MINUTES  CITY COUNCIL HOUSING COMMITTEE Tuesday, June 11, 2024-3 3:45PM City Hall Council Chambers  Members Present: Pamela Holder, Chair, City Council Member  Aaron Baker, City Council Member Victor Foster, Citizen Member Mayor Maureen Copelof, Ex-Officio Dean Luebbe, Assistant City Manager/Finance Director Paul Ray, Planning Director Alex Shepherd, Assistant to the City Manager Emily Brewer, Planner Becky McCann, Communications Coordinator Stephanie Holland, Planning Staff  Staff Present:  A. Welcome and Call to Order  Aaron Baker welcomed everyone and called the meeting to order at 3:45 PM.  B. Certification of Quorum  Quorum was certified by Assistant to the City Manager. Alex Shepherd.  C.A Approval of Agenda The motion carried unanimously. D. Approval of! Minutes  Motion by Mr. Foster, seconded by Mr. Baker to approve the agenda as presented.  Motion by Mr. Baker, seconded by Mr. Foster to approve the minutes oft the. April 9,  2024 meeting as presented. The motion carried unanimously.  E. Update on BDRPCI Negotiation  Mr. Ray said we heard that the vote went well; the vote was 76-27 in favor ofthe agreement. He said we will be signing the lease any day now, then moving on to the geo- technical phase. Ms. Brewer added that an estimated high-level timeline would be to conduct the geo-technical and architectural review over the summer. Then, in the fall, we will review the findings and proceed with community engagement. We hope to have all of    that information completed by the end oft the year sO we can move to developer solicitation  by early next year.  Mayor Copelof said there was a lot ofi interest at' "Meet the Mayor" today from people whol live nearby, asking when we would have the community engagement and if there would be engagement specifically for adjacent property owners. They are already  raising thati issue.  Ms. Brewer said it's certainly still in the works, but we will have engagement sessions. Per our ordinances, we will have to send out notices to adjacent and nearby property owners for re-zoning. The property is currently split zoned; the front oft the property is residential mixed-use, and thel backi is GR-8. Re-zoning will go to the Planning  Board first, and then to City Council for publichearing. F. Model Deed Restrictions Options  Ms. Brewer shared a presentation that discussed the shared-equity homeownership mode.Shared-equity homeownership is a deed-restricted homeownership program that is self-sustaining for low-income families. A one-time investment is made to make the home affordable, whether it be a City investment or from a non-profit. This could bei in the form of down payment assistance or a repair program, making the home affordable to purchase by a working family with modest means. The home would then remain affordable after the family purchases it. The deed restriction states that they agree to limit the proceeds when they sell to another family, allowing them toj purchase an affordable home. Some benefits of this model include affordable homeownership opportunities for multiple generations, a greater likelihood ofattaining and sustaining homeownership, and around 6 out of10 families use the equity from a: shared-equity model to then buy a traditional market-rate home. Building wealth among lower-income families becomes a critical piece oft this, ensuring that publici investments go furthera and do more good in the long run. However, the biggest question is how to balance different priorities regarding ongoinga affordability  versus wealth building.  Ms. Holder asked who sets thel limits or caps on affordability. Ms. Brewer said it would be up to this committee and City Council. Ifyou all set the thresholds, in exchange for us giving down payment assistance, you agree toj put this covenant on your deed that restricts your resale potential. She said there area a lot of formulas that could be used to determine the cap. One oft the most common is an index-based formula, where the purchase price is setata a rate of appreciation that's tied to an increase in the consumer price index or the area median income. So asi incomes rise, we will be able to raise the home price with that. This way it would ensure that the home is always available to someone within 80% of the area median income. Ms. Brewer said the fixed percentage formula includes a pre- determined rate of between 2-5%, and this formula is easier to explain and allows the homeowner to understand what they would receive during the resale oft the home. However, it does not account fori income changes and improvements to thel home. She said an appraisal-based formula is the most complicated because its sets the affordable purchase price as the appraisal minus a certain percentage to determine the allowable resale price.  Minutes Housing Committee Meeting  June 11,2024 Page 2of4    The biggest con is thati iti is directly tied to thel housing market.. Another covenant often included in deed restrictions is that the City has the first right ofrefusal. There isa requirement to notify the City before you put thel house up for sale, and the City has the option to purchase at the stated resale price. Often this right can be transferred to a non-  profit organization or to an income-eligible buyer.  Ms. Brewer presented three different case studies to show how the formulas Mr. Ray said these are all options for the committee to consider, but the deed Ms. Holder asked which option gives people the largest increase in equity and wealth building while maintaining affordability. Ms. Brewer provided a financial model that calculated each option and projected financial outcomes in year 7.  operate.  restrictions must be for affordable housing in North Carolina.  Ms. Holder: said when Ms. Brewer first explained the formulas, she was leaning towards the fixed rate model. She asked why we should not choose that option. Ms. Brewer said it's more predictable for the homeowner, buti it doesn'taccount for anything in the  market, and they are not gaining much wealth.  Mr. Luebbe said with a fixed percentage, we're never really getting people out oft the wealth level they are at because the way you get out ofthat] level is by accruing a large gain  inyour home value.  Mr. Baker mentioned the home market is noti in a vacuum. He said, for example, I could sell my house for more than Iboughti it for, butIcannot' buy another house because the market has increased so much too. He said it will take time to get to a model that finds a  solution because, in the end, we. have tol build new homes.  Mayor Copelofasked Ms. Brewer ifs she could find models that are legal in North Carolina because some oft them seem that they cannot be done here. Ms. Brewer said the only example that cannot be done is related to the Colorado example that would require  someone to work in a certain geographic: area.  Mr. Baker said we need to make this process easy for everyone to understand because with these formulas, it can become complicated. He asked what kind of reimbursements are eligible. Ms. Brewer said last spring, we expanded the authority oft the Housing Trust Fund so thati it can be spent on more items like repair programs, accessibil- ity improvements, and weatherability improvements. However, we are waiting to see the results with the Brevard Davidson River Presbyterian Church Agreement and the PRO  Housing Grant.  G. Set Date for Next Meeting  The next meeting was scheduled for Tuesday, August13,2 2024 at 3:45 pm.  Minutes - Housing Committee Meeting  June 11,2024 Page 3of4    H. Adjourn  There being no further business, the meeting adjourned at 4:49P P.M.  X Pamela Holder City Council Member  Minutes Approved: August 13,2024  X Denise Hodsdon City Clerk  Smidlolm  Minutes Housing Committee Meeting  June 11,2024 Page 4of4