2008-121-Adopting Revised Below Market Price Housing Guidelines And Rescinding Resolution 2005-117 To Confirm That The Program Is Intended To Assist First The Homeowners.RESOLUTION 2008-121
RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF LOS GATOS
ADOPTING REVISED BELOW MARKET PRICE HOUSING GUIDELINES AND
RESCINDING RESOLUTION 2005-117 TO CONFIRM THAT THE PROGRAM IS
INTENDED TO ASSIST FIRST TIME HOMEOWNERS
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
low and 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 Housing
Program Guidelines to confirm that the program is intended to assist first time homeowners.
NOW, THEREFORE, BE IT RESOLVED that the Town Council of the Town of Los
Gatos (1) repeals Resolution 2005-117; and, (2) adopts the revised Town of Los Gatos Below
Market Price Housing Program guidelines attached as Exhibit A.
PASSED AND ADOPTED at a regular meeting of the Town Council of the Town of
Los Gatos, California, held on the 3rd day of November, 2008, by the following vote:
COUNCIL MEMBERS:
AYES: Steve Glickman, Diane McNutt, Joe Pirzynski, Mike Wasserman, and Mayor
Barbara Spector
NAYS:
ABSENT
ABSTAIN:
b C4,~t~-
. OF THE TOWN OF LOS GATOS
TOS, CALIFORNIA
LOS GATOS, CALIFORNIA
B~HIBX"7' A
TOWN OF LOS GATOS
BELOW MARKET PRICE DOUSING PROGRAM GUIDELINES
1• CrENERAL PROVISIONS
A. Number of units '
Every multifamily rental dwelling project at the time of building permit, every
residential condomiiuum or planned development residential subdivision at the
time of subdivision, and every community apartment project and every residential
stack 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. The Tov,~n and
developer may negotiate to provide more BMP units than required by the rules
listed below, to .fulfill a development's Community Benefit requirements,
1. Projects containing five or more but fewer than twenty marker rate units
must~provide a number of BMP units equal to 10 percent of the number of
nlarlcet rate units,
2, Projects which include 20 to 100 market rates units must provide BMP
units <is determined by the following formula:
Number of BMP units = (.225 x total # of market rate units) - 2.S
't'his formula acts to incxease the number ofBMP units required, as a
percentage of market-rate units, from 10% to 20% over the range of 20 to
100 market rate units,
~ • 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'ofbelew market price units result in a fi~aetion
of one-half or rrzore, the number of units to be reserved is increased to the
next whole number.
S. BMP dwellings within aproject of rental units shall also be rental units.
BMP units within a project of ownerioceupied units shall also be
designated as units for purchase. BMP units vtjithin a project that contains
both rental and owner-occupied units shall also be designated as both
rental azld as units f'ox purchase, in a ratio similar to that of the market rate
units.
B. Unit Standards
1 , S1"!_.e Ol Llll].ts '
T11e size and design of• BMP dwelling units shall be reasonably consistent
with the ~narlcet rate units in the project, T'he Town and developer may
negotiate regarding the size of units if more units than required are to be
BMP Guidelines page I
provided under the Cotnmtulity Benefit requirements. BMP units should
be provided proportionately in the same unit type mix (number of
bedrooms) as the market rate units. In consideration ofthe household size
of tl~ze households on the cuz7ent program interest lisf, the Town and
developer may negotiate to provide a greater proportion of a particular unit
type.
Z. Loeatiozl Of Unlts
BMP units shall be located throughout the development, to the extent
feasible; in all buildings, on each floor, and in each project phase. !~
concentration of BMP units in one location. is not desirable.
3. .Finish of units
The external appealranee of BMP units should be indiscernible to that of
the market rate units in the project. The internal finish of BMP units
should be identical to that of the market rate units in the project, except
that the .developer may request Town approval of substitutions for luxtuy
interior finishings, appliances, or fixhnes, if such substitutions do not
violate any Town code requirement.
4. Project Facilities
All project facilities and atllerlities, including parking, must be available
on the same basis to the BMP units as to the market rate units in the
project, to the extent feasible,
C. Zn,Lieu Fees
1. Establislunent of Fee:
J'z•ojects with five ox more but less than ten units. lnay pay a fee in-lieu of
building a BMP tiulit in order to comply with BMP Program requirements.
Approval of hillside Plazaned 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 fatal building permit valuation is determined by the Building
Official,
2. Fees shall be paid prior to or at time of final occupancy as follows;
a. Multi-Family Owner Occupied Developments. Prior to occupancy
of each phase, a proportional amount oi' fees shall be paid, as
determined during the Planning approval process.
b. Multi-Family Renter Occupied pavelopments. Prior to occupancy
of each phase, a proportional amount of fees shall be paid, as
determined during the Planning .approval process.
c. Single-Family Planned Developments, At time of final occupancy
BMP Guidelines T'age 2
for each unit.
In-lien fees will be deposited into the Town`s Affordable Housing Fund.
Applications/recommendations far use of remaining funds will be
reviewed as received. Possible use of the funds include, but is not Iimsted
to, the following:
a. subsidizing the cost of owner occupied units to make them
affordable to low/moderate income households
b, purchasing rental units to make them affordable to love/moderate
income households
c, purchasing land for the fizture development of affordable housing
d. developing affordable housing
e, supplementing of affordable housing projects developed through
the Los Gatos Redevelopment Agency
f. funding administration of the program, as approved by the Town
Council in its annual budget process
D. Confidentiality
Any information provided by an applicant in ordex to demonstrate eligibility for
the program is confidential and not considered public information to the e~ctent
permitted by law except for statistical information on the BMP units and general
demogi•aplue information on the buyers and renters of BMF housing units.
Through BMY program implementation, the Town is attempting to provide a
supply oflow-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 of the projects contaizung BMP units may be.provided
as well as a range of sales prices.
II. OWNER ~CCIIPIED UNITS
A. Applicant Eligibility
Household Income:
In order to be eligible to purchase an owner-occupied BMP unit, an
applicant's annual household income must be no greater than 100% of the
Median Family Income (MFI), adjusted for household size, as defined by
the United States Department of (lousing and Urban Development (HUD)
i'or the San Jose, CA .Primary Metropolitan Statistical .Area (PMSA).
Household assets, such as real property, may also be considered in
determining eligibility.
BMP Guidelines Page 3
2. Housing Costs:
a. In order to 6e eligible to purchase an owner-occupied BMP unit, an
applicant must also demonstrate the ability to pay monthly hauling
costs, The monthly Housing cost shall include the following
factors:
(1) unit price
(2) current lending rates -
(3) estimated property taxes
(4) estimated homeowner's insurance costs
(S) homeowners'.s association fees, if applicable
(6) other expenses as determined necessary by the lender
b. All persons must qualify for tl-reir own mortgage witho~it assistance
fiom the Town, Qualifications must include the ability to pay
taxes, insurance, closing costs and any homeowner association fees
in addition to the mortgage,
First Tr'me Home Buyers;
Tlie Below Market Pr°ice (BMP) Program is far First Time Home
Buyers. A First 'l'ime Horzze Buyer, by definition, is an applicant whose
name has not appeared on a residential title in the counties covered by the
Association af'Bay Area Governments (ABAG) or Association afMonterey
Bay Governments (A111BAG) which are Alameda, Contra Costa, Merin,
~ll~onterey, Napa, San Benito, San Francisco, San Mateo, Santa Clara,
,~5'anta Cruz, Salarao and Sonoma for at least three (3) years prior tv
application. Exception is rzzade for people who were hameowner°s prior to
a divorce settlement.
B. Buyer Selection
!A point system is used to establish a ranking of applicants for the
purchase of an available unit. Applicants will be ranked accordizrg to
total points and must leave at least one point to be eligible to purchase a
unit. In addition, apl.~licant households must contain at least the same
number of persons as the number of bedrooms in a unit, at the tune of
application, in order to be eligible to purchase that unit, if the unit
contains tlu•ee bedrooms or more.
All points are calculated per household, not for each individual within
the household For example, a household ia~ which two members .are
senior citizens would receive six points for senior citizen status, not
twelve points for two rnenibers having senior citizen status. Points are
BMP Guidelines Page 4
awarded as follows;
a. Sim points:
(1} 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.
(2) Senior Citizens who have lived in the Town far at least
two years and have moved out of the Town within the last
five years prior to the time of application.
(3) Disabled 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. The definition of "disabled" for the
purpose of assigning points under this section shall be
that used by the U,S. Social Security Administration for
the purpose of determining eligibility for Social Security
disability benefits.
(4) Households required to relocate their residence as a resulf
of Council action or mobile home park closure.
(5) Regular Full-Time and Regular fart-Time Town
employees as defined in the Town's Personnel Rules, who
have been etxtployed by the T'awnz for a period of no Iess
than 1.2 months prior to the time of application.
(6) 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.
b. Four points:
(1) Persons who live in the Town of Las Gatos at time of
application and who have lived in the Town at least the
prior two years.
(2) Persons who work in the Town of L,os Gatos at time of
application and have worked in the Town for at least the
prior two years.
c. Twva poixlts:
(I) 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,
BMP Guidelines Page S
(2) Household size is worth two points per person,
d, One point;
(1) Households who live or work within Sattta Clara County
at the time of application,
(2) Households with an annual household income at or below
60% of the Medzan~ramily Inooxne (MFI}, adjusted for
household size, as defined by the United States
Department of IIousirig and Urban Develapxxrent (HUD)
for the San Jose, CA 1?rirnary Metropolitan Statistical
Area (PMSA).
2. A lottery will be used to rank each qualified applicant in the case of a tie,
Applicants are provided the opporhinity to purchase available units in
order of point ranking, from most points to least points. An applicant
has two opportunities to refuse to purchase a unit before being removed
from the curt7ent applicant pool.
4. Applicants who do not qualify for a particular project or who are not
provided the opportunity to purchase a unit in a particular project shall
retain their eligibility to apply for future projects.
S. An applicant rnt~st obtain pre-approval far a mortgage loam within ono
week after notification of eligibility to ptu•chase a unit. 'The applicant
- must submit documentation of loan approval within three weeks of
notification ofe;ligibility io purchase a unit.
C. Determination of Initial Selling Price
1, BMP units shall be priced to be of fordable to households in two income
categories; Median Income I-louseholds .(those whose incorne is above
80%, but no greater than 100%, of'the County Median Income); and
Low Iricorrze Households (those whose income is above S(?`%, but no
greater than 8(}%, of the County Median Income).
Fifty percent (50%) of the units in a project shall be priced to be
affordable to Median Income Households; fifty percent (SQ%} shall be
priced to be affordable to Low Income Households. Whenever the
calculations result in fractional units, then the number of units priced to
be affordable to Low Income households shall be rounded ttp to the next
whole number, and the number of units priced to be affordable to
Median Income Households shall be rounded down to the next whole
number, ilicluding zero {0). The following table applies this formula to
projects with 1, 2, and 3 units:
IMP Guidelines Page
Total Number of BMP
Units in Project Units Priced for
Low Income Households Units Priced far Median
Income ~Iouseholds
I 1 p
2 1 1
. 3 2 1
The Town and developer may negotiate regarding the affordability mix
of units, to fulfill a development's Community Benefit requirements.
The affordability level of a unit shall be for the purpose of setting the
initial selling price only, and do not prevent its sale to any household
eligible to purchase an owner-occupied BMP unit, as set forth in these
Guidelines,
2. AmYUally, the Town shall set the initial unit sales price for each unit type
(number of• bedrooms}, for each of the two income categories, These
initial sales prices shall be set using the most recent Median Family
Income (MFI) figures from the United States Department of Housing
and Urban Development (HUU) for the San Jose, CA Primary
Metropolitan Statistical Area (PMSA), and tl~z•ough the following
calculations;
a. For units to be priced to be affordable to Median Income
Households: the average of the lU0°/a MFI aruiual income and the
$0% MFI annual income (assuming household size appropriate
to size of unit) xMultiplier =Initial Sales Priee•
(1) Assumptions of household size by size of unit are as
follows;
Unit Size Household Size
Studio 1
1 Bedroom 1
2 Bedroom 2
3 Bedraorn 3
4 Bedraam ~}
BMP Guideln~es Page 7
These assumptions of household size by size of unit shall
be for the purpose of setting the initial sales price only,
and do not prevent the sale of any unit to any household
eligible to purchase an owner-occupied BMP unit, as set
forth in these Guidelines,
b. For units to be priced to be affordable to Low Income
Households: the average of the 80% MFI annual income and the
SO% annual income (assuming household size appropriate to size
of unit) xMultiplier =Initial Sales Price,
a Calculation of Multiplier. A Multiplier shall be calculated, based
an reasonable assumptions about unit sales prices, based on the
na.ost recent comparable sales of BMP units; current lendiaag
rates, as determined ley the most recent Primary Mortgage Market
Survey {PMMS) conducted by the Federal Home Loan Mortgage
Corporation (Freddie Mac); and related costs; and using the
following formula:
(1) Determination of Total Housing Cost: Sample sales price
., 10% down payment =mortgage. Annual debt service
on. mortgage + annual property taxes + annual
homeowners fees -+- annual private mox•tgagc instuance
(PMI) =Total Annual Housing Cost,
(2) Determination of Minimum Hoa.XSehold Income;
Asswning oaae-third of housela~ld income goes far
housing expenses, Total.Aaaaaual Housing Cost x 3 =
Minimum Annual 1-Iousehald Income.
(3) Determination of Multiplier: Sample Sales
Price/Minimum Annual I~ousehold Income ~ Multiplier.
Copies of the initial sales prices, and the calculations made, shall be
available on request from the Town's Community Services Department.
U. Deed Restrictions
Council approved Deed Restrictions shall be recorded with each Belaw Market
Price dwelling unit.
IJ. Resale of Units
1. If the owner elects to sell his%her unit, the Town must be notified in
writing by the owner.
2. When a BelowMarket Price dwelling unit becomes available for resale,
the Town shall set the resale price and make the unit available for
t~MP Guidelines Page 8
purchase through the BMP process.
3. The Town determines the resale price in accordance with the deed
restriction recorded on the property.
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 to rent a BMP rental unit,'a household's annual
income must be no greater than 8U% of the Median Family Income
(MFI), adjusted far household size, as defined by the United States
Depaz•tment of Housing and Urban Development (I-IUD) for the San
.lose, CA Primary Metropolitan Statistical Area (PMSA). Priority will
be given to those households whose income is less than 50% of the MFI.
I-Iousehold assets may also be considered in determining eligibility.
2. Ability to Pay Rent
A tenant's ability to pay monthly rent will also be considered in
determining tenant eligibility.
C• Tenant Selection
The property owzler ox manager of the development shall market the BMP
z.znit(s}, and solicit rental applications. Applications from tenants selected by
property owner or manager will be forwarded to Town or designee for
verification of income eligibility.
D, Management
I3MP rental units shall be managed by the property owner or mazzagcr in
.the same mazu~er as other units •in the development.
2, Tenants of BMP rental units are eligible to receive conciliation and
mediation services provided thz•augh the Town's Rental Dispute
Resolution Program except as they regard rent increases.
E, Unit Rents
Rents may not exceed 8U% of the most cw•rent Fair Market Rents as determined
by the Santa Clara County HausizZg Authority.
F, Annual Review
E3MP Guidelines ~ Page 9
If a tenant's income increases so that it falls between 80 and 100 percent of MFI,
then the rent may be increased in accordance with the Town's Rental Dispute
C7rdinance; and the unit shall still be considered a BMP Rental Unit. However,
if a tenant's income exceeds 100 percent of MFI, 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 that is comparable in size
shall be designated as a BMP unit in its place, and must be rented to an eligible
household so that the number of BMP units within the project remains the same.
G. Deed Restrictions •
Council approved Deed Restrictions shall be recorded for each Below Market
Price rental dwelling unit,
IV. RENTAI, UNITS -NEW S>JCOND DWEI.,I_,ING UNITS
A. Administration
Tlae program shall be administered by the Town or its designee.
B. Second Unit Incentive Program
The property owner of aNew Second Dwelling Unit, as defined in Section
29.10.310' of the Town Code, nay choose to participate in the Second Unit
Incentive Program (SUIP) as referenced in Section 29.10.320(a) of the Town
Code and as set forth below.
The SUIP consists of a no interest construction loan to a property owner
who intends to develop a new second unit, The loan amount shall be
determined based on the square foot construction cost as set forth in the
current version Uniform Building Code as adopted by the Town far new
construction and remodels. The loan amount will be calculated at 100%
of the construction cost if the unit is income and rent restricted to serve
households with incomes below 50% of the Median FatniIy Income
(MFI), adjusted for household size, as defined by the United States
Department of Housing and Urban Development (HUD) for the Stn
Jose, CA Primary Metropolitan Statistical Area (PMSA), or 80% of the
construction cost if the unit is income and rent restricted to serve
households with incomes below 80% of MI'I.
2. When a property owner participates in the SUIP, a deed restriction shall
be recorded on the property, The deed restriction shall stipulate the
rental rate, tenant income level, duration of affordability and loan
repayment requirement as wall as any other criteria as determined
appropriate by the Town.
A SUIP loan to construct a second unit within the Central I,os Gatos
BMP Cruidelines Page 10
Redevelopment Pxojeet area shall be funded using Redevelopment
Affordable Housing )funds and shall remain affordable far SS years. A
SUIP loan to construct a second unit outside the Central Los Gatos
Redevelopment Project area shall be funded using BMP Program Funds
and shall remain affordable for.:~0 years. The SUIP affordability
restrictions as set fot•th in this section tnay only be amended by action of
the Tawn Council.
4. A tenant's ability to pay monthly rent will also be considered in
determining tenant eligibility, Applications from tenants~selected by the
property owner or manager 'will be forwarded to the Town or its agent
for verification of income eligibility. Rental agreements skaal] be
submitted to the Town or its agent to verify compliance with the
provisions of this section. Tenants are eligible to receive conciliation
and in.ediation services provided through the Tawn's Rental Dispute
Resolution Program except as alley regard rent increases,
5, Units targeted to households with incomes up to 8U% of the Median
Iiamily Income (MFI) shall have rents restricted to 80% of pair Market
Rents as determined by the Santa Clara County Housing Authority.
Unts tat•getecl to households with incomes up to 50% of CMI shall have
rents restricted to 50% of Fair Matlcet Rents as determined by the Santa
Clara County Housing Authority. Tenant rents and incantes will be
monitored annually.
(Adopted by Resolution 2008- August 18, 2008)
N:1CSD1'I'CRPTS12008 'I'GRP'I'S\E3MP Guidelines 2008.wpd
13MP GuicJelines hage 11