HomeMy WebLinkAboutAgenda - 02-14-2000 - 9cORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: February 14, 2000
Action Agenda
Item No. _ q ~ ~
SUBJECT: Community Revitalization Program
DEPARTMENT: Housing/Comm. Development PUBLIC HEARING: (Y/1~ No
ATTACHMENT(S): INFORMATION CONTACT:
Revised Guidelines Tara L. Fikes, ext. 2490
TELEPHONE NUMBERS:
Hillsborough 732-8181
Chapel Hill 968-4501
Durham 688-7331
Mebane 336-227-2031
PURPOSE:
To approve revised operational guidelines for the Community Revitalization Loan Program.
BACKGROUND:
A Community Revitalization Loan Program was created in the 1997-98 Orange County HOME program
design to provide funds to assist low/moderate income families purchase existing housing for first-time
homeownership. Funds can be used for the acquisition, property rehabilitation, or as direct second
mortgage assistance.
In late October 1999, approximately two years since inception of the program, the HOME Program
Council, comprised of a staff representative from Carrboro, Chapel Hill, Hillsborough, and Orange
County, determined the need to re-examine the guidelines for this program to ensure compliance with all
federal regulations, smooth program operations, and to incorporate "lessons learned". Specifically, the
review would review: rehabilitation costs; property appraisals; property inspections; rehabilitation
findings; and environmental requirements. During this review, staff temporarily suspended acceptance
of funding request~~in order to allow the review to take place without prejudice to any given project. All
local non-profit hwising organizations were notified of this review and were given the opportunity to
provide any suggestions they had regarding the program guidelines.
The HOME Program Council has completed its review and developed revised Program Guidelines for the
Community Revitalization Loan Program. The revisions define and clarify the following items: Eligible
activities; Loan Requirements; Recapture/Resale Provisions; Environmental Requirements; Appraisal
requirements; and Submission Requirements. The revisions are indicated in bald print in the guidelines.
FINANCIAL IMPACT:
A total of $60,000 was allocated in the 1997-98 fiscal year for this program and $210,000 was allocated
in the 1998-99 fiscal year. To date, approximately, $242,557 of the HOME dollars has been expended far
this program leaving an available balance of $27,443. Further, this program is also an eligible program
activity under the County Housing Bond Program.
RECOMMENDATION(S): The Manager recommends approval of the Revised Operational Guidelines
for the Community Revitalization Loan Frogram.
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COMM,_,~]NIT_X_LOAN FUND PROGRAM GUIDELINES
Purpose: To provide funds for the acquisition and/or rehabilitation of existing housing
in Orange County for resale to very low and low-income families. The program will operate in
tandem with a local SO1 (c)(3) non-profit organization sponsoring, developing, or serving as an
advocate for the potential homebuyer.
Eligible Activifies: Funds appropriated under this program may be used for the acquisition
and/or residential property rehabilitation of existing dwelling units situated within Orange
County suitable for resale to low and moderate income families qualifying under the provisions
of this program. The property must have an anticipated life of at least 20 years after
rehabilitation.
The acquisition of property must not cause displacement of any resident family. Also, if
federal money is used for the property acquisitian will be considered a voluntary
transaction and the seller must waive their rights under the Uniform Relocation Assistance
and Real Property Acquisition Policies Act of 1970 (URA). A waiver form will be
provided for signature by the seller.
Eligible Property Owner: The prospective property owner must meet three key eligibility
criteria.
• Income Requirements
The total annual family income must be 70% or less of the HUD published median
income for the Raleigh-Durham-Chapel Hill Metropolitaa Statistical Area (MSA).
Total annual family income shall be defined in accordance with the current HUD
Section 8 Existing Housing Program definition of annual income.
• Priucipal Residence
The prospective buyer must use the property as his/her principal residence. This
requirement will be incorporated into all pmgram loan documents. The property may
not be rented during the 20 year affordability period.
• Residency Requirement
The prospective buyer must live or work in Orange County for at least one year prior
to purchasing a home under this program. Further, the prospective buyer must be
residing in the property to be rehabilitated, or if purchased or constructed, occupy the
property when the acquisitioNrehabilitation is complete.
Eligible Property Types:
Single family dwelling (one unit)
Condominium unit
Townhouse
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n 'mitat'
All loans provided under this program shall not exceed 30% of the house sales price. The loan
shall be either a deferred payment loan or an amortized loan over a period of twenty years. The
loan shall be secured by a Deed of Trust and Promissory Note subordinate only to the first
mortgage loan. The loan may not be refinanced unless the new loan is obtained for the
purposes of home improvement only. Prior consent of the County is required under these
circumstances. Further, the loan may not be assumed without the prior consent of the
County. There should be no additional encumbrances against the property during the term of
the Loan without the prior consent of the County.
Recapture/Resale~o i~iQn~
At the time of resale of the subject property during the twenty-year affordability period, loan
funds will be recaptured in full plus a 50% share of any appreciation realized from the sale of the.
property. At the end of the twenty-year affordability period, a deferred loan may be Xe`
negotiated with the property owner far an additional twenty year period or paid in full. If the
loan is made as an amortized loan, the loan commitment will be fulTilled at the end of
twenty years.
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.
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All prospective property must be inspected for health and safety defects prior to purchase. The
initial assessment is the responsibility of the sponsoring non-profit entity. At a minimum, the
property must meet the HUD Section $ Housing Quality Standards (HQS) at the time of initial
occupancy.
If the dwelling fails to meet Section $ Housing Quality Standards (HQS) and repairs are
necessary, the sponsor is responsible for ensuring that the work is done properly. If the
residential property rehabilitation is financed by the loan, progress payments will be processed
for rehabilitation work with evidence that the work completed has been done satisfactorily. This
certification must be made by the sponsor. In the event that the work certified as complete
required the sponsor to obtain a building permit, certification must include evidence that the
work has been approved by the applicable Building Inspections Department. Any representative
of Orange County, Carrboro, Chapel Hill, or Hillsborough reserves the right to inspect the
rehabilitation work in process when partial payments are requested by the sponsor.
The final rehabilitation payment will be made when all repair work has been inspected by the
appropriate Building Inspections Department to certify conformance with local building codes
and minimum housing codes. The Orange County Housing and Community Development
Department will certify conformity with the Section $ Housing Quality Standards.,
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In the event that property rehabilitation is not necessary, the sponsor will certify that the dwelling
meets Section $ Housing Quality Standards (HQS) prior to the disbursement of loan funds.
Environmental Requirements
All prospective property and proposed rehabilitation work must be assessed to determine any
potential environmental impacts to the community. At a minimum, each property will be
assessed to determine historic significance by collaborating with the local Historic Property
Commission or the State Department of Cultural History. If the property is of historic
significance, the applicable guidelines of the local or state governments must be followed in
the acquisition/rehabilitation project. The County will have primary responsibility for
completing this task but may solicit the assistance of the sponsor as necessary.
Environmental review will begin at the time that the initial request for loan funds is
submitted to the County. -
Prone Values
The value of identified property to be acquired by a homebuyer must have a value that does not
exceed 95% of the area median purchase price for that type of housing. HUD makes these
purchase value limits available to all participating jurisdictions each year.
The before and after rehabilitation value must be established by:
• An appraisal by a qualified independent appraiser;
• Tax assessments may be used to establish value, but only if they are current and can
be computed at 100% of market value.
• Transfer of property that includes rehabilitation requires an appraisal.
Values established will be reviewed by qualified review appraiser at the expense of the
County. If the review appraiser does not accept an appraisal, it will be accessary to obtain
a second full appraisal.
The property sales price cannot exceed the established property value.
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The organization sponsoring, developing, or serving as an advocate for the potential homebuyer
must provide:
1. A detailed description of the loan fund request;
2. Certification that the buyer meets all eligibility criteria;*
3. Evidence that primary financing has been obtained by the homebuyer;
4. A Certification signed by the sponsor and the homebuyer applicant that the program
guidelines have been fully explained;
S. Copies of all building inspection reports;
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6. Statement of property value;
7. If applicable, a Development Budget identifying the sources 'and use of all funds in the
project;
8. An Opinion on Title of the security property from an attorney licensed to practice law in the
State of North Carolina; and an
9. Estimated Settlement Statement.
In the event property is acquired For rehabilitation and resale without identifying a
prospective homebuyer, the non-profit sponsor must agree to identify a qualified
buyer and complete the sell of the property to the homebuyer within one hundred
twenty days (120) days of the date of acquisition of the property.
Submission Requirements
No facsimiles of submitted documentation will be accepted. To receive preliminary
commitment, the following information must be submitted in original form.
1. A detailed description of the loan fund request;
2. Certification that the buyer meets all eligibility criteria;
3. Evidence that primary financing has been obtained by the homebuyer;
4. Results of the initial building assessment;
5. Statement of property value; and
6. If applicable, a Development Budget identifying the sources and use of all funds in the
project.
Upon receipt and favorable review of these documents, the County will begin the
environmental review process and request the review appraisal at this time. The sponsor
will be notified that this process has begun and will be given an estimated time of
completion.
Once this process is complete and the County has determined that the project is eligible for
loan funding, the County may issue a preliminary commitment with final commitment
issued upon receipt and review of the all of the items identified above under the Submission
requirements.
In the event, that the project is determined to be non-feasible the sponsor will be notified in
writing with the reasons for the determination.
Original: August 1997
Revised: January 2000