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HomeMy WebLinkAboutAgenda - 01-21-2003-9cORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: January 21, 2003 Action Agenda Item No.? SUBJECT: Housing Bond Policy - Land Banking Policy Approval DEPARTMENT: Housing/Community Dev. PUBLIC HEARING: (Y/N) No ATTACHMENT(S): Land Banking Policy Affordable Housing Bond Policy INFORMATION CONTACT: Tara L. Fikes, ext. 2490 TELEPHONE NUMBERS: Hillsborough 732-8181 Chapel Hill 968-4501 Durham 688-7331 Mebane 336-227-2031 PURPOSE: To approve a Land Banking Policy for incorporation into the County Affordable Housing Bond Policy. BACKGROUND: On October 15, 2002, the Affordable Housing Advisory Board (AHAB) presented a revised Affordable Housing Bond Policy for the review and approval of the Board of County Commissioners (BOCC). The Policy was approved on that date. At that time, AHAB committed to continuing to work to develop criteria for a Land Banking Program for the Board's consideration within 30-90 days of that date. (Land Banking provides the opportunity to purchase land that becomes available prior to the establishment of a firm development plan.) Also, at that time, AHAB asked that the final 20% of the $1.3 million dollars available in the first round of 2001 bond funding be designated for a land banking RFP process. Subsequently, a subcommittee of AHAB developed a Land Banking Policy and the Policy was distributed to local non-profit organizations and posted on the County's website in order to receive public feedback. The subcommittee and full Advisory Board have reviewed the public comments received and a final draft Land Banking Policy has been prepared for BOCC review and approval. AHAB has also prepared a summary of public comments as a foreword to the Bond Policy that is attached to this abstract. The Land Banking Policy, upon approval, will be incorporated into the County Affordable Housing Bond Policy approved on October 15, 2002, a copy of which is attached for reference. FINANCIAL IMPACT: The approved Land Banking Policy will govern the allocation of approximately $260,000 of the $1.3 million housing bond dollars available this year. RECOMMENDATION(S): The Manager recommends that the Board approve the proposed Land Banking Policy for incorporation into the County Affordable Housing Bond Policy. PROPOSED POLICY FOR LAND BANKING SUMMARY OF PUBLIC COMMENTS 1. General Comment, no action required: From Susan Levy, " ... Overall, I think the proposed policy is excellent....... Please let me know when this is to go before the County Commissioners for their approval. Thanks for the work in putting together this proposed policy." 2. Re: Project Completion: Procedural Assumption #2 states that "The Land Banking Policy will be incorporated into the Orange County Housing Bond Policy document and Land Banking project proposals will be subject to the same requirements regarding ... Project Completion, ...." The project completion requirement states "All New Construction program activities should begin within three years of funding award. Any requests for time extensions will be granted at the discretion of the Board of County Commissioners and must be submitted at least six months prior to the deadline date." Both Dowling and Levy think this time requirement is to short. Dowling states, " You might want to consider how we are defining `land banking'. With this scoring criteria it seems the land won't be in the bank very long - more short term CD than medium term T-note." Levy is more specific. She states " ... I think the requirement that construction begin within three years of the funding award somewhat defeats the concept of landbanking, in which the idea is to take a property off the market so it can be reserved for future affordable housing development. There will be projects that can meet this time line, but there may be other instances where the land is available now, and won't be in the future, but there is not the funding and/or capacity among non-profit developers to begin what can be a very lengthy (and costly) process to actually develop the property. With the proposed Adequate Public Facilities Ordinance, the proposed new land management ordinance for the Town of Chapel Hill, and any other future changes that local governments may make that affect the development process, three years could be an unrealistic timeframe to get through the development process, especially for a larger tract. I would argue for a five year time frame, rather than three, with the flexibility to make exceptions for a longer time frame when a piece of land is desirable, but there is not an immediate necessity or ability to develop it." Ad hoc committee response: No specific recommendation. Since the allocations for landbanking is only 20% of funds available, a longer time frame may be acceptable. However, this may be a point best left for the BOCC to decide. AHAB ACTION: Leave as is. 3. Re: threshold requirements #7: The current proposal states that applicant must "include a detailed project schedule for bringing the project on-line, including critical next steps and a plan for the management of the land until construction begins." Dowling remarks that this "could involve a great deal of work; and possibly time and money. An applicant may not have a development plan in place yet. The next steps might simply be to determine how best to use the land, which could include hiring a surveyor and land use planner or civil engineer." Ad hoc committee response: The current proposal may have unintentionally suggested a more specificity than intended. We recommend this requirement be rephrased as follows "include a detailed ec proposed schedule for bringing the project on-line, including critical next steps such as pre-development planning and fundraising, as well as and-a plan for the management and maintenance of the lam property until construction begins." AHAB ACTION: Accept proposed change. 4. Re: Pre-Development Due Diligence, A. Planning and Zoning. The current proposal states, "Does the site conform to the governing jurisdictions planning documents and zoning ordinance? If applicable, does the appropriate subdivision procedure comply with current subdivision regulations?" Dowling and Levy find this problematic. Dowling states that "Many times a parcel of land will need to be rezoned in order to develop in a manner allows the housing to be affordable (like our Legion Road Townhomes). It could be difficult to document the likelihood that a rezoning application will be successful. How does this score?" Levy's concerns are more direct. "I don't understand either question. Are you asking if a rezoning is necessary? I'm not sure what you are trying to get at. Speaking as a potential applicant, clearer language would be helpful." Ad hoc committee response: Our proposed changes are as follows: "Does the site conform to the governing jurisdiction's planning, deeu ei4s a„a zoning, and subdivision er-dinaftee requirements? , " If not, what is required to accomplish this and what is the likelihood of a successful outcome? " To answer the second question, the applicant should refer to similar situations in which the governing jurisdiction has had to provide variances, amendments, etc. to permit an affordable housing development to move forward. AHAB ACTION: Section to read. "Does the protect conform to the governing jurisdiction's planning zoning and subdivision requirements for this parcel? If not what is required to accomplish this?" 5. Re: Pre-Development Due Diligence, Utilities. The current proposal states "Are utilities (water, sewer, electricity, natural gas, phone, etc) available at the site now or in the respective utilities capital improvement plan to be provided at the site in the future? What is the estimated cost of providing the utilities? What is the source of funding?" Levy writes, "In asking the source of funding for infrastructure, I am assuming that it will be acceptable to list possible sources. For a landbanking proposal, it is unrealistic to think that funding would be in place for infrastructure." Ad hoc committee response: Change third sentence to read, "What the setwee of ftin ing are the possible funding sources?" AHAB ACTION: Accept proposed change. 6. Re: Project Feasibility, A. Current policy states that "The applicant must submit a general land use concept plan." Dowling comments that "a general land use plan takes time and money. It could be possible that land is determined to be suitable for development, but a plan has yet to be worked out - either due to time constraints or funding constraints." Ad hoc committee response: Leave as is. The requirement is not expected to be burdensome. An acceptable plan should take no more than one full day of a landscape architect, engineer, or surveyor's time; more likely half that. AHAB ACTION: Leave as is. 7. Re: Project Feasibility, B. Current policy states that "A non-binding, but professionally competent project feasibility budget must be submitted using the following worksheet." Dowling comments that "It would be ideal to be able to produce a budget for a project that you hope to build one day in the future, but it could also be impossible to provide. Clearly a development plan needs to be in place and lots of work needs to be done in order to provide even a rough budget. The notion of simply purchasing a parcel of land (after performing due diligence) for future planning would not be possible with this scoring criteria." Ad hoc committee response: Leave as is. However, simplifying the worksheet to include less expense items might be possible. This particular point can be up for discussion at tonight's AHAB meeting. AHAB ACTION: Reduce # of cost categories in worksheet. Simplifguae. See final version. Proposed Policy for Land Banking Approved by AHAB, December 10,2002 Procedural Assumptions/Recommendations 1. This Land Banking Policy is intended to govern the allocation of 20% of the $1.3 million of 2001 bond funds to be released in FY 2003-2003. 2. The Land Banking Policy will be incorporated into the Orange County Housing Bond Policy document and Land Banking project proposals will be subject to the same requirements regarding Eligible Applicants, Request for Proposals, Project Review and Selection, Minimum Score, Project Completion, Reporting Requirements, Leveraging Requirements, and Long Term Affordability Requirements as are other bond project proposals, unless specific instructions are given for Land Banking project proposals. The Land Banking Threshold Requirements and Evaluation Criteria will be included in the Housing Bond Policy as an attachment. In particular please note that projects funded by Land Banking financial awards will be a) required to start construction within three years of the funding award and b) leverage other financial resources in the land purchase. (See the guidelines for Project Completion and Leveraging Requirements, respectively). 3. If a project is awarded Land Banking funds and subsequently applies for other County bond funds, the Land Banking award will be included in the leverage calculations. 4. We recommend that a specific Request for Proposal process be approved for Land Banking. Our recommendations are: a. An initial Land Banking RFP is open for 30 days and that after the RFP period closes the Land Banking proposals will be scored within 30 days and the funding recommendations are forwarded to the County Manager. b. If the sum total of recommended bond funding awards is less than the total lank banking funds available, then the remainder of the funds continue to be set aside for future land banking RFPs until such time as next release of funds from the 2001 affordable housing bonds. C. If after the initial Land Banking RFP, funds are still available the RFP process is re-opened and be open-ended, i.e. proposals will be reviewed on a first-come, first-serve basis. Furthermore, all proposals will be scored within 30 days of the receipt of a complete proposal and the recommendations forwarded to the County Manager by the Project Review and Selection Committee. Threshold Requirements For an application to be considered, the applicant must: 1) Demonstrate exclusive site control for a specified period of time, 2) Demonstrate that the intended use of the property conforms to the applicant's strategic plan and geographic focus area, 3) Include a resolution authorizing this land acquisition by applicant's governing board, 4) Present a land purchase budget that lists the other amounts and sources of funding required to complete the purchase of property, including all transactions costs and applicable fees, 5) Provide a location map, 6) List the current tax value of property and the current property tax, and 7) Include a proposed schedule for bringing the project on-line, including critical next steps such as pre-development planning and fundraising, as well as a plan for the management and maintenance of the property until construction begins. Scoring Criteria 1. Pre-Development Due Diligence (30 points total) The applicant must demonstrate the suitability of the site for residential development. The following considerations must be addressed for the proposal to be considered: A. Planning and Zoning: Does the project conform to the governing jurisdiction's planning, zoning, and subdivision requirements for this parcel? If not, what is required to accomplish this? (10 points total) B. Utilities: Are utilities (water, sewer, electricity, natural gas, phone, etc) available at the site now or in the respective utilities capital improvement plan to be provided at the site in the future? What is the estimated cost of providing the utilities? What are the possible funding sources? (10 points total) C. Site Conditions: Are there any topographic, geologic, soil, wetlands, open-space requirements and/or other special features or other conditions that adversely impact the development of this parcel? What is the likely impact of such conditions? (10 points total) II. Project Feasibility (50 points total) A. The applicant must submit a general land use concept plan. (10 points total) B. A non-binding, but professionally competent project feasibility budget must be submitted using the following worksheet. (Use current dollars, not inflation-adjusted dollars). (30 points total) Total Acreage Projected # of units Projected type and tenure of units Projected income targeting distribution COST ESTIMATES Total Per Unit Requested land banking award Total land cost % of total land cost from bond funds* Soft Costs Infrastructure Costs Subtotal/Developed Lot Costs % of total developed lot costs from bond funds Units Construction Costs Other Costs leasespecify) Total Costs * Leveraging is required. This percentage must be less than 100% for the project to be eligible for a Land Banking award. C. A non-binding, but reasonable project timeline must be submitted using the following worksheet: (10 points total) Beginning Expected Completion Date Land Acquisition Na Pre-development planning Na Infrastructure installed Construction Final project completion III. Other Attributes (20 points total) A. Is the parcel eligible for Affordable Housing planning and zoning incentives and/or bonuses, special districts, etc. of the governing jurisdiction? If so, what is their projected impact on the future development? (5 points total) B. What are the "smart growth" attributes of the site location? Relevant considerations include ease of access to jobs, schools, transit, shopping, etc. (10 points total) C. Are there any other significant site attributes or other qualities that warrant consideration and special attention? (5 points total) Conditional Approval All awards will be subject to conditions that must be satisfied before the funding will be completed. At a minimum, all projects will be required to complete an appraisal, title opinion, and survey, as well as a Phase I environmental report, before the award can be granted. 9 Orange County Housing Bond Policy Established: September 1998 Approved: December 15, 1998 Amended: April 2001 Revision: October 2002 This document outlines the policies governing the expenditure of 200 1 Affordable Housing Bond funds and future bond programs. 1. INTRODUCTION Separate Funding Pools Strategy: Separate Request for Proposals (RFPs) will be issued simultaneously for three types of projects: 1) homeownership, 2) special needs, whether ownership or rental, and 3) non-special needs rental/ cooperative housing. Within each category, no distinction should be made between new construction and rehabilitation. The RFP closing dates and award dates will also be the same. 20% of the expected $1.3 million that will be made available in the first round of 2001 bond funding will be designated for the homeownership pool, 20% will be designated for the special needs pool, and 40% will be designated for the non-special needs rental/cooperative housing pool. (The final 20% will be reserved for the land banking RFP process.) If funds for any pool are not fully allocated in the initial round, an extension period of 60 days will be granted for the submission of additional RFPs for that specific project type. This extension period will begin the day following the BOCC's vote on awarding bond funds. During this extension period new applications will be received; in addition, applicants who did not score the required 60 points may revise their applications and reapply during the extension period. If, after this extension period and corresponding funding decisions, there are still funds remaining in either the Home Ownership, Rental, and/or Special Needs pool(s), the PRS committee will make a recommendation to the County Manager for the disposition of remaining funds. Eligible Applicants: Only non-profit entities will be eligible to apply for funding under the County's bond program. Non-profits may partner with for-profit entities to develop projects, however, in those cases; the non-profit must have the controlling majority in the project (more than 50% interest). Request for Proposals: Prospective developers will be required to submit an application once the Orange County Department of Housing and Community Development announces a Request for Proposals. The applications will be scored according to the established evaluation criteria and targeting goals explained herein. Project Review and Selection: A County Committee will evaluate project proposals and make funding recommendations to the County Manager. The Project Review and Selection (PRS) Committee will be composed of up to three members of the Affordable Housing Advisory Board (AHAB), three Orange County employees (from among the Orange County Assistant County 10 Manager for Human Services, Planning Director, Finance Director, and County Engineer) and one employee from each of the Chapel Hill, Carrboro, and Hillsborough planning departments. The Orange County Director of Housing and Community Development will also serve as a member of the PRS Committee. The Board of County Commissioners will appoint the members of the PRS Committee. AHAB appointments will be for the period of each phase of funding and appointees are not to have been affiliated with eligible applicants within the last 12 months. "Affiliation" includes involvement as a volunteer, member of the staff, board, or board committee, or of a funding agency. The Board of County Commissioners must approve all housing bond projects. Project proposals recommended for funding by the PRS committee, with the concurrence of the County Manager, will be placed on a regular Board of County Commissioners meeting agenda for their consideration. Eligible Projects: Both Existing Housing and New Construction projects are eligible activities for funding, as are mixed-tenure projects, i.e. homeownership and rental, homeownership and special needs rental, etc. Production of non-traditional housing types -- such as duplexes, single room occupancy (SROs), group homes, and transitional housing - is also encouraged. Eligible projects are described in Attachment 1. If a prospective applicant is considering a project that is not included in the list of eligible projects, then the applicant should request a pre-application conference with the Director of Housing and Community Development and the Chair of the PRS Committee to determine how the project will be evaluated by the current criteria. Minimum Score: All projects that score above 60 points under the Evaluation Criteria are eligible to receive funding. The PRS Committee will review and score the application. The score of 60 must be derived from points earned in each evaluation category. The Board of County Commissioners must approve all housing bond projects. Project proposals recommended for funding by the PRS Committee, with the concurrence of the County Manager, will be placed on a regular BOCC meeting agenda for their consideration. Project Completion: All Existing Housing Program activities should be completed within three years of funding award. All New Construction program activities should begin within three years of funding award. Any requests for time extensions will be granted at the discretion of the Board of County Commissioners and must be submitted at least six months prior to the deadline date. Reporting Requirements: Bond fund recipients will be required to submit status reports to the County. (See Attachment 2). Leveraging Requirements: Projects that do not leverage other financial resources will not be funded. Examples of other available resources include: the Community Development Block Grant (CDBG) Program, HOME Investment Partnerships Program, NC Housing Finance Agency Programs, as well as local general fund contributions, private bank financing, equity contributions from the end-user and/or the developer, and philanthropic funds. II Long Term Affordability Requirements: All projects must meet the County's Long-Term Housing Affordability Policy. See Attachment I 12 IL EVALUATION CRITERIA A. Income Targeting (25 points) Household Income Range Points to be Awarded < 30 % of Area Median Income 25 < 60 %, but >= 30 % of Area Median Income 20 < 80 %, but >= 60 % of Area Median Income 15 Note: For projects serving mixed-income ranges, a corresponding weighted average of points will be awarded. B. Leveraging (20 points) The degree to which the proposed project includes funding from other sources and minimizes County bond funds required, given the income groups served. All outside funding sources must be committed within twelve (12) months of the date of the funding award. Any requests for time extensions will be granted at the discretion of the BOCC and must be submitted at least three (3) months prior to the deadline date. Percent Funded by Bonds Points to Be Awarded 60 - 80 % 3 40-59% 6 20-39% 9 10-19% 12 <10% 15 Other Criteria 1. The project pays property taxes 2a. The project repays the bond funds - principal only 2b. The project repays the bond funds - both principal and interest Points to Be Awarded 2 2 3 13 C. Design (15 points) The design of the site plan and housing units with respect to accessibility, maintenance, functionality and quality of appearance in terms of compatibility with that of neighboring housing. Building Design Maximum Points Scoring Criteria to be Awarded 1. The project exceeds the NC Housing Finance Agency Energy 3 Efficiency Criteria (Attachment 4) 2. The project is accessible to needed services for the target 2 population such as healthcare, schools or public transportation 3. The project provides for handicap accessibility and/or utilizes 3 the principles of Universal Design in the building design. (See Attachment 5 for further details). 4. Additional points may be awarded for meeting aspects 2 associated with functionality and maintenance. (Details must be Community Design Maximum Points Scoring Criteria to be Awarded 5. The project contributes to a mix of housing within an existing 2 neighborhood 6. Additional points may be awarded for criteria associated with 3 building appearance, quality of construction, compatibility with surrounding housing, ability to foster a sense of a secure community, and contributes to neighborhood revitalization. (Details must be provided by applicant 14 D. Community Sponsorship/ Support (10 points) This section evaluates the degree to which the sponsoring organization demonstrates plans for strong community participation throughout the development of a project. Scoring Criteria Maximum Points to be Awarded 1. The applicant can submit evidence that they coordinated the 3 application with other organizations to complement and/or support the proposed project (please be explicit). 2. The applicant involved the intended beneficiaries of the 2 project in the planning process. 3. The applicant can demonstrate that it has been actively 2 involved, or describes the steps it will take to become actively involved in the Community's Consolidated Planning process to identify and address a housing need or problem that is related in whole or part to the proposed project. 4. The applicant has developed, or describes the plans to develop 3 linkages with other community activities, programs or projects related to the proposed project (i.e. support services) to coordinate its activities so solutions are holistic and E. Project Feasibility (15 points) Project feasibility is the degree to which the project is judged to have a likelihood of successful completion, addressing such elements as zoning, site control, construction schedule, and funding. The proposal should be complete and present a budget that is reasonable and is based on reasonable assumptions. Scoring Criteria Maximum Points to be Awarded 1. The applicant can demonstrate site control, zoning 4 compliance, and a timely construction schedule that is feasible 2. Funding (other than bond funding) is in place at the time of 4 application 3. The applicant's proposal is complete and presents a proposed 7 project budget that is reasonable and is based on reasonable 15 F. Developer Experience (15 points) Developer experience is judged based on the scope, extent and quality of the applicant's experience in housing or related services to those proposed to be served by the project and the scope of the proposed project (i.e. number of units, services, relocation costs, development, and operation) in relationship to the applicant's demonstrated development and management capacity, as well as its financial management capability. This includes the applicant's utilization of minority and women-owned businesses, and other allied small businesses in the planning and development of the project. Partnerships by local organizations will be encouraged. The amount of experience of the project sponsor and the proposed development team in carrying out similar projects in a successful fashion, particularly with respect to reasonably meeting project budgets and timetables on such projects will also be considered. This would include review of the organization's track record in handling projects which used town or county local funds and/or funds awarded to the local governments in Orange County by the federal or state government. In the case of rental projects, the amount of experience the project sponsor and management company have in managing low income housing (including an adequate management plan for dealing with special population needs and special community needs) must be demonstrated. Scoring Criteria Maximum Points to be Awarded 1. Experience of the applicant in carrying out projects of 5 comparable scope and nature (e.g., new construction, rental housing, rehabilitation, etc.) to that proposed, and has met regulatory compliance for prior projects 2. Applicant has proposed a team with demonstrated 5 development, managerial, and financial management capabilities in prior projects 3. Applicant has successful record of meeting proposed 5 budgets and timetables 16 ATTACHMENT 1 -- ELIGIBLE PROJECTS It is the intention of the BOCC that a wide range of projects is eligible for bond funding, including projects of mixed-tenure nature, i.e. mixing different housing types together in one project. Production of non-traditional housing types -- such as duplexes, single room occupancy (SROs), group homes, and transitional housing - is also encouraged. If a prospective applicant is considering a project that is not included in the list of eligible projects, then the applicant should request a pre-application conference with the Director of Housing and Community Development and the Chair of the PRS Committee to determine how the project will be evaluated by the current criteria. The following housing programs are also eligible for funding. Existing Housing Programs Affordable Housing Loan Program: The focus of this homeownership program would be direct assistance to eligible borrowers. An eligible homeowner is one that has not owned a home in the past three (3) years. Income-eligible borrowers would be pre-qualified for first and second mortgages by a local housing non-profit agency with the cooperation of local lenders. All prospective homebuyers would have to complete a county-approved homebuyer education program prior to receiving approval to participate in the program. The County would provide a "pre-commitment" letter to the borrower, who could then purchase a standard home available on the market that they could afford and that sold for less than the FHA maximum sales price for this area. The eligible borrower must provide a minimum of $750 cash contribution to this transaction. Rehabilitation of Substandard Housing - Second Mortgage: This program would provide direct assistance to eligible homeowners and 501(c)(3) non-profit organizations that own rental property for rehabilitation of units with code violations. Community Revitalization Loan Program: This program would provide assistance with the purchase and rehabilitation of existing property by first-time homebuyers. The guidelines governing this program will be in accordance with the existing County and Town of Chapel Hill Programs with the same name. Acquisition for Low Income Rental Housing: Funds would be used to assist local 501(c)(3) organizations purchase and, if necessary, renovate available property for lease to low-income Orange County residents. Urgent Repair Program: The program would be used to provide funds for home repairs that eliminate potential life or safety threats to low-income homeowners and/or enable the elderly and disabled to remain in their homes by providing essential accessibility modifications. New Construction Programs Assistance may be provided to non-profit housing developers of new construction projects for first-time homebuyers and/or renters. A Builder Participation Agreement would set aside a funding allocation for second mortgages to developers/homebuyers in a specific project. For rental projects, the use of federal income tax credits and Section 8 certificates and vouchers must be utilized if available. 17 ATTACHMENT 2 -- PROGRAM MONITORING AND REPORTING All housing bond recipient agencies are required to file semi-annual project reports with the Orange County Department of Housing and Community Development beginning six months after the BOCC approves the award and ending with a final project report no later than two (2) months after project completion. These reports will involve the completion of a standardized form that is intended both to collect baseline information on each phase of every project (pre- development, development, and marketing) as well as to provide an opportunity for self- reporting on the particular details of each project. The Affordable Housing Advisory Board will 1) review the bond program semi-annually to monitor the housing bond program, raise policy issues with staff and the BOCC, and receive information, 2) maintain a database to facilitate the dissemination and analysis of housing bond- related information, and 3) prepare a Housing Bond Annual Report which will be made available to all County residents and formally presented to the Orange County Board of Commissioners during a regularly scheduled meeting. 18 ATTACHMENT 3 -- 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 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/Qualified 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 policy 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 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. 19 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 to provide first-time homeownership opportunities for the initial buyer as well as 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. 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 remain affordable to families at or below 80% of median income for a minimum of ninety-nine (99) years from the date of initial assistance. 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 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. 20 If neither Orange County nor the sponsoring non-profit organization advises 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 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 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: 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. 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. 21 IV. 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