HomeMy WebLinkAboutD-2106_AHA_22 ChorroRECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
City of San Luis Obispo
Community Development Department
919 Palm Street
San Luis Obispo, CA 93401-3249
Attn: Community Development Director
No fee for recording pursuant to
Government Code Section 27383
J
Tommy Gong
San Luis Obispo - County Clerk -Recorder
09/111201$ 02:44 PM
Recorded at the request of:
PUBLIC
Titles: 1 Pages: 19
Fees: $0.00
Taxes:$0.00
Total: $0.00
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(Space above for Recorder's Use)
AFFORDABLE HOUSING RENTAL RESTRICTION AGREEMENT AND
DECLARATION OF RESTRICTIVE COVENANTS
(Rental Affordable Units #210, #211, #310, & #311 for "The Academy at Chorro")
This AFFORDABLE HOUSING RENTAL RESTRICTION AGREEMENT AND
DECLARATION O ' RE TRICTIVE COVENANTS ("Agreement") is made and entered into on
this ^JS1' day of 2018, by and between the City of San Luis Obispo, a
California charter city and municipal corporation (the "City"), and 22 North Chorro Project Owner
LLC, a Delaware limited liability company (the "Owner"), collectively referred to as the
"Parties."
RECITALS
A. Owner is the owner of certain real property located at 22 Chorro Street in the City,
which is more particularly described in attached Exhibit A incorporated herein by this reference
(the "Property").
B. On December 5, 2016, the City's Architectural Review Commission adopted
Resolution No. ARC -1027-16 which was appealed and the City Council adopted Resolution No.
10771 (2017 Series) and the City's Planning Commission denied the project and adopted
Resolution No. PC -1009-16 which was appealed and the City Council adopted Resolution No.
10749 (2016 Series) (the "Project Approvals") to approve Owner's construction of twenty-seven
(27) residential units on the Property (the "Project"). Under Government Code Section 65915 —
65918 (the "Density Bonus Law"), Owner applied for, and the City granted a height exception
(allowing a 43 -foot tall structure where normally a 35 -foot tall structure is allowed) in exchange
for Owner's offer to provide the Affordable Units, as defined below. Density Bonus Law requires
the City to ensure, and the Owner to agree to, continued affordability of the units that qualified the
Owner for the density bonus.
C. Pursuant to Municipal Code Section 17.91.040 B, and to satisfy the requirements
of Density Bonus Law the City's Community Development Department has established rental
prices and income limits for affordable rental housing units (the "Affordable Housing
Standards"). The Owner is required to rent four (4) units of the twenty-seven (27) total residential
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units developed in the Project ("Units"), at Affordable Rents, as defined below, to Very Low
Income Households, as defined below (the "Affordable Units"), in conformance with the rental
prices and income limits established by the Affordable Housing Standards.
D. Owner acknowledges and agrees that the Project Approvals provided adequate and
proper notice pursuant to Government Code Section 66020 of Owner's right to protest any
requirements for fees, dedications, reservations, and other exactions as may be included in this
Agreement, that no protest in compliance with Section 66020 was made within ninety (90) days
of the date that notice was given, and that the period has expired in which Owner may protest any
and all fees, dedications, reservations, and other exactions as may be included in this Agreement.
AGREEMENT
NOW, THEREFORE, the Parties agree and acknowledge that the above recitals are true
and accurate, and are incorporated into this Agreement by this reference, and the Parties mutually
acknowledge and agree as follows:
ARTICLE 1.
DEFINITIONS AND EXHIBITS
Section 1.1. Definitions. In addition to terms defined elsewhere in this Agreement, the
following terms have the following meanings in this Agreement:
(a) "Affordable Rent" means the maximum total of monthly payments by the
Tenant of an Affordable Unit, which is to be calculated in accordance with the formula provided
in the City of San Luis Obispo Affordable Housing Standards.
(b) "AMI" means the HCD Income Limit for San Luis Obispo County, as
established and published by the California Department of Housing and Community Development
or any successor thereto.
(c) "Director" means the Community Development Director of the City or
successor position.
(d) "Eligible Household" means a household which has been determined by
the Housing Authority or other agency designated by the Director to be eligible to rent an
Affordable Unit as a Very Low Income Household, in compliance with the Affordable Housing
Standards and this Agreement.
(e) "Household Income" means the combined gross, pre-tax income of all
adult occupants of the applicant household.
(f) "Housing Authority" means the Housing Authority of the City of San Luis
Obispo.
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(g) "Low Income Household" is defined in the City of San Luis Obispo's
Affordable Housing Standards and means a household with a Household Income that does not
exceed eighty percent (80%) of AMI.
(h) "Moderate Income Household" is defined in the City of San Luis Obispo's
Affordable Housing Standards and means a household with a Household Income that does not
exceed one hundred twenty percent (120%) of AMI.
(i) "Tenant" is a household occupying an Affordable Unit pursuant to a valid
lease with the Owner.
0) "Term" shall mean the term of this Agreement, which shall be in effect for
a fifty-five (55) year period from the date that a certificate of occupancy is issued for the last
Affordable Unit to be completed.
(k) "Very Low Income Household" is defined in the City of San Luis Obispo's
Affordable Housing Standards and means a household with a Household Income that does not
exceed fifty percent (50%) of AMI.
Section 1.2. Exhibits. The following exhibits are attached to this Agreement:
Exhibit A Legal Description of the Property
Exhibit B Map Showing Location of Affordable Units
Exhibit C 2018 Schedule of Affordable Rents for Affordable Units
ARTICLE 2.
CONSTRUCTION OF PROJECT AND AFFORDABLE UNITS
Section 2.1. Construction of Affordable Units. The Owner agrees to construct and make
available four (4) units as Affordable Units in the Project on the Property during the Term. The
Owner agrees to provide four (4) units that are affordable to Very Low Income Households.
Section 2.2. Design and Appearance of Affordable Units. The design, bedroom count,
appearance, and general quality of the Affordable Units shall be of the same as character of the
Project as a whole. The Owner agrees to provide the Affordable Units with a bedroom count of
studios in the location shown and described on Exhibit B. If, after recordation of this Agreement,
Owner proposes to change the location of any Affordable Unit within the Project, Owner shall
submit a written request for such change to the Director, who shall have sole discretion to approve
or deny such request.
Section 2.3. Construction Timing. The Affordable Units shall be constructed in
proportion to construction of the other units in the Project location further described in Exhibit B.
No certificates of occupancy or final inspections shall be issued for any units in the Project unless
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a proportional number (generally one certificate of occupancy for an Affordable Unit for each four
(4) other units issued certificates of occupancy) of certificates of occupancy or final inspections
have been issued for Affordable Units unless an alternate phasing plan has been approved as part
of the Project Approvals.
ARTICLE 3.
RENT REGULATORY PROVISIONS
Section 3.1. Affordability and Occupancy Covenants. The Affordable Units shall be
used exclusively for rental housing for the Term. The Affordable Units shall not be kept vacant
or used for any purpose except for residential use and shall be offered for rent only to Eligible
Households at Affordable Rents; provided, however, that any vacancies of the Affordable Units
from time to time in the ordinary course of Owner's rental business or on account of any damage
by fire or other casualty shall not constitute a Default hereunder.
Section 3.2. Schedule of Affordable Rents.
(a) The City has provided the Owner with a schedule of Affordable Rents for
the Affordable Units in effect on the date of this Agreement, which is attached as Exhibit C hereto.
Affordable Rents may be increased annually thereafter as set forth in the City of San Luis Obispo
Affordable Housing Standards. Except as provided in subsection (b) of this Section, the Owner
shall not charge any fee other than rent to any Tenant of Affordable Units for any housing or other
services provided by Owner.
(b) Increased Income of Tenants. In the event Tenant's income exceeds the
qualifying income for a Very Low -Income Household, Owner shall not be entitled to any
additional rent.
Section 3.3. Agreement to Limitation on Rents. The Owner hereby covenants that the
rent restrictions as provided herein are consistent with Gov. Code 65850 and as such, certain
provisions of Civil Code Section 1954.51 et seq. (the "Costa -Hawkins Act") do not apply. The
Owner hereby covenants that any Affordable Units provided pursuant to this Agreement are not
subject to Civil Code Section 1954.52(a) or any other provision of the Costa -Hawkins Act
inconsistent with controls on rents. The Owner further covenants that this Agreement complies
with all federal, State, and City laws and ordinances and that the terms of this Agreement are fully
enforceable.
Section 3.4. Income Certification.
(a) Prior to Owner entering into a lease with a prospective tenant of an
Affordable Unit, the prospective tenant household shall be certified as an Eligible Household by
the Housing Authority of the City of San Luis Obispo or other agency designated by the Director.
(b) Annually, thereafter, the Owner will obtain, complete and maintain on file,
immediately prior to initial occupancy and annually thereafter, income certifications for each
Tenant renting any of the Affordable Units. Owner shall obtain written certification by the
Housing Authority or other agency designated by the Director that the Affordable Units are being
occupied by Eligible Households in compliance with the terms of this Agreement.
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Section 3.5. Reports to City. The Owner shall submit to the Director on or before July
31 st of each year, or at other such interval as mutually agreed by the Parties, a report in a form
acceptable to the City to enable the City to verify that the Affordable Units are being occupied by
Eligible Households in compliance with the terms of this Agreement. At a minimum, information
to be submitted shall include:
(a) Certifications of eligibility for all Tenants of Affordable Units at the time
of initial occupancy. Such certification shall include verified income statements and number of
persons in each Affordable Unit;
Units; and
(b) Certification of the amount of rent charged for the year for all Affordable
(c) Other information reasonably required by the City.
Section 3.6. Inspections. The City reserves the right to inspect the Affordable Units
upon reasonable notice to the Owner to ensure that the Affordable Units are being maintained,
operated, and used consistent with this Agreement and applicable federal, state and local codes.
The Owner agrees to correct all conditions found by such inspections not to conform to the
applicable requirements within ninety (90) days of delivery of written notice from the City, or such
period as necessary to correct the violations as reasonably determined by the Director, provided
that corrections are commenced within ninety (90) days and prosecuted diligently to completion.
Failure maintain the Affordable Units as required by this Agreement or to correct such conditions
shall be a Default, as defined below.
Section 3.7. Management of Property and Property Maintenance.
(a) Management Responsibilities. Except for the Housing Authority's initial
certification of a Tenant as an Eligible Household, the Owner is responsible for all management
functions with respect to the Project, including, without limitation, the annual recertification of
household size and Household Income (subject to review by the Housing Authority, the City or its
assignee), selection of Tenants, evictions, collection of Rents and deposits, maintenance,
landscaping, routine and extraordinary repairs, replacement of capital items, and security. The
City shall have no responsibility over management of the Project.
(b) Property Maintenance. The City places prime importance on quality
maintenance to ensure that all developments within the City which include affordable housing
units are not allowed to deteriorate due to below-average maintenance. The Owner shall provide
the Affordable Units with the same level and quality of maintenance, including performance of
repairs and periodic replacement of fixtures as the other units in the Project. The Owner agrees to
maintain all interior and exterior improvements, including landscaping, on the Property in good
condition and repair (and, as to landscaping, in a healthy condition) and in accordance with all
applicable laws, rules, ordinances, orders and regulations of all federal, state, county, municipal,
and other governmental agencies and bodies having or claiming jurisdiction and all their respective
departments, bureaus, and officials.
(c) Taxes and Assessments. The Owner shall pay all real and personal property
taxes, assessments, if any, and charges and all franchise, income, employment, old age benefit,
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withholding, sales, and other taxes assessed against it, or payable by it, at such times and in such
manner as to prevent any penalty from accruing, or any lien or charge from attaching to the
Affordable Units; provided, however, that the Owner shall have the right to contest in good faith,
any such taxes, assessments, or charges. In the event the Owner exercises its right to contest any
tax, assessment, or charge against it, the Owner, on final determination of the proceeding or
contest, shall promptly pay or discharge any decision or judgment rendered against it, together
with all costs, charges and interest.
Section 3.8. Laws and Regulations. The Owner acknowledges that Owner is familiar
with and will comply with all local and State laws and regulations that pertain to construction,
health and safety, labor, fair housing practices, equal opportunity and all other matters applicable
to maintaining sound, safe and affordable rental housing.
ARTICLE 4.
ENFORCEMENT
Section 4.1. Covenants Running with the Land. The requirements of this Agreement
shall be covenants running with the land as defined in California Civil Code Section 1460 and
shall apply to the Property. Pursuant to Civil Code Section 1468, which governs such covenants,
the provisions of this Agreement shall be binding upon all Parties having any right, title, or interest
in the Property, or any portion thereof and on their heirs, successors in interest and assigns for the
Term. The Parties agree that all future deeds or transfers of interest regarding the Property shall
show the restrictions of this Agreement for the Term.
Section 4.2. Default. Failure of the Owner to satisfy any of Owner's obligations under
the terms of this Agreement within ninety (90) days after the delivery of a notice of default from
the City will constitute a default under this Agreement ("Default"). In addition to remedies for
breach of this Agreement, the City may exercise any and all remedies available to it under the
Municipal Code or other any other provision of law or equity, including but not limited to:
(a) withholding, conditioning, suspending or revoking any Project Approvals,
including without limitation final inspections for occupancy and/or certificates of occupancy;
(b) instituting against the Owner, or other parties, a civil action for declaratory
relief, injunction or any other equitable relief, or relief at law, including without limitation an
action to rescind a transaction and/or to require repayment of any funds received in connection
with such a violation;
(c) where one or more persons have received financial benefit as a result of
violation of this Agreement or of any requirement imposed under the Density Bonus Law, the City
may assess, and institute legal action to recover as necessary, a penalty in any amount up to and
including the amount of financial benefit received, in addition to recovery of the benefit received;
and
(d) requiring the Owner or his/her successors in interest to the Property to pay
the City rent or any other payment received by the Owner for the Affordable Unit from the date of
any unauthorized use of the Affordable Unit or in excess of Affordable Rent.
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Section 4.3. Attorney's Fees and Costs. If either Party takes or commences any actions
or proceedings, including litigation or arbitration, against the other by reason of any breach or
claimed breach of any provision of, or in any way connected with, this Agreement, or seeks a
judicial declaration of rights under this Agreement, the Party prevailing in such action or
proceeding shall be entitled to recover from the other Party the prevailing Party's reasonable
attorney's fees and costs, including, but not limited to, all expert witness fees, other witness fees
and associated expenses, whether or not the proceeding or action proceeds to judgment.
ARTICLE 5.
GENERAL PROVISIONS
Section 5.1. Appointment of Other Agencies. At its sole discretion, the City may
designate, appoint or contract with any other public agency, for-profit or non-profit organization
to perform some or all of the City's obligations under this Agreement.
Section 5.2. Records. The Owner shall retain all records related to compliance with
obligations under this Agreement for a period not less than five (5) years from the date of
origination of such records, and make them available to City employees or others designated by
the City for inspection and copying on five (5) business days' written notice. The City shall be
entitled to monitor compliance with this Agreement and Density Bonus Law, and the Owner shall
cooperate with City monitoring, including obtaining Tenant Affordable Rent and Household
Income verification upon request of the City.
Section 5.3. Hold Harmless. Owner will indemnify and hold harmless (without limit as
to amount) City and its elected officials, officers, employees and agents in their official capacity
(hereinafter collectively referred to as "Indemnitees"), and any of them, from and against all loss,
all risk of loss and all damage (including expense and attorney's fees) sustained or incurred because
of or by reason of any and all claims, demands, suits, actions, judgments and executions for
damages of any and every kind and by whomever and whenever made or obtained, allegedly
caused by, arising out of or relating in any manner to the Project, the Affordable Units, or Owner's
performance or non-performance under this Agreement, including claims pursuant to California
Labor Code Section 1720 et seQ., and shall protect and defend Indemnitees, and any of them with
respect thereto, except to the extent arising from the proven gross negligence or willful misconduct
of the City. The provisions of this Section shall survive expiration or other termination of this
Agreement or any release of part or all of the Property from the burdens of this Agreement, and
the provisions of this Section shall remain in full force and effect.
Section 5.4. Notices. All notices required pursuant to this Agreement shall be in writing
and may be given by personal delivery or by registered or certified mail, return receipt requested,
to the Party to receive such notice at the addressed set forth below:
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TO THE CITY:
City of San Luis Obispo
Community Development Department
919 Palm Street
San Luis Obispo, CA 93401-3249
Attn: Community Development Director
WITH COPY TO:
City of San Luis Obispo
990 Palm Street
San Luis Obispo, CA 93401
Attn: City Attorney
TO THE OWNER:
22 North Chorro Project Owner LLC
c/o GMH Capital Partners, LP
10 North Campus Boulevard
Newtown Square, PA 19073
Attn: James T. Asali, General Counsel
Any notice shall be deemed delivered on the first business day that delivery is attempted or upon
receipt, whichever is sooner. As used herein, "business day" means any day other than a Saturday,
Sunday, or any state or federal holiday on which financial institutions in San Luis Obispo County
are authorized or required to close for observance thereof. 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.
Section 5.5. Integrated Agreement. This Agreement sets forth the full and entire
understanding of the Parties regarding the matter set forth herein. Any other prior or existing
understandings or agreements by the Parties, whether formal or informal, regarding any matters
addressed within this Agreement are hereby superseded or terminated in their entirety.
Section 5.6. Each Party's Role in Drafting the Agreement. Each Party to this Agreement
has had an opportunity to review the Agreement, confer with legal counsel regarding the meaning
of the Agreement, and negotiate revisions to the Agreement. Accordingly, neither Party shall rely
upon Civil Code Section 1654 in order to interpret any uncertainty in the meaning of the
Agreement.
Section 5.7. Amendment of Agreement. No changes, amendments, or alterations to this
Agreement shall be effective unless in writing and signed by all Parties hereto. Major amendments
to this Agreement, shall be subject to the review and approval of the decision-making body which
approved the Project Approvals. Minor amendments to this Agreement may be approved by the
Director. Upon approval, a new Agreement containing the amendments shall be executed and
recorded.
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Section 5.8. _Applicable Law. This Agreement shall be governed by California law.
Venue shall be the County of San Luis Obispo.
Section 5.9. Waivers. Any waiver by the City of any obligation or condition in this
Agreement must be in writing. No waiver will be implied from any delay or failure by the City to
take action on any breach or default of Owner or to pursue any remedy allowed under this
Agreement or applicable law. Any extension of time granted to Owner to perform any obligation
under this Agreement shall not operate as a waiver or release from any of its obligations under this
Agreement. Consent by the City to any act or omission by Owner shall not be construed to be a
consent to any other or subsequent act or omission or to waive the requirement for the City's written
consent to future waivers.
Section 5.10. Title of Parts and Sections. Any titles of the sections, subsections, or
subparagraphs of this Agreement are inserted for convenience of reference only and shall be
disregarded in interpreting any part of the Agreement's provisions.
Section 5.11. Multiple Originals, Counterpart. This Agreement may be executed in
multiple originals, each of which is deemed to be an original, and may be signed in counterparts.
Section 5.12. Recording of Agreement. This Agreement shall be recorded against the
Property in the Official Records of the County of San Luis Obispo prior to the recordation of any
parcel map or final subdivision map or issuance of any building permit for the Project, whichever
occurs first.
Section 5.13. Severability. In the event any limitation, condition, restriction, covenant, or
provision contained in this Agreement is to be held invalid, void or unenforceable by any court of
competent jurisdiction, the remaining portions of this Agreement shall nevertheless be and remain
in full force and effect.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
as of the day and year first above written.
Ll k— �
22 North Chorro Project Owner LLC, a Delaware limited liability company
By:
tZ�i
Its: 6M it&rul
CITY:
City of San Luis Obispo, a California charter city and municipal corporation
By: v
Michael Codron, Community Development Director
APPROVED AS TO FORM AND LEGAL EFFECT:
//I By:
ChristirAvietrick, City Attorney
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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.
COMMONWEALTH OF PENNSYLVANIA
COUNTY OF DELAWARE
On 001V 2,`6 2Y `b7 , befor ine, �44n t, , i 21�d , Notary
Public, personally appeared 4l , who proved to me
on the basis of satisfactory evidence to bete person(s) wh se 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 which the person(s) acted, executed the instrument.
I certify UNDER PENALTY OF PERJURY under the laws of the State of California that
the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Name: 5ttUt) L
Notary Public
1808\03\1835187.4
Commonwealth of Pennsylvania
Notarial Seal
SUSAN L DEMARCO - Notary Public
NEWTOWN TWP, DELAWARE COUNTY
My Commission Expires Mar 1, 2021
ACKNOWLEDGMENT
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.
State of California
County of San Luis Obispo
On ' `� - zoo
before me, Diane Dostalek, Notary Public
(insert name and title of the officer)
personally appeared Michael Codron
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 which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS my hand and official seal. 01ANE DOSTALEK
Commission # 2138341
Z j Notary Public - California z
San Luis Obispo County
My Comm. Expires Dec 25, 2019
Signature _ (Seal)
EXHIBIT A
LEGAL DESCRIPTION OF THE PROPERTY
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF SAN
LUIS OBISPO, COUNTY OF SAN LUIS OBISPO, STATE OF CALIFORNIA AND IS
DESCRIBED AS FOLLOWS:
PARCEL A: APN: 052-174-001
Lot 1 of Mt. Pleasanton Square No. 2, in the City of San Luis Obispo, County of San
Luis Obispo, State of California, according to map recorded May 21, 1928 in Book 3 at
Page 104 of Maps, in the office of County Recorder of said County.
PARCEL B: APN: 052-174-041
Lots 2 and 3 of Mt. Pleasanton Square No. 2, in the City of San Luis Obispo, County
of San Luis Obispo, State of California, according to map recorded Map 21, 1928 in
Book 3 at Page 104 of Maps, in the office of County Recorder of said County.
Excepting from said Lot 3 that portion lying North of the following described line:
Beginning at the Northwest corner of said Lot 3; thence South 00 12' 30" East along
the dividing line of Lots 2 and 3, a distance of 4.42 feet; thence South 890 35' 30"
East, a distance of 489.04 feet, more of less; thence on a curve concave to the right
with a radius of 83.49 feet through an angle of 68° 50' 30" for a length of 100.31 feet to
a point on the Westerly property line of Santa Rosa Street, as conveyed to the City of
San Luis Obispo, a municipal corporation, by a deed recorded May 25, 1966 in book
1397 at page 610 of Official Records.
PARCEL C: APN: 052-174-002
Lot 6 of Mt. Pleasanton Square No, 2, in the City of San Luis Obispo, County of San
Luis Obispo, State of California, according to the map recorded May 21, 1928 in Book
3 at Page 104 of Maps, in the office of County Recorder of said County,
A-1
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EXHIBIT B
MAP SHOWING LOCATION OF AFFORDABLE UNITS
302 303 304 305 306 j
311
310
306
Location of
Affordable Units
4310 and 4311 -------
F141R0 MOOR PLAN IXCUrANC W PIAN
B-1
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EXHIBIT C
2018 SCHEDULE OF AFFORDABLE RENTS FOR AFFORDABLE UNITS
[To be attachedl
C-1
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0
�o
� A
2018 AFFORDABLE HOUSING STANDARDS
(Effective June 21, 2018)
Purpose
These standards apply to all development projects within the City. They set maximum rental
costs or sales prices based on income level and dwelling size and are used by developers,
citizens, housing groups, City staff and commissions, and housing agencies. The Community
Development Director implements the standards. Besides defining the often misunderstood
term "affordable housing", the standards promote the construction of housing which meets
residents' needs and help explain the City's housing requirements. In addition, the City uses
these standards to determine if housing projects are "affordable" and qualify for density
bonuses, financial assistance or other types of incentives. For more information about these
standards, call the City's Community Development Department at (805) 781-7170.
The City requires new development projects to provide affordable housing for extremely -low,
very -low, low, or moderate income households by:
1) Building affordable housing in conjunction with new residential or commercial
development; or
2) Paying an "in -lieu fee" to support the development of affordable housing; or
3) Contributing real property, including land or existing dwellings, to be used as
affordable housing; or
4) By a combination of these methods.
To help offset costs of providing affordable housing, the City has adopted Affordable Housing
Incentives (San Luis Obispo Municipal Code Chapter 17.90). State and local law allows
residential density bonuses and certain other incentives in return for developers agreeing to
construct affordable housing. Additional information on incentives is available from the
Community Development Department.
How the Standards Are Determined
These standards are prepared by the Community Development Department and are updated
annually to show income limits for the City and County of San Luis Obispo as published by
the State Department of Housing and Community Development (HCD). These limits are
shown in Table 1. By law, the upper income limit for "extremely -low income" households is
30. percent of the area median income; the upper income limit for "very -low income"
households is 50 percent of the area median income; the upper limit for "lower income"
households is 80 percent of the area median income; and the upper limit for "moderate -
income" households is 120 percent of the area median income.
Households with More Than Eight Persons
For all income groups, the income limits for households larger than eight persons are
determined as follows: For each person in excess of eight, add eight percent of the four-
2018 Affordable Housing Standards
person income limit to the eight -person income limit and round the sum to the nearest $50.
For example, the nine -person very -low income limit is 0.08 X $41,600 = $3,328; then $3,328
+ $54,950 = $58,278 rounded to $58,300.
TABLE 1: 2018 ANNUAL INCOME LIMITS ($)
INCOME GROUP
EXTREMELY LOW 11 17,500
VERY LOW 11 29,150
LOW 11 46,600
MEDIAN* 11 58,250
MODERATE 11 69,900
NUMBER OF PERSONS IN HOUSEHOLD
ll,
I20,000
22,500
25,100
29,420
33,740
38,060
42,380
j 33,300
37,450
41,600
44,950
48,300
51,600
54,950
1 53,250
1 66,550
59,900
74,900
66,550
83, 200
71,900
89,850
77,200
96, 500
82,550
103,150
87,850
109,800
79,900
89,850
99,850
107,850
115,850
123,800
131,800
Updated June 2018, from CA State Department of Housing and Community Development (HCD) Official Income Limits.
*Median Income shown for reference only. This is not an official Affordable Housing Income Level.
How to Determine Affordable Rents or Sales Prices
To determine affordable rents or sales prices, follow these three steps: 1) find the "income
group" in Table 1, based on the number of persons in the horlsehold and their gross annual
household income; 2) determine the number of bedrooms in the dwelling to be bought, rented
or sold; and 3) Use Table 2 to find the maximum affordable rent or sales price based on the
income group and number of bedrooms. When the number of persons in the household is
not known, the City's affordability standards for both rent and sales prices can assume the
following household sizes corresponding to the number of bedrooms in the dwelling:
• Studio unit: use the income limit for a one-person household.
• One -bedroom unit: use the income limit for a two -person household.
• Two-bedroom unit: use the income limit for a three-person household.
• Three-bedroom unit: use the average income limit for a four -five person household
• Four-bedroom unit: use the income limit for a six -person household
Affordable Rent Limits
The maximum monthly rents to qualify as affordable housing are listed in Table 2. For
example, the maximum monthly rent cost for a two-bedroom dwelling which is affordable to a
lower-income household can be found in Table 2 by reading across the row labeled "Low,
Maximum Monthly Rent" and then finding $1,124 under the column heading "2 -Bedroom."
Rent limits are based on formulas set by State law (H&S Code 50053) and are computed as
shown on Page 3 of these Standards.
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2018 Affordable Housing Standards
TABLE 2: 2018 RENT/SALES AFFORDABILITY STANDARDS
Calculation of Affordable Rents
• For extremely -low income households: Affordable monthly rents shall not exceed 30%
of 30% of the annual area median income for the number of persons expected to reside in
the unit, divided by 12, and adjusted for household/unit size.
• For very -low income households: Affordable monthly rents shall not exceed 30% of
50% of the annual area median income for the number of persons expected to reside in
the unit, divided by 12, and adjusted for household/unit size.
• For lower-income households: Affordable monthly rents shall not exceed 30% of 60%
of annual area median income divided by 12, and adjusted for household/unit size.
• For moderate -income households: Affordable monthly rents shall not exceed 25% of
100% of the annual area median income divided by 12, and adjusted for household/unit
size.
Affordable Sales Prices
The maximum sales prices for affordable housing are based on a formula that accounts for
what a typical extremely -low income, very -low income, low-income or moderate -income
household can afford to pay for housing, following established guidelines. Sales price limits
are determined by multiplying the annual income limit of the income group, adjusted for
household size (by 3 for extremely -low, very -low and low income households, and by 3.5 for
moderate income households), rounded to the nearest $25. For example, the calculation of
maximum sales price for a 2 -bedroom dwelling is computed as shown on Page 4 of these
Standards.
TENURE
I DWELLING
INCOME GROUP
Maximum
STUDIO
1-BDRM
2-BDRM 3-BDRM 4-13DRM
Monthly
Rent
$437
$499
$562 $649 $724
EXTREMELY LOW
Sales Price $52,500 $60,000 $67,500 $81,775 $101,225
Monthly
$728 $832 $936 $1,082 $1,206
Rent
VERY LOW
Sales Price $87,45 $99,900 $112,350 $129,825 $144,900
Monthly
$874 $998 $1,124$1,298 $1,448
Rent
LOW
Sales Price $139,800 $159750 $179,700 $207,675 1 $231,640
Monthly
Rent $1,214 $1,386 $1,560 :$1,7803:1$2,010
MODERATE
Sales Price $244,650
$279,650 $314,475 1 $363,475 ! $405.475
Calculation of Affordable Rents
• For extremely -low income households: Affordable monthly rents shall not exceed 30%
of 30% of the annual area median income for the number of persons expected to reside in
the unit, divided by 12, and adjusted for household/unit size.
• For very -low income households: Affordable monthly rents shall not exceed 30% of
50% of the annual area median income for the number of persons expected to reside in
the unit, divided by 12, and adjusted for household/unit size.
• For lower-income households: Affordable monthly rents shall not exceed 30% of 60%
of annual area median income divided by 12, and adjusted for household/unit size.
• For moderate -income households: Affordable monthly rents shall not exceed 25% of
100% of the annual area median income divided by 12, and adjusted for household/unit
size.
Affordable Sales Prices
The maximum sales prices for affordable housing are based on a formula that accounts for
what a typical extremely -low income, very -low income, low-income or moderate -income
household can afford to pay for housing, following established guidelines. Sales price limits
are determined by multiplying the annual income limit of the income group, adjusted for
household size (by 3 for extremely -low, very -low and low income households, and by 3.5 for
moderate income households), rounded to the nearest $25. For example, the calculation of
maximum sales price for a 2 -bedroom dwelling is computed as shown on Page 4 of these
Standards.
2018 Affordable Housing Standards
Calculation of Affordable Sales Prices
i 3 X $59,900 = $179,700 for a two-bedroom low-income unit; and
• 3.5 X $89,850 = $314,475 for a two-bedroom moderate -income unit.
Affordability Programs
Rental housing affordability is maintained through recorded agreements (Affordable Housing
Agreement) between a property owner and the City. These agreements shall specify: a) the
income category for each dedicated affordable unit; b) the term for which rental units must
remain affordable; and c) terms under which affordability is maintained after sale or transfer
of the property. The City's current terms as specified in the Housing Element are the
maximum allowed by State law; 45 years for ownership units and 55 years for rentals. For
purposes of determining affordability requirements, Single Room Occupancy (SRO) units
shall be treated as one -bedroom dwellings.
There are two different approaches to maintaining long-term affordability which require
signing an Affordable Housing Agreement: 1) the property owner agrees to maintain the
designated dwelling unit as affordable for at least 45/55 years; or 2) the property owner
agrees to participate in a "shared equity purchase program" as described in the City's
Inclusionary Housing Requirement. The decision on which approach to use is up to the
developer, except where state or federal standards applying to a given project require
specific affordability periods.
Long Term Affordability Program
Under the long-term affordability program, the housing must remain affordable for at least
45/55 years from the original date of sale or rental. Affordability terms are secured by an
affordable housing agreement, promissory note and deed of trust, recorded on the property
prior to or concurrent with the initial occupancy (for rental units) or sale of the property. The
promissory note is based on the monetary difference between the property's initial capped
purchase price and its fair market value outside of the program. The note is an "affordability
loan" or "silent second" payable to the City. Repayment of the affordability loan is waived as
long as affordability requirements are met. For -sale properties must be owner -occupied,
and may be sold or otherwise transferred only to eligible buyers and at prices deemed
affordable under these standards. Upon resale, the City, its Housing Authority, or a non-profit
agency approved by the City, retains the first right of refusal to purchase affordable properties
at their then current appraised value.
Equity Share Program
Under the equity -share program, the buyer of an affordable dwelling enters into an
agreement with the city guaranteeing affordability for at least 6 years after the initial date of
sale. Upon resale of the property, the agreement ensures that the City's equity share returns
to the City for use in other affordable housing developments. The City's equity share is
based on the difference between the property's market value and the actual price paid by the
homeowner, divided by the market value; or the amount of subsidy provided by the city,
divided by the property's market value. Affordable units sold before the sixth year are subject
to an additional "Equity Recapture Fee" ranging from 25 to 100 percent of the property's
equity. For more information, refer to the Inclusionary Housing Requirements, Ch. 17.91 of
the San Luis Obispo Municipal Code.
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END OF DOCUMENT