Item 34 Staff Report Town Council Resolution Specifying Rules, Procedures and Criteria for the Town's Below Market Price Programbuuirb 1 L f 1 Gn
DATE:
TO:
FROM:
SUBJECT:
TOWN OF LOS GATOS
Council Agenda Report
JULY 29, 1986
MAYOR AND TOWN COUNCIL
TOWN MANAGER
TOWN COUNCIL RESOLUTION SPECIFYING RULES, PROCEDURES AND
CRITERIA FOR THE TOWN'S BELOW MARKET PRICE PROGRAM
Date:
PAW! C,•
Item No. ? -/
RECOMMENDATION:
'1
That the Town Council Resolution Specifying Rules, Procedures
and criteria for the Town's BI1P Program be approved as amended.
DISCUSSION:
The attached Resolution has been amended to incorporate the
amendment of Chapter 3.90 of the Zoning Ordinance which relates
to the BMP Program.
In addition to minor outline revisions, the following changes
have been made:
1. General Provisions as listed in the Zoning Ordinance have
been added. (pages 1 and 2)
2. As recommended by the Planning Commission and the Community
Services Commission, the in -lieu fee established in the
Zoning Ordinance is set at a cost equal to the sum of six
percent of the building valuation for each unit as
determined by the building official. (page 8)
PREPARED BY:
Reviewed by:
Regina A. Falkn
Acting Director
rjinity Services Dept. (continued page 2)
Attorney
C1 erk Treasurer
TOWN COUNCIL ACTION DIRECTED TO:
ACTION OF COUNCIL:
COMMENTS:
Report to Tow'. Juncil
BMP Resolution
July 29, 1986
Page 2
In -lieu fees are to be deposited into an Affordable Housing
Fund. These funds will be used for administrative costs.
Remaining funds could be used,for example, for landbanking;
buying down the cost of additional owner occupied units to
make them affordable to low/moderate income households; or,
to purchase rental units to rent to eligible households.
3. An entire section regarding Rental Units has been added to
the resolution. (page 8 and 9) The section states that the
program will be administered by an agent of the Town. They
will be responsible for determining initial client eligibility,
reviewing eligibility annually, and tenant selection. Staff
is currently in the process of identifying prospective agents.
Eligible households will be those whose income is less than or
equal to 80% of the County's median income. Rents will be
set at Fair Market Rents. Both sets of figures are established
by the Federal Department of Housing and Urban Development.
,Rental applications will be prioritized according to the
categories previously established for the Owner -Occupied Units.
Tenants will be eligible for conciliation and mediation
services provided through the Town's Rental Mediation Program
except as they regard rent increases.
If a tenants income increases so that it falls between 80 and
100% of the County's median income, then their rent will be
set at 33% of their annual income; and, the unit shall still
be considered a BMP Rental Unit. However, if a tenants income
exceeds 100% of the median, their rent will be at market rate.
In the 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.
RAF:cr
Attachment(s)
RESOLUTION NO. 1986-139
TOWN COUNCIL RESOLUTION SPECIFYING RULES, PROCEDURES
AND CRITERIA FOR THE TOWN'S BELOW MARKET PRICE PROGRAM
This resolution effects the provisions of Zoning Ordinance Sections
3.90.100 through 3.90.135 regarding the Below Market Price Program. This
supersedes Resolution 1986-45. Resolved:
I. GENERAL PROVISIONS
A. 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 following rules:
1. Projects containing five or more but less than twenty units must
provide a number of BMP units equal to ten percent of the number
of market rate units.
(1)
2. 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 this
requirement.
3. Projects with from 20 to 100 units must provide BMP units as
determined by the following formula:
Number of BMP units = .225 (total # of units) - 2.5
4. All projects in excess of 100 units must provide a number of BMP
units equal to 20% of the market rate units.
5 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. Applicant Priority
1. Priority of eligibility at the time of purchase:
a. First priority:
(i) Senior citizens who have lived in the Town for at least
two years. A senior citizen is defined as any person
60 years of age or older, or married couples living
together when at least one spouse is 60 years of age or
older.
(ii) Salaried Town employees as defined in the Town's
Personnel Rules, who have been employed by the Town for
a period of no less than 72 months.
(iii) Senior Citizens who have lived in the Town and have
moved out of the Town within the previous five years at
time of application.
b. Second priority - Single heads of household with dependent
children who have lived in the Town for at least two years.
(2)
c. Thiru priority - Persons who live in cne Town of Los Gatos
and have lived in the Town for at least two years.
d. Fourth priority - Persons who work in the Town of Los Gatos
and have worked in the Town for at least two years.
e. Fifth priority - All other applicants who live or work
within Santa Clara County and are eligible according to
family size and income criteria.
2. Household Size/Unit Size:
The size of the family will be considered when a home is sold.
The number of bedrooms that a family qualifies for is based on
the household size according to the following schedule:
1 - 2 Family Members 1 Bedroom and Studio
2 - 4 Family Members 2 Bedrooms
First priority - 2-4 family members
Second priority - single individuals
3 - 6 Family Members 3 Bedrooms
No distinction is made between adults and children. For example,
a husband and wife are eligible for a 2-bedroom unit, as well as
a parent and child.
II. OWNER OCCUPIED UNITS
A. Applicant Eligibility
1. Household Income
Income limits are set according to household size and range from
80%-120% of the Santa Clara County Median Income, as determined
by the Federal Department of Housing and Urban Development.
Current income guidelines are attached as Exhibit A.
(3)
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:
BMP Price
Current Lending Rates
Estimated Taxes
Estimated Insurance
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 and any homeowner
association fees in addition to the mortgage.
c. Closing costs for the unit shall include a fee to cover the
administration of the BMP Program.
B. Buyer Selection
1. Applications will be prioritized in accordance with the
established place of employment and income requirements.
2. A lottery will be used to rank each qualified applicant within
each of five priorities.
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.
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 range outlined in Exhibit B,
(4)
"Initial Jelling Price." The Manager is authorized to approve
changes in specifications to lower the price of the BMP units
which do not affect any Town code or ordinance requirements, such
as changes in carpeting, lighting fixtures, etc. The initial
price will be set by a BMP agreement. This agreement will be
signed by the Town Manager and the developer. The price
agreement shall be reached prior to Planning Commission review of
the project.
2. The initial price may include direct construction cost 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 to purchase (as defined above).
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, offsite 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 basis (See Exhibit B):
a. Calculation of the Housing Multiplier
i. Determination of Total Housing Cost
Sales price - 10% down payment = mortgage
„nnual Debt Service
Taxes
Homeowners Fees
+PMI
Total Housing Cost
ii. Determination of Minimum Household Income
Assume 30% of household income to go towards housing:
Total Housing Cost = Minimum household income
.03
iii. 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% and 100% and 120% of median income) x multiplier
= sales price.
D. Deed Restrictions
1. All Below Market Price dwelling units must be owner -occupied
except as noted in 2. below.
2. An owner of a Below Market Price dwelling unit is not permitted
to lease, rent, sublet, or otherwise assign his interests in the
property, except that the property may be leased for limited
periods of time when the owner is required to live elsewhere and
expects to return. Tenants will be limited to persons qualified
under the Section 8 income limits. All leases must be arranged
through the Community Housing Developers Corporation and the
owner must accept tenants qualified by the Community Housing
Developers.
(6)
3. In order co lease a unit under the terms or 2. above, the owner
must still be qualified within the income limits of the Below
Market Price Program in effect at the time of the lease,
otherwise the owner must sell the unit.
4. The Town has the right of first refusal on the sale of the BMP
units. The Town must exercise its right of refusal within six
months from notice of availability of a unit. The developer has
second right of refusal on first sale of all new units if the
Town is unable to find a buyer.
5. Resale provisions are provided in Section E. below.
E. Resale of Units
1. If the owner elects to sell his/her unit, the Town and/or CHD
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, after receiving a recommendation from the CHD, will
determine the resale price by adding to the original price.
a. The percentage increase in the median income index for Santa
Clara County as published by the United States Department of
Housing and Urban Development for the years the owner has
lived in the unit;
b. The value of any substantial improvements the owner has made
on the property, and will deduct from the price of the unit
any costs incurred to repair damages to the Below Market
Price dwelling unit.
(7)
5. CHD notilles the next qualified buyer in the application pool.
F. In -Lieu Fees
1. Establishment of Fee
Projects with five or more but less than ten units may pay a fee
equal to the sum of six percent of the building permit valuation
for each unit to be built 4s determined by the building official.
2. Fees will be paid prior to or at close of escrow of 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. Applications/recommendations for use of remaining funds
will be reviewed as received. Possible use of fund 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 an agent of the Town. The agent
is responsible for determining applicant eligibility, and reviewing
eligibility annually, and tenant selection.
B. Applicant Eligibility
1. Household Income
In order to be eligible, applicants must have a household income
under eighty percent of the County's median income as defined by
the Federal Department of Housing & Urban Development. (See
Exhibit A, attached.)
(8)
2. Buyer Qualification
A tenant's qualifications are determined by the households
ability to pay monthly rent.
C. Tenant Selection
1. Applications will be prioritized in accordance with the
established place of employment and income requirements.
2. If necessary, a lottery will be used to rank each qualified
applicant within each of the five priorities.
3. An applicant has two opportunities to refuse a unit before being
removed from the current applicant pool.
D. Management
BMP rental units shall be managed in the same manner as other units in
the development.
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
Rents shall be set at the Fair Market Rents developed by the Federal
Department of Housing & Urban Development. Current rents are listed in
Exhibit C, Fair Market Rents.
F. Annual Review
Eligible households will be those whose income is less than or equal
to 80% of the County's median income. Rents will be set at Fair
Market Rents. Both sets of figures are established by the Federal
Department of Housing and Urban Development.
Rental applications will be prioritized according to the categories
previously established for the Owner -Occupied Units.
(9)
If a tenants income increases so that it falls between 80 and 100% of
the County's Median income, then their rent will be set at 33% of
their annual income; and, the unit shall still be considered a BMP
Rental Unit. However, if a tenants income exceeds 100% of the median,
their rent will be at market rate.
In the 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.
PASSED AND ADOPTED at a
regular
meeting of the Town Council
of the Town of Los Gatos held on the 4th day of August , 1986 by the
following vote:
AYES: COUNCILMEMBERS Thomas J. Ferrito, Brent N. Ventura and
Mayor Terrence J. Daily
NOES: COUNCILMEMBERS
None
ABSTAIN: COUNCILMEMBERS Joanne Benjamin
ABSENT: COUNCILMEMBERS Eric D. Carlson
SIGNED:
ATTEST:
/S/ Terrence J. Daily
MAYOR OF THE TOWN OF LOS GATOS
/S/ Rose E. Aldag (seal)
CLERK OF THE TOWN OF LOS GATOS
EXHIBIT A
CURRENT INCOME GUIDELINES
DETERMINED BY
FEDERAL DEPARTMENT OF HOUSING & URBAN DEVELOPMENT
REVISED 11/85
OF MEDIAN- 80 100 120
Persons in Household
1
2
3
4
5
6
7
8
19,250
22,000
24,750
27,500
29,200
30,950
32,650
34,400
27,440
31 ,360
35,280
39,200
41,650
44,100
46,550
49,000
32,928
37,632
42,336
47,040
49,980
52,920
55,860
58,800
Revised Guidelines, Incorporated into
Resolution: 1986-45
Dated: 4/7/86
E3IIB1'1' 8
lP 1T.4. SALES PRICE RANGES
1. CaZculation of tha 3ousinc c .cZtitlier
Aesumotions:
* Loan:
* Privata Mortgage 1'nsurance:
* !Underwriting Ratio:
a. Determination of TotaZ aouaina Cost
Sales Price
10% dazn
Ann al Debt Service
(12%, 30 Years)
Tares
goseeownsra Peas ($75 ma.)
P►!'
Total Sousing Cost
b . Detarttinatian of f4inimust Household
Total Sousing Cost
0.3
$Z2,437
0.3
c. Datarmination of Multiatier
Sales Price
Minima Household Zhoo e
Average meultipZiar is 2.14
2. Initial Sales Pride Ranger
The follmrrng char, reflects: the salsa pities: affordable for fiterfaime ass 80%,
100%, and 120% of the County nndimil. (income r 2.14 a Sales prior) .
12%, 30 Year
.44% of Loan Amount
Total housing cost no more than
30• of total income
S90,000
- 9,000
$81, 000
$20, 056
1,125
900
356
$12, 437
$42, 457
$60, 000
- 6,000
$54,000
$ 6,704
750
900
238
3 8,592
S8, 592
0.3 = $28,640
$90 000
41,47=2.17
$B0_
28,640 a 2.10
SALES PRICES
&oueahoZd Size 80% 100: 120:
1 41,195 58,721 70, 466 ,
2 47,080 67,110 30,533
3 52,965 75,499 90,599
4 58,850 83,888 100,666
5 62,488 89,131 106,957
6 66,233 94,374 123,249
7 69,871 99,617 119,540
8 73,616 104,860 225,832
RECORDED SALES PRICE RANGE
Jett Size
Studio 1-2 People 141,195 to 080,533
1 Bedroom 41,195 to 80,533
2 Bedroom 47,080 to 100,666
3 Bedroom 58,850 to 113,249
4 Bedroom 62,488 to 125,832
Revised Guidelines, Incorporated into
Resolution: 1986-45
Dated: 4/7/86
EXHIBIT C
FAIR MARKET RENTS
CURRENT FAIR MARKET RENTS AS DETERMINED BY THE
FEDERAL DEPARTMENT OF HOUSING & URBAN DEVELOPMENT
BEDROOMS RENT
Studio $450
1 510
2 595
3 775
4 850
5 978
6 1105
Incorporated by Resolution
Dated: August 4, 1986