02 Staff Report - 576 West Parr Avenue~Ow N O,c
!ps GAtpS.
DATE:
TO:
FROM:
SUBJECT:
COUNCIL AGENDA REPORT
_ August 22, 2006
MEETING DATE: 9/5/06
ITEM NO.
MAYOR AND TOWN COUNCIL
DEBRA J. FIGONE, TOWN MANAGER
ADOPT A RESOLUTION SETTING THE SALES P CES FOR BELOW
. PARR AVENUE
RECOMMENDATION:
Adopt a resolution setting the sales prices for Below.Market Price Housing Program units located
at 576 West Parr Avenue.
BACKGROUND:
The Town's Below Market Price Housing Program (BMP Program) allows low and moderate
income households the opportunity to become homeowners. It has a limited number of homes,
typically condominiums or townhomes, which are sold at a price below the current market value.
In return for the ability to purchase a. home at a below-market price, participating homebuyers agree
to restrict the price at which they may resell the unit in the future. In order to be eligible to purchase
a unit, a buyer must meet federal income guidelines.
BMP units are built by private developers, in accordance with the Town's Inclusionary Zoning
Ordinance (Town Code sections 29.10.3000 through 29.10.3040). Developers of multifamily
projects with five or more units must designate a specified number of those units as BMP units,
which are then sold through the Town's BMP Program.
DISCUSSION:
The Villa Capri development, located at 576 West Parr Avenue, was originally approved in 1983
under Ordinance No. 1564 (later amended,under Ordinances No. 1632 and 1638). The Town's
PREPARED BY: Regina A. Falkner,-Community Services- Directors
N:\CSD\TCRPTS\2006 TCRPTS\Villa Ca ri Prices. d
Reviewed by:
Revised: 8/22/06
Assistant Town Manager Town Attorney
Clerk Administrator Finance Community Development
11:01 am
Reformatted: 5/30/02
PAGE 2
MAYOR AND TOWN COUNCIL
SUBJECT: ADOPT A RESOLUTION SETTING THE SALES PRICES FOR BELOW
MARKET PRICE HOUSING PROGRAM UNITS LOCATED AT 576 WEST
PARR AVENUE
August 22, 2006
approval of the development required that four of the 3 5 total units be BMP units, and that the entire
development, including the BMP units, be restricted to occupancy by senior citizens (age 60 or
older). The BMP units were later identified as units 23, 33, 34, and 35. All four units are one-
bedroom, one-bathroom units.
use was later discontinued and the units were prepared for sale as condominiums. At the time, the
Town's BMP Program Guidelines required that. the Town and the developer come to agreement on
the initial sales prices for BMP units. The Town participated in .lengthy negotiations with the
developer of the Villa Capri units, Capri Associates, but the two parties failed to reach agreement.
Finally, the Town received information that the BMP units were to be placed on the market,
presumably at market price. In order to maintain these units as part of the Town's valued affordable
housing stock, the Town initiated legal action against Capri Associates, resulting in Capri Associates
selling the units to the Town at less than their market value. Escrow closed August 15,2006. It is
the Town's intention to sell the units to qualified buyers, according to the current BMP Program
Guidelines.
Proposed Sales Prices
As the Villa Capri BMP units have never been sold through the BMP Program, sales prices have
never been set for the units. The purpose of this report is for Council to set initial sales prices for
all four units. Staff recommends that the initial sales prices for these units should be the same as
those dictated by the current BMP Program Guidelines for new units, as follows:
► 2 units at $233, 975 (affordable to households between 80% and 100% of median)
► 2 units at $168, 963 (affordable to households between 50% and 80% of median)
The Town's purchase price was $250,000 per unit. However, staff believes that it would be
appropriate to set the sales prices with reference to the current Council-adopted BMP Guidelines,
which consider what would be affordable to income-eligible households. The price that the Town
paid for each unit, though clearly below the market price, is still above what is considered affordable
under the BMP Guidelines.
The BMP Guidelines state that 50% of units should be priced to:be affordable to households between
80% and 100% of the Area Median Income, and- 50% of units should be priced to be affordable to
households between 50% and 80% of theArea MedianIncome. The Area Median Income limits are
set by the U.S. Department of Housing -and Uiban Development (HUD). Any, household that
qualifies under the terms of the BMP: Program may . purchase the units; the Guidelines language just
refers to setting the sales price. As shown in the table above, 2 of the units are recommended to be
priced to households between 80% and 100% of the median, and 2 of the units are recommended to
be priced to households between 50% and 80% of the median. For Council's reference, below is a
PAGE 3
MAYOR AND TOWN COUNCIL
SUBJECT: ADOPT A RESOLUTION SETTING THE SALES PRICES FOR BELOW
MARKET PRICE HOUSING PROGRAM UNITS LOCATED AT 576 WEST
PARR AVENUE
August 22, 2006
summary of the current HUD-adopted income guidelines, by household size:
Annual Income Limit
Persons in
1 $37,150 $59,400 $74,300
2 $42,450 $67,900 $84,900
CONCLUSION:
Staff recommends that Council adopt a resolution (Attachment 1) setting the sales prices for 576
West Parr Avenue, units 23, 33, 34, and 35, in accordance with the current Below Market Price
Housing Program Guidelines.
ENVIRONMENTAL ASSESSMENT:
The recommended action is not a project defined under CEQA, and no further action is required.
FISCAL IMPACT:
The Town's BMP In-Lieu Fee fund was used to purchase the units; this fund will be reimbursed
when the units are sold. The BMP In-Lieu Fee fund receives revenue from developers that are
required to pay a fee in lieu of providing BMP units. If the units are sold at the recommended prices,
the BMP In-Lieu Fee fund will subsidize a total of $194,124, as follows:
Town Purchase
Cost
Total of Sales
Prices
BMP In-Lieu
Subsidy
$1,000,000
$805,876
$194,124
The purpose of the BMP In-Lieu Fee-fund is to provide for affordable housing in Los Gatos.
Therefore, staff believes that this recommended subsidy would bean appropriate use of BMP In-Lieu
Fee monies. The FY 2006/07 beginning balance in this fund is $1,418,144.55. Once the sales
transactions were completed, the cost"to the Town would be $194,124.
PAGE 4
MAYOR AND TOWN COUNCIL
SUBJECT: ADOPT A RESOLUTION SETTING THE SALES PRICES FOR BELOW
MARKET PRICE HOUSING PROGRAM UNITS LOCATED AT 576 WEST
PARR AVENUE
August 22, 2006
Attachments:
1. Draft Resolution of the Town Council of the Town of Los Gatos Setting the Sales Prices for
Below Market Price Housing Program units 'located at 576 West Parr Avenue
Diana Moreno, Housing Authority of the County of Santa Clara
RESOLUTION 2006-
RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF LOS GATOS
SETTING THE SALES PRICES
FOR BELOW MARKET PRICE HOUSING PROGRAM UNITS
LOCATED AT 576 WEST PARR AVENUE
WHEREAS-the-T-own-ofL-os Gatos-Z-oning-Ordinance Sections 29-10-3000-through
29.10.3040 establish a Below Market Price (BMP) Housing Program to assist low and moderate
income Los Gatos citizens to purchase homes; and
WHEREAS, the BMP Program requires construction of dwellings that persons and
families of low and moderate income can afford to buy, and assures to the extent possible that the
resale prices of those dwellings will be within the means of persons and families of low and
moderate income; and
WHEREAS, the Town wishes to ensure that all BMP units remain in the BMP
Program, and retain their affordability to persons and families of low and moderate income.
NOW, THEREFORE, THE TOWN COUNCIL OF THE TOWN OF LOS
GATOS DOES HEREBY RESOLVE:
That the initial sales prices for the four (4) BMP units located at 576 West Parr Avenue, Los Gatos,
Units 23, 33, 34, and 35, are set as follows: two (2) units shall be sold at $233,975, and two (2) units
shall be sold at $168, 963.
PASSED AND ADOPTED at- a--regular meeting of the Town Council of the Town
of Los Gatos, California, held on the ' day of September; 2006, by the following vote.
COUNCIL MEMBERS:
1
AYES:
NAYS:
ABSENT:
ABSTAIN:
SIGNED:
MAYOR OF THE TOWN OF LOS GATOS
ATTEST:
CLERK OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
NACSDUCRPTS\Resolutions\BMP Villa Capri Prices.wpd 2