SR-081396-6H6H~
Council Meeting August 13, 1996 Santa Monica, California
Max Rents and Purchase Prices BM TR r'share~'wp fiieslmclusionary•
AUG ~3
TO city council
FROM City Staff
SUBJECT City Council Resolution to Establish 1996f 1997 Maxunum Allowable Income, Rents
and Purchase Prices for Inclusionary Housing Units
This report reconunends City Council adoption of a resolution establishing the maximum allowable
income, rents and purchase prices for inclusionary housuig wets subject to Ordinance 1615. The
ordinance provides for Ciry Council to set these maximum rents and purchase prices annually. City
staff calculates these maximum allowable rents and purchase prices based on a defined method as
set forth in the Inelusionary Housing Program Guidelmes ("the program guidelines"}.
On November b, 1990, the voters of the City of Santa Momca approved Proposition R, adding
Section 630 to the City Charter Proposition R provides that the City shall require that not less thari
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 houselolds. A low income
household, is defined as a household whose income does not exceed 60°10 of L A. County median
income, adjusted by family size. A moderate income household is defined as a household whose
income does not exceed 100% of the L A County median income, adjusted by farnily size. At least
50% of the affordable units must be affordable to Iow income households. On March 3, 1992, the
City Council adopted Ordinance 161 ~ to implement Proposition R.
6 .~
AUK i
On December 14, 1993, Crty Council took further action unplemenhng Ordinance 161 ~ by
approving the lnclusionary Housing Program Guidelines and adopting a resolution to establish
maximum allowable rents and purchase pnces for Fnclus~onary amts Ordinance 1615 provides that
the City Council is to establish maximum allowable rent and purchase pnces for mclusionary units
annually.
Maximum Allowable Income
To be eligible for an inclusionary unit, households shall not earn more than the maximum allowable
income for a low and moderate income household adjusted by household size The 1996/1997
maximum allowable income for low and moderate income households is shown in Exhibit 1.
Maximum Allowable Rents
The inclusionary Housing Program Guidelines (Ordinance 1615) set forth the method for calculating
the maximum rent for all rental inclusionary 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 Housing and Urban Development
(HUI?), and adjusted for unit 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 unit size. A
bedroom adjustment factor is used m establishing maximum rents per Ordinance 1615 as shown in
Exhibit 2
2
The maximum allo~~~able rents for low and moderate income amts for 1996!1997 are shop;°n on
Exhibit 2 For 1996, the maximum allowable rent far a low mcome household renting a one-
bedroom unit rs $616 and the maximum allowable rent far a t«~o-bedroom amt is $731 The
maxztnum rents for a moderate mcome 1-bedroom unit and 2-bedroom amt are $1,026 and $1,218
respectn-ely
117aximum Purchase Price
Ordinance 161 ~ requrres the purchase price of an mclusronan- unit be based on the amount of a
mortgage that can be amortized over thirty rears by a buyer ~~-ho makes no more than the maximum
income for a low mcome household {60% of median} and a moderate mcome household {100% of
median) at 30% of gross income (housing affordability standard). assuming a 10% down payment
The mortgage amount is calculated on the basis of maximum allowable mcome. interest rates, typrcal
homeowner association fees. propert~° taxes and prrvate mortgage insurance In order to set the
maximum purchase prices. the program gutdelmes require staff to assume an interest rate for fixed
rate loans using the midpoint beri~=een the hrgh and low required yield as set by Fannre Mae dunng
the prior tu-elve months Addtt~onall~•, homeow~rxer association fees are calculated on the basis of an
annual survey of fees for ne~i~ly constructed condominiums in the City
In setting the maxinum purchase prices, a calculation for afour-person household at both 60% and
100% of median mcome rs prepared These purchase pnces are then adjusted by the unit size (i e.
bedroom adjustment factor), which incorporates assumptions of household size
The maximum allo«;°able purchase pnces for lo~v income and moderate mcome urns for 1996!97 are
shown on E~xhibrt 3 The maxirriurn purchase price for a lows income household buying a one-
3
bedroom unit is $57,278 and the maximum purchase pnce for atwo-bedroom is $6$,018 The
maxinum purchase pnce for a moderate income household buying aone-bedroom unit is $108,874,
while the maxunum purchase price for atwo-bedroom unit is $129,288 As reflected m Exhibit 3,
the calculations assume the fo11ou7ng (1) Interest Rate at 7.87%, (2}Homeowner Association Fees
at $200 per month, (3) Property Taxes at the assessment year rate of 1.25%, (4) Private Mortgage
Insurance calculated at 52 basis points of the loan amount.
Maximum allowable rents and maxinum purchase prices are available to the public from the
Housing Division and at the Planning counter
BiTDGETARY lE'INANCIAL IMPACT
The are no financial or budgetary unpacts
RECOMMENDATIONS
It is reconunended that the City Council adopt a resolution establishing the maximum allowable
income levels, maximum allowabhe rents and maxunum allowable purchase prices for inclusioniary
urns per the requirements of Ordinance 1615 as shown in Exhibit l , Exhibit 2 and Exhibit 3 of this
staff report
Prepared by: Jeff Mathieu, Resource Management Director
Bob Moncrief, Housing Manager
7ohanna Gullick, Housing Coordinator
Tina Rodriguez, Senior Administrative Analyst
Exhibits• 1 1996 Maximum Allowable Income Levels for Inclusionary Housing
2 1996 Maximum Rents for Inclusionary Housing
3 Maximum Purchase Pnces for Inclusionary Housing (1996)
4
199fi MAXIMUM ALLOWABLE INCOME LEVELS ~ ~x>~xT 1,
For Inclusionary Housing
DEED RESTRICTED BETWEEN 1988 - 1996 (wl 30°ln Affordal~lllty Standardl
MAXIMUM INCOME LEVELS
BY HOUSEHOLD SIZE AND INCOME CATEGORY
Medan Income 1996 51 300 "4 - PERSON I-IOUSEHOLD"
~~
Affordability Standard ~_ 30%
INCOME CAL~LATION Medan Income x Income Category x Household Adrustment Factor
H~ivicehold Admstment Factnrc.
50% 60% 80% 100% 120%
1-person 0 7000 0 7000 0 7000 0 7000 D 7000
2-person 0 8000 0 8000 0 8000 0 8000 0 8004
3-person 0 9000 0 9000 0 9000 0 9000 0 90{10
4-person 100(10 10000 10000 10000 10000
5 person 1 0700 1 0700 1 0700 1 0700 1 0700
G-person 11400 11400 11400 11400 11400
7-pe Goy 1 2100 1 2100 1 2100 1 2100 1 2100
8-person 12800 12800 12800 12800 12800
MAXIMUM [N(`C]ME LEVELS
DEFII RESTRIC.TF~ Low
~~ 40% $9%Q li~114 120%
1-PERSON $17 955 $21,546 $28 728 $35 910 $43 092
2-PERSON $20 520 $24 b24 $32 832 $41 040 $49 248
3-PERSON $23 085 $27 702 536 936 $46 170 $55 404
4-PERSON $25 650 $30,780 $41 040 $51 300 $61 560
5-PERSON $27 446 $32,935 $43 913 $54 891 $65 869
:6-PERSON $29 241 $35 089 546 786 $58 482 $70 178
7-PERSON $31 037 $37 244 $49 658 $b2 073 574 488
8-PERSON $32 832 39 39 $52 531 6 64 $78 797
f lhousmglshare1123fi1es196Inc
311196 HUDAFFRD WK4 04 02 PM
1996 MAXIMUM RENTS ~ ~XH~ix z
For Incluslonary Housing
QEED RESTRICTED BETWEEN 1386 - 1936 Ew/ 30% Affordahiliiv Standardl
MAXIMtiM RENTS BY
TNCOMF CATEGORY AND UT~~'I' Ci7.F.
MONTHLY RENT CALCiJLATION (Medan Income x Income Category x Bedroom Adjust x Affordability Standard) r12
yfedian Income 199E I 551.300 "4 - PERSON HOUSEHOLD"
Affordabthty Standard ._. 30%:
Bedtaam Adjustments. 0 Bdr 0 700
1 Bdr 0 800
2 Bdr 0 950
3 Bdr 1 085
4 Bdr 1 225
MAXIMTTM M(]NTHi.Y RF_.NTS
DFF.>) RF.CTRIC'TED j„Q~ Moderate
50% 60% 8~ ~ 120%
0-BDRM 5449 $539 $718 $898 $1077
1-BDRM $513 $61b $821 $1026 $1231
2-BDRM $609 $731 $975 $I 218 $1462
3-BDRM $696 5835 $1I13 $1392 $1670
4-BDRM $786 94 $T 257 1 571 $1 885
f lhousmglshare1123fi1es196rents
31196 HUDAFFRD WK4 04 13 P:4'1
MAXIMUM PURCHASE PRICES FOR INCLUSIONARY HOUSING (1996)
Medaan Income X1996)
Affordability Standard
Rate
Term
Unit
Bed Adt
LOW INCOME UNITS
Percent of Median
Annual Encome
Affordable Housing Cost
Homeowner Association Pees
Property Taxes (1.25°~ )
PMI (529'0 of loan amount}
Affordable Mortgage Payment
Affordable Mortgage
Uownpayment @ 10%
Sales Pnce @ 10%downpayment
MODERATE INCOME UNITS
Percent of Median
Annual Income
Affordable Housing Cost
Homeowner Association Fees
Property Taxes (1 25%)
PMI (.52% of loan amount)
Affordable Mortgage Payment
Affordable Mortgage
Downpayment @ 10%
Sake Price @ 10% downpayment
EXHIBIT 3
$51,300
30%
7 $70%
$360
;Unadjusted 0 bed 1 bed 2 bed 3 bed
1 0.70 0 80 0 95 1 085
60 DO%
$30,780
$770
!I $200
~ $75
$28
$467
$64,43$
$7,160
100 00%
$51, 300
$1,283
$200 i
$142
$53
$888
$122,483
~ $13,609 ~
$136,092 $95,265 $108,874 $129,2$8 $147,660 ,
321196 PRICE1 WK1
D
F IHOUSINGISHAREIWPFILESIINCLUSNlRES2
City Councrl Meeting 8113196 Santa Monrca, Calrfornra
RESOLUTION NUMBER 9Q77 {ccs)
(City Councrl Series}
A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF SANTA MONICA ESTABLISHING
THE MAXIMUM ALLOWABLE RENTS AND
MAXIMUM ALLOWABLE PURCHASE PRICES
FOR THE lNCLUSIONARY HOUSING PROGRAM
WHEREAS, the Crty Councrl of the Crty of Santa Monrca adopted Ordinance
Number 1615 (CCS} on March 3, 1992, Santa Monrca Munrcrpal Code Sections 9 28 ~
sea ("the Inclusronary Housrng Program"), and
WHEREAS, Santa Monrca Munrcrpal Code Sec#ron 9 28 100 pravrdes that the
City Councrl by Resolution shall estalJlrsh and adjust on an annual basis the maxrmum
allowable rents and maxrmum allowable purchase paces for rnclusronary units under
the Inclusronary Housrng Program
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA MONICA
DOES RESOLVE AS FOLLOWS
SECTION 1 The maxrmum allowable income levels and maxrmum
allowable rents and maxrmum purchase paces for rnclusronary units under the
Inclusronary Housrng Program are as shown rn Exhrbrt 1 attached hereto and
rncorpora#ed herein by reference
1
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
Marsha Jone~JMoutrie
City ttorney
2
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Adopted and appro~~ed thas 13th of August; 1996
~°~,~,..
Ma~~ or
I hereby certify that the foregoing Resolution 9077 (CCS) w-as duh~ adopted at a meeting
of the City Council held on the 13th of August. 199b by the following vote
Ayes Councilmembers Abdo. Genser, Greenberg ,Holbrook. Q' Connor.
Rosenstein
Noes Councilmembers None
Abstain Councilmembers None
Absent Councilmembers Ebner
ATTEST
~}
City Clerk `
S ~ y~mer~~ ~ ~ ~
August 13, 1996
TO City Council
FROM City Staff
SUBJECT ITEM 6H
1996!1997 Maximum Allowable Incomes, Rents and Purchase
Paces for lnclusronary Hous~rag Unrts
Aug 13, 14 9b
Attached are substitute charts (1 } Exhibit 1. entitled 1996 Maxirnurn Allowable
Income Levels for Inclusionary Housing to the staff report and (2} Exhibit 1, en#~tled
19!6 Inclusionary Housina Ordinance 'I615 to the CFty Council Resolution
establishing the Maximum Allowable Rents and Maximum Allowable Purchase Prices
far the Inclusionary Housing Program
These two charts were modified due to changes m the HU>0 adjustment factors for
household sizes ranging from 5- 8 persons in a household The change resukts in a
higher rnaximum allowable income for these households
1996 MAXIMUM AL!_OWABLE INCOME ~.EVE~S ~ h:xr~LSIT 1
For Inclus~onary Housing ~-=_=- ~ _.
f~EED_ RESTRIC~.~_I~ETWF~LIL 1986 - 196 ~ `° _ ~ardl
,~•
'~ZAXII`~tU~i NCOI`~tE LEVELS
BY HOUSEHOLD SIZ£ ~.\D I\1COh1E C~TEGDRS'~ ~~ `~ ~ 3 ~ ~ ;L~
Ivl~an Income J 996. 51 300 "4 - PERSOti HOUSEHOLD" `` J
J~li ~j1 i ~Z.:rti L: t, ~:~.~
Affordab~lth~ Standard , 30°'°
1 '~DR1E CALCL"L,ATIO:~. l~4edian Income x Income Category x Household Ad3ustment Factor
H~usehnld Adiu~tment Factorc_
50% 6Q!° 80% 3-49~L° ~9~
~-person 0 7000 0 7000 0 7000 D 70oa 0 7000
2-person 0 8000 0 8000 0 8000 0 SD00 0 8000
3-person 0 9000 09000 0 9000 09000 09000
4-person 10000 10000 10000 10000 10000
5-person 1 0800 1 080D i 0800 1 0800 l 0&DO
6-person 1160D 11600 11600 I1600 11600
7-person 124011 12400 1.2400 1.2400 12400
8-person 1 3200 1 3200 l 3200 i 3200 1 3200
MAXIM[1M tNCOMfi I _FV>=1.5
DEED RESTRZC'TF.D _ l.nw Moderate
5_U°ls 60% 80% 100% 120%
1-PERSON $17,955 $21,546 _ $28,728 $35 910 543,092
2-PERSON $20,520 $24,624 $32,832 _ _ $41 04D ~ ~ 549,24$
~3-PERSON $23,085 $27,702 $36,936 $46,170 $55,404
~4-PERSON 525,650 $.10,780 _ 541,04D $51,300 $61,560_
5-PERSON $27,702 _ $33,242 544,323 $55,404 $66,483_
6-PERSON $29,754 535 705 __ $4606 $59,508 $71,410
7-PERSON $31£806 $382167 $50,890 $63£612 $76 334
~8-PERSON ~
_ _. _ _ $33,858
_ $40,636 $54,173 ~67~716 j _ $81 254
f lhousmglshare1123fi1es196Inc
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