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28 1 See below for additional background information: 2 • In FY 2000, Orange County designated $30,250 and $69,750 in FY 2001 HOME funds 3 to EmPOWERment, Inc., for the purpose of providing second mortgage assistance for 4 up to eight (8) low and moderate income families who were assisted in their housing 5 search by EmPOWERment. 6 • On June 27, 2003, EmPOWERment provided second mortgage assistance utilizing 7 HOME funds identified in the preceding Bullet and implemented a Promissory Note, 8 Deed of Trust and Declaration of Restrictive Covenant with Shannon J. Brown for the 9 property at 509 Central Avenue, Hillsborough, NC. 10 • The loan to Ms. Brown did not require any monthly principal or interest payments. 11 However, if the property was sold or transferred by the Borrower, whether voluntarily or 12 involuntarily or by operation of law, other than to a qualified buyer or assumer, and also 13 given any date within 99 years after the date of recording, then all unpaid principal 14 amount of the loan shall be due and payable. 15 Section 4 of the Declaration of Restrictive Covenant sets out the procedure for 16 enforcement of the affordable housing requirements. See below for the procedure: 17 o Orange County and EmPOWERment, Inc. are each granted a right of first 18 refusal to purchase the property. 19 o No sale assignment, sale, transfer, conveyance or other disposition of the 20 property or any part there of whether voluntarily or involuntarily or by operation of 21 law shall be effective unless and until the prescribed procedure has been 22 followed. 23 o Notice of Intent to Sell, not less than 90 days prior to the contemplated closing of 24 transfer, shall be provided to Orange County and EmPOWERment, Inc. Note 25 that the County did not receive notice until February 20, 2019 and the Closing 26 was scheduled for February 22, 2019. The County received notice from 27 EmPOWERment, Inc., and not the seller. 28 o If the County elects to exercise its right of first refusal then it must notify the 29 seller within 30 days and purchase the property within 90 days of receiving the 30 Notice of Intent to Sell. If both EmPOWERment and the County wish to purchase 31 and elects to exercise the right of first refusal, EmPOWERment, Inc., shall have 32 priority. 33 o If neither Orange County nor EmPOWERment advises the seller in a timely 34 fashion of its intent to purchase the property, then the seller shall be free to 35 transfer the property. 36 37 If the County does not exercise its right of first refusal, and the sale of the property 38 during the affordability period is to a "nonqualified" buyer, the rule regarding the 39 recapture of fifty percent (50%) of the net proceeds will apply. The rule calculation for 40 determining the amount of net proceeds owed the County is as follows: Sales price less 41 (1) selling cost, (2) unpaid principal of original first mortgage (USDA lien), and (3) the 42 unpaid principal of the County and any other government lien secured by deferred Deed 43 of Trust and Note. 44 Using the formula above, the calculation for this matter is $171,000 - $105,569.64 (this 45 is the total selling costs taken from the ALTA and is inclusive of the estimated USDA lien 46 pay-off and County second mortgage balance). 47 The net sales proceeds are $65,430.36 and of this amount, $32,715.18 is owed to 48 Orange County. 49 On March 5, 2019, H&CD staff inspected the property at 509 Central Avenue, 50 Hillsborough, NC and found that approximately $14,000 in repairs is needed.