1990-213-Specifying Rules, Procedures And Criteria For The Town's Below Market Price Housing ProgramRESOLUTION 1990 -213
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:
I. 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 ten 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 % 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.
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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 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 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.
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 Town for at least the prior two years.
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e. 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 income
criteria.
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 priority categories and then in order
of household size. The following schedule shall be used to determine
eligibility:
Minimum 1 - Maximum 2 Family Members .. 1 Bedroom and Studio
Minimum 2 - Maximum 4 Family Members ......... 2 Bedrooms
Minimum 3 - Maximum 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. 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 individual units) may be provided as well as a range of sales
prices.
IL OWNER OCCUPIED UNITS
A. Applicant Eligibility
1. Household Income:
Income limits are set according to household size and range from 80% -120%
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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. Closing costs for the unit shall include a fee to cover the administration
of the BMP Program. For a resale unit, the fee shall be shared by the
buyer and seller. 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 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.
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S. The highest ranked applicant must secure financing within two weeks of
notification of their 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 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
+ Annual Debt Service
+ Taxes
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+ Homeowners Fees
+ PMI
= Total Housing Cost
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
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. Rents will be restricted
to Fair Market Rents as determined by H.U.D. for implementation of the
Section 8 Housing Program. 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.
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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 its agent 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.
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
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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 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 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.
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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 income; and,
the unit shall still be considered a BMP Rental Unit. However, if a tenant's
income exceeds 100% of the median, the rent will 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, this Resolution 1989 -53 is repealed
PASSED AND ADOPTED at a regular meeting of the Town Council of the Town of
Los Gatos held on the 15th day of October, 1990 by the following vote:
COUNCIL MEMBERS:
AYES: Joanne Benjamin, Brent N. Ventura, and Mayor Thomsas J. Ferrito
NAYS: Eric D. Carlson
ABSENT: Robert L. Hamilton
ABSTAIN: None.
SIGNED:
AYOR OF
LOS GATOS,
ATTEST:
CLERK OF THE TOW OF LOS GATOS
LOS GATOS, CALIFORNIA
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TOWN OF LOS GATOS
EXHIBIT A
CURRENT INCOME GUIDELINES
DETERMINED BY
FEDERAL DEPARTMENT OF HOUSING & URBAN DEVELOPMENT
REVISED 1/1/90
4
% OF MEDIAN 50 80 100 120
Persons
In
Household
1 18900
25000
37800
45350
2 21600,
28550
43200
51800
3 24300
32150
48600
58300
4 27000
35700
54000
64800
5 29150
37950
57400
68850
6 31300
40150
60750
72900
7 33500
42450
64150
76950
8 35650
44650
67500
81000
Revised Guidelines, Incorporated into
Resolution: 1986 -45
Dated: 4/6/86
Revised through Resolution No. 1988 -45
Dated: 2/6/88
Revised through Resolution No. 1989 -53
Dated: 4/24/89
Revised through Resolution No.
Dated:
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-2-
2. Initial Sales Price Ranges
The following chart reflects the sales prices affordable for families at
80%, 100%, and 120% of the County median. (Income X 2.28 - Sales price).
SALES PRICES
Household Size
80%
100%
120%
1
57,000
86,184
103,398
2
65,094
98,496
118,104
3
73,302
110,808
132,924
4
81,396
123,120
147,744
5
86,526
130,872
156,978
6
91,542
138,510
166,212
7
96,786
146,262
175,446
8
101,802
153,900
184,680
RECOMMENDED SALES PRICE RANGE
Unit Size
Studio 1 -2 People
$57,000
to
$51,800
1 Bedroom
57,000
to
118,104
2 Bedroom
65,094
to
147,744
3 Bedroom
81,396
to
166,212
4 Bedroom
86,526
to
184,680
Revised Guidelines, Incorporated. into
Resolution: 1986 -45
Dated: 4/7/86
Revised by Resolution: 1989 -53
Dated: 4/24/89
Revised by Resolution No.
Dated:
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