HomeMy WebLinkAboutAgenda - 04-11-2000-5aORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: April 11, 2000
Action Agenda
Item No. ~-[,~
SUBJECT: Communit Revitalization Pro am
DEPARTMENT: Housing/Comm. Development FUBLIC HEARING: (Y/1~ No
ATTACHMENT(S):
Revised Guidelines
INFORMATION CONTACT:
Taza L. Fikes, ext. 2490
TELEPHONE NUMBERS:
Hillsborough 732-51$1
Chapel Hill 968-4501
Durham 688-7331
Mebane 336-227-2031
PURPOSE: To approve revised operational guidelines for the Community Revitalization Loan Program.
BACKGIYOUND: 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 yeazs 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.
On February 14, 2000, the revised Program Guidelines for the Community Revitalization Loan Program
were presented to the Board for adoption. At that time, the Board requested review and/or modification of
certain guidelines. These modifications were presented to the Boazd on April 3, 2000. At that meeting,
more revisions were suggested and have been incorporated into the attached Guidelines. These guidelines
seek to define and clarify the following items: Eligible activities; Loan Requirements; Recapture/Resale
Provisions; Environmental Requirements; Appraisal requirements and Submission Requirements. The
revisions as of Apri14, 2000 are indicated by bold print.
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
dollazs has been expended for 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 Program.
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~Q _. QAN FUND PRIaGRAM GUIDELINE
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 501(c)(3) non-profit organization sponsoring, developing, ~or serving as an
advocate for the potential homebuyer.
Eligible Activities: 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 acquisition 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). The seller will provide a waiver form for signature.
Period of Affordability: All properties assisted under this program must remain
affordable to families at or below SO% of median income for a minimum of ninety-nine (99)
years from the date of initial assistance.
Eligible Property Owner: The prospective property owner must meet three key eligibility
criteria.
• Income Requirements
The total annual family income must be SO% or less of the HUD published median
income for the Raleigh-Durham-Chapel Hi11 Metropolitan 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.
• Principal Residence
The prospective buyer must use the property as his/her principal residence. This
requirement will be incorporated into all program loan documents. The property may
not be rented during the 99-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 acquisition/rehabilitation is complete.
Eligible Property Types:
Single family dwelling (one unit)
Condominium unit
Townhouse
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a i 'tation
All loans provided under this program should 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 forty (40) years.
The loan shall be secured by a Deed of Trust and Promissory Note subordinate only to the first
mortgage loan. Primarily, loan refinancing to lower interest rates and for home improvements
will be reviewed by the County. Refinancing for debt consolidation will not be permitted. The
loan may not be refinanced or 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.
anture/Resale Provision
All financial contributions provided by the County will be provided as a deferred second loan
secured by a forty (40) yeaz 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 period of affordability will be 99 yeazs and 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.
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.
Tf 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., aloes-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
theix principal residence.
However, if the property is sold during the term of affordability to anon-qualified homebuyer to
be used as their principal residence, the net sales proceeds (sales price less selling costs and 1 sc
mortgage payoff) or "equity", after repayment, if required by the Note and Deed of Trust, of the
initial County contribution, will be divided 50/50 by the seller of the Property and the County. If
the initial Caunty contribution does not have to be repaid because the sale occurs more than forty
yeazs 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.
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PropertX, Standards
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
properly must meet the HUD Section $ Housing Quality Standards (HQS) at the time of initial
occupancy.
If the dwelling fails to meet Section 8 Housing Quality Standazds (HQS) and repairs aze
necessary; the sponsor is responsible far ensuring that the work is done properly. If the
residential property rehabilitation is financed by the loan, progress payments will be processed
far rehabilitation work with evidence that the work completed has been done satisfactorily. The
sponsor must make this certification. In the event that the work certified as complete required
the sponsor to obtain a building permit, certification must include evidence that the applicable
Building Inspections Department has approved the work. Any representative of Orange County,
Carrbaro, Chapel Hi11, or Hillsborough reserves the right to inspect the rehabilitation work in
process when the sponsor requests partial payments. .
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 Qrange County Housing and Community Development
Department will certify conformity with the Section 8 Housing Qualify Standards.
In the event that property rehabilitation is not necessary, the sponsor will certify that the dwelling
meets Section 8 Housing Quality Standards (HQS) prior to the disbursement of loan funds.
vironmental~~cu~irement
Environmental review will begin at the time that the initial request for loan funds is submitted to
the County. ,Each property must be assessed by the County and the sponsoring non-profit
organization to determine the sensitive aspects of the natural environment that might be
impacted by this project or activity.
Developers/Sponsors of acquisition-rehabilitation projects will be encouraged to create
environmentally sound and resource efficient residential buildings using an integrated approach
known as "green building". Crreen buildings promote resource conservation, including energy
efficiency, renewable energy, and water conservation features. Further, deconstruction
methods will be considered to capture the greatest passible amount of materials for reuse
in this or other projects.
Further, HUD requires that all prospective property and proposed rehabilitation work must be
assessed to determine any potential environmental impacts to the community. Specifically, each
property must 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
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followed in the acquisition/rehabilitation project. The County will have primary responsibility
far completing this task but may solicit the assistance of the sponsor as necessary.
Proper Valves
The value of identified property to be acquired by a homebuyer must have a value that does not
exceed 95% of the azea median purchase price for that type of housing. HUD makes purchase
value limits available to all participating jurisdictions each yeaz.
The before and after rehabilitation value must be established by:
• An appraisal by a qualif ed 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 necessary to obtain a second full
appraisal.
The property sales price cannot exceed the established property value.
Responsibilities of the SQ~,r~(311Von-Profit Organization,
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;
5. Copies of all building inspection reports;
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 Cazolina; and an
9. Estimated Settlement Statement.
In the event property is acquired far 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.
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Submission Requ~rement~
No facsimiles of submitted documentation will be accepted. To receive preliminary
commitment, the following information must be submitted in original form.
l . A detailed description of the loan fund request;
2. Certification that the buyer meets all eligibility criteria;
3. Evidence that primary fmancing has been obtained by the homebuyer;
4. Results of the initial building assessment;
S. Statement ofproperly 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
Apri12000
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