Agenda - 09-18-2001 - 8e - Laserfiche WebLink

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2 Prior to agreeing to provide HOME funds for the Legion Road Townhomes as a grant, county staff and OCHLT representatives discussed the pros and cons of providing these funds as a grant. This discussion yielded the following results. 1. Benefits • Grant funds would be a financial asset to the OCHLT, and thus would assist the organization to build fiscal credibility. • The OCHLT'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 OCHLT 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 OCHLT home is for sale and there is not a buyer lined up, the OCHLT 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 OCHLT ceases to exist, ownership of the land would revert to the County. • If the OCHLT homes are sold to a family earning more than 80% of the area median income, the OCHLT 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 OCHLT does not. • The OCHLT Board would have the right to take over the Meadowmont Homeowners Association responsibilities if problems occur with maintenance of the property. • The OCHLT will work towards having access to a capital reserve for emergency situations. • The OCHLT 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 this 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. Thus, the Grant Agreement developed for this project provides the financial assistance in the form of a grant and incorporates the above discussion points.