certify that on this day personally came before me with whom I am personally acquainted, and being by me duly sworn, says that W. Calvin Horton is the Town Manager of Chapel Hill, NC, and that she the said , is the Clerk to the Chapel Hill Town Council, 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 Town of Chapel Hill was subscribed thereto by the said Town Manager of Chapel Hill, NC and said e subscribed their names hereto and said common seal was affixed, all by order of the Town Council and that said instrument is the act and deed of Chapel Hill. Witness my hand and notarial seal, this the day of 20_ Notary Public My commission expires: