HomeMy WebLinkAboutItem 4.08 Inclusionary Zoning Update Guidelines or
19 82 STAFF REPORT CITY CLERK
` CITY COUNCIL File #430-20
DATE: June 2, 2015
TO: Honorable Mayor and City Councilmembers
FROM: Christopher L. Foss, City Manager "
SUBJECT: Updated Guidelines to the Inclusionary Zoning Regulations Ordinance
Prepared by Kim Obstfeld, Housing Specialist
EXECUTIVE SUMMARY:
The City Council will consider proposed revisions to the Guidelines to the Inclusionary Zoning
Regulations Ordinance. Changes are intended to address issues encountered in the ongoing
administration of the below market rate home ownership program.
FINANCIAL IMPACT:
None.
RECOMMENDATION:
Staff recommends that the City Council adopt the Resolution approving the updated Guidelines
to the Inclusionary Zoning Ordinance Regulations.
Submitted By 'Reviewed By
Community Development Director Assistant City Manager
DESCRIPTION:
The Guidelines to the Inclusionary Zoning Ordinance Regulations ("Guidelines") describes
requirements and procedures for the sale, rental, and administration of below market rate (BMR)
homes. The Guidelines were last updated in September 2014. Based on market conditions and
current best practices, City staff recommends that the City Council approve updates or additions
to several sections of the Guidelines including: the interest rate for determining the sale price of
new BMR homes, income limits for program eligibility, the application of preference point
systems, the maximum rent calculation for temporary BMR home rentals, marketing
requirements for the resale of BMR homes, and the removal of resale restrictions under certain
circumstances. Redline and clean draft revisions are provided as Attachments 2 and 3 to this
report.
Page 1 of 3 ITEM NO. 4.8
Proposed Amendments:
Interest Rate Assumption (Section 3.5.1)
Section 3.5.1 Maximum Sale Price of BMR Units has been updated to clarify the source and
timeframe for determining the interest rate assumption used to calculate the maximum sale
price for new BMR home sales. The current Guidelines rely on the prevailing rate for a 30-year
fixed-rate mortgage. The revised Guidelines base the assumption on the greater of the current
prevailing rate or the average commitment rate from the previous 10-year period for a 30-year
fixed-rate mortgage as published by Freddie Mac.
2015 Income Limits (Section 4.2.2.1)
Section 4.2.2.1 has been updated to reflect the new maximum income limits for 2015, as
provided by the California Department of Housing and Community Development (HCD). HCD
releases updated income limits annually. The limits are used in determining household eligibility
for the City's BMR ownership and rental programs.
For 2015, the Area Median Income (the median income for a four-person) household remained
flat from 2014 to 2015 at $93,500, however, the low-income maximum changed based on
revisions to HCD's methodology.
Preference Points (Section 4.2.4)
Section 4.2.4 Preference Points has been revised to clarify that, under certain circumstances, a
preference point system that varies from the system outlined in the Inclusionary Zoning
Ordinance and the Guidelines may be utilized with advance approval from the City. Such
variations are intended to allow developers to target populations with specific housing needs at
certain development projects. Targeted groups may include veterans, seniors, or persons with
disabilities.
Maximum Rent Calculation (Section 6.2)
Section 6.2 Owner Occupancy Exception has been revised to clarify that the monthly housing
costs that may be factored in to the calculation of maximum of monthly rent may include the
mortgage payment, homeowner's insurance, homeowner's association fees, and property taxes.
Marketing Requirements (Section 6.4.2 — new)
Section 6.4.2 BMR Unit Marketing has been added to establish standards for good faith
marketing efforts in the resale of BMR homes. This section describes requirements regarding
BMR home condition, professional representation, listing/advertising, and home showings.
Changes are intended to ensure that available BMR home resale information is widely
accessible and advertised to a broad segment of the population, in keeping with industry and
fair housing best practices.
Removal of Resale Restrictions (Section 6.5.2 — new)
Section 6.5.2 Release of Resale Restrictions has been added to describe specific
circumstances in which BMR homes could be released from resale restrictions prior to the
expiration of the established affordability period (30 to 55 years). Under these limited conditions
and upon request from the owner and Housing Division approval, the home would be allowed to
sell at market rate to a non-income-qualified buyer, subject to specific sale terms.
Removal of resale restrictions is not currently allowed under the City's program guidelines. Staff
recommends this change to accommodate occasions in which the homeowner is unable to find
a qualified buyer, despite good faith marketing efforts (as established in the new Section 6.4.2
Page 2 of 3
described above). For homeowners who are experiencing financial or personal hardship, the
minimum marketing period is six months. Otherwise the provision is available to those who have
marketed their BMR home for at least nine months. Allowing the owner to sell outside of the
program will increase the pool of potential buyers and available loan products, likely facilitating a
faster sale.
Any difference between the market rate value and maximum restricted resale price will be
payable to the City at the close of escrow, and used to fund future affordable housing
opportunities. Homes must be sold to owner-occupants and any outstanding loans from the City
(such as a First Time Homebuyer Loan Program loan) must be repaid in full.
NOTICING REQUIREMENTS/PUBLIC OUTREACH:
Not applicable.
ATTACHMENTS: 1. Resolution Approving the Updated Guidelines to the Inclusionary
Zoning Ordinance Regulations
2. Redline of the existing sections of the Guidelines to the Inclusionary
Zoning Ordinance Regulations showing proposed changes
3. Recommended updated sections of the Guidelines to the
Inclusionary Zoning Ordinance Regulation
Page 3 of 3
RESOLUTION NO. XX - 15
A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF DUBLIN
* * * * * * * * * * *
APPROVING AMENDMENTS TO THE GUIDELINES TO THE INCLUSIONARY ZONING
REGULATIONS ORDINANCE GUIDELINES
WHEREAS, a goal of the Housing Element is to expand housing opportunities for all
segments of Dublin's population; and
WHEREAS, accordingly, the City has adopted the Inclusionary Zoning Regulations ("the
Regulations"), set forth in Chapter 8.68 of the Dublin Municipal Code, which generally require
developers of residential housing in excess of 19 units in the City of Dublin to set aside 12.5% of
such units for very low-, low-, and moderate-income households, as defined; and
WHEREAS, the City Council established the Guidelines to the Inclusionary Zoning Ordinance
Regulations on June 1, 2004 to interpret the provisions of the Regulations and establish procedures
and standards for the administration of units developed under the Regulations; and
WHEREAS, the Guidelines to the Inclusionary Zoning Ordinance Regulations were amended
by the City Council on December 2, 2008; and
WHEREAS, the Guidelines to the Inclusionary Zoning Ordinance Regulations were amended
on December 7, 2011 by the City Manager (in consultation with the Community Development
Director) under the authority granted to the City Manager in City Council Resolution 211-08; and
WHEREAS, the Guidelines to the Inclusionary Zoning Ordinance Regulations were amended
by the City Council on September 2, 2014; and
WHEREAS, on June 2, 2015, the City Council received a report from Staff regarding
recommended changes to the guidelines to improve the management and administration of the
inclusionary housing programs; and
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Dublin takes
the following actions:
1. Adoption.
a. These Guidelines to the Inclusionary Zoning Regulations Ordinance supersede
the existing Guidelines to the Inclusionary Zoning Ordinance Regulations,
which were adopted by the City Council on December 2, 2008, amended by
the City Manager on December 2, 2011, and amended by the City Council on
September 2, 2014.
2. Effective Date. This resolution shall take effect immediately.
PASSED, APPROVED AND ADOPTED this 2nd day of June, 2015, by the following
vote:
AYES:
ATTACHMENT 1
NOES:
ABSENT:
ABSTAIN:
Mayor
ATTEST:
City Clerk
ATTACHMENT 1
3 GUIDELINES FOR DEVELOPERS
The following assumptions are used to calculate the maximum sale price for BMR Units.Note,however,that a
Qualified Household's actual Housing Expenses may differ from these assumptions.
• Interest—The
rate. f�)r 30:X�2ar fixed rate. mortgag�� fQL ffi�212L�2YkWS 12�2E!Qd, a� jjub�khed b� LreMe Mac,
• Mortgage Term—fixed rate for upto4Uyears.
• Taxes— l.25Y6of the estimated sale price of the unit.
• Insurance—homeowners insurance. The cost of homeowners insurance may be calculated based on an
estimate provided by the developer. (If the homeowners insurance is covered by an HOA structure,
homeowners insurance need not be included,but it must be documented that the HOA will provide
adequate insurance.)
• PMI—private mortgage insurance. Because most BMR Unit buyers will have a down payment of 3.5%,
they will be subject to private mortgage insurance,which is estimated at 1.25% of the sale price of the unit.
• Other—may include special assessments or fees for special assessment districts.
• H0A dues, ifany.
Example 7 shows how the sale price iacalculated.
Example 7.BMR Unit Sales Price Calculation
(3-bedroom home for a 4-person Moderate-income household)
Price of home $373,500
Buyer's mortgage amount $360,428
Buyer's down payment amount(3.5%) $13,073
Buyer's monthly costs
Mortgage payment' $1,935
Property tax $389
Insurance $50
HOA $250
Mortgage insurance $375
Other $0
Total monthly housing cost $2,999
Total annual housing cost $35,992
Buyer's annual income' $102,850
Buyer's maximum monthly housing cost(35%) $3,000
Buyer's maximum annual housing cost(35%) $35,998
Percentage of AMI for housing costs above 35%
/Assumes a3o-yea'6md rate loan a/
bowq�ak*ndoa' |
Guidelines to the|nc|u`iono,y Zoning Regulations Ordinance
3 GUIDELINES FOR DEVELOPERS
2.For207 m;6 the maximum income fora l(i ff:4L y c � Moderate-Income household is$772,200(720%ofAMI).As previously noted,the calculation
is based on an assumption ofincome at 77096 for Moderate-Income households.
3.5.2 The Marketing Plan for Ownership BMR Units
Prior to the issuance of building permits for any ownership BMR Units,the developer must submit a Marketing
Plan to the City for approval. The Marketing Plan must contain the components described in Table 3.
Table 3. Required Marketing Plan Contents
Component Description
Narrative Summary A 1-page narrative summary suitable for advertising the availability of the BMR Units on the
City web page and other locations.The summary must include:
• A description of the total number of BMR Units and market-rate units in the Residential
Development;
• The HOA dues for each BMR Unit;
• The amenities included in the unit;and
• Contact information for sales representatives(including a name,telephone number,
address,and e-mail address).
Application Process An explanation of the application process and the deadline for submitting applications.If the
Explanation development is phased,the developer must establish deadlines for each phase of the
development that includes BMR Units.
Selection Process An explanation of the buyer selection process,including an explanation of the Preference
Explanation Point system.
Sales Training Timeline for the developer's sales staff to meet with the City's Housing staff to receive training
Timelines on the sale selection and application process.
Application Timelines Timelines for application submittals buyer selection.If the development is a phased project,
information must be provided on the number of phases and the timelines for those phases.
Marketing Materials Copies of materials that will be used to market the BMR Units.
Application Packet The application packet must include:
• Application for Inclusionary Unit
• Disclaimer for BMR Units
• Credit Authorization and Release
• Signed Sample Resale Disclosure Statement
• Required Supporting Documentation Checklist
• Highlights of Dublin Resale Restriction Agreement
No marketing of the BMR Units shall begin until the developer has received written approval of the Marketing
Plan from the City and the developer's sales staff has met with City Staff for training so that the sales staff
understands and can explain the application process.
3.5.3 Application and Screening Process
The developer must require each applicant to complete the application that has been approved by the City as part
of the Marketing Plan and to provide the required supporting documentation by the deadline set forth in the
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4 BMR BUYER AND RENTER QUALIFICATIONS
4.2.2 Household Income
4.2.2.1 Maximum Total Househo/d Income
To be eligible for a BMR Unit,the applicant's Total Household Income must not exceed the applicable Maximum
Income. Total Household Income means the household's Gross Household Income (see Section 4.2.2.2)plus
assets calculated pursuant to Section 4.2.2.4.Maximum Income is determined annually by HCD based on Area
Median Income.Table 7 shows the Maximum Incomes for Alameda County for 20 1420�5,.
Table 7. Income Limits per Income Category(1014201$)
Income Household Size(Number of Persons)
Category 1 2 3 4 5 6 7 8
Very Low $32,750 $37,400 $42,100 $46,750 $50,500 $54,250 $58,000 $61,750
Low $4;Z7359 $547199 $697860 $ �„690 $Z3„959 $;z8„459 $83„85 $897259
Q,1 5Q 5Z136 5Z13QQ 64145Q 7,6Q 7j,6QQ /Z,3.p 63JQQ 68186Q 24,550
Moderate $78,550 $89,750 $101,000 $112,200 $121,200 $130,150 $139,150 $148,100
Source.,HCD State Income Limits for: 1 1015
4.2.2.2 Gross Household Income
Gross Household Income means all income from all adult household members (18 years of age and older) derived
from all sources as provided in the Internal Revenue Code (Title 26,Subtitle A, Chapter 1, Subchapter B,Part I,
Section 61),whether or not such income is exempt from federal income tax. Such income includes,but is not
limited to,the following:
• Compensation received from an employer
• Compensation includes,but is not limited to, salary, overtime pay, and other pay
• Other pay can include,but is not limited to compensation for special working conditions or one-time
pay-out of unused vacation and sick leave
• Alimony, spousal and child support
• Cash
• Pensions,if at an age where pension is being received as income
• Public benefits including,but not limited to,CalWorks, SSI, and disability income
• All interest,dividends, and royalties
• Income derived from private businesses
• Rental income
• Income from pensions
• Compensation for services rendered including fees,fringe benefits,commissions,tips, and bonuses
• Stipend received for participation in a mentor,learning, or education opportunity
Guidelines to the Inclusionary Zoning Regulations Ordinance Afln �w(��p a€eff4aer 2,201.5:4 7„
23
4 BMR BUYER AND RENTER QUALIFICATIONS
4.2.4 Preference Points
Applicants for BMR Units will be screened by the developer or their designated party for initial eligibility based on
the requirements set forth in Section 4.1.1 (for ownership units) or Section 4.1.2 (for rental units). Qualified
Households will then be ranked based on the number of Preference Points they receive.
The Preference Point system set out in the Inclusionary Zoning Ordinance provides priority to certain households
who are deemed to have a priority need for housing in Dublin.Priority groups are shown in Table 9. Each
household may only claim Preference Points once for any given category.The Ordinance provides that even if two
persons in the household qualify for Preference Points for the same category,the points are only awarded for one
person. For example,if a husband and wife are both employed in Dublin,the couple receives only 3 Preference
Points for being employed in Dublin. Similarly,if two seniors make up a household,they would be entitled to only
1 Preference Point.
S.Mie dr,�:rrr° oj2j u]r°ruj: !1,ay � k IQ °rirr°tr sr° �,12rjfur..hQUShla !]r° dU Qf orue or nio rr° rra ux�r°rutrr��,b tr�sr°��r� �rul�rtrur�ra, rrur,
s rrar�ors, cUura;lfled ��r^.�r��aur,�)r yeter,am SOMC rru.ch c.Urrrrl,�42Mr.nL m ry:.rujfl�z°...a j�Lrf ,r rlc :y !trr jjjhjjjyjjr,�es fro rti
tr,4,�ar syr !,!!c.U�uul)ed hi the I[wlIC4�sk a ry �2 1]uaaS QLdhiaruce agc:U..c.Uescffl)ed hr.�ehi h2 order to 12Lk)r�,trurr these treuS�j
i,(Wrrho Ms M„t unrfi,y,r 12urf�,r„urarrr :'rtrrur r..ur rurtr12 urrruefirrcU .12� trhr rty1 Mager agd c.Ues au )ed jai
dei° rul h2 al)IIEQyr °r._l���ra��a r°urr r°ratr..a lag for the d,erre° oj2�1]r°ratr (r,,ir Sects on 3.�,.1 fQr c;Uriafl rr,�a ardh2 ffir,.
SS;rar;y mlrm! 1Sl;raah
Guidelines to the Inclusionary Zoning Regulations Ordinance Afln �w(��p a€eff4a(q 2,201.5:4 7„
27
6 REQUIREMENTS FOR OWNERSHIP AND RESALE OF BMR UNITS
6.1.3 Special Assessments
HOA-initiated Special Assessments are considered capital improvements and will be added to the resale price of
the BMR Unit. In order to receive credit for Special Assessments,homeowners must submit the following
documentation within 3 months of payment:
• Invoice for Special Assessment; and
• Proof of Payment, such as a cancelled check,bank account statement,or credit card bill.
6.1.4 Capital Improvements Minimum and Cap
To be considered in the adjusted resale price,the initial cost of capital improvements must total$1,000 or more.
In order to maintain the affordability of the BMR Unit for subsequent buyers, at the time of sale,BMR Unit
Owners may receive credit for Approved Capital Improvements up to a maximum of 5%of the adjusted resale
price.
6.1.5 Building Permits
It is the responsibility of the BMR Unit Owner to ascertain whether the work to be performed requires a City
building permit and,if so,to obtain such permit.Any work that is done without a required permit will
automatically be deemed ineligible as a capital improvement expense whether or not it fits within the definition of
an Eligible Capital Improvement or Eligible Replacement and Repair.BMR Unit Owners may call the City of
Dublin Building&Safety Division at(925) 833-6620 to inquire about building permits.
6.2 Owner Occupancy Exception
Ownership BMR Units are subject to an owner occupancy requirement.However,under the following
circumstances, a BMR Unit Owner may be permitted to temporarily rent his or her unit to a Qualified Household
(see Section 4.1.2 for renter qualifications)to alleviate one or more of the following specified hardships:
• The BMR Unit Owner is unable to resell the unit as described in Section 6.5;
• The BMR Unit Owner must temporarily relocate for employment purposes; or
• The BMR Unit Owner must attend to personal health problems or the health problems of an immediate
family member.
The BMR Unit Owner must request and obtain advance written permission from the City to rent the BMR Unit
before advertising the unit and selecting a qualified tenant.Once the request is approved and a qualified tenant is
selected,the BMR Unit Owner must execute a rental agreement that clearly states:
1. That the term of the rental is for a limited period of time (not to exceed 12 months);
2. The monthly rental payment(set in accordance with the maximum monthly rent calculated in accordance
with the Ordinance and published annually or the BMR Unit Owner's total monthly housing costs
�m�Eig r prn mm! :: 11d udlial prlu; hiterest, hC�u7(;ir°omier's eraSi�pr:mce,...ho�nico,mier's..asso�datkm fees, :M
lrmvrr ayr tr:r r° ,).,whichever is less).
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G REQUIREMENTS FOR OWNERSHIP AND RESALE OF BMR UNITS
6,3 Refinance Requirements
Figure 5. ByNR Unit Refinance Process
8MB Owners may refinance their units;however,
financing terms are subject to the restrictions noted in 1.BMR Owner submits written request to refinance
Section 5.5` above, and the terms stated inthe Bcaa|c
Restriction Agreement. 8MB Unit refinances are subject to
un administrative fee.8MB Owners should contact City
Staff for the current fee schedule.
2.City reviews the request and provides conditional
6.3.1 Refinance Procedure authorization (within 7 working days)
8MB Unit Owners must comply with the following
procedures when refinancing un ownership 8MB Unit(see
Figure S for un over-view of the refinance proccaa): 3.BMR Unit owner works with a lender to secure a
loan that meets City criteria and provides
l. Inform the City. The 8MB Owner must inform documentation to the City
the City of his or her desire torefinance.
Notification must bc submitted in writing and
must bc accompanied byu copy of the 8MBUnit 4.City submits escrow instructions to the title
Owner's most recent mortgage statement. company
2. City Review. The City will review the refinance
request within 7 working days to verify that the
proposed loan terms are in keeping with City 5.Title company provides required documentation
requirements and terms outlined in the Resale
Restriction Agreement. lf the loan iafound
acceptable,the City will issue uconditional
authorization letter to the 8MB owner. The letter 6.City prepares and submits a Subordination
will outline documentation needed 6,the City3 Agreement to escrow
which typically includes u loan approval letter,
good faith estimate, and truth in lending statement
from u lender,ua well uau preliminary title report,
and appraisal. 7.Subordination Agreement is signed and recorded
3. Document Preparation and Closing. Once all
requested documents are received and deemed acceptable, City Staff will issue escrow instructions to the
title company. The instructions will outline the final documents the City needs to prepare closing
paperwork.Once received,the City will prepare and submit a Subordination Agreement to the title
company to be reviewed and signed by the BMR Owner and bank. The documents will then be signed by
the City and recorded.
Guidelines to the|nc|u`iono,y Zoning Regulations Ordinance JuoeS(1Aeff4ae 2.2ol5:+ |
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6 REQUIREMENTS FOR OWNERSHIP AND RESALE OF BMR UNITS
inspections,resale inspections, and other expenses related to the BMR Unit which the owner has failed to
pay or has permitted to become delinquent.
See Example 10 for a sample maximum restricted resale price calculation.
Example 10.Maximum Restricted Resale Price Calculation
A BMR Unit owner purchased her home in 2008 for$300,000 and would like to sell the unit in 291420 1 p.The BMR Unit
owner received City approval to replace worn carpeting (eligible at 50%of total cost)for a credit of$2,000.The
maximum restricted resale price is calculated as follows:
Purchase price(2008) $300,000
Median income(2008) $86,100
Median income(20142 1 p) $93,500
Percentage change in median income 8.59%
Increase in value $25,770
Approved Capital Improvement credits $2,000
Maximum Restricted Resale Price(291420 1 p.) $327,770
.� .m: ..............IIIIIC. .III' ... iiii°I Iii.''...M. .tkgtiiii.11l"lg
Wk Unu t Owners shall f0fl O„W CUrrent Inc°st pr:ccf�.ces for home markef ng, r.Orfipl�ance w�th the fodI QrYm
p,r��rr�s��,ras c:QD , ftufc°r...a a o�od.fiirt s �u,�arkefin rJfort:
• 3M,R Qnit condition The IIWk.Unr t shall be rrllc°red bo)r sac hi a card f on shii lar for or Inciter than at
the fim,.f of the IIWk....Una t Owner's...„j� Eu hrisc lr�tr,e afion the It g Lrr:L hi r...rrc. UCfl„Orl h2 V,i4 (r,:Ud2 l
��f �r...,llr, I2c.d oc�ms,..or bathrooms,or downgLijds r 1�) tpp1�cnc,c s, floor hig,c);1 IiarWrva,f r( r)2AII be
co�rrectr°d 12Lk r to the hi fi:ctr,on of II'Wk Unr t m arkefi g,,
• [In) es,sional ,irgprt^tntnfioti,p The IIWk...Unr t Owner s,sal)c°sc,�.CUtC:c,6thig Tia n°c°ment wr th an acfive.
,ic clfcrr,,,,,,currenty 1�cc���.rurcdl'). ffic rtM()rn(„a IlW�c.,�W Of IROcl II rfttc�.,.
isi'iuq, The Wk �nJ t stria)) be 6ted as an actrive nrou ,-, r rrn thc rle:II �sfir
rmahit:r,hled b ff2 II"act In As QcJaf on of Rea: 1jw.6fing shall hlCc de the fodI rfryw g:
—:BMR (rnm i jI'lloti, grrp11.8 at Ieasf one exteHor 12 2QIoWajjh and at Ieasf three wr,�Hj- t hiterk)r
Qf the IlWll��� Unr t �i p s � rY p "
�, , Benin wit current induct ,radices.
r7 Pr pgrjy..d,iltii ...,pc Ljhi;�.nt data hruclU.c;h1 , !Wt not 1hii�ted to cskhl, IrL�cr;,..( t or.arc Iorr, t tc r1 rr�hrwM
rest Hcfc.d,..:resale.,I2jcc( 1,Q, cfiorl, S(jjuare. fQo f9c, U)Umber oI....bed Qc:IIS, U)Urflb r of bcflrr,QOMS,.:rHIrt,
fc ltffes and :cme..Jf es,c,lc°rrc° ojjp r]c°ruf f(°0ffes,and aril °jf CS, CUrrent MrMUnit OI.,h0rflc°ow ner's
:cssO)Jaf orl c UCS,( ( and information about p«rr f�raa� p�.,«rcc° ar2d.restrictions.,
3 ,R Qnit sirt ,l!Illnent :.a dear statement that the home �s a IIWk,._thirt and th:it.p��fc°rutr,�«c1 I)Lmr Er �11Uu j
mr;,.,
cf �rccr.ir�c cnt,��.��f s.r...i
A.t,11.�„7„S<.ja€eff4aer 2,201,54 Guidelines to the Inclusionary Zoning Regulations Ordinance
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G REQUIREMENTS FOR OWNERSHIP AND RESALE OF BMR UNITS
,
�ss�c�te�vn�� t�eSa��Am� ��� BKHRUn|t |
- --�~~�—' --- |
The BMR Unit Owner is responsible for all fees associated with the sale of the unit including,but not limited to,
any real estate fees, and the City's Administration Fee of$1,500,which may be adjusted from time to time.
6,5 Units Unable to Resell
The City may offer special consideration where the BMR Unit Owner has been unable to attract a buyer and at
least one of the following conditions applies:
* The 8MB Unit Owner has u made u good faith effort to market the 8MB Unit for 6or more onontb��as
defined in Section ; |
* The resale price for the BMR Unit is at or below current comparable market-rate units; or
* Financing for the BMR Unit is unavailable due to pending litigation in the project or a ratio of rental to
ownership housing units in the project that ia unacceptable to lenders.
0nucuac'6"'cuacbuaia`uponrcgucat6"thc8MBlJnit0vvncr`thcCitypdUconaidcrgruntingoncorrnorcofthc
following exceptions onu one-time basis:
l. The BMR Unit Owner may rent the unit to a Qualified Household for a maximum of 12 months in
keeping with the provisions of Section 6.2:
2. A one-time waiver of the first-time homebuyer qualification requirement for a potential BMR buyer;
3. A one-time waiver of the asset test for a potential buyer(potentially allowing a household that could pay
in cash to purchase the 8MBlJnit);
4. A one-time allowance to exceed the maximum qualifying income level for the potential BMR buyer
household by up to 20%of the maximum stated in the Resale Restriction Agreement for the unit,but not
to exceed l2UY6of AMT ut any time.
8MB Unit Owners who are unable to sell and may seek an exception should contact City Staff for a consultation.
Guidelines tothe|nc|u`iono,yZoning Regulations Ordinance JuoeS(lAembe 2.2ol5:+ |
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6 REQUIREMENTS FOR OWNERSHIP AND RESALE OF BMR UNITS
!nacre nionths and has a SV 2d'E need trac sell the hortie dUC trac financual Or 12e°rr„acnac harclshfJ2, :Jfg�lfl e
harclsh112e hlClUcle:
A rJij!Dgj2 1r2 DWMI� h()UsehoM hicortie that has re.SLfltecl hl hOUShlg
borticowner's assocuafiorl &Cs, IIEQIIe°Ejy jaxes,and 12EQIIe°qy hISUrence.) 50 jj�a�:�mj Of
mQuIbly WcQme'
Rdocafion Of a 1york sate that k 60 nifles Or niore from the Cfty o)f DubIbI a
The MeXhlMrti restHctecl resale,D as IjEocnJclecl by rJty jaff hl the CUrrent Consent toTransfer
letter k bdow Or Mthbi 1()12e°rc2emj o)f that Of recent (ayWihi three months.) rIles j1dces Of corlillaLalfle
market rate harries as ev clencecl 12y dQCLM1Cr1tefiOr1 Of these Corlillaralfle saLs (bst 1 1dces are
not a evia!12L
Excessive time on niarket,'The 1MR Un�t Owner has a rnicle a pod faufl2 effOrt 11a2ut Owner has
roM]121(ec1 Mt h X:J,, recortmiencle°d nIiclrkel ng 12my!suoMs as set forth hi Secfion 6,6,2,) IQ ffie° 11MR Unit,
for I) Or more months,
is tither histance, say es W wWch rests, e° restHcfions are aV11m2rd fo)r re�ease are SLdu j�j jQ efl Of the fo)flQmng
Lc°cjjuarertients:
EMM Mogd:&Tbe r Jtx k entrfled to ,x,,,00% of any Mere ase. between the niarket rate resaje lmr„r es
stated hi trlre,,lneuuclrar,e ca)ntract and the rtieXhlMrti restHctecl resa e jlEyce'as<Yauc2trecU 12� r Jtx rjaff hi the
Consent to 'Fransf�r letter,
2, Resale price.The aHowalfle.contract market rate revIlC 12LuCC k SUI)Je 21 IQ rJty e1212EQYal, bar d Q!) an
fQrrtia� CVe4N1fiOr1 1W a rJty:ajjjjEmrd aijimiker, I the Cfty re°(IUures the ser%jas Of an aijimiker Other
than the°ajjjjEiirser retahied to CVe4N1tC the JIEQJ!e;Ejy hl COMICCflOrl Wrth the IMye°L'r Qar2,jhc rJty !Yffl Ila
the cost Of the al2vmkal (12) be cledUcted Loril r:f,tryr 12L2areecls hi the 6)ru!]g JlEQc e ee and reflected On the
final set flertlent stat me�2t)�
i ' d
3, 0-ArnqT occljpantjh� !�Mk Una need not be soM to a(jUahk bL y„cE (jjr deecfflwcl hi Secfion
j.I j) bUt MUSt be soM trac e,IMye°L !YhQ aYffl Q�2�:ujjy jh u!iut, y„ale°r..trac hivestors are 11EQh�b tecl,
The I)LM, E'S h1tCr1t to OCCLq2y ujiusj 1. �e reflected hi the refified vlm:barn ave° ms° !and On k)an
cloCUMCrIts, k e12121uCeNC,
Aty ���f rst'hrtie l TonICIM��L :Qjj�2 1�
I, Loan i: Mt, II f the 1MR Unnt Owner took OUt e,C )an
the 4)erl �iMSt be rel%i�d hi fid� (l2Lh1cfjli1j jlju� hiter�stl clLEhig�E befQre the 6)se Of escrow,
kfl1eS(jAeff)ber 2,20154 Guidelines to the Inclusionary Zoning Regulations Ordinance
44
CITY OF DUBLIN
Guidelines to the Inclusionary
Zoning Regulations Ordinance
June 2, 2015
TABLE OF CONTENTS
1 INTRODUCTION 1
2 DEFINITION OF TERMS 2
3 GUIDELINES FOR DEVELOPERS 6
3.1 Overview of Inclusionary Zoning Requirements 6
3.2 Inclusionary Zoning Process 6
3.3 Inclusionary Obligation 7
3.3.1 Rounding 8
3.3.2 Portion of the Obligation That Must Be Constructed 8
3.3.3 In-Lieu Fee Calculation 8
3.3.4 On-Site BMR Unit Requirements 9
3.4 Housing Agreements 11
3.5 Procedures for Initial Sale of BMR Units 12
3.5.1 Maximum Sale Price of BMR Units 12
3.5.2 The Marketing Plan for Ownership BMR Units 14
3.5.3 Application and Screening Process 14
3.6 Procedures for Rental BMR Units 18
3.6.1 The Management Plan for Rental BMR Units 18
3.6.2 Application and Screening Process 18
3.6.3 Annual Report and Monitoring 19
4 BMR UNIT BUYER AND RENTER QUALIFICATIONS 21
4.1 Household Qualifications 21
4.1.1 BMR Unit Buyers 21
4.1.2 BMR Unit Renters 21
4.2 Description of Qualification Requirements 22
4.2.1 Household Size 22
4.2.2 Household Income 23
Guidelines to the Inclusionary Zoning Regulations Ordinance June 2,2015
TABLE OF CONTENTS
4.2.3 Credit Score 26
4.2.4 Preference Points 27
5 REQUIREMENTS FOR BUYERS OF BMR UNITS 30
5.1 BMR Unit Application and Purchase Procedures 30
5.2 In-Person Consultation 31
5.3 Homebuyer Education Program 31
5.4 Title and Loan Requirements 31
5.5 Financing Requirements 32
5.5.1 Acceptable Loan Products to Purchase or Refinance a BMR Unit 32
5.5.2 Prohibited Loan Products and Unacceptable Mortgage Features 32
5.5.3 Down Payment 32
5.5.4 Down Payment Assistance 32
5.5.5 Debt to Income Ratio 33
5.5.6 First Mortgage Loan to Value Ratio 33
5.5.7 Closing Costs and Deposits 33
5.6 Recorded Documents (Resale Restriction Agreement and Performance Deed of Trust) 33
5.6.1 Highlights of the Resale Restriction Agreement 33
6 REQUIREMENTS FOR OWNERSHIP AND RESALE OF BMR UNITS 36
6.1 Capital Improvements 36
6.1.1 Procedure for Requesting Approval of Capital Improvements 36
6.1.2 Eligible and Ineligible Capital Improvements 37
6.1.3 Special Assessments 38
6.1.4 Capital Improvements Minimum and Cap 38
6.1.5 Building Permits 38
6.2 Owner Occupancy Exception 38
6.3 Refinance Requirements 39
June 2,2015 Guidelines to the Inclusionary Zoning Regulations Ordinance
TABLE OF CONTENTS
6.3.1 Refinance Procedure 39
6.4 Resale Procedure 40
6.4.1 Restricted Resale Price Calculation 41
6.4.2 BMR Unit Marketing 42
6.4.3 Fees Associated with the Selling of a BMR Unit 43
6.5 Units Unable to Resell 43
6.5.1 Special Exceptions 43
6.5.2 Release of Resale Restrictions 43
7 REQUIREMENTS FOR OWNERS OF BMR SECONDARY UNITS 45
7.1 Purchase Process 45
7.2 Rental Requirements 46
7.3 Tenant Income Verification 46
7.4 Annual Report 46
7.5 Management Responsibilities 47
7.6 Refinance Requirements 47
8 EXCEPTIONS AND APPEALS 48
8.1 Exception Requests 48
8.2 Appeals Procedure 49
EXHIBITS
Exhibit 1 Resale Restriction Agreement and Option to Purchase
Exhibit 2 Performance Deed of Trust
Exhibit 3 Sample Marketing Plan
Exhibit 4 Sample Management Plan
Exhibit 5 Secondary Unit Regulatory Agreement and Declaration of Restrictive Covenants
Guidelines to the Inclusionary Zoning Regulations Ordinance June 2,2015
iii
TABLE OF CONTENTS
LIST OF TABLES
Table 1.Required BMR Units by Income Category 9
Table 2.Household Size Assumption for Maximum Sales Price Calculations 12
Table 3.Required Marketing Plan Contents 14
Table 4.Ownership BMR Unit Household Qualifications 21
Table 5.Rental BMR Unit Household Qualifications 22
Table 6.Allowable Household Size per BMR Unit 22
Table 7.Income Limits per Income Category(2014) 23
Table 8.Annual Income Calculations by Pay Frequency 25
Table 9.Preference Points 28
Table 10.Eligible and Ineligible Capital Improvements 37
LIST OF FIGURES
Figure 1. Inclusionary Zoning Process 7
Figure 2. Initial BMR Unit Sale Process 16
Figure 3. BMR Rental Process 18
Figure 4. BMR Application and Purchase Process 30
Figure 5. BMR Unit Refinance Process 39
Figure 6. BMR Unit Resale Process 40
Figure 7. BMR Secondary Unit Sale Procedure 45
Figure 8. Exception Request Procedure 48
Figure 9. Appeals Procedure 49
LIST OF EXAMPLES
Example 1.Inclusionary Obligation Calculation 7
Example 2.Treatment of Fractions in Calculating the Inclusionary Requirement 8
Example 3.Determining the"Must-Build"Obligation 8
Example 4.In-Lieu Fee Calculation 9
Example 5.Rental Development BMR Unit Composition 9
Example 6.BMR Unit Bedroom Requirements 10
Example 7.BMR Unit Sales Price Calculation 13
Example 8.Determining Income with Assets 26
Example 9.Preference Points Calculation 29
Example 10.Maximum Restricted Resale Price Calculation 42
June 2,2015 Guidelines to the Inclusionary Zoning Regulations Ordinance
iv
1 INTRODUCTION
This document constitutes the Guidelines (these"Guidelines") to the City's Inclusionary Zoning Regulations
Ordinance (the"Ordinance") set forth in Chapter 8.68 of the City's Municipal Code. The City Council's purpose
in adopting the Ordinance is to increase the diversity of housing prices/rents in the community and ensure that
the range of prices/rents continues over time.
The purpose of these Guidelines is to assist the layperson in interpreting the Ordinance. The Guidelines are
intended to:
• Assist developers early in the development process to ensure that Residential Development projects are
sensitively designed from the beginning in compliance with the requirements of the Inclusionary Zoning
Ordinance;
• Inform developers,management firms, and owners of BMR Units and BMR Secondary Units of the
procedures for selling and renting BMR Units and BMR Secondary Units; and
• Provide households interested in renting or purchasing a BMR Unit with an overview of the eligibility
requirements,the application and screening process,the restrictions on ownership, and the procedures
for reselling a BMR Unit.
These Guidelines should be read in conjunction with the Ordinance.While every effort has been made to ensure
that these Guidelines are consistent with the Ordinance,if there is any conflict between these Guidelines and the
Ordinance,the terms of the Ordinance shall prevail. In addition,the provisions of a Housing Agreement or Resale
Restriction Agreement(or like Agreement)recorded against a BMR Unit shall prevail over any general
requirements of the Ordinance.
Users of these Guidelines are encouraged to seek their own legal counsel to aid in understanding the requirements
of the City's Inclusionary Program. For any general questions regarding the Guidelines,users may call the City's
Housing Division at(925) 833-6610.
The effective date of these Guidelines is June 2,2015.The City will review and to the extent necessary,update
these Guidelines annually.The Community Development Director may make interim revisions,interpretations,
or clarifications to these Guidelines,provided that he or she considers the revision,interpretation, or clarification
to be minor and consistent with the purposes of the Inclusionary Zoning Ordinance and the Guidelines.Any such
revision,interpretation, or clarification shall not become effective until posted on the City's website.
Guidelines to the Inclusionary Zoning Regulations Ordinance June 2,2015
1
2 DEFINITION OF TERMS
As used in these Guidelines,the following terms shall be defined as follows:
Administration Fees:
• A$1,500 fee charged by the City to the BMR Unit Owner for all sales and re-sales of BMR Units;
• An$826 fee charged by the City to the developer/property manager for the annual review of rental
developments;
• A$200 fee charged by the City to the BMR Unit Owner for requests to subordinate the Resale Restriction
Agreement and/or Performance Deed of Trust or requests to refinance a BMR Unit.
• An$872 fee charged by the City to the owner for the sale and/or resale of a BMR Secondary Unit.
Fees may be adjusted from time to time by the City.
Affordable Housing Agreement:An agreement between the developer and the City for an ownership Residential
Development project which is recorded against the property containing the BMR Units;sets forth the developer's
Inclusionary Obligation and the method by which the developer will comply with the requirements of the
Ordinance; and requires, among other things,that the developer require purchasers of BMR Units to execute and
record a Resale Restriction Agreement and Option to Purchase and Performance Deed of Trust.
Affordable Housing Regulatory Agreement and Declaration of Restrictive Covenants: An agreement
between the developer and the City for a rental Residential Development project which is recorded against the
property containing the BMR Units; sets forth the developer's Inclusionary Obligation and the method by which
the developer will comply with the requirements of the Ordinance; and requires,among other things,that the
BMR Units are reserved for occupancy by Very Low-,Low-, and/or Moderate-Income households at rents
affordable to such households for a period of not less than 55 years.
Approved Capital Improvements: Capital improvements to BMR Units that have been approved by the City
pursuant to the procedure set forth in Section 6.1. The cost of such improvements may be added to the resale
price of the BMR Unit.
Area Median Income or AMI: The Area Median Income adjusted for household size as published annually by
the California Department of Housing and Community Development(HCD).
Below Market Rate(BMR) Units:A Below Market Rate or BMR Unit is a unit that is reserved for rent or for sale
to Very Low-,Low-, or Moderate-Income households.BMR Units have restrictions recorded against them to
ensure they remain affordable for a period as set forth in the Housing Agreement or Resale Restriction
Agreement. Owner-occupied units are deemed affordable if the sales price results in annual Housing Expenses
that do not exceed 35% of the maximum income level for Low- or Moderate-Income households, as applicable,
adjusted for household size.
BMR Unit Owner:A household that owns a BMR Unit.
Guidelines to the Inclusionary Zoning Regulations Ordinance June 2,2015
2
2 DEFINITION OF TERMS
CalHFA: The California Housing Finance Agency.
City: The City of Dublin.
City Council: The legislative body of the City of Dublin.
City Staff An employee or designee of the City of Dublin responsible for actions related to the Ordinance or
these Guidelines.
Consent Agreement:An agreement between the City and a Qualified Household which authorizes the City to
access and review the Qualified Household's credit reports or other personal or financial information to verify a
Qualified Household's compliance with the Resale Restriction Agreement,the Ordinance, and these Guidelines.
This agreement must be executed by purchasers of ownership BMR Units prior to the close of escrow.
Domestic Partner:A legal or personal relationship between individuals who live together and share a common
domestic life,but are not joined in a traditional marriage or a civil union as formalized through a local or state
registry.
First-Time Homebuyer:A person who has not owned any interest in real property during the three-year period
prior to the date of the household's application to qualify for purchase of a BMR Unit,including without
limitation,real property in which a household member's name appears on title regardless of whether the
member's interest in such property results in a financial gain, such property is located in another state or country,
or the member has occupied such property as his or her primary residence. If any person has had his or her name
on title of a property,but the property was sold more than three years ago from the date of application,the person
is considered a First-Time Homebuyer.
Gross Household Income:All income,from whatever source derived, of all adult household members (18 years
of age and older),whether or not such income is exempt from federal income tax. Refer to Section 4.2.2 for a list
of income sources and exceptions.
(These) Guidelines: These Guidelines to the Inclusionary Zoning Regulations.
HCD: The California Department of Housing and Community Development.
HOA: Homeowners Association.
Homebuyer Education Workshop for Below Market Rate Buyers:A HUD-approved 8-hour course designed
to provide basic education specific to BMR Homebuyers. Refer to the City's website (www.dublin.ca.gov) for
organizations that may offer this course. The date on the completion certificate for the class must be within 6
months of the date of application for a BMR Unit.
Housing Agreement:An Affordable Housing Agreement, an Affordable Housing Regulatory Agreement and
Declaration of Restrictive Covenants, or a Secondary Unit Regulatory Agreement and Declaration of Restrictive
Covenants or other Agreement that relates to housing that may be adopted from time to time by the City.
Housing Expenses: Principal,interest,private mortgage insurance,taxes,insurances, and HOA dues.
Guidelines to the Inclusionary Zoning Regulations Ordinance June 2,2015
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2 DEFINITION OF TERMS
HUD: The United States Department of Housing and Urban Development.
Immediate Family Member:A mother,father,brother, sister, child, grandparent, or grandchild.
Inclusionary Obligation: The number of BMR Units a developer is required to construct(or pay fees in lieu
thereof)in a Residential Development project to comply with the Inclusionary Zoning Regulations.
Inclusionary Zoning Regulations Ordinance: Chapter 8.68 of the City of Dublin Municipal Code.
In-Lieu Fee:A fee paid by a developer in lieu of constructing BMR Units to satisfy up to 40%of its inclusionary
obligation.
Legal Resident:A citizen or other national of the United States or a qualified alien as defined by the Federal
Personal Responsibility and Work Opportunity Reconciliation Act of 1996("PRWORA").
Low Income: Total Household Income that is 51%to 80% of AMI, adjusted for actual household size.
Management Plan:A plan required for rental Residential Developments that contains the information set forth
in Section 3.6.1 of these Guidelines.
Marketing Plan:A plan required for ownership Residential Developments that contains the information set forth
in Section 3.5.2 of these Guidelines.
Maximum Income: The maximum income for an income category(Very Low, Low, or Moderate Income)
determined periodically by HCD based on AML See Section 4.2.2 of these Guidelines for Maximum Incomes.
Moderate Income: Total Household Income that is 81%to 120%of AMI, adjusted for actual household size.
Performance Deed of Trust:A deed of trust recorded against a BMR Unit by the City which secures a BMR
Owner's compliance with the Resale Restriction Agreement and Option to Purchase.
Preference Points:Points assigned to persons employed within the City of Dublin,public service employees
working within the City of Dublin, Dublin residents, seniors(62+),veterans,persons who are permanently
disabled(with written verification from a physician or show receipt of SSI or SSDI),persons who are immediate
family members of a Dublin resident,and persons who are required to relocate from a Dublin residence due to
demolition of the residence or conversion of the residence from a rental to an ownership unit.Persons with
Preference Points are given priority over other Qualified Households in the rental or purchase of a BMR Unit.
Principal Residence: The place where a person resides on a substantially full-time basis during not less than 10
months per year. Children attending college and not living at home as their Principal Residence may not be
counted as a household member.
Priority List:A list that ranks Qualified Households based on the number of Preference Points received.
Program:Activities related to the development,rental,sale, and occupation of BMR Units developed under the
City's Inclusionary Zoning Regulations Ordinance.
June 2,2015 Guidelines to the Inclusionary Zoning Regulations Ordinance
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2 DEFINITION OF TERMS
Qualified Household: Can include any group of persons, so long as such persons,when viewed as a whole,satisfy
the eligibility requirements for a household. For an ownership BMR Unit or for a rental BMR Unit,a"qualified
household"means a household that satisfies the requirements listed in Section 4 of these Guidelines.
Resale Restriction Agreement and Option to Purchase,also known as"Resale Restriction Agreement":An
agreement between the City and a BMR Unit Owner that is recorded against the BMR Unit and, among other
restrictions,requires that the unit remain affordable to Low- or Moderate-Income households usually for a period
of 55 years or as outlined in the Housing Agreement,restricts the resale price of the BMR Unit,requires the BMR
Unit Owner to notify the City upon refinancing,reselling, or changing the title of a BMR Unit, and provides the
City with an option to purchase or transfer the BMR Unit upon the occurrence of certain events.
Residential Development: Includes,without limitation, detached single-family dwellings,multiple-dwelling
structures, groups of dwellings, condominium or townhouse developments, condominium conversions,
cooperative developments,mixed-use developments that include housing units, and residential land subdivisions
intended to be sold to the general public.
Secondary Unit:A legal secondary dwelling unit that has been approved by the City and that is reserved for
occupancy by Very Low-,Low-, or Moderate-Income households at rents affordable to such households.
Secondary Unit Regulatory Agreement and Declaration of Restrictive Covenants: An agreement between the
City and the owner of a Secondary Unit which is recorded against the property containing the Secondary Unit and
requires, among other things,that the Secondary Unit be reserved for occupancy by Very Low-,Low-, or
Moderate-Income households for an amount of time specified in the Affordable Housing Agreement or
Affordable Housing Regulatory Agreement and Declaration of Restrictive Covenants.
Senior:A person 62 years of age or older for the purpose of qualifying for preference points.
Special Assessment:A proportional fee charged to the BMR Unit Owner by an HOA to cover the cost of physical
improvements to the entire building or common areas.
Total Household Income:All Gross Household Income and assets received(as calculated pursuant to Section
4.2.2).
Very Low Income: Total Household Income that is 50% or less of AMI, adjusted for actual household size.
Veteran:A person who served in the active military, naval, or air service and who was discharged or released
therefrom under conditions other than dishonorable,for the purpose of qualifying for Preference Points.
Guidelines to the Inclusionary Zoning Regulations Ordinance June 2,2015
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3 GUIDELINES FOR DEVELOPERS
3.1 Overview of Inclusionary Zoning Requirements
Residential Developments consisting of 20 residential units or more must comply with the Inclusionary Zoning
Ordinance (Section 8.68.030.A). In general,the Ordinance requires that 12.5%of the units constructed in a
Residential Development be reserved for occupancy by Low-and Moderate-Income households in for-sale units
or Very Low-,Low-, and Moderate-Income households in rental units. Such restricted units are referred to as
BMR Units(Section 8.68.030.A). In addition to these Guidelines, developers should thoroughly review the
Inclusionary Zoning Regulations Ordinance (Chapter 8.68 of the City's Municipal Code).
While the Ordinance requires that 12.5%of the units in the Residential Development be BMR Units,the
Ordinance permits the developer to meet up to 40%of this obligation by paying an In-Lieu Fee(subject to
approval by the City Council). Thus,there is a"must-build"requirement of 60%of the BMR Units in the
Residential Development.BMR Units must remain affordable for a period of 55 years,through affordability
restrictions recorded against the property.
In addition,the Inclusionary Zoning Ordinance requires that BMR Units:
• Be constructed concurrently with the market-rate units in the Residential Development;
• Have a similar range of bedrooms to the market-rate units in the Residential Development;
• Not be distinguished by design or materials from the market-rate units in the Residential Development;
and
• Be reasonably dispersed throughout the Residential Development.
A developer may also satisfy its Inclusionary Obligation by dedicating land or constructing BMR Units off-site if
the City Council makes the required findings.See Section 8.68.040 of the Inclusionary Zoning Regulations for
alternate methods of complying with the requirements of the Ordinance.
3.2 Inclusionary Zoning Process
Developers should address how to comply with the Inclusionary Obligation when submitting an application to the
City for a Residential Development that includes 20 or more residential units. City Staff is available to discuss
options for meeting the Inclusionary Obligation with developers. For example,if a developer intends to build only
the minimum number of BMR Units and to pay an In-Lieu Fee for the remaining units, staff can,for planning
purposes,provide the developer with the preliminary number of BMR Units the developer would be required to
build,the income levels and sizes of the required BMR Units, and the amount of the In-Lieu Fee under the then-
current fee schedule.
Guidelines to the Inclusionary Zoning Regulations Ordinance June 2,2015
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3 GUIDELINES FOR DEVELOPERS
After a Residential Development application is submitted Figure 1. Inclusionary Zoning Process
to the Community Development Department for review, a
Project Review Committee(PRC)meeting is generally 1.Conceptualize residential development and review
held. In this meeting,City Staff and interested agencies Inclusionary Regulations
involved in the development process review the Residential
Development and give preliminary comments to the
developer.
2.Contact City staff for questions or clarification,as
Prior to or following the PRC meeting, City Staff will send needed
a letter to the developer indicating the developer's
Inclusionary Obligation for the Residential Development
as preliminarily proposed.A copy of this letter will also be
directed to the City's Project Planner responsible for the 3.Submit a Residential Development application to
Residential Development.The purpose of this letter is to the Community Development Department
provide the developer information on the Inclusionary
Obligation as early as possible in the development process.
The City recognizes that the Residential Development is
likely to evolve over time and that the Residential 4.Project Review Committee Meeting (respond to
Development will likely change prior to obtaining City comments,as needed)
entitlements. However,this information is provided early
in the process as a service to the developer for planning
purposes.
5.Inclusionary obligation letter(issued by the City to
The developer's final Inclusionary Obligation will be the developer)
formalized in an Affordable Housing Agreement(or
alternate satisfaction of the obligation as approved by the
City Council)between the City and the developer,prior to 6.Execute Affordable Housing Agreement or
the recordation of the first final map or the issuance of the alternate satisfaction of obligation as approved by
first building permit,whichever occurs first,for the the City Council
development.
3.3 Inclusionary Obligation
Developers of residential projects subject to Section 8.68.030.A of the Inclusionary Zoning Ordinance must meet
an Inclusionary Obligation equivalent to 12.5%of the total number of proposed dwelling units,unless subject to
an exception approved by the City Council.Example 1 shows a sample calculation of the Inclusionary Obligation.
Example 1.Inclusionary Obligation Calculation
The developer proposes a 224-unit subdivision. 12.5%of 224 is 28.The Inclusionary Obligation is 28 of the 224 total
units proposed.
Guidelines to the Inclusionary Zoning Regulations Ordinance June 2,2015
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3 GUIDELINES FOR DEVELOPERS
3.3.1 Rounding
In making this calculation,any decimal fraction less than or equal to 0.50 is disregarded and a decimal fraction
greater than 0.50 is construed as a unit.An example of the treatment of fractions in calculating the Inclusionary
Obligation is shown in Example 2.
Example 2.Treatment of Fractions in Calculating the Inclusionary Requirement
The developer proposes a 316-unit subdivision.12.5%of 316 is 39.5.Rounding the decimal fraction down,the
Inclusionary Obligation is 39 of the 316 total units proposed.
3.3.2 Portion of the Obligation That Must Be Constructed
The Ordinance requires that the developer provide 60%of the Inclusionary Obligation by constructing affordable
units.The developer may opt to pay an In-Lieu Fee for up to 40%of its Inclusionary Obligation. Using the
scenarios from Example 1 and Example 2,Example 3 illustrates the calculation of the number of BMR Units
that must be constructed.
Example 3.Determining the"Must-Build°Obligation
Example 3.A The developer proposes a 224-unit subdivision,for which the Inclusionary Obligation is 28 of the 224
proposed units.
Must-Bui/d(6096)
60%of 28 units=16.8 units
The must-buiidobligation is 17 units.
in-Lieu Fee Option(4096)
40%of 28 units= 11.2 units
The developer may pay an In-Lieu Fee for up to 11 units.
Example 3.13 The developer proposes a 316-unit subdivision,for which the Inclusionary Obligation is 39 of the 316 units.
Must-Bui ld(6096)
60%of 39 units=23.4 units
The must-buiidobligation is 23 units.
in-Lieu Fee Option(4096)
40%of 39 units= 15.6 units
The developer may pay an In-Lieu Fee for up to 16 units.
3.3.3 In-Lieu Fee Calculation
The amount of the In-Lieu Fee is set by Resolution of the City Council. Resolution No. 56-02 provides that the In-
Lieu Fee per BMR Unit is adjusted annually on July 1 to reflect the greater of the percentage change either in
(a)the Bay Area Urban Consumer Price Index(CPI) as of February of each year,or(b)the United States
Department of Housing and Urban Development(HUD)Fair Market Rent limits for the Oakland Primary
Metropolitan Statistical Area(PMSA)that are in effect at the time. The fee as of July 1, 2014,was$127,061 per
BMR Unit.
The entire In-Lieu Fee amount for the Residential Development is due and payable upon issuance of the
first building permit for the Residential Development or a time otherwise specified by City Council.
June 2,2015 Guidelines to the Inclusionary Zoning Regulations Ordinance
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3 GUIDELINES FOR DEVELOPERS
Using the scenarios from Examples 1,2, and 3,Example 4 illustrates the calculation of the amount of the In-Lieu
Fee as of July 1,2014.
Example 4.In-Lieu Fee Calculation
Example 4.A The developer proposes a 224-unit subdivision.In-Lieu Fees may be paid for 11 units.
11 X$127,061 =$1,397,671
Example 4.13 The developer proposes a 316-unit subdivision.In-Lieu Fees may be paid for 16 units.
16 X$127,061 =$2,032,976
3.3.4 On-Site BMR Unit Requirements
3.3.4.1 BMR Units Requirements byincome Level
Pursuant to Section 8.68.030.B of the Inclusionary Zoning Ordinance,the BMR Units included in each Residential
Development project must be allocated to Very Low-,Low-, and Moderate-Income households in the manner
described in Table 1.
Table 1. Required BMR Units by Income Category
Income Level For-Sale Units Rental Units
Moderate 60% 50%
Low 40% 20%
Very Low — 30%
If the allocation calculations result in a decimal fraction,the rounding rules contained in Section 8.68.030.A and
explained in Section 3.3.1,above, apply. In addition,if the allocation calculation results in fewer units than would
otherwise be required; one additional unit should be allocated to the lowest income level with the decimal fraction
closest to 0.50 (Section 8.68.030.13).Example 5 illustrates the calculation of the number of units that must be
provided at each income level and how the rounding requirement is implemented.
Example 5. Rental Development BMR Unit Composition
A Residential Rental Development includes 200 units.The Inclusionary Obligation is 25 BMR Units.The developer
chooses to pay an In-Lieu Fee for 40%of the Inclusionary Obligation,which equals 10 units.The must-build
requirement(60%of the BMR Units) is 15 BMR Units.The number of units per income category is calculated as follows_
Moderate-Income households:50%of 15=7.5
Low-Income households,20%of 15 =3
Very Low-Income households,30%of 15 =4.5
Since two of these numbers are fractions at exactly.5,the additional required unit must be provided in the lower-
income category.Thus the unit income mix would be:
7 Moderate-Income units
3 Low-Income units
5 Very Low-Income units
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3.3.4.2 BMR Unit Size Requirements
The Ordinance requires that the same proportion of bedrooms be reflected in the BMR Units as are in the market-
rate units.The rounding conventions described in Section 8.68.030.A and explained in Section 3.3.1, above, are
used if the allocations result in decimal fractions.Example 6 illustrates the determination of the number of BMR
Units that must be provided at each unit size.
Example 6.BMR Unit Bedroom Requirements
A developer proposes a 200-unit rental Residential Development and is paying In-Lieu Fees for 40%of the BMR Units.
The must-buiidobligation is 15 units.The overall Residential Development includes:
50 one-bedroom units(25%of total)
100 two-bedroom units(50%of total)
50 three-bedroom units(25%of total)
Therefore:
25%of the BMR Units are to be one-bedrooms
50%of the BMR Units are to be two-bedrooms
25%of the BMR Units are to be three-bedrooms
To determine bedroom requirementperincome category.•
If 5 of the units are Very Low-Income units,using the percentages above the requirement for bedrooms are:
25%of 5=1.25 one-bedroom units
50%of 5=2.5 two-bedroom units
25%of 5=1.25 three-bedroom units
Therefore,the development would be required to provide:
1 one-bedroom unit
3 two bedroom units
1 three bedroom unit
The same calculation is performed to determine the bedroom sizes of the Low-and Moderate-Income units.
3.3.4.3 Location ofBMR Units Within the Development
The Inclusionary Zoning Ordinance requires that BMR Units be reasonably dispersed throughout the Residential
Development.The purpose of this requirement is to avoid concentration of the BMR Units in a particular location
within a development,effectively segregating them from the rest of the Residential Development. There are many
ways in which to implement this requirement,and consultation with Community Development Department staff
is recommended prior to developing the final site plan.
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3.4 Housing Agreements
Section 8.68.50 of the Inclusionary Zoning Ordinance requires the developer to execute one of the following
Housing Agreements with the City:
• Affordable Housing Agreement.An agreement between the developer and the City for a Residential
Development project that includes ownership BMR Units (and potentially BMR Secondary Units). Such
Agreements are recorded against the property on which the Residential Development is being
constructed; set forth the developer's Inclusionary Obligation and the method by which the developer will
comply with the requirements of the Inclusionary Zoning Ordinance; and require,among other things,
that the developer require purchasers of BMR Units to execute a Resale Restriction Agreement and
Option to Purchase with the City. The Affordable Housing Agreement is effective until all of the In-Lieu
Fees are paid;all of the BMR Units are constructed and sold; and all of the BMR Units are subject to a
Resale Restriction Agreement.
• Affordable Housing Regulatory Agreement and Declaration of Restrictive Covenants.An agreement
between the developer and the City for a Residential Development project that includes rental BMR Units.
Such agreements are recorded against the property containing the BMR Units; set forth the developer's
Inclusionary Obligation and the method by which the developer will comply with the requirements of the
Inclusionary Zoning Ordinance; and require, among other things,that the BMR Units are reserved for
occupancy by Very Low-,Low-, and/or Moderate-Income households at rents affordable to such
households for a period of not less than 55 years.
The two Housing Agreements described above set forth the legal requirements for certain Residential
Development projects for compliance with the Inclusionary Zoning Ordinance. The Housing Agreements are
recorded against the property on which the Residential Development is being constructed,run with the land, and
survive transfer or sale of the land. If a developer executes a Housing Agreement for a particular Residential
Development project but the project is not built and new entitlements are sought for the applicable property,the
developer must execute a new Housing Agreement,which would replace the existing Agreement.
Among other things,the Housing Agreements must contain the following information:
1. A description of how the developer will comply with its Inclusionary Obligation (whether through unit
construction and/or payment of an In-Lieu Fee).
2. Whether the BMR Units will be ownership or rental units.
3. The number of BMR Units the developer will construct for each income category.
4. The size of the BMR Units the developer must construct for each income category.
5. Depending on the nature of the development,the timing of construction of the units to ensure that the
BMR Units are constructed concurrently with the market-rate units.
6. If the development proposes ownership BMR Units,a requirement that the developer prepare and obtain
City approval of a Marketing Plan,prior to issuance of any building permits in the Residential
Development,indicating how the developer plans to sell the BMR Units. This requirement is discussed in
additional detail in Section 3.5.2 below.
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7. If the development proposes ownership BMR Units,there is a requirement that the developer require the
purchasers of such units to execute a Resale Restriction Agreement or a Secondary Unit Regulatory
Agreement and Declaration of Restrictive Covenants and a Performance Deed of Trust.A sample Resale
Restriction Agreement is attached as Exhibit 1.A sample Performance Deed of Trust is attached as
Exhibit 2.A sample Secondary Unit Regulatory Agreement and Declaration of Restrictive Covenants is
attached as Exhibit 5.
8. If the development proposes rental BMR Units,the developer is required to provide a Management Plan
as described in Section 3.6.1 to the City for its approval and prepare the Annual Report described in
Section 3.6.3.
3.5 Procedures for Initial Sale of BMR Units
3.5.1 Maximum Sale Price of BMR Units
Pursuant to Section 8.68.020A.2 of the Inclusionary Zoning Ordinance, owner-occupied units are deemed
affordable units if the sales price results in annual housing expenses that do not exceed 35%of the maximum
income level for low- and moderate-income households, adjusted for household size.
The maximum sale price for BMR for-sale units is based on a designated income percentage that is intended to be
affordable to a greater range of households in each applicable income category.
• For Low-Income households (household income of between 51% and 80%of Area Median Income),the
maximum sales price is determined based on a total monthly housing payment equivalent to 35%of one-
twelfth of 70%of the AMI for Alameda County.
• For Moderate-Income households(household income of between 81% and 120%of Area Median
Income),the maximum sales price is determined based on a total monthly housing payment equivalent to
35% of one-twelfth of 110%of the AMI.
In addition,the maximum sales price is based on the number of bedrooms in the home instead of the number of
persons in the particular household. For example,if a developer is selling a two-bedroom unit,the sales price
would be calculated under a"number of bedrooms,plus one"rule for the assumed household size. The assumed
household size is based on the size of the residential unit, as shown in Table 2.
Table 2. Household Size Assumption for Maximum Sales Price Calculations
Unit Size(Number of Bedrooms) Assumed Household Size(Number of Persons)
1 2
2 3
3 4
4 5
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The following assumptions are used to calculate the maximum sale price for BMR Units.Note,however,that a
Qualified Household's actual Housing Expenses may differ from these assumptions.
• Interest— The greater of the prevailing rate(fixed rate for 30 years) or the average annual commitment
rate for 30-year fixed rate mortgages for the previous five-year period, as published by Freddie Mac.
• Mortgage Term—fixed rate for up to 40 years.
• Taxes—1.25% of the estimated sale price of the unit.
• Insurance—homeowners insurance. The cost of homeowners insurance may be calculated based on an
estimate provided by the developer. (If the homeowners insurance is covered by an HOA structure,
homeowners insurance need not be included,but it must be documented that the HOA will provide
adequate insurance.)
• PMI—private mortgage insurance.Because most BMR Unit buyers will have a down payment of 3.5%,
they will be subject to private mortgage insurance,which is estimated at 1.25% of the sale price of the unit.
• Other—may include special assessments or fees for special assessment districts.
• HOA dues, if any.
Example 7 shows how the sale price is calculated.
Example 7.BMR Unit Sales Price Calculation
(3-bedroom home for a 4-person Moderate-Income household)
Price of home $373,500
Buyer's mortgage amount $360,428
Buyer's down payment amount(3.5%) $13,073
Buyer's monthly costs
Mortgage payment' $1,935
Property tax $389
Insurance $50
HOA $250
Mortgage insurance $375
Other $0
Total monthly housing cost $2,999
Total annual housing cost $35,992
Buyer's annual income' $102,850
Buyer's maximum monthly housing cost(35%) $3,000
Buyer's maximum annual housing cost(35%) $35,998
Percentage of AMI for housing costs above 35%
7.Assumes a 30 year fixed rate loan at 596.
2.For 2075,the maximum income fora four-person Moderate-Income household is$772,200(720%ofAMI).As previously noted,the calculation is
based on an assumption of income at 77096 for Moderate-Income households.
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3.5.2 The Marketing Plan for Ownership BMR Units
Prior to the issuance of building permits for any ownership BMR Units,the developer must submit a Marketing
Plan to the City for approval. The Marketing Plan must contain the components described in Table 3.
Table 3. Required Marketing Plan Contents
Component Description
Narrative Summary A 1-page narrative summary suitable for advertising the availability of the BMR Units on the
City web page and other locations.The summary must include:
• A description of the total number of BMR Units and market-rate units in the Residential
Development;
• The HOA dues for each BMR Unit;
• The amenities included in the unit;and
• Contact information for sales representatives(including a name,telephone number,
address,and e-mail address).
Application Process An explanation of the application process and the deadline for submitting applications.If the
Explanation development is phased,the developer must establish deadlines for each phase of the
development that includes BMR Units.
Selection Process An explanation of the buyer selection process,including an explanation of the Preference
Explanation Point system.
Sales Training Timeline for the developer's sales staff to meet with the City's Housing staff to receive training
Timelines on the sale selection and application process.
Application Timelines Timelines for application submittals buyer selection.If the development is a phased project,
information must be provided on the number of phases and the timelines for those phases.
Marketing Materials Copies of materials that will be used to market the BMR Units.
Application Packet The application packet must include:
• Application for Inclusionary Unit
• Disclaimer for BMR Units
• Credit Authorization and Release
• Signed Sample Resale Disclosure Statement
• Required Supporting Documentation Checklist
• Highlights of Dublin Resale Restriction Agreement
No marketing of the BMR Units shall begin until the developer has received written approval of the Marketing
Plan from the City and the developer's sales staff has met with City Staff for training so that the sales staff
understands and can explain the application process.
3.5.3 Application and Screening Process
The developer must require each applicant to complete the application that has been approved by the City as part
of the Marketing Plan and to provide the required supporting documentation by the deadline set forth in the
Marketing Plan. The developer should plan accordingly to ensure that applicants are not qualified more than 6
months before the move-in date for the unit.
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Complete application packets should include at a minimum:
1. Complete application;
2. Income and asset documentation set forth in Section 4.2.2;
3. Reservation instrument showing the address, number of bedrooms, and sales price;
4. A loan pre-approval letter with a Good Faith Estimate and Truth in Lending Statement;
5. A signed Disclosure Statement(Exhibit F of the Resale Restriction Agreement);
6. A signed credit report authorization and release or other consent and verification letter;
7. Copy of tri-merge Credit Report; and
8. Evidence of 3.5% available funds to be used as a down payment.
The developer must comply with the following process to sell the BMR Units(see Figure 2 for an overview):
1. Application Collection and Screening. Developer collects applications for the period of time set forth in
the approved Marketing Plan. Developer screens applicants to determine whether they satisfy the
requirements for Qualified Households set forth in Section 4.1.1.
2. Preference Points/Priority List. Developer sorts and ranks the Qualified Households based on the
Preference Points and creates a Priority List with those applicants with the most Preference Points at the
top,followed by all other applicants in descending order based on the number of Preference Points
received. If more than one qualified applicant receives the same number of Preference Points or if some
applicants receive no Preference Points,the developer will rank the Qualified Households based on other
objective criteria outlined in its approved Marketing Plan. For example,the developer may date stamp all
applications and,in the case of a tie,rank the Qualified Households based on who applied first, or the
developer may choose to hold a lottery to break ties. However,whichever criteria the developer uses must
be set forth in its approved Marketing Plan.
3. Priority List and Application Packets Submittal. Developer completes the Priority List within 30 days of
the application deadline.Developer submits complete application packets of Qualified Households,
(including supporting documentation)to the City within 45 days of the planned close of escrow.
4. City Review and Verification. The City reviews the application packets to verify the applicants are
Qualified Households.The City will make every effort to review the applications within 7 working days of
receiving a complete application packet.
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5. Qualification/Disqualification. Once the City has Figure 2. Initial BMR Unit Sale Process
verified that the applicant is a Qualified Household,
the City will send the developer a conditional 1.Complete Marketing Plan
qualification letter(or similar document)indicating
the applicant's name and income level,the
2.Meet with City staff t discuss procedures and
maximum sale price of the unit(see Section 3.5.1
requirements
for more detail on establishing the sale price), and
any requirements that must be met before moving
forward with the applicant. The conditional 3.Market the availability of BMR Units
qualification letter is valid for 6 months from the
date of the letter.A copy of the application packet,
along with income verification for the household, 4.Collect and screen applications,establish a priority
will be retained by the City as proof of the buyer's list based on preference points
qualification to purchase the BMR Unit. If the City
determines that the applicant is not a Qualified
Household,the City will send the developer an 5.Submit qualified applications to the City
ineligibility letter.An applicant who has been
deemed to be ineligible may not reapply for a period
of one year from the date of the ineligibility letter. 6.City review and approval/disapproval (within 7
The developer bears the responsibility of ensuring days of receipt of a complete application)
that applicants are not qualified more than 6
months before a unit becomes available and closes 7.Execute purchase contract,open escrow,and
escrow.Applicants must be requalified if occupancy provide the City with escrow information
is to take place more than 6 months from the date of
the conditional qualification letter.Applicants may
8.City issues escrow instructions and meets with
or may not qualify to purchase a BMR Unit upon BMR Buyer
requalification. In addition,the price of the BMR
Unit may change upon requalification. If,upon
requalification,an applicant does not qualify,it is 9.Escrow officer provides required documents for
the responsibility of the developer to notify the City review
applicant.
Conditional approvals are based on information 10.City provides required documents to be signed at
supplied to the City by the developer or their agent. closing
If any material changes to the financial conditions,
marital status, employment status, or other
information is made known prior to loan closing, 11.Sale closes,documents are recorded
the developer,their agent, or the lender must notify
the City of Dublin in writing of these changes. The City expressly reserves the right to reverify the
applicant(s) and may void or cancel this conditional approval or other approval at any time prior to the
loan closing if material changes affect the qualification status of the buyer's).
Qualification determinations may be appealed in accordance with the procedures described in Section
8.2.
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The sale cannot proceed until all required documents are provided to the City and the developer
receives a written qualification letter from the City.
6. Offer to Purchase/Purchase Agreement. The developer will offer the unit to Qualified Households
based on the Priority List,offering the BMR Unit first to those applicants with the most Preference Points,
then to other applicants in descending order. The developer and applicant will enter into a purchase
agreement.A copy of the signed agreement must be provided to the City.
7. Escrow Instructions. The developer will provide the City with the name and address of the title company
closing the sale and the name of the escrow officer. The City will prepare and send escrow instructions to
the escrow officer.
8. Receipt of Documents. The escrow officer will submit the following documents to the City:
• Completed and Signed Residential Loan Application;
• Completed Truth in Lending Statement, Good Faith Estimate, and an estimated HUD-1 statement;
• Completed, executed, and notarized Resale Restriction Agreement and Option to Purchase;and
• Completed, executed, and notarized Performance Deed of Trust.
9. Compliance Review.Prior to the City sending the Resale Restriction Agreement and Option to Purchase
and Performance Deed of Trust to the Title Company for signing,the City will review all final documents
for completeness and compliance with Program requirements.
10. Prepare and Record Documents.When all documents have been received and are deemed to be in
compliance with Program requirements,the City will prepare and send the Resale Restriction Agreement
and Performance Deed of Trust to the escrow officer to be reviewed and signed by the BMR buyer.Once
signed by the buyer,the escrow officer will send the original documents to the City. The City will prepare
the Request for Notice of Default for each of the buyer's loans and secure the signature of the City
Manager or his/her designee on the necessary documents.The City will send the original signed Resale
Restriction Agreement,Performance Deed of Trust, and Request(s) for Notice of Default to the escrow
officer for recording.
If at any time during the application, screening, or sale process, an applicant requires translation services,the
developer shall provide such services at the developer's sole cost and expense.
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3.6 Procedures for Rental BMR Units Figure 3. BMR Rental Process
After the Housing Agreement is executed, and prior to the
issuance of any building permits,the developer of a project 1.Complete Management Plan
that includes rental BMR Units must prepare and submit a
Management Plan to the City of Dublin Housing Division
for approval.After the Management Plan has been 2.Meet with City staff to discuss procedures and
approved by the City, and prior to the rental of any units, requirements
the developer must screen,rank, and qualify eligible tenants
and send a priority list to the City of Dublin's Housing
Division. This should happen within 30 days,if possible. 3.Market the availability of BMR Units
Figure 3 provides an overview of the BMR Unit rental
process.
3.6.1 The Management Plan for Rental BMR Units 4.Collect and screen applications,establish a Priority
List based on Preference Points
Prior to the issuance of building permits,the developer
must submit a Management Plan to the City for its
approval.The Management Plan must contain the 5.Offer BMR Units to qualified households based on
following information: the Priority List
• A plan outlining how the management firm will
market and maintain the rental BMR Units;
• How the firm will maintain a waiting list for the
6.Execute rental agreements
BMR Units; :SS,5;-
• How the management firm will verify applicants'
Total Household Income,both initially and 7.Establish and maintain a waiting list for BMR Units
annually;
• Information on the units to be made available for
publication on the City's website; 8.Recertify household incomes annually and report
to the City
• A contact telephone number; and
• The names of those individuals responsible for contact and communication with the City.
3.6.2 Application and Screening Process
The management firm (which could be the owner or builder)is the entity that will be responsible for occupant
selection and documentation of rental BMR Units.The management firm's leasing staff should be trained so the
staff understands and can explain the rental application process to applicants.
The management firm must require each applicant to complete and return to the management company a Rental
BMR Unit Application packet.
To lease the BMR Units,the developer/management company must do the following:
1. Collect applications for a given time period.
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2. Screen applicants to determine whether they satisfy the requirements for Qualified Households set forth
in Section 4.1.2.
3. Sort and rank the applications of Qualified Households based on the Preference Points and produce a
Priority List with those applicants with the most Preference Points at the top,followed by all other
applicants in descending order based on the number of Preference Points received. If more than one
applicant receives the same number of Preference Points or if some applicants receive no points,the
developer will use other objective criteria set forth in the approved Management Plan to select occupants.
For example,the management firm may date stamp all applicant applications and,in the event of a tie,
offer the unit to the applicant that applied first, or the management firm may choose to hold a lottery to
break ties. However,whichever criteria the management firm uses must be set forth in the approved
Management Plan.
4. Complete the Priority List within 30 days of the application deadline and submit to the City for approval.
5. Offer the BMR Units to applicants based on the Priority List, offering first to those applicants with the
most points,then to other applicants in descending order.
6. Execute a Rental Agreement with the tenant that notifies the tenant that he or she may not sublease the
unit and that annual certification is required.
7. Maintain applications with income verification and recertification for the City to review at annual on-site
monitoring.
Qualification determinations may be appealed by the developer in accordance with the procedures described in
Section 8.2.
3.6.3 Annual Report and Monitoring
Pursuant to Section 8.68.050.B of the Inclusionary Zoning Ordinance,the management entity for the development
must provide the City an annual report. 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.City Staff will send a reminder letter to the
management firm,with a copy of the Annual Report form for completion and certification,at least one months
prior to the due date.
The City may perform an annual site visit to monitor the records of all BMR Units. The City will provide at least
two weeks'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,these Guidelines,and the City approved Management
Plan.
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If, during the course of monitoring, a BMR Unit tenant household is found to no longer meet qualification
guidelines due to an increase in income or change in household size,the household 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 rent-restricted BMR Unit.
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.
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4.1 Household Qualifications
4.1.1 BMR Unit Buyers
A household is qualified to purchase a BMR Unit if it satisfies the requirements stated in Table 4.Section 4.2
provides additional detail on certain requirements.
Table 4.Ownership BMR Unit Household Qualifications
Qualification Requirement Description
Income The household's Total Household Income must not exceed the applicable
Maximum Income set forth in Section 4.2.2.
First-Time Homebuyer No member of the household may have owned any interest in real property
during the three-year period prior to the household's BMR Unit application
date.
Owner Occupancy The household will occupy the unit as its Principal Residence within 30 days
of the close of escrow on the unit.
Size The household is of a size meeting the household size criteria set forth in
Section 4.2.1.
Homebuyer Education All title holders of the property must take a HUD approved or City approved
8-hour homebuyer education workshop and receive a certificate of
completion.The certificate of completion must be dated within 6 months of
the date of application.
Credit Score All applicants have a minimum FICO credit score of 620(see Section 4.2.3).
Residency/Citizenship The City will require all household members to be either a citizen or national
of the United States or a qualified alien defined by the federal Personal
Responsibility and Work Opportunity Reconciliation Act of 1996(PRWORA).
Loan Preapproval Homebuyers must be preapproved for a home loan that conforms to the
requirements established in Section 5.5.
Debt to Income Ratio Homebuyers'proposed debt(based on current liabilities and proposed
housing payment) may not exceed a certain percentage(contact the City for
the current maximum percentage).
Qualification determinations may be appealed. Refer to Section 8.2 for appeal procedures.
Qualified Households with Preference Points will receive priority over other Qualified Households. For
information on the application and screening process,see Section 3.5.3.
Qualified households are subject to specific requirements and restrictions regarding BMR Unit financing and title
and loan structure. Refer to Section 5 for procedures and regulations relating to ownership BMR Units.
4.1.2 BMR Unit Renters
A household is qualified to rent a BMR Unit if it satisfies the requirements shown in Table 5.Section 4.2 provides
additional detail on certain requirements.
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Table 5. Rental BMR Unit Household Qualifications
Qualification Requirement Description
Household Income The household's Total Household Income must not exceed the applicable Maximum
Income(see Section 4.2.2).
Household Size The household must be of a size meeting the household size criteria set forth in
Section 4.2.1.
Residency/Citizenship All members of the household must be Legal Residents.
Occupancy The household must occupy the unit as its Principal Residence within 30 days of
executing the lease.
Real Property Interest(not No member of the Qualifying Household must own any interest in any real property,
allowed) including but not limited to,any dwelling unit,commercial real estate,or land.
The names of all non-dependent household members must appear on the lease for the BMR Unit.
Qualified Households with Preference Points will receive priority over other Qualified Households. For
information on the application and screening process,see Section 3.6.2.Qualification determinations may be
appealed. Refer to Section 8.2 for appeal procedures.
4.2 Description of Qualification Requirements
4.2.1 Household Size
The size of the household is determined by the number of people living in a household at the time of application.
To qualify for a BMR Unit,the size of a household must be compatible with the size of the unit being rented or
purchased.
The household size for each BMR Unit may not exceed two people for each bedroom and may not be less than
one person per bedroom,unless otherwise permitted by special financing sources.Consult with the City of Dublin
for further clarification.Table 6 contains the household size permitted for each BMR Unit based on the number
of bedrooms.
Table 6.Allowable Household Size per BMR Unit
Unit Size(Number of Bedrooms) Household Size(Number of Persons)
0(studio) 1-2
1 1-2
2 2-4
3 3-6
4 4-8
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4.2.2 Household Income
4.2.2.1 Maximum Total Househo/d Income
To be eligible for a BMR Unit,the applicant's Total Household Income must not exceed the applicable Maximum
Income. Total Household Income means the household's Gross Household Income (see Section 4.2.2.2)plus
assets calculated pursuant to Section 4.2.2.4.Maximum Income is determined annually by HCD based on Area
Median Income.Table 7 shows the Maximum Incomes for Alameda County for 2015.
Table 7. Income Limits per Income Category(2015)
Income Household Size(Number of Persons)
Category 1 2 3 4 5 6 7 8
Very Low $32,750 $37,400 $42,100 $46,750 $50,500 $54,250 $58,000 $61,750
Low $50,150 $ 57,300 $64,450 $71,600 $ 77,350 $83,100 $88,800 $ 94,550
Moderate $78,550 $89,750 $101,000 $112,200 $121,200 $130,150 $139,150 $148,100
Source.,HCD State Income Limits for 2075
4.2.2.2 Gross Household Income
Gross Household Income means all income from all adult household members (18 years of age and older) derived
from all sources as provided in the Internal Revenue Code (Title 26,Subtitle A, Chapter 1, Subchapter B,Part I,
Section 61),whether or not such income is exempt from federal income tax. Such income includes,but is not
limited to,the following:
• Compensation received from an employer
• Compensation includes,but is not limited to, salary, overtime pay, and other pay
• Other pay can include,but is not limited to compensation for special working conditions or one-time
pay-out of unused vacation and sick leave
• Alimony, spousal and child support
• Cash
• Pensions,if at an age where pension is being received as income
• Public benefits including,but not limited to,CalWorks, SSI, and disability income
• All interest,dividends, and royalties
• Income derived from private businesses
• Rental income
• Income from pensions
• Compensation for services rendered including fees,fringe benefits,commissions,tips, and bonuses
• Stipend received for participation in a mentor,learning, or education opportunity
• Gains from dealings in private and/or commercial property
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4 BMR BUYER AND RENTER QUALIFICATIONS
• Gambling winnings
• Annuities,life insurance, and endowment contracts
• Income from discharge of indebtedness
• Gross partnership contributions or distributions
• Income from an interest in an estate or trust
Exceptions:
1. Gross Household Income does not include income earned by a household member who is between the ages of
18 and 26 and meets both of the following criteria:
• Is claimed as a dependent of a household member on such member's federal income taxes; and
• Is a full-time student(12+units;school transcript must be provided).
2. Gross Household Income does not include payments to a household member from a governmental fund if all
of the following requirements are satisfied:
• The payments are based on the recipient's or the recipient's family's financial need;
• The payments do not represent compensation for services rendered; and
• The payments are part of a governmental housing subsidy program including,but not limited to, so-called
Section 8 federal housing assistance payments.
For purposes of determining Gross Household Income, each person 18 years of age or older must present the
following:
• A complete set of federal and state income tax returns for the past three years,including all schedules
(signed and dated) and W-2 forms (in the case where taxes have not been filed for any of the past three
years, a letter of verification of non-filing from the Internal Revenue Service is required);
• Four most recent and consecutive pay stubs; and
• Three recent and consecutive statements for all financial accounts,including,but not limited to,savings
accounts,checking accounts,retirement accounts,401(k) accounts,stock accounts, and another accounts
held in the applicant(s) name(s),whether held individually or together.
If a household member is self-employed,in addition to the information above,the member must submit profit
and loss statements for the past three years(if applicable), and a current profit and loss statement for the year.
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4 BMR BUYER AND RENTER QUALIFICATIONS
4.223 income Caicuiation
a. Wage and Salary. If an applicant is a full-time employee(usually 30 to 40 hours per week)or an employee
with consistent regular hours or income, or income with overtime or adjustments as a regular part of their
job,one of the-formulas listed in Table 8 will be used to determine the applicant's salary.Bonuses,
commissions,and limited overtime may be calculated into the annual income calculation. In the case of
unclear income or income that is somewhat difficult to calculate,please contact the City. The City will make
the final determination as to which Income Calculation formula to use.
Table 8.Annual Income Calculations by Pay Frequency
Pay Frequency Annual Income Calculation
Monthly Monthly income amount x 12
Twice Monthly Twice monthly income amount x 24
Biweekly Biweekly income amount x 26
Weekly Weekly income amount x 52
Hourly Hourly income x 40(or whatever normal hours per week may be)x 52
b. Variable Income. For applicants who are part-time employees or employees with variable hours every pay
period(or variable hours less than 40 hours per week),inconsistent income or hours,frequent overtime,
bonuses and commissions, etc.,their annual salary will be calculated using year-to-date income,plus the
previous year's income (from same income source or employer), divided by the number of months reviewed
(UP TO BUT NOT EXCEEDING 12 MONTHS)times 12 to arrive at their annual income. If there is no
previous year income from the same employer, or the job was started mid-year,the current income year to
date using the calculation explained in(a) above will be used. If an applicant works consistently 40 hours per
week and has occasional or regular overtime,the calculation listed in(a) above will be used to calculate
income.
c. Inconsistent or Temporary Change in Income Due to a Temporary Circumstance. If an applicant has a
temporary situation(7 months or less)that makes income calculation difficult, a Verification of Employment
may be used to calculate the applicant's income based on a normal annual time period.Or,the income may be
calculated based on the person's hourly rate times their normal working hours(as shown in item (a) above).
d. Self-Employed or Non-Corporation.A self-employed applicant is also considered to have variable income.
Gross annual income calculations will be based on the previous two years' net income shown on Schedule C of
the federal income tax returns,plus net income before taxes from the applicant's signed,year-to-date Profit
and Loss Statement, divided by the appropriate number of months(NOT TO EXCEED 12 MONTHS)times
12 to arrive at the annual income.
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4 BMR BUYER AND RENTER QUALIFICATIONS
4.224 Assets
An asset test will be applied to all applicants to determine whether they satisfy the income requirements. If an
applicant has assets that exceed$30,000,the following amounts will be added to the applicant's Gross Household
Income to determine the household's Total Household Income:
• 10% of all assets valued at between$30,001 and$130,000
• 30% of all assets valued over$130,000
The maximum assets allowed are$250,000. Households with assets in excess of$250,000 will be disqualified.
Assets include,but are not limited to,cash, all savings and checking accounts,stocks,bonds,real estate, gifts, and
other sources of money.Pensions and federally approved retirement savings accounts,such as IRAs, Roth IRAs,
and 401(k)s,are excluded;however,retired applicants who receive income from their retirement account must
include such income as Gross Household Income on their application.Example 8 illustrates the calculation for
determining income with assets.
Example 8.Determining Income with Assets
Example 8.A A household of 3 earns$50,000 a year and has$150,000 in total household assets
$150,000-$30,000=$120,000(which is less than $130,000)
10%of$120,000=$12,000
New total household income:$50,000+$12,000=$62,000
Example 83 A household of 3 earns$50,000 a year and has$200,000 in total household assets
$200,000-$30,000=$170,000(which is more than $130,000)
10%of$130,000=$13,000
30%of balance of$40,000=$12,000
New total household income:$50,000+$13,000+$12,000=$75,000
4.2.3 Credit Score
For ownership BMR Units, a credit check will be conducted on all adults(other than dependents)in the
household.Applicants must have sufficient creditworthiness to qualify. Creditworthiness means that:
1. All household individuals shall have a minimum of three years since Chapter 7 or Chapter 13 bankruptcy
discharge date and/or foreclosure/short sale and evidence of reestablished credit is provided; and
2. All persons appearing on the mortgage shall have a minimum FICO credit rating of 620 points from all
three credit agencies.
4.2.3.1 Alternative Credit History Parameters
Alternative Credit History is permitted with satisfactory references from a minimum of four trade lines and 12
months of consistent payment records. One of the trade lines must be a 12-month verification of rent history.
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4 BMR BUYER AND RENTER QUALIFICATIONS
4.2.4 Preference Points
Applicants for BMR Units will be screened by the developer or their designated party for initial eligibility based on
the requirements set forth in Section 4.1.1 (for ownership units) or Section 4.1.2 (for rental units). Qualified
Households will then be ranked based on the number of Preference Points they receive.
The Preference Point system set out in the Inclusionary Zoning Ordinance provides priority to certain households
who are deemed to have a priority need for housing in Dublin.Priority groups are shown in Table 9. Each
household may only claim Preference Points once for any given category.The Ordinance provides that even if two
persons in the household qualify for Preference Points for the same category,the points are only awarded for one
person. For example,if a husband and wife are both employed in Dublin,the couple receives only 3 Preference
Points for being employed in Dublin. Similarly,if two seniors make up a household,they would be entitled to only
1 Preference Point.
Some developments may seek to serve the specific housing needs of one or more segments of the population, such
as seniors, disabled persons, or veterans. Some such developments may utilize a preference system that varies from
the system described in the Inclusionary Zoning Ordinance and described herein in order to prioritize these target
households.Alternative preference systems must be reviewed approved by the City Manager and described in
detail in the approved Management Plan for the development(see Section 3.6.1 for detail regarding the
Management Plan).
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4 BMR BUYER AND RENTER QUALIFICATIONS
Table 9. Preference Points
Priority Points Proof Required
Employed in Dublin for at least 6 3 Copy of first and most recent pay stub establishing length of
months employment;or
Letter from employer,on company letterhead,indicating
continuous employment for the past six months;or
If self-employed in Dublin,then the business must have a current
City business license for at least 6 months at the time of application.
Public service employee in 1 Copy of first and most recent pay stub establishing length of
Dublin* additional employment;or
Letter from employer,on company letterhead,indicating
continuous employment for the past six months;or
For a newly hired teacher at a State-accredited school,who will be
working in Dublin,a copy of employment contract;and
A letter from employer confirming employment and employer
contact information.
Has resided in Dublin for at least 3 Copy of two utility bills(PG&E or water),one from at least one year
one year ago and one most recent utility bill both showing the applicant with
a Dublin address;or
Copy of a current rental agreement.
Seniors(62 and over) 1 A valid State driver license;or
A valid State identification card (with photo);or
A valid passport.
Permanently disabled 1 Doctor's note confirming that applicant is permanently disabled;or
Other verification from a state agency establishing permanent
disability status;or
Verification of receipt of SSI or SSDI.
Veteran 1 A military department record of service such as an original military
service record or certified copy.The document must contain the
length,time,and character of the service.
Has an immediate family 1 Copy of two utility bills(PG&E or water),one from at least one year
member who is a Dublin resident ago and one most recent utility bill both showing the immediate
and who has continuously lived family member with a Dublin address;or
in Dublin for at least one year** Copy of the immediate family member's current rental agreement;
and
A copy of birth certificates for self and immediate family member,
establishing relationship;or
Other legal document establishing relationship.
Must move because housing is to 1 Letter from apartment owner or management firm verifying the
be demolished or converted to imminent condominium conversion or demolition of the unit;and
condo Confirmation from the City's Community Development Department.
*A public service employee is a person who is employed by a public agency such as the City ofDublin,a fire fighterorpolice officer assigned to
work in Dublin,BART,DSRSD,or LISPS working in Dublin.
"Immediate family is defined as a mother,father,brother,sister,child,grandparent,orgrandchild currently living together for 6 months or more.
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4 BMR BUYER AND RENTER QUALIFICATIONS
Example 9 demonstrates how Preference Points are calculated.
Example 9.Preference Points Calculation
Example 9.A An applicant for a BMR Unit both lives in Dublin (for at least one year)and works in Dublin (for at least 6
months).This individual will receive the following points:
Lives in Dublin 3 points
Works in Dublin 3 points
Total number of points 6 points
Example 93 One member of an applicant household works in Dublin and is a schoolteacher.This household will
receive the following points:
Works in Dublin 3 points
Public service employee 1 point
Total number of points 4 points
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5 REQUIREMENTS FOR BUYERS OF BMR UNITS
5.1 BMR Unit Application and Purchase
Procedures Figure 4. BMR Application and Purchase Process
The following are the general steps for qualifying for and
purchasing a BMR Unit(see Figure 4 for an overview): 1.Review qualification requirements(see Section 4)
1. Review qualification requirements. Potential
BMR Unit buyers should review these Guidelines
and confirm that they meet established 2. Pre-qualify for a home loan (see financing
requirements in Section 5.5)
qualification requirements(see Section 4).
2. Pre-qualify with a lender.Potential BMR buyers
should work with a lender of their choosing to get 3.Complete homebuyer education class
pre-qualified to purchase a home.Potential (see Section 5.3)
financing must meet the requirements described in
Section 5.5. This will be necessary for preparing a
complete application and will give the buyers a 4.Identify a for-sale BMR Unit
clear understanding of the amount of money they
are eligible to borrow for a home purchase.
5.Prepare and submit application package
3. Homebuyer education. Potential BMR Unit
buyers must complete an 8-hour homebuyer :SS
education course (see Section 5.3).
6. City review and qualification,within 7 days of
4. Identify a BMR Unit. If eligible,potential buyers receipt of complete application
should identify and view BMR Units available for
sale,including newly constructed units or resale
units(most available BMR Units are listed on the 7.Execute purchase contract
City's website).
5. Prepare application package.When the BMR 8.New BMR buyer meets with the City
buyers find a BMR Unit that they would like to
purchase,the potential buyers should work with
the real estate agent or developer's sales staff to g.City receives required documents from escrow
confirm eligibility, complete the application, and
compile qualification materials.The complete
application must be submitted to the City's
Housing Division. 10.City provides closing documents to escrow
sl__
11. New BMR buyer signs City agreements at close of
escrow
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5 REQUIREMENTS FOR BUYERS OF BMR UNITS
6. City review and qualification determination. The City will make every effort to review the application
and qualification materials and determine program eligibility within 7 working days of receipt of a
complete application. If approved,the City will send the developer or agent a conditional qualification
letter(or similar document). The letter will be valid for 6 months from the issue date.Applicants who are
determined to be ineligible will receive an ineligibility letter. Ineligible applicants may not reapply to
purchase any BMR Unit for a period of one year from the date of the ineligibility letter.
7. Execute contract. Once the BMR buyer household has confirmed eligibility and received a conditional
qualification letter from the City,the BMR buyer should execute a purchase contract with the seller. The
agent should open escrow and provide escrow information to the City. The City will prepare escrow
instructions and submit them to the escrow officer.
8. In-person consultation.Potential BMR buyers must schedule and complete an in-person consultation
with City Staff(see Section 5.2).
9. Sign paperwork. Following receipt of required paperwork from the escrow company,the City will
prepare the Resale Restriction Agreement and Performance Deed of Trust for the BMR buyer to sign at
closing(see Section 5.6).Once the BMR Unit buyer has signed,the paperwork will be delivered to the
City for signature.The City will forward this paperwork as well as a request for notice of default on the
BMR Unit buyer's loan to the escrow officer for recordation.
10. Monitoring and correspondence. The BMR Unit Owner must complete annual surveys to the City and
should contact City Staff with any questions. The BMR Unit buyer must contact the City when
considering a refinance,to request approval for any planned capital improvements (see Section 6.1), and
to notify the City of intent to sell.
5.2 In-Person Consultation
All members of the BMR Unit buyer household must attend an in-person meeting with City Staff to discuss BMR
Unit resale restrictions and ongoing requirements. Following issuance of a qualification letter, City Staff will work
with the buyers to determine a mutually convenient meeting time.At the meeting,buyers will review and sign a
disclosure statement.
5.3 Homebuyer Education Program
Homebuyer(s) must successfully complete a City-approved Below Market Rate 8-hour homebuyer education class
prior to the close of escrow and must provide the City with evidence of completion.
5.4 Title and Loan Requirements
All adult household members must appear as an owner or co-owner on the BMR Unit title and must co-sign for
any purchase loan for the BMR Unit with the following exceptions:
1. Legal dependents of titleholders as claimed on the most recent tax return or legal minor children of
titleholders. Spouses or domestic partners are not considered dependents.
2. Recent immigrants with insufficient credit history, defined as persons who have been in the United States
for two years or less, as supported by entrance documentation or a sworn statement and lender
documentation of the reason for loan denial,including a copy of the applicant's credit report.
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5 REQUIREMENTS FOR BUYERS OF BMR UNITS
5.5 Financing Requirements
All BMR Unit buyers must be able to secure a loan through a lending institution for a BMR Unit. For new BMR
Units,the developer may require that all applicants get pre-approval from the developer's preferred lender at the
time of application. However, once an applicant receives approval to purchase a unit, applicants may use a lender
of their choice,provided that the lender adheres to the City's Guidelines for acceptable loan products.
5.5.1 Acceptable Loan Products to Purchase or Refinance a BMR Unit
The City reserves the right to reject loan products if the City believes in its sole discretion that there is a stronger
likelihood that the loan product would potentially result in loss of the BMR Unit due to the purchasers'inability to
comply with the terms of the loan.
Following is a nonexclusive list of the loan products that may be acceptable to the City. The list is not intended to
be exhaustive, and other loan products may be evaluated upon request.
Acceptable First Mortgage Loan Products
• Fixed mortgages up to 40 years
• Maximum 100%combined loan to value
5.5.2 Prohibited Loan Products and Unacceptable Mortgage Features
• Interest-only loans
• Negative amortizing loans
• Adjustable rate loans
• Balloon payment loans
• Lines of credit that exceed the resale price of the unit
• Stated income loans
• Excessive points and fees(more than what is typical of the market at the time)
5.5.3 Down Payment
The applicant is required to make a minimum down payment of at least 3.5%of the sales price.Funds must be
placed into escrow prior to the close of escrow and must come from acceptable sources and be verified and
properly documented per Federal Housing Administration guidelines. The 3.5% down payment may not be used
toward closing costs.
5.5.4 Down Payment Assistance
The City reserves the right to reject down payment assistance products if the City believes in its sole discretion
that there is a stronger likelihood that the down payment assistance product would potentially result in loss of the
BMR Unit due to the purchasers'inability to comply with the terms of the assistance.
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5 REQUIREMENTS FOR BUYERS OF BMR UNITS
5.5.5 Debt to Income Ratio
A homebuyer's total debt to income ratio will be set from time to time by the City based on current financial or
real estate market conditions.
5.5.6 First Mortgage Loan to Value Ratio
Borrower must provide funds in an amount equal to a minimum of 3.5%of the purchase price for use as a down
payment.The 3.5%must be applied to the purchase price so the combined loan to value ratio does not
exceed loo%.
5.5.7 Closing Costs and Deposits
The buyer is responsible for all closing costs related to the purchase of the BMR Unit,including,but not limited
to,title fees, escrow fees,and loan origination fees (approximately 2%to 3%of the purchase price).The buyer may
be"gifted"funds to pay for closing costs.
The buyer may take advantage of other down payment assistance programs to assist with closing costs with
approval from the City.
5.6 Recorded Documents (Resale Restriction Agreement and Performance Deed of Trust)
The Inclusionary Zoning Ordinance requires that all BMR Units be restricted for a period of 55 years.As a result,
BMR Unit buyers must execute a Resale Restriction Agreement and a Performance Deed of Trust.These
documents must be signed by all title holders and recorded.
5.6.1 Highlights of the Resale Restriction Agreement
The following list highlights some of the restrictions in the Resale Restriction Agreement. This list is not intended
to be exhaustive.A sample Resale Restriction Agreement is provided in Exhibit 1.
Principal Residence Requirement
The unit must be owner-occupied and shall not be used as an investment or rental property.BMR Unit Owners
are required to occupy the BMR Unit as their Principal Residence.BMR Owners are prohibited from renting their
unit without prior written approval from the City. Refer to Section 6.2 for a discussion of circumstances in which
a BMR Unit Owner may be approved to rent out a BMR Unit and related provisions.
Resale of BMR Unit
The City of Dublin is not responsible for locating or providing qualified buyers for BMR Units;however, all
potential buyers must be qualified by the City before the sale can proceed.BMR Unit Owners may only sell their
units to a Qualified Household or to the City for a restricted price calculated pursuant to Section 6.4.1.A BMR
Unit Owner must follow the requirements set forth in Section 6.4 when selling his or her unit. The City has the
right of first refusal.
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5 REQUIREMENTS FOR BUYERS OF BMR UNITS
Appreciation Share
Upon the first sale of the BMR Unit after the end of the 55-year term of the Resale Restriction Agreement,the
owner must pay to the City an amount equal to 25% of the difference between the actual sale price and the
adjusted resale price calculated pursuant to the formula set forth in Section 6.4.1.For example,if a unit was
originally purchased for$200,000 (actual sale price) and at the end of 55 years sells for$500,000 (adjusted resale
price),the equity in the unit is$300,000. The amount owed to the City would be 25%of the$300,000, or$75,000.
Title Changes
A BMR Unit Owner cannot make changes to the title on a BMR Unit without prior written approval from the
City.BMR Unit Owners must request changes to title in writing before making any changes to the title to a BMR
Unit and are responsible for all costs associated with adding or removing a person to or from the title.
In the case of a change in the household makeup, due to either marriage,divorce,legal separation, death, or other
occasion that will cause a person to move in or to vacate the BMR Unit,BMR Unit Owners should contact the
City to ascertain how to add or remove names from the Resale Restriction Agreement and Performance Deed of
Trust.
City's Option to Purchase
The City has the option to purchase a BMR Unit Owner's unit upon the occurrence of certain events,including,
but not limited to,the sale of the BMR Unit,bankruptcy of the BMR Unit Owner, and foreclosure.The City may
also choose to transfer its purchase option to an individual or organization of its choosing.A BMR Unit Owner
must notify the City when it desires to sell its BMR Unit by submitting a Notice of Intent to Transfer(Exhibit B to
the Resale Restriction Agreement)to the City. If the City decides not to purchase the unit,the City will send the
BMR Unit Owner a letter, along with a packet of information that will assist the BMR Owner in finding another
Qualified Household to purchase the unit.
Refinancing BMR Units and Taking Cash Out
In general,BMR Unit Owners may refinance their units only to take advantage of a new loan that benefits the
BMR Unit Owner financially(e.g., a lower interest rate with lower monthly payments).BMR Unit Owners must
contact the City in writing for prior written approval of all refinancing. Taking cash out of the unit is not allowed
unless the cash will be used for Approved Capital Improvements as outlined in Section 6.1.
Annual Survey/Monitoring
Each year,the City of Dublin will monitor and require occupancy certification for all BMR Units.An annual
survey will be mailed to the owner(s) of each BMR Unit,usually around the anniversary date of the purchase of
the unit. Each owner must complete and return the survey along with qualifying documentation. Failure to return
the survey and documentation could place the owner(s)in default of the Resale Restriction Agreement. In
addition,pursuant to the Consent Agreement,the City may access and review the BMR Unit Owner's credit
reports or other financial or personal information to verify the BMR Unit Owner's compliance with the Resale
Restriction Agreement and these Guidelines.
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5 REQUIREMENTS FOR BUYERS OF BMR UNITS
Estate Planning
Upon the death of a BMR Unit Owner,the inheriting owner must notify the City of the BMR Unit Owner's death
within 30 days of the date of the death and must sell the BMR Unit to a Qualified Household at a restricted resale
price within 180 days(or longer if approved by the City due to market conditions)unless(i) the inheriting owner
is the legal child or stepchild of the BMR Unit Owner; (ii)the City verifies that legal child or stepchild qualifies as
a Qualified Household; and(iii)the legal child or stepchild signs a Resale Restriction Agreement and a
Performance Deed of Trust.
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6 Requirements for Ownership and Resale of BMR Units
6.1 Capital Improvements
BMR Unit Owners may make modifications to improve their home for maintenance and aesthetic purposes.For
certain Approved Capital Improvements (i.e.,permanent changes that improve the health, safety, or efficiency of
the home),the adjusted resale price of the BMR Unit will be increased.It is the responsibility of the BMR Unit
Owner to keep cost and accounting records of all Approved Capital Improvements.
6.1.1 Procedure for Requesting Approval of Capital Improvements
In accordance with regulations adopted by the City,from time to time the City will approve capital improvements
that improve the health and safety conditions of a BMR Unit.To receive such approval,the BMR Unit Owner
must:
• Complete a Request for Capital Improvement form and submit the form along with a cost estimate-for the
capital improvement(s);
• Receive written approval from the City prior to commencing any improvements; and
• Submit documentation to the City within 30 days of completion of the improvements verifying that such
improvements have been completed.
Upon receipt of the request and estimate for capital improvements, City Staff will review the request for
compliance with these Guidelines.The City will categorize requests into three categories: (1) Eligible Capital
Improvements; (2) Eligible Replacement and Repair; and(3) Ineligible Costs.A description of each category is
provided in Section 6.1.2,below.
The City will send a letter to the BMR Unit Owner approving or denying the requested capital improvements
within 30 days of original receipt.A copy of the letter will be maintained in the BMR Unit's file at the City of
Dublin for inclusion in the adjusted resale price calculation when the unit is resold.
Once the City has approved the capital improvements,the BMR Unit Owner may proceed with the work,
obtaining permits from the City Building Division,if applicable.Within 30 days of completion of the
improvements and sign-off by the City Building Division,if applicable,the BMR Unit Owner must submit all of
the following information:
• A copy of the receipt/invoice for each eligible improvement;
• Proof of payment, such as a cancelled check,bank account statement,or credit card bill;
• A copy of the building permit,if required; and
• A picture or pictures of the completed work.
The City may, at its discretion,visit the job site to view the completed work.
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6 REQUIREMENTS FOR OWNERSHIP AND RESALE OF BMR UNITS
6.1.2 Eligible and Ineligible Capital Improvements
Table 10 provides a nonexclusive list of example improvements that are eligible,partially eligible, and ineligible
for capital improvement credit.
Table 10. Eligible and Ineligible Capital Improvements
Eligible Capital Eligible Replacement and Ineligible Costs
Improvements Repair
Description Includes major structural Includes in-kind replacement Include cosmetic
system upgrades,some new of existing amenities,repairs, enhancements,installations
additions to the unit,and and general maintenance that with limited useful life spans,
improvements related to keeps the property in good and nonpermanent fixtures.
increasing the health,safety, working condition.
and energy efficiency of the
BMR Unit.
Percentage Credited 100% 50% 0%
Example Improvements Major electrical wiring system Electrical maintenance and Fireplace tile and mantel
(lists are not exclusive) upgrade repair Decorative wall coverings or
Major plumbing system Plumbing maintenance and hangings
upgrade repair,such as: Window treatments(blinds,
Upgrade to double-paned Supply line shutters,curtains,etc.)
windows Sinks Installed mirrors
Room additions(if room Flooring (tile,linoleum,or Shelving
addition meets the criteria for hardwood) Refinishing of existing
the household size) Countertops surfaces
Installation of additional Cabinets Nonpermanent fixtures,such
closets and walls
Bathroom the as:
Alarm system Bathroom vanity Track lighting
Removal of toxic substances Replacement of built-in Portable appliances
such as asbestos,lead,or appliances,as follows: (refrigerator,microwave,
mold/mildew stove/oven,etc.)
Insulation Furnace
Water heater Installations with limited
Upgrade to Energy Star built- useful life spans,such as:
in appliances,as follows: Stove/range
Dishwasher Carpet
Furnace Painting of existing surfaces
Water heater Microwave hood
Garbage disposal Window glass
Stove/range
Dishwasher Fireplace maintenance or in-
Microwave hood kind replacement(gas)
Heating system
Lighting system (recessed)
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6 REQUIREMENTS FOR OWNERSHIP AND RESALE OF BMR UNITS
6.1.3 Special Assessments
HOA-initiated Special Assessments are considered capital improvements and will be added to the resale price of
the BMR Unit. In order to receive credit for Special Assessments,homeowners must submit the following
documentation within 3 months of payment:
• Invoice for Special Assessment; and
• Proof of Payment, such as a cancelled check,bank account statement,or credit card bill.
6.1.4 Capital Improvements Minimum and Cap
To be considered in the adjusted resale price,the initial cost of capital improvements must total$1,000 or more.
In order to maintain the affordability of the BMR Unit for subsequent buyers, at the time of sale,BMR Unit
Owners may receive credit for Approved Capital Improvements up to a maximum of 5%of the adjusted resale
price.
6.1.5 Building Permits
It is the responsibility of the BMR Unit Owner to ascertain whether the work to be performed requires a City
building permit and,if so,to obtain such permit.Any work that is done without a required permit will
automatically be deemed ineligible as a capital improvement expense whether or not it fits within the definition of
an Eligible Capital Improvement or Eligible Replacement and Repair.BMR Unit Owners may call the City of
Dublin Building&Safety Division at(925) 833-6620 to inquire about building permits.
6.2 Owner Occupancy Exception
Ownership BMR Units are subject to an owner occupancy requirement.However,under the following
circumstances, a BMR Unit Owner may be permitted to temporarily rent his or her unit to a Qualified Household
(see Section 4.1.2 for renter qualifications)to alleviate one or more of the following specified hardships:
• The BMR Unit Owner is unable to resell the unit as described in Section 6.5;
• The BMR Unit Owner must temporarily relocate for employment purposes; or
• The BMR Unit Owner must attend to personal health problems or the health problems of an immediate
family member.
The BMR Unit Owner must request and obtain advance written permission from the City to rent the BMR Unit
before advertising the unit and selecting a qualified tenant.Once the request is approved and a qualified tenant is
selected,the BMR Unit Owner must execute a rental agreement that clearly states:
1. That the term of the rental is for a limited period of time (not to exceed 12 months);
2. The monthly rental payment(set in accordance with the maximum monthly rent calculated in accordance
with the Ordinance and published annually or the BMR Unit Owner's total monthly housing costs
[mortgage payment—principal plus interest,homeowner's insurance,homeowner's association fees, and
property taxes],whichever is less).
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6 REQUIREMENTS FOR OWNERSHIP AND RESALE OF BMR UNITS
The BMR Unit Owner must submit a copy of the executed rental agreement to the City and,within 10 days of
execution of the rental agreement, sign a Rental Regulatory Agreement with the City. The signed Rental
Regulatory Agreement will be recorded against the property.
6.3 Refinance Requirements
Figure 5. BMR Unit Refinance Process
BMR Owners may refinance their units;however,
financing terms are subject to the restrictions noted in
Section 5.5, above, and the terms stated in the Resale 1.BMR Owner submits written request to refinance
Restriction Agreement.BMR Unit refinances are subject to
an administrative fee.BMR Owners should contact City
Staff for the current fee schedule.
2.City reviews the request and provides conditional
6.3.1 Refinance Procedure authorization (within 7 working days)
BMR Unit Owners must comply with the following
procedures when refinancing an ownership BMR Unit(see
Figure 5 for an overview of the refinance process): 3.BMR Unit owner works with a lender to secure a
loan that meets City criteria and provides
1. Inform the City. The BMR Owner must inform documentation to the City
the City of his or her desire to refinance.
Notification must be submitted in writing and
must be accompanied by a copy of the BMR Unit 4.City submits escrow instructions to the title
Owner's most recent mortgage statement. company
2. City Review. The City will review the refinance
request within 7 working days to verify that the
proposed loan terms are in keeping with City 5.Title company provides required documentation
requirements and terms outlined in the Resale
Restriction Agreement. If the loan is found
acceptable,the City will issue a conditional
authorization letter to the BMR owner. The letter 6.City prepares and submits a Subordination
will outline documentation needed by the City, Agreement to escrow
which typically includes a loan approval letter,
good faith estimate, and truth in lending statement
from a lender,as well as a preliminary title report,
and appraisal. 7.Subordination Agreement is signed and recorded
3. Document Preparation and Closing. Once all
requested documents are received and deemed acceptable, City Staff will issue escrow instructions to the
title company. The instructions will outline the final documents the City needs to prepare closing
paperwork.Once received,the City will prepare and submit a Subordination Agreement to the title
company to be reviewed and signed by the BMR Owner and bank. The documents will then be signed by
the City and recorded.
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6 REQUIREMENTS FOR OWNERSHIP AND RESALE OF BMR UNITS
6.4 Resale Procedure
Figure 6. BMR Unit Resale Process
BMR Unit Owners must comply with the following
procedures when reselling an ownership BMR Unit(see 1.BMR Owner submits Notice of Intent to Transfer
Figure 6 for an overview of the resale process):
1. Inform the City. The owner must inform the City 2.(If the City elects not to excercise purchase or
of his or her intent to sell the unit by filling out a transfer option)City issues consent letter with and
Notice of Intent to Transfer(Exhibit B to the information packet(within 30 days of receipt of
Notice of Intent)
Resale Restriction Agreement) and submitting it,
along with any letters from the City for Approved S�'"IF
Capital Improvements,to the City. (The owner 3.BMR Unit Owner markets the unit for sale(through
may still decide not to sell their unit after a realtor,if desired)
submitting these documents.)
2. City Option to Purchase/Consent to Transfer. 4.Submit potential buyer application package
The City may exercise its option to purchase the
unit or transfer its right to purchase the unit to a
designated entity. The City will make this 5.City review of application and qualification
determination and inform the BMR Unit Owner determination (within 7 days)
of its intent within 30 days of receipt of the Notice
of Intent to Transfer.If the City opts not to
6.Once approved,execute a purchase contract
purchase the unit or transfer its purchase option,
the City will send the BMR Unit Owner a
Conditional Consent to Transfer letter and a
packet of information that will assist the BMR 7.Provide escrow information to the City
Unit Owner in finding another Qualified
Household to purchase the unit. The Conditional
Consent to Transfer letter will be valid for 90 days 8.City issues escrow instructions
from the date of the letter and will include the
maximum restricted resale price of the unit
(pursuant to the formula in Section 6.4.1) and any 9.New BMR buyer meets with the City
other conditions of sale.
3. Marketing. The BMR Unit Owner must market
the unit and pay all fees associated with the sale of 10.City receives required documents from escrow
the unit. The BMR Unit Owner may resell the
BMR Unit through a BMR Resale Program
conducted by a for-profit or nonprofit 11.City provides closing documents to escrow
organization. If the seller uses a real estate agent,
the agent must contact the City to learn the
requirements for listing the property. 12.New BMR buyer signs City agreements at close of
escrow
4. Potential Buyer Application.At least 30 days
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6 REQUIREMENTS FOR OWNERSHIP AND RESALE OF BMR UNITS
prior to the anticipated date of the close of escrow,the prospective buyer must submit the following
documentation to City Staff for approval:
a. The income documentation set forth in Section 4.2.2;
b. Evidence of completion of a below market rate homebuyer education workshop;
c. A loan pre-approval letter with Good Faith Estimate and Truth in Lending Statement;
d. A signed Disclosure Statement(Exhibit F of the Resale Agreement);
e. A signed Credit Authorization and Release Form,or similar document;
h. Copy of tri-merge Credit Report; and
i. Evidence of 3.5% available funds to be used as a down payment.
5. Potential Buyer Qualification. The City shall notify the owner within 7 working days of receipt of
complete packet of documentation as listed above of its approval or disapproval of the prospective buyer.
6. Execute Purchase Contract. The BMR Unit owner executes a purchase contract with the qualified
buyer and open escrow.Provide a copy of the contract to the City along with the name, address, and
phone number of the title company handling the transaction and the name of the escrow officer.
6.4.1 Restricted Resale Price Calculation
The resale price of a BMR Unit is dependent on AMI at the time of sale and the value of Approved Capital
Improvements.
The resale price is equal to:
1. The lowest of the (i) original price paid by the owner for the BMR Unit,increased by an amount equal to
the original price multiplied by the percentage increase in AMI between the effective date of the Resale
Restriction Agreement and the date the City receives the owner's Notice of Intent to Transfer(for
instance,if the original price of the unit was$200,000 and the median income increases 2%between the
effective date of the Resale Restriction Agreement and the date the City receives the owner's Notice of
Intent to Transfer,the unit price will increase by 2%, or$4,000 to$204,000); or(ii)the fair market value
of the BMR Unit as determined by an appraiser approved in writing by the City;plus
2. The cost of Approved(in writing by the City) Capital Improvements;minus
3. The cost to repair damage to the BMR Unit and to place the unit into saleable condition (the
determination of what is considered damage to a unit will be determined by the City). Such items may
include,but are not limited to,ripped or torn carpet, damage to kitchen or bathroom appliances or
fixtures,broken light fixtures,broken or missing tiles and/or grout around tiles, or damage to floors;
minus
4. The amount of all costs advanced by the City for the payment of mortgages,taxes,assessments,insurance
premiums, HOA dues, and/or associated late fees, costs,penalties,interest,attorneys'fees,pest
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6 REQUIREMENTS FOR OWNERSHIP AND RESALE OF BMR UNITS
inspections,resale inspections, and other expenses related to the BMR Unit which the owner has failed to
pay or has permitted to become delinquent.
See Example 10 for a sample maximum restricted resale price calculation.
Example 10.Maximum Restricted Resale Price Calculation
A BMR Unit owner purchased her home in 2008 for$300,000 and would like to sell the unit in 2015.The BMR Unit
owner received City approval to replace worn carpeting (eligible at 50%of total cost)for a credit of$2,000.The
maximum restricted resale price is calculated as follows:
Purchase price(2008) $300,000
Median income(2008) $86,100
Median income(2015) $93,500
Percentage change in median income 8.59%
Increase in value $25,770
Approved Capital Improvement credits $2,000
Maximum Restricted Resale Price(2015) $327,770
6.4.2 BMR Unit Marketing
BMR Unit Owners shall follow current best practices for home marketing.Compliance with the following
provisions constitutes a good faith marketing effort:
• BMR Unit condition—The BMR Unit shall be offered for sale in a condition similar to or better than at
the time of the BMR Unit Owner's purchase.Alterations that may result in a reduction in value (such as
removal of walls,bedrooms, or bathrooms, or downgrades to appliances, flooring, or finishes) shall be
corrected prior to the initiation of BMR Unit marketing.
• Professional representation—The BMR Unit Owner shall execute a listing agreement with an active
realtor, currently licensed by the California Bureau of Real Estate.
• Listing—The BMR Unit shall be listed as an active property on the Multiple Listing Service (MLS)
maintained by the East Bay Association of Realtors. The listing shall include the following:
• BMR Unit photographs—at least one exterior photograph and at least three well-lit interior
photographs of the BMR Unit in keeping with current industry practices.Property data—pertinent
data including,but not limited to asking price(at or below the maximum restricted resale price)
location, square footage, number of bedrooms, number of bathrooms,unit features and amenities,
development features and amenities, current amount of homeowner's association dues(if applicable),
and information about parking spaces and restrictions.
• BMR Unit statement—a clear statement that the home is a BMR Unit and that potential buyers must
meet income and other requirements.
• Professional showings—The BMR Unit Owner and agent shall make the home available for showings
including a broker's open,weekend open houses, and individual showings with interested buyers and
agents representing interested buyers.
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6 REQUIREMENTS FOR OWNERSHIP AND RESALE OF BMR UNITS
• City of Dublin website—The BMR Unit Owner shall complete and submit the required form to the
Housing Division to advertise the resale on the City of Dublin's website.
6.4.3 Fees Associated with the Selling of a BMR Unit
The BMR Unit Owner is responsible for all fees associated with the sale of the unit including,but not limited to,
any real estate fees, and the City's Administration Fee of$1,500,which may be adjusted from time to time.
6.5 Units Unable to Resell
6.5.1 Special Exceptions
The City may offer special consideration where the BMR Unit Owner has been unable to attract a buyer and at
least one of the following conditions applies:
• The BMR Unit Owner has a made a good faith effort to market the BMR Unit for 6 or more months, as
defined in Section 6.4.2;
• The resale price for the BMR Unit is at or below current comparable market-rate units; or
• Financing for the BMR Unit is unavailable due to pending litigation in the project or a ratio of rental to
ownership housing units in the project that is unacceptable to lenders.
On a case-by-case basis,upon request by the BMR Unit Owner,the City will consider granting one or more of the
following exceptions on a one-time basis:
1. The BMR Unit Owner may rent the unit to a Qualified Household for a maximum of 12 months in
keeping with the provisions of Section 6.2;
2. A one-time waiver of the first-time homebuyer qualification requirement for a potential BMR buyer;
3. A one-time waiver of the asset test for a potential buyer(potentially allowing a household that could pay
in cash to purchase the BMR Unit);
4. A one-time allowance to exceed the maximum qualifying income level for the potential BMR buyer
household by up to 20%of the maximum stated in the Resale Restriction Agreement for the unit,but not
to exceed 120%of AMI at any time.
BMR Unit Owners who are unable to sell and may seek an exception should contact City Staff for a consultation.
6.5.2 Release of Resale Restrictions
Upon written request by the BMR Unit Owner,the City may authorize the release of resale restrictions and allow a
BMR Unit Owner to sell the BMR Unit at a market rate price where the BMR Unit Owner has been unable to
attract a qualified buyer and at least one of the following conditions applies:
• Proven hardship.The BMR Unit Owner has a made a good faith effort(BMR Unit Owner has complied
with ALL recommended marketing provisions as set forth in Section 6.4.2)to sell the BMR Unit for 6 or
more months and has a specific need to sell the home due to financial or personal hardship. Eligible
hardships include:
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6 REQUIREMENTS FOR OWNERSHIP AND RESALE OF BMR UNITS
• A change in annual household income that has resulted in housing costs(mortgage payment,
homeowner's association dues,property taxes,and property insurance) exceeding 50 percent of
monthly income;
• Relocation of employment to a work site that is 60 miles or more from the City of Dublin; or
• The maximum restricted resale price, as provided by City Staff in the current Consent to Transfer
letter is below or within 10 percent of that of recent(within three months) sales prices of comparable
nearby market rate homes as evidenced by documentation of these comparable sales(list prices are
not acceptable).
• Excessive time on market.The BMR Unit Owner has a made a good faith effort(BMR Unit Owner has
complied with ALL recommended marketing provisions as set forth in Section 6.4.2) to sell the BMR Unit
for 9 or more months.
In either instance, sales in which resale restrictions are approved for release are subject to all of the following
requirements:
1. Excess proceeds.The City is entitled to 100%of any increase between the market rate resale price as
stated in the purchase contract and the maximum restricted resale price, as quoted by City staff in the
Consent to Transfer letter.
2. Resale price.The allowable contract market rate resale price is subject to City approval,based on a
formal evaluation by a City-approved appraiser. If the City requires the services of an appraiser other
than the appraiser retained to evaluate the property in connection with the buyer's loan,the City will pay
the cost of the appraisal(to be deducted from City proceeds in the closing process and reflected on the
final settlement statement).
3. Owner occupant. The subject BMR Unit need not be sold to a qualified buyer(as described in Section
4.1.1)but must be sold to a buyer who will personally occupy the unit. Sales to investors are prohibited.
The buyer's intent to occupy must be reflected in the ratified purchase agreement and on loan
documents,if applicable.
4. Loan repayment. If the BMR Unit Owner took out a City First Time Homebuyer Loan Program loan,
the loan must be repaid in full(principal plus interest) during or before the close of escrow.
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7 REQUIREMENTS FOR OWNERS OF BMR SECONDARY UNITS
A BMR Secondary Unit is a legal secondary dwelling unit on an owner's property that has been approved by the
City of Dublin as a rental BMR Unit for purposes of compliance with the Ordinance and that is reserved for
occupancy by Very Low-,Low-, or Moderate-Income households.The City Council may approve such units as
part of the developer's proposal for an alternate method of compliance with the Inclusionary Zoning Ordinance.
The owner of a BMR Secondary Unit must sign a Secondary Unit Regulatory Agreement and Declaration of
Restrictive Covenants,which will be recorded against the property. The Agreement will remain in effect regardless
of any sale, assignment, or transfer of the property,unless the Agreement is terminated by the City in writing.
7.1 Purchase Process
Buyers and sellers of homes that include a BMR Secondary
Unit must coordinate with the City during the purchase Figure 7. BMR Secondary Unit Sale Procedure
and sale process (see Figure 7 for an overview). Key steps 1.Receive Secondary Unit restriction information
are as follows: from the home seller
I. Initial Sale or Resale Notification. For the initial SSF__
sale of homes with a restricted secondary unit,the
2.Enter into a purchase agreement
developer must explain the rent restrictions
associated with the secondary unit and provide
potential buyers with a sample of the Secondary
Unit Regulatory Agreement(see Exhibit 5).At
3.Meet with the City
least 30 days prior the anticipated close of escrow,
the developer must submit a completed contact
sheet, a disclosure statement signed by the
potential buyer, and a preliminary title report to 4.City issues closing instructions to the escrow officer
the City.
2. Meeting with City Housing Division. Potential
buyers of restricted secondary units must meet 5.Sign the Secondary Unit Regulatory Agreement at
with City Staff to discuss the rental limitations and closing
requirements associated with restricted secondary :S2
units and review the Secondary Unit Regulatory
Agreement.At the meeting,buyers will review and 6.Follow income restrictions if/when the unit is
rented
sign a disclosure statement.For initial sales by the
developer,the City will contact the potential buyer
upon receipt of the contact sheet from the
developer to arrange the meeting.For resales, real 7.Complete annual reports to the City
estate agents or potential buyers should contact
City Staff directly to arrange the meeting_
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7 REQUIREMENTS FOR OWNERS OF BMR SECONDARY UNITS
3. Escrow Instructions. Following the meeting with the potential buyers,the City will issue escrow
instructions to the title officer who will facilitate the closing of the transaction. The instructions will
clearly inform the title officer of documents the City will need to review prior to providing the Secondary
Unit Regulatory Agreement.
4. Close of Escrow. Following receipt and satisfactory review of all documents requested in the escrow
instructions,the City will provide the Secondary Unit Regulatory Agreement for execution at closing.
7.2 Rental Requirements
If the owner rents the BMR Secondary Unit,the owner shall rent the unit to a Qualified Household(see Section
4.1.2).The owner shall ensure that all leases and contracts with tenants prohibit subleasing of the BMR Secondary
Unit.
7.3 Tenant Income Verification
Prior to a household's initial occupancy of a BMR Secondary Unit and on every anniversary thereafter,the owner
or its authorized agent shall obtain from each household written documentation verifying each tenant's eligibility
containing all of the following,including additional documentation as City may reasonably require:
• Number of people in the household; and
• Total Household Income.
The owner or its authorized agent shall retain this documentation for not less than three years, and upon City's
request,shall make the documentation available for inspection by the City and shall provide copies of the
documentation to the City.The owner or its authorized agent may require each household to certify the verifying
documentation.
7.4 Annual Report
Owner shall submit an annual report to the City in conformity with the requirements of Section 8.68.050.B of the
Inclusionary Zoning Ordinance,together with a certification that the property is in compliance with the
requirements of the Secondary Unit Regulatory Agreement and Declaration of Restrictive Covenants.The annual
report shall, at a minimum,include the following information:
1. The address of the BMR Secondary Unit;
2. The monthly rent charged and proposed to be charged;
3. The number of people residing in the unit; and
4. The Total Household Income of residents.
Upon the City's request,the owner shall provide the City a copy of the verifying documentation and such
additional information as City may reasonably request from time to time in order to show compliance with the
Secondary Unit Regulatory Agreement and Declaration of Restrictive Covenants.
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7 REQUIREMENTS FOR OWNERS OF BMR SECONDARY UNITS
7.5 Management Responsibilities
The 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 the City may otherwise agree in writing,the 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.
7.6 Refinance Requirements
Owners of BMR Secondary Units must inform the City if they intend to refinance their home and are subject to an
administrative fee for the City's review and preparation of the Subordination Agreement. The City and owner will
follow a procedure similar to that outlined in Figure 5 and described in Section 6.3.1, except that BMR
Secondary Units are not subject to the same financing restrictions as BMR Units.
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8 Exceptions and Appeals
8.1 Exception Requests
Figure 8. Exception Request Procedure
Any applicant believing that his/her situation warrants an
exception to any part of these Guidelines due to 1.Review requirements and regulations
circumstances outside of his/her household's control, such
as refugee status, special needs, or other hardships or
special circumstances,may request an exception by
submitting a written letter to the City prior to submitting
2.Submit exceptions request letter to the Housing
an application of any kind.The exceptions request Division
procedure is outlined in Figure 8.
The exception request must specify which particular
guideline or requirement the household cannot meet for
3.Housing Division review and response(within 10
reasons beyond their control or other valid reasons, and/or days)
describe the household's unique circumstances which
warrant one or more specific exceptions to be identified in
the letter,referencing the page(s) and section(s) of these
Guidelines and/or application form related to the request.
4.If denied,submit an appeal,if desired (refer to
Section 8.2)
If the need for an exception arises while an application is
being reviewed, a request may be submitted at such time. If
the need for an exception arises only after receipt of a determination letter issued by City Staff, an exception
request shall be submitted as an appeal of such determination, according to the appeal process described in
Section 8.2.
Exceptions related to disabilities(reasonable accommodations)may be requested according to this procedure,
with a brief description of the exception(s) needed due to the applicant's disability. Such requests will be handled
in accordance with the City's reasonable accommodations policy and these Guidelines.
The City will consider the requested exception and will provide a letter response within 10 calendar days,stating
whether the requested exception can be granted in full or part and the reason for such decision. If denied,
applicants may submit an appeal, as explained in Section 8.2.
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8 EXCEPTIONS AND APPEALS
8.2 Appeals Procedure
Applicants may appeal any determination letter,including Figure 9. Appeals Procedure
denial of a requested exception,by providing a written
explanation of the reasons for their appeal,and any
1.Receive determination letter from City
supporting evidence they wish to provide. The appeals
procedure is outlined in Figure 9.
City Staff is not authorized to assist applicants in drafting
appeal letters, nor in determining appropriate grounds for 2.Prepare and submit an appeal letter to the
appeal or appropriate forms of supporting evidence, Community Development Director(within 10 days of
beyond advising them of the contents of these Guidelines, issuance of determination letter)
application forms, and other published program materials.
Applicants may refer to these Guidelines and application
forms and/or seek their own advisors/counsel for guidance
in determining what types of documentation would be 3.Community Development Director determination
reasonable. (within 10 days)
The appeal shall be heard by the Community
Development Director.The appeal letter must be delivered
by mail, e-mail, or personal delivery within 10 calendar
4
days of issuance of the determination letter being .If denied,submit appeal letter to the City Manager,
if desired
appealed.The Community Development Director will
review the appeal and make a determination within 10
calendar days.
If denied,the applicant may submit an appeal letter to the
C 5.City Manager determination (within 10 days)-final
City Manager. The City Manager will review the appeal
and issue a determination within 10 calendar days or less
of receipt. Determinations by the City Manager shall be
final.
Unless the appellant opened escrow to purchase a BMR Unit prior to submittal of an appeal letter, no BMR Unit
will be held or reserved for the applicant while an appeal is being considered, and offers from other prospective
buyers may be accepted by seller(s) of BMR Unit(s) during this time. If the appellant is in escrow to purchase a
BMR Unit,the City shall not issue any escrow instructions until a final determination regarding the appeal has
been made, other than to inform the escrow officer that he/she may not close until further written notice from the
City.
The City is not responsible for any actions of seller,lender, or other parties regarding the escrow during the appeal
period which may jeopardize buyer's ability to purchase the BMR Unit.
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