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RM JM bm Jk mcluslonary rents & pnces Santa MOnlca, California - -
Cou nC11 Meeting August 12, 1997 AUG 1 2 1997
TO City Council
FROM City Staff
SUBJECT CIty CouncIl Resolution to Establish 1997/1998 Maximum Allowable Income,
Rents and Purchase Pnces for lncluslonary HousIng Units
INTRODUCTION
ThIS report recommends City Council adoption of a resolution establishing the maxImum
allowable Income, rents and purchase pnces for IncJuslonary housing units subject to
Ordinance 1615 The ordInance provides for City CounCil to set these maximum rents and
purchase prrces annually City staff calculates these maximum allowable rents and
purchase prrces based on a defined method as set forth In the Inciuslonary Housing
Program GUidelines ("the program gUidelines")
BACKGROUND
On November 6, 1990, the voters of the City of Santa Monica approved PropOSition R,
adding Section 630 to the City Charter PropOSition R prOVides that the City shall reqUire
that not less than 30% of all multifamily residential housing newly constructed In the City
on an annual baSIS be permanently affordable to and occupied by low and moderate
Income households A low Income household, IS defined as a household whose Income
does not exceed 60% of L A County medIan mcome, adjusted by family size A moderate
Income household IS defmed as a household whose Income does not exceed 100% of the
1 6C
AUG 1 2 1997
L A County median mcome, adjusted by family size At least 50% of the reqUIred
affordable Units must be affordable to low Income households On March 3, 1992, the City
Council adopted Ordmance 1615 to Implement Proposition R
On December 14, 1993. CIty Council took further action Implementing Ordinance 1615 by
approving the Incluslonary Housing Program GUIdelines and adopting a resolution to
establish maximum allowable rents and purchase pnces for mcluslonary Units Ordinance
1615 provides that the City Council IS to establIsh maximum allowable rent and purchase
pnces for Incluslonary umts annually
On August 13, 1996 the City Council adopted a resolution establishing the 1996-97
maximum rents, purchase pnces and Income eligibility limits for the Incluslonary Housing
Program The maximum rents and eligibility figures for 1997-98 are the same as last
year's because the median Income figure for Los Angeles County did not change The
maximum purchase prices, however, have changed due to a minor Increase In the mterest
rate factor These Issues are discussed In more detaIl below
DISCUSSION
Maximum Allowable Income
To be eligible for an InCIUSlonary umt. households shall not earn more than the maximum
allowable Income for a low and moderate Income household adjusted by household size
The 1997/1998 maxim um allowable Income for low and moderate Income households IS
shown In Exhibit 1
2
Maximum Allowable Rents
The Incluslonary Housing Program GUidelines (Ordinance 1615) set forth the method for
calculatrng the maxImum rent for all rental rncluslonary units The maxImum rent for low
Income households IS equal to 30% of the monthly Income for households earning 60% of
the median Income for a four person household, as published by the U S Department of
Housrng and Urban Development (HUD), and adjusted for umt sIze (I e number of
bedrooms) The maximum rent for moderate Income households IS equal to 30% of the
monthly Income for households earning 100% of the median Income for a four person
household. as published by HUD and adjusted for Unlt Slze A bedroom adjustment factor
IS used rn establlshrng maximum rents per OrdInance 1615 as shown In ExhIbit 2
The maxImum allowable rents for low and moderate Income un Its for 1997/1998 are shown
on Exhibit 2 For 1997, the maximum allowable rent for a low Income household renting
a one-bedroom unit IS $616 and the maximum allowable rent for a two-bedroom unit IS
$731 The maximum rents for a moderate Income 1-bedroom Unit and 2-bedroom umt are
$1.026 and $1.218 respectIvely
Maximum Purchase Price
The mortgage amount IS calculated on the baSIS of maximum allowable rncome, Interest
rates, tYPical homeowner assoclatlOn fees, property taxes and pnvate mortgage Insurance
assuming a 10% down payment In order to set the maximum purchase pnces, the
program gUidelines reqUire staff to assume an Interest rate for fixed rate loans uSing the
mldpornt between the high and low reqUired Yield as set by Fannie Mae dunng the prior
3
twelve months Additionally. homeowner aSSociation fees are calculated on the basIs of
an annual survey of fees for newly constructed condominiums In the City As reflected In
Exhlblt3, the calculatIons assume the followmg (1) Interest Rate at 805%, (2) Homeowner
Association Fees at $200 per month. (3) Property Taxes at the assessment year rate of
1 25%, (4) Pnvate Mortgage Insurance calculated at 0 52% ofthe loan amount In setting
the maximum purchase prices. a calculation for a four-person household at both 60% and
100% of med Ian Income IS prepared These purchase prices are then adJ usted by the unit
size (I e bedroom adjustment factor), which Incorporates assumptIons of household size
The maximum allowable purchase prices for low Income and moderate Income Units for
1997/98 are shown on Exhibit 3 The maxImum purchase pnce for a low Income household
bUYing a one-bedroom unit IS $56,477 and the maxImum purchase price for a two-bedroom
IS $67,067 The maximum purchase price for a moderate Income household buymg a one-
bedroom Unit IS $107,352. while the maximum purchase prrce for a two-bedroom unit IS
$127.480
ADMINISTRA TION
MaXimum allowable rents and maximum purchase prices are available to the public from
the HOUSing DIVIsion and at the Plannrng counter
BUDGETARY FINANCIAL IMPACT
The are no financial or budgetary Impacts
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RECOMMENDA TIONS
It IS recommended that the CIty Council adopt a resolutIOn establishing the maXImum
allowable Income levels, maximum allowable rents and maximum allowable purchase
prices for Incluslonary units per the requirements of Ordmance 1615 as shown m ExhIbIt
1, Exhibit 2 and Exhibit 3 of this staff report
Prepared by Jeff Mathieu. Resource Management Director
Bob Moncrief. Housing Manager
Johanna Gullick. Housing Coordinator
Jim Kemper, Senior AdministratIve Analyst
Exhibits 1 1997 Maximum Allowable Income Levels for Incluslonary Housmg
2 1997 Maximum Rents for Inclusronary Housing
3 1997 Maximum Purchase Prices for Incluslonary Housmg
5
EXHIBIT 1
I 1997 MAXIMUM ALLOWABLE INCOME LEVELS I
For lncluslonary Housing
'\I~XI~ILv1 r\CO:'v1E LEVELS
BY HOUSEHOLD SIZE '"I.KD r!\CO\.fE CATEGORY
T,"COME CALCL"LA TIO~ ~ledtan Income x AffordabllJt) Standard x Household Adjustment Factor
.\rledlan Income 1997 I $51.300 I "4 - PERSO, HOCSEHOLD"
Affordablhty 51:andard 30<ljo
---
Household AdJUstment Factors.
I-person o 7000
2-persun o 8000
3-pelson o 9000
4- pel SOil 1000(1
5-p~r\(1l1 L 0800
6- rer~on I 1600
7_person 12400
8-person 13200
-- ~- --
MAxnn:M T'\"CO\"TE U::VELS
Househ...vld Size - ---
Lo~ - 60% :\loderate - 100'%
1- Person 52 I. 546 535.910
:-Pelson S246:4 541.040
3-Pelson ':\27702 $46.170
4-Person 1;,30 780 $51300
5- Person $33.242 $55 404
r>. Person $35_705 559.508
7-P~rson 538.167 563.612
S- Pel SOil 540.630 567,716
08 '05 '97 97\-1AXI'\C \\'K4
EXHIBIT 2
I 1997 MAXIMUM RENTS I
For I ncluslonary Housing
\l-\XlIvlCM REt\'TS BY
f'\COf\.IF CA. TFGORY A 1\T) CNIT ST7.E
MO:\TJIL Y RENT C~.LCCLA TlO"\' ()'ledlan Income x Income Category x Bedroom Adjust x Affordabllltv Standard) /12
\-1edwn Incomu297 I 551.300 I "4 - PERSO::--I HOCSEHOLD"
- --
--- -
Affordablhty Standard~ 30%
--~- -
- - - --
- -- - -~ ---
B.edtQQllL AdJ U stLUem~ o Bdr 0700
I Bdr 0800
: Bdr 0950
3 Bdr 1085
4 Bdr 1225
-- -- --~ -- --
]\fA XnJC\f "U)NTHT T RENTS
Lnlt Size I.ow - 60% l\Ioderate - 100%
O-BDR[l..l 5539 ~898
I-BDR}"-l 5616 $1.026
2-BDR\.1 $731 51.218
3-BDR\.1 $835 S 1.3 92
4.BDR\1 5943 S 1.571
08:05:97 97REKTS WK4
EXHIBIT 3
MAXIMUM PURCHASE PRICES FOR INCLUSIONARY HOUSING (1997)
Median Income (1997) $51,300
Affordablhty Standard 30%
Interest Rate 8 070%
Term (months) 360
UnIt --- -- - ---- - - ---- ---
UnadJusted o bed 1 bed 2 bed 3 bed
Bed Adj. 1 070 080 095 1 085
---
LOW INCOME UNITS
Percent of Median 60 00%
Annual Income $30,780
Affordable Housing Cost (mo ) $770
Homeowner ASsOciation Fees (mo ) $200
Property Taxes ( 1 25% [mo ]) $73
PMI ( 52% of loan amount [mo D 527
Affordable Mortgage Payment (mo ) $469
Affordable Mortgage $63.437
Downpayment @ 10% $7,049
Sales Price @ 10% downpayment $70;4~ $49~340 $56.388 ~~6.9~1 $76.477
MODERATE INCOME UNITS
Percent of Median 1 00 00%
Annual Income 551,300
Affordable Housmg Cost (mo ) S 1,283
Homeowner Association Fees (mo ) $200
Property Taxes ( 1 25% [mo ]) $140
PMI ( 52% of loan amount [mo ]) $52
Affordable Mortgage Payment $891
Affordable Mortgage 5120.581
Downpayment @ 10% $ 13.398
Sale Price @ 10% downpayment $133,97~~ _ _ $93JZ~5 _ _$107,183 $127-1.?80 $145.367
08/05/97 97PRICE WK1
\
I
City Council Meeting 8/12/97 Santa MOnica. California
RESOLUTION NUMBER 9174
(City Council Series)
A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF SANTA MONICA ESTABLISHING
THE 1997-98 MAXIMUM ALLOWABLE RENTS AND
MAXIMUM ALLOWABLE PURCHASE PRICES
FOR THE INCLUSIONARY HOUSING PROGRAM
WHEREAS. the City Council of the City of Santa Monrca adopted Ordinance
Number 1615 (CCS) on March 3.1992. Santa MOnica Munlclpal Code Sections 928 gl.
seq ("the Incluslonary Housing Program"), and
WHEREAS, Santa MonJca MunicIpal Code Section 928 100 provides that the
City Council by Resolution shall establish and adjust on an annual basIs the maximum
allowable rents and maximum allowable purchase prices for mcluslonary Units under
the InclusJonary Housing Program
NOW. THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA MONICA
DOES RESOLVE AS FOLLOWS
SECTION 1 The maximum allowable Income levels and maxImum
allowable rents and maxImum purchase prices for mcluslonary Units under the
I ncluslonary Housmg Program are as shown In Exhibit 1 attached hereto and
Incorporated herein by reference
1
,
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I
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SECTION 2 The City Clerk shall certify to the adoptIon of this Resolution,
and thenceforth and thereafter the same shall be In full force and effect
APPROVED AS TO FORM
1 <f .
!lLo--<- J ~,~ j~ I-f-{.;./
Marsha Jones -Moutrre
CIty Attorney
F '.HOC~]'G.~H'"I.Rj:>.\~'PFILE~".JKCLUSN.Il1;;1us rents pnces resolution "'pel
2
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Adopted and approved thIS 12nd of August 1997
,
~A1t1 O~tl^--- - -
ram OTOllllOr. Mayor
i
L Mana 1\'1 Stevv"art. CIty Clerk of the CIty of Santa MOllIca. do hereby cernfy that the
foregomg ResolutIon 9174(CCS) \-,,-as duly adopted at a meetmg of the CIty CouncIl held on the
12nd of August. 1997 by the followmg vote
Ayes Councllrnembers Ebner. Femstem. Genser. Greenberg. Mayor Pro Tern
Holbrook y1ayor O'Connor. Rosenstem
Noes Councllmembers None
Abstam Councllmembers None
Absent Councllmembers None
ATTEST
~.~.~
Yiana M. Stewart. City Clerk
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