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Town of Los Gatos Redevelopment Agency Affordable Housing StrategyTown of Los Gatos Redevelopment Agency Affordable Housing Strategy September, 2002 DRAFT Prepared by the Los Gatos Redevelopment Agency ATTACHMENT 1 Town of Los Gatos Redevelopment AgencyAffordable Housing Strategy Table of Contents Introduction 1 Housing Requirements and Obligations 2 Funding Sources 5 Types of Affordable Housing 7 Potential Sites for Affordable Housing Projects 10 Next Steps 16 Appendices 17 Appendix #1 - Income Guidelines for Affordable Housing in Santa Clara Co. Appendix #2 - Maps & aerial photographs of potential sites for affordable housing Appendix #3 - Detailed Funding Sources N:1DEV1Marty\affordab lehousing\affordab 1 ehousin gs trategyreport.wpd Introduction Lack of affordable housing is one of the key regional issues impacting Silicon Valley and the Bay Area. The lack of available land, high construction costs, and difficulty in getting projects approved has resulted in a serve shortage of affordable housing. The high cost of housing forces many to live many miles from where they work, resulting in time consuming commutes. Companies often find it difficult to recruit employees as they cannot afford to live in the area, despite good salaries. In turn, some companies relocate outside of the Bay Area because of this housing problem. Housing and transportation will continue to be the two most significant issues that Silicon Valley will have to address in order to continue to maintain its economic vitality and high quality of life. All cities and towns in the Santa Clara Valley have a State mandated obligation to produce housing and affordable housing. The Town has its "Fair Share" housing obligations adopted in its General Plan Housing Element. Los Gatos, with its redevelopment agency, must spend 20 percent of all tax increment collected on affordable housing. Furthermore, the Town has its Below Market Price (BMP) program that requires new housing developments to set -aside a certain number of units as affordable, or pay an in -lieu fee. Developing affordable housing is challenging in Los Gatos for several reasons. First, the cost of land and construction is very expensive here. Second, there is very little land available for affordable housing or any other type of development. Finally, the approval process is often lengthy and highly scrutinized by residents. Despite the aforementioned obstacles, Los Gatos has been successful in developing a significant number of affordable housing units in the past. Because of the substantial redevelopment affordable housing funds the Town is accumulating, as well as BMP in lieu funds, it is important for the Town to develop a strategy to produce additional affordable housing. Affordable housing projects often take several years from inception to completion, consequently, planning needs to begin immediately. This Affordable Housing Strategy report is an initial effort to outline a number of the issues concerning -affordable housing in Los Gatos and seek direction from the Town Council in terms of the direction to proceed. As indicated in the report, there are only a handful of sites that have the potential for such affordable housing developments, and each has its own unique challenges. As a result, we must develop a multifaceted approach to create affordable housing. We are optimistic that with diligent efforts units can be developed that will address the affordable housing shortage in Los Gatos and be accepted by the community. 1 Affordable Housing Requirements and Obligations Introduction This section will outline the Town of Los Gatos' affordable housing requirements and obligations. Such obligations result from redevelopment law, State General Plan and Housing Element requirements, and Town adopted requirements such as the BMP program. Definition of Affordable Housing The following table summarizes the affordable housing cost definitions: AFFORDABLE HOUSING COST INCOME LEVEL OF OCCUPANTS RENTAL HOUSING OWNERSHIP HOUSING Very low income 30% of 50%* 30% of 50% Lower income 30% of 60%* 30% of 70%* Moderate income 30% of 110%* 35% of 110%* but no less than 28% of actual income * In each cell above, the second percentage represents the percent of area median income. For example, 30% of 50% means annual affordable housing cost is equal to 30% of 50% of area median income. Appendix 1 contains a chart showing the current income guidelines determined by HUD for Santa Clara County. Redevelopment Law Requirements For each redevelopment plan adopted after 1976 (Los Gatos Plan adopted in 1991), an agency is required to set aside at least 20% of all tax increment revenue generated from the project area for the purpose of "increasing, improving, and preserving the community's supply of low- and moderate -income housing." An agency has a broad range of uses for the Housing Fund, including but not limited to: acquisition of land or buildings; construction of buildings, on -site improvements or offsite improvement; rehabilitation of buildings; paying a portion of the principal and interest on bonds issued to finance low- and moderate -income housing; 2 preservation of housing subsidized by federal, state, or local government and subject to conversion to market rate rental; the maintenance of the community's supply of mobile homes; and provision of subsidies for financing of housing. Housing Fund monies must be used inside the redevelopment project area unless the legislative body makes a finding that use outside the project area will be of benefit to the redevelopment project. Another Redevelopment Law requirement is that when residential units housing Iow-or moderate income persons are destroyed or taken out of the low- and moderate -income market as part of a redevelopment project, the agency must replace those units with new or newly rehabilitated low - and moderate -income units. To date, the Los Gatos Redevelopment Agency has not caused the loss of any such units as a result of a redevelopment project. Finally, Redevelopment Law requires that 15% of the units developed or rehabilitated in a redevelopment project area must be affordable to low- and moderate -income persons and households. Of those units, 40% must be affordable to very low income households. The 40% very low-income requirement translates to 6% of the units developed in the project area (40% of 15% = 6%). In the Central Los Gatos Project Area we have had little new residential growth and have added 12 very low units with the Community Housing Developers project on Miles Ln. Consequently, we have a surplus of affordable units as it pertains to this project area housing production requirement. State Housing Element Fair -Share Requirements The State's General Plan law requires that a city adopt a Housing Element at least every five years. The Housing Element establishes goals, policies and programs that provide incentives for the development of affordable housing in order for the Town to produce its "fair share" of affordable housing. ABAG (the Association of Bay Area Governments) establishes the "fair share" goals for the number of affordable housing units to be produced. The ABAG goal for the period 1996 - 1999 was to produce 45 very low income units; 44 low income units; and 55 moderate income units for a total of 144 units. This is an extremely difficult goal to achieve given the high cost to construct new housing and the Iimited supply of land available for new projects. Los Gatos Proerams to Facilitate Affordable Housing Los Gatos has a number of programs to either assist in the production of affordable housing or to assist low or moderate income residents purchase or rent a housing unit: BMP (Below Market Price Units): One of Los Gatos' most successful programs is its BMP program which requires that a market rate multifamily development contain a certain percentage of BMP units or, in certain circumstances a developer may pay an in lieu fee. A total of approximately 40 BMP units have been produced to date. The proposed Sobrato Development 3 which will construct a 135 unit apartment development, will contain 27 BMP units plus seven rental units affordable to public employees such as teachers (25% of total units). Mortgage Credit Certificate Program: Through the County of Santa Clara, the Town participates in the Mortgage Credit Certificate Program, which reduces mortgage payments by providing a tax credit on federal -personal income tax. Housing Conservation Program: This program, administered through the County, offers low interest loans for home repairs to low-income eligible Los Gatos residents. Habitat of Humanity House: Earlier this year the Town Council approved the construction of a Habitat for Humanity single family residence on Charles Ave. The house will be constructed with volunteer labor on a remnant Town parcel paid for by the Redevelopment Agency. The house will be sold to a low-income family. Construction is expected to begin sometime this year. Summary- affordable rental housing in Los Gatos The following projects offer affordable rental housing in Los Gatos: Beckwith Apartments, 31 E. Main, Two BMP rental units Los Gatos Apartments, 517 Blossom Hill Rd, Two BMP rental units Los Gatos Fourplex, 221-227 Nicholson Ave., Four apartments for low and moderate income senior 95 Fairview Plaza, Four rental units • Los Gatos Creek Apartments, 31 Miles Ave., 12 rental units Open Doors Multi -Family Development, 634 W. Parr Ave/, 64 units Villa Vasona, 626 W. Parr ave., 107 units for seniors and handicapped • Pending - Sobrato, 27 BMP rental units and 7 affordable rental units available to public employees 4 Funding Sources Introduction The production of affordable housing typically requires the use of many financial resources. However, in terms of local funding sources, there are two that are most significant. The first, and most significant, is the Redevelopment Agency 20 percent Housing set -aside funds. The second local funding source, is the BMP in lieu funds. Each of these will be discussed in detail below. (Appendix 3 contains a detailed description of a variety of funding sources that may be available for affordable housing). Redevelopment 20% Housing Set -Aside Funds The most significant source of affordable housing financing for Los Gatos will come from its 20% housing set -aside funds. As noted earlier, 20% of the tax increment that the Town receives must be set -aside in a separate fund and used to produce affordable housing. Currently, the Town has over $2 million in this fund and over $700,000 coming in annually. The annual revenue has increased sharply in recent years due to accelerated tax increment growth. Again, these funds can be used for a variety of affordable housing activities as will be discussed in greater detail later in this report. State Law requires a redevelopment agency to spend accumulated housing funds within a specified period of time, thereby producing affordable housing. The law states that an agency will have an "excess surplus" of housing funds when the unexpended and unencumbered amount in the agency's Housing Fund exceeds the greater of $1 million or the total amount deposited in the agency's Housing Fund during the proceeding four years. Once an agency has an "excess surplus" it has three years from that date to spend or encumber such excess amount. Should an agency not spend or encumber the"excess surplus" within the three year period, then it will be subject to sanctions. These include a prohibition by the agency from undertaking new non - housing activities until the excess surplus has been expended or encumbered and requires additional affordable housing expenditures using non -Housing Fund money. Amassing adequate funds to undertake an affordable housing development is critical to efficiently producing affordable housing. It is important to recognize that California Redevelopment Law applies the "excess surplus" requirement to every redevelopment agency in the state. While $1 million may be a significant amount of money in a lower cost area like the Central Valley, in the Bay Area where land costs are extreme, $1 million is often not enough to be a catalyst for an affordable housing development of any size. 5 It is anticipated that the Los Gatos Redevelopment Agency will have an excess surplus beginning in the 2002/03 fiscal year. As such, it is prudent that the Agency proceed with projects that will spend down this excess surplus in the next three years. Note: New leveraging requirements in Redevelopment Law indicate that an agency can only use redevelopment funds to the extent that other sources of funding are not available. Therefore, it may not be possible to finance projects 100 percent with redevelopment funds in order to spend down excess surplus. It is possible to capitalize the Housing Fund annual revenue by issuing tax exempt bonds. However, the Internal Revenue Code places substantial limits on the use of the proceeds which make it more difficult to expend the proceeds of those bonds to construct or assist low- and moderate income housing. Use of these proceeds may be limited to land acquisition, with the land then being donated to the housing developer or the construction of public infrastructure (such as streets and sidewalks) but only if it meets restrictive requirements. Alternatively, the housing set -aside revenue could be capitalized through a taxable bond, in which case there would be greater flexibility in the types of housing assistance activities that could be funded from the bond proceeds. However, taxable bonds will result in the Agency paying a higher interest rate for funds and therefore resulting in less proceeds available for a project. Staff is not recommending either a tax-exempt or a taxable housing bond issue at this time. Los Gatos BMP In -Lieu Fees As discussed earlier, developers of multi -family projects greater than five units but not more than nine units may either provide BMP units or pay an in -lieu fee. Multi -family projects in excess of nine units must provide BMP units in accordance with Town regulations. Planned Development applications in the Hillside Residential and Resource Conservation zones must pay the BMP in - lieu fee since those projects are located in more rural areas where urban services are limited and there is no access to mass transit. We have collected in -lieu fees from several developers, and currently have approximately $1.3 million in this fund. These funds could be combined with RDA Housing Set -Aside funds to assist in producing affordable housing. Los Gatos CDBG Funds • Los Gatos receives approximately $125,000 annually in federal Community Development Block Grant Funds (CDBG). These funds can be used for certain capital projects or a variety of affordable housing activities. These funds could be combined with RDA Housing Funds and BMP in -lieu funds to assist in producing affordable housing. However, in the past these funds have been needed for other pubic uses. Other Financial Resources Available for Affordable Housing There are a variety of other financial resources available to government agencies and housing developers for affordable housing activities. Appendix 1 contains a description of these. 6 Types of Affordable Housing Introduction There are a variety of housing types to consider when developing affordable housing strategies. As is usually the case, there are pluses and minuses to each. Much depends on the specific needs of the community and the funding that is available. Below is a brief description of some of the more common types of affordable housing. Rental vs. Home ownership If a jurisdiction has areas that are characterized by large concentrations of rental housing, then promoting home ownership may be a priority. However, if a jurisdiction has a Iack of available rental housing, construction of multifamily rental housing may be the focus of the strategy. It should be noted that the construction of affordable ownership housing in an area like Los Gatos will require significant subsidies by the Town/Agency. This is a result of the very high cost of land and housing in the area, and the large subsidies required to "buy down" the ownership units to affordable levels. Senior Housings Family Housing, Special Needs Housing From a community acceptance standpoint, senior housing is often easier to build than family housing or housing for special needs groups. People may be more accepting of housing for older populations than they are of housing for families, which they believe may bring problems to neighborhoods such as overcrowded schools, traffic congestion and reduced property values. However, much of the financing available in recent years has stressed the need for larger units for families, or for special housing such as Single Room Occupancy hotels (SROs) and housing for persons with disabilities. A variety of housing is needed in a community to address the needs of all community residents, including those who are retired or disabled, those who work in local stores and businesses, those who provide personal and business services and public employees such as teachers and public safety empl6yees. Family housing is needed, especially large family housing. Senior housing and special needs housing is a critical component of a housing plan, because many seniors and persons with disabilities are on fixed incomes and have little means to maintain or improve their standard of without government assistance. SRO's and transitional housing are needed to provide an alternative to being homeless. It should be noted that new redevelopment law requires that communities use housing funds for senior vs. family housing in proportion to the relative population of under and over 65 years of age in the community. 7 Large Families vs. Small Families Like senior housing, it is easier to build small family units than large family units. Aside from the problems created by neighborhood opposition to large families and high density housing, large family units cost more to build and the extra rent achieved with the extra bedroom is often not sufficient to cover the cost of constructing the bedroom. As a result, a market -rate developer is unlikely to build a project with many 3 and 4 bedroom units. Policies encouraging the development of more bedrooms per unit are needed. Rehabilitation vs. New Construction Rehabilitation programs improve and preserve existing housing while strengthening neighborhoods and stopping the decline of areas that may otherwise require significant attention and funding from government agencies. They help ensure that families who want or need to stay in their current houses can afford to live there under improved conditions. A disadvantage of rehabilitation programs is that they do not typically increase the supply of affordable housing, unless, for example, the rehabilitation is for a vacant structure. In addition, rehabilitation of an occupied rental structure may trigger the need for relocation, either temporary or permanent, thereby adding to the cost of a project. New construction may have the same neighborhood benefits as rehabilitation, strengthening neighborhoods and reducing neighborhood decline. However, new construction almost always adds to the overall number of affordable housing units in a community. Historically, more funding has been available for new construction than for small scale rehabilitation projects. However, unlike most rehabilitation projects, new construction projects are often opposed by neighbors who fear the development of new, higher -density housing. Projects Built Inside the Redevelopment Project Area vs. Outside the Project Area The Redevelopment Agency's 20% Housing Set -Aside Funds must be used inside the redevelopment project area unless the legislative body makes a finding that the use outside the project area will be of benefit to redevelopment project area. The finding of benefit can usually be made if the housing to be constructed outside the project area is in close proximity to the project area or if there are other identifiable benefits to the project area. Affordable units constructed outside the project area are counted toward the agency's project area housing production requirement, on a two -for -one basis: that is, two affordable units created outside a project area will count the same toward the inclusionary obligation as one unit created inside the project area. This should not pose a problem for the Los Gatos Central Redevelopment Project Area as it currently has an excess of affordable units based on number of housing units thus -far produced in the project area. Building affordable housing within the project area has the benefit of potentially increasing tax increment revenues to the agency and possibly eliminating a blighted property with a new, 8 modern development. (It should be noted that if an affordable rental project is non-profit owned or has a non-profit general partner, then it may qualify for property tax exceptions). In addition, such affordable housing would be within walking distance of the downtown. However, it should be noted that it may not be possible to find a suitable site within the project area. It is not uncommon for redevelopment agencies to make findings and construct affordable housing outside the project area. Other Town funds such as BMP in -lieu funds and CDBG are not restricted to the redevelopment project area. Size of Protects: Small vs. Larger It is generally more economical to seek approval and construct a project of ten or more units than several 2 to 5 unit projects. Many non-profit housing developers have minimum project sizes, and are not interested in doing very small projects. Again, their objective is to create as much affordable housing as possible, and small projects do not provide enough benefit for the effort required. Therefore, projects of at least 10 units or greater should be considered. Methods to Build or Rehabilitate Affordable Housing Few redevelopment agencies actually contract to construct or rehabilitate affordable housing directly. Most agencies don't have the time or expertise to handle this complex function. Instead, it is common for redevelopment agencies to contract either with for -profit or non-profit housing developers. Non-profit housing developers' mission is to produce affordable housing, and they use a variety of partnerships and funding sources to accomplish this goal. This would be the recommended approach for producing affordable housing using Town funds. Affordability Restrictions When affordable housing is constructed or rehabilitated with 20 percent housing funds, affordability covenants are required in order to ensure that the units remain affordable. Redevelopment law requires that redevelopment rental housing for very low, low and moderate - income residents be kept available to persons of those income categories for up a minimum of 55 years. Affordable ownership housing requires 45 year resale restrictions/affordability covenants. The Town has consistently strived to exceed the minimum time period requirements with the goal to create affordable housing that will be available in perpetuity. 9 Potential Sites for Affordable Housing Projects Introduction Several factors make finding acceptable affordable housing sites in Los Gatos very challenging. First, there is very little undeveloped land left in the Town. Few parcels of adequate size with the proper zoning remain in Town. Second, the cost of land is very high. Therefore, finding parcels that present several challenges or are under public ownership are often the only means available. Finally, finding potential sites that will not impact established residential neighborhoods is key. The following is a list of several properties that may have some potential for affordable housing. All will have a variety of issues to deal with, however they represent what appears to be the best possibility for affordable housing developments. It is likely that there are other sites available as well, and staff will continue to explore other possibilities. Parcel maps and/or aerial photographs of these properties are available in Appendix 2. 20 Dittos Lane Location: Adjacent to Los Gatos Creek/ behind the Penthouse Apartments/Maple Lane off E. Main St. Located within Central Los Gatos Redevelopment Project Area Size: Approximately 1.5 acres. About 2/3's of it on fairly level ground, remainder hillside Existing Use: A vacant 6,000 sq. ft. former boarding house building (historic); 2 small single family homes, one duplex (four livable units) Ownership: Owned by the Gera family. Owned property since late 1980's. Have discussed with Town potential uses for the property, including affordable housing. Zonine: Single Family Residential - Downtown; It is adjacent to Penthouse Apartments which has zoning of Multi -Family Residential 12 to 20. Potential use: Rehabilitation of boarding house building and 4 other units, for possibly 10 affordable units, or; Demolish existing structures and build 20 +- affordable units Benefits of Site: Near the Downtown; isolated from existing single family neighborhoods; nice setting along Los Gatos Creek; property currently is blighted - this would clean it up Issues: Access is limited on Ditto's Lane and Maple Lane - property does not appear to have legal access via these streets; Access to College Ave. would be difficult and possibly controversial; hillsides pose some development challenges; Town has ownership of land next to 10 the creek, however, this is generally a steep band and would require significant engineering and retaining walls to make access work. The Redevelopment Agency could also condemn an easement via Maple Lane, however, this would be complicated and potentially costly. Riviera Terrace Apartment Complex Location: 135 Riviera Terrace (Towne Terrace and University Ave.) Site is not located in the Redevelopment Project Area, although very close to it Size: Approximately 5.25 acres Existing Use: 123 market rate apartment units constructed 30 to 40 years ago (three stories) Ownership: Sobrato Development Corporation General Plan: High Density Residential - 12 to 20 units per acre Potential Use: Sobrato would like to add additional units and make some units affordable Benefits of Site: It is isolated in an area of other high density apartment complexes. Adjacent to Los Gatos Creek Trail and Sobrato would build a bridge to connect to it. Complex is currently laid out in a manner that would accommodate new apartments. Old apartment buildings are dated and could be rehabilitated and updated as part of this process. Issues: Traffic would have to be studied as well as impact on adjacent apartment complexes. Number of apartment units to be added would have to be studied carefully (Los Gatos Ordinance would allow a density bonus of up to 100% for affordable units, thereby doubling the number of units). Los Gatos Mobile Home Park Location: 484 Woodland Ave. @ Highway 9 - adjacent to Los Gatos Creek (Located in Redevelopment Project Area) Size: Approximately 12.5 acres - much of this is vegetation area on the east side of Los Gatos Creek Existing Use: Mobile Home Park with 72 units/spaces 11 Ownership: Malcom and Margaret McNelly - Barry Swenson developer Zoning: Residential Mobile Home Potential Use: Barry Swenson has submitted an application to remove the mobile home park and construct 60 townhouse units on individual lots. 19 units are shown as BMP. Other residential uses would also be possible. Another option would be to maintain the mobile home park and formally price restrict the units in order to provide for affordable housing. A number of issues would need to be investigated. Benefits of Site: Isolated from the residential neighborhood on Woodland by elevation differences and landscaping. Access to the site could be designed to prevent traffic into residential neighborhood. Adjacent to Los Gatos Creek, close to Downtown and located in the Redevelopment Project Area. New development may generate substantial new tax increment revenue for the Agency. Issues: If mobile home park is closed and the property redeveloped with other housing, 72 units of affordable housing ( although not formally price restricted) would be eliminated. Issues with tenant relocation and Redevelopment Agency requirements to replace affordable housing if the Redevelopment Agency was involved. Potential concerns with Woodland Ave. neighborhood. Capri Ave. - Vacant Property Adiacent to the Los Gatos Courthouse Location: This property is located on Capri Ave. at Knowles Rd. adjacent to the Los Gatos • Courthouse (Located outside the Redevelopment Project Area) Size/Existing Use: The property is approximately 5.1 acres in size. About %1 of this is used for the Courthouse, the remainder is vacant. Ownership: The propertjis owned by the County of Santa Clara. Recently, the County has become more active in promoting affordable housing, including proposals by Supervisor Beall to use surplus County land for affordable housing. (It will have to be determined if this County property is considered surplus, or is being reserved for future expansion of the Courthouse). General Plan: Shown as "Public" on the General Plan and "Office" on the Zoning Map. Potential Use: 2'/2 acres could support a substantial sized affordable housing project. Benefits of Site: Isolated from single family home neighborhoods. Would be bordered by Courthouse to the south, shopping center to the east, office to the north, and multi -family 12 residential to the west. In area of good bus transportation and located near the intersection of two somewhat major streets. Also, located very close to Los Gatos Community Hospital and shopping. In addition, it would be close to the future Vasona light rail corridor. Issues: County disposition of property; located very near the border of the City of Campbell - Los Gatos already has substantial affordable housing in the immediate area. General Plan and Zone change may be required. Oka Road Location: Oka Road off of Lark Ave. (outside of Redevelopment Project Area). Size: Several different vacant parcels ranging in size from about 1 acre to 6 acres Existing Use: The undeveloped parcels are currently used as orchards. Ownership: Most are owned by the Yuki family General Plan: Portions shown as multiple family residential and portions single family residential Potential Use: Parcels of this size would be well suited for an affordable housing project. Benefits of Site: Oka Lane is an isolated area that may be well suited for affordable housing. An existing higher density apartment complex is located on Oka Lane just off Lark Ave. The Jewish Community Center is located opposite this apartment complex. The Bonnie View Mobile Horne Park and Los Gatos Swim and Racket Club are Iocated close to Highway 85. A project in this location would seem to have minimal impact on any existing Los Gatos neighborhoods. In addition, it is located close to the future Vasona Light Rail Corridor. Issues: The Yuki family has generally not been interested in selling or leasing their land. General Plan and zone changes may be required on some of the parcels. Noise from Highway 17 could be an issue. at 14561 Winchester Blvd. Location: Winchester Blvd. just north of Courtside Tennis Club and south of Highway 85(outside redevelopment project area) Size: Approximately 2.3 acres 13 Existing Use: Two older single family homes Ownership: Carol Wisely General Plan: Low density residential Potential Use: A parcel of this size could support an affordable housing project of moderate size Benefits of Site: Somewhat isolated with CALTRANS property to the north, railroad spur and Courtside to the south, Winchester Blvd. to the east and townhouses to the west with no access between townhouses and site. Adjacent to Winchester Blvd. and good public transportation. Close to future Vasona Light Rail. Issues: Ingress and egress to the site from Winchester Blvd. only. Poor pedestrian access to the site. No food market in the immediate vicinity. Property may require General Plan and Zone change to higher density. Residential neighborhood to the west may express concerns. Town Owned Property - Lark at Winchester Location: Southwest comer of Lark Ave. and Winchester Blvd. (Outside of Redevelopment Project Area) Size: Approximately %z acre + Existing Use: vacant - rear portion of parcel is fire station and fire truck repair facility Ownership: Town of Los Gatos General Plan: Public • Potential Use: Smaller affordable housing project Benefits of Site: It is already owned by the Town and is vacant. It is isolated from other uses that might be concerned about this use. Issues: Located on a noisy corner of a busy intersection with a fire station behind it. Pedestrian access in the area is poor and no food market close -by. Ingress and egress may be difficult being located on a corner at this intersection. Property may require General Plan and Zone change. 14 15940 BIossom Hill Rd. Location: Blossom Hill Rd. at Old Blossom Hill Rd. Size: Two parcels totaling approximately 1 Y2 acres Existing Use: Older single family home Ownership: James Bratton and Hidemi Kimura General Plan: Low Density Residential 0-5 Potential Use: Parcels of this size could accommodate a moderately sized affordable housing project Benefits of Site: Somewhat isolated with a church to the west, Blossom Hill Rd. to the north and single family residential to the east and south. Site is almost vacant, with just one older single family residence on the property. Issues: Property would require a General Plan and Zoning change to higher density to accommodate an affordable housing project. Single family residences in the vicinity may object to use. No neighborhood services in the immediate area. Noise issues from Blossom Hill Rd. Subdivision application is pending. Villa Vasona Apartments Location: 626 W. Parr Ave. Size: 2.69 acres Existing Use: 107 units of affordable (Section 8) rental housing for elderly and handicapped persons Ownership: Villa Vasona Ltd General Plan: Medium Density Residential, 5-12 Potential Use: Continue with affordable housing on site far elderly and handicapped Benefits of Site: Existing project in good condition in a good location. Has fit in well with surrounding uses for years. Issues: Section 8 assistance is scheduled to expire in November 2004. Without intervention by 15 Town and County Housing Authority units may become market rate thereby displacing elderly and handicapped low-income residents. It does not appear that agreement between the Town and developer in the early 1980's provides for continuation of affordability restrictions nor does the Town's rent control ordinance. However, in discussion with the Housing Authority and property owner it appears that there is the ability to extend the Section 8 assistance for the project for a ten year period. Staff will be discussing this with both parties in greater detail in the future. Next Steps This report provides information concerning affordable housing in Los Gatos in order that the Council can better determine the direction the Town should take in utilizing its Redevelopment Agency's Affordable Housing Set -Aside Funds. The report includes the requirements for producing affordable housing in accordance with Redevelopment Law, State Fair Share Housing Requirements, and the Los Gatos Below Market Price program. The report discusses the substantial Redevelopment 20 percent Affordable Housing Set -Aside funds that must be used as well as BMP in -lieu funds. The report goes on to discuss a number of different types of affordable housing programs including ownership, rental, special needs, and rehabilitation. Finally, the report outlines a number of potential sites of one acre or more (except Town parcel at Lark and Winchester which is about Y2 acre) on which affordable housing projects may be possible without adversely impacting established residential neighborhoods. In addition, it includes a discussion of protecting the affordability restrictions on the Villa Vasona project. All of the potential sites have a number of issues and challenges that must be overcome. However, staff believes they represent the best possibilities for developing affordable housing in Los Gatos. 16 Appendix #1 HUD Income Guidelines for Affordable Housing in Santa Clara County 17 HUD Income Limits Santa Clara County Jurisdictions Effective January 30, 2002 OF MEDIAN 30% 50% 80% 100% Extremely Low Very Low Persons in Household Income Income Low Income* Median Income 1 $ 20,150 $ 33,600 $ 51,950 $ 67,200 2 $ 23,050 $ 38,400 $ 59,400 $ 76,800 3 $ 25,900 $ 43,200 $ 66,800 $ 86,400 4 $ 28,800 $ 48,000 $ 74,250 $ 96,000 5 $ 31,100 $ 51,850 $ 80,200 $ 103,700 6 $ 33,400 $ 55,700 $ 86,100 $ 111,400 7 $ 35,700 $ 59,500 $ 92,050 $ 119,000 8 $ 38,000 $ 63,350 $ 98,000 $ 126,700 *The "Low Income" limit is less than the actual 80 percent of median because a national maximum or cap is applied. The cap is the nationalmedian family income, and no Low Income limit may exceed HUD's estimate of the national median income except by HUD waiver. 2002incomelimits, rev. 5/21/2002 Appendix #2 Maps & Aerial Photographs of Potential Sites for Affordable Housing . 18 OM O 0 M 20 DITTOS LANE e 1:3477.8( .4 N b • >r I NI r ! r --" ' 1 1 II / 1 ! `fir- r G r /I + 1 `�l i r i a. 1 . t _^ I ( r ! ( Cril r r ' t -' _ r 4 I r + 1 jJ ! ri� _ r r , Zvi r �l + p, r' p 1 i +�, r T , M / --.1.__. Ir R' I rr I I ry! r mil CI 3f IQI 1 • r " 1 -:"--.---1-.. A , rr . rl ? �i q Al' i. -�- R r • r 1 .... I /r 7y �r 'r Q--lt---��1 r ,1 r ,a kill tzi Fi -,.....1„,,z.L - h., �y r r0. 1 1 1 Iol II 0I t Id 03I Ai 3 1 1r 1 1 IN1 a ' 1 1 Pia .u9 4 �1 r"i6•: .14 0 a° as cip riSID View z O v cc J U z z 0 N z 7 O U m. y• r100' 0 m h � CC CC a 4L.. eL V& THERESA W h) r,}f 1111111 O N osr z • c � J COUNTY OF SANTA CLARA if, YNOSdA— R.O. & /98/6/ ti En DIV I SION W O H U Att County targets affordable housing ® Supervisors may create new position, dedicate rnore cash and surplus land to address problem. By JONATHAN JEISEL Staff Writer The waiting list, for 'the _Jchrane Village apart- ments - one of several com- plexes in Morgan Hill with affordable units - is always full at 250 people: Some names have remained on that list for three years. "It's a big problem down here," said Bill Newkirk, an analyst who works on hous- ing issues for the city. "If you were to call any of the projects, any would tell you they have no vacancies and standing waiting lists." Faced with similar situa- tions all over Silicon Valley,. supervisors recently declared a "state of afford- able housing emergency" in Santa Clara County. While that statement is largely symbolic measure meant to emphasize the severity and importance of the issue, supervisors have also decided to look harder at expanding the county's leadership role by dedicat- ing.more money, land and manpower for low-cost housing. «What we're saying is that housing is a top issue," said District 4 County Turn to HOUSING, A10 ready for affordable projects; County officials would lo bby other local governments to • • continued from page Al do the same. The new proposals could Supervisor Jim Beall Jr., who mean an increased partner - brought the proposals before ship with the Housing Trust his • fellow supervisors. . of Santa Clara County, a. "We're going to try to get all nonprofit agency that corn the (government) entities biases public dollars with together to -get an action donations from the private plan going." sector to support affordable - That plan could include rental developments, first the creation of a . special time home buyer assistance.: county office to coordinate and homeless shelters. government housing efforts, Task force members are•1. as •much as S70 million in now refining the proposals, additional county spending and will send them to a corn - and the dedication of surplus mittee chaired by District 1. government land for afford- Supervisor Don Gage for dis- able projects. The ideas were cussion later this winter. developed by a 150-member • That committee Will make a task force created in January recommendation to superv..i- 2001. sors, who make final polio Beall said the new county decisions. • position would help match "I made the motion (to up the housing efforts of sev- advance the recommends- eral local governments and tions), so obviously I like .1 avoid unnecessary overlap. It • them," Gage said. • would have at least one paid Morgan Hill . Mayor • staff member.. • • .. Dennis Kennedy Gage-s "The county has no one supervisorial opponent in body coordinating affordable housing issues through the region,"Beall said. "It would make it easier for govern- ment entities to work togeth- er to create affordable hous- ing. • Another task force propos- al would see the county ded- icate millions of dollars to drive affordable housing.. That money would be taken from a $200 million pot the county is due to •receive from San Jose redevelopmentproj-. reasons. Of 190 possible. ects over the next 60 years. points, 3'0 are awarded for., .: The task force wants 30 per. housing needs and .types- cent of that money to go The • 15 points ' given for toward housing - an average housing needs encourage of$l million a year. . • affordable housing. Beall said the county State law requires the. could also consider transfer- dty's Redevelopment Agency ring its surplus property to a to set aside 20 percent of its newly 'created land bank," revenue to benefit low and where it would be held until very low income housing. Housing the March 5 election - alsg• suppprts the plans. Kennedyy, said he has spoken at task; force meetings. "It's a good effort, and w&: need to move forward quick.: ly," he said. 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SAN O VILLA VASONA =i=KI I AV PIMMMEBITil Appendix #3 Detailed Funding Sources 19 rif Chapter 6 The Art of Layering By Christine Gouig, CGMS Incorporated Did You Really Need 10 Resources to Produce Those Five Affordable Units? This chapter describes the primary financial resources that are currently available for both rental and homeownership housing. It lists general eligible and ineligible activities, identifies the target groups required to be served, and dis- cusses the availability of the resources. The production of affordable housing today, whether homeownership or rental, requires the use of many. resources. Twenty years ago, when the U.S. Department of Housing and Urban Development (HUD) provided not only project financing, but ongoing rental subsidies. Agencies were able to deal with just one funding entity. Simply put, it was one -stop shopping. Today, however, in order to produce housing that provides long-term affordability (particularly affordability to very low-income households), local (gencies are required to combine multiple sources, .create multiple loan documents, and monitor multiple affordability restrictions. It is not uncommon to see HOME Investment Partnerships Program (HOME), Community Development Block Grant (CDBG), Low -Income Housing Tax Credits, redevelopment set -aside, and a conventional first mortgage all financing a 50-unit rental project. In putting together an affordable project, an agency must make two initial decisions: (1) Define the target group it wants to serve; and (2) Identify the amount of subsidy the agency has available. The agency is then in the position to begin initial discussions with a developer in the form of financing needed by the developer (e.g., predevelopment, land acquisition, construction, perma- nent) and the total resources that will be required, includ- ing those to be brought by the developer. In determining the availability of resources other than redevelopment set -aside, an agency must ask itself who holds the purse strings for each of the sources? Is it your city's community development department, or do you have to go to the county or state? What are the funding cycles? Are projects funded on an ongoing basis, or do the funding agencies have specified cydes for accepting ap- plications? Arrange meetings with all the local funding sources and get on the mailing lists of the state depart- ments that provide funding so you will know how to access the resources of others. An agency must be opportunistic, yet accommodating, to layer resources successfully for a project. Redevelop- ment set -aside funds are one of the most flexible resources available and the one under the agency's control. An agency should schedule its approval and commitment process to accommodate the timing of the outside funding sources. Due to the flexible nature of an agency's funding, redevelopment set -aside funds will probably be the first money committed and the last to be repaid. Redevelopment funds loaned to a project often carry a 30-year deferred payment term, or are just paid out of surplus cashflow—of which there may not be much for several years. Because an agency's funding is often committed early, developers usually return as the project becomes more defined to ask for further concessions or restructuring. California Affordable Housing Handbook 79 This is usually a result of their obtaining commitments from other funding sources which, taken together, are insufficient to build the project. Sometimes a developer will claim that its lender or investor required it to ask the local agency for additional funds. Prior to making any changes in its commitment, the agency should request documentation of the need for the additional funds, in- cluding lender and investor written commitments. Resources in the Development Process It is important to ascertain a developer's experience with the various available resources. Does he know what TCAC is, or does he think it is a kind of breath mint? Does she think Fannie Mae is a chocolate company in Washing- ton DC, or that HUD is an old Paul Newman movie? The project will proceed along a much faster timeline if the agency works with a developer knowledgeable about the type of resources, and the affordability and underwriting requirements of those resources. Housing development usually proceeds in stages and there are certain resources that are used in each of those stages. During the predevelopment stage, it is not necessarily clear that a project will result. At this point, Project Description Number of Units-75 60% of Medlan-35 50% of Median-25 40% of Median-15 Type of Housing —New Construction Rental Developer —For Profit Cost Per Unit—$119,000 Construction Financing Conventional (Bank) Construction Loan HOME CDBG Redevelo6ment Set -Aside Total $8,925,00 Permanent Financing CHFA $2,500,00 Low•Income Housing Tax Credits Rollover HOME Rollover CDBG Rollover Redevelopment Set -Aside Deferred Developer Fee Total $4,462,500 $1,500, 000 $ 350,000 $2,612,500 50.00% 16.81% 3.92% 29.27% 0 100.00% 0 28.01%. $1,900,000 $1,500,000 $350,000 21.29% 16.81% 3.92% $2,612,500 29,27% $62,500 0.7096 $ 8,925,000 100.00% the developer is still exploring the feasibility of the proje and will use funds fos preliminary toxic studies, si options, market studies, title reports, etc. A for -prof developer generally covers the cost of these items itself; nonprofit may request funding assistance from the agent Typical sources for predevelopment costs for nonprofit are locally controlled funds such as CDBG, redeveoopmer. housing set -aside, and perhaps Local Initiatives Suppor Corporation (LISC). Banks generally do not mak loans for predevelopment costs, although an experiencec developer may use a line of credit with a bank. Agencie, should consider predevelopment funds as "at -risk" funds if a project is never built, there is no source from whicl- to repay the agency. If a project appears feasible, it moves into the design and local approval stage. At this stage, the developer is firming up its need for funds from the agency and will negotiate the amounts and terms of financing with the agency. At the same time, the project's application for financing is being reviewed by a construction and/or permanent financing lender. Predevelopment funds are needed at this point for engineering, working drawings, application filing fees, appraisals, Phase I toadc reports, etc. Local funds are invested in affordable projects on favorable, belowmarket terms —if a project could support full market rate terms it wouldn't need Local funding assistance. It is not uncommon for CDBG, HOME and redevelopment housing set -aside loans to carry interest rates of one percent or three percent, and to have all loan payments made from surplus cash flow. If there is no surplus cash flow, loan repayment is deferred to the later years. (See Table VI —IL) Single Family Homeownership Programs Mortgage Credit Certificates Description —Section 25 of the IRS code permits states and political subdivisions to elect to issue Mortgage Credit Certificates (MCCs) in lieu of mortgage revenue bonds. An MCC holder is entitled to take a credit against his/her federal income tax liability each year. The effect of the MCC is to directly :educe the monthly housing costs and increase the ability of the homebuyer to qualify for a mortgage loan. The program allows buyers to reduce their income tax obligation through adjustments to their W-4 withholding. The amount of MCC credit claimed by the homebuyer depends upon the amount of mortgage interest paid (or accrued) during the year and the applicable federal rate as established by the local MCC issuer. The regulations allow an issuer to establish the credit rate anywhere below 50 percent. If the rate is above 20 percent, then it must be capped at a $2,000 annual amount. Issuers in California generally choose a rate of 20 percent or less. The MCC holder is also eligible for the applicable 80 California Redeve!aTpmcnt association mortgage interest deduction the remaining 80 percent not used as a credit. Eligible and Ineligible Activities —An MCC is not a mortgage in itself. It is available to the first-time buyer only in a community that has a qualified MCC program through a participating lender. A MCC can be used with conventional fixed rate loans, FHA or VA loans, or privately insured loans. MCCs may not be used with bond -backed loans such as California Housing Finance Agency or California Veterans Affairs (CALVETS) loans, or with refinancing loans. Income limits and house price limits apply. Income limits are those published by HUD, while the IRS publishes the "average area purchase price" from which the house price limits are calculated. The IRS also publishes a list of "targeted areas' in which certain exceptions are allowed. • Maturity —The MCC is available to the certificate holder for the life of the first mortgage and as long as the property is owner -occupied. • Loan Costs —Applicants pay for the cost of process- ing the MCC through a participating lender. • Lender Servicer—Under the tax code regulations, all lenders who are trained must be allowed to par- ticipate in the program. However, MCC issuers may charge participating lenders a program fee. • Recapture —Upon sale of a residence within nine years of purchase, a portion of the gain realized on the sale will be recaptured as part of the mortgagor's individual tax liability. The amount of recapture is based on a formula which includes the amount of the loan, the number of years the loan was outstanding, the gain on the sale of the property, and the adjusted • qualifying income of the taxpayer. Targeted Groups —First-time buyer. The program is limited to first-time buyers defined as households that did not have an interest in a principal residence during the past three years. IRS -designated target areas are exempt from the first-time buyer requirement. (See Table VI —III.) Availability —MCC -allocations are available four times r per year through application to the State of California Debt Limit Allocation Committee (CDLAC) in Sacramento. r CDLAC encourages applications on a county basis with r the allocation limited to a per -capita amount. Cities are s encouraged to apply through their county, although that s is not required. e Once CDLAC grants an allocation, it gives the issuer it 120 days in which to issue the first MCC. Within this time n frame, the issuer must publish a public notice in a major 3. newspaper, put together the program handbook and e forms, train and select participating lenders, and market the program. The IF" zx code requires that the notice appear in the newspaper 90 days before the first MCC is issued. Mortgage Revenue Bonds Description —Cities and counties (and in specific circumstances, redevelopment agencies) can issue Mortgage Revenue Bonds (MRBs) to assist first-time homebuyers with the purchase of new or existing housing. The bonds are repaid with revenue from the mortgages, not local government funds. Typically, the bonds are tax-exempt and provide favorable interest rates of one to two points below the current market rate for fixed-rate mortgages. MRB programs are often combined with FHA insurance, VA guarantees, or private mortgage insurance. In addition, bonds may be further supported by Ginnie Mae or Fannie Mae securities which result in higher bond ratings, better interest rates, and a more stable program. ^!L l.4 Y? Project Description Number of Units-101 90% of Medlan-45 80% of Median-30 60% of Medlan-26 Type of Housing —Single Family Detached Ownership Developer —Housing Authority Cost Per Unit-5120,000 Construction Financing Conventional (Bank) Construction Loan—$7,272,000 Foundation Grant—$1,000,000 HOME—$2,000,000 CDBG—$500,000 Redevelopment Set-Aside—$1,348,000 Total—$12,120,000 Permanent Financing First Mortgages Single Family Mortgage Revenue Bonds-30 (7.2% fixed for 30 years) Mortgage Credit Certificates (MCC)-71 (Market rate loans, with MCC resulting in effective rate of 7.5%. Market rates at the time were 8.5%.) Down Payment Assistance Affordable Housing Program (AHP)-25 Rollover of CDBG, HOME, Redevelopment Set-Aside-60 Closing Cost Grants Grants from Developer's Fee-50 n California Affordable Housing Handbook 81 Eligible and Ineligible Activities —Mortgage revenue bonds provide fixed -interest rates below the conventional market rates. Due to the costs of bond issuance, a minimum issue size of about $20 million is needed to achieve a cost-effective program. In order to simplify the costs and the process of issuing MRBs, a re- development agency should secure an allocation under a local city or county program. Like the MCC program, income limits and house price limits apply. Income limits are those published by HUD, while the IRS publishes the "average area purchase price" from which the house price limits are calculated. The IRS also publishes a list of targeted areas in which certain ex- ceptions are allowed. O Residence RequIrement—The residence purchased with a mortgage revenue bond loan must be the prin- cipal residence of the buyer. • New Mortgage Requirement —Bond proceeds can not be used to refinance an existing mortgage. • Permanent Financing -Bond proceeds can only be used to provide permanent mortgages; construction financing is not permitted. • Loan Assumptions —Assumptions are permitted only if the assuming mortgagor complies with the in- come limits, purchase price limits, principal residence requirement, and first-time buyer provision as of the time of assumption. O Recapture —The recapture provisions are the same as those for the MCC program. Targeted Groups —First-time buyer. The program is limited to first-time buyers, defined as households who did not have an interest in a principal residence for the past three years. IRS -designated target areas are exempt from the first-time buyer requirement. (See Table VI —III.) 82 abfe Income Guidelines: 1 to 2 Persons 3 and More Persons Purchase Price Limits: New Units Existing Units Availability —Mortgage revenue bond allocations available four times per year through application to State of California Debt Limit Allocation Commit (CDLAC) in Sacramento. A local issuer can only sell t exempt MRBs after obtaining an allocation from CDL1 Like the MCCs, CDLAC limits the allocation on a capita basis by county. FHA Rehabilitation Loan Programs Description: Section 203(k)—HUD's Section 203( program provides mortgage insurance to approved mo, gage lenders for loans made to homeowners to purchs or refinance a property. The cost of making necessary r pairs is included in the loan. It is available to persons wl will occupy the home as their principal residence. The downpayment requirement for an owner-occupaj is approximately five percent of the acquisition and repa costs of the property Eligible and Ineligible Activities-0ne- to four family properties, condos, and planned unit development (PUDs) maybe financed. Mortgage proceeds must be use' in part for rehabilitation of the property. A minimum o $5,000 must be spent on repairs. Any repair that may of fect the health and safety of the occupants is acceptable it the first $5,000. Minor or cosmetic repairs by themselves can not be included in the first $5,000, but may be addec after the $5,000 threshold is reached. Targeted Groups —Borrowers of all income levels are eligible. Availability —This program is available to purchasers through qualified FHA -approved lenders. Interested agen- cies should contact the HUD office in San Francisco or Los Angeles for a list of such lenders. A potential hornebuyer locates a home and executes a sales contract. The contract should state that the buyer is seeking a 203 (k) loan and that the contract is contingent on Ioan approval, including approval of proposed repairs. CC Jncome and Purchase Price tint I • s Inside Target Area 120% of median income 140% of median Income None None Outside Target Area 100% of median income 115% of median Income 90% of average area purchase price 90% of average area purchase price California Redevelopment Association Description: FHA Title I Home Imp, :ment Loans — Title I loans are FHA -insured loans (typically second mort- gages and unsecured consumer loans) for credit -worthy homeowners to finance home improvements up to $25,000. There are no income limits. The funds must be used for rehabilitation or remodeling projects. Funds may also be used for a variety of special -needs remodeling, such as retrofitting houses for better accessibility by seniors and lead -based paint abatement. Unlike most other rehabili- tation or renovation financing, Title I loans are credit - based, not equity -based, so they are an excellent tool for neighborhood revitalization. One- to four -family owner - occupied or investor properties are eligible. . California Housing Finance Agency Description —The California Housing Finance Agency (CHFA) provides below -market interest rate financing for affordable owner -occupied housing. CHFA raises its funds for mortgage financing in the capital mar- kets through the sale of tax-exempt revenue bonds. For homeownership, the proceeds obtained from the sale of these bonds are loaned to qualified individuals and families. Eligible and Ineligible Activities—CHFAs single fam- ily program funds are used to make mortgages to indi- vidual homebuyers who obtain them from qualified CHFA lenders. Funds can not be used to construct the homes. In addition to the first mortgages available through participating lenders for single family housing, CHFA offers the following: ♦ Affordable Housing Partnership Program —This allows for a downpayment as low as three percent us- ing downpayment assistance, closing costs assistance, or deferred payment subordinate loans provided by a local government agency; ♦ Self Help Housing —This allows families and indi- viduals with limited downpayment resources to con- tribute their labor as "sweat equity" towards the downpayment. Priority is given to projects in rural and targeted areas, as well as local government -assisted projects. The permanent mortgage financing is provided by participating CHFA lenders; and • The Builder Commitment Program —This offers builders the opportunity to purchase forward com- mitments for loans at a fixed interest rate. The com- mitments are for six, nine, or 12 months. Targeted Groups —Since CHFA's source of financing is tax-exempt mortgage revenue bonds, projects must, at least comply with the federal affordability restrictions for such bonds as described in the section on single family bonds. CHFA may have additional restrictions for some of its more targeted programs. Availability —Interest gencies should contact CHFA in Sacramento. CHFA programs are generally available on an open window basis. For the Builder Commitment Program, developers are given the opportunity to bid on such commitments on a semiannual basis. Rural Housing Services Description: Section 502 Rural Housing Loans — The Rural Housing Service (RHS), formerly the Farmers Home Administration, provides financing assistance under its Section 502 Rural Housing Loan program for the development of new, or acquisition of, existing housing for very low-, low- and moderate -income prospective homebuyers. Assistance is made available either through direct loans, soft second mortgages or guaranteed/insured loans. Subsidized funds are available only on direct loans for low- and very low-income applicants. Nonsubsidized funds are available for very low- and low-income appli- cants who are otherwise eligible for assistance but, based on the amount of the loan requested, no interest credit is needed. Loan guarantees are available to assist moderate - income families to purchase a home. Loans are amortized for periods up to 38 years for ap- plicants whose income does not exceed 60 percent of the area median income (33 years for others), if necessary to show repayment ability. The interest rates vary, but RHS can provide an annual interest credit to reduce the monthly payment to the level as if the interest rate were one percent. Eligible and Ineligible Activities —Direct loans may be used for construction, repair (including weatherization), or purchase of housing. They may also be used to provide adequate sewage disposal facilities, water facilities, and site acquisition. Targeted Groups —All homes must be modest in cost and located in a rural area that does not exceed 10,000 in population or in a place with a serious lack of mortgage credit for low- and moderate -income families whose population exceeds 10,000, but is less than 25,000. Applicants must be unable to secure the necessary credit from other sources at prevailing terms and conditions and have adequate available income to make all housing payments. For direct loans, applicants must be eligible for the interest credit and earn less than 80 percent of the HUD area median income. Availability —For direct loans, interested persons should contact the regional RHS office (guaranteed loans are processed by local participating lenders). An application may be filed at any time. Funding is subject to availability. California Affordable Housing Handbook 83 Multifamily Rental Programs Low -Income Housing Tax Credits Descrlptlon—The Low -Into: a Housing Tax Credit (LIHTC) Program was created by Congress in 1986, and made permanent in 1993 (retroactive to 1992). The pro- gram allows owners of qualified low-income rental hous- ing developments to receive a "tax credit" against their federal income tax liability for a period of 10 years. The amount of the credit that can be taken is based on the eligible costs of the development. Most project owners sell or "syndicate" the credits to an investor who has income tax liability. They then use the sale proceeds to help finance the project. Typically, there are three types of buyers of federal tax credits: • Public funds made up of individuals who purchase shares; ♦ Corporations; and ♦ Corporate funds established by local agencies, national nonprofits or for -profits and some states which pool corporate resources into funds. In addition to the tax credit, the buyers benefit from depreciation and interest deductions. Once the tax credits are purchased by one of the types of buyers listed above, a limited partnership is created with the buyer and a nonprofit, or for -profit housing developer. The developer is the managing general part- ner and the investor (buyer) is the limited partner (in the case of public funds the individual buyers become liinited partners). In order to maximize the sale proceeds, the typical transaction with nonprofits or housing authori- ties Has a distribution of one percent ownership to the gen- eral partner and 99 percent to the limited partner(s). This distribution of interest is applied to ownership, cash flow, and sales proceeds. When deciding whether or not to purchase the tax credits, a limited partner will perform an internal rate of return analysis which calculates the future value of the limited partner's return from the tax benefits and distri- butions. This analysis will determine the method of the limited partner's payments. Generally, an investor pays for the credits in one of two ways: Either with a lump - sum payment or, more typically, with payments ("pay - ins") spread over time. In the case of payments over time, the developer obtains a "bridge" loan —the repayment of which is based on the expected tax credit pay -ins. The gross pay -in from the limited partner includes the costs of the transaction which are subtracted out to achieve the net pay -in for the project. The actual equity which will be contributed to the project is the net pay -in. The current net pay -in rate to projects receiving the nine percent tax credit is between .65 and ,75 cents p( credit dollar. Eligible and ineligible Activities —Three types of are available to low-income housing developers: O Present Value Credit ("nine percent") for new struction and substantial rehabilitation (expend in excess of $3,000 per unit); O Present Value Credit ("four percent") for federall' sidized new construction or substantial rehabilit developments; and ♦ Present Value Credit ("four percent") fo acquisition cost of buildings which are to be sul tially rehabilitated. The credit can only be used by the following enti • Individuals can use the credit up to a "dedu equivalent" of $25,000 annually. For example, i individual in the 28 percent tax bracket, the an of credit which may be used to offset current ta: liability would be $7,000; • (Subchapter) S-Corporations may use the c: to the extent that shareholders can use the c on their personal returns. Personal se corporations may use the credits only again: attributable to passive income; • (Subchapter) C-Corporations may typically u: full amount of credit available for a given year as both passive income and active income; • A project developer may use the credits directly or she has an eligible tax liability; and ♦ A limited partnership, with the developer as the aging general partner and the investor(s) as t : ited partner(s) may use the credits in propor:_ their ownership interest. Targeted Groups —At the federal level, developers a choice of two affordability restrictions: At least 2( cent of the units must be occupied by and affordal individuals or families with incomes of 50 percent c of the area median income; or at least 40 percent c units must be occupied by and affordable to indiv: or families with incomes of 60 percent or less of thf median income. The income and rent restrictions remain in place for at least 15 years. Each state ma devise additional affordability restrictions. Califorr example, requires affordability be maintained for 5: for projects receiving the nine percent credit. Avallabllity—The California Tax Credit Allo cation mittee (TCAC) in Sacramento is responsible for ai ing the tax credits in the state according to the Qus 84 California Redevelopment Asscc Allocation Plan (QAP) it develops. x credits are allocated to each state on the basis of 4-25 per capita. Thus, California receives an annual allocation of federal tax credits of approximately $35 million. In addition, California has established a state tax credit program to be used in conjunction with the federal credits. Competition for tax credits is extremely keen; there are many more applications than can be funded. As a result, TCAC has developed a scoring system to award the credits. It has also created.l2 geographic areas (11 counties and the remainder of the State) and allotted certain amounts of credit to each area. Applications for projects in each geographic area will use credits allocated to that area. Based on the current QAP, projects may compete in two categories: 0 Affordability Competition —In this competition, projects with deeper income targeting and lower rents will receive preference; and . 0 Credit Utilization Competition—TCAC has established a maximum amount for eligible basis. Eligible basis is used to determine the amount of credit a project is eligible to receive under the program. This competition rewards those projects requesting less credits than would be allowed by the maximum. If there is a tie among projects in the Affordability Competition, a lottery is used to select the projects which will receive the credits. If there is a tie in the Credit Utilization Competition, an "affordability" tie breaker is used which calculates a project's proposed average income target compared to TCAC's threshold income target. If there is still a tie, a lottery is used. California Housing r ' ence Agency Description —The Calitt -ilia Housing Finance Agency (CHFA) provides below market interest rate financing for the development or acquisition/rehabilitation of affordable multifamily rental housing. CHFA raises its funds for mortgage financing in the capital markets through the sale of tax-exempt revenue bonds. Rental housing developments are financed by providing capital directly to eligible developers (nonprofit, for -profit and public agencies). Typical Underwriting Standards —The maximum loan amount is the lesser of 90 percent of the approved total development cost or 80 percent of the economic value. The interest rate and loan fee vary according to the mar- ket at the time which CHFA sells bonds. The interest rate commitment occurs at the time of final CHFA commit- ment. CHFA requires a mortgage insurance premium which is included in the interest rate. A nonprofit borrower is required to have five percent equity in the project and a for -profit must have 10 per- cent, of which five percent must be cash. Debt service coverage for a nonprofit is 1.05 and 1.10 for a for -profit. Loans are fixed rate and amortize over 30-40 years. Pre- payment is generally not permitted. All loans are secured by a first mortgage; if the prop- erty is subject to a ground lease, that lease must be subordinated to the first mortgage. Subordinate mort- gages, payable out of surplus cash flow, are permitted with CHFA's prior approval. CHFA requires that a marketing account, rent -up account, operating expense reserve, replacement reserve, and construction defects agreement be established and arlrninistered by them. .f tir'^-h- � r" f � r r ' �•v.,;lhsre'��1.. � vim}"� 7�r'kS. i � ,�! �at"t'�','' ti��,�+'a� �r� �' ding Sour fgr,ar ffol�da`b�e rtrnentCol3wlex First Mortgage (10% Interest) Soft Loans (Agency) Tax Credit Equity California Affordable Housing Handbook 85 Eligible and Ineligible Activities—CHFA provides permanent financing only. Thus, another source of construction financing would have to be obtained. Targeted Groups —At least 20 percent of the units must be occupied by households with incomes of 50 percent or less of the area median income, adjusted for household size. For loans in excess of $15 million, at least 40 percent of the units must be affordable, with 25 percent of the units at 50 percent of median and the remainder at 80 percent of median. A regulatory agreement which contains the affordability restrictions will be recorded against the property. Availability —Interested agencies should contact CHFA in Sacramento. Applications to CHFA may be made on an open window basis. Tax -Exempt Multifamily Housing Bonds Description —Tax-exempt multifamily housing bonds provide financing at below market interest rates for the development of rental housing, a portion of which is af- fordable to very low- or low-income households. Bonds are sold for a specific project for which the developer has site control; they can not be sold and "banked" until a project comes along. Bonds do not substitute for deep subsidies, nor do they work for group homes, SROs and homeless shelters since projects must have net operating income and evidence of the ability to repay debt. Bonds do not provide credit that a project can not otherwise obtain. The tax code regulates the issuance of bonds on the federal level. Individual states also have laws which authorize cities, counties, housing authorities, and • redevelopment agencies to issue bonds. A bond issue meet both the federal and state requirements. There are three basic types of financings: (1) Pr activity bonds, where the project is owned by a par ship or other profit motivated sponsor; (2) 501(c bonds, where the project is owned solely by a nonp corporation which has received a 501(c)(3) determine letter from the IRS; and (3) Essential function bo where the project is owned by a public body such housing authority or redevelopment agency. Eligible and Ineligible Activities —Bond proceeds be used for both construction and permanent, or permanent, financing. They may also be usec purchase and rehabilitate an existing rental property addition, no more than two percent of the bond procc may be used to pay the costs of issuance, includ underwriters, attorneys fees, rating agency fees, iss fees, and credit enhancement fees. Targeted Groups —Essential function bonds do carry any affordability restrictions. In California, s: law applies the same affordability requireme to 501(c)(3) bonds as it does to private activity bar: These are: • At least 20 percent of the units must be rented households earning no more than 50 percent of area median income, adjusted for household size, 40 percent rented to households at 60 percent of area median income. Income eligibility must be certified annually and if a tenant is no longer eligit the next available unit must be rented to an incorr eligible household; .. _. _ _ ..... ........... . :. .. ,..-.. -• •.. -....-...:• cc,: u r _ ...,... -.;:;,- ; 0.3..::-a -',.. ' - Type of Loans Term (No. of Years) Interest Rate Levels Loan Fees • Loan to Value Debt Coverage Typical % Comments (Transaction Cost) Construction Loan Cbnventlonal Loan* Taxable Bond Tax Exempt Bond AHP Program** Soft Second Loans 1-2 Years 25-30 Years 30-40 Years 25-40 Years 10-30 Years 1-30 Years 9-11% 8-10% 6.75% 5.75% 3.00% 1-3 points over prime 1-3 points over long term Treasuries or ilth District COF Rate depends on bond Issuance Rate depends on bond Issuance Competitively awarded 1% up to Applicable Federal Rate 1 to 3 points 1 to 2 points 1 to 1.5 points 1 to 2 points 0 points Varies 75-- 75% 80% 75-90% N/A N/A N/A 1.1 to 1.2:1 1.0 to 1.1:1 1.0 to 1.15:1 N/A N/A Usually offered as a 30 Vent mortgage w th`a'fized interestrate {payment} 1-o tl;e first 10 to 15 •yearswnth_subaeque� t adjustmrents TheAI� Pto� 'am ohl;offered throw h Savt . - $r ( y g ngs Banks and S&Ls) offers vanausways to et�ecizvely Iower fiaancsng coats Y Note T ead`ers use the word "points" to refer to a mulhplr of one percentage pdutt (n a orie point 1 pe cent). As oaates, CGMS'Incorporafed < 86 California Rec,,:velopm rit Aisociatic • Rents are calculated at 30 percent 50 percent (or 60 percent if applicable) of the area median income, assuming certain household size in a unit and not subtracting out a utility allowance; and • Affordability requirements are contained in a regulatory agreement which is recorded against the property and remains in place for 15 years or as long as bonds are outstanding, whichever is longer. The requirements are lifted in the event of foreclosure and the redemption of the bonds. Some Other Rules —For private activity bonds: 4 Dwelling units must have complete bathing and cooking facilities; and • If bonds are used for purchase of an existing build- ing, 15 percent of the bond amount not used for land acquisition or costs of issuance must be used for rehabilitation of the units. For private activity and 501(c)(3) bonds: • If bonds are used for building purchase, all affordable units must be in place at the time of bond closing; there is no "phase -in" period. For 501(c)(3) bonds: • New 501(c) (3) organizations whose mission is afford- able housing must meet the safe harbor guidelines established by the IRS. The most rigorous of these is that at least 75 percent of the units must be rented to households earning no more than 80 percent of area median income and 20 percent are rented to 50 percent of median income households. Availability —In California, the California Debt Limit Allocation Committee (CDLAC) in Sacramento is charged with allocating bond authority. CDLAC has developed a procedures manual and application process to award bond volume. If the bonds are to be credit enhanced, evidence of a credit enhancement commitment must be submitted with, or soon after, the application. In addition, a refund- able deposit equal to one-half percent of the bond authority requested muti be posted. This deposit may be forfeited if an allocation is granted, and bonds are never sold. To discourage projects that are really not ready to proceed, CDLAC requires that once an allocation is granted bonds be sold and the bond issue closed within 90 days. Therefore, it is important that the issuer and developer have their primary transaction terms agreed upon and the credit enhancer has underwritten and sized the bond loan before a CDLAC allocation is requested. The tax code imposes an annual private activity bond volume ceiling for each state {(501(c)(3) bonds are not subject to the volume ceiling]. In California, this volume ceiling is divided among single family, multifamily, student loan, industrial elopment, and exempt facili- ties bonds. In 1998, of the total state volume ceiling of approximately $1.6 billion, $890 million was set aside for multifamily private activity bonds. As more developers have turned to the use of tax- exempt multifamily bonds combined with the four per- cent low-income housing tax credit, the demand for private activity bond authority has become increasing- ly competitive. Federal National Mortgage Association Description —The Federal National Mortgage Associa- tion (Fannie Mae) has created a number of programs to support the development of multifamily housing. Pro- grams of most interest to redevelopment agencies are described below. Delegated Underwriting and Servicing (DUS) and Prior Approval—DUS and Prior Approval are Fannie Mac's key product lines for the purchase of individual multifamily mortgages on rental properties. Under each product line, Fannie Mae purchases first -lien mortgages for the acquisition or refinance of existing or recently completed multifamily properties, or properties needing moderate rehabilitation. Under Prior Approval, Fannie Mae underwrites and approves the transaction prior to purchase and assumes all of the risk of loss. Under DUS, specially approved lenders, operating within guidelines established by Fannie Mae, are able to underwrite, close, and sell mortgages to Fannie Mae without prior review. In turn, DUS lenders share in any losses with Fannie Mae should there be a default. Tax -Exempt Multifamily Bonds —Fannie Mae also supports the efforts of state and local bond issuers through the provision of credit enhancement for tax-exempt bonds. Working through a Fannie Mae -approved lender, credit enhancement can be provided for both fixed-rate and variable -rate bonds. Bond proceeds may be used to refund older, higher interest rate bonds, as well as to fi- nance new construction or substantial rehabilitation. Fannie Mae's AAA rating results in the most favorable in- terest rate on the bonds at the time of sale. Typical Underwriting Standards —Fannie Mae permits a loan value of 90 percent (excluding the value of tax-exempt bonds, if any). Required debt service coverage is in the 1.20-1.30 range. The typical term and amortization is 30 years, with 25 years used for acquisition/rehabilitation projects. Eligible and Ineligible Activities —Fannie Mae's programs provide permanent financing only so another source of construction financing must be used. Perma- nent financing will take out the construction loan after 90 percent occupancy is sustained for 90 days. California Affordable Housing Handbook 87 Targeted Groups —Tax-exempt bonds backed by Fannie Mae credit enhancement carry the same requirements as ail tax-exempt private activity bonds. • Availability —Prospective borrowers must work through a Fannie Mae approved lender to access the Fannie Mae programs described above. Interested agencies should contact the Fannie Mae office in Los Angeles for a•list of such lenders. - Federal Housing Administration Description: Section 221(d)(3) & (d)(4) Programs — Under Section 221(d)(3) and (d)(4) programs, FHA pro- vides mortgage insurance to insure FHA -approved lend- ers against loss on rental projects. The paperwork for the insurance is handled by a HUD field office designated to process FHA insurance. The loan made by the lender or "mortgagee" may either be taxable or use tax-exempt bonds issued by a local or state issuer. The FHA mortgage is fully amortized over 40 years. FHA charges an annual mortgage insurance premium equal to one-half percent of the mortgage amount. In addition, there is an application processing fee, and an inspection fee. Annual financial statements must be submitted to HUD each year. Typical Underwriting Standards —There are three types of limits on the maximum loan amount: A percentage of the replacement cost, the amount obtained using the debt coverage ratio and the statutorylimit which varies accord- ing to the size of the unit, type of structure, and location of the project. Using the replacement cost limit, the maximum amount of the loan is equal to 90 percent of the replacement cost for all users of the 221(d)(4) program. For -profit borrowers using the 221(d)(3) program are limited to mortgages equal to 90 percent of the estimated replacement cost; nonprofits may obtain loans up to 100 percent of the replacement costs. The debt coverage is 1.11:1.0. Eligible and ineligible Activitles—Insured mortgages may be lased to finance new construction or rehabilita- tion of rental housing containing five or more units. Targeted Groups —There are no income limits for the tenants. HUD does have restrictions which control re- porting, reserve deposits, management, etc. which will be contained in a regulatory agreement that is recorded against the property. If tax-exempt bonds are used, the regulatory agreement required by the tax code is subordi- nated to the FHA regulatory agreement. Availability —This program is available to borrowers through qualified FHA -approved lenders. Interested agen- cies should contact the San Francisco or Los Angeles of- fices of HUD for a list of such lenders. There are several steps in the FHA approval process. HUD consid project's financial feasibility, market need, zoning, tectural merits, sponsor capacity, etc. in granting proval. HUD will issue its commitment to the FHA: The cornmitment•is usually valid for 60 days whit be extended under specific circumstances. Total pr ing time usually takes from nine to 12 months. Description: Section 223(f) Program—Und Section 223(f) Program, HUD provides mortgage ante to insure FHA -approved lenders against loss on projects, just as in the 221(d) programs described e. The difference is that 223(f) is•used for refinance, ac, tion or moderate rehabilitation of existing apart-rte.: The mortgage term is not less than 10 years more than the Iesser of 35 years or 75 percent o remaining economic life of the improvements. Thy full amortization. FHA charges a mortgage insurance premium equ one percent of the mortgage amount for the first Thereafter, the premium is equal to one-half percei the mortgage amount. Typical Underwriting Standards --There are three t of limits on the maximum loan amount: (1) A perc age of the value; (2) The amount obtained using the coverage ratio; and (3) The statutory limit. The statue limit varies according to the size of the unit, type of sti ture, and location of the project. Using the value limitation, the maximum loan can exceed 85 percent of the value determined by HUD. debt coverage is 1.17:1.0. Eligible and Ineligible Activities—Purcha moderate rehabilitation, and refinancing of projects five or more units are permitted. Projects requiri substantial rehabilitation are not eligible. In. additic (1) At least three years must have elapsed from the later the date of completion of the project or beginning of c cupancy to the date of application; and (2) The remaini economic life must be long enough to permit at least 10-year mortgage. The estimated cost of required repairs may not excel 15 percent of the estimated value after repairs, or $6,5( per unit, adjusted by a high cost factor, whichever is greate It may not involve the replacement of more than or major system. Targeted Groups —Like the 221(d) programs there at no income limits for the tenants. HUD does ha. restrictions which control reporting, reserve deposit. management, etc. which will be contained in a regulator agreement that is recorded against the property. I tax-exempt bonds are used, the regulatory agreemen required by the tax code is subordinated to the FH= regulatory agreement. 88 California Redevelopment Associatior Availability —This program is avai. .e to borrowers through qualified FHA -approved lenders. Interested agen- cies should contact the San Francisco or Los Angeles of- fices of HUD for a list of such lenders. The formal mort- gage insurance application for either conditional or firm commitment is submitted through an FHA -approved mortgagee. HUD will issue its commitment to the FHA lender. The length of the commitment is established on a case -by -case basis. Total processing time usually takes from six to nine months. Savings Associations Mortgage Company Description —The Savings Associations Mortgage Company (SAMCO) is a mortgage banking organization composed of a consortium of financial institutions. SAMCO makes permanent mortgages for affordable rental housing projects on a participation basis, thus sharing the risk among several lenders. Both nonprofit and for -profit developers can obtain a SAMCO loan. Typical Underwriting Standards —Projects are underwritten with a 1.15 debt coverage ratio on total debt from project inception. Alternatively, an operating reserve may be funded at closing to support debt coverage requirements until the coverage ratio is reached. The loan -to -value ratio is based on the market appraised value with unrestricted rents, with a maximum of 75 percent for construction take-out loans and 80 percent for acquisition financing. Loans fully amortize over 15, 20 or 30 years. There is a prepayment penalty that declines over time if the loan is prepaid prior to 10 years. The interest rate is set at the time of loan funding at the 10-year treasury bond yield plus about two percent. The commitment term is based on the proposed project development schedule. A maximum 18-month forward commitment is available. The interest rate is reset every 10 years during the life of the loan. There is a lifetime adjustment cap upward of four percent and downward of two percent. Eligible and Ineligible Activities—SAMCO provides first position, permanent financing for the acquisition or development of rental projects of five or more units. Construction, refinancing, and rehabilitation loans are not eligible. SAMCO does not provide financing for homeownership projects. Affordability restrictions from other funding sources must be subordinated to the SAMCO first mortgage. Loans are assumable at SAMCO's sole discretion. Targeted Groups —At least 51 percent of the units must be affordable to, and occupied by, low-income households earning less than 80 percent of the area median income. Rents are set at 30 percent of income, adjusted for household size. If such rents are at or above the market rents for t_ srea, the rents charged in the project must be at least 10 percent below the market for the affordable units. Availability —Interested agencies should contact the SAMCO office in San Jose. Applications are accepted on an open window basis. Staff will review the application, which is then presented to the Loan Committee and finally to the Board of Directors. Following approval by the Loan Committee and Board of Directors, loan requests are distributed to all of SAMCO's participating financial institutions for investment. Once institutions have committed to purchase the full loan amount, a loan commitment is issued. This process typically takes two to three months following loan approval. California Community Reinvestment Corp. Description —The California Community Reinvestment Corp. (CCRC) is a nonprofit consortium of over 40 California banks that make mortgages for affordable rental housing projects. Every member participates in each CCRC loan in a share amount approximately equal to the bank's size in relation to the aggregate assets of all partici- pating banks. The size of CCRC's revolving blind loan pool at this time is about $200 million. Both nonprofit and for profit developers can obtain a CCRC loan. Typical Underwriting Standards —The minimum loan amount is $250,000; total outstanding loans per borrower can not exceed $15 million. Projects are underwritten at a cumulative loan -to -value ratio of 80 percent on a restricted basis. Subordinate notes are not included in the loan -to -value ratio if they are structured as residual receipt loans with a provision for forgiveness. Interest rates are based on the rate of U.S. treasury bonds with maturities matched to the number of years for which the CCRC rate will initially be fixed. There are two basic rate structures: "30/10-10" where the loan is recast at the prevailing CCRC rate in years 11 and 21 and the "30/15-15" where the rate is reset in year 16. . Loans fully amortize over 30 years. Either in years 11 and 21, or just in year 16, a borrower may either prepay or accept a rate adjustment. Prepayment carries a penalty. Commitments are made on either an immediate deliv- ery (i.e., loans closing with 45 days of commitment) or forward basis. Forward commitments are available for up to 24 months, with a lock -in provision any time up to the 45-day preclosing period. Eligible and Ineligible Activities—CCRC provides first position permanent financing for the development or acquisition of family or senior rental housing projects of five or more units. SROs and special needs housing can be considered on a limited basis. Construction loans are California Affordable Housing Handbook 89 not available. Refinancing of permanent loans is permit- ted where the new loan will significantly enhance affordability. Affordability restrictions from other funding sources must be subordinated to the CCRC first mortgage. Loans are nonassumable. Targeted Groups —The number of affordable units must meet one of three tests; (1) Fifty-one percent of the units are affordable to households earning 80 percent or less of the median income; (2) Forty percent of the units are affordable to households earning 60 percent or less of the median income; or (3) Twentypercent of the units are affordable to households earning 50 percent or less of the median income. Rents are calculated at 30 percent of the income appropriate to the targeted group and must be suf- ficiendybelow area market rents. Affordability provisions remain in effect for the life of the loan. Availability —Interested agencies should contact the CCRC offices in either San Francisco or Pasadena. Applications are accepted on an open window basis. CCRCs loan committee generally meets once per month to grant loan commitments. CCRC can perform a preliminary feasibility analysis to ensure the project is eligible for CCRC financing. If CCRC resources are limited, it gives priority to projects with greater, deeper, or longer affordability; projects in areas with a shortage of affordable housing or served by CCRC member banks; and to projects where the sponsors use an affirmative marketing plan or have local government financial participation. Rural Rental Housing Loans (Section 515) Description —The Rural Housing Services (RHS), formerly the Farmers Horne Administration, makes direct Ioans for the construction, purchase and substan- tial rehabilitation of rental or cooperative housing. For profit and nonprofit borrowers are eligible to apply. Applicants must submit evidence of: Market demand, the legal capacity to incur the debt and operate the housing, a sound budget, good credit history, and inability -to obtain the necessary funds from other sources on feasible financing terms. Eligible and Ineligible Activities —Loans may be made in communities of up to 10,000 in metropolitan statistical areas (MSA) and some communities of up to 20,000 (in non-MSA areas). Funds may be used for site acquisition and all hard and soft construction costs for the housing, as well as ancillary recreation and service facilities. Funds may not be used for nursing homes, special care or other facility - type homes. Targeted Groups —Tenant occupants must be very low-, low-, or moderate -income households. Avallablllty—Interested agencies should co their regional RHS dace. Project applications are acc on an open window basis and approval is subj, funding availability. Programs for Single and Multifar Rental Housing Redevelopment Set Aside Description —In general, 20 percent of a redevelop agency's annual tax increment must be "set aside" fc purpose of "increasing, improving, and preser the community's supply of low- and moderate-inc housing" (Section 33334.2 of the Redevelopment I The set -aside money is to be placed in a separate I and Moderate -Income Housing Fund, and any int earned and repayments of Housing Fund me (except when used as a match for HOME) must als into the Fund. Loan terms maybe established by the agency in ac dance with a project's needs. Agencies often make lc to projects at below market rates with repayment defer until there is sufficient surplus cash, sometimes uI 30 years. Because of this flexibility, agencies are often to fill the affordability gap for housing projects t otherwise could not be built. Eligible and Ineligible Activities —An array of act. ties are eligible uses of the Housing Fund including: • Site acquisition; • Purchase, rehabilitation, and/or new constructs of housing; • On -site and offsite improvements directly related the newly constructed or rehabilitated housing; • Payment of principal and interest on bonds used finance housing; and • The preservation of rental housing subsidized federal, state, or local government that is subject conversion to market rates. If the Housing Fund is used for site acquisitio: property development must begin within five years the acquisition. Housing Funds may be used for planning an administrative functions that are necessary for th production, improvement, or preservation of low- an moderate -income housing. Housing Fund monies must be used inside a redeye: opment project area unless the legislative body makes finding that using them outside the project area will be o benefit to the redevelopment project. Rental projects assisted with Housing Funds mus remain affordable for the longest feasible time, bu 90 California Redevelopment A: sociatior not less than 15 years. Owner-occul housing must remain affordable for the longest feasible time, but not less than 10 years. New or substantially rehabilitated owner -occupied units may be sold without the affordability restriction if the agency has a program such as equity sharing or resale controls, which provides for the agency to receive a share of the sales proceeds. This share must be placed in the Housing Fund. Affordability restrictions are contained in an agreement recorded against the land. Targeted Groups —The Housing Fund must be spent on housing which is available at affordable housing cost to persons and households whose incomes do not exceed low- and moderate -income levels. • Very low-income households have incomes that do not exceed the qualifying limits for very low-income families for the Section 8 program (generally, 50 percent of area median income); ® Low-income households have incomes that do not exceed 80 percent of area median income; and • "Moderate" is defined as 120 percent of the area median income. HUD adjusts the figures for 50 percent of median and 80 percent of median based on high and low cost areas and, as a result, such figures may not be a "true" 50 per- cent or 80 percent of median. Agencies should always use the published figures rather than simply multiplying the median income by 50 percent or 80 percent. Agencies are required to expend the Housing Fund to assist very low- and low-income households in at least the same proportion to the housing needs of those two groups that are not being met by other government programs. Housing Cost —Redevelopment law defines the housing cost that is affordable to the targeted group for all housing receiving assistance after January 1, 1991. Table VI —VI summarizes affordable housing cost. A. utility allowance (excluc' telephone) must be subtracted from the housing cost it utilities are paid by the house- hold. Note that housing cost may optionally be linked to actual income at the upper end of the low- and moderate - income categories. (See Chapter 3—Affordable Housing Cost Definitions Section). Availabillty—Interested parties should contact their local redevelopment agency office. Community Development Block Grant Description —The Community Development Block Grant (CDBG) Program, administered by the U.S. Department of Housing and Urban Development (HUD), provides annual grants on a formula basis to entitled cities and counties to develop viable urban communities by providing decent housing, a suitable living environment, and by expanding economic opportunities, principally for low- and moderate -income persons. States administer the Program for non -entitled communities. Entitlement communities develop their own programs and funding priorities. However, grantees must give maximum feasible priority to activities which either benefit low- and moderate -income persons, aid in the prevention or elimination of slums and blight, or are designed to meet other community development needs having a particular urgency where other financial resources are not available to meet such needs. Eligible and Ineligible Activltles—Housing-related activities that may be carried out with CDBG funds indude, but are not limited to: Downpayment assistance, payment of predevelopment costs, the acquisition of vacant sites, acquisition of existing housing, or buildings suitable for conversion to housing, relocation and demo- lition, rehabilitation of residential and nonresidential structures, construction of necessary public facilities and improvements, such as streets, water and sewer facilities, and activities relating to energy conservation. The types of housing activities that are generally ineligible include construction of new rental or for sale 35% of 110% but no less than 28% of actual Income Source: A LegQ1 Guide to .California Ridevefbpment 1994 (Second) Edition Law Offices of Goldfarb & Liman California Affordable Housing Handbook 91 housing and other facilities offering 24-hour care and certain income paymdnts such as rental subsidies. Targeted Groups —Households earning up to 80 percent of the area median income, defined as low- or moderate - income, are eligible to participate in CDBG programs. The grantee must certify to HUD that not less than 70 percent of its CDBG funds received over a one-, two- or three- year period (specified by the grantee) will be used for ac- tivities that benefit low -/moderate -income households. Avallabillty—Cities and counties of a certain population may receive funds directly from HUD each year (entitle- ment jurisdictions). Smaller cities within an entitlement county (urban county) usually receive funds from that county. Smaller counties and cities not within an urban county annually compete for funds from the State Depart- ment of Housing and Community Development (HCD) in Sacramento. CDBG funds are appropriated each year by Congress. HUD requires that each jurisdiction (or state) prepare and obtain HUD approval of a Consolidated Plan in order to receive funding. Home Investment Partnerships Program Description —The Home Investment Partnership Program (HOME) has several purposes, including: Expanding the supply of decent and affordable housing for very low- and low-income households; building the capacity of state and local governments and nonprofit organizations to design and implement strategies for providing affordable housing; and creating partnerships among all levels of government and the private sector, including for -profit and nonprofit organizations, to produce and/or manage affordable housing. Jurisdictions are required to set aside a minimum of 15 percent of their HOME funds for housing to be devel- oped, sponsored, or owned by community housing de- velopment organizations (CHDOs). Jurisdictions receiving HOME funds are required to match HOME funds expended with state, local, or private funds at a ratio of one dollar for every four HOME dollars. Eligible and Ineligible Activities —HOME fiends may be used for a wide variety of activities to develop and sup- port affordable housing including: Tenant -based rental assistance, relocation costs of persons displaced by HOME activities, rehabilitation of existing rental or ownership housing, purchase of existing housing, conversion of existing buildings into housing, construction of new rental or for -sale housing, and financing assistance for first time homebuyers. HOME funds may not be used for public housing modernization, project -based rental assistance, tenant subsidies for specifically mandated purposes, matching funds for other federal programs, operating subsidies for rental housing, activities under the Low -Income H Preservation Acts 'of 1987 and 1990, or Annual Cor. tion Contracts. Additionally, the funds can not b to create a reserve account for replacements, a I reserve account for unanticipated increases in ope costs, or operating subsidies. Targeted Groups —All housing which is deve with HOME funds must serve very low -and income households. At least 90 percent of HOME funds used for rental ing must be invested in units that are occupied by h holds whose incomes are no more than 60 percent area median income. The remainder of the house receiving assistance must qualify as low-income far (i.e., earning no more than 80 percent of the area mec HUD publishes the rents to be charged in HOME- as, units. HOME -assisted units must remain affordab varying amounts of time, depending on the arnou HOME funds invested and the type of project. Homeowners assisted with HOME funds must incomes at or below 80 percent of the area median inc The home must be the owner's principal reside Resale or recapture provisions apply to homebuye assure continued affordability. Availability —HUD allocates HOME funds using a mula designed to reflect relative housing need. Cities counties with a "threshold" (or formula allocatior $500,000 or more can receive funds directly from l- each year ("participating jurisdictions"). Smaller c within a county that is aparticipating jurisdiction tha also formed a HOME consortium usually receive from that county. Smaller counties and cities not w: a county consortium annually compete for funds from. State Department of Housing and Community Deve meat (HCD) in Sacramento. Federal Home Loan Bank The Federal Home Loan Bank (FHLB) is the central cr facility for, and provider of, correspondent banking vices to member savings institutions, commercial bar and thrift and loans. The Federal Home Loan Bank 12 banks throughout the country. California Ienders all part of the San Francisco Federal Home Loan Ba The FHLB offers two programs that maybe used in a riety of ways to assist homeownership and rental housi The Affordable Housing Program (AHP) and the Co munity Investment Fund (CIF). In general, all FH funds are available only through a member institution Description: Affordable Housing Program--Thro:: the AHP, the FHLB makes advance: to :.nembers at in: est rates below the bank's cost of funds (subsidiz advances), gives direct cash pave ;nt.s to members "buy down" the effective interest i .ttQs on their own, 92 Califs, rn,. oF ,'c,aprnert Associati provides other sources of funds (dir, subsidies) to finance eligible uses. Subsidized advances are at fixed interest rates with maturities generally from one to 10 years. AHP direct subsidies may be used to subsidize the underlying interest rates for terms up to 30 years, when necessary, or to provide other direct assistance such as downpayment assistance which lowers the monthly housing payments of the qualifying use to affordable levels. Eligible and Ineligible Activities —The AHP funds must be used in one of the following two ways: ® To finance the purchase, construction and/or rehabilitation of owner occupied housing for very low-, low- and moderate -income households; or • To finance the purchase, construction, and/or reha- bilitation of rental housing —of which at least 20 per- cent of the units will be occupied by, and affordable to, very low-income households for the remaining useful life of such housing or the mortgage term. Targeted Groups —See above. Avallablllty—Interested agencies should contact the FHLB in San Francisco, The application is submitted by the member institution on behalf of the municipality, housing authority, redevelopment agency, or nonprofit. Each FHLB accepts applications twice annually. In California, applications are accepted April 15th and October 15th with funding announcements in June and December, respectively. Description: Community Investment Fund (CIF) Advances—FHLB makes funds available to its member institutions at its cost of funds. The member bank may then loan the funds to an eligible project, adding on a ne- gotiable spread between 50 to 250 basis points. The funds carry a 10-year maximum term. For this reason, CIF funds are ideal for construction and short-term financing. Eligible and ineligible Activities —CIF Funds can be used to finance home purchases or the purchase or rehabilitation of housing for occupancy by households whose incomes do not exceed 115 percent of the area median. These funds can also be used to finance com- mercial and economic development activities that benefit low- and moderate -income households or to finance projects that combine any of the above, Targeted Groups —See above. Availability —Interested agencies should contact the FHLB in San Francisco. Unlike AHP, CIF is available on a continuous basis. Lenders may apply to the FHLB on an open window basis. Commitments are for 30 to 180 days. Conventional tends Description —Banks and savings and loan associations make construction and/or permanent loans to developers of affordable rental and for sale housing. These lenders may receive credit under the Community Reinvestment Act (CRA) for making such loans. Typical Underwriting Standards —Lenders employ sound underwriting criteria when reviewing loan appli- cations for affordable housing. The CRA does not require a lender to make a risky loan, make a loan for a project that looks infeasible, or otherwise provide credit for a project that doesn't appear viable. A lender will usually make a construction loan at about 75-80 percent of value. A project will, therefore, usually need additional sources of construction financing. A permanent loan is underwritten using the lesser of loan -to -value or debt service coverage. Usually the debt service coverage controls the amount loaned. Typical debt coverage for a CRA loan to a nonprofit is 1.10 to 1.20. Loans are at a fixed rate of interest and amortize over 30 years. The interest rate is reset, usually in year 10 or 20. Eligible and Ineligible Activities —All development ac- tivities are eligible. Some lenders will make construction loans only, others will not take construction and rent -up risk and will only make permanent loans that take out the construction loan upon project completion and rent -up. Others will make both construction and permanent loans. A construction lender will require a borrower to have its permanent financing commitment in place before it releases any construction loan proceeds. Targeted Groups—CRA lenders usually use the require- - ments of the project's other funding sources for the project (e.g., 20 percent at 50 percent of median or 40 percent at 60 percent of median). Avallablllty—Interested agencies should contact any bank or savings and loan to determine the availability of CRA loans. Local initiatives Support Corporation Description —The Local Initiatives Support Corp- oration (LISC) is a national nonprofit organization that provides financial and technical assistance for the devel- opment of affordable housing under its Core Grant and Loan Programs. Recoverable Grants —Funds under the Recoverable Grant program are used to support project expenses associated with the development of affordable single family or multifamily rental housing, commercial or industrial space which produces new jobs, child care facilities, economic development ventures, or mixed - use developments. California Affordable Housing Handbook 93 22 The maximum recoverable grant is $50,000. The in- terest rate is zero percent with no payments. The entire grant is due at the end of the maximum two-year term. No security is required. Loans —Loan funds may be used for site acquisition, predevelopnient costs, construction expenses, or short-term gap financing for residential and commer- cial development. The maximum loan is $400,000, although the average loan is $200,000. The interest rate is 6 percent. The maxi- mum term is five years, although the typical term is 18 to 24 months. Loans are secured against the property or other suitable collateral. LISC disburses construction loan funds directly. Eligible and ineligible Activities —Applicants must be nonprofit community development organizations able =V Funding Sources Predevelopment Funds Nonprofit Corporations Foundations Nonprofit Lenders Private Lending Institutions Banks Savings & Loan Institutions r ■ Pension Funds Economically Targeted Investments whose board of directors includes members frc community served by the organization. Targeted Groups—LISC targets low- and ver' income households. Availabillty—Interested agencies should co the LISC offices in San Francisco, Los Angel' San Diego. Low -Income Housing Fund The Low -Income Housing Fund (LIHF) created in 1984 with the mission to target affordable housing needs of the poorest and 1 vulnerable populations. LIHF operates within the private financial community and the r profit community, and serves as a link between t two sectors. urnmar"ofFtundin So 1,1 g ttrces and �lses Low [ncoriie Housing Development: Permanent Loan Sort Loans 11 II III) III 11111111111 Federal Programs Community Development Block Grants HOME Funds Section 8/202 Rental Assistance Mortgage Credit Certificates Federal Insured Mortgages Farmers Home Administration Low -Income Housing Tax Credits State Programs Low -Income Housing Tax Credits HCD CHFA Local Funds Redevelopment Agency e m ouree. SufelAssoaates,.CGMSIncorporate Property Purchase Construction Loan Bridge ' Loan Equity Source Rent Subsidy e 94 California Redevelopment Association LIHF creates innovative ways to ra_ mancing to pro- duce affordable housing and operates several programs designed to assist developers: • Direct lender of its own funds; 4 Mortgage guarantees and interest subsidies; O Financial intermediary which arranges interim and permanent financing, mostly from conventional lend- ers, through allocations, participations, and pools; • Technical services to special needs housing providers; and ® General technical assistance to low-income hous- ing providers. Other Funding Sources Finally, there are additional funding sources not included in this chapter due to their very limited availability. These include some of the Rural Housing Services programs tar- geted specifically to farmworkers, the HUD Section 202 and 811 programs for the elderly and disabled, respectively, and the Housing Opportunities for People With AIDS (HOPWA) program, _ .) not discussed are the various emergency shelter/homeless programs. About the Author Christine Gouig is a Senior Associate at the San Francisco office of CGMS Incorporated, a financial advisory firm that specializes in advising state and local governments in the issuance of bonds for both single family and multifamily housing. Prior to joining CGMS, Gouig was PIanning Di- rector and Housing and Community Development Director for San Mateo County, and Executive Director of the Sonoma County housing authority and redevelop- ment agency, She has extensive experience in project development and financial feasibility analysis, and in identifying and obtain- ing project financing including conventional loans, tax cred- its, tax-exempt bonds, CDBG, HOME and redevelopment set -aside. Gouig has an undergraduate degree from the University of California at Davis and a Master of City and Regional Planning from the University of California at Berkeley. California Affordable Housing Handbook 95 l 1 r) 0 0 Town of Los Gatos TOWN COUNCIL RANDY ATTAWAY, MAYOR SANDY DECKER, VICE MAYOR STEVE GLICKMAN STEVE BLANTON JOE PIRZYNSKI PLANNING COMMISSION LEE QUINTANA, CHAIR PHIL MICCICHE PAUL Du BOIS JEANNE DREXEL MORRIS TREVITHICK MIKE BURKE GENERAL PLAN HOUSING SUB -COMMITTEE Sandy Decker Joe Plrzynskl Mark Weiner " Jo Zlentek DEBRA J. FIGONE, TOWN MANAGER BUD N. LORTZ, DIRECTOR OF COMMUNITY DEVELOPMENT SUZANNE DAVIS, ASSOCIATE PLANNER JENNIFER CASTILLO, ASSISTANT PLANNER DEBORAH UNGO-MCCORMICK, CONTRACT PLANNER MARTY WOODWORTH, REDEVELOPMENT MANAGER REGINA FALKNER, DIRECTOR OF COMMUNITY SERVICES TOWN OF Los GATOS HOUSING ELEMENT 2002-2006 'Lk!=":.z,,:,'4r_K�'az: rn��^.V'h.::,1'-."..�;,�r-'c��.;tl'?�:.�;, �..,r.,:-;r-,;�:z;k �i�".ti��=ty�,ttt �r:'=�.•rn�c•�ri'.;�:'., TABLE OF CONTENTS Executive Summary 1 1. Introduction 3 2. Housing Needs Assessment 5 Population Information 5 Population Data 5 Future Population Growth 6 Population by Ethnicity 7 Population by Age 7 Population and Employment Projections 8 Household Information 8 Current and Projected Households 8 Household Size 9 Households by Income Level 9 Households Overpaying For Housing 12 Household Tenure 13 Households With Special Needs 14 Housing Stock Data 21 Housing Units by Type 21 Vacancy Rates • 22 Age of Housing 22 Housing Condition 23 Cost of Housing and Affordability 24 3. Projected Housing Needs 29 Nev Construction Need: 1999-2006 29 Estimate of Need (1999-2006) 29 Household Need by Income Level 29 Adjusted New Construction Need: 2002-2006 30 Housing Need by Income Level, Adjusted 2002-2006 Conservation of Affordable Units 31 Description and Identification of Potential "At -Risk" Projects33 33 Cost Analysis of Preserving "At Risk" Units 37 e EXECUTIVE SUMMARY 1. Los GATOS' POPULATION IS EXPECTED TO INCREASE BY 9 % DURING THE 2000-2020 TIME FRAME (PAGE 6). ABAG (Association of Bay Area Governments) estimates that the population of the Town and its Sphere of Influence will increase by approximately 2,500-3,000 persons in the next 20 years. 2. IN 2000, THE TOWN HAD A 1.5 JOBS/HOUSING RATIO (PAGE 8). The 1.5 ratio indicates that the Town is producing an appropriate number of jobs for the residents of the community. The Town will endeavor to continue this ratio as it approves new residential or job -producing developments. 3. HOUSING COSTS ARE EXPENSIVE IN LOS GATOS (PAGES 24-28). Los Gatos is one of the most expensive housing markets in the Bay Area. In December 2001, the median price for a single-family, detached home in Los Gatos was $948,000. Average rent for a multi -family unit was $1883 per month. 4. THERE WERE A TOTAL OF 72 AFFORDABLE UNITS APPROVED/BUILT BETWEEN 1999- 2002 (PAGE 31). In 1999-2000, the Los Gatos Creek Village Apartments were built and occupied. This 12-unit development for very low-income households has affordability restrictions that will remain in place until 2049. The Town has also approved 1 unit to be constructed by Habitat for Humanity for a very low-income household. Further, the Town approved 59 BMP (Below Market Price) units between 2000-2002. These units will double the number of BMP units in the Town's inventory. 5. IN ORDER TO MEET ITS REGIONAL HOUSING NEEDS FOR 2002-2006, THE TOWN WILL NEED TO PROVIDE ADEQUATE SITES FOR LOWER AND MODERATE INCOME HOUSING (PAGE 32) . It is estimated that the Town will need to ensure adequate land at appropriate zoning for 132 additional housing units between 2002-2006. 6. THE 2002-2006 HOUSING PROGRAM STRATEGY INCLUDES 24 PROGRAMS AND 5 GOALS TO ADDRESS Los GATOS' HOUSING NEEDS (PAGE 69) The 2002-2006 Housing Program Strategy includes specific goals, program actions and quantified objectives, where appropriate, to meet housing needs. One of the more significant program actions is to ensure that the affordability restrictions at Villa Vasona are monitored prior to their November 2004 expiration date. 1 This page intentionally left blank. 2 9. INTRODUCTION The Housing -Element is one of seven elements required to be included in the Town's General Plan. There are specific guidelines developed by the State of California for subjects that must be included in a Housing Element. These guidelines are identified in Article 10.6 of the State of California Government Code. In very simple terms, Article 10.6 specifies that Housing Elements must evaluate the current housing market in a community and then identify programs that will meet housing needs. The following information is required to be included in a Housing Element: • Evaluation of existing housing needs; • Estimates of projected housing needs; • Review of previous Housing Element goals and programs; • Inventory of adequate sites for housing and evaluation of infrastructure condition and requirements; • Identification of constraints on housing, including governmental as well as non -governmental constraints; • Housing program strategy to address identified needs; and • Quantifiable objectives for attainment of new construction, rehabilitation and conservation housing needs. The Town's previous Housing Element was completed in 1997 and was certified by the State as being in compliance with State Housing Element law. The 2002- 2006 Housing Element represents an update of the 1997 Housing Element. The 2002-2006 Housing Element contains the most current information in regard to Los Gatos' housing market as of Winter 2001. Unfortunately, only a very limited amount of 2000 U.S. Census data was available at the time this Element was prepared. Therefore, 1990 U.S. Census data is sometimes cited but as much as possible, is updated with more recent source information. SEPTEMBER 2002 3 This page intentionally left blank. 4 2. HOUSING NEEDS ASSESSMENT POPULATION INFORMATION POPULATION DATA The Town of Los Gatos was incorporated in 1887. The population of Los Gatos has changed considerably since the Town's incorporation. in 1890, the U.S. Census indicated that the population of the Town was 1,652 persons. From 1890-1950, the population varied between a total 2,000-4,000 persons. However, similar to many other California communities, Los Gatos experienced a tremendous growth spurt during the post World War 11 era. From 1950-1960, the population almost doubled. But the most significant increase was during 1960- 1970 when the population increased from 9,026 persons to 22,613 persons. In the last three decades, the population has remained fairly stable. In 1980, there were 26,906 persons and the 2000 U.S. Census indicated that the population had increased only slightly to a total of 28,592 persons. ILLUSTRATION #I : TowN OF Los GATos - POPULATION BY YEAR 1950-2000 35,000 30,000 z 25,000. z 20,000 120 , 15,000 CL 10,000 5,000 0 SEPTEMBER 2002 1 I 1 1 1 1950 1960 1970 1980 1990 2000 SOURCE: U.S. CENSUS: 1950- 2000 5 FUTURE POPULATION GROWTH Los Gatos is located in Santa Clara County, which has the most population of any county in the San Francisco Bay region. Santa Clara County is expected to continue to be the most populous county in the future. According to estimates prepared by ABAG (Association of Bay Area Governments), Santa Clara County is expected to increase from 1,755,300 persons in 2000 to 2,016,700 persons in 2020. This is a 14,8% increase in the 20-year period. ABAG has projected that the population of Los Gatos and its sphere of influence (Lexington Hills) will increase by approximately 9% during the 2000-2020 time frame. This would represent an additional 2,500-3,000 persons during that time period. ILLUSTRATION #2: COUNTY OF SANTA CLARA ESTIMATED POPULATION INCREASE, 2000-2020 Gilroy Santa Clara Morgan Hill Monte Sereno Cupertino Mountain View 1 Milpitas Sunnyvale Saratoga San Jose Campbell Los Alto; LOS GATOS Los Altos Hills °l Palo Alto 0% 6 • 5% r r 10% 15% 20% 25% 30% Source: Projections 2000 Association of Bay Area Governments, December 1999 p.66 35% CHAPTER 2: HOL ,G NEEDS ASSESSMENT POPULATION BY ETHNICITY Los Gatos' population is primarily white and nc Hispanic. The only significant racial group is Hispanic/Latino, which represented 5.2% of the town's population in the 2000 U.S. Census. The next significant racial group was Black or African American, which represented less than 1 % of the total population. POPULATION BY AGE The population distribution of Los Gatos in 2000 indicated that over 76% of the community was 21 years of age and older. In fact, the age groups over 21 years of age have increased proportionally in the last several decades while the younger population cohorts of 20 years or less have decreased. This "aging" of the population is also evident by the change in median age in the Town. In 1970, the median age was 30.3 years; in 2000, the median age was 41.2 years. ILLUSTRATION #3: TOWN OF Los GATOS- POPULATION BY AGE 1970 —2000 Under 18 Years 1970 " 2000 CHANGE 8,097 (34%) 973 ( 21-64 Years 11,993 17,600 +5,607 (51%) (61.5%) (+10.5%) 65+ Years 2,672 4,384 +1,712 ( (11%) (15.3%) (+4.3%) TOTAL 23,735 28,592 b .. F s _; (100%) , (100%) F ls' w: Source: U.S. Census, 1970 and 2000 SEPTEMBER 2002 7 POPULATION AND EMPLOYMENT PROJECTIONS In 2000, ABAG estimated that there were 20,870 jobs in Los Gatos. Using ABAG's estimated number of households for the same time period, the jobs/housing ratio in Los Gatos was approximately 1.5 jobs per household. This is an appropriate jobs/housing ratio and indicates that the Town is producing an appropriate number of jobs for the residents of the community. In looking toward the future, ABAG estimates that there will be an increase of 2,080 jobs in Los Gatos by 2020. This represents a 10% increase over the 2000 base of 20,870 jobs. Approximately 57% of these jobs are forecast to be in the service sector and the remainder scattered throughout the retail, manufacturing and other job sectors. Service jobs are traditionally low -paying jobs and households employed in this sector typically have lower than average wages. This definitely has an impact on the range of housing opportunities available to these jobholders. Further, while the total jobs are expected to increase by 10% between 2000- 2020, the number of households is only expected to increase by 6% in Los Gatos for that same time period. If these figures do prove to be correct, the jobs/housing ratio could be affected with the Town producing more jobs than housing units. This increased pressure for housing, coupled with the wage rates expected for many of the new jobs, could have an additional effect on housing supply and costs. The Town will need to monitor its job production during the next two decades and strive to maintain a healthy jobs/housing balance. HOUSEHOLD INFORMATION CURRENT AND PROJECTED HOUSEHOLDS For purposes of evaluating housing supply and demand, it is helpful to translate information from population figures into household data. The U.S. Bureau of the Census defines a household as all persons who occupy a housing unit, which may include single persons living alone, families related through marriage or blood, and unrelated individuals living together. Persons living in retirement or convalescent homes, dormitories, or other group living situations are not considered households. 8 CHAPTER 2: HOUS, . NEEDS ASSESSMENT In 2000, there were 11,988 households in Los Gatos (U.S. Census estimates). Of those households, 61% were in family households and the remaining 39% were in non -family households. Of those non -family households, 76% were individuals living alone. HOUSEHOLD SIZE Household size is an interesting indicator of changes in population or use of housing. An increase in household size can indicate a greater number of large families or a trend toward overcrowded housing units. A decrease in household size, on the other hand, may reflect a greater number of elderly or single person households or a decrease in family size, Los Gatos' average household size has not changed significantly during the last decade. In 1990, the average household size was 2.36 persons per household; in 2000, the average household size had decreased very slightly to 2.33 persons per household. As would be expected, the average household size of owner - occupied units in Los Gatos is 2.54 persons while the average household size for renter -occupied units is 1.92 persons. (2000 U.S. Census estimates) Because the Town's household size has not changed in any significant manner and is not expected to in the future, change in household size does not appear to be an indicator of any significant housing trend in the Town. HOUSEHOLDS BY INCOME LEVEL In 2000, the mean income in Los Gatos was estimated to be $126,600 per household. Household incomes are expected to increase, with the mean household income in Los Gatos predicted to be $138,200 in 2005 and $147,600 in 2010.2 Of the 15 incorporated communities in Santa Clara County, Los Gatos had the 5th highest estimated household income. The chart on the following page (Illustration #4) compares the mean household incomes for the Santa Clara communities. 1 Projections 2000, ABAG December 1999, p.79 2 Ibid. SEPTEMBER 2002 9 ILLUSTRATION #4: COUNTY OF SANTA CLARA MEAN HOUSEHOLD INCOME, 2000 Rank Community Los Altos Hills Mean Estimated Household Income in 2000 $250,500 2 Monte Sereno $220,900 3 Saratoga $184,500 4 Los Altos $159,300 6 Cupertino $110,200 7 Palo Alto $107,100 8 Morgan Hill $90,700 9 Milpitas $85,200 0 Sunnyvale $82,300 Mountain View $78,100 2 San Jose $76,600 3 Campbell $74,200 4 Santa Clara $72,600 5 Gilroy $67,500 Source: Projections 2000 Association of Bay Area Governments, December 1999 p.225 When reviewing household income information, it is helpful to evaluate the proportion of households by income level. Typically, households are defined as very low income, low income, and moderate income. All remaining households then are considered above -moderate or upper income. Typically, programs with federal funding or requirements are available only to the very low and low-income 10 CHAPTER 2: Hot 'G NEEDS ASSESSMENT household levels. Housing programs utilizing State Redevelopment tax increment funds are applicable to the very low and low-income categories as well as moderate income. Listed on the following chart (Illustration #5) are the maximum household incomes by household size that are used by federal, state and local programs to determine eligibility for housing assistance in Los Gatos, The categories are determined by the average household income as a percentage of median income for the area. For example, the very low-income household category has a maximum income qualification of $33,600 for a one - person household. ILLUSTRATION #5: MAXIMUM HOUSEHOLD INCOME LEVELS, JANUARY 2002 INCOME CATEGORY 1 Person 2 Persons 3 Persons 4 Persons Very Low $33, 600 $38, 400 $43, 200 $48, 000 Low $51,950 $59,400 $66,800 $74,250 Moderate $80,650 $92,150 $103,700 $115,200 Source: U.S. Department of Housing and Urban Development, Income Limits: County of Santa Clara, 2002 Unfortunately, at the time that this Housing Element document was prepared, the 2000 U.S. Census data was not yet available regarding specific household income levels for the Town. Therefore, 1990 Census data is the most recent data and is used to estimate the percentage and number of households by income,level in the Town. Using 1990 U.S. Census data, approximately 15.4% of Los Gatos' households were considered to be very low income and another 6.5°A, were identified as low income. Moderate -income households represented 22% of the Town's total households. The table on the following page illustrates those percentage proportions applied to the total households in Los Gatos in 2000. It is important to note that the 1990 data uses the federal definition of moderate income, which includes households at 81-95% of median income. This is different from the State definition, which includes households at 81-120% of median income. SEPTEMBER 2002 11 ILLUSTRATION #6: HOUSEHOLDS BY INCOME LEVEL (ESTIMATED FOR 2000) 56.1% Above Moderate Income 15.4% Yery Low Income 6.5% Low Income 22% Moderate Income Very Low Low Income Moderate Income Above Moderate Town Total 1,846 (15.4%) 779 (6.5%) - 2,638 _ (22%) __ 6,725 (56.1%) __ 11,988 (100%) Sources Household Income Distributions: 1990 U.S. Census Number of Households: 2000 U.S. Census The illustration above indicates that an estimated 21.9% of Los Gatos' households are very low or low-income. These households would typically have the most difficulty in securing affordable housing and may be "overpaying" for their housing. HOUSEHOLDS OVERPAYING FOR HOUSING Using state and federal definitions, a household is considered to be "overpaying" for housing when they spend more than 30% of their annual income on housing costs. Lower income households typically "overpay" for housing more than moderate and above moderate -income households. In fact, as the household 12 CHAPTER 2: Hot 4G NEEDS ASSESSMENT income levels decrease, the percentage of households "overpaying" for housing typically increase. ILLUSTRATION #7: HOUSEHOLDS OVERPAYING FOR HOUSING BY INCOME LEVEL, TOWN OF Los GATOS (1990) 80% Percentage of 60% Households 40% Overpaying , 20%.. 0% • Renters Overpaying for Housing "'Homeowners Overpaying for Housing Very Low Income Households Low -Income Households Source: U.S. Census, 1990 The most recent data regarding overpaying is from the 1990 U.S. Census. According to that data, 33% of all homeowners and 40% of all renters in Los Gatos were paying more than 30% of their income for housing costs. However, when the information is evaluated by household income, the percentages increase significantly. As the chart above illustrates, 78% of very low-income renters were overpaying for housing and 71 % of low-income renters were overpaying. For homeowners, 53% of very low-income owners were overpaying and 45% of low-income owners were paying more than 30% of their income for housing. HOUSEHOLD TENURE Household tenure (owner occupied or renter occupied) is an important characteristic to review in evaluating housing supply and demand. Communities need to have an adequate supply of units available both for rent and for sale in SEPTEMBER 2002 13 order to accommodate a range of households with varying incomes, family sizes and composition, life styles, etc. In Los Gatos, -the majority of housing units are owner -occupied. Of all occupied units in the 2000 U.S. Census. 65% were owner -occupied or 7,827 households. The remaining 35% were renter -occupied units (4,161 households). This is only a slight change from the 1990 data, which indicated 64% owners and 36% renters. Los Gatos has traditionally had a goal of 35% of the housing stock being renter -occupied. The 2000 Census data indicate that the Town's housing stock continues to reflect the desired percentage goal of 35%. Los Gatos' percentage of homeowner units is only slightly higher than the percentage for the County and the State. En 2000, the percentage of homeowner units in Santa Clara County was 59.8%. The rate for the State of California in 2000 was 56.9% of all households were homeowners. HOUSEHOLDS WITH SPECIAL NEEDS Within each community, there may be certain sub -populations that have special housing needs. For purposes of this Housing Element, following are the households that have been identified as having special housing needs: 1. Homeless Households 2. Overcrowded Households 3. Single Parent Households 4. Elderly Households 5. Disabled (Physical and Mental) Households Farm worker households are also typically considered to be households with special needs. However, a review of all available data for the Town of Los Gatos indicates that there are not a substantial number of farm worker households within the Town and, consequently, they are not identified specifically as a group with sOecial needs. The 1990 U.S. Census data identified less than 1.5% of the Town's labor force employed in farming or agricultural work. Information from the State Employment Development Department (EDD) was also reviewed and indicated no significant number of workers employed in the agricultural sector in Los Gatos. 1. Homeless Households Homelessness is a housing issue that has become a significant social concern in recent years. The number of homeless persons in the Bay Area has increased in the last decade for a number of reasons. These include the decrease in federal 14 CHAPTER 2: Ho VG NEEDS ASSESSMENT housing funds, the high cost of available housing, the increasing number of mentally ill individuals living on their own, persons with substance abuse problems, women and children fleeing family violence and the lack of family support networks in today's fast paced society. As part of the County of Santa Clara "Urban County," Los Gatos was included in a 1999 survey of homeless individuals. That survey identified 20,000 episodes of homelessness in Santa Clara County. This was an increase from the 1995 survey that identified 16,000 episodes of homelessness in the County. it is important to note that an individual or household could have more than one episode of homelessness in a year. The 1999 survey did not specifically identify the number of homeless in Los Gatos. However, some of the more significant data from the countywide survey concluded: • There were twice as many males as females in the homeless population. • The majority (79%) of homeless were individuals who were either single, divorced, widowed or separated. Homeless adults with children represented 21 % of the survey respondents. • The number of working homeless was 34%. • Approximately 73% of the homeless listed Santa Clara County as their fast place of residence before becoming homeless. • The major reasons individuals gave for becoming homeless were: 1. lack of a job (21%), 2. lack of affordable housing (17%), 3. lack of money (14%), and 4. drug and/or substance abuse (8%), Most of the visible homeless in the County are the "urban" homeless. Suburban communities, such as Los Gatos, do not have the visible homeless but may have invisible homeless who may be camping along creeks or living in their cars for limited, periods of time. Representatives of the Town's Police Department estimated that there were on average Tess than 5 persons known to be homeless at any one time in Los Gatos. This would include people visibly identified as potentially homeless but, of course, does not include persons living in their cars or camping in hidden locations. Resources Available: Homeless Households There are no emergency or transitional shelters in the Town of Los Gatos. The Town does participate, however, in the Santa Clara County Collaborative on Housing and Homeless Issues. The Collaborative follows a "Continuum of Care" SEPTEMBER 2002 15 approach in addressing the needs of homeless persons. Basically, the continuum consists of the following steps in providing homeless resources: I). Prevention Services ii) Emergency Shelter iii) Transitional and Permanent Affordable Housing The Town contributes financially to supporting facilities that meet the objectives of the County's "Continuum of Care." For example, the Town has contributed CDBG funds towards the construction costs of HomeSafe and Sobrato Living Center in Santa Clara. These facilities provide emergency, transitional and permanent affordable housing opportunities. There are additional limited resources in the Town for homeless individuals or persons threatened with homelessness. Vouchers for food and shelter are available on a limited basis from the Salvation Army. There are also food pantries at several of the local churches in the community, such St. Mary's and St. Luke's churches. Site and Zoning Requirements for Homeless/Transitional Facilities There are no site or zoning constraints specifically for homeless or transitional housing facilities in Los Gatos. Residential Care Facilities or Group Homes are allowed in all districts (except RMH) with a conditional use permit. 2. Overcrowded and Large Family Households Overcrowded households are defined as households in which there is more than one person per rodm in the living structure (usually "room" is defined as any room in the structure except for kitchen and bathrooms). According to the 1990 U.S. Census, approximately 221 units or 1.8% of the Town's total occupied housing units were overcrowded with more than 1.1 persons per room. Renter households had a higher incidence of overcrowding than owner households. Of the 221 total overcrowded units, 61 units were owner occupied and renters occupied the remaining 160 units. In regard to age of the residential structure, overcrowded households are found in both older as well as newer housing units in the Town. While 83% of the overcrowded households live in units that were built after 1940, this proportion reflects the fact that 78% of the units in the Town were built after 1940. Therefore, the age of the housing unit is not statistically significant in regard to overcrowded households in Los Gatos. 16 CHAPTER 2: Hol ;G NEEDS ASSESSMENT Households do not typically choose to be overcrowded but end up in that situation either because they cannot afford a housing unit that is appropriate in size to their needs or there is not a sufficient supply of 3+ bedroom units. Traditionally, large households (households of 5 or more persons) have difficulty in securing and/or affording housing units of 3 or more bedrooms. Large renter families, in particular, have difficulty in finding rental housing stock that is both appropriate for their household size and affordable. The 1990 data indicate that there were 719 households in Los Gatos that had 5 or more persons. However, in Los Gatos, the majority of the households with 5 or more persons are owner - occupied households, Approximately 83% of households with 5 or more persons, or 596 households total, were homeowner households. Therefore, the assumption is that these are probably family households with 3 or more children at home and that the units they have chosen to buy are appropriately sized for their household. Overcrowded households then do not appear to be a significant housing issue in Los Gatos at this time. 3. Single Parent Households There were a total of 11,323 households in Los Gatos according to the 1990 census data and, of these 11,323 households; approximately 7,269 were family" households. Single parent households represented 8% of all family households. There were 590 single parent households in 1990: 116 single parent households were headed by a male parent and 474 had a female head of household. Single parent household as used in this document is defined as a family household with one or more children under the age of 18 years and headed by either a female or male head of household, with no spouse present. Lower household income is one of the more significant factors affecting single parent households. For example, of all married couples with children under the age of 18 years in Los Gatos, less than 1% of the households had incomes below the poverty level according to 1990 U.S. Census data. However, 13% of all single parent households with children had incomes, which were less than the poverty level. Limited household income levels affect the ability of these households to locate affordable housing and, consequently, this is one of the more significant housing problems of this household category. Resources Available to Single Parent Households There are no housing developments in Los Gatos that are specifically reserved for single parent households. However, the 64 unit "Open Doors" rental development is available to single parent households, as well as other households. SEPTEMBER 2002 17 Catholic Charities also offers a shared housing program for single parent households in Santa Clara County. The program provides information and assistance in "matching" single parent households in suitable living arrangements. 4. Elderly Individuals and Households The percentage of elderly persons in the Town of Los Gatos has increased slightly over the last three decades. In 1970, elderly (persons age 65 years and older) comprised 11% of the population but, by 2000, that percentage had increased to 15% of the total population. The total number of elderly persons ages 65 and over residing in Los Gatos in 2000 was 4,384 persons. Approximately 24% of all Los Gatos households in 2000 included at least one individual of 65 years or older. Approximately 69% of all Los Gatos elderly householders are homeowners and the remaining 31 % are renters (1990 data). ABAG has provided projections for age distributions from 2000-2020 for the region. These estimates indicate that the 65+ years population will increase by almost 90% during that time period. The population of persons 85+ years is expected to almost double in size with two-thirds of that population estimated to be female. These large increases in percentage and number of older adults in our population indicate that there will be an even greater demand for a range of housing opportunities such as independent living facilities, assisted housing or congregate care facilities, group homes, etc. Santa Clara County's 2000 "Consolidated Plan" (p. 26) document identifies the following critical service areas for seniors: • protective services for vulnerable elders, • legal services, • mental health services, • affordable and supported senior housing, • language -related services, and • in -home services and primary health care services. The Urban County program has provided supportive service funding for senior and frail seniors to the following organizations: Catholic Charities Long Term Care Ombudsman Program, Independent Aging, Live Oak Adult Day Care Center, Live Oak Senior Nutrition and Service Center, San Jose State University Foundation (The Health Place), Second Harvest Food Bank and Senior Adults Legal Assistance. The Town's housing conservation program also provides assistance to low-income seniors and the County -funded Economic and Social Opportunities Program assists low-income seniors by providing funding for 18 CHAPTER 2: HOl IG NEEDS ASSESSMENT weatherization, removal of architectural barriers to the home and minor home repairs. The County has also funded Project Match, which provided shared housing services for elderly households. On an annual average, Project MATCH has helped 27 Los Gatos households each year in securing affordable shared housing arrangements. However, as of December 31, 2001, Project Match was forced to discontinue services due to lack of funding. The elderly couple, pictured above in front of Villa Vasona, has Lived there since 1986. Resources Available to Elderly Individuals and Households There are several affordable housing opportunities in Los Gatos specifically designed for lower income elderly households. These include: 1. Villa Vasona, 626 W. Parr Avenue This facility provides 107 units for elderly and handicapped households. 2. Los Gatos Four-Plex, 221-227 Nicholson Avenue Owned by Mid Peninsula Housing Coalition, this facility consists of four one -bedroom apartments for lower income elderly. 3. Terraces of Los Gatos, 800 Blossom Hill Road A licensed residential care facility for the elderly and a retirement community care facility, this development provides 29 housing units and services at reduced rates to eligible senior citizens. SEPTEMBER 2002 19 5. Disabled Households Disabled households include households who have family members that are disabled because of physical handicaps or because of mental illness or disability. It is possible that some individuals have both a physical and mental disability but census data does not provide that level of specificity. According to the 1990 U.S. Census data, there were 820 persons ages 16-64 years in Los Gatos who had a disability, which affected mobility or self -care. Of these, 545 persons had a disability, which affected their ability to work. Census information is not available about the type of household they live in, their income level or how their disability affects theft housing needs. Generally, persons with disabilities have lower incomes especially if their disability affects their ability to work. Housing that is affordable is a high priority for these individuals. In Santa Clara County, the San Andreas Regional Center provides support services for disabled households but housing costs are usually the responsibility of the individual. For most individuals with developmental disabilities, the average range of SSI payment in 2000-2001 was approximately $600-700 per month. With this level of income, finding affordable housing is very problematic. Mobility impaired persons are also often in need of affordable housing. In addition, the person with a mobility limitation typically requires housing that is physically accessible. Examples of accessibility in housing include widened doorways and hallways, ramps leading to doorways, modifications to bathrooms and kitchens (lowered countertops, grab bars, adjustable shower heads, etc.) and special sensory devices (smoke alarms, light switches, etc.). Resources Available to Disabled Households m Silicon Valley Independent Living Center in Santa Clara: Provides services to developmentally disabled adults. Mental Health Advocacy Project: Provides fair housing services to individuals with mental illness or mental disability. Shelter Plus Care Program Provides rental assistance linked with supportive services for the most difficult to house homeless population, including those with a disability. For physically challenged individuals, there are some housing units in Los Gatos specifically designed to be handicapped accessible. Villa Vasona has 107 units total, of which 9 units are accessible for physically handicapped individuals. Further, the Town of Los Gatos requires all newly constructed residential units to be wheelchair accessible. 20 CHAPTER 2: Hoi • "G NEEDS ASSESSMENT HOUSING STOCK DATA HOUSING UNITS BY 'TYPE In the last decade between 1990-2000, approximately 55 units were added annually to Los Gatos' housing stock. In 1990, there were 11,822 housing units in Los Gatos. The 2000 U.S. Census data indicated that this figure had increased to 12,367 total housing units, or an increase of 545 units during the 10- year period. The majority of housing units in the Town are single-family units. In 2000, approximately 71 % of the total housing stock was single-family units with 80% of those units being single-family, detached units and the remainder were single- family attached (i.e. condominium and town home units). Multi -family developments of 5 or more units represented 20% of the housing stock and multi -family units in structures of 2-4 units comprised 8% of the housing stock. Mobile homes represented 1% of the total housing stock in 2000. ILLUSTRATION #8: HOUSING STOCK BY TYPE, TOWN OF Los GATOS JANUARY 2000 80% 60% Percentage of 40% Total Stock 20% Single Family (70%) Multi - Family (20%) 2-4 Units (8%) Mobile Homes (1%) Source: State of California, Department of Finance Population And Housing Estimates, January 1, 2000 The 2000 U.S. Census data also indicated that 65% of the housing units in the Town were owner -occupied and 35% were renter -occupied. This is only a slight change from the 1990 U.S. Census data, when 64% of the Town's units were owner - occupied and 36% were renter -occupied. SEPTEMBER 2002 21 VACANCY RATES The vacancy rate in a community indicates the percentage of units that are vacant and for sale/rent at any one time. Low vacancy rates (typically defined as anything less than 3% for homeowner units and 5% or less for renter units) can indicate a tight housing market with few vacant units which then creates a high demand for those vacant units. Data from the 2000 U.S. Census indicate that a total of 379 units were vacant out of a total housing stock of 12,367 units. This reflects an overall vacancy rate of 3.1%. The census data then identified the owner -occupancy rate as less than 1% and the renter -occupancy rate at 2.3%. Both of these rates are considered very low vacancy rates and indicate a housing market with a strong demand for units. AGE OF HOUSING At the time that this Housing Element document was written, 2000 U.S. Census data was not yet available regarding age of housing. Using 1990 U.S. Census data and January 2000 data from the California Department of Finance, the following estimates of age of housing were developed. This data indicates that approximately 37% of the Town's housing stock was built prior to 1959 and, at the time this report was written, was over 40 years of age. ILLUSTRATION #9: AGE OF HOUSING STOCK (ESTIMATES) TOWN OF Los GATOS, JANUARY 2000 Year Built Number of Units Percent of Total 1949 or earlier 2,366 19% 1950-1959 2,196 18% 1960-1969 3,459 28% 1970-1979 2,713 22% 1980-1989 1,088 8% 1990-1999 545 5% TOTAL 12,367 100% Source: U.S. Department of Commerce, Bureau of the Census, 1990 Census State of California, Department of Finance, January 2000 22 CHAPTER 2: Hou G NEEDS ASSESSMENT HOUSING CONDITION In determining housing condition, there are several levels of analysis that a community can utilize. A general overview of the condition of the housing stock can often be determined by looking at census data indicators such as the age of housing or the lack of complete plumbing facilities in a unit. The next level of analysis is usually a "windshield survey" of the housing units in which the exterior condition of housing units is assessed. A third, more detailed and more costly analysis is a thorough house -by -house interior and exterior analysis of housing condition. During 1983-84, the Town did conduct a comprehensive housing stock condition survey. Over a one-year period, approximately 90% of the Town's housing stock was evaluated. The survey results at that time indicated there were 433 units (or 4.5% of the total stock surveyed) that were suitable for rehabilitation. Another 8 units were identified as so substandard that replacement rather than rehabilitation would be required. It is important to note also that the 1989 Loma Prieta earthquake affected many residential units in Los Gatos. The Town monitored the rehabilitation of approximately 785 residential buildings, distributing over $3,000,000 in State funds and $300,000 in private funds. Approximately 72% of those units needed chimney repairs, 27.5% required foundation repair or reconstruction and the remaining units (0.5%) were found to be in need of demolition. In 1992, the Town adopted "Residential Guidelines for Pre-1941 Structures." These guidelines are designed to assist property owners who are considering building alterations, remodeling or new construction of residences. In addition to these guidelines, the Town has provided financial and technical assistance for housing rehabilitation since 1976. This assistance is provided through the Town's Housing Conservation Program (HCP) to low and moderate -income households whose housing units are in need of repair or safety improvements. From 1976-1995, there were 325 clients assisted through this program. Demand for the program however has decreased in recent years. From 1997-2001, a total of 7 units have been rehabilitated. All of these units were owner occupied units. One issue that was identified during the preparation of this Housing Element was the need to obtain a more current and complete estimate of the number of units needing rehabilitation/replacement in the Town of Los Gatos. Therefore, Program #11 in Chapter 8 of this document ("Housing Program Strategy") includes a work program to update the Town's housing condition survey. It is important to continue to provide housing rehabilitation assistance for limited income households, especially as the Town's housing stock continues to age. In order to increase program activity, the Town should also consider implementing a continuous and systematic marketing strategy to inform property owners of the availability of the housing conservation SEPTEMBER 2002 program. Further, the Town might want to target the two mobile home parks in the Town for more in-depth marketing strategies. The housing conservation program is a valuable asset in the Town's "tool bag" of resources for conserving existing housing, especially affordable housing. Therefore, there should be a concerted and continuous marketing effort to keep residents and property owners informed about the program, COST OF HOUSING AND AFFORDABILITY One of the most important factors in evaluating a community's housing market is the cost of housing and, even more significant, whether the housing is affordable to households who live there or would like to live there. Unfortunately, housing costs have increased in the San Francisco Bay Area in recent years. In fact, the Bay Area has consistently been ranked as one of the most expensive places to live in the United States. A poll sponsored by the "San Francisco Chronicle" ("Tales of Housing, San Francisco Chronicle, November 26, 2000) underscores this issue. In their poll of San Francisco Bay Area residents, 66% of the respondents stated that they were unable to afford the type of housing they would like in the Bay Area. Responses were also categorized by geographic area and, of those respondents from the Peninsula area, 77% stated that they were unable to afford the type of housing they would like. In other words, two out of three respondents could not afford the type of housing they wanted. Homeownership Costs The cost of acquiring a home has increased significantly in recent years. In fact, the appreciation of homes has escalated so rapidly that home sale prices in excess of $1 million are no longer unusual. Los Gatos has historically been a desirable place to live and, consequently, home values have always been high in comparison to other communities in the Santa Clara Valley. While still expensive, home values in Los Gatos have decreased or stabilized since the rapid valuation increase that reached a peak in 2000. DataQuick reports that median prices had decreased by 31% from December 2000 to December 2001 in Los Gatos. Still, the median price in December 2001 for a single family detached home was $948,000 and the median price for a condominium was $497,000. Rental Costs While homeownership is out of reach for many low and moderate -income households, the rental market does not provide many more opportunities. According to a rental housing survey conducted in Los Gatos of multi -family units in September 2001, the average rent for a multi -family rental unit was $1,883 per month. The average rent by bedroom size is illustrated in the following chart. 24 CHAPTER 2: Ho NG NEEDS ASSESSMENT ILLUSTRATION #10: AVERAGE MULTI -FAMILY RENTAL COSTS, TOWN OF LOS GATOS 2001 Bedroom Size ' verage Monthly Rent 1 Bedroom $1,769 2 Bedroom/1 Bath $1,780 2 Bedroom/2 Bath $2,098 Average for All Sizes $1,883 Source: Real Facts, Novato California 2001 The same survey referenced above reviewed rental costs in Los Gatos from 1994 to 2001. The results of that review indicated that the average rent for multi- family units in Los Gatos doubled during that time period. In 1994 the average rent was $935 and, by the end of 2001, it was $1,883 per month. From 1999- 2001 alone, the average rent increased by 27%. ILLUSTRATION #I 1: CHANGE IN AVERAGE MULTI -FAMILY RENTS, TOWN OF Los GATOS 1994-2001 $2,000.00 a) $1,500.00 $1,000.00 a) $500.00 a) $0.00 1994 1996 1999 Source: Real Facts, Novato California 2001 2001 Los Gatos does have a Rental Dispute Resolution Program that is applicable to rental units in structures of 3 or more units. Rent increases are limited to the greater of either a 5% annual increase or 70% of the Consumer Price Index. SEPTEMBER 2002 25 Rents can be further negotiated, however, if the property is sold or if significant capital improvements are made to the property. The Town's Community Services Department administers the program and contracts with Project Sentinel to provide mediation services for appeals to the program's rent limits. Example of a downtown Los Gatos residential neighborhood. Housing Cost and Overpaying for Housing One indicator of the healthiness of a housing market is whether households are "overpaying" for housing. Overpaying is usually defined as a household that is paying more than 30% of their income for housing. Once a household starts to pay more than 30% of income for housing, then it is assumed that there is less money available for other household necessities such as food, transportation, child care, etc. and, consequently, the household is considered to be paying too much for housing. The 30% figure is typically used by govemmental agencies as a measure of affordable housing and includes all housing costs. For a renter household this would include monthly rent and utilities. For a homeowner 26 CHAPTER 2: HoLNG NEEDS ASSESSMENT household, it typically includes monthly mortgage principal, interest, tax and insurance payments. While lower income households typically are most at risk for overpayment of housing, this situation can also affect moderate and above income households. Due to the spiraling increase in housing costs in California communities, overpaying for housing has extended into the moderate and above income categories also. The chart on page 28 (Illustration #12) demonstrates why there are so many households overpaying for housing. Using year 2001 data for household incomes and housing costs, the chart compares the amount of funds that a household has available for an affordable housing payment (defined as 30% of monthly income) and compares that amount to average rents in Los Gatos. As the chart demonstrates, very low-income and low-income households cannot "afford" the average rental in Los Gatos. For example, a very low-income household of 4 persons can afford to pay $1,091 per month but the average rent is $1,883—more than what they can "afford." If this household chose to pay the market rent of $1,883, they would be paying approximately 52% of their monthly income for rent. Only the moderate and higher income households can afford the average rental unit in Los Gatos. Homeownership without some type of subsidy is also out of the reach of lower and moderate -income households. The chart on the following page also indicates the sales prices of a single-family unit that would be affordable to the average very low, low and moderate -income households. The very low-income household could only afford to purchase a home with a maximum sales price of $136,429 and the moderate -income household could only afford a maximum sales price of $367,696. Neither of these households could afford to purchase the median priced condominium in Los Gatos, which was $497,000 in December 2001. And, of course, the December 2001 median priced single-family detached unit of $948,000 would be completely out of reach for these households. SEPTEMBER 2002 27 ILLUSTRATION #12: SALES PRICE OF A SINGLE- FAMILY UNIT THAT WOULD BE AFFORDABLE TO HOUSEHOLD N CO M Eft I N co N 64 co 0)) t-- co C) Eft CAN AFFORD AVERAGE RENT OF $1883 MONTHLY? Z Z U) >- 30% OF MONTHLY INCOME (AFFORDABLE HOUSING PAYMENT) (2) c r EH ti e- 69 CD N tf} MONTHLY INCOME (1) CD 0 1— INCOME LEVEL AND HOUSEHOLD SIZE Very Low Income Household (4 Persons) Low Income Household (4 Persons) Moderate Income Household j4 Persons) _13 17 y• o W • .c O — E c Ca Q y.. ` CV C7) C A ,� CA cC • 0 0 ',; c 0 c E o O•— >, E aQ 0 3 >. •c E O o. a)0 E O-0a CO) O• .cO .5 y U) «! �• aOm c • ,0 .c cu • a) 0 � 0.0 co '0 • c.) O CIS ) 'o ++ co 6 > to' 3 U .0 +• , U O On • E 0 cn c •c a 0 0 c a) • �y'O c6 E • o cn �`.. O�=�(A `O U C a) O ``" N ca Q)� U s0• 'Oc_-03 O Q 0 O 2 o .c Q a $2 ,-- 0 z N C7 3. PROJECTED HOUSING NEEDS NEW CONSTRUCTION NEED: 1999-2006 According to State Housing Element Guidelines, Housing Elements must include an analysis of the number of housing units to be built, rehabilitated, and conserved in order to meet the locality's current and future housing needs. Following is an analysis of Los Gatos' new construction, rehabilitation and conservation needs. ESTIMATE OF NEED (1999-2006) Determining the number of new units needed in a community has been the responsibility of the regional "Council of Governments" in past years. The State of California provides population estimates to each regional government in the State and the regional government then allocates estimated housing units needed among member communities. ABAG (Association of Bay Area Governments) is the regional Council of Government that represents Los Gatos and neighboring communities in the Bay Area. During 1999-2000, ABAG developed the "Regional Housing Needs Determination" for its member communities and, on March 15, 2001, the ABAG Board of Directors certified the final numbers. The estimated number of housing units needed as determined and certified by ABAG reflect the planning period from January 1, 1999 to June 30, 2006. According to the certified ABAG estimates, Los Gatos has a need of 402 new housing units between 1999-2006. This estimate was developed by ABAG based on various -factors including projected population, job growth, land availability, vacancy rates and replacement housing needs. HOUSEHOLD NEED BY INCOME LEVEL After,determining the number of additional households expected by the end of the planning period, ABAG further quantified future households by income level. The goal of this analysis was to distribute lower income households equitably throughout a region thereby avoiding undue concentrations of very low and low- income households in one jurisdiction. For the Town of Los Gatos, the ABAG goal is that 26.6% of all new households will be lower income (very low and low income) households, or 107 total new lower income households. The remaining 195 households or 73.4% of the total SEPTEMBER 2002 29 were estimated to be moderate or above moderate -income households. The exact breakdown of the income groups is as follows: Very low Income Low Income Moderate Income Above Moderate Income TOTAL 72 households (17.9%) 35 households ( 8.7%) 97 households (24,1 %) 198 households (49.3%) 402 households (100%) The definitions of income used in the ABAG plan reflect the income definitions used by the State of California. See pages 10-11 in this document for further descriptions of income determinations. ADJUSTED NEW CONSTRUCTION! NEED: 2002-2006 The ABAG new construction need was certified in 2001 and reflects the period from January 1, 1999 to June 30, 2006. Since this Housing Element document was written and adopted in 2002, it is important to adjust the totals in order to reflect the units that have been added to the stock between January 1, 1999- January 1, 2001. According to data from the Department of Finance (DOF), State of California, there were 20 units added to the housing stock in Los Gatos from January 1999 to January 2001. In 1999, there were 12,426 units total in Los Gatos and, in 2001, that figure had increased to 12,446 units. From 2001 to Spring 2002, there were 283 additional units approved/under construction in the Town. Units Approved/Under Construction January 2001-Spring, 2002 Boyer Lane 25 Units Vasona Gateway (Sobrato) 135 Units Terreno de Fiores 19 Units Farley Road West 7 Units Live Oak Apartments 49 Units 1300 Pollard Road 12 Units Villa Capri 35 Units Habitat for Humanity 1 Unit TOTAL 283 Units Since the ABAG data reflects the 1999-2006 time period, the new construction estimate must be adjusted by the number of units added to the housing stock betw'- n 1999-2001 (20 units) and the units approved and/or under construction 30 CHAPTER 3: PRf 'CTED HOUSING NEEDS as of Spring 2002 (283 units), a total of 303 units, Therefore, the original 402 unit new construction need as estimated by ABAG needs to be adjusted by 303 units. However, this estimate needs to be further adjusted by housing need by income level. HOUSING NEED BY INCOME LEVEL, ADJUSTED 2002-2006 The new construction estimate is composed of different household income groups as explained previously in this section. In addition to revising the total new construction estimate, the number of units provided in the 1999-2002 time frame for very low, low and moderate -income households needs to be identified and the total adjusted for those units. There were a total of 72 affordable units approved/built during the 1999-2002 period. ILLUSTRATION # 13: HOUSING UNITS BUILT/APPROVED, BY HOUSEHOLD INCOME LEVEL 1999-2002 HOUSEHOLD'INCOME LEVEL �FFORDA•LEt'O; 3 ' , _ � ` , -4 E t�� EVERY LOW !NCO.ME 7i? F' e.,�w '' VSE I:OL;D,S r ,•- DEVELOPMENT Los Gatos Creek Village Apartments STATUS (SUMMER 2002) Built/Occupied UNITS '" ; ::;' .45 12 Units Habitat for Humanity Approved 1 Unit • TOTAL FOR VERY Low 13 UNITS , :�. �, .-. -. 3-' ,fir• � " � - � FFOR Bti;TO Bella Vista Built/Occupied 2 BMP Units The Village Built/Occupied 1 BMP Unit : ,i4�' s ".:� "�.,,d . tiN Terreno de Flores Approved 2. BMP (Rentals) 4 BMP (Rentals) 7 BMP (Rentals) • 1 BMP (Rental) pye.t , AS �,U :�� . V..,4f�: �s -- �, •� '' �t Farley Road West Approved LiveOak Apts. Approved 1,i - 1300 Pollard Road Under Construction =r x ,,,,-• .' ,,: '' N, • , , , - *" 1 ss<<r�V' �'• -� ,nw 4� erLane Built 3 BMP (Rentals) Vasona Gateway jSobrato Develop.) Approved 27 BMP Rentals) 2 BMP Units Villa Capri Approved `k� 49 UNITS • n . " 'mow: "' Bella Vista Buiit/Occu ied 4 BMP Units " OD It-;; L The Villa •e • Buiit/Occu ied 1 BMP Unit yam1 �' USEF Terreno de Flores Approved 2 BMP Units �. - OLDS = � }a, ;44k Calle Mar•arita 1 BMP Unit .. ,�. # 1 r '' Villa Capri Approved 2 BMP Units y '' .,�..n ;�„ . `r v.f I i TOTAL FOR MODERATE -INCOME 10 UNITS 441-- Kr14,y -e TOTAL FOR ALL UNITS 72 UN!Ts SEPTEMBER 2002 J E All of the units identified in Illustration #13 on the previous page have affordability controls. The BMP (Below Market Price) units have restrictions, which control their affordability "in perpetuity." Some of the BMP units also include "priorities" for teachers or -public employees; however, the income eligibility and affordability restrictions remain the same as other BMP units. Habitat for Humanity housing units also require affordability restrictions that are "in perpetuity." The Los Gatos Creek Village Apartments have affordability restrictions that are in effect until 2049. These affordable units represent a total of 72 units built/approved between 1999-2002. Therefore, of the total 303 units built/approved from 1999-2002, 72 are affordable to very low, low or moderate income and the remaining 231 are above moderate -income units After adjusting for units built or approved from 1999 to Summer 2002 then, the revised Regional Housing Need for the Town of Los Gatos from 2002 to June 30, 2006 is 132 units. Of that total, there is a need for 59 very low-income units and 73 moderate -income units. ILLUSTRATION # 14: REVISED REGIONAL HOUSING NEEDS 2002-2006 HOUSEHOLD INCOME LEVEL , f ESTIMATED . NEW,;UNR (1999-2006) ay TOTAL UNITS BUILT OR APPROVED ; (1999-2002) r , �''' t ; , ' •REVISED NEW UNIT`. d r; ; ` NEED (2002 2006j .: ,, ; is `" Very Low 72 Units 13 Units 59 Units Low 35 Units . 49 Units . 0 Units Moderate 97 Units 10 Units (+14 unit `surplus' of low. income units )= 24 Units 73 Units Above Moderate 198 Units 231 Units 0 Units TOTAL 402 Units 267 Units 132 Units 32 CHAPTER 3: Pr 'ECTED HOUSING NEEDS CONSERVATION OF AFFORDABLE UNITS State Housing Element law requires that all Housing Elements include additional information regarding the conversion of existing, assisted housing developments to other non -low income uses (Statutes of 1989, Chapter 1452). This was the result of concern that many affordable housing developments throughout the country were going to have affordability restrictions lifted because their government financing was soon to expire or could be pre -paid, Without the sanctions imposed due to financing, affordability of the units could no longer be assured. Following are the required components to be discussed in an analysis of the conservation of the "at risk" units in a community. 1. Description and Identification of Potential "At Risk" Projects • Federally -Assisted Projects • State and Locally Assisted Projects 2. Cost Analysis of Preserving "At Risk" Units 3. Resources for Preservation • Public Agencies and Non Profit Housing Corporations 4. Quantified Objectives for "At Risk" Units DESCRIPTION AND IDENTIFICATION OF POTENTIAL "AT -RISK" PROJECTS Projects that are subject to an evaluation of their "at risk" potential are listed on the following pages. The projects are identified according to their primary funding source. Federally Assisted Projects: 1. RURAL DEVELOPMENT/FARMERS HOME ADMINISTRATION (FMHA) There are no Rural Development/Farmers Home Administration assisted units in the Town of Los Gatos. 2. SECTION 8 ASSISTANCE VILLA VASONA Villa Vasona, a 107 unit elderly and handicapped development, is located at 626 W.Parr Avenue, It is owned by PMG Properties and was originally financed with CDBG (Community Development Block Grant) funds from the Town of Los Gatos as well as Section 8 New Construction funds. The Section 8 funding provided a rental subsidy guarantee to all 107 tenants that will expire in November 2004. SEPTEMBER 2002 33 As part of its agreement with the original owners of Villa Vasona, ownership of the development was to be transferred to the Town 65 years after the completion of development (approximately year 2049) for $1.00. Further, the agreement specifies that there are no rent limits set in the event that Section 8 rent subsidies expire. The agreement does state that if the subsidy does expire, the development is to continue renting to elderly and handicapped residents of low and moderate income, as defined by HUD regulations. As the year 2004 approaches, the Town will need to review this agreement. Specifically, while the agreement may specify that units have to be rented to low and moderate households, it is unclear whether the rents will have to be affordable to low and moderate income households. The affordability of the units is as important as the occupancy of the units and the continued affordability of the units should be preserved as much as possible. Villa Vasona Provides Elderly and Handicapped Housing Opportunities As the information on the previous page indicates, Villa Vasona is definitely considered an "at risk" project. Although the agreement appears to state that the units need to continue to be rented to low and moderate income elderly and handicapped households, there appears to be no requirement that the rents will be affordable when the Section 8 subsidy expires in November 2004. This would 34 CHAPTER 3: PR( OTED HOUSING NEEDS indicate that there needs to be an effort on the part of the owners to renew the Section 8 subsidy or that there may be a need for some Town assistance to continue to ensure the affordability of the units. Please see Program #17 in Chapter 8 of this document for additional information about actions to be taken to conserve these affordable units. 3. HOME AND CDBG There are multi -family units funded with CDBG funds in Los Gatos. In all instances, the units also received local financial assistance. In order to avoid repetitive text, these units are specifically identified in the narrative that follows, "State and Local Assistance." State and Local Assistance 1. SINGLE FAMILY DEVELOPMENTS The Town's "Below Market Price" Housing Program was first adopted in 1979. The Program is an Inclusionary Housing program that requires a certain amount of units or in -lieu fees to be paid for residential development. There are 62 built and occupied units in the BMP program (including 29 units at The Terraces), with another 37 BMP units approved as of Spring 2002. Should the owners wish to sell their units, the resale price is controlled and the units are to be sold to another income -eligible household. In the past, there were some units that were released from the program's resale restrictions because of problems with the original resale calculations. This problem has since been corrected and it is not anticipated that there will be any further units released from the program's resale controls. 2. MULTI -FAMILY DEVELOPMENTS All of the multi -family affordable developments in the Town were financed with a variety of funding sources. State funding and Low Income Tax Credits were used as well as Town Redevelopment funds. Further, there was one multi -family rental development ("The Terraces") that was developed pursuant to the Town's "Below Market Price" program. Following is a description of the multi -family rental units .in the Town developed with some type of State/local funding source or requirement. A. THE TERRACES 800 BLOSSOM HILL ROAD, Los GATOS The Terraces is a continuing care facility for the elderly. In 1993, the owners signed an agreement with the Town to provide 29 units at reduced prices for lower income (80% of median income and below) households. The agreement required that the units be provided "in perpetuity." Therefore, these units are not at risk of losing their affordability status. SEPTEMBER 2002 35 B. OPEN DOORS 634 PARR AVENUE, Los GATOS Open Doors is a 64-unit rental housing development, managed by Mid - Peninsula Housing Coalition. The development was financed with Low Income Tax Credits, state and local financing and other funding sources. The affordability restrictions of the tax credits do not expire until 2048. C. Los GATOS FOUR-PLEX 221 NICHOLSON AVENUE, LOS GATOS Mid -Peninsula Housing Coalition also manages this 4-unit development. The units are occupied by very low income, elderly rental households. It is important to note that when the Town Council approved the change in zoning to "Planned Development" (PD) for the Los Gatos Four-Plex, there were restrictions placed on the property that provided for the continued use of the housing for low-income elderly. Therefore, unless the Town approves a change in zoning or in the conditions of the PD zone, the owners are required to continue the use as housing for low- income elderly. D. 95 FAIRVIEW PLAZA, Los GATOS This is a four-plex development with State and local assistance to help with the acquisition and rehabilitation costs. There are no on -going project based rent subsidies. The project at this time is not at risk of losing its affordability status. The development is managed by Community Housing Developers. E. Los GATOS CREEK VILLAGE APARTMENTS, 31 MILES AVENUE, LOS GATOS This 12-unit rental development was built in 2001 and is managed by Community Housing Developers. Very low-income households occupy all 12 units. Among other funding sources, the development was financed with Town Redevelopment funds and CDBG funds. Affordability restrictions do not expire until 2049 (50 year period beginning in 1999). 36 CHAPTER 3: PRO'-CTED HOUSING NEEDS ILLUSTRATION # 15: INVENTORY OF PUBLICLY ASSISTED, MULTI -FAMILY UNITS Town of Los Gatos Name of Development Project Type Governmental Assistance is Development "At Risk?" Between 2002-2011? Villa Vasona Rental Elderly and Section 8 Assistance scheduled to expire in November 2004 Yes The Terraces Continuing Care BMP Agreement to Provide Affordable Units in Perpetuity No Open Doors Rental Units for Low income Tax Credits, State and Local Assistance No Los Gatos Four-Plex Rental Units for State and Local Assistance No 95 Fairview Plaza Rental Units for State and Local Assistance No Los Gatos Creek Village Apartments Rental Units for Family/Elderly CDBG and Local Assistance No COST ANALYSIS OF PRESERVING "AT RISK" UNITS The cost of replacing existing affordable units is significant. For example, Los Gatos Creek Village Apartments, a 12-unit development affordable to very low- income households, was built in 1999. At that time, the development cost per unit was $163,000. Using the.$163,000 figure as a very conservative estimate, the cost of replacing the 107 unit Villa Vasona development would be at least $17 million dollars. If just the cost of providing rental subsidies alone were calculated, the expense would still be significant. For example, a very low-income household of 1 person should spend no more than $800 per month for housing (using a 30% housing cost to income ratio for the year 2002). The market rental cost of a 1-bedroom apartment in 2002 was $1769 per month. Therefore, it would take a $969 subsidy monthly to "write down" the cost of the monthly rental to a level that would be affordable to a very low-income household. If the subsidy were provided to all 107 households at Villa Vasona, the minimum cost would be $103,683 monthly. SEPTEMBER 2002 37 RESOURCES FOR PRESERVATION Public Agencies The Town of Los Gatos is fortunate to have an active Redevelopment Agency, which is committed to preserving and producing affordable housing opportunities. The Redevelopment Agency manages the Redevelopment Housing Set -Aside fund which, among other uses, can be used to preserve affordable housing units. In addition, the Town could utilize CDBG and HOME funds as well as the Housing in -Lieu Fee fund to assist with preservation activities. The Housing Authority of County of Santa Clara can also assist in preserving affordable units that are "at risk." Non -Profit Agencies In addition to the two public agencies identified above, Los Gatos is fortunate to have several active non-profit agencies involved in affordable housing. Examples of non -profits active in the Town: Mid -Peninsula Housing Coalition, Open Doors Associates, Community Housing Developers, and Habitat for Humanity. These non -profits are examples of potential partners that the Town could approach in preventing affordable units from converting to market rate units. QUANTIFIED OBJECTIVES AND PROGRAM EFFORTS FOR "AT RISK"UNITS As part of the objectives of this Housing Element Update, quantified objectives were established for the construction, rehabilitation and conservation of units (see page 81, "Housing Program Strategy, 2002-2006"). The specific objective is the preservation of 220 affordable units. Further, the program section also includes a program action for the 2002-2003 time frame requiring the Town to develop a strategy to preserve the affordability of the 107 units at Villa Vasona. 38 L` R HOUSING CONSTRAINTS Nero housing development can be affected by economic forces in the private market as well as regulations and policies imposed by public agencies. These constraints primarily impact the production of new housing but can also affect the r-aintenance and/or improvement of existing housing. The discussion below and on the following pages analyzes both the governmental and non -governmental ("market") constraints that can affect the housing market in Los Gatos. GOVERNMENTAL CONSTRAINTS Governmental regulations, while intentionally regulating the quality of development in the community can also, unintentionally, increase the cost of development and thus the cost of housing. These governmental constraints include land use controls, building codes and their enforcement, site improvements, fees, and other exactions required of developers, and local processing and permit procedures. Land use controls may limit the amount or density of development, thus increasing the cost per unit. On site and off site improvements like road improvements, traffic signals on adjacent streets or sewer improvements may increase an individual project's costs of development. Processing and permit requirements may delay construction, increasing financing and/or overhead costs of a development. A. LAND USE CONTROLS The Town's General Plan and Zoning Ordinance are the primary tools, which are used to manage the development of residential units in Los Gatos. The Town's General Plan allows for residential land use ranging from "Hillside Residential" (a maximum of 1 unit per acre) to "High Density Residential -Special Use" with a maximum density of 20+ units per acre. The Zoning Ordinance is more specific than the General Plan and continues these same general density parameters but with more detailed residential zone districts. In specific, the Zoning Ordinance allows for the following residential zone categories: 1: Resource Conservation (RC) 2. Hillside Residential (HR) 3. Single Family Residential (R-1) 4. Single Family Residential, Downtown (R-1 D) 5. Duplex Residential (R-D) 6. Multiple Family Residential (RM) 7, Mobile Home Residential (RMH) The table on the following page illustrates the various requirements by residential zoning district. SEPTEMBER 2002 39 ILLUSTRATION # 16: RESIDENTIAL DEVELOPMENT STANDARDS BY ZONING DISTRICT OTHER (Note: density range_ are also dependent on hillside slope calculations) Arch. and Site approval required except for new mobile home on an existing mobile pad. PARKING PER UIv' [2 spaces N 8 as w N 2 spaces 2 spaces 2 spaces 2 spaces 2 spaces 2 spaces 2 spaces for single-family 1.5 times number of units for duplexes 2 spaces Resident 1.5 times the number of units Visitor. 1 space for unit REAR YARD SETBACK w4 In N In N 20 feet 20 feet 20 feet L25 feet 25 feet 25 feet O N 20 feet 20 feet 20 feet CI re F-- CT)- >V) 0 30 feet 20 feet 4= N CO 25 feet 110 feet 25 feet 10 feet Y F30 feet 15 feet 1- 2 In 8 CO O- CO r. 8 CO FRONT YARD SETBACK 30 feet w to N 25 feet 30 feet 15 feet $ In N 8 In N 25 feet MAXIMUM HEIGHT DO feet 30 feet 30 feet 30 feet 30 feet 30 feet 30 feet O M O. CO 30 feet 30 feet 30 feet MINIMUM LOT AREA 20 Acres 40,000 sq.ft' 8,000 sq. ft. Sr 0 0 0 O v— 112,000 sq. ft 15,000 sq. ft. 20,000 sq. ft. l 30,000 sq. ft 5,000 sq. ft for single- family 8,000 sq. ft. for du lexes 8,000 sq. ft. 8,000 sq. ft 5 acres for mobile home zone DENSITY RANGE 1 Unit Per Lot HR-1: 1-5 acres for each unit HR-2.5: 2.5-10 acres for each unit HR-5: 5-40 acres for each unit HR-20: 20-160 acres for each unit a-e`rN a- M 5-8 units per acre 1-5 units per acre R-M:5-12 5-12 units per acre R-M: 5-20 5-20 units per acre Maximum is 12 units per acre 1- co ZONING DISTRICT G = itt Overlay Zones There are two overlay zones that apply to residential uses in the Town's Zoning Ordinance. These are the Planned Development (PD) and the Landmark and Historic Preservation (LHP) zones. The LHP overlay is applied to those areas of the Town with special historic or architectural significance. Standards have been established for alterations, demolitions and reconstruction of structures in these areas. The PD Overlay provides for alternative uses and developments more consistent with site characteristics. The minimum lot size for a PD is 40,000 square feet, unless the purpose is to provide affordable housing, in which case there is no minimum site area. When a PD overlay is applied to a residential zone for an affordable housing development, the affordable housing requirement becomes a part of the overlay conditions. The PD Overlay is also flexible in regard to other standards, such as setback and height requirements in order to encourage the most feasible site design. Mixed Use development is allowed in any residential zone in the Town and is processed as a Planned Development. Mixed Use developments have been approved in several recent developments in Los Gatos. Most notably, the Town approved the Sobrato development (Vasona Gateway), which included 135 apartment units and a research and development office park. The Town also approved the Los Gatos Boulevard development that included office uses and residential apartment and single-family units. In 2002, the Town was developing a work plan to further refine the Mixed Use requirements in order to encourage more Mixed Use development. Code Compliance The Town enforces building, housing and safety codes through the Code Compliance program. Upon complaint, the Town will conduct an evaluation of the viability of the complaint and follow-up will be provided as appropriate. For those dwelling units built as BMP (Below Market Price) units, there is an annual compliance audit to ensure that the units continue to meet code requirements. Secondary Dwelling Units Secondary dwelling units are residential units in addition to the primary residential unit on a lot. Los Gatos allows new secondary units as follows: ® In RM, R-1D and Planned Development districts, or a In other residential districts (except RC and HR) in conjunction with a transfer of secondary dwelling unit credit and a conditional use permit. SEPTEMBER 2002 41 s ILLUSTRATION # 17: RESIDENTIAL DEVELOPMENT STANDARDS STANDARDS FOR DEVELOPMENT OF SECONDARY DWELLING UNITS Type of Secondary Unit Interior Attached Detached Minimum Lot Size - 10,000 sq. ft. 12,000 sq. ft. 15,000 sq. ft. Maximum + Height Parking Unit Size l 750 sq. ft. Unit must be located on 1 space first floor of primary unit 750 sq. ft. Unit must be located on 1 space first floor of primary unit 900 sq. ft. Maximum of one 2 spaces story/Not permitted on second floor of a detached accessory unit Architectural and Site Review is required for all secondary units.' Further, transfer of credit for a secondary unit is only available upon demolition, removal or conversion in use of an existing secondary unit. Therefore, the "pool" of potential secondary units is currently limited to the number of existing, legal secondary units in the Town and the secondary units that could be created in new residential developments in the RM, R-1D and PD zones. As a community becomes "built -out," the use of all available tools to create more housing units becomes even more important. Secondary dwelling units are an important tool because they can be provided on already -developed land. Program #6 in Chapter 8 of this document ("Housing Program Strategy") suggests that the Town re -consider its Secondary Dwelling Unit program; and, in particular, evaluate whether the number of secondary units should be controlled and if there are standards such as minimum lot size or parking requirements that could be revised to encourage more units. Residential and Commercial Uses Residential uses are allowed in all office and commercial zones in the Town with a conditional use permit. Density Bonuses The Town allows up to a 100% density bonus for qualified projects. An example of this procedure is the approval of the Los Gatos Creek Village Apartments, which received a 100% density bonus. 42 CHAPTEF HOUSING CONSTRAINTS Constraints Regarding Housing for People with Disabilities and Homeless The Town's Zoning Code allows small group homes (limited to 6 or fewer persons) for day care or residential care in all residentially zoned districts without a use permit. Residential care and day care facilities for 7 or more persons are allowed in all districts (except RMH) with a conditional use permit. There are no specific constraints imposed for developments that assist disabled or homeless households. The Town encourages accessibility improvements by requiring that certain "universal design" features be incorporated into all residential projects as a condition of approval (Town Resolution 1994-61). These requirements include: 1. Wooden backing (no smaller than 2 inches x 8 inches) shall be provided in all bathroom walls, at water closets, showers and bathtubs, located at 34 inches from the floor to the center of the backing, suitable for the installation of grab bars. 2. All passage doors shall be at least 32 inches wide on accessible floor. 3. Primary entrance shall have a 36-inch wide door including a 5- foot x 5-foot level landing, no more than one -inch out of plane with the immediate interior floor level, with an 18-inch clearance. The Town will continue to evaluate any potential constraints to the development or improvement of housing for people with disabilities. See Program #23 in Chapter 8, which includes an evaluation of the City's Zoning and Development Standards during 2002-2003 to ensure that all constraints to the development or improvement of housing for people with disabilities are removed. B. LOCAL HOUSING PROGRAMS There are two Town housing programs that could be considered as constraints to housing. The first program is the Below Market Price (BMP), which facilitates the development of units affordable to low and moderate income households. The BMP is applicable to projects of 5 or more units, which are new multifamily rental projects, residential condominium or planned development subdivisions and community apartment or residential stock cooperative projects. For projects containing 5-19 market rate units, BMP units are required at a number equal to 10% of the number of market rate units. Projects of 20-100 market rate units must produce BMP units according to the following formula: # of BMP units=.225 (total # of market units) - 2.5. Projects in excess of 100 market rate units must provide BMP units equal to 20% of market rate units. Planned developments with an underlying zone of HR (Hillside Residential) pay an in -lieu fee instead of producing actual BMP units. Rental rates for BMP rental units are established at 80% of the fair market rent (FMR) limit as determined by HUD. The initial sales price of the owner -occupied units is determined in consultation between the Town Manager (or delegate) and SEPTEMBER 2002 43 the developer. The maximum sales price is based on household income limits (ranging between 80-100% of HUD income limits). The initial sales price may include construction costs and a per unit share of infrastructure, financing and improvement costs In evaluating the BMP program in light of the Los Gatos housing market, the BMP is not considered to be a constraint to the development of market -rate housing. As the following sections of this chapter explain, the cost of land and the cost of construction in Los Gatos are more significant constraints to the development of market rate housing than the BMP. In other words, housing in Los Gatos is expensive due to land/construction costs as well as the desirability of Los Gatos as a residential setting within the Santa Clara Valley area. The BMP's impact on housing costs is minimal compared to these factors. Further, the BMP units are "bonus" units that are units in addition to the approved density of a project. Therefore, the developer is allowed to build additional units in exchange for providing those units at below market costs. Rather than being considered a constraint to housing, the BMP actually provides an incentive in the form of additional units that the developer is allowed to provide. The second Town housing program that needs to be evaluated as a potential constraint is the Town's Rental Dispute Resolution Program. The Rental Dispute Resolution Program is contracted out to a local non-profit, Project Sentinel, for administration. The Program limits annual rent increases in multi -family rental properties of 3 or more units to the greater of 5% or 70% of the Consumer Price index. However, there is flexibility to this requirement if repairs are made to the property or upon sale of the property. At this time, the Program is not considered to be a constraint to housing, especially multi -family housing. C. INFRASTRUCTURE CAPACITY There are no major infrastructure capacity or delivery issues in Los Gatos at this time. ,There are certain areas of the Town, however, where the sewer and/or water systems are old and are in need of replacement or upgrade. The Town's water is primarily supplied by San Jose Water Company. There are some smaller, private mutual water companies that supply water but they are few in number. Approximately 95% of the Town is serviced by San Jose Water Company. There are some areas of the Town, such as parts of the downtown area and some areas in the east side, where the water delivery system is old and the piping needs to be replaced. The Town and San Jose Water Company are 44 CHAPTEF HOUSING CONSTRAINTS aware of this situation and the San Jose Water Company is developing plans to upgrade those lines. The sanitary sewer system is maintained by the West Valley Sanitation District and the Town is primarily responsible for the storm drain system. Again, there are areas in the Town that need some of their sewer lines replaced due to age or composition of the lines. For example, the downtown area still uses some of the original main sanitary lines, installed in the 1940s. Restaurants in the downtown that do not have grease traps contribute to the problems in the sanitary system. The Sanitation District is working on maintaining these lines and upgrading as needed. There are some properties that were annexed into the Town and have pre- existing septic systems and no connections to sanitary or storm water. This is especially true for the neighborhoods east of Highway 17, in the Placer Oaks and Frank Avenue areas. These residential units are allowed to remain on septic systems until new development is proposed for the property. In regard to traffic and circulation, the overall circulation system is estimated to be below capacity. The construction of Route 85, in particular, has alleviated most of the Town's traffic capacity issues although there are a few intersections that experience traffic congestion during certain peak hours. D. GOVERNMENTAL FEES Governmental fees can add a significant cost to the price of housing. In 1999, the State of California Department of Housing and Community Development distributed the report, Pay to Play that analyzed governmental fees in 89 cities and counties in California. The Town of Los Gatos was one of the communities surveyed. Listed below is the summary of fees charged by Los Gatos for an infill, single-family unit. ILLUSTRATION # 18: TYPICAL FEES: SINGLE FAMILY, INFILL UNIT TOWN OF Los GATOS, 1999 TYPE OF FEE AMOUNT Planning Fees $3,216 Plan Check, Permit and Inspection Fees $6,294 Infrastructure, Impact and District Fees $13,389 TOTAL FEES $22,899 SEPTEMBER 2002 45 The 1999 Report compares individual jurisdiction's fees with neighboring communities. Listed below are Los Gatos' typical fees as compared to the average for Bay Area communities. The comparisons indicate that Los Gatos' fees are lower than the average for other Bay Area communities. Infill, Single Family Unit Single Family Subdivision Multi -Family, Per Unit E. PROCESSING TIME Los Gatos $22, 899 $23,505 $12,148 Bay Area Average_ $26,819 $28,526 $18,428 The residential development process proceeds through various stages, each of which requires some form of Town approval. According to Town staff, a typical single-family infill residential application takes less than 3 months to process. If the unit is proposed in a hillside residential zone, then the processing time usually is lengthened to 4-6 months total. In regard to mixed use, two mixed use projects in 2002 (Sobrato Development and Terreno de Flores) were processed in 4-6 months, following establishment of zoning densities on the property. Typical processing steps for a multi -family housing project include: 1. Upon submittal of a PD or subdivision application, the application is distributed to other Town departments (Planning, Engineering, Parks, Police) and other public agencies for review (e.g. utility districts, school districts, etc.) 2. Staff reviews/meets with applicant to resolve any concerns or plan deficiencies. Design issues are discussed at this time also. Arborist review and/or architectural review may be done concurrently at this time. 3. Development Review Committee (DRC) meeting — once DRC deems application is complete, it forwards its recommendation to the Planning Commission. 4. Environmentai peview, traffic impact analysis (and occasionally geotechnicaf review) completed as appropriate 5. Story poles placed on project site by applicant. 6. Public hearings with Planning Commission and/or Town Council approval. The types of issues that usually prolong the processing time are design issues and ieighborhood compatibility. Recently, the Town approved the use of an architectural consultant to review plans and provide recommendations. It is anticipated that the use of the consultant will reduce processing time for those applications that are problematic in regard to design and neighborhood issues. F. BUILDING CODES The Building Codes adopted by the Town of Los Gatos are the Uniform Building Code, Uniform Plumbing Code, Uniform Mechanical Code, and National Electric Code. The Town's Building Codes have been adopted in order to prevent unsafe 46 CHAPTER HOUSING CONSTRAINTS or hazardous building conditions. As such, the Town's codes are a reasonable and normal enforcement of Town regulations and do not act as a constraint to the construction or rehabilitation of housing. G. PARKING REQUIREMENTS The chart on page 40 of this document identifies parking requirements for various residential zones. The Town does allow flexibility in these parking requirements, especially for Planned Developments. Shared parking as well as reduced parking for elderly and disabled developments have been approved in past developments. Parking requirements are not considered a constraint to housing. MARKET CONSTRAINTS There are a number of costs involved in the development of housing. These include land and construction costs, site improvements (streets, sidewalks, etc.), sales and marketing, financing, and profit. Because these costs are so market sensitive, it is difficult for a local governmental body to reduce them in any way. As is true for most Bay Area communities, Los Gatos is an expensive housing market. Developable land is available but not plentiful. Land costs are consequently high due to the demand for land. The Construction Industry Research Board reports that the medium cost per square foot for new residential construction (including land and overhead cost) was $246 per square foot in Santa Clara County in 2000. Developers in Los Gatos report that financing of new residential development is not a problem. Financing is available and can be provided at reasonable terms and conditions. The only residential construction that can potentially be affected by financing and insurance requirements is condominium construction. Due to the many lawsuits filed in recent years regarding construction litigation of condominiums, there has been a decrease in the financing and insurance available to new condominium developments. This is a statewide problem and not unique to Los Gatos. PRODUCING AFFORDABLE HOUSING IN TODAY'S MARKET The expensive land and construction costs in the area also affect the production of affordable housing. Non-profit developers who build affordable units report that their costs have escalated in recent years. For example, Community SEPTEMBER 2002 47 Housing Developers have indicated that the cost in 1999 to build the Los Gatos Creek Village Apartments was approximately $163,000 per unit. In order to ensure that the units are affordable to very low-income households, governmental' subsidies were necessary. The Town contributed funds and staff time to the development. Community Housing Developers report that the Town's subsidy was $56,250 per unit. Affordable developments require substantial assistance from local, State and Federal funding sources. Examples of funding subsidies include Redevelopment funds, In -lieu fees, CDBG and HOME funds, Below Market Bond financing, Low Income Housing Tax Credits, California Housing Finance Agency funding, California Housing and Community Development programs. The provision of financing or other subsidies to an affordable housing development is necessary in today's high -cost housing market where land is scarce and construction costs are expensive. SUMMARY ANALYSIS OF CONSTRAINTS ON LOS GATOS' HOUSING MARKET , n Analysis of Land Use Control Constraints: INFORMATION IN THIS CHAPTER INDICATES THAT THERE ARE LAND USE CONTROLS THAT AFFECT THE DEVELOPMENT OF RESIDENTIAL UNITS. EXAMPLES OF THESE CONTROLS ARE ZONING REGULATIONS, PROCESSING TIMES AND FEES. IN REGARD TO PROCESSING TIMES AND FEES, THE TOWN'S AVERAGE PROCESSING TIME FOR SINGLE FAMILY UNITS AND ITS AVERAGE FEES FOR ALL TYPES OF UNITS ARE BELOW THOSE OF NEIGHBORING COMMUNITIES. ZONING, ESPECIALLY FOR HILLSIDE PARCELS, IS A DEFINITE CONSTRAINT TO ADDITIONAL HOUSING BECAUSE MOST OF THE LAND AVAILABLE FOR DEVELOPMENT IN LOS GATOS IS LOCATED IN HILLSIDE RESIDENTIAL AREAS. HOWEVER, THE TOWN CONSIDERS THE HILLSIDE AREA AS A UNIQUE VISUAL, OPEN SPACE AND ENVIRONMENTAL RESOURCE AND HAS CHOSEN TO CONTROL THE AMOUNT AND TYPE OF HOUSING BUILT IN THOSE AREAS. THERE IS ONE LAND USE CONTROL ISSUE, HOWEVER, THAT THE TOWN NEEDS TO RE-EVALUATE DURING THE 2002-2007 PLANNING PERIOD AND THIS ISSUE IS SECONDARY DWELLING UNITS. SECONDARY DWELLING UNITS: THE TOWN'S SECONDARY DWELLING UNIT PROGRAM SEVERELY CONTROLS THE PROVISION OF ADDITIONAL SECONDARY UNITS. UNLESS A TRANSFER DEVELOPMENT CREDIT IS AVAILABLE, SECONDARY UNITS ARE NOT ALLOWED IN EXISTING R-1 ZONED AREAS. FURTHER, THE MINIMUM LOT SIZE AS WELL AS THE HEIGHT AND PARKING LIMITATIONS PROHIBIT CREATIVE USE OF SECONDARY UNITS IN RESIDENTIAL AREAS. PLEASE SEE PROGRAM #6 IN CHAPTER 8 OF THIS DOCUMENT, WHICH PROPOSES AN EVALUATION OF THE TOWN'S SECONDARY DWELLING UNIT PROCEDURES. 48 5. RESOURCE INVENTORY LAND INVENTORY In preparation for the 2002-2006 Housing Element, Town staff conducted a study of vacant and underutilized land that had no infrastructure constraints. The table below shows the results of that study. The information in the table includes vacant land availability in relation to the Regional Housing Needs Allocation (RHNA), as described in pages 29-32 of this document. The Town's RHNA consists of a very low income and a moderate income housing unit need. The Town has already met its need for low income and above moderate income housing for the 2000-2006 time frame. ILLUSTRATION # 19: PROJECTED HOUSING NEEDS AND LAND AVAILABILITY (WITH NO INFRASTRUCTURE CONSTRAINTS) SPRING 2002 HOUSEHOLD INCOME CATEGORY AND REGIONAL HOUSING NEED 2002-2006 AVAILABLE VACANT AND UNDERUTILIZED LAND DENSITY RANGE THAT COULD BE PROVIDED AT CURRENT ZONING/LAND USE DESIGNATION NUMBER OF POTENTIAL UNITS SUFFICIENT LAND ZONED TO MEET REGIONAL HOUSING NEED? VERY Low INCOME 59 Units 0.58 acres 12-20 units per acre/ high density 3-10 Units YES (RM:12-20) • 26.23 acres 5-12 units per acre/medium density 131-315 Units MODERATE INCOME (R-M: 5-12 and R1-D) 73 Units 412 acres 1-5 units/ low density 322 Units (HR and R:1 _ Zones) TOTALS: 132 UNITS 438.81 acres _ 456 — 647 Units SEPTEMBER 2002 49 As the table on the previous page illustrates, there is sufficient land with infrastructure to accommodate the Town's RHNA for the 2002-2006 time frame. The. very low income need of land suitable for 59 additional units can be met through the existing land zoned at high and medium density. There is ample evidence from previously approved developments that the Town can provide high density housing in the medium density zone as well as the high density zones. For example, the Vasona Gateway (Sobrato development) approved in 2002 was for a mixed -use development with 135 residential units. The 'effective" density for the residential land only was 30 units per acre. Mixed use development is allowed on any residentially zoned land in the Town, especially medium and high density land. !t is important to note that 27 of the total 135 units in Vasona Gateway are "Below Market Price" (BMP) rental units for very low and low income households. Another development approved in 2002, Terreno de Flores, is a 19 unit project with a density of 13.7 units per acre, of which 2 units will be BMP very low and low income rental units. In addition to using the Mixed Use designation to provide higher density developments, the Town has also successfully used density bonuses. The Los Gatos Creek Village development was granted a 100% density bonus for a parcel (less than an acre in size) that was zoned for medium density, 5-12 units per acre. The entire development consists of rental units affordable to very low income households. The Town will monitor the development community's progress in providing very low income housing units. Program #1 in Chapter 8 of this document specifies that the Town will review the production of very low income units in relation to its RHNA goal in rate 2003. If it does not appear that the units are being produced as needed, the Town will consider rezoning at least 5 acres of medium density land to a higher density or apply an -affordable housing overlay zone in order to address the very low income housing need. The moderate income RHNA need of 73 units can easily be achieved through land currently zoned medium density. Even if the existing vacant land is developed at the lower range of 5 units per acre, there is sufficient land to accommodate both the moderate income and the remaining very low income need. (For further information regarding vacant/underutilized land in the Town, please see Appendices B and C of this document.) FINANCIAL RESOURCES LOCAL FINANCIAL RESOURCES The most significant source of housing funds controlled locally is the Town's Redevelopment Housing Set -Aside funds. As required by State law, the Redevelopment Agency "sets aside" 20% of tax increment revenues to be used to increase the supply of low and moderate income housing in the community. 50 CHAPTER 5: RESOURCE INVENTORY The Town's "Five Year Affordable Housing Production Plan", completed in 1999, estimates that 14 affordable units will be required to meet Redevelopment requirements between 1995-2004. The total number of affordable units needed during the "life" of the Redevelopment Project Area is 23 units from 1995-2032. In 1997-98, the Agency provided financial assistance to Community Housing Developers to develop the 12-unit Los Gatos Creek Village Apartments on Miles Avenue. As of Spring 2002, the Town's Redevelopment Housing Fund had a balance of approximately $1.8 million dollars. The illustration below provides an estimate of the fund's revenues for the period between 2002-2006. ILLUSTRATION # 20: REDEVELOPMENT AGENCY HOUSING SET ASIDE FUNDS, ESTIMATES FOR 200 1.2006 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 SOURCE : , ' , , ,, r 1 S to .1 y A,14 ♦ � uis '_.�"°'19Tt�.it y` ", �� Z r'l3 ll � h }y��.y�N 1i�" 1.. y',I. �f P,f2 Fund 1 215 140 Y fi - , �7J1; y�pa . �+(�{OS Balance , ?o.v, « /.., ,5` ,,, . • , Yt1N Tax $ 681,530 $741,912 $787,950 $823,043 $859,330 Increment Revenue TOTAL $1, 896, 670 _ � ' ? ,. R; ,A-9. r1 ,y rP. k r w'. The table above provides an estimate of the annual amount of funds expected to be generated from 2001-2006. The Agency expects to utilize these funds on an annual basis by providing assistance for affordable housing production and paying administrative expenses. At the time that this Housing Element document was adopted, there were no plans for the use of the housing funds for a specific development or project. However, it is anticipated that, within the time frame of this Housing Element, the Agency will provide assistance to developers (non profit or for profit) for developments that meet the following Agency guidelines (from "Five Year Affordable Housing Production Plan", Page 9): '1. Redevelopment Housing Funds shall be used to assist the construction of new units for very low and low/moderate income households or to "buy down" the affordability level of existing BMP units. 2. Redevelopment Housing Funds will be provided as either an amortized or deferred payment loan. 3. The units must meet the basic occupancy and affordability provisions specified in the Town's Redevelopment Implementation Plan. 4. All units created or subsidized using Redevelopment Housing Funds shall remain affordable for the longest feasible time but in no case fewer than 55 years for rental housing and 45 years for owner -occupied housing. 5. Redevelopment Housing Funds shall be used for development of affordable units on property located within the Redevelopment Project Area. SEPTEMBER 2002 51 In 2001, the Town's Agency executed an agreement with the Housing Trust of Santa Clara County in which the Town contributed $250,000 in Redevelopment funds to the Trust. In return, the Trust agreed to provide funds for one or more affordable housing projects in Los Gatos. At the time this Housing Element was prepared, housing proposals were still being evaluated and there were no specific projects identified for the use of these funds. In addition to Redevelopment Housing Funds, the Town also collects in -lieu fees from the BMP program. As of Spring 2002, the balance in that fund was estimated to be approximately $1.4 million dollars. The Town intends to combine this fund with Redevelopment Housing Fund monies in providing assistance to developers and/or providers of affordable housing. In Fall 2002, the Town is planning an affordable housing strategy session that will include a discussion of specific uses of the Redevelopment funds and in -lieu fees so that any expenditures reflect the goals of the 2002-2006 Housing Element. FEDERAL RESOURCES (CDBG AND HOME FUNDS) The Town of Los Gatos also is eligible to receive federal CDBG and HOME funds through their participation in the Urban County and Consortium of Santa Clara County. These federal funds are awarded on an annual basis to the County and are used by member communities for affordable housing activities. For example, CDBG funds were provided to the Los Gatos Creek Village Apartments on Miles Avenue and these funds are also used to fund the Town's Housing Conservation Program for housing -rehabilitation activities. OTHER STATE/FEDERAL./LOCAL FINANCIAL RESOURCES In addition tothe funding sources identified above, the Town also has access to other funding resources as appropriate. These funding sources are typically used on a project -by -project basis and are not secure, annual funding sources such as CDBG, HOME and Redevelopment housing set -aside funds. These financial resources include: 1. State of California, Department of Housing and Community Development loan and grant programs, 2. Califomia Housing Finance Agency financial assistance programs, 3. Federal/State 'Low Income Housing Tax Credits, 4. Federal Home Loan Bank, Affordable Housing Program, 5. Mortgage Credit Certificates 6. Housing Trust Fund of Santa Clara County, and 7. Second/Third Mortgage Financing for Teachers in certain school districts. 52 6. AFFORDABLE HOUSING OPPORTUNITIES This chapter of the Housing Element summarizes the current range of affordable housing opportunities in Los Gatos. Information is included on housing program administered by the Town of Los Gatos as well as an inventory of affordable housing developments, TOWN HOUSING PROGRAMS 1. Below Market Price (BMP) Program The Town of Los Gatos was one of the first communities in Califomia to adopt an Inclusionary Housing Zoning Ordinance in 1979. Since its adoption, the Town has implemented the Ordinance through the "Below Market Price" program. The BMP Program requires that a certain number of units in new residential developments be designated for low and moderate -income occupancy. The exact number of units required depends on the type and size of the development. For example, projects of 5-19 market rate units must provide a number of BMP units equal to 10% of the market rate units. Projects between 5-10 units may contribute an in -lieu fee instead of constructing actual units. BMP ownership units are initially sold at affordable prices to low and moderate -income persons and certain restrictions are recorded with the grant deed to ensure that there will be continued occupancy and ownership of the unit by low and moderate -income persons. The deed restrictions are designed to ensure that the units, even on resale, will remain affordable. When a BMP owner wishes to sell the unit, he or she must give the Town the right of first refusal to purchase it. The Town has six months in which to find a new purchaser. As of Spring 2002, there were 62 ,units in the Town's inventory of BMP units. However, another 60 BMP/Teacher units had been approved but not yet built. If these units are built, the Town's inventory of BMP units will be approximately 122 total units. The Housing Authority of the County of Santa Clara manages the BMP program for the Town. 2. Density Bonus Program The Town's Density Bonus Program provides a density bonus of up to 100% of the units permitted by the land use designation for housing restricted to seniors, disabled persons, very low and low-income households. From 1985-90, 115 density bonus units were approved. From 1990-96, 27 additional units were approved because of the density bonus program. During the period from 1996- 2002, the Town approved residential density bonuses in the Los Gatos Creek Village Apartments, the Open Doors development and the Sobrato development. SEPTEMBER 2002 53 3. Redevelopment Housing Funds In 1991, the Town adopted a Redevelopment Plan for the Central Los Gatos area and, in 1992, began implementation activities in that area. According to State law, approximately 20% of tax increment funds generated in a Redevelopment area are to be used for affordable housing. The 20% tax increment funds are an important housing revenue source for a local community. Communities have a great deal of flexibility in using those funds as compared to State or Federal housing funds which may have detailed eligibility and use restrictions. The fund's balance as of Spring 2002 was approximately $1.8 million dollars. It is expected that there will be additional annual increases to the fund from 2002-2006. The chart on page 51 of this document describes the amount of housing funds estimated from 2001-2006. The Town's Redevelopment Agency expects to utilize fund resources for the development and/or provision of affordable housing opportunities. 4. In -Lieu Fee Fund As required by the Town's BMP Program, certain residential developments must either built affordable units or contribute to the Town's BMP In -Lieu Fee fund. As of Spring 2002, the In -Lieu Fee fund had a balance of approximately $1.4 million dollars. Similar to Redevelopment Housing Funds, the monies in this fund are to be used for the development or provision of affordable housing opportunities. 5. Housing Conservation Program In 1976, the Town initiated a program that was designed to assist in the rehabilitation of housing units occupied by lower income households. The program has continued to operate since 1976 and currently the Town provides both financial and technical assistance to owners of units occupied by lower income households. The Town provides both loans and grants to assist in financing repairs to correct health or building code violations, handicap accessibility modifications, earthquake safety or alleviate overcrowded situations through additional bedrooms or baths. 6. Rental Dispute Resolution Program The Rent Resolution Program monitors rent increases in multi -family housing development in the Town. The administration of the program is contracted out to a local non-profit organization, Project Sentinel. 54 CHAPTER 6: AFFORDABLE HOUSING OPPORTUNITIES Generally, rent increases are limited annually to the greater of 5% or 70% of the Consumer Price Index for that year. However, if repairs are made to the property or if the property is sold, additional rent increase can be allowed. Staff at Project Sentinel work with property owners in determining appropriate rent increases. Further, staff can also provide information and mediation services in regard to certain type of tenant -landlord issues. Open Doors is a 64 Unit Affordable Housing Development in Los Gatos AFFORDABLE HOUSING UNIT INVENTORY In addition to the housing programs identified on the previous pages, the affordable housing opportunities in Los Gatos include units specifically designated in developments for very low, low and moderate -income households. The table on the following page summarizes these units by name, type and household income level. SEPTEMBER 2002 55 0 C•4 2 a. z 0 t.7 0 —1 0 0 z Lu z z z 1 tu 0 cc 0 11. u. .• 0 0 0 0 Lu 0 LOW INCOME 0 LU 0 LU u > TYPE OF AFFORDABLE UNIT Lt/ .14 12,1 uJ < -01 Z Cr) v.) Cc, N a— c) 0 00 0 0 0 0 8 0 0 7 8 co 0_ 43 cis 13. co co 0 0 0 43 8 -o a) 8 tr) 0 43 co *c CL 4, 43 'C 0- Ta. "L= a. .4C 0 12 co e 0 0 0 di LL. < 0 CL Fountain Lane 0 0 ea) 8 0 Owner Occupied co 0 co O. cLi 0 0 0 0 co 0 0 0 . c a) Renter Occupied American Baptist Home 43 43 > .c c 0 se 't 5 03 0 . 0 o 0 co 0 .. g c 5 co cu Je 0 o 7.2) .c o .c E w z 0 LU 0 co 0 cO .0 0 Los Gatos Fourplex Renter Occupied 43 a) LU o. L.7 CD 0 a O. Q7 L'o- C C CD CD it 2 Renter Occupied X e E e -2, E o o 00 95 Fairview Plaza 43 CD 0 cu o. 0 PMG Properties Villa Vasona c 7 0 co 7. REVIEW OF 1997 HOUSING ELEMENT The Town's previous Housing Element was adopted in 1997. In order to effectively plan for the future, it is important to reflect back on the goals of the 1997 Element and to identify those areas where progress was made and those areas where additional effort is needed. In fact, the State Housing Element guidelines require communities to evaluate their previous Housing Element according to the following criteria: • Effectiveness of Element, • Progress in Implementation, and • Appropriateness of Goals, Objectives and Policies. EFFECTIVENESS OF ELEMENT The Town's 1997 Housing Element identified the following goals: 1. To improve the choice of housing opportunities for senior citizens, families and singles and for all income groups through a variety of housing types and sizes, including a mixture of ownership and rental housing. 2. To preserve existing moderately priced and historically significant housing. 3. To improve the quality of existing housing and prevent blight. 4. To eliminate racial, lack of handicapped accessibility and all other forms of discrimination that prevent free choice in housing. 5. To make infrastructure projects and residential and nonresidential developments be compatible with environmental quality and energy conservation. 6. To Ieduce the homeless population. 7. To provide housing affordable to people who work in the Town. 1n order to achieve these goals, the 1997 Element listed a series of policies and programs that would help to achieve the goals. The tables on the following pages identify the policies and programs from the 1997 Element. The tables SEPTEMBER 2002 57 then also include a description of the actions that were taken from 1996-2001 and the progress that was achieved in addressing the 1997 goals and policies. The Los Gatos Creek Village Apartments (Miles Avenue) were completed with Town assistance during the 1996-2001 Housing Element time frame. It should be noted that the 1997 Housing Element projected a 4-year time frame for implementation of the housing program policies and goats. The time frame projected was 1996-99 because it was anticipated that the Housing Element would be updated in 1999. However, the deadline to update the Element in 1999 was later extended by the California Department of Housing and Community Development in order to provide enough time for ABAG to revise the Regional Housing Needs Allocation plan for the area. The deadline for all of the ABAG jurisdictions to revise their Housing Elements was extended to December 30, 2001. Therefore, the goals and objectives as listed in the following tables were originally expected to be achieved between 1996-99 but the accomplishments as listed were actually achieved during the time period from 1996-2001. 58 CHAPTER 7: REVIEW OF 1997 HOUSING ELEMENT ILLUSTRATION # 22: PROGRESS IN ACHIEVING 1997 HOUSING POLICIES AND PROGRAMS (1996-2001) POLICY IMPLEMENTATION PROGRAM ACCOMPLISHMENTS (1996-2001) COMMENTS 1. Developments restricted for occupancy by senior citizens, handicapped or persons in the very low and low income groups shall be eligible for a density bonus of up to 100% of the units permitted by the land use designation as shown on the land use plan or any specific plan. 1. Density Bonus The Town will continue the Density Bonus Program allowing 100% density bonus for qualified projects. The Town Council approved density bonuses for the Open Doors development and the Sobrato Development (in early 2002). Further, the Council also approved a 100% density bonus for the Los Gatos Creek Village Apartments, which was completed in 2001. Continue Policy In 2002-2006 Time Frame with following changes: a) Ensure that staff and developers are aware of density bonus b) Develop marketing materials for development community 2. The Town will consider reductions in development standards for affordable housing developments. 2. Development Standards The Town will continue to review and, where feasible reduce development standards (e.g. parking, open space) for affordable developments. Development standards were reduced for the Los Gatos Creek Village Apartments, The Council also approved exceptions to the maximum height limitation for the Sobrato Development Continue Policy In 2002-2006 Time Frame 3. The Town will consider Housing Element and Technical Appendix goals, policies and needs when reviewing residential applications of 3 , or more units. 3. Consistency with Housing Element and Housing Element Technical Appendix All approvals of residential developments of 3 or more units must include a finding that the proposed development is consistent with the Town's Housing Element and addresses the Town's Housing needs as identified in the Element and Technical Appendix. All residential applications of 3 or more units from 1997-2001. contained a finding that the development was consistent with the Town's Housing Element, Continue Policy In 2002-2006 Time Frame SEPTEMBER 2002 59 POLICY 4. The town shall support the mixing of residential uses with other non- residential uses. New residential units will be encouraged with commercial uses on the same site. Existing residential uses in non-residential areas shall be allowed to remain when certain conditions are met. IMPLEMENTATION PROGRAM 4. New Residential uses in Commercial Areas The Town shall encourage the mixing of residential uses with commercial uses, 5. Existing Residential Uses In Non -Residential Areas ACCOMPLISHMENTS (1996-2001) From 1996-2001, the Town Council approved several mixed use developments including: a) Los Gatos Boulevard[Terreno de Flores development, which includes 14,000 square feet of office space and 19 residential units b) Sobrato Development, which includes a 288,000 square foot research building and 135 apartments. Existing residential uses were allowed to remain in non-residential areas. 5. Higher density, affordable housing shall be encouraged throughout the Town. 6. Infill and Rezoning Policies The Town shall approve mixed -use development at high density or rezone sufficient acreage to RM:5- 20 as needed in order to meet the very low and low- income need as identified in illustration #16 of the Housing Element Technical Appendix. The Town will also adopt a policy that specifies that any rezoning of non-residential land to residential land shall only be approved if the site is rezoned for higher density use. The Town has approved mixed -use developments through the Planned Development process. The Los Gatos Soulevard/Terreno de Flores and Sobrato developments mentioned above are two examples. Illustration #18 in the 1997 Housing Element identified the following very low and low income needs for 1996-99: Very Low. 45 Units Low; 44 Units A total of 13 very low Income and 12 low -Income units have either been approved or constructed at the time that this Housing Element was written. COMMENTS Continue Policy in 2002-2006 Time Frame Continue Policy in 2002-2006 Time Frame The Town has been supportive of mixed -use development and will continue this policy in the future. 60 CHAPTER 7: REVIEW OF 1997 HOUSING ELEMENT POLICY IMPLEMENTATION PROGRAM ACCOMPLISHMENTS (1996-2001) COMMENTS 6. Smaller, moderate cost, quality housing units shall be encouraged and the expansion of existing homes will be limited. 7. Housing Unit Size and Neighborhood Compatibility The Town will continue to use Floor Area Ratio (FAR) in order to control the size of dwelling units in relation to the lot and surrounding neighborhood. The Town will consider the feasibility of adopting a Residential Demolition Ordinance. The Town continues to consider FAR through the Zoning Ordinance provisions ( Sec. 29.40.075. In January 1998, the Town also amended the °Residential Development Standards for All Single Family and Two Family Dwellings.° Those standards establish guidelines for site and neighborhood compatibility including building size and mass. Demolition of existing residences Is also Included in the Standards. It should also be noted that demolition of historic structures is controlled by the Ordinances for specific Historic Districts in the Town. Continue Policy in 2002-2006 Time Frame 7. The conversion of existing rental projects to condominium ownership shall be discouraged in order to maintain the stock of available rental units. 8. The Town shall attempt to maintain a range of 30-35% of the total Town dwelling units as rental units. B. Condominium Conversion Ordinance The Town shail formalize its policies regarding the conversion of apartments to condominiums by adopting a Condominium Conversion Ordinance. The Town's Zoning Ordinance effectively prohibits the conversion of apartments due to parking and open space requirements. The Town has achieved this objective, The 2000 U.S. Census data indicate that 35% of the Town's housing stock was renter -occupied. Since rental housing often times provides a more affordable source of housing opportunities, it Is important to preserve the existing housing stock. The Town will implement the Rental Housing Preservation Program for the 2002-2006 time frame. 9, Secondary units shall be allowed subject to restrictions on lot size, floor area, density and occupancy. 9. Secondary Dwelling Unit Ordinance The Town will evaluate the Secondary Dwelling Unit Ordinance to determine if revisions are appropriate. Secondary dwelling unit provisions are contained in Division 7 of the Town's Zoning Ordinance. There has been no evaluation of Division 7 or revision of Secondary Unit requirements from 1996- 2001 Ensure that the evaluation of Secondary Unit requirements is a high priority work task for the 2002- 2006 time frame. SEPTEMBER 2002 61 POLICY 10. The Towr shall discourage the conversior of mobile home parks into other uses that would reduce the availability of comparably priced housing units. 11. The Town shall utilize rehabilitation to preserve and improve the quality of existing housing and eliminate blight. 12. The Town shall encourage increased opportunities for home ownership but not at the expense of the; availability of multiple rental unit construction. IMPLEMENTATION PROGRAM 10. Mobile Home Park Ordinance The Town will continue to administer the Mobile Horne Park Ordinance and will revise the Ordinance to specify that any proposal to convert a mobile home park to a residential development shall provide at least as many low cost housing units as could be accommodated within the existing park's capacity. 11. Housing Conservation Program The Town will continue to provide financial and technical assistance to lower income households. Special efforts will be made to market the program to the Town's mobile home parks as well as other prospective applicants. Objective: 6 Households Assisted Annually 12. Mortgage Credit Certificate Program (MCC) The Town shall continue to participate in the Mortgage Credit Certificate Program. Objective: 5 Households Assisted Annually ACCOMPLISHMENTS (1996-2001) There were no mobile home park conversions during the 1996-2001 time period. (There are two mobile home parks in Los Gatos.) The Mobile Horne Park Ordinance was not revised during the time period. Objective Partially Achieved From 1997-2001, the Housing Conservation Program assisted a total of 7 households. The 1996-99 objective was to assist 6 households annually. Therefore, the program only partially achieved its stated objectives. Objective Partially Achieved From 1997-2001, there were four Mortgage Credit Certificates (MCC) issued for homes purchased In Los Gatos. As of Spring 2002, the maximum sales price fora MCC unit is $410,000. This maximum has precluded most purchasers of units in Los Gatos from qualifying for a MCC. COMMENTS Revise Mobile Home Park Ordinance to ensure the provision of affordable units similar to the existing park's unit capacity. The Town needs to update its housing condition information by undertaking an evaluation of housing conditions in the older housing stock. Once the units have been Identified that need rehabilitation assistance, more aggressive marketing should be undertaken. Continue to support MCC Program and related programs for Teacher Certificate a! •a First Time Homebuyers as offered by the County of Santa Clara. 62 CHAPTER 7: REVIEW OF 1997 HOUSING ELEMENT POLICY IMPLEMENTATION PROGRAM ACCOMPLISHMENTS (1996-2001) COMMENTS 13. The Town shall encourage the provision of new units for 13. Below Market Price (BMP) Program The Town shall continue The Town has continued to implement the The Town has not ownership and to implement the BMP BMP program through the 1996-2001 revised eligibility rental by low and program and shall period. criteria for the moderate -income implement the following BMP program. households. revisions: The Town will be 14. New and existing dwelling a) If necessary, the Town will exercise its "right of first refusal" to Obiective Achieved holding a Housing Affordability From 1996-2001, there were 8 BMP units units for purchase BMP units added to the housing stock (Bella Vista Study Session in ownership and that may have resale and The Village). In addition, $1.2 million Fall 2002 and will rental by very that exceed low dollars in In -Lieu Fees were collected study this issue low, low and moderate -income households shall• prices or moderate -income affordability limits. during the time period. then. be dispersed throughout the Town. b) The Town will consider revising the income eligibility so that future BMP units are affordable only to households with Incomes at or below 80% of median income. c) The Town will continue to monitor the existing inventory of BMP units, especially rental units. Objective: 5 BMP Units $400,000 in In -Lieu Fees 14. Affordable Housing The Town did riot establish a separate The Town will Fund Affordable Housing Fund but, rather, used continue to utilize The Town will utilize the Affordable Housing Fund A financial provideto various funding resources (Redevelopment housing set -aside funds, In -Lieu Fees and CDBG) to assist affordable housing. all funding resources for affordable housing assistance to developers Obiective Achieved assistance and In 2000-2001, the Town provided financial who develop affordable development in • housing. assistance to the Los Gatos Creek Village the 2002-2006 Objective: 15 total new units assisted Apartments, a 12-unit project of which very low-income households occupy all units. In addition, the Town also contributed time frame. CDBG funds to assist with 25-unit HomeSafe transitional housing and 50-unit Sobrato Living Center (transitional, permanent and emergency housing). Both of these developments are located in Santa Clara but are available to Los Gatos residents. SEPTEMBER 2002 63 POLICY 13. The Town shall encourage the provision of new units for ownership and rental by low and moderate -income households. (Continued) 14. New and existing dwelling units for ownership and rental by very low, low and moderate -income households shalt be dispersed throughout the Town. Continued 15. The Town Will make every effort to preserve the existing supply of affordable housing units. 64 IMPLEMENTATION PROGRAM 15. Redevelopment Housing Program The Town will continue to implement the Redevelopment Housing Program and to allocate housing tax increment funds to the Affordable Housing Fund, Any Redevelopment funds expended shall be used In the following proportions: 31% - very low income 31 % - low income 38% - very low, low or moderate income 16. Surplus Lands Program The Town will monitor the disposal of any surplus public lands and consider the use of those lands for affordable housing. 17. Affordable Housing Program Staffing The Town will evaluate the need to create a staff position that will co- ordinate all of the Town's affordable housing policies and programs and be responsible for the monitoring of those programs. 16. At Risk Preservation Program The Town will work with the owners of the three housing developments in the Town that are at risk of losing government subsidies which enable them to be affordable, ACCOMPLISHMENTS 1996-2001 COMMENTS Approximately $538,500 was provided to the Los Gatos Creek Village Apartments, a 12-unit apartment in which very low- income households occupy all units. In late 2001, the position of Redevelopment Manager was filled. With this new staff person, the Town expects increased Redevelopment, especially housing, activity. There were no surplus sites available during the time frame of the Element, See accomplishments in #15 above. The job duties of the Redevelopment Manager position include supervision of the Town's affordable housing programs. Two of the three developments, Villa Vasona and Los Gatos Fourplex, are still under affordability restrictions. However, the third development, Hartin House, did lose its affordability restrictions and the units are no longer affordable. CHAPTER 7: REVIEW OF 1997 HOUSING ELEMENT POLICY ' IMPLEMENTATION PROGRAM ACCOMPLISHMENTS (1996-20011 COMMENTS 16. The Town shall encourage landlords and tenants to work together to develop rental rates fair to the needs of both parties. 19. Rental Resolution Program The Town shall continue to operate the Rental Resolution Program and will conduct a bi-annual review of the program and will revise the program if necessary. The Town continues to operate this program but has re -named it the "Rental Dispute Resolution Program.' Continue to fund Rental Dispute Resolution Program. 17, The Town shall continue its participation in regional and countywide housing efforts in cooperation with the federal and state governments to develop realistic programs to provide housing for very low and low-income families. 20. Coordinate Housing Programs The Town shall continue to review and coordinate regional, state and county, reg, federal programs for the satisfaction of housing needs in the Town. The Town participates as a member of the HOME consortium of Santa Clara County and the CDBG Urban County program. Further, Town staff also participates in the Santa Clara County Housing Task Force. Continue participation in County programs and coordination of other governmental resources. 18. The Town shall work with other agencies to provide housing or other appropriate assistance for the homeless population. 21. Homeless Assistance Program The Town will continue to work in a co -coordinated manner with Santa Clara County in developing a continuum of resources available to homeless households. As part of the Santa Clara County Continuum of Care plan, the Town contributes CDBG funds to emergency, transitional and permanent housing developments in Santa Clara County. Further, the Town's Community Services Department coordinates services from non - profit groups (Second Harvest Food Bank, Catholic Charities, Live Oak Senior Center, etc.) that assist households at risk of homelessness. Continue to participate in the County Continuum of Care process. 19. The Town shall assist in the provision of equal housing opportunities for all households , regardless of race, age, sex; marital status, ethnic background or other arbitrary factors. 22. Fair Housing information The Town will continue to provide fair housing, tenant -landlord mediation services and housing information. The Town continued to fund non-profit agencies that provided fair housing counseling and information services. Continue to fund fair housing activities. SEPTEMBER 2002 65 Example of new construction, infill development in Spring 2002. (Boyer Lane) PROGRESS IN IMPLEMENTATION To assess the Town's progress in implementing the 1997 Housing Element, the following key areas were reviewed. 1. Production of Housing The 1997 Housing Element identified a need for new construction of 144 units, From January 1, 1996 to January 1, 2000, there were 132 housing units added to the Town's housing stock. Therefore, it would appear that 92% of the Town's new construction need was achieved from 1996-2000. However, the 1997 new construction need specifically identifies units that would be affordable as follows: 45 Units Affordable to Very Low Income Households 44 Units Affordable to Low Income Households 55 Units Affordable to Moderate Income Households 144 - TOTAL UNITS 66 CHAPTER 7: REVIEW OF 1997 HOUSING ELEMENT ILLUSTRATION # 23: UNITS PRODUCED BY INCOME LEVEL 1996-2000 Household Income 1997 Housing Element Objective Units Produced 1996-2000 % Achieved Very Low Income 45 12 27% Low Income 44 _ 3 7% Moderate Income 55 5 9% Above Moderate Income 0 112 — TOTAL 144 132 _ 92% The 12 units of very low-income housing were developed at the Los Gatos Creek Village Apartments (Miles Avenue). The low-income units include 2 at Bella Vista and 1 at the Village. The moderate -income units include 4 units at Bella Vista and 1 unit at the Village. As the table above demonstrates, the Town did not achieve its objectives for very low, low or moderate -income housing during the 1997 Housing Element time frame. 2. Preservation of "At Risk" Units Two "at risk" affordable housing developments were preserved during the planning period (Villa Vasona and the Los Gatos Fourplex). Unfortunately, the Hartin House lost its affordability restrictions during the same time period. 3. Rehabilitation of Existing Units The Town had established a goal of rehabilitating 6 units annually or 24 units total during the .time frame of the 1997 Housing Element. However, the number of units actually rehabilitated from 1996-2001 was 7 units total. Therefore, the program did not achieve its objective. APPROPRIATENESS OF GOALS, OBJECTIVES AND POLICIES Earlier in this chapter (page 57), the goals from the 1997 Housing Element were identified. These goals are still appropriate for the 2002-2006 time frame. However, the language of the goals will be modified to more specifically respond to the housing environment in Los Gatos in 2002. The following chapter, Chapter 8, identifies the goals, policies and programs for the 2002-2006 time period. SEPTEMBER 2002 67 SUMMARY :ice .t J:ii !.: i fi "l• w {.::� ?!p =t1..w� Tf .:Y+:f: :: THE TOWN ACHIEVED 92% OF ITS QUANTIFIED OBJECTIVES FOR NEW CONSTRUCTION OF UNITS DURING THE 1996-2000 TIME FRAME. HOWEVER, THE TOWN DID NOT ACHIEVE ITS NEW CONSTRUCTION OBJECTIVES FOR UNITS AFFORDABLE TO VERY LOW, LOW INCOME AND MODERATE INCOME HOUSEHOLDS. THIS WAS PARTIALLY DUE TO THE FACT THAT LOS GATOS IS ONE OF THE MOST EXPENSIVE HOUSING MARKETS IN THE SAN FRANCISCO BAY AREA AND, INDEED, THE NATION. FURTHER, HOUSING PRICES ESCALATED DRAMATICALLY, ESPECIALLY DURING THE 1998-2000 TIME PERIOD. THIS SITUATION MADE IT ESPECIALLY DIFFICULT TO DEVELOP HOUSING, ESPECIALLY AFFORDABLE HOUSING. QUANTIFIED OBJECTIVES WERE ONLY PARTIALLY ACHIEVED IN REGARD TO PRESERVATION OF AFFORDABLE, AT -RISK UNITS AND REHABILITATION OF THE EXISTING HOUSING STOCK. 68 CHAPTER 8: HOUSING PROGRAM STRATEGY I 8. HOUSING PROGRAM STRATEGY This chapter of the Housing Element describes the strategy that will be followed in order to address the housing issues and needs previously identified in this document. The strategy consists of goals, policies and programs for the time frame of 2002-June 30, 2006. Included in the description of each housing program are a proposed time frame, responsible party, financial resources and quantified objectives, where appropriate. •_.. ...•!ci ..ad ...e,. . _ ...:Q'•...✓°M=..::.1•'rtstii^'.'tJr�r.e..x^_ir}L+..vi�.?:. 'L6�1Y.. -. SIGNIFICANT HOUSING ISSUES Adequate Sites for Housing: The Town needs to provide adequate sites for 132 dwelling units to meet its 2002-2006 Regional Housing Need. The 132 unit estimate Includes 59 very low income units and 73 moderate income units. With the opportunities to apply Mixed Use or a density bonus, there is sufficient land zoned at appropriate densities with infrastructure available to meet the projected need for very low and moderate income units. Development of Affordable Housing for Lower and Moderate Income Households: • The most significant new construction need is housing for very low, low and moderate -income households. Of the 132 projected units needed, all of these units are estimated to be needed to be affordable to very low and moderate -Income households. Conservation of Existing Units: The Town's existing stock of mobile homes and rental units provides an Important resource for affordable housing. These units need to be preserved. Further, rehabilitation assistance needs to continue to be made available to property owners of units occupied by lower income households. The Town also needs to conduct a housing condition survey in the older areas of the community in order to determine the extent of need for rehabilitation assistance. SEPTEMBER 2002 69 CHAPTER 8: HOusit GROGRAM STRATEGY GOAL 1: EXPAND THE CHOICE OF HOUSING OPPORTUNITIES FOR ALL ECONOMIC SEGMENTS OF THE COMMUNITY THROUGH A VARIETY OF HOUSING TYPES AND SIZES, INCLUDING A MIXTURE OF OWNERSHIP AND RENTAL HOUSING. POLICY IA: CONTINUE TO DESIGNATE SUFFICIENT RESIDENTIALLY -ZONED LAND AT APPROPRIATE DENSITIES TO PROVIDE ADEQUATE SITES TO MEET Los GATOS' NEW CONSTRUCTION NEED FOR 2002-2006. Implementation Program: 1 M Adequate Land Inventory The Town will ensure that there is land available at appropriate zoning categories to meet its need for very low and moderate income households, as identified in Illustration #19 on page 49. In order to achieve this, the Town will assess the progress of the development community in providing very low income units during the latter part of 2003. If it appears that the very low income units are not being produced as needed, the Town will consider rezoning up to 5 acres of vacant land to RM:12-20 units per acre and/or applying an affordable housing overlay zone(s). Time Frame: 2002-2006: Continue to maintain an adequate land inventory that meets 2002-2006 Regional Housing Needs goals. Late 2003: Evaluate need to rezone up to 5 acres of R-1 or RM:5-12 vacant land to RM: 12-20 units per acre and/or apply affordable housing overlay zone(s). Responsible Party: Community Development Department Objective: Maintain a Land Inventory, which will provide sites that accommodate the following: Units Affordable to Very Low Income 59 Units Units Affordable to Moderate Income 73 Units Total Need: 132 Units POLICY 1B: MAINTAIN AND/OR ADOPT APPROPRIATE LAND USE REGULATIONS AND OTHER DEVELOPMENT TOOLS TO ENCOURAGE THE DEVELOPMENT OF AFFORDABLE HOUSING. Density Bonus Continue to provide up to a 100% density bonus for developments that include housing for elderly, handicapped and/or very low and low-income households. Eligibility requirements are as follows: SEPTEMBER 2002 71 Preservation of "At Risk" Affordable Units Another significant issue in the 2002-2006 time frame is the expiration of Section 8 subsidies for the Villa Vasona development, This 107-unit development provides affordable housing to elderly and disabled households. The Town needs to monitor the potential expiration in 2004 of these subsidies and, if needed, develop a strategy to preserve the affordability of the units. Management of Housing Programs and Funds The goals, policies and programs identified in the following pages Include many proposed actions that will be the responsibility of the Community Development Department and/or Redevelopment Agency. In addition to implementing these actions, the Town also has existing programs that need to be managed (e.g. Below Market Rate Program) and a significant source of housing funds that needs to be expended (e.g. Redevelopment Housing Set -aside funds and In - Lieu fee funds). The Town needs to ensure that there is adequate staff support to manage and implement the proposed 2002-2006 housing strategy. In order to address the housing issues identified above, a housing strategy of goals, policies and programs for 2002-2006 has been developed. This strategy is described on the following pages. The policies and programs are organized according to the following five general goals: GOAL 1: EXPAND THE CHOICE OF HOUSING OPPORTUNITIES FOR ALL ECONOMIC SEGMENTS OF THE COMMUNITY THROUGH A VARIETY OF HOUSING TYPES AND SIZES, INCLUDING A MIXTURE OF OWNERSHIP AND RENTAL HOUSING. GOAL 2: PRESERVE EXISTING RESIDENTIAL OPPORTUNITIES AND ENCOURAGE ADDITIONAL RESIDENTIAL USE THAT IS COMPATIBLE WITH NEIGHBORHOOD AND COMMUNITY. GOAL 3: PRESERVE THE EXISTING AFFORDABLE HOUSING STOCK GOAL 4: ENSURE THAT ALL PERSONS HAVE EQUAL ACCESS TO HOUSING OPPORTUNITIES GOAL 5: PROVIDE ADEQUATE MANAGEMENT AND STAFFING OF AFFORDABLE HoustNG FUNDS AND PROGRAMS 70 • All housing projects on Tots in excess of 40,000 square feet must be processed as Planned Developments in order to receive a density bonus, • Housing restricted to elderly, handicapped ind very low and low income residents shall be eligible for a density bonus up to 100% of the units permitted by the land use designation as shown on the land use plan or any specific plan and incentives based on the State Density Bonus law. • Town density bonuses will also be granted for residential projects that actively facilitate and encourage use of transit or directly provide transit services to residents. • Concessions to the Town's density, traffic and parking regulations may be granted for mixed -use projects that provide residential units in non-residential zones. • BMP (Below Market Price) units are not included when calculating density bonuses for a property. The Town will develop marketing materials that will ensure that Town staff and developers are aware of the various features of the density bonus program. Time Frame: 2002-2003 Develop marketing materials 2002-June 30, 2006 Implement Program Responsible Party: Community Development Department 3 El Development Standards Continue to review and, where feasible, reduce development standards (e.g. parking requirements, open space requirements, etc.) for housing developments that will guarantee affordable units on a Tong -term basis for low and moderate -income households. Time Frame: 2002-June 30, 2006 Responsible Party: Community Development Department 4 ® Mixed Use Developments Encourage mixed -use developments that provide affordable housing close to employment centers and/or transportation facilities. Time Frame: 2002-June 30, 2006 Responsible Party: Community Development Department 72 CHAPTER 8: HOUS1 PROGRAM STRATEGY 5 iE Below Market Price (BMP) Program Continue to implement the BMP Program in order to increase the number of affordable units in the community. Continue policy that BMP units are counted in addition to maximum density allowed on a site. At the Housing Affordability Study Session in Fall 2002, evaluate changing eligibility criteria to very low and low-income households. Time Frame: Responsible Party: Objective: 2002-June 30, 2006 Community Services Department 10-15 Total BMP Units from 2002-2006 6 Second Unit Program Revise existing second unit program to encourage the production of more second units on residential parcels. Evaluate existing parking, square footage, transfer of credits and other requirements to determine whether revisions would encourage the development of more second units. 7 Ea Time Frame: 2002-2003 2002-June 30, 2006 Responsible Party: Objective: Evaluate and Revise Program Implement Program Community Development Department 10 Total New Second Units from 2002-2006 Consistency with Housing Element/Community Benefit Continue policy that all approvals of residential developments of 3 or more units must include a finding that the proposed development is consistent with the Town's Housing Element and addresses the Town's housing needs as identified in the Housing Element. Further, review of potential developments shall include a determination that affordable units provided beyond the minimum BMP requirements are to be considered as a significant community benefit. Time Frame: 2002-June 30, 2006 Responsible Party: Community Development Department SEPTEMBER 2002 73 8 l Annual Housing Report Prepare an annual housing report for the review of the Town Council including information on progress made towards achieving new construction need, affordable housing conserved/developed, effectiveness of existing programs and recommendations for improvement. Consult with non-profit providers, special need providers and other community resources in the preparation and evaluation of the report. Time Frame: 2002-June 30, 2006 Responsible Party: Community Development Department POLICY 1C: DEVELOP AND UTILIZE ALL AVAILABLE FUNDING RESOURCES IN ORDER To PROVIDE THE MAXIMUM AMOUNT OF AFFORDABLE HOUSING AS FEASIBLE. Implementation Programs: 9 ® Redevelopment Housing Set -Aside Funds/In-Lieu Fees Develop a strategy for use of Redevelopment Housing Set -Aside funds and In -Lieu fees from the BMP Program. Consider the needs as identified in this Housing Element (e.g. Preservation of At Risk Units, Development of Units Affordable to Very Low and Low - Income Households, etc.) in the development of funding conditions and incentives. as PE 74 Time Frame: 2002- January, 2003 2002-June 30, 2006 Responsible Party: Develop Funding Strategy Implement Strategy Redevelopment Agency Mortgage Credit Certificate (MCC) Program Continue to encourage Los Gatos households to participate in MCC and other financial assistance programs (e.g. Teacher Mortgage Assistance) provided in the County of Santa Clara. Time Frame: 2002-June 30, 2006 Responsible Party: County of Santa Clara Objective: 5 Households Total Assisted from 2002-2006 CHAPTER 8: Housir °ROGRAM STRATEGY GOAL 2: PRESERVE EXISTING RESIDENTIAL OPPORTUNITIES AND ENCOURAGE ADDITIONAL RESIDENTIAL USE THAT IS COMPATIBLE WITH NEIGHBORHOOD AND COMMUNITY. POLICY 2A: ENCOURAGE THE MAINTENANCE AND IMPROVEMENT OF EXISTING HOUSING UNITS. Implementation Programs: 11 El 12 jt Housing Conservation Program Continue to provide Housing Conservation Program assistance to property owners to improve their housing units. Undertake the following actions to increase program productivity: • Conduct a housing condition survey in neighborhoods with older housing stock. • If needed, redesign program goals and objectives to respond to results of housing condition survey. • Redesign marketing materials and aggressively market program to potential applicants. Time Frame: 2002-2003 2002-June 30, 2006 Conduct housing condition survey Implement Program Responsible Party: . Community Services Department Funding Source: CDBG Funds/Redevelopment Funds Objective: 10-20 Units Total Rehabilitated from 2002-2006 Home Access Program Continue to support countywide programs, such as the Home Access Program, which provides assistance with minor home repairs and accessibility improvements for lower -income households. Time Frame: 2002-June 30, 2006 Responsible Party: County of Santa Clara SEPTEMBER 2002 75 POLICY 28: WHEN EVALUATING NEW DEVELOPMENTS, EVALUATE IMPACT OF DEVELOPMENT ON TowN's JOBS/HOUSING RATIO. Implementation Programs: 13 19 Jobs/Housing Balance As part of the development review process, evaluate applications that have significant number of jobs or housing in regard to the potential impact on the Town's jobs/housing ratio. The objective is to maintain the Town's 2002 ratio of 1.5 jobs per household/housing unit. However, the jobs/housing balance shall not be used as a criteria for denying projects that include affordable housing opportunities. Time Frame: 2002-June 30, 2006 Responsible Party: Community Development Department Objective: Maintain 1.5 jobs to household/housing unit ratio POLICY 2C: ENCOURAGE RESIDENTIAL CONSTRUCTION WHICH PROMOTES ENERGY CONSERVATION. 14 :h. Energy Conservation Opportunities Continue to enforce Title 24 requirements for energy conservation and evaluate utilizing some of the other suggestions as identified in Chapter 9 of this document, Time Frame: 2002-June 30, 2006 Responsible Party: Community Development Department 15 II Weatherization Program Support the weatherization program administered countywide by the County of Santa Clara. This program assists very low-income homeowners with weatherization improvements to their home. Time Frame: 2002-June 30, 2006 Responsible Party: Community Development Department 76 CHAPTER 8: Housir PROGRAM STRATEGY GOAL 3: PRESERVE THE EXISTING AFFORDABLE HOUSING STOCK POLICY 3A: SUPPORT THE PRESERVATION AND CONSERVATION OF EXISTING HOUSING UNITS THAT PROVIDE AFFORDABLE HOUSING OPPORTUNITIES FOR TOWN RESIDENTS AND WORKERS AND STRIVE TO ENSURE THAT AT LEAST 30% OF THE HOUSING STOCK ARE RENTAL UNITS. Implementation Programs: 16 ® Mobile Home Preservation Preserve existing mobile homes (150 mobile homes total) and adopt mobile home park conversion policies to preserve existing housing opportunities and to ensure the provision of affordable units similar to the existing park's unit capacity. Time Frame: 2002-2006 Responsible Party: Objective: Implement policies Community Development Department Preserve existing 150 mobile home units. 17 :' Preserve "At Risk" Affordable Housing Units Monitor the 220 publicly assisted, multi -family housing units in the Town to ensure that they retain their affordability status. These developments include Villa Vasona, The Terraces, Open Doors, Los Gatos Four Plex, 95 Fairview Plaza and the Los Gatos Creek Village Apartments. Develop a strategy to retain affordability of units at Villa Vasona, which is scheduled to have its Section 8 assistance expire in November 2004. Included in that strategy will be a notification procedure for tenants that will be developed cooperatively between the Town and the property owner. Time Frame: 2002-June 30, 2006 Monitor Affordability Status of Developments September 2003 Complete strategy to retain affordability status of Villa Vasona Funding Sources: Redevelopment Housing Set -Aside Funds, CDBG and/or HOME Funds, other Federal and State Funding Resources SEPTEMBER 2002 77 Responsible Party: Community Development Department and Redevelopment Agency Objective: Preserve existing 220 units of affordable, multi -family housing. 18 Rental Housing Conservation Program The Town's existing multi -family, privately owned rental units provide housing opportunities for households of varied income levels. The Town will continue to implement Section 29.20.155 of the Zoning Ordinance that addresses conversions of residential use. Specifically, Section 29.20.155(a) (2) that requires that any proposed conversion satisfy the housing goals and policies as set forth in the General Plan. Time Frame: 2002-June 30, 2006 Continue Implementation of Conservation Policies Responsible Party: Community Development Department 78 CHAPTER 8: Housir '3ROGRAM STRATEGY GOAL 4: ENSURE THAT ALL PERSONS HAVE EQUAL ACCESS TO HOUSING OPPORTUNITIES POLICY 4A: SUPPORT HOUSING PROGRAMS THAT PROTECT INDIVIDUALS' RIGHTS Implementation Programs: 19 El Rental Dispute Resolution Program Continue the administration of the Rental Dispute Resolution Program and consider revisions as necessary to make the program as effective as possible in protecting both tenants and landlords. Time Frame: 2002-2006 Funding Source: Fees Responsible Party: Community Services Department 20 ?' Santa Clara County Fair Housing Consortium Support the efforts of the Santa Clara County Fair Housing Consortium, which includes the Asian Law Alliance, Mid -Peninsula Citizens for Fair Housing, Project Sentinel and the Mental Health Advocates Program. These organizations provide resources for Los Gatos residents with tenant/landlord, housing discrimination and fair housing concerns. Time Frame: 2002-2006 Funding Source: County of Santa Clara Urban County Funds Responsible Party: Santa Clara County Fair Housing Consortium POLICY 4B: CONTINUE TO PROVIDE ASSISTANCE TO SERVICE PROVIDERS OF SPECIAL NEEDS HOUSEHOLDS SUCH As SENIORS, DISABLED AND HOMELESS. Implementation Programs: 21 0 Support for Non -Profit Affordable Housing Providers Recognize and support the efforts of non-profit affordable housing organizations that provide housing services in Los Gatos. Encourage the participation of these providers in developing housing and meeting the affordable housing needs of Los Gatos households. Non-profit groups will be invited to work cooperatively SEPTEMBER 2002 79 with the Town in developing strategies and actions for affordable housing, such as the Town's Fall 2002 affordable housing strategy session and the Housing Element 2002-2006 Update process. Time Frame: 2002-2006 Responsible Party: Community Development Department 22 Homeless: Increased Range of Housing Opportunities Continue to support the County of Santa Clara's "Continuum of Care" plan to provide housing opportunities for homeless households; including emergency shelters, transitional housing and permanent affordable housing opportunities. Time Frame: 2002-2006 Responsible Party: Community Development Department 23 ® Disabled: Remove Constraints and Encourage Accessible Housing In Residential Developments Continue to require "universal design" features in all new residential developments. Conduct an evaluation of Town's zoning and development requirements to ensure the removal of all constraints to providing housing for people with disabilities. Time Frame: 2002-2003: Conduct Evaluation Responsible Party: Community Development Department GOAL 5: PROVIDE ADEQUATE MANAGEMENT AND STAFFING OF AFFORDABLE HOUSING FUNDS AND PROGRAMS 24 ' Housing Management Consider additional staff support for the management and planning of housing programs and funding in the Town. Time Frame: 2002-2003 Develop recommendation and plan for additional staff support for housing. Funding Source: Responsible Party: 80 Redevelopment Housing Set Aside Funds, Urban County funds Community Development Department and Redevelopment Agency CHAPTER 8: HOUSING PROGRAM STRATEGY ILLUSTRATION #24 : SUMMARY OF QUANTIFIED OBJECTIVES HOUSING PROGRAM STRATEGY: 2002-2006 NUMBER AND NAME OF PROGRAM 1. Adequate Land Inventory 5. Below Market Rate program 6. Second Unit Program 10. Mortgage Credit Certificate Program 11. Housing Conservation Program 16. Mobile Home Preservation 17. Preservation of "At Risk" Units MODERATE 73 Units 10-15 Units IS ._ a 0 e- 5 Units 10-20 Units Rehabilitated 150 Mobile Homes Preserved 220 Affordable Units Preserved us O w a c 2 ill cr) zu-) TYPE OF ACTIVITY ADEQUATE SITES AFFORDABLE HOUSING PROGRAMS HOUSING CONSERVATION PRESERVATION OF AFFORDABLE HOUSING CC SEPTEMBER 2002 9. ENERGY CONSERVATION OPPORTUNITIES ENERGY CONSERVATION AND RESIDENTIAL DEVELOPMENT Energy conservation is achieved at both the local and individual level. During the planning and development process, there are many opportunities for local governments to support energy efficient models. Such proven methods include: • Enforce the State of California Title 24 laws — state energy efficiency standards for residential and nonresidential buildings. New subdivision areas should adhere to the California Subdivision Map Act, which requires consideration of maximum natural heating and cooling features, including solar power. Additionally, building codes inspectors should be credentialed from the California Building Officials Training institute, ensuring they are familiar with all energy efficiency models. • Preserve and encourage planting trees in neighborhoods to provide shade in summer and reduce heat loss in winter. Successful methods include placing trees to the west and northwest of houses to shade from the hot summer sun and grouping trees to protect them from harsh elements and support their longevity. Trees can reduce air temperatures 5-10° F from shading and evapotranspiration (water in leaves converting into vapor, cooling the air). • Encourage energy efficient - landscaping for resource conservation by developing guidelines that emphasize proper irrigation techniques and sustainable landscaping (organic fertilizers and pesticides). • Consider light-colored surfacing on pavements and rooftops to reduce heat absorption. New materials for shingled rooftops and paved roadways are being developed that reflect more sunlight and last longer. • in future street development, encourage narrower street widths to reduce pavement area and allow more room for roadside trees and greenery. • Work with builders and developers to place houses in optimal area on site, with regard to sun and natural breezes. • Promote the construction of energy efficient new homes with assistance from the Energy Star Homes Program (supported by the EPA and DOE). Energy Star homes reduce energy consumption by 30% by using energy 82 CHAPTER 9' ERGY CONSERVATION efficient lighting, ventilation, windows, and replacing electricity with natural gas where appropriate. • Provide incentives to retrofit older homes with energy efficient features before resale or major remodeling. • Encourage pool covers and solar pool heating systems in place of conventional methods in residential areas. • Encourage solar energy and other renewable resources, ENERGY CONSERVATION AND AFFORDABLE HOUSING Energy efficiency opportunities are an important consideration in affordable housing planning and analysis. High energy costs for low- income and fixed -income households directly affect the affordability of both rental units and home ownership. As basic energy is an inelastic housing cost, the ability to provide conservation assistance is especially critical. For individuals and households, there are programs available to help conserve energy and reduce energy costs. The Town of Los Gatos can promote and provide assistance for households to access the following opportunities: Low -Income Home Energy Assistance Program (LIHEAP) Low-income households (less than 60% of the State Median income Level) qualify for financial assistance and free housing renovations to offset their energy costs. Funded by the Department of Health and Humana Services, the LIHEAP Block Grant provides two services, weatherization assistance and financial assistance. • The Weatherization Program provides homes with free weatherization services to conserve energy, including attic Insulation, weather-stripping, minor housing repairs, and related energy conservation measures. • The Homes Energy Assistance Program (HEAP) provides financial assistance to pay the energy bills. The average payment within the State of California Is $182 per household per year. SEPTEMBER 2002 83 Energy Efficient Mortgages (EEM) Homebuyers that purchase energy efficient homes or renovate houses to conserve energy qualify for special mortgage benefits through EEMs. Determined by results from the Home Energy Rating System (HERS), home loans may include energy Improvement costs reducing homeowner's utility bills. The California Home Energy Efficient Rating System (CHEERS) is a local HERS and is supported by PG&E, lending institutions, and building associations. Relief for Energy Assistance Through Community Help (REACH) Sponsored by Pacific Gas and Electric and administered by the Salvation Army, REACH provides energy assistance to low-income customers. Households that do not qualify for HEAP or another alternative assistance program may receive a one-time payment ald for energy costs. In the last 18 years, REACH has assisted 369,000 households in Northern California with more than $56 million In total aid. 84 l I O. PUBLIC PARTICIPATION PUBLIC PARTICIPATION PROCESS During the update of the 2002-2006 Housing Element, the Town encouraged the participation of all economic segments of the community, especially lower - income and special needs households. A brief description of that process is included below: 1. Information to General Community Public hearings on the draft 2002-2006 Housing Element were publicized with a display ad in the local newspaper, the "Los Gatos Weekly Times." Further, written information was posted at community meeting places including the Library, Town Hall and Neighborhood Center. Copies of the draft Housing Element document were also made available at the community meeting places identified above. Further, the draft document was also posted on the Town's web site. 2. Information to Special Needs and Lower Income Households The Town conducted an outreach effort to those non-profit groups that represented special need and lower income households in the community. Written notices regarding the public hearings were sent to the non-profit groups and representatives were invited to comment on the draft Housing Element document. In addition, an outreach effort was made to local churches and neighborhood groups. Finally, the Town's Community Services Commission was encouraged to respond and comment on the draft Housing 'Element also. 3. Public Comments/Responses to Draft Document All public comments/responses to the draft Housing Element will be summarized and included in the final copy of the 2002-2006 Housing Element. 4. Public Review Time Line May 8, 2002: General Plan Committee, Study Session on Draft Document September 25, 2002: General Plan Committee , Review of Draft Document October 9, 2002: Planning Commission Public Hearing October 21, 2002: Town Council Public Hearing SEPTEMBER 2002 85 NSISNCY WITH GENERAL PLAN At the time that the Housing Element was adopted (2002), the Housing Element was consistent with other Elements of the current General Plan. However, at the same time that the Housing Element was being revised in 2002, the Town was in the process of updating the rest of the General Plan Elements. During the 2002 General Plan Update process, the Town will review proposed revisions to ail Elements of the General Plan to determine whether they are consistent with the 2002-2006 Housing Element. The Town will ensure that any adopted revisions to the General Plan during the update process are consistent with the 2002-2006 Housing Element. During the 2002-2006 period of the Housing Element, the Town will also ensure that any further revisions to the General Plan, Redevelopment Plan, Capital Improvement Plan, and Zoning Ordinance are consistent with the adopted Housing Element. 86 i. APPENDIX MATERIALS A. Reference Materials/Organizations B. Vacant Land Inventory: No Infrastructure Constraints C. Underutilized Land Inventory: No Infrastructure Constraints SEPTEMBER 2002 87 A. REFERENCE CE MATERIALS/ORGANIZATIONS Area Agencies on Aging (Alameda County, Contra Costa County, Santa Clara County, San Mateo County and San Francisco County), "Coming of Age in the Bay Area," 1999 California Budget Project, "Locked Out: California's Affordable Housing Crisis", May 2000 Housing California, The Long Wait: A Critical Shortage of Housing in California April 2000 State of California, Department of Housing and Community Development Raising the Roof: California Housing Development Projections and Constraints May 2000 www.hcd.ca.gov/hod/hro/rtr/ State of California, Department of Housing and Community Development Pay to Play 1999 www.hcd.ca.gov/hpd/hro/rtr/ State of California, Department of Housing and Community Development The State of California's Housing Markets 1990-97 January 1999 www. hcd.ca.gov/hpd/hrc/plan/shp Town of Los Gatos, "Five Year Affordable Housing Production Plan, July 1, 1999- June 30, 2004" Association of Bay Area Governments (ABAG) www.abag.ca.gov State of California, Department of Finance www.dof.ca.gov State of California, Department of Housing and Community Development www.hcd.ca.gov State of California, Department of Rehabilitation www.dor.ca.gov State of California, Employment Development Department www.edd.ca.gov 88 1- z cm — N z 0 W ct 3 u H 0 1— W. F- z ESTIMATED UNITS N In0 v• w h 0'0 M C7 # OF ACRES O N Q% Sri N of N T O to N 6.0 - Nt In O CO CONDITIONAL USES Public buildings, schools; parks; golf courses; churches; private recreation; large group homes CD > 0 d cu CO E in Same as above Same as above Same as above Same as above Same as above Same as above 0 > > 0 0 .0 CO (C f0 ca E E in cn PERMITTED USES Single-family detached dwelling per lot; small -family day home, Agriculture, except commercial greenhouses, nurseries Same as above a .a co co CO c23 E (O 0 Same as above Same as above Same as above Same as above Same as above Single-family dwelling; Two- family dwelling; Small family day care home; Residential care facility. ZONING GENERAL PLAN DESIGNATION Hillside Residential Hillside Residential Hillside Residential Low Density, 0-5 Low Density, 0-5 _ Low Density, 0-5 Low Density, 0-5 Medium Density 0-5 units per acre 1 5-12 units per acre Single Family Residential District " lt7 N 19 O� O 7 N 7 O N One and Two Family Residence District RD R1-D (Downtown Zone) co 0 CD Vf OS Z 0 0 w et V oC w oc O w Z O -Z W rit 0 t O C E= � yz o w O N 50 ' O r 1r) N 20 I I. co ci N 125.67 C et0c0.- 1 N-Co v O o r o0 cio o c o coon o o c 0 Public buildings, schools; parks; golf courses; churches; private recreation; large group homes Same as above Same as above Same as above Same as above Same as above Same as above Same as above Same as above Same as above Large recycling collection facilities; condo conversion Single-, two- and multiple family units; Residential condo; Same as above, except no apartment Single-family detached dwelling per lot; small -family day home, Agriculture, except commercial greenhouses, nurseries Same as above Same as above Same as above Same as above Same as above Same as above Same as above Single-family dwelling; Two- family dwelling; Small family day care home; Residential care facility. Single-family dwelling; Two- family dwelling; Small family day care home; Residential care facility. Office, administrative, professional, medical, dental, optical and other professional non -retail uses. Retail, personal service, limited manufacturing associated with General Plan Designations Hillside Residential 1 Hillside Residential Hillside Residential Low Density, 0-5 Low Density, 0-5 Low Density, 0-5 Low Density, 0-5 Medium Density 0-5 units per acre 5-12 units per acre Medium Density 5-12 units per acre 5-20 units per acre 12-20 units per acre Office Professional; Public Neighborhood Commercial Single Family Residential District e- 222thCCCC tn N to Po. O r r N r r O N. r cC One and Two Family Residence District RD R1-D (Downtown Zone) Multiple Family Residential District R-M: 5-12 R-M: 5-20 R-M: 12-20 Non- Residential Districts 0 r U Qi to;C G co 000 O N. QS N hotel or boarding house Same as above plus apartment hotel and boarding house Same as above plus apartment hotel and boarding house Same as above except no apartment hotel. TOTAL on -site sales. Same as above, plus office activities and single-family and two-family in conjunction with other permitted uses. Same as above, except no residential unless by conditional use permit. Central Business District Commercial Highway Low Density Manufacturing: Light Industrial Open Space; Agriculture, Mixed Use Commercial (North Forty Area) N 0 0 - 0 N Q) s 0 0 RESOLUTION 2000 -131 RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF LOS GATOS ADOPTING REVISED BELOW MARKET PRICE HOUSING PROGRAM GUIDELINES WHEREAS, the Town of Los Gatos Zoning Ordinance Sections 29.10.3000 through 29.10.3040 establishes a Below Market Price (BMP) Housing program to assist low and moderate income Los Gatos citizens purchase homes at prices below market value; and, WHEREAS, the Program requires construction of dwellings that persons and families of moderate income can afford to buy or rent, and assures to the extent possible that the resale prices of those dwellings and rents, if they are rented, will be within the means of persons and families of low and moderate income; and, WHEREAS, the program helps the Town meet State mandated housing goals; and, WHEREAS, this resolution revises the Town of Los Gatos Below Market Price Guidelines. NOW, THEREFORE, BE IT RESOLVED that the Town Council of the Town of Los Gatos (1) repeals Resolution 1992-88; and, (2) adopts the Revised Below Market Price Guidelines attached as Exhibit A. PASSED AND ADOPTED at a regular meeting of the Town Council of the Town of Los Gatos held on the 6th day of November, 2000 by the following vote: ATTACHMENT 3 COUNCIL MEMBERS: AYES: Randy Attaway, Jan Hutchins, Linda Lubeck, Joe Pirzynski. Mayor Steven Blanton NAYS: None ABSENT: None ABSTAIN: None SIGNED: A i"I'EST: LOS GATOS, CALIFORNIA CLERK OF THE TOWN OF L GATOS LOS GATOS, CALIFORNIA csd08a:\resos\cs101600.R00 xhibit A TOWN. 'S BELOW MARKET PRICE HOUSING PROGRAM GUIDELINES I. GENERAL PROVISIONS A. Every multifamily rental dwelling project at the time ofbuilding permit, every residential condominium or planned development residential subdivision at the time of subdivision, and every community apartment project and every residential stock cooperative apartment or unit project at the time of subdivision if the transaction involves subdivision, or at the time of sale, if it does not, shall contain one or more BMP dwellings according to the rules Listed below with the following exception: Any planned development with an underlying zone of HR, shall only be required to pay an in -lieu fee as established by this resolution. 1. Projects containing five or more but fewer than twenty market rate units must provide a number of BMP units equal to 10 percent of the number of market rate units. 2. Projects which include 20 to 100 market rates units must provide BMP units as determined by the following formula: Number of BMP units = .225 (total # of market rate units)-2.5 3. All projects in excess of 100 market rate units must provide a number of BMP units equal to 20 percent of the market rate units. 4. Whenever the calculations of below market price units result in a fraction of one-half or more, the number of units to be reserved is increased to the next whole number. B. Confidentiality Client information is confidential and not considered public information except for statistical information on the BMP units and general csd08A:\resos\cs10i600.R01 demographic information on the buyers and renters of BMP housing units. Through BMP program implementation the Town is attempting to provide a supply of low -moderate income housing. The Town does not wish to set the occupants of such housing apart from the general community, attaching a stigma to the occupants. Furthermore, no public interest is served by disclosure of this information. The address ofthe projects containing BMP units may be provided as well as a range of sales prices. II. OWNER OCCUPIED UNITS A. Applicant Eligibility 1. Household Income: Income limits are set according to household size using the Federal Department of Housing and Urban Development statistics regarding median income. 2. Buyer Qualification: a. A buyer's qualification is determined by the family's ability to make the monthly payments for the unit. The monthly housing cost shall include the following factors: ▪ Unit Price ▪ Current Lending Rates ▪ Estimated Taxes • Estimated Insurance Costs ▪ Homeowner's Fees Other expenses as determined necessary by the lender. b. All persons must qualify for their own mortgage without assistance from the Town. Qualifications must include the CI0011:•:\RZ30 -z- ability to pay taxes, insurance, closing costs and any homeowner association fees in addition to the mortgage. B. Buyer Selection 1. A point system is used to establish applicant rating and ranking. Applicants will be ranked according to total points and must have at least one point to be eligible for consideration. Points are awarded as follows: Six points: (a) Senior citizens who reside in the Town at the time of application and have lived in the Town for at least the prior two years. A senior citizen is defined as any person 62 years of age or older at time of application or married couples living together when at least one spouse is 62 years of age or older at time of application. (b) Senior Citizens who have lived in the Town for at least two years and have moved out of the Town within the last five years prior to the time of application. (c) Handicapped persons who reside in the Town at the time of application and who have lived in the Town for at least the prior two years. (d) Households required to relocate their residence as a result of Council action or mobile home park closure. (e) Salaried Town employees as defined in the Town's Person- nel Rules, who have been employed by the Town for a period of no less than 12 months prior to the time of application. -3- Ll OOL• n \PqO Five points: Single heads of household with dependent children who reside in the Town at the time of application and have lived in the Town for at least the prior two years. Four points: Persons who live in the Town of Los Gatos at time of application and who have lived in the Town at least the prior two years. Three points: Persons who work in the Town of Los Gatos at time of applica- tion and have worked in the Town for at least the prior two years. Two points: a. Households who have lived in the Town for at least 10 years and have moved out within the last ten years prior to the time of application. b. Household size is worth two points per person. One point: Households who live or work within Santa Clara County at the time of application. 2. A lottery will be used to rank each qualified applicant in the case of a tie. - 3. An applicant has two opportunities to refuse a unit before being removed from the current applicant pool. 4. Applicants who do not qualify for a particular project shall retain their eligibility. 5. The highest ranked applicant must obtain pre -approval for a loan within one week after notification of its eligibility to purchase the unit. The applicant must submit documentation of loan approval within four weeks of notification of its eligibility to purchase the -4- C3009, 1\Ilf!O unit. Determination. of Initial Selling Price 1. The initial sales price of the unit will be determined by consulta- tion between the Town Manager, or delegate, and the developer within the price ranges calculated as defined herein. The Manager is authorized to approve changes in specifications to lower the price of the BMP units which do not violate any Town code or ordinance requirements, such as changes in carpeting, lighting fixtures, etc, The initial price will be set by a BMP price agreement, which must be signed by the Town Manager and the developer prior to the Planning Commission review of the proj ect. 2. The initial price of a unit may include direct construction costs and may include a proportionate share of the costs of providing utility services, required on -site improvement, financing and premium points, loan standby fees, landscaping and parking, provided that the price shall not exceed an amount which will allow a range of qualified buyers (as defined above) to purchase a unit. 3. The initial price shall not include cost of land, builder's profit, marketing costs, planning, promotional or advocacy expenses, options preliminary drawings, preparing working drawings and specifications, 'off -site improvements, public agency fees, bonds, insurance, recreational facilities and engineering and architectural fees related to construction. 4. The range in which the initial selling price shall be set will be determined through completion of the following calculation on a regular basis: -7- a. Calculation of the Housing Multiplier i. Determination of Total Housing Cost Sales Price - 10 percent down payment = mortgage + Annual Debt Service + Taxes + Homeowners Fees + Private Mortgage Insurance (PMI) = Total Housing Cost ii. Determination of Minimum Household Income Assume 30 percent of household income to go towards housing: Total Housing Cost/.30 = Minimum household income Determination of Multiplier Sales Price/Minimum Household Income= Multiplier b. Initial Sales Price Ranges Minimum and maximum sales prices are established by completing the following formula for a range of family sizes: Income (80, 100, and 120 percent of median income as defined by the Federal Department of Housing and Urban Development) (H.U.D.) x multiplier = sales price. D. Deed Restrictions Council approved Deed Restrictions are recorded with each Below Market Price dwelling units. E. Resale of Units 1. If the owner elects to sell his/her unit, the Town must be notified. C3DOI .:\RESQ -6- csoce.., \AESO 2. When a Below Market Price dwelling unit becomes available for resale, the owner must allow the Town to set the resale price and make the unit available to other program applicants. 3. The Town determines the resale price in accordance with the deed restriction recorded on the property. 4. Town markets the unit and ranks applications, to identify the top qualified applicants. F. In -Lieu Fees 1. Establishment of Fee: Projects with five or more but less than ten units may pay a fee in -lieu of building a BMP unit in order to comply with BMP Program requirements. Approval of Hillside Planned Develop- ments with five or more residential building sites shall require the payment of an in -lieu fee. The fee shall be equal to the amount of six percent of the building permit valuation for the project. The total building permit valuation is determined by the chief building official. 2. Fees shall be paid prior to or at time of final occupancy as follows: a. Multi -Family Owner Occupied Developments. At approxi- mately 40% occupancy of entire development as deter- ' mined during the Planning approval process. b. Multi -Family Renter Occupied Developments. At approxi- mately 75% occupancy of entire development as deter- mined during the Planning approval process. c. Hillside Planned Developments. At time of final occu- pancy for each unit. 3. In -lieu fees will be deposited into the Town's Affordable Housing Fund. Funds will be used, in part, for administration of the -7- program. Applications/recommendations for use of remaining funds will be reviewed as received. Possible use of the funds include, but is not limited to, the following: ▪ landbanking ▪ writing down the cost of owner occupied units to make them affor_able to low/moderate income households purchasing rental units for renting to eligible tenants. III. RENTAL UNITS A. Administration The program shall be administered by the Town or its designee. B. Applicant Eligibility 1. Household Income: In order to be eligible, applicants must have a household income under 80 percent of the County's median income as defined by the Federal Department of Housing and Urban Development. 2. Ability to Pay Rent A tenant's ability to pay monthly rent will also be considered in determining tenant eligibility. C. Tenant Selection Applications from tenants selected by property owner or manager will be forwarded to Town for verification of income eligibility. D. Management 1. BMP rental units shall be managed in the same manner as other units in the development. 2. Tenants are eligible to receive conciliation and mediation services provided through the Town's Rental Mediation Program except as they regard rent increases. C3001 : a: %ALSO -8- E. Unit Rents Tenants will be limited to persons whose annual income is less than 80 percent of the County's Median Income as defined by the Federal. Department of Housing and Urban Development. Priority will be given to those households whose income is less than 50 percent of the median income as defined by H.U.D. Rents will be restricted to 80% of Fair Market Rents as determined by the Santa Clara County Housing Authority. F Annual Review If a tenant's income increases so that it falls between 80 and 100 percent of the County's Median income, then the rent may be increased in accordance with the Town's Rental Dispute Ordinance; and the unit shall still be considered a BMP Rental Unit. However, if a tenant's income exceeds 100 percent of the median, the rent may be increased to the average rent of similar units in the complex; in this latter case, the unit will no longer be a BMP unit and the next available unit must be rented to an eligible household so that the number of subsidized units remains the same. CSCOa: ai l}asp -9- n 0 0 § 29,10.3030 LOS GATOS TOWN CODE Sec. 29.10.3030. Price. The price of BMP units is controlled for the first buyer and for future buyers as follows: (1) The initial price is limited to direct construction cost and a proportionate share of the costs of preparing working drawings and specifications and providing on -site and off -site improvements, determined according to rules set by the Council. (2) The initial price does not include the cost of land, profit, or marketing costs. (3) Each BMP unit will be subjected to recorded title restrictions concerning manner of future sales, occupancy and leasing. (4) Each buyer of a 'BMP unit must agree to sell the unit to a moderate income buyer designated by the Town. The Town will designate moderate income persons according to rules adopted by the Council in effect at the time the seller purchased the unit. (5) The resale price cannot exceed the original selling price plus the value at the time of sale of improvements added by the owner, and plus an amount equal to the increase in cost of living or housing during the owner's tenure. The index or method to be used in calculating the increase is established by the Council. (6) If a BMP unit to be resold has not been properly maintained or for any other reason is in poor condition and in need of cleaning or repair, the Town may elect to do the work or have it done and recover the cost from the sale price limited as provided in subsection (5). (7) The regulations will specify the period for controlled resales. The time period will be for as Iong as is practical. (Ord. No. 1316, § 3.90.125, 6.7-76; Ord. No. 1430, 6-4-79) Sec. 29.10.3035. Project denial. If an applicant for zoning approval declines to provide BMP units required by ordinance, the zoning approval shall be denied. (Ord. No. 1316, § 3.90.130, 6-7-76; Ord. No. 1430, 6-4.79) Sec. 29,10.3040. Administration. The Council shall adopt by resolution regulations concerning all aspects of the BMP program, including the elements of price, buyer eligibility standards, rent, the length of the period during which a unit will be subject to BMP restrictions, the form of recorded instru- ments and any other matter consistent with the provisions of this section. (Ord. No. 1316, § 3.90.135, 6-7-76; Ord. No. 1430, 6-4-79; Ord. No. 1685, 6.2.86) 2032 ATTACHMENT 4 0 0 OS BMP UNITS cn —J Z 0 Z W a z 0 Po Uw cc II (re 1,0 W U CC LU 0 LLJ LL1 0 C7 Z LLJ O < J U LL. 0 LOCATION U O o • E y C.)• p cct , 0 'CZ T O .0 O C o C O m 0. C O o ❑' oa Terreno de Flores co 0 'C 0. a) -Cu Q d CO m t • 3 co co T_ N N J C co cu co Q7 N t I' 0 W O c ro CN 0 QC`7 ✓ N N PD approved by Council. a) 0 E c O U la E CU d CC) n. E C U o c cc a u T O C C E a) 0) "a) U m a) a co o a°1) O 0 a� a v N 0 3 0 Project under construction. 0 4 Condominiums 0 n n n 0 0 l HUD Income Limits Santa Clara County Jurisdictions Effective January 30, 2002 % OF MEDIAN 30% 50% 80% 100% Persons in Household Extremely Low Income Very Low Income Low Income* Median Income 1 $ 20,150 $ 33,600 $ 51,950 $ 67,200 2 $ 23,050 $ 38,400 $ 59,400 $ 76,800 3 $ 25,900 $ 43,200 $ 66,800 $ 86,400 4 $ 28,800 $ 48,000 $ 74,250 $ 96,000 5 $ 31,100 $ 51,850 $ 80,200 $ 103,700 6 $ 33,400 $ 55,700 $ 86,100 $ 111,400 7 $ 35,700 $ 59,500 $ 92,050 $ 119,000 8 $ 38,000 $ 63,350 $ 98,000 $ 126,700 *The "Low Income" limit is less than the actua180 percent of median because a national maximum or cap is applied, The cap is the national median family income, and no Low Income limit may exceed HUD's estimate of the national median income except by HUD waiver. ATTACHMENT 6 2002incomefimits.xis, rev. 5/16/2002 n 0 0 Town of Los Gatos Demographics ATTACHMENT 7 EXECUTIVE SUMMARY Prepared For: TOWN OF LOS GATOS Project Code: 970795 - LOS GATOS, CA Type: Standard Geography (Aggregated) See Appendix: Geography List Order #: 962279211 Site: 01 Aggregated Geographies The population in this area is estimated to change from 28,592 to 29,132, resulting in a growth of 1.9% between 2000 and the current year. Over the next five years, the population is projected to grow by 4.3%. The population in the United States is estimated to change from 281,42I,906 to 286,815,107, resulting in a growth of 1.9% between 2000 and the current year. Over the next five years, the population is projected to grow by 4.8%. • The current year median age for this population is 41.9, while the average age is 41.5. Five years from now, the median age is projected to be 43.4. The current year median age for the United States is 35.6, while the average age is 36.5. Five years from now, the median age is projected to be 36.2. • Of this area's current year estimated population: 86.0% are White Alone, 0.8% are Black or African Am. Alone, 0.3% are Am. Indian and Alaska Nat. Alone, 8.1 % are Asian Alone, 0.0% are Nat. Hawaiian and Other Pacific Isl. Alone, 1.3% are Some Other Race, and 3.4% are Two or More Races. For the entire United States: 74.5% are White Alone, 12.4% are Black or African Am. Alone, 0.9% are Am. Indian and Alaska Nat. Alone, 3.8% are Asian Alone, 0.1% are Nat. Hawaiian and Other Pacific Isl. Alone, 5.7% are Some Other Race, and 2.5% are Two or More Races. • This area's current estimated Hispanic or Latino population is 5.2%, while the United States current estimated Hispanic or Latino population is 13.1%. . The number of households in this area is estimated to change from 11,988 to 12,257, resulting in an increase of 2.2% between 2000 and the current year. Over the next five years, the number of households is projected to increase by 4.5%. The number of households in the United States is estimated to change from 105,480,101 to 107,753,802, resulting in an increase -of 2.2% between 2000 and the current year. Over the next five years, the number of households is projected to increase by 5.4%. • The average household income is estimated to be $164,036 for the current year, while the average household income for the United States is estimated to be $64,338 for the same time frame. The average household income in this area is projected to increase 29.4% over the next five years, from $164,036 to $212,207. The United States is projected to have a 20.9% increase in average household income. • The current year estimated per capita income for this area is $71,011, compared to an estimate of $24,636 for the United States as a whole. Prepared on: September 12, 2002 Page I of 3 CLI R ITAS ® 2002 CLARLTAS INC. All rights reserved. 1800 234 5973 Q SITEREPO,TS EXECUTIVE SUMMARY Prepared For: TOWN OF LOS GATOS Project Code: 970795 - LOS GATOS, CA Type: Standard Geography (Aggregated) See Appendix: Geography List Order #: 962279211 Site: 01 Aggregated Geographies • For this area, 81.6% of the population is estimated to be age 16 and over for the current year. Of the labor force, 0.1% are in the Armed Forces, 69.3% are emplc red civilians, 2.0% are unemployed civilians, and 28.5% are not in the labor force. For the United States, 77.3% of the population is estimated to be age 16 and over for the current year. Of the labor force, 0.8% are in the Armed Forces, 61.2% are employed civilians, 4.0% are unemployed civilians, and 34.0% are not in the labor force. . For the employed population age 16 and over in this area, it is estimated that they are employed in the following occupational categories: 23.1% are in "Executive; Administrative and Managerial", 25.8% are in "Professional Speciality", 32.2% are in " Technical, Sales, and Administrative Support", and 6.9% are in "Service". 6.0% are in "Precision, Production, Craft and Repair", 1.2% are in "Farming, Forestry and Fishing", and 4.8% are in "Operators, Fabricators and Laborers". For the employed population age 16 and over in the United States, it is estimated that they are employed in the following occupational categories: 12.6% are in "Executive, Administrative and Managerial", 14.1% are in "Professional Speciality", 31.8% are in " Technical, Sales, and Administrative Support", and 12.9% are in "Service". 11.4% are in "Precision, Production, Craft and Repair", 2.5% are in "Fanning, Forestry and Fishing", and 14.6% are in "Operators, Fabricators and Laborers". ▪ For the current year, it is estimated that 1 8.1 % of the population age 25 and over in this area had earned a Graduate or Professional Degree and 29.8% had earned a Bachelor's Degree. In comparison, for the United States, it is estimated that for the population over age 25, 7.3% had earned a Graduate or Professional Degree, while 13.5% had earned a Bachelor's Degree. . Most of the dwellings in this area (65.3%) are estimated to be Owner Occupied for the current year. For the entire country the majority of the housing units are Owner Occupied (66.3%). • The majority of dwellings in this area are estimated to be structures of 1 Unit Detached(58.9%) for the current year. In the United States, the majority of dwellings are estimated to be structures of 1 Unit Detached(60.2%) for thy same year. . The majority of housing units in this area (27.2%) are estimated to have been Housing Unit Built 1960 to 1969 for the current year. Most of the housing units in the United States (18.4%) are estimated to have been Housing Unit Built I970 to 1979 for the current year. Prepared on: September 12.2002 Page 2 of 3 CLAR ITAS © 2002 CLARITAS INC. All rights reserved. 1 800 234 5973 SITEREPORTS EXECUTIVE SUMMARY Prepared For: TOWN OF LOS GATOS Project Code: 970795 - LOS GATOS, CA Type: Standard Geography (Aggregated) See Appendix: Geography List Order #: 962279211 Site: 01 Appendix: Geography List Place Geography Geography Geography Geography Code Name Code Name 0644112 Los Gatos town Prepared on: September 12, 2002 Page 3 or 3 C(J R ITA5 © 2002 CLARITAS INC. All rights reserved. 1800 234 5973 SITEREPORTS POP -FACTS; DEMOGRAPHIC SNAPSHOT Prepared For: TOWN OF LOS GATOS Project Code: 970795 - LOS GATOS, CA Type: Standard Geography (Aggregated) See Appendix: Geography List Order #: 962279211 Site: 01 Description Population Geography Totals 2007 Projection 2002 Estimate 30,377 2000 Census 29,132 1990 Census 28,592 28,013 Growth 2002-2007 Growth 2000-2002 Growth 1990-2000 2002 Est. Population by Single Race Classification White Alone Black or African American Alone American Indian and Alaska Native Alone Asian Alone Native Hawaiian and Other Pacific Islander Alone Some Other Race Alone Two or More Races 4.27% 1.89% 2.07% 29,132 85.97% 0.81% 0.32% 8.12% 0.07% 1.34% 3.36% 2002 Est. Population Hispanic or Latino by Origin Not Hispanic or Latino 29,132 Hispanic or Latino: 94.77% Mexican 5.23% Puerto Rican 59.97% Cuban 4.20% All Other Hispanic or Latino 1.25% 34.58% 2002 Est. Hispanic or Latino by Single Race Class. White Alone Black or African American Alone American Indian and Alaska Native Alone Asian Alone Native Hawaiiajn and Other Pacific islander Alone Some Other Race Alone Two or More Races 1,524 63.71% 0.66% 2.49% 0.85% 0.13% 21.46% 10.70% Prepared on: September 12.2002 Page I of 10 CLARITAS Ci 2002 CLARITAS INC. All rights reserved. I SOO 234 5973 Si TEREPQR TS I FACTS: DEMOGRAPHIC SNAPSH.. Prepared For: TOWN OF LOS GATOS Project Code: 970795 - LOS GATOS, CA Type: Standard Geography (Aggregated) See Appendix: Geography List Order #: 962279211 Site: 01 Description Geography Totals 2002 Est. Pop. Asian Alone Race by Category 2,366 Chinese, except Taiwanese 32.16% Filipino 7.57% Japanese 22.19% Asian Indian 13.74% Korean 7.14% Vietnamese 9.76% Cambodian 0.13% Hmong 0.00% Laotian 0.04% Thai 0.25% Other Asian 4.10% Two or more Asian categories 2.92% 2002 Est. Population by Sex 29,132 Male 47.14% Female 52.86% 2002 Est. Population by Age 29,132 Age 0 - 4 4.83% Age 5 - 9 5.97% Age 10 - 14 6.47% Age 15-19 4.92% Age 20 - 24 3.06% Age25-34 12.47% Age 35 - 44 17.80% Age45-54 16.59% Age 55 - 59 7.15% Age 60 - 64 5.25% Age65-74 7.10% Age 75 - 84 5.32% Age 85 and older 3.07% Age 16 and older Age 18 and older Age 21 and older Age 65 and older 81.55% 79.16% 77.23% 15.49% 2002 Est. Median Age 41.89 2002 Est. Average Age 41.47 Prepared on: September 12. 2002 Page 2 of 10 ,,,, CLhR ITA5 m 2002 CLARITAS INC. All rights reserved. 1 800 234 5973 SITEREPORTS POP -FACTS: DEMOGRAPHIC SNAPSHOT Prepared For: TOWN OF LOS GATOS Project Code: 970795 - LOS GATOS, CA Type: Standard Geography (Aggregated) See Appendix: Geography List Order #: 962279211 Site: 01 Description 2002 Est. Male Population by Age Age 0-4 13,734 Age5-9 5.35% Age 10 - 14 6.30% Age 15 - 19 7.02% Age20-24 5.29% Age 25 - 34 3.05% Age 35 - 44 13.08% Age 45-54 18.30% Age 55 - 59 17.02% Age 60 - 64 7.08% Age 65 - 74 5.46% Age 75 - 84 7.07% Age 85 and older 3.76% 1.21% Geography Totals 2002 Est. Median Age, Male 2002 Est. Average Age, Male 40.41 39.37 2002 Est. Female Population by Age 15,398 Age 0 - 4 Age 5 - 9 4.36% Age 10 - 14 5.68% Age 15 - 19 5.99% Age 20 - 24 4.59% % Age 25 - 34 Age35-44 11.92% Age 45-54 17.35% Age 55 - 59 16.20% Age 60 - 64 7.20% Age65-74 5.05% Age 75 - 84 7.12% Age 85 and older , 6.72% 4.73% 2002 Est. Median Age, Female 2002 Est. Average Age, Female 43.29 43.34 Prepared on: September 12, 2002 Page 3 of 10 C LI R I TA5 © 2002 CLARITAS INC. All rights reserved. 1800 234 5973 SITEREPORTS ,P-FACTS: DEMOGRAPHIC SNAPSh jT Prepared For: TOWN OF LOS GATOS Project Code: 970795 - LOS GATOS, CA Type: Standard Geography (Aggregated) See Appendix: Geography List Order #: 962279211 Site: 01 Description 2002 Est. Population Age 15+ by Marital Status 24,100 Male, Never Married 14.19% Female, Never Married 12.57% Total Married 52.46% Male, Previously Married 6.45% Female, Previously Married 14.33% 2002 Est. Pop. Age 25+ by Educational Attainment Less than 9th grade Some High School, no diploma High School Graduate (or GED) Some College, no degree Associate Degree Bachelor Degree Graduate or Professional Degree Households 2007 Projection 2002 Estimate 2000 Census 1990 Census Growth 2002-2007 Growth 2000-2002 Growth 1990-2000 Geography Totals 21,774 2.20% 4.44% 14.12% 23.71% 7.67% 29,80% 18.06% 12,813 12,257 11,988 11,519 4.54% 2.24% 4.07% 2002 Est. Average Household Size 2.32 2002 Est. Households by Household Type Family Households Nonfamily Households 12,257 60.46% 39.54% 2002 Est. Group Quarters Population 703 Prepared on: September 12.2002 Page 4 of 10 CLI R ITA5 C 2002 CLARITAS INC. All rights reserved. 1800 234 5973 51TEREPORTS POP -FACTS: DEMOGRAPHIC SNAPSHOT Prepared For: TOWN OF LOS GATOS Project Code: 970795 - LOS GATOS, CA Type: Standard Geography (Aggregated) See Append;x: Geography List Order #: 962279211 Site: 01 Geography Description Totals 2002 Est. Households by Household income Income Less than $15,000 12,257 Income S15,000 - $24,999 3.68% Income $25,000 - $34,999 3.91% Income $35,000 - $49,999 4.10% Income $50,000 - S74,999 5.90% Income $75,000 - $99,999 14.85% Income $100,000 - $149,999 12.40% Income $150,000 - $249,999 20.01% Income $250,000 - $499,999 21.93% Income $500,000 and over 9.01% 4.21% 2002 Est. Average Household Income 2002 Est. Median Household Income $164,036 2002 Est. Per Capita Income $112,897 $71,011 2002 Est. Household Type, Presence of Own Children Single Male Householder 12,257 Single Female Householder 11.55% Married -Couple Family, own children 18.44% Married -Couple Family, no own children 21.71% Male Householder, own children 28.90% Male Householder, no own children 1.44% Female Householder, own children 1.28% Female Householder, no own children 3.92% Nonfamily, Male Householder 3.21% Nonfamily, Female Householder 5.08% 4.46% 2002 Est. Households by Household Size 1-person household 2-person household 3-person household. 4-person household 5-person household 6-person household 7 or more person household 12,257 29.99% 36.23% 14.65% 12.74% 4.55% 1.44% 0.40% Prepared on: September 12, 2002 Page 5 of 10 CLh R I TA$ C) 2002 CLARITAS INC. All rights reserved. 1 800 234 5973 SITEREPORTS _ JP -FACTS: DEMOGRAPHIC SNAPSrrOT Prepared For: TOWN OF LOS GATOS Project Code: 970795 - LOS GATOS, CA Type: Standard Geography (Aggregated) See Appendix: Geography List Order #: 962279211 Site: 01 Description 2002 Est. Households by Presence of Children Households with Children less than Age 18: Married -Couple Family Other Family, Male Householder Other Family, Female Householder Nonfamily, Male Householder Nonfamily, Female Householder Households with no Children less than Age 18: Married -Couple Family Other Family, Male Householder Other Family, Female Householder Nonfamily, Male Householder Nonfamily, Female Householder Geography Totals 12,257 22.23% 1.63% 4.33% 0.15% 0.06% 28.38% 1.09% 2.80% 16.49% 22.84% 2002 Est. Households by Number of Vehicles 12,257 No Vehicles 3.83% 1 Vehicle 26.59% 2 Vehicles 42.06% 3 Vehicles 18 50% 4 Vehicles 6.11% 5 or more Vehicles 2.91% Family Households 2007 Projection 7,609 2002 Estimate 7,411 2000 Census 7,303 1990 Census 7,290 Growth 2002-2007 Growth 2000-2002 Growth 1990-2000 Prepared on: September 12, 2002 Page 6 of 10 CLARITAS 0 2002 CLARITAS INC. All rights reserved. 1 800 234 5973 2.67% 1.48% 0.18% SITEREPORTS PUP -FACTS: DEMOGRAPHIC SNAPSHOT Prepared For: TOWN OF LOS GATOS Project Code: 970795 - LOS GATOS, CA Type: Standard Geography (Aggregated) See Appendix: Geography List Order #: 962279211 Site: 01 Description 2002 Est. Family Households by Household Income Income Less than $15,000 Income $15,000 - $24,999 Income $25,000 - $34,999 Income $35,000 - $49,999 Income 550,000 - $74,999 Income $75,000 - $99,999 Income $100,000 - $149,999 Income $150,000 - $249,999 Income $250,000 - $499,999 Income $500,000 and over 2002 Est. Average Family Household Income 2002 Est. Median Family Household Income 2002 Est. Families by Poverty Status Income Above Poverty Level: Married -Couple Family, own children Married -Couple Family, no own children Male Householder, own children Male Householder, no own children Female Householder, own children Female Householder, no own children Income Below Poverty Level: Married -Couple Family, own children Married -Couple Family, no own children Male Householder, own children Male Householder, no own children Female Householder, own children Female Householder, no own children 2002 Est. Families by,Number of Workers No Workers 1 Worker 2 Workers 3 or more Workers Geography Totals 7,411 1.23% 1.17% 2.52% 4.63% 11.12% 10.51% 23.65% 27.92% l 1.78% 5.46% $197,893 $139,766 7,411 32.7 1 % 50.0 1 % 1.65% 2.50% 5.40% 5.56% 0.45% 0.54% 0.32% 0.04% 0.73% 0.11% 7,411 7.88% 27.08% 50.95% 14.09% Prepared on: September 12, 2002 Page 7 of 10 Gl.11R 1TA © 2002 CLARITAS INC. All rights reserved. 1 SOO 234 5973 SITEREPORTS .,P-FACTS: DEMOGRAPHIC SNAPSIIvT Prepared For: TOWN OF LOS GATOS Project Code: 970795 - LOS GATOS, CA Type: Standard Geography (Aggregated) See Appendix: Geography List Order #: 962279211 Site: 01 Description Geography Totals 2002 Est. Population Age 16+ by Employment 23,758 In Armed Forces 0.13% Civilian - Employed 69.29% Civilian - Unemployed 2.03% Not in Labor Force 28.55% 2002 Est. Employed Pop, Age 16+ by Occupation 16,461 Managerial and Professional Specialty 48 85% Technical, Sales and Administrative Support 32.22% Service 6.94% Farming, Forestry and Fishing 1.20% Precision, Production, Craft and Repair 5.97% Operators, Fabricators and Laborers 4.82% 2002 Est. Employed Pop. Age 16+ by Class of Worker 16,461 For -Profit Private Wage or Salary Workers 72.15% Not -For -Profit Private Wage or Salary Workers 5.66% Local Govemment Workers 7.46% State Govemment Workers 2.41% Federal Government Workers 0.89% Self -Employed Workers 11.06% Unpaid Family Workers 0.38% 2002 Est. Workers Age 16+, Transportation To Work 16,220 Drove Alone 84.58% Car Pooled 7.39% Public Transportation 1 23% Walked 1.75% Motorcycle 0.25% Bicycle 0.74% Other Means 0.46% Worked at Horne 3.60% 2002 Est. Workers:Age 16+ by Travel Time to Work Less than 15 Minutes 15 - 29 Minutes 30 - 44 Minutes 45 - 59 Minutes 60 or more Minutes 15,636 21.99% 40.22% 28.22% 5.99% 3.58% 2002 Est. Average Travel Time to Work in Minutes 23.87 Prepared on: September 12, 2002 Page 8 of 10 CL RITAS 0 2002 CLARITAS INC. All rights reserved. 1 800 234 5973 SITEREPORTS POP -FACTS: DEMOGRAPHIC SNAPSHOT Prepared For: TOWN OF LOS GATOS Project Code: 970795 - LOS GATOS, CA Type: Standard Geography (Aggregated) See Appendix: Geography List Order #: 962279211 Site: 01 Description 2002 Est. Tenure of Occupied Housing Units 12,257 Owner Occupied 65.27% Renter Occupied 34.73% Geography Totals 2002 Est. Owner Occupied Housing Values 6,994 Value Less than $25,000 0.06% Value $25,000 - $49,999 0.14% Value $50,000 - $74,999 0.29% Value $75,000 - $99,999 0 21 % Value $100,000 - $149,999 0.27% Value $150,000 - $199,999 0.57% Value $200,000 - $299,999 1.79% Value $300,000 - $399,999 5.40% Value $400,000 - $499,999 11.24% Value $500,000 or more 80.03% 2002 Est. Median Owner Occupied Housing Value $687,612 2002 Est. Housing Units by Units in Structure 12,645 1 Unit Attached 1 Unit Detached 14.02% 58.92% 2 Units 3.34% 3 to 19 Units 12.88% 20 to 49 Units 50 or More Units 7.10% 1.34% Mobile Home or Trailer 1.17% Other• 123% 2002 Est. Housing Units by Year Built Housing Unit Built 1989 to present Housing Unit Built 1985 to 1988 Housing Unit Buik 1980 to 1984 Housing Unit Bjxilt 1970 to 1979 Housing Unit Built 1960 to 1969 Housing Unit Built 1950 to 1959 Housing Unit Built 1940 to 1949 Housing Unit Built 1939 or Earlier Prepared on: September f 2, 2002 Page 9 of I CLARITAS 4' 2002 CLARITAS INC. All rights reserved. 1800 234 5973 12,645 7.00% 3.21% 4.86% 21.12% 27.17% 17.40% 7.21% 12.02% SITEREPQRTS JP -FACTS: DEMOGRAPHIC SNAPShOT Prepared For: TOWN OF LOS GATOS Project Code: 970795 - LOS GATOS, CA Type: Standard Geography (Aggregated) See Appendix: Geography List Order #: 962279211 Site: 01 Appendix: Geography List Place Geography Geography Geography Geography Code Name Code Name 0644112 Los Gatos town Prepared on: September 12.2002 Page 10 of 10 ry CLAR ITAS 0 2002 CLARITAS INC. All rights reserved. 1 800 234 5973 SITEREPORIS