CC Resolution No. 20-055 Amending the Below Market Rate Housing Mitigation Procedures ManualRESOLUTION NO. 20.055 A RESOLUTION OF THE CUPERTINO CITY COUNCIL AMENDING THE BELOW MARKET RATE HOUSING MITIGATION PROCEDURES MANUAL WHEREAS, the City's General Plan Housing Element contains goals and policies (including Goal HE-2 and Policy HE 2.3) calling for development of housing that is affordable to a diversity of Cupertino households; and WHEREAS, the Housing Element contains strategies for achieving these goals and policies, including implementation of the City's Residential Housing Mitigation Program described in Strategy HE 2.3.2, which requires at least fifteen percent (15%) below market rate (BMR) units in housing developments of seven or more units; and WHEREAS, Cupertino Municipal Code Section 19.172.030 authorizes the City Council to adopt rules and regulations for the purposes of carrying out the administration of the Residential Housing Mitigation Program; and WHEREAS, the City Council has implemented Section 19.172.030 through the adoption of the City's BMR Housing Mitigation Program Procedural Manual, which was last amended on May 5, 2015; and WHEREAS, on May 19, 2020, the City Council considered the July 2019 Economic Feasibility Analysis prepared by Strategic Economics and supplemental analyses prepared by Strategic Economics, LeSar and Associates, and KMA, and considered a recommendation from the Housing Commission with support from the Planning Commission to increase the City's Residential Housing Mitigation Program inclusionary requirement for new for-sale housing developments of seven or more units from fifteen percent (15%) BMR units to twenty percent (20%) BMR units; and WHEREAS, the Economic Feasibility Analysis determined that increasing the City's BMR inclusionary requirements as recommended would be feasible; and WHEREAS, increasing BMR inclusionary requirements for new for-sale housing projects would further the following goals and policies of the City's Housing Element and would therefore be consistent with the General Plan •Goal HE-1: An Adequate Supply of Residential Units for All EconomicSegments.Increasing the inclusionary requirements for for-sale units will help tocreate adequate housing for median and moderate income households.
Resolution No. 20-055
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•Goal HE-2: Housing is Affordable .for a Diversity of Cupertino
Households.
In Cupertino, new market-rate housing is not affordable to median and
moderate income households. Requiring more units affordable to median
and moderate income households in new developments will provide more
housing that is affordable to those income levels.
•Policy HE-4: Housing Mitigation: Ensure that all new developments -
including market-rate residential developments-help mitigate project
related impact on affordable housing needs.
Increasing the BMR requirements for for-sale market-rate units will ensure
that these projects will more completely mitigate their impact on
affordable housing needs.
•Policy HE-5: Range of Housing Types: ... Emphasize the provision of
housing for lower-and moderate-income households ...
Increasing the provision of housing for moderate-income households will
further emphasize moderate-income housing as a component of new, for
sale affordable housing development.
•Policy HE-6: Development of Affordable Housing and Housing for
Persons with Special Needs: Maintain and/or adopt appropriate land use
regulations and other development tools to encourage the development of
affordable housing.
Adopting provisions to increase the proportion of median and moderate
income housing in new developments will encourage the development of
affordable housing.
•Strategy 7: Residential Housing Mitigation Program: Require 15% for-sale
BMR units in all residential developments where the units can be sold
individually.
The strategies contained in the Housing Element are not the only strategies
that the City may use to accomplish its goals and policies. The Mitigation
Program will continue to require at least 15% of new for-sale units to be
BMR units. Increasing the percentage of required BMR units to 20% will
better assist the City in achieving its goals and is consistent with the
Housing Element's policies.
Resolution No. 20-055
Page3 WHEREAS, the City Council desires to amend the BMR Housing Mitigation Program Procedural Manual to require twenty percent (20%) BMR units for new forsale housing developments of seven or more units, and to make other conforming changes consistent with state law; NOW, THEREFORE, BE IT RESOLVED that the City Council hereby 1.Finds that the foregoing recitals are true and correct; and2.Approves the proposed amendments to the City's BMR HousingMitigation Program Procedural Manual, as shown in Exhibit A attachedhereto.BE IT FURTHER RESOLVED that this Resolution is not a project under the requirements of the California Environmental Quality Act of 1970, together with related State CEQA Guidelines (collectively, "CEQA") because it has no potential for resulting in physical change in the environment, either directly or ultimately, in that changing the affordability of residences has no potential for resulting in a physical change in the environment, either directly or indirectly. In the event that this Ordinance is found to be a project under CEQA, it is subject to the CEQA exemption contained in CEQA Guidelines section 15061(b)(3) because it can be seen with certainty to have no possibility of a significant effect on the environment. CEQA applies only to projects which have the potential of causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. In this circumstance, the amendments to the Housing Mitigation Manual would have no or only a de minimis impact on the environment. The foregoing determination is made by the City Council in its independent judgment. PASSED AND ADOPTED at a regular meeting of the City Council of the City of Cupertino this 19th day of May, 2020, by the following vote: Vote Members of the City Council A YES: Scharf, Paul, Chao, Sinks, Willey NOES: None ABSENT: None ABSTAIN: None
Resolution No. 20-055 Page4 SI
�
St� City of Cupertino ATTEST: Kirsten Squarcia, City Clerk r;/1/29� Date Date 6/12/2020
EXHIBIT A
PROPOSED AMENDMENTS TO THE CITY'S
BMR HOUSING MITIGATION PROGRAM PROCEDURAL MANUAL
Amended and Adopted by City Council
May 19, 2020
Resolution No. 20-055
City of Cupertino
Housing Div ision
Department of Community Development
10300 Torre Avenue
Cupertino, CA 95014
Voice: (408)777-3251
Fax: (408)777-3330
Table of Contents
1 Introduction ........................................................................................................ 1
2 Housing Mitigation Program .............................................................................. 2
2.1 Applicability ................................................................................................................................. 2
2.2 Affordable Housing Mitigation Fee .............................................................................................. 2
2.2.1 Payment ..................................................................................................................................... 2
2.2.2 Permitted Use of Fees ........................................................................................................... 3
2.3 Affordable Housing Units ............................................................................................................ 3
2.3.1 Minimum Affordability of Residential Units ....................................................................... 3
2.3.2 Fractional Units ................................................................................................................... 4
2.3.3 Affordable Housing Plan ...................................................................................................... 5
2.3.4 BMR Unit Design Requirements ............................................................................................ 5
2.3.5 Initial Maximum Sales Prices and Rents of BMR Units ..................................................... 5
2.3.6 Terms of Affordability .......................................................................................................... 7
2.3.7 Agreement between Developer and City............................................................................... 7
3 Mitigation Requirements of Non-Residential Developments ............................. 9
3.1 Requirements ................................................................................................................................ 9
3.2 Non-Residential Fee Calculations ................................................................................................ 9
4 Mitigation Requirements of Ownership Residential Developments ............... 10
4.1 Requirements ............................................................................................................................. 10
4.2 BMR Requirements for Developments with One (1) to Six (6) Units ....................................... 10
4.3 BMR Requirements for Developments with Seven (7) or more Units ....................................... 10
5 Mitigation Requirements of Rental Residential Developments ...................... 11
5.1 Requirements ............................................................................................................................. 11
5.2 Residential Rental Impact Fee Calculations .............................................................................. 11
6 Mitigation Requirements for Mixed-Use Projects ........................................... 12
6.1 Requirements ............................................................................................................................. 12
6.2 Mixed-Use Mitigation Fee Calculations .................................................................................... 12
7 Alternatives to BMR Requirements ................................................................ 13
7.1 Options for Alternatives ............................................................................................................ 13
7.2 Housing Plan for Alternative BMR Requirements ................................................................... 13
8 City Incentives ................................................................................................ 15
8.1 Density Bonus ........................................................................................................................... 15
8.2 Financial Assistance .................................................................................................................. 15
8.3 Fee Waivers ............................................................................................................................... 15
8.4 Priority Processing .................................................................................................................... 15
8.5 City Certification of Buyer and Tenant Eligibility .................................................................... 15
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1 Introduction In accordance with the City of Cupertino’s Housing Element, all new residential and/or non- residential developments are required to help mitigate project-related impacts on affordable housing needs.
As required by Section 19.172.030 of the Cupertino Municipal Code, this manual
establishes procedures for implementing the affordable housing mitigation provisions of the City’s Below Market Rate (BMR) Housing Mitigation Program.
A separate manual, the “Policy and Procedures Manual for Administering Deed
Restricted Affordable Housing Units” establishes the procedures for the on-going
administration of the inventory of BMR units created by the City’s Residential Housing
Mitigation Program. The City or its agent will administer the programs.
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2 Housing Mitigation Program
2.1 Applicability
A. The Non-residential and Residential Housing Mitigation Programs are
applicable to all non-residential and/or residential projects that result in an
increase of gross floor area (for fee-based program) and/or the number of
net new units in a development (for unit-based program) with the following
exemptions:
1. New gross floor area that is replacing demolished or destroyed gross floor
area;
2. Existing space that is being rehabilitated, but not enlarged;
3. Governmental buildings;
4. Institutional buildings;
5. Demolition and rebuild of or additions to existing single family homes;
6. Accessory dwelling units and
7. Parking garages (this exemption does not apply to commercial paid-parking garages).
The program has two components; a fee-based program for certain types of
development and a unit-based program for other types of development.
2.2 Affordable Housing Mitigation Fee
A. Non-residential and residential affordable housing mitigation fee amounts
are set by the City Council.
B. The Affordable Housing Mitigation Fee may not exceed the cost of
mitigating the impact of the type of development on the need for affordable
housing as supported by nexus studies that may be commissioned from time
to time by the City Council.
C. The fee shall be adjusted annually using the Consumer Price Index (all items
index for the San Francisco Bay Area).
D. The City will publish the most recently adopted housing mitigation fees
annually in the fee schedule.
2.2.1 Payment
A. Fees shall be based on the fee schedule in e ffe ct on the date that the
construction permit is issued by the City and shall be due and payable
on the date of issuance of construction permits, unless otherwise
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required by state law.
B. In the event that the applicant is allowed to defer payment of fees and
is issued construction permits, the fees shall be due and payable
according to the fee schedule in effect on the date of fee payment,
prior to first occupancy of the project, unless a negotiated Development
Agreement allows otherwise.
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C. All fees shall be deposited into the City’s Below Market Rate (BMR)
Affordable Housing Fund (AHF).
2.2.2 Permitted Use of Fees
A. Affordable housing mitigation fees deposited into the BMR AHF shall
only be used for the provision of affordable housing in Cupertino.
B. The options for use of the fee revenue include, but are not limited to
the following:
1. BMR Program Administration
2. Land Acquisition
3. New Construction
4. Acquisition and/or rehabilitation of buildings for permanent
affordability
5. Preserving “at-risk” BMR Units
6. Substantial Rehabilitation
7. Rental Operating Subsidies
8. Down Payment Assistance
9. Direct gap financing
10. Fair Housing
C. A portion of the BMR AHF will be targeted to benefit the following
groups, to the extent that these target populations are found, to be
consistent with the needs identified in the nexus study:
1. Extremely low-income households and
2. Persons with special needs (such as the elderly, victims of
domestic violence, and the disabled, including persons with
developmental disabilities).
2.3 Affordable Housing Units
Affordable housing unit requirements are set by the City Council.
2.3.1 Minimum Affordability of Residential Units
A. When a development provides Ownership Below-Market-Rate (BMR)
units, the affordability requirements for units shall be as follows:
1. Fifty percent (50%) of BMR units as median-income and fifty
percent (50%) as moderate-income.
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2. If a single BMR unit is provided, it shall be designated for median
income.
B. When a development proposes to provide on-site Rental BMR units, the affordability requirements for units shall be as follows:
1. Sixty percent (60%) of BMR units as very low-income and forty
percent (40%) as low-income.
2. If a single BMR unit is provided, it shall be designated for very-low
income.
C. When the calculations in A or B (above) result in an odd number, the
“extra unit” shall benefit the median-income group for Ownership
BMR units and the very low-income group for on-site Rental BMR
units.
Affordability of Units - Example
Ownership BMR Units Rental BMR Units*
# of BMR
Units
Required*
# of Median
Income Units
# of Moderate
Income Units
# of Very-Low
Income Units
# of Low Income Units
1 1 0 1 0
4 2 2 2 2
9 5 ** 4 5 4***
* See Chapter 7 for BMR rental units.
** See Section 2.3.1 for extra unit
*** See Section 2.3.2 for fractional units
2.3.2 Fractional Units
A. When computations for the number of required BMR units result in
fractional units, the developer’s obligations shall be as follows:
1. 0.00 - 0.49 of a unit: Pay an in-lieu fee for the fractional unit in
compliance with Section 2.2.1.
2. 0.50 - 0.99 of a unit: Round up and provide one additional BMR unit.
B. De termination of the in-lieu fee for fractional units:
1. De termine the total Housing Mitigation Fee for the entire project
(as though impact fees will be paid rather than on-site units
provided.) The Housing Mitigation Fee for the project is calculated
by multiplying the gross floor area of the project by the applicable
affordable housing mitigation fee based on the fee schedule in
effect.
2. De termine the Housing Mitigation Fee per affordable unit by
dividing the total Housing Mitigation Fee as calculated in B1 (see
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above) by the total number of required affordable units (even if
fractional).
3. De termine the in-lieu fee owed for the fractional unit by multiplying
the Housing Mitigation Fee per affordable unit as calculated in B3
(see above) by the fractional amount.
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Example
Residential project: 42 units; BMR requirement = 8.4 units
Gross Floor Area/home = 3,000 sq. ft. (excluding exemptions)
On-site requirement = 8 BMR units; In-lieu fee requirement = 0.4 unit
Affordable housing mitigation fee = $20/sq. ft (assumed)
In-lieu fee calculated as follows:
Step 1: Total Housing Mitigation Fee = 42 units x 3,000 sq. ft. x $20/sq. ft. = $2,520,000.
Step 2: Impact fee per affordable unit = $2,520,000 ÷ 8.4 BMR units = $300,000 per BMR unit.
Step 3: In-lieu fractional impact fee = $300,000 x 0.4 = $120,000.
Note: The fee calculation and estimates above are examples only and may not reflect actual fees.
2.3.3 Affordable Housing Plan
A. For projects that propose BMR units, the applicant shall submit an
“Affordable Housing Plan,” describing how a development project
will comply with the City's BMR requirements, with the application for
the first approval of the project.
B. The plan shall identify the BMR units or parcels in the development.
C. If alternatives are proposed in compliance with Chapter 7, the plan shall
identify how the proposal is equivalent to the BMR requirements of
Chapter 4.
D. An applicant may submit a request for a waiver or modification of the
City's BMR requirements concurrently with the application for the first
approval of the project, based upon a showing that applying the
requirements would result in an unconstitutional taking of property or
would result in any other unconstitutional result. The request must set
forth in detail the factual and legal basis for the claim.
The request for the waiver or modification will be processed
concurrently with the affordable housing plan and all other permits
required for the project.
E. The decision-making body with authority to approve the project shall
review and may approve, conditionally approve, or deny the Affordable
Housing Plan. However, the City Council shall review and may
approve, conditionally approve, or deny an Affordable Housing Plan
that proposes alternatives to the BMR requirements of Chapter 3, 4,
and/or 5 or that requests a waiver or modification of the BMR
requirements. The waiver or modification may be approved only to the
extent necessary to avoid an unconstitutional result, based on the City
Attorney's legal advice, after adoption of written findings based on
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legal analysis and substantial evidence. If a waiver or modification is
granted, any change in the project will invalidate the waiver or
modification, and a new application will be required for a waiver or
modification.
2.3.4 BMR Unit Design Requirements
A. BMR units shall be comparable to market rate units in terms of unit
type, number of bedrooms per unit, quality of exterior appearance and
overall quality of construction.
B. BMR unit size should be generally representative of the unit sizes within the market-rate portion of residential project.
C. Interior features and finishes in affordable units shall be durable, of
good quality and consistent with contemporary standards for new
housing.
D. The BMR units shall be dispersed throughout the residential project.
2.3.5 Initial Maximum Sales Prices and Rents of BMR Units
A. For Sale BMR Units
The maximum initial sales prices of BMR units will be determined by
the City, or its agent, based on the maximum affordable housing cost
provisions of Section
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50052.5 of the California Health and Safety Code and the most
recent published State Department of Housing and Community
Development (HCD) income limits, as follows:
1. De termine the annual median income , based on HCD income tables
for Santa Clara County, for a household size that is one person more
than the number of bedrooms in the BMR unit.
2. Multiply the median income by the following:
a. 110% for a BMR moderate income unit; and
b. 90% for a BMR me dian income unit.
3. Obtain the maximum annual housing allowance by multiplying the
annual income from Step 2 above by 0.35 (moderate-income) or
0.30 (median- income).
4. Obtain the maximum monthly housing allowance by dividing the
annual housing allowance by 12.
5. De termine the maximum mortgage that can be financed:
a. The City’s BMR ownership program requires a minimum
borrower down payment of 5%; therefore, the first mortgage
loan amount will be calculated at a 95% loan-to-value (LTV)
ratio. In order to determine the primary mortgage interest rate
at least two City BMR approved lenders will be contacted for
a 30 year fully amortized fixed-rate primary home mortgage
interest rate quote based on specific BMR sales price scenarios.
Either use the average of the BMR lender interest rate quotes
or 0.5% higher interest rate than interest rate quotes.
b. De termine the maximum home mortgage that can be finance d
based on the principal and interest (P&I) mortgage payment as
determined by the interest rate in Step 5a. The total monthly
housing expense shall include the P&I mortgage payment,
property taxes, mortgage insurance (if applicable), homeowner’s
insurance, and homeowner’s association (HOA) fees.
c. De termine the maximum initial BMR unit sales price by adding
up the total monthly housing expense as described in Step 5b.
The proposed total monthly housing expenses cannot exceed the
maximum monthly housing allowance as described in step 4.
B. Rental BMR Units
1. The maximum initial rents for BMR units are set at a level affordable to low and very low-income households. The maximum
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initial rents for BMR units shall be determined based on:
a. Maximum housing allowance of 30% of gross income for a
household size
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of one person more than the number of bedrooms in the rental
BMR unit, and
b. For low income units, assume household income at 60% of
median- income, and for very low-income units, assume
household income at 50% of median-income.
2. The maximum rents for BMR units and maximum household
income limits are revised annually following the annual publication
of HCD income limits for Santa Clara County.
3. "Rent" includes monthly rent paid to the property owner, utilities,
and all fees for parking and other housing services. A reasonable
utility allowance, as determined by the tables published annually by
the Santa Clara County Housing Authority, shall be deducted from
the maximum monthly rents for those utilities paid by the tenant.
4. Where affordable housing units are developed with other state or
federal housing program assistance, the rental price requirements of
the state or federal housing program will supersede the price
limitations of these Guidelines where they are more stringent.
2.3.6 Terms of Affordability
Affordable housing is subject to recorded covenants that require the units
be occupie d at prices/rents that are affordable to Low to Moderate-income
households for a period of not less than 99 years from the date of first
occupancy of the unit. These deed restrictions shall run with the land and
will remain in effect for subsequent buyers and owners.
2.3.7 Agreement between Developer and City
A. Prior to recordation of a final or parcel map or issuance of any building
permit, whichever is earlier, an affordable housing agreement shall be
recorded against the property. The affordable housing agreement shall
include, but not be limited to, the following:
1. Total number of BMR units, type, location, square footage and number of bedrooms, and construction scheduling of market-rate and BMR units;
2. Provisions to ensure concurrent construction and completion of BMR and market-rate units;
3. Affordability levels for each BMR unit;
4. Provisions for income certification and screening of potential
occupants of BMR units;
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5. Re sale control mechanisms;
6. Financing of ongoing administrative and monitoring costs (City and
private);
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7. If applicable, a relocation plan for tenants of rental BMR units
upon sale of units or redevelopment of site; and
8. Other reasonably required provisions to implement the Affordable
Housing Plan.
B. Agreements for projects that provide alternatives to BMR requirements shall additionally contain provisions to ensure that the alternative requirements are completed prior to occupancy of the market rate development.
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3 Mitigation Requirements of Non-Residential Developments
3.1 Requirements
A. All non-residential projects that result in a net increase in gross floor
area shall be required to pay the Affordable Housing Mitigation Fee in
compliance with Section 2.2 of this manual.
B. Projects may propose alternatives to the BMR requirement in A (see above) in compliance with Chapter 7 of this manual.
3.2 Non-Residential Fee Calculations
Non-re sidential affordable housing mitigation fees shall be calculated by
multiplying the increase in gross square footage (SF) by the applicable non-
residential affordable housing mitigation fee.
Example Calculation of Non-Residential Affordable Housing Mitigation Fee
Scenario Applicable
SF
Fee Amount per SF of
Gross Floor Area †
Total Fee
Demolish and rebuild retail project:
Existing Gross sq. ft. = 10,000 sq. ft.;
New Gross sq. ft. = 15,000 sq. ft.
5,000 sq. ft.
$10.00/sq. ft.
$50,000
New construction:
Commercial office = 50,000 sq. ft.;
Police substation = 1,500 sq. ft.*;
Parking garage = 48,000 sq. ft.*
50,000 sq. ft.
$20.00/sq. ft.
$1,000,000
Note: * Exempt
† The fee amounts above are examples only and may not reflect actual fee amounts.
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4 Mitigation Requirements of Ownership Residential Developments
4.1 Requirements
A. An ownership reside ntial development is any residential development that
includes the approval of a subdivision map and creates one or more units
that may be sold individually. It also includes a condominium conversion.
B. All ownership projects that result in the net increase in units shall be
required to provide BMR mitigations in compliance with Section 4.2 and
4.3.
C. Projects that propose alternatives to the BMR requirement in A (see
above) shall do so in compliance with Chapter 7 of this manual.
4.2 BMR Requirements for Developments with One (1) to Six (6) Units
New ownership projects adding one to six units may either pay the Affordable Housing Mitigation Fee in compliance with Section 2.2 or provide one BMR unit in compliance with Section 2.3.
Example Calculation of Ownership Affordable Housing Mitigation Fee (1-6 units)
Scenario Applicable
SF
Fee Amount per SF of
Gross Floor Area †
Total Fee
New single family home or townhome:
Gross sq. ft. = 3,025 sq. ft.;
Garage = 425 sq. ft.*
2,600 sq. ft.
$20.00/sq. ft.
$52,000
New 5 unit multifamily ownership development:
Gross sq. ft. = 10,000 sq. ft;
Garage = 4,000 sq. ft.*
6,000 sq. ft.
$20.00/sq. ft.
$120,000
Note: * Exempt;
† The fee amounts above are ex amples only and may not reflect actual fee amounts.
4.3 BMR Requirements for Developments with Seven (7) or more Units
New ownership projects with seven or more units or lots shall provide at
least 20% of the units or lots as BMR ownership units or lots per Section
2.3.
Example Calculation of Ownership Affordable Housing Mitigation Fee (7+ units)
Scenario
BMR requirement BMR
units
Fees
New 24-unit ownership townhome project
24 x 20% = 4.8 units
5 units*
NA
New 46-unit condominium development
46 x 20% = 9.2 units
9 units Pay fee for 0.2 unit
per Section 2.3.2
Note: * Additional unit if over 0.49 per Section 2.3.2;
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† The fee amounts above are ex amples only and may not reflect actual fee amounts.
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5 Mitigation Requirements of Rental Residential Developments
5.1 Requirements
A. A rental residential development is any residential development that
creates new dwelling units that cannot be sold individually.
B. All rental projects that result in the net increase in units shall be required
to provide BMR mitigations in compliance with Section 5.2 and 5.3.
C. Projects that propose alternatives to the BMR requirement in A (see above)
shall do so in compliance with Chapter 7 of this manual.
5.2 BMR Requirements for Developments with One (1) to Six (6) Units
New rental projects adding one to six units may either pay the Affordable Housing Mitigation Fee in compliance with Section 2.2 or provide one BMR unit in compliance with Section 2.3.
Scenario Fee Amount per SF of
Gross Floor Area †
Total Fee
New 5 unit multifamily rental development:
Gross livable sq. ft. = 5,000 sq. ft;
$20.00/sq. ft.
$100,000
Note: † The fee amounts above are examples only and may not reflect actual fee amounts
5.3 BMR Requirements for Developments with Seven (7) or more Units
New rental projects with seven or more units shall provide at least 15% of
the units or lots as BMR ownership units or lots per Section 2.3.
Example Calculation of Rental Affordable Housing Mitigation Fee (7+ units)
Scenario
BMR requirement BMR
units
Fees
New 25-unit rental project
25 x 15% = 3.75 units
4 units*
NA
New 45-unit rental project
45 x 15% = 8.25 units
8 units Pay fee for 0.25 unit
per Section 2.3.2
Note: * Additional unit if over 0.49 per Section 2.3.2;
† The fee amounts above are examples only and may not reflect actual fee amounts.
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6 Mitigation Requirements for Mixed-Use Projects
6.1 Requirements
A. All new and redeveloped mixed-use developments shall comply with requirements in:
1. Chapter 3 for non-residential components; and/or
2. Chapter 4 for residential ownership components; and/or
3. Chapter 5 for residential rental components.
B. Projects that propose alternatives to the BMR requirements in A (see
above) shall do so in compliance with Chapter 7 of this manual.
6.2 Mixed-Use Mitigation Fee Calculations
Example Calculation of Residential Affordable Housing Mitigation Fee
Scenario
Applicable SF
Fee Amount per SF of Gross Floor
Area †
Total
Mitigation
New mixed-use project:
Res. condos (2 units) = 3,000 sq. ft.
Office = 5,000 sq. ft.
Parking Garage = 850 sq. ft.*
Res. = 3,000 sq. ft.
Off. = 5,000 sq. ft.
Residential Ownership fee =
$20.00/sq. ft.
Residential Ownership BMR units =
20%
Residential Rental fee = $25.00/sq.
ft.
Residential Rental BMR Units =
15%
Office fee = $20.00/sq. ft.
Retail & Hotel fee = $10/sq. ft.
$160,000
New mixed-use project:
Res. rental (120 units) = 110,000 sq. ft.
Retail space = 50,000 sq. ft.;
Hotel (160 rooms) = 50,000 sq. ft.;
Parking Garage = 150,000 sq. ft.*
Res. = 120 units.
Retail = 50,000 sq. ft.
Hotel = 50,000 sq. ft.
18 units plus
$1,000,000
New mixed-use project:
Res. Condos (120 units) = 110,000 sq. ft.
Retail space = 10,000 sq. ft.
Office = 25,000 sq. ft.
Parking Garage = 60,000 sq. ft.*
Res. = 120 units
Retail = 10,000 sq. ft.
Office = 25,000 sq. ft.
24 units
plus
$600,000
Note: * Exempt
† The fee amounts above are examples only and may not reflect actual fee amounts.
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7 Alternatives to BMR Requirements
The Council may, at its discretion, approve other alternatives to Chapters 3, 4, 5
and 6. The alternatives proposed shall be equivalent to the applicable BMR
requirements for the project.
7.1 Options for Alternatives
A. Options for Alternatives to BMR Requirements may include, but are
not limited to the following:
1. On-site BMR rental units where ownership units or a fee is required.
2. Purchase of off-site units to be dedicated and/or rehabilitated as for-
sale or rental BMR units per Section 2.3.
3. Development of off-site units to be dedicated as for-sale or rental
BMR units per Section 2.3.
4. Land for development of affordable housing.
B. The Council may approve, conditionally approve, or deny a proposal
to provide alternatives to BMR requirements.
7.2 Housing Plan for Alternative BMR Requirements
A. If alternatives to BMR requirements are proposed, an Affordable
Housing Plan shall, in addition to the requirements of Section 2.3.3:
1. Demonstrate equivalency of the alternative to BMR requirements
2. Rental BMR units shall be affordable as shown in Section 2.3.1.
3. If off-site de velopment of BMR units is proposed:
a. Identify the proposed site and demonstrate site control;
b. Identify the developer for the proposed off-site BMR project;
c. If not appropriately zoned, demonstrate compatibility of the proposed project with adjacent uses;
d. Provide a financial pro forma identifying all financing sources to
fully fund an affordable project; and
e. Provide a plan for completion of the off-site BMR development,
prior to
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approval of the market-rate project. The Affordable Housing Plan
shall additionally include, but not be limited to, the following items
prior to any parcel or final map or issuance of building permits for
the market-rate project, whichever is earlier:
i. Transfer of property to BMR
developer;
ii. Re cordation of a city-approved deed restriction against the
property;
iii. Discretionary approvals from the City for the proposed BMR
development;
iv. Committed financing for the project in an escrow account or an
account approved by the City with joint signatory authority
with the City and firm commitments from lenders or other
sources of financing for the project; and
v. A contingency plan, including a schedule of timing and
agreement to provide the required on-site BMR mitigation, in
the event the off-site BMR units are not completed prior to
completion of the market rate development.
B. The City may retain a consultant, at the developer's expense, to review the reasonableness of the proposal and the submitted pro-forma.
8 City
Incentives
8.1 Density Bonus
To maximize housing opportunity and partially assist the developer
by reducing or eliminating the development cost for the affordable
units, a density bonus consistent with Chapter 19.56 of the Cupertino
Municipal Code, Density Bonus, will be permitted.
8.2 Financial Assistance
If the project qualifies, the City may choose to utilize BMR AHF
monies to create a greater percentage of affordable units at greater
affordability than otherwise required (very low and low income in
for-sale developments; extremely low and very low in rental
developments).
8.3 Fee Waivers
The City may consider waiving park dedication and construction tax fees for affordable units.
8.4 Priority Processing
The City shall, wherever possible, consider expediting the processing
of developments with affordable units.
8.5 City Certification of Buyer and Tenant Eligibility
The City or its agent shall certify the eligibility of all proposed
buyers and renters of BMR units.