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Resolution 2006-76 RESOLUTION NO. 2006-76 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF GILROY APPROVING M 06-16 AMENDING THE CITY'S "AFFORABLE HOUSING EXEMPTION PROCEDURE" TO MAKE AFFORD ABILITY LEVELS CONSISTENT WITH STATE DEFINITIONS FOR "AFFORDABLE HOUSING" AND TIERING AFFORDABILITY LEVELS TO ASSIST DEVELOPERS IN MARKETING OWNERSHIP UNITS TO INTENDED LOW AND MODERATE INCOME HOUSEHOLDS WHEREAS, existing language in the City's Affordable Housing Exemption Procedure (AHEP) references percentages and certain terms, such as "median income" households rather than "moderate income" households, that are not currently consistent with the State of California's definitions for "affordable" for low and moderate income households; and WHEREAS, the existing percentages defining affordability make it difficult for developers to market affordable units to targeted income households; and WHEREAS, developers of affordable housing have found it difficult to market for sale units to persons earning in the lower end of appropriate income categories; WHEREAS, as a result, City staff has proposed amendments to the AHEP (the "Proposed Amendments") that would make affordability levels and terminology consistent with the levels and terminology used by the State of California and that would assist developers in marketing ownership units to intended low and moderate income households at all levels of income within low and moderate income ranges; and WHEREAS, the Proposed Amendments are exempt pursuant to CEQA Guideline 15061(b)(3), because it can be seen with certainty that these changes will have no significant effects on the environment; and WHEREAS, On September 12, 2006, the Housing Advisory Committee (HAC) reviewed and recommended approval of the Proposed Amendments to the Planning Commission and the City Council; and WHEREAS, the Planning Commission held a duly noticed public meeting on November 2, 2006, at which time the Planning Commission considered the HAC recommendation, the staffreport dated October 12,2006 ("Staff Report") as well as all evidence received, including public testimony; and 1 Resolution No. 2006-76 IVPAPP\710659.1 112706-04706012 WHEREAS, the Planning Commission recommended approval of the Proposed Amendments with no changes; and WHEREAS, the City Council held a duly noticed public meeting on November 20, 2006, at which time the City Council considered the Planning Commission and HAC recommendations, the Staff Report, as well as all relevant evidence received, including public testimony; and determined to approve the Proposed Amendments. NOW, THEREFORE, BE IT RESOLVED THAT: SECTION I The City Council of the City of Gilroy hereby makes the following findings: A. The proposed changes to the Affordable Housing Exemption Procedure are consistent with the intent of the text of the General Plan, specifically the following sections encouraging creation of affordable housing: Housing Element - Goal 9 - Housing Mix Housing of different types, prices and tenure (for sale and for rent) to meet the City's 'fair share' of regional housing need, mixing different housing types and price levels throughout the community and within each new neighborhood. The proposed amendments would expand opportunities for households earning between 60% and 80% of the median income. Housing Element - Action 10.A - Residential Development Ordinance (RDO). Provide more units that are affordable through the Residential Development Ordinance through evaluation of the current process, revision of the point allocation system, provision of a mechanism to ensure long-term affordability, and monitoring guarantees of affordability. The City evaluated the current process and is proposing the amendments under consideration to expand affordability to households earning 60% to 80% of the median income. 2 Resolution No. 2006-76 IVPAPP1710659.1 112706-04706012 (B) The proposed amendments will result in the City's target percentages matching the State's definitions of affordable with respect to low and moderate income households. The City will then be able to effectively track low and moderate income ownership units created under the RDO Exemption Procedure process for reporting to the State and other entities. SECTION II 1. The City of Gilroy hereby amends the City's Affordable Housing Exemption Procedure to change certain existing references from "median income" households or residents to read "moderate income" households or residents in conformance with the terminology used by the State of California. 2. The City of Gilroy hereby amends Sections 1.04 (F) and 1.04 (G) of the City's Affordable Housing Exemption Procedure to read as follows: (F) Cost of Housing a. Houses constructed in this program should be affordable to Low and Moderate Income households in the following ratios: 1. At least 40% of the units should be affordable to households earning up to 60% of Median Income. 2. At least 15% of the units should be affordable to households earning above 60% up to 80% of Median Income. 3. At least 15% of the units should be affordable to households earning above 80% up to 100% of median income. 4. Not more than 30% of the units should be sold to households earning above 100% up t0120% of Median Income. The Median Income shall be as published by the California Department of Housing and Community Development for Santa Clara County. b. Residences constructed in this program shall be sold at or below the City of Gilroy's published sales prices or other pricing structure approved by the City prior to initiating outreach and marketing efforts required in Section 1.02.G of this document. (G) If the developer is unable to find Low and Moderate Income buyers who are qualified to purchase homes through this program, the developer 3 Resolution No. 2006-76 IVPAPP1710659.1 112706-04706012 shall be required to continue to solicit potential Low and Moderate Income buyers for eight (8) months after the date of issuance of the Certificate of Occupancy. After this time, the developer shall be allowed to sell the homes to any person, without regard to income levels. These homes shall, however, be sold at Low and Moderate Income prices, as determined by the City, and shall remain affordable, in accordance with this policy. The applicant shall provide the City with a report on the marketing efforts of these projects, prior to the end of the eight month period. Overall, homes must be sold at a ratio of 50% to Low Income households, and 50% to Moderate Income households. (H) For sale homes constructed through this program shall not be leased or rented, unless exceptional circumstances are established by the owner that the leasing or renting of the home is necessary and approved by the City Planning Division and Division of Housing and Community Development. Any such lease or rental shall be consistent with the rental rates as established by this policy for Very Low, Low, and Moderate Income households and limited in time to not more than one-year. SECTION III The Affordable Housing Exemption Procedure as revised by this Resolution is attached hereto in its entirety as Exhibit A. 4 Resolution No. 2006-76 IVPAPP1710659.1 112706-04706012 PASSED AND ADOPTED this 4th day of December, 2006 by the following vote: AYES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: ABSENT: COUNCILMEMBERS: }ut/d Rho da Pellin, City Clerk I " ~~,.,~ ^ '"" IVPAPP1710659.1 112706-04706012 ARELLANO, BRACCO, CORREA, GARTMAN, VALIQUETTE, VELASCO and PINHEIRO NONE NONE 5 Resolution No. 2006-76 EXHIBIT A ROO AFFORDABLE HOUSING EXEMPTION PROCEDURE City of Gilroy Revised December 4, 2006 Section 1.00 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) (3) and (4). 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 that is affordable to Very Low, Low and Moderate income households, as specified in this document. Section 1.01 Definitions Affordable Housing: A dwelling unit, either rented or owned, which is affordable to households with Very Low, Low, or Moderate incomes, as specified by this document. Aoolicant: Any person, partnership, corporation, firm, or any entity or combination of entities, which seek permits or approval for residential development in the City of Gilroy. Dwelling 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: United States Department of Housing and Urban Development. 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 Moderate income households, as defined in this document, for a specified time. Page 1 of 6 Residential Oevelooment (ROO): All development that 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 Oevelooment Ordinance: Section 50.60 of the City of Gilroy Zoning Ordinance that encourages responsible growth in the community, and restricts the amount of housing which may be constructed each year. Very Low. Low and. Moderate Income Levels: Income categories established by HUO for Santa Clara County. Very Low and Low income levels are calculated based on Median household size and income. Section 1.02 General Requirements (A) One hundred percent (1000/0) of the housing units granted an exemption from the Residential Development Ordinance under this program must be sold and/or rented at prices that are affordable to Very Low, Low, or Moderate income households, as specified by sections 1.03 and 1.04. The procedure for this exemption shall be as follows: Procedure: (1) The applicant must apply for an "ROO Affordable Housing Exemption," and must submit all required fees at the time of application. Consideration for approval of this application shall be made in accordance with the criteria contained within Zoning Ordinance section 50.62. (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 that will be affordable to households with Very Low, Low, and Moderate incomes, as defined by this document. (3) Rental and/or sale prices of all units shall be reviewed and approved by the City, and shall be affordable to households with Very Low, Low, and Moderate incomes, as specified by sections 1.03 and 1.04. (4) Approval of the application will be based upon compliance with this policy and all other City requirements, as may be updated from time to time. The applicant must receive approval of the ROO exemption prior to Tentative Page 2 of 6 Map approval. In situations where a Tentative Map is not required, the applicant must receive approval of the ROO exemption prior to Architectural and Site Review approval. (5) After approval of this application, and prior to receiving Tentative Map approval (or Architectural and Site Review approval in situations where Tentative Maps are not required), the applicant must enter into a contract with the City (hereafter referred to as Agreement) agreeing to provide affordable housing as delineated in this policy, and as approved by the City Council. This Agreement will assure affordability of the units. Failure to comply with the terms of the Agreement will void all approvals, and the project will not be allowed to proceed without complying with the Residential Development competition procedures of Zoning Ordinance section 50.60, regardless of the stage of construction of the project. (8) The applicant shall advertise the existence and terms of this policy to the general public and accept applications from prospective purchasers and tenants. The applicant shall keep a list of all qualified purchasers and tenants, and shall make this list, along with pertinent financial data, available to the City upon request. (e) All tentative maps, 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 required for market rate housing. This requirement shall apply to projects that consist solely of affordable housing units, as well as projects that combine affordable housing with market rate housing. (E) Low and Very Low income rental units constructed through this program shall be affordable for a minimum of 55 years, and Low and Very Low income for-sale units shall be affordable for a minimum of 30 years. Grant deeds and/or Codes, Covenants and Restrictions (CC&Rs) for units constructed under this program shall state that these units are required to remain affordable for these time periods, and shall be recorded against the property with the County Recorder of Santa Clara County. Page 3 of 6 (F) Resale controls shall be incorporated as part of the Agreement signed by individual purchasers of these units. This Agreement shall be recorded against the property with the county recorder of Santa Clara County. (G) The developer shall provide the City with a detailed outreach and advertising plan, in order to insure the housing needs of existing Gilroy Very Low, Low, and Moderate Income residents are met. Section 1.03 Procedure for Renting Affordable Units (A) The City reserves the right to review documents and verify the eligibility of all prospective tenants. (B) In the event an income increase disqualifies a tenant [from hereon referred to as Over-Income Tenant] from meeting the income requirements to rent a unit through this program, the following rules shall apply: (1) The property owner shall re-certify incomes annually. If a tenant is found to make more than 1200/0 of the maximum income to qualify as a Low Income household, the tenant will be given up to 90 days to relocate. (2) During the time the Over-Income Tenant continues to rent the unit, the rental rate of the unit may not increase above the maximum rental rates per bedroom size which are determined by the City (see Appendix) . (e) The developer shall specify, in the Agreement entered into with the City, the number of units that are to be constructed and the number of bedrooms in each unit. (D) Cost of Housing: Rental housing constructed through this program shall be affordable to Very Low, Low, and Moderate income households, consistent with the intent of this policy. Rental rates shall be equivalent to the California Tax Credit Allocation Committee (CTCAC) 500/0 income level rental rates for Santa Clara County. The rental rates shall be revised with every published revision of California Tax Credit Allocation Committee (CTCAC) rental rates. (See Appendix) Tenants in this program may be required to pay a cleaning and/or security deposit of not more than the cost of the monthly rent. Page 4 of 6 Section 1.04 Procedure for Selling Affordable Dwelling Units (A) All saleable dwelling units constructed through this program shall be sold to households that qualify for affordable housing, as defined in this document. For thirty years from the sales date, resale of these homes shall be subject to a resale Agreement that will ensure that these units remain affordable housing for a period of years as specified in the Agreement. The standard time period for affordability should be no less than 30 years. Transfer of these homes shall be to Very Low, Low, and Moderate Income households, and will be subject to the same resale restrictions applied to the original sale. Transfers by gift, devise, or inheritance to an existing spouse, surviving joint tenant, or a spouse as part of a dissolution proceeding, or in connection with marriage shall not be considered a transfer for the purpose of this policy. (B) The City reserves the right to review and approve documents verifying the eligibility of all homebuyers, prior to sale and transfer of each property. (e) All dwelling units constructed under the terms of this program shall be sold to owners who occupy the residences as their principal place of residence. (D) Resale of these units shall be conducted as provided for in this policy. Upon resale, the purchaser's income must correspond to the initial income category established for this unit by the developer. (E) All homebuyers shall enter into an Agreement, recorded on the property, which provides that the home shall be subject to Resale Controls. (F) Cost of Housing: a. Houses constructed in this program should be affordable to Low and Moderate Income households in the following ratios: 1. At least 400/0 of the units should be affordable to households earning below 600/0 of Median Income. 2. At least 150/0 of the units should be affordable to households earning above 600/0 up to 800/0 of Median Income. 3. At least 150/0 of the units should be affordable to households earning above 800/0 up to 1000/0 of the Median Income. 4. Not more than 300/0 of the units should be sold to households earning above 1000/0 up to 1200/0 of Median Income. Page 5 of 6 The Median Income shall be as published by the California Department of Housing and Community Development for Santa Clara County. b. Residences constructed in this program shall be sold at or below the City of Gilroy's published sales prices or other pricing structure approved by the City, prior to initiating outreach and marketing efforts required in Section 1.02.G of this document. (G) If the developer is unable to find Low and Moderate Income buyers who are qualified to purchase homes through this program, the developer shall be required to continue to solicit potential Low and Moderate Income buyers for eight (8) months after the date of issuance of the Certificate of Occupancy. After this time, the developer shall be allowed to sell the homes to any person, without regard to income levels. These homes shall, however, be sold at Low and Moderate Income prices, as determined by the City, and shall remain affordable, in accordance with this policy. The applicant shall provide the City with a report on the marketing efforts of these projects, prior to the end of the eight (8) month period. (H) For sale homes constructed through this program shall not be leased or rented, unless exceptional circumstances are established by the owner that the leasing or renting of the home is necessary and approved by the City Planning Division and Division of Housing and Community Development. Any such lease or rental shall be consistent with the rental rates as established by this policy for Very Low, Low, and Moderate Income households and limited in time to not more than one-year. Page 6 of 6 APPENDIX RENTAL UNITS Rental rates will be based on unit size, and will not distinguish between the income levels of the renters. The rental rate for a unit is found by using the following steps: 1. The typical household size each unit can accommodate is determined by using figure 1, although the number of people actually housed in each unit will vary by circumstance. 2. Rental rates shall be equivalent to the California Tax Credit Allocation Committee (crCAC) 500/0 income-level rental rates for Santa Clara County. Figure 1 Number of Bedrooms In Typical Household Size Dwelling Unit Single Residential Occupancy 1 Studios 1 1 2 2 3 3 4 4 6 5 8 The project manager shall provide the City with a rental report in January, April, July and October of each year. This report shall provide the following elements: 1. Name of the project 2. Number of Units in the project 3. Rental rate of each unit 4. Name, unit number, and income level of each lease holder. Page 1 of 2 FOR-SALE UNITS: HUD income limits shall be used to determine eligibility for participation in this program. Houses constructed in this program should be affordable to Low and Median Income households in the following ratios: 1. At least 400/0 of the units should be affordable to households earning 500/0 to 600/0 of Santa Clara County Median Income, as defined in the Policy. 2. 300/0 of the units should be affordable to households earning up to 1000/0 of Santa Clara County Median Income, as defined in the Policy. 3. Not more than 300/0 of the units should be sold to households earning between 1000/0 and 1200/0 of Santa Clara County Median Income, as defined in the Policy. The City Council may permit an exception to the above ratios and approve the allocation of market-rate units from the Market-Rate Exempt pool, not to exceed 250/0 of the total units in a development, if the development meets the following criteria: a) Total Affordable Units in a project meet the following affordability levels (calculated as a percentage of the total affordable units): . 200/0 below 500/0 of Santa Clara Median Income . 250/0 between 500/0 and 800/0 of Santa Clara Median Income . 250/0 between 800/0 and 1000/0 of Santa Clara Median Income . 300/0 between 1000/0 and 1200/0 of Santa Clara Median Income b) The project complies with the requirements of the Neighborhood District policy. c) A Master Plan is required d) The development provides substantial public and/or private infrastructure improvements, beyond those required by the "Neighborhood District Policy," as negotiated through a Development Agreement. The applicant shall submit proposed sales rates to staff, with backup documentation demonstrating that the units will be affordable to buyers in each income category in the specified percentages. The following provisions will apply to all homes sold under this program: . Prices for homes sold in this program will be based on the homebuyer putting a maximum of a 100/0 down payment on the home. . The monthly mortgage shall include PITI. . All projects constructed through this program must provide a minimum of three bedrooms in twenty percent (200/0) of the units. . Applicants are responsible for financing their units. Page 2 of 2 I, RHONDA PELLIN, City Clerk of the City of Gilroy, do hereby certify that the attached Resolution No. 2006-76 is an original resolution, or true and correct copy of a city resolution, duly adopted by the Council of the City of Gilroy at a regular meeting of said Council held on the 4th day of December, 2006, at which meeting a quorum was present. IN WITNESS WHEREOF, I have hereunto set my hand and affixed the Official Seal of the City of Gilroy this 15th day of December, 2006. ~ (Seal)