N40 Phase 1 - Staff Report Exh.20' )
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ORDINANCE 218 1
AN ORDINANCE OF THE TOWN OF LOS GATOS
AMENDING DIVISON 6 OF THE ZONING ORDINANCE OF THE TOWN CODE
TITLED HOUSING ASSISTANCE (BELOW MARKET PRICE) PROGRAM
THE TOWN COUNCIL OF THE TOWN OF LOS GATOS DOES ORDAIN AS
FOLLOWS:
SECTION I
Town Code Chapter 29, Division 6 (Sections 29.10.3000 through 29.10.3040,
Housing Assistance Program) is deleted in its entirety.
SECTION II
Town Code Chapter 29, is hereby amended to read as follows :
ZONING REGULATIONS
Article I. In General
DIVISION 6 . HOUSING ASSISTANCE PROGRAM
Sec. 29.10.3000. Intent.
Sec. 29.10.3005. Below market price program-Established.
Sec. 29.10.3010. Same-Intent.
Sec. 29.10.3015. Application.
Sec. 29.10 .3020. Definitions .
Sec. 29.10.3025 Scope.
Sec. 29.10.3030 . Price.
Sec. 29 .10.3035. Project denial.
Sec. 29.10.3040. Administration.
SECTION III
T own Code Chapter 29, Division 6 is replaced as follows :
Page 1 of5
EXHIBIT 2 0 /
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HOUSING ASSI STANCE PROGRAM
Sec. 29.10.3000. Intent.
This division is adopted to meet housing needs shown in the housing element of the general
plan.
(Ord. No. 1316, § 3.90.010, 6-7-76; Ord. No. 1430, 6-4-79)
Sec. 29.10.3005. Below market price program--Established.·
This division establishes the below market price program (BMP).
(Ord. No. 1316, § 3.90.100; 6-7-76; Ord . No. 1430, 6-4-79)
Sec. 29.10.3010. Same--Intent.
The below market price (BMP) program requires the provision of dwellings that persons and
families of moderate income can afford to buy or rent, and assures to the extent wssible that the
resale prices of those dwellings, and rents if they are rented, will be within the means of persons
and families of moderate income.
(Ord. No. 1316, § 3 .90.105, 6-7-76; Ord. No. 1430, 6-4-79; Ord. No. 1685, 6-2-86)
Sec. 29.10.3015. Application.
! ) This division shall apply to all multiple-family dwelling projects, residential condominium
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projects, condominium conversions, and to all residential planned development projects (division
2 of article VIII of this chapter) either approved after July 4, 1979, or whose approval includes a
condition requiring the provision ofBMP dwellings . Projects in the R-1 and HR zones are
excepted from BMP participation. The exception does not apply if the project is built under the
rules of an overlay zone unless the rules of the overlay zone provide otherwise.
(Ord. No. 1316, § 3 .90.110, 6-7-76; Ord. No. 1430, 6-4-79; Ord. No. 1685, 6-2-86)
Sec. 29.10.3020. Defmi tions.
For the purposes of this division. the following definitions shall apply:
BMP dwelling means any residential dwelling unit designated for very low, low, and
moderate income under the rules of this section.
Person of moderate income means one whose income falls within the range specified by the ·
Town Council in the resolution authorized by secti on 29.10.3040.
(Ord. No. 1316, § 3.90.115, 6-7-76 ; Ord. No . 1430, 6-4-79; Ord. No. 1685 , 6-2-86; Ord. No.
2115, §II, 9-15-03)
Sec. 29.10.3025. Scope.
Page 2 of5
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The Below Market Price Program requirements shall apply to all residential development
projects that include five (5) or more residential units or parcels which involve :
1. New construction of ownership or rental housing units, including mixed use
developments and addition of units to existing projects , or
2. Subdivision of property for single family or duplex housing development, or
3. Conversion of rental apartments to condominiums or other common interest
ownership, or
4. Conversion of non-residential use to residential use.
Planned development with an underlying zone of HR shall only be required to pay an in-
lieu fee as established by a separate resolution.
The residential developments consisting of five or more units are required to provide the
following number of BMP units :
(1) Projects containing five (5) or more but less than twenty (20) market rate units
must provide a number ofBMP units equal to ten (10) percent of the number of market
rate units.
(2) Projects with from twenty (20) to one hundred (1 00) market rate units must
provide BMP units as determined by the following formula :
Number ofBMP units= .225 (total# of market rate units)-2 .5
(3) All projects in excess of one hundred (100) market rate units must provide a
number of BMP units equal to twenty (20) percent of the market rate units.
( 4) Whenever the calculations of BMP units result in a fraction of one-half or more,
the number of units to be reserved is increased to the next whole number.
(5) The Town, at its sole discretion, may consider an in-lieu payment alternative to
the required BMP unit in the case of Planned Unit development with an underlying zone
of HR. The required in-lieu fee is as established by a separate resolution and is to be paid
to the Town prior to issuance of the certificate of occupancy for the market rate
residential unit that triggered the BMP requirement. The pr~vision for a BMP unit applies
if the project is built under the rules of an overlay zone unless the rules of the overlay
zone provide otherwise. ·
BMP units shall be constructed and Certificate of Occupancies secured concurrently with
or prior to the construction of the market-rate units . The BMP requirement will be
calculated on the basis of the whole development. The Town Council may grant an
exception to the phasing requirements during the project approval process.
(Ord . No. 1316, § 3.90.120 , 6 -7-76 ; Ord. No. 1430, 6-4-79; Ord. No. 1685, 6-2-86 ; Ord. No.
1687, 8-4-86; Ord. No. 1838, § I, 11-5-90)
Page 3 of5
.r--, Sec. 29.10.3030. Price.
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The price ofBMP units is controlled for the first buyer and for future buyers by the BMP
Guidelines as adopted and amended from time to time by Council resolution and as follows :
(1) The initial price is limited to direct construction cost and a proportionate share of the
costs of preparing working drawings and specifications and providing on-site and off-
site improvements, determined according to rules set by the Council.
(2) The initial price does not include the cost of land, profit, or marketing costs.
(3) Each BMP unit will be subjected to recorded title restrictions concerning manner of
future sales, occupancy and leasing.
( 4) Each buyer of a BMP unit must agree to sell the unit to a moderate income buyer
designated by the Town. The Town will designate moderate income persons according
to rules adopted by the Council in effect at the time the seller purchased the unit.
(5) The resale price cannot exceed the original selling price plus the value at the time of
sale of improvements added by the owner, and plus an amount equal to the increase in
cost of living or housing during the owner's tenure . The index or method to be used in
calculating the increase is established by the Council.
(6) · If a BMP unit to be resold has not been properly maintained or for any other reason is
in poor condition and in need of cleaning or repair, the Town may elect to do the work
or have it done and recover the cost from the sale price limited as provided in
subsection (5).
(7) The regulations will specify the period for controlled resales. The time period will be in
perpetuity or for as long as is practical.
(Ord. No. 1316, § 3.90.125, 6-7-76; Ord. No. 1430, 6-4-79)
Sec. 29.10.3035. Project denial.
If an applicant for zoning approval declines to provide BMP units required by ordinance, the
zoning approval shall be denied.
(Ord. No. 1316, § 3.90.130, 6-7-76; Ord. No. 1430, 6-4-79)
Sec. 29.10.3040. Administration.
The Council shall adopt by resolution regulations concerning all aspects of the BMP
program, including the elements of location of the units, price, buyer eligibility standards, rent,
the length of the period during which a unit will be subject to BMP restrictions, the form of
recorded instruments and any other matter consistent with the provisions of this section.
; (Ord. No. 1316, § 3.90.135, 6-7-76; Ord. No. 1430, 6-4-79; Ord. No. 1685, 6-2-86)
Page 4 of5
SECTION IV
If any of the provisions of this ordinance or the app lication thereof to any person or
property is held invalid, such invalidity shall not affect the other provisions of this ordinance
which can be given effect without the invalid provision or application, and to this end the
provisions of this ordinance are declared to be severable.
SECTION V
Any judicial review of this ordinance shall be by writ of mandate, under Code of Civil
Procedure 1085. Any action or proceedings seeking to attack, review, set aside, void or annul
this ordinance shall be commenced within 90 days after adoption of this ordinance.
This Ordinance was introduced at a regular meeting of the Town Council of the Town of Los
Gatos on October 5, 2009, and adopted by the following vote as~ ordinance of the Town of Los
Gatos at a meeting of the Town Council of the Town of Los Gatos on October 19,2009. This
ordinance takes effect 30 days after it is adopted.
COUN~IL MEMBERS :
AYES :
NAYS:
ABSENT:
ABSTAIN :
ATTEST:
Joe Pirzynski, Stev e Rice, and Mayor Mike Wasserman
Diane McNutt and Barbara Spector
None
None
SIGNED :
MAYOR OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
CLERK ADMIONISTRATOR OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
Page 5 of 5
RESOLUTION 2009 -108
RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF LOS GATOS
ADOPTING REVISED BELOW MARKET PRICE HOUSING GUIDELINES AND
REPEALING RESOLUTION 2008-121
WHEREAS, the Town of Los Gatos Zoning Ordinance Sections 29.10.3000 through
29.10.2040 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 fainilies oflow
and moderate income can afford to rent or buy, and assures to the extent possible that the resale
prices of those dwellings units 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.
NOW, THEREFORE, BE IT RESOLVED, that Town Council of the Town ofLos Gatos
(1) repeals Resolution 2008-121; and (2) adopts the Town of Los Gatos Below Market Price Housing
Program Guidelines attached as Exhibit A .
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PASSED AND ADOPTED at a regular meeting of the Town Council held on the 5th day of
October, 2009, by the following vote:
COUNCIL MEMBERS:
A YES: Joe Pirzynski, Steve Rice, Mayor Mike Wasserman
NAYS: Diane McNutt and Barbara Spector
ABSENT: None
ABSTAIN : None
SIGNED:
ATTEST: Is/ Jackie Rose
Is/ Mike Wasserman
MAYOR OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
CLERK ADMINISTRATOR OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
I.
Exhibit A
TOWN OF LOS GATOS
BELOW MARKET PRICE HOUSING PROGRAM GUIDELINES
Purpose
A. Purpose: The overall purpose of the Below Market Price (BMP) Housing
Program is to provide the Town of Los Gatos with a supply of affordable housing.
While the program is available to all qualified applicants, the general intent of the
program is to provide affordable housing for households who work or currently
live in Los Gatos. The main goal is to increase the housing supply for households
that have median and low incomes compared to the median income for Santa
Clara County and meet the housing needs identified in the Town's General Plan
Housing Element. The Program further intends to ensure, to the greatest extent
possible, that rent and re-sale of these housing units will remain affordable to
median and low income levels in perpetuity. Although the Town has a fee-in-
lieu of constructing actual units option for defined circumstances, the primary
objective of the BMP Program is to obtain actual "rental" or "for sale" housing
units rather than equivalent funds . All off-site BMP units shall be constructed
within the Town of Los Gatos. The construction and occupancy of the BMP unit
is determined according to these Town Council established guidelines and
Ordinance No. 2009----
B. Enabling Legislation: The Below Market Price Program is governed by Division
6 of the Town Code. The BMP Program is administered under these Below
Market Price Housing Program Guidelines .
II. Below Market Price Housing Requirements -General
A . Applicability : The BMP Program requirements shall apply to all residential
development projects that include five (5) or more residential units or parcels
which involve :
1. New construction of ownership or rental housing units , including mixed
use developments and addition of units to existing projects, or
2. Subdivision of property for single family or duplex housing development,
or
3. Conversion of rental apartments to condominiums or other common
interest ownership, or
4 . Conversion of non-residential use to residential use .
B . Number of BMP Units: All residential developments consisting of fi v e (5) or
more units are required to participate in the BMP Program. The requirements for
participation increase by development size as shown below:
BMP Guidelines Page I
1. Five (5) to Nineteen 19 market rate units: The developer shall provide a
minimum number ofBMP units equal to ten (10) percent ofthe number of
market rate units.
2. Twenty (20) to one hundred (100) market rates units : The developer shall
provide a minimum of BMP units as determined by the following formula:
Number ofBMP units= (.225 x total# of market rate units)-2.5 .
This formula acts to increase the number of BMP units required, as a
percentage of market-rate units, from 10% to 20% over the range of 20 to
1 00 market rate units.
3. One hundred and one (101) units or more: The developer shall provide a
minimum number of BMP units equal to twenty (20) percent of the
number of market rate units.
BMP dwellings within a project of rental units shall also be rental units. BMP
units within a project of owner-occupied units shall also be designated as units for
purchase. BMP units within a project that contains both rental and owner-
occupied units shall also be designated as both rental and as units for purchase, in
a ratio similar to that of the market rate units .
The Town and developer may negotiate to provide. more BMP units than required
by the rules listed in these guidelines to fulfill a development's Community
Benefit requirements .
C. Fraction of a BMP Housing Units: In determining the number of BMP units
required, any decimal fraction of .5 or above shall be rounded up to the nearest
whole number.
D. Residential In-Lieu Payments: The general intent of the BMP Program is to
provide the Town of Los Gatos with a supply of affordable housing for
households who work or currently live in Los Gatos . However, there may be
circumstances when the construction of the BMP unit is impractical or there are
unusual circumstances that make the construction of the unit inconsistent with
Town policy. The Town, at its sole discretion, may consider an in-lieu payment
alternative to the required BMP unit in the case of Planned Unit development with
an underlying zone of HR or a residential developments with five (5) to nine (9)
units. Prior to approving the in-lieu fee alternative, the applicant must
demonstrate to the satisfaction of the Town why a BMP unit cannot be (1)
developed on the same site as the market rate units, and if it cannot be provided
on the same site then, (2) develop at an appropriate off-site location within the
Town limits. If the developer provides sufficient justification that both of these
alternatives are not viable, then a fee in-lieu · option may be considered . The
required in-lieu fee is as established by a separate resolution and is to be paid to
the Town prior to issuance of the certificate of occupancy for the market rate
BMP Guidelines Page 2
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residential unit that triggered the BMP requirement. The provision for a BMP unit
applies if the project is built under the rules of an overlay zone unless the rules of
the overlay zone provide otherwise.
The in-lieu fee shall be equal to the amount of six (6) percent of the building
permit valuation for the entire project. The total building permit valuation shall
be determined by the Town Building Official.
Fees shall be paid prior to or at time of final occupancy as follows :
1. Multi-Family Owner Occupied Developments: Prior to occupancy of each
phase, a proportional amount of fees shall be paid, as determined during
the Planning approval process .
2. Multi-Family Renter Occupied Developments: Prior to occupancy of each
phase, a proportional amount of fees shall be paid; as determined during
the Planning approval process.
3 . Single-Family Planned Developments: At time of final occupancy for
each unit.
E. Housing Fund: In-lieu fees will be deposited into the Town's Affordable Housing
Fund. Applications and or recommendations for use of remaining funds will be
reviewed as received. Possible use of the funds include, but is not limited to, the
following :
1. Subsidizing the cost of owner occupied units to make them affordable to
low/moderate income households
2 . Purchasing rental units to make them affordable to low/moderate income
households
3. Purchasing land for the future development of affordable housing
4 . Developing affordable housing
5. Supplementing of affordable housing projects developed through the Los
Gatos Redevelopment Agency
6. Funding administration of the program, as approved by the Town Council
in its annual budget process
F. Off-Site Construction: The Town Council may consider off-site construction of
BMP units for continuum care facilities and for Hillside Residential (HR) Zone
District and residential developments with five (5) to nine (9) units projects that
have provided sufficient justification to the Town that an on-site BMP unit is not
viable.
G . Phasing of the Construction of On-and Off-Site BMP Units : On-and off-site
BMP units shall be constructed and Certificate of Occupancies secured
concurrently with or prior to the construction of the market-rate units . The BMP
requirement will be calculated on the basis of the whole development. The Town
Council may grant an exception to these phasing requirements during the Planned
BMP Guidelines Page 3
Development project approval process for condominium conversiOn
developments.
H. Affordability Agreement: The developer of "for sale" BMP units shall enter into
an affordability agreement with the Town. The agreement will ensure that the
BMP units are sold to qualified buyers and will be released by the Town through
the escrow process once the BMP is sold to a qualified buyer.
III. Characteristics of BMP Units
A. Size of units: The size and design of BMP dwelling units shall be reasonably
consistent with the market rate units in the project. The Town and developer may
negotiate regarding the size of units if more units than required are to be provided
under the Community Benefit requirements. BMP units should be provided
proportionately in the same unit type mix (number of bedrooms) as the market
rate units. In consideration of the household size of the households on the current
program interest list, the Town and developer may negotiate to provide a greater
proportion of a particular unit type. There shall not be significant identifiable
difference between the BMP and market-rate units visible from the exterior. The
size and design of the BMP units must be reasonably cpnsistent with the market-
rate units in the development.
B Location of units: BMP units shall be dispersed throughout the development, to
the extent feasible; in all buildings, on each floor, and in each project phase . A
concentration of BMP units in one location is not desirable and will generally not
be allowed.
C. Finish of units: The external appearance 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 luxury interior finishes,
appliances, or fixtures, if such substitutions do not violate any Town .code
requirement.
D. Project Facilities: All project facilities and amenities , 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.
IV . The BMP Unit Purchase Process ; Buyer Selection, and BMP Unit Sale and Resale
Procedures.
A. Owner Occupied Units
1. Applicant Eligibility
BMP Guidelines Page 4
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a. 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 Housing and Urban Development (HUD) for the
San Jose, CA Primary Metropolitan Statistical Area (PMSA).
Household assets, such as real property, may also be considered in
determining eligibility.
b. Housing Costs: In order to be eligible to purchase an owner-
occupied BMP unit, an applicant must also demonstrate the ability
to pay monthly housing costs. The monthly housing cost shall
include the following factors:
c.
1. unit price
2. current lending rates
3. estimated property taxes
4. estimated homeowner's insurance costs
homeowners ' association fees, if applicable
5. other expenses as determined necessary by the lender
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.
2. First Time Home Buyers : The Below Market Price (BMP) Program is for
First Time Home Buyers. A First Time Home Buyer, by definition, is an
applicant whose name has not appeared on a residential title in the
counties covered by the Association of Bay Area Governments (ABAG)
or Association of Monterey Bay Governments (AMBAG) which are
Alameda, Contra Costa, Marin, Monterey, Napa, San Benito, San
Francisco, San Mateo, Santa Clara, Santa Cruz, Solano and Sonoma for at
least three (3) years prior to application. Exception is made for people who
were homeowners prior to a divorce settlement and tenants residing in a
rental apartment proposed to be converted to a condominium or other
common interest ownership prior to a Notice of Intent to Convert the
development to an oWnership residential unit.
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 according to total
points and must have at least one point to be eligible to purchase a unit. In
addition, applicant households must contain at least the same number of persons
as the number of bedrooms in a unit, at the time of application , in order to be
eligible to purchase that unit , if the unit contains three bedrooms or more .
BMP Guidelines Page 5
All points are calculated per household, not for each individual within the
household. For example , a household in which two members are senior citizens
would receive six points for senior citizen status, not twelve points for two
members having senior citizen status. Points are awarded as follows:
1. Six points:
a. 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 ye~s 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.
b. 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.
c . 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.
d. Households required to relocate their residence as a result of
Council action or mobile home park closure.
e . Regular Full-Time and Regular Part-Time 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.
f . 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 .
2. Four points:
a. Persons who live in the Town of Los Gatos at time of application
and who have lived in the Town at least the prior two years.
b. 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.
3 . Two points:
BMP Guidelines Page 6
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a. 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.
b. Household size is worth two points per person.
4. One point:
a. Households who live or work within Santa Clara County at the
time of application.
b . Households with an annual household income at or below 60% of
the Median Family Income (MFI), adjusted for household size , as
defmed by the United States Department of Housing and Urban
Development (HUD) for the San Jose, CA Primary Metropolitan
Statistical Area (PMSA).
5. A lottery will be used to rank each qualified applicant in the case of a tie.
6. Applicants are provided the opportunity 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 current applicant pool.
7. 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.
8. An applicant must obtain pre-approval for a mortgage loan within one
week after notification of eligibility to purchase a unit. The applicant
must submit documentation of loan approval within three weeks of
notification of eligibility to purchase a unit.
9. Exception to the Buyer Selection Process : An exception to the Buyer
Selection Process may be granted to a resident of a rental apartment that is
proposed to be converted to an "owner occupied" condominium or other
common interest ownership development. In order to qualify for the
exception , the resident must have resided in the rental apartment prior to
the issuance of the Notice of Intent to Convert the development to an
ownership project and shall meet the financial eligibility requirements to
qualify for a BMP unit. The resident shall be provided first right of
refusal , .regardless of point ranking, for units in the following order:
a. The unit the y reside in if it is designated as a BMP unit.
b. Any other av ailable BMP unit.
BMP Guidelines Page 7
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C. Determination of Initial Selling Price: BMP units shall be priced to be affordable
to households in two income categories: Median Income Households (those
whose income is abov e 80%, but no greater than 100%, of the County Median
Income); and Low Income Households (thqse whose income i s above 50%, but no
greater than 80%, of the County Median Income).
1. Fifty percent (50%) of the units in a project shall be priced to be
affordable to Median Income Households; fifty percent (50%) 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 up 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,
including zero '(0). The following table applies this formula to projects
with 1, 2, and 3 units:
Total Number of Units Priced for Units Priced for Median
BMP Units in Project Low Income Households Income Households
1 1 0
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 . Annually, 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 (HUD) for the San Jose, CA Primary Metropolitan
Statistical Area (PMSA), and through the following calculations:
a .
BMP Guide lines
For units to be priced to be affordable to Median Income
Households : the average of the 100% MFI annual income and the
80% MFI annual income (assuming household size appropriate to
size of unit) x Multiplier= Initial Sales Price.
Page 8
BMP Guidelines
1. Assumptions of household size by s1ze of unit are as
follows:
Household Size
Studio 1
1 Bedroom 1
2 Bedroom 2
3 Bedroom 3
4 Bedroom 4
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 50% annual
income (assuming household size appropriate to size of unit) x
Multiplier = Initial Sales Price .
c. Calculation of Multiplier. A Multiplier shall be calculated, based ·
on reasonable assumptions about unit sales prices, based on the
most recent comparable sales of BMP units; current lending rates,
as determined by the most recent Primary Mortgage Market
Survey (PMMS) conducted by the Federal Home Lqan Mortgage
Corporation (Freddie Mac); and related costs; and using the
following formula:
1.
2.
3 .
Determination of Total Housing Cost: Sample sales price -
1 0% down payment = mortgage. Annual debt service on
mortgage + annual property taxes + annual homeowners .
fees + annual private mortgage insurance (PMI) = Total
Annual Housing Cost.
Determination of Minimum Household Income: Assuming
one-third of household income goes for housing expenses,
.Total Annual Housing Cost x 3 = Minimum Annual
Household Income.
Determination of Multiplier: Sample Sales Price/Minimum
Annual Household Income = Multiplier.
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Copies of the initial sales prices, and the calculations made, shall
be available on request from the Town's Community Development
Department.
D . Deed Restrictions: Council approved Deed Restrictions shall be recorded with
each Below Market Price dwelling unit.
E. 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 Below Market Price dwelling unit becomes available for resale,
the Town shall set the resale price and make the unit available for
purchase through the BMP process. ·
3 The Town determines the resale price in accordance with the deed
restriction recorded on the property.
F. Occupancy of Units :
Consistent with the deed restriction that will be recorded on the subject property,
the household purchasing a BMP unit must occupy the unit as his or her primary
residence during his or her ownership of said unit.
V. Requirements for BMP Rental Development
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 80% of the Median
Family Income (MFI), adjusted for household size, as defined by the
United States Department of Housing and Urban Development (HUD) for
the San Jose, CA Primary Metropolitan Statistical Area (PMSA). Priority
will be given to those households whose income is less than 50% of the
MFI. Household 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 owner or manager of the development shall
market the BMP unit(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.
BMP Guidelines Page 10
( D. Management
1. BMP rental units shall be managed by the property owner or manager in
the same manner as other units in the development.
2. Tenants of BMP rental units are eligible to receive conciliation and
mediation services provided through the Town's Rental Dispute
Resolution Program except as they regard rent increases.
E. Unit Rents : Rents may not exceed 80% of the most current Fair Market Rents as
determined by the Santa Clara County Housing Authority.
F. Annual Review: 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 Ordinance; and the unit shall still be considered a BMP Rental
Unit. However, if a tenant's income exceeds 100 percent ofMFI, 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.
VI . RENTAL UNITS-NEW SECOND DWELLING UNITS
A. Administration: The program shall be administered by the Town or its designee .
B. Second Unit Incentive Program: 29 .10.310 of the Town Code, may choose to
participate in the Second Unit Incentive Program (SUIP) as referenced in Section
29.10.320(a) ofthe Town Code and as set forth below.
1. 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 for 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 Family Income
(MFI), adjusted for household size, as defined by the United States
Department of Housing and Urban Development (HUD) for the San 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 MFI.
BMP Guidelines Page 11
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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 well as any other criteria as determined appropriate by the
Town .
3. A SUIP loan to construct a second unit within the Central Los Gatos
Redevelopment Project area shall be funded using Redevelopment
Affordable Housing Funds and shall remain affordable for 55 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 30 years. The SUIP affordability
restrictions as set forth in this section may only be amended by action of
the Town Council.
4. A tenanfs 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 shall be submitted to
the Town or its agent to verify compliance with the provisions of this
section. Tenants are eligible to receive conciliation and mediation
services provided through the Town's Rental Dispute Resolution Program
except as they regard rent increases.
5. Units targeted to households with incomes up to 80% of the Median
Family Income (MFI) shall have rents restricted to 80% of Fair Market
Rents as determined by the Santa Clara County Housing Authority. Units
targeted to households with incomes up to 50% of CMI shall have rents
restricted to 50% of Fair Market Rents as determined by the Santa Clara
County Housing Authority. Tenant rents and incomes will be monitored
annually.
(Adopted by Resolution 2009-September , 2009)
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