Memorandum of Understanding
Between
Habitat for Humanity, Orange County, NC, Inc.
1829 E. Franklin Street Suite 1200B Chapel Hill, NC 27516
and
Orange Community Housing and Land Trust
104-C Jones Ferry Road
Carrboro, NC 27510
Re:
The Northside Initiative
RECITALS:
1) Orange Community Housing and Land Trust (hereinafter “OCHLT”) intends to purchase renovate, and/or redevelop a number of lots and homes in the Northside
Neighborhood over the next three years.
2) The primary goals of OCHLT’s work in the neighborhood are to:
a) Generate a stock of attractive, durable, permanently affordable housing to serve
generations of low-income homebuyers;
b) Improve appearances of properties in target areas of the neighborhood;
c) Provide homeownership opportunities to buyers who live and/or work in Orange
County earning no more than 80% of the adjusted area median income (hereinafter “Low Income Households”);
d) Sell the homes as “leasehold estates” using a long-term ground lease to restrict
the resale price of the homes and preserve affordability; and
e) Reduce crime and promote a sense of stability in target areas of the neighborhood.
3) OCHLT intends to use funds from the HOME Program, CDBG Program, Town of
Chapel Hill Affordable Housing Trust Fund, and NCHFA New Homes Loan Pool
to make these homes affordable. These programs require that the homebuyers:
a) Earn no more than 80% of the adjusted area median income as determined by
the Department of Housing and Urban Development;
b) Live or work in Orange County for one year before purchasing the subsidized
home;
c) Occupy the property as their primary residence; and
d) Be first-time homebuyers.
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4) Habitat for Humanity, Orange County, NC, Inc. (hereinafter “HHOC”) has among its
purposes to develop affordable homeownership opportunities in Orange County, NC
(hereinafter the “Habitat Program”). Key elements of the Habitat Program are to:
a) Build well-constructed, low cost homes in partnership with families/individuals
who earn at or below 50% of the area median income;
b) Involve the community in the building of the homes as volunteers and donors;
c) Provide no interest mortgages to the families/individuals who purchase the
homes; and
d) Work collaboratively with other organizations in the community to further our mission of eliminating substandard housing in Orange County.
5) HHOC supports the OCHLT Program and desires to collaborate with OCHLT on its
successful implementation of the Northside Initiative. OCHLT supports the stated
objectives of the Habitat Program and desires to collaborate with HHOC on its successful participation in the Northside Initiative.
Therefore, HHOC and OCHLT hereby agree to the following:
HHOC and OCHLT agree to collaborate as partners in the Northside Initiative on certain
parcels identified as redevelopment opportunities.
1) OCHLT will act in the role of Developer for the Northside Initiative. Key elements of
the responsibilities of OCHLT in this regard are to:
a) Acquire properties suitable for redevelopment;
b) Provide house designs appropriate to the architectural character of the neighborhood;
c) Work with HHOC to develop construction plans for those projects to be built by
HHOC;
d) Carry the project forward through Town of Chapel Hill process to conclusion of
the Zoning Compliance Permit (ZCP) approval process and pay for the ZCP;
e) Remove or demolish any existing structure(s) on the property as a part of the
HHOC Building Permit;
f) Provide HHOC with access to the Property for the purpose of constructing a
Dwelling Unit and completing other site improvements as specified in the Construction Documents; and
g) Prior to closing, execute its standard Offer to Purchase and Contract, using the
form in Exhibit C, attached. On the closing date, OCHLT will execute a ground
lease with the buyer, using the form in Exhibit A, attached, and will convey a
leasehold interest to the buyer.
h) Administer re-sales of the home using the resale formula contained in the
OCHLT Ground Lease,
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i) Educate homebuyers prior to closing on the sale of the property as to how the
Land Trust model works. Buyers will also comply with other standard and customary Land Trust practices prior to closing.
2) HHOC will act in the role of Contractor for specified projects in the Northside Initiative. Key elements of the responsibilities of HHOC in this regard are to:
a) Obtain and pay for all construction permits necessary for the prosecution of the
work and will comply with all laws and regulations bearing on the conduct of the
work for each specific house project;
b) Provide financing for the construction project including construction of the dwelling unit, hardscape, and landscape, site utilities and all other improvements to
secure a Certificate of Occupancy and complete the intent of the Construction
Documents.
c) Provide such insurance as is required by the Worker's Compensation Act and
agrees to indemnify and hold OCHLT harmless from all losses, costs or damages
of whatever nature arising from on the job injuries that might be suffered by
HHOC, its agents, employees, volunteers, subcontractors or suppliers. HHOC
will provide Builder's Risk insurance on the building and materials as work progresses naming OCHLT as an insured party. Uninsured theft losses will be the
responsibility of HHOC. HHOC has general liability insurance, and will name
OCHLT as co-insured under this policy.
d) Provide construction supervision of all subcontractors, suppliers, and volunteers
on-site throughout the duration of work. HHOC will perform the work in a good
and workmanlike manner and in accordance with all applicable building codes.
All materials will be like new and of quality generally accepted in the building
trade. HHOC will indemnify and hold OCHLT harmless from all loss, cost and
expense arising out of any claim by the future owner of the premises that the
home was not constructed in accordance with any express or implied warranty.
e) Establish and maintain control over the homebuyer selection process. OCHLT
will have input to the homebuyer selection and will assist HHOC in explaining to
the selected homebuyer the neighborhood revitalization goals of the Northside
Initiative. Final homebuyer selection authority will reside with HHOC.
3) First mortgage financing for Purchaser’s acquisition of the leasehold estate will be
$67,500 and will be provided to the Purchaser(s) by HHOC on terms agreeable to
Purchaser and HHOC. OCHLT may record additional deeds of trust securing subsidy funds (from the Town of Chapel Hill or Orange County or NCHFA) needed to
provide the affordable home buying opportunity. HHOC may record a subordinate
deed of trust for documented construction expenses that exceed $67,500. This
subordinate deed of trust, which is intended to provide HHOC with recovery of excess construction costs when the home is resold, may also include up to $5000 of
fee income. The maximum amount of this HHOC subordinate deed of trust will be
$12,500.
4) HHOC and OCHLT will together be responsible for sustaining the Project to maintain
compliance with regard to income eligibility of the Purchaser(s). OCHLT will be responsible for compliance with provisions to assure continuing affordability. Not withPage 3 of 4
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standing this provision, HHOC retains the right to nominate future purchasers of The
Property in the event of resale. OCHLT shall honor such nominations, if so made, to
the extent they do not conflict with the other terms of this agreement.
5) OCHLT agrees that in future resales, at HHOC’s request, it will assign its purchase
option rights under section 10.6 of its ground lease to HHOC.
6) .
7) HHOC reserves the right to secure and protect the improvements against OCHLT’s
bankruptcy, assignment for the benefit of creditors, etc. OCHLT shall execute, and
HHOC shall cover the expenses for, a Deed of Trust against OCHLT and in favor of
HHOC, in an amount equal to the combined value of the site improvements and the
building improvements at the time a Certificate of Occupancy is issued, and will specifically exclude the value of the land. Such Deed of Trust will be deemed satisfied
by OCHLT upon transfer of the leasehold estate to a Purchaser under the terms of
this agreement.
8) Any conflicts between HHOC and OCHLT arising from changes in the organizational
policies or procedures of either party will be resolved in good faith. Any disagreement between the parties arising out of this contract or application of any of its provisions will be submitted to arbitration by an arbitrator(s) not interested in the finances
of the contract and the parties will be forever bound by the result. If possible, The
Dispute Settlement Center will be used for arbitration, to minimize the expenses of
the process. If the Dispute Settlement Center is not available, and the parties are
not able to agree on an arbitrator, each party will appoint an arbitrator and the arbitrators so appointed will select a third arbitrator
OCHLT
By: ________________________________________ Date: ___________
Habitat
By: __________________________________________ Date: ___________
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