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7ta�N of MEETING DATE: 9/3/13 ITEM NO. °, ADDENDUM cos �AoS COUNCIL AGENDA REPORT DATE: AUGUST 27, 2013 TO: MAYOR AND TOWN COUNCIL FROM: GREG CARSON, TOWN NIANAGERA�_;, SUBJECT: ADOPT A RESOLUTION REVISINGTHE BELOW MARKET PRICE (BMP) HOUSING PROGRAM GUIDELINES SCORING CRITERIA. (Continued from August 19, 2013) RECOMMENDATION: Adopt a resolution revising the Below Market Price (BMP) Housing Program Guidelines scoring criteria to include preferences for public and private school employees and emergency first responders, and repealing Resolution 2012 -054. BACKGROUND: On August 19, 2013, the Town Council reviewed the General Plan Committee recommendation to revise the BMP Housing Program scoring criteria to include two additional preference categ6ries with the same preference as Town employees (6 points): 1. All licensed pre - school and public or private K -12 school employees of schools and districts geographically located in and serving the Town; and 2. Emergency First Responders (e.g. police officers, fire fighters, and emergency medical response professionals). The Council was generally supportive of the proposed BMP preferences but continued its review so staff could better define "emergency medical response professionals" to reflect the Council's desire that the preference be limited to certified ambulance or medical technicians. PREPARED BY: Sandy L. Baily, Director of Commru3ity Development Reviewed by: _Assistant Town Manager —&—Town Attorney Finance N1DE W REPORTS\2013\13MP Program Guidelines Scoring Rev 93 -13 ADD.doc Revised: 8/27/13 2S6 PM PAGE 2 MAYOR AND TOWN COUNCIL SUBJECT: Below Market Price Program Guidelines August 29, 2013 DISCUSSION: Staff has reviewed the State certification requirements for Emergency Medical Service (EMS) professionals (e.g. Emergency Medical Technicians and Paramedics) and has revised the proposed additions to be more precise about the Town's intended preferences for Emergency First Responders. Emergency Medical Technicians (EMT) must past a State certification exam in order to be licensed and must be recertified every 24- months. Santa Clara County Fire Department firefighters are required to obtain the basic EMT certification. Los Gatos police officers and the County Sherriff's deputies are required to complete a Police Officer Standards and Training (POST) course and obtain certification. The General Plan Committee was in unanimous agreement that first responders living in the community was desirable to enhance public safety. The focus of the Conunittee's discussion during the June 12, 2013 meeting was whether or not Los Gatos police officers, as Town employees, should receive 6 points for the proposed first responder preference in addition to an existing 6 point BMP preference that is available for all Town employees. The Committee reconnnended to Council that Los Gatos police officers receive only the 6 points under the proposed first responder category and that the Town employee preference be revised to exclude police officers. The Committee's recommendation for this change is also reflected in the proposed preference criteria revisions to the BMP Housing Program Guidelines. Staff recommends that the previously submitted Exhibit A to the draft resolution be replaced with a revised Exhibit A (Attachment 4) which includes the following revised preference criteria: g. All licensed pre - school and public or private K -12 school employees of schools and districts geographically located in and serving the Town, and who have been employed for at least one year at the time of application. L All certified emergency first responders who are responsible for going immediately to the scene of an accident or incident (e.g. sworn police officers, fire fighters, and emergency medical technicians and paramedics) who have been employed in such capacity for at least one year at the time of application by an agency serving the Town. FISCAL IMPACT: There is no anticipated fiscal impact from the proposed revisions. CONCLUSION: Staff recommends that the Council adopt the resolution revising the Below Market Price (BMP) Housing Program Guidelines Scoring Criteria and repealing Resolution 2012 -054 (Attachment 1). PAGE 3 MAYOR AND TOWN COUNCIL SUBJECT: Below Market Price Program Guidelines August 29, 2013 Attachments previously received vdth August 19, 2013, staff report: 1. Resolution revising the Below Market Price (BMP) Housing Program Guidelines Scoring Criteria and repealing Resolution 2012 -054 2. General Plan Committee Meeting Minutes of June 12, 2013 3. CODV of Resolution 2012 -054 Attachment received with this Addendum: 4. Revised Exhibit A to draft resolution (Attachment 1) SLB:EO:ah N: \DEV \TC REPORTS\2013 \BMP Program Guidelines Scoring Rev 9 -3 -13 ADD.doc THIS PAGE INTENTIONALLY LEFT BLANK taw n of E DATE: TO: FROM: SUBJECT REMARKS: MEETING DATE: 8/19/13 ITEM NO. DESK ITEM COUNCIL AGENDA REPORT AUGUST 19, 2013 MAYOR AND TOWN COUNCIL GREG LARSON, TOWN MANAGER ADOPT A RESOLUTION REVISING THE BELOW MARKET PRICE (BMP) HOIISINGPROGRAM GUIDELINES SCORING CRITERIA. In response to Council member inquiries regarding buyer selection criteria noted in Section III.B.1 of Exhibit A of Attachment 1, Council could modify the criteria for school employees and/or first responders as follows (new wording is in bold italics and deletions are striked out): School Employees - The buyer selection criteria, is for all school employees which includes public and private schools. g. All licensed pre - school and public and private K -12 school employees of schools and districts geographically located in and serving the Town, and who have been employed for at least one year at the time of application. First Responders - First responders is defined as emergency and medical persons who arrive at the scene of an accident or incident. Hospital and medical office workers would not fall into this category. h. Emergency and medicalpersons who are responsible forgoing immediately to the scene of an accident or incident to provide assistance (Eemergency first responders, (e.g. police officers, fire fighters, and emergency medical response professionals) of agencies serving the Town and who have been employed for at least one year at the time of application. SLB:ct PREPARED BY: Sandy L. Baily, Director of Community Development 6 Reviewed by: 4 Assistant Town Manager 4 Town Attorney Finance N:\DEV\TC REPORTS\2013 \BMP Program Guidelines Scoring Rev Staff Report 8- 19- 13.desk.doc Revised: 8/19/13 12:52 PM THIS PAGE INTENTIONALLY LEFT BLANK .�qW h Of !ps GA'tq� DATE: TO: FROM: SUBJECT: COUNCIL AGENDA REPORT AUGUST 7, 2013 MAYOR AND TOWN COUNCIL GREG LARSON, TOWN MANAGER MEETING DATE: 8/19/13 ITEM NO. ADOPT A RESOLUTION REVISING THE BELOW MARKET PRICE (BMP) HOUSING PROGRAM GUIDELINES SCORING CRITERIA. RECOMMENDATION: Adopt a resolution revising the Below Market Price (BMP) Housing Program Guidelines scoring criteria and repealing Resolution 2012 -054. BACKGROUND: The Town has received requests to consider a Below Market Price (BMP) scoring criteria preference for public school teachers for its BMP Housing Program since 2005. During the 2009 Housing Element update, a suggestion was made by residents but not included in the final draft of the adopted Housing Element. In September 2012, as part of Town Council's review of BMP Program Guidelines revisions, Chris Miller, former Los Gatos Unified School District (LGUSD) trustee, made a similar request for inclusion of a public schoolteacher preference. Staff indicated to Town Council in response to Mr. Miller's request, that additional scoring criteria could be reviewed by the General Plan Committee in 2013 as part of the on -going refinements to the BMP! Guidelines. On June 12, 2013, the General Plan Committee reviewed proposed additions to the BMP scoring criteria which included preferences for both public school employees and emergency first responders (e.g. police officers, firefighters, and emergency medical response professionals). The Committee also received e -mail correspondences from Mr. Miller, LGUSD Superintendent Diana Abatti; and Ms. Vanda Roth; a Los Gatos Christian Church School teacher supporting the teacher preference. Additionally Ms. Roth spoke at the GPC meeting and asked the Committee to consider broadening the recommended school employee preference to also include private schools. PREPARED BY: Sandy L. Baily, Director of Community Development Reviewed by: _,1Assistant Town Managel_Town: Attorney Finance N:\DEV\TC REPORTM013 \BMP Program Guidelines Scoring Rev Staff Report 8- 19- 13.doc .Revised: 8/7/13 4:49 PM PAGE 2 MAYOR AND TOWN COUNCIL SUBJECT: Below Market Price Program Guidelines August 7, 2013 The Committee has recommended approval to Town Council. of these additional preference categories for the BMP scoring criteria as noted in the attached draft resolution (Attachment 1). DISCUSSION: The Town BMP Housing Program Guidelines include scoring criteria for determining the order that available BMP for -sale units are offered to potential buyers. Preference points are awarded to each applicant based on the scoring criteria approved by the Council in the Guidelines (e.g., households with seniors and disabled family members, Town employees, prior Town residency, etc.). BMP for - sale applicants are offered the opportunity to buy a particular unit based on the ranking of the scores from the eligible applications received (i.e., highest score is offered a unit first) and tied scores are settled -v-ia alottery tie - breaker. BMP rental units do not use a scoring system because their individual leases are administered by each landlord and vacancies are filled from a first come -first served waiting list. The Town currently has an inventory of 45 owner- occupied BMP units. An additional four units are anticipated to be ready for sale by the end of 2013. Since 1979, the Town has averaged only one to two. newly constructed BMP units per year, due to the infrequency and smaller scale of residential development in Los Gatos. Due to the scarcity of affordab_ le for -sale housing in Los Gatos, there are very -few resale requests (one every two to three years). Many_ communities routinely provide priority preferences for targeted professions or groups in their housing programs to advance =a particular_ local policy or goal. One local example is the City of Sunnyvale which provides a priority in its Below Market Rate. and First Time Homebuyer Programs for credentialed teachers or licensed childcare workers who. serve the City of Sunnyvale, in order to support the City's efforts to maintain and_enhance local educational and childcare resources. The- correspondences-received by the Town suggest adopting a similar preference for teachers and school employees by providing the same point preferences that are currently available for Town employees (six points). In addition to the school. employees preference, staff recommended a similar preference for emergency first responders. A preference for emergency first responders would encourage safety "Provide adequate fire protection and emergency response services to Town residents" and Policies SAF -7.1: "Work with the Santa Clara County Fire Department to ensure that first response travel time is maintained and enhanced where possible" and SAF -7.2: "Work with the Santa Clara County 11 Fire Department to continue to increase the emergency response facilities and personnel necessary to meet `residential and employment growth in the Town." Of the 45 current BMP homeowners, one is a police officer and two are teachers. PAGE 3 MAYOR AND TOWN COUNCIL SUBJECT: Below Market Price Program Guidelines August 7, 2013 As a result of its review, the General Plan Committee recommended that Council revise the BMP Program Guidelines Scoring Criteria to include the recommended preference for both categories as noted in Attachment 1 (Exhibit A, pages 6 -7 redlines). FISCAL IMPACT: There is no anticipated fiscal impact from the proposed revisions. CONCLUSION: Staff recommends that the Council adopt the resolution revising the Below Market Price (BMP) Housing Program Guidelines Scoring Criteriaand repealing Resolution 2012-054-(Attachment 1). Attachments: 1. Resolution revising the Below Market Price (BMP) Housing Program Guidelines Scoring Criteria and repealing Resolution 2012 -054 2. General Plan Committee Meeting Minutes of June 12, 2013 3. Copy of Resolution 2012 -054 SLB:EO:ct NADEVATC REPORTS\2013\BW Program Guidelines Scoring Rev Staff Report 9- 19- 13.doe THIS PAGE INTENTIONALLY LEFT BLANIZ RESOLUTION 2013- RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF LOS GATOS ADOPTING REVISED BELOW MARKET PRICE HOUSING GUIDELINES SCORING CRITERIA AND REPEALING RESOLUTION 2012 -054 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, due to the high cost of housing in Santa Clara County, K -12 school employees and emergency first responders (e.g. police officers, fire fighters and emergency medical response professionals) who earn low and moderate incomes may be unable to live in the communities they serve; and WHEREAS, the Town Council has identified that K -12 school employees and first responders living in the communities they serve is beneficial to the community; and WHEREAS, the Town Council desires to provide additional preference categories in the BMP Housing Program Scoring Criteria for K -12 school employees and emergency first responders who serve the Town of Los Gatos; and ATTACHMENT- 1 WHEREAS, the Town has identified the need to revise the BMP Housing Program Guidelines Scoring Criteria to effectuate and implement these additional preference categories; and WHEREAS, this resolution revises the Town of Los Gatos Below Market Price Housing Program Guidelines. NOW, THEREFORE, BE IT RESOLVED, that Town Council of the Town of Los Gatos (1) repeals Resolution 2012 -054; 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 191h day of August 2013, by the following vote: COUNCIL MEMBERS: AYES: NAYS:. ABSENT: ABSTAIN: SIGNTTED: MAYOR OF THE TOWN OF LOS GATOS LOS GATOS, CALIFORNIA ATTEST: CLERK ADMINISTRATOR OF THE TOWN OF LOS GATOS LOS GATOS, CALIFORNIA. '0DPVRRR50S %2013\RES0 -BM9 Prog Guidelines Scoring Criteria - Rvsd Re50 2013.doex Exhibit A ,TOWN OF LOS GATOS - - -. Fiend cod BELOW MARKET PRICE HOUSING PROGRAM GUIDELINES I. Purpose A. Pumose: The overall purpose of the Below Market Price (BMP) Housing Program is to provide the Town of Los Gatos with a supply of affordable housing. While the program is available to all qualified applicants, the general intent of the program is to provide affordable housing for households who work or currently live in Los Gatos. The main goal is to increase the housing supply for households that have median and low incomes compared to the median income for Santa Clara County and meet the housing needs identified in the Town's General Plan Housing Element. The Program farther intends to ensure, to the greatest extent possible, that rent and re -sale of these housing units will remain affordable to median and low income levels for the longest feasible time as approved by an authorized body. Although the Town has a fee -in -lieu of constructing actual units option for defined circumstances, the primary objective of the BMP Program is to obtain actual "rental" or "for sale" housing units rather than equivalent funds. All off -site BMP units shall be constructed within the Town of Los Gatos. The construction and occupancy of the BMP unit is determined according to these Town Council established guidelines and authorizing ordinances. B. Enabling Legislation: The Below Market Price Program is governed by Division 6 of the Town Code. The BMP Program is administered trader these Below Market Price Housing Program Guidelines. II. Below Market Price Housing Requirements — General A. Ap licability: The BMP Program requirements shall apply to all residential development projects that include five (5) or more residential units or parcels which involve: 1. New construction of ownership or rental housing units, including mixed use developments and addition of units to existing projects, or 2. Subdivision of property for single family or duplex housing development, or 3. Conversion of rental apartments to condominiums or other common interest ownership, or 4. Conversion of non - residential use to residential use. B. Number of BMP Units: All residential developments consisting of five (5) or more units are required to participate in the BMP Program. The requirements for participation increase by development size as shown below: E%HIBIT A BMP Guidelines Of Attachment 1 L Five (5) to Nineteen 19 market rate units: The developer shall provide a minimum number of BMP units equal to ten (10) percent of the number of market rate units. 2. Twenty (20) to one hundred (100) market rates units: The developer shall provide a minimum of BMP units as determined by the following fonnula: Number of BMP units = (.225 x total # of market rate units) - 2.5 This formula acts to increase the number of BMP units required, as a percentage of market -rate units, from 10% to 20% over the range of 20 to 100 market rate units. 3. One hundred and one (10 1) units or more: The developer shall provide a minimum number of BMP units equal to twenty (20) percent of the number of market rate units. BMP dwellings within a project of rental units shall also be rental units. BMP units within a project of owner- occupied units shall also be designated as units for purchase. BMP units within a project that contains both rental and owner- occupied units shall also be designated as both rental and as units for purchase, in a ratio similar to that of the market rate units. The Town and developer may negotiate to provide more BMP units than required by the rules listed in these guidelines to fulfill a development's Community' : Benefit requirements. C. Fraction of a BMP Housing Units: In determining the number of BMP units required, any decimal fraction of .5 or above shall be rounded up to the nearest whole number. Decimal fractions below .5 shall be rounded down to the nearest whole number. D. Residential In -Lieu Payments: The general intent of the BMP Program is to provide the Town of Los Gatos with a supply of affordable housing for households who work or currently live in Los Gatos. However, there may be circumstances when the construction of the BMP unit is impractical or there are unusual circumstances that make the construction of the unit inconsistent with Town policy. The Town, at its sole discretion, may consider an in -lieu payment alternative to the required BMP unit in the case of Planned Unit development with an underlying zone of HR or a residential developments with five (5) to nine (9) units. Prior to approving the in -lieu fee alternative, the applicant must demonstrate to the satisfaction of the Town why a BMP unit cannot be (1) developed on the same site as the market rate units, and if it cannot be provided on the same site then, (2) develop at an appropriate off -site location within the Town limits. If the developer provides sufficient justification that both of these alternatives are not viable, then a fee in -lieu option may be considered. The required in -lieu fee is as established by a separate resolution and is to be paid to BMP Guidelines Paae 2 the Town prior to issuance of the certificate of occupancy for the market rate residential unit that triggered the BMP requirement. The provision for a BMP unit applies if the project is built under the rules of an overlay zone unless the rules of the overlay zone provide otherwise. The in -lieu fee shall be equal to the amount of six (6) percent of the building permit valuation for the entire project. The total building permit valuation shall be determined by the Town Building Official. Fees shall be paid prior to or at time of final occupancy as follows: L Multi - Family Owner Occupied Developments: Prior to occupancy of each phase, a proportional amount of fees shall be paid, as determined during the Planning approval process. 2. Multi- Family Renter Occupied Developments: Prior to occupancy of each phase, a proportional amount of fees shall be paid, as determined during the Planning approval process. 3. Single- Family Planned Developments: At time of final occupancy for each unit. E. Housing Fund: In -lieu fees will be deposited into the Town's Affordable Housing Fund. Applications and or recommendations for use of remaining funds will be reviewed as received. Possible use of the funds include, but is not limited to, the following: 1. Subsidizing the cost of owner occupied units to make them affordable to low /moderate income households 2. Purchasing rental units to make them affordable to low/moderate income households 3. Purchasing land for the future development of affordable housing 4. Developing affordable housing 5. Supplementing of affordable housing projects developed through the Los Gatos Redevelopment Agency 6. Funding administration of the program, as approved by the Town Council in its annual budget process F. Off -Site Constriction: The Town Council may consider off -site construction of BMP units for continuum care facilities and for Hillside Residential (HR) Zone District and residential developments with five (5) to nine (9) units projects that have provided sufficient justification to the Town that an on -site BMP unit is not viable. G. Phasing of the Construction of On- and Off -Site BMP Units• On- and off -site BMP units shall be constructed and Certificate of Occupancies secured concurrently with or prior to the construction of the market -rate units. The BMP requirement will be calculated on the basis of the whole development. The Town BMP Guidelines Paee 3 Council may grant an exception to these phasing requirements during the Planned Development project approval process for condominium conversion developments. H. Affordability Aereement The developer of "for sale" BMP units shall enter into an affordability agreement with the Town. The agreement will ensure that the BMP units are sold to qualified buyers and will be released by the Town through the escrow process once the BMP is sold to a qualified buyer. III. Characteristics of BMP Units A. Size of units: The size and design of BMP dwelling units shall be reasonably consistent with the market rate units in the project. The Town and developer may negotiate regarding the size of units if more units than required are to be provided under the Community Benefit requirements. BMP units should be provided proportionately in the same unit type mix (number of bedrooms) as the market rate units. In consideration of the household size of the households on the current program interest list, the Town and developer may negotiate to provide a greater proportion of a particular unit type. There shall not be significant identifiable difference between the BMP and market -rate units visible from the exterior. The size and design of the BMP units must be reasonably consistent with the market - rate units in the development. B Location of units: BMP units shall be dispersed throughout the development, to the extent feasible; in all buildings, on each floor, and in each project phase. A concentration of BMP units in one location is not desirable and will generally not be allowed. C. Finish of units: The external appearance of BMP units should be indiscernible to that of the market rate units in the project. The internal finish of BMP units should be identical to that of the market rate units in the project, except that the developer may request Town approval of substitutions for luxury interior finishes, appliances, or fixtures, if such substitutions do not violate any Town code requirement. D. Project Facilities: All project facilities and amenities, including parking, must be available on the same basis to the BMP units as to the market rate units in the project, to the extent feasible. IV. The BMP Unit Purchase Process; Buyer Selection, and BMP Unit Sale and Resale Procedures. A. Owner Occupied Units Applicant Eligibility Cr' BMP Guidelines Page 4 a. Household Income: In order to be eligible to purchase an owner - occupied BMP unit, an applicant's annual household income must be no greater than 100% of the Median Family Income (MFI), adjusted for household size, as defined by the United States Department of Housing and Urban Development (HUD) for the San Jose, CA Primary Metropolitan Statistical Area (PMSA). Household assets, such as real property, may also be considered in determining eligibility, b. Housing Costs: In order to be eligible to purchase an owner- occupied BMP unit, an applicant must also demonstrate the ability to pay monthly housing costs. The monthly housing cost shall include the following factors: 1. unit price 2. current lending rates 3. estimated property taxes 4. estimated homeowner's private mortgage insurance (PMI) costs homeowners' association fees, if applicable 5. other expenses as determined necessary by the lender C. Mortgage Financing: All persons must qualify for their own mortgage financing for the purchase of available BMP units without assistance from the Town. Qualifications must include the ability to pay taxes, insurance, closing costs and any homeowner association fees in addition to the mortgage. All loans used to purchase or refinance BMP units must be fixed rate and fixed term without balloon payments to minimize homeowners exposure to increased risks of mortgage default. d. Required Down payment: A homebuyer shall have a minimum down payment that is equivalent to at least 10% of the BMP purchase price and is required to document the source of all down payment Rinds. The minimum 10% down payment is exclusive of any other supplemental down payment assistance grant or loan programs available from other agencies. 2. First Time Home Buyers: The Below Market Price (BMP) Program is for First Time Home Buyers. A First Time Home Buyer, by definition, is an applicant whose name has not appeared on a residential title in the counties covered by the Association of Bay Area Governments (ABAG) or Association of Monterey Bay Governments (AMBAG) which are Alameda, Contra Costa, Marin, Monterey, Napa, San Benito, San Francisco, San Mateo, Santa Clara, Santa Cruz, Solano and Sonoma for at Ieast three (3) years prior to application. Exception is made consistent with BNT Guidelines Page 5 the Federal Housing and Urban Development (HUD) definitions (e.g. for people who were homeowners prior to a divorce, a displaced homemaker, a single parent who has only owned with a former spouse, a widow /widower of a veteran, etc.) and for tenants residing in a rental apartment proposed to be converted to a condominium or other common interest ownership prior to a Notice of Intent to Convert the development to an ownership residential unit. B. Buyer Selection: A point system is used to establish a ranking of applicants for the purchase of an available unit. Applicants will be ranked according to total points and must have at least one point to be eligible to purchase a unit. In addition, applicant households must contain at least the same number of persons as the number of bedrooms in a unit, at the time of application, in order to be eligible to purchase that unit, if the unit contains three bedrooms or more. All points are calculated per household, not for each individual within the household. For example, a household in which two members are senior citizens would receive six points for senior citizen status, not twelve points for two members having senior citizen status. Points are awarded as follows: 1. Six points: a. Senior citizens who reside in the Town at the time of application and have lived in the Town for at least the prior two years. A senior citizen is defined as any person 62 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. b. Senior Citizens who have lived in the Town for at least two years and have moved out of the Town within the last five years prior to the time of application. C. Disabled persons who reside in the Town at the time of application and who have lived in the Town for at least the prior two years. The definition of "disabled" for the purpose of assigning points under this section shall be that used by the U.S. Social Security Administration for the purpose of determining eligibility for Social Security disability benefits. d. Households required to relocate their residence as a result of Council action or mobile home park closure. C. Regular Full -Time and Regular Part-Time Town employees as defined in the Town's Personnel Rules but excluding Los Gatos Monte - Sereno Police Officers, who have been employed by the Town for a period of no less than 12 months prior to the time of BMP Guidelines Pale 6 application. f. Single heads of household with dependent children who reside in the Town at the time of application and have lived in the Town for at least the prior two years. All licensed rare- school and K -12 school employees of schools and districts geogrUhrcally located in and serving the Town and who have been employed for at least one vear at the time of application h. Emergency first responders (e g police officers fire fighters and emergency medical response professionals) of agencies serving the Town and who have been employed for at least one year at the time of application. 2. Four points: a. Persons who live in the Town of Los Gatos at time of application and who have lived in the Town at least the prior two years. b. Persons who work in the Town of Los Gatos at time of application and have worked in the Town for at least the prior two years. 3. Two points: a. Households who have lived in the Town for at least 10 years and have moved out within the last ten years prior to the time of application. b. Household size is worth two points per person. 4. One point: a. Households who live or work within Santa Clara County at the time of application. b. Households with an annual household income at or below 60% of the Median Family Income (MFI), adjusted for household size, as defined by the United States Department of Housing and Urban Development (HUD) for the San Jose, CA Primary Metropolitan Statistical Area (PMSA). 5. A lottery will be used to rank each qualified applicant in the case of a tie. 6. Applicants are provided the opportunity to purchase available units in order of point ranking, from most points to least points. An applicant has B_'MiP Guidelines Page 7 two opportunities to refuse to purchase a unit before being removed from the current applicant pool. 7. Applicants who do not qualify for a particular project or who are not provided the opportunity to purchase a unit in a particular project shall retain their eligibility to apply for future projects. 8. An applicant must obtain pre - approval for a mortgage loan within one week after notification of eligibility to purchase a unit. The applicant must submit documentation of loan approval within three weeks of notification of eligibility to purchase a unit. 9. Exception to the Buyer Selection Process: An exception to the Buyer Selection Process may be granted to a resident of a rental apartment that is proposed to be converted to an "owner occupied" condominium or other common interest ownership development. In order to qualify for the exception, the resident must have resided in the rental apartment prior to the issuance of the Notice of Intent to Convert the development to an ownership project and shall meet the financial eligibility requirements to qualify for a BMP unit. The resident shall be provided first right of refusal, regardless of point ranking, for units in the following order: a. The unit they reside in if it is designated as a BMP unit. b. Any other available BMP unit. C. Determination of Initial Selling Price: BMP units shall be priced to be affordable to households in two income categories: Median Income Households (those whose income is above 80 %, but no greater than 100 %, of the County Median Income);. and Low Income Households (those whose income is above 50 %, but no greater than 80 %, of the County Median Income). 1. Fifty percent (50 %) of the units in a project shall be priced to be affordable to Median Income Households; fifty percent (50 %) shalI be priced to be affordable to Low Income Households. Whenever the calculations result in fractional units, then the number of units priced to be affordable to Low Income Households shall be rounded up to the next whole number, and the number of units priced to be affordable to Median Income Households shall be rounded down to the next whole number, including zero (0). The following table applies this formula to projects with 1, 2, and 3 units: Total Number of Units Priced for Units Priced for Median BMP Units in Project Low Income Households Income Households BMP Guidelines Page 8 G I 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: BMP Guidelines 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 household size appropriate to size of unit) x Multiplier = Initial Sales Price, Example: 100% MFI (4- person/4 bedroom) = $105,000 80% MFI (4- person/4 bedroom)= $75,700 Average MFI = ($105,000 + $ 75,700 ) divided by 2 = S90,350 Average MFI X Multiplier = Initial Sales Price 1. Assumptions of household size by size of unit are as follows: Pale 9 Household Size Studio 1 1 Bedroom 1 2 Bedroom Pale 9 3. Bedroom 3 4 Bedroom 4 These assumptions of household size by size of unit shall be for the purpose of setting the initial sales price only, and do not prevent the sale of any unit to any household eligible to purchase an owner - occupied BMP unit, as set forth in these Guidelines. b. For units to be priced to be affordable to Low Income Households: the average of the 80% MFI annual income and the 50% annual income (assuming household size appropriate to size of unit) x Multiplier = Initial Sales Price. Example: 50% MFI (4- person/4 bedroom) _ $ 52,500 80% MFI (4- person/4 bedroom)= $75,700 Average MFI = ($52,500 + $75,700) divided by 2 _ $ 64,1001 Average MFI X Multiplier = Initial Sales Price C. Calculation of Multiplier. A Multiplier shall be calculated, based on reasonable assumptions about unit sales prices, based on the most recent comparable sales of BMP units; current lending rates, as determined by the most recent Primary Mortgage Market Survey (PMMS) conducted by the Federal Home Loan Mortgage Corporation (Freddie Mac); and related costs; and using the following formula: 1. Determination of Total Housing Cost: Sample sales price - 10% down payment = mortgage. Annual debt service on mortgage + annual property taxes + annual homeowners fees + annual private mortgage insurance (PMI) = Total Annual Housing Cost. 2. Determination of Minimum Household Income: Assuming one -third of household income goes for housing expenses, Total Annual Housing Cost x 3 = Minimum Annual Household Income. BMP Gaidelines Page 10 3. Determination of Multiplier: Sample Sales Price /Minimum Annual Household Income = Multiplier. Copies of the initial sales prices, and the calculations made, shall be available on request from the Town's Community Development Department. D. Deed Restrictions /Request for Notice: Council approved Deed Restrictions shall be recorded with each Below Market Price dwelling unit. In addition to the Deed Restriction, the Town shall also require that a Request for Notice for the benefit of the Town be recorded for each lender Deed of Trust record on title. E. Resale of Units: 1. If the owner elects to sell his/her unit, the Town must be notified in writing by the owner. 2. When a Below Market Price dwelling unit becomes available for resale. the Town shall set the resale price and make the unit available for purchase through the BMP process. I The Town determines the resale price in accordance with the deed restriction recorded on the property. 4. The homeowner, as noted in the recorded Deed Restriction, is responsible for paying all closing costs (including comrnissions or fees). F. Occupancy of Units: Consistent with the deed restriction that will be recorded on the subject property, the household purchasing a BMP unit must occupy the unit as his or her primary residence during his or her ownership of said unit. V. Requirements for BMP Rental Development A. Administration: The program shall be administered by the Town or its designee. B. Applicant Eligibility 1. Household Income: In order to be eligible to rent a BMP rental unit, a household's annual income must be no greater than 80% of the Median Family Income (MFI), adjusted for household size, as defined by the United States Department of Housing and Urban Development (HUD) for the San Jose, CA Primary Metropolitan Statistical Area (PMSA). Priority will be given to those households whose income is less than 50% of the MFI. Household assets may also be considered in determining eligibility. BMP Guidelines Pate 11 2. Ability to Pay Rent: A tenant's ability to pay monthly rent will also be considered in detennining 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 1. BMP rental units shall be managed by the property owner or manager in the same manner as other units in the development. 2. Tenants of BMP rental units are eligible to receive conciliation and mediation services provided through the Town's Rental Dispute Resolution Program except as they regard rent increases. E. Unit Rents: Rents may not exceed 80% of the most current Fair Market Rents as determined by the Santa Clara County Housing Authority. F. Annual Review: If a tenant's income increases so that it falls between 80 and 100 percent of MFI, then the rent may be increased in accordance with the Town's Rental Dispute Ordinance; and the unit shall still be considered a BMP Rental Unit. However, if a tenant's income exceeds 100 percent of MFI, the rent may be increased to the average rent of similar units in the complex; in this latter case, the unit will no longer be a BMP unit and the next available unit that is comparable in size shall be designated as a BMP unit in its place, and must be rented to an eligible household so that the number of BMP units within the project remains the same. G. Deed Restrictions: Council approved Deed Restrictions shall be recorded for each Below Market Price rental dwelling unit. V1. RENTAL UNITS - NEW SECOND DWELLING UNITS A. Administration: The program shall be administered by the Town or its designee. B. Second Unit Incentive Program: 29.103 10 of the Town Code, may choose to participate in the Second Unit Incentive Program (SUIP) as referenced in Section 29.10320(a) of the Town Code and as set forth below. The SUIP consists of a no interest construction loan to a property owner who intends to develop a new second unit. The loan amount shall be determined based on the square foot construction cost as set forth in the current version Uniform Building Code as adopted by the Town for new BMP Guidelines Page 12 construction and remodels. The loan amount will be calculated at 100% of the construction cost if the unit is income and rent restricted to serve households with incomes below 50% of the Median Family Income (MFI), adjusted for household size, as defined by the United States Department of Housing and Urban Development (HUD) for the San Jose, CA Primary Metropolitan Statistical Area (PMSA), or 80% of the construction cost if the unit is income and rent restricted to serve households with incomes below 80% of MFI. 2. When a property owner participates in the SUIP, a deed restriction shall be recorded on the property. The deed restriction shall stipulate the rental rate, tenant income level, duration of affordability and loan repayment requirement as well as any other criteria as determined appropriate by the Town. 3. A SUIP loan to construct a second unit within the Central Los Gatos Redevelopment Project area shall be funded using Redevelopment Affordable Housing Funds and shall remain affordable for 55 years. A SUIP loan to construct a second unit outside the Central Los Gatos Redevelopment Project area shall be funded using BMP Program Funds and shall remain affordable for 30 years. The SUIP affordability restrictions as set forth in this section may only be amended by action of the Town Council. 4. A 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. 5. Units targeted to households with incomes up to 80% of the Median Family Income (MFI) shall have rents restricted to 80% of Fair Market Rents as determined by the Santa Clara County Housing Authority. Units targeted to households with incomes up to 50% of CMI shall have rents restricted to 50% of Fair Market Rents as determined by the Santa Clara County Housing Authority. Tenant rents and incomes will be monitored annually. � „_•nersao?coi� saw ero��,ez.�ons`a�m cwe�e�:: s���„a;�n„xz.;;�,.s s -c poi, xo ___ ___________t_ -_ Formattec Formattec BMP Guidelines Page 13 I This Page Intentionally Left Blank m TOWN OF LOS GATOS 110 East Main Street, Los Gatos, CA 95030 (408) 354 -6872 - ------- ----- -- -- - - - SUMMARY MINUTES OF A REGULAR MEETING OF THE GENERAL -- AL PLAN COMMITTEE OF THE TOWN OF LOS GATOS ON JUNE 12, 2013, HELD N THE LOS GATOS TOWN COUNCIL CHAMBERS, AT 110 E. MAN STREET, LOS GATOS, CALIFORNIA. The meeting was called to order at 5:30 p.m, by Chair John Bourgeois. ATTENDANCE: Members present: Barbara Spector; Joe Pirzynski, John Bourgeois; Marico Sayoc, Todd Jarvis, Matthew Hudes, Charles Erekson, Bob Beyer Members absent: Barbara Cardillo Staff ip esent.: Erwin Ordonez, Senior Planner; Suzanne Avila, Senior Planner Others resent: Vanda Roth VERBAL COMITUNICATIONS Vanda Roth requested that the BMP points be inclusive of credentialed teachers, not just public school teachers. She currently teaches at a private school and her husband is a special education teacher at Rolling Hills Middle School. They have.been trying to purchase a BMP unit for some time. ITEM I APPROVAL OF MINUTES Bob Beyar made-a motion to approve the mimites of May 22, 2013, as submitted. The motion was secondedby Barbara Spector and passed unanimously (8 -0). ITEh'I2 REVISIONS TO BMP SCORING CRITERIA Erwin Ordone_ commented that the proposed amendments are based on input from the Community. He suggested that the Committee determined if job preference should be. included. He noted that Ms. Roth's husband's position would qualify for the additional points as he is a public school employee serving the Town of Los Gatos. Staffs recommendation is that the Committee discusses whether a job preference consideration should be included in the 6 point category. John Bourgeois said that the Committee will first discuss whether it is appropriate to have a job preference included and if so, which positions should be included. ATTACHMENT 2 General Plan Committee Minutes June L, 20! 3 Page 2 of 5 Matthew Hudes asked if this issue was included in the 2012 amendients to the BMP .Guidelines. Erwin Ordoner responded that the 2012 amendments were quick fixes to address immediate issue_ identified in 2012• He. clarified for the Committee that the proposed amendments are related to the Town's_BMP Program_ guidelines, not the AHOZ guidelines the Committee will be developing in August• Marico Sayoc asked if there are income limitations. Erin Ordohe_ confirmed that there are, and provided examples: low income is about 580,000 for a family of four and moderate income is S 105,000 for a family of four._ He also noted the ratio of units provided by the developers and explained that the composition of an individual household determines their score. Todd Jarvis asked if there is any data on the longevity of the job classifications relate to the length of time people work in the Town. John Bourgeois asked what happens if income increases following qualification. Erwin Ordone:� said that rental housing recipients are re- qualified annually. Once a for -sale unit is sold, the income could increase. Resale BMP units are allowed a modest equity increase that is reflected a very small increase in price over time. Charles Erekson commented on disparate impact and issues related to inadvertent exclusion certain groups. Barbara Spector asked why the recommendation is to limit educators to public schools. Ervin Ordone_ said that based on demographics, it appeared that limiting the preference only to credentialed teachers might discriminate or disadvantage some other underrepresented school employee groups which have under represented homeowner populations. Private schools are not required to provide demographics while public schools are. Information was voluntarily provided for Los Gatos Christian School due to Ms. Roth's interest, but is not readily available for other private schools. John Bourgeois asked if other jurisdictions have done something similar. Erwin Ordoij - said the City of Sunnyvale has a preference for crcdentia1cd _1eachers_and child care providers that serve the community. Joe Pir_�vnski commented that private schools such as St. Mary's and Hillbrook also provide a service to the Town because they provide additional capacity for high quality educational opportunities. _Marico Sayoc commented that she is concerned about where to limit the umbrella, Should preschools be included andlor should in -home day care be included. Matthew Hudes asked if private schools have any boundaries like a public school does and /or limitations as to where their students come from. Erwin Ordohe_ said no, and that enrollment for private schools is pretty broad and not regulated. The Los Gatos Christian School data for school enrollment was used as an example. General Plan Committee Minutes June 12, 201 Page 3 of 5 Charles Erekson commented on the number of public versus private school employees in Town and gave the opinion that the potential for a disparate impact is eery low based just on the number of employees in public school districts. He noted that private schools do not have an obligation to hire credentialed teachers. Matthew Hudes noted that a credentialed teacher might not be employed by a private school. Todd Jarvis commented that unless the Town is mandated to use protected classes and he is concerned about opening Pandora's Box, Erwin Ordohe_ clarified that the demographics from the Los Gatos School District show that a preference only for employees with credentialed versus non - credentialed staff may potentially create an unintended disparity and disadvantaged certain groups. To even out the process, staff recommended that all public school .employees should be included in any considered preference and not just the credential teachers, John Bourgeois asked if the Committee feels that is reasonable Marico Sayoc commented that the easiest one for her is emergency responders. These are people that we want in the community and they should be included. She supports public school employees versus credentialed teachers. Barbara Spector agreed with Marico Sayoc. John Bourgeois agreed that there should be a preference for first responders and teachers and public school employees. Charles Erekson commented that he also agrees, There is value to having private schools and the percentage of students from the community is not necessarily relevant. Joe Pirynskd clarified that if a Los Gatos Police Officer were to apply, they would reccive double point for being a Town employee and for-being a first responder, He is in agreemenLthat these categories shouldbe represented. He would like to address the double dipping, in terms of school employees, there is value in all of the schools in Town, There is value in both the public and private systems, although it should somehow be defined. He is in favor of being both. inclusive of Matthew Hudes commented that he is supportive of having the preferences that are being discussed. He asked about precedent and how other communities handle the situation of an employee falling into more than one category. Erwin Ordone� said the preference as noted would allow a Los Gatos police officer to claim both the employee and first responder preference unless, changed by the Committee. He noted that many communities have valued having police officers living in their neighborhoods and do provide similar preference in addition to the basic employee preference. General Plan Committee ivtsmrtes June 12,2013 Pa,e 4 of > Bob Beyer commented that he supports adding the categories of first responders; but that it should be defined. Barbara Spector agreed with Joe Pirzynski's comments. The Town should not distinguish between public and private schools. She noted that Los Gatos was the first community to develop a BMP pro�'am with preference. Chcndes Erekson asked if Matthew Hudes's point was that Police officers should be given a higher preference than other Town employees. hfatthew Hades confinned that it was. Charles Erekson commented that if someone lives in the Town, that person has a better understanding of the Town and their value should not be diminished for Police officers: Matthew Hades commented that he believes there is a value to having Police affi.cers living in Town. Barbara Spector commented that there are maximum income levels to qualify for the BMP program and that some Police Officers may not qualify based on income level. Charles Erekson suggested the IE be modified to reference a preference for Town employees and other first responders who serve the Town. John Bourgeois suggested that H be left as it is, and that E be modified to exclude the Los Gatos - Monte Sereno Police Department. John Bourgeois suggested modifying G to specify public or private schools serving the Town. Erwin Ordoher suggested clarifying that it is schools and districts located in the Town and that serve the Town. John. Bourgeois made a motion to recommend approval with these changes. Joe Pir_vrski seconded the motion. M_attJietiv Hudes commented that he believes that public schools are part of the community and private. schools are an option that is available to people,. however, they do not have to be accredited. Charles Erekson commented, that using the word "school" maybe too open ended. ]oe_P _unski_commentedthrt K_12, public and private is appropriate. Erwin Ordone- summarized the proposal to read as follows; - "All licensed preschool and K -12 school employees of schools and districts geographically located in and serving the Town, who have been employed for at least one year at the time of application." The motion passed 7 -1 (Hudes dissenting). General Plan Committee Minutes June 12, 2013 Page 5 of 5 ITE`2 3 IMEETL \'G START TIME Erwin Ordonez informed the Committee that for the next series of meetings staff is recommending that the start time be 5 :00 pm. There are a number of i g tems comin forward including a proposed General Plan amendment -for the Courthouse site and AHOZ templates. ITEN44. ADJOURNMENT The meeting was adjourned at 6:30 p.m. The next regular meeting is scheduled for June 26, 2013. Prepared by: Suzanne Avila, Senior Planner N:IDEV1,GPC'0013 Minute 'GPC- 0612 13.doc This Page Intentionally Left Blaizk RESOLUTION 2012 -054 RESOLUTION OF THE TOWN COUtNCIL OF THE TOWN OF LOS GATOS ADOPTING REVISED BELOW MARKET PRICE HOUSING GUIDELIrNES AND REPEALING RESOLUTION 2009 -108 WHEREAS, the Town of Los Gatos Zoning Ordinance Sections 29.10.3000 through 29.103040 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 WHERE, 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 fmancumarkets and WHEREAS, this resolution revises the Town of Los Gatos Below Market Price Housing Program Guidelines. NOW, THEREFORE, BE IT RESOLVED, that Town Council of the Town 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. 1 ATTACHMENT 3 PASSED ATo ADOPTED at a regular meeting of the Town Council of the Town of Los Gatos, California, held on the 17°i day of September 2012, by the following vote: COUNCIL MEMBERS: AYES: Steven Leonardis, Diane McNutt, Joe Pirzynski, Barbara Spector, and Mayor Steve Rice NAYS: ABSENT: ABSTAIN: SIGNED: MAYOR OF THE TOWN OF LOS GATOS LOS GATOS, CALIFORNIA ATTEST 1 CLERK ADMINISTRATOR OF THE TOWN OF LOS GATOS LOS GATOS, CALIFORNIA 2 Exhibit A TOWN OF LOS GATOS BELOW MARKET PRICE HOUSING PROGRAM GUIDELINES L Purpose A. Purpose: The overall purpose of the Below Market Price (BMP) Housing Program is to provide the Town of Los Gatos with a supply of affordable housing, While the program is available to all qualified applicants, the general intent of the program is to provide affordable housing for households who work or currently live in Los Gatos. The main goal is to increase the housing supply for households that have median and low incomes compared to the median income for Santa Clara County and meet the housing needs identified in the Town's General Plan Housing Element, The Program further intends to ensure, to the .greatest extent possible, that rent _ and -re -sale of these housing lints will remain affordable to median and low income levels for the longest feasible time as approved by an authorized body. Although the Town has a fee -in -lieu of constructing actual units option for defined circumstances, the primary objective of the BMP Program is to obtain actual "rental" .or "for sale" housing units rather than equivalent funds, All off-site BMP units shall be constructed within the Town of Los Gatos. The construction and occupancy of the BMP unit is determined according to these Town Council established guidelines and authorizing ordinances. B, Enabling L egislatiorr The Below Market Price Program is governed by Division 6 of the Town Code, The BMP Program is administered under these Below Market Price Housing ProgramrnGuidelines, Il. Below Market Price Housing Requirements — General A. Applicability: The BMP Program requirements shall apply to all residential - development projects that include five (5) or more residential units or parcels which involve: 1. New construction of ownership or rental housing units, including mixed use developments and addition of units to existing projects, or 2. Subdivision of property for single family or duplex housing development, or 3. Conversion of rental apartments to condominiums or other common interest ownership, or 4, Conversion of non - residential use to residential use. B. Number of BMP Units: All residential developments consisting of five (5) or more units are required to participate in the BMP Program. The requirements for participation increase by development size as shown below: BIMP Guidelines Page 7 1. Five (5) to Nineteen 19 market rate units: The developer shall provide a minimum number of BMP units equal to ten (10) percent of the number of market rate units, 2. Twenty (20) to one hundred (100) market ratee units: The developer shall provide a minimum of 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 nunbcr of BMP units requited, as a percentage of market -rate units, from 10% to 201/ o over the range of 20 to 100 market rate- units, 3. One hundred and one (101) units or, -more: The developer shall provide a minimum number `of BMP units equal to twenty (20) percent of the number of maiket rate- units, B_NIP dwellings within a project of rental units shall also be rental units, BMP units within apioject of owner- occupied units shall also be designated as units for purchase, BMP units within a project that contains both rental and owner - occupied units shall also be designated as both rental and as units for purchase, in a ratio similar to that of the market rate units. The Town and developer may negotiate to provide more BMP units than required by the rules listed in these guidelines to fulfill a development's Conmrmity Benefit requirements. C. Fraction of a BMP Housing Units: In determining the mmiber of BMP units required, any decimal fraction of .5 or above shall be rounded up to the nearest whole number. Decimal fractions below .5 shall be rounded down to the nearest whole number. D. Residential 'In =Lieu Payments: The general intent of the BMP, Program is to provide the Town of Los Gatos with a supply of affordable housing for households who work. or ctuz•ently live in Los Gatos, However, there may be circumstances Am the construction of She BMP unitis impractical or there are unusual circumstances that make the "conistiuction of the unit inconsistent with Town, po.My. The Town, at its sole discretion, may consider'aii in -lied payment alternative to the required_ BMP unit in the case of Planned Unit development with a„ „h arlv,nu zone of HR or a resnctential developments wi'thfnve (5) to nine (9) demonstrate to the satisfaction of the To'k, why a BMP unit cannot be (1) developed on the same site as the market rate. units, and of it cannot be provided on the same site tYen; (t) develop at an aotopfidte off site locahori'within the Townliirits. If the developer provides suffrerentjustnfication tha- both of these alternatives are not vialihe, then a fee -in -lieu option may be considered. The required in -lieu fee is as established by a separate resolution and is to be paid to BMP Guidelines Page 2 the Town prior to issuance of the certificate of occupancy for the market rate residential unit that triggered the BMP requirement. The provision for a BMP unit applies if the project is built under the rules of an overlay zone unless the rules of the overlay zone provide otherwise. The in -lieu fee shall be equal to the amount of six (6) percent of the building permit valuation for the entire project. The total building permit valuation shall be determined by the Town Building Official. Fees shall be paid prior to or at time of final occupancy as follows: 1, Multi - Family Owner Occupied Developments: Prior to occupancy of each phase, a proportional amount of fees shall be paid, as determined during the Planning approval process, 2. Multi - Family Renter Occupied Developments: Prior to occupancy -of each phase, a. proportional amount of fees shall be paid, as- determined during the.Planning approval process, 31 Single- Family Planned Developments: At time of final occupancy for each unit. E. Housing Fund: In -lieu fees will be deposited into the Town's Affordable Housing Fund, Applications and or recommendations for use of remaining funds will be reviewed as received. Possible use of the fiords include, but is not limited to, the following: 1. Subsidizing the cost of owner occupied units to make them affordable to IOW/moderate income households 2. Purchasing rental units to make them affordable to low /moderate income households 3. Purchasing land for the future development of affordable housing 4. Developing affordable housing 5. Supplementing of affordable housing projects developed through the Los Gatos Redavelopment.Agency . 6. Funding administration of the program, as approved by the Town Council in its annual budget process F. Off -Site Construction: The Town Council may consider off -site construction of BMP units for continuum care facilities and for Hillside Residential (HR) Zone District and residential developments with five (5) to nine (9) units projects that have provided sufficient justification to the Town that an on -site BMP unit is not -0ablo. G, Phasing of the Construction of On- and Off -Site BMP Units: On- and off -site BMP units shall be constructed and Certificate of Occupancies secured concurrently with or prior to the construction of the market -rate units. The BMP requirement will be calculated on the basis of the whole development, The Town BMP Guidelines Page 3 Council in grantan- exception -to_ these_.phasing requirements - during the Planned Development project approval process for condominium conversion developments, rI, Affordability Aereement: The developer of "for sale" - BMP = units rshall enter into an affordability agreement with the Town. The agreement will ensure that the BMP units are sold to qualified buyers and will be released by the -Town through the escrow process once the BMP is sold to a qualified buyer. III. Characteristics of BMP Units A. Size of units: The size and design of; BMP dwelling units ;shall be. reasonably consistent with the market rate iuuts in the project, The Town,and developer may negotiate regarding the size of units if more units than required Pie to be provided under the Community Benefit requirements.. BMP units should be provided proportionately in the same unit type mix (number of bedrooms) as the market rate units. In consideration of the household size of the households on the current program interest list, the Town and developer may negotiate to provide a greater proportion of a particular unit type. There shall not be, significant identifiable difference between the BMP and.market -rate units visible from the exterior, The size and design of the BMP units must be reasonably. consistent with the market - rate units in the development. B Location of units: BMP units shall be dispersed throughout the development, to the extent feasible; in all buildings, on each floor, and in each project phase, A concentration of BMP units in one location is not desirable and will generally not be allowed. C. Finish of units: The external appearance of BMP units should be indiscernible to that of the market rate units in the project, The internal finish of BMP units should._be identical .to that of the market rate.units in the project, except that the developer may request Town approval of substitutions for luxury interior finishes, appliances, or- fixtures, if such substitutions do not violate any Town code requirement. D, Project Facilities: All project facilities and amenities, including parking, must be available; on the same basis to the BMP units as to the market rate units in the project, fo the extent feasible. — - - - IV. — The BMP Unit Purchase lsiocess; Buyer - Selection; and BMP Unut 5aie and Regale Procedures. A. Owner Occupied Units 1. Applicant Eligibility BMP Guldelvres Page 4 a. Household Income; In order to be eligible to purchase an owner- occupied BMP unit, an applicant's annual household income must be no greater than 100% of the Median Family Income (MFI), adjusted for household size, as defined by the United States Department of Housing and Urban Development (HUD) for the San Jose, CA Primary Metropolitan Statistical Area (PMSA). Household assets, such as real property, may also be considered in determining eligibility, b. Housing Costs: In order to be, eligible to purchase an owner- occupied BMP unit, an applicant must also demonstrate the ability to pay monthly housing costs. The monthly housing cost shall include the following factors; I. unit price .21 cinrent lending rates 3. estimated property taxes 4. estimated homeowner's private mortgage insurance (PMI) costs homeowners' association fees, if applicable 5. other expenses as determined necessary by the lender C. Mortgage Financing; All persons must qualify for their own mortgage financing for the purchase of available BMP units without assistance from the Town. Qualifications must include the ability to pay taxes, insurance, closing costs and any homeowner association fees in addition to the mortgage, All loans used to purchase or refinance BMP units must be fixed rate and fixed term without balloon payments to minimize homeowners exposure to increased risks of mortgage default. d. Required Down payment; A home'ouyer shall have a minimum down payment that is equivalent to at least 10% of the BMP purchase - price and is required to document the source of all doom payment funds. The minimum 10% down payment is exclusive of any other supplemental clown payment assistance grant or loan programs available from other agencies, 2. First Time Home Buyers: The Below Market Price (BMP) Program.is for Fist Time Home Buyers. A First Time Home Buyer, by definition, is an applicant whose name has not appeared on a residential title in the counties covered by the Association of Bay Area Governments (ABAG) or Association of Monterey Bay Governments (AMBAG) which are Alameda, Contra Costa, Marin, Monterey, Napa, San Benito, San Francisco, San Mateo, Santa Clara, Santa Cruz, Solano and Sonoma for at least three (3) years prior to application. Exception is made consistent with BMP Guidelines - Page. 5 I the Federal Housing and Urban Developiiient.(HUD) definitions (e, e• for people who were Homeowners prior to a divorce, a displaced Homemaker, a single parent who has only owned with a former spouse, a widow /widower of a veteran, etc.) and for tenants residing in a rental apartment proposed to -be converted to a condominium or other common interest ownership prior to a Notice of Intent to Convert the development to an ownership residential unit. B. Buyer Selection: A point - system is used to establish a ranldng of applicants for the purchase of an, _available unit.,.. Applicants will be ranked according to total points and must, have at least one point to be. eligible to purchase a unit. In addition, applicant households must contain at least the same number of persons as the number of bedrooms in a unit, at the time of application, in order to be eligible to purchase that unit, if the unit contains three bedrooms or more. All points.are calculated per household; not for each individual 'within the household. For example, a household in which two members are senior citizens would receive six points for senior citizen. status, not twelve points for two members having senior citizen status. Points are awarded as follows: 1, Six points:' a, Senior citizens who reside in the Town at the time of application and have.lived in the Town for at least the prior two years. A senior citizen. is defined as any person 62 years of age or older at. time of application or married-,couples living together when at least one spou k is 62 years of age or older at time of application. b. Senior Citizens who have lived in the Town for at least two years and have moved out of the Town within the last five years prior to the time of. application,, c, Disabled persons who reside in the Town at the time of application and_who' have -1!Wd in the Town for at.least the prior two years. Tlie definition" of- `.`disabled" for the puipose of assigning points undet this section shall be that used by the U.S, Social Security Admimsti•afion for the purpose of determining eligibility for Social Security, disability. benef ts, . d. --HOuseio7ds required-o relo��heu• re�de3tce as a result of Council action or mobile home park closure, e. R'eg[ilar Full -Time and Regular_Part =Time Town employees as defined in the Town's Personnel Rules, who have been employed by the Totiv' for a period of no less than 12 months prior to the time of application. (, Page 6 BMP Guidelines - f Single heads of household with dependent children who reside in the Town at the time of application and have lived in the Town for ,at Ieast the prior two years, 2, Four points: a: Persons who live in the Town of Los Gatos at time of application and who have lived in the Town at least the prior two years. b. Persons who work in the Town of Los Gatos at time of application and have worked in the Town for at least the prior two years, 3, Two points: a. Households who have lived in the Town for at least 10 years -and have moved out within the last ten years prior to the time of application, b. Household size is worth two points per person, 4. One point: a. Households who live or work within Santa Clara County at the time of application. b. Households with an annual houschold.income at or below 60% 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). 5. A lottery will be used to rank each qualified applicant in the case-of a tie, 6. Applicants are provided the opportunity to purchase available units in order of point ranking, from most points to least points. An applicant has two opportunities to refuse to purchase a unit before being removed from the current applicant pool. 7. Applicants who do not qualify for a particular project or who are not provided the opportunity.to purchase a unit in a particular project shall retain their eligibility to apply for future projects. 8. An applicant must obtain pre - approval for a mortgage loan within one week after notification of eligibility to purchase a unit. The applicant must submit documentation of loan approval within three weeks of B>Yi Quidelines - - Page 7 notification of eligibility to purchase a trait. Exception to the Buyer Selection Process: An exception to the Buyer Selection Process may be granted to a resident of a rental apartment that is proposed to be converted to an "owner occupied" condominium or other common interest ownership development. In order to qualify for the exception, the resident must have resided in the .rental apartment prior to the issuance of the Notice of Intent to Convert the development to an ownership project and shall meet the financial eligibility requirements to qualify for a BMP.. unit. — The resident shall be provided first right of refusal, regardless of point ranking, for units in the following order: a. The unit they reside in if it is designated as a BMP unit. b. Any other available BMP unit. C. Determination of Initial Selling Price: BMP units shall be priced to be affordable to households in two income categories: Median Income Households (those whose income is above 80 %, but no greater than 100 %, of the County Median Income); and Low Income Households (those whose income is above 50 %, but no greater than 80 %, of the County Median Income), Fifty percent (50 %) of the units in a project_ shall be priced to be affordable to Median Income Households; fifty percent (50 %) shall be priced to be affordable to Low Income Households. Whenever the calculations result in fractional units, then the number of units priced to be affordable to Low Income Households shall be rounded up to the next whole number; and the number of -Louts priced to. be affordable to Median Income Households shall be rounded down to .the next whole number, including zero (0). The following table applies this formula to projects With 1, 2, and 3 units: Total Nuimber of BMP Units in Project Units Priced for Low Income Households Units Priced for Median Income Households 1 1 0 2 1 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 ' Page 8 BW Guidelines 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 household size appropriate to size of unit) x Multiplier = Initial Sales Price, Example: 100% MFI (4- person/4 bedroom) = $105,000 80% MFI (4- person/4 bedroom)= $75,700 Average MFI = ($105,000 + $75,700 ) divided by 2 = $90,350 Average MFI X Multiplier = Initial Sales Price 1. Assumptions of household size by size of unit are as follows: These assumptions of household size by size of unit shall be for the purpose of setting the initial .sales price only, and do not prevent the sale of any unit to any household eligible to purchase an owner - occupied BMP unit, as set forth in these Guidelines: BMP Guidelines .. - page 9 Household Size Studio 1 1 Bedroom 1 2 Bedroom 2 3 Bedroom 3 4 Bedroom 4 These assumptions of household size by size of unit shall be for the purpose of setting the initial .sales price only, and do not prevent the sale of any unit to any household eligible to purchase an owner - occupied BMP unit, as set forth in these Guidelines: BMP Guidelines .. - page 9 b. For units to,be priced to be affordable to Low I_ncome Households: the - average- _of_the. 30 %o -MFI annual income-and the 50% annual income (assuming household size appropriate to size of unit) x Multiplier = Initial Sales Price, Example: 50 %MFI (4- person/4 bedroom) ° $ 52,500 80 %MFI (4- person/4 bedroom)= $75,700 Average MFI = ($52,500 + $75,700) divided by 2 $ 64,100 A-yerageMFI X Nultiplier = Initial Sales Price c. Calculation of Multiplier. A Multiplier shall on reasonable assumptions about unit sales most recent comparable sales of BMP units; as . determined by the most recent Primar Survey (PMMS) conducted by the Federal Corporation (Freddie Mac); and related c following formula: be calculated, based prices, based on the current lending rates, y Mortgage Market Home Loan Mortgage osts; and using the Determination of Total Housing Cost: Sample sales price - 10% down payment = mortgage. Annual debt service on mortgage + annual property taxes + annual homeowners fees + annual private mortgage insurance (PMI) Total Annual Housing Cost. 2, Determination of Minimum Household Income: Assuming one -third ef.:house,hold income goes for housing expenses, Total -Ami ial ,Musing -Cost x 3 = Minimum Annual Houseliold Income. DUarmihation of Multiplier: Sample Sales Price /Minimum Annual Houseliold Income = Multiplier. Cop %es of t3e tniiial` sal -s p-cwand the calculations =made, shall be available on request from the Town's Community Development Department, D. Deed Restrictions /Request for Notice: Council - approved Deed Restrictions shall be recorded with each Below Market Price dwelling unit. In addition to the Deed Restriction, the Town shall also require that a Request for Notice for the benefit B1 T(hidelines _ - Page 10 of the Town be recorded for each lender Deed of Trust record on title. E, Resale of Units: 1, If the owner elects to sell his/her unit, the Town must be notified in writing by the owner. 2. When a Below Market Price dwelling unit becomes available for resale, the Town shall set the resale price and make the unit available for purchase through the BMP process, 3. The Town determines the resale price in accordance with the deed restriction recorded on the property, 4. The homeowner, as noted in the recorded Deed Restriction, is responsible for paying all closing costs (including commissions or fees), F. Occupancy of Units, Consistent with the deed restriction that will be recorded on the subject property, the household purchasing a BMP unit must occupy the unit as his or her primary residence during his or her ownership of said unit, V. Requirements for BMP Rental Development A. Administration: The program shall be administered by the Town or its designee, B. Applicant Eligibility 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 (MFD, adjusted for household size, as defined by the United States Department of Housing mad Urban Development (HUD) for the San dose, CA Primary Metropolitan Statistical Area (PMSA), Priority Will be-given to those households whose income is-less -than 500/ 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 Guidelines' Page 11 VI 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. Aimual Review. If a tenant's income increases so that it falls between 80 and 100 percent of MFI, then the rent may be increased in accordance-with the Town's Rental Dispute Ordiiiance; and the unit shall still be considered a BMP Rental Unit. However, if a tenant's income exceeds 100 percent of MFI, the rent may be increased to the average rent of similar units in the complex; in this latter case, the unit.will_nolonger -be-a BMP unit and the next available unit that is comparable in size shall be designated as a BMP unit in its place, and "must be rented to an eligible household so that the number of BMP units within the project remains the same, G• Deed Restrictions: Council approved Deed Restrictions shall be recorded for each Below Market Price rental dwelling -unit, RENTAL UNITS - NEW SECOND DWELLING UNITS A• Administration: The program shall be administered by the Town or its designee. B. Second Unit Incentive Program: 29,10310 of the Town Code, may choose to partieipate in the Second Unit Incentive Program (SUIP) as referenced in Section 29.10.320(a) of the Town Code and as set foith below. The SUIP consists of a no interesf construction loan to a property owner who intends to develop n new second unit. The loan amount shall be de €ermined -tiased on' '.the. square foot aonstiuction. cost . as set forth in the currEtNersion Uniform Building, Code as adopted by the Town for new construction and remodels. The loan amount will be calculated at 100% -of'the'construction cost if the unit is income and cent restricted to serve h-1: households with mcores lielow 50 % 'of the` Me.dian Family Income as defined by. the United States CA Piimary`'Metropolitan Statistical Area (PWA), or 80 % of the .,: coiistruchon cost if the uift'is income and rent restricted to serve households with incomes below 80 % of IV 1. 2: When a property owner participates in the SUIP, a deed restriction shall be, recorded on the property. The deed restriction shall stipulate the rental Page i2 BMP Guidelines rate, tenant income level, duration of affordability and loan repayment requirement as well as any other criteria as determined appropriate by the Town. 3. A SUIT .loan to construct a second unit, within the Central Los Gatos Redevelopment Project area shall. be funded using Redeveloprirent 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 managcr will be forwarded to the Town -or its agent for verification of income eligibility, Rental agreements shall he submitted to the Town or its agent to verify compliance with the provisions of this section. Tenants are eligible to receive conciliation and mediation services provided through the Town's Rental Dispute Resolution Program except as they regard rent increases. 5. Units targeted to households with incomes up to 80% of the Median Family Income (MFI)'shall have rents restricted to 80% of Fair Market Rents as determined by the Santa Clara County Housing Authority, Units targeted to households with incomes up to 50% of CMI shall have rents restricted to 50% of Fair Market Rents as determined by the Santa Clara County Housing Authority. Tenant rents and incomes will be monitored annually. (FINAL; Approved by Town Council 9 -17 -2012) BMP Guidelines - - Page 73 This Page Intentionally Left Blank Exhibit A TOWN OF LOS GATOS BELOW MARKET PRICE HOUSING PROGRAM GUIDELINES I. Purpose A. Pu_rgose: The overall purpose of the Below Market Price (BMP) Housing Program is to provide the Town of Los Gatos with a supply of affordable housing. While the program is available to all qualified applicants, the general intent of the program is to provide affordable housing for households who work or currently live in Los Gatos. The main goal is to increase the housing supply for households that have median and low incomes compared to the median income for Santa Clara County and meet the housing needs identified in the Town's General Plan Housing Element. The Program further intends to ensure, to the greatest extent possible, that rent and re -sale of these housing units will remain affordable to median and low income levels for the longest feasible time as approved by an authorized body. Although the Town has a fee -in -lieu of constructing actual units option for defined circumstances, the primary objective of the BMP Program is to obtain actual "rental" or "for sale" housing units rather than equivalent funds. All off -site BMP units shall be constructed within the Town of Los Gatos. The construction and occupancy of the BMP unit is determined according to these Town Council established guidelines and authorizing ordinances. B. Enabling Legislation: The Below Market Price Program is governed by Division 6 of the Town Code. The BMP Program is administered under these Below Market Price Housing Program Guidelines. II. Below Market Price Housing Requirements — General A. Applicability: The BMP Program requirements shall apply to all residential development projects that include five (5) or more residential units or parcels which involve: 1. New construction of ownership or rental housing units, including mixed use developments and addition of units to existing projects, or 2. Subdivision of property for single family or duplex housing development, or 3. Conversion of rental apartments to condominiums or other common interest ownership, or 4. Conversion of non-residential use to residential use. B. Number of BMP Units: All residential developments consisting of five (5) or more units are required to participate in the BMP Program. The requirements for participation increase by development size as shown below: BMP Guidelines ATTACiL11GNT 4 Five (5) to Nineteen 19 market rate units: The developer shall provide a minimum number of BMP units equal to ten (10) percent of the number of market rate units. 2. Twenty (20) to one hundred (100) market rates units: The developer shall provide a minimum of BMP units as determined by the following formula: Number of BMP units = (.225 x total # of market rate units) - 2.5 This formula acts to increase the number of BMP units required, as a percentage of market -rate units, from 10% to 20% over the range of 20 to 100 market rate units. 3. One hundred and one (101) units or more: The developer shall provide a minimum number of BMP units equal to twenty (20) percent of the number of market rate units. BMP dwellings within a project of rental units shall also be rental units. BMP units within a project of owner - occupied units shall also be designated as units for purchase. BMP units within a project that contains both rental and owner - occupied units shall also be designated as both rental and as units for purchase, in a ratio similar to that of the market rate units. The Town and developer may negotiate to provide more BMP units than required by the rules listed in these guidelines to fulfill a development's Community Benefit requirements. C. Fraction of a BMP Housing Units: In determining the number of BMP units required, any decimal fraction of .5 or above shall be rounded up to the nearest whole number. Decimal fractions below .5 shall be rounded down to the nearest whole number. D. Residential In -Lieu Payments: The general intent of the BMP Program is to provide the Town of Los Gatos with a supply of affordable housing for households who work or currently live in Los Gatos. However, there may be circumstances when the construction of the BMP unit is impractical or there are unusual circumstances that make the construction of the unit inconsistent with Town policy. The Town, at its sole discretion, may consider an in -lieu payment alternative to the required BMP unit in the case of Planned Unit development with an underlying zone of HR or a residential developments with five (5) to nine (9) units. Prior to approving the in -lieu fee alternative, the applicant must demonstrate to the satisfaction of the Town why a BMP unit cannot be (1) developed on the same site as the market rate units, and if it cannot be provided on the same site then, (2) develop at an appropriate off -site location within the Town limits. If the developer provides sufficient justification that both of these alternatives are not viable, then a fee in -lieu option may be considered. The required in -lieu fee is as established by a separate resolution and is to be paid to BMP Guidelines Paac the Town prior to issuance of the certificate of occupancy for the market rate residential unit that triggered the BMP requirement. The provision for a BMP unit applies if the project is built under the rules of an overlay zone unless the rules of the overlay zone provide otherwise. The in -lieu fee shall be equal to the amount of six (6) percent of the building permit valuation for the entire project. The total building permit valuation shall be determined by the Town Building Official. Fees shall be paid prior to or at time of final occupancy as follows: 1. Multi- Family Owner Occupied Developments: Prior to occupancy of each phase, a proportional amount of fees shall be paid, as determined during the Planning approval process. 2. Multi - Family Renter Occupied Developments: Prior to occupancy of each phase, a proportional amount of fees shall be paid, as determined during the Planning approval process. 3. Single - Family Planned Developments: At time of final occupancy for each unit. E. Housing Fund: In -lieu fees will be deposited into the Town's Affordable Housing Fund. Applications and or recommendations for use of remaining funds will be reviewed as received. Possible use of the funds includes, but is not limited to, the following: 1. Subsidizing the cost of owner occupied units to make them affordable to low /moderate income households 2. Purchasing rental units to make them affordable to low /moderate income households 3. Purchasing land for the future development of affordable housing 4. Developing affordable housing 5. Supplementing of affordable housing projects developed through the Los Gatos Redevelopment Agency 6. Funding administration of the program, as approved by the Town Council in its annual budget process F. Off -Site Construction: The Town Council may consider off -site construction of BMP units for continuum care facilities and for Hillside Residential (HR) Zone District and residential developments with five (5) to nine (9) units projects that have provided sufficient justification to the Town that an on -site BMP unit is not viable. G. Phasing of the Construction of On- and Off -Site BMP Units: On- and off -site BMP units shall be constructed and Certificate of Occupancies secured concurrently with or prior to the construction of the market -rate units. The BMP requirement will be calculated on the basis of the whole development. The Town BMP Guidelines Page 3 Council may grant an exception to these phasing requirements during the Planned Development project approval process for condominium conversion developments. H. Affordability Agreement: The developer of "for sale" BMP units shall enter into an affordability agreement with the Town. The agreement will ensure that the BMP units are sold to qualified buyers and will be released by the Town through the escrow process once the BMP is sold to a qualified buyer. III. Characteristics of BMP Units A. Size of units: The size and design of BMP dwelling units shall be reasonably consistent with the market rate units in the project. The Town and developer may negotiate regarding the size of units if more units than required are to be provided under the Community Benefit requirements. BMP units should be provided proportionately in the same unit type mix (number of bedrooms) as the market rate units. In consideration of the household size of the households on the current program interest list, the Town and developer may negotiate to provide a greater proportion of a particular unit type. There shall not be significant identifiable difference between the BMP and market -rate units visible from the exterior. The size and design of the BMP units must be reasonably consistent with the market - rate units in the development. B Location of units: BMP units shall be dispersed throughout the development, to the extent feasible; in all buildings, on each floor, and in each project phase. A concentration of BMP units in one location is not desirable and will generally be allowed. C. Finish of units: The external appearance of BMP units should be indiscernible to that of the market rate units in the project. The internal finish of BMP units should be identical to that of the market rate units in the project, except that the developer may request Town approval of substitutions for luxury interior finishes, appliances, or fixtures, if such substitutions do not violate any Town code requirement. D. Project Facilities: All project facilities and amenities, including parking, must be available on the same basis to the BMP units as to the market rate units in the project, to the extent feasible. IV. The BMP Unit Purchase Process; Buyer Selection, and BMP Unit Sale and Resale Procedures. A. Owner Occupied Units 1. Applicant Eligibility BMP Guidelines Pate 4 a. Household Income: In order to be eligible to purchase an owner - occupied BMP unit, an applicant's annual household income must be no greater than 100% of the Median Family Income (MFI), adjusted for household size, as defined by the United States Department of Housing and Urban Development (HUD) for the San Jose, CA Primary Metropolitan Statistical Area (PMSA). Household assets, such as real property, may also be considered in determining eligibility. b. Housing Costs: In order to be eligible to purchase an owner- occupied BMP unit, an applicant must also demonstrate the ability to pay monthly housing costs. The monthly housing cost shall include the following factors: 1. unit price 2. current lending rates 3. estimated property taxes 4. estimated homeowner's private mortgage insurance (PMI) costs 5. homeowners' association fees, if applicable 6. other expenses as determined necessary by the lender C. Mortgage Financing: All persons must qualify for their own mortgage financing for the purchase of available BMP units without assistance from the Town. Qualifications must include the ability to pay taxes, insurance, closing costs and any homeowner association fees in addition to the mortgage. All loans used to purchase or refinance BMP units must be fixed rate and fixed term without balloon payments to minimize homeowners' exposure to increased risks of mortgage default. d. Required Down payment: A homebuyer shall have a minimum down payment that is equivalent to at least 10% of the BMP purchase price and is required to document the source of all down payment funds. The minimum 10% down payment is exclusive of any other supplemental down payment assistance grant or loan programs available from other agencies. 2. First Time Home Buyers: The Below Market Price (BMP) Program is for First Time Home Buyers. A First Time Home Buyer, by definition, is an applicant whose name has not appeared on a residential title in the counties covered by the Association of Bay Area Governments (ABAG) or Association of Monterey Bay Governments (AMBAG) which are Alameda, Contra Costa, Marin, Monterey, Napa, San Benito, San Francisco, San Mateo, Santa Clara, Santa Cruz, Solano and Sonoma for at least three (3) years prior to application. Exception is made consistent with BMP Guidelines Page 5 the Federal Housing and Urban Development (HUD) definitions (e.g. for people who were homeowners prior to a divorce, a displaced homemaker, a single parent who has only owned with a former spouse, a widow /widower of a veteran, etc.) and for tenants residing in a rental apartment proposed to be converted to a condominium or other common interest ownership prior to a Notice of Intent to Convert the development to an ownership residential unit. B. Buyer Selection: A point system is used to establish a ranking of applicants for the purchase of an available unit. Applicants will be ranked according to total points and must have at least one point to be eligible to purchase a unit. In addition, applicant households must contain at least the same number of persons as the number of bedrooms in a unit, at the time of application, in order to be eligible to purchase that unit, if the unit contains three bedrooms or more. All points are calculated per household, not for each individual within the household. For example, a household in which two members are senior citizens would receive six points for senior citizen status, not twelve points for two members having senior citizen status. Points are awarded as follows: Six points: a. Senior citizens who reside in the Town at the time of application and have lived in the Town for at least the prior two years. A senior citizen is defined as any person 62 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. b. Senior Citizens who have lived in the Town for at least two years and have moved out of the Town within the last five years prior to the time of application. C. Disabled persons who reside in the Town at the time of application and who have lived in the Town for at least the prior two years. The definition of "disabled" for the purpose of assigning points under this section shall be that used by the U.S. Social Security Administration for the purpose of determining eligibility for Social Security disability benefits. d. Households required to relocate their residence as a result of Council action or mobile home park closure. e. Regular Full -Time and Regular Pail -Time Town employees as defined in the Town's Personnel Rules but excluding Los Gatos Monte- Sereno Police Officers, who have been employed by the Town for a period of no less than 12 months prior to the time of application. BMP Guidelines Page 6 f. Single heads of household with dependent children who reside in the Town at the time of application and have lived in the Town for at least the prior two years. g All licensed pre- school and public or private K-12 school emplovees of schools and districts geographically located in and serving the Town. and who have been emploved for at least one vear at the time of application. h. All certified_ emergency first responders who are responsible for eoine immediately to the scene of an accident or incident (e sworn police officers. fire fighters and emergency medical technicians and paramedics) who have been employed for at least one year at the time of application by an aLyenev serving the Town Four points: a. Persons who live in the Town of Los Gatos at time of application and who have lived in the Town at least the prior two years. b. Persons who work in the Town of Los Gatos at time of application and have worked in the Town for at least the prior two years. Two points: a. Households who have lived in the Town for at least 10 years and have moved out within the last ten years prior to the time of application. b. Household size is worth two points per person. 4. Onc point: a. Households who live or work within Santa Clara County at the time of application. b. Households with an annual household income at or below 60% of the Median Family Income (MFI), adjusted for household size, as defined by the United States Department of Housing and Urban Development (HUD) for the San Jose, CA Primary Metropolitan Statistical Area (PMSA). BLIP Guidelines Page 7 5. A lottery will be used to rank each qualified applicant in the case of a tie. 6. Applicants are provided the opportunity to purchase available units in order of point ranking, from most points to least points. An applicant has two opportunities to refuse to purchase a unit before being removed from the current applicant pool. 7. Applicants who do not qualify for a particular project or who are not provided the opportunity to purchase a unit in a particular project shall retain their eligibility to apply for future projects. 8. An applicant must obtain pre - approval for a mortgage loan within one week after notification of eligibility to purchase a unit. The applicant must submit documentation of loan approval within three weeks of notification of eligibility to purchase a unit. 9. Exception to the Buyer Selection Process: An exception to the Buyer Selection Process may be granted to a resident of a rental apartment that is proposed to be converted to an "owner occupied" condominium or other common interest ownership development. In order to qualify for the exception, the resident must have resided in the rental apartment prior to the issuance of the Notice of Intent to Convert the development to an ownership project and shall meet the financial eligibility requirements to qualify for a BMP unit. The resident shall be provided first right of refusal, regardless of point ranking, for units in the following order: a. The unit they reside in if it is designated as a BMP unit. b. Any other available BMP unit. C. Determination of Initial Selling Price: BMP units shall be priced to be affordable to households in two income categories: Median Income Households (those whose income is above 80 %, but no greater than 100 %, of the County Median Income); and Low Income Households (those whose income is above 50 %, but no greater than 80 %, of the County Median Income). 1. Fifty percent (50 %) of the units in a project shall be priced to be affordable to Median Income Households; fifty percent (50 %) shall be priced to be affordable to Low Income Households. Whenever the calculations result in fractional units, then the number of units priced to be affordable to Low Income Households shall be rounded up to the next whole number, and the number of units priced to be affordable to Median Income Households shall be rounded down to the next whole number, including zero (0). The following table applies this formula to projects with 1, 2, and 3 units: B,bIP Guidelines Pase 8 Total Number of BMP Units in Project Units Priced for Low Income Households Units Priced for Median Income Households I 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 household size appropriate to size of unit) x Multiplier = Initial Sales Price, Example: 100% MFI (4- person/4 bedroom) = $105,000 80% MFI (4- person/4 bedroom)= $75,700 Average MFI = ($ 105,000 + S75,700 ) divided by 2 = $90,350 Average MFI X Multiplier = Initial Sales Price 1. Assumptions of household size by size of unit are as follows: BMP Guidelines Pee 9 Household Size Studio 1 1 Bedroom 1 BMP Guidelines Pee 9 2 Bedroom 2 3 Bedroom 3 4 Bedroom 4 These assumptions of household size by size of unit shall be for the purpose of setting the initial sales price only, and do not prevent the sale of any unit to any household eligible to purchase an owner- occupied BMP unit, as set forth in these Guidelines. b. For units to be priced to be affordable to Low Income Households: the average of the 80% MFI annual income and the 50% annual income (assuming household size appropriate to size of unit) x Multiplier= Initial Sales Price. Example: 50% MFI (4- person/4 bedroom) = S 52,500 30% MFI (4-person/4 bedroom)= 575,700 Average MFI = (S52,500 + S75,700) divided by 2 = S 64,100 Average MFI X Multiplier = Initial Sales Price C. Calculation of Multiplier. A Multiplier shall be calculated, based on reasonable assumptions about unit sales prices, based on the most recent comparable sales of BMP units; current lending rates, as determined by the most recent Primary Mortgage Market Survey (PMMS) conducted by the Federal Home Loan Mortgage Corporation (Freddie Mac); and related costs; and using the following formula: 1. Determination of Total Housing Cost: Sample sales price - 10% down payment = mortgage. Annual debt service on mortgage + annual property taxes + annual homeowners fees + annual private mortgage insurance (PMI) = Total Annual Housing Cost. 2. Determination of Minimum Household hrcome: Assuming one -third of household income goes for housing expenses, Total Amoral Housing Cost x 3 = Minimum Amoral Household Income. 3. Determination of Multiplier: Sample Sales Price /Minimum Annual Household Income = Multiplier. BMPGuideiineN Paee 10 Copies of the initial sales prices, and the calculations made, shall be available on request from the Town's Community Development Department. D. Deed Restrictions/Request for Notice: Council approved Deed Restrictions shall be recorded with each Below Market Price dwelling unit. In addition to the Deed Restriction, the Town shall also require that a Request for Notice for the benefit of the Town be recorded for each lender Deed of Trust record on title. E. Resale of Units: 1. If the owner elects to sell his/her unit, the Town must be notified in writing by the owner. 2. When a Below Market Price dwelling unit becomes available for resale, the Town shall set the resale price and make the unit available for purchase through the BMP process. 3. The Town determines the resale price in accordance with the deed restriction recorded on the property. 4. The homeowner, as noted in the recorded Deed Restriction, is responsible for paying all closing costs (including commissions or fees). F. Occupanev of Units: Consistent with the deed restriction that will be recorded on the subject property; the household purchasing a BMP unit must occupy the unit as his or her primary residence during his or her ownership of said unit. V. Requirements for BMP Rental Development A. Administration: The program shall be administered by the Town or its designee. B. Applicant Eligibility Household Income: In order to be eligible to rent a BMP rental unit, a household's annual income must be no greater than 80% of the Median Family Income (MFI), adjusted for household size, as defined by the United States Department of Housing and Urban Development (HUD) for the San Jose, CA Primary Metropolitan Statistical Area (PMSA). Priority will be given to those households whose income is less than 50% of the MFI. Household assets may also be considered in determining eligibility. 2. Ability to Pay Rent: A tenant's ability to pay monthly rent will also be considered in determining tenant eligibility. BMP Guidelines Page 11 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 1. BMP rental units shall be managed by the propertv owner or manager in the same manner as other units in the development. 2. Tenants of BMP rental units are eligible to receive conciliation and mediation services provided through the Town's Rental Dispute Resolution Program except as they regard rent increases. E. Unit Rents: Rents may not exceed 80% of the most current Fair Market Rents as determined by the Santa Clara County Housing Authority. F. Annual Review: If a tenant's income increases so that it falls between 80 and 100 percent of MFI, then the rent may be increased in accordance with the Town's Rental Dispute Ordinance; and the unit shall still be considered a BMP Rental Unit. However, if a tenant's income exceeds 100 percent of MFI, the rent may be increased to the average rent of similar units in the complex; in this latter case, the unit will no longer be a BMP unit and the next available unit that is comparable in size shall be designated as a BMP unit in its place, and must be rented to an eligible household so that the number of BMP units within the project remains the same. G. Deed Restrictions: Council approved Deed Restrictions shall be recorded for each Below Market Price rental dwelling unit. VI. RENTAL UNITS - NEW SECOND DWELLNG UNITS A. Administration: The program shall be administered by the Town or its designee. B. Second Unit Incentive Program: 29.10.310 of the Town Code, may choose to participate in the Second Unit Incentive Program (SUIP) as referenced in Section 29.10320(a) of the Town Code and as set forth below. 1. The SUIP consists of a no interest construction loan to a property owner who intends to develop a new second unit. The loan amount shall be determined based on the square foot construction cost as set forth in the current version Uniform Building Code as adopted by the Town for new construction and remodels. The loan amount will be calculated at 100% of the construction cost if the unit is income and rent restricted to serve households with incomes below 50% of the Median Family Income (MFI), adjusted for household size, as defined by the United States BNIP Guidelines Pa,c 12 Department of Housing and Urban Development (HUD) for the San Jose, CA Primary Metropolitan Statistical Area (PMSA), or 80% of the construction cost if the unit is income and rent restricted to serve households with incomes below 80% of MFI. 2. When a property owner participates in the SUIP, a deed restriction shall be recorded on the property. The deed restriction shall stipulate the rental rate, tenant income level, duration of affordability and loan repayment requirement as well as any other criteria as determined appropriate by the Town. 3. A SUIP loan to construct a second unit within the Central Los Gatos Redevelopment Project area shall be funded using Redevelopment Affordable Housing Funds and shall remain affordable for 55 years. A SUIP loan to construct a second unit outside the Central Los Gatos Redevelopment Project area shall be funded using BMP Program Funds and shall remain affordable for 30 years. The SUIP affordability restrictions as set forth in this section may only be amended by action of the Town Council. 4. A tenant's ability to pay monthly rent will also be considered in detennining tenant eligibility. Applications from tenants selected by the property owner or manager will be forwarded to the Town or its agent for verification of income eligibility. Rental agreements shall be submitted to the Town or its agent to verify compliance with the provisions of this section. Tenants are eligible to receive conciliation and mediation services provided through the Town's Rental Dispute Resolution Program except as they regard rent increases. 5. Units targeted to households with incomes up to 80% of the Median Family Income (MFI) shall have rents restricted to 80% of Fair Market Rents as determined by the Santa Clara County Housing Authority. Units targeted to households with incomes up to 50% of CMI shall have rents restricted to 50% of Fair Market Rents as determined by the Santa Clara County Housing Authority. Tenant rents and incomes will be monitored annually. BMP Guidelines Page 13 Th is Page Intentionally Left Blank