CC Resolution No. 16-084 Adopting Amendments to the Policy and Procedures Manual for Administering Deed Restricted Affordable Housing UnitsRESOLUTION NO. 16-084
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CUPERTINO
ADOPTING AMENDMENTS TO THE POLICY AND PROCEDURES MANUAL
FOR ADMINISTERING DEED RESTRICTED AFFORDABLE HOUSING UNITS
WHEREAS, the City of Cupertino (the "City") has since 1993 implemented an Office
and Industrial Housing Mitigation Program and a Residential Housing Mitigation Program,
described in the Housing Element of the General Plan, requiring the payment of housing
mitigation fees by non-residential development and residential projects with six units or
less, and requiring the provision of moderate-income and median-income housing m
developments with seven units or more (the "Housing Mitigation Program"); and
WHEREAS, the Policy and Procedures Manual for Administering Deed Restricted
Affordable Housing Units serves as the day-to-day operational manual for both City staff
and its Below Market-Rate (BMR) program administrator for BMR units generated by the
City's Housing Mitigation Program; and
WHEREAS, from time to time the Policy and Procedures Manual for Administering
Deed Restricted Affordable Housing units is to be updated for clarity, to ensure consistency
in review of applications, and to ensure compliance with state law.
THEREFORE, BE IT RESOLVED:
Section 1. After careful consideration of the facts, exhibits, staff report, testimony, and other
evidence submitted in this matter, the City Council finds as follows :
1. The foregoing recitals are true and correct and incorporated into this resolution by this
reference.
2. The Policy and Procedures Manual for Administering Deed Restricted Affordable
Housing Units has been updated to amend the appeal procedures and conflict of interest
provisions.
3. Adoption of this resolution is exempt from the California Environmental Quality Act
because the proposed changes to the Policy and Procedures Manual for Administering
Deed Restricted Affordable Housing Units are not a project, in that the adoption of the
Manual is an administrative activity that will not result in direct or indirect physical
changes in the environment (CEQA Guidelines Section 15378(b)(5)).
394 \09\1924793.2
Resolution No . 16-084
Page2
Section 2.
The City Council hereby approves the amendments to the Policy and Procedures Manual for
Administering Deed Restricted Affordable Housing Units as shown in Exhibit "A" attached to
this resolution.
PASSED AND ADOPTED at a Regular Meeting of the City Council of the City of Cupertino the
2nd day of August 2016, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
ATTEST:
Members of the City Council
Chang, Paul, Sinks, Wong
Vaidhyanathan
None
None
APPROVED:
~df
Grace Schmidt, City Clerk
Resolution No. 16-084
Page3
Exhibit A
Policy and Procedures Manual for Administering Deed Restricted
Affordable Housing Units
(Attached)
As revised by City Council:
Resolution 16-084, August 2, 2016
City of Cupertino
Housing Division
Community Development Depaitment
10300 Torre Avenue
Cupertino , CA 95014
Voice: (408)777-3251
Fax: (408)777-3330
Table of Contents
1. 0 Introduction ........................................................................................................................ 1
2.0 Applicant Selection Process ............................................................................................... 2
2.1 Minimum Tenant/Homebuyer Eligibility Requirements .................................................... 2
2.2 Conflict of Interest .................................................................................. 2
2 .3 Priority Point Placement System ........................................................................................ 2
2 .3.1 BMR Applicant Waiting Lists ..................................................................... 3
2.3.2 Applicant's Right to Refuse BMR unit .......................................................... 3
2.3.3 Housing Constructed with Disabilities ........................................................... 3
2.3.4 Requests for Reasonable Accommodation ...................................................... 3
2.3.5 Household Minimum Size to Occupy the BMR unit ........................................... 3
2.3.6 Solicitation of Applicants .......................................................................... 4
2.3.7 Submitting an Eligibility Fmm for a BMR Unit ................................................ 4
2.3 .8 Eligibility Process to Reapply on BMR Waitlist. .............................................. .4
2.3.9 Application Fees .......... ~ .......................................................................... 4
2.3 .10 Definition of Employment in Cupertino .......................................................... 5
2 .4 Annual Gross Income .......................................................................................................... 5
2.4.1 Documentation to Verify Sources of Income .............................. .' ..................... 5
2.5 Assets ................................................................................................................................. 6
2.5.1 Documentation to Suppo11 Assets ................................................................. 6
2.6 False Statements ................................................................................................................ 7
3.0 Ownership Units ................................................................................................................ 7
3.1 Income Limits for Ownership Units .................................................................................. 7
3 .1.1 Co-applicants ........................................................................................ 8
3 .1.2 Household Composition ............................................................................. 8
3.2 Asset Limit for Ownership Units ...................................................................................... 8
3.3 D efinition of First-time Homebuyer .................................................................................. 9
3.4 Affordable Sale P1ice Determination ................................................................................. 9
3.4.1 Initial Prices of Newly Constructed Units ....................................................... 9
3.4.2 Prices of Existing BMR Units ...................................................................... 9
3.5 Financing ........................................................................................................................... 9
3.5.1 Lenders ................................................................................................. 9
3 .5.2 Loan Requirements ................................................................................. 10
3.6 Insurance Requirements .................................................................................................. 10
3. 7 Required Pre-Purchase Education .................................................................................... 10
3.8 Minimum Cash Available ............................................................................................... 10
3.9 Documents for Completing Home Purchase .................................................................... 10
3.10 Terms of Affordability .................................................................................................. 11
4 .0 Rental Units ..................................................................................................................... 12
4.1 Income Limits for BMR Rental Units .............................................................................. 12
4.1.1 Co -Si gners .......................................................................................... 12
4.1.2 Household Composition ........................................................................... 12
4.2 Applicant Assets ........................................................................................................... 12
4 .2.1 Documentation to Supp011 Assets ............................................................... 12
4.3 Rental Rate Dete1mination .............................................................................................. 13
4 .4 Previewing of Unit .......................................................................................................... 13
4.5 Owning Prope11y .................................................................................... 13
4.6 Occupancy Conditions .................................................................................................... 14
4 .7 Annual Rent Adjustments ............................................................................................... 14
4.8 Annual Re-Certification of Income ................................................................................. 14
4.9 Te1ms of Tenancy ................................................................................. 14
4.10 AvailabilityofNew Units for Lease ............................................................ 15
4.11 Eligible Prospective Tenants ..................................................................... 15
4.12 Prospective Tenant's Previewing of Unit ........................................................................ 15
4.13 Executed Lease Agreement ............................................................................................. 15
4.14 Annual Rent Adjustments ............................................................................................... 15
4 .15 Owner/Manager Ce11ification .......................................................................................... 15
4.16 Terms of Affordability Covenants .................................................................................. 15
4 .17 Terms of Tenancy ........................................................................................................... 16
4 .18 Occupancy Requirements ................................................................................................ 16
5.0 Appeal Process ..................................................................................... 17
6 .0 Authority ............................................................................................. 17
1.0 Introduction
As required by Section 19.172 .030 of the Cupe1tino Municipal Code, this manual establishes
procedures for the on-going administration of the inventory of affordable units, also refeITed to as
Below Market Rate (BMR) units, created by the City of Cupertino 's Residential Housing Mitigation
Program . The manual includes procedures and guidelines for prioritizing applicants, evaluating the
eligibility of applicants, setting maximum affordable rents and sales prices , and monitoring
compliance of tenants and homeowners with the recorded affordability covenants . The manual will
provide guidance to City staff, the City's program administrator, BMR homeowners, BMR renters , a
nd property managers of rental complexes that contain BMR units. The attached exhibits and
certain po1tions of this manual will be updated as necessary to comply with regulations and policies
of the United States Department of Housing and Urban Development (HUD), State of California
Department of Housing and Community Development (HCD), and City Housing Element and zoning
ordinance.
A separate manual, the "Below Market Rate (BMR) Housing Mitigation Program Procedural
Manual," describes the procedures for implementing requirements applicable to developers under the
Residential Housing Mitigation Program.
The City of Cupe1tino has overall responsibility for the BMR program although the administration
may be contracted out to another agency. The guidelines in this Manual must be interpreted in
conjunction with the City's Housing Element, zoning, and documents implementing the BMR
program.
2.0 Applicant Selection Process
2.1 Minimum Tenant/Homebuyer Eligibility Requirements
Every tenant or purchaser of a BMR unit must meet specific minimum eligibility
requirements , as follows:
• Annual household income (including the income of all household members 18
years of age and older) must not exceed the maximum income limits established for
the BMR unit ;
• All owners must live in the BMR unit as a primary residence;
• Potential BMR homeowners must meet the definition of a first-time homebuyer ;
and
• Potential BMR homeowners must be able to obtain primary mortgage financing
and have a minimum of 5 .0% of the BMR purchase price for down payment plus
closing costs (gift funds are allowed)
2.2 Conflict of Interest
The following individuals are ineligible to purchase or rent a BMR unit:
• City employees and officials (and their immediate family members and dependents)
who have policy-making authority or influence regarding City housing programs,
paiiicipate in making decisions regarding City housing programs, administer City
housing programs , or whose salary is paid in any paii from a City housing program ;
• Any consultant to the City and employees of the consultant (and their immediate
family members and dependents) who have policy-making authority or influence
regarding City housing programs, participate in making decisions regarding City
housing programs , administer City housing programs, or whose salary is paid in any
paii from a City housing program;
• An applicant for or developer of the project containing the BMR units and its officers
and employees (and their immediate family members), and the prope1iy owner of the
project and its officers and employees (and their immediate family members); or
• Any other individual who has a conflict of interest as defined by federal or state law
or the City 's adopted Conflict of Interest Code .
In addition, if an employee of any consultant involved with City housing programs is on
the waiting list for any BMR unit , all review of that employee 's application must be
perfo1med by the City.
In order to track applicants who potentially fall under this conflict of interest policy, the
City will ensure that the waitlist of BMR Program applicant s contains the employer and
position for each person on the waitlist.
2.3 Priority Point Placement System
2
The City has established a priority point placement system that reflects the City 's priorities
regarding pl acement of households into the limited number of BMR affordable units in the
City. While not a minimum requirement, the selection of BMR tenants and homebuyers
will be based on a priority point placement system that reflects the City's priorities
regarding placement of households into the limited number of BMR affordable units
in the City. Under the priority point placement system, preference is given to applicants
who live and/or work in Cupertino , including public service employees . The priority
point placement system point scale is listed below.
Applicants can receive up to a maximum of three points based on the following criteria
below:
One Point
Two Points
Cupertino resident
Employment in Cupertino
Applicants receiving three points shall be considered the highest pnonty Applicants
receiving two points shall be considered the second highest priority Applicants receiving
one point shall be considered the third highest priority Applicants receiving zero points shall
be considered the lowest priority
In addition, applicants who have been displaced from rental housing in Cupertino by
public or private redevelopment shall receive a priority over all other applicants.
2.3.1 BMR Applicant Waiting Lists
The waitlist application period for BMR for -sale and rental units will open on the first
business day of October annually. At that time BMR for-sale and rental unit eligibility
forms will be accepted. The waitlist application period will close on the last business day
of October annually. Within 30 business days of the submission deadline (last business day
of October); the City or its agent will conduct a lottery. Each Eligibility Form will be
separated into categories with equivalent priority points , and then randomly assigned a
number to be put on the waitlist. Along with the City or its agent, two witnesses assist with
the lottery. All candidates will be mailed results of their applications by the end of
December annually specifying if they have been denied or approved, and if approved , their
applicant number on the waitlist.
When selecting BMR tenants or homebuyers for an available BMR unit, the City or its
agent will first attempt to identify an eligible household from the highest priority group
within the appropriate applicant pool and income designation. BMR units that become
available will be offered based upon the order of the waitlist within each priority group .
If there is no eligible household in the highest priority group, the City or its agent will
then look at applicants in the second highest priority group and so on.
2.3.2 Applicant's Right to Refuse BMR Unit
An applicant has two oppo1tunities annually to refuse a BMR unit and retain their place
on the waitlist. If an applicant refuses a third time , then they will be placed at the bottom
3
of the waitlist.
2.3.3 Housing Constructed for People with Disabilities
Some BMR units may be specially constructed to be accessible for people with disabilities.
In the event that an accessible unit becomes available, persons with disabilities on the waitlist
will be provided a preference for those BMR units .
2.3.4 Requests for Reasonable Accommodation.
If an applicant or member of the applicant 's household has a disability or handicap , an
applicant may request a reasonable accommodation in the City's policies or procedures so
that the applicant may take advantage of the City's BMR program. Examples may include
making large-type documents or a reader available to visually impaired applicants,
permitting an outside agency to assist with the application process , or allowing another
family member to co-sign a loan or lease . An applicant may request a reasonable
accommodation at any time in the application process or after having been selected for a
BMR unit.
2.3.5 Household Minimum Size to Occupy the BMR Unit
To ensure that the City's limited BMR units are used efficiently, a household must be
of a size equal to the number of bedrooms in the BMR unit. For instance, to be eligible to
purchase a three-bedroom unit, a household must contain at least three members . Minimum
household size occupancy standards for BMR units are:
1 bedroom unit = 1 persons
2 bedroom unit= 2 persons
3 bedroom unit = 3 persons
4 bedroom unit= 4 persons
2.3. 6 Solicitation of Applicants
Applications for BMR rental and ownership units shall be solicited as necessary to
maintain an adequate number of applications in each of the following applicant pools :
Very Low Income (up to 50% AMI)-BMR Rental Units
Low Income (up to 80% AMI) -BMR Rental Units
Median Income (up to 100% AMI) -BMR Ownership Units
Moderate Income (up to 120% AMI) -BMR Ownership Units
Outreach shall be conducted through the City's website, program brochures, community
workshops, presentations and periodic print media advertising. The City and/or its agent
shall be responsible for updating the content on the City's website and distributing
program brochures that are culturally and linguistically appropriate to the community.
These brochures will be available at City Hall , the Cupertino Public Library, the Quinlan
Community Center, the Cupe1tino Senior Center and other appropriate locations .
Furthermore, the City or its agent shall conduct outreach effo1ts through local media that
4
are culturally and linguistically appropriate to the community.
2.3. 7 Submitting an Eligibility Form for a BMR Unit
A sample copy of the BMR Eligibility Fo1m for purchasing or renting is provided as Exhibit
1.
2.3.8 Eligibility Process to Reapply on BMR Waitlist
Each year the BMR waitlist resets. For example, even if a BMR applicant scored three points
based on the priority point system in a given year, the same priority is not guaranteed for
the following year. All prospective candidates must apply annually in October even if the
candidate was on the BMR waitlist the prior year, except that displacees must apply within
90 days of receiving a displacement notice.
Candidates must keep the City or its agent informed about their cmTent mailing address,
telephone contact information, employment information, household composition, or any
substantial changes in income that may affect the applicant's eligibility to remain on the
waitlist.
2.3.9 Application Fees
BMR application and administrative fees may change from time to time. As a result, the
most recently approved application and administrative fees will be disclosed by the City
or its agent at the time of application annually in October for both BMR for-sale and rental
units. There will be no annual fee to maintain an applicant's place on the waitlist.
Exhibit 2 shows a sample copy of the BMR application with required documentation to be
certified for the BMR program.
2.3.10 Definition of Employment in Cupertino
A letter or verification of employment shall serve as sufficient proof of employment in
Cupertino .
2.4 Annual Gross Income
Annual household income is defined pursuant to the U.S. Code of Federal Regulations and
provided on the website of the U.S. Depaitment of Housing and Urban Development at:
http ://po1tal.hud.gov/hudportal/ documents/huddoc ?id= DOC 3 5699. pdf
Exhibit 3 provides the definitions of what is included and excluded from the detennination
of annual gross income in accordance with the U.S. Code of Regulations. In summary, gross
household income is the sum of all the income for every adult, 18 years or older, living
in the unit. Sources of income include all wages or salaries, overtime pay, commissions,
fees , tips , bonuses and other compensation, net income from a business or profession or
5
from the rental of real or personal property, interest and dividends, payments received from
social security, annuities, insurance policies, retirement funds, pensions, disability or
death benefits, payments in lieu of earnings, public assistance, alimony and child suppo1t
received, and any other sources of income .
2.4.1. Documentation to Verify Sources of Income
The gross annual incomes of all household members age 18 or older are considered when
detennining eligibility. The types of income to be verified and the type of documentation
that will be requested may include:
Signed copies of federal tax returns for the most recent three years
W2 form for most recent two years
Copies of the last three consecutive payroll stubs or other velification of
employment
The following income documentation below may also be ve1ified as follows:
Source of Income Documentation
Salaries and wages Prior three years federal tax returns, two years W2,
three most recent payroll stubs
Business income Prior three years federal tax returns and
verification of income by a certified public
accountant or bookkeeper including a most recent
quarterly profit /loss statement
Interest and dividend income Prior three years federal tax returns
Retirement and Insurance Income Ve1ification from source
Unemployment & Disability Income Ve1ification from source
Welfare Assistance Velification from source
Alimony, Child Support and Gift Income Ve1ification from source
Armed Forces Income Ve1ification from source
Other Velification from source
2.5 Assets
There are limits to the amount of net assets that are used for eligibility for BMR for-
sales and rental units . For households applying to be an owner of a BMR unit, the limit
is $100,000. For households applying to be a tenant of a BMR unit, the limit is equal to the
maximum household income limited adjusted for household size that is allowable in order
to be eligible for the program. The maximum allowable household income limits for the
BMR rental program are published annually in the BMR Program brochure.
The table below represents what is included and excluded for as assets .
2.5.1 Documentation to Support Assets
6
The following chmt contains the types of assets to be verified and the type of
doc umentation that wi ll be requested.
Assets Documentation
Checking Account, Savings Account, Mutual Copies of two most recent statements
Fund/Money Market Fund, Certificates of
Deposit (C.D.)
Stocks , including Options Copy of stock certificate or proof of purchase and
statement of current value; for stock prices attach a
copy of recent dated newspaper or online source that
shows the value of each company's stocks
Bonds, including savings bonds Copies of most recent document
Trust Copies of most recent document
Gift Signed Gift Letter by all parties
Personal Loan Letter or loan agreement
Down Pavment Assistance Loan Copy of Agreement
Individual Development Match Account Copy of two most recent statements
Other Verification from source
2.6 False Statements
During the BMR application process, applicants who intentionally make false statements
or misrepresent any facts on the application to purchase or rent a BMR unit will be
removed from the BMR waiting list and barred from re-applying for a BMR unit in
Cupertino in the future.
If the City or its agent should discover that a contract was completed by a purchaser
or renter who intentionally made false statements or misrepresented the facts in order to
appear eligible, the
City will treat this as a breach of the resale and/or rental restrictions and may exercise
any remedies allowed under the resale and/or rental agreement including a forced sale of
the unit or eviction and the imposition of any civil penalties that apply.
3.0 Owners hip Units
Requirements fo r Buyine-a BMR Unit
3.1 Income Limits for Ownership Units
The BMR for -sale program is designed to assist first-time median and moderate-income
homebuyers. The BMR for-sale program uses income limits published by HCD annually
for Santa Clara County, per household size. HCD's income limits include the median and
moderate-income categories and income limits are adjusted per household size. BMR
7
for-sale program income limits per household size are published annually in the City's
BMR program brochure. An example of median and moderate-income ranges is listed
below.
Median Income (up to 100% AMI) -BMR Ownership Units
Moderate Income (up to 120% AMI)-BMR Ownership Units
3.1.1 Co-applicants
The City or its agent will accept one application per household. A co-applicant is
defined as an adult member of the household whether related or unrelated who intends to
apply for the BMR unit, be on the title of the property with the applicant, and occupy
the unit as his or her primary residence. The combined income and assets of all adult
members of the household (including co-applicants) to purchase a BMR unit must not
exceed the maximum income limits per household size and asset limitations of the
program . All co-applicants must go through the same process as the applicant and must
agree to comply with the program requirements . Non-occupant co-signors are not allowed
to assist with the BMR purchase.
3.1.2 Household Composition
A household is comprised of one or more persons who may or may not be related. An
unborn child can be counted in family size once there is medical confirmation of pregnancy.
An adoption in process will be counted in family size with verification of the adoption
process being underway. A child will be considered pai1 of the household when the
child lives with a single parent for at least 75% of the time or in instances of joint
custody, at least 50%. The applicant will need to submit a copy of the divorce decree
and/or child custody agreement as verifiable documentation. If a divorce is in process, it
may not be possible to qualify an applicant because family size and financial status are
unclear.
If the applicants are proposing to combine households with the purchase of the BMR,
the combined household must meet eligibility requirements and combined income must
meet the household income limits .
3.2 Asset Limit for Ownership Units
Households with net assets over $100 ,000 held in the United States or foreign countries
will not be eligible to purchase a BMR home . Excluded from net assets are: 1) all non-
accessible funds, including any assets that generate a penalty when withdrawn i.e. 401K,
CALPERS , STRS and other pension plans; and 2) assets that will be used to fund the
down payments . Section 2.4 ofthis manual defines assets and provides the documents that
must be submitted to supp011 the calculation of assets.
3.3. Definition of First-time Homebuyer
An applicant must be a first-time homebuyer to be considered for a BMR for-sale unit. An
8
applicant shall be considered a first-time homebuyer if they have not owned a home for
at least three years. This definition applies to prope1ties owned in foreign countries as well
as the United States. An exception will be made for people who were homeowners prior
to a divorce or legal separation.
The City or its agent may verify first-time homebuyer status by (1) reviewing mortgage
deductions on the three most recent years of federal tax returns for each adult in the
applicant's household; (2) a signed statement on the application stating homeownership
status: and (3) a title search.
3.4 Affordable Sale Price Determination
3.4.1 Initial Prices of Newly Constructed Units
Newly constructed initial BMR sales prices will be determined by the City or its agent.
The City or its agent will calculate newly constructed initial BMR sales prices for both
median and moderate-income based on the maximum affordable housing cost provisions
of Section 50052.5 of the California Health and Safety Code and most recent published
HCD income limits.
3.4.2. Prices of Existing BMR Units
Resale prices for existing BMR units will be determined by the City or its agent. The
City or its agent will reference the Occupancy, Refinancing, and Resale Restriction
Agreement with Option to Purchase (Resale Agreement) recorded on the title of the existing
BMR unit when calculating the BMR resale price.
3.5 Financing
3.5.1 Lenders
Prospective purchasers of BMR units must seek and obtain their own primary mo1tgage
financing in order to purchase a BMR unit. There is no prearranged City financing;
however the City and its agent maintain a list of City approved BMR lending institutions
who have provided written confirmation through their underwriting and/or bond department
that their lending institution is able to provide primary mortgage financing with the City's
BMR requirements . In order to qualify as an approved BMR lender the institution must
have reviewed and approved the City's Resale Restriction Agreement, Deed of Trust and
Promissory Note in advance. From time to time the City may require additional training
in order for a lending institution to maintain its status as an approved City BMR lender.
3. 5.2 Loan Requirements
The primary first mo1tgage loan must be a fully amo1tized 30-year term fixed principal and
interest loan. Interest only loans, negative am01tization loans , adjustable rate loans and
reverse mortgage loans are not pe1mitted .
9
In some cases the primary 30-year fixed principal and interest loan may be combined
with down payment assistance, mortgage assistance or a community program second loan.
Under this scenario the primary and secondary lenders must receive written approval from
the City.
3.6 Insurance Requirements
Prior to the sale of any unit , the City shall require that each purchaser secure a standard
homeowner' s insurance policy, with the City named as an additional insured . The City will
be entitled to any policy proceeds in excess of the affordable unit purchase price if the
proceeds are not used to rebuild the home. The insurance policy shall be in an amount equal
to the replacement value of the home . At least every five (5) years, the replacement
value must be reviewed and adjusted as needed. If the owner hires a contractor to work
on the home, the contractor must be licensed and cany liability and workers compensation
msurance.
3.7 Required Pre-Purchase Education
After the applicant is placed on the BMR Homeownership waitlist and before receiving an
offer to purchase a BMR unit, the applicant(s) must attend a BMR pre-purchase education
workshop or program offered by the City of Cupertino or a qualified HUD approved
agency. If an applicant completes the HUD approved workshop or City approved
program, the applicant will receive a certificate of completion. The ce1tificate of completion
must be provided as proof of paiticipation in the workshop or program and will be submitted
at, or prior to, close of escrow. The applicant must complete pre-purchase education within
a reasonable timeframe established by the City or its agent, or the applicant will be removed
from the waitlist.
3.8 Minimum Cash Available
The applicant(s) should have sufficient readily available assets for a minimum of 5% of the
purchase price for down payment, plus closing costs and other associated fees. Gifts funds
can be applied towards applicant's 5% down payment assistance; a signed gift letter is
required by all patties involved .
3.9 Documents for Completing Home Purchase
The following documents must be read and signed by the Owner(s) before the sale or
resale of a BMR unit is completed :
• Buyer's Disclosure Statement (Exhibit 4)
• Promissory Note
Deed of Tmst
Occupancy, Refinancing, and Resale Restriction Agreement with Option to
Purchase
(Resale Agreement)
• Request for Notice Under Section 2924b of California Civil Code
10
The Resale Agreement requires owners of BMR units to live in their home as their
principal place of residence and prohibits renting the home except in cases of hardship . It
also limits the price at which the homes can be sold. If the owner sells the home above
the restricted price, then the owner must pay the City the difference between the restricted
price and the sales price. In addition, the owner must follow certain steps and procedures
when deciding to sell the home.
The City has an option to purchase a BMR home at the restricted p1ice whenever the
owner decides to sell the home or if the owner violates any agreements. The purpose of
the Promissory Note, Resale Agreement, and Deed of Trnst is to make sure that BMR
homes remain affordable to other BMR households upon resale.
The Buyer's Disclosure Statement is attached as Exhibit 4 and should be reviewed by all
applicants who desire to purchase BMR homes. It summarizes the major provisions of the
other documents to ensure that a BMR owner understands his or her obligations under
the program. The City or its agent will provide the other documents to any interested
applicant and to all applicants who are considered for purchase of a particular BMR unit.
3.10 Term of Affordability
The deed restrictions imposed on each BMR affordable unit pursuant to the program shall
remain in effect for a pe1iod of 99 years from the date of original sale of that unit.
Fmihermore, the resale restrictions shall renew at each change of title .
4.0 Rental Units
Requirements for Rentin~ a BMR Unit
4.1 Income Limits for BMR Rental Units
The BMR rental program is designed to assist very low and low-income households.
The BMR rental program uses income limits published by HCD annually for Santa Clara
County. HCD 's income limits include the very low and low-income categories, and income
limits are adjusted for household size. BMR rental program income limits per household
size are published annually in the City's BMR program brochure. An example of very low
and low-income ranges is listed below.
Very Low Income (up to 50% AMI)-BMR Rental Units
Low Income (up to 80% AMI) -BMR Rental Units
4.1.1 Co-Signers
Non-occupant co-signers are not allowed to assist with the BMR rentals .
4.1.2 Household Composition
11
A household is comprised of one or more persons who may or may not be related. An
unborn child can be counted in family size once there is medical confomation of pregnancy.
An adoption in process will be counted in family size with verification of the adoption
process being underway. A child will be considered part of the household when the
child lives with a single parent for at least 75% of the time or in instances of joint
custody, at least 50%. The applicant will need to submit a copy of the divorce decree
and/or child custody agreement as verifiable documentation. If a divorce is in process , it
may not be possible to qualify an applicant because family size and financial status is
unclear.
4.2 Applicant Assets
For households applying to be a tenant of a BMR unit, the maximum asset limit
is equal to the maximum household income adjusted for household size that is allowable
in order to be eligible for the program. The maximum allowable household income limits
for the BMR rental program are published annually in the BMR Program brochure.
4.2.1 Documentation to Support Assets
The following chart contains the types of assets to be verified and the type of
documentation that will be requested .
Assets Documentation
Checking Account, Savings Account, Copies of two most recent statements
Mutual Fund/Money Market Fund,
Ce1iificates of Deposit (C.D.)
Assets Documentation
Stocks , including Options Copy of stock ce1iificate or proof of purchase
and
statement of cunent value; for stock prices attach a
copy of recent dated newspaper or online source
Bonds, including savings bonds Copies of most recent document
Trust Copies of most recent document
Gift Signed Gift Letter by all paiiies
Personal Loan Letter or loan agreement
Down Pavment Assistance Loan Coov of Agreement
Individual Development Match Account Copy of two most recent statements
Other Verification from source
4.3 Rental Rate Determination
The City or its agent will determine the rental rates for BMR units by income level and
household size . The rents will be determined based on annual HCD published income
limits and section 50053 of the California Health and Safety Code.
12
Annual Rent (inclusive of fees and utilities) for very low-income units cannot exceed
30% of 50% of the area median income adjusted for the size of the household appropriate
for the unit. Annual Rent (inclusive of fees and utilities) for low-income units cannot
exceed 30% of 60% of the area median income adjusted for household size appropriate for
the unit.
Rent includes all charges related to occupancy of the unit including utilities, parking
fees, fees for use of common facilities and other fees and charges. If utilities are not paid
by the property owner, the rent for the BMR units must be adjusted downward to allow
for a utility allowance calculated in accordance with the utility allowances published by
the Santa Clara Housing Authority annually.
4.4 Previewing of Unit
The City or its agent will coordinate with the apaitment manager/ property manager to
preview the BMR unit.
4.5 Owning Property
Candidate(s) cannot own a home and/or be on title of a property when applying for the
BMR rental program.
Livin2 in a BMR Rental Unit
4.6 Occupancy Conditions
The approved BMR tenant(s) must occupy the BMR unit during the entire term of the
lease. If an additional occupant (roommate, family member, etc.) moves into the BMR unit,
he/she will be considered part of the existing household . In such cases, the BMR tenant
must notify the City or its agent prior to the move in date, and the entire household
(including the new occupant) will be reevaluated to determine eligibility, including
household income requirements. If the tenant(s) fail to receive approval from the City
for any changes in occupancy or if the tenant(s) subleases the prope11y, the tenant
household will no longer be eligible to occupy the BMR unit.
4.7 Annual Rent Adjustments
Maximum BMR rents will be adjusted annually based on the most recently published
HCD income limits for Santa Clara County per household size and also in accordance with
the California Health and Safety Code Section 50053. The most recent BMR rent levels
will be included in the BMR program brochure. The City or its agent will notify the property
owner of the new rental rates. If the owner chooses to raise rents , the tenant will be given a
60 day notice before any rent increase .
4.8 Annual Re-Certification of Income
13
At least once a year, the property owner shall requalify BMR tenants to verify that they
are eligible to remain in BMR rental units. The City will provide the "BMR Renter
Occupancy Ce1tification Fo1m" (Exhibit 5) to the property owners. If the BMR renter fails
to submit a signed Certification within thirty (30) days of the w1itten request, then the
lease shall automatically te1minate , and the renter must vacate the unit within thirty (30)
days of written notice from the apaitment owner/property manager. If the renter fails to
vacate the unit, the apaitment owner/ property manager will institute evictions
proceedings.
On an annual basis, Requalification shall be based upon the BMR tenant's household
income, as determined by the three most recent pay stubs, prior year tax returns and
household size. If a very low income BMR tenant's household income increases and
exceeds the BMR income limits for very low income household but does not exceed the
BMR income limits for a BMR low income household, then the tenant's rent will be
increased to BMR low income rents, and the tenant main remain in the unit until either a
suitable BMR low income unit becomes available. If a tenant's household income increases
and exceeds the BMR income limits for a low income household, the tenant will be given
three months to locate alternate housing and vacate the BMR rental unit. A three month
extension may be granted in cases of extreme hardship.
4.9 Terms of Tenancy
BMR tenants will be subject to the same conditions of tenancy as other tenants
occupying the same property, except for te1ms relating to occupancy, income eligibility,
annual rece1tification, and limits on rents . The initial BMR lease te1m is for one year .
14
Requirements ofBMR Property Owners and Manaeers
4.10 Availability of New Units for Lease
An affordable BMR unit may not be leased until the City has approved the unit for
occupancy.
4.11 Eligible Prospective Tenants
All BMR units must be rented to BMR tenants approved by the City and/or its agent. The
services of this agency shall be funded out of the City's Below Market-Rate (BMR)
Affordable Housing Fund (AHF) and shall be monitored by the City.
An apartment owner/ property manager shall notify the City or its agent of any available
BMR units and the City and/or its agent shall have fourteen days to provide owner
with an income eligible candidate or candidates . In reviewing each candidate, the owner
or property manager may apply the same tenant selection criteria, such as past performance
in meeting financial obligations and credit references, as those applied to applicants for
non-BMR units on the property, except for those standards relating to income eligibility.
4.12 Prospective Tenant's Previewing of Unit
The City or its agent will coordinate with the apartment owner/ property manager so that a
prospective tenant may view the unit.
4.13 Executed Lease Agreement
The apartment owner/prope1ty manager will provide City or its agent with a copy of the
executed lease agreement.
4.14 Annual Rent Adjustments
Maximum BMR rents will be adjusted annually based on the most recently published
HCD income limits for Santa Clara County per household size and also in accordance with
the California Health and Safety Code Section 50053 . The City or its agent will notify the
property owner of the new rental rates. If the owner chooses to raise rents, the tenant must
be given 60 days notice before any rent increase .
4.15 Owner/Manager Certification
Prior to the rental of the first BMR unit on a prope1ty, the apaitment owner/prope1ty
manager will sign a certification of r eceipt of these Administrativ e Procedures with a
statement of intent to manage the BMR units according to these procedures. The sample
copy of the Certification Fo1m is provided as Ex hibit 6 of these procedures . Subsequent
apartment owners/ prope1ty manager may be asked to sign certifications of receipt of these
procedures .
15
4.16 Terms of Affordability Covenants
The deed restrictions imposed on each BMR unit pursuant to the program shall remain
in effect for a period of99 years from the date ofrecordation of the Regulatory Agreement.
Future owners of the prope11y will abide by all of the administrative procedures and by
the conditions in the recorded Regulatory Agreement for the entire 99 year period from date
of recordation.
4.17 Terms of Tenancy
BMR tenants will be subject to the same conditions of tenancy as other tenants occupying
the subject property, except for te1ms relating to occupancy, income eligibility, annual
rece11ification, and limits on rents. The initial BMR lease term must be for one year.
4.18 Occupancy Requirements
The property owner/property manager shall notify the City or its agent if it suspects
that there have been any changes to the occupancy of the BMR unit. If the tenant fails to
receive approval from the City for any changes in occupancy, or subleases the property,
or fails to provide the annual occupancy recertification, the tenant shall be in violation of
its lease and will no longer qualify as a BMR tenant.
5.0 Appeal Process
Any person may appeal a decision made under this Manual. The appellant must file a
written appeal with either the Community Development Director (if the program is being
administered by the City) or the Executive Director of any agency administering the BMR
program within 10 days of receipt of the decision . The Community Development Director
or the Executive Director, as applicable, will hear the appeal and provide a written decision
on the appeal within 10 days from receipt of the appeal.
The appellant may further appeal the decision of the Community Development Director or
the Executive Director, as applicable, by filing a written appeal with the Community
Development Director within 10 days of receipt of the decision. The appeal will be heard
by the City Council within 30 days from the date ofreceipt of the written appeal. The City
Council's decision on the appeal is final.
The sale of any BMR unit at issue in the appeal shall be postponed until a final decision is
reached on the appeal , or until the applicable period for filing an appeal has lapsed .
6.0 Authority
The City Manager or designee is authorized to sign all documents on behalf of the City that
implement the BMR Program and the policies in this Manual , including without limitation
promissory notes , deeds of trnst , res ale restriction agreements , and requests for notice .
16
EXHIBITS
17
EXIDBIT 1
City of Cupertino & West Valley Community Services
Below Market Rate (BMR) Program
Eligibility Form Instructions
The City of Cupertino and their Agent, West Valley Community Services, is pleased to offer you the opportunity to apply
to rent a Below Market-Rate (BMR) apartment or purchase a Below Market-Rate (BMR) home in Cupe1iino.
The City has contracted with West Valley Community Services (WVCS) to process eligibility fonns , applications, verify
info1mation, detennine eligibility, notify applicants of their eligibility, and maintain the rental and purchase waitlists.
ELIGIBILITY PROCESS;
• Please read these instructions completely, dete1mine your eligibility and complete the enclosed BMR Eligibility
Form. The completed form must be received at the WVCS office, 10104 Vista Drive,
Cupertino, CA 95014, . (WVCS is located behind the Stevens
Creek Fire Station on Stevens Creek Boulevard, one block east of De Anza Boulevard).
• WVCS will review your eligibility fonn and detennine your priority ranking (3, 2, 1, or 0) based on current
Cupertino residency and current employment in the City of Cupertino . Please see page 2 for definitions of these
tenns.
• A drawing with the eligibility fonns will determine the order of eligibility within each priority ranking
(3, 2, 1, or 0).
• All candidates will be mailed results by the end of the year; if they have been denied or approved,
and if approved, the applicant number on the waitlist. The first candidate on the waitlist
will be notified to view the next available unit (rental or purchase) and begin the application process .
ELIGIBILITY FORM:
Please note that all infonnation provided on the Eligibility Form will be verified when you are shown an available
unit. Any infonnation found to be false or inaccurate will irnmediately void your p artic ipation in the
program. Candidates must keep WVCS upd ate d throughout the year of any changes in inf01mation supplied. Incomplete
and late Eligibility Fonns will not be processed .
Rent or Purchase: Choose only one box.
Household Size: The total number of individual or family members who will be living in the unit.
Income Limits to Qualify for Purchasing a Home : See chart below . The amounts listed are gross (before taxes are taken out).
Housing and Community Development (HCD).Income Limits for 2016
(Income Limits will be Updated Each Year by HCD)
BMR Purchase Program
Household Si ze 1 2 3 4 5 6
Median Income 74,950 85,700 96,400 107 ,100 115,650 124,25 0
Moderate Income 89,950 102 ,8 00 115 ,6 50 128 ,500 138 ,8 00 149 ,050
Assets for Sale Program: Households with net assets over $100,000 will not be eligible . Excluded from net assets are all
non-access ible funds or any assets that generate a penalty when withdrawn, i.e ., 401K, CALPERS, STRS, and other pension
plans.
First-time Homebuyer: A ll of the applicants who wi ll be on the prope1iy titl e must b e a first -time homebuye r. Applicant(s)
shall be considered a first-time homebuyer if they have not owned any re sidential real estate for at least three years. This
definition applies to prope1iy owned in foreign co untri es as well as in the United States.
18
EXIDBIT 1
Available Cash for Down Payment, Closing Costs to Purchase: Households are required to have readily available assets for
a minimum of 5% down of the purchase price.
Housing and Community Development (HCD) Income Guidelines
BMR Rental Program
Household Size 1 2 3 4 5 6
Very-Low Income 39,100 44,650 50,250 55 ,800 60,300 64 ,750
Low Income 59,400 67,900 76,400 84,900 91,650 98,450
Income Limits to Qualify for a Rental Unit. See chart above . The amounts listed are gross (before taxes are taken out).
• The minimum income the household must make is at least 2.5 times the monthly rent.
o For Example: $940.00 (in rent) x 2.5= $2350.00 (minimum household income, gross before taxes are
taken out).
Assets for Rental Program: Households net assets, including and not limited to CD's , money market accounts and
cash/funds, may not exceed the maximum gross income allowed for the appropriate household size.
Priority Points are based upon the following criteria:
• One point: At least one member of the household, on the property title or lease, must currently maintain a primary
residence at an address loc ated within the City of Cupe11ino.
• Two points: At least one member of the household, on the property title or lease, must:
o Work for wages or salary within the boundaries of the City of Cupertino; or
o Own or operate a business in the City of Cupe11ino ; or
o Perform contract or conunission work where the actual work is conducted at a Cupertino location.
If you have any questions, please contact, Program Manager, Housing Services at :
housing@wvconununi tyservices. org.
PLEASE SUBMIT ONE ELIGIBILITY FORM PER HOUSEHOLD. DUPLICATE FORMS WILL
RESULT IN AN AUTOMATIC DISQUALIFICATION. COPIES/ FAXES/ SCANS WILL NOT BE
ACCEPTED
Please return the completed fonn to the WVCS office, loc ated at 10104 Vista Drive, Cupe11ino, CA . 95014 .
This Program is not designed to aid emergency or immediate housing needs.
19
EXHIBIT 1
City of Cupertino-West Valley Community Services
Below Market Rate (BMR) Eligibility Form
(Please read the Eligibility Form Instructions before completing)
D RENT
Please print clearly.
Name:
First Last
Current Address:
City State
Home Phone: Work Phone:
Total Number of Household
Members:
Total
Income:
E-Mail:
Household Gross
Estimated Value of Net Assets (Checking, savings, stocks, bonds, and/or CD
accounts):
1. Are any members of the household listed on a primary residential property title , at
any time, in the past three (3) years?
2. Are any members of the household currently living in the City of Cupertino?
3 . Are any members of the household cmTently employed in the City of Cupertino?
D PURCHASE
Middle Initial
Zip Code
(Annual)
D Yes D No
D D
Yes No
D D
Yes No
By signing below, I certify that all the information on this fonn is true and complete to the best of my knowledge.
When asked, I agree to give proof of this information and knowingly understand that supplying false, incomplete or
inaccurate infonnation is punishable under Federal or State criminal law .
Signatme: Date:
20
EXIDBIT2
WEST VALLEY COMMUNITY SERVICES APPLICATION FOR BELOW-MARKET-RATE
HOUSING
Please print clearly
Name:
Gender: D Male 0Female I E-Mail:
Mailing Address (No P. o. Box)
City: I State: I Zip:
Social Security: I Driver's License* and State:
Home Phone: I Work Phone:
*If you do not have a driver's license write in "None"
Marital Status:
D I I _am not man-ied (I am single! D I 1 am man-ied
widowed, or divorced) I I DI I am separated from my
spouse.
Household Composition (List all individuals who will be living in your home, listing head of household first)
Date of Relationship to head of
Full Legal Name Social Security Birth Age household
(Self, son, daughter, friend)
Ethnic Background (Per Department of Hou si ng and Urban Development Guidelines)
D African American D Asian or Pacific Islander I D I Hispanic
D White or Caucasian D American Indian or Alaskan Native (Tribe):
D Decline to answer I
21
EXHIBIT 2
INCOME, EARNINGS AND BENEFITS
All household members over the age of 18 must comp lete the information below
Total
Monthly
Wages
Child Social Employer Name and (gross AFDC* Full Legal Name Address amount Amount Suppo1t Security
before (Monthly) Benefits
taxes an
deducted
*Ai d to Families with Depend ent Children
22
EXHIBIT 2
BMR PRIORITY POINT QUESTIONAIRE
The purpose of this page is to determine if your household qualifies for Priority Points. Carefully
read each description of priority living and employment circumstances; then check all that apply.
You must provide the listed documentation as proof before receiving a unit to rent or purchase.
D I am a CURRENT CITY of CUPERTINO RESIDENT-1 POINT
• Households applying under priority description RESIDENT shall provide proo
of residency in Cupertino.
• A utility bill or a rental agreement shall be considered proof of residency .
D I am working in the CITY of CUPERTINO-2 POINTS
• A letter or verification from your employer shall serve as sufficient proof.
23
EXHIBIT 2
READ, SIGN, AND DATE BELOW
By signing below , you certify that all the information on this form is true and complete to the best of your
knowledge . If asked, you agree to give proof of the information, which may include a copy of your U.S. or state
income tax form. You certify that all the information provided on household composition
and income is trne and accurate. You understand you are required to cooperate in supplying all information
needed to determine eligibility, level of benefits or verify your trne circumstances . Your participation
includes attending scheduled meetings and completing and signing necessary fmms. Failure or refusal to do so
may result in delay of application for BMR sales or denial of program services .
CRIMINAL AND ADMINISTRATIVE ACTIONS F OR FALSE INFORMATION
You understand that knowingly supplying false, incomplete, or inaccurate infmmation may constitute a Felony,
punishable under Federal or State c1iminal law . Knowingly supplying false, incomplete or inaccurate
information is grounds for termination of the h ousing process. You understand that the Housing
Representative may perfmm a background check and/or verification of employment records .
Make sure that you have completed, dated, and signed this application. Make a copy of this application for
your records and submit the original application to the West Valley Community Services' office. MAKE SURE
THAT YOU HAVE COMPLETED, DATED, AND SIGNED THIS APPLICATION. WVCS will not
process incomplete applications .
All individuals, ov er the age of 18 , applying for the BMR program must sign below .
Print Full Legal Name Signature Date
OFFICE USE ONLY
Received on: I
I Signature of Housing
Representative: I
Notes: I
24
EXHIBIT 2
REQUIRED DOCUMENTATION
Please review the following checklist to ensure your application is complete. If you are unable to provide copies
of the documents listed below, you must submit a written and signed statement to WVCS explaining the reasons
for the missing documents.
Household Documents:
• Copy of rental agreement
• Copies of social security cards for each person in the household
The following documents must be turned in for each person 18 years or older:
• Copies of valid Photo ID
• Copies of three (3) most recent consecutive payroll stubs
• Copies for other income such as SSI, SS , pension, child support, spousal suppo11, etc.
• Copies ofW2 forms for the last two (2) years
• Copies of Federal Tax return papers for the last two (2) years (1040 , 1040EZ, etc .)
• Copies of all bank statements (all pages) for the last two months (checking, savings, stocks ,
bonds , CD's, etc.)
• Copies of all asset statements (all pages) for the last two months ( 401 K, Pension Accounts,
Retirement Accounts, etc .)
• For rental program: non-refundable $30 .00 application fee in the form of check, money order, or
cashiers' check payable to West Valley Community Services
• For sales program : non-refundable $50 .00 application fee in the fo1m of check, money order
or cashiers' check payable to West Valley Community Services
• For sales program: non-refundable $300.00 administrative fee in the fo1m of check, money order, or
cashiers ' check payable to West Valley Community Services (at the close of escrow)
WVCS will not return any submitted documents or make copies of submitted documents. Please provide
copies.
2 5
EXHIBIT 2
Notice to All Applicants
Options for Applicants with Disabilities or Handicaps
WVCS has an obligation to provide a "reasonable accommodation" to applicants if they or any family
members have a disability or handicap that requires a change in the usual application process.
A reasonable accommodation is some modification or change that we can make to the policies or
procedures that will assist an otherwise eligible applicant with a disability to take advantage of the
City's BMR program. Examples of a reasonable accommodation include:
• Making large type documents or a reader available to a vision impaired applicant during the
application process ;
•Permitting an outside agency to assist an applicant with a disability to meet the property's screening
criteria ; or
• Pe1mitting a sign language interpreter to assist a hearing impaired applicant during the application
process .
An applicant that has a family member with a disability must still be able to meet the essential obligations
of the BMR program. Potential renters must be able to pay rent, care for their apartments, report required
information to the owner, avoid disturbing neighbors, etc ., but there is no requirement that they be able
to do these things without assistance . Potential homeowners must have adequate income to suppo11 a
mortgage and meet other eligibility criteria.
If you or a member of your household has a disability or handicap and think you might need or want a
reasonable accommodation, you may request it at any time in the application process. If you would
prefer not to discuss your situation with us, that is also your right.
26
EXHIBIT 3
CITY OF CUPERTINO HOUSING MITIGATION PROGRAM DEFINITION
OF GROSS INCOME
Part 5 Inclusions
This table presents the Pait 5 income inclusions as stated in the Code of Federal Regulations.
General Category Statement from 24 CFR 5.609 paragraph (b) (April I, 2004)
I. Income from The full amount, before any payroll deductions , of wages and sa laries, overtime pay, commissions, fees, 'tips and wages, salaries, tips, bonuses, and other compensation for person a l services. etc.
---------
2. Business Income
3. Interest &
Dividend lncome
The net in come from the operation of a business or profession. Expenditures for business expansion or
amortization of capital indebtedness shall not be used as deductions in determining net income. An allowance
for depreciation of assets used in a business or profession may be deducted, based on straight-lin e
depreciation , as provided in Internal Revenue Service regulations. Any withdrawal of cash or assets from the
operation of a business or profession will be included in income, except to the extent the withdrawal is
reimbursement of cash or assets invested in the operation by the family.
Interest, dividends, and other net income of any kind from real or personal property. Expenditures for amo ization
of capital indebtedness shall not be used as deductions in determining net income. An allowance for depreciation
is permitted only as authorized in number 2 (above). Any withdrawal of cash or assets from an investmen wi ll be
included in income, except to the extent the withdrawal is reimbursement of cash or assets invested by th family.
Where the family has net family assets in excess of $5,000, annual income shall include the greate of the
actual income derived from all net family assets or a percentage of the value of such assets based on th e current
passbook savings rate, as determined by HUD.
_______ .The full amount of periodic amounts received from Social Security, a nnuities, in surance policies, retireme t funds,
pensions, disability or death benefits, and other similar types of periodic receipts, including a lump-sum amount
4. Retirement
Insurance lncome
or prospective monthly amounts for the delayed start of a periodic amount (except as provided in number 14 of
& lncome Exc lu sions).
5. Unemployment &
Disability Income ________ _, Welfare Assistance. Welfare assistance payments made under the Temporary Assistance for Needy
15. Welfare
Assistance
7. Alimony, Chi ld
~imo rt, & Gift
Income
Famili es (TANF) program are included in annual income:
Qualify as assistance und er the T ANF program definition at 45 CFR 260.31 ; and
Are otherwise excluded from the calcu lat ion of annual income per 24 CFR 5.609(c).
Ifthe welfare assistance payment includes an a mount specificall y designated for shelter and utilities that i subject
to adjustment by the welfare assistance agency in accordance with the actual cost of shelter and utilities, th e
amount of welfare assistance income to be included as income shall consist of:
th e amount of the allowance or grant exc lusive of the amount specifically designated for shelter or utilities ;
._ plus
the maximum amount that the welfare assistance agency could in fact allow the family for shelter and utilities .
If the family's welfare assistance is reduced from the standard of need by applying a percentage, the amount
calculated under 24 CFR 5.609 shall be the amount resulting from one application of the percentage.
Periodic and detennina ble allowances, such as alimony and child support payments, and regular contributions or
iftrre·c·eivetl-frcrnr0Tg1fniz11ttomrnrfi'o11'1pers1rrrsimrre·stdtrrg---i11tlre-Uwell "
8. Armed Forces All regular pay, special day and allowances ofa member of the Armed Forces (except as provided in
Income number 7 oflncome Exclusions).
27
EXHIB IT 3
Part 5 exclusions
This table presents the Pmi 5 income exclusions as stated in the Code of Federal R egulations.
General Category Statement from 24 CFR 5.609 paragraph (c) (April 1, 2004)
I. Income of
C:hildren
2. Foster Care
Payments
3 . Inheritance and
In su rance Income
4. Medical Expense
Reimbursements
Income from employment of children (including foster children) under the age of 18 years.
Payments received for the care of foster children or foster adults (usually persons with disabilities, unrelated to the tenant
family, who are unable to live alone).
Lump-sum additions to family assets, such as inheritances, insurance payments (including payments under he alth and accident
insurance and worker's compensation), capital gains and settlement for personal or property losses (except as provided in
number 5 oflncome Inclus ions).
Amounts received by the family that are specifically for, or in reimbursement of, the cost of medical expenses for any family
member.
5. ncomeof 1ve -m --1
Aides Income ofa li ve -in aide (as defined in 24 CFR 5.403).
6. Di sabled Persons C eta in increases in income of a disabled member of qualified families residing in HOME-assi sted housing or receiving HOME
tenant-basedrental assistance (24 CFR 5.67l(a)).
7 . Student Financial
Aid
8. Armed Forces
Hostile Fire Pa y
9. Self-Sufficiency
Program Income
10. Gifts
I I . Reparations
12 . Income from
Full-time Students
13 . Adoption
Ass istance
Payments
14 . Social Security
& SS! In come
15. Propeny Tax
Refunds
16 . Home Care
Ass istance
The full amount of student financial assistance paid directly to the student or to the educational institution .
The special pay to a family member serving in the Armed Forces who is exposed to hos tile fire .
a. Amounts recei ved under training programs funded by HUD .
b . Amounts recei ved by a person with a disability that are disregarded for a limited time for purposes of
Supplemental Security Income eligibility and benefits because they are set side for use under a Plan to
Attain Self-Sufficiency(PASS).
c. Amounts recei ved by a participant in other publicly assisted programs that are specifically for, or in reimbursement
of, out-of-pocket expenses incurred (s pecial equipment, clothing, transponation, childcare,
etc.) and which are made solely to allow panicipation in a specific program.
d. Amounts recei ved under a resident service stipend. A res ident service stipend is a mod es t amount (not to exceed
$200 per month) received by a resident for performing a servi ce for the PHA or owner, on a part-
time basis, th at enhances the quality of life in the development. Such services ma y include, but are not limited to,
fire patrol, hall monitoring, lawn maintenance, resident initiatives coordination, and serving as a member of the
PHA's governing board. No resident may receive more than one such stipend during the same
period of time.
e . Incremental earnings and benefits resulting to any family member from panicipation in qualifying state or local
employment training programs (including training not affiliated \vith a local government) and trainin g
of a family member as resident management staff Amounts excluded by thi s provision must be received under
employment training programs \vith cl ea rl y defined goals and objectives, and are excluded only for the period
during which th e family member panicipates in the employment training program .
Temporary, nonrecurring, or sporadic income (includin g gifts).
Reparation payments paid by a foreign government pursuant to claims filed under the la ws of that government by persons
who were persecuted during the Nazi era .
Earnings in excess of$480 for each full-time student 18 years old or older (excluding the head of household or s·pouse).
Adoption assistance payme nt s in excess of$480 per adopted child .
De ferred periodic amounts from SS! and Social Security benefits th at are received in a lump sum amount or in
prospect ive monthly amounts.
Amoun ts received by the family in th e fom1 of refunds or rebates under stat e or loca l la w for property laxes paid on the
dwelling unit.
Amounts paid by a slate agency lo a family with a member who has a developmental disability and is livin g at home to offset
the cost of services and equipment needed to keep thi s developmentally disabled fami ly member at home.
28
I
EXHIBIT 3
16. Home Carel Amounts paid by a state agency to a family with a member who has a developmental disability and is living at home to offset th
Assistance cost of services and equipment needed to keep this developmentally disabled family member at home.
17 . Other Amounts specifically excluded by any other federal statute from consideration as income for purposes of determining eligibility o
Federal benefits under a category of assistance programs that includes assistance under any program to which the exclusions of 24 CFR
Exc lusions .609(c) apply, including:
• The value of the allotment made under the Food Stamp Act of 1977;
• Payments received under the Domestic Volunteer Service Act of 1973 (employment through VISTA, Retired Senior
Volunteer Program, Foster Grandparents Program, youthful offender incarceration alternatives, senior companions);
• Payments received under the Alaskan Native Claims Settlement Act;
• Income derived from the disposition of funds to the Grand River Band of Ottawa Indians;
• Income derived from certain submarginal land of the United States that is held in trust for certain Indian tribes;
• Payments or allowances made under the Department of Health and Human Services' Low-Income Home Energy
Assistance Program;
• Payments received under the Maine Indian Claims Settlement Act of 1980 ( 25 U.S.C. 1721);
• The first $2,000 of per capita shares received from judgment funds awarded by the Indian Claims Commission or th
U.S. Claims Court and the interests of individual Indians in trust or restricted lands, including the first $2,000 per yea
of income received by individual Indians from funds derived from interests held in such trust or restricted lands;
• Amounts of scholarships funded under Title IV of the Higher Education Act of 1965, including awards under the Federa
workstudy program or under the Bureau of Indian Affairs student assistance programs;
• Payments received from programs funded under Title V of the Older Americans Act of 1985 (Green Thumb, Senior
Aides, OlderAmerican Community Service Employment Program);
• Payments received on or after January 1, 1989, from the Agent Orange Settlement Fund or any other fund establishe
pursuant to the settlement in the In Re Agent Orange product liability litigation,M .D .L. No. 381 (E.D.N .Y.);
• Earned income tax credit refund payments received on or after January 1, 1991, including advanced earned incom
credit payments;
• The value of any child care provided or arranged (or any amount received as payment for such care or reimbursemen
for costs incurred for such care) under the Child Care and Development Block Grant Act of 1990;
• Payments received under programs funded in whole or in part under "the Job Training Partnership Act (employmen
and training programs for Native Americans and migrant and seasonal farm workers, Job Corps, state job trainin
programs and career intern prognims, AmeriCorps);
• Payments by the Indian Claims Commission to the Confederated Tribes and Bands of Yakima Indian Nation or the
Apache Tribe of Mescalero Reservation;
• Allowances, earnings, and payments to AmeriCorps participants under the National and Community Service Act of
1990;
• Any allowance paid under the provisions of 38 U.S.C . 1805 to a child suffering from spina bifida who is the child of a
Vietnam veteran;
• Any amount of crime victim compensation (under the Victims of Crime Act) received through crime victim assistanc
(or payment or reimbursement of the cost of such assistance) as determined under the Victims of Crime Act becaus
of the commission of a crime against th e applicant under the Vi ctims of Crime Act; and
• Allowances, earnings, and payments to individuals participating in programs under the Workforce Investment Act of
1998.
29
EXHIBIT 4
BUYER'S DISCLOSURE STATEMENT
CITY OF CUPERTINO INCLUSIONARY HOUSING PROGRAM
The City of Cupertino (the "City") has adopted an Inclusionary Housing Ordinance that
makes it possible for median and moderate income households to buy a house at a price that is
affordable. The p1ice that you are paying for your house is below the market rate, as required by the
Inclusionary Housing Ordinance.
In exchange for giving you the opportunity to buy your house at a below-market affordable
price, the City will require you to sign a Promissory Note, Deed of Trust, and an Occupancy,
Refinancing, and Resale Agreement with Option to Purchase (the "Resale Agreement"). The Deed
of Trust and Resale Agreement will be recorded against your property. These documents are
enforceable by the City. In general, the Promissory Note, Deed of Trust and the Resale Agreement
set fo1th conditions that you must meet, including but not limited to the following:
• The Resale Agreement requires you to live in your home as your principal place of residence
and prohibits you from renting out your home.
• The Resale Agreement places controls on the sale of your home. There is a limit to the
price at which you can sell the home. If you sell the home above the restricted price, you must
pay the City the difference between the restricted price and the sales price. In addition, you
must follow ce1tain steps and procedures when you decide to sell your
• home.
• The City has an option to purchase your home at a restiicted p1ice when you put the home
up for sale or if you violate any agreements.
The purpose of the Promissory Note, Resale Agreement, and Deed of Trust is to make sure that
the City's goal of providing affordable homeownership oppo1tunities to moderate income buyers
continues to be met by keeping your house affordable to other moderate income households should
you choose to sell or move. The City has helped you to buy a home; it wants to help others as well.
This Disclosure Statement explains the major provisions of the Promissory Note, Deed of Trust,
and Resale Agreement so that you will understand their requirements. You should, of course,
read the entire Promissory Note, the Resale Agreement, and the Deed of Trust and become
familiar with them if you are considered for the purchase of a particular BMR home.1
1 Numerical examples are included in this Disclosure Statement to help you better understand the provisions of the
Buyer's Resale Agreement and Promissory Note. Please be aware that these are simply to show how things work and
that they are not intended to represent your specific situation. If you follow along with a calculator, you may not get exactly
the same answers. Any differences are probably due to how your calculator "rounds-off" numbers.
30
REQUIREMENTS WHILE LIVING IN A BMR UNIT
A. REQUIREMENTS IN EFFECT FOR 99-YEAR TERM
The requirements that are in the Resale Agreement apply until the earlier of (i) ninety-nine
(99) years from the date of the recordation of the Resale Agreement, or (ii) the date you sell or
transfer your home in accordance with the Resale Agreement and the Deed of Trust. If you own and
live in your home for the whole 99-year te1m , all of the requirements of the Resale Agreement go
away.
B. PRIMARY RESIDENCE AND ANNUAL CERTIFICATION
Your house must be your main place of residence. This means you must live in your home for
at least 10 months out of each calendar year. At least once per year, City or its agent will verify
that owners continue to occupy the BMR units . The verification process will include the following
steps :
• The City or its agent will mail to all BMR units a Certification of Owner Occupancy.
• You must complete the f01m and return it to the City within 30 days, including proof of
occupancy such as a copy of the most recent mo1tgage statement, property tax bill, or utility
bill.
• The City or its agent will annually order property title lot books to verify homeownership
and liens on the property.
Failure to Submit Annual Certification
If the City dete1mines that you have willfully made false statements or misrepresented any facts
on the annual certification, or if you fail to submit the Certification of Owner Occupancy, the
City will treat this as a breach of the Resale Agreement and the Deed of Trust and will take all
legal remedies available, including forced sale of the unit.
C. LEASE OR RENT OF HOME
You are not allowed to lease or rent the house to anyone, except that in the event of substantial
hardship, you may rent-out the house for no more than 12 months, with prior written City approval.
If the City permits you to rent out your home for up to 12 months , you may only rent the home to a
lower income household , and the rent you may charge is restricted by the City to an affordable rent,
as defined by state law (approximately 30% of the tenant's household income, less an allowance for
utilities). If you violate these requirements , the City may sue to enforce them, and you will owe
the City any Excess Rental Proceeds you have collected (i .e., the rent in excess of the restricted
amount you are pe1mitted to charge). You will also be in default under the Resale Agreement , and
the City may require you to sell the home to the City in the manner described in the Resale
Agreement.
D. MAINTAINING YOUR HOME/ PROPERTY INSURANCE
By signing the Resale Agreement and Deed of Trust, you agree to keep your home and
landscaping in good repair and in neat , clean, and orderl y condition and to prev ent deterioration
31
of the home. You agree not use or dispose of any hazardous substances on the property, except those
commonly used on residential properties . You also agree to keep a standard homeowner's insurance
policy, with the City named as an additional insured. The insurance policy shall be in an amount
equal to the replacement value of the home. Every five ( 5) years , the replacement value will be
reviewed and adjusted as needed, if requested by the City. If you hire a contractor to work on your
home , the contractor must be licensed and caITy liability and workers compensation insurance.
E. CAPITAL IMPROVEMENTS
If you make improvements to your home, and you want the value of the capital improvements
to be taken into account when the Maximum Restricted Resale P1ice (or option price) is calculated,
you must obtain w1itten approval of the improvements by the City before the improvements are
made. The initial cost of such improvements must be at least $2 ,000 or more, and the improvements
must conform with existing building codes and with Federal Housing Quality Standards. A copy of
the receipts and invoices must be submitted to the City or its agent for proof of the capital
improvements made to your home.
F. REFINANCE AND JUNIOR MORTGAGES
The Resale Agreement allows you to refinance your first mortgage loan or place a
second mortgage or equity line of credit on your home, but places restrictions on the amount
received by you from the refinancing. Following refinancing of your first mortgage or the addition
of a junior mortgage, the principal amount of all debt secured by your house must not be greater
than the larger of: (i) 90 percent of the Maximum Restricted Resale Price; or (ii) the original amount
of all the loans you took out to finance the purchase of your home. If you are considering a refinance
of your first mortgage or obtaining a junior m01igage , you should contact the City for a
calculation of the Maximum Restricted Resale Price amount before you contact your financial
institution . The City will not approve any mo1igage that allows payment of interest only, negative
amortization, adjustable rate, or reverse mortgage.
REQUIREMENTS FOR SELLING OR TRANSFERRING OWNERSHIP OF A
BMRUNIT
A. CITY HAS OPTION TO PURCHASE
In exchange for the oppo1iunity given to you to buy your home at an affordable, below-
market price, the City has an option to buy your home at a restricted price if you sell your home or
transfer ownership during the term of the Resale Agreement or if you violate any of the te1ms of
the Resale Agreement. In other words , the City has · the first oppo1iunity to buy your house before
anyone else. The City may also give its option to purchase your house to a public agency, a nonprofit
organization, or a person or family meeting income and other requirements.
32
B. PERMISSIBLE TRANSFERS OF OWNERSIDP-NOT A SALE
Certain transfers of ownership are allowed although these transfers will require the new owner or
owners to sign new BMR documents . The following transfers are pennitted under the BMR
program. The City must be infonned of these transfers , but the City does not have the right to
purchase your home if you transfer ownership to: ·
• An existing spouse or domestic partner;
• A spouse or domestic pai1ner where the spouse or domestic pai1ner becomes the co-owner
of the home;
• One spouse as part of a man-iage dissolution proceeding;
• An existing spouse or domestic partner of owner by devise or inheritance following the
death of owner; or
• An inter vivos (living) trnst in which the owner is the beneficiary and trnstee, provided a
new resale restriction is executed in the name of the living trnst and the BMR owner
provides the City with a copy of the trnst document or certification of trust to verify the
trnstee info1mation.
Inheritance
In the event that someone inherits your home, the administrator of your estate or the
person inhe1iting your home must contact the City within 30 days of your death . If the person
inheriting your home qualifies as an eligible purchaser, he or she may keep your home, but he or
she will have to execute new homebuyer documents with the City. If the person inheriting your home
does not qualify as an eligible purchaser, he or she will have to sell the home in accordance with the
Resale Agreement, but may live in the home for up to 12 months , leave the home vacant for up to
12 months, or rent the home to a low income tenant at a restricted rent for up to a year. If the person
inheriting your home does not qualify as an eligible purchaser, and does not comply with the terms
of the Resale Agreement , he or she will be in default under the Resale Agreement, and the City may
exercise its option to purchase the home at the Maximum Restricted Resale P1ice. These provisions
do not apply to a spouse or domestic partner of the owner.
C. PROCESS FOR SELLING A BMR UNIT
The first action that you must take if you want to sell your home is to contact the City or its
agent and submit an Owner's Notice of Intent to Transfer. You should do this before you contact a
real estate broker and before you put the home on the market. The notice must include a pest
report from a licensed pest inspector , other required inf01mation, and a desc1iption of any capital
improvements that you have made and for which you received City approval. The Owner 's Notice
of Intent to Transfer must be sent by ce11ified mail with a return receipt requested or by express
delivery service with a delive1y receipt. Notices are considered effective as of the date received
or the date deliv ery was refused.
City's Response
The City will contact you w ithin seven days of receiving the Intent to Transfer to an-an ge
for a time to inspect your prope11y to as sess its condition. Within 30 days of th e City's re ceipt of
the Intent to Transfer, the p est control repo11, other required information, and the capital
33
improvement request, and the City's on-site inspection, the City will send you a City Response
Notice. The Notice will explain whether the City intends to exercise its right to purchase or transfer
its right to an income-eligible buyer. The City Response Notice will also provide the restricted sales
price amount.
City Exercises Right to Purchase
If the City elects to exercise its right to purchase the prope1ty or transfer its right to an
income eligible buyer, escrow will close within 90 days of the date that the City Response Notice
is sent to you. The City or its agent will select the new buyer from the City's waitlist.
When your home is bought by the City or a City-selected buyer under the City's option to
purchase, you will pay to the City a transaction fee equal to six percent of the sales price. This
fee takes the place of the fee for a broker's services. The City will be performing those services
when it purchases your home.
You should not contact a broker to sell your home until the Citv has informed you
whether or not it will not exercise its option to purchase your home. If you contact a broker and
the City exercises its option. you will owe the City a six percent transaction fee and you will be
solely responsible for any additional broker fee.
City Elects to Not Exercise Right to Purchase
If the City chooses to not exercise its right to purchase the prope1ty or assign its right to an
income eligible buyer, you may sell the home to an income eligible household for no more than the
restiicted sales price provided by the City: An eligible purchaser is a household (1) who will live in
the home; (2) whose income is equal to or less than the income level designated in the City Response
Notice; and (3) who will agree to sign resale restriction documents required by the City and to
otherwise cooperate with the City.
Once you find a potential eligible purchaser, you must refer the proposed buyer to the City so
that the City can determine if in fact the buyer is an eligible purchaser. The seller and the proposed
buyer must give specific information and documents to the City as described in the Resale
Agreement.
When the sale of the home to the eligible purchaser is completed , you must submit to the
City the info1mation and documents listed in Resale Agreement.
Non-Permissible Transfers
You may not transfer title to the BMR unit (except for the transfers listed in Sec ti
on B above) without submitting the Owner's Notice of Intent to Transfer and receiving the City's
approval. Title to the BMR unit may not be transferred to your friends or relatives whose income
or assets exceeds the established limits, or who will not occupy the BMR unit on a permanent
basis after the transfer, or who are otherwise not eligible to purchase a BMR unit.
D. SALES PRICE OF BMR UNIT IS RESTRICTED: MAXIMUM
RESTRICTED RESALE PRICE
34
The City wants to make sure that the price of the BMR unit remains affordable to future
median and moderate-income buyers. Therefore , the Resale Agreement limits the sales price of your
home . The Maximum Restricted Resale Price that you can receive is the lower of the Indexed P1ice
desc1ibed in Section D. l below and the Fair Market Value as described in Section D .2 .
1. INDEXED PRICE
(a) Owner's Base Price (price at which you bought it)
(b) increased by the percentage increase of the Area Median Income for Santa
Clara County for a household size of 4 persons from the date of your original purchase (the
recording date of the grant deed for the property) to the date of receipt by the City of the Owner's
Notice of Intent to Transfer
plus
(c) appraised val u e (not cost) of any eligible capital improvements and any
special assessments imposed by the homeowners association and paid by you. Eligible capital
improvements, among other requirements, must be approved in writing by the City before they are
installed, as described previously
minus
( d) Cost of repairs to con-ect any violations of building or other codes, to put the
house in a "sellable condition," such as cleaning, painting, appliance and other repairs, and other
defen-ed maintenance repairs.
Example 1 shows how the Indexed Price fo1mula works.
EXAMPLE 1 You sell your house at the end of eight years. The original price of your three-
bedroom home was $341,000. The median income for a family of four in Santa
Clara County when you bought your home was $105,500. Median income increases
by 16% over the eight years. Five years after buying your home, you remodel your
kitchen (with prior City written approval) and the remodeling work is valued by an
appraiser as worth $3,000 at the time you sell. There is no defened maintenance .
(a) 01iginal P1ice of Home $341,000
(b) Median Income Increases by 16% over
eight years
multiply (a) by 16%, then add 54,560
result ($54 ,560) to (a) $395,560
(c) Appraised Value (not cost) of Eligible + 3!000
Capital Improvements
INDEXED PRICE $398,560
2. FAIR MARKET VALUE
Under the Resale Agreement, the fair market value can be detennined in one of two
ways. First, it can be established by a real estate appraiser approved in advance by the City. If
35
possible, the appraisal will be based on sales prices of homes similar to yours that are sold in your
market area during the preceding three-month period. The appraisal will not take into account the
fact that the resale price of your home is restricted by the Resale Agreement. The value of any (i)
eligible capital improvements that you have made to your home, or (ii) damage or defen-ed
maintenance that decrease its value shall be included in the appraisal. The cost of the appraisal
used to determine fair market value will be paid by you, unless a new buyer has obtained an appraisal
that you may utilize. The Resale Agreement also allows you and the City to set the fair market value
of your home by mutual agreement instead of relying on an appraiser. Both you and the City would
have to agree to this particular method (instead of hiring an appraiser) and to the final fair market
value amount. If you and the City fail to agree on the Fair Market Value, either one can require use
of the appraisal method.
Example 2 shows how the Indexed Price and the Fair Market Value of the home are compared
to determine the Maximum Restricted Resale Price at which you can offer your house for sale.
EXAMPLE 2 The assumptions are the same as in Example 1. You sell your house at the end of eight
years. The original sales price of your home was $341,000. The median income for a
family of four in Santa Clara County when you bought the home was
PRICE
$105,500. Median income increases by 16% over the eight years. Five years after
buying your home, you remodel your kitchen. The Fair Market Value of your home
is determined by appraisal, the cost of which is paid by you. The appraisal determines
the Fair Market Value at $450,000. This amount includes the value of the kitchen
improvements, at $3,000.
INDEXED is less FAIR MARKET MAXIMUM RESTRICTED PRICE
than VALUE then RESALE
$398,560 < $450,000 $398,560
Since the Fair Market Value of the home is greater than the Indexed Price of
the house, the Maximum Restricted Resale Price which you can receive from the sale
of your home is $398,560.
E. TRANSFER IN VIOLATION OF RESALE RESTRICTION AGREEMENT;
PAYMENT OF "EXCESS SALES PROCEEDS" TO CITY
If you sell or transfer your home in a way that violates the te1ms of the Resale Agreement, or
if the City does not choose to purchase your home and you cannot find an eligible buyer, then you
must pay to the City any "Excess Sales Proceeds" that result from the sale of your house. For
example, if you do not sell your home to the City or to an eligible purchaser, but to someone else
for market value, then you will owe the City any "Excess Sales Proceeds" that result from the sale .
The term "Excess Sales Proceeds" is defined in the Resale Agreement as the amount by which
the gross sales proceeds you receive from the ineligible buyer exceed the Maximum Restricted
Resale Price for the home. Another way to put it is the following:
Gross Amount of Money the New Buyer Paid for the House
36
MINUS
Maximum Restricted Resale Price (from City Response Notice) EQUALS
Payment to the City of Excess Sales Proceeds
The amount of Excess Sales Proceeds that you pay to the City is used by the City for other
affordable housing programs to help other median and moderate income families purchase a home .
Example 3 shows how the Excess Sales Proceeds are calculated.
EXAMPLE 3 You sell your house at the end of eight years. You originally paid $341,000 for your
home. The City Response Notice sets the Maximum Restricted Resale Price at
$398,560. The City does not choose to purchase your own, and you are unable to
find a buyer who qualifies as an eligible purchaser. You sell the house for
$500,000. You must pay the City Excess Sales Proceeds as calculated below:
Total Amount Market
Purchaser Paid For House
MINUS
Maximum Restricted Resale Price (from
City Response Notice)
Amount of Excess Sales
Proceeds You Pay to City
$ 500,000
-398,500
$101,500
In cases where transfer of your home to another person is by means other than sale (with the
exception of a creditor taking title), the amount of Excess Sales Proceeds is the difference between
the original purchase price and the fair market value of the home at the time of transfer
VIOLATIONS OF BMR REQUIREMENTS
If you violate any provisions of the City documents, you are considered to be in default under
the Resale Agreement. Also, if you default under any loan on the home, such as a mortgage
or home equity loan, you would also be considered to be in default under the Resale Agreement. If
you do not correct the violation, the City could require you to repay Excess Sales Proceeds and/or
exercise its option and buy your home for the Maximum Restricted Resale Price. The City could
also go to court and get a com1 order to enforce the provisions of the City documents, which may
result in a foreclosure on your home.
The City may learn of violations of the Resale Agreement and program restrictions through
periodic audits and other resources available to the City. The City may take all actions necessary
to verify occupancy of the unit by the persons on the title to the unit. Any homeowner who violates
the terms of the Resale Agreement may be forced to sell the unit to the City, who
37
will n01mally then sell the unit to the next eligible purchaser on the waitlist. The City will require
the owner to reimburse the City for any rent that was collected in excess of that allowed by the
Resale Agreement.
Forced Sale due to Breach of Resale Agreement with Option to Purchase
Owners who breach the requirements of the Resale Agreement are violating the City
Council's policy of providing homeownership opportunities to median and moderate income
households. The number of people on the BMR waitlist often exceeds the number of BMR
units available. Therefore, when the City confirms that an owner has breached the terms of the
Resale Agreement, especially by not living in the BMR unit, the City may exercise its option and
force the sale of the BMR unit.
Foreclosure
If a lender records a Notice of Default on a BMR unit, then a breach of the te1ms of
the Resale Agreement has occurred. The City shall inform the owner of the action that needs
to be taken to cure the default and by what date the default must be cured . If the owner is unable
to cure the default, then the City again may exercise its option and force the sale of the BMR unit
to preserve the unit as affordable housing.
38
Signature Page
Please sign this Buyer's Disclosure Statement in the space provided below, keep a signed
copy for your records, and return the 01iginal to the City at the following address:
City of Cupertino
Community Development Depaitment
10300 Ton-e Avenue
Cupertino, CA 95104
I have received, read and understand the above Buyer's Disclosure Statement. I also
understand the following:
By:
By:
1. The restrictions last for 99 years.
2 . The home may be sold only to a moderate income family for 99 years.
3 . The resale restrictions will usually reduce the property's sale price compared to the sales price
of other homes . The sales price that I receive may be less than half the price of an
unrestricted home.
4 . Refinancing of the property and home equity loans are restiicted.
5. I must contact the City of Cupertino before any sale or refinancing of the prope11y and
before receiving a home equity loan. Any sale or refinancing or home equity loan must be
approved by the City.
6. I must live in the home . I cannot lease or rent it unless approved by the City for hardship.
7. The City has the right to buy my home at a restricted price when I decide to sell it or ifl
violate any of the provisions of the agreements I have signed.
Signature of Buyer
Print Name of Buyer
Signature of Buyer
Print Name of Buyer
39
EXHIBIT 5
CITY OF CUPERTINO HOUSING MITIGATION PROGRAM BMR
RENTER OCCUPANCY CERTIFICATION
Prope1ty Name: _______ _
Property Owner: ______ _
Address of BMR Unit: ---------
Tenant Name: ------
Instructions to BMR Renter: Please complete this form and return to _
____ (Property Owner) by ,_, 20 .
If you fail to submit this signed form within thirty {30} days of the written request, then
your lease shall be terminated and you must vacate the unit within thirty
(30) days of written notice from the property owner/manager. If you fail to vacate the
unit, the property owner will institute eviction proceedings.
HOUSEHOLD MEMBERS-List below all persons who live in the
unit.
HOUSEHOLD MEMBER AGE RELATIONSHIP TO HEAD OI
HOUSEHOLD
Criminal and Administrative Actions for False Information
You understand that knowingly supplying false , incomplete or inaccurate information may
constitute a felony, punishable under Federal or State criminal law. Knowingly supplying
false, incomplete or inaccurate information is grounds for termination of your lease.
By signature below , I" ______ _
_ [insert name] hereby ce1tify to the City under penalty of perjury that I and all of the
Household Members listed above occupy the rental unit located at _[insert address] as
my/our principal place of residence and that I/we have occupied the Premises for_(_)
40
EXHIBIT 5
[insert number] months of the calendar year ___ [insert previous calendar year]. I
further ce1iify that there are no additional occupants residing in the unit.
Signature of Household Adults
1.
Date __ / __ / __
2 .
3 .
4.
___ / __ / __ _
___ / __ / __ _
___ / __ / __ _
TO BE COMPLETED BY THE PROPERTY OWNER OR MANAGER
By signature below, !_[insert name] hereby ce1tify to the City that, to the best of
my knowledge, the persons identified above do indeed live at the address referenced above,
and no additional persons live there.
Signature of Property Owner/Manager Date
I I
(Company Name)
5
EXIDBIT6
CITY OF CUPERTINO HOUSING MITIGATION PROGRAM
RENTAL PROPERTY OWNER'S AND/OR MANAGING AGENT
CERTIFICATION OF RECEIPT OF ADMINISTRATIVE PROCEDURES
MANUAL
The undersigned received a copy of the Administrative Procedures Manual for the
City of Cupertino's Below Market Rate (BMR) Housing Mitigation Program. Further,
the undersigned understand that the BMR Administrative Policies and Procedures require
compliance with the requirement described in the Procedures .
Development Name and Site Address
Signature of Prope11y Owner Printed Name
Date
Signature of Co-Owner Printed Name
Date
Signature of Prope11y Manager or Owner 's Managing Agent Printed Name
6