Resolution 1993-10
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RESOLUTION NO. 93- 10
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF GILROY PURSUANT TO SECTION 50.62 OF THE
ZONING ORDINANCE ADOPTING AN AFFORDABLE
HOUSING EXEMPTION POLICY
WHEREAS, Section 50.62 (b) of the ci ty' s Residential
Development Ordinance provides for exemptions from the ordinance
for certain types of residential projects; and
WHEREAS, Section 50.62(b) (4) provides for an exemption
for certain private sector funded projects meeting criteria of
long-term affordability where the City Council has adopted such
criteria by resolution; and,
WHEREAS, city staff have drafted a "Policy Statement for
Exempting Affordable Private Development Proposals from the RDO",
hereafter known as the "Affordable Housing Exemption policy",
intended to establish the criteria by which long-term affordability
of projects sought to be exempted under Section 50.62(b) (4) may be
gauged.
NOW, THEREFORE, BE IT RESOLVED THAT:
A. The City Council hereby finds that "Affordable Housing
Exemption Policy," attached hereto as Exhibit A and incorporated
herein by this reference adequately meets the goals of the City'S
Residential Development Ordinance and affordable housing policies
goals.
B. Said Affordable Housing Exemption Policy should be
and hereby is adopted pursuant to and in furtherance of Section
RESOLUTION NO. 93 - 10
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50.62(b) (4) of the Zoning Ordinance.
PASSED AND ADOPTED this 22nd day of February, 1993, by
the following vote:
AYES:
COUNCILMEMBERS: GILROY, HALE, KLOECKER, NELSON,
ROWLISON, VALDEZ and GAGE.
NOES:
COUNCILMEMBERS: None
ABSENT:
COUNCILMEMBERS: None
Don
steirunetz, city
RESOLUTION NO. 93 - 10
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Affordable Housing 1 Revised 2/02/93
EXHIBIT "A"
POLICY STATEMENT FOR EXEMPTING AFFORDABLE PRIVATE
DEVELOPMENT PROPOSALS FROM THE ROO
City of Gilroy
December, 1992
Section 4.00 statement of Intent
It is the intent of this policy to set forth the specific criteria and
guidelines for the affordable housing exemption provided in the City of
Gilroy Zoning ordinance, section 50.62 (b) (4). This policy shall apply
to private sector requestB~ Government funded projects shall continue to
be exempted from the RDO under the terms of zoning ordinance section 50.62
(b) (3). The goal of this exemption is to enhance public welfare by
meeting the current and future housing needs of all segments of the
community. This exemption is intended to encourage private developers to
construct housing which is affordable to Very Low, Low and Median income
households, as defined in this document.
section 4.01 Definitions
Affordable Housinq:
A dwelling unit, either rented or owned, which is affordable to households
with Very LOW, Low, or Median incomes, as defined by this document.
Applicant:
Any person, partnership, corporation, firm, or any entity or combination
of entities, which seeks permits or approvals for residential development
in the City of Gilroy.
Dwellinq unit:
Housing which is designed and intended for occupancy as a residence by one
(1) household. This term includes condominiums, townhouses, single family
homes, multi-family homes and apartments.
HUD:
The united states Department of Housing and urban Development or its
successor.
Resale controls:
Legal restrictions imposed upon property owners by the city to ensure that
the dwelling units will remain affordable to Very Low, Low and Median
income households, as defined in this document, for 55 years from the date
the city issues the certificate of occupancy for the development .
Affordable Housing
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Residential Development:
All development which includes single family dwellings, multi-family
dwellings, condominiums, townhouses, cooperative developments, and land
subdivisions intended to be sold to the public for residential use.
Residential Development ordinance:
section 50.60 of the City of Gilroy Zoning Ordinance which encourages
responsible growth in the community, and restricts the amount of housing
which may be constructed each year.
verY Low. Low and Median Income levels:
Income categories established by HUD for santa clara county. Very Low and
Low income levels are calculated on the basis of Median household size and
income.
* VERY LOW INCOME - Households earning under fifty percent (50%) of
the Median income level, as published from time to
time by HUD.
* LOW INCOME - Households earning fifty percent (50%) to eighty
percent (80%) of the Median income level, as
published from time to time by HUD.
* MEDIAN INCOME - The most recent Median gross yearly income
adjusted for actual household size, in the County
of Santa clara, California, as published from time
to time by HUD.
Section 4.02 General Requirements
(A) All applicants desiring an exemption from the Residential Development
ordinance under this program must sell or rent one hundred percent
(100%) of the dwelling units which receive an exemption at prices
which are affordable to very LOW, Low or Median income households, in
accordance with the procedures of sections 4.03 and 4.04. Each
application shall be limited to construction of to a maximum of forty-
five (45) units. The procedure for this exemption shall be as
follows:
procedure:
(1) The applicant must apply for an "RDO Affordable Housing
Exemption". A reasonable fee will be collected for review of the
application.
(2) At the time of application for the exemption, the applicant must
specify the number of units to be constructed. The applicant must
also identify the number of units which will be affordable to
households with very LOW, Low, and Median incomes, as defined in
this document.
(3) Rental and/or sale prices of all units shall be established by the
City or its designee, and shall be affordable to households with
very Low, Low and Median incomes as defined by this document.
Affordable Housing
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(4) Approval of the application will be at the discretion of the
Planning Director, based upon this policy and compliance with all
other City requirements. The applicant must receive approval of
the ROO exemption prior to filing for tentative map approvals or
architectural and site review applications.
(5) After approval of this application, and prior to filing for
tentative map approval or architectural and site review, the
applicant must enter into a Contract with the City (hereafter
referred to as contract) agreeing to provide affordable housing as
delineated in this policy. This Contract will assure on-going
affordability of the units. The units shall remain affordable for
55 years from the date the city issues the certificate of Occupancy
for the development, as set forth in this document. Failure to
comply with the terms of the Contract will void all approvals, and
the project will not be allowed to proceed without complying with
the annual competition procedures of section 50.60, regardless of
the stage of construction of the project.
(B) The City or its designee will advertise the existence and terms of
this program to the general public and accept applications from
prospective purchasers and tenants. The City or its designee shall
then compile and maintain a list of qualified purchasers and tenants.
(C) All tentative mapB, architectural and site reviews, or other
development permits approving residential development shall contain
conditions sufficient to ensure compliance with the requirements set
forth in this policy. These conditions shall include but not be
limited to conditions that specify the number of affordable units
(whether for sale or rental), their prices and Resale controls.
(D) All dwelling units proposed under this program must be constructed
with the same quality of design, construction and materials as would
be used for market rate housing. This requirement shall apply to
projects which consist solely of affordable housing units, as well as
projects which combine affordable housing with market rate housing.
(Note: Market rate units are required to receive Residential
Development allocations through the ROO process, regardless of whether
a portion of the project receives an ROO exemption through this
Affordable Housing Policy).
(E) Grant deeds for units constructed under this program shall state that
these units are required to remain affordable housing as set forth in
this policy for the 55 years from the date the City issues the
certificate of occupancy for the development, and shall be recorded
against the property with the county recorder of Santa clara county.
This restriction shall run with the land for 55 years from the date
the City issues the certificate of Occupancy for the development, and
shall be a condition of the Contract the applicant enters into with
the city.
Affordable Housing
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(F) Resale controls shall be incorporated as part of the grant deeds of
these residential developments. This restriction shall be recorded
against the property with the county recorder of Santa Clara County,
and shall run with the land for 55 years from the date the City issues
the certificate of occupancy for the development.
section 4.03 procedure for Renting Affordable units
(A) All prospective tenants shall have their eligibility verified by the
City or its designee prior to unit rental, and shall be subject to
periodic income verification throughout their tenancY4 In the event a
tenant's income increases during the tenancy, the following
regulations shall apply:
(1) If a tenant, who is renting a unit at a Very Low Income rate, has
an income increase from a very Low to a Low Income level, the
tenant may be allowed to rent the same unit at a Low Income rate,
whenever feasible, under the following conditions:
* A comparable vacant rental unit in the same development, which is
designated to be rented at a Low Income rate, must be reduced in
price so that it is rented at a very Low Income rate.
* The development must maintain the number of very Low, Low and
Median Income units which are specified in its Contract with the
city.
(2) If a tenant, who is renting a unit at a Very Low or Low Income rate
has an income increase to a Median level or higher, the tenant may
be allowed to rent the same unit at a Median Income rate, whenever
feasible, under the following conditions:
* The development must be eligible to provide Median income rental
units, as specified in a contractual agreement with the City.
* A comparable vacant rental unit in the same development, which is
designated to be rented at a Median Income rate, must be reduced
in price so that it is rented at a Very Low or Low Income rate,
depending on the tenant's previous rental rate.
* The development must maintain the number of Very LoW, Low and
Median Income units which are specified in a contractual agreement
with the city.
If these criteria cannot be met, the tenant shall be required to vacate
the unit. Any tenant required to vacate their unit because of an
increase in income shall be given a maximum of nine months to do so.
Landlords shall be given a maximum of nine months, from the date a
tenant's income increases above a Very Low or Low income level, to
comply with the requirements of this section.
The nine month time period which tenants and landlords will be given in
order to comply with the requirements of this section is intended to
prevent displacement of renters. HUD regulations prohibit a city
receiving HUD monies from implementing any program which would cause
tenants to be displaced.
Affordable Housing
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(B) The city or its designee shall maintain a list of qualified tenants.
All renters in this program shall be selected off of this list.
(C) The developer shall specify, in the contract entered into with the
city, the number of units which are to be constructed, the number of
bedrooms in each unit, and which units shall be reserved for Very Low,
Low and Median income rates.
(D) cost of Housing:
The rates of rental units shall be determined by the city or its
designee. very Low income rents shall be set at thirty-five percent
(35%) of the rental rate for a Median income household, and Low income
rents shall be set at fifty percent (50%) of the rental rate for a
Median income household. The rents shall take into account the number
of people in the household, and shall be revised with every published
revision of HUD income limits. (see Appendix)
Tenants in this program may be required to pay a cleaning and/or
security deposit of not more than one half (~) the cost of the monthly
rent.
(E) Percentage of Housing units in Each Income Level
One hundred percent (100%) of the rental units constructed under this
program must be affordable to Low Income households, with the exception
that for every three (3) units which are affordable to very Low income
households, one (l) unit may be rented at the rental rate for a Median
income household. A maximum of fifteen percent (15%) of the units may
be rented at the rental rate for a Median income household. No units
may be rented for more than the rental rate for a Median income
household.
section 4.04 Procedure for selling Affordable Dwelling units
(A) All saleable dwelling units constructed through this program shall be
sold to households which qualify for affordable housing, as determined
by the city or its designee. Resale of these homes shall be subject
to Resale controls which will ensure that these units remain
affordable housing.
(B) The City or its designee shall establish a list of qualified buyers.
All home buyers in this program shall be selected from this list.
(C) All prospective home buyers shall have their eligibility verified by
the City or its designee prior to unit purchase.
Affordable Housing
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(D) All dwelling units constructed under the terms of this program shall
be owner-occupied, and all applicants shall certify, prior to escrow
closure, that the unit being purchased shall be maintained as the
purchaser's primary place of residence. Failure of the purchaser to
maintain eligibility for a homeowner's property tax exemption shall be
construed as evidence that the unit is not the primary place of
residence of the property owner. If a purchaser is found to not be
using the home as his or her primary place of residence, the purchaser
will be required to sell the home back to this program for a price
equivalent to the purchase price of the home, adjusted for inflation,
plus the adjusted amount of any substantial capital improvement
expenditures.
(E) Resale of these units shall be conducted through this program. The
seller of any home purchased through this program may receive a price
equivalent to the purchase price of the home, adjusted for inflation,
plus the adjusted amount of aoy substantial capital improvement
expenditures which were approved by the city under this program, prior
to installation. Any costs necessary to repair the unit, in the event
it has been allowed to deteriorate, shall be subtracted from the price
received by the seller.
(F) Houses purchased through this program may not be transferred to
heirs. Upon the death of a home owner, the property shall be re-sold
through this program. The estate of the deceased may receive a price
equivalent to the purchase price of the home, adjusted for inflation,
plus the adjusted amount of any substantial capital improvement
expenditures. Any costs necessary to repair the unit, in the event it
has been allowed to deteriorate, shall be subtracted from the price
received for the property.
(G) prospective purchasers in this program may not own any other dwelling
units.
(H) All home buyers shall enter into a Contract, recorded on the property,
which provides that the home shall be subject to Resale Controls and
shall remain in the city's Affordable Housing program.
(I) Cost of Housing:
The prices of the owner-occupied units shall be determined by the city
or its designee, and shall be revised each year. The formula for
determining the mortgage rate is included in the appendix.
(J) Percentage of Housing Units in Each Income Level:
One hundred percent (lOO%) of the dwellings constructed for sale under
this program must be affordable to Low income households, with the
exception that for everyone (1) unit affordable to very Low Income
households, one (l) unit may be sold at a price affordable to a Median
income household.
Affordable Housing
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section 4.05 Eligibility Requirements
The City or its designee shall select potential occupants of units
constructed under this program from a list of people qualified on the
basis of household income and assets, credit ratings, HUD income
statistics, household size, the size of available units, and any other
criteria established by the city in conformance with this criteria.
Priority selection shall be given to applicants in the following
categories:
* FIRST PRIORITY: Applicants who have maintained their primary place of
residence within the city of Gilroy for at least one year.
* SECOND PRIORITY: Applicants who have maintained their primary place of
employment within the city of Gilroy for at least one year.
* THIRD PRIORITY: All other applicants.
All eligible applicants must be first time home buyers, which is defined
as:
1. Those who haven't owned a home in the last three years.
2. Newly single head of households who may have been homeowners within
the last three years, but meet the income eligibility requirements.
All potential home buyers must be pre-screened and lender pre-qualified.
section 4.06 Occupancy standards For Rental units
The criteria for occupancy shall be the same as the standards set forth by
the santa clara county Housing Authority, as shown here. These are as
follows:
(A) criteria for Occupancy standards:
It shall be the family'S responsibility to report fully and completely
on the household composition to ensure the appropriate bedroom size is
assigned to each applicant family.
The number of bedrooms are to be assigned in accordance with the
minimum and maximum occupancy standards set forth in Chart 1 (see
Appendix), however the rental rate for each unit shall be based on the
housing requirements for a typical family, as set forth in Figure 1 of
the Appendix. The appropriate dwelling unit size for the family will
be determined by applying the following criteria:
l. One bedroom certification will be assigned to single person
households, only when there are no zero bedroom allocations
available or when there are no zero bedroom units readily available
in the area.
Affordable Housing
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2. The bedroom size assigned should not require more than two (2)
persons to occupy the same bedroom. In addition, the living room
need not be used as a sleeping room. This requirement may be
deviated from, in order to allow the maximum number of people to be
assigned to a dwelling unit, as shown in chart 1 (see Appendix).
3. Family members of the same sex will share a room, regardless of age
difference.
4. The bedroom size assigned should not require persons of the
opposite sex, except husband and wife, to occupy the same bedroom.
Infants or very young children under the age of five (5) may share
the same bedroom even if they are of opposite sex. Once a child
who shares a bedroom with another child of the opposite sex reaches
the age five (5), a new rental unit may be assigned to the family,
unless the renter can comply with these requirements by making
other sleeping arrangements in the same unit.
5. The head of household, if single, shall be assigned a separate
bedroom.
6. Every family member, regardless of age, is to be counted as a
person. An unborn child will not be counted as a person needing
sleeping accommodations.
7. In cases of verifiable medical or attendant need or hardship t~TeT7
~efte~a~~efta~-a~EEe~efteee-e~-eft~e~a~ea-aae~~et, the City or its
designee has the discretion to deviate from the guideline found in
chart 1.
Mont.hly Rent.
under Program:
$521
$744
$893
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Affordable Housing Appendix
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Revised 2/02/93
APPENDIX
May 1992 Income Limits for santa clara County
Figure 1
Area Median Income: $59,500
Number of Persons in Family
STANDARD -L --L- ~ ~ ---L.. -L
Very Low Income 20850 23800 26750 29750 32150 34500
Lower Income 27000 30900 34750 38600 41700 44800
Median Income 41650 47600 53550 59500 64250 69000
Moderate Income 50000 57100 64250 71400 77100 82800
RENTAL UNITS:
An example of how rental rates will be determined, based on the May, 1992
HUD publication of income limits is shown below for a three bedroom
dwelling unit, which would house a family of four (4). The rental rate
for this size unit is found by adjusting the Median income level for a
family of four by thirty-five percent (35%) for very Low income units,
fifty percent (50%) for Low income units, and sixty percent (60%) for
Median income units. This number is then multiplied by ~weft~y-e~~ft~
~e~eeft~-t~8%t t.hirt.y percent. (30%), in order to determine the amount of
money which will be spent on rent each year. Dividing this number by
twelve gives the monthly rental rate.
Very Low Income
Low Income
Median Income
Median Income:
Income Factor:
Adjust.ed Income:
Percent. of Income
Spent on Rent.*:
Annual Housing
Expendit.ure:
$59,500
x 0.35
$20,825
$59,500
x 0.50
$29,750
$59,500
x 0.60
$35,700
x 0.30
x 0.30
x 0.30
$6,248
. 12
$8,925
. 12
$10,710
. 12
* Monthly rental cost will include the cost of all utilities (gas and
electric, water, sewer and garbage), with the exception of telephone 4
The cost of these utilities shall follow the standards set by the
Housing Authority of Santa clara county, and shall be updated with
every revision of these standards.
HUD income limits shall be used to determine eligibility for
in this program. However, the price of housing shall be set
rate in the categories of Very Low, LOW, and Median incomes.
will not vary based on the number of people in the household.
participation
at a standard
The prices
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Affordable Housing Appendix
2
Revised 2/02/93
The number of people housed in each size unit shall generally follow the
HUD guidelines listed in chart 1. These guidelines show the minimum and
maximum number of people which can be housed in each unit, although the
actual number of occupants may vary according to individual situations a
The rents shall depend on the number of bedrooms in each unit, and shall
be based on a typical family as follows:
Figure 2
Number of Bedrooms
In owellinq unit
Number of people
Typically Housed
single Residential Occupancy
studios
1
2
3
4
5
1
1
2
3
4
6
8
Families which require to be housed in a unit which has more bedrooms than
the same size typical family would need (e.g. a two person family which
needs to be housed in a two bedroom unit, rather than a one bedroom unit),
even though it may not exceed the minimum person per bedroom ratio listed
in chart l, shall pay the rent which would normally be charged for the
larger unit. This shall be true even though the rental rate may exceed
the rental rates which a person in that income bracket would normally be
charged.
The monthly rental rates for units constructed under this program, for the
year beginning May 1, 1992 and ending April 30, 1993, shall be as follows:
Figure 3
Number of Bedrooms
STANDARD SRO studio ----1- ---L -L -.!
Very Low Income $340 $340 $389 $437 $486 $564
Lower Income $486 $486 $555 $625 $694 $805
Median Income $583 $583 $666 $750 $833 $966
FOR-SALE UNITS:
Affordable Housing Appendix
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The formula which will be used to determine the monthly mortgage amount is
as follows:
Income
x PITI Ratio*
Annual Mortgage
.. 12
Allowable Monthly PITI*
- Monthly Taxes**
- Monthly Insurance Payment
Allowable Monthly Mortgage
*
PITI = Principal, Interest, Tax and Insurance. The PITI Ratio is the
percentage of the applicant's income that can be devoted to a mortgage
payment. This shall not exceed twenty-eight percent (28%) of the
applicant's income. (Note: This figure shall be set at 28%, as the
utilities are not included in this payment.) The annual interest rate
shall be based on an average of the interest rates from the previous
twelve months.
** Monthly Taxes = 0.01215 x sales Price.. 12 (This is an industry
standard)
An example of the monthly mortgage payment for a family earning the Median
income in Santa clara County, using the above formula, is as follows:
$59,500
x .28
16,660
.. 12
1,388
178
50
$1,160
Income
PIT I Ratio
Annual Mortgage
Months in a year
Allowable Monthly PITI
Monthly Taxes
Monthly Insurance Payment
Allowable Monthly Mortgage without Taxes and Insurance
A monthly mortgage of this amount would allow the applicant to buy a house
with a sales price of $;9&,4;7 $176,041 based on the following factors:
Family Income: $59,500 per year
Interest Rate: 8%
Down Payment: 10% of sales price
Length of Mortgage: 30 years
The amount mortgaged would then be $;SS,7;~ $158,437, based on the
following formula:
Sales Price of Home:
x percentaae of Downoavrnent: x
Downpayment amount:
Mortgage Amount:
$176,041
.10
$H,aH 17,604
$158,437
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Affordable Housing Appendix
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Revised 2/02/93
The sales price for units constructed under this program, for the year
beginning May 1, 1992 and ending April 30, 1993, shall be as follows:
Very Low Income: $85,826
Low Income: $111,861
Median Income: $176,041
Prices for homes sold in this program will be based on the home buyer
putting a maximum of a 10% downpayment on the home.
The monthly mortgage shall include PITI.
A~~-he~8eS-eeft8~rae~ee-!ef-8a~e-e8aer-~ftie-~Ee!fam-9fta~~-ftaYe-a-miftimam-e~
~ftFee-he8reem8T All units constructed through this program must contain a
minimum of one bedroom. Developments may contain a variety of different.
sized units in the following ratios:
A maximum of twenty percent (20%) of the units may contain one bedroom.
A maximum of twenty percent (20%) of the units may contain two
bedrooms.
A minimum of sixty percent (60%) of the units must be three bedrooms or
larger.
Applicants are responsible for financing their units.
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Official Seal of the City of Gilroy this 23rd day of
February
,1993.
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I, SUSANNE E. STEINMETZ, City Clerk of the City of Gilroy, do
hereby certify that the attached Resolution No. 93-10
is an original
resolution, duly adopted by the Council of the City of Gilroy at an
adjourned regular meeting of said Council held on the 22nd
day of
February, 19~, at which meeting a quorum was present.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the
A ~0.df;-:::-:
~erk of the City Of~
(Seal)