04 Staff Report - Below Market Price Housing ProgramW N O,c
s.c COUNCIL AGENDA REPORT
MEETING DATE: 8118108
ITEM NO: , y
DATE: August 7, 2008
TO: MAYOR AND TOWN COUNCIL
FROM: GREG LARSON, TOWN MANAGER
A7-
SUBJECT: ADOPT A RESOLUTION ADOPTING REVISED BELOW MARKET PRICE
HOUSING PROGRAM GUIDELINES AND RESCINDING RESOLUTION
2005-117.
RECOMMENDATION:
Adopt a Resolution adopting revised Below Market Price Housing Program Guidelines and
rescinding Resolution 2005-117.
BACKGROUND:
The Community Services Department manages a Below Market Price Housing Program (BMP)
to allow low and moderate income households to become home owners. Recently, the owner of a
BMP unit has requested to sell their home in order to purchase another newer, upgraded BMP
unit at a different development. In reviewing the request, Staff noted that the Town's Below
Market Price Guidelines and Resolution require modifications to more directly address this
question. This report includes a review of the current BMP Program and Guidelines and offers a
comparison to BMP Programs in other local municipalities.
DISCUSSION:
Below Market Price Program
The Town's BMP Program 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 fixture.
PREPARED BY. Regina A. Fal
Community Reviewed by: Assistant Town Manager Town Attorney
Clerk Administrator Finance Community Development
PAGE 3
MAYOR AND TOWN COUNCIL
SUBJECT: ADOPT A RESOLUTION ADOPTING REVISED BELOW MARKET PRICE
HOUSING PROGRAM GUIDELINES
AUGUST 7, 2008
Sunnyvale
May not have owned residential property in the counties covered by
Association of Bay Area Governments ( ABAG) or Association of
Monterey Bay Governments (AMBAG) (Alameda, Contra Costa,
Marin, Monterey, Napa, San Benito, San Francisco, San Mateo,
Santa Clara, Santa Cruz, Solano and Sonoma) for three years prior
to submittal of a BMP application.
Los Gatos Proposed
Same as Sunnyvale requirements listed above.
Staff recommends that the Sunnyvale requirement be added to the Town's BMP Guidelines. The
specific language is stated below and has been included on page 4 of the draft guidelines.
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 (ABA G) 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.
Additional BMP Program Review
During the next year, the BMP Program and condominium conversions will be reviewed as part
of the Housing Element and General Plan update. Additional recommended changes to the
ordinance and/or guidelines will be made, if appropriate, based on comparison with best
practices. Consequently, changes will also be recommended to assist households displaced as a
result of the conversion of apartments to condominiums if directed by Council.
CONCLUSION:
Staff recommends that the program be limited to first time home buyers who have not owned
property in the above listed counties for 3 years prior to submittal of an application. This change
reinforces the intent of the program and prevents BMP owners from "trading" units simply to
purchase a newer or larger unit.
BMP Homeowners who benefit from the program are potentially able to use the equity to
purchase a home at market price. The BMP homes left behind become available to others in need
and the program continues to grow its scope and ability to serve more of those in need. While the
housing shortage in the area is unlikely to be resolved in the near future, this program strives to
make a small impact on the overall economic vitality of our community.
ATTACHMENT 1
RESOLUTION 2008-
RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF LOS GATOS
ADOPTING REVISED BELOW MARKET PRICE HOUSING GUIDELINES
AND RESCINDING RESOLUTION 2005-117
WHEREAS, the Town of Los Gatos Zoning Ordinance Sections 29.10.3000
through 29.10.3040 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
families of low and moderate income can afford to buy or rent, and assures to the extent
possible that the resale prices of those dwellings 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 the Town Council of the Town
of Los Gatos (1) repeals Resolution 2005-117; and, (2) adopts the revised Town of Los
Gatos Below Market Price Housing Program guidelines attached as Exhibit A.
PASSED AND ADOPTED at a regular meeting of the Town Council of the
Town of Los Gatos, California, held on the 18th day of August, 2008, by the following
vote:
TOWN OF LOS GATOS Exhibit A
BELOW MARKET PRICE HOUSING PROGRAM GUIDELINES
1. GENERAL PROVISIONS
A. Number of units
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 this resolution. The Town and
developer may negotiate to provide more BMP units than required by the rules
listed below, to fulfill a development's Community Benefit requirements.
1. Projects containing five or more but fewer than twenty market rate units
must provide a number of BMP units equal to 10 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 x total # of market rate units) - 2.5
This formula acts to increase the number of BMP runts required, as a
percentage of market-rate units, from 10% to 20% over the range of 20 to
100 market rate units.
3. All projects in excess of 100 market rate units must provide a number of
BMP units equal to 20 percent 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.
5. 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.
B. Unit Standards
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
BMP Guidelines Page 1
for each unit.
In-lieu fees will be deposited into the Town's Affordable Housing Fund.
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:
a. subsidizing the cost of owner occupied units to make them
affordable to low/moderate income households
b. purchasing rental units to make them affordable to low/moderate
income households
c. purchasing land for the future development of affordable housing
d, developing affordable housing
e. supplementing of affordable housing projects developed through
the Los Gatos Redevelopment Agency
f. funding administration of the program, as approved by the Town
Council in its annual budget process
D. Confidentiality
Any information provided by an applicant in order to demonstrate eligibility for
the program is confidential and not considered public information to the extent
permitted by law except for statistical information on the BMP units and general
demographic information on the buyers and renters of BMP housing units.
Through BMP program implementation, the Town is attempting to provide a
supply of low-moderate income housing. The Town does not wish 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 may be provided
as well as a range of sales prices.
11. OWNER OCCUPIED UNITS
A. Applicant Eligibility
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.
BMP Guidelines Page 3
awarded as follows:
a. Six points:
(1) 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 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.
(2) 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.
(3) 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.
(4) Households required to relocate their residence as a result
of Council action or mobile home park closure.
(5) 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.
(6) 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.
b. Four points:
(1) 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.
(2) 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.
Two points:
(1) 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.
BMP Guidelines Page 5
Total Number of BMP
Units in Project
Units Priced for
Low Income Households
Units Priced for Median
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. 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 housebold size appropriate
to size of unit) x Multiplier = Initial Sales Price.
(1) Assumptions of household size by size of unit are as
follows:
Unit Size
Household Size
Studio
1
1 Bedroom
1
2 Bedroom
2
3 Bedroom
3
4 Bedroom
4
BMP Guidelines Page 7
purchase through the BMP process.
The Town determines the resale price in accordance with the deed
restriction recorded on the property.
III. RENTAL UNITS
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
lose, 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.
D. Management
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
BMP Guidelines Page 9
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 tenant's 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.
Units targeted to households with incomes up to 80% of the Median
Family Income (MFI) shall have rents restricted to 80% of Fair Markct
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 2008- August 18, 2008)
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