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sr-030309-8a~~r ~;,Yof City Council Report .Santa Monica City Council Meeting: March 3, 2009 Agenda Item: To: Mayor and City Council From: Andy Agle, Director of Housing and Economic Development Subject: Introduction for First Reading of an Ordinance Amending the Affordable Housing Production Program and Proposed Revisions to the Administrative Guidelines Recommended Action Staff recommends that City Council: Introduce for first reading amendments to SMMC Section 9.56, the Affordable Housing Production Program (AHPP), as set forth in Attachment A, to: a. amend Section 9.56.030 to exempt from the requirements of the AHPP any City-financed, 100% affordable rental housing developed by nonprofits and deed-restricted for a period of not less than 55 years; b. amend Section 9.56.110(a) to require that occupants of AHPP `inclusionary' housing be selected from a City-administered list and remove the developer option to self-select occupants, except ownership projects of 4 or more units in the City's multifamily residential zones; and c. amend Sections 9.56.090, 9.56.100, 9.56.110 and 9.56.160 to include references to "moderate income" households that were inadvertently omitted when the AHPP was previously updated. 2. Amend the AHPP Administrative Guidelines (Guidelines) as set forth in Attachment B, to: a. revise Section 7C of the Guidelines regarding protocols for administration and maintenance of the City-administered housing eligibility list to be consistent with the tenant selection procedures established in the Housing Authority's Administrative Plan; b. revise Section 6(B)(2) to substitute the type of index used in the resale price formula regarding affordable ownership units; c. revise Section 2 to incorporate the affordable housing fee adjustment methodology adopted by Council in June 2006; d. remove portions of Sections 2 through 7 that reiterate the AHPP Ordinance; and e. update the Guidelines to reflect changes in the AHPP since the last update of the Guidelines. Executive Summary The proposed changes to the AHPP Ordinance and Guidelines are intended to eliminate regulatory redundancy and conflicts between the AHPP and affordable housing funding programs, ensure that occupants of inclusionary housing are properly selected with regard to income eligibility and local preferences, and implement technical changes to facilitate administration of the AHPP. Background SMMC Section 9.56 contains the AHPP that implements Proposition R, which establishes that not less than 30 percent of all newly constructed multifamily housing in the City annually must be affordable to low- and moderate-income households for at least 55 years. The AHPP was adopted by the City Council on July 21, 1998 and has been periodically amended to ensure that the provisions of Proposition R are met.. The AHPP requires developers of new market-rate multifamily housing units to contribute to affordable housing goals through payment of a fee, dedication of a portion of a projects total units as affordable housing, construction of affordable housing offsite, or dedication of land for affordable housing. development. Multifamily ownership housing of four of more units developed in the City's multifamily districts is required to include affordable units either onsite or offsite. Currently, there are approximately 800 AHPP housing units developed by for-profit developers dispersed throughout the City. The AHPP ordinance establishes that the City shall develop administrative guidelines regarding the offsite development of affordable units and the tenant/purchaser selection process, including selection priorities. The current Guidelines were adopted by the City Council on October 5, 1999 and have been amended on December 11, 2001 regarding the concurrent development of offsite affordable units and the associated market-rate units. Section 1 of the Guidelines provides an introduction, Sections 2 and 3, reiterate the AHPP ordinance, Sections 4 and 5 establish additional requirements for the offsite unit option and the land acquisition option, respectively, Section 6 details the formula and factors used in determining the affordable sale price of ownership units and Section 7 provides protocols regarding the tenant and purchaser selection process, including priorities, for income-qualified households. 2 On July 23, 2008, the City Council exempted the High- Place East affordable homeownership development from AHPP due to conflicts between the AHPP and the requirements of the development. At the meeting, Council directed staff to analyze whether the AHPP requirements adversely affect government-funded affordable housing and return with findings and recommendations. This staff report addresses the Council direction and proposes other changes to strengthen and simplify the AHPP Discussion Staff identified several areas where changes to the AHPP and the associated Guidelines could. better serve the City's affordable housing goals while preserving the long-term affordability of Santa Monica's housing stock and providing protections for the lower-income households. The recommended changes include amendments regarding program applicability, tenant/purchaser selection, and the enforcement of tenant/purchaser-selection violations by property owners. Also included are minor, technical changes to the Guidelines to modify. the resale price formula index for affordable ownership units, include the affordable housing fee adjustment methodology and remove language that is duplicative of the AHPP Ordinance. Applicability to City-Funded Affordable Housing Projects The typical City-funded, deed-restricted affordable housing developed by nonprofit housing corporations targets 100 percent of the housing units to low-income and very low-income households for at least 55 years. For these developments to be financially viable, they require funding from multiple government sources that each have strict and complex regulations regarding the time period of restrictions; income eligibility, rent limits, and other affordability standards. The multiple funding restrictions increase the complexity of achieving project feasibility. These 100 percent affordable housing developments satisfy the City's zoning code definition of an "affordable housing project" (see Section 9.04.02.030:025) and consequently qualify for various zoning incentives such as density bonuses. Affordability restrictions result from the .Planning approval process and are memorialized in deed restriction agreements recorded in the title of the property. As a result, the typical City-funded development has at least three layers of affordability requirements (two from financing programs and one from the Planning 3 approval) that establish sufficient protections. Given these circumstances, the AHPP requirements (i.e., a fourth layer) are redundant and sometimes conflict with other requirements, complicating the feasibility of affordable housing without increasing the supply. To .resolve this issue, staff, recommends exempting City-funded affordable projects from the provisions of the AHPP: Tenant/Purchaser Selection The AHPP provides that property owners may either select occupants from their own marketing efforts or from aCity-administered list. When selecting applicants from their own marketing efforts for occupancy, owners are supposed to notify the City and submit income-eligibility documents to staff for verification. However, owners routinely select occupants without submitting documentation for City verification of eligibility, either because they disregard it or are unaware of the requirement (e.g., new property ownership). In these. instances, staff does not become aware that a unit has been re- rented until the owner's annual report is submitted. This results in post-occupancy verification of eligibility during routine monitoring, and staff has discovered irregularities. When staff determines that an occupant is ineligible, the recourse is relocation to a market-rate unit within the project, if available, or eviction of the tenant so the owner can comply with the affordability restrictions. Staff is concerned about the impact of eviction on potentially unknowing occupants. Compliance with income-eligibility criteria is better ensured when occupants are selected from a qualified pool that has been compiled according to the City of Santa Monica's Housing Authority Administrative Plan: Staff recommends that the City eligibility list become the sole process for occupancy of AHPP affordable units, except in cases where there are no qualified applicants or the occupants would be in ownership projects of 4 or more units in the City's multifamily residential zones. This change would be beneficial both for those seeking housing and for property owners who often find it easier to seek assistance from the City to achieve qualifying occupancy. Existing inclusionary housing units would- continue to provide owners with the opportunity to select tenants subject to verification by the City, as the proposed policy cannot be made retroactive. 4 The proposed changes to the occupant selection process established in. Section 7C of the Guidelines will also allow consolidation of the AHPP list with other City affordable housing program lists, such as the Housing Authority program list, to create one master list. This master list will preserve existing priorities and criteria for the individual programs, yet .simplify applicant efforts to obtain affordable housing and improve effectiveness in administering these .multiple housing programs. To accomplish this, staff recommends streamlining Section 7C of the Guidelines to be consistent with the tenant selection procedures established in the Housing Authority's Administrative Plan. This Plan already contains requirements regarding establishing and maintaining a list, including public noticing, selection priorities, income definitions and an appeal process. Enforcement The Housing Division and the City Attorney's Office intend to meet and coordinate more frequently to address concerns discovered in monitoring the AHPP units and respond to violations of affordability restrictions. Some responses to violations of the affordability restrictions discussed to date include holding property owners liable for relocation costs of ineligible households and requiring that non-compliant property owners be required to select applicants for vacant affordable units from the City-administered list. The- Guidelines currently establish- protocols for cases in which household incomes increase beyond the eligible ceiling allowed for a particular unit. Staff intends to analyze the approach to this situation by various .State and federal funding programs, and other cities with inclusionary housing programs; and may return to the City Council with further recommendations to amend the AHPP. Resale Price Formula Index Resale restrictions are placed on the AHPP ownership units and focus on preserving long-term affordability for future homebuyers rather than increasing homebuyer equity to benefit only one household. Most housing affordability formulas in California utilize the Area Median Income (AMI) index. However, the current Guidelines use the Consumer Price Index (CPI) in its resale formula. Staff. has determined that the AMI index provides the best indicator of affordability and recommends this index for use iri the 5 resale price formula. The City Council considered and approved this change to the resale price formula in July 2008 specifically for the High Place East affordable homeownership demonstration project, and staff now recommends this change be applied to the Guidelines uniformly. Technical Changes Staff recommends the following technical changes to the AHPP Ordinance: • amend Sections 9.56.090, 9.56.100, 9.56.110 and 9.56.160 to include reference to "moderate income" households, which was inadvertently omitted when the AHPP was previously updated; and Staff also recommends the following technical changes to the AHPP Guidelines: • revise Section 66[2] to substitute the type of index used in the resale price formula regarding affordable ownership units; • incorporate the affordable housing fee adjustment methodology adopted by Council on June 13, 2006 into Section 2; this methodology tracks changes in .construction and land costs for the prior year as an index used to adjust, on an annual basis, the affordable housing fee paid by developers; • remove. portions of Sections 2 through 7 that reiterate the AHPP Ordinance, as the Ordinance is attached to the Guidelines; and • Update the Guidelines to reflect changes in the AHPP since the last update of the Guidelines. Commission Action The Housing Commission discussed the proposed changes in this report at its February 19, 2009 meeting and recommended that the City Council be guided by the following values in considering the proposed revisions to the AHPP and Guidelines: • development of a master list that developers/owners must use for selecting tenants/purchasers of AHPP units, with an exception that would allow for accommodating developer/owner self-selection in certain cases; • systematic effort to educate developers/owners about the incentives for using the City-administered list for selecting tenants/purchasers; and • fines for noncompliance with the AHPP and Guidelines by developers/owners should be instituted. Alternatives An alternative to address the conflicts between the AHPP and the requirements of affordable housing funding programs is to amend the AHPP to comply with other 6 funding requirements. However, the .number, complexity and evolving nature of these funding programs creates a difficult challenge that could require continuous on-going amendments to the AHPP. Additionally, affordable housing funding opportunities have strict timelines that could be incompatible with the lead time necessary to complete AHPP amendments. Financial Impacts & Budget Actions There are no financial or budget impacts associated with the staff recommendation in this report. Prepared by: Jim Kemper, Housing Administrator Housing and Economic Development Manager Attachment A: Proposed Ordinance Amending the Affordable Housing Production Program (Section 9.56 of the Municipal Code) Attachment B: Proposed Amendments to. the Administrative .Guidelines of the Affordable Housing Production Program 7 Approved: Forwarded to Council: F: atty\muni\laws\barry\affordablehousingamehdord rev3-3-09 City Council Meeting 3-3-09 Santa Monica, California ORDINANCE NUMBER (CCS) (City Council Series) AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SANTA MONICA AMENDING SANTA MONICA MUNICIPAL CODE SECTIONS 9.56.030, 9.56.090, 9.56.100, 9.56.110,.9.56.120, AND 9.56.160 TO EXEMPT CITY- FINANCED ONE HUNDRED PERCENT AFFORDABLE NONPROFIT HOUSING PROJECTS FROM THE AFFORDABLE HOUSING PRODUCTION PROGRAM, TO REQUIRE THAT OCCUPANTS OF AFFORDABLE HOUSING BE SELECTED FROM A CITY-MAINTAINED LIST WITH SPECIFIED EXCEPTION, AND TO CLARIFY THAT AFFORDABLE HOUSING UNITS INCLUDE VERY LOW-, LOW-, AND MODERATE- INCOME UNITS WHEREAS, the typical City-funded, deed-restricted affordable housing projects developed by nonprofit housing corporations target one hundred percent of the housing units to low-income and very low-income households for at least fifty-five years; and WHEREAS, for these developments to be financially viable, they require funding from multiple government sources that each have strict and complex regulations regarding .the time period of restrictions, income eligibility, rent limits, and other affordability standards; and WHEREAS, multiple funding restrictions increase the complexity of achieving project feasibility; and 1 WHEREAS, these one hundred -percent affordable housing projects meet the Zoning Ordinance definition of an "affordable housing project" and qualify for various zoning incentives such as density bonuses; and WHEREAS, these affordability restrictions are deed-restricted or otherwise restricted by an agreement approved by the City; and WHEREAS, the typical City-funded development has at least three layers of affordability requirements (two from financing programs and one from Zoning Ordinance compliance); and WHEREAS, the. additional requirements of the Affordable Housing Production Program are unnecessary to ensure the continued affordability of these units consistent with the policies and objectives of this program; and WHEREAS, the Affordable Housing Production Program provides that property owners may either select occupants from their own marketing efforts or from a City waiting list; and WHEREAS, owners are required to notify the City when selecting applicants from their own marketing efforts and to submit income-eligibility documents to City staff for verification; and WHEREAS, owners routinely select occupants without submitting documentation to the City for verification which can lead to unqualified tenants occupying affordable units; and WHEREAS, compliance with income-eligibility criteria is better ensured when the tenants are selected from a qualified pool of qualified applicants complied by the City; and 2 WHEREAS, certain technical modifications to the Affordable Housing Production Program are necessary to clarify that affordable housing units include very low-, low-, and moderate-income units, NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA MONICA DOES HEREBY ORDAIN AS FOLLOWS: SECTION 1. Santa Monica Municipal Code Section 9.56.030 is hereby amended to read as follows: 9.56.030 Applicability of chapter. (a) The obligations established by this Chapter shall apply to each multi-family project for which a development application was determined complete on or after May 25, 2006 involving the construction of two or more market rate units. No building permit shall be issued for any multi-family project unless such construction has been approved in accordance with the standards and procedures provided for by this Chapter. Notwithstanding the above, amulti-family rental housing protect that will be developed by a nonprofit housing provider receiving financial assistance through one of the City's housing trust fund programs shall not be subject to the requirements of this Chapter so long as the project is an affordable housing project meeting the requirements of Santa Monica Municipal Code Section 9.04.02.030.065 and 3 the project's affordability obligations will be secured by a regulatory agreement memorandum of agreement or recorded covenant with the City for a minimum period of 55 ey ars• (b) Multi-family projects for which a development application was determined complete prior to May 25, 2006 shall be subject to the provisions of Santa Monica Municipal Code Section 9.56.010 et sea. as they existed on the date the application for the project was determined complete. (c) A designated landmark building or contributing structure to an adopted Historic. District that is retained and preserved on-site as part of amulti-family project shall not be considered or included in assessing any of the requirements under this Chapter. SECTION 2. Santa Monica Municipal Code Section 9.56.090 is hereby amended to read as follows: 9.56.090 Fee waivers. The Condominium and Cooperative Tax described in Section 6.76.010 of the Santa Monica Municipal Code and the Park and Recreation Facilities Tax established in Chapter 6.80 of Article 6 of the Santa Monica Municipal Code shall be waived for required affordable housing units 4 and for low, -aac~ very low. and moderate-income dwelling units developed by the City or its designee using affordable housing fees. However, any multifamily project applicant who elects to pay an affordable housing fee shall not be eligible for any fee waiver under this Section. SECTION 3. Santa Monica Municipal Code Section 9.56.100 is hereby amended to read as follows: 9.56.100 Pricing requirements for affordable housing units. The City Council shall, by resolution, on an annual basis, set maximum affordable rents and maximum affordable purchase prices for affordable housing units, adjusted by the number of bedrooms. Such maximum affordable rents shall be set at rates such that qualified occupants for low-income units pay monthly rent that does not exceed thirty percent of the gross monthly household income for households earning sixty percent of the median income acid that qualified occupants for very low income units pay. monthly rent that does not exceed thirty percent of the gross monthly household income for households earning fifty percent of the median income and that qualified occupants for moderate-income units pav monthly rent that does not exceed thirty percent of the gross monthly 5 household income for households earninq one hundred percent of the median income. Such maximum affordable purchase price shall be set at rates such that qualified occupants for low income units pay total monthly housing costs (mortgage payment, property taxes, homeowners' insurance, property mortgage insurance, homeowners' association fees) that do not exceed thirty-eight percent of the gross monthly household income for households earning sixty percent of the median income and that qualified occupants for very low-income units pay total monthly housing costs. (mortgage payment. property taxes, homeowners' insurance, property mortgage insurance, homeowners' association fees) that do not exceed thirty- eight percent of the gross monthly household income for households earning fifty percent of the median income and that qualified occupants for moderate income units pay total monthly housing costs (mortgage payment property taxes, homeowners' insurance property mortgage insurance, homeowners' association fees) that do not exceed thirty- eight percent of the gross monthly household income for households earninq one percent of the median income. SECTION 4. Santa Monica Municipal Code Section 9.56.110 is hereby amended to read as follows: 6 9.56.110 Eligibility requirements. (a) Only low-income very low-income, and moderate-income households shall be eligible to occupy or own and occupy affordable housing units. The City shall develop a list of income-qualified households. Multi-family project applicants shall be required either to select households from the City-developed list of income-qualified households-er except applicants of ownership projects of 4 or more units in the City's multi-family residential zones may to ck}eese themselves is select income-qualified households which shall be subject to eligibility certification by the City. (b) The City shall develop administrative guidelines for the tenant and purchaser selection process detailed in this Section, which shall establish, at a minimum, the timing by which affordable housing units in a project must be leased or sold and occupied, both initially after issuance of the certificate of occupahcy for the project and upon subsequent vacancies in the affordable housing unit. The guidelines may also establish priorities for income- qualified tenants. 7 (c) The following individuals, by virtue of their position or relationship, are ineligible to occupy an affordable housing unit: (1) All employees and officials of the City of Santa Monica or its agencies, authorities, or commissions who have, by the authority of their position, policy-making authority or influence over the implementation of this Chapter and the immediate relatives and employees of such City employees and officials; (2) -The immediate relatives of the applicant or owner, including spouse, children, parents, grandparents, brother, sister, father-in-law, mother-in-law, son-in-law, daughter-in-law, aunt. uncle, niece, nephew, sister-in-law, and brother-in-law. SECTION 5. Santa Monica Municipal Code Section 9.56.120 is hereby amended to read as follows: 9.56.120 Relation to units required by Rent Control Board. Very low-income-and low-income, and moderate- income dwelling units developed as part of a market rate 8 project, pursuant to replacement requirements of the Santa Monica Rent Control Board, shall count towards the satisfaction of this Chapter if they otherwise meet applicable requirements for this Chapter including, but not limited to, the income eligibility requirements, deed restriction requirements, and pricing requirements. New inclusionary units required by the Rent Control Board which meet the standards of this Chapter shall count towards the satisfaction of this Chapter. SECTION 6. Santa Monica Municipal Code Section 9.56.160 is hereby amended to read as follows: 9.56.160 Principles and guidelines. (a) In addition to the administrative guidelines specifically required by other provisions. of this Chapter, the City Manager or his or her designee shall be the designated authority to develop and implement.rules and .regulations pertaining to this Chapter, to enter into recorded agreements with multi-family project applicants, and to take other appropriate steps necessary to assure that the required affordable housing units are provided and are occupied by very low- and low-. and moderate-income households. (b) Within one year from the passage of this Chapter, administrative rules and regulations pertaining to this Chapter shall be brought before the City Council for adoption. SECTION 7. Any provision of the Santa Monica Municipal Code or appendices thereto inconsistent .with the provisions of this Ordinance, to the extent of such inconsistencies and no further, is hereby repealed or modified to that extent necessary to effect the- provisions of this Ordinance. SECTION 8. If any section, subsection, sentence, clause, or phrase of this Ordinance is for any reason held to be invalid or unconstitutional by a decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance. The .City Council hereby declares that it would have passed this Ordinance and each and every section, subsection, sentence, clause, or phrase not declared invalid or unconstitutional without regard to whether any portion of the ordinance would be subsequently declared invalid or unconstitutional SECTION 9. The Mayor shall sign and the City Clerk shall attest to the passage of this Ordinance. The City Clerk shall cause the same to be published once in the 10 official newspaper within 15 days after its adoption. This Ordinance shall become. effective 30 days from its adoption. APPROVED AS TO FORM: M RSH ONES O'UTRIE Ci Att r y 11 ADMINISTRATIVE GUIDELINES for the AFFORDABLE HOUSING PRODUCTION PROGRAM of the. CITY OF SANTA MONICA (Pursuant to Chapter 9.56 of the Municipal Code) Approved by City Council March 3. 2009 Prepared by the Housing ° °~. ~'~~^'^pn~~ Division Aa~mvfsauv~ cniudines Affi~dzble Housing ProJUCUOn Pmgam Table of Contents 1. Introduction .................................................................................................................1 2. Fee Option......., ........................................................................................ ..................2 A. Establishment and Periodic Adjustment of Base Fee ................. ..................2 B. Example of Fee Calculation ......................:................................. ..................2 C. Fee Reductions .........................................:................................. ..................3 D. When the Applicable Base Fee is Determined ..............:............ ..................4 E. When to Pay the Fee .......................:.......................................... ..................4 F. Calculation of Flooc Area ............................................................. ..................4 G. Fee Refunds ............................................................................... ..................5 H. Relation to Rent Control ............................................................. ..................5 3. On-Site Affordable Unit Option ....................................................................... ............6 A. Three Ways to Satisfy the On-Site Requirement .............................. ............6 B. Calculation of Minimum Required On-Site Affordable Units ............. ............7 C. Incentives for Constructing Affordable Units on Site ......................... ..........10 D. Size and Unit Characteristics of the On-Site Affordable Units .......... ..........12 E. Income Requirements for Households Occupying On-Site Affordable Units l2 F. Rent Requirements ........................................................................... ..........13 G. Sale Price Requirements ........:.:....................................................... ..........14 H. Purchaser/Tenant Eligibility; Annual Monitoring/Reporting ............... ..........14 I. Timing of Rental or Sale of On-Site Affordable Units ......................... ..........14 J. Restrictions on Affordable Units .....................................................: ..........14 4. Off-Site Affordable Unit Option .................................................................................15 A. One-Quarter Mile Radius Maximum ............................................................15 B. Exceptions to the One-Quarter Mile Radius Maximum ...............................16 C. Evidence of Site Control ......:......................................................................17 Admtnieo-etive GuideJires AffaNablc Housing HoOUaian Pmgr D. Simultaneous Development of Off-Site Affordable Units .... ........................17 5. Land Acquisition Option .................................................................... ........................19 A. Eligible Land Parcels .......................................................... ........................19 B. Evidence of Site Control ..................................................... ........................22 C. Conveyance of the Site ....................................................... ........................22 D. Simultaneous Conveyance of Land or Option .................... ........................24 E. Eligible Non-Profit Affordable Housing Developer .............. ........................24 6. For-Sale Affordable Unit Requirements ............................................ ........................26 A. Establishment of the Initial Purchase Price ......................... ........................26 B. Re-Sale of an Affordable Unit to a Subsequent Purchaser . ........................28 C. Subordination ...................................................................... ........................30 D. Default and Foreclosure ..................................................... ........................30 E. Distribution of Insurance and Condemnation Proceeds ...... .......................:31 7: Tenant and Purchaser Eligibility Procedures ............:....................... ........................32 A. Priority Households ............................................................. ........................32 B. Persons Ineligible to Occupy an Affordable Unit ..............:.. ........................33 C. Establishment, Maintenance, and Update of Income-Qualified Tenants and Purchasers List .........:...................... ........................34 Admws~n[ivc Guidelines N6nAeble HOUSins Pmduction Pmgr ATTACHMENTS 1-A Municipal Code Chapter 9.56 1-B AHPP Options Comparison Table 2-A Fee Adjustment Methodology ~2-B Current Base Fees for Apartment and Condominium Projects ---- --~ Formatted: Indent Left: 0", 3-A Affordable Units Table -Condominium Projects w14+ Units in Multifamily Zones ° Hanging: 0.63 ------1 3-B Development Incentives Table ;?-A3333=C Calsula#ien-e#-Very Low, Low and Moderate Income Levels 2-~3-D Sal~+latiea-of Maximum Rents ~--C3=E Sample of Deed Restrictions ~4-A Sample Application for Affordable Housing Waiting List z-4 B Referral Status Form Admwsme~ive Guidelines AffoNable Housing Peodu<~ion P~ug,~ 1. Introduction These Administrative Guidelines e~cplaia provide guidance on the implementation of the City's Affordable Housing Production Program. Chapter 9.56 of the Santa Monica Municipal Code ("AHPP") (see Attachment 1-A for a complete copy of the AHPP). Tka+s pregram- The AHPP was originallyadopted by the City Council on July 21, 1998 (see It has been amended on several occasions since then. gad The AHPP gives developers of multi-family housingavarietyof options for satisfying the City's affordable housing requirements. The precise options vary depending on the housing type and location of the housing being produced. All new multi-family housing developments of two or more units, including multi-family housing that is part of commercial or other development, must comply with Chapter 9.56 unless specifically exempted by the terms of Chapter 9.56. See Attachment 9-13 for a comparison table on the various options for complyinq_with Chapter 9.56. T"'~^^ pregr2raThe AHPP °,T,^~+^.,,+°,++^ r.^~..'.,,.,~^,-•,^.,+implements Proposition R. Approved by Santa. Monica voters in November, 1990, Proposition R requires that not less than 30 percent of all multi-family residential housing newly constructed in the City each year be permanently affordable to, and occupied by, low- and moderate-income households. Section ~ 2 of these Guidelines describes the Fee iylethodology. Section 3 provides information about the number of affordable units required and development incentives associated with the On-Site Option~The remaining sections ~^°~ "°expand upon the AHPP and provide additional requirements regarding t,~,~^-^^.~~;~ ieca nam~nsenri~z a~idzuozs AROMable Ho~smg RaJiictiun Pmerem /C^^+'^n O']l ~v~~~, the Off-Site Option (Section 34), and-the Land Dedication Option (Section 5) F, or-Sale Affordable Units (Section 6). the Tenant and Purchaser Eliyib~ility Arocedures (Section 7) and P,djustments or waivers (Section 8). Questions about how a particular multifamily proiect applicant shall satisfy the affordable housinq obligation (pay tee, build units onsite or offsite, or provide land dedications) the 8a-Slte-9ptien should be directed to the City Planning Division at (310) 458-8341 or to the Planning Counter in Room 111 in City Hall. Questions about , Sedicatien--9ptien current maximum rents and ; Ssales gprice calculation, or Tenant Eligibility and Selection Procedures should be directed to staff in the Housing Division at (310) 458-8702, ^~*~„°'^^ "^~". 2. Fee e##1~~faletty One way to satisfy the affordable housing obligation is through payment of the Affordable Housing P-roductio~F-Unit Base Fee (§ 9.56.070). The amount of the Affordable Housing P--redust+e+~-Unit Base Fee ("Base Fee") is based upon the floor area of the project. The floor area of the project, as defined in the Municipal Code § 9.04.02.030.315, is multiplied by the Base Fee in order to determine the total fee owed by each project. The proceeds from this Base Fee w~tl-be are deposited into a special City Trust Fund and used to facilitate the development of housing affordable to very low income, low-income and moderate-income households. The Fee Option is not available for ownership projects of 4 or more units in the City's multi-family residential zones. A. Establishment and Periodic Adjustment of Base Fee The Base Fee is set by a Resolution of the City Council See Municipal Code 9.56.070(b)).. -' Formatted: unaerfiHe and is subject to annual adjustment based on changes in land cost and construction cost. The methodology for making these annual adjustments was established by the Citv Council in June X09-x2006. More specifically construction cost inflation is established based on the_ Engineering News Record's (ENR) Construction Cost Index .because it is updated Administm[ive Cuidalmas Affirdablc Housing Produc,iun Pmmam monthly and is readily available via the Internet. The methodology uses annual change in median condominium purchase prices as a proxy measure for land cost changes. The relative balance between land cost inflation (based on changes in median condo prices) and construction cost inflation (based on a construction cost index) is determined based on current development cost data for recently completed or construction-in-progress multi- family affordable developments assisted tiv the City. T~",~~ '^^ ~^^ ~ "^ ^~'' ^+^~' nrJ'^olly ". 1h`n ("+. !`.. ^"I M rofly nt ^h^ nc .~,..+.. A +" fl'+' r" p°~.,..,.r ry . ,,,.y .,.,...,.,, „ ~. ., „ny~. ~~rm S+ty. AID A detailed explanation of the annual adjustment methodology is provided in Attachment 2-A. There are different base fees for condominiums and apartment projects. Attachment~A 2~B contains the current Base Fee amounts for apartment and condominium projects. F _ - - Formatted: Heading 3 Administrative Guidelines riff tdnbk HOUSinS Raducmu Pm~rem gqo/ Coo Qn.1.~n1:nn fnv MnH:_C~m:h« o.n:nna~ nn v.,n..„+o...nnin . nn. a: s.. •i . _ . __ ..____............,..........y ...,~ ............................................ ,......, y Onci.Ie..finl ~n..:nn f1:c1v:n4c ~rwo ......i;,..,~.iE .°:,E ... ~E [EQaEEa Ee ~ r4~~«~.~ ,.... ,.«T„_..:.. ~ oa .. ~.o., ~.,.«~. ,.r ..t.r....,,... 3j •cc^jaior. «~,., t,.u .... :.... ..:..,,,,.....«~ ....i.. a o Admvtisiative Guideliocs AffNaAle Fio~uing &odmfion PmSrzam F ~~ t, t~F r r ..oA F..~ «6.. ,,.....«..... 1....~ .... Fes,.., H !" ' D b L^ i Tha a t,~ a P.....i ...:,... ~~o ... « ~o ....:a ., F.,tt .. .~._ n b ~ Administmvive Guldel'mcs ALhNabla Housing $aJOUion Pmgmm c a a . Formatted: Font: (Default) Arial, B.. Affiordable Fiousing Unit Development Cast eom The Affordable Housing Unit Develooment Cost is set by a Resolution of the Citv Council {See Municipal Code 9.56.070tc)) and is subject to annual adjustment based qn changes in land cost and construction cost. The methodology for making these annual adlustments was established by the City Council in June 2006 and is the same mathodology used in adiustingthe Affordable Housing Unit Base Fee described in Section 3-A. The Affordable Housing Unit Development Cost is the average cost to the Gity to develop a unit of housing affordable to low- and moderate-income households. The Affordable Housing Productiori Admi,us[mtive Guiddiues AROrclablc Hausmg Prodoaiov Proy~am Program provides that when developers of market rate multi-family housinq are providirig affordable units on- or off-site, and the calculation of the number of affordable units required results in a fractional unit these developers are eligible to pay a fee equal to the cost of producing that fractional unit based on the Affordable Housing Unit Development Gost if that fraction is less than 0.75, ',~'^~rv~'^; ~^^^,^°+'° u^ r ,. ~ ~.,+ R^~^ c~^ See Attachment 2-A. Example (6-unit condominium proiectl 6 X .20 = 1.2 affordable housinq units - - Formatted: Centered 1 unit would be constructed on-site Fee payment of 0.2 X $265.632 = $53 126.40 3. On-Site Affordable Unit Option Another way to satisfy the affordable housing requirements of Chapter §9.56 is by constructing affordable units on the same site as the proposed new multi-family project (See § 9.56.050). Ownership projects or 4 or more units in multifamily zones must provide affordable units either onsite or oftsite (See.§ 9.56,040Z_All housinq developments that provide onsite affordable units in accordance with the AHPP are entitled to a bonus over the maximum allowable number of units on the site (i.e. density bonus) or a development bonus (commercial/industrial zones) and incentives in accordance with Interim Ordinance No. 2180 extended by Interim Ordinance No. 2252. This includes all units for sale or rent such as: • Substantial remodel and conversion of commercial buildings to residential units • Substantial remodel of residential buildings • Condos and apartments. AJmiviatrmive Guidelines AHOOOVbIa Housing t'roduction Ragmm - Formatted: Font: (Default) Arial 7 Attachment 3-A provides a table indicating the minimum number of affordable units re~cuirad in an ownership project in a multifamily zone and the fractional portion of a,unit that may be paid as a fee. Attachment 3-B provides information on density bonus and other development incentives allpwed when providing onsite affordable units. Attachment 3-C and 3-D provide information on the most current income eligibility and rent limits. Attachment 3-E provides an example of the Agreement Imposing Restrictions on Real Property between the Citv and the developer reaarding a project containing affordable housing units. .,~-r-~r.~y~a~ $....>-F-~~+~„a_.~, aa-~,~..=~,,,n„_c;er caa~ .-~ti ;' asc~a..sr rh>...~~. ~ c_ :tr,,.~ +h~.~ ,~;#i *.~* Bpt~^:mf~^. ~9v}Ei~.,,. +h~ ~f„*~e^, °..it2{vc„°~°-.~~~.nGn~ 1-}-RY--eor~st~ue#+rx~-a~- -~&~- e~-tJ~e-~otat --k~rejet;t trr~i~s-#er - leer . hC~v!'o!d°. --/~-~Bb'1°IR68m2-9I£1-FS-deCf+r+2f~-2S~F}2-@aKr}IK}E~J-'8+#t%' f}8F6~K}t-E}i' tev$-Bf-#~18~3K2e .-[-S2e~eF1F-;?-A} zT_'g'-err A..y~ lr.~~~ heir! '~ d~f'nn~~~ ~~ r F~ rf+„ n..r~n+... 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Ebe'e44e~,.i ;s u+.;i~,s'~ -~~-~?~3; 63= GS4; -G€r, aaEl-SPA. Aamwnmrivz o~iaeiio~ ARO~anblc Housing Pmduction Progr 13 c I 0 ..ate. ;,.. u....~ea ..w~ n ..........:... . n., e:.~ nf{....r~e.re-r r.,:{ rh.. n ca {h..{ i .. ,,.'.,,, il,.. n.,_e'{ .. nu,,..f~hlo o,..,i.,l 1 I.,'in ..,,.., . .,..,,, .~y_.. .,....._, r. _~__._ ..._ ......y ..._ _.. _.. _ .... _.___._ .._. __. _...._ ..I I {ham G(lo/ f ih.. m..,{'.. .. {„m'6, 'r _ n iho I ..c n....nlnn 1 n n Rnonh 0 Formatted: Font: Bold in nr Inc {hen 1!1!10/ of iho ~ ...~1'~ AdmiNS~m~tvc Guiddires Affonlablc Housme Pmdudinn Pmgrum 14 C Qe..t Q 1 ...tm.. n a enni.emen .,t an .rel.,., M ..... ntc (ln_ C'tn A{F ~.A~hln 11..'tc m M h~ . niwlo Cnr ~nnrinm'n r r F dn.rnln..m.. .. t. ..a. ll.. Ci ....... .. Aii.. ~ ..J~.h h I L.ie .. ......, ..... .......... .. '• ... ., h... 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G~O/ L ...rr. :110/ ........._ n.J 1! .. ...._...... _ . ........ .... .... ...... _... _. ___._ _...._ ._. 1/10/ ..F +hn nfl'~ ...J .`ahiv~w.rcnlt Administrative Guidelines AffoNable Huusing Pmdt¢tion Pragmm 15 x Ee-~4euelep~f'z ar~lEs-e~reile~ 1#ea##e~a~4e-mill-bite-e „m„~~u~~ • ~eeSFrjs~jg~-~c~ n cc~~ o,~i-~rSerTple~°e~-~~+. ,.~„-.a ~3F9Y+C~2d ~n+++-,nh..~„+ ~ r`~~ r`'._-$+~-.u^~+,.~-P,~ii .~~~., _~..~c..+ +-K-,°L,^-r~-I4f?~f~S--li#e~8sY+6-d+FHtFS-#BK-Ek~B fns+r+r I~m'+n tn,~~`i hc~ - , ~~t, . .° ~r~y` uKo f~NfFeY-.S~}4~--5-, -3~ ~~-- Admi,tinmlPoC Goidelires ARO~dnblc HOUSNg PmduUion Pm~nm 16 43. Off-Site Affordable Unit Option T#e-t#ii=rTeptisn fer+aee#itherequ}rrexnes~tse#-9r~ia~se a+s~o prevJde Eae t~itssn a-~+..,ftt.# rarTs+te-fro+n_t~r,v-^,wse, .u!o ur~it~S§8) ###i~e~tie~a-+s se4e~ted-af4 c~,'the rte',.: in ~estlea- 4+r~es regard+ng err~o#-#t~e -:..inm ~-fir ^f~-~:,,, ~~ ; ~,+n;~' -E,;,:t_~+~es_aac#. ~; a^~° st;ss @#9~--IA6BK~+&~-i,..~}r~°. ~.~klrFtt~; °i........!'...id ...'.I,..,:..-., c1~}C-~-3?~}}(y~-c'tRd pre}est-app/4~is/,2,~~~ ~~/ T",~;~^9c'+cemo~Tn nl~~n n.,rt~IInfr_C~+n-A#fordab4e~Ftts-(Stv1M~ §§-4:55-2~8-{a}id-(~N- c'r l~rv~-rmmr, t'..I ~ of This section of the Guidelines specifies certain additional requirements concerning the location of the Off-Site Affordable Units site control and concurrent development of the market-Tale prQjeCt_and the off~site units. A. One-Ouarter Mile Radius Maximum Except as provided below, the alternative site for the Off-Site Affordable Units shall be located within aone-quarter mile radius of the parcel on which the market rate units are proposed, and within the boundaries df the City. (SMMC § 9.56.060 (c)) The outer limit of this one-quarter mile radius area shall be determined by the Planning and Community Development Department. The Departments method for so doing shall be similar to the method used for determining the area within which written notice of a pending development permit is given. Specifically, on a map of City parcels, the project applicant shall submit as part of the project application a set of one-quarter mile radii from the corners of the parcel on which the market rate units will be constructed. Any multi-family parcel or commercial parcel on which multi-family housing is a permitted use, located, in whole or in any part, within these intersecting one-quarter mile radii is an eligible parcel for development of Off- Site Affordable Units. Admmno-ari~e cameimes Affordable Housi,g Produc,ioo Pmgr 17 B. Exceptions to the One-Quarter Mile Radius Maximum The maximum one-quarter mile radius requirement may be waived by majority vote bf the City Planning Commission (whose decision shall be appealable to the City Council), based upon substantial evidence demonstrating thatthe location of Off-Site Affordable Units more than one-quarter mile from the site of the market rate units, but still within the City limits, better accomplishes the goals of the City's zoning and planning regulations, including maximizing affordable housing production and dispersing affordable housing throughout the City. (SMMC § 9.56.060 (f)) The project applicant shall have the burden of demonstrating why a location forthe Off-Site Affordable Units of more than one-quarter mile from the market rate units better accomplishes the City's affordable housing objectives. In making its determination, the Planning Commission shall considerthe recommendations ofthe Planning Director and the Housing and Redevelopment Manager on the petition. An application for an exception to the one-quarter mile radius shall be submitted as part of the planning application for any other discretionary approvals on the project that are within the purview of the Planning Commission. By way of example, but not by limitation, factors that may justify the special exception include: ^ No Available Sites. There are no multi-family or suitably zoned non-residential parcels within the strict boundaries of the one-quarter mile radius that can accommodate the required number of Affordable Off-Site Units. ^ Dispersal of Affordable Units. The alternative location makes it possible to locate Off-Site Affordable Units throughout the City. ^ More Affordable Units. The size, price or other characteristics ofthe alternative site results in a project that yields more affordable units than the project would yield if it were located within the strict limits of the one-quarter mile radius. 1Jmirdsim,ive Guidclines AffoMablc Housing Production Progrem 18 ^ Deeper Level of Affordability. The size, price or other characteristics of the alternative location makes it possible to offer the Off-Site Affordable Units to households at a lower household income level than would be possible within the strict limits of the one-quarter mile radius. In no event, however, shall the Off-Site Affordable Units be located outside a radius of one mile from the market rate units. No more thah five project exceptions to the one-quarter mile radius shall be approved in any one City fiscal year. C. Evidence of Site Control In order to exercise the Off-Site Affordable Unit Option, the applicant must provide evidence that the site is owned in fee or that an option to purchase, subject to City project approval, has been secured.. (SMMC § 9.56.060 (b)) Evidence of such site control (e.g., copies of purchase or option agreements) shall be provided to the City as part of the project application package. D. Simultaneous Development of Off-Site Affordable Units All affordable housing units in amulti-family project or a phase of amulti-family project shall be constructed concurrently with the construction of market rate units in the multi- family project or phase of that project. No final City construction permit sign-off or occupancy permit shall be granted for the market rate units until either: 1) A final construction permit sign-off or occupancy permit has been granted for the Off-Site Affordable Units. Off-Site Affordable Units shall be offered for rent or sale, as applicable, prior to or concurrently with rental or sale of the market rate units; or, 2) All of the following conditions have been met: i) the Off-Site Affordable .Units have been issued a building permit; ii) all equipment and facilities necessary to commence construction of the Off-Site Affordable Units have .been mobilized on site and construction has commenced; and, iii) the Admi,dsrr.~tive Guidelines AHordablz Housing Pcoducrinn Pmgram 19 developer provides the City with an irrevocable letter of credit or similar financial instrument deemed acceptable by the City in an amount at least equal to the in-lieu fee that would otherwise be required to meet the obligation for the market rate project(s), plus advance interest on that amount equal to the most recent yield listed in the City Treasurer's Monthly Cash and Investments Report. If the off-site affordable housing units are not issued a final City construction permit sign-off or occupancy permit within 18 months of a final City construction permit sign-off or occupancy permit for the market rate units which produced the affordable housing obligation, the letter of credit or other approved financial instrument shall contain a provision allowing the City, in its discretion, to draw down on the letter of credit (i.e. convert the letter of credit to cash). The City Manager shall have the discretion to extend the 18 month period by not more than an additional 6 months. ~?t. Land Acquisition Option - n 4h~=("i, i' ~'.J..., t'nl .J'c+~.'ntn T4hn nr,4i.~.~.~~,on,~nn~t~hn~«nrm~~ «~nn+cs~f f"~~.F ~~v I,PO,cr.~~n r.-o°~'a~~+~er+-pxef+t-d2velc~er-of-a#fecdable-hs~+s?rag-;-~#af-w~Ic~-be-used ta-develo{~ h~~-a##ordabl2--ta e+c#5--E~Aa~fS~s19}-~--TkFe-raa,=~;--.e.e.+~ ded}sateJar~el-s~~~~~;,;~ .,.~«.,+„ ,.,mat-fenbe?~a!# ^~ti-~.~,ty-er-aa el+gidle- -This section of the Guidelines specifies t#aeda~res-and-re~afedadditional requirements for exercising the Land Acquisition Option. A. Eligible Land Parcels Only land parcels meeting the following minimum characteristics shall be eligible underthe Land Acquisition Option: Adminiserneive Guideliau AL6iNable Huusing Prudnttian Pro~am 20 1. Zoning Land parcels eligible for conveyance to the City, or an eligible non-profit affordable housing developer, shall be located in a City multi-family housing, commercial or industrial district in which multi-(amity housing is a permitted use. 2. Minimum Land Value For sites dedicated to the City, or an eligible non-profit affordable housing developer, the .fair market value of the parcel(s) shall be at least equal to the amount of the Affordable Housing Production Fee that would otherwise apply were the market rate project applicant to elect that option under Chapter 9.56 instead of the Land Acquisition Option. The fair market value of the parcels proposed under this Option shall be supported by an estimate of value prepared by a qualified real estate appraiser, subject to the City's reasonable review of the appraisal. For situations involving option payments, rather than conveyance of land in fee, see below. For below market rate sales, or option transfers, see below. 3. Site Characteristics The parcel shall satisfy the following minimum criteria: 6,000 square feet - Can be developed with at least 4 dwelling units - Free of characteristics that would make it difficult or impossible to develop (i.e., irregular shape, excessive sloping, soil or other contamination, adjacent to incompatible land use) A Phase I environmental evaluation report shall be required before any parcel can be considered for conveyance. 4. One-Quarter Mile Radius Maximum Except as provided below, the land parcel(s) proposed to be conveyed to the City, or an eligible non-profit affordable housing developer, shall be located within aone- quartermile radius of the parcel on which the market rate units are proposed and Admivis~ra~ive Guiddi,~s Affu,Juble Huusi~g Production Pm~em 21 within the City limits. (SMMC § 9.56:080) The outer limits of this one-quarter mile radius area shall be determined by the Planning and Community Development Department. The Department's method for so doing shall be similar to the method used for determining the area within which written notice of a pending development permit is given. Specifically, on a map of City parcels, the project applicant shall draw a set of one-quarter mile radii from the corners of the parcel on which the market rate units will be constructed. Any multi-family parcels located, in whole or in any part, within these intersecting one-quarter mile radii is an eligible parcel for the Land Acquisition option. 5. Exceptions to the One-Quarter Mile Radius Maximum The maximum one-quarter mile radius requirement may be waived by majorityvote of the City Planning Commission (whose decision shall be appealable to the City Council), based upon substantial evidence demonstrating that the location of land more than one-quarter mile from the site of the market rate units better accomplishes the goals of the City's zoning and planning regulations, including maximizing affordable housing production and dispersing affordable housing throughout the City. (SMMC § 9.56.080) The project applicant shall have the burden of demonstrating why a proposed site more than one-quarter mile from the market rate units (but still within the City limits) better accomplishes the City's affordable housing objectives. In making its determination, the Planning Commission shall considerthe recommendations of the Planning Director and the Housing and Redevelopment Manager. An application for an exception to the one-quarter mile radius shall be processed simultaneously with any other discretionary approvals on the project that. are within the purview of the Planning Commission. By way of example, but not by limitation, factors that may justify the special exception include: Admvtistn[ica Cuidaluxs AffoMabla Housing Production Pmgrem 22 ^ No Available Sites. There are nomulti-family parcels within the strict boundaries df the one-quarter mile radius that are suitable for multi-family development. ^ Dispersal of Affordable Units. The alternative location makes it possible to locate affordable housing throughout the City. ^ More Affordable Units. The size, price or other characteristics ofthe alternative site could result in an affordable housing project that yields more affordable units than would otherwise be required under the On-Site Affordable Units option or the Off- Site Affordable Units option in Ordinance 1918. ^ Deeper Level of Affordability.- The size, price or other characteristics of the alternative location makes it possible to offer affordable units to households at a lower household income level than would be possible within the strict limits of the one-quarter mile radius. In no event, however, shall the Land Acquisition Option apply to a site located outside a radius of one mile from the market rate units. No more than five project exceptions to the one-quarter mile radius maximum shall be approved in any one City fiscal year. B. Evidence of Site Control In order to exercise the Land Acquisition Option, the market rate multi-family project applicant shall provide evidence, subject to reasonable City approval, that the site to be conveyed to the City; or an eligible non-profit affordable housing developer, is owned in fee by the applicant, or that an option to purchase has been secured. Evidence of such site control, including a current title report, and a copy of the option or lease agreement, if applicable, shall be included as part of the application for the market rate project. C. Conveyance of the Site An eligible site, or option to purchase an eligible site, shall be conveyed to the City, or an eligible non-profit affordable housing developer, as follows: Adminisaazive Quidelinu AffiNable Housive Produnion Pmgam 23 1. Fee Title Transfer The site shall be sold or dedicated to the City or to a qualified non-profit housing developer free of any encumbrances, contractual, physical or financial, that would prevent it from being developed in a timely way by the City, or a qualified non-profit housing developer, for affordable multi-family housing. If the site is dedicated to the City, or to an eligible non-profit affordable housing developer at no cost, the City shall provide reasonable cooperation as may be requested to help the applicant secure any state or federal tax credit for which such a dedication may be eligible. If the site is sold to the City, dr to an eligible non-profit affordable housing developer at below market rate, the difference between the fair market value and the below market sale price must be at least equal to the amount of the Affordable Housing Production Fee other wise due, if that option had been selected by the project applicant. 2. Option to Purchase If the market rate project applicant secures an option for another site to fulfill the Land Acquisition Option, the option must have a minimum term of six months and clearly state that the option may be transferred to a third party, such as the City or a qualified non-profit housing developer, under the same terms and conditions, including the agreed upon purchase price. A copy of the option agreement and a current title report shall be included with the application for the market rate project. Any costs incurred by applicant to maintain the option from the date of project application through successful transfer of the option to the City or to a qualified non- profit developer shall be the responsibility of the applicant. If the sum of the applicant's out-of-pocket option-related expenses, from date of project application through conveyance of the option, is lessthan the amount of the Affordable Housing Production Fee Option, these costs will be treated as a credit againstthe Affordable Housing Production Fee that would otherwise be due the City under that Chapter ~wmw:~ma~z~c~iaU~ MOtdobk Housing Production Pmgam 24 9.56 option. The applicant shall pay any difference to the City as a reduced Affordable Housing Production Fee. The applicant shall provide the City a full accounting of all option payments and out-of-pocket option-related costs eligible for offset against the Affordable Housing Production Fee amount, which accounting shall be subject to reasonable City review and approval. The land offered for option must have the following minimum site characteristics: - 6,000 square feet - Can be developed withat least 4 dwelling units - Free of characteristics that would make it difficult or impossible to develop (i.e., irregular shape, excessive sloping, soil or other contamination, adjacent to incompatible land use) A Phase I environmental evaluation report shall be required before any parcel can be considered for option. The City shall exercise reasonable discretion in considering the option. The land option must be consistent with all City funding requirements, including the Consolidated Rental Housing Trust Fund Guidelines. D. Simultaneous Conveyance of Land or Option Conveyance of land or an option to purchase land to the City or an eligible non-profit affordable housing developer, pursuant to Chapter 9.56, shall be completed prior to the City's final sign-off on construction permits for the market rate units, or issuance of a certificate of occupancy, whichever occurs first: E. Eligible Non-Profit Affordable Housing Developer Dedication of land, below market rate sale of land or transfer of an option to purchase may be made either to the City or an "eligible non-profit affordable housing developer." For purposes of the Land Acquisition Option of Chapter 9.56, an eligible not-profit affordable housing developer is a private; non-profit corporation with: (1) a current exemption under Adminiserwive Guidelmcs AffmdaAk Hoaxing Radvclion Pmgam 25 Section 501(c)(3) of the U.S. Internal Revenue Code; (2) a certificate of good standing from the Secretary of State in which the organization is incorporated; (3) has the development of housing affordable to low-income households as one of its principle missions; and (4) has been approved by the City Housing and Redevelopment Manager, based on reasonable review of the organization's record of performance developing multi- family housing affordable to low-income households. The non-profit affordable housing developer intended as the recipient of land pursuant the Land Acquisition Option must be identified as part of the project application. ~~. For-Sale Affordable Unit Requirements In the event that the affordable units required under either the On-Site Affordable Unit Option or the Off-Site Affordable Unit Option aceis intended to be for-sale units, rather than rentals, the following rules shall apply. A. Establishment of the Initial Purchase Price The developer shall establish the sales price for the affordable unit based upon an the median income and total housing cost as described in the AHPP (9.56.1001 and the income-qualifying household's ability to obtain conventional bank financing and to service debt at a front-end ratio of no less than a 33 percent and no greater than a 38 percent'. The conventional financing shall conform to all of the following terms: Loan Term: 30 Years Interest Rate: Fixed Minimum Down payment: 5% Min./Max. Front End Debt-to-Income Ratio': 33% min./38% max. Maximum Back End Debt-to-Income Ratio2: 41°/p 'Front Entl Ratio: ratio of total monthlyhousing costs (including marlgage principal antl interest, properytaxes, prope,tyinsumnce, homeowners association tlues and mortgage insurance, if applicable-to total gross householtl income. Chapter 9.56 of the Municipal Cade restricts the front-entl ratio to no more than 38%. Back Entl Ratio: ratio of total monthlyhousingcosts (inclutling mortgage principal antl interest, propeMtaxes, propertyinsurance, homeowners association tlues antl mortgage insurance, if applicable) plus other monthly payments on long-term householtl tlebtto gross household inc°me. Note: The borrower must be income-qualified pursuant to Chapter 9.56 of the Municipal Code. Admwnmtiva Guidel6,u AHardable Housing Pmdmtian Pm@rem 26 The lending criteria used by the private lender must be reasonable and customary and shall be subject to review and approval by the City Housing Division prior to completion of the purchase transaction. Moreover, any purchase price for an affordable unit underwritten with afront-end ratio of less than 33 percent or aback-end ratio of more than 41 percent (the maximum generally required by the secondary mortgage market) will also require review and reasonable approval by the City priorto completion of the purchase transaction. Weasiag-salEUlafions ~ nn ~,~tii ~.~~., n~e~,~---~,_ aaoi_ x o, o..° ~.~ °ot,~ld ;~ .;, r`~ $ ^~ig term debt;~gress ineeme - 18°1°° ~ P~~.:nihl., rPrv~.rvn n m ..tlhiwl m ..tL.l., hn rv soh -Rio/ `~ Admw tmtiva Guidalmas AffoMablc Housing Production Pmgeam 27 Formattetl " ~l Formatted ~¢ "' Formatted ~-~~ aFaaS; aebNe-iPSeme-ratiee[a.'3°, ~" Formatted ^..taleMeFinevaWaFiFl9fke-Berrew Formatted ,aa;::ew,~,^ 4 "Formatted Formatted ~ .."'e~"'~' Formatted ~Nafaeta'etGlehlsbasetl'e6~H6 ~Y `~4i FOrmattetl "Formatted "°°'°"°°,"""°"``a~~ y'~~' Formatted Formatted ~~lq~ ~ Formatted ~ a. Q i::r'i Formatted ~2~312-G ' ~ ~ Formatted ~..___~__ _. .._..._.._ r,..._..___ r,..__.. ~ro„w..r,~,. ,,, i ~ ~~ 1 ccn~nco $6a3aa $f7rf>C5 $>11~99 $ $64b~4 $7-7~~88 $@&~~- $964~'~ ?4 "'::,o' Formatted ' "i;.~:f~'' Formatted ~, j~~~°:~'~ Formatted Fy~lynh ~~i ~qpy Formatted it `;;~' y~'~~;~~~~ Formatted ~i b4u~ngry Formatted !(A~~,;"~ Formatted i r, llin r tti~". Formatted (; a;,~ 1„q, ~; Formatted ~I`r~~' ~. Formatted I:°r, i .~M `~~~ ~,, - Formattetl „I ~:;'~ Formatted ~,"," Formatted - Formatted ~ _ Formatted ~~ ~. Formattetl '1 "~~ Formatted ,` 1~~ o' ~,`, Formatted al>°`„~~ Formattetl I~ f~ ,,, ~e'".,. ~.. Formatted I'y "„n ` ~ Formatted ~i~~9,~i~~ ~~ (,Y',. ~`~ Formatted namN„~me~r cmaa~ AfforAabl< Housing Producfion Pro~nm 28 .l Formatted ... f411 ' Formatted ... (421 '~ Formatted ... f431 '~ Formattetl ((qq3 ~'~ Formatted ... (451 ~` Formatted ,., q6 ~' Formattetl ,,, 47 " Formatted r. ... (481' ~' Formatted ... 49 " Formatted o ... 50 , ~' Formatted d' ... f5p ~` Formatted ... f621 ~' Formatted ... f531 Formatted ( r;a1" !il Formatted ... f661 !' Formatted (_ _ rs~ '!I FOnnattetl I Formatted f iii B. Re-Sale of an Affordable Unit to a Subsequent Purchaser t. First Rioht of Refusal to the City Throughout the 55-year period of the Agreement Imposing Restrictions on Real Property, the City shall have the first opportunity to purchase affordable for-sale units created pursuant to the On-Site Affordable Unit Option or the Off-Site Affordable Unit Option ("Option to Purchase"). Owners wishing to sell their units shall notify the City in writing at least 60 days before the unit is offered for sale to another qualifying party.- The seller shall ensure that the uriit is clean, in good repair and is available to be shown to prospective buyers. Any Option-related time periods in favor of the City shall be tolled until these conditions are met to the City's reasonable satisfaction. The City shall have 60 days to notify the seller of its intent to exercise the Option to Purchase, either by City purchase, by its desigriee (e.g., anon-profit affordable housing developer), or by referral of a qualified fewmoderate-income buyer. (See below for the method for calculating the subsequent purchase price.) The City or other qualified buyer shall close escrow within 90 days from the date that the City notifies seller of its intent to exercises the Option to Purchase. If the City elects to assign its Option to Purchase, the opening of escrow may be deferred for up to 30 additional days to enable the City to effectuate the assignment. In the event that the City does not exercise the Option to Purchase, or an offer to purchase by the City or a qualified buyer is not accepted by the seller, or once accepted, if an escrow account contemplating a sale shall not have been opened within 60 days of a purchase offer, the Option shall terminate and the owner may sell the unit to any income qualifying party at a price as set forth below. Seller shall not refuse an offer by an income qualified buyer, subject to the price restrictions set forth below. Closing costs shall be divided between seller and buyer as is customary for like real estate transactions in Santa Monica atthe time that escrow is opened. Ad,rvnistmtive Guidelines AHoNable Housine PraJUC,ion Progam 29 2. Maximum Subsequent Selling Price The resale rp ice restriction will provide that the price for resale of the affordable unit shall be calculated using the same formula and factors set forth in Section 6A. The monthly housind cost shall include mortaaae principal and interest, property taxes, property insurance, homeowners' association dues and mortgage insurance, if applicable. *~^'^'^'^~ ^P ^~'~^~: _ - - Formatted: Indent: Left: 0.5" Formatted: Level 1, Numbered + Level: 1 + Numbering Style: Bullet + Start at: 0 + Alignment: Lek + Aligned at: 0.5" + Tab after:. 0" + Indent at: 1" 3. Continuous Use as a Primary Residence Each purchaser of an affordable unit shall certify,. prior to the close of escrow, in a form acceptable to the S+ty~klatCity that the unit is being purchased and shall be maintained as the purchaser's primary residence. Failure of the purchaser to maintain eligibility for a homeowner's exemption from property tax shall be construed as evidence that the unit is not the primary residence of the purchaser. C. Subordination At the request of the lewmoderate-income household's lender, the City may subordinate the foregoing income eligibility and resale price restrictions to a first Deed of Trust at the time of purchase, provided that the Deed of Trust does not exceed the purchase price of the unit. namwsranve cwazlmu AHordnble Ranting Roauc~ion Pmgam 30 D. Default and Foreclosure A Request for Notice of Default shall be recorded along with the Agreement Imposing Restrictions on Real Property. The Agreement will provide that any Notice of Default will constitute an owner's Notice of Intent to Sell, and that the City may exercise its Option to Purchase. In the event that the City does not exercise its Option and the unit is foreclosed upon, proceeds of the foreclosure sale shall be used first to satisfy the lender's lien(s), and any surplus proceeds, up to the amount that the owner would have received had there been no foreclosure, shall be paid to the owner. The remaining balance of any surplus shall be paid to the City for deposit into the Citywide Affordable Housing Trust Fund. E. Distribution of Insurance and Condemnation Proceeds In the event that the unit is destroyed and insurance proceeds are distributed to the low- .income household owner instead of being used. to rebuild, or in the event of liquidation of the homeowners' association and distribution of the assets of the association to the members, including the owner, any surplus remaining after payment of encumbrances shall be distributed as set forth above with respect to default and foreclosure. ~ s. Tenant and Purchaser Eligibility Procedures Per Chapter 9.56, multi-family project applicants who have opted to satisfy the affordable housing obligation through the on-site or off-site option are required to fill vacant affordable units'^ ^'*"^~~ *'~~^ ••~aye: a) by selecting income-eligible tenants from aCity-developed list of income-qualified households except in cases where no qualified households are available or except ownership projects of 4 or more units in the Cm's multi-family residential zones may to choose themselves to select income-qualified households which shall be subject io eligibility certification by the City. , '' ° ^" ^ '' * ' ••^''^"'^, ^• "` "•• *hnm cc.h,ac olo^i'n ~I'i'...J h.. n..hn Wn ., h'nh nhnll n * r hn h'o^* +n mc.. ~.......... .`.........~..n n~~mo rv ...... .......... n c a ~ y...... .~ ..... ......... _.. ..~.. ... ._... .,.. __.,~...,. ... ~1'~n~l'*v nn H'i'n~*'nn by *h~ ("hr /coo Co^*'.~n 0 ?oF i 1!1/•. \~~~0 GR i. ~riPnr co ih..1 "Thn r"i., nh^II An.,^Inn •+rJm'n'c*rM'v '.Jea l'n c fnr +h.. *^^^n*~ ^^a ^ rnhnnnr , II Admwstmtiva Guidelines Affordable Housing Noductiou Roycun 31 This section establishes priorities for eligibility to occupy On-Site Affordable Units, describes categories of persons ineligible to occupy On-Site Affordable Units, and outlines the procedures whereby the City Housing Division A~~ther-ity shall establish, maintain, and update the list of eligible tenants. A. Priority Households In establishing the list of households eligible to occupy affordable units, the Housing Authority shall adhere to the following priorities: 1) FirstPriority Persons who have been permanently displaced or face permanent displacement from their housing units in Santa Monica as a result of any of the following: A) Ellis Act, owner-occupancy, or removal permit eviction B) Earthquake, fire, flood, or other natural disaster C) Cancellation of Section 8 contract by property owner D) Governmental Action, such as Code enforcement Admwstative Guideline Affivdablz Hooting Rodvuion Pmerem 32 2) Second Priority Persons who are either: A) Residents of Santa Monica and/or B) Working in Santa Monica at least 36 hours per weekfor at least 6 months B. Persons Ineligible to Occupy an Affordable Unit Chapter 9.56 (see § 9.56.110(c)) specifically disqualifies the following categories of persons from occupying On-Site Affordable Units: - All employees and officials of the City or its agencies, authorities, or commissions who have, by virtue of their position, policy-making authority or influence over the implementation of the Affordable Housing Production Program, as well as the immediate relatives of employees of such City employees and officials.. - The immediate relatives of the applicant or owner, including spouse, child, parent, grandparent, brother, sister, father-in-law, mother-in-law, son-in-law, daughter-in- law, aunt, uncle, niece, nephew, sister-in-law, and brother-in-law. C. Establishment, Maintenance, and Update of Income-Qualified Tenants and Purchasers List The Housing Division A ' shall be responsible for preparing and maintaining an Eligibility '";g List for this program and shall follow these guidelines for preparing, maintaining, and updating the ~"''a;~~ ;g Eliaibility List. This Eliaibility List shall be established maintained and updated in accordance with the protocols set forth in the Housing Authority Administrative Plan. Admi,unrvtive Gui~clircs Affordable Housiq RoAVC,ion Pmgrem 33 3) Referral Process Each time affordable units become available for occupancy, the owner and the Housing Division At~eFity shall follow these procedures: nanw~s~ar~z c~taeit~~ Affocdablc Hoosm~ Pmduc~ion Pmerum 34 A) At least &9 90 days prior to issuance of a Certificate of Occupancy by the City for newly developed units, or within 5 business days of notice of tenant vacation in existing developments, owners shall notify the City of the number and type (low-/mod-income, number of bedrooms, ownership or rental) of units available. B) Within 5-20 business days of notice by the owner, the City shall provide the owner with a Referral List, drawn from the Eligibility List-a#-F'+aq~a~f+ed App4sants, containing at least twe-three names for each unit available. Additional names may be provided to the owner upon request, subject to availability. C) Owners shall directly contact the persons on the Referral List provided by the City. Owners shall give applicants at least 5 business days to submit a completed application. Owners who are not able to fill vacant units from the Referral List provided may request additional names from the City. Additional names will be provided within 5 business days, subject to availability. D) Owners shall conduct all screening and selection of applicants. All applicable State Fair Housing laws must be observed. E) Candidates on the City's Eligibility List may be referred up to a maximum of five times. After the fifth referral, candidate names will be removed from the'W~,t,ng Eligibility List. 4) Updating the Waiting List Admwstn~ive Goide~inec Affi~rdal,le flousin~ Pewluc~iun Nu5 35 ~A) Emergency Additions to Waiting List: At any time, even if the Wai#ing Eligibility List is closed, cancellation of a Section 8 contract administered by the Santa Monica Housing Authority or eviction due to governmental action for a household residing in Santa Monica will result in the automatic addition of that household to the Waiting Eliaibility List with the applicable priority. SB) The City will provide a Referral Status Form to the owner for each household on the Referral List. The owner shall complete the Referral Status Form indicating whether a unit was offered to the household and whetherthe unit was accepted or refused. A sample Referral Status Form is provided in Attachment 7.B. If a unit was not offered because of a poor credit history or for any other reason, the owner will note this as well. The City will incorporate this information into the Waiting List. D) Applicants will be referred. only for those units for which they qualify. For example, moderate income households will only be referred for vacancies in moderate income units. Applicants must report any changes to address, household size, Santa Monica residency, employment in Santa Monica, and/or, for households on the List of Prequalified Applicants, income to the Housing Authority within 10 days. 5) Persons Dependent Upon Income from Other Sources Applicants must report income from all sources. Any Applicant receiving support, including tuition payments, rent payments, and/or, substantial gifts, and/or any Applicant who appears as a dependent upon the tax return of another individual must so disclose. In these cases, the income of the other will Adm,nisma,iva Guideiurc - AHo,dablc Rowing Producaion Pmgvm 36 be considered along with the income of the Applicant in determining eligibilityfor any Referral List. 6) Automatic Removal from Waiting List Applicant names will be removed immediately from the ~PEaiting Eli ibili List for: A) Failure to appear for a scheduled prequalification interview or prior to the interview time contact the Housing A"qty Division to arrange an alternate time or date, or; B) More than two refusals of offered Units, or; C) Fraudulent statements on Application, Prequalification Interview, Referral Interview, or Informal Hearing, or; D) Failure to disclose dependent status or receipt of substantial support, or; E) Acceptance of an affordable unit stemming from a Referral. Applicants whose names are removed from the g Elioibility List will also have their names removed from the List of Prequalified Applicants, and from any Referral Lists upon which their names appear. Applicants whose names are removed from the `"fig Elioibility List shall be notified by mail at the address which they have supplied to the City. The reason for removal will be specified as part of the notification. 7) Appeal Process A) Right to Appeal The decision by the City to remove a name from the WaiNag Eligibility List, the List of Prequalified Applicants or from a Referral List may be appealed. All appeals must be in writing and must be postmarked or received by the Housing ,~ Division within 10 days after the City has mailed out notification of removal from any list. B) Scheduling an Informal Hearing AJmuustmtivc Guiddiras AffuNable Housin5 Roduc[ion Pmgram 37 Upon receipt of an appeal in writing, the Housing "'>^ Division shall designate an Informal Hearing Officer. The Housing ,4otherity Division may use the Dispute Resolution Service to conduct Informal Hearings. The Informal Hearing Officer will schedule an Informal Hearing to take place within 10 days of receipt of the appeal. Once the Informal Hearing date is set, the appellant may reschedule only upon showing "good cause," which is defined as an unavoidable conflict seriously affecting the health, safety or welfare of the appellant or his/her family. C) Failure of Appellant to Appear for Informal Hearing If the appellant does not appear at a scheduled Informal Hearing and has not rescheduled the Ihformal Hearing inadvance, the appellant must contact the Housing Division Atrtherity within two working days. The Housing Division Atftherity shall reschedule the Informal Hearing only if the appellant's absence was caused by medical emergency or incarceration. In this event, the Informal Hearing may be rescheduled only once. D) Conduct of the Informal Hearing i. Informal Hearings are conducted by a Hearing Officer who is appointed by the Housing Division Autl~erity. ii. Appellant may present written and/or oral objections to the decision; may present any information or witnesses pertinentto the issue of the Informal Hearing; may request that staff be available or present at the Informal Hearing to answer questions pertinent to the case; and may be represented by legal counsel or other designated representative at their own expense. iii. In addition to other rights, the Housing AaHaerity Division has a right to present evidence and any information pertinent to the issue of the Informal Hearing; be notified in writing if the appellant intends to be repre- sented by legal counsel oranother party; examine any documents to be used by the appellant prior to the Informal Hearing; have its attorney Anmmis,nnvz c~mern~~ AQoNll,k Housing P~oduc~iou Pmgam 38 present; and have staff persons and other witnesses familiar with the case present. iv. The Informal Hearing Officer may adjourn the Informal Hearing in drder to allow the appellant time to provide additional information, documents or witnesses before making a decision. If the appellant misses an appointment or deadline for submission of information requested by the Informal Hearing Officer, the action of the Housing ">^ Division takes effect and another Informal Hearing is not granted. E) Informal Hearing Officer Decision The Informal Hearing Officer determines whether the decision to remove the appellant's name from any list was correct based on the information presented at the Informal Hearing. A notice of the Informal Hearing Findings is provided in writing to the Housing Aafhorafy Division within 10 days and includes a clear explanation of the reasons for the Officer's decision. The Housing Aa#laerity Division is not bound by Informal Hearing decisions where such decision concerns matters other than the matter directly under appeal, is contrary to HUD regulations or requirements, is contrary to federal, State or local laws, or exceeds the authority of the person conducting the Informal Hearing. F) Notification of Decision i. If the Informal Hearing decision is valid, the Housing Authe~ity Division sends a notice to the appellant within 14 days of receipt of the decision stating a summary of the decision and reasons for the decision. ii. If the Housing Division AeN-ierity determines it is not bound by the Informal Hearing Officer's determination, the Housing Division Aat#erity sends a letter to the participant within 14 days of receipt of the decision describing the reasons for not complying with the Informal Hearing Officer's decision. Admws~mtive Guidelioes AftDedable HousmS Roductiov PmSmm 39 8) Changes in Income of Residents of Affordable Units If after moving into an affordable unit the tenant's income- eventually exceeds the income limit for the unit, the tenant may remain in the unit as long ashis/her income does not exceed 140% of the income limit for the unit. However, if the. tenant's income exceeds 140% of the income limit for the unit, the following shall apply, depending upon the income mix of the development: 1) For Developments that are All Low-Income: If a tenant's income exceeds 140% of the income limit forthe low income unit but remains within the Program limit for amoderate-income unit, the tenant may remain in the unit and his/her name shall be moved automatically to the top of the Waiting List for the next available moderate-income unit of the same size or larger in the City. As long as the tenant's income does not exceed the program limits for a moderate income unit, the tenant may remain in the low income until the next moderate income affordable unit of an appropriate size becomes available. Once the tenant is offered tenancy in amoderate-income unit, if the tenant does not accept the offer, then the tenant must move out of the low income unit with 90 days of the offer of the moderate-income unit. Notwithstanding, if the tenant's income exceeds the program limits for a moderate income unit at any time during his/her tenancy in the low-income unit, the tenant shall be given one year's notice to vacate the unit. 2) For Mixed Income Developments: If a tenant's income exceeds 140% of the income limit for his/her unit ("original unit") but does not exceed the income limits of other units in the development, the tenant may remain in the original unit as long as a) the income limit for the original unit is re-designated for an appropriate higher income category applicable to another unit in the development, and b) the next vacant higher income unit in the development is re-designated for the same lower income category applicable to the original unit. Admvtistrative Guidelixn AffoNable HoLLCing Pcaduaion Pmy~nm 40 Notwithstanding, if the tenant's income exceeds 140%the program limits for all affordable units in the mixed income development and also exceeds the program limits for a moderate. income affordable unit, the tenant shall be given one year's notice to vacate the unit. 3) For Mixed Income Projects Including Market Rate Units: If the tenant's income exceeds the program limits for the original unit by 140%, and if there are no units designated for a higher income category within the development which maybe substituted for the original unit, the tenant may remain in the original unit and the tenant's rent may be raised to market rate. However, the next vacant market rate unit in the development must be re-designated for the same income limit formerly applicable to the original unit. Tenants Residing in Moderate Income Units If the income of a tenant residing in amoderate-income unit exceeds the income limit for the unit, the tenant may remain in the unit as long as his/her income does not exceed 140% bf the income limit for the unit. However, once the tenant's income exceeds 140% of the moderate income limit, the tenant shall be given one year's notice to vacate the unit. Formatted: Font: Bold g6. Adjustments or Waivers. -'~ - - - - - - - - _ - _- Formatted: Font: Bold The AHPP authorizes a project applicant to request an adjustment or waiver of the AHPP based on a showing that applvinq the requirements of this Chapter would effectuate an unconstitutional taking of property or otherwise have an unconstitutional application to the property. To receive an adjustment or waiver the applicant must submit an application to the Director of °n°^ ^° ni°^^^^^~^^`Housing and Economic Developrrment, or his/her designee at the time the applicant files amulti-family project application The applicant bears the burden of presenting substantial evidence to support the request and set forfh in Admws[ntiva (jmdc~0U4 MoNabla Hoiuing Pmdu¢iou PmSVm 41 detail the factual and legal basis for the claim including all supporting technical documentation. In making a determination on an application to adjust or waive the requirements of this Chapter, the Director of Housing and Economic Development __. or City Council on appeal may assume each of the following when applicable: (1) The applicant is subject to the affordable housing requirement of this Chapter: (2) The applicant will benefit from the inclusionary incentives set forth in this Chapter and the City's Municipal Code; (3) The applicant will be obligated to provide the most economical affordable housing units feasible in terms of construction design location and tenure. The Director of Housing and Economic Development must make a written decision within ninety days after a complete application is filed. The Director's decision may be appealed to the City Council if such appeal is filed within fourteen consecutive calendar days from the date that the decision. If the Director of Housing and Economic Developrnent€fes or Cit Council on appeal upon legal advice provided by or at the behest of the City Attorney determines that applvina the requirements of this Chapter would effectuate an unconstitutional taking of property or otherwise have an unconstitutional application to the property the affordable housing requirements shall be adjusted or waived to reduce the obligations under this Chapter to the extent necessary to avoid an unconstitutional result. If an adjustment or waiver is granted any change in the use within the project shall invalidate the adjustment or waiver If thebirector or City Council on appeal determines that no violation of the United States or California Constitutions would occur through application of this Chapter the requirements of this Chapter remain fully applicable [The end] Admwsva{va Guidelines AfioMabla Housi~s Production Pmymm 42 1-A Municipal Code Chapter 9.56SSubiect to Amendments) 1-B AHPP Options Comparison Table 2-A t3ase-Fee Adjustment Methodology ~ 2-B Current Base Fees for Apartment and Condominium Projects Ad'usted Annual) 3-A Affordable Units Table -Condominium Projects wl4+ Units in Multifamily Zones 3-B Development Incentives Table ~A3_C Salsi+Fati~-eE-Very Low, Low and Moderate Income Levels (Adjusted Annually)'' 2-S3~D ~alcu4atien e# Maximum Rents (Adjusted Annually) 2-C3~E Sample of Deed Restrictions (Subject to Staff Revision) ~ n n n n f~ ~. ; .c. ~ r„.~ ~4-A Sample Application for Affordable Housing Waiting List. endin ~4-B Referral Status Form ending) nu~n.anve cr~aa~ AHoNOblc Housing Produmion Pmgrem ~ Formatted: ]ushfied ~ Tabs: 0 75", j Left+ 013", Left+ 063", Left+ Not at 0 83" + 0 5 + 0.75 + 1' (+ i.zs^ Formattetl: Tabs: 0.63", Left + Not at 0.75" -- -- 43 ATTACHMENT 1-A Municipal Code Chapter 9.56 Chapter 9.56 AFFORDABLE HOUSING PRODUCTION PROGRAM 9.56.010 Findings and purpose. 9.56.020 Definitions. 9.56.030 Applicability of chapter. 9.56.040 Affordable housing obligation. - 9.56.050 On-site option. 9.56.060 Off-site option. 9.56.070 Affordable housing fee. 9.56.080 Land acquisition. 9.56.090 Fee waivers. 9.56.100 Pricing requirements for affordable housing units. 9.56.170 Eligibility requirements. 9.56.120 Relation to units required by Rent Control Board. 9.56.130 Deed restrictions. 9.56.140 Enforcement. 9.56.150 Annual report. 9.56.160 Principles and guidelines. 9.56.070 Findings and purpose. The Cit~IS affordable housing production program requires developers of market rate multi-family developments to contribute to affordable housing production and thereby help the City meet its affordable housing need. As detailed in the findings supporting the ordinance cod'rfied in this Chapter, the requirements of this Chapter are based on a number of factors including, but not limited to, the City's long-standing commitment to economic diversity; the serious need for affordable housing as reflected in local, state, and federal housing regulations and policies; the demand for affordable housing created by market rate development; the depletion of potential affordable housing sites by market-rate development; and the impact that the lack of affordable housing production has on the health, safety, and welfare of the City's residents including its impacts on traffic, transit and related air quality impacts, and the demands placed on the regional transportation infrastructure. (Added by Ord. No. 7918CCS§ 7 (part), adopted 7/27/98; amended by Ord. No. 2174CCS § 1, adopted 11/08/05) 9.56.020 Definitions. The following words or phrases as used in this Chapter shall have the following meanings: Affordable Housing Fee. A fee paid to the City by amulti-family project applicant pursuant to Section 9.56.070 of this Chapter to assist the City in the production of housing affordable to very low-, low-, and moderate-income households. Admiuistmtivc Guidzlines AHOrdvblc HOUSin~Roduttiou Raepm Attachment 1-A: Page 7 Affordable Housing Unit. A housing unit developed by amulti-family project applicant pursuant to Section 9.56.050 or 9.56.060 of this Chapter which will be affordable to very low-, low-, or moderate-income households. Affordable Housing Unit Development Cost. The City's average cost to develop a unit of housing affordable to low- and moderate income households. Dwelling Unit. One or more rooms, designed, occupied or intended for occupancy as separate living quarters, with full cooking, sleeping and bathroom facilities for the exclusive use of a single household. Dwelling unit shall also include single-room occupancy units as defined in Santa Monica Municipal Code Section 9.04.02.030.790. Floor Area. Floor area as defined in Santa Monica Municipal Code Section 9.04.02.030.315. HUD. The United States Department of Housing and Urban Development or its successor. Income Eligibility. The gross annual household income considering household size and number of dependents, income of all wage earners, elderly or disabled family members,. and all other sources of household income. Industrial/Commercial District, Any district designated in the Santa Monica Zoning Ordinance as a commercial or industrial district. "Low,' "Very Low,' and "Moderate" Income Levels. Income levels determined periodically by the City based on the United States Department of Housing and Urban Development (HUD) estimate of income for afour- person household in the Los Angeles-Long Beach Primary Metropolitan Statistical Area. The major income categories are: "low-income" (sixty percent or less of the area median),'Yery law-income" (fifty percent or less of the area medianj, and "moderate-income" (one hundred percent or less of the area median). Adjustment shall be made by household size as established by the City. Market Rate Unit. A dwelling unit as to which the rental rate or sales price is not restricted by this Chapter. Maximum Affordable Rent. A monthly housing charge which does not exceed one-twelfth of thirty percent of the maximum very low-, low-, and moderate-income levels as defined in this Chapter and adopted each year by the City. This charge shall represent full consideration for housing services and amenities as provided to market rate dwelling units in the project, whether or not occupants of market rate dwelling units pay separate charges for such services and amenities. Housing services and common area amenities include, but Admims[m~ive Guidelinex AHoNablc Hwsmg Reduction Pmgrvm Attachment 1-A: Page 2 are not limited to, the following: parking, use of common facilities including pools or health spas, and utilities'rf the project ismaster-metered. Noiwithstandingthe foregoing, utility charges, to the extent individually metered for each unit in the project, may be passed through or billed directly to the occupants of affordable housing units in the project in addition to maximum allowable rents collected for those affordable housing units. Multi-family Project. Amulti-family residential development, including but not limited to apartments, condominiums, townhouses or the multi-familyresideniial component of a mixed use project, for which City permits and approvals are sought. Multi-family Project Applicant. Any person, firm, partnership, association, joint venture, corporation, or any entity or combination of entities which seeks City development permits orapprovals todevelop a multi-family project. Multi-family Residential District. Any district designated in the Santa Monica Zoning Ordinance as a muiti- -family residential district. Parcel. Parcel as defined in Santa Monica Municipal Code Section 9.04.02.030.570. Vacant Parcel. A parcel in amulti-family residential districtthat has no residential structure located on it as of August 20, 7998 or which had a residential structure located on it on that date which was subsequently demolished pursuant to a demolition order of the City. No demolition of structures shall be permitted except in accordance with Santa Monica Municipal Code Section 9:04.10.76 et seq. (Added by Ord. No. 1918CCS § 1 (part), adopted 7/21/98; amended by Ord. No. 1926CCS § 7, adopted 10/13/98; Ord. No. 2174CCS § 2, adopted 17/08/05; Ord. No. 2191 CCS § 7, adopted 6/13/06) 9.56.030 Applicability of chapter. (a) The obligations established by this Chapter shall apply to each multi-family project for which a development application was determined complete on or after May 25, 2006 involving the construction of two or more market rate units. No building permit shall be issued for any multi-falmily project unless such construction has been approved in accordance with the standards and procedures provided for by this Chapter. Notwithstanding the above, amulti-family rental housing project thatwill be developed by a nonprofd housing provider receiving financial assistance through one of the City's housing trust fund programs shall not be subject to the requirements of this Chapter so long as the project is an affordable housing project meeting the requirements of Santa Monica Municipal Code Section 9.04.02.030.065 and the project's affordability obligations will be secured bya regulatory agreement, memorandum of agreement, or recorded covenant with the City for a minimum period of 55 years. _ AAtwtistrntive Guiddu,cs AffoNablc Haosmg Pmdvc~inn PmSm Attachment 1-A: Page 3 (b) Multi-family projects for which a development application was determined completed prior to May 25, 2006 shall be subject to the provisions of Santa Monica Municipal Code Section 9.56.010 et seq., as they _ existed on the date the application for the project was determined complete. (c) A designated landmark building or contributing structure to an adopted Historic District that is retained and preserved on-site as part of a multi-family project shall not be considered or included in assessing any of the requirements under this Chapter. (Added by Ord-. No. 1918CCS § 1 (part), adopted 7/21/98; amended by Ord. No. 2191 CCS § 2, adopted 6/13/06; Ord. No. 2206CCS § 5, adopted 10/3/06) 9.56.040 Affordable housing obligation. All multi-family project applicants shall comply with the requirements of this Chapter in the following manner. (a) Multi-family project applicants for multi-family ownership projects of four or more units inmulti-family residential districts shall choose one of the two following options: (1) Providing affordable housing units on-site in accordance with Section 9.56.050; (2) Providing affordable housing units off-site in accordance with Section 9.56.060; (b) In addition to the options established in subsections (a)(1) and (2), all other multi-family project applicants may also choose one of the following options: (1) Paying an affordable housing fee in accordance with Section 9.56.070; (2) Acquiring land for affordable housing in accordance with Section 9.56.080. Amulti-family project application will not be determined complete until the applicant has submitted a written proposal which demonstrates the manner in which the requirements of this Chapter will be met. (Added by Ord. No. 1918CCS § 1 (part), adopted 7/21/98; amended by Ord. No. 2191 CCS § 3, adopted 6/13/06) 9.56.050 On-site option. The following requirements must be met to satisfy the on-site provisions of this Chapter: (a) For ownership projects of at least four units but not more than fifteen units in multi-family residential districts: The multi-family project applicant agrees to construct at least: (i) tweniypercent of the total units as ownership units for moderate-income households, or as an alternative (2) twenty percent of the total units as rental units for low-income households if these rental units are provided by the applicant in accordance with Civil Code Sections 1954.52(6) and 1954.53(a)(2). Admws[nciva Guidelires Affordable Housi~5 Roducvion Pmerem Attachment 1-A: Page 4 (b) For ownership projects of sixteen units or more in multi-family residential districts: The multi-family project applicant agrees to construct at least (1) twenty-five percent of the total units as ownership units for moderate-income households, or as an alternative, (2) twenty-five percent of the total units as rental units for low-income households if these rental units are provided by the applicant in accordance with Civil Code Sections 1954.52(b) and 1954.53(a)(2). (c) For all other multi-family applicants: The multi-family project applicant agrees to construct at least (1) ten percent of the total units of the project for very-low income households or (2) twenty percent of the total units ofthe project for law income households or (3) one hundred percent of the total units of a project for moderate income households in an Industrial/Commercial District. (d) Any fractional affordable housing unit that results from the formulas of this Section that is 0.75 or more shall be treated as a whole affordable housing unit (i.e., any resulting fraction shall be rounded up to the next larger integer) and that unit shall also be built pursuant to the provisions of this Section. Any fractional affordable housing unit that is less than 0.75 can be satisfied by the payment of an affordable housing fee for that fractional unit only pursuant to Section 9,56.070(a)(4) or by constructing all the mandatory on-site affordable units with three or more bedrooms. The Planning and Community Development Department shall make available a list of very low-, low-, and moderate-income levels adjusted for household size, the corresponding maximum affordable rents adjusted by number of bedrooms, and the m inimum number of very low- or low-income units required for typical sizes of multi-family projects, which list shall be updated periodically. (e) The multi-family project applicant may reduce either the size or interior amenities of the affordable housing units as long as there are not signiticant identifiable differences between affordable housing units and market rate units visible from the exterior of the dwelling units, provided that all dwelling units conform to the requirements of the applicable Building and Housing Codes. However, each affordable housing unit provided shall have at least two bedrooms unless (1) the proposed project comprises at least ninety-five percent one bedroom units, excluding the manager's unit, in which case the affordable housing units may be one bedroom, (2) the proposed project comprises ai least ninety-five percent zero bedroom units, excluding the manager's unit, in which case the affordable housing units may be zero bedroom units, (3) the proposed project comprises zero and one bedroom units, excluding the manager's unit, in which case the affordable housing units must be at least one bedroom units, or (4) the multi-family project applicant has elected not to pay the affordable housing fee pursuant to Section 9.56.070(a)(4), in which case the affordable housing units must be at least three bedroom units. The design of the affordable housing units shall be reasonably consistent with Adndn;nmtiva GUldalmu AHOMabla Houci,y Pmdnction Pmgam Attachment 1-A: Page 5 the market rate units in the project. An affordable housing unit shall have a minimum total floor area, depending upon the number of bedrooms provided, no less than the following: 0 bedrooms: 500 square feet 1 bedroom: 600 square feet 2 bedrooms: 850 square feet 3 bedrooms: 1080 square feef 4 bedrooms: 1200 square feet Affordable housing units in multi-family projects of one hundred units or more must be evenly disbursed throughout the multi-family project to prevent undue concentrations of affordable housing units. (f) All affordable housing units in amulti-family project or a phase of amulti-family project shall be constructed concurrently with the construction of market rate units in the multi-family project or phase of that project. (g) On-site affordable housing units must be rental units in rental projects. In ownership projects, these affordable housing units may be either rental units or ownership units. Affordable housing ownership units shall comply with requirements concerning sales price, monthly payment, and limited equity and resale restrictions as established by resolution of the City Council to ensure that subsequent purchasers are also income-qual'rfied households. (h) Each multi-family project applicant, or his/her successor, shall submit an annual report to the City identifying which units are affordable units, the monthly rent (or total housing cost if an ownership unit), vacancy information for each affordable unit for the prior year, verification of income of the household occupying each affordable unitthroughout the prior year, and such other information as may be required by City staff. (i) Amulti-family project applicant who meets the requirements of this Section shall be entitled to the density bonus development standards established in Santa Monica Municipal Code Section.9.04.10.14.040. Q) All residential developments providing affordable housing on-site pursuant to the provisions of this Section shall receive priority building department plan check processing by which housing developments shall have plan check review in advance of other pending developments to the extent authorized by law. (Added by Ord. No. 1918CCS § t (part), adopted 7/21/98; amended by Ord. No: 2191CCS § 4, adopted 6/13/06) 9.56.060 Off-site option. The following requirements must be met to satisfy the off-site option of this Chapter: Administmtivc Guidelines AfioMVbla Housing Pmduttiov Pcogmm Attachment t-A: Page 6 (a) The multi-family project applicant for ownership projects of four or more units inmulti-family residential districts shall agree to constructtwenty-five percent more affordable housing units than number of affordable housing units required by Section 9.56.050(a) and (b). (b) For all other multi-family project applicants, the applicant shall agree to construct the same number of affordable housing units as specified in-Section 9.56.050(c): (c) The multi-family project applicant shall identify an alternate site suitable for residential housing which the project applicant either owns or has site control over (e.g., purchase agreement, option to purchase, lease) subject to City review to ensure that the proposed development is consistent with the Cilys housing objectives and projects. (d) The off-site units shall be located within aone-quarter mile radius of the market rate units. (e) The off-site units shall satisfy the requirements of subsections (d) through Q) of Section 9.56.050. (f) The off-site units shall not count towards the satisfaction of any affordable housing obligation that development of the alternative site with market rate units would otherwise be subject to pursuant to this Chapter. (g) Exceptions to the location of the off-site units specified in this Section may be granted by the Planning Commission on a case-by-case basis upon a showing by the multi-family project applicant, hosed upon substantial evidence, that the location of off-site units in a location different from that specified in this Section better accomplishes the goals of this Chapter, including maximizing affordable housing production and dispersing affordable housing throughout the City. (h) The Housing Division of the Resource Management Department shall prepare administrative guidelines to. implement this Section. (Added by Ord. No. 1918CCS § 1 (part), adopted 7/21/98; amended by Ord. No. 2191 CCS § 5, adopted 6/13/06) 9.56.070 Affordable housing fee. - Amulti-family project applicant eligible to meet the affordable housing obligations established by this Chapter by paying an affordable housing fee shall pay thetee in accordance with the following requirements: (a) An affordable housing tee may be paid in accordance with the following formulas: (1) Multi-family projects in Multi-family Residential Districts: Affordable housing unit-base fee x floor area of multi-family project; Administrmivc Guidclivcs AfroMOblc Housing Production Pmgctm Attachment 1-A: Page 7 (2) Multi-family projects in Multi-family Residential Districts on vacant parcels: Affordable housing unit base fee x floor area of multi-family project xseventy-five percent; (3) Multi-family projects in lndustriaVCommercial Districts on parcels that are either not alreadydeveloped with multi-family housing or are already developed with multi-family housing, but the multi-family project preserves the existing m ulii-family housing or a Category C removal permit has been obtained for the existing multi-family housing:. Affordable housing unit base fee x floor area of project devoted to residential uses x fifty percent.. (4) Multi-family projects with fractional affordable housing units of less than 0.75 based on the formula established in Section 9.56.050(d): City's affordable housing unit development cost x fractional percentage. (b) For purposes of this Section, the affordable housing unit base fee shall be established by resolution of the City Council. Commencing on July 1, 2006 and on July 1st of each fiscal year thereafter, the affordable housing unit base fee shall be adjusted based on changes in construction costs and land costs. No later than July 1, 2010; and approximately everyfive year period thereafter, theCitywill conduct a comprehensive study of these fees and the results of the comprehensive studyshall bereported to the City Council. The amount of the affordable housing fee that the multi-family project applicant must pay shall be based on the affordable housing unit base fee resolution in effect at the time that the affordable housing fee is paid to the City. (c) For purposes of this Section, the City's affordable housing unit development cost shall be established by resolution of the City Council. Commencing on July 1, 2007 and on July 1st of each fiscal year thereafter, the City's affordable housing unit development cost shall be adjusted based on changes in construction costs and land costs. No later than July 1, 2010 and approximately every five year period thereafter, the City will conduct a comprehensive study of these fees and the results of the comprehensive study shall be reported td the City Council. The affordable housing fee that the multi-family project applicant must pay shall be based on the affordable housing unit development cost resolution in effect at the time df payment to the City. (d) The amount of the affordable housing unit base fee may vary by product type (apartment or condominium) and shall reflect, among other factors, the relationship between new market rate multi-family development and the need far affordable housing. - (e) The affordable housing fee shall be paid in full to the City prior to the City granting any approval forthe occupancy of the project, but no earlier than the time of building permit issuance. Aumim.,~a,m~ c~~aoi~zs AffaNabla Ho¢cins ProJUC,ian Program Attachment 1-A: Page 8 (f) The Cityshall deposit any payment made pursuant to this Section in a reserve account separate from the General Fund to be used only for development of very low- and low-income housing, administrative costs related to the production of this housing, and monitoring and evaluation of this affordable housing production program. Any monies collected and interest accrued pursuant to this Chapter shall be committed within five years afterthe payment of such fees or the approval of the multi-family project, whichever occurs later. Funds that have not been appropriated within this five-year period shall be refunded on a pro rata share to those multi-family project applicants who have paid fees during the period. Expenditures and commitments of funds shall be reported to the City Council annually as part of the City budget process. (g) An affordable housing fee payment pursuant to this Section shall. not be considered provision of affordable housing units for purposes of determining whether the multi-family project qualifies for a density bonus pursuant to Government Code Section 65915. (Added by Ord. No. 1918CCS § 1 (part), adopted 7/27/98; amended. by Ord. 1926CCS § 2, adopted 10/13/98; Ord. No. 2174CCS § 3, adopted 71/8/05; Ord. No. 2191 CCS § 6, adopted 6/13/06) 9.56.080 Land acquisition. Amulti-family project applicant may meet the affordable housing obligations established. by this Chapter by making an irrevocable offer: (a) dedicating land to the City or anon-profit housing provider, (b) selling of land to the City or anon-profit housingprovider at below market value, or (c) optioning of land on behalf of the City or anon-profit housing provider. Each of these options must be for a value at IeasYequivalent tothe affordable housing obligation otherwise required pursuant to this Section. The m ulti-tamily project applicant must identify the land ai the time that the development application is filed with the City. Any land offered pursuant to this Section must be located within one-quarter mile radius df the market rate units unless the multi-family project applicant demonstrates that locating the land outside of this radius better accomplishes the goals of this Chapter, including maximizing affordable housing production and dispering affordable housing throughou*. the City. The City may approve, conditionally approve or reject such offers subject to administrative guidelines to be prepared by the Housing Division of the Resource Management Department. If the City rejects such offer; the multi-family project applicant shall be required to meet the affordable housing obligation by other means set forth in this Chapter. (Added by Ord. No. 1918CCS § 1 (part), adopted 7/21/98) 9.56.090 Fee waivers. The Condominium and Cooperative Tax described in Section 6.76.010 of the Santa Monica Municipal Code and the Park and Recreation Facilities Tax established in Chapter 6.80 of Article 6 of the Sonia Monica Municipal Code shall be waived for required affordable housing units and for low, very low and moderate income dwelling units developed by the City or its designee using affordable housing fees. However, any multifamily project applicant who elects to pay an affordable housing fee shall not be eligible for any fee waiver under this Section. (Added by Ord. No. 1918CCS § 1 (part), adopted 7/21/98) AdmiNsxvd[iVL GuiAzlNes Afto~Aable Housine Ralaction Ro~ram Attachment 1-A: Page 9 9.56.100 Pricing requirements for affordable housing units. The City Council shall, by resolution, on an annual basis, set maximum affordable rents and maximum affordable purchase prices for affordable housing units, adjusted by the number of bedrooms. Such maximum affordable rents shall be set at rates such that qualified occupants for low-income units pay monthly rent that does not exceed thirty percent of the gross monthly household income for households earning sixty percent of the median income, that qualified occupants for very low income units pay monthly rent that does not exceed thirty percent of the gross monthly household income for households earning fifty percent of the median income and that and that qualified occupants for moderate-income units pay monthly rent that does not exceed thirty percent of the gross monthly household income for households earning one hundred percent of the median income. Such maximum affordable purchase price shall be set at rates such that qualified occupants for low income units pay total monthly housing costs (mortgage payment, property taxes, homeowners' insurance, property mortgage insurance, homeowners' association fees) that do not exceed thirty-eight percent of the gross monthly household income for households earning sixty percent of the median income, that qualified-occupants for very low-income units pay total monthly housing costs (mortgage payment. property taxes, homeowners' insurance, property mortgage insurance, homeowners' association fees) that do not exceed thirty-eight percent of the gross monthly household income for households earning fifty percent of the median income and that qualified occupants for moderate-income units pay total monthly housing costs (mortgage payment. property taxes, homeowners' insurance, property mortgage insurance, homeowners' association fees) that do not exceed thirty-eight percent of the gross monthly household income for households earning one hundred percent of the median income. (Added by Ord. No. 1918CCS § 1 (part), adopted 7/21/98) 9.56.110 Eligibility requirements. (a) Only low-income, very low-income and moderate income households shall be eligible to occupy or own and occupy affordable housing units. The City shall develop alist otincome-qualified households. Multi-family project applicants shall be required to select households from the City-developed list of income-qualified households, except applicants of ownership projects of 4 or more units in the City's multi-family residential zones may themselves select income-qualified households which shall be subject to eligibility certification by the City. (b) The City shall develop administrative guidelines for the tenant and purchaser selection process detailed in this Section, which shall establish, at a minimum, the timing by which affordable housing units in a project must be leased or sold and occupied, both initially after issuance of the certificate of occupancyforthe project and upon subsequent vacancies in the affordable housing unit. The guidelines may also establish priorities for income-qualified tenants. AJmie,ixtmtiva Cuidalinu Affordable Hnusi~e H,xlucrio~ Pmgmm Aftachmeni 1-A: Page 10 (c) The following individuals, by virtue of their position or relationship, are ineligible to occupy an affordable housing unit: (1) All employees and officials of the City of Santa Monica or its agencies, authorities, or commissions who have, bythe authority of their position, policy-making authorityor influence overthe implementation of this Chapter and the immediate relatives and employees of such City employees and officials; (2) The immediate relatives of the applicant or owner, including spouse, children, parents, grandparents, brother, sister, father-in-law, mother-in-law, son-in-law, daughter-in-law, aunt. uncle, niece, nephew, sister-in- law, and brother-in-law. (Added by Ord. No. 1918CCS § 1 (part), adopted 7/21/98) 9.56.120 Relation to units required by Reni Control Board. Very low-income, low-income and moderate-income dwelling units developed as part of a market rate project, pursuant to replacement requirements of the Sonia Monica Rent Control Board, shall count towards the satisfaction of this Chapter if they otherwise meet applicable requirements for this Chapter including, but notlimited to,the income eligibility requirements, deed restriction requirements, and pricing requirements. New inclusionary units required by the Rent Control Board which meet the standards of this Chapter shall count towards the satisfaction of this Chapter. (Added by Ord. No. 1918CGS § t (part), adopted 7/21/98) 9.56.130 Deed restrictions. Prior to issuance of~a building permit for a project meeting the requirements of this Chapter by providing affordable units on-site oroff-site, the multi-family project applicantshall submit deed restrictions or other legal instruments setting forth the obligation of the applicant under this Chapter for City review and approval. Such restrictions shall be effective for at least fifty-five years. (Added by Ord. No. 1918CCS § 1 .(part), adopted 7/21 /98) 9.56.140 Enforcement. No building permit or occupancy permit shall be issued, nor any development approval granted, for a. project which is not exempt and does not meet the requirement of this Chapter. All affordable housing units shall be rented or owned in accordance with this Chapter. (Added by Ord. No. 1918CCS § 1 (part), adopted 7/21/98) 9.56.150 Annual report. The Housing Division of the Resource Management Department shall submit a reportio the City Council on an annual basis which shall contain information concerning the implementation of this Chapter. This report shall also detail the projects that have received planning approval during the previous year and the manner in which the provisions of this Chapter were satisfied. This report shall turther assess whether the provisions of nami~i=~art~z eniadi~, A(rnNabla Housing Production Pmyrum Attachment 1-A: Page 11 Proposition R have been met and whether changes to this Chapter or its implementation procedures are warranted. In the event the provisions of Proposition R have not been met, the City Council shall take such action as is necessary to ensure that the provisions will be met in the future. This action may include, but not be limited to, amending the provisions of this Chapter or its implementation. (Added by Ord. No. 1918CCS § 1 (part), adopted 7/21/98) 9.56.160 Principles and guidelines. (a) In addition to the administrative guidelines specificallyrequired by other provisions of this Chapter,the City Manager or his or her designee shall be the designated authority to develop and implement rules and regulations pertaining to this Chapter, to enter into recorded agreements with multi-family project applicants, and to take other appropriate steps necessary to assure thatthe required affordable housing units are provided and are occupied by very low-income, low-income and moderate-income households. (b) Within one year from the passage of this Chapter, administrative rules and regulations pertaining to this Chapter shall be brought before the City Council for adoption. (Added by Ord. No. 1918CCS § 1 (partj, adapted 7/21/98) ' 9.56.170 Adjustments or waivers. (a) Amulti-family project applicant may request that the requirements of this Chapter be adjusted or waived based on a showing that applying the requirements of this Chapter would effectuate an unconstitutional taking of property or otherwise have an unconstitutional application to the property. (b) To receive an adjustment or waiver, the applicant must submit an application to the Director of Resource Management, or his/her designee, at the time the applicant files amulti-family project application. The applicant shall bear the burden of presenting substantial evidence to support the request and set forth in detail the factual and legal basis for iheclaim, including all supporting technical documentation. (c) In making a determination on an application to adjust or waive the requirements of this Chapter, the Director of Resource Management, or City Council on appeal, may assume each of the following when applicable: (1) The applicant is subject to the affordable housing requirement of this Chapter; (2) The applicant will benefit from the inclusionary incentives set forth in this Chapter and the City's Municipal Code; (8) The applicant will be obligated to provide the most economical affordable housing units feasible in - terms of construction, design, location and tenure. A~mw~t,ativc GuiAelmes AffoNaM1le Housing &oduttiov Pmgam Attachment 1-A: Page 12 (d). The Director of Resource Management shall render a written decision within ninety days after a complete application is filed. The Director's decision may be appealed to the City Council if such appeal is filed within fourteen consecutive calendar days from the date that the decision is made in the manner provided in Part 9.04.20.24, Sections 9.04.20.24.070 through 9.04.20.24.040 of this Code. (e) If the Director of Resource Management, or City Council on appeal, upon legal advice provided by or at the behest of the City Attorney, determines that applying the requirements of this Chapter would effectuate an unconstitutional taking of property or otherwise have an unconstitutional application to the property, the affordable housing requirements shall be adjusted or waived to reduce the obligations under this Chapter to the extent necessary to avoid an unconstitutional result. If an adjustment or waiver is granted, any change in the use within the project shall invalidate the adjustment or waiver. If the Director, or City Council on appeal, determines that no violation of the United States or California Constitutions would occurthrough application of this Chapter, the requirements of this Chapter remain fully applicable. (Added by Ord. No. 2174CCS § 4, adopted 11/8/05; amended by Ord. No. 2207CCS § 70, adopted 10/3/06) Administra~ive Guidolues Affordable Housing Prnduc~ion PNgr~ Attachment 1-A: Page 13 ATTACHMENT 1-B AHPP Options Comparison Table • 10% of units for Very I Income • 20% of units for Low Income • 100% of units for ,Moderate Income (for • Same as on-site option $25.31/sf for apartments $29.56/sf for condominiums SMMC 9.58.080 • 20% of units are affordable for 4-15 unit projects • 25% of units are affordable for 16+ unit projects • 25% more than the required number of on- Not Applicable Not Applicable Admivis~m~ive Guideliuu AffoNable flnuing Pmdudion Pmgam Attachment 1-B ATTACHMENT 2-A Fee Adjustment Methodoloav Table 1 -Affordable Housing Unit Base Fee AHordable Housing Unit Base Fee Annual lnflazicn Adjustment Calwlations far FY 2008-09 Land Cost Irr#adan Median Annual Pdce Calculation ZIP Cede - Change During 2006 #COndos BOltl Weighs Weighted AVg 90401 -2.2% 18 3.]% -0.1% 90402 445% 31 71% 32% 90403 1.0% t60 36 ]°k 04% 80404 1.4% 92 21.1% 0.3% 90405 114% 13] 31.4% 38% 436 ].4% Source: Los Angeles Times, Real Estate Section, p. K1q January ID, 2008 (bacetl on DataCUick Information Systems) CorzsLUCtMn ConlrrflaHOn Engineering News Records COnstmction Cast lntlex-LOS Angeles March 200] Intlex Value 8,8]3.09 March 20081ntlex Value 9,188.89 Percentage Change IDOJ-2000 3.]% Source Engineering News Recortl (available at btlpJM+uw.encconsW coon.mmfreatures(mnecofsubslconstlntlexHinasp) DetlvaHen ofLantl Cost and Constmcdon Ces[Calculaflorz Weights Hartl COnnmction Mon Recall CC6M Family Rental Projects Land Cos[ Cast Sum Berkeley Place-3031 Santa Monica BNtl. $ 3,808,109 $ 10,5]9,820 $ 14,185,]29 The Tahilt Apts-2411 CeMinela S 1920851 S 9929.1]8 $ 11850029 $ 5,528,980 $ 20,508,]98 5 28,035,]58 21.2% ]8.8% 10000% Source: Reusing DiNSim, Cdy of Santa Monica Irzllafbn Fac[ar Dedvaflon Inflation Value Weigh LNtl. Avg. Lantl Value Inflation ].4% 21 2% 1.6% COnelNeflOn COSt Inflation 3J% ]8.8% ?9° _ 6.5% Atl/usletl Fees FY 200]-08 Faes Inflazicn Factor Updazed Fees $ Change Contlos $29.56 45% $30.88 $1.33 Apartments $25.31 4.5% $28.45 $1.14 Adnuvstmrive Guideliuu A[foNablc Housing Pmdouinn Pmgmm Farmatted_ Font: (Default) Arial_._ _ ~ Attachment 2-A: Page 1 ATTACHMENT 2-A Fee Adjustment Methodology Table 2 -Affordable Housing Unit Development Cost AROrdable Housing Oevalapmen(Cos[ Cumulative Inflation Adustmertt Calculations for FY 2908-09 Land COSt ingatian Median Annual Price Calculaion 21P Coda Change Oaring 200] # Condos 9Wd Weights Weighed Avg. 00401 -22% 16 3]% -0.1% 90402 44.5% 31 ].i% 3.2% 90403 19% 160 36J% a4% 90404 1.4% B2 21.1% 0.3% 90405 114% 13] 31.4% 3.8% 436 ].d% Source: tas Angeles Times, Real Estate Sedion, p. K10, January 20, 2008 (based on DataDUick InicrmaHbn Systems] Consvuctiorz Cos[ Irrtlarlon Engineering News Record's Construction Cost Intlez-Los Angeles March 200] Intlez Value 8,8]3.09 March 20081ntlex Value 8,188.89 Percentage Change200]-2008 3.]% Source: Engineering News Record (availahle at http:/Fw.nv.enrconstudion.comffeaNre9coneco/subs/constlntlexHisl.asp) DerivaUOn o{Lantl COStand COnaVUCGnn Cart Calculation Weights Hard Constuction Most Recent CCSM Farrily Rental Projects Lantl Cost Cos[ Sum BeMeley Place-3031 Santa Monica BNtl. $ 3,fi06,109 S 10,5]9,620 $ 14,185,]29 The Tahiti Apts: 2411 Centinela $ 1.920.851 S 9.929.1]8 $ 11.850029 $ 5$26,860 $ 20,508)98 $ 26,035,]58 212% ]8.8°b 100.0% Source: Housing DiVisicn, City of Santa Mcnia /ngalion Factor Cerlvatlon Inflaion Value Weigh Wtd. AVg. Land Value Inflation ].4% Z1.2% t.6% Conslmdion Cod lnflatim 3]% ]8.8% 2.9% QS% Atljurtetl Untt COS[ FY 200]418 COSWnit inflation Factor ppda[ed COStNnit $CHange AROrtlableHmsing Development COt $265,632 4.5% $2]],585 $11953 Aden;wtvtivc Guidalmzs Affordable Housivg Pmducrioo Pmgmm Formatted Font: (Default) Arlal C____________- _~__-_.__-__- _J Attachment 2-A: Page 2 ATTACHMENT 2-B Current Base Fees for Apartment and Condominium Projects FEE FOR APARTMENT PROJECTS $26.45 [adopted 7-23-08]. Effective October 1, 2008. FEE FOR CONDOMINIUM PROJECTS $30.89 [adopted 7-23-08]. Effective October 1, 2008. TIMING OF FEE PAYMENT Base Fee is due prior to completion of project, but not before building permit issuance, and the amount of fee due is based on fee amount in effect at time of payment. AJmwnr~~iva Guidelines AfioNVblc Housing Pmduninn Pmgsam Attachment 2-B ATTACHMENT 3-A Affordable Housing Table for 4+ Ownership Units in Multi-Family Zones Number of units Number of FRAGT10fVS`** in project before density bonus affotdable units to be provided" Fraction eligible foe fee payment Fractional cost of developing a unit 2 On-site or off-site units are not mandatory. 3 May pay in-lieu fee. 4 1.00 0.00 $0.00 + 5 1.00 O.DO $0.00 Z \ 4 O N 7 1 00 O.dO $ 06 252 80 4 k 8 1.00 0.60 $159,379.20 U f/1 9 2.00 0.00 $0.00 ti ~ 14 2.00 0.00 $O.OD f? ~ 11 2.00 0.20 $53,126.40 ~ ~, 12 2.00 0.40 $106,252.80 13 2.00 0.60 $159,379.20 14 3.00 0.00 $0.00 15 3.00 0.00 $0.00 - 16+ # units x 25°la fraction < 0.75 fraction x unit develo ment cost 2 On-site or off-site units required are not mandatory 3 May pay in-lieu fee. 4 1.00 0.00 $0.00 * 5 1.00 0.25 $66,4D8.00 O \ 6 1.00 0.50 $132,816.00 F`- N 7 2.00 0.00 $O.DO 40 k S 2.00 0.00 $O.DO W F 9 2.00 0.25 $66,408.00 2 10 2.00 0.50 $132,816.00 y , b 11 3.00 0.00 $0.00 t t, `, 12 3.00 0.00 $0.00 ~ 13 3.00 D.25 $66,408.00 14 3.00 0.50 $132,816.00 15 4.00 0.00 $0.00 etc. etc. raction < 0.75 fraction x unit develo ment cast 'Ownershin units must be available far very low. low. or nmderate income households "Rental units must be available for very low or low income hmisehalAs *'For fractions of 035 or mare -round up to next whole number "`Farfractimrs less than 0.75 -there are 2 options: 7) Pay the fractional cost of developing the writ }based on affonlahle housing unit development cos4) 2} CmrstmM all mandatory affordable units with 3+ bedrooms Admwnrmive Guidelines Affordable Housing Pmduc~ion Pmgam Attachment 3-A ATTACHMENT 3-B Development Incentives Density Bonus Table for Housing Developments in All Zones Minimum % of project that must be affordable to be eligible for bonus OF UNITS THAT DENSITY BONUS" ADDITIONAL BONUS° ARE AFFORDABLE VERY LOW INCOME LOW INCOME MODERATE INCOME LAND DONATION FOR RESIDENTIAL ZONES B% 6% a a•. 22 5% 7% 25.0% 8% 27.5% 9% 10% 11% 30.0% 32.5% 35.0% a e•. 21.5! a'. 60% a•. 16D% 12% 350% 23.0% 707 170% 13% 350% 24.5% 8.0% 180% 14% 350% 26.0% 9.0% 190% 15 % 35.0% 27:5% 10.0% 2D.0°!o 16% 35.0% 29 0°!0 11.0 % 21.0 % 17% 35.0% 30.5% 120% 220% 18 % 35 0% 32.0% 13 0% 23 0% 19% 35.0% 33.5% 14.0% 24.0% 20% 35.0% 350% 15.0% 25.0% 21 % 35.0% 35 0% 16 0% 26.0 22% 35.0% 35.0% 170% 270% 23% 35 0% 35.0% 18 0% 28 0 24% 35.0% 35.0% 19.0% 29.0 25% 35.0% 35 0% 20.0% 30.0 26% 35.0% 35.0% 21 D% 31.0% 27°l0 35 0 % 35.0% 22.0% 32 0 % 28% 350% 350% 23.0% 33.0% 29% 35.0% 35.0% 24.0%~ 34.0% 30% 35.0% 3S0% 25D% 350% 31 % 35 0 % 35.0 % 26.0% 35 0% 32% 350% 350% 27.0% 350% - - 33 % 35.0°fo. 35 0 % 28.0% 35.0% 34% 35.0% 350% 29D% 350% 35 % 35.0 % 35.0% 30 0% 35 0 36 % 35.0% 35.0 % 31.0 % 35.0°!0 37% 35.0% 350% 32.0% 35.0°!0 38 % 35.0 % 35.0% 33.0 % 35.0 % 39% 350% 35.0% 340% 350% 40% 35 0 % 35.0 % 35.0% 35.0°!0 FOR COMMERCIAL AND INDUSTRIAL ZO NES C5, CP, and M1 zones FAR bonus of 35°/0 over maximum allowable Floor area - for each zone BSC, BCD, C2, C3, C4, C3C, C6, CM, LMSD zones FAR bonus of tliscounting residenSal floor area alreatly exists in development standards for each zone in addition to provisions in SMMC 9.04.10.14 0309(b)(1) 'Developer shall only choose only ONE densiy bom s <ateaorv anA may request a lesser density bonus. "Boons tar land Aonation can be in addition m density honus for providing units. CamhineA total cannot exceeA 35°0. AJnuvixw~ivc GUidAmra Ad'oodable Flousi2 Produetiov Promam Attachment 3-B: Page 1 ATTACHMENT 3-B Development Incentives Affordable Housing Incentives and Concessions Note That: Requests for incentives/concessions on the Menu shall not require the filing of an application for Variance, GPA, Zone Change, or any other discretionary approval. Requests for density bonuses without incentives, with by-right incentives, and/or one or more incentives included in the Menu of Incentives/Concessions shall be reviewed by the Director of Planning or designee. Requests shall be granted unless: o The incentive/concession is not required to provide for affordable housing costs per Section 50052.5 of Health and Safety Code, or for rents for the affordable units. o There is~aspecific adverse impact upon public health and safety, on the physical environment or on any real propertythat includes historic sites, andforwhich there is no feasible method to mitigate or avoid the specific adverse impact without rendering the development unaffordable to Moderate, Low, or Very Low Income households. PARKING STANDARDS When requested, the following parking standards must be granted to an entire housing development that has obtained a density bonus and are inclusive of guest and disabled access parking: 0 to 1 bedroom units: 1 onsite space/units 2 to 3 bedroom units: 2 onsite spaces/unit 4 or more bedroom units: 2.5 onsite spaces/unit Fractional numbers shall be rounded up to the neat whole number. DEVELOPMENT STANDARDS Incentives and Concessions A developer that obtains a density bonus may be granted up to 3 concessions/incentives based on the percentage of units in a project that are affordable. Number of % of units that are restricted affordable before densit bonus) Incentives/ Concessions Very Low Income Low Income Moderate Income 1 5% 10%, 10% 2 10% 20% 20% 3 15% 30% 30% Administrative Goiddires Affordable Housing Raduc,ion Pmg.am Attachment 3-B: Page 2 ATTACHMENT 3-B Development Incentives Affordable Housing Incentives and Concessions (cont.) The following are the incentives/concessions that a developer may request, depending on the zone. The developer may also request additional waivers and modifications not in this list. T e of Zone Menu of Incentives/Concessions that ma be re nested up to 15% deviation from one side yard Side Yard Setback setback re uirement Residential Zones Parcel Covera e u to 10% deviation up to 15% deviation as long as rear yard Front or Rear Setback setback is at least 5 feet Number of stories Eliminate restriction Residential floor area to be discounted by 50% Commercial or Floor Area when determining Development Review permit Industrial Zones threshold Private O en S ace Eliminate restriction Additional Waivers and Modifications Developer that seeks a density bonus may also request the waiver or modification of development standards but shall show that: 1) The modification is necessary to make the housing units economically feasible. 2) The development standards, even with the concessions or incentives, would have the effect of precluding construction of the density bonus units. A Public Hearing shall be held by the Planning Commission to review these waivers and modifications following the procedures for Design Compatibility Permits in SMMC 9.04.20.15.030. The Planning Commission's decision maybe appealed to the City Council. APPLICATION TO REQUEST INCENTIVES Applicant must submit the following: 1) Site Plan showing total number of units, number and location of affordable housing units, and number and location of density bonus units. 2) Level of affordability for affordable housing units and proposals for ensuring affordability. 3) Description of any requested modifications or incentives. For all waivers and modifications not on the Menu of Incentives/Concessions, applicant must demonstrate that the request will result in identifiable, financially sufficient, and actual cost reductions. The cost of reviewing anyfinancial data submitted bythe developer, including the hiring of a consultant bythe City, shall be borne by the developer. Administa~ive Guidelines ARO~dabla Housing Pmduc~ion Pmgmm Attachment 3-B: Page 3 ATTACHMENT 3-C Very Low, Low and Moderate Income Levels 2008 MAXIMUM INCOME MAXIMUM ALLOWABLE INCOME Household Very Low Moderate Size (50%) Low (60%) Low (80%) (100%) 1 $26,550 $31,860 $42,450 $53,100 2 $30,300 $36,360 $48,500 $60,600 3 $34,100 $40,920 $54,600 $68,200 4 $37,900 $45,480 $60,650 $75,800 5 $40,950 $49,140 $65,500 $81,900 6 $43,950 $52,740 $70,350 $87,900 7 $47,000 $56,400 $75,200 $94,000 8 $50.050 $60,060 $80,050 $100,100 Admiuistntive G11iJC~lIW4 AtfoNaLle Housing PeWu<tio~ Rugam Attachment 3-C ATTACHMENT 3-D Maximum Rents 2008 MAXIMUM ALLOWABLE RENT~MONTHLY)" _ -_ Unit T e Very Low (50%) Low 60%) Low 80% Moderate (100%) 0-Bdrm $663 $796 $1;061 $1,327 1-Bdrm $758 $910 $1,213 $1,516 2-Bdrm $900 . $1,080 $1,440 $1,800 3-Bdrm $1,028 $1,234 $.1,645 $2,056 4-Bdrm $1,161 $1,393 $1,857 $2,321 Rents: Median Income for 4- erson household x Betlroom Ad'ustment x Affordabilit 30 % / 72. Bdrm Adjustments 0-Bdrm ~ 0.7 1-Bdrm 0.8 2-Bdrm 0.95 3-Bdrm 1.085 4-Bdrm 1.225 Admwstn[ivc Guidelivee AffuNubl<HOUSmS r~oduaion Pmgr~m Attachment 3-D ATTACHMENT 3-E Sample of Deed Restrictions Recording Requested Bv: City of Santa Monica When Recorded Mail To: City of Santa Monica 1685 Main Street, Room 212 Santa Monica, CA 90401 Attention: Housing Division Space Above This Line For Recorders Use No Recording Fee Required Government Code Section 27383 AGREEMENT IMPOSING RESTRICTIONS ON RENTS & OCCUPANCY OF REAL PROPERTY THIS AGREEMENT IMPOSING RESTRICTIONS ON RENTS & OCCUPANCY OF REAL PROPERTY, entered into this [] day of [month, 20--], by and between the CITY OF SANTA MONICA, a Municipal Corporation (hereinafter the "City"), and [name of applicant], a [California Limited Liability Company] (hereinafter the "Developer"), is made with reference to the following: RECITALS: A. Developer is the owner of certain real property located at [address] in the City of Santa Monica, in the County of Los Angeles, California (hereinafter referred to as the "Subject Property"). The subject property is more particularly described in Exhibit "A" which is attached hereto and incorporated herein by this reference. B. Developer wishes to construct [project description include# stories, building square footage, form of ownership apt./condo etc.] (hereinafter referred to as the "Project"). The City has approved [type of application/ project # AA, DR, VAR etc] for the proposed development Project. The City issued this approval subject to conditions which are imposed for the benefit of the City, the public and surrounding landowners and without which no permit would be issued. The developer wishes to meet a requirement to provide [#] affordable units in the Project. Adminismn~ive Guiddixs AKoNable Homing Prod~etion Pmgnm Attachment 3-E: Page 1 NOW, THEREFORE, it is mutually agreed by and between the undersigned parties as follows: 1. CONTRACT W ITH CITY. [Select as applicable] Developer hereby acknowledges that in issuing the [type of permit AA, VAR etc.] Permit for the Project, the City is reducing or modifying development standards otherwise applicable to the Project such as increasing unit density, reducing parking standards, and other property development standards. In exchange for such forms of assistance from the City, which are of financial benefit to the Developer, Developer has entered into this contract with the City and agreed to the other conditions of the [type of permit see above] Permit, including the requirement included in this Agreement to provide and maintain [#] affordable units on site for occupancy by qualified households which meet income requirements specified in Section 2 of this Agreement. The parties agree and acknowledge that this is a contract providing forms of assistance to the Developer within the meaning of Civil Code Section 1954.52 (b). [OR if rio density bonus or incentives, use the following paragraph] In exchange for the development approvals from the City authorized by [Type of permit AA, VAR, TM, etc.], which are of financial benefit to the Developer, Developer entered into this contract with the City and agreed to the other conditions of [type of permit -see above] including the requirement included in the Agreement to provide and maintain X# (#) affordable unit of housing on site for occupancy by qualified households which meet the income requirements specified in Section 3 of this Agreement. The parties agree and acknowledge that this is a contract providing forms of assistance to the Developer with the meaning Civil Code Section 1954.52(b). 2. DEVELOPER TO PROVIDE (Total # deed restricted unitsl AFFORDABLE UNITS. (a) Developer shall provide and maintain [#] affordable housing units on the Subject Property that shall be affordable to households which earn not more than [fifty percent (50%)] of the then current annual median income adjusted for household size, for the Los Angeles County Area, as defined bythe United States Department of Housing and Urban Development ("HUD") [if very-low units, or sixty percent (60%) if low affordable units, or eighty percent (SO%), or one hundred percent (100%) if moderate affordable units as appropriate]. Three (3) [insert correct number] of the affordable units shall contain at least two bedrooms and one [insert correct number] of the affordable units shall contain at least three bedrooms. The affordable units at the subject property shall be rented to and affordable to [very-low, low or moderate (select correct rate)] income households as follows: Administre,ive Guidalmu Affi,dable Hoosin5 &oducnon Pmgam Attachment 3-E: Page 2 (b) Developer may satisfy Section 2(a) by providing the Affordable Units to households which participate in a subsidy program under Section 8 of the Housing Act of 1937, as amended, or any other comparable subsidy program. (c) The Affordable Units shall be rental-units and the maximum rent shall be calculated pursuant to the formula set forth in Section 3 of this Agreement. (d) The City shall issue a Certificate of Occupancy for the Project ("Certificate") expressly contingent upon compliance with the terms of this Agreement. A valid Certificate shall be required at all times to continue to use or occupy the Project. A breach of this Agreement shall be grounds for revoking-the Certificate. The City shall provide reasonable notice and an opportunity to cure any breach of this Agreement prior to revoking the Certificate. 3. TERMS FOR THE RENTAL OF THE AFFORDABLE UNITS. [specify unit #=s] units shall be rented to [very low, low or moderate (select appropriate level). ] income households which meet income requirements specified in Sections 2 and 4 of this Agreement, not to exceed the maximum allowable rental rates established as follows: (a) If the household is receiving assistance under the .Section 8 Existing Assistance Program or similar subsidy program, the maximum allowable rent shall be that which is established by the Section 8 subsidy program. (b) If the household is not receiving federal rental assistance as defined above, the maximum allowable rent for the unit shall be calculated as follows: Median income x 50%x Bedroom Adjustment Factor x 30%=Maximum Allowable Rent (Annual). [ if Very-Low Income, otherwise delete ] Median income x 60%x Bedroom Adjustment Factor x 30%=Maximum Allowable Rent (Annual). [if Low Income, otherwise delete ] Median Income x [ 80%or 100%(select appropriate rate)] x Bedroom Adjustment Factor x 30% =Maximum Allowable Rent (Annual). [if Moderate Income otherwise delete] The Maximum Allowable Rent figures must be divided by twelve to determine the maximum allowable monthly rent. "Median Income" is defined as the median income for a four person household in' the Los Angeles County Area as established periodically by HUD. The formula for the calculation of rents as of the date of this Agreement is as follows: Median Income (1) x Income Range (2) x Bedroom Adjustment (3) x 30% Median Income - As periodically published by HUD, currently $75,800 (for a family of four). 2. Income Ranges Aamwscmeva Goiaalmu AfforAable F{ousing PeoduRinn Pm~mm Attachment 3-E: Page 3 Very-Low is 50% or less of median income [delete if inapplicable] Low is 60% or less of median income [delete if inapplicable] Moderate is 80%, or 100% or less of median income [delete inapplicable ] 3. Bedroom Adjustment Factors 0 Bedroom .7 3 Bedrooms 1.085 1 Bedroom .8 4 Bedrooms 1.225 2 Bedroom .95 Affordable Rents 2008 [Housing Div. updates figures once a year] 0-BR 1-BR 2-BR 3-BR Very-Low (50%) $663 $758 $900 $1,028 Low (60%) $796 $910 $1,080 $1,234 Moderate (100%) $1,327 $1,516 $1-,800 $2,056 In the event the standards for establishing the monthly rental rate of the Affordable Units set forth in Section 3 above cease to exist, the parties shall substitute a similar standard established by HUD or its successor governmental agency. If the parties are unable to agree upon a substitute standard, the parties shall refer the choice of the substitute standard to binding arbitration in accordance with the rules of the American Arbitration Association. 4. INCOMES. OCCUPANCY AND ELIGIBILITY STANDARDS. Except as required by section 2, Developer shall only rent the Affordable Units to persons whose income, adjusted for household size, does not exceed the following income guidelines: Median Income x 50% x Household Adjustment Factor [for Very-Low, delete if inapplicable] Median Income x 60% x Household Adjustment Factor [for Low, delete if inapplicable] Median Income x 80% or 100% x Household Adjustment Factor [for Moderate, delete inapplicable rate] AdmiNSmoive Guidclincs Affo,Anbla Housing Protlwnon Pmtvm Attachment 3-E: Page 4 The Household Adjustment Factors are as follows: 1 person 0.7 2 persons 0.8 3 persons 0.9 4 persons 1.0 5 persons 1.08 6 persons 1.16 7 persons 1.24 8 persons 1.32 If the affordable rents are below the Section 8 Program "Fair Market Rents" Developer shall make the Affordable Units available for occupancy to Section 8 Housing Assistance Program Certificate Holders by listing the Affordable Units with the local Housing Authority. In no case shall the Developer discriminate against Section 8 Program Certificate Holders for occupancy in the property. Developer shall not rent the Affordable Units to a member of his or her family. For the purposes of this Agreement, the term "family" shall include the Developer and his or her spouse, children, parents, grandparents, brother, sister, father-in-law, mother-in-law, son-in-law, daughter-in-law, aunt, uncle, niece, nephew, sister-in-law and brother-in-law. For the purposes of this Section, the term"Developer" shall include all parties bound by this Agreement. In addition, if Developer is a corporation, Developer shall not rent the Affordable Units to any officer, shareholder or employee of such corporation. If Developer is a partnership, Developer shall not rent the Affordable Units to any partner or employee of such partnership. In addition, Developer shall not rent the Affordable Units to any member of the Santa Monica City Council, or City Boards or Commissions, or City employees who presently exercise any function or responsibility in connection with the Property, or shall have or acquire any personal, financial, or economic interest, direct or indirect. For the purposes of this Agreement direct or indirect interest includes any interest held by the spouse, parent, child, brother, sister, father-in-law, mother-in-law, brother-in-law, sister-in- law, daughter-in-law, or son-in-law of the potential tenant. Developer agrees to make reasonable efforts to rent vacant Affordable Units within sixty days. 5. TENANT SELECTION. Developer shall select households from aCity-administered list of income-qualified households, or self select households subject to the following requirements. Admwnm,ive Goideliwx AffoNable Housing Pmduction Prayam Attachment 3-E: Page 5 Developer shall give preference in leasing the affordable units to persons evicted pursuant to the EIIis Act, Government Code Section 7060, persons residing in Santa Monica, and persons working in Santa Monica, unless preempted by HUD grant program requirements or other government requirements that pertain to tenant selection. Developer shall certify the income of the prospective tenants subject to City certification, prior to selection for occupancy in order to ensure that the occupancy requirements specified in Section 4 of this Agreement are met. The income certification shall be completed in accordance with the following: (a) Developer shall require an income declaration from all household members eighteen (18) years of age and older. (b) For the purposes of this Agreement, "income" shall include employment income, social security, disability, pensions, supplementary benefits, support payments, income from sale of real property, and income from assets over $5,000 (not including automobiles or furnishings). Developer shall obtain verification for all income, which may include pay stubs, income tax returns, savings account statements, financial statements, stock certificates, etc. in order to verify the gross annual household income. (c) Developer shall compute gross annual household income bytotaling all income, and adjusting as follows: (1) Deduct $480 for each dependent, defined herein as a household member under 18 years of age; (2) Deduct $400 for any family with a head of household over 62 years old; (3) Deduct medical expenses in excess of three percent (3%) of annual income for any elderly family; and (4) For households whose total assets exceed $5,000, the Developer must calculate the annual asset income by multiplying the value of the total assets by ten percent (10%). Developer shall then add the result to the other household income to obtain the adjustment gross annual income. (d) Developer shall select a household for the Affordable Units upon completion of income verification process and may require other information prior to selection, including documentation of ability-and history of timely payment of rent, and ability and history of maintaining property. (e) Developer may accept a tenant with a current and valid Section 8 Housing Assistance Payments Program Certificate as eligible, without completing the above verifications. 6. CITY APPROVAL OF DOCUMENTS.. The Conditions, Covenants and Restrictions (C,C & R's) for the Subject Property shall include reference to all applicable obligations and duties of the parties created bythis Agreement. The City Attorney of the City of Santa Monica shall approve as to form the C,C & R's prior to recordation of the final subdivision or parcel map for the Subject Property. Adminisva,ive Guidelivo~ AfioNable Housig Productiov ProSmm Attachment 3-E: Page 6 Developer shall rent the Affordable Units pursuant to the terms and conditions of a lease or rental agreement approved by the City. At least thirty days prior to the expected completion date, Developer shall submit to the City Housing Division for review a copy of the lease agreement to be used and a brief marketing plan and description of the tenant selection process to be used. In addition to any other provision required by the City to ensure compliance with Chapter 9.56 and the Administrative Guidelines for Chapter 9.56, said lease or rental agreement shall contain a provision prohibiting subleasing of the Affordable Units or revising the composition of the household without Developer's permission. Developer shall not approve any change that renders the Units in noncompliance with the income guidelines for such household as set out in Section 1. The addition to the household of a minor child or children shall not be deemed a change in the household requiring Developer's prior approval pursuant to this Section. 7. ATTORNEYS' FEES AND COSTS. In the event of any controversy, claim or dispute between the parties hereto, arising out of or relating to this Agreement or breach thereof, the prevailing party shall be entitled to recover from the losing party reasonable expenses, attorneys' fees and costs. 8. APPOINTMENT OF OTHER AGENCIES. The City may designate, appoint or contract with any other public agencytoperform City's obligations under this Agreement. 9. SEVERABILITY. In the event any limitation, condition, restriction, covenantor provision contained in this Agreement is held to be invalid,. void or unenforceable by any court of competent jurisdiction, the remaining portions of this Agreement shall, nevertheless, be and remain in full force and effect. 10. NOTICES. All notices required under this Agreement shall be sent by certified mail, return receipt requested, to the following addresses: TO THE CITY OF SANTA MONICA: City of Santa Monica Planning and. Community Development Department 1685 Main Street, Room 212 Santa Monica, California 90401 Attention: Director, Planning and Community Development Department Admims,nsiva Cuidelires Afiardabla Housing Pmductian Pmgrum Attachment 3-E: Pagel TO THE DEVELOPER: (enter developer name/address] Any party may change the address to which notices are to be sent by notifying the other parties of the new address, in the manrier set forth above. 11. HOLD HARMLESS. As between the City and the Developer, the Developer is deemed to assume responsibility and liability for, and the Developer shall indemnify and hold harmless the City and its City Cduncil, boards and commissions, officers, agents, servants or employees from and against any and all claims, loss, damage, charge or expense, whether director indirect, to which the City or its City Council, boards and commissions, officers, agents, servants or employees may be put or subjected, by reason of any damage, loss or injury of any kind or nature whatever to persons or property caused by or resulting from or in connection with any negligent act or action, or any neglect, omission or failure to act when under a duty to act, on the part of the Developer or any of Developer's officers, agents, servants, employees or subcontractors in his or their performance hereunder. 12. BURDEN TO RUN WITH PROPERTY. The covenants and conditions herein contained shall apply to and bind the heirs, successors and assigns of all the parties hereto and shall run with and burden the Subject Propertyfor the benefit of the City, the public and surrounding landowners, until terminated in accordance with the provisions hereof. Developer shall expressly make the conditions and .covenants contained in this Agreement a part of any deed or other instrument conveying any interest in the Subject Property. 13. SALE OR CONVERSION OF PROPERTY. In the event of sale or conversion of the subject property, any Conditions, Covenants and Restrictions (CC & R's) for the property, shall incorporate by reference all obligations and duties of the parties created by this Agreement. Reporting obligations set forth in Section 22 below, shall be set forth in the CC & R's if any, for the project. 14. PROHIBITION AGAINST DISCRIMINATION. Developer agrees not to discriminate against any actual or potential occupant of the subject. property on the basis of sex, race, color, religion, ancestry, national origin, sexual AAmwsrsiva Guideli,us AffuNablc Hwsmg PmAuainn Pm~rum Attachment 3-E: Page 8 orientation, age, pregnancy, marital status, handicap, HIV, family composition, or the potential or actual occupancy of minor children. Developer further agrees to take affirmative action to ensure that no such person is discriminated against for any of the aforementioned reasons. 15. STANDING TO ENFORCE AGREEMENT. Violation of this Agreement may be enjoined, abated or remedied by appropriate legal proceeding in a court of competent jurisdiction by any aggrieved party, including but not limited to, the parties hereto, or there respective successors, heirs and assigns. The right to specific performance of this Agreement shall be an appropriate remedy for a breach of this Agreement because of the uniqueness of the Property and the inherent difficulty in calculating adequate damages. 16. INTEGRATED AGREEMENT. This Agreement constitutes the entire agreement between the parties and no modification hereof shall be binding unless reduced to writing and signed by the parties hereto. 17. APPLICABLE LAW. All questions pertaining to the validity and interpretation of this Agreement shall be determined in accordance with the laws of California applicable to contracts made to and to be performed within the State. 18. CITY AUTHORITY TO ENFORCE LAW The obligation of the Owner pursuant to this Agreement are in addition to, and in no way limit, the authority of the City to enforce all laws and regulation applicable to the Subject Property. Nothing in this Agreement shall limit the authority of the City to take appropriate action to enforce the terms of any permit issued by the City relating to the Subject Property. 19. DURATION OF AGREEMENT. This Agreement shall terminate and become null and void fifty-five (55) years from the date of recordation hereof. 20. AMENDMENT OF AGREEMENT. Admws[m[ive Guidelivcs Affivdable Hovs ing Pmduttiov Pro~mm Attachment 3-E: Page9 This Agreement, and any Section, subsection, or covenant contained herein, may be terminated or amended only upon the written consent of all parties hereto. 21. RECORDING OF AGREEMENT. The parties hereto shall cause this Agreement to be recorded in the Official Records of the County of Los Angeles. 22. YEARLY REPORT. Developer shall issue a written report to City on an annual basis commencing one year from the date of recordation of this Agreement and continuing thereafter throughout the term of the Agreement. The report shall state the rent level then being.charged for the Affordable Units, whether the occupants are assisted by a program under Section 8 of the Housing Act of 1937, the number of occupants in the household, whether there have been any changes in the composition of the household, whether any vacancies have occurred during the reporting year, and any changes in income of the residents of the affordable units: 21. AUTHORITY TO EXECUTE. The undersigned declare they have full authority to execute this Agreement on behalf of Developer, and bind Developer to all the terms and conditions contained herein. [Note: document text needs to be part of signature page; set hard page breaks when necessary] IN WITNESS WHEREOF, the parties hereto have caused-this Agreement to be executed as of the day-and year first above written. .1dmi,iistn[ive G~idelires rdable Houcins PmJvc,ion Pmgam Attachment 3-E: Page 70 ATTEST: "CITY" CITY OF SANTA MONICA a Municipal Corporation MARIA STEWART City Clerk By: P. Lamont Ewell APPROVED AS TO FORM: City Manager SANTA MONICA CITY ATTORNEY MARSHA JONES MOUTRIE City Attorney "DEVELOPER" [Name], LLC a California limited liability company [name, and title, i.e. Manager, trustee, owner etc] Admi~ds~.a~ive G~iJSlines AffNable Hmisivg Production Pmgam Attachment 3-E: Page 11 EXHIBIT A LOT -----------, BLOCK---------, TRACT ------------ IN THE CITY OF SANTA MONICA, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK XX PAGE XXX, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. (Insert Complete Legal Description) APN Administrerire GuiJdiucs AfE rdeble Housing Raluetiav Progrem Attachment 3-E: Page 12 STATE OF CALIFORNIA COUNTY OF LOS ANGELES ss. On f ; 2008, before me the undersigned, Notary Public personally appeared [project applicant], who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. Type of Document: Document Date: Address: Number of Pages: WITNESS my hand and official seal. Notary Public in and for said State Aaaa~~~rari~o cmaaNes Affordable Hnacivy Production Pm~ram Attachment 3-E: Page 13 ATTACHMENT 4-A Sample Application for Affordable Housing Waiting List (pending) ndnuNSr~~mz c~~azr AfioNvble Horsing Pcadocfion Progwn Attachment 4-A ATTACHMENT 4-B Referral Status Form (pending) Admwmm~va Galdcl'mze AftoMabk HousmS Production Program Attachment 4-B Page 28:[i]FOrmatted. barry.rosenbaum 2/17/200911:37:00 AM Justified, Line spacing: 1.5 lines, Widow/Orphan control, Tabs:. -1", Left Page 28: [2] Formatted barry.rosenbaum 2/17/2009 11:37:00 AM Justified, Don't keep w ith next, Don't keep lines together Page 28: [3] Formatted ba~ry.rosenbaum 2/17/2009 11:37:00 AM Justified, Line spacing: 1.5 lines, Don't keep with next, Don't keep lines together Fage28:[4]Formatted barry.rosenbaum 2/17/200911:37:00 AM Justified, Space After: 0 pt, Line spacing: 1.5 lines, Don't keep with next, Don't keep lines together Page 28! 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