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HomeMy WebLinkAboutAgenda - 01-18-2000 - 9fORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: January 18, 2000 Action Agenda Item No. Q - -r- SUBJECT: Scarlette Drive Townhome Project DEPARTMENT: Housing/Comm. Development PUBLIC HEARING: (Y/N) No ATTACHMENT(S): Project Proposal Summary INFORMATION CONTACT: Letter from OCHC Tara L. Fikes, ext. 2490 Grant Agreement Development Agreement TELEPHONE NUMBERS: Hillsborough 732-8181 Chapel Hill 9684501 Durham 688-7331 Mebane 336-227-2031 PURPOSE: 1. To approve the allocation of $131,000 in HOME Investment Partnership funds to the Orange Community Housing Corporation in the form of a grant and authorize the County Manager in consultation with the County Attorney to execute a Grant Agreement on behalf of the County. 2. To approve the allocation of $140,000 in Housing Bond funds to the Scarlette Drive Townhome Development; the Capital Project Ordinance authorizing the expenditure of $140,000 in housing bond funding; and authorize the County Manager upon the County Attorney's review and approval, to execute a Development Agreement with Orange Community Housing Corporation on behalf of the County. BACKGROUND: The Orange Community Housing Corporation (OCHC) proposes to develop fourteen (14) townhomes on land currently owned by the Town of Chapel Hill at the corner of Legion Road and Scarlette Drive. The townhomes will be available for purchase by families earning less than 80% of the area median income. OCHC is developing this project in conjunction with the Community Land Trust in Orange County and thus, Scarlette Drive will become the first land trust affordable housing project in the County. By retaining ownership in the land and the use of a resale formula, the land trust model is able to keep units permanently affordable. On June 22, 1998, the Board of County Commissioners approved a Development Agreement with the Orange Community Housing Corporation (OCHC) designating HOME funding to assist with new construction activities on Scarlette Drive in Chapel Hill. Presently, the HOME Program investment is provided as a deferred loan divided equally by the number of housing units to be produced and structured as a deferred second mortgage to the qualified homebuyer that purchased the housing units. The investment is secured by a Deed of Trust and Promissory Note from the homebuyer for the amount of the second mortgage. The funds would be due and payable to the County if the property is sold within the initial twenty (20) year affordability period. Any funds returned to the County are then used for future housing and community development activities. In a September 27, 1999 letter, the Community Land Trust in Orange County request all HOME funds provided to the Scarlette Drive Project be provided as a grant rather than a deferred loan. A copy of this letter is attached to this abstract. After receipt of the letter, County staff met with representatives of Orange Community Housing Corporation (OCHC) - the administrator for the Community Land Trust in Orange County (CLTOC), the Town of Chapel Hill Planning Department, as well as the consultant from Burlington Associates that has been assisting our local land trust organization become an established organization. During this meeting we discussed the "pros and cons" of the request. The meeting yielded the following discussion points. 1. Benefits • Grant funds would be a financial asset to the CLTOC, and thus would assist the organization to build fiscal credibility. • The CLTOC's ability to market the homes is enhanced when the advertised price is reduced by the amount of the public subsidy that is granted the project. This also eliminates the need to explain the terms of the public investment. • The units would become permanently affordable and would most likely not require additional public subsidy. This point was fully discussed and as a result of that conversation, the following situations were identified that might require additional public subsidy. They include: • If interest rates and housing prices increase and income levels remain stagnant, additional subsidy could be needed for future homebuyers. • If the homebuyer damages their home to such a great extent that the CLTOC does not exercise its option to purchase the home, or if the damage is not reflected in the appraised values, additional funds could be needed to renovate the home so it could be resold. • A homeowner may apply for a maintenance or home improvement loan through the County or Town's Comprehensive Rehabilitation Program. • If a CLTOC home is for sale and there is not a buyer lined up, the CLTOC may need funds from the County or another source to buy the house or for the funds to continue to make monthly payments on the home until a buyer is identified. 2. Protection of Investment • If CLTOC ceases to exist, ownership of the land would revert to the Town of Chapel Hill, the original owner. • If the CLTOC homes are sold to a family earning more than 80% of the area median income, the CLTOC would repay the HOME funds. • If a homeowner is in default, the County will have the right to step in and purchase the home from the bank if the CLTOC does not. 3 • The CLTOC Board would. have the right to take over the Scarlette Drive Homeowners Association responsibilities if problems occur with maintenance of the property. • The CLTOC will work towards having access to a capital reserve for emergency situations. • The CLTOC will maintain a waiting list of pre-qualified homebuyers so that when a home is available, there will be a family ready to purchase the home. Based on this analysis, County staff recommends that the HOME funds allocated for the Scarlette Drive Project be provided in the form of a grant. The potential benefits of granting rather than loaning these funds - permanent affordability, and the reduced sales prices - are consistent with the long term housing affordability goals of the County. To provide the financial assistance in the form of a grant, the current Development Agreement should be terminated and replaced with a new Grant Agreement that incorporates the above discussion points and provides for a grant rather than a loan to the project. Additionally, the Orange Community Housing Corporation (OCHC) submitted a request for bond funding for this project. Specifically, OCHC requested that $140,000 be granted to this development to be used for project construction costs. The Bond Review Committee has reviewed the request and recommend full funding of the request. In order to facilitate this expenditure, the BOCC must approve a Capital Project Ordinance appropriating funds to this project. A Capital Project Ordinance has been prepared to accomplish this task and is included with this abstract for the Board's consideration. Second, a Development Agreement must be executed between the County and Orange Community Housing Corporation that secures and governs the bond funds. A Development Agreement has been developed by County staff for review by the Board and the County Attorney. FINANCIAL IMPACT: Approximately $131,000 in HOME Program funding has been allocated to the Scarlette Drive Project. Bond fund award to this project represents an expenditure of $140,000 of the $1.8 million dollar Affordable Housing Bond approved in November 1997. RECOMMENDATION(S): The Manager recommends the following: 1. Approval of the allocation of $131,000 in HOME Investment Partnership funds to the Orange Community Housing Corporation in the form of a grant and authorize the County Manager in consultation with the County Attorney to execute a Grant Agreement on behalf of the County. 2. Approval of the allocation of $140,000 in Housing Bond funds to the Scarlette Drive Townhome Development; the Capital Project Ordinance authorizing the expenditure of $140,000 in housing bond funding; and authorize the County Manager upon the County Attorney's review and approval, to execute a Development Agreement with Orange Community Housing Corporation on behalf of the County. Housing Bond Proiect Summary Applicant: Orange Community Housing Corporation Project Title: Meadowmont Request for Bond Funds: $450,000 Total Project Costs: $3,739,250 Bond Fund Leverage: 12% bond funds; 88% other funding sources Project Description: 4 Orange Community Housing Corporation proposes construction of a 32 unit townhouse development in the Meadowmont development in Chapel Hill. Meadowmont is a mixed-use development located off Highway 54 in Chapel Hill. In the approval process, the Town of Chapel Hill required the developer, East West Partners to provide land for 32 affordable townhouses. The developer has agreed to donated the land to develop the townhouses. OCHC is proposing that bond funds be loaned to OCHC for construction and converted to second mortgages at $14,000 per unit in order to lower the cost of the first mortgage of the first time homebuyers. Target Population/Projected Outcome: 32 first time homebuyers with incomes at or below 80% of median income Project Schedule Obtain building permits Groundbreaking Begin home sales Project Completion Long Term Affordability Vehicle Second Quarter 2000 Third Quarter 2000 Early 2001 - Late 2001- Early 2002 Second mortgages, deed restrictions and equity sharing arrangements will be used to insure affordability for at least 40 years. coMAmmy J rC71Y) :1 MW Ii., P O Box 307 Carrboro NC 27510 919.960.0076 tel 919.968.4030 fax soniag@mindspring.com BOARD of DiREcroRs Alison Werner Cbair josh Gudira Vic&chdr Pucka Bateman Madeline Jeh'ieison Susan Levy ShideyMarshaU Myles Preslar STAFF SUPPORT Orange Coromunrty Housing Corporadon Robelrraawl ng Executive Director Sonia C;anison Land Trust Projea Manager September 27, 1999 John Link, County Manager P O Box 8181 Hillsborough NC 27278 Dear Mr. Link The Board of Directors of the Community Land Trust in Orange County respectfully request that the subsidy monies for the Scadett Drive Townhomes be provided as a grant to the project Our reasons for this request are as follows: 1. Because these townhomes will be part of the land trust (through the ground lease agreement), the units will be permanently affordable and will never require additional subsidy. Subsidy monies are traditionally used in homeownership developments as second mortgages in order to secure the Town's investment. However, once these second mortgages are paid off, the homes tend to escalate in price and become unaffordable. As a part of the land trust, homes not only remain affordable, they tend to become more affordable over time. 2. By granting the funds to the development, the townhomes can be marketed at the true cost to the buyer (i.e. $85,000), rather than at the developer's cost ($115,000) which includes the development of the land. This will simplify the marketing of the homes and help make the project a success. The alternative, to sell the homes for $115,000, will require an explanation of the second (and perhaps third) mortgage, in addition to the rather complicated explanation of the land trust modeL The more complicated the sale becomes, the more difficult it will be to sell the homes. 3. By granting the subsidies to the development and allowing the sales price to be $85,000, the homebuyers will be able, if necessary, to borrow closing costs from the banks. This may be impossible if the homes are priced at $115,000, and the appraisal does not exceed that amount. We appreciate the support you have provided to this first land trust development and, like you, we are most interested in assuring its success. We believe that granting the various subsidy monies the County has approved for this development will be extremely beneficial to the ultimate success of the Scarlett Drive Townhomes. Thank you for your consideration of this request. If you have any questions, please contact Robert Dowling at Orange Commuaity Housing Corporation at 967-1545. cerre_ly,( Alison Weiner Chair, Board of Directors Community Land Trust in Orange County DRAFT NORTH CAROLINA ORANGE COUNTY GRANT 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 ORANGE COMMUNITY HOUSING CORPORATION, a North Carolina nonprofit corporation (hereinafter referred to as "OCHC."). The date of this Agreement is WITNESSETH WHEREAS, the Orange County HOME Consortium has designated $57,000 in FY 1996 HOME funds and $74,000 in FY 1999 HOME funds for the purpose of conveying these funds to Orange Community Housing Corporation, Inc. to assist with the development of fourteen (14) townhome units on Legion Road and Scarlette Drive in Chapel Hill, which property is more particularly described in Exhibit A attached hereto and made a part of this Agreement (hereinafter referred to as the "Property"); and . WHEREAS, the County is the lead entity of the Orange HOME Consortium; so designated in an agreement dated August 27, 1992, and amended January 26, 1993, and July 28, 1993, and as such is the lead entity in a representative capacity for all members of the Orange HOME- Consortium for the purposes of carrying out the HOME Program in accordance with the Title II of the Cranston-Gonzalez National AffordabJe Housing Act (Pub. L. 101-625), (42 U.S.C. 3535(d.) et. SeMc .) (hereinafter referred to as the "Act"), and as further defined in the Federal Program Requirements provided by the U.S. Department of Housing and Urban Development; and WHEREAS, Orange Community Housing Corporation intends to develop the Property for the purpose of constructing housing opportunities for families earning 80% and below of the HUD area median income in partnership with the Community Land Trust in Orange County, Incorporated; and WHEREAS, in cooperation with the Community Land Trust in Orange County, NC, Inc., the land would be held in a Community Land Trust (CLT), ensuring affordability of the homes for at least 99 years; NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the parties hereto do agree as follows: 1.. OCHC agrees to design, market, and implement the Scarlette Drive Project whereby HOME funds will be used for development costs for constructing DRAFT 7 fourteen (14) townhomes that will be placed in the CLT. The townhomes on that land shall remain affordable to low-income households (Homebuyer), households whose annual income is not greater than 80% of the median income for the area, as determined by HUD published area median income for a minimum of ninety- nine (99) years. 2. HOME Assisted Units Designation. HOME funds will be used as part of OCHC's Scarlette Drive construction budget. HOME assisted units must be the principal residence of the first time homebuyer, low-income household. All units, five or more, that include assistance with HOME funds, will have a HOME assisted unit designation. 3. Progress Payments. The County shall make progress payments, when requested by OCHC, as the work progresses. Payments shall be based upon work completed and approved by County. Progress payment requests shall be based on actual costs incurred by OCHC identified in the Budget as described in attached Exhibit B. Payment requests shall be accompanied by copies of documentation for actual expenses. Request amounts shall be verified by County for satisfactory completion prior to payment. 4. Time for Commencement and Completion. OCHC shall commence the Work immediately following execution of contract and complete construction and sale of the townhomes within eighteen (18) months of execution of contract. Additionally, OCHC will be responsible for providing status reports to the County quarterly detailing the project activities until project completion. Completion date shall be designated as the closing date of the purchase of the final Scarlette Drive property. OCHC may, at its option, submit a written request for a delay of completion for County approval. Any delay in the completion date shall be approved by County. In the event that OCHC is unable to proceed with any aspect of the project in a timely manner, and County and OCHC determine that reasonable extension(s) for completion will not remedy the situation, then the conditions of termination shall be in effect. OCHC shall monitor HOME assisted units for affordability for the period of affordability - ninety-nine (99) years. Final contract completion date shall be the latest end date of all HOME assisted unit affordability periods. 5. Affordability Requirement. HOME assisted units must remain affordable for period of ninety-nine years. OCHC retains full responsibility for compliance with the HOME affordability benefit for HOME assisted units, unless HOME affordability restrictions are terminated due to the occurrence of any of the DIV I A rT 8 following events: 1) foreclosure, 2) transfer in lieu of foreclosure, or 3) assignment of an FHA insured mortgage to HUD. OCHC shall assure compliance with affordability of HOME assisted units through the CLT Land Lease Agreement restrictions and by recording Exhibit C "Declaration of Restrictive Covenants" on every HOME assisted property. 6. Resale Provisions. OCHC shall assure compliance with affordability of HOME assisted units through the CLT Land Lease resale restrictions. The CLT Land Lease agreement shall include at least the following elements in their resale provisions for the Improvements: 6.1 If the original Homebuyer no longer uses the Improvement as a principal residence or is unable to continue ownership, then the Homebuyer must sell, transfer, or otherwise dispose of its interest in the Improvement only to a low-income household, one whose combined income does not exceed 80%-of the median household income as determined annually by HUD, to use as their principal residence. 6.2 The original Homebuyer shall receive a fair return on investment (including the Homebuyer's investment and any capital investment). 6.3 The resale provision shall remain in effect for the full HOME affordability period - 99 years. 7. Property Standards. HOME assisted units must, at a minimum, meet the housing quality standards of the HOME program 24 CFR 982.401. In addition, HOME assisted units must meet all applicable local codes, ordinances, and zoning ordinances. The housing must meet the accessibility requirements in the regulations referenced 24 CFR 5.105 (a) which implement the Fair Housing Act and Section 504 of the Rehabilitation Act of 1973. 8. Miscellaneous Provisions. a. Termination of Agreement. The full HOME benefit of the Scarlette project will be realized only after the completion of the HOME affordability periods for all properties constructed with HOME funds provide affordable units 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 OCHC for the HOME assisted units as follows: i. In the event that OCHC is unable to proceed with any aspect of the Scarlette Drive project in a timely manner, and County and OCHC determine that reasonable extension(s) for completion will not remedy the situation, then DRt" r 9 OCHC will retain responsibility for HOME requirements for any HOME units assisted and County will make no further payments to OCHC. ii. In the event that OCHC, prior to the close of the final affordability period, is unable to continue to function due to, but, not limited to, closure or insolvency of the organization, filing a petition of bankruptcy or similar proceedings, or is adjudged bankrupt or fails to comply or perform with provisions of this agreement as required by federal HOME regulations, then OCHC shall, upon the County's request, convey to the County the properties assisted with HOME funds and included in the CLT. Conveyance shall be at the sole discretion of County and on a property by property basis. Conveyance of properties shall be on the terms set forth herein: Conveyance of properties shall occur within thirty (30) days of County and OCHC's agreement of OCHC's inability to continue as a viable organization. OCHC shall convey the subject properties to City by statutory warranty deed, free and clear of all liens and encumbrances of record. 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 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.. OCHC shall maintain records of its HOME grant requirements. under this contract for a period of not less than five (5) full fiscal years following completion date of this contract as follows: OCHC shall ensure access to records and financial statements, as necessary, to provide effective monitoring and evaluation of project performance. Upon reasonable advance notice, County or its authorized representatives may from time to time inspect, audit, and make copies of any of OCHC's records that relate to this contract. If any audit by County discloses that payments to OCHC were in excess of the amount to which OCHC was entitled under this contract, OCHC shall promptly pay to County the amount of such excess. If the excess is greater than 1 % of the contract amount, OCHC shall also reimburse County its reasonable costs incurred in performing the audit. ii. OCHC shall maintain files of all Homebuyers, regardless of length of occupancy, residing in HOME assisted units. Documentation shall verify DIV -- eligibility for federal HOME assisted housing, at the point of initial closing on the unit, and every subsequent Homebuyer thereafter for the period of affordability. Information maintained shall include Homebuyer income level, ethnic data, female head of household, and disability status and Property and Improvement purchase price. iii. OCHC shall maintain records verifying the affordability of the HOME assisted units. Each party agrees that any authorized representative of the County, the State, the U.S. Department of Housing and Urban Development and Comptroller General of the United States shall, at all reasonable times, have access to and the right to inspect, copy, audit and examine all of the books, records and other documents relating to the grant and the fulfillment of this Agreement for a period of five (5) fiscal years following the completion of the Project. d. Conflict with HOME Agreement. Notwithstanding anything herein to the contrary, the parties hereto acknowledge the due execution of a HOME Program Agreement between the County and the U.S. Department of Housing and Urban Development and agree that any conflict between the provisions, requirements, duties or obligations of this Agreement and the HOME Agreement shall be resolved in favor of the HOME Agreement. e. 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 P.Q. Box 8181 Hillsborough, NC 27278 ATTN: Director ii. To OCHC: OCHC P.O. Box 307 Carrboro, NC 27510 ATTN: Executive Director DR rT Either the County or OCHC may change the person or address to which any future Notice shall be given as herein provided. f. No Assignment. No transfer or assignment of OCHC interest in this Agreement shall occur without the prior written consent of the County. g. Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns. h. Indemnification. To the extent legally possible, OCHC shall indemnify and hold City, 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 OCHC and OCHC's employees, agents, officers, and contractors in connection with this contract. In the event any such action or claim is brought against City, OCHC shall, upon City's tender, defend the same at OCHC's sole cost and expense, promptly satisfy any judgment adverse to City or to City and OCHC, jointly, and reimburse City for any loss, cost, damage, or expense, including attorney fees suffered or incurred by City. L Subcontracting. OCHC shall not subcontract work under this contract, in whole or in part, without County's prior written approval. OCHC 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 obligations of OCHC specified in this contract. Notwithstanding County's approval of a subcontractor, OCHC shall remain obligated for full performance of this contract and City shall incur no obligation to any subcontractor OCHC shall indemnify, defend, and hold City harmless from all claims of its contractors. j. No Joint Venture or Agency. The County and OCHC each agree and acknowledge that nothing contained herein or otherwise, including, without limitation, any act of the County or OCHC 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 OCHC 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 OCHC be a waiver by the County of its rights and remedies with respect to that or any other breach. DR" " lz 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 OCHC 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 OCHC 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. OCHC shall not discriminate against any employee or applicant for employment because of race, color, religion, sex, national origin, political affiliation or belief, age, or handicap. 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. 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, OCHC shall DR" 13 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. OCHC 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. U. No Third Party Rights. The parties hereto covenant and agree that nothing contained in this Agreement or any act by the County or OCHC 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, OCHC 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. DR"rT 14 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: Beverly A. Blythe Clerk to the Board of Commissioners NORTH CAROLINA ORANGE COUNTY This is to certify that on this day personally came before me Beverly A. Blythe, with whom I am personally acquainted, and being by me duly sworn, says that John M. Link, Jr. is the County Manager of Orange County, NC, and that she the said Beverly A. Blythe, 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 Beverly A. Blythe 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 2000. Notary Public My commission expires: DRP eY 15 Orange Community Housing Corporation (SEAL) President ATTEST: Secretary NORTH CAROLINA ORANGE COUNTY I, , Notary Public in and for the above named Count and State, do hereby certify that on this day personally appeared before me with whom I am personally acquainted, who, being by me duly sworn, says at he is Secretar and that is President of OCHC, a North Carolina corporation, and that b, authority duly given and as the act of the corporation, the foregoing instrument was signed ii its name by its President, sealed with its corporate seal and attested to by its Secretary.- Witness my hand and notarial seal, this the day of 2000. Notary Public My commission expires: 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 DRAFT NORTH CAROLINA ORANGE COUNTY DEVELOPMENT-AGREEMENT lb 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 ORANGE COMMUNITY HOUSING CORPORATION, a North Carolina non-profit housing organization (hereinafter referred to as "OCHC"). The effective date of this agreement is WITNESSETH WHEREAS, the County, in the implementation of the Orange County Affordable Housing Bond Program solicited applications for funding from interested non-profit organizations; WHEREAS, OCHC submitted an application for Housing Bond funding on August 31, 1999 for S 140,000 in the form of a grant for New Owner-occupied Housing Construction approved by the Board of County Commissioners on January 18, 2000; and WHEREAS, OCHC proposes to develop fourteen town s on land at the corner of Legion Road and Scarlette Drive in Chapel Hill for buyers earning less than 80% of the HUD area median income; and WHEREAS, OCHC agrees to utilize bond funds provided by the County for the purpose of constructing fourteen townhomes for first-time homebuyer families as described in their bond application dated July 31, 1999 which is EXHIBIT A to this Agreement, and hereinafter referred to "the Project"; and WHEREAS, OCHC is implementing this Project in cooperation with the Community Land Trust in Orange County, NC, Inc., the land would be held in a Community Land Trust (CLT), ensuring affordability of the homes for at least 99 years; NOW, THEREFORE, in consideration of the mutual covenants, promises, and representations contained herein, it is agreed between the parties hereto as follows: 1. OCHC shall construct the dwelling units defined in the Project , obtain all permits and licenses necessary to construct the townhomes on the Property, and comply with applicable building and zoning ordinances and the N.C. Housing Finance Agency Energy Standards. The Project shall be undertaken without residential displacement. OCHC is responsible for soliciting buyers for the townhomes they intend to construct on the Property. OCHC and/or their buyers shall be responsible for securing permanent mortgage financing for the townhomes built by them on the Property. 20 DRAFT 17 OCHC shall be responsible for explaining the second mortgage program to potential buyers and certify by written documentation signed by the buyer that the program requirements have been fully explained. OCHC shall maintain purchaser files for a period of 99 years following completion of the development of the Property. 2. Progress Payments. The County shall make progress payments, when requested by OCHC, as the work progresses. Payments shall be based upon work completed and approved by County. Progress payment requests shall be based on actual costs incurred by OCHC identified in the Budget as described in attached Exhibit A. Payment requests shall be accompanied by copies of documentation for actual expenses. Request amounts shall be verified by County for satisfactory completion prior to payment. 3. Time for Commencement and Completion. OCHC shall commence the Work within three (3) years of the date of this agreement. OCHC will be responsible for providing status reports to the County quarterly detailing the project activities until project completion. In addition, OCHC 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 each fiscal year until the Project is complete. Completion date shall be designated as the closing date of the purchase of the final Scarlette Drive property. In the event that OCHC is unable to proceed with any aspect of the project in a timely manner, and County and OCHC determine that reasonable extension(s) for completion will not remedy the situation, then the conditions of termination shall be in effect. OCHC may, at its option, submit -a written request for a delay of completion for County approval. Any delay in the completion date shall be approved by County. OCHC shall monitor the constructed units 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. 4. Affordability Requirement. The units must remain affordable for period of ninety-nine years. OCHC retains full responsibility for compliance with the affordability benefit for assisted units, unless affordability restrictions are terminated due to the occurrence of any of the following events: 1) foreclosure, 2) transfer in lieu of foreclosure, or 3) assignment of an FHA insured mortgage to HUD. OCHC shall assure compliance with affordability of assisted units through the CLT Land Lease Agreement restrictions and by recording Exhibit B "Declaration of Restrictive Covenants" on every assisted property. 5. Resale Provisions. OCHC shall assure compliance with affordability of assisted units through the CLT Land Lease resale restrictions. The CLT Land Lease agreement shall include at least the following elements in their resale provisions for the Improvements: 5.1 If the original buyer no longer uses the Improvement as a principal residence or is unable to continue ownership, then the buyer must sell, transfer, or otherwise 21 DRAFT dispose of its interest in the Improvement only to a low-income household, one whose combined income does not exceed 80% of the median household income as determined annually by HUD, to use as their principal residence. 5.2 The original buyer shall receive a fair return on investment (including the buyer's investment and any capital investment). 5.3 The resale provision shall remain in effect for the full affordability period - 99 years. 6. Miscellaneous Provisions. 18 a. Termination of Agreement. The full benefit of the Scarlette project will be realized only after the completion of the affordability periods for all properties constructed with funds provide affordable units 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 OCHC for the assisted units as follows: i. In the event that OCHC is unable to proceed with any aspect of the Scarlette Drive project in a timely manner, and County and OCHC determine that reasonable extension(s) for completion will not remedy the situation, then OCHC will retain responsibility for requirements for any units assisted and County will make no further payments to OCHC. ii. In the event that OCHC, prior to the close of the final affordability period, is unable to continue to function due to, but, not limited to, closure or insolvency of the organization, filing a petition of bankruptcy or similar proceedings, or is adjudged bankrupt or fails to comply or perform with provisions of this agreement as required by federal regulations, then OCHC shall, upon the County's request, convey to the County the properties assisted with funds and included in the CLT. Conveyance shall be at the sole discretion of County and on a property by property basis. Conveyance of properties shall be on the terms set forth herein: Conveyance of properties shall occur within thirty (30) days of County and OCHC's agreement of OCHC's inability to continue as a viable organization. OCHC shall convey the subject properties to County by statutory warranty deed, free and clear of all liens and encumbrances of record. 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 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. 22 DRAFT 19 C. Books and Records. OCHC shall maintain records of its grant requirements under this contract for a period of not less than five (5) full fiscal years following completion date of this contract as follows: i. OCHC shall ensure access to records and financial statements, as necessary, to provide effective monitoring and evaluation of project performance. Upon reasonable advance notice, County or its authorized representatives may from time to time inspect, audit, and make copies of any of OCHC's records that relate to this contract. If any audit by County discloses that payments to OCHC were in excess of the amount to which OCHC was entitled under this contract, OCHC shall promptly pay to County the amount of such excess. If the excess is greater than 1% of the contract amount, OCHC shall also reimburse County its reasonable costs incurred in performing the audit. ii. OCHC shall maintain files of all buyers, regardless of length of occupancy, residing in assisted units. Documentation shall verify eligibility for federal assisted housing, at the point of initial closing on the unit, and every subsequent buyer thereafter for the period of affordability. Information maintained shall include buyer income level, ethnic data, female head of household, and disability status and Property and Improvement purchase price. iii. OCHC shall maintain records verifying the affordability of the assisted units. Each party agrees that any authorized representative of the County shall at all reasonable times, have access to and the right to inspect, copy, audit and examine all of the books, records and other documents relating to the grant and the fulfillment of this Agreement for a period of five (5) fiscal years following the completion of the Project. 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: i. To the County: Orange County c/o Housing and Community Development Department P.Q. Box 8181 Hillsborough, NC 27278 ATTN: Director ii. To OCHC: OCHC P.O. Box 307 Carrboro, NC 27510 ATTN: Executive Director 23 DRAFT 20 Either the County or OCHC 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 OCHC interest in this Agreement shall occur without the prior written consent of the County. f. Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns. g. Indemnification. To the extent legally possible, OCHC 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 OCHC and OCHC's employees, agents, officers, and contractors in connection with this contract. In the event any such action or claim is brought against County, OCHC shall, upon County's tender, defend the same at OCHC's sole cost and expense, promptly satisfy any judgment adverse to County or to County and OCHC, jointly, and reimburse County for any loss, cost, damage, or expense, including attorney fees suffered or incurred by County. h. Subcontracting. OCHC shall not subcontract work under this contract, in whole or in part, without County's prior written approval. OCHC 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 obligations of OCHC specified in this contract. Notwithstanding County's approval of a subcontractor, OCHC shall remain obligated for full performance of this contract and County shall incur no obligation to any subcontractor OCHC shall indemnify, defend, and hold County harmless from all claims of its contractors. i. No Joint Venture or Agency. The County and OCHC each agree and acknowledge that nothing contained herein or otherwise, including, without limitation, any act of the County or OCHC under this Agreement, shall be deemed or construed to create any relationship of joint venture, partnership or agency between the parties. j. 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 OCHC 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 OCHC be a waiver by the County of its rights and remedies with respect to that or any other breach. k. 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. 1. 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 24 DRAFT 21 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 OCHC 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 OCHC 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. M. Equal Opportunity. OCHC 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. Further, OCHC shall provide a Statement regarding the utilization of minority and women- owned businesses in the planning and development of the Project. This statement will be Exhibit C to this agreement. n. Headings. Headings are for convenience only and shall not be used to interpret or construe its provision. o. 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. P. 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. q. 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, OCHC 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. r. Publicity; Signage. OCHC 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. S. 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. 25 DRAFT 22 t. No Third Party Rights. The parties hereto covenant and agree that nothing contained in this Agreement or any act by the County or OCHC 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, OCHC or any of their respective officers, agents or employees by any third party. U. 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. 26 DRAFT 23 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: Beverly A. Blythe Clerk to the Board of Commissioners NORTH CAROLINA ORANGE COUNTY This is to certify that on this day personally came before me Beverly A. Blythe,. with whom I am personally acquainted, and being by me duly sworn, says that John M. Link, Jr. is the County Manager of Orange County, NC, and that she the said Beverly A. Blythe, 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 Beverly A. Blythe 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 2000. Notary Public My commission expires: 27 DRAFT 24 Orange Community Housing Corporation (SEAL) , President ATTEST: , Secretary NORTH CAROLINA ORANGE COUNTY I, , Notary Public in and for the above named County and Stat4 do hereby certify that on this day personally appeared before me with whom I ai personally acquainted, who, being by me duly sworn, says at he is Secretary and that i President of OCHC, a North Carolina corporation, and that by authority duly given and as the act of th corporation, the foregoing instrument was signed in its name by its President, sealed with its corporal seal and attested to by its Secretary. Witness my hand and notarial seal, this the day of 2000. Notary Public My commission expires: 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 28 Affordable Housing Program 25 Capital Project Ordinance Be it ordained by the Orange County Board of County Commissioners that pursuant to Section 13.2 of Chapter 159 of the General Statutes of North Carolina, the following capital project is hereby adopted. Section 1. The project authorized provides funds to fund housing activities in the following categories: land acquisition; housing development; and homeownership. The project is financed by proceeds from the 1997 voter approved bond referendum. Section 2. The officers of the County are hereby directed to proceed with the project within the budget contained herein. Section 3. The following revenue is anticipated to complete this project: Through FY 1998-99 FY 1999-00 Through FY 1999-00 Sales Tax $0 $0 $0 Bond Funds $0 $690,000 $690,000 Private Placement $0 $0 $0 Fees $0 $o $0 Other $0 $0 $0 Total Funding $0 $690,000 $690,000 Section 4. The following amount is appropriated for this project: Through FY 1998-99 FY 1999-00 Through FY 1999-00 Land EmPOWERment $0 $90,000 $90,000 Habitat for Humanity $0 $460,000 $460,000 Total Land $0 $550,000 $550,000 Design $0 $0 $0 Construction Scarlett Drive $0 $140,000 $140,000 Total Construction $0 $140,000 $140,000 Other $0 $0 $0 Total Costs $0 $690,000 $690,000 Section 5. This ordinance shall remain in effect until June 30, 2000. Adopted this eighteenth day of January, 2000.