08 Staff Report - Affordable Housing Strategy~pW N 0
,-Rn
to Sos COUNCIL AGENDA REPORT
DATE: August 5, 2009
MEETING DATE: 8/17/09
ITEM NO:
TO: MAYOR AND TOWN COUNCIL
FROM: GREG LARSON, TOWN MANAGER
SUBJECT: AFFORDABLE HOUSING STRATEGY
RECOMMENDATION:
Council should review the Affordable Housing Strategy (Attachment 1) and take the following
action:
1. Accept the report regarding the Affordable Housing Strategy.
BACKGROUND:
The Town retained Seifel Consulting to develop an Affordable Housing Strategy (AHS) with the
following objectives:
• Spend accumulated funds in the Redevelopment Housing Set-Aside Fund and Below
Market In-Lieu Fund;
• Produce as many affordable housing units as possible per dollar invested;
• Attain the Town's Housing Element goals and help meet housing needs, including the
Town's Regional Housing Needs Allocation;
• Meet the Redevelopment Agency's Redevelopment Plan housing goals and obligations.
DISCUSSION:
Seifel worked with Town staff to assess the Town's housing needs and obligations, existing
housing programs, affordable housing inventory, and financial resources. As a result, Seifel has
prepared an AHS (Attachment 1). The AHS includes the following chapters:
1. Introduction
II. Overview of the Town's Housing Needs, Goals, and Obligations
III. Existing Housing Programs
PREPARED BY: ~Wendie R. Rooney, Director of Community Development
11
Reviewed by:~ssistant Town Manager AF-Town Attorney Clerk Administrator
Finance Community Development
PAGE 2
MAYOR AND TOWN COUNCIL
SUBJECT: AFFORDABLE HOUSING STRATEGY
August 5, 2009
IV. Current and Projected Funds Available for Affordable Housing
V. Affordable Housing Strategy
VI. Conclusions and Next Steps
GENERAL PLAN COMMITTEE
On March 25, 2009, the General Plan Committee reviewed the Draft AHS that was prepared for
the Town by Seifel Consulting. The Committee provided valuable input regarding the proposed
AHS at that meeting. The GPC minutes for the meeting have been included as Attachment 2.
Staff sent the Committee's comments to Seifel who incorporated those modifications into the
Draft AHS.
On June 24, 2009, the General Plan Committee reviewed the revised Draft AHS and requested
one additional modification to the AHS. The requested modification was to add whenever
possible," before mixed income housing developments," in the first paragraph on page 8.
The GPC minutes for the meeting have been included as Attachment 2. Seifel has incorporated
the recommended modification into the AHS (Attachment 1).
CONCLUSION:
If the Council accepts the Affordable Housing Strategy, staff will pursue the options for
affordable housing production outlined in the document.
ENVIRONMENTAL REVIEW:
Direction offered by Council regarding the Affordable Housing Strategy is not a project defined
under CEQA, and no further action is required at this point.
FISCAL IMPACT:
None.
Attachments:
1. Affordable Housing Strategy
2. General Plan Committee minutes from their March 25, 2009 meeting
3. General Plan Committee minutes from their June 24, 2009 meeting
N:\DEV\CNCLRPTS\2009\AffordableHousingStrategy. doc
FINAL
Affordable Housing Strategy
Prepared for:
The Town of Los Gatos and
Los Gatos Redevelopment Agency
April 2009
Seifel
CONSULTING INC.
221 Main Street
Suite 420
San Francisco CA
94105
415.618.0700
fax 415.618,0707
www,seifel.com
ATTACHMENT 1
Table of Contents
Los Gatos Redevelopment Agency
Affordable Housing Strategy
1. Introduction ......................................................................................1
II. Overview of the Town's Housing Needs, Goals and
Obligations ........................................................................................2
A. Housing Needs Assessment ....................................................................................................................2
B. Housing Element and Redevelopment Plan Goals .................................................................................7
C. Redevelopment Affordable Housing Obligations 8
III. Existing Housing Programs ............................................................10
IV. Current and Projected Funds Available for Affordable
Housing ............................................................................................13
V. Affordable Housing Strategy ..........................................................14
A. Enhancements to Existing Housing Programs 14
B. Proposed Programs and Initiatives 15
C. Proposed Allocation of Resources ........................................................................................................17
VI. Conclusions and Next Steps ............................................................19
Los Gatos Redevelopment Agency I Seifel Consulting Inc.
Affordable Housing Strategy April 2009
Table of Contents
Los Gatos Redevelopment Agency
Affordable Housing Strategy (cont.)
Table of Figures
Figure 1 Proposed Allocation of Funds ...............................................................................................................19
Table of Tables
Table 1 Household Income by Household Size .....................................................................................................3
Table 2 Households by Income Category in 2000 ................................................................................................3
Table 3 Comparison of Household Income and Housing Costs in 2008 ..............................................................4
Table 4 Adjusted Regional Housing Needs Allocation (RHNA), 2007-2014 5
Table 5 Special Housing Needs Groupsa 6
Table 6 Housing Set-Aside Fund Expenditure Targeting .....................................................................................9
Table 7 Housing Set-Aside Fund Expenditure Targeting .....................................................................................9
Table 8 2008 Affordable Housing Inventory .......................................................................................................12
Table 9 Funds Available for Affordable Housing ...............................................................................................13
Table 10 Proposed Allocation of Funds ..............................................................................................................18
Appendices
Appendix A: Affordable Housing Strategy Tracking and Evaluation Tool
Appendix B: Potential Sites for New Infill Development, Acquisition/Rehab and Purchasing Affordability
Covenants
Los Gatos Redevelopment Agency ii Seifel Consulting Inc.
Affordable Housing Strategy April 2009
I. Introduction
The Town of Los Gatos retained Seifel Consulting Inc. (Seifel) to assist Town staff in developing
an Affordable Housing Strategy (Strategy) with the following objectives:
• Spend accumulated funds in the Redevelopment Housing Set-Aside Fund ($7.2 million) and
the Below Market Price (BMP) Program In-Lieu Fee Fund ($1.4 million).
• Produce as many affordable housing units as possible per dollar invested.
• Attain the Town's Housing Element goals and help meet the Town's housing needs,
including its Regional Housing Needs Allocation.
• Meet the Los Gatos Redevelopment Agency's (Agency) Redevelopment Plan housing goals
and obligations.
Seifel has worked with Town staff to assess the Town's housing needs and obligations, the
Town's existing housing programs, affordable housing inventory, and financial resources. In
June 2008, Seifel toured Downtown Los Gatos and various neighborhoods, as well as the Central
Los Gatos Redevelopment Project Area, with Town staff to identify potential opportunity sites for
acquisition/rehabilitation and other types of affordable housing projects. In November of 2008,
Seifel received and reviewed Housing Element data needed for the Housing Needs Assessment
section of this Strategy.' To supplement Housing Element data, Seifel also gathered and analyzed
additional data needed for completing the assessment. In February of 2009, Seifel submitted
drafts of the Strategy to Town staff and the General Plan Committee for review and incorporated
their feedback. Our work has culminated in the preparation of this final draft of the Strategy. This
report is organized as follows:
1. Introduction
II. Overview of the Town's Housing Needs, Goals and Obligations
III. Existing Housing Programs
IV. Current and Projected Funds Available for Affordable Housing
V. Affordable Housing Strategy
Vt. Conclusions and Next Steps
i Town of Los Gatos Draft Housing Element Update (2009), Ch. 1-4.
Los Gatos Redevelopment Agency Seifel Consulting Inc.
Affordable Housing Strategy April 2009
II.Overview of the Town's Housing Needs, Goals and
Obligations
This section examines the key objectives that the Affordable Housing Strategy should fulfill. It
begins with a summary of the Town's housing needs and presents the goals articulated in the
Town's Housing Element. It then describes the Redevelopment Plan's goals and obligations, as
well as its progress to date in meeting the obligations.
A. Housing Needs Assessment
A clear understanding of the housing needs of the Town is essential to the formulation of an
Affordable Housing Strategy. Data from the 2009 Draft Housing Element Update formed the
foundation of Seifel's assessment of the Town's housing needs.
1. Population and Housing Units
According to the 2009 Draft Housing Element Update, the estimated population of the Town of
Los Gatos is 28,813 and its residents are housed in approximately 12,952 housing units.' Over the
past three decades, the Town's population and housing supply have grown at a slow pace, and is
projected to continue at a similar pace. According to the Association of Bay Area Governments
(ABAG), the Town's population is anticipated to grow by 7 % to 30,900 people between 2005
and 2025.
2. Housing Construction Types and Tenure
Approximately 70 percent of the total housing units in Los Gatos are single family units,
including single family attached units. An additional 29 percent of housing units are multifamily
apartments or buildings with two or more units. Mobile homes account for the remaining one
percent of housing units in the Town.'
Owner-occupied units form the majority of the housing tenure types in Los Gatos. The 2000
U.S. Census reported that 65 percent of housing units in the Town are owner-occupied and
35 percent are renter-occupied.'
3. Housing Affordability Gap
A barometer to measure housing needs in a community is the housing affordability gap, which is
the difference between what households can afford to pay for housing-related expenses and actual
housing costs. This section compares household incomes to typical costs for rental and for sale
housing in Los Gatos to determine if the community's housing needs are being met by the local
rental and for sale housing market.
2 Both the Town's population and housing unit estimates are as of 2008.
s Town of Los Gatos Draft Housing Element Update (2009).
4 Ibid
Los Gatos Redevelopment Agency 2 Seifel Consulting Inc.
Affordable Housing Strategy April 2009
a. Household Income
Many local jurisdictions, including Los Gatos, use the countywide household income limits set by
the U.S. Department of Housing and Urban Development (HUD), as a standard for defining
income categories within a community. Table 1 summarizes the maximum income levels for each
income category and household size for Santa Clara County. The typical or "median" household
income for a four-person household in Santa Clara County is $97,800.5 This figure is generally
referred to as the Area Median Income (AMI) because it represents the midpoint of household
incomes within the county, with half of the households countywide earning incomes above this
level and half below. Area Median Income is also referred to as 100 percent AMI, and HUD
defines all other income levels in relation to a percentage of AMI, as presented in Table 1.
Table 1
Household Income by Household Size
Santa Clara County
Household Size
Income Category
1
2
3
4
5
6
7
8
Extremely Low (30% AMI)
$22,300
$25,500
$28,650
$31,850
$34,400
$36,950
$39,500
$42,050
Very Low (50% AMI)
$37,150
$42,450
$47,750
$53,050
$57,300
$61,550
$65,800
$70,050
Low Income (80% AMI)
$59,400
$67,900
$76,400
$84,900
$91,650
$98,450
$105,250
$112,050
Moderate (120% AMI)
$82,200
$93,900
$105,700
$117,400
$126,800
$136,200
$145,600
$155,000
Source: U.S. Department of Housing and Urban Development, issued by State of California Department of HCD February 28, 2008.
According to the 2009 Draft Housing Element Update, extremely low, very low and low income
households comprise approximately 20 percent of all households in the Town, as shown in
Table 2 below.
Table 2
Households by Income Category in 2000
Town of Los Gatos
Income Category
Total HouseholdSa
Percent of Total
Households
Extremely Low
900
7.5%
Very Low
677
5.7%
Low
772
6.5%
Moderate and Above
9,611
80.4%
Total
11,960
100.0%
a. U.S. Department of Housing and Urban Development,
Comprehensive Housing Affordability Strategy (CHAS) 2000 data.
Source: Town of Los Gatos Draft Housing Element Update (2009),
Design, Community & Environment (DC&E), Seifel Consulting Inc.
5 State of California HCD, "Official State Income Limits for 2008" (February 28, 2008).
Los Gatos Redevelopment Agency 3 Seifel Consulting Inc.
Affordable Housing Strategy April 2009
b. Housing Costs and the Affordability Gap
According to Federal and State housing standards, in order for housing to be affordable, a
household is expected to spend no more than 30 to 35 percent of its gross monthly income on
housing related expenses, also known as the allowed monthly housing cost. Such expenses may
include utilities and rent for renters, or utilities, mortgage, property tax, insurance and
homeowners assessment fee for homeowners. Implicit in the allowed monthly housing cost is the
rental or mortgage payment a household can afford.
Overall, housing costs are high in Los Gatos. The cost of renting an apartment or purchasing a
home in the Town is not affordable to a four-person household of extremely low, very low and
low income. As shown in Table 3, the average market rate rent of $2,600 per month for a
three-bedroom unit is only affordable to households of moderate income and above. The Town's
median home sales price of $838,000 in November 2008 is unaffordable to households of low and
moderate income.
Table 3
Comparison of Household Income and Housing Costs in 2008
Town of Los Gatos
Maximum Income
Maximum
Affordable Rent/
Income
(Four-Person
Monthly
Allowed Monthly
Affordable Sales
Category
Household A
Income
Housing Costb
Price`
Extremely Low
$31,850
$2,654
$796
$66,000
Very Low
$53,050
$4,421
$1,326
$146,000
Low
$84,900
$7,075
$2,123
$266,000
Moderate
$117,400
$9,783
$3,424
$462,000
Market Rated
$2,600
$838,000
a. Maximum income as defined by HUD for Santa Clara County.
b. Calculated as 35% of monthly income for moderate income and 30% for all other income levels, as
defined by California Redevelopment Law.
c. Estimate rounded and based on monthly income with 10 percent down payment and 30-year amortized
loan with an allowance for utilities, taxes, HOA dues, and insurance.
d. Average market rent for three bedroom units as of January 2009 (http://www.craigslist.org,
http://www.apartmentratings.com/rate/CA-Los-Gatos.html#market). Median sales price for new
construction and resales of single family homes and condos (DataQuick Real Estate News, November 2008).
Source: Town of Los Gatos, Seifel Consulting, DataQuick Real Estate News
Los Gatos Redevelopment Agency 4 Seifel Consulting Inc.
Affordable Housing Strategy April 2009
C. Recent Housing Market Conditions
In the past year, the Town has experienced an 18.2 percent decrease in housing sales prices from
$1.02 million in November 2007 to $838,000 in November 2008.6 According to Town staff,
Los Gatos has had relatively few home foreclosures during the recent mortgage crisis and
downturn in the real estate market. While housing sales prices are decreasing in Los Gatos, the
cost of owning a home in Los Gatos is, and will likely continue to be, unaffordable for most of
the community's low and moderate income households.
4. Regional Housing Needs Allocation
The Regional Housing Needs Allocation (RHNA) is a measure of the future housing needs of the
Town of Los Gatos. The California Department of Housing and Community Development (HCD)
determines overall housing needs for the Bay Area, and the Association of Bay Area
Governments (ABAG) then assigns the Town its share of regional housing needs or RHNA. As
summarized in Table 4, Los Gatos must plan for 376 new units of housing affordable to very low,
low and moderate income households, and 171 new units of housing affordable to above
moderate households by 2014. Since January 1, 2007, the beginning of the current RHNA
tracking period, only 15 housing units affordable to above moderate income households have
been built in the Town.
Table 4
Adjusted Regional Housing Needs Allocation (RHNA), 2007.2014
Town of Los Gatos
Units Built,
Income Category
New Housing
Under Construction
Adjusted RHNA
Units Needed
and/or A roved°
Very Low (0-50%)
154
0
154
Low (51-80%0)
100
0
100
Moderate 81-120%
122
0
122
Subtotal
376
0
376
Above Moderate
186
15
171
Total
562
15
547
a. Since January 1, 2007.
Source: ABAG Final Regional Housing Needs Allocation (adopted May 2008), Design, Community &
Environment (DC&E), Seifel Consulting Inc.
6 DataQuick Real Estate News, ham://www.dQnews.com, November 2008.
Los Gatos Redevelopment Agency 5 Seifel Consulting Inc.
Affordable Housing Strategy April 2009
5. Special Housing Needs Groups
Households with special needs represent a significant percentage of households in Los Gatos.
Groups with special housing needs in Los Gatos include seniors, large family, single-parent and
overcrowded households, persons with disabilities, and the homeless! Twenty two percent of the
Town's households have one or more seniors, many of whom are likely to be aging in place.
A significant proportion of households with special needs, such as households with disabilities,
are on fixed incomes, and thus could be considered extremely low income households. These
groups are least likely to have their housing needs met by the private market. Table 5 summarizes
the number of households and individuals in each group.
Table 5
Special Housing Needs Groupsa
Town of Los Gatos
Total
Percent of Total
Households
Households
Seniorsb
2,631
22.0%
Large Family
760
6.4%
Single-Parent
611
5.1%
Overcrowded
312
2.6%
Subtotal of Special Needs Households
4,314
36.1%
Total Households in Los Gatos
11 960
100.0%
Total
Percent of Total
Individuals
Population
Persons with Disabilities
1,776
6.2%
Homeless
30
0.1%
Subtotal of Special Needs Individuals
als
1,806 806
6.3%
Total Population in Los Gatos
28 813
100.0%
a. Estimates for households and individuals in each category are not mutually exclusive.
b. Households with one or more seniors.
Source: 2009 Draft Housing Element Update, Seifel Consulting Inc.
7 The U.S. Census defines an overcrowded household as one that is occupied by more than one person per room,
excluding bathrooms and kitchens. The U. S. Census defines a large family household as a household with five or
more persons.
Los Gatos Redevelopment Agency 6 Seifel Consulting Inc.
Affordable Housing Strategy April 2009
B. Housing Element and Redevelopment Plan Goals
To stay in compliance with State Housing Element Law and the California Community
Redevelopment Law (CRL), the Town and its Redevelopment Agency must meet the goals of the
Housing Element and Redevelopment Plan. State Housing Element Law requires that local
jurisdictions outline the housing needs in the community, the barriers or constraints to providing
that housing, and actions proposed to address these concerns over a five-year period. In regards to
housing, the CRL outlines certain affordable housing requirements for redevelopment project
areas and redevelopment agencies, as described in more detail below. For the purposes of this
Strategy, certain requirements apply only to the CRL and others apply only to Housing Element
law. Where applicable, distinctions between the two laws are made.
The Town will continue to support and advance the Town's General Plan, and more specifically,
the goals and strategies identified in the 2002-2006 Housing Element through the Affordable
Housing Strategy, including':
• Improve the choice of housing opportunities for senior citizens, families and singles and for
all income groups through a variety of housing types and sizes, including a mixture of
ownership and rental housing.
• Preserve existing moderately priced and historically significant housing.
• Eliminate racial discrimination, lack of disabled accessibility and all other forms of
discrimination that prevent free choice in housing.
• Make infrastructure projects and residential and nonresidential developments be compatible
with environmental quality and energy conservation.
• Reduce the homeless population.
• Provide housing affordable to people who work in the Town.
The Town and its Redevelopment Agency will continue to support and advance the primary
affordable housing goal of the Redevelopment Plan, as follows:
• The expansion and improvement of the community's supply of low and moderate income
housing.'
The Central Los Gatos Redevelopment Project Area's FY 2004/05-FY 2008/09 Implementation
Plan states that the Agency will meet this goal through the following primary affordable housing
objectives:10
• Initiate affordable housing projects within the Central Los Gatos Redevelopment
Project Area.
• Provide zero interest loans for secondary dwelling units in the Central Los Gatos
Redevelopment Project Area.
s Town of Los Gatos Housing Element (2002-2006). The 2009 Housing Element Update at the time of this report.
9 Redevelopment Plan for the Central Los Gatos Redevelopment Project, adopted November 25, 1991.
10 Los Gatos Redevelopment Agency, FY 2004/05 to FY 2008/09 Implementation Plan, October 2004.
Los Gatos Redevelopment Agency 7 Seifel Consulting Inc.
Affordable Housing Strategy April 2009
In addition to the Housing Element and Redevelopment Plan goals summarized above, a goal of
the Affordable Housing Strategy is to create, whenever possible, mixed income housing
developments recognizing that the availability of funding opportunities may dictate the
affordability mix and income levels of potential developments.
C. Redevelopment Affordable Housing Obligations
The CRL requires that a redevelopment agency comply with and fulfill its affordable housing
responsibilities, including:
Housing Production: Minimum percentages of new or substantially rehabilitated housing
units in a project area are to be made available at an affordable housing cost."
Housing Set-Aside Fund Expenditure (Housing Fund): Redevelopment agencies are
required to deposit tax increment into the Housing Fund and expend tax increment revenue
for the provision of affordable housing. Expenditures must be made according to specific
target percentages for assisting various income levels and non age-restricted housing.
1. Housing Production
The Agency is expected to surpass its affordable housing production obligation for the Central
Los Gatos Redevelopment Plan as required by CRL for the 2004 through 2014 production
compliance period."
2. Housing Set-Aside Fund Expenditure
The Agency currently has an excess surplus of Housing Fund monies of between $500,000 and
$2 million." Timely expenditures are imperative to reduce the Agency's excess surplus and avoid
penalties.
Under the CRL, Housing Fund moneys must be targeted to specific income levels according to
need and to non age-restricted housing. The targeting obligations must be met over the
expenditure compliance period beginning January 1, 2002 and ending in December 31, 2014.
1 When new dwelling units are developed in a project area by public or private entities other than the Agency (with or
without Agency assistance), or when housing is substantially rehabilitated in a project area by public or private
entities with Agency assistance, at least 15 percent of these units must be affordable to, and occupied by, very low,
low or moderate income households. Of those units, at least 40 percent must be affordable to very low income
households. Affordable housing units that are produced (with or without Agency assistance) within the project area
count towards meeting the Agency's production obligations on a one-for-one basis. For each unit produced outside of
the project area (with or without Agency assistance), the Agency receives half a credit towards meeting the Agency's
obligations. For "mutual self-help housing," like the housing built by Habitat for Humanity, one-third credit is given
to the Agency for each unit produced within the project area. 11 One-sixth credit is given for self-help units produced
outside of the project area.
12 Los Gatos Redevelopment Agency, 2004 Implementation Plan Midterm Review, February 2008.
13 If an agency fails to expend the excess surplus within three years from the time the amount became an excess
surplus, the agency is prohibited from expending moneys derived from any source (including non-housing funds)
until it has encumbered or expended for qualified affordable housing activities the excess surplus amount plus an
additional amount equal to 50 percent of the excess surplus amount. The additional amount must be from non-
housing funds sources.
Los Gatos Redevelopment Agency g Seifel Consulting Inc.
Affordable Housing Strategy April 2009
Housing Fund moneys must be used to assist housing for persons of very low and low income in
at least the same proportion to the total number of housing units needed for each of these income
groups in the community. Table 6 shows the regional fair share allocation and the targeting
objective currently applicable to the Town. The Agency is required to spend Housing Fund
moneys in the following proportions: at least 41 percent for units affordable to very low income
households, at least 27 percent for units affordable to low income households, and no more than
32 percent on housing affordable to moderate income households.
Table 6
Housing Set-Aside Fund Expenditure Targeting
By Income Level
Town of Los Gatos
Income Group and Relation
Total Housing Units
Expenditure Percentage
to County Median Income
Needed
Need by Income Level
Very Low (0-50%)
154
At least 41%
Low Income (51-80%)
100
At least 27%
Moderate (81-120%) 1
122
No more than 32%
Total
376
100%
Source: ABAG Final Regional Housing Needs Allocation (May 2008), Seifel Consulting Inc.
In addition, a defined minimum percentage of Housing Fund moneys must be spent on housing
available to all persons regardless of agc. This minimum is equal to the percentage of Los Gatos'
low income households with a member under age 65, as reported in the most recent U.S. Census.
The 2000 Census indicates that 58 percent of the Town's low income households have a
householder under 65 years of age, as shown in Table 7. Thus, the Agency must expend at
minimum 58 percent of its funds on housing that does not impose age restrictions on residents.
Table 7
Housing Set-Aside Fund Expenditure Targeting
Non Age-Restricted Housing
Town of Los Gatos
Low Income
Age Targeting'
Households
Expenditure Percentage
Non Age-Restricted Housing
2,216
58%0
Age-Restrict d Housing
1,580
42%
Total
3,796
100%
a. Based on Census data showing low income households by householder age. (The Census
does not report low income household information according to the age of household members.)
b. Includes households earning 80% or less of AMI based on limits published by HCD in 2000.
Source: 2000 U.S. Census, HCD Income Limits 2000.
Los Gatos Redevelopment Agency 9 Seifel Consulting Inc,
Affordable Housing Strategy April 2009
III. Existing Housing Programs
A variety of programs are currently available to assist the Town of Los Gatos in meeting its
affordable housing needs, goals and obligations. This section reviews the Town's existing
housing programs, the Town's participation in the Housing Trust of Santa Clara County and the
current inventory of affordable housing in Los Gatos.
1. Town Housing Programs
The following are programs administered by the Town or in conjunction with affiliates and
partners such as the Los Gatos Redevelopment Agency and the Santa Clara County Office of
Affordable Housing.
a. Below Market Price (BMP) Program and In-.Lieu Fees
The Town's BMP Program requires that a certain percentage of units in new residential
developments containing five or more units be designated for low and moderate income
occupancy.14 Affordable units developed under the BMP Program are subject to deed restrictions
that are designed to ensure that the units will remain affordable in perpetuity. Projects between
five to ten units may contribute an in-lieu fee instead of constructing actual units. These fees are
deposited into the Town's BMP In-Lieu Fee and are used as a source of funding for affordable
housing developments. To date, 128 units have been produced through this program.15
b. Density Bonus Program
The Town's Density Bonus Program provides a density bonus of up to 100 percent of the units
permitted under zoning regulations for housing restricted to seniors, disabled persons, as well as
very low and low income households.
C. Assisting Affordable Housing Developments
Over the years, the Town and its Redevelopment Agency have facilitated the development of a
number of affordable housing developments such as the Los Gatos Creek Village Apartments,
Blossom Hill and more recently, projects with Senior Housing Solutions. Approximately
200 units of affordable housing have been created in the Town to date as a result of local
support. 16
14 New residential developments affected by the BMP Program includes every multifamily rental dwelling project at
the building permit application stage, every residential condominium or planned development 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.
15 Town of Los Gatos
16 Ibid.
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Affordable Housing Strategy April 2009
d. Housing Conservation Program
The Town's Housing Conservation Program, administered by the Santa Clara County Office of
Affordable Housing, was designed to assist in the rehabilitation of housing units occupied by
lower income and special needs households. The Town provides both loans and grants to assist in
financing repairs to correct health or building code violations, handicap accessibility
modifications, earthquake safety or alleviate overcrowded situations. Since the program began in
1976, the Town has provided over 370 loans and grants through this program." The Housing
Conservation Program currently has approximately $500,000 available through its revolving
fund."
2. Housing Trust of Santa Clara County
The Town of Los Gatos contributes funds to the Housing Trust of Santa Clara County, a
non-profit organization, which in turn uses the funds for affordable housing. Los Gatos has
contributed $100,000 per year to the Housing Trust from FY 2005/06 through FY 2007/08, and
previously contributed $250,000 in 2001.19 The Housing Trust uses these funds for two programs,
the Affordable Multi-Family Rental Program, which provides loans to developers of affordable
multi-family projects, and the First-Time Homebuyer Program, which assists low income
households in securing below market rate financing to purchase homes.
In 2003, the Housing Trust provided a $60,000 loan to fund a five-unit senior housing project in
Los Gatos using the Town's funds. In 2008, the Housing Trust committed to assist in the
development of another five units of senior affordable housing within the Town by providing a
$450,000 loan for Anne Way, a project by Senior Housing Solutions.
3. Affordable Housing Inventory
The Town and its Redevelopment Agency have facilitated the creation of numerous affordable
housing units, primarily through the BMP Program and by assisting specific affordable housing
developments. Table 8 summarizes the affordable housing inventory currently available in the
Town and the income levels that are served by the units. This inventory only includes those units
that have received local subsidies, among other funding sources. The Town of Los Gatos
currently has over 300 subsidized housing units.
17 Ibid.
18 Town of Los Gatos Draft Housing Element Update (2009).
19 Los Gatos Redevelopment Agency, 2004 Implementation Plan Midterm Review, February 2008.
Los Gatos Redevelopment Agency Seifel Consulting Inc.
Affordable Housing Strategy April 2009
Table 8
2008 Affordable Housing Inventory
Town of Los Gatos
Very Low
Low
Moderate
Income
Income
Income
Total
Rental
Affordable Housing Developments
193
8
0
201
BMP Program
Q
23
1
944
Subtotal
193
101
1
295
Ownership
Affordable Housing Developments
1
0
0
1
BMP Program
Q
15
25
40
Subtotal
1
15
25
41
Total
194
116
26
336
Source: Town of Los Gatos, Seifel Consulting Inc.
Los Gatos Redevelopment Agency 12 Seifel Consulting Inc.
Affordable Housing Strategy April 2009
IV. Current and Projected Funds Available for
Affordable Housing
An accurate understanding of the Town's funding resources is essential to determine the means
by which the Town can address its affordable housing needs, goals and obligations. To achieve
this, Seifel reviewed the funds currently available and funds projected to be available through
FY 2013/14 to the Town and its Redevelopment Agency for housing programs.
The Town has two primary funding resources for programs to meet Los Gatos' affordable
housing needs: the Redevelopment Housing Set-Aside Fund (Housing Fund) and Below Market
Price (BMP) In-Lieu Fee Fund.
As shown in Table 9, as of the end of FY 2007/08, the Town had approximately $8.6 million in
funding available for housing-related programs and activities. By FY 2013/14, the Town is
projected to have approximately $17.6 million available for housing-related programs and
activities. Seifel conservatively estimated that approximately $1.5 million would accumulate
annually between FY 2008/09 and FY 2013/14 in the Housing Fund and zero dollars for the BMP
In-Lieu Fee Fund.
Table 9
Funds Available for Affordable Housing
Town of Los Gatos
Funds Available as of
Projected Funds Available
Total Projected
°
~
Funding Source
FY 2007/08
FY 2008/09 - FY 2013/14
Funds Available
O
Housing Fund
$ 7,199,000
$ 9,000,000
$ 16,199,000
92%
BMP In-Lieu Fee Fund
$ 1,381,000
$ -
$ 1,381,000
8%
Total Funds
$ 8,580,000
$ 9,000,000
$ 17,580,000
100%
Source: Town of Los Gatos, Seifel Consulting Inc.
The funding sources in Table 9 are the most reliable source of local funding, as the amount of
Federal and State funding sources for affordable housing vary widely from year to year, and the
Town must compete to receive many of these funds. As the Town has done in the past, it will
continue to use its local funds to leverage Federal and State housing resources, including:
• CDBG and HOME
• State of California, Department of Housing and Community Development
• California Housing Finance Agency
• Federal and State Low Income Housing Tax Credits
• Federal Home Loan Bank
• Mortgage Credit Certificates
Los Gatos Redevelopment Agency 13 Seifel Consulting Inc.
Affordable Housing Strategy April 2009
V. Affordable Housing Strategy
As described above, the Town has a variety of existing housing programs to further its goals to
meet the community's housing needs and expand the Town's supply of affordable housing. Seifel
recommends that many of the existing programs be continued and new programs be initiated. The
criteria shown in the tracking and evaluation tool in Table 1 of Appendix A were used to
formulate the recommended enhancements to existing housing programs and to propose new
housing programs and initiatives. The section below presents the proposed housing programs,
including both existing and new initiatives.
A. Enhancements to Existing Housing Programs
Seifel recommends that the Town's existing programs continue with potential enhancements to
each, as follows:
1. Housing Trust of Santa Clara County
As described in Section III, the Redevelopment Agency has been contributing money from the
Housing Fund to the Housing Trust of Santa Clara County under an agreement between the
Agency and the Housing Trust that the funds be expended for the production of affordable
housing in Los Gatos. The Agency provided $250,000 in 2001 and $100,000 annually for three
years between 2005 and 2007. The 2001 funds were not fully utilized within the timeframe
agreed upon, and the agreement was amended in 2007 to allow an additional two years for the
remaining funds to be expended.20
Moving forward, Seifel recommends that the Town continue to monitor the funds granted to the
Housing Trust to ensure that they are expended in a timely and efficient manner to produce as
many affordable units as possible. In addition, the Agency must ensure that the funds are spent
within the boundaries of Los Gatos to comply with CRL requirements.
2. First Time Homebuyer Program
The Town partners with the Housing Trust of Santa Clara County to administer a First Time
Homebuyer Program (FTHB) for Los Gatos. According to Town staff, there have been few
participants in this program in the past due to the difficulty of purchasing a first home in
Los Gatos for low income households. Between 2001 and 2008, the Housing Trust provided five
FTHB loans.21 Seifel recommends that the Town review and revise its policies for assisting first
time homebuyers, and ensure that the Housing Trust administer the program to meet the Town's
goals. The Town may consider targeting moderate and middle income households through the
First Time Homebuyer Program using BMP In-Lieu Fee funds to create more home ownership
opportunities for the Town's workforce. In addition, the Town may focus on utilizing First Time
Homebuyer Program funds for multifamily condo projects.
20 Town Council of Los Gatos, Town Council Agenda Report, May 16, 2007.
21 Based on data provided by the Housing Trust of Santa Clara County.
Los Gatos Redevelopment Agency 14 Selfel Consulting Inc.
Affordable Housing Strategy April 2009
3. Housing Conservation Program
The Town partners with the Santa Clara County Office of Affordable Housing to administer the
Housing Conservation Program. Between 2002 and 2007, eleven rehab loans were provided
through this program. The Housing Conservation Program currently has a revolving fund that
allows the fund to be replenished as rehabilitation loans are repaid. In order to satisfy the goals of
the Central Los Gatos Redevelopment Plan, Seifel recommends that the Town focus the program
to rehabilitate blighted properties within the Redevelopment Project Area and consider
prioritizing the use of funds for projects that qualify as "substantial rehabilitation" as defined by
the CRL in order to gain more housing production credits."
4. Below Market Price (BMP) and Density Bonus Programs
The BMP and Density Bonus Programs have been key components of the Town's strategy for
affordable housing production. For condo developments, the BMP Program requires developers
to provide units affordable to median and low income households. For rental developments,
developers must create units affordable to low income households.
As an enhancement to these programs, Seifel recommends that the Town actively seek to
purchase additional affordability covenants and/or "buy down" affordability covenants in market
rate for sale and rental developments that are required to provide BMP units. Affordability
covenants are essentially deed restrictions on the property that retain the affordable housing price
of the unit for a certain period of time. If Housing Funds are used, affordability covenants must
be in place for at least 45 years for ownership properties and 55 years for rental properties.
As an example, for the Bay Tree Condominium Development by Lyon Capital Ventures, the
Town may use its Housing. Fund to purchase additional BMP units for sale beyond the required
number of BMP units by the developer or provide additional subsidy to target lower income
households.
While the Town's Density Bonus Program is an important incentive for developers to include
affordable housing within market rate developments, increasing density alone will likely not be
enough to spur new affordable housing development. Since the BMP and Density Bonus
Programs are dependent on market rate development, the Town will see fewer units produced
through these programs in the near future due to the recent downturn in the real estate market and
mortgage crisis.
B. Proposed Programs and Initiatives
In the next few years, the Town will need to focus on other tools to facilitate and encourage the
development of affordable housing in Los Gatos. In past years, the Town and its Redevelopment
Agency have collaborated with both for-profit and non-profit developers in the Bay Area to create
new affordable housing development opportunities, primarily to create multifamily housing
22 "Substantial rehabilitation" is defined as a rehabilitation in which the rehabilitation costs constitute at least
25 percent of the after-rehabilitation value of the dwelling including the land value. AB 637 modified the CRL
definition of substantially rehabilitated dwelling units such that, as of January 1, 2002, only agency-assisted
substantially rehabilitated multifamily (three or more units) and agency-assisted substantially rehabilitated single
family dwelling units (one or two units) will be included in the production unit calculation.
Los Gatos Redevelopment Agency 15 Seifel Consulting Inc.
Affordable Housing Strategy April 2009
developments. More recently, the Town has seen fewer affordable housing developments
proposals in Los Gatos for various reasons, such as high development costs and availability of
suitable sites. To address these problems, Seifel recommends that the Town issue a Notice of
Funding Availability and create a Property Acquisition Fund, as described in more detail below.
1. Issue Notice of Funding Availability (NOFA) for Multifamily Housing
The Town may issue a NOFA to attract proposals from for-profit and non-profit developers to
develop mixed income or 100 percent affordable multifamily housing projects. Seifel
recommends that the NOFA be written to request applications for both new infill development
and acquisition/rehab of existing apartments in Los Gatos.
The NOFA may be geared toward specific project sites that the Town is investigating.
Appendix B summarizes a preliminary list of sites that Seifel and Town staff have identified for
potential new infill development and acquisition/rehab. The Town may issue a NOFA in the
future for any of these sites once project readiness is established. Alternatively, an open NOFA
may be written to encourage proposals for sites that have not been considered by the Town.
Seifel recommends that the NOFA outline the type of projects that the Town is looking for and
the criteria that would be used to evaluate the proposals. The NOFA can be written to be flexible
in terms of the type of tenure, income mix and special needs groups that the project must fulfill to
encourage as many proposals as possible.
2. Create a Property Acquisition Fund
In the current real estate market downturn, the Town may take advantage of the decrease in
property values to prepare suitable sites for affordable housing development by creating a
property acquisition fund. The Town may use this fund to acquire vacant parcels or properties for
redevelopment, with a particular focus on blighted and/or foreclosed properties.
Purchasing sites to be designated for future affordable housing is a proper use of Redevelopment
Housing Set-Aside funds and may also be an effective way to decrease the Redevelopment
Agency's excess surplus."
3. Purchase Affordability Covenants in Existing Apartments
The Town may purchase affordability covenants to increase the supply of affordable housing or
"buy-down" existing affordability covenants to have deeper affordable units in existing rental
properties. This recommended program is analogous to purchasing covenants in new
developments in conjunction with the BMP program, but for existing apartments. Affordability
covenants are essentially deed restrictions on the property that retain the affordable housing price
of the unit for a certain period of time. If using Housing Funds, the covenants must be in place for
at least 55 years for rental properties.
23 Under California Redevelopment Law (CRL), an Agency must annually calculate and monitor whether it has
accumulated an excess surplus in its Housing Fund. The CRL defines an excess surplus as unexpended and
unencumbered funds accumulated in the Housing Fund that exceed the greater of $1 million or the total amount
deposited in the Agency's Housing Set-Aside Fund during the preceding four years. HCD annually monitors whether
agencies have accumulated an excess surplus in the Housing Fund.
Los Gatos Redevelopment Agency 16 Seifel Consulting Inc.
Affordable Housing Strategy April 2009
In existing and new rental developments, the Agency could provide a rehabilitation loan or
another form of subsidy to a rental property owner in exchange for securing affordability
covenants on a percentage of units and the owner's agreement to restrict rents on these units to
levels that would be affordable to very low and low income households.
Each affordability covenant acquisition opportunity is unique because the owner may negotiate
for a varying proportion of units to be restricted as well as the level of affordability. Seifel
recommends that the Town work to secure units for very low and low income households through
this program. In order to have a successful policy or program for purchasing affordability
covenants, the Town must have a legal counsel that is familiar with structuring effective
agreements, as well as dedicated resources for periodic monitoring to ensure that the agreements
are met.
Seifel recommends that the Town investigate the potential of purchasing and buying-down
affordability covenants for new rental developments coming on-line and existing apartments. In
the tour with Town staff, Seifel identified a preliminary list of sites for acquiring covenants, as
shown in Appendix B. In order to target existing apartments, the condition of the property and the
background of the property owner should be assessed. The Town may then issue a Notice of
Funding Availability (NOFA) to announce its intentions to purchase affordability covenants and
attract interest from property owners.
4. Provide Zero Interest Loans for Secondary Dwelling Units
As one of the objectives of the Central Los Gatos Redevelopment Project Area, the Town and its
Redevelopment Agency may sponsor a loan program to assist in the development of secondary
dwelling apartment units for low and moderate income households. The Agency may provide
zero interest loans for the production of secondary dwelling units in the Central Los Gatos
Redevelopment Project Area that are restricted to occupancy by low and moderate income
households, often called "in-law" units, typically referring to small one-bedroom or studio units
located in existing single family homes or as detached units. If using Housing Funds, affordability
covenants are required and must be in place for at least 55 years for rental properties. Seifel
recommends implementing this program in an effort to increase affordable units in the
Redevelopment Project Area.
C. Proposed Allocation of Resources
As funds for affordable housing are limited, the Town recognizes that its resources need to be
prioritized to ensure the most effective use of funding. The recommended allocation of resources
emphasizes a balanced Affordable Housing Strategy to meet the Town's housing needs, goals and
obligations, as summarized in Table 1 of Appendix A.
As discussed in Section IV and summarized in Table 9, the Town has $8.6 million available for
affordable housing (as of the end of FY 2007/08) and projects another $9 million will be available
by FY 2013/14 for a total of $17.6 million. Table 10 below summarizes the proposed allocation
of the Town's current available funds for affordable housing and total projected available funds
for affordable housing through FY 2013/14 for existing and proposed programs. As several of the
existing programs are administered by other entities, the Housing Trust of Santa Clara County
and the County's Office of Affordable Housing, Seifel recommends that the Town review the
Los Gatos Redevelopment Agency 17 Seifel Consulting Inc,
Affordable Housing Strategy April 2009
goals and policies for these programs before allocating additional resources to them. The table
below also shows the potential number of affordable housing units that may be created through
each program or initiative with the available funding resources given development opportunities.
Table 10
Proposed Allocation of Funds
Town of Los Gatos
Funds Available
as of
Total Projected Fun
ds Available
FY 2007/08
FY 2008/09 - FY 2013/14
Projected
Per Unit
Local
Programs and Initiatives
Total Allocation
Total Allocation
%
Subsidy
U
nits
Existing
Housing Trust of Santa Clara County (HTSCC)°
$
$
0%
N/A
N/A
First Time Homebuyer Program (HTSCC)°
$
$
0%
N/A
N/A
Housing Conservation Program (SCC OAH)b
$
$
0%
N/A
N/A
BMP Program - Purchase Additional Affordability Covenants
$
$
1,000,000
6%
$ 50,000
20
Propose
NOFA for Multifamily Housing
Infill Development
$
2,928,000
$
5,000,000
28%°
$ 70;000
71
Acquisition/Rehab
$
2,196,000
$
4,500,000
26%
$ 60,000
75
Property Acquisition Fund
$
1,464,000
$
3,000,000
17%
N/A
N/A
Purchase Affordability Covenants in Existing Apartments
$
976,000
$
2,000,000
11%
$ 50,000
40
Other Housing Activities / Secondary Dwelling Loans
$
137,000
$
280,000
2%
$ 30,000
9
Program and Initiatives Subtotal
$
7,702,000
$
15,780,000
90%
$73,000
215
Administration Costs
$
878;000
$
1,800,000
10%
Total Allocation
$
8,580,000
$
17,580,000
100%
a. These programs are administered by the Housing Trust of Santa Clara County.
b. This program is administered by the County's Office of Affordable Housing,
Source: Town of Los Gatos, Seifel Consulting Inc.
Figure 1 demonstrates the proposed distribution of funds across the different programs and
initiatives.
Los Gatos Redevelopment Agency 18 Seifel Consulting Inc.
Affordable Housing Strategy April 2009
Figure 1
Proposed Allocation of Funds
Town of Los Gatos
Other Housing
Activities / Secondary
Dwelling Loans
2%
Purchase Affordabil
Covenants in Existi
Apartments
11%
BMP Program
Administration Costs 6% Lifill Development
Acyuieiuon/Rehab
26%
VI. Conclusions and Next Steps
The Town and its Redevelopment Agency seek to use available resources to increase the supply
of affordable housing in Los Gatos and to meet the Housing Element and Redevelopment Plan
goals and obligations.
As such, Seifel recommends steps that the Town may take to enhance its existing housing
programs. For programs that are administered in partnership with other entities, such as the
Housing Trust of Santa Clara County and Santa Clara County Office of Affordable Housing, the
Town may consider reviewing and refining its policies to ensure that the community's affordable
housing goals are being met.
Seifel also recommends that the Town and Agency take steps to implement the following new
programs and initiatives with support from the Town Council and community:
• Issue Notice of Funding Availability (NOFA) for Multifamily Housing
• Create a Property Acquisition Fund
• Purchase Affordability Covenants in Existing Apartments
• Provide Zero Interest Loans for Secondary Dwelling Units
Los Gatos Redevelopment Agency 19 Seifel Consulting Inc,
Affordable Housing Strategy April 2009
Property Acquisition
Fund
17%
Appendix A:
Affordable Housing Strategy Tracking and
Evaluation Tool
Appendix A:
Affordable Housing Strategy Tracking and Evaluation Tool
As shown in Appendix Table 1, Seifel formulated a tracking and evaluation tool based on the Town's
housing needs, goals and obligations to guide the development and implementation of the Affordable
Housing Strategy. The recommended programs and resource allocation in the Affordable Housing
Strategy were crafted to ensure that the Town meets all of its housing needs, goals and obligations, as
summarized in the table. This matrix may also be used by Town staff and the Los Gatos community as an
evaluation tool to help guide the Town's decisions impacting individual affordable housing programs and
projects. For each category of needs, goals, and obligations, the criteria is measured by certain questions,
the results of which are shown.
Los Gatos Redevelopment Agency A_1 Seifel Consulting Inc,
Affordable Housing Strategy April 2009
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Appendix B:
Potential Sites for New Infill Development, Acquisition/Rehab and
Purchasing Affordability Covenants
Appendix B:
Potential Sites for New Infill Development, Acquisition/Rehab and Purchasing
Affordability Covenants
1. Potential Sites for New Infill Development
a. Ditto's Lane
Ditto's Lane is a privately-owned property containing an abandoned building, formerly a bordello, and
three other existing structures. The Town is interested in acquiring the property and working with a
developer to produce affordable housing units on the site. The Town has placed an offer to purchase the
property in the past, but was rejected by the owner. The Ditto's Lane site currently does not have
sufficient access rights to build additional units. Town staff believes that obtaining access rights and
improving access for the site will be challenging because access from College Avenue is not feasible.
b. Park Avenue
Park Avenue is a privately held property containing six housing units located within the boundaries of the
Redevelopment Project Area. The approximately 0.7-acre site is adjacent to a Town-owned parcel with
access from S. Santa Cruz Avenue, which the Town may consider combining with the Park Avenue site
to provide additional developable space. Some of the, site's development challenges include parking,
topographic constraints and conservation regulations governing existing trees on the land.
2. Potential Sites for Acquisition/Rehab of Existing Apartments
a. Foothill Apartments
Foothill Apartments is a 21-unit building within the Central Los Gatos Redevelopment Project Area in
Downtown Los Gatos. According to Town staff, a developer has expressed interested in creating
affordable units on the site and is willing to work with the Town.
b. Riviera Terrace Apartments
Seifel recommends that the Town evaluate the potential project at Riviera Terrace, a 123-unit apartment
building at the end of Town Terrace Road. Sobrato Development currently owns the building and has
expressed interest in the past of rehabilitating the apartment and converting the units to below market rate
and creating 100 additional market rate units in the back of the site in parking area. The project was
rejected by the Town's Conceptual Development Advisory Committee, the initial planning approval
committee for development applications, in the past due to the size of the proposed development and
potential traffic impacts.'
i "Expansion of Riviera Terrace Apartments draws criticism from advisory committee." Los Gatos Weekly Times. July 18, 2001.
Los Gatos Redevelopment Agency B-1 Seifel Consulting Inc.
Affordable Housing Strategy April 2009
3. Potential Sites for Purchasing Affordability Covenants in Existing Apartments
a. Bay Tree Condominium Development by Lyon Capital Ventures
Lyon has an approved planned development application to convert 56 rental units to condominiums,
resulting in an obligation of 8 affordable units under the Below Market Price (BMP) Housing Program.
The Town could consider the possibility of buying additional BMP units or converting several of the
currently proposed BMP units into units that are affordable to lower income levels.
Landmark/La Mar Apartments and Town Terrace Road
In the tour with Town staff, Seifel viewed the Landmark and La Mar apartments on Oka Road and other
small and large rental properties along Town Terrace Road as potential projects. These properties may be
investigated further as opportunities for purchasing affordability covenants.
Los Gatos Redevelopment Agency B_2 Seifel Consulting Inc.
Affordable Housing Strategy April 2009
TOWN OF LOS GATOS
110 East Main Street, Los Gatos, CA 95030 (408) 354-6872
SUMMARY MINUTES OF A REGULAR MEETING OF THE GENERAL PLAN
COMMITTEE OF THE TOWN OF LOS GATOS MARCH 25, 2009 HELD AT THE
NEIGHBORHOOD CENTER, 208 EAST MAIN STREET, LOS GATOS,
CALIFORNIA.
The meeting was called to order at 5:30 pm by Jane Ogle.
ATTENDANCE
Members present: John Bourgeois, Joe Pirzynski, Barbara Cardillo, Marcia Jensen,
Chuck Sloan, Barbara Spector,
Members absent: Margaret Smith
Staff present: Wendie Rooney, Director of Community Development; Suzanne Davis,
Associate Planner; Joel Paulson, Associate Planner.
Public attendees: None
VERBAL COMMUNICATIONS: NONE
ITEM 1 Affordable Housing Strategies
Associate Planner Joel Paulson introduced the Draft Affordable Housing Strategies
Report dated February 2009, noting that the Town has been working with Seifel
Consulting to develop affordable housing strategies.
The Committee discussed and made the following comments regarding the document:
• Table 8 on Page 11 (Proposed Criteria for Use of Housing Set-Aside Funds and
BMP Funds ) - is confusing. The Committee questioned how it would be used and
stated that the "criteria" and "measurements" would not be applicable to all
projects. The Committee commented that there is a brief explanation of Table 8 on
Page 9, but that the explanation of its use is separated from the Table by the
"Existing Housing Programs" Section. The Committee suggested revising Table 8
and providing a better description and methodology for how it should be used.
Rather than calling Table 8 proposed "criteria", it might be called something else
(or take the word criteria out).
• Table 11 on Page 19 (Proposed Allocation of Funds) is very helpful, but does not
relate well to Table 8. The Programs in Table 11 may fit under the "Criteria"
Section in Table 8, but needs some clarification if these are to be used together to
analyze the effectiveness of the program.
• Add a summary chart that provides the basis for measuring the success of the
various programs identified in Table 11. The chart should be included in the final
chapter of the report or include an appendix.
ATTACHMENT 2
General Plan Committee
March 25, 2009
Page 2 of 3
• Questioned if the various "Special Needs Population" categories in Table 5 on Page
6 (Special Housing Needs Groups) are mutually exclusive or double counted, and if
so, which category or group has higher priority?
• Asked clarification of whether income levels are factored into Table 5. Stated that
it does not appear that they are included.
• Page 4 Section A.3.b (Housing Costs and Affordability Gap) states that in order to
consider a unit affordable, the household is expected to pay a maximum of 35% of
income on housing. The Committee asked if this percentage is adjusted due to the
housing costs in Santa Clara County and also suggested that the document clarify
the use of the range from 30% - 35%.
• Asked if the median price and other valuations used in Table 3, Page 4 (Comparison
of Household Income and Housing Costs in 2008) in particular are changing as the
value of homes decreases.
• Referring to Table 3, the Committee commented that never before has there been
such a universal decline in the housing market and that this is a new enviromnent
for the foreseeable future. They questioned if the median price numbers reflect this
new dynamic in the housing market and requested to have the numbers Staff stated
that while the median housing price numbers are important, the affordable housing
qualifications levels are based on household income, which may actually decline
with the recent loss of jobs/shrinking income levels in the County.
• Section V.13.4 (Provide Zero Interest Loans for Secondary Dwelling Units):
Questioned whether this program would conflict with the Town's policies on
second units.
• Section V.A.4 (Below Market Price (BMP) and Density Bonus Programs): The
Committee advocated deed restrictions to maintain the unit as an affordable unit for
a specified time frame, preferably in perpetuity..
• Subsection V.B.l (Issue Notice of Funding Availability for Multifamily Housing):
Committee members noted a concern with requiring 100% affordable housing
projects versus mixed income housing While they recognize that there may be
cases where 100% affordability may be the best plan, they prefer that projects have
a mixture of market rate and affordable units so that the affordable units are not
clustered.
• Section V.B,1: Support the NOFA concept.
• Section V.B.3 (Purchase Affordability Covenants...) Support this concept.
• Section II. B (Housing Element and Redevelopment Plan Goals): Add a goal that
reflects the following: The Community strives to provide housing projects that
include a variety of affordability levels (integrated housing).
• Ensure that the Town's philosophy on non-clustering of affordable units is
referenced in the document.
• Section V.13.2 (Create a Property Acquisition, Fund): Clarify what happens when
the Town purchases a property.
• Section V.13.3 (Purchase Affordability Covenants in Existing Apartments): Clarify
who would monitor this and how it is paid for.
• Figure 1,Page 20: provides no new information - it is all in Table 11. It should be
revised or removed.
General Plan Committee
March 25, 2009
Page 3 of 3
Appendix A, Page A-1: Has staff verified the feasibility of these projects?
Appendix A, Page A-1: Add site on Park Avenue to Appendix A.
ADJOURNMENT
Meeting was adjourned at 6:30 PM. The next meeting of the General Plan Committee is
scheduled for April 8, 2009.
Prepared by:
Suzanne Davis, Associate Planner
N:\DEV\GPC\2009minutes\GPC-032509.doe
TOWN OF LOS GATOS
110 East Main Street, Los Gatos, CA 95030 (408) 354-6872
SUMMARY MINUTES OF A REGULAR MEETING OF THE GENERAL PLAN
COMMITTEE OF THE TOWN OF LOS GATOS JUNE 24, 2009 HELD AT THE
NEIGHBORHOOD CENTER, 208 EAST MAIN STREET, LOS GATOS,
CALIFORNIA.
The meeting was called to order at 5:35 pm by John Bourgeois.
ATTENDANCE
Members present: John Bourgeois, Barbara Cardillo, Marcia Jensen, Tom O'Donnell,
Jane Ogle, Joe Pirzynski, and Chuck Sloan
Members absent: Barbara Spector
Staff present: Wendie Rooney, Director of Community Development and Joel Paulson,
Associate Planner.
Public attendees: Eric Morley
VERBAL COMMUNICATIONS:
None
ITEM 1 Affordable Housing Strategies
Joel Paulson stated that the April 2009 Draft is a result of the Committee's March 25,
2009, review and comments. The meeting information packet contains both the revised
copy and the copy with the changes identified in Track Changes Format.
Committee Comments:
John Bourgeois asked whether the Committee's former request to add a goal that the
Town encourages mixed income housing developments had been included.
Barbara Cardillo stated that it was addressed in the first paragraph on Page 8. The
Committee discussed if the goal statement sufficiently addressed their concerns, and Mr.
Pirzynski suggested adding "whenever possible" before "...mixed income housing
developments." The Committee agreed to revise the goal consistent with Mr. Pirzynski's
suggestion.
Marcia Jensen asked if paragraph 2 on page 9 affects the Town's ability and desire to
provide age restricted housing.
Joel Paulsen explained that it does not eliminate the ability to provide age restricted
housing. However, per RDA Housing requirements, the Town cannot spend more than
ATTACHMENT 3
General Plan Committee
June 24, 2009
Page 2 of 3
42 percent of its total RDA
percentage is consistent with
member over the age of 65.
dousing Funds on senior or age restricted housing. This
the percent of low income household in the Town with a
Jane Ogle referenced Table 3 on Page 4 and commented on the income ranges and the
difficulty in trying to provide housing for the very low income category. Mr. Pirzynski
noted that the Town uses the Santa Clara County HUD maximum incomes. The
Committee discussed the difficulty in trying to achieve this level of affordability.
Marcia Jensen commented on Section 4 (Provide Zero Interest Loans for Secondary
Dwelling Units) on Page 17. She asked whether the Town should subsidize the
construction of secondary units that may end up housing family member/s of the primary
residential dwelling. Mr. Paulson commented that staff is working with the Town
Attorney on deed restriction language that would be imposed on the property that has a
subsidized secondary unit. He further commented that the Town Council has been
supportive of this program, but it has not yielded many new units.
Chuck Sloan asked how the Town would monitor this program to ensure that the units are
rented to qualifying recipients. Mr. Paulson noted that the staff is working with the
Housing Trust on the monitoring process and that this information will be included in the
Affordable Housing Strategies Council report.
Chuck Sloan asked about the marketing of these affordable housing programs and how
potential recipients find out about their availability. Mr. Paulson commented that the
programs will be publicized on the Town's website.
Marcia Jensen asked if the secondary dwelling units will need to meet all zoning
requirements. Mr. Paulson answered yes.
Marcia Jensen commented on the improvement made to Table 1 in the Appendix. She
asked if the table would be used to evaluate proposals. Mr. Paulson answered yes. Ms.
Jensen noted that there should be some type of tracking system and annual evaluation.
She also noted that the tracking should include the number of historic units that are
destroyed in addition to those preserved.
Joe Pirzynsld asked why Park Avenue on Appendix B was in red font. Mr. Paulson noted
that the red font indicated that the item was added from the previous draft.
Chuck Sloan asked if the Planning Commission reviews this document. Mr. Paulson
noted that the Planning Commission is not required to review this document and that the
Town Council has final approval.
Other than the one addition stated in these minutes, the Committee did not make any
other changes to the April 2009 draft of the Affordable Housing Strategies and forwarded
the document to the next reviewing body.
General Plan Committee
June 24, 2009
Page 3 of 3
APPROVAL OF MINUTES
Wendie Rooney noted that the Committee had asked her to review the minutes for clarity
purposes. Ms. Rooney commented that to ensure the minutes are more clear, all
documents that are referenced in the minutes will be dated and that the sections, and, in
relevant cases, the paragraphs that are germane to the Committee's comments will be
noted. The Committee indicated that the minutes were much clearer and would suffice.
Joe Pirzynski made a motion to approve the minutes; Mr. O'Donnell seconded the
motion; and the committee voted 7-0 to approve the March 25, 2009 and April 22, 2009
minutes.
ADJOURNMENT
Meeting was adjourned at 5:55 PM. The next meeting of the General Plan Committee is
scheduled for July 8, 2009.
Prepared by:
Wendie R. Rooney, Community Development Director
N:\DEV \GPC\2009minutes\GPC-062409. doe
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'Hill
~~S CASpS
DATE:
COUNCIL AGENDA REPORT
August 17, 2009
MEETING DATE:
ITEM NO: 8
DESK ITEM
TO: MAYOR AND TOWN COUNCIL
FROM: GREG LARSON, TOWN MANAGER
SUBJECT: AFFORDABLE HOUSING STRATEGY
REMARKS:
8/1.7/09
A Councilmember forwarded four questions to staff regarding this agenda item. The questions
are followed by Scifel Consulting and staff's responses:
1. Page 2 lists 12,952 housing units, but Table 2 on page 3 lists 11,960 units. Why is there a
difference?
There are several reasons for the difference: the year of the data, the data source and the
data comparison. Page 2 shows an estimate of the number of housing units in 2008 from
the Association of Bay Area Government's data (as presented in the Town's Housing
Element Update) and page 3 shows an estimate of the number of households in 2000 from
Census data. Additionally, the number of housing units does not necessarily translate to
households because there are likely to be vacant homes within the Town.
2. Page 5 says Los Gatos has had relatively few foreclosures. What is the number of
foreclosures?
Zip Code
Default (Pre-Foreclosure)
Auction
Bank Owned
95030
20
9
8
95032
57
23
27
Staff obtained this information from RealtyTrac (http://www.realtytrac.com).
PREPARED BY: V Wendie R. Rooney, Director of Community Development
Reviewed by: 4, ssistant Town Manager __JiTown Attorney Clerk Administrator
Finance P,*-*
Community Development
PAGE 2
MAYOR AND TOWN COUNCIL
SUBJECT: AFFORDABLE HOUSING STRATEGY
August 17, 2009
3. The number of low income households in Table 7 on page 9 seems way off compared to
Table 2 on page 3. Why is there a difference?
Both tables are from Census 2000 data, but the difference is in the way the data is cut by
the U.S. Census which the Town has no control over. In Table 7 on page 9, "low" income
households broadly includes low income levels and below. Additionally, the Census data
set used for Table 7 on page 9 presents incomes in brackets and does not allow a precise
cutoff at the low income level for Los Gatos, thus this table is most likely overstating the
number of low income households. However, the purpose of Table 7 is to show low
income senior households in Los Gatos versus low income non-senior households. This
data set was used because it produced a more conservative result for targeting RDA
housing fund expenditures which was done under the advisement of the Agency's legal
counsel.
4. On page 11 could we have more exact numbers on items Id (Housing Conservation
Program loans) and 3 (subsidized housing units)?
The Town has provided 372 Housing Conservation Program Loans and has 336
subsidized housing units. Table 8 illustrates how the 336 units are distributed among the
various income levels.
Attachments:
1-3. Previously Submitted
N:1DEV1CNCLRPTS120091Aff rdableHousingStiategyDesk.doo
Affordable Housing Strategy Objectives Spend RDA and BMP In-Lieu Funds Produce As Many Affordable Units Per Dollar Invested Meet Housing Element Goals and Housing Needs Meet RDA
Housing Goals and Obligations Current and Projected Funds RDA Housing Fund Approximately $7.2 million Approximately $16.2 million by FY 2013/14 BMP In-Lieu Fee Fund Approximately
$1.4 million Housing Needs, Goals and Obligations Overview of Housing Needs, Goals and Obligations Housing Needs Assessment Housing Element and Redevelopment Plan Goals RDA Affordable
Housing Obligations Existing Programs BMP Program and In-Lieu Fees Density Bonus Program Assisting Affordable Housing Developments Housing Conservation Program Contributions to
HTSCC Strategy Enhance Existing Housing Programs Proposed Programs NOFA for Multi-Family Housing Create a Property Acquisition Fund Purchase Affordability Covenants in Existing
Apartments GPC reviewed the document on March 25 and June 24 Recommendation Accept report regarding AHS If Council accepts AHS, staff will pursue: Enhancement of Existing Programs
Implementation of Proposed Programs Small Town Service ~ Community Stewardship ~ Future Focus Small Town Service ~ Community Stewardship ~ Future Focus Small Town Service
~ Community Stewardship ~ Future Focus