1992-088-Specifying Rules, Procedures And Criteria For The Town's Below Market Price Housing ProgramRESOLUTION 1992 -88
RESOLUTION OF THE TOWN COUNCIL
OF THE TOWN OF LOS GATOS
SPECIFYING RULES, PROCEDURES AND CRITERIA
FOR THE TOWN'S BELOW MARKET PRICE HOUSING PROGRAM
THIS resolution establishes the rules, procedures and criteria that will be used to
administer the BMP Housing Program as requested pursuant to Zoning Ordinance Sections
3.90.100 through 3.90.135.
RESOLVED:
L 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 section F of 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.
CS008: a: \RESOS \CS051892. R88 -1 -
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. Applicant Priority
Point system to establish applicant rating and ranking.
Six points:
(i) 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.
(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 12 months prior to the time of application.
(iii) 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.
(iv) 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.
(v) Households which are required to relocate their residence as
a result of Council action.
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
CSDO8:e: \RESOS \CS051892.R88 -2
two years.
Three points:
Persons who work in the Town of Los Gatos at time of
application and have worked in the Town for at least the prior
two years.
Two points:
Households who have lived in the Town for at least 10 years and
have moved out within the last five years prior to the time of
application.
One point:
Households who live or work within Santa Clara County at the
time of application and are eligible according to family size and
income criteria.
Household size is worth two points per person. Applicants will
be ranked according to total points and must have at least one
point to be eligible for consideration.
2. Household Size /Unit Size:
The objective of the BMP Housing Program is to maximize the number
of people who may benefit from the BMP housing units. Applications
for any unit will first be prioritized according to the point system above
and then in order of household size.
C. 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
implementation of the BMP program the Town is attempting to provide a
supply of low- moderate income housing not 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 the
CSD08:a: \RES0S \CS051892.R88 - 3 -
individual 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 and range from 80
percent - 120 percent 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.
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.
C. For a resale unit, the closing costs and title insurance shall be
shared by the buyer and seller in a manner consistent with the
previous sale /purchase of the unit. For a new unit, the fee shall
be shared by the Town from the in -lieu fees, and the buyer.
B. Buyer Selection
1. Applications determined to be eligible according to Section II. A. will
be prioritized in accordance with the point system described in Section
I.B.
CSDO8:a: \RES0S \CS051892.R88 -4 -
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 range outlined in Exhibit B, "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 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
CSDOB:e: \RESOS \C5051892AW - 5 -
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
L Determination of Total Housing Cost
Sales Price - 10 percent down payment = mortgage
• Annual Debt Service
• Taxes
• Homeowners Fees
• 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
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) 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. Owners of Below Market Price dwelling units are not permitted to
lease, rent, sublet, or otherwise assign their interest in the property,
except that the property may be leased for a maximum of 12 months
within a 10 -year period. Tenants will be limited to persons whose
CSD08:a: \RESOS \CS051892.R88 - 6 -
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.
Income guidelines determined by H.U.D. are set forth in Exhibit A.
Rents will be restricted to thirty percent of the maximum H.U.D.
income for low income households. Household size will be assumed
as follows: studio and one bedroom -1 person; two bedrooms - 3
persons; three bedroom - 4 persons. All leases must be arranged
through the Town or its designee and the Owner must accept qualified
tenants.
3. In order to lease a unit under the terms of 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 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 Agent will
determine the resale price in accordance with the deed restriction
recorded on the property.
4. Agent notifies the next qualified buyer in the application pool.
CSD08:a: \RES0$ \CS051892.R88 - 7 -
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 the requirements
in Section I.A. 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. 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 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 Department of Housing and Urban Development. (See
Exhibit A, attached.)
2. Ability to Pay Rent
A tenant's ability to pay monthly rent will also be considered in
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determining tenant eligibility.
C. Tenant Selection
1. Applications determined to be eligible according to paragraph B,
above, will be prioritized in accordance with the point system
established in Section I.B. of this resolution.
2. If necessary, 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.
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. Income guidelines determined by H.U.D. are set forth in
Exhibit A. Rents will be restricted to thirty percent of the maximum H.U.D.
income for low income households. Household size will be assumed to be as
follows: studio and one bedroom - 1 person; two bedrooms - 3 persons; three
bedrooms - 4 persons.
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 set at 30 percent of their
annual income; 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 will
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be at market rate; 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.
FURTHER RESOLVED, that Resolution 1990 -213 is repealed
PASSED AND ADOPTED at a regular meeting of the Town Council of the Town
of Los Gatos held on the 18th day of May, 1992 by the following vote:
COUNCIL MEMBERS:
AYES: Randy Attaway, Joanne Benjamin, Steven Blanton,
Brent N. Ventura, Mayor Eric D. Carlson
NAYES: None.
ABSENT: None.
ABSTAIN: None.
SIGNED: 0'70 —���
MAYOR OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
ATTEST:
CLERK OF THE TOWN OF S GATOS
LOS GATOS, CALIFORNIA
CSD08: e : \ RESOS \CS051892. R88 -10-
EXHIBIT A
CURRENT INCOME GUIDELINES
DETERMINED BY
FEDERAL DEPARTMENT OF HOUSING & URBAN DEVELOPMENT
REVISED 4/17/91
OF MEDIAN 50 80 100 120
Persons
In
Household
1 20200
26600
40400
48500
2 23100
30400
46700
55450
3 25950
34200
51900
62300
4 28850
38000
57700
69200
5 31150
41050
62300
74800
6 33450
44100
66900
80300
7 35750
47100
71500
85800
8 38100
50150
76200
91400
Revised Guidelines, Incorporated into
Resolution: 1986 -45
Date: 4/6/86
Revised through Resolution 1988 -45
Date: 2/6/88
Revised through Resolution 1989 -53
Date: 4/24/89
Revised through Resolution 1990 -213
Date: 10/15/90
Revised through Resolution 1992 -88
Date: 5/18/92
CSD01:N: \reports \GUIDELIN.HUD
[ONW -}�7
INITIAL SALES PRICE RANGES
1. Calculation of the Housing Multiplier
To calculate the initial sales price ranges the
Town of Los Gatos
multiplies the current income
guidelines (determined
by the Federal
Department of Housing and Urban
Development) by 2.28.
Assumptions:
• Loan:
12 %, 30 Year
• Private Mortgage Insurance:
.44% of Loan Amount
• Underwriting Ratio:
Total housing cost
no more than 30%
of total income
a. Determination of Total Housing Cost
EXAMPLE A
EXAMPLE B
Sales Price
$130,000
$50,000
10% down
- 13.000
5.000
$117,000
$45,000
Annual Debt Service
$12,969
$ 4,988
(12 %, 30 Years)
Taxes (rate of 1.15 %)
1,495
575
Homeowners Fees ($100 mo.)
1,200
1,200
PMI (Private Mortgage Ins.) .44%
515
198
Total Housing Cost
$16,179
$ 6,961
b. Determination of Minimum Household
Income
EXAMPLE A
EXAMPLE B
Total Housing Cost
$16,179
$6,961
0.3
0.3 = $ 53,930
0.3 = $23,203
c. Determination of Multiplier
Sales Price
Minimum Household Income
Average multiplier = 2.28
EXAMPLE A
130 000
53,930 = 2.41
EXAMPLE B
$50,000
23,203 = 2.15
-2-
2. Initial Sales Price Ranges
The following chart reflects the sales prices affordable for families at
80, 100, and 120 percent of the County median. (Income X 2.28 = Sales
price).
SALES PRICES
Household Size
80%
100%
120 %,
1
60,648
92,112
110,580
2
69,312
106,476
126,426
3
77,976
118,332
142,044
4
86,640
131,556
157,776
5
93,594
142,044
170,544
6
100,548
152,532
183,084
7
107,388
163,020
195,624
8
114,342
173,736
208,392
SALES PRICE RANGE
Unit Size
Studio 1 -2 People
$60,648
to
$110,580
1 Bedroom
60,648
to
126,426
2 Bedroom
69,312
to
157,776
3 Bedroom
86,640
to
183,084
4 Bedroom
93,594
to
208,392
Revised Guidelines, Incorporated into Resolution 1986 -45
Date: 4/7/86
Revised through Resolution 1989 -53
Date: 4/24/89
Revised through Resolution 1990 -213
Date: 10/15/90
Revised through Resolution 1992 -88
Date:5 /18/92
CSDOI:A: \HOUSING \SLSPRICE.RNG