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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 IIN�C�k��IPfN,f�i'�YP�IItlI (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 1 1808\03\1 835187.4 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. 0 1808\03\1835187.4 (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 1808\03\1835187.4 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. 4 1808\03\1835187.4 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, 1808\03\1835187.4 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. 6 1808\03\1835187.4 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: 7 1808\03\1835187.4 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. 8 1808\03\1835187.4 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] 9 1808\03\1835187.4 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 10 1808\03\1835187.4 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 1808\03\1835187.4 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 1808\03\1835187.4 EXHIBIT C 2018 SCHEDULE OF AFFORDABLE RENTS FOR AFFORDABLE UNITS [To be attachedl C-1 1808\03\1835187.4 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. 2 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. 4 END OF DOCUMENT