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)