San Mateo, CA Below Market Inclusionary Program
Status: In effect
It is the intent of this resolution to establish requirements for the reservation of housing units for moderate – and lower – income households in residential development projects requiring planning approvals.
Whenever the following terms are used in this resolution, they shall have the following meanings:
(a) “Affordable Housing” means affordable for-sale housing or affordable rental housing. Affordable for-sale housing is housing affordable to households whose incomes do not exceed one hundred twenty percent (120%) of the area median income (moderate – or lower – income households).
Affordable rental housing is housing affordable to households whose incomes do not exceed eighty percent (80%) of the area median income (lower-income households).
(b) “Area Median Income” means the median household income for the San Francisco Primary Metropolitan Statistical Area (PMSA) as determined annually by the U.S. Department of Housing and Urban Development.
(c) “Below Market Rate (BMR) Unit” means an affordable housing unit.
(d) “Density Bonus” means entitlement to build additional residential units above the maximum number of units permitted pursuant to the existing General Plan, applicable specific plan and/or zoning designation.
(e) “Development Fees” means fees charged for improvements to City public facilities such as streets, sewer or storm drainage improvements, City building permit fees, City planning fees and City park in-lieu fees, but does not include fees charged by other public agencies such as school districts and public utilities.
(f) “For-sale Units” means housing units offered for sale including, but not limited to, single family homes, condominiums, other common interest developments and mutual housing associations.
(g) “Lower Income” means households earning a gross income of not more than 80 percent of the median income for the San Francisco PMSA as determined annually by the U.S. Department of Housing and Urban Development, as adjusted for household size.
(h) “Market Rate Unit” means a dwelling unit where the rental rate or sales price is not restricted by this resolution.
(i) “Moderate Income” means households earning a gross income of more than 80 percent and less than 120 percent of the median income for the San Francisco PMSA as determined annually by the U.S. Department of Housing and Urban Development, as adjusted for household size.
(j) “Occupancy Standards” means the minimum household size upon which qualification and pricing for BMR units is based.
(k) “Rental Units” means housing units offered for lease or rent.
(l) “Very-low Income” means households earning a gross income of not more than fifty percent (50%) of the median income for the San Francisco PMSA as determined annually by the U.S. Department of Housing and Urban Development, as adjusted for household size.
III. BELOW MARKET RATE HOUSING REQUIREMENTS – GENERAL
(a) Applicability. The requirements of this program shall apply to all residential development projects of eleven (11) or more units or parcels which involve:
- 1. New construction of rental or for-sale housing units, or
- 2. Subdivision or property of single family or duplex housing development, or
- 3. Conversion of rental apartments to condominium or other common interest ownership under Chapter 26.65 of the Municipal Code.
For development projects within the City’s Redevelopment Areas, see Section XI of this resolution.
(b) Number of BMR Units Required. Not less than ten percent (10%) of all newly constructed residential units, newly subdivided residential parcels or condominium conversions in developments of eleven (11) or more units or parcels shall be set aside for occupancy by and shall be affordable to moderate – or lower – income households. In determining the number of BMR units required, any decimal fraction below .5 shall be rounded down to the nearest whole number and any decimal fraction .5 or above shall be rounded up to the nearest whole number.
(c) Adding Units to Existing Projects. For purposes of calculating the number of required BMR units, on additions to existing projects the following rules shall apply:
- 1. For projects which received planning approval before January 1, 1992, the number of BMR units required shall be based on ten percent (10%) of only those units added after January 1, 1992, where at least eleven (11) units have been added since January 1, 1992.
- 2. For projects which received planning approval after January 1, 1992, the number of BMR units required shall be based on ten percent (10%) of the entire project (both previously existing and added units).
(d) Occupancy Standards. Priority for occupancy shall be for households meeting the
following size requirements.
1 bedroom units - no restriction
2 bedroom units - Minimum two person occupancy
3 bedroom units - Minimum three person occupancy
Other households for such units will be on a lower priority.
IV. FOR-SALE UNIT AFFORDABLE HOUSING STANDARDS
(a) Price of Units. The maximum sales price of BMR units shall be limited to a price that is affordable to a household earning between 100-120% of area median income, adjusted for household size, with payments not to exceed between 30-35 percent of the gross monthly income, less insurance and property taxes and homeowners association dues. The City Council at least once per year shall adopt by resolution maximum allowable purchase prices, adjusted by unit size, within the ranges established above and based on prevailing interest rates and prior experience in maintaining an adequate sized list of qualifying buyers. The sales prices for BMR units shall be established at the time of building permit issuance for each project. For units which provide congregate care or personal assistance for residents, the costs of care shall be separate from housing costs, and shall not be included in the pricing formula.
(b) Sales Restrictions. BMR units shall be sold or resold only to eligible moderate or lower income households. The City, or its designees, shall determine the eligibility of such households. A deed restriction, covenant, and/or other instrument enforceable by the City, limiting the resale of such units to eligible or lower income households shall be recorded in the chain of title of all BMR units. The duration of such resale restrictions shall be 45 years, and shall be reapplied and recorded upon each resale of the unit. The deed restriction shall provide that the City have the first right of refusal to purchase the unit. The City’s option to purchase may be assigned to a qualifying moderate or lower income household.
The City or its designee shall be responsible for selection and qualification of buyers in accord with its marketing polices regulating affordable housing. The seller shall pay costs associated with buyer selection, qualification and unit sales.
(c) Unit Appreciation. Each unit offered for resale will be subject to resale restrictions in which the effective sales price (sales price less City subsidy) will be computed to equal the average increase in moderate income for the San Francisco PMSA during the period of ownership.
(d) Occupancy Restrictions. Units shall only be occupied by their owners. Renting, leasing, subleasing or subletting shall not be permitted for more than two months in any year. Violation of these occupancy restrictions will be grounds for termination of the occupancy.
V. RENTAL UNIT AFFORDABLE HOUSING STANDARDS
(a) Rental Rates. The monthly rent to be charged for a BMR unit in a rental project shall be based on the income of eligible tenants, but shall not exceed between 30-35 percent of the gross monthly income for households earning between 70-80 percent or less of area median income, adjusted for household size. The City Council shall at least once per year adopt by resolution maximum allowable rental rates, adjusted by unit size, within the ranges established above and based on prior experience in maintaining an adequate sized list of qualifying renters. Rents may be adjusted annually based on a tenant’s income increases.
For units which provide congregate care or personal assistance for residents, the cost of care shall be separate from housing costs, and shall not be included in the rental formula.
(b) Move-in Costs. Total costs and security deposits to occupy a unit shall be limited to first and last month’s rent, plus a cleaning deposit not to exceed one month’s rent.
(c) Rental Restriction. Occupancy of BMR rental units and qualification of eligible lower income tenants shall be the responsibility of the project owner or an authorized agent of the owner. Annual leases shall be offered to tenants of BMR units. Income qualifications of the tenants shall be verified upon annual lease renewal. If a tenant’s income rises above the 90% area median income, the unit shall become a market rate unit and the next comparable unit available will become a BMR unit, unless the tenant chooses to vacate the unit.
Each project owner shall submit an annual report to the City identifying for each BMR unit the monthly rent, vacancy information for the prior year, income and income verification for tenants, and other information as required by the City.
A subdivider of land for single family or duplex development resulting in eleven (11) or more parcels shall provide BMR units equivalent to at least ten percent (10%) of the density permitted on the subdivided lots.
VII. UNIT SIZE AND DESIGN
BMR units shall:
a) have exterior design and appearance compatible with and substantially the same as market rate units within the project, including landscaping;
b) be distributed throughout the development project;
c) have similar access to the unit from the exterior as market rate units;
d) contain proportionately the same or a larger number of bedrooms as market rate units;
e) generally be of comparable size to similar market rate units, but may not be smaller than the following:
- Unit Type -- Regular Units -- Senior Units
- studio units -- 460 square feet -- 405 square feet
- one bedroom units -- 550 square feet -- 507 square feet
- two bedroom units -- 800 square feet -- 602 square feet
- three bedroom -- units 1080 square feet -- 950 square feet
f) have access to all on-site amenities; and
g) in phased development projects, be constructed proportionately in each phase.
Interior unit amenities, such as floor covering, appliance and other fixtures, shall be specified within the BMR proposal submitted at the time of planning application, and may differ from market rate units, but must at a minimum be UL or AGA listed.
VIII. OFF-SITE CONSTRUCTION / IN-LIEU FEES
The required BMR units shall be provided on the development project site. Off-site construction shall be allowed only if the applicant demonstrates, and the City finds during the planning approval process, that on-site construction is infeasible. If allowed, off-site units shall be constructed within the City of San Mateo and shall be constructed and occupied prior to occupancy of the development project.
Fees in-lieu of constructing required BMR units shall not be allowed.
IX. FEE CONTRIBUTIONS
The City may elect to contribute funds to compensate for specified development fees for new BMR units. The City Council shall annually consider the appropriate level of contribution, but in no case shall the contribution exceed one-half the normally required development fees charged at the time of building permit issuance and of final subdivision map approval and pro rata planning application fees, or include fees of other jurisdictions.
X. ELIGIBILITY REQUIREMENTS
Only households qualifying as lower or moderate income households shall be eligible to occupy BMR units. Preference shall be given to persons residing or working within San Mateo. Every third unit available shall be offered to an employee of the City of San Mateo meeting the eligibility requirements. Eligibility shall be determined in conjunction with City’s Marketing Policies, etc.
(a) Responsibilities. The City or its designee shall be responsible for administering for-sale BMR units. The project owner shall be responsible for administering BMR rental units.
The City’s Community Development Director or a designee shall be responsible for administration of the BMR program, including, but not limited to, determinations regarding calculation of the number of BMR units required, pricing, design, qualification of tenants, and long-term program compliance. The City may prepare administrative guidelines to further clarify program requirements.
(b) Application Process. At the time of filing a planning application for a development project subject to the BMR program, the developer shall provide the following information:
- 1. The number of BMR units proposed;
- 2. The unit sizes and the number of bedrooms per dwelling unit;
- 3. The location of the BMR units (for-sale projects only);
- 4. The interior unit amenities which would differ from market-rate units, including, but not limited to, floor coverings, appliances, plumbing and electrical fixtures; and
- 5. The schedule for production of BMR units in phased developments.
(c) BMR Agreement. Prior to approval of a planning application the applicant shall enter into a BMR Agreement with the City, which shall be referenced as a condition of project approval.
XII. REDEVELOPMENT AREAS
Notwithstanding the provisions of Section III, development projects within the City’s Redevelopment Areas shall provide affordable units as required by state law. Nine percent (9%) of the units within the project shall be affordable to moderate – income households, and six percent (6%) of the units within the project shall be affordable to very low-income households. With the exception of the calculation of the number of required units, affordable units provided in redevelopment areas shall generally comply with requirements of the BMR program.
XIII. DENSITY BONUSES FOR RESIDENTIAL DEVELOPMENTS
(a) Bonus for Increased Affordable Units. For residential development projects of five or more units, a maximum twenty-five percent (25%) increase in the number of dwelling units above the number of units permitted by the General Plan, applicable specific plan and/or zoning designation shall be allowed when one of the following requirements are met:
- 1. Ten percent (10%) of the total units within the project will be provided for very low income households, or
- 2. Twenty percent (20%) of the total units within the project will be provided for lower income households
Density increases allowed under the Senior Citizen Overlay District, Chapter 27.61 of the Zoning Code, satisfy the requirements of state law for density bonuses for senior residential developments.
(b) BMR Program Applicable. The affordable units provided to obtain the density bonus shall comply with all requirements of the BMR program.
(c) Additional Incentives. In addition to any density bonus, one additional incentive shall be provided by the City, to any residential development which qualifies under XII (a) above, including either:
- 1. Modification of zoning code requirements, such as minimum lot size, setbacks, or mixed-use zoning, or
- 2. Allowance of other regulatory incentives or measures which can be shown to result in construction cost reductions, without compromising public policy, such as expedited permit processing.
The additional incentive to be provided shall be determined by the City at the time of application approval. The incentive shall contribute significantly to the economic feasibility of the affordable units within the project, unless the City finds that the additional incentive is unnecessary for affordability. The City may require information from the applicant to determine the necessary incentive, or may hire a consultant to prepare an analysis at the expense of the applicant.