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HomeMy WebLinkAbout4.10 Extension Temp Policy BMR Ownership UnitsG~~,~ OF DU~~2 /~~~~\ 19\ ~(~_' =i1~7~ Z \\~ ~"/l ~4LIFOR~~~ STAFFREPORT CITY CLERK DUBLIN CITY COUNCIL File #^~~ 0^-~~ DATE: May 18, 2010 TO: Honorable Mayor and City Councilmembers FROM: Joni Pattillo, City Manager SUBJEC . Extension of a Temporary Policy for the Rental of Below Market Rate Ownership Units Prepared By: John Lucero, Housing Specialist EXECUTIVE SUMMARY: Due to the slow down in the housing market, for-sale Below Market Rate (BMR) owners desiring to sell their BMR unit are having difficulty finding qualified buyers willing to purchase the units at the restricted resale price. Qualified buyers would rather purchase market rate homes free of resale restrictions rather than BMR units that are priced close to or above market rate prices. To assist BMR owners with the difficulty of finding qualified buyers, Staff is requesting that the City Council extend the Temporary Policy for the Rental of Below Market Rate Ownership Units by Owners Unable to Sell Their Units at the Restricted Resale Price that was adopted by the City Council on August 19, 2008 for an additional two years ending August 19, 2012. FINANCIAL IMPACT: None. RECOMMENDATION: Staff recommends that the City Council adopt the Resolution Extending a Temporary Policy for the Rental of Below Market Rate Ownership Units by Owners Unable to Sell Their Units at the Restricted Resale Price. ~--- u mitted By Reviewe y Community Development Director Assistant City Manager DESCRIPTION: Page 1 of 4 ITEM NO. `• I V (~, n 1'~ The City's Inclusionary Housing Program requires purchasers of for-sale Below Market Rate (BMR) units to execute a"Resale Restriction Agreement and Option to Purchase" (Resale Restriction Agreement) that is recorded against the BMR unit. The Resale Restriction Agreement requires the BMR unit to remain affordable for a period of time; requires the owner to live in the unit as his or her primary residence; prohibits the owner from selling the BMR unit for more than the restricted price; and prohibits the owner from renting the BMR unit without the consent of the City. In mid-2008, some owners of for-sale BMR units desiring to sell their units requested consent from the City to rent their units. The request came from BMR owners having difficulty finding qualified buyers willing to purchase the units at the restricted resale price. At the August 19, 2008 City Council meeting, the City Council adopted Resolution No. 157-08, Resolution Establishing a Temporary Policy for the Rental of below Market Rate Ownership Units by Owners Unable to Sell Their Units at the Restricted Resale Price (Policy) (Attachment 1) for a two-year time period. Temporary Rental Policy The provisions of the Policy are as fotlows: Policy. During the Term of this Policy, the owner of a BMR unit who is unable to find a qualified buyer to purchase his or her unit at the Adjusted Resale Price may rent his or her unit provided that the following requirements are satisfied: (a) The BMR unit has been on the Market for at least six (6) months and the owner has made commercially reasonable efforts to sell the BMR unit, as determined by the City. Such efforts shall inclUde, but shall not be limited to, listing the unit with a Real Estate Broker, ensuring the unit is listed in the Multiple Listing Service, and making the unit reasonably available for viewing by Brokers and potential purchasers and their agents; (b) The BMR owner enters into a Regulatory Agreement with the City; (c) The future tenant is an Eligible Household in the same income category as the BMR unit; (d) The lease contains the provisions set forth in the Lease Agreement Section below; (e) The monthly rental payment does not exceed the amount set forth in the Lease Agreement Section below; (f) A copy of the lease is submitted to the City within five (5) days of the date following execution of the Agreement by the owner and tenant; and (g) The BMR owner does not live in the BMR unit during the term of the lease. Page 2 of 4 Affordable Housing Rental Regulatorv Aqreement and Declaration of Restrictive Covenants A BMR owner that satisfies the terms of the Policy enters into an Affordable Housing Rental Regulatory Agreement and Declaration of Restrictive Covenants (Regulatory Agreement) with the City to lease their unit. The Regulatory Agreement (Attachment 2) term corresponds with the Policy, establishes the maximum rental amount and provisions in the Lease Agreement between the BMR owner and lessee. Over the past two years, two BMR owners have taken advantage of the program. Currently, the City has one executed Regulatory Agreement that terminates on August 19, 2010. Should the City Council extend the Policy for another two years, the current BMR owner can enter into a new Regulatory Agreement and Lease Agreement for an additional finro year term of August 19, 2010 through August 19, 2012. The Policy states that all Regulatory Agreements and leases must terminate no later than two years after the effective date of the Policy. The City Manager enforces the Policy and has the authority to enter into Regulatory Agreements with the BMR owners. Maximum Rental Amount The maximum rent for the unit would be calculated based upon Chapter 4.11.3 of the Guideline to the Inclusionary Zoning Ordinance Regulations (Attachment 3) with the caveat that the rent to be charged shall not exceed the amount of the current Total Monthly Household Cost. Under existing City policy, maximum rents are reduced if the Tenant pays for utilities. Lease Aqreement The Lease Agreement would be required to include: (1) the term of the lease; (2) the monthly rental payment; (3) a statement that the BMR unit is an affordable unit subject to certain restrictions imposed by the City; (4) a statement that the tenant may be required to submit income documentation to the City upon request; (5) a statement that the lease term will expire on or before August 19, 2012; and (6) a statement that the City is a third party beneficiary to the lease. The terms of Lease Agreement are a matter between the landlord and tenant. Extension of Policy Since the inception of the Policy, two BMR homeowners have utilized the Policy. One has since stopped renting and is pursuing a short sale. Currently, six BMR homeowners have the option to utilize the Policy. Unfortunately, the market conditions are continuing to be challenging, making it difficult for BMR homeowners to sell their units. Therefore, Staff is requesting that the City Council adopt the proposed resolution (Attachment 4) extending the Policy for another finro years ending August 19, 2012. NOTICING REQUIREMENTS/PUBLIC OUTREACH: Staff has sent out a notice to all the BMR homeowners with homes listed for sale that City Council is considering the extension of the Policy. Page 3 of 4 ATTACHMENTS: 1. Resolution No. 157-08, Resolution Establishing a Temporary Policy for the Rental of below Market Rate Ownership Units by Owners Unable to Sell Their Units at the Restricted Resale Price 2. Sample of Affordable Housing Regulatory Agreement and Declaration of Restrictive Covenants 3. Chapter 4.11.3 of the Layman's Guide to the Inclusionary Zoning Ordinance 4. Resolution Extending a Temporary Policy for the rental of Below Market Rate Ownership Units by Owners Unable to Sell Their Units at the Restricted Resale Price Page 4 of 4 / ~~ ~ RESOLUTION N0.157 - 08 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DUBLIN **~*~*,~~*** ESTABLISHING A TEMPORARY POLICY FOR THE RENTAL OF BELOW-MARI~T RATE OWNERSHIP ITNITS BY~?.WNERS UNABLE TO SELL THEIR U1~TITS AT THE RESTRICTED RESALE PRICE RECITALS WHEREAS, the City of Dublin's ("City") Inclusionary Housing Program requires purchasers of Below Mazket Rate ("BMR") for-sale units ("Unit") to execute and record a Resale Restriction Agreement with Option to Purchase ("Resale Restriction Agreement"); and WHEREAS, the Resale Restriction Agreement prohibits BMR owners from selling their BMR Units at more than a restricted price; and WHEREAS, due to the recent slow down in the housing mazket, BMR owners aze having difficulty finding qualified buyers willing to purchase their BMR units at the restricted resale price because such prices are so close to market prices that qualified buyers would rather purchase Market Ra.te homes free of resale restrictions; and WHEREAS, BMR owners who aze unable to sell their BMR units would like to rent their BMR units; and VVHEREAS, the Resale Restriction Agreement prohibits the rental of the BMR units without the consent of the City; and WHEREAS, although the City does have a policy authorizing rental of BMR units when the owner has a hazdship, the City does not currently have a policy regarding the rental of BMR units by BMR owners who aze unable to sell their units at the restricted price; and WHEREAS, this Resolution is intended to establish a temporary policy for the rental of BMR units by BMR owners who are unable to sell their units. NOW, THEREFORE, the City Council of the City of Dublin does hereby resolve as follows: 1. Policy. During the Policy Term, the owner of a BMR unit who is unable to find a qualified buyer to purchase his or her unit at the Adjusted Resale Price may rent his or her unit provided that the followi.ng requirements are satisfied: (a) The BMR unit has been on the market for at least six (6} months and the Owner has made commercially reasonable efforts to sell the BMR unit, as determined by the City. Such efforts shall include, but shall not be limited to, listing the unit with a Real Estate Broker, ensuring the unit is listed in the Multiple Listing Service, and making the unit reasonably available for viewing by Brokers and potential purchasers and their agents; (b) The BMR owner enters into a regulatory agreement with the City; (c) The future Tenant is an Eligible Household in the same income category as the BMR unit; Reso No. 157-08, Adopted 8/19/08, Item 7.2 Page 1 of 3 [„ jr'D `' ',~ ~ -~ •t,~' eTTarAMFNT 1 ~~~i (d) The lease contains the provisions set forth in Section 4 below; (e) The monthly rental payment does not exceed the amount set forkh in Section 3 below; ( fl A copy of the lease is submitted to the City within five (5) days following execution of the agreement by the Owner and Tenant; (g) The BMR owner does not live in the BMR unit during the term of the lease; and (h) The lease shall terminate no later than the Authorized Lease Termination Date. 2. Definitions. The following definitions sha11 apply to this Policy: (a) "Authorized Lease Termination Date" means two (2) yeazs from the efFective date of this Resolution. (b) "Policy Term" means two (2) years from the effective date of this Resolution. (c) Capitalized terms not defined herein shall have the meaning ascribed to such terms in the Resale Restriction Agreement. (d) Tota1 Monthly Household Cost of the Unit means mortgage payment, taxes, homeowners association fees and insurance (does not include utilities). 3. Rent. The monthly rental payment for the BMR unit sha11 not exceed either the maximum rent, as calculated per Chapter 5.6 of the Layxnan's Guide to the Inclusionary Zoning Ordinance, for the applicable income category and household size, or the total monthly household cost of the unit, whichever is less. If the Tenant pays utilities or Homeowners' Association dues, maximum rent must be decreased pursuant to the City's utility allowance schedule. Household size will be assumed based on the number of bedrooms in the unit as follows: studio, 1 person; 1 bedroom, 2 persons; 2 bedroom, 3 persons; 3 bedrooms, 4 persons; 4 bedrooms, 5 persons; and 5 bedrooms, 6 persons. 4. Lease. The lease agreement sha11 clearly state: (1) the term of the lease; (2) the monthly rental payment; (3) that the BMR unit is an affordable unit subject to certain restrictions imposed by the City; (4) that the Tenant may be required to submit income documentation to the City upon request; (5) that the lease term will expire no later than the Authorized Lease Termination Date; and (6) that the City is a third party beneficiary to the lease. 5. Authority of City Manager. The City Manager or his or her designee shall have the authority and responsibility for the implementation of this Policy, including the authority to enter into regulatory agreements with the BMR owners in aform approved by the City Manager and the City Attorney. 6. Effect of Violation. Any lease that violates the provisions of this Policy is prohibited, and any owner who violates this Policy sha11 be deemed to be in default under his or her Resale Restriction Agreement. 7. Severability Clause. The provisions of this Resolution are severable and if any provision, clause, sentence, word or part thereof is held illegal, invalid, unconstitutional, or inapplicable to any Reso No. 157-08, Adopted 8/19/08, Item 7.2 Page 2 of 3 3~ ~~ person or circumstances, such illegality, invalidity, unconstitutionality, or inapplicability shall not affect or impair any of the remaining provisions, clauses, sentences, sections, words, or parts thereof of this Resolution or their applicability to other persons or circumstances. 8. Effective Date. T'his Resolution shall take effect immediately. PASSED, APPROVED AND ADOPTED this 19th day of August, 2008, by the following vote: AYES: Councilmembers Hildenbrand, Oravetz, Sbranti, and Scholz and Mayor Lockhart NOES: None ABSENT: None ABSTAIN: None ATTEST• ~' =2-~ G~- ~'V-~`~ City Clerk Reso No. 157-08, Adopted 8/19/08, Item 7.2 Page 3 of 3 y~ ~i ~ RECORDING REQUESTED BY: CITY OF DUBLIN When Recorded Mail To: City Clerk City of Dublin 100 Civic Plaza Dublin, CA 94568 Fee Waived per GC 27383 Space above this line for Recorder's use SECONDARY UNIT REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS Owner: Property Address: Dublin, California Name of Development: Positano This Secondary Unit Regulatory Agreement and Declaration of Restrictive Covenants (this "Agreement") is entered into effective as of ("Effective Date") by and between the City of Dublin, a public body, corporate and politic ("City") and (the "Owner"). City and Owner are hereinafter collectively referred to as the "Parties. Recitals A. Owner is the owner of certain real property that contains a secondary dwelling unit, which is located in the City of Dublin, County of Alameda, State of California and more particularly described in Exhibit A attached hereto and incorporated herein by reference (the "Property"). The Property is located within a residential development project area (the "Project") that was subject to the City's Inclusionary Zoning Regulations (Chapter 8.68 of the Dublin Municipal Code), which requires that developments consisting of 20 or more residential units must include a specified percentage of units that are subject to affordability restrictions set forth in a binding agreement recorded against the property. Secondary Unit Regulatory Agreement May 7, 2007 Positano Second Unit Regulatory AgreemenY5 07 07 Page 1 of 10 ATTACHMENT 2 5~ a I ~ B. The developer of the Project chose to satisfy its obligations through among other things the construction of 13 secondary units on some of the residential lots in the Project, including on the Property, and requiring the purchasers to enter into regulatory agreements restricting the rents charges for the secondary units to affordable rents, in accordance with the Inclusionary Zoning Regulations. C. The Parties have agreed to enter into and record this Agreement in order to satisfy the requirements described in the foregoing Recitals. The purpose of this Agreement is to regulate and restrict the occupancy and rents of the Property's Restricted Unit (defined below) for the benefit of the occupants. The covenants in this Agreement are intended to run with the land and be binding on Owner and its successors and assigns for the full term of this Agreement. NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the Parties hereby agree as follows: 1. Definitions. The following terms have the meanings set forth in this Section wherever used in this Agreement or the attached exhibits. "Applicable Income Level" means the annual gross income level specified below: ^ Very-low income: 50% or less of Area Median Income. ^ Low-income: 50% to 80% of Area Median Income. ^ Moderate-income: 80°/o to 120% of Area Median Income. "Area Median Income" or "AMI" means the area median income for Alameda County, California, adjusted for household size, published periodically by the California Department of Housing and Community Development ("HCD") in Section 6932 of Title 25 of the California Code of Regulations ("Regulations") or successor provision published. "Eligible Household" means a household whose gross income does not exceed the Applicable Income Level and that is otherwise eligible to rent a Restricted Unit. "Qualifying Rent" means a monthly rent which does not exceed one-twelfth of thirty percent (30%) of the Applicable Income Level adjusted for household size, less a utility allowance as specified by the Housing Authority of Alameda County. "Restricted Unit" means the secondary dwelling unit on the Property that is depicted in Exhibit B and that is reserved for occupancy at a Qualifying Rent in accordance with and as set forth in Section 2. 2. Use and Affordability Restrictions. Owner represents and warrants that it has not entered into any agreement that would restrict or compromise its ability to comply with Secondary Unit Regulatory Agreement May 7, 2007 Positano Second Unit Regulatory Agreement 5 07 07 Page 2 of 10 ~ a~ a i the occupancy and affordability restrictions set forth in this Agreement, and Owner covenants that it shall not enter into any agreement that is inconsistent with such restrictions without the express written consent of City. 2.1 Affordability Requirements. The Restricted Unit, if it is rented, shall be rented at not more than Qualifying Rent and occupied by Eligible Households. Owner shall ensure that language is contained in all leases and contracts with tenants executed by Owner that prohibits subleasing of the Restricted Unit. 2.2 Rents for Restricted Units. Rent charged to, and paid by, a tenant for Restricted Units shall be not more than Qualifying Rent. Notwithstanding the foregoing; no tenant qualifying for a Restricted Unit shall be denied continued occupancy of the Restricted Unit because, after admission, such tenant's adjusted income increases to exceed the qualifying limit for such Restricted Unit. 2.3 Non-Discrimination; Compliance with Fair Housinq Laws. Owner shall not discriminate against persons or groups of persons on account of race, color, religion, creed, sex, sexual orientation, marital status, familial status, ancestry or national origin in the lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property, nor shall Owner or any person claiming under or through Owner establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the Property. Owner shall each ensure that language prohibiting such discrimination shall be included in all deeds, leases and contracts executed by Owner or its successors and assigns with respect to the Property. Owner shall comply with state and federal fair housing laws in the marketing and rental of the units in the Property. 3. Reportinq Requirements. 3.1 Tenant Verification. Owner or its authorized agent shall obtain from each household prior to initial occupancy of each Restricted Unit, and on every anniversary thereafter, written documentation verifying each tenant's eligibility containing all of the following, including additional documentation as City may reasonably require (collectively hereinafter "Written Verification"): (a) Number of people in the household; and (b) Total household income. Owner or its authorized agent shall retain Written Verification for not less than three (3) years, and upon City's request, shall make the Written Verification available for inspection by City and shall provide copies of the Written Verification to City. Owner or its authorized agent may require each Eligible Household to certify the Written Verification. 3.2 Annual Report; Inspections. Owner shall submit an annual report ("Annual Report") to the City in conformity with the requirements of Section 8.68.050.B Secondary Unit Regulatory Agreement May 7, 2007 Positano Second Unit Regulatory Agreement 5 07 07 Page 3 of 10 ~~ ~i d of the Inclusionary Zoning Regulations, together with a certification that the Property is in compliance with the requirements of this Agreement. The Annual Report shall, at a minimum, include the following information: (i) identification of the Restricted Unit by address; (ii) the monthly rents charged and proposed to be charged; (v) the number of people residing in the unit; and (vi) the total household income of residents. Upon City's request, Owner shall include with the Annual Report, a copy of the Written Verification Owner obtained pursuant to Section 3.1 above, and such additional information as City may reasonably request from time to time in order to show compliance with this Agreement. Owner shall permit representatives of City to enter and inspect the Property during reasonable business hours in order to monitor compliance with this Agreement upon 24 hours advance notice of such visit to Owner. 4. Term of Aqreement. 4.1 Term of Restrictions. This Agreement shall remain in effect in perpetuity. 4.2 Effectiveness Succeeds Convevance of Property. This Agreement shall remain effective and fully binding for the full term hereof regardless of any sale, assignment, transfer, or conveyance of the Property, unless this Agreement is terminated earlier by City in a recorded writing. 4.3 Reconveyance. Upon the termination of this Agreement, the Parties agree to execute and record appropriate instruments to release and discharge the terms of this Agreement; provided, however, the execution and recordation of such instruments shall not be necessary or a prerequisite to the termination of this Agreement in accordance with its terms. 5. Bindinq Upon Successors; Covenants to Run with the Land. Owner hereby subjects its interest in the Property to the covenants and restrictions set forth in this Agreement. The City and Owner hereby declare their express intent that the covenants and restrictions set forth herein shall be deemed covenants running with the land and shall be binding upon and inure to the benefit of the heirs, administrators, executors, successors in interest, transferees, and assigns of Owner and City, regardless of any sale, assignment, conveyance or transfer of the Property or any part thereof or interest therein. Each reference in this Agreement to a specifically named party shall be deemed to mean a reference to the successor of each such Party. Any successor-in- interest to Owner, including without limitation any purchaser, transferee or lessee of the Property (other than the tenants of the individual dwelling units within the Property) shall be subject to all of the duties and obligations imposed hereby for the full term of this Agreement. Each and every contract, deed, ground lease or other instrument affecting or conveying the Property or any part thereof, shall conclusively be held to have been executed, delivered and accepted subject to the covenants, restrictions, duties and obligations set forth herein, regardless of whether such covenants, restrictions, duties and obligations are set forth in such contract, deed, ground lease or other instrument. If any such contract, deed, ground lease or other instrument has been executed prior to the date hereof, Owner hereby covenants to obtain and deliver to City an instrument in recordable form signed by the parties to such contract, deed, ground lease or other Secondary Unit Regulatory Agreement May 7, 2007 Positano Second Unit Regulatory Agreement 5 07 07 Page 4 of 10 ~ ~i ~ instrument pursuant to which such parties acknowledge and accept this Agreement and agree to be bound hereby. Owner agrees for itself and for its successors that in the event that a court of competent jurisdiction determines that the covenants herein do not run with the land, such covenants shall be enforced as equitable servitudes against the Property in favor of City. 6. Property Manaqement; Repair and Maintenance; Marketinq. 6.1 Management Responsibilities. Owner shall be responsible for all management functions with respect to the Property, including without limitation the selection of tenants, certification and recertification of household income and eligibility, evictions, collection of rents and deposits, maintenance, landscaping, routine and extraordinary repairs, replacement of capital items, and security. Except as City may otherwise agree in writing, City shall have no responsibility for management or maintenance of the Property. The contracting of management services to a management entity shall not relieve Owner of its primary responsibility for proper performance of management duties. 6.2 Intentionally Omitted. 6.3 Repair, Maintenance and Securitv. Throughout the term of this Agreement, Owner shall at its own expense, maintain the Property in good physical condition, in good repair, and in decent, safe, sanitary, habitable and tenantable living conditions in conformity with all applicable state, federal, and local laws, ordinances, codes, and regulations. Without limiting the foregoing, Owner agrees to maintain the Property (including without limitation, the residential units, common areas, landscaping, driveways and walkways) in a condition free of all waste, nuisance, debris, unmaintained landscaping, graffiti, disrepair, abandoned vehicles/appliances, and illegal activity, and shall take all reasonable steps to prevent the same from occurring on the Property. Owner shall prevent and/or rectify any physical deterioration of the Property and shall make all repairs, renewals and replacements necessary to keep the Property and the improvements located thereon in good condition and repair. 6.4 Intentionally omitted. 6.5 Intentionally omitted. 6.6 Intentionally omitted. 6.7 Intentionally omitted. 6.8 Propertv Damaqe or Destruction. If any part of the Property is damaged or destroyed, Owner shall repair or restore the same as soon as practicable, consistent with the occupancy and rent restriction requirements set forth in this Agreement. Secondary Unit Regulatory Agreement May 7, 2007 Positano Second Unit Regulatory Agreement 5 07 07 Page 5 of 10 ~° ~ ~ 7. Recordation; No Subordination. This Agreement shall be recorded in the Official Records of Alameda County. Owner hereby represents, warrants and covenants that with the exception of easements and restrictions of record, absent the written consent of City, this Agreement shall not be subordinated in priority to any lien (other than those pertaining to taxes or assessments), encumbrance, or other interest in the Property. If at the time this Agreement is recorded, any interest, lien, or encumbrance has been recorded against the Property in position superior to this Agreement, upon the request of City, Owner hereby covenants and agrees to promptly undertake all action necessary to clear such matter from title or to subordinate such interest to this Agreement consistent with the intent of and in accordance with this Section, and to provide such evidence thereof as City may reasonably request. 8. Transfer and Encumbrance. 8.1 Restrictions on Transfer. During the term of this Agreement, except as permitted pursuant to this Agreement, Owner shall not make or permit the occurrence of any conveyance, sale or lease (except as to individual dwelling units) of the Property without the prior written consent of the City; provided however City shall not withhold its consent to the sale, transfer or other disposition of the Property, in whole or in part, provided that (i) the transferee expressly assumes all obligations of Owner imposed by this Agreement; (ii) the transferee executes all documents reasonably requested by the City with respect to the assumption of the Owner's obligations under this Agreement; and (iii) the Owner has paid the City a Affordable Home Ownership Fee to cover the City's costs associated with the transaction. The amount of the Affordable Home Ownership Fee is currently $1,500 per transaction, and the applicable amount shall be as established from time to time by the City Council 8.2 Encumbrances. Owner agrees to use best efforts to ensure that any deed of trust secured by the Property shall contain each of the following provisions: (i) the holder of such deed of trust shall use its best efforts to provide to City a copy of any notice of default issued to Owner concurrently with provision of such notice to Owner (provided however, the failure to do so shall not impair such holder's rights and remedies); and (ii) City shall have the reasonable right, but not the obligation, to cure any default by Owner within the same period of time provided to Owner for such cure, extended by an additional thirty (30) days. 8.3 Mortqaqee Protection. No violation of any provision contained herein shall defeat or render invalid the lien of any mortgage or deed of trust made in good faith and for value upon all or any portion of the Property, and the purchaser at any trustee's sale or foreclosure sale shall not be liable for any violation of any provision hereof occurring prior to the acquisition of title by such purchaser. Such purchaser shall be bound by and subject to this Agreement from and after such trustee's sale or foreclosure sale. Promptly upon determining that a violation of this Agreement has occurred, City shall give written notice to the holders of record of any mortgages or deeds of trust encumbering the Property that such violation has occurred. Secondary Unit Regulatory Agreement May 7, 2007 Positano Second Unit Regulatory Agreement 5 07 07 Page 6 of 10 ~~~ ~I d 9. Default and Remedies. 9.1 Events of Default. Owner's failure to cure any default in performance of Owner's obligations under this Agreement within thirty (30) days following City's delivery of a notice of default shall constitute an Event of Default hereunder and shall entitle the City to proceed with any of the remedies described below. Notwithstanding the foregoing, if the default is such that it is not reasonably capable of being cured within thirty (30) days, an Event of Default shall not arise hereunder if Owner commences to cure the default within 30 days and thereafter prosecutes the curing of such default to completion with due diligence and in good faith, but in no event later than ninety (90) days after receipt of City's notice of default or such longer period as City may agree to in writing. (a) Bring an action for equitable relief seeking the specific performance of the terms and conditions of this Agreement, and/or enjoining, abating, or preventing any violation of such terms and conditions, and/or seeking declaratory relief; (b) For violations of obligations with respect to rents for Restricted Units, impose as liquidated damages a charge in an amount equal to the actual amount collected in excess of the Qualifying Rent; (c) Pursue any other remedy allowed at law or in equity. 9.2 Remedies Cumulative. Each of the remedies provided herein is cumulative and not exclusive. The City may exercise from time to time any rights and remedies available to it under applicable law or in equity, in addition to, and not in lieu of, any rights and remedies expressly provided in this Agreement. 10. Indemnification. Owner shall defend (with counsel approved by City), indemnify and hold the City and its officials, officers, directors, employees, and agents (collectively, the "Indemnified Parties") harmless from and against any and all losses, damages, liabilities, claims, demands, judgments, actions, court costs, and legal or other expenses (including reasonable attorneys' fees) arising from or in connection with or in any way related to: (i) Owner's performance or failure to perform any obligation required by this Agreement; or (ii) any act or omission by Owner, or any of Owner's contractors, subcontractors, agents, employees, licensees or suppliers related to the Property, except to the extent arising from the gross negligence or willful misconduct of such Indemnified Party. The provisions of this Section shall survive the expiration or earlier termination of this Agreement. 11. Miscellaneous. 11.1 Amendments. This Agreement may be amended or modified only by a written instrument signed by both Parties. 11.2 No Waiver. Any waiver by City of any term or provision of this Agreement must be in writing. No waiver shall be implied from any delay or failure by City to take action on any breach or default hereunder or to pursue any remedy allowed under this Secondary Unit Regulatory Agreement May 7, 2007 Positano Second Unit Regulatory Agreement 5 07 07 Page 7 of 10 ~~ al ~ Agreement or applicable law. No failure or delay by City at any time to require strict performance by Owner of any provision of this Agreement or to exercise any election contained herein or any right, power or remedy hereunder shall be construed as a waiver of any other provision or any succeeding breach of the same or any other provision hereof or a relinquishment for the future of such election. 11.3 Notices. Except as otherwise specified herein, all notices to be sent pursuant to this Agreement shall be made in writing, and sent to the Parties at their respective addresses specified below or to such other address as a Party may designate by written notice delivered to the other parties in accordance with this Section. All such notices shall be sent by: (a) personal delivery, in which case notice is effective upon delivery; (b) certified or registered mail, return receipt requested, in which case notice shall be deemed delivered upon receipt if delivery is confirmed by a return receipt; (c) nationally recognized overnight courier, with charges prepaid or charged to the sender's account, in which case notice is effective on delivery if delivery is confirmed by the delivery service; (d) facsimile transmission, in which case notice shall be deemed delivered upon transmittal, provided that (a) a duplicate copy of the notice is promptly delivered by first-class or certified mail or by overnight delivery, or (b) a transmission report is generated reflecting the accurate transmission thereof. Any notice given by facsimile shall be considered to have been received on the next business day if it is received after 5:00 p.m. recipient's time or on a nonbusiness day. City: City of Dublin 100 Civic Plaza Dublin, CA 94568 Attention: City Manager Facsimile: (925) 833-6651 Owner: At the address of the property 11.4 Further Assurances. The Parties shall execute, acknowledge and deliver to the other such other documents and instruments, and take such other actions, as either shall reasonably request as may be necessary to carry out the intent of this Agreement. Secondary Unit Regulatory Agreement May 7, 2007 Positano Second Unit Regulatory Agreement 5 07 07 Page 8 of 10 ~a ~r ~ 11.5 Parties Not Co-Venturers. Nothing in this Agreement is intended to or shall establish the Parties as partners, co-venturers, or principal and agent with one another. 11.6 Action by the City. Except as may be otherwise specifically provided herein, whenever any approval, notice, direction, consent or request by the City is required or permitted under this Agreement, such action shall be in writing, and such action may be given, made or taken by the City Manager or by any person who shall have been designated by the City Manager, without further approval by the City Council. 11.7 Non-Liability of Citv and City Officials, Employees and Aqents. No member, official, employee or agent of the City shall be personally liable to Owner or any successor in interest, in the event of any default or breach by the City, or for any amount of money which may become due to Owner or its successor or for any obligation of City under this Agreement. 11.8 Headings; Construction. The headings of the sections and paragraphs of this Agreement are for convenience only and shall not be used to interpret this Agreement. The language of this Agreement shall be construed as a whole according to its fair meaning and not strictly for or against any Party. 11.9 Time is of the Essence. Time is of the essence in the performance of this Agreement. 11.10 Governinq Law. This Agreement shall be construed in accordance with the laws of the State of California without regard to principles of conflicts of law. 11.11 Attornevs' Fees and Costs. If any legal or administrative action is brought to interpret or enforce the terms of this Agreement, the prevailing party shall be entitled to recover all reasonable attorneys' fees and costs incurred in such action. 11.12 Severabilitv. If any provision of this Agreement is held invalid, illegal, or unenforceable by a court of competent jurisdiction, the validity, legality, and enforceability of the remaining provisions shall not be affected or impaired thereby. 11.13 Entire Aqreement; Exhibits. This Agreement contains the entire agreement of Parties with respect to the subject matter hereof, and supersedes all prior oral or written agreements between the Parties with respect thereto. The exhibits attached hereto are incorporated herein by this reference. 11.14 Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be an original and all of which together shall constitute one agreement. SIGNATURES ON FOLLOW/NG PAGE. Secondary Unit Regulatory Agreement May 7, 2007 Positano Second Unit Regulatory Agreement 5 07 07 Page 9 of 10 l~ ~1 ~ IN WITNESS WHEREOF, the Parties have executed this Agreement effective as of the date first written above. OWNER CITY OF DUBLIN By: Joni Pattillo City Manager Attest: Gaylene Burkett Deputy City Clerk S/GNATURES MUST BE NOTARIZED. Secondary Unit Regulatory Agreement May 7, 2007 Positano Second Unit Regulatory Agreement 5 07 07 Page 10 of 10 /~ ~ ~ ~ Exhibit A PROPERTY DESCRIPTION (Attach legal description.) /~ ~i ~ Exhibit B DIAGRAM SHOWING LOCATION OF RESTRICTED UNIT (Attach diagram.) ~~ ~i ~ Exhibit C ANNUAL REPORT FORM (Attach Form.) i7f~ ~i 4. The Priority List must be completed within 30 days of the application line and submitted to the City for approval; 5. Offer the BMR Units to applicants based on the Prio ~ ist, offering first to those applicants with the most points, then in descendin er; 6. Execute a Rental Agreement with the nt that notifies the tenant that he or she may not sublease the unit and that annu rtification is required. 7. Maintain applicat' with income verification and re-certification for City to review at annual ons' onitoring. Qualific~i~el~determinations may be appealed by the Developer to the Community Development 4.11.3 Calculatin~ Maximum Rent The Inclusionary Zoning Regulations state that maximum rents cannot exceed 30% of the Maximum Income in a given income category. Affordable rents are calculation formula is listed below for Very Low, Low and Moderate Income Households: • Very Low Income Tenants, monthly rent not in excess of thirty percent (30%) of one- twelfth of fifty percent (50%) of the annual Median Income for the Area; • Low Income Tenants, monthly rent not in excess of thirty percent (30%) of one-twelfth of sixty percent (60%) of the annual Median Income for the Area; and • Moderate Income Tenants, monthly rent not in excess of thirty percent (30%) of one- twelfth of one-hundred and ten percent (110%) of the annual Median Income for the Area, with in each case based upon the following assumed household sizes for the following sizes of residential units in the Project. If tenant is required to pay for utilities, the maximum rent must be reduced to account for the cost of such utilities (a utility allowance). Utilities include gas, electric, water, and trash disposal. In addition, if tenants are required to provide their own stove, refrigerator, or washer and dryer, these expenses are considered utilities, and the maximum rent is further reduced. If the tenant is responsible for any of the above, the maximum rent must be reduced by the amounts listed in the Utility Allowance Sheet* (See Exhibit No. 8). Figure 7 illustrates the calculation of maximum rent: # The Utility Allowances are established by the Housing Authority of Alameda County and revised periodically. The most current Utility allowances for Alameda County may be accessed at the following web site: http//www.haca.net., then click on statistics. 22 Revised January 2, 2009 ATTACHMENT 3 ~~~ ~i FIGURE 7 2008 Rent limits Bedroom Size Assumptio ns 0 bdrm = 1 person 1 bdrm = 2 people 2 bdrm = 3 people 3 bdrm = 4 people 50% , 60%0 110%0 0 $754 $905 $1,658 : 1 _$861 $1,034 $1,895 2 $969 $1,163 $2,131 3 _ $1,076 ' $1,292 $2,368 4 $1,163 $1,395 . $2,558 If a tenants/households income increases to where the tenant/household is no longer income or household size qualified for the BMR rental unit, the tenantlhousehold will not be required to move; however, the household will no longer be considered qualified for a BMR unit and the rent may be increased to market rate rent. The developer/landlord will then offer the next available unit with the same specifications (i.e. bathrooms and bedrooms) as a BMR rent restricted unit. 4.11.4 Annual Report Pursuant to Section 8.68.OSO.B of the Inclusionary Zoning Regulations, the management entity for the development must provide the City an annual report (See Exhibit No 9). The annual report must include the following information: • Total Household Income for the prior year for each BMR Unit; • Number of people residing in each BMR Unit; • Monthly rents charged and proposed to be charged for each BMR Unit; and • Vacancy of BMR Units during the previous year. The management firm must submit the report annually by October 31 st. The City of Dublin Housing Staff will send a reminder letter to the management firm, with a copy of the Annual Report form for completion and certification at least three months prior to the anniversary date. This form must be completed and returned to the City by the anniversary date. 4.11.5 Annual Monitorin~ bv Citv The City of Dublin may perform an annual site visit to monitor the records of all BMR Units. The City will provide at least two-week's notice to the developer and/or management firm as to the date of the site visit. Files for all BMR Units must be made available for review at the request of the City. The purpose of the monitoring is to ensure compliance with the City's Inclusionary Zoning Ordinance and these Guidelines. If a Residential Development is financed through a government program that has stricter occupant selection or occupant documentation requirements than the City, the City may elect to rely on those requirements and associated documentation and not require additional documentation. The City will require tenant income verification and restriction of the BMR units for 55 years; however, the management firm may send to the City copies of the documentation that is required and produced for other monitoring agencies. 23 Revised January 2, 2009 ~~ ~~ ~ RESOLUTION NO. XX -10 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DUBLIN ************** EXTENDING A TEMPORARY POLICY FOR THE RENTAL OF BELOW MARKET RATE OWNERSHIP UNITS BY OWNERS UNABLE TO SELL THEIR UNITS AT THE RESTRICTED RESALE PRICE WHEREAS, the City of Dublin's ("City") Inclusionary Housing Program requires purchasers of Below Market Rate ("BMR") for-sale units ("Unit") to execute and record a Resale Restriction Agreement with Option to Purchase ("Resale Restriction Agreement"); and WHEREAS, the Resale Restriction Agreement prohibits BMR owners from selling their BMR Units at more than a restricted price; and WHEREAS, due to the recent slow down in the housing market, BMR owners are having difficulty finding qualified buyers willing to purchase their BMR units at the restricted resale price because such prices are so close to market prices that qualified buyers would rather purchase Market Rate homes free of resale restrictions; and WHEREAS, BMR owners who are unable to sell their BMR units would like to rent their BMR units; and WHEREAS, the Resale Restriction Agreement prohibits the rental of the BMR units without the consent of the City; and WHEREAS, although the City does have a policy authorizing rental of BMR units when the owner has a hardship, the City does not currently have a permanent policy regarding the rental of BMR units by BMR owners who are unable to sell their units at the restricted price; WHEREAS, the City does have a policy in place through August 19, 2010 (Temporary Policy for the Rental of below Market Rate Ownership Units by Owners Unable to Sell Their Units at the Restricted Resale Price) that allows for the rental of BMR units by BMR owners who are unable to sell their units at the restricted price; and WHEREAS, to assist BMR owners with the difficulty of finding qualified buyers, this Resolution is to extend a temporary policy for additional finro years from the date of expiration of the original policy which is August 19, 2012 for the rental of BMR units by BMR owners who are unable to sell their units. NOW, THEREFORE, the City Council of the City of Dublin does hereby resolve as follows: 1. Policy. During the Policy Term, the owner of a BMR unit who is unable to find a qualified buyer to purchase his or her unit at the Adjusted Resale Price may rent his or her unit provided that the following requirements are satisfied: (a) The BMR unit has been on the market for at least six (6) months and the Owner has made commercially reasonable efforts to sell the BMR unit, as determined by the City. Such efforts shall include, but shall not be limited to, listing the unit with a Real Estate Broker, ensuring the unit is listed in the Multiple Listing Service, and ~ ~ -~ ~ ~~~ ~I Real Estate Broker, ensuring the unit is listed in the Multiple Listing Service, and making the unit reasonably available for viewing by Brokers and potential purchasers and their agents; (b) The BMR owner enters into a regulatory agreement with the City; (c) The future Tenant is an Eligible Household in the same income category as the BMR unit; (d) The lease contains the provisions set forth in Section 4 below; (e) The monthly rental payment does not exceed the amount set forth in Section 3 below; (fl A copy of the lease is submitted to the City within five (5) days following execution of the agreement by the Owner and Tenant; (g) The BMR owner does not live in the BMR unit during the term of the lease; and (h) The lease shall terminate no later than the Authorized Lease Termination Date. 2. De~nitions. The following definitions shall apply to this Policy: (a) "Authorized Lease Termination Date" means August 19, 2012. (b) "Policy Term" means up to four years, from August 19, 2008 until August 19, 2012. (c) Capitalized terms not defined herein shall have the meaning ascribed to such terms in the Resale Restriction Agreement. (d) Total Monthly Household Cost of the Unit means mortgage payment, taxes, homeowners association fees and insurance (does not include utilities). 3. Rent. The monthly rental payment for the BMR unit shall not exceed either the maximum rent, as calculated per Chapter 4.11.3 of the Guideline to the Inclusionary Zoning Ordinance Regulations, for the applicable income category and household size, or the total monthly household cost of the unit, whichever is less. If the Tenant pays utilities or Homeowners' Association dues, maximum rent must be decreased pursuant to the City's utility allowance schedule. Household size will be assumed based on the number of bedrooms in the unit as follows: studio, 1 person; 1 bedroom, 2 persons; 2 bedroom, 3 persons; 3 bedrooms, 4 persons; 4 bedrooms, 5 persons; and 5 bedrooms, 6 persons. 4. Lease. The lease agreement shall clearly state: (1) the term of the lease; (2) the monthly rental payment; (3) that the BMR unit is an affordable unit subject to certain restrictions imposed by the City; (4) that the Tenant may be required to submit income documentation to the City upon request; (5) that the lease term will expire no later than the Authorized Lease Termination Date; and (6) that the City is a third party beneficiary to the lease. 2of3 a~ ~ ~I 5. Authority of City Manager. The City Manager or his or her designee shall have the authority and responsibility for the implementation of this Policy, including the authority to enter into Regulatory Agreements with the BMR owners in a form approved by the City Manager and the City Attorney. 6. Effect of Violation. Any lease that violates the provisions of this Policy is prohibited, and any owner who violates this Policy shall be deemed to be in default under his or her Resale Restriction Agreement. 7. Severability Clause. The provisions of this Resolution are severable and if any provision, clause, sentence, word or part thereof is held illegal, invalid, unconstitutional, or inapplicable to any person or circumstances, such illegality, invalidity, unconstitutionality, or inapplicability shall not affect or impair any of the remaining provisions, clauses, sentences, sections, words, or parts thereof of this Resolution or their applicability to other persons or circumstances. 8. Effective Date. This Resolution shall take effect immediately. PASSED, APPROVED, AND ADOPTED BY the City Council of the City of Dublin on this 18th day of May, 2010, by the following votes: AYES: NOES: ABSENT: ABSTAIN: ATTEST: City Clerk Mayor 3of3