BMPH °F MEETING DATE: 9/17/12
/ ITEM NO.
!ps GAS S
COUNCIL AGENDA REPORT
DATE: SEPTEMBER 6, 2012
TO: MAYOR AND TOWN COUNCIL
FROM: GREG LARSON, TOWN MANAGER i�—
SUBJECT: ADOPT A RESOLUTION REVISING THE BELOW MARKET PRICE (BMP)
HOUSING PROGRAM GUIDELINES AND REPEALING RESOLUTION
2009 -108.
RECOMMENDATION.
Adopt a resolution revising the Below Market Price (BMP) Housing Program Guidelines and
repealing Resolution 2009 -108.
BACKGROUND:
As a result of the "Great Recession" there have been many systemic changes to the housing and
residential lending markets. The Town's BMP Housing Program has not been immune to these
effects which have come in the form of potential foreclosures and tightened lending requirements.
The BMP Housing Program Guidelines and Ordinance were originally adopted by the Town in 1979
and last amended by Council in October 2009. However, the most recent review did not address the
changes that were occurring in the housing and lending markets and did not include the "best
practices" for the effective administration of these types of affordable housing programs. Planning
staff recently initiated an internal review of the BMP Housing Program Guidelines in response to a
potential mortgage default that was forestalled by the Town, and a requested release of an affordable
senior unit from the BMP inventory.
As a result of the review, staff recommended a few immediate refinements to the BMP Guidelines to
align the Program with some of the "best practices" of affordable housing agencies and to clarify
procedures for the administration of the BMP Program. The proposed changes do not require
amendment of the existing BMP Ordinance since the revisions only address administrative items.
PREPARED BY: Todd Capurso, Acting Director of Community Development �)�
Reviewed by: L� Assistant Town Manager 42T�, -Town Attorney Finance
MOEVUC REPORT0012\BMP Program Guidelines Rev Staff Report 917- 12.doc Revised: 9/6/12 4:05 PM
PAGE 2
MAYOR AND TOWN COUNCIL
SUBJECT: BELOW MARKET PRICE PROGRAM GUIDELINES
SEPTEMBER 6, 2012
DISCUSSION:
Staff recommended initial changes in the BMP Guidelines to the General Plan Committee on August
8, 2012. The Committee amended four (4) of the proposed text revisions and then unanimously
recommended approval of the revisions to the Town Council as shown in the prepared draft
resolution and exhibit. As established by past practice, Resolution 2009 -108 which adopted the
existing version of the BMP Guidelines (Attachment 3), will be repealed when Council adopts the
resolution approving the recommended revisions.
The following is a summary of the proposed initial changes recommended for approval by the GPC:
• Clarification for fractional BMP calculations
(Section II C: edit made to complete section)
• Allowing only fixed rate / fixed term loans
(Section IV Al c: revised to reduce potential for future loan defaults)
• Clarification of the 10% down payment requirement
(Section IV Al d: clarifies that buyers must provide 10% down payment)
e Updating First Time Homebuyer definition
(Section IV A 2: revised to be more consistent with HUD definition)
• Clarification of initial sales price determination process
(Section IV C 2 a & b: examples for median averaging)
e Requiring recording of Request for Notice for other lender loans
(Section IV D: revised so Town will receive future Notices of Default)
• Clarification of homeowner responsibility for payment of closing costs
(Section IV E: clarifies that owner pays closing costs based on restriction)
• Miscellaneous
(Section I A: description of deed restriction term to reflect that units maybe released
at resale if no qualified buyers elect to purchase a BMP unit)
Staff is planning to undertake a second phase in the upcoming months which will include more
thorough in -depth policy level discussions with the GPC, Planning Commission, and Town Council
to consider more systemic changes to ensure the long -term sustainability of the BMP Program. It is
anticipated that this next phase may include ordinance amendments in addition to possible future
revisions to the guidelines depending on the direction received from Council.
PAGE 3
MAYOR AND TOWN COUNCIL
SUBJECT: BELOW MARKET PRICE PROGRAM GUIDELINES
SEPTEMBER 6, 2012
FISCAL IMPACT:
There is no anticipated fiscal impact from the proposed revisions but the proposed revisions are
expected to help minimize the risk of potential foreclosures for future BMP homeowners. This in
turn should lessen the likelihood that the Town will need to use its housing resources to intercede on
behalf of a BMP homeowner.
CONCLUSION:
Staff recommends that the Council adopt the resolution revising the Below Market Price (BMP)
Housing Program Guidelines and repealing Resolution 2009 -108 (Attachment 1).
Attachments:
1. Resolution revising the Below Market Price (BMP) Housing Program Guidelines and repealing
Resolution 2009 -108.
2. Draft General Plan Committee Meeting Minutes of August 8, 2012
3. Copy of Resolution 2009 -108
TC:JP:EO:Imi
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RESOLUTION 2012-
RESOLUTION OF THE TOWN COUNCIL
OF THE TOWN OF LOS GATOS
ADOPTING REVISED BELOW MARKET PRICE HOUSING GUIDELINES AND
REPEALING RESOLUTION 2009 -108
WHEREAS, the Town of Los Gatos Zoning Ordinance Sections 29.10.3000 through
29.10.2040 establishes a Below Market Price (BMP) Housing Program to assist low and moderate
income Los Gatos citizens purchase homes at prices below market value; and
WHEREAS, the Program requires construction of dwellings that persons and families of
low and moderate income can afford to rent or buy, and assures to the extent possible that the
resale prices of those dwelling units and rents, if they are rented, will be within the means of
persons and families of low and moderate income; and
WHEREAS, the Program helps the Town meet State mandated housing goals; and
WHEREAS, systemic changes in the broader housing and finance markets due to the
"Great Recession" have increased the risk of potential foreclosures for homeowners and have
tightened the underwriting standards used by lenders; and
WHEREAS, the Town has identified the need to revise the BMP Housing Program
Guidelines to reflect the changes that have occurred in the housing and finance markets; and
WHEREAS, this resolution revises the Town of Los Gatos Below Market Price Housing
Program Guidelines.
ATTACHMENT 1
NOW, THEREFORE, BE IT RESOLVED, that Town Council of the Town of Los
Gatos (1) repeals Resolution 2009 -108; and (2) adopts the 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 17th day of September 2012, by the following vote:
COUNCIL MEMBERS:
M=
NAYS:
ABSENT:
__
SIGNED:
ATTEST:
MAYOR OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
CLERK ADMINISTRATOR OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
NADEWESM2012BMP Prog Guidelines Rev Resolution2012.doex