Agenda - 01-20-2000 - 9f - Laserfiche WebLink

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2 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 Scazlette 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 mazket 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 aze sold to a family earning more than 80% of the azea 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.