Agenda - 09-09-2008- 1 - Laserfiche WebLink

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~~~ ~~ £)MI+~ITNITY ~.BI3W$S~[L1~tT 1~s~aci~zz©~ ~3 P N~t~~'H CsAttt#LtNlk P.U_ Box i~Z~ i l0 Eas. Ggaa ~s~~r B~~~xs. NC 27701 ~91~} b67-1i~57 Pxoxa {414) b67-lia8 Fix nee a~.cx 3-ac.vxr~ September 3, 2008 Preservation and Redevelopment of a Manufactured Haasing Conunanity Manufactured housing in land lease communities is a popular and common housing choice in Orange County. In 2006, 9,230 residents occupied 3,770 mobile homes in Orange County, with many of these units on leased land. They provide affordable housing and neighborhood environments. They also face distinct disadvantages in land tenancy, quality and financing. As land use changes and the housing stock ages, there is a loss of this type of affordable housing. Successful conversions of manufactured housing communities from for-profit to non- profit status have provided long-term affordability and neighborhood revitalization. The Community Reinvestment Association of North Carolina has documented the challenges of land lease communities in North Carolina and success stories in Vermont, New Hampshire, Nevada and California in its book This Is My Home. The first conversion of a land lease community to nonprofit ownership has happened in Burnsville, North Carolina. This model can be replicated in Orange County with the Orange Community Housing and Land Trust (OCHLT) as the principal for the acquisition and redevelopment ofnon-profit manufactured housing community. The park would operate under the land trust model. Residents would own their units and participate in the park management. OCHLT would own the land and infrastructure of the community and act as the property manager. This is a consistent fit with park resident expectations of awning the unit and renting the land and with OCHLT experience of managing land trust communities. As a project illustration, a community in the unincorporated area of Orange County is for sale at an asking price of $200,000. If sold to a nonprofit, the owner can receive a tax deduction of 5% of the sales price on state taxes owed. Orange Community Housing and Land Trust would purchase the park using private bank financing of $100,000 assuming loan terms of 8% interest 20 year amortization, and a $150,000 grant or 0% interest rate loan from Orange County. Transaction costs are estimated at $18,400 including predevelopment expenses. Site improvements to improve appearances and utility include landscaping, mailboxes, and signage. Four new pads would be installed, one new septic system and other improvements estimated at a total budget of $31,600. The total acquisition and redevelopment is estimated at $250,000. Currently, the park rents 81ots at $230 and one unit for $465 or seven units at $230 and 1 lat/unit combo at $675 for a gross potential income (GPI) of $27,660. Operating costs under management by the OCHLT are estimated at $13,060. OCHLT is compensated at 8% of NOI for management services. Debt service is estimated at $10,185. The property could operate with a 1.14 debt to operating income ratio as is and during transition. By adding four new units, GPI can be increased to $33,120, creating a stronger DOI of 1.33. This assumes that the one mobile home that is currently rented is sold to a resident and that the proceeds are used to help capitalize an operating reserve.