Item 13 Staff Report Adopt Resolution Adopting Revised Market Price Housing Program Guidelines and Rescinding Resolution #1992-88COUNCIL AGENDA REPORT
DATE: May 25, 2000
TO: MAYOR AND TOWN COUNCIL
FROM: TOWN MANAGER
SUBJECT:
MEETING DATE: 6/05/00
ITEM NO. /
ADOPT RESOLUTION ADOPTING REVISED BELOW MARKET PRICE HOUSING
PROGRAM GUIDELINES AND RESCINDING RESOLUTION #1992-88.
RECOMMENDATION:
Adopt Resolution Adopting Revised Below Market Price (BMP) Housing Program Guidelines and Rescinding
Resolution 1992-88. (Attachment 1)
BACKGROUND:
The Town's Inclusionary Zoning Ordinance was adopted in 1979. The ordinance requires developers to provide a
specified number of affordable owner -occupied or rental units, as appropriate. Fees can be paid in lieu of constructing
units in some instances. In the case of rental developments, units must be made available for below market rents. Units
are managed in accordance with Council guidelines. The program includes 29 owner -occupied and 33 rental units.
The Town contracts with the Housing Authority of Santa Clara County, a nonprofit housing development corporation,
to market and aid in facilitating unit sales. Deed restrictions are recorded with each BMP unit at the time of sale. The
deed restrictions are designed to limit the resale price to a price affordable to another income eligible household. The
Program's primary challenges are to keep owner -occupied units affordable, and accommodate the needs of low/moderate
income Program applicants.
DISCUSSION:
As part of the Town's program management process, the BMP guidelines have undergone a thorough review. Policy
issues have been reviewed by the Community Services Commission and staff. Council guidance regarding the program
has also been incorporated into the documents.
The Community Services Commission Housing Committee reviewed the Below Market Price (BMP) Guidelines. Its
objectives were to better understand the Program and then to develop policy change recommendations to reflect current
needs. Adopted in 1992, the current guidelines were due for review. The Community Services Commission approved
the Housing Committee's recommendations. Recommended changes are shown in the attached draft.
PREPARED BY:
Regina A. Falk
Community S
Reviewed by: Or, Attorney N Finance
pirector
csd34A:\cnclrpts\bmpguide. rpt
Revised:5/25/00 4:16 PM
Reformatted: 10/23/95
PAGE 2
MAYOR AND TOWN COUNCIL
SUBJECT: ADOPT RESOLUTION ADOPTING REVISED BELOW MARKET PRICE HOUSING
PROGRAM GUIDELINES AND RESCINDING RESOLUTION #1992-88
May 25, 2000
The Commission recommends two policy changes:
Point System:
Two points are awarded to households who have lived in the Town for at least 10 years and have moved out
within the last 5 years prior to Program application. The Commission recommends that the 5-year limit be
increased to 10.
The Housing Committee studied the point system at length. A primary consideration was whether or not to
give points to senior applicants because their child or children live in Town. The desire to bring families
together was weighed against the impact on senior service providers. After considerable discussion the
Committee decided to make no further changes to the point system.
Unit Rents:
Rents in the current Guidelines are based on a percent of the tenants income. This system encourages property
owners to select tenants that are at the high end of the income range. Instead, it is recommended that rents be
restricted to 80% of Fair Market Rents published by the County Housing Authority.
Staff recommends a number of administrative changes:
The point system used to prioritize applicants has been moved from "General Provisions" to "Owner Occupied
Units." Applying the point system to apartments has proven to be cumbersome, time intensive and places an
undue burden on apartment managers. Instead, under "Rental Units," property owners are required to forward
applicant information to the Town to confirm income eligibility.
• The recommended revisions define the income restrictions and eliminate the need to attach the actual figures.
• References to allocation of closing costs have been eliminated to allow for adherence to real estate practices.
The recommended guidelines state that Council approved deed restrictions are recorded with each BMP unit
and eliminate the need to reiterate specifics from the restrictions. Since deed restrictions change from time to
time, excerpting portions into the guidelines unnecessarily requires guideline revisions.
• Community Development recommends that language regarding payment of in -lieu fees be amended to require
payment at or prior to final occupancy.
The draft guidelines also incorporate Council's request that mobile home owners relocated due to park closure be given
priority. The guidelines appoint six points to households required to relocate their residence as a result of Council action.
This item (IIB. Buyer Selection) is expanded to include relocation resulting from a mobile home park closure. The
points given to Town employees who have worked for the Town at least one year has been increased from 6 to 20 in an
effort to retain Town employees faced with exorbitant Silicon Valley housing costs.
CONCLUSION:
Changes to the BMP Guidelines are primarily administrative. The documents, necessary to managing this affordable
housing program, allow staff to assure that only income eligible applicants are able to occupy the units. Furthermore,
the guidelines and restrictions attempt to balance the need of meeting low income families' needs with respecting families
privacy once they reside in the unit. Keeping administrative efforts within reasonable limits is also a consideration.
PAGE 3
MAYOR AND TOWN COUNCIL
SUBJECT: ADOPT RESOLUTION ADOPTING REVISED BELOW MARKET PRICE HOUSING
PROGRAM GUIDELINES AND RESCINDING RESOLUTION #1992-88
May 25, 2000
ENVIRONMENTAL ASSESSMENTS:
This action is not a project defined under CEQA, and no further action is required.
FISCAL IMPACT:
Funds for implementing the BMP Housing Program are included in the Town's Operating Budget. Approval of the
Guidelines will not impact the budget.
Attachments:
1. Resolution Adopting Revised Below Market Price Housing Program Guidelines (with Exhibit A)
Distribution:
Richard Warren, Property Management Director, Housing Authority of the County of Santa Clara, 505 West Julian Street
San Jose, CA 95110-2300
RESOLUTION
RESOLUTION OF THE TOWN COUNCIL
OF THE TOWN OF LOS GATOS ADOPTING REVISED
BELOW MARKET PRICE 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 attached Revised Below Market Price
Guidelines.
PASSED AND ADOPTED at a regular meeting of the Town Council of the Town of
Los Gatos held on the 5th day of June, 2000 by the following vote:
COUNCIL MEMBERS:
AYES:
NAYES:
ABSENT:
ABSTAIN:
SIGNED:
ATTEST:
MAYOR OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
CLERK OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
csd08a:\resos\cs060500.R02
RESOLUTION OF TIIE TOWN COUNCIL
OF TIIE TOWN OP LOS GATOS
ADOPTING REVISED GUIDELINES
TOWN'S BELOW MARKET PRICE HOUSING PROGRAM GUIDELINES
3.90.100 through 3.90.135.
I. GENERAL PROVISIONS
A. Every multifamily rental dwelling project at the time of building 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.
PP
y
Point system to establish applicant rating and ranking.
Six --points:
one spouse is 62 ycars of agc or oldcr at time of appriimti,rr:
(ii) Salaried Town cirr ie�-tn
p
e�appneaeie�r.
and-frave-moved-ont-of-the—Town-withrtr the -fast -fire -years -prior -to
the time of application.
n�Ypt au iJt11es e—t,
years.
of Council action.
Singh.. heau tif-
at the timc of application and havc livcd in thc Town for at lcast thc prim
two ycars.
points:
havc livcd in thc Town at lcast thc prior two ycars.
rcc points:
csdO8A:\resos\cs072098.r02 -2-
i wo points.
----Homehertds-who-have-frved-m-the-Terwrr for-at-least-1-0-years-and
appliratiem
point:
critcria.
its. Applications for any
eB. Confidentiality
Client information is confidential and not considered public information except for
statistical information on the BMP units and general 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 net 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 of the projects containing BMP units {not-t nits) may be
provided as well as a range of sales prices.
II. OWNER OCCUPIED UNITS
A. Applicant Eligibility
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1. Household Income:
Income limits are set according to household size -and -range -front 80-pereent
using the Federal Department of Housing and Urban Development statistics
regarding median income.
ESA.
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 ability to pay taxes,
insurance, closing costs and any homeowner association fees in
addition to the mortgage.
previous salt/purchase of the unit. For-a--,n;w iit;-tin, fcL ALr11--bt.
sbared-brthe-Thwirfrerm-the-in-lietrfeesr and -the -burn
B. Buyer Selection
1. Applications determined to be eligible according to Scction II. A. wiHH.,�
prioritized in accordance -with -the point system described in Scction I.D.
A point system is used to establish applicant rating and ranking. Applicants
csdO8A:\resos\cs072098.r02 -4-
will be ranked according to total points and must have at least one point to
be eligible for consideration. Points are awarded as follows:
Twenty points:
Salaried, full-time Town employees as defined in the Town's Personnel
Rules, who have been employed by the Town for a period of no less than 12
months prior to the time of application.
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 applica-
tion 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.
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 application and have
csd08A:\resos\cs072098.r02 -5-
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 unit.
C. Determination of Initial Selling Price
1. The initial sales price of the unit will be determined by consultation
between the Town Manager or delegate and the developer within the price
ranges calculated as defined herein. outlincd in Exhibit D, "Initial Selling
Price" 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 project.
2. The initial price of a unit may include direct construction costs and may
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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 an annual a regular basis
(Scc Exhibit B):
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
iii. Determination of Multiplier
Sales Price/Minimum Household Income = Multiplier
b. Initial Sales Price Ranges
csdO8A:\resos\cs072098.r02 -7-
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 Sri Below
Market Price dwelling units. - _
belevy-
,
, •
the property may be lcascd for a n,in�t�v€�rn,ntisitiiira,,�
maximum II.U.D. incomc for low incomc houschelds. IIouscheld sizc will
- -
---3-irrerderte-lease-runit-underthe-t-ernis-efabever the -owner -must -still -be
4. The Town has thc right of first rcfusal on thc salc of-thc BMP units The
csdO8A:\resos\cs072098.r02 -8-
able to frnet--a-btryer.
5. Rcsalc provisions arc provided in Scction E. below.
E. Resale of Units
1. If the owner elects to sell his/her unit, the Town must be notified.
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.
. 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 The require-
ments in Scction I.A. Approval of Hillside Planned Developments 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. Fccs will be paid prior to or at close of escrow of cach unit.
Fees shall be paid prior to or at time of final occupancy as follows:
a. Multi -Family Owner Occupied Developments. At approximately
40% occupancy of entire development as determined during the
Planning approval process.
b. Multi -Family Renter Occupied Developments. At approximately
csdO8A:\resos\cs072098.r02 -9-
75 % occupancy of entire development as determined during the
Planning approval process.
c. Hillside Planned Developments. At time of final occupancy 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 program. Applica-
tions/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
affordable 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 Depart-
ment of Housing and Urban Development. (Scc Exhibit A, attachcd.)
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.
csd08A_\resos\cs072098.r02 -10-
Section I.D. of this resolution.
cast of a tic.
3. An applicant has two opportunitics to rcfus
f
ppiicant pool.
ilg-ieii ov
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.
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.
dctcrmincd by II.U.D. arc sct forth in Exhibit A. Rents will be restricted to thirty
perccnt of the m
- person, two
bcdrooms - 3 persons, three bcdrooms - 4 persons. 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 their rent will be sct at 30 percent of their annual
income 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
csd08A:\resos\cs072098.r02 -11-
income exceeds 100 percent of the median, the rent will be at markct ratc, 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.
SIGNED:
MAYOR OF TIIL TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
csd08A:\resos\cs072098_r02 -12-
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clk:d16:\other\ordres2
-bmp revised
reso
From: Marlyn Rasmussen
To: Kimberley Vitale
Date: PM
Zmp
Smbj»ot: /reso
can you please put this up on share for me. I can't find it. thx.
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