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SR 08-23-2016 3B Ci ty Council Report City Council Meeting : August 23, 2016 Agenda Item: 3.B 1 of 4 To: Mayor and City Council From: Andy Agle, Director , Housing and Economic Development, Housing Division Subject: Affordable Housing Production Program Fee Resolutions Recommended Action Staff recommends that the City Council : 1. Adopt a Resolution incr eas ing the Affordable Housing Unit Base Fee for new market -rate apartments and condominiums by 3.6 percent ; and , 2. Adopt a Resolution increas ing the Affordable Housing Unit Development Cost by 3.6 percent . Executive Summary The proposed adjustments to t he Affordable Housing Unit Base Fee and Affordable Housing Unit Development Cost reflect changes in land and construction costs. On June 13, 2006 (Attachment C), the City Council approved the methodology for ascertaining changes in the costs and thereby ca lculating the adjustment. The attached resolutions have been prepared in accordance with the approved methodology. The Affordable Housing Unit Base Fee and the Affordable Housing Unit Development Cost would be 3.6 percent higher than the existing amounts a nd would become effective November 1, 2016, if approved. Background The Affordable Housing Production Program (AHPP), Chapter 9.64 of the City’s Municipal Code, implements Proposition R, which establishes that not less than 30 percent of all newly constr ucted multi -family housing in Santa Monica 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 (Attachment D) and has been periodically amended, as necessary. The AHPP requires developers of new market - rate, multi -family housing to contribute to affordable housing goals by designating a portion of a development’s total residences as affordable housing, constructing affordable housing off site, designating land for affor dable housing development, or paying the Affordable Housing Unit Base Fee (fee). Fees are used to pr eserve and produce affordable housing through housing trust fund loans to nonprofit affordable 2 of 4 housing organizations. The annual amount of fees received i n the last five years ha s ranged from $451,000 to $1,248,000. The f ee is updated annually based on changes in land and construction costs. When a developer chooses to designate a portion of a project’s total residences as affordable housing, the number of affordable residences that must be provided is based on the number of market -rate units in the development. Often, the calculation of required affordable residences results in a fraction. In that instance, when the fraction is 0.75 or more, the number is rounded -up to a whole number. However, any fraction less than 0.75 can be satisfied by payment of a fee. The amount of the fee is based on the Affordable Housing Unit Development Cost, which is also adjusted annually based on changes in land and construc tion costs. For example, if a developer is required to provide 4.7 units of affordable housing within a development, the developer would be required to designate four affordable units and pay 0.7 times the Affordable Housing Unit Development Cost to satisf y the requirement associated with the fraction. Discussion Annual Fee Adjustments Section 9.64.070 of the City’s AHPP provides that the Affordable Housing Unit Base Fee and the Affordable Housing Unit Development Cost shall be adjusted annually by Council resolution based on changes in construction and land costs. The fee adjustment methodology is detailed in Section 2 of the AHPP Administrative Guidelines (Attachment E) and reflects the methodology approved by Council in 2006. The fees are adjusted based on two factors: 1) changes in construction costs as measured by the Engineering News Records Construction Cost Index, and 2) changes in land costs measured by using the proxy of change in median condominium sales prices. The previous annual adjustment, ad opted by Council on August 25, 2015 (Attachment F ), increased the fees by 4.9 percent ($1.46 per square foot for apartments and $1.71 per square foot for condominiums). The table below summarizes this year’s proposed adjustment to the fees, which would b e increased by 3.6 percent based on this year’s changes in land and construction 3 of 4 costs. Fee Description 2015 Amount 2016 Amount % Change Affordable Housing Unit Base Fee - Apartments (per square foot) $31.25 $32.38 +3.6% Affordable Housing Unit Base Fee - Condominiums (per square foot) $36.51 $37.82 +3.6% Affordable Housing Unit Development Cost $327,927 $339,732 +3.6% The proposed Resolutions, Attachments A and B, would adjust the fees accordingly, effective November 1, 2016. Details of the calculat ions prepared by HR&A Advisors, Inc. (“HR&A”) for the Affordable Housing Unit Base Fee and the Affordable Housing Unit Development Cost are provided in Attachments G and Attachment H . The revenue implications are minimal and depend on development activity in any given year. On August 12, 2016, the City published notice in the Santa Monica Daily Press of Council consideration and the availability of the HR&A analyses. The City republished th e notice on August 18, 2016. Copies of the analyses have been a vailable in the City Clerk's Office for public review since August 12, 2016. Financial Impacts & Budget Actions The proposed rate change in the Affordable Housing Production Program (AHPP) fee w ould increase annual revenues by an estimated $40,000 to $50,000 depending on development activity levels. Revenues will be deposited at account 04264.404400 and budget is included in the FY 2016 -17 adopted budget. 4 of 4 Prepared By: Jonathan Carr, Administrative Analyst Approved Forwarded to Council Attachments: A. A. Resolution Automatically Adjusting the Affordable Housing Unit Base Fee B. B. Resolution Automatically Adjusting the Affordable Housing Unit Development Cost C. C. June 13, 2006 Staff Report D. D. July 21, 1998 Staff Report E. E. Affordable Housing Production Program Administrative Guidelines F. F. August 25, 2015 Staff Report - AHPP Fee Resolutions G. G. 2016 -17 Base Unit Fee Adjustment Letter H. H. 2016 -17 Development Cost Adjustment Letter Administrative Guidelines Affordable Housing Production Program AFFORDABLE HOUSING PRODUCTION PROGRAM A DMINISTRATIVE GUIDELINES CIT Y OF SANTA MONICA (Pursuant to Chapter 9.64 of the Municipal Code) P repared by T he C ity of Santa Monica Housing Division A pproved by City Council April 12 , 2016 Attachment E Administrative Guidelines Affordable Housing Production Program i Table of Contents 1. Introduction ................................................................................................................ 1 2. Fee Methodology ........................................................................................................ 2 A. Establishment and Periodic Adjustment of Base Fee ............................................. 2 B. Affordable Housing Unit Development C ost ........................................................... 3 3. On -Site Affordable Residence Option ........................................................................ 4 4. Off -Site Affordab le Residence Option ........................................................................ 4 A. One -Quarter Mile Radius Maximum ....................................................................... 5 B. Exceptions to the One -Quarter Mile Radius Maximum ........................................... 5 C. Evidence of Site Control ......................................................................................... 6 D. Simultaneous Development of Off -Site Affordable Residence s ............................. 7 5. Land Acquisition Option ............................................................................................. 7 A. Eligible Land Parcels .............................................................................................. 7 B. Evidence of Site Control ....................................................................................... 10 C. Conveyance of the Site ........................................................................................ 10 D. Simultaneous Conveyance of Land or Option ...................................................... 12 E. Eligible Non -Profit Affordable Housing Develo per ................................................ 12 6. For -Sale Affordable Residence Requirements ......................................................... 13 A. Establi shment of the Initial Sales Price ................................................................ 13 B. Re -Sale of an Affordable Residence to a Subsequent Purchaser ........................ 15 C. Subordination ………. .......................................................................................... 16 D. Default and Foreclosure ....................................................................................... 16 E. Distribution of Insurance and Condemnation Proceeds ....................................... 16 7. Tenant and Purchaser Eligibility Pr ocedures ............................................................ 17 A. Priority Households .............................................................................................. 17 B. Persons Ineligible to Occup y an Affordable Residence ........................................ 18 C. Establishment, Maintenance, and Update of Income -Qualified Tenants and Purchasers List .................................................................................................... 20 D. Tenant Income Increases, Initial Ineligibility and Advance Notice to City ............. 25 8. Adjustments o r Waivers ........................................................................................... 28 Administrative Guidelines Affordable Housing Production Program ii ATTACHMENTS 1 -A Municipal Code Section 9.64 – Affordable Housing Production Program 1 -B AHPP Options Comparison Table 2 -A Fee Adjustment Methodology 2 -B Current Base Fees for Apartment and Condominium Projects 3 -A Affordable Residence s Table - Condominium Projects w/4 + Residence s in Multifamily Zones 3 -B Incentives Table – Affordable Housing Developers 3 -C Extremely -Low, Very -Low, Low and Moderate Income Levels 3 -D Maximum Allowable Rents 3 -E Deed Restriction Sample 4 -A Affordable Housing Eligibility List Sample Application 4 -B Waiting List Referral Form Sample Administrative Guidelines Affordable Housing Production Program 1 1. Introduction These Administrative Guidelines provide guidance on the implementation of the City’s Affordable Housing Production Program , Chapter 9.64 of the Santa Monica Municipal C ode (“AHPP”) (see Attachment 1 -A for a complete copy of the AHPP). The AHPP was originally adopted by th e City Council on July 21, 1998 . It has been amended on several occasions since then. The AHPP gives developers of multi -family housing a variety of options for satisf ying 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 residence s, including multi - family housing that is part of commercial or other development s , must comply with Chapter 9.64 unless specifically exempted by the terms of Chapter 9.64 . See Attachment 1 -B for a comparison table on the various options for complying with Chapter 9.64 . The AHPP implements P roposition R. Approved by Santa Monica voters in November, 1990, Proposition R requires that not less than 30 percent of all newly constructed multi -family residential housing in the City each year be permanently affordable to, and occupied by, low - and m oderate -income households. Section 2 of these Guidelines describes the Fee Methodology . Section 3 provides information about the number of affordable residence s required and the development incentives associated with the On -Site Option . The remaining sections expand upon the AHPP and provide additional requirements regarding the Off -Site Option (Section 4 ), the Land Dedication Option (Section 5 ), For -Sale Affordable Residence s (Section 6 ), the Tenant and Purchaser Eligibility Procedures (Section 7 ) and Adjustments or Waivers (Section 8 ). Questions about how a particular multifamily project applicant shall satisfy the affordable housing obligation (pay a fee, build residence s onsite or offsite, or provide land dedications) should be directed to e ither the City Planning Division at (310) 458 -8341 , or Administrative Guidelines Affordable Housing Production Program 2 to the Planning Counter in Room 111 in City Hall. Questions about current maximum rents and s ales p rice calculation, or Tenant Eligibility and Selection Procedures should be directed to staff in the H ousing Division at (310) 458 -8702. 2. Fee Methodology One way to satisfy the affordable housing obligation is through payment of the Affordable Housing Unit Base Fee (§ 9.64 .070). The amount of the Affordable Housing 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 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 avail able for ownership projects of four or more residence s in t he 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 9.64 .070 (b)) 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 City Council in June 2006 . More specifically, construction cost inflation is established based on the Engineering News Record’s (ENR) Construction Cost Index, which is updated 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 m edian 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 devel opments assisted by the City. A d etailed explanation of the annual adjustment methodology is provided in Attachment 2 -A. Administrative Guidelines Affordable Housing Production Program 3 T here are different base fees for condominiums and apartment projects. Attachment 2 - B contains the current Base Fee amounts for apartment and condominium projects. B . Affordable Housing Unit Development Cost The Affordable Housing Unit Development Cost is set by a Resolution of the City Council (See Municipal Code 9.64 .070(C )) 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 City Council in June 2006 and is the same methodology used in adjusting the Affordable Housing Unit Base Fee described in Section (3 )(A ). The Affordable Housing Unit Development Cost is the average cost to the City to develop a residence of housing affordable to low - and moderate -income households. The Affordable Housing Production Program provides that when developers of market rate multi -family housing are providing affordable residence s on - or off -site, and the calculation of the number of affordable residence s required results in a fractional residence , these developers are eligible to pay a fee equal to the cost of producing that fractional residence based on the Affordable Housing Unit Development Cost if that fraction is less than 0.75. See Attachment 2 -A. Example (6 -residence condominium project) 6 X .20 = 1.2 affordable housing residence s 1 residence would be constructed on -site Fee payment of 0 .2 X $3 27,927 = $6 5,585.40 Administrative Guidelines Affordable Housing Production Program 4 3. On -Site Affordable Residence Option Another way to satisfy the affordable housing requirements of Chapter §9.64 is by constructing affordable residence s on the same site as the proposed new multi -family project (See § 9.64 .050). Ownership pro jects or 4 or more residence s in multifamily zones must provide affordable residence s either onsite or offsite (See § 9.64 .040). All housing developments that provide onsite affordable residence s in accordance with the AHPP are entitled to a bonus over th e maximum allowable number of residence s on the site (i.e., density bonus) or a development bonus (commercial/industrial zones) and incentives (See Section 9.64 .050[I ] and Section 9.22 ). This includes all residence s for sale or rent such as: • Substantial remodel and conversion of commercial buildings to residential residence s • Substantial remodel of residential buildings • Condos and apartments Attachment 3 -A provides a table indicating the minimum number of affordable residence s required in an ownership project in a multifamily zone and the fractional portion of a residence that may be paid as a fee . Attachment 3 -B provides information on density bonus and other development incentives allowed when providing onsite affordable residence s. Attach ment s 3 -C and 3 -D provide information on the most current income eligibility and rent limits. Attachment 3 -E provides an example of an “Agreement Imposing Restrictions on Real Property ” between the City and a developer regarding a project containing affor dable housing residence s . 4 . Off -Site Affordable Residence Option This section of the Guidelines specifies certain additional requirements concerning the location of the Off -Site Affordable Residence s , site control , and concurrent development of the mark et -rate project and the off -site residence s . Administrative Guidelines Affordable Housing Production Program 5 A. One -Quarter Mile Radius Maximum Except as provided below, the alternative site for the Off -Site Affordable Residence s shall be located within a one -quarter mile radius of the parcel on which the market rate residence s are proposed, and within the boundaries of the City. (SMMC § 9.64 .060(C )) The outer limit of this one -quarter mile radius area shall be determined by the Planning and Comm unit y 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 applican t 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 residence s will be constructed. Any multi -family parcel or commercial parcel on which multi -family housing is a permi tted 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 Residence s. B. Exceptions to the One -Quarter Mile Radius Maximum The maximum one -quarter mile radius requirement may be waived by majority vote of the City Planning Commission (whose decision shall be appealable to the City Council), based upon substantial evidence demonstrating that the location of Off -Site Affordable Residence s more than one -quarter mile from the site of the market rate residence s, but still within the City limits, better accomplishes the goals of the City’s zoning and planning regulations, including maximizing affordable housing production and dispers ing affordable housing throughout the City. (SMMC § 9.64 .060(F )) The project applicant shall have the burden of demonstrating why a location for the Off - Site Affordable Residence s of more than one -quarter mile from the market rate residence s better accom plishes the City’s affordable housing objectives. In making its determination, the Planning Commission shall consider the recommendations of the Planning Director and the Housing Manager on the petition. An application for an exception to the one -quarter mile radius shall be submitted as part of the planning Administrative Guidelines Affordable Housing Production Program 6 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 Residence s. • Dispersal of Affordable Residence s . The alternative location makes it possible to locate Off -Site Affordable Residence s throughout the City. • More Affordable Residence s. The size, price or other characteristics of the alternative site results in a project that yie lds more affordable residence s than the project would yield if it were located within the strict limits of the one -quarter mile radius. • Deeper Level of Affordability . The size, price or other characteristics of the alternative location makes it possible to offer the Off -Site Affordable Residence s 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 Residence s be located outside a radius of one mile from the market rate residence s. No more than 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 Residence Op tion, 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 § 9.64 .060(B )) Evidence of such site control (e.g., Administrative Guidelines Affordable Housing Production Program 7 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 Residence s All affordable housing residence s in a multi -family project or a phase of a multi -family project shall be constructed concurrently with the construction of market rate residence s in the multi -family project or phase of that project. No building permit for the market rate residence s shal l be issued until a building permit has been issued for the Off -Site Affordable Residence s, and no final City construction permit sign -off or occupancy permit shall be granted for the market rate residence s until final construction permit sign -off or occup ancy permit has been granted for the Off -Site Affordable Residence s. Off -Site Affordable Residence s shall be offered for rent or sale, as applicable, prior to or concurrently with rental or sale of the market rate residence s. 5 . Land Acquisition Option This section of the Guidelines specifies additional requirements for exercising the Land Acquisition Option. A. Eligible Land Parcels Only land parcels meeting the following minimum characteristics shall be eligible under the Land Acquisition Option: 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 -family housing is a permitted use. Administrative Guidelines Affordable Housing Production Program 8 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 wer e the market rate project applicant to elect that option under Chapter 9.64 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 est ate 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 T he 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 in a timely manner (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 belo w, the land parcel(s) proposed to be conveyed to the City, or an eligible non -profit affordable housing developer, shall be located within a one - quarter mile radius of the parcel on which the market rate residence s are proposed and within the City limits. (SMMC § 9.64 .080) The outer limits of this one -quarter mile radius area shall be determined by the Planning and Comm unit y Development Department. The Department’s method for so doing shall be similar to the method used for determining the area within wh ich written notice of a pending development permit is given. Specifically, on a map of City parcels, the project applicant shall Administrative Guidelines Affordable Housing Production Program 9 draw a set of one -quarter mile radii from the corners of the parcel on which the market rate residence s 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 re quirement may be waived by majority vote 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 marke t rate residence s 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 § 9.64 .080) The project applicant shall have the burden of demonstrating why a proposed site more than one -quarter mile from the market rate residence s (but still within the City limits) better accomplishes the City’s affordable housing objectives. In making its determination, the Planning Commissi on shall consider the recommendations of the Planning Director , the Housing Manager , and the Housing Commission . An application for an exception to the one -quarter mile radius shall be processed simul taneously 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:  No Available Sites . There are no multi -family parcels within the strict boundaries of the one -quarter mile radius that are suitable for multi -family development.  Dispersal of Affordable Residence s . The alternative location makes it possible to locate affordable housing throughout the City. Administrative Guidelines Affordable Housing Production Program 10  More Affordable Residence s . The size, price or other characteristics of the alternative site could result in an affordable housing project that yields more affordable residence s than would otherwise be required under the On -Site Affordable Residence s option or the Off -Site Afforda ble Residence s option in Ordinance 1918.  Deeper Level of Affordability . The size, price or other characteristics of the alternative location makes it possible to offer affordable residence s 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 residence s. No more than five project exceptions to the on e -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 a pproval, 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, a nd 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: 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 Administrative Guidelines Affordable Housing Production Program 11 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, th e 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, or to an eligible non -profit affordable housing de veloper 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 otherwise due, if that option had been selected by the project applican t. 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 par ty, 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 marke t 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 less than the amount of the Affordable Housing Production Fee Option, these costs will be treated as a credit against the Af fordable Housing Production Fee that would otherwise be due the City under that Chapter 9.64 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 Administrative Guidelines Affordable Housing Production Program 12 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 fo llowing minimum site characteristics: - 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 contami nation, 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 cons istent 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 9.64 , shall be completed prior to the City’s final sign -off on construction permits for the market rate residence s, 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 9.64 , an eligible not -p rofit affordable housing developer is a private, non -profit corporation with: (1) a current exemption under 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 inc orporated; (3) has the development of housing affordable to low -income households as one of its Administrative Guidelines Affordable Housing Production Program 13 principle missions; and (4) has been approved by the City Housing Manager, based on reasonable review of the organization’s record of performance developing mul ti -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. 6 . For -Sale Affordable Resid ence Requirements In the event that the affordable residence s required under either the On -Site Affordable Residence Option or the Off -Site Affordable Residence Option are intended to be for -sale residence s, rather than rentals, the following rules shall a pply. A. Establishment of the Initial Sales Price The developer shall establish the initial sales price for the affordable residence so that the Total Monthly Housing Costs for the purchaser do not exceed the following formula: Area Median Income x 110% x Bedroom Adjustment x 35 % / 12 . Total Housing Cost includes mortgage principal and interest, property taxes, property insurance, homeowners’ association dues and mortgage insurance, if applicable Area Median Income is defined in SMMC Section 9.64.020(K) and determined periodically by the Unit ed States Department of Housing and Urban Development for the Los Angeles area. The Bedroom Adjustment Factors are: 0 Bedroom 0 .7 3 Bedrooms 1.0 1 Bedroom 0 .8 4 Bedrooms 1.08 2 Bedrooms 0 .9 Administrative Guidelines Affordable Housing Production Program 14 The conventional financing shall conform to all of the following terms: Loan Term: 30 Years Interest Rate: Fixed Minimum Down payment: 5% Max imum Front End Debt -to -Income Ratio 1 : 38% Maximum Back End Debt -to -Income Ratio 2 : 41% The buyer must be income -qualified pursuant to Santa Monica Municipal Code Chapter 9.64 and this Agreement. The actual price of the affordable residence will be a combination of the bank loan amount a buyer qualifies for plus the down payment provided by the buyer (consistent with the total monthly housing costs and the financing terms listed above). The lending criteria used by the private lender must be reasonabl e 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 residence underwritten with a back -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 prior to completion of the purchase transaction. 1 . Front End Ratio: ratio of total monthly housing costs (including mortgage principal and interest, property taxes, property insurance, homeowners’ association dues and mortgage insurance, if applicable ) to total gross household income. 2 . Back End Ratio: ratio of total monthly housing costs (including mortgage principal and interest, property taxes, property insurance, homeowners’ association dues and mortgage insurance, if applicable) plus other mon thly payments on long -term household debt to gross household income. Administrative Guidelines Affordable Housing Production Program 15 B. Re -Sale of an Affordable Residence to a Subsequent Purchaser 1. First Right of Refusal to the City Throughout the 55 -year period of the Agreement Imposing Restrictions on Real Property, the City shall have the first opport unit y to purchase affordable for -sale residence s created pursuant to the On -Site Affordable Residence Option or the Off -Site Affordable Residence Option (“Option to Purchase”). Owners wishing to sell their residence s shall notify the City in writing at least 60 days before the residence is offered for sale to another qualifying party. The seller shall ensure th at the residence 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 designee (e.g., a non -profit affordable housing developer), or by referral of a qualified moderate -income buyer. (See below for the method for calculating the subsequent purchase price.) 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, the Option shall terminate and the owner may sell th e residence to any income qualifying buyer at a price consistent with Section 6 (B )(2 ) of these Guidelines . Seller shall only accept an offer by a n income qualified buyer at a price consistent with Section 6 (B )(2 ) of these Guidelines . Closing costs shall be divided between seller and buyer as is customary for like real estate transactions in Santa Monica at the time that escrow is opened. 2. Maximum Subsequent Selling Price The resale price restriction will provide that the price for resale of the affordable residence shall be calculated using the same formula and factors set forth in Section 6 (A ). Administrative Guidelines Affordable Housing Production Program 16 3. Continuous Use as a Primary Residence Each purchaser of an affordable residence shall ce rtify, prior to the close of escrow, in a form acceptable to the City that the residence 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 pro perty tax shall be construed as evidence that the residence is not the primary residence of the purchaser. C. Subordination At the request of the qualifying 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 residence . D. Default and Foreclosure A Request for Notice of Default shall be recorded along with the A greement 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 exercis e its Option and the residence 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 p aid 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 residence is destroyed and insuran ce 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. Administrative Guidelines Affordable Housing Production Program 17 7 . Tenant and Purchaser Eligibility Procedures Per Chapter 9.64 , 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 residence s by selecting income -eligible tenants from a City -developed list of income -qualified households , except if there are no qualified households on the City - developed list or if the project applicant is developing ownership projects of four or more residence s in the City's multi -family residential zones . Under these exceptions, the project applicant may choose themselves to select income -qualified households which shall be subject to eligibility certification by the City . This section establishes priorities for eligibility to occupy On -Site Affordable Residence s, describes categor ies of persons ineligible to occupy On -Site Affordable Residence s, and outlines the procedures whereby the City Housing Division shall establish, maintain, and update the list of eligible tenants. A. Priority Households In establishing the list of households eligible to occupy affordable residence s, the Housing Division shall adhere to the following priorities: 1) First Priority Persons who have been permanently displaced or face permanent displacement from their housi ng residence s 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 ) F unding reductions in Santa Monica housing voucher assistance programs Administrative Guidelines Affordable Housing Production Program 18 d ) Governmental Action, such as Code enforcement e ) Closure of a mobile home park 2) Second Priority Persons who are: a ) Residents of Santa Monica b ) Working in Santa Monica at least 36 hours per week B. Persons Ineligible to Occupy an Affordable Residence Section 9.64 of the Municipal Code (see § 9.64 .110(B )) specifically disqualifies the following categories of persons from occupying Affordable Residence s: - All employees and officials of the City or its agencies, authorities, or commis - sions 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 a 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. Other parties d isqualified from occupying affordable residences include: - Tenants for whom the affordable residence will not be their sole residence. Administrative Guidelines Affordable Housing Production Program 19 - E mployees of the owner or the owner’s agent s , including but not limited to employees of the property manage ment com pany , except as required by law. An example of an exception would be a 100 percent affordable building that is required by law to provide onsite management, and must therefore use an affordable residence. - Employees of any corporation or other entities where the owner has more than a 10 percent equity, participation, revenue , or ownership interest. - Immediate relatives, including a 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, of any other individual or entity with a financial interest in the pr operty. - Households where all adults are full -time students unless all members of the household meet all of the following criteria : - Twenty -four years of age or older, - Have lived separate from their parents for at least one year, - Are not claimed as a dependent pursuant to IRS regulations on any tax return for the most recent tax year, and - The head of household provides written certification of all outside financial assistance. - and a t least one member of the household meets one of the following criteria : - A veteran or active duty member of the U.S. military, - Have one or more legal dependents other than a spouse, - Live with a recognized disability, - Be a graduate or professional student, - Be married, or - Have been an orphan or ward of the court through age 18. Administrative Guidelines Affordable Housing Production Program 20 C. Establishment, Maintenance, and Update o f Income -Qualified Tenants and Purchasers List The Santa Monica Housing Division shall be responsible for preparing and maintaining a n Eligibility List for this program and shall follow these Guidelines for preparing, maintaining, and updating the Eligibility List. Subject to the requirements below, t he establishment, maintenance and update of the Eligibility List shall be generally modeled after t he Housing Authority Administrative Plan with the Housing Division retaining the authority to adjust these protocols as appropriate for this local program . 1 ) Public Noticing Procedures To create the Eligibility List, the Housing Division shall publish notices in newspapers circulated widely in Santa Monica, including newspapers that reach minority comm uniti es , at a minimum . At least one notice shall be published in a Spanish -language ne w spaper of general circulation. Examples of appropriate newspapers include the Santa Monica Daily Press, L.A. Times , La Opinion , and The Sentine l . The notices should briefly explain what affordable housing is, state the applicable income requirements, indicate how to apply for the Eligibility List , state when the application period opens and closes, indicate priorities for eligible occupants, and provide a telephone number for questions. Applications may require name, address, telephone number, household size, income , date of birth, information relevant to program priorities, and applicant’s signature. 2) Creating the Eligibility List T he Ho using Division shall create a n Eligibility List using the information provided on the application s received , including name, household size, income, age, residency, place of employment (if applicable), priority status, and Administrative Guidelines Affordable Housing Production Program 21 any oth er relevant information. Additionally, the Eligibility List will include households on any existing waiting list who indicated their intent to be included in the Eligibility List after being contacted by the Housing Division. Households will be drawn from the Eligibility List as affordable residence s becom e available or in anticipation of affordable residence s becoming available in the near future and shall be income qualified for use in referrals for available affordable residences. 3 ) Eligibility List and Referral Process Each time affordable residence s become available for occupancy, the owner and the Housing Division shall follow these procedures: a ) At least 90 days prior to issuance of a Certificate of Occupancy by the City for newly developed residence s, or within 5 business days of notice of tenant vacation in existing developments, owners shall notify the City of the number and type (affordability level , number of bedrooms, ownership or rental) of residence s available. b ) Within 20 business days of notice by the owner, the City shall provide the owner with a Referral Form , for each household drawn from the Eligibility List, and provide at least five names for each residence available . Additional names may be provided to the owner upon request, subject to availability. c ) Owners shall directly contact the persons on the Referral Forms 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 residence s from the Re ferral Forms provided may request additional names from the City. Additional names will be provided within 5 business days, subject to availability. Administrative Guidelines Affordable Housing Production Program 22 d ) Owners shall conduct all further screening and selection of applicants. All applicable State Fair Hou sing laws must be observed. e ) Candidates on the City’s Eligibility List may be referred up to a maximum of five times , except in cases involving a reasonable accommodation . After the fifth referral, candidate names will be removed from the Eligibility L ist. 4 ) Updating the Eligibility List a ) Periodic Update: The Eligibility List shall be periodically updated at least every two years . Letters shall be sent to all households on the Eligibility List requesting verification of all information, including name, address, place of residency, place of employment (if applicable), and continued interest in staying on the list. Eligibility List households shall be given two weeks to respond. At the end of the two week period, the names of households who have failed to respond shall be taken off the Eligibility List. The Eligibility List shall also be updated to incorporate any changes in status (place of residency, eligibility for priority status, etc.) fo r each applicant. b ) Emergency Additions to Eligibility List : At any time, even if the Eligibility List is closed, persons displaced from Santa Monica housing as set forth in Section 7 (A )(1) of these Guidelines (i.e., “first -priority” households) will result in the automatic addition of that household to the Eligibility List with the applicable priority. c ) The City will provide a Referral Form to the owner for each household selected from the Eligibility List . The owner shall complete the Refer ral Form indicating whether a residence was offered to the household and whether the residence was accepted or refused. A sample Referral Form is provided in Attachment 4 -B. If a residence was not offered because of a poor credit history or for any other reason, the owner will note this as well. Administrative Guidelines Affordable Housing Production Program 23 The City will incorporate this information into the Eligibility List , but not disclose such information to other owners . d ) Households on the Cit y’s Eligibility List will be referred only for those residence s for which they qualify. For example, moderate income households will only be referred for vacancies in moderate income residence s. Households on the City’s Eligibility List must report any c hanges to address, household size, Santa Monica residency, employment in Santa Monica, and/or, income to the Housing Division within 10 days of the change . 5 ) Persons Dependent Upon Income from Other Sources Households on the City’s Eligibility List must report income from all sources. Any households on the City’s Eligibility List receiving support, including tuition payments, rent payments, and/or, regular gifts, and/or any household who appears as a dependent upon the tax return of another individu al must so disclose. In these cases, the income of the other party will be considered along with the income of the applicant/tenant household in determining eligibility. 6 ) Automatic Removal from Eligibility List Applicant names will be removed immediately from the Eligibility List for: a ) Failure to appear for a scheduled qualification interview or prior to the interview time contact the Housing Division to arrange an alternate time or date, or b ) More than two refusals of offered residence s , or c ) Misrepresentative statements on eligibility documentation , in qualification interview(s), or Informal Review , or d ) Failure to disclose dependent status or receipt of substantial support, or Administrative Guidelines Affordable Housing Production Program 24 e ) Acceptance of an affordable residence stemming from a Referral. Households whose names are removed from the E ligibility List will also have their names removed from the Referral Form upon which their names appear. Households whose names are removed from the Eligibility 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 Eligibility List or from a Referral Form may be appealed. All appeals must be in writing and delivered to the Housing Division in person or by first class mail, by the close of the business day, no later than 10 business days from the date of the Housing Division ’s notification of removal from the Eligibility List . b ) Scheduling an Informal Review Upon receipt of an appeal in writing, the Housing Division shall conduct an Informal Review . The Housing Division will schedule an Informal Review to take place within 10 days of receipt of the appeal. Once the Informal Review date is set, the appellant may reschedule only upon showing "good cause," which is defined as an unavoidable conflict seriously affec ting the health, safety or welfare of the A ppellant or his/her family. c ) Failure of Appellant to Appear for Informal Review If the appellant does not appear at a scheduled Informal Review and has not rescheduled the Informal Review in advance, the appell ant must contact the Housing Division within two working days. The Housing Division shall reschedule the Informal Review only if the appellant's absence was caused by medical emergency or incarceration. In this event, the Informal Review may be reschedul ed only once. Administrative Guidelines Affordable Housing Production Program 25 d ) Conduct of the Informal Review The informal review must be conducted by a person other than the one who made or approved the decision under review, or a subordinate of this person. The Appellant must be provided an opport unit y to present written or oral objections to the decision to remove them from the Eligibility List and both the Appellant and the Housing Division have a right to present any information pertinent to the issue of the Informal Review . e ) Notification of the Informal Re view Decision The Housing Division must notify the Appellant within 14 days of the decision regarding the Informal Review , including a n explanation of the decision and the associated findings . This decision shall be final and not subject to further admini strative review. D. Tenant Income Increases , Initial Ineligibility and Advance Notice to City This subsection of the Guidelines provides protocols for changes in tenant income during occupancy , property owner and tenant responsibilities when tenant was not income eligible at the time of initial occupancy , and advance notice to the City regarding rent increases. 1) Tenant Income Increases The published Maximum Allowable Income applies to the household from the day the tenant moves in th r ough the first year of occupancy or the first annual recertification , whichever comes first . If after the first year of occupancy in an affordable apartment , or during the first annual recertification, the household income is found to exceed the maximum a llowable income limit for the apartment , the tenant (s) may remain in the apartment as long as the household income does not exceed 140 percent of the income limit for the residence . However, if the tenant’s income exceeds 140 percent of the income limit for the apartment , the following shall apply: Administrative Guidelines Affordable Housing Production Program 26 a) If there is a vacant affordable apartment in the same building for which the household qualifies, the household will be offered that apartment , providing the move does not violate any other provisions of the law , including minimum occupancy requirements . If the relevant “Agreement Imposing Restrictions on Real Property ” allows it, the property owner may also switch the affordability level s of the two apartments to prevent the househol d from having to move their belongings . The rent will then be adjusted to reflect the higher level of affordability. If the household refuses to move to the higher affordability level apartment for which they qualify , or refuses to pay the higher rent, t hey will be provided with a one -year notice to vacate the apartment. If, before the term of the notice has passed, the tenant recertifies the household income and they again qualify for the apartment, the one year notice to vacate will be rescinded. b) If the previous section does not apply, and there is a vacant market -rate apartment of equal accommodations in the same building, the owner may designate the market -rate apartment as the affordable apartment. The rent in the formerly affordable apartment may then be raised to the market -rate for the apartment . However, this option cannot be chosen if the relevant “Agreement Imposing Restrictions on Real Property” specifically enumerates which apartments in the building are designated as the affordable apa rtments. c) If neither of the two previous section s apply, the household will be provided with a one -year notice to vacate the apartment. i) If, before the term of the notice has passed, a market -rate apartment becomes vacant in the same building, the tenant under notice to Administrative Guidelines Affordable Housing Production Program 27 move will have first right of refusal to lease the market -rate apartment. ii) If, before the term of the notice has passed, the tenant recertifies the household income and they again qualify for the apartment, the one - year notice to vacate will be rescinded. 2) Initial Tenant Ineligibility If during compliance monitoring by the City , or the property owner , it is determined that the tenant’s income exceed ed the income limit for the residence at the time the tenant initially moved into the residence , the tenant shall be given a 90 -day notice to vacate the residence . Notwithstanding the above, if the tenant would quali f y for an affordable apartment targeted to a higher affordability level and such a vacant residence is available within the subject property, then the tenant may be allowed to move to that vacant residence , subject to Section 7 (D )(3 ) below. 3) Property Owner to Pay for Relocation When it is determined that a tenant’s income exceeded the income limit for an affordable residence at initial occupancy, then it shall be the property owner’s responsibility to pay the costs directly associated with relocating the tenant to another residence within Santa Monica or adjacent area , unless the tenant misrepresented pertinent information to obtain the residence . Such costs would include packing/unpacking, moving/movers and utility connection fees, but would not include the differential in rent bet ween the affordable (AHPP) residence and new residence. 4) Notice to City of Rent Increases A property owner must provide a 30 -day advance d written notice to the City before issuing a rent increase notice to a tenant. The information provide d in the property owner’s notice to the City shall include the residence identification, tenant name, affordability level of the residence (i.e., extremely low -, very low -, low - or moderate - income ) current rent, amenities included in rent (e.g., parking, water, tra sh), Administrative Guidelines Affordable Housing Production Program 28 proposed rent, and proposed rent start date. The City will have 30 -days upon which to rev iew the proposed rent increase and notify the property owner of any objections before the property owner may issue a rent increase notice to a tenant. In the ab sence of any other, more stringent, rent increase limitations on the property , the rent of an affordable apartment shall not be increased by more than five percent in any twelve month period , up to the published maximum allowable rent . 8 . Adjustments or Waivers The AHPP authorizes a project applicant to request an adjustment or waiver of the AHPP 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. T o receive an adjustment or waiver, the applicant must submit an application to the Director of Housing and Economic Development , or his/her designee, at the time the applicant files a multi -family project application. The app licant bear s the burden of presenting substantial evidence to support the request and set forth in 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 Chapte r; (2) The applicant will benefit from the inclusionary incentives set forth in this Chapter and the City’s Municipal Code; Administrative Guidelines Affordable Housing Production Program 29 (3) The applicant will be obligated to provide the most economical affordable housing residence s feasible in terms of construction, design, location and tenure. T he 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 C ouncil if such appeal is filed within fourteen consecutive calendar days from the date of the decision. If the Director of Housing and Economic Development , or City Council responding to an appeal of the Director’s decision , determines that applying the r equirements 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 Chap ter 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 viola tion of the Unit ed States or California Constitutions would occur through the application of this Chapter, the requirements of this Chapter shall remain fully applicable. Administrative Guidelines Affordable Housing Production Program 30 ATTACHMENTS 1 -A Municipal Code Chapter 9.64 (S ubject to A mendments) 1 -B AHPP Options Comparison Table 2 -A Fee Adjustment Methodology 2 -B Current Base Fees for Apartment and Condominium Projects (Adjusted Annually) 3 -A Affordable Residence s Table - Condominium Projects w/4+ Residence s in Multifamily Zones 3 -B Development Incentives Table 3 -C Very Low, Low and Moderate Income Levels (Adjusted Annually) 3 -D Maximum Rents (Adjusted Annually) 3 -E Sample of Deed Restrictions 4 -A Sample Application for Affordable Housing Waiting List 4 -B Referral Status Form Administrative Guidelines Affordable Housing Production Program Attachment 1 -A: Page 1 ATTACHMENT 1 -A Municipal Code Chapter 9.64 Chapter 9.64 AFFORDABLE HOUSING PRODUCTION PROGRAM 9.64.010 Findings and Purpose The City’s affordable housing production program requires developers of market rate multi - family developments to contribute to af fordable housing production and thereby help the City meet its affordable housing need. As detailed in the findings supporting the ordinance codified in this Chapter, the requirements of this Chapter are based on a number of factors including, but not limi ted 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. 2486CCS §§ 1, 2, adopted June 23, 2015) 9.64.020 Definitions The following words or phrases as used in this Chapter shall have the following meanings: A. 30% Income Household means a household whose gross income does not exceed the 30% income limits applicable to the Los Angeles -Long Beach Primary Metro politan Statistical Area, adjusted for household size, as published and periodically updated by HUD. B. 50% Income Household means a household whose gross income does not exceed 50% of the area median income, adjusted for household size, as published and p eriodically updated by HUD. 50% income households include 30% income households. C. 80% Income Household means a household whose gross income does not exceed 80% of the area median income, adjusted for household size, as published and periodically updated by HUD. 80% income households include 50% income households. D. Adjusted for Household Size means 70% adjustment for a household of one person, 80% adjustment for a household of two persons, 90% adjustment for a household of three persons, 100% adjustment for a household of four persons, 108% adjustment for a household of five persons, 116% adjustment for a household of six persons, 124% adjustment for a household of seven persons, 132% adjustment for a household size of eight persons. For households of mor e than eight persons, adjustments shall be made in accordance with applicable HUD regulations. E. Adjusted for Household Size Appropriate for the Unit means for a household of one person in the case of a studio unit, two persons in the case of a one -bedroo m unit, three Administrative Guidelines Affordable Housing Production Program Attachment 1 -A: Page 2 persons in the case of a two -bedroom unit, four persons in the case of a three -bedroom unit, and five persons in the case of a four -bedroom unit. F. Affordable Housing Fee means a fee paid to the City by a multi -family project applicant pursu ant to Section 9.64.070 of this Chapter to assist the City in the production of housing affordable to 30% income households, 50% income house holds, 80% income households, and moderate -income households. G. Affordable Housing Unit means a housing unit developed by a multi -family project applicant pursuant to Section 9.64.050 or 9.64.060 of this Chapter which will be affordable to 30% income households, 50% income househo lds, 80% income households, or moderate -income households. H. Affordable Housing Unit Development Cost means the City’s average cost to develop a unit of housing affordable to 30% income households, 50% income households, 80% income households or moderate income households. I. Affordable Ownership Housing Cost . Affordable ownership housing cost means: For moderate income households whose gross incomes exceed the maximum income limits for 80% income households, affordable housing cost shall not be less than 28 percent of the gross income of the household, nor exceed the product of 35 percent times 110 percen t of the area median income adjusted for household size appropriate for the unit. J. Affordable Rent . Affordable rent means: 1. For 30% income households, the product of 30 percent times 30 percent of the area median income adjusted for household size app ropriate for the unit. 2. For 50% income households, the product of 30 percent times 50 percent of the area median income adjusted for household size appropriate for the unit. 3. For 80% income households whose gross incomes exceed the maximum incomes for 50% income households, the product of 30 percent times 60 percent of the area median income adjusted for household size appropriate for the unit. 4. For moderate income households, the product of 30 percent times 110 percent of the area median income adjus ted for household size appropriate for the unit. For purposes herein, affordable rent shall be adjusted as necessary to be consistent with pertinent Federal or State statutes and regulations governing Federal or State assisted housing. K. Area Median Incom e or AMI . Area median income or AMI means the median family income published from time to time by HUD for the Los Angeles -Long Beach Metropolitan Statistical Area. L. Dwelling Unit . One or more rooms, designed, occupied or intended for occupancy as separat e 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 9.52.020 or any successor thereto. M. Floor Area . Floor area as defined in Santa Monica Municipal Code Section 9.52.020 or any successor thereto. Administrative Guidelines Affordable Housing Production Program Attachment 1 -A: Page 3 N. Gross Income . Gross income has the same meaning as provided in Title 25, Section 6914 of the California Code of Regulations , as amended from time to time, in accordance with law. O. HCD . The California Department of Housing and Community Development or its successor. P. Housing Cost . Housing cost has the same meaning as provided in Title 25, Section 6920 of the California Code of Regulations , as amended from time to time in accord ance with law. Q. HUD . The United States Department of Housing and Urban Development or its successor. R. Income Eligibility . Income eligibility is based upon the gross income of the household, including the income of all wage earners, elderly or disabled family members, and all other sources of household income. S. Market Rate Unit . A dwelling unit as to which the rental rate or sales price is not restricted by this Chapter. T. Moderate Income Household means a household whose gross income exceeds the maxi mum income for an 80% income household and whose gross income does not exceed the lesser of: (i) 120% of the area median income, adjusted for household size, as published and periodically updated by HCD or (ii) twice the income limit for 50% income househo lds, adjusted for household size, as published and periodically updated by HUD. U. Multi -family Project . A multi -family residential development, including but not limited to apartments, condominiums, townhouses or the multi -family residential component of a mixed use project, for which City permits and approvals are sought. V. Multi -family Project Applicant . Any person, firm, partnership, association, joint venture, corporation, or any entity or combination of entities which seeks City development permits o r approvals to develop a multi -family project. W. Multi -family Residential District . Any district designated in the Santa Monica Zoning Ordinance as a multi -family residential district. X. Parcel . Parcel as defined in Santa Monica Municipal Code Section 9.52.020 or any successor thereto. Y. Rent . Rent has the same meaning as provided in Title 25, Section 6918 of the California Code of Regulations , as amended from time to time in accordance with law. Z. Vacant Parcel . A parcel in a multi -family residential district that has no residential stru cture located on it as of August 20, 1998 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 Chapter 9.25 et seq. or any successor thereto. (Added by Ord. No. 2486CCS §§ 1, 2, adopted June 23, 2015) Administrative Guidelines Affordable Housing Production Program Attachment 1 -A: Page 4 9.64.030 Applicability of Chapter A. The obligations established by this Chapter shall apply to each multi -family project involving the construction of two or mo re multi -family units, which project has not received its ministerial or discretionary planning approvals including, without limitation: variances, conditional use permits, administrative approvals, development review permits, and development agreement ord inances which have not yet become effective (collectively, “Approvals”) on or before July 26, 2013. No building permit shall be issued for any multi - family project unless such construction has been approved in accordance with the standards and procedures p rovided for by this Chapter. Notwithstanding the above, a multi - family rental housing project 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 t o the requirements of this Chapter so long as the project is an affordable housing project meeting the requirements of Santa Monica Municipal Code Section 9.52.020 or any successor thereto and 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 fifty -five years. B. Multi -family pr ojects which have received Approvals prior to the effective date of this ordinance shall be subject to the provisions of Santa Monica Municipal Code Section 9.64.010 et seq., as they existed on the date of their approvals, except that pricing requirements for affordable housing units shall be published by the City on an annual basis instead of adoption by resolution of the City Council. C. A d esignated 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. (Add ed by Ord. No. 2486CCS §§ 1, 2, adopted June 23, 2015) 9.64.040 Affordable Housing Obligation A. Except as provided in Section 9.23.030 (A), all multi -family project applicants shall comply with the requirements of this Chapter in the following manner: 1. Multi -family project applicants for multi -family ownership projects of four or more units in multi -family residential districts shall choose one of the two following options: a. Providing affordable housing units on -site in accordance with Section 9.64.050 ; b. Providing affordable housing units off -site in accordance with Section 9.64.060 . Administrative Guidelines Affordable Housing Production Program Attachment 1 -A: Page 5 2. In addition to the options established in subsections (1)(a) and (b), all other multi - family project applicants may also choose one of the following options: a. Paying an affordable hou sing fee in accordance with Section 9.64.070 ; b. Acquiring land for affordable housing in accordance with Section 9.64.080 . B. A multi -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. 2486CCS §§ 1, 2, adopted June 23, 2015) 9.64.050 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 le ast: (1) twenty percent 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 80% income households if these rental units are provided by the applicant in accor dance with Civil Code Sections 1954.52(b) and 1954.53(a)(2); (3) ten percent of the total units as rental units for 50% income households if these rental u nits are provided by the applicant in accordance with Civil Code Sections 1954.52(b) and 1954.53(a)(2); or (4) five percent of the total units as rental un its for 30% 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). 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 a lternative; (2) twenty - five percent of the total units as rental units for 80% 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); fifteen percent of the total units as rental units for 50% 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); or (4) ten percent of the total units as rental units for 30% 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 lea st: 1. Five percent of the total units of the project for 30% income households; 2. Ten percent of the total units of the project for 50% income households; Administrative Guidelines Affordable Housing Production Program Attachment 1 -A: Page 6 3. Twenty percent of the total units of the project for 80% income households; or 4. One hundred pe rcent of the total units of a project for moderate income households. D. Except as provided in Section 9.23.030 (A), any fractional affordabl e 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 9.64.070 (A)(4) or by constructing all the mandatory on -site affordable units with three or more bedrooms. The City shall make available a list of income levels for 30% income households, 50 % income households, 80% income households, and moderate income households, adjusted for household size, the corresponding maximum affordable rents adjusted by household size appropriate for the unit, and the minimum number of units required for 30% income households, 50% income households, or 80% income households 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 affor dable housing units as long as there are not significant 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 a pplicable Building and Housing Codes. However, except as provided in Section 9.23.030 (A), 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 at 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 affor dable 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 9.64.070 (A)(4), in which case the affordable housing units must be at least three bedroom units. The design of the affordable housing units shall Administrative Guidelines Affordable Housing Production Program Attachment 1 -A: Page 7 be reasonably consistent with the market rate units in the project. An affordable h ousing 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 occupant 1 bedroom 600 square feet 1 occupant 2 bedrooms 850 square feet 2 occupants 3 bedrooms 1,080 square feet 3 occupants 4 bedrooms 1,200 square feet 5 occupants 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 afforda ble housing units. F. All affordable housing units in a multi -family project or a phase of a multi -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 -sit e 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. H. Each multi -family project applicant, or his or her successor, shall submit an annua l 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 afford able unit throughout the prior year, and such other information as may be required by City staff. I. A multi -family project applicant in a residential district who meets the requirements of this Section shall be entitled to the density bonuses and incentives provided by Section 9.22.020 or any successor thereto and Section 9.22.030 or any successor thereto and the waiver/modificat ion of development standards provided by Section 9.22.040 or any successor thereto. A multi -family project applicant in a commercial or indus trial district shall be entitled to the development bonuses and incentives provided in the Land Use and Circulation Element and implementing ordinances. J. All residential developments providing affordable housing on -site pursuant to the provisions of thi s 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. Administrative Guidelines Affordable Housing Production Program Attachment 1 -A: Page 8 K. The City Council may by resolution establish compliance monitoring fees which reflect the reasonable regulatory cost to the City of ensuring compliance with this Section when affordable housing units are being initially rented or sold, when the required annual reports are submitted to the City, and when the units are being re -sold or re -leased. (Added by Ord. No. 2486CCS §§ 1, 2, adopted June 23, 2015) 9.64.060 Off -Site Option The following requirements must be met to satisfy the off -site option of this Chapter: A. The multi -family project applicant for ownership projects of four or more units in multi - family residential districts shall agree to construct twenty -five percent more affordable housing units than number of affordable housing units required by Section 9.64.050 (A) and (B). B. For all other multi -family project applicants, the appl icant shall agree to construct the same number of affordable housing units as specified in Section 9.64.050 (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 developmen t is consistent with the City’s housing objectives and projects. D. The off -site units shall be located within a one -quarter mile radius of the market rate units. E. The off -site units shall satisfy the requirements of subsections (D) through (J) of Sect ion 9.64.050 . F. The off -site units shall not count towards the satisfaction of any affordable housing obligation that development of the al ternative 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, based 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 pro duction and dispersing affordable housing throughout the City. Administrative Guidelines Affordable Housing Production Program Attachment 1 -A: Page 9 H. The City Council may by resolution establish compliance monitoring fees which reflect the reasonable regulatory cost to the City of ensuring compliance with this Section when affordable hou sing units are initially being rented or sold, when the required annual reports are submitted to the City, and when the units are being re -sold or re -leased. (Added by Ord. No. 2486CCS §§ 1, 2, adopted June 23, 2015) 9.64.070 Affordable Housing Fee A multi -family project applicant eligible to meet the affordable housing obligations established by this Chapter by paying an affordable housing fee shall pay the fe e in accordance with the following requirements: A. An affordable housing fee may be paid in accordance with the following formulas: 1. Affordable housing unit base fee x floor area of multi -family project; 2. Multi -family projects with fractional affordable housing units of less than 0.75 based on the formula established in Section 9.64.050 : (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 y ear thereafter, the affordable housing unit base fee shall be adjusted based on changes in construction costs and land costs. 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. The affordable housing fee that the multi -family project applicant mu st pay shall be based on the affordable housing unit development cost resolution in effect at the time of 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, amo ng other factors, the relationship between new market rate multi -family development and the need for affordable housing. E. The affordable housing fee shall be paid in full to the City prior to the City granting any approval for the occupancy of the proje ct, but no earlier than the time of building permit issuance. Administrative Guidelines Affordable Housing Production Program Attachment 1 -A: Page 10 F. The City shall deposit any payment made pursuant to this Section in a reserve account separate from the General Fund to be used only for development of affordable housing, administrative cos ts 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 after the payment of such fee s 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. E xpenditures 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 purpose s of determining whether the multi -family project qualifies for a density bonus pursuant to Government Code Section 65915. (Added by Ord. No. 2486CCS §§ 1, 2, adopted June 23, 2015) 9.64.080 Land Acquisition A. A multi -family project applicant may meet the affordab le housing obligations established by this Chapter by making an irrevocable offer: 1. Dedicating land to the City or a non -profit housing provider; 2. Selling of land to the City or a non -profit housing provider at below market value; or 3. Optioning of land on behalf of the City or a non -profit housing provider. Each of these options must be for a value at least equivalent to the affordable housing obligation otherwise required pursuant to this Section. B. The multi -family project applicant must identify the land at 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 of 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 dispersing affordable housing throughout the City. The City may approve, conditionally approve or reject suc h offers subject to administrative guidelines to be prepared by the City Manager or designee. 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 Ch apter. (Added by Ord. No. 2486CCS §§ 1, 2, adopted June 23, 2015) Administrative Guidelines Affordable Housing Production Program Attachment 1 -A: Page 11 9.64.090 Fee Waivers The Condominium and Cooperative Tax described in Section 6.76.010 of the Santa Monica Municipal Code or any successor thereto and the Park and Recreation Facilities Tax established in Chapter 6.80 of Article 6 of the Santa Monica Municipal Code or any successor thereto, the Transportation Impact Fee required by Chapter 9.66 , or any successor thereto, the Open Space Fee required by Chapter 9.67 , or any successor thereto, and the Childcare Linkage Fee required by Chapter 9.65 , or any successor thereto, shall be waived for required a ffordable housing units and for 30%, 50%, 80% and moderate -income dwelling units developed by the City or its designee using affordable housing fee. However, any multi -family project applicant who elects to pay an affordable housing fee shall not be eligib le for any fee waiver under this Section. (Added by Ord. No. 2486CCS §§ 1, 2, adopted June 23, 2015) 9.64.100 Pricing Requirements for Affordable Housing Units The City shall publish, on an annual basis, the 30%, 50%, 80%, and moderate income household levels, and affordable rents for affordable housing units, adjusted for household size appropriate for the unit. (Added by Ord. No. 2486CCS §§ 1, 2, adopted June 23, 2015) 9.64.110 Eligibility Requirements A. Only 30%, 50%, 80% 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 to select households from the City -developed list of income -qualified households, except applicants of ownership projects of fou r 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 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 implementa tion 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, so n -in -law, daughter -in -law, aunt, uncle, niece, nephew, sister -in -law, and brother -in -law. (Added by Ord. No. 2486CCS §§ 1, 2, adopted June 23, 2015) 9.64.120 Relation to Units Required by Rent Control Board 30%, 50%, 80% and moderate -income dwelling units developed as part of a market rate project, pursuant to replacement requirements of the Santa Monica Rent Control Board, Administrative Guidelines Affordable Housing Production Program Attachment 1 -A: Page 12 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. (Added by Ord. No. 2486CCS §§ 1, 2, adopted June 23, 2015) 9.64.130 Deed Restrictions Prior to issuance of a building permit for a project meeting the requirements of this Chapter by providing affordable units on -site or off -site, the multi -family project applicant shall submit deed restrictions or other legal i nstruments 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. In addition to the administrative guidelines specifically required by other provis ions of this Chapter, the City Manager or designee shall be the designated authority to enter into recorded agreements with multi -family project applicants. (Added by Ord. No. 2486CCS §§ 1, 2, adopted June 23, 2015) 9.64.140 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. 2486CCS §§ 1, 2, adopted June 23, 2015) 9.64.150 Annual Report The City Manager or designee, shall submit a report to 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 a pproval during the previous year and the manner in which the provisions of this Chapter were satisfied. This report shall further assess whether the provisions of Proposition R have been met and whether changes to this Chapter or its implementation procedu res 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. 2486CCS §§ 1, 2, adopted June 23, 2015) 9.64.160 Principles and Guidelines The City Mana ger or designee, shall develop guidelines to implement this chapter, which guidelines shall be subject to approval of the City Council. The guidelines shall include, but not be limited to, the methodology for the establishment and periodic adjustment of th e base fee and the affordable housing unit development cost; for -sale affordable unit requirements, tenant and purchaser eligibility procedures; and additional requirements for exercise of the off -site option and land acquisition option. (Added by Ord. No. 2486CCS §§ 1, 2, adopted June 23, 2015) Administrative Guidelines Affordable Housing Production Program Attachment 1 -A: Page 13 9.64.170 Adjustments or Waivers A. A multi -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 City Manager or designee, at the time the applicant files a multi -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 the claim, including all supporting technical documentation. C. In making a determination on an application to adjust or waive the requirements of this Chapter, the City Manager or designee, or City Council on appeal, may a ssume 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. D. The City Manager or designee shall render a written decision within ninety days after a complete applica tion is filed. The City Manager’s or designee’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 Chapter 9.37 Common Procedures of this Code or any successor thereto. E. If the City Manager or designee, or City Council on appeal, upon legal advice pro vided 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 requ irements 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 o r waiver. If the City Manager or designee, 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. (Added by Ord. No. 2486CCS §§ 1, 2, adopted June 23, 2015) Administrative Guidelines Affordable Housing Production Program Attachment 1 -B ATTACHMENT 1 -B AHPP Options Comparison Table Project Type: Rental Ownership Ownership Ownership Ownership Project Size: 2+ Apartments 2 -3 Units 4 -15 Units 16+ Units 2+ Units Zoning: Any Multifamily Multifamily Multifamily Not Multifamily Developer Chooses One Option Below : 1. Construct Units Onsite: Moderate Income Units 1 100% 100% 20% 25% 100% 80% Income Household Rental 20% 20% 20% 25% 20% 50% Income Household Rental 10% 10% 10% 15% 10% 30% Income Household Rental 5% 5% 5% 10% 5% 2. Construct Units Offsite: Same as Onsite Options Same as Onsite Options Onsite Options +25% Onsite Options +25% Same as Onsite Options 3. Pay Affordable Housing Fee: $31.25/Sq.Ft. $36.51/Sq.Ft. Not Applicable Not Applicable $36.51/Sq.Ft. 4. Acquire and Donate Land See SMMC 9.64.080 See SMMC 9.64.080 Not Applicable Not Applicable See SMMC 9.64.080 Note 1: Moderate -Income residences in this row are the same as the Project Type in terms of owner versus renter. Administrative Guidelines Affordable Housing Production Program Attachment 2 -A: Page 1 ATTACHMENT 2 -A Fee Adjustment Methodology Table 1 – Affordable Housing Unit Base Fee Administrative Guidelines Affordable Housing Production Program Attachment 2 -A: Page 2 ATTACHMENT 2 -A Fee Adjustment Methodology Table 2 – Affordable Housing Unit Development Cost Administrative Guidelines Affordable Housing Production Program Attachment 2 -B ATTACHMENT 2 -B Current Base Fees for Apartment and Condominium Projects FEE FOR APARTMENT PROJECTS Current Fee : $31.25 (Effective November 1, 2015) FEE FOR CONDOMINIUM PROJECTS Current Fee : $36.25 (Effective November 1, 2015) 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. Administrative Guidelines Affordable Housing Production Program Attachment 3 -A ATTACHMENT 3 -A Affordable Housing Table for 4+ Ownership Residence s in Multi -Family Zones Number of residence s in project before density bonus Number of affordable residence s to be provided** FRACTIONS*** Fraction eligible for fee payment Fractional cost of developing a residence ON -SI T E O P T I O N * [# RE S I D E N C E S X 2 0 % ] 2 On -site or off -site residence s are not mandatory. May pay affordable housing fee. 3 4 1.00 0.00 $0.00 5 1.00 0.00 $0.00 6 1.00 0.20 $65,585.40 7 1.00 0.40 $131,170.80 8 1.00 0.60 $196,756.20 9 2.00 0.00 $0.00 10 2.00 0.00 $0.00 11 2.00 0.20 $65,585.40 12 2.00 0.40 $131,170.80 13 2.00 0.60 $196,756.20 14 3.00 0.00 $0.00 15 3.00 0.00 $0.00 16+ [# residence s x 25%] [fraction < 0.75] [fraction x unit development cost] OF F -SI T E O P T I O N * [# RE S I D E N C E S X 2 5 % ] 2 On -site or off -site residence s required are not mandatory May pay affordable housing fee. 3 4 1.00 0.00 $0.00 5 1.00 0.25 $81,981.75 6 1.00 0.50 $163,963.50 7 2.00 0.00 $0.00 8 2.00 0.00 $0.00 9 2.00 0.25 $81,981.75 10 2.00 0.50 $163,963.50 11 3.00 0.00 $0.00 12 3.00 0.00 $0.00 13 3.00 0.25 $81,981.75 14 3.00 0.50 $163,963.50 15 4.00 0.00 $0.00 etc. etc. [fraction < 0.75] [fraction x unit development cost] *Ownership residence s must be available for very low, low, or moderate income households *Rental residence s must be available for very low or low income households **For fractions of 0.75 or more - round up to next whole number ***For fractions less than 0.75 - there are 2 options: 1) Pay the fractional cost of developing the unit based on affordable housing unit development cost ($327,927 per residence ) 2) Construct all mandatory affordable residence s with 3+ bedrooms Administrative Guidelines Affordable Housing Production Program Attachment 3 -B: Page 1 ATTACHMENT 3 -B Development Incentives Density Bonus Table for Housing Developments in Residential Zones * See Santa Monica Municipal Code Section 9.22 for more information. Administrative Guidelines Affordable Housing Production Program Attachment 3 -C ATTACHMENT 3 -C Extremely -Low, Very -Low, Low - and Moderate Income Levels 20 1 5 Income Limits MAXIMUM ALLOWABLE INCOME (ANNUAL) Household Size Extremely Low (30%) Very Low (50%) Low (80 %) Moderate (1 2 0%) 1 $17,950 $29,900 $47,850 $54,450 2 $20,500 $34,200 $54,650 $62,200 3 $23,050 $38,450 $61,500 $70,000 4 $25,600 $42,700 $68,300 $77,750 5 $28,410 $46,150 $73,800 $83,950 6 $32,570 $49,550 $79,250 $90,200 7 $36,730 $52,950 $84,700 $96,400 8 $40,890 $56,400 $90,200 $102,650 Administrative Guidelines Affordable Housing Production Program Attachment 3 -D ATTACHMENT 3 -D Maximum Allowable Rents 20 1 5 Maximum Allowable Rent Limits MAXIMUM ALLOWABLE RENTS (Based on 30% Affordability Standard) Residence Type Extremely Low (30%) Very Low (50%) Low (80 %) Moderate (1 2 0%) 0 -Bdrm $340 $567 $680 $1,247 1 -Bdrm $389 $648 $778 $1,426 2 -Bdrm $437 $729 $875 $1,604 3 -Bdrm $486 $810 $972 $1,782 4 -Bdrm $525 $875 $1,050 $1,925 Rents: Median Income for 4 -person household x Income Level x Bedroom Adjustment x Affordability Standard (30%) / 12. (Ref: CA H&SC 50053 , H&SC 50052.5(h), SMMC 9.64.020(D)) * Rents limits reflect a hold -harmless approach and are therefore held at their highpoint reached in 2011. Administrative Guidelines Affordable Housing Production Program Attachment 3 -E ATTACHMENT 3 -E Sample Deed Restriction 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: R E C I T A L S : 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 a [project description include # stories, building square footage, form of ownership apt/condo] a (hereinafter referred to as the "Projec t"). The City has approved [type of application #AA, DR, VAR etc .] for the Project. The City approved the [type of application] subject to the conditions of this Agreement, which are imposed for the benefit of the City, the public and surrounding landowners and without which the [type of application] would not be approved. C. The Project is subject to the requirements of the City's Affordable Housing Production Program, Santa Monica Municipal Code Chapter 9.64 , and the Administrative Guidelines for Chapter 9.64 , as they may be amended from time to time (all collectively, referenced herein as "Affordability Restrictions"). The Developer has agreed to satisfy the Affordability Restrictions by fully complying with this Agreement . NOW, THEREFORE, it is mutually agreed by and between the undersigned parties as follows: 1. RECITALS . The Recitals stated above, are hereby incorporat ed by reference into this Agreement and adopted by the parties to this Agreement as true and correct. 2. DEFINITIONS . 2.1 “Affordable Units” means dwelling units within the Project that are Administrative Guidelines Affordable Housing Production Program Attachment 3 -E available to and occupied by Fifty Percent Income Households and Eighty Percent Income Households at Affordable Rent. 2.2 “Affordable Rent ” means: (a) For thirty percent income households, the product of thirty percent times thirty percent of the are a median income adjusted for household size appropriate for the unit. (b) For fifty percent income households, the product of thirty percent times fifty percent of the area median income adjusted for household size appropriate for the unit. (c) F or eighty percent income households whose gross incomes exceed the maximum incomes for fifty percent income households, the product of thirty percent times sixty percent of the area median income adjusted for household size appropriate for the unit. 2.3 “A rea Median Income or AMI” means the median family income published from time to time by the United States Department of Housing and Urban Development ("HUD") for the Los Angeles -Long Beach Metropolitan Statistical Area. 2.4 “Eighty Percent Income Household” means a household whose gross income does not exceed the eighty percent income limits applicable to the Los Angeles - Long Beach Primary Metropolitan Statistical Area, adjusted for household size, as published and periodically updated by HUD. Eighty Percent Income Households include Fifty Percent Income Households. 2.5 “Fifty Percent Income Household” means a household whose gross income does not exceed the fifty percent income limits applicable to the Los Angeles - Long Beach Primary Metrop olitan Statistical Area, adjusted for household size, as published and periodically updated by HUD. Fifty percent income households include Thirty Percent Income Households. 2.6 “Life of the Project” shall mean a period commencing on the date of Certifica te of Occupancy is issued for the Project and ending on the date which is fifty - five (55) years from Certificate of Occupancy for the Project; provided, however, that if the Project is damaged or destroyed and cannot be rebuilt in accordance with the devel opment standards permitted in this Agreement, then the Life of the Project shall be deemed to have ended as of the date of such damage or destruction. 2.7 “Rent” has the same meaning as provided in title 25, section 6918 of the California Code of Regulatio ns, as amended from time to time in accordance with law. 2.8 “Thirty Percent Income Household” means a household whose gross income does not exceed the thirty percent income limits applicable to the Los Angeles - Long Beach Primary Metropolitan Statistical A rea, adjusted for household size, as published and periodically updated by HUD. Administrative Guidelines Affordable Housing Production Program Attachment 3 -E 3. CONTRACT WITH CITY . Developer hereby acknowledges that in issuing the [type of application] for the Project , the City is reducing or modifying development standards other wise applicable to the Project such as increasing unit density, reducing parking and other property development standards, and/or waiving fees. In exchange for such forms of assistance from the City, which are of financial benefit to the Developer, Develo per has entered into this contract with this City and agreed to the other conditions of the [type of permit see above], including the requirement included in this Agreement to provide and maintain [#] Affordable Units on the Subject Property for occupancy by qualified households who meet the requirements specified in 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) and Government Cod e Section 65915 et seq. 4. DEVELOPER TO PROVIDE AND MAINTAIN [Total # deed restricted units] Example : TEN (10) AFFORDABLE UNITS . (a) Upon issuance of a Certificate of Occupancy for the Project, Developer shall provide and maintain [#] Affordable U nits on the Subject Property, as follows: [# and type of unit] Example: Ten (10) one -bedroom Affordable Units shall be available to and occupied by [insert affordability level] Example: Fifty Percent Income Households at Affordable Rent. Developer shall submi t plans to the City's Building Official, identifying the unit numbers and exact locations of all of the Affordable Units. The submittal of these plans with the required identification of Affordable Units shall be a condition precedent to Developer's obtai ning a building permit for the Project. (b ) The Affordable Units shall be rental units and the maximum rent shall be calculated pursuant to the formula set forth in Section 5 of this Agreement. (c ) 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 breac h 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. 5 . TERMS FOR THE RENTAL OF THE AFFORDABLE UNITS . The maximum Affordable Rent for the [#] Affordable Units on the Subject Property shall be as follows: Administrative Guidelines Affordable Housing Production Program Attachment 3 -E (a) If the household is receiving a rental housing subsidy , the maximum allowable rent shall be th e lesser of the Affordable Rent calculated under subparagr aph (b) of this Section 5 or the payment standard authorized by the Santa Monica Housing Authority. (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: For Fifty Percent Income Households Area Median Income x 50% x Bedroom Adjustment Factor x 30% = Maximum Affordable Rent (Annual). For Eighty Percent Income Households Area Median Income x 60% x Bedroom Adjustment Factor x 30% = Maximum Affordable Rent (Annual). The Maximum Allowable Rent figures must be divided by twelve to determine the maximum allowable monthly rent. The formula for the calculation of rents as of t he date of this Agreement is as follows: (c) Area Median Income - As periodically published by HUD, currently $64,800 (for a family of four). (d) Bedroom Adjustment Factors 0 Bedroom .7 3 Bedrooms 1.00 1 Bedroom .8 4 Bedrooms 1.08 2 Bedroom .9 0 (e) Affordable Rents 2015 , to be updated annually 3 Studio 1 -BR 2 -BR 3BR Fifty Percent Income Household $567 $648 $729 $810 Eighty Percent Income Household $680 $778 $875 $972 (f) In the event the standards for establishing the monthly rental rate of the Affordable Units set forth in Section 5 cease to exist, the parties shall substitute a similar 3 These numbers include the utility allowance adopted by the City's Housing Authority for 2015, and is adjusted annually thereafter. Administrative Guidelines Affordable Housing Production Program Attachment 3 -E 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. (g) Minimum Occupancy Requirements 0 bedroom 1 occupant 1 bedroom 1 occupants 2 bedroom 2 occupants 3 bedrooms 3 occupants 4 bedrooms 5 occupants 6. HOUSEHOLD ADJUSTMENT FACTORS . The Household Adjustment Factors are as follows: 1 person 0.7 2 persons 0.8 3 persons 0.9 4 persons 1.0 5 pe rsons 1.08 6 persons 1.16 7 persons 1.24 8 persons 1.32 D uring the duration of this agreement, d eveloper agrees to make reasonable efforts to rent vacant Affordable Units within sixty days. 7. TENANT SELECTION . Developer shall select households from the City -developed list of income qualified households. Only households selected from the City -developed list of income qualified households shall occupy any of the Affordable Units. 8. CITY APPROVAL OF DOCUMENTS . The Conditions , Covenants and Re strictions (C C&R's), if any, for the Subject Property shall include reference to all applicable obligations and duties of the parties created by this Agreement. The City Attorney of the City of Santa Monica shall approve as to form the C C&R's prior to rec ordation of the final subdivision or parcel map for the Subject Property. Developer shall rent the Affordable Units pursuant to the terms and conditions of Administrative Guidelines Affordable Housing Production Program Attachment 3 -E a lease or rental agreement approved by the City. At least ninety days prior to the expected comp letion date, Developer shall submit to the City Housing Division for review a copy of the lease agreement to be used. In addition to any other provision required by the City to ensure compliance with Chapter 9.64 and the Administrative Guidelines for Chap ter 9.64 , as they may be amended from time to time, 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 ap prove any change that renders the Affordable Units in noncompliance with the household income requirements of this Agreement. The addition to the household of minor child ren, a spouse, or registered domestic partner shall not be deemed a change in the hou sehold requiring Developer's prior approval pursuant to this Section. Developer shall lease the Affordable Units concurrently with all other units in the Project so as to avoid prolonged vacancy of the Affordable Units during lease -up of the Project. 9. 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 e xpenses, attorneys' fees and costs. 10. APPOINTMENT OF OTHER AGENCIES . The City may designate, appoint or contract with any other public agency to perform City's obligations under this Agreement. 11. SEVERABILITY . In the event any limitation, condition, restriction, covenant or 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 eff ect. 12. 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 Administrative Guidelines Affordable Housing Production Program Attachment 3 -E Attention: Director, Planning and Community Development Department 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 manner set forth above. 13. 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 a nd its City Council, boards and commissions, officers, agents, servants or employees from and against any and all claims, loss, damage, charge or expense, whether direct or 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 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. 14. 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 Property for the benefit of the City, the public and surrounding landowners, until terminated in accordance with the pro visions 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. 15. SALE OR CONVERSION OF PROPERTY . In the event of sale or c onversion 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 2 4 below , shall be set forth in the CC&R's if any, for the project. 16. 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, ancestr y, national origin, sexual orientation, age, pregnancy, marital status, handicap, HIV, family composition , source of income, the use of a rental subsidy voucher , or the potential or actual occupancy of minor children. Developer further agrees to take affi rmative action to ensure that no such person is discriminated against for any of the aforementioned reasons. Administrative Guidelines Affordable Housing Production Program Attachment 3 -E 17. 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 their respective successors, heirs and assigns. The right to specific performance of this Agreement shall be an appropriate remedy for a breach of this A greement because of the uniqueness of the Property and the inherent difficulty in calculating adequate damages. 18. 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. 19. APPLICABLE LAW . All questions pertaining to the validity and interpretati on 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. 20. CITY AUTHORITY TO ENFORCE LAW The obligation of the Owner pursuant to this Agreement are in ad dition 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. 21. DURATION OF AGREEMENT . This Agreement shall terminate and become null and void fifty -five (55) years from issuance of the Certificate of Occupancy . 22. AMENDMENT OF AGREEMENT . This Agreement, and any Section, subsection, or covenant contained herein, may be terminated or amended only upon the written consent of all parties hereto. 23. RECORDING OF AGREEMENT . The parties hereto shall cause this Agreement to be recorded in the Official Administrative Guidelines Affordable Housing Production Program Attachment 3 -E Record s of the County of Los Angeles. 24. YEARLY REPORT . Developer shall issue a written report to City on an annual basis commencing one year from the date of issuance of the Certificate of Occupancy and continuing thereafter throughout the term of the Ag reement. The report shall state the rent level then being charged for the Affordable Units, whether the occupants are assisted by a rental housing subsidy program, the number of occupants in the household, whether there have been any changes in the compos ition of the household, whether any vacancies have occurred during the reporting year, any changes in income of the residents of the affordable units, and such other information as may be required by City staff. 25. COMPLIANCE MONITORING . Pursuant to C ity of Santa Monica Resolution 10635 (CCS) and Santa Monica Municipal Code Sections 9.64.050 and 9.64.060, Developer shall pay the reasonable regulatory costs of ensuring compliance with this Agreement through a Compliance Monitoring Fee, adopted and appro ved on November 22, 2011 and administratively revised on an annual basis. \\\ Administrative Guidelines Affordable Housing Production Program Attachment 3 -E 26 . 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. AT TEST: “CITY” CITY OF SANTA MONICA a Municipal Corporation ___________________________ Denise Anderson -Warren City Clerk By: ____________________________ Rick Cole AP PROVED AS TO FORM: City Manager SANTA MONICA CITY ATTORNEY __________________________ MARSHA JONES MOUTRIE City Attorney “DEVELOPER” [Name], LLC a California limited liability company By_______________________ [name, and title, i.e. Manager, trustee, owner etc] Prepared by: Planner Name Reference Number: XXDED -XXX Administrative Guidelines Affordable Housing Production Program Attachment 3 -E 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 ___________ Commonly Known As: [Street Address] Administrative Guidelines Affordable Housing Production Program Attachment 3 -E A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. ACKNOWLEDGMENT STATE OF __________________ }ss: COUNTY OF ________________ On before me, , a Notary Public, (insert name and title of the officer) personally appeared who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of whi ch the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of _______________________ that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature (Seal) Administrative Guidelines Affordable Housing Production Program Attachment 4 -A ATTACHMENT 4 -A (Updated for 2016 AHPP Guidelines Update) Sample Application for Affordable Housing Eligibility List Administrative Guidelines Affordable Housing Production Program Attachment 4 -A Administrative Guidelines Affordable Housing Production Program Attachment 4 -B ATTACHMENT 4 -B (Updated for 2016 AHPP Guidelines Update) Property Address Owner/Manager Name Phone #/Email Residence # Name and Phone Number Referr al #1: Was #1 Offered the Residence? Yes No Comments: Did #1 Accept the Residence? Yes No Comments: Name and Phone Number Referr al #2: Was #2 Offered the Residence? Yes No Comments: Did #2 Accept the Residence? Yes No Comments: Name and Phone Number Referral #3: Was #3 Offered the Residence? Yes No Comments: Did #3 Accept the Residence? Yes No Comments: Housing Division Waiting List Referral Form HR&A Advisors, Inc. | Los Angeles | New York | Washington, D.C. | Dallas Privileged & Confidential Attorney-Client Work Product and/or Communication June 20, 2016 Mr. Barry Rosenbaum, Esq., Senior Land Use Attorne y Office of the City Attorney City of Santa Monica 1685 Main Street Santa Monica, CA 90405 Re: Proposed FY 2016-17 Annua l Autom atic Adjustment for the Affordable Housing Unit Base Fee Dear Mr. Rosenbaum: This letter summarizes the results of applying the annual adjustment calculation methodology adopte d by the City to establish the Affordable Ho using Unit Base Fee pursuant to Santa Monica Municipal Code Section 9.64.070(b) (“the affo rdable housing unit base fee shall be adjusted [annually] based on changes in constructions cost s and land costs). This methodology was approved by the Santa Monica City Council at a publ ic hearing on June 13, 2006, based on the recommendation of HR&A in a letter to City staff dated April 24, 2006. A copy of the April 24, 2006 letter is included for reference as Attachme nt A hereto. The City Council approved the last annual increase for FY 2015-16 using this methodology when it adopted Resolution No. 10902 (CCS) on August 25, 2015. For the construction cost inflation component of the calculation approac h, the Engineering News Record’s (ENR) Construction Cost Index specific to th e Los Angeles metro area is utilized, because it is updated monthly and is readily available via the Internet by subscription. The applicable index change was 1.5 percent measured between March 2016 (the current budget adoption year) and March 2015, as compared with a 2.5 percen t change between March 2014 and March 2015. Although there is no comparable in dex for inflati on in land cost, the City-adopted method uses the weighted average annual change in median cond ominium sale prices, by ZIP Code, as a proxy measure for land cost changes measured for the immediately preceding calendar year. Based on our analysis of sales data compiled by Dataquic k from the Los Angeles County Assessor records, the weighted average change for the City duri ng 2015 was 9.8 percent, as compared with a 11.9% increase during 2014. The relative balance between land cost inflation (based on changes in m edian condo prices) and construction cost inflation (based on a construction cost index) continues to be based on development cost data for the two most recently completed an d/or under-construction multi-family affordable developments assisted by the City. For the current analysis, the two City-assisted projects are 2802 Pico Boulevard and 430 Pico Boulevard. The Ci ty-adopted calculation approach uses a simple average of the ratio between land purchase price and the sum of land cost and hard construction Attachment G Barry Rosenbaum, Esq. City of Santa Monica June 20, 2016 HR&A A DVISORS , I NC . Page 2 cost to derive the land value percentage (25.3%). The inverse of the land value percentage is the construction cost share (74.7%). Table 1, on the following page, presents the annual adjustment calculation establishing the Affordable Housing Unit Base Fee for FY 2016-17. It shows that a weighted average inflation index using this City Council-approved approach results in a 3.6 perc ent annual increase (as compared with a 4.9 percen t increase for FY 2015-16):  $37.82 per square foot for condominium developm ents (an increase of $1.31 per square foot from the FY 2015-16 Fee); and  $32.38 per square foot for apartment developmen ts (an increase of $1.13 per square foot from the FY 2015-16 Fee). It is my understanding that the results of the ca lculations shown in Table 1 will be the basis for a Resolution changing the Affordable Housing Base Fee for FY 2016-17. We ar e available to assist you in presenting the Resolution to the City Council. Sincerely, PAUL J. SILVERN, Vice President HR&A A DVISORS , I NC . ATTACHMENT A April 24, 2006 HR&A Letter re: Annual Adjustment Methodology HR&A Advisors, Inc. | Los Angeles | New York | Washington, D.C. | Dallas Privileged & Confidential Attorney-Client Work Product and/or Communication June 20, 2016 Mr. Barry Rosenbaum, Esq., Senior Land Use Attorne y Office of the City Attorney City of Santa Monica 1685 Main Street Santa Monica, CA 90401 Re: Proposed FY 2016-17 Annual Adjustment for the Affordable Housing Unit Development Cost Dear Mr. Rosenbaum: This letter summarizes the results of applying an annual adjustment to the Affordable Housing Unit Development Cost pursuant to Santa Monica Muni cipal Code (SMMC) Section 9.64.070(c) (“ . . . Commencing on July 1, 2007 and on July 1 st of each fiscal year thereafter, the City’s affordable housing unit development cost shall be adjusted bas ed on changes in construction costs and land costs . . .”). The inflation method ology is the same as that used to produce annual adjustments for the Affordable Housing Unit Ba se Fee, pursuant to SMMC Sect ion 9.64.070(b). That methodology was approved by the Santa Monica City Council at a public hearing on June 13, 2006, based on the recommendation of HR&A in a letter to City staff dated April 24, 2006. A copy of the April 24, 2006 letter is included for reference as Attachment A hereto. SMMC Section 9.64.070(a)(4) provides that deve lopers of market rate multi-family housi ng are eligible to pay a fee equal to a fraction of an affordable unit when the number of units otherwise required by Section 9.64.050(d) is less than 0.75. In such cases, the amount of the fee is equal to the City’s Affordable Housing Unit Development Co st multiplied by the fractional unit. The City’s Affordable Housing Development Unit Cost is define d as the average cost to the City to develop a unit of housing affordable to low- and moderate-income households. The Affordable Housing Unit Development Cost was originally estimated to be $239,949, as contai ned in the nexus study prepared by HR&A in 2005 1 to support the imposition of the Affordable Housing Unit Base Fee. The amount of the Affordable Housing Unit Developm ent Cost is equal to the City’s total cost to develop a unit of affordable housing (i.e., land, const ruction, professional fees and other “soft” costs and financing costs) minus the amount of constr uction loan that can be supported by the net operating income derived from operating a typical City-assisted affordable housing development. A 2005-2007 cumulative inflation increase for th e Affordable Housing Unit Development Cost to $265,632 using the approved method ology was adopted by the Ci ty Council when it approved Resolution No. 10230 (CCS) on July 24, 2007. The City Council approved the last annual increase 1 Hamilton, Rabinovitz & Alschuler, Inc., The Nexus Between New Market Rate Multi-Family Developments in the City of Santa Monica and the Need for Affordable Housing, 2005 Update , July 1, 2005, prepared for the City of Santa Monica. Attachment H Barry Rosenbaum, Esq. City of Santa Monica June 20, 2016 HR&A A DVISORS , I NC . Page 2 for FY 2015-16 using this methodology when it adopted Resolution No. 10903 (CCS) on August 25, 2015. For the construction cost inflation component of the calculation approach, the Engineering News Record’s (ENR) Construction Cost Index specific to th e Los Angeles metro area is utilized, because it is updated monthly and is readily available via the Internet with a subscription. The applicable index change was 1.5 percent measured between March 2016 (the current budget adoption year) and March 2015, as compared wi th a 2.5 percent change be tween March 2014 and March 2015. Although there is no co mparable index for inflation in land cost, the City-adopted calculation method uses the weighted average annual change in median condominium sale prices, by ZIP Code, as a proxy measure for land cost changes measure d for the immediately preceding calendar year. Based on our analysis of 2014 sa les data compiled by Dataquick from Los Angeles County Assessor records, the weighted average change for the Ci ty during 2013 was 9.8 percent, as compared with a 11.9 percent increase during 2013. The relative balance between land cost inflation (based on changes in median condo prices) and construction cost inflation (based on a construction cost index) continues to be based on development cost data for the two most recently completed an d/or under-construction multi-family affordable developments assisted by the City. For the current analysis, the two City-assisted projects are 2802 Pico Boulevard and 430 Pico Boulevard. The Ci ty-adopted calculation approach uses a simple average of the ratio between land purchase price and the sum of land cost and hard construction cost to derive the land value percentage (25.3%). The inverse of the land value percentage is the construction cost share (74.7%). Table 1, on the following page, presents the annual adjustment calculation establishing the Affordable Housing Unit Developm ent Cost for FY 2016-17. It sho ws that a weighted average inflation index using the City Council-approved appr oach results in a 3.6 percent annual increase (compared with a 4.9 percent in crease for FY 2015-16), to $339,7 32, which is a $11,805 increase compared with the FY 2015-16 Housing Unit Cost. It is my understanding that the results of the ca lculations shown in Table 1 will be the basis for a Resolution changing the Affordable Housing Un it Development Cost for FY 2016-17. We are available to assist you in presenting the Resolution to the City Council. Sincerely, PAUL J. SILVERN, Vice President HR&A A DVISORS , I NC . ATTACHMENT A April 24, 2006 HR&A Letter re: Annual Adjustment Methodology Reference: Resolution No. 10985 (CCS) & Resolution No. 10986 (CCS)