1986-045-Specifying Rules, Procedures And Criteria For The Town's Below Market Price ProgramRESOLUTION 1986-45
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 1985 -51. Resolved:
I. Buyer Qualification
A. Priority of eligibility at the time of purchase:
1. First priority:
(a) 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.
(b) 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.
(c) Senior Citizens who have lived in the Town and have moved out of
the Town within the previous five years at time of application.
2. Second priority - Single heads of household with dependent children
who have lived in the Town for at least two years.
3. Third priority - Persons who live in the Town of Los Gatos and have
lived in the Town for at least two years.
4. Fourth priority - Persons who work in the Town of Los Gatos and have
worked in the Town for at least two years.
5. Fifth priority - All other applicants who live or work within Santa
Clara County and are eligible according to family size and income
criteria.
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.
B. 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:
a
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.
C. 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.
D. 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 followings factors:
1. BMP Price
2. Current Lending Rates
3. Estimated Taxes
4. Estimated Insurance
5. Homeowner's Fees
6. Other expenses as determined necessary by the lender.
Closing costs for the unit shall include a fee to cover the administration
of the BMP Program.
II. Buyer Selection
A. Applications will be prioritized in accordance with the established
place of employment and income requirements.
B. A lottery will be used to rank each qualified applicant within each of five
priorities.
C. An applicant has two opportunities to refuse a unit before being removed
from the current applicant pool.
D. Applicants who do not qualify for a particular project shall retain their
eligibility.
III. Determination of Initial Selling Price
A. The initial sales price of the unit will be determined by consultation
between the Town Manager or delegate and the deveZoper within the price
range outZined in Exhibit B, " InitiaZ Selling 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 deveZoper. The price agreement shall be reached prior to
3.
Planning Commission review of the project.
B. 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).
C. 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 improve-
ments, public agency fees, bonds, insurance, recreational facilities and
engineering and architectural fees related to construction.
D. The range in which the initiaZ selling price shaU be set wiZZ be determined
through completion of the foZZowing eaZculation on an annuaZ basis (See Exhibit B):
1. CaZculation of the Housing MuZtipZier
a. Determination of TotaZ Housing Cost
SaZes price
(10% down payment)
mortgage
AnnuaZ Debt Service
Taxes
Homeowners Fees
PMI
TotaZ Housing Cost
b. Determination of Minimum HousehoZd Income
Assume 30% of househoZd income to go towards housing:
TotaZ Housing Cost = Minimum househoZd income
0.3
c. Determination of MuZtipZier
SaZes Price = MuZtipZier
Minimum HousehoZd Income
2. InitiaZ SaZes Price Ranges
Minimum and maximum saZes prices are estabZished by completing the
foZZowing formula for a range of famiZy sizes:
Income (80% and 100% and 120% of median income) x muZtipZier = saZes
price.
IV. Deed Restrictions
A. All Below Market Price dwelling units must be owner- occupied except as
noted in (B) below.
M
B. As 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.
C. In order to lease a unit under the terms of (B) 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.
D. 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.
E. Resale provisions are provided in Section V. below.
V. Resale of Units
A. If the owner elects to sell his unit, the Town and /or CHD must be notified.
B.. 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 avail-
able to other program applicants.
C. The Town, after receiving a recommendation from the CHD, will determine the
resale price by adding to the original price.
1. 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;
2. 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.
D. The repair of any damage to the unit will be done prior to resale. The
CHD will arrange for the repairs. Money to cover the costs of repair may
be loaned to the CHD by the Town if there is a delay of close of escrow
and the CHD will reimburse the Town after the sale.
E. CHD notifies the next qualified buyer in the application pool.
EXHIBIT A
CURRENT INCOME GUIDELINES
DETERMINED BY
FEDERAL DEPARTMENT OF HOUSING & URBAN DEVELOPMENT
OF MEDIAN 80 100 120
Persons in Household
0
19,250
27,440
32,928
22,000
31,360
37,632
24,750
35,280
42,336
27,500
39,200
47,040
29,200
41,650
49,980
30,950
44,100
52,920
32,650
46,550
55,860
34,400
49,000
58,800
5.
PASSED AND ADOPTED at a regular meeting of the Town Council of
the Town of Los Gatos held on 7th day of April , 1986 by the following
vote:
AYES: COUNCILMEMBERS Joanne Benjanin, Eric D. Carlson,
Thomas J. Ferrito and Vice Mavor Brent N. Ventura
NOES: COUNCILMEMBERS None
ABSTAIN: COUNCILMEMBERS None
ABSENT: COUNCILMEMBERS Terrence J. Dail
_ � f
SIGNED: ,i j . 7
ATTEST:
CLERK OF THE TOWN OF LOS G OS
VICE- P4AYOR OF THE TOWN OF LOS GATOS
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