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<br />houses at an Appraisals completed in 1995 show property values between $85,000 and
<br />average cost of $102,000. The homes are generally in good condition, though some are in need of
<br />$88,364 each. new roofing, upgraded central heat/air and
<br />other cosmetic repairs. We have estimated an average cost of $10,000 per unit for renovations.
<br />There are two scenarios for County support depending on the timing and amount of the County's
<br />investment. Detailed financial projections aze attached describing both options.
<br />Scenario 1
<br />EmPOWERment, Inc. purchases the properties by October 1, 2000 for $1,232,000. Two homes aze re-
<br />sold to family members for $260,000, leaving an effective acquisition cost of $972,000 for the eleven
<br />homes. The County would make an investment of $247,500 towazd acquisition; the balance would be
<br />financed through BB&T. Over the fall, EmPOWERment, Inc. performs renovations, subdivides the
<br />properties and helps current tenants to prepare to purchase their home. Homes would be re-sold to first
<br />time hamebuyers earning less than 80% AMI.
<br />Tatal per unit development costs are projected at $109,015, including a contribution of $2,000 toward
<br />buyers' closing costs. After renovations the eleven homes would be sold to eligible, first time buyers at
<br />a cost of about $85,515, which would include the County subsidy of $22,500 each ($247,500/11). This
<br />is the simplest and least costly alternative.
<br />Scenario 2
<br />EmPOWERment, Inc. purchases the properties by October 1, 2000 for $1,232,000. Two homes are re-
<br />sold to family members for $260,000, leaving an effective acquisition cost of $972,000 for the eleven
<br />homes. County investment would come in two stages to allow greater time to review current
<br />affordable housing policies prior to committing all necessary funds to the project.
<br />The first stage of investment would be in the amount of $136,962 by October 1 when
<br />EmPOWERment, Inc. closes on the property: This funding would provide the equity required to
<br />achieve 85% loan to value on our construction loan. We are assuming as-is appraisals in the amount of
<br />$100,000, an actual per unit cost of $94,915 and a required equity investment of $9,915 per unit. The
<br />goal here would be to secure site control and lease the properties to current tenants until additional
<br />funding is available from the County to complete renovations and sell the homes to first-time buyers.
<br />Because current rents aze only $465 per month, we would require an operating subsidy to cover debt
<br />service, pay taxes and handle ongoing maintenance and repairs. Our projected monthly costs per unit
<br />aze $855, including $655 for debt service, $150 for taxes and $50 for maintenance. We will require an
<br />operating subsidy of $423 per month per unit to cover the gap in available funds. Assuming a 6-month
<br />holding period, the total operating subsidy required for all eleven units would be $27,902. This
<br />amount, plus the required equity for purchase, equals the sum of $136,962 mentioned above.
<br />There will be additional costs deferred until homes are renovated and sold, totaling $14,100 per unit or
<br />a total of $155,100. These casts are outlined on the attached development proforma. The total county
<br />investment under scenario 2 would be $292,062, which reflects the costs of the operating subsidy
<br />required to hold the units for six months until development.
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