1988-045-Specifying Rules, Procedures And Criteria For The Town's Below Market Price Housing ProgramRESOLUTION NO, 1988 -45
TOWN COUNCIL. RESOLUTION SPECIFYING RULES, PROCEDURES
AND CRITERIA FOR THE TONIV S BELOW MARKET PRICE HOUSING PROGRAM
This resolution establishes the rules, procedures and criteria that will be
used to administer the BMP as requested pursuant to Zoning Ordinance Sections
3.90,100 through 3.90.135, Resolved:
T. 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 BIMP dwellings according to the
following rules:
1w Projects containing five or more but fewer than twenty market
rate units must provide a number of BMP units equal to ten
percent of the number of market rate units.
I
2. Projects which include 20 to 100 market rates units must
provide BMP units as determined by the following formula:
Number of BNP units = .225 (total A 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 2.0% 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.
B. Applicant Priority
1. Priority of eligibility at the time of purchase or rental:
a. First priority:
( i ) Senior citizens who reside in the Town at time of
application and have lived in the
prior two years. A senior citizen
person 62 years of age or older at
or married couples living together
spouse is 62 years of aye or older
application.
Town for at least the
is defined as any
time of application
when at least one
at time of
(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.
2
/iii) Senior Citizens who have lived in the Town for at least
two years and have moved Out of the Town Within the
five years prior t0 the time Of application.
b. Second priority:
Single heads of household with dependent children who reside
in the Town at time Of application and have lived in the
Town for at least the prior two years.
C. Third priority:
Persons who live in the Town of Los Gatos at time of
application and have lived in the Town for at least the
prior two years.
d. Fourth priority:
Persons Who work in the Town of Los Gatos at time of
application and have worked in the T8Wx for at least the
prior two years.
8. Fifth priority:
All other applicants who live or work within Santa Clara
County at time of application and are eligible according to
family size and iACUNe criteria.
2. Household Size/Unit Size:
The 3iI9 of the family will be considered when a home is sold.
The number of bedrooms that J family qualifies for is based on
the household size according to the following schedule:
I ~ 2 Family Members Bedroom and Studio
2 - 4 Family Members Bedrooms
First priority - 2~4 family members
Second priority ~ single individuals
J ~ 6 Family Members Bedrooms
3
No distinction is made between adults and children. For example,
a husband and wife are eligible for a 2- hedroom unit, as well as
a parent and child.
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 WHIP units (not the 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% -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.
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
4
- 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. Closing costs for the unit shall include a fee to cover the
administration of the BNP Program and shall be borne by the
buyer.
B, Buyer Selection
1, Applications determined to be eligible according to paragraph A
will be prioritized in accordance with the criteria of Section I
B.
2. A lottery will be used to rank each qualified applicant within
each of the five priority categories.
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 Token Manager or delegate and the
developer within the price range outlined in Exhibit B, "Initia.l
Selling Price." The Manager is authorized to approve changes in
speci€ications to lower the price of the BNP units which do not
violate any Town code or ordinance requirements, such as
5
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 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, 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
a. Calculation of the Housing Multiplier
i. Determination of Total housing Cost
Sales price - 10% down payment = mortgage
• Annual Debt Service
• Tuxes
• Homeowners Fees
• PMT
= Total Housing Cost
6
ii. Determination of Minimum Household Income
Assume 30% 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% 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 Town's agent and the owner must accept tenants
qualified by the Town's agent.
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 EMIR
7
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 its agent
must, be notified.
2. When a Below Market Price dwelling unit becomes available for
resale, the owner must allow the Toren 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 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,
U. 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.
4w Agent notifies the next qualified buyer in the application pool.
E. In -Lief: 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. The fee shall be equal to the
8
of six percent of the building permit valuation for the project.
The total building permit valuation is determined by the chief
building official,
2, t=ees 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
IIT, 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 Incomes
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.)
2, Ability to Pay Rent.
A tenant's ability to pay monthly rent will also be considered in
determining tenant eligibility.
C. Tenant. Selection
1. Applications determined to be eligible according to paragraph B,
above, will be prioritized in accordance with the criteria of
Section I.B. of this resolution.
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
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
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
If a tenant's income increases so that it falls between 80 and 100% of
the County's Median income, then their rent will be set at 30% of
their annual incomes and, the unit shall still be considered a OF
Rental Unit. However, if a tenant's income exceeds 100% of the median,
the rent will be at market rate.
I 0
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.
Be it resolved that Resolution #1986 -139 is repealed."
PASSED AND ADOPTED at a
regular
meeting of the Town Council
of the Town of Los Gatos held on the 16th day of Fahrnary 1988 by the
following vote:
AYES: COUNCILMEMBERS Joanne Benjamin, Thomas J. Ferrito, Robert L.
Hamilton Brent N. Ventura and Mayor Eric D. Carlson.
NOES: COUNCILMEMBERS None
ABSTAIN: COUNCILMEMBERS None
ABSENT: COUNCILMEMBERS None
SIGNED:
MAYOR OF THE TOWN OF LOS GATOS
ATTEST:
i
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
46,550
100
55,860
120
Persons in Household
40,500
49,000
59,250
58,800
71,100
1
19,250
22,700
27,440
33,180
32,928
39,816
2
22,600
25,900
31,360
37,920
37,632
45,504
3
24,750
29,150
35,280
42,660
42,336
51,192
4
27,500
32,400
39,200
47,400
47,040
56,880
5
29,200
34,450
41,650
50,363
49,980
60,436
6
30,950
36,450
44,100
53,325
52,920
63,990
7 32,650
38,500
46,550
56,288
55,860
67,546
8 34,400
40,500
49,000
59,250
58,800
71,100
Revised Guidelines, Incorporated into
Resolution: 1086~46
Dated: 4/7/86
Updated through Resolution No._
Dated 2/1/88
ly
Ii Y JI: i r.
2. Ca2C712a mon of the Ruing Muttriyuer '
'
Assumetions:
Locm' 2
225, 30 Ye=
Privats Mortgage Insararos: .
.445 of Loan Amount
Dnde24RR tL7Lg BataO: '
'"otat houssng cost no m
mars than
305 of total incomr
a. Detsrmtin= on of Total Bousina Cost
Sale Prca $
$90, 000
$80,000
- 9 000 $
B 000
S4ST , 000
Anmua1 Debt Sanxas
(
(12S 30 S
$ 8,704
Taxee
S
Sxwowtere Peas ($75 mo.l 1
1,225
7SO
AYI g
Z2, 43
900
b. Dstsrniar¢rion of ttiniav�r 8buaahoZd
Totes -� L Bousr'y on $12.437 $
$8, Sig
0. S .
$28,640
o. Detaiai¢tyoR oP �kslttiaZisr
Sal" tiers .
'• °t'+'�10� a
ao goo .
42, 2.17 s
.$ego .0,.0,0,
Am"W awZaLptsar • 2.14
Z" Na ,Sala Prim &Mee
Via fo2ZMILV Owr* r+ftaayr 1" 021" P"~ affagwu for fwizias m 80S
ZOOS, dmd 120x of We Cmeay Wdim. (Dwowr a 2.14 • SZZW P14m).
jaueeiwZd Sise
1
2
3
4
5
e
7
8
Unit Size
Studio 1.2 People
1 3edroam
2 3edroam
3 3edroam
4 3edroaa
MCOMl == SALES PRICE RANG8
$48,578
SALES PRICES
$ 97,379
80%
1005
1205
48,578
71,005
85,206
55,426
81,149
97,379 '
62,381
91,292
109,551
69,336
101,436
121,723
73,723
107,777
129,333
78,003
114,116
136,939
82,390
120,456
144,548
86,670
126,795
152,154
MCOMl == SALES PRICE RANG8
$48,578
to
$ 97,379
48,578
to
97,379
55,426
to
121,723
69,336
to
136,939
73,723
to
152,154
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
523
1
592
2
691
3
901
4
989
5
1137
6
1286
Incorporated by Resolution 1986 -139
Dated: August 4, 1986
Revised by Resolution
Dated: