Agenda, regular meeting — Campbell City Council, June 7, 2022 (part 2 of 2)

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1. INTRODUCTION

HouseKeys is the City of Campbell’s Affordable Housing Program Administrator. This Rental Application Guide includes the guidelines, policies, and procedures that comprise the Affordable Rental Program for Below Market Rate (BMR) units.

Applying for, renting, and following leasing rules on an Affordable Rental Unit differs in many ways from renting at market rate. These differences include maintaining income eligibility during the entire lease term. It is important that prospective tenants understand the rules and procedures of the City’s Affordable Housing Program (“Program”) fully.

The Program Application Guide and other relevant information (e.g., Ordinances, procedures, and income limits), will be amended and updated from time to time . All proposed changes are subject to approval by the City Council prior to implementation and shall comply with state and federal affordable housing laws.

Updates to this Program Application Guide and other relevant information will be posted on the HouseKeys website

Please contact HouseKeys with any questions or concerns regarding this document or any other question regarding the City’s affordable housing program:

Online: http://www.housekeys2.com

Email: [email protected]
Phone: 1-877-460-KEYS (5397)
Address: 70 N. First Street Campbell, CA 95008

ALL GUIDELINES ARE SUBJECT TO CHANGE WITHOUT NOTICE

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2. ONLINE WEB PORTAL DASHBOARD OVERVIEW

Information Profiles Tools & Planning Program Center
Information Profiles are used to
gather important facts that
determine your eligibility and
qualification. These profiles will
be used by the Program
Administrator to complete your
Program application and
determine your eligibility to
participate in Program activities.

There are many calculations
involved in an Affordable
Housing Program. From
calculating the income category
of your household, to
determining your maximum
restricted rent pr ice and utility
allowance, it’s important to
understand the math behind
these Programs.

All Application, Opportunit ies,
Opportunity Drawing s, and
Participation Activit ies are
captured in your Program
Center. As soon as you
complete your initial registrati on,
this is where you’ll spend the
most time participating in the
Program.

Program File Cabinet Program Marketplace Community Center As you start to apply for and
participate in Program activities,
your file cabinet is where you’ll
track progress, exchange
information, and communicate
with Program administrators.

The Program marketplace is
where you can shop for
ownership, rental, and financing
opportunities.

The online community center will
have a classroom, a bulletin
board, and chatroom so you can
stay educated, informed and in
touch with other Program
participants and stakeholders.

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3. ESTABLISHING AN ACCOUNT (HOUSEHOLD PROFILE) IN THE MYHOUSEKEYS (WWW.MYHOUSEKEYS.COM)

The following five (5) actions are the initial steps needed to establish your household’s affordable housing account.

REGISTRATION

PROCESS ACTION OR MILESTONE

1. Initial Signup

Start out by completing our simple registration form. This step collects very basic information from you to establish a User Account, including your name, contact information, and your household size and income.

2. Complete the
Registration Wizard

The next step includes additional details about your address, household members, income profiles, and preference criteria. The preference criteria are described on Step 5 of the Registration Wizard. Completion of the Wizard will create a summary of your household and provide you with access to additional features of the Administrator Platform.

3. Browse the
Marketplace

The Marketplace allows you to shop for Ownership, Rental and Finance Program opportunities that interest you. Make sure to read the Program Profile and get an understanding for how it works, the intent, the rules and the process.

4. Request an
Application I.D.

The Application I.D. allows the Program Provider and Administrator to identify your household as a prospective applicant household. It also puts you on the notification list to receive information and updates.

5. Find an Opportunity
and Enter an
Opportunity
Drawing

Each Opportunity is placed into an Opportunity Drawing that allows HouseKeys to facilitate multiple applicant interest. Application I.D.s are prioritized through a Random Selection Process (Lottery) or by Time and Date Stamp (First -Come- First-Serve).

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4. HOUSEHOLD INFORMATION PROFILES

HouseKeys holds orientation classes t o introduce the Program and help applicant Households organize their application files and prepare for the application process. The application packet is broken down into 10 Household Information Profiles:

# Information
Profile Name
Description Purpose
1 Location Profile Where you live and
where you work
The address where you live and work is an important factor in determining your eligibility. The county you presently live in, or may be moving to, is often used to determine how to categorize your household.
2 Member Profile The people who live in
your housing unit
The number of people in your household determines your household size and household size is used to determine income category.
3 Income Profile Documenting the total
income of all
household members.

Income documentation is required by all household members who are 18 years of age or older
4 Expense Profile Documenting monthly
expense obligations
It’s important to ensure that your total monthly expenses show that you can afford the monthly rent for the unit you are applying for 5 Asset Profile Deposit Funds and
other Assets
You need to document your rental deposit funds. Please note that Assets are included in income calculations using the income shown on statements or calculations used by the Program Underwriter. See Asset Limits below. 6 Liability Profile Your Debt Your debt adds to monthly expenses and the maximum monthly rent that you can afford is an important qualification factor
7 Credit Profile Your Credit Score All three credit bureaus (Equifax, Experian, and TransUnion) are evaluated to ensure you meet minimum credit requirements
8 Public Record
Profile
Collections, Liens,
Bankruptcies and
Foreclosures
These are evaluated to determine whether or not there is any risk that the finalization of lease signing or meeting any of the property management requirements.
9 Demographics
Profile
Applicant
Characteristics
Demographic information is critical to ensure fair housing compliance and to track how Program Providers are meeting their housing goals. 10 Program
Preference Profile
Program Factors that
determine Applicant
Priority
While all applicants may apply for a housing program, applicants that live and work where the program is located are prioritized in many jurisdictions.

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5. APPLICATION PROCESS

5A. APPLICATION PROCESS (ORIENTATION, PRE-APPLICATION, AND PREFERENCES)

The application process is summarized below and on the following pages:

ORIENTATION

• All applicants, co-applicants, married couples, domestic partners, and any person that can or will be on the lease, must complete the Orientation before being eligible to participate in an Opportunity Drawing. Any exceptions to this rule will be posted in the Opportunity Drawing details. Applicants can sign up for an orientation class on the HouseKeys website.

PRE-APPLICATION AND APPLICATION ID ASSIGNMENT

• Request an Application ID in the Program Center
• Answer all of the Pre-Application Questions in the Request Wizard • The applicant will either receive a pass or fail rating based on the information in the pre-application wizard • If the applicant passes, an Application ID will be assigned immediately. If there is a system delay or malfunction, Application IDs can take up to 10 business days to be assigned.
• An Application ID does not
mean you are eligible or approved for the Program. It provides the applicant Household with the ability to enter Opportunity Drawings.

PREFERENCES AND RANKING

In all instances, the live in Campbell / work in Campbell / work-for Campbell preference (described in Section 9 ) will be used and verified by HouseKeys during the application process. Applicant Households that meet the stated preference criteria will be assigned a higher ranking. Once the preferred Household list is exhausted, HouseKeys will begin processing the files for the non- preference households.

Continued next page

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5B. APPLICATION PROCESS (OPPORTUNITY DRAWINGS)

Affordable Rental Opportunities are marketed through an Opportunity Drawing (i.e., lottery). Applicant Households enter an Opportunity Drawing using their Application ID number.

OPPORTUNITY NOTIFICATION

• A notification email will be sent out to Application ID holders. When a new Opportunity Drawing is released it will be posted in the Program Center
• Follow the instructions and review the terms in each Drawing Notification. It is the applicant Household’s responsibility to follow all instructions in each Opportunity Drawing, based on the method used. Each Opportunity Drawing announcement will include the selection method, file submission instructions, and one or more deadlines that the applicant Household must meet.

OPPORTUNITY ENTRY

• Once the applicant reviews the Opportunity Drawing information and is certain that he/she can meet ALL listed requirements, the applicant can follow the instructions to Enter Drawing
• Applicant must complete Authorization Form for verification and sharing information with Property Management (landlord) • Applicant must complete the Intent to Abide Form to confirm that the applicant understands the Program Requirements • Applicant Households can only apply for one Opportunity Drawing at any one time. If an applicant Household has entered more than one drawing, the lowest ranked submission will be chosen. Applicant Households are allowed to opt out of any drawing as long as the “opt out form” is submitted before an applicant Household enters another drawing. • If there is another Opportunity Drawing available at the same time, the applicant can opt out of one Opportunity Drawing to ente r another, if it is done before the Opportunity Drawing submission deadline. • If a household applies for two opportunities at the same time, and obtains two priority numbers, the applicant will be assigned the lower priority number.
• In some cases, the Opportunity Drawing will remain open until all applicable units are leased. Anyone who enters their Application ID into an Opportunity Drawing after the first deadline will be added to the end of the list using the time and date stamp of their Opportunity Drawing entry.
• Ranking and file request numbers are issued to set the processing order for each Opportunity Drawing. A new ranking and file request number will be issued every time an applicant Household participates in a new Opportunity Drawing. Ranking, file request, and Application ID numbers are not transferable.

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5C. APPLICATION PROCESS (OPPORTUNITY DRAWING METHODS)

When an Opportunity becomes available, HouseKeys uses the methods outlined below to determine the order in which Application IDs and files will be ranked and organized for review.

METHOD 1: LOTTERY SELECTION AND ASSIGNMENT

All applicant Households that enter their Application ID numbers into an Opportunity Drawing by the deadline will receive an Application ID ranking. If a Lottery is held, Application IDs will be chosen at random and assigned an Unfiltered Ranking nu mber based on the order in which they were drawn.

Each Application ID on the Unfiltered Ranking list will be re- ordered to account for the Live/Work Preference and a new ranking list Filtered by Live/Work Preference will be created. The Unfiltered Ranking number becomes the tie breaker between households with the same preference category.

Please note: Applicant Households who do not meet the Occupancy Standard will be assigned a lower priority number, regardless of lottery placement, or other eligibility criteria (e.g., First Time Home Buyer [FTHB]).

METHOD 2: FORM SUBMITTAL (DATE & TIME STAMP) TIE-BREAKER

All applicant Households that enter their Application ID numbers into an Opportunity Drawing by the deadline will receive an Application ID ranking. The Unfiltered Ranking in this method is based on the time and date stamp that their entry form was completed.

As with Method 1, the Unfiltered Ranking number list is re- ordered based on Live/Work Preference and the Unfiltered Ranking number is used as the tie breaker between households with the same preference category.

Please Note: Applicant Households that do not meet the Occupancy Standard will be ranked last.

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5D. APPLICATION PROCESS (APPLICATION REVIEW)

TENANT APPLICATION REVIEW AND LANDLORD SCREENING

• The Administrator will determine the processing order of the applicants and their priority ranking • Once the Administrator has finalized the application ranking and processing order, a list will be sent to the landlord to begin the background and credit check process using the previously signed authorization form. If the Administrator performs the background and credit check, this will be done immediately following the application ranking and processing order determination.

PROGRAM APPLICATION PACKAGE COMPLETION

• Once written confirmation has established that an applicant has met all requirements after credit bank background check, the Administrator will request the full application package for Underwriter review. • Applicants must provide and return all necessary documents to underwrite the file to the Administrator within 3 business days. • Documentation needs to be dated within 30 days of submission. • Applicants/Co-applicants, and or household members who submit inaccurate information, altered documentation, or false documentation or certifications, will be disqualified.
• Once all documents are received, the Applicant will be provided with a Submission ID which will be their file in line for Processing and Underwriting

APPLICATION REVIEW

• The application package will be reviewed, and if complete, will be submitted to the underwriter for review • If the application is incomplete, applicants will be given written notice to respond with any file updates or missing items • Applications that remain incomplete after notifications and applicable grace periods, will not be processed or forwarded to the Underwriter for final review

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5E. APPLICATION PROCESS (APPLICATION UNDERWRITING AND APPEAL)

APPLICATION UNDERWRITING

• The Underwriter will complete the review and issue a Program Eligibility and Qualification Certification (AKA “Approval Letter”). • It is important to note that the Program Underwriter may request additional items from the applicant. If the applicant does not respond within the grace period, or a denial is issued, the Underwriter will move to the next Submission ID holder. • If approved, the Administrator will notify the landlord of the outcome so that the applicant can move on with the leasing documentation and lease/contract signing as described in the next section.

APPEAL

• If the applicant does not agree with the Processor or Underwriter decision, the applicant Household will have 3 business days to appeal. The applicant Household will need to submit clear and sufficient documentation, along with an appeal form that details why they feel the decision is inaccurate, within the timeframe given. • Administrator Management will review the Appeal and all documentation. • Administrator will contact the applicant regarding the status of the appeal approximately 7 business days from the date the complete Appeal Package was submitted. Administrator may require additional time as will be indicated during the status notification
• Administrator is unable to hold properties for households in the application or appeal process. Administrator will move on to the next Application ID holder after the initial appeal review

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6. BELOW MARKET RATE MAXIMUM RENTAL RATES (Updated Annually)

Maximum Rental Rates: Maximum BMR rental rates are updated annually using the formula defined in the City’s Inclusionary Ordinance.

"Affordable rent" means monthly rent, including utilities and all fees for housing services, which do not exceed the following:

1. For lower-income households: one-twelfth of thirty percent of sixty percent of area median income, adjusted for assumed household size based on presumed occupancy levels of one person in a studio apartment, two persons in a one bedroom unit, three persons in a two bedroom unit, and one additional person for each additional bedroom thereafter.

2. For very low-income households: one-twelfth of thirty percent of fifty percent of area median, adjusted for assumed household size based on presumed occupancy levels of one person in a studio apartment, two persons in a one bedroom unit, three persons in a two bedroom unit, and one additional person for each additional bedroom thereafter.

The allowance for utilities is based on estimates published by the Santa Clara Housing Authority and the California Department of Housing and Community Development (HCD).

The United States Census Bureau uses a series of terms to determine the definition of a household. The basic meaning of Household is an occupied housing unit. A Householder (Primary Applicant) is the person whose name the housing unit is rented to or owned by. Members of the household share familial ties, living space, expenses, debts and/or assets with the Householder.

Rent Adjustments: The BMR rental rate may be increased once in a 12- month period. Rent adjustments will be based on the updated income limits published by the California Department of Housing and Community Development (HCD) annually and posted on the Administrator website.

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7. TENANT SELECTION, LEASE SIGNING, AND MOVE IN

Once an applicant is selected and their file is fully underwritten, and a Program Approval is issued, the Administrator will contact the Landlord and provide the name of the selected applicant to coordinate the next step which is signing the lease agreement and all Program related documents.

1. Lease/Contract Signing:

a. The landlord will schedule an appointment with the applicant to go over all documents and sign the lease agreement. b. The landlord may ask the tenant for other documents needed to finalize the move-in (e.g. renter’s insurance). c. The applicant must comply with all Landlord requirements.

2. Move in Process:

a. The landlord may start the move- in process with the applicant once all of the rules and regulations for the project are explained and accepted by the applicant.
b. The landlord shall provide Administrator staff with a copy of the lease agreement, renter’s insurance, and all other documents deemed necessary to document the file for Administrator records. c. Once all documents have been approved by the landlord and Administrator and signed by the applicant, the “applicant” becomes a “participant” and must comply with all BMR Program rules and regulations, including but not limited to submitting all required Annual Certification documentation described on the following page.

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8. PARTICIPANT / TENANT COMPLIANCE, RESONSIBILITIES, AND ANNUAL RECERTIFICATION

Participant/Tenant Compliance and Responsibilities:

1. The tenant shall comply with all rules and regulations set forth by the Landlord or development.

2. The tenant shall also comply with all Affordable Program (BMR) requirements for the duration of the lease.

3. Tenant must notify Owner/Manager within ten (10) working days of any and all changes in family structure, family size, employment income etc.

Annual Recertification Process:

1. All BMR tenants shall be recertified once per year, at the end of the lease term, for compliance with all Program requirements including, but not limited to income and family size.

2. Administrator will initiate the Recertification Process with the Owner/Manager as described in the next section.

3. The Program Coordinator will require a full and complete application package for any household asking for a lease extension or a new lease.

4. The tenant will be required to sign the “Intent to Abide” disclosure/form.

5. The tenant will have 30 days to submit all required documentation, following notification of the annual recertification process.

6. Refusal by tenant to promptly provide all required documents for re -certification will result in a 60 -day Termination of Lease and a Notice to Vacant will be sent out.

Enforcement

1. If tenant fails to cure the violation, the City/Administrator will exercise its legal right to coordinate with Property Owner, Landlord, and/or the Management Company to initiate Unlawful Detainer proceedings

2. The City/Administrator reserves the option to apply to a court of competent jurisdiction if it deems legal action is appropriate

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9. THE APPLICATION FILE STRUCTURE & APPLICATION CRITERIA

Program Eligibility and Qualification Criteria

The primary role of a Program Administrator is to determine the eligibility and qualification of applicant Households. A Program Processor serves the role of gathering the documents needed to evaluate the application and a Program Underwriter reviews the application to determine if it meets Program requirements.

It is important to understand that there is a lot of information needed to determine whether an application meets all the Program requirements. The application criteria used to determine whether an applicant Household will be approved fall into one of two categories:

• Program Eligibility Criteria: These are standards that define the characteristics of the target households who are best served by the Program and help the Program provider meet its intended goals. These standards often follow legal definitions and published documentation requirements. Underwriters evaluate Program Eligibility Criteria to determine if households “check eligibility boxes” that include, but are not limited to, residence address, employment address, household size requirements, total household income requirements, and whether an applicant meets the legal standard to be defined as a first-time homebuyer. Program Underwriters need to consider Program eligibility for the years prior to the rental application.

• Program Qualification Criteria: Once it is determined that an applicant is eligible for the Program, the Program Underwriter must also make sure that the rental opportunity is affordable for the applicant and that they are tenant-ready. In addition to requiring applicants attend orientation classes, the underwriter ensures that the tenant understands what they are signing up for and is comfortable with the annual income recertification.

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10A. ELIGIBILITY FACTORS AND PREFERENCE CRITERIA FOR RENTAL OF BMR UNITS

The City’s Inclusionary Housing Ordinance establishes a priority system for allocating the limited number of affordable rental units.

First priority (for up to ten percent of all affordable units) shall be given to income eligible employees of the City of Campbell. Second priority is given to income eligible existing Campbell residents and third priority is given to income eligible persons employed within the city limits of the City of Campbell. If a particular address is in question, Administrator will check with City staff to determine if the property is within the City’s jurisdictional boundaries.

The preference system will be used to establish a ranking of applicants. An eligible household will be ranked according to where they live or work. While an applicant who lives or works within the city limits will have priority over an applicant who does not, residency/employment status is not a requirement for the Program, and all individuals and households may apply. Households comprised of applicants who do not reside or work in Campbell may occupy a BMR unit if there are no eligible Campbell residents or workers on the eligibility list for occupancy.

PROGRAM PREFERENCE CRITERIA*
Priority 1: Work for City
(for up to 10% of units)
Must currently work for the City of Campbell government entity at least 20-hours per week, and held their position for at least 6-months Employee must have passed probation
Priority 2: Live in Campbell Must currently live in Campbell and maintained residency for at least 6-months Priority 3: Work in Campbell
Must currently work at a business located in Campbell
at least 20-hours per week, and held position for at least 6-months * This category includes Campbell School District employees . The district office is located in Campbell although the school building may be located in another city

*Eligibility will be evaluated at the time of lottery submission and verified again prior to occupancy

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10B. OCCUPANCY STANDARDS FOR PROGRAM UNITS

Applicant/Co-Applicants must occupy the property as their principal residence. This means that the Applicant/Co-Applicants must use the property as their primary place of residence and the property must be tenant-occupied upon renting for the term of the lease agreement. Use of the property for additional rental purposes, including temporary leases, sub- leasing or room rentals are not allowed under the Program and will trigger immediate action.

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. Pursuant to fair housing laws, the maximum occupancy allowed in a BMR Unit is two people per bedroom, plus one additional person. The table below shows the minimum and maximum household size based on the number of bedrooms. In some cases, an exception to the minimum standard may be made where no other qualified renter can be approved within 30- days of holding the lottery.

The City’s BMR Administrator will verify household occupancy once per year for the Term of the Lease Agreement between the City and the renter(s).

Note: Maximum Household size is subject to change per property management or Affordably Housing Agreement documents.

PROGRAM OCCUPANCY STANDARDS
Number of Bedrooms Minimum Household Size Maximum Household Size One 1 3
Two 2 5
Three 3 7
Four 4 9
Five 5 11

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10C. INCOME ELIGIBILITY CRITERIA

Income Eligibility is based on household size (number of persons in the household) and whether a household’s income is below income category limits published annually by the California Department of Housing and Community Development (HCD) on their HCD website as well as the Program Website. These resources should be used to determine the income percentage and income category that is applicable to your household.

Campbell’s housing ordinance presently defines the three income types most often used in their affordable homeownership program

• “Very low-income Household” means a household whose household income does not exceed very low-income limits applicable to Santa Clara County

• “Lower-Income Household” means a household whose household income does not exceed the lower income limits applicable to Santa Clara County.

• “Moderate-Income Household” means a household whose household income does not exceed one hundred twenty percent of the area median income applicable to Santa Clara County

It is very important for the applicant Household to know BOTH:

• Applicant Household Income as a percentage of the published County Median Income (calculated by dividing Household Income by the published Median Income Amount) applicable to your household size • Whether or not applicant Household Income is below the published income category limit applicable to your household size (e.g. Extremely Low, Very Low, Low, Median, or Moderate)

Income earned from assets, such as dividends, interest, rental income, business income, etc., is included in the household’s annual income pursuant to the Code of Federal Regulations, Title 24, Part 5 income inclusions (§ 5.609). Income calculation is also guided by California Code of Regulations , Title 25, Chapter 6.5 Program Operations, Gross Income (§ 6914). To qualify for the City of Campbell BMR Program, your househol d’s combined gross annual income cannot exceed the maximum income limit for your household size, as established by the HCD. All household members ages 18 or older must have their income verified. Household members that do not work or will not have any income in the next 12 months must complete a zero-income affidavit.

Note: The income categories for a particular development may vary in accordance with the Affordable Housing Agreement.

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10D. ASSET LIMITATION

In addition to meeting the income limit, there are restrictions on the amount of assets that a household may have to be eligible for the City of Campbell’s Program. For households applying to be a renter of a BMR unit, the limit is 100% of household AMI.

Asset limit = 100% of household AMI

The Administrator will review household income and assets for all occupants, including temporary occupants. To determine total household assets, Administrator will review the household’s total assets according to monthly financial statements and/or other valuations. A six-month average will be calculated just prior to Program application to determine eligibility and avoid applicant “asset dumping” (asset liquidation or transfer to other parties). Assets held in IRS -recognized retirement accounts (401-k’s, IRA’s, etc.) are not included for the purpose of determining whether an Applicant meets the Program asset limits. However, retirement and insurance payments will be used to determine gross household income.

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11. QUALIFICATION FACTORS

RENT TO INCOME RATIO

• To qualify, applicants must have income at least 2 times the tenant paid rental amount for Below Market Rent ( BMR) rental units. Applicants may be accepted with conditions, such as additional security deposit or guarantor. • No more than 50% of the applicant’s income can go to the rent payment. For example, if income is $30,000, the maximum rent cannot exceed $1,250.00 (50% of $30,000/12). Additional debts will also be taken into consideration. • If a guarantor is required, the guarantor’s income must be 5 times the tenant paid rental amount.

CREDIT

• The applicant shall pay the required non-refundable fee to the landlord in the form of a money order or cashier check. • A credit report is required for all applicants and co-applicants • All applicants/co-applicants must pass the landlord’s credit check and a background check. • The minimum credit score is 620 (in addition to Landlord Requirements). • An applicant with an unsatisfactory credit report will be denied. • Excessive collection accounts, including utility accounts (regardless of status) will result in denial of the rental application. All utility collection accounts within the last 2 years must be paid in full and confirmation presented with the application in order to be approved.
• An applicant whose credit report contains more positive than negative history may be approved subject to an additional deposit. • Bankruptcy (regardless of discharge) or repossession within the last 2 years will be grounds for denial of the application or may require an additional deposit for approval.
• Applicants with a foreclosure history over 2 years old may be accepted without an additional deposit. Applicants with a more recent foreclosure history may be approved with an additional deposit. • Rental housing debt, evictions, or collections will result in automatic denial of the application. • Any unresolved tax liens will negatively impact the overall applicant screening result.

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11. QUALIFICATION FACTORS (CONTINUED)

BACKGROUND SCREENING
• All applicants will be screened for criminal history at initial application. • A f elony conviction or adj udication for a fel ony offense against persons or property in the last seven years will result in an automatic denial of application.
• A m isdemeanor conviction may result in denial of a pplication or lease renewal with conside ration given to the nature of the conviction.
• Applicants or current residents appearing on the list of known terrorists and/or wanted fugitives as pro vided by the Office of Foreign Asset Control (OFAC), federal agencies (including the FBI or other state and local law enforcement agencies) will be denied.

GUARANTORS
• Acceptable guarantors must reside in the United States and qualify in each of the above categories. An additional deposit may be accepted if a qualified guarantor is not available.

REN

T HISTORY
• Applicants (except first time renters) must have at least 12 months of verifiable and positive residency history immediately preceding application.
• First-time renters or applicants with no verifiable residency history will require payment of an additional deposit or acceptable guarantor in lieu of immediate past rental history.
• Residency history that includes prior evictions, multiple late payments, returned checks, poor housekeeping, conduct disturbi ng the rights and comforts of other residents, unauthorized occupants, property damage or failure to adhere to the policies and regulations of the community or management company will result in automatic denial of the application. • Landlord reference indicating the landlord would not re-let to the applicant due to lease violation is grounds for automatic denial of the application.
• If the applicant owned his/her immediate pr ior residence, mor tgage history w ill be verified thr ough a c redit r eport o r other documentation of homeownership.

IDENTIFICATION
All applicants will be asked to provide positive identification including a copy of a valid driver’s license and social security card.

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12. INCOME INCLUSION AND EXCLUSION

The Federal and State government both have rules that determine how Gross Income is calculated and what income types are included and excluded from the Gross Income total.

Application Criteria Description

• The gross amount, before any payroll deduction, of wages and salaries, overtime pay, commissions, fees, tips and bonuses, and other compensation for personal services
• The net income from the operation of a business or profession (for this purpose, expenditure for business expansion or amortization of capital indebtedness shall not be deducted to determine the net income from a business). The adding back of certain deductions will be subject to underwriter approval (e.g. depreciation). • Interest, dividends and other net income of any kind from real or personal property. • Payments in lieu of earnings, such as unemployment and disability compensation, worker’s compensation and severance pay (except as outlined in “exclusions” section)
• Where the family has net family assets in excess of $5,000, annual income shall include the greater of the actual income derived from all net family assets or a percentage of the value of such assets based on a passbook savings rate, up to 10%. The current passbook savings rate used by the Administrator is 2.5% • Periodic and determinable allowances such as alimony and child support payments, and regular contributions or gifts received from persons not residing in the dwelling;

The following is an abbreviated list of items that are excluded from income:

• Casual, sporadic or irregular gifts
• Amounts which are specifically for or in reimbursement of the cost of medical expenses • Lump-sum additions to family assets such as inheritances, insurance payments (including payments under health and accident insurance and worker’s compensation), capital gains and settlement for personal or property losses • Foster child care payments
• The value of coupon allotments for the purchase of food pursuant to the Food Stamp Act of 1964 which is in excess of the amount actually charged the eligible household
• See full inclusion list on the Program Website

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Income Review Procedures

Income maximums are based on “gross” income derived from all sources as detailed in Internal Revenue Code (26 USC Section 61), whether or not exempt from federal income tax. Administrator projects future income based on the gross income on each applicant’s past income. In addition to other items deemed necessary to make this income determination, the Administrator may request up to 4 of the most recent year -to-date pay statements and the previous year’s final pay statement. Administrator must review income documentation for all Household members 18 years and older, regardless of dependency status. Applicants without income will need to sign a Zero-Income Affidavit provided by the Administrator. Unemployment benefits are considered income.

Please Note: All Variable Income is subject to Underwriter Approval. Each circumstance is different and must be considered using the documentation in the file. The terminology in this Guide is meant to be used as a basic guide to help pros pective applicant Household’s understand how this income type is considered during the underwriting process.

For employed applicants, annual income is generally derived by dividing the year-to-date gross income by the current pay period count and then by annualizing an estimated pay period amount by the total pay period count over one year (12 months). Please note that a Verbal and Written Verification of Employment may be required to be completed by the Employer issuing the pay statements.

# How Often Paid How to Determine Annual Income
1 Paid Annually Annual Gross Pay
2 Paid Monthly Use monthly gross payment x 12
3 Paid Twice Monthly Twice monthly gross pay x 2 pay periods x 12 4 Paid Biweekly Biweekly gross pay x 26 pay periods
5 Paid Weekly Weekly gross pay x 52 pay periods
6 Paid Hourly Hourly gross pay x average # of hours per week x 52 weeks 7 Government Employees with Annual Award Letters Income may be derived by referring to the Annual Award Letter

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Variable Income (Tips, Overtime, Bonuses, etc.)

Please Note: All Variable Income is subject to Underwriter Approval. Each circumstance is different and must be considered using the documentation in the file. The words below are meant to be used as a basic guide to help prospective applicant Household’s understand how this income type is considered during the underwriting process.

Tips, Overtime, Bonus, and other “variable income amounts” (amounts that change with each pay period) will be annualized separately from the base income outlined on the chart above. All income will be annualized and totaled unless the applicant can provide documentation from the employer. The employer must be available to complete a verbal verification of employment with the Administrator. In cases, where the variable income item is a one -time occurrence, the amount will be removed from the annualized calculation of income and added in a one-time total to determine the annual income.

Example: An applicant earns $60,000 per year based on base monthly pay statements of $5,000 ($5,000 x 12). In addition to the base income show, the applicant received a $2,500 one-time bonus in the first quarter of the year. If annualized, the $2,500 quarterly bonus would total $10,000 and the total income would be $70,000 ($60,000 base + $10,000 annualized bonus income). If proper documentation shows that the $2,500 is a one -time payment, and Administrator is able to verify and validate this information, the $2,500 would be added to the $60,000 base. The alternative total income would be $62,500 ($60,000 base + $2,500 one-time bonus).

Seasonal Workers: Administration will not annualize current income for seasonal workers who provide a Verification of Employment from their employer (s) verifying that the work does not occur year-round

Self-Employed Income: All self-employed applicants must submit a notarized Self -Employed Affidavit provided by Administrator. If self-employed for 2 or more years, Administrator will use verifiable (verified using Form 4506-T) federal income tax returns and review the net income for as many as 3 years of tax returns to determine the projected annual income. If self -employed less than 2 years, Administrator will review the submitted Profit & Loss Statement and use it to determine projected annual income. Additional documentation may be needed from the Self-Employed Household Member in order to determine projected annual income.

Calculating Income from Cash Income: In the case of an applicant who is paid cash for employment, Administrator will require a Verification of Employment from the applicant’s employer to confirm annual income and IRS Tax Verification Form 4506 -T to confirm that no taxes were paid.

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Variable Income (Continued)

Income from Commercial Property or Land Owned: The net income from any commercial property or land owned by any applicant shall be counted toward the annual Household income.

Unemployed Applicants: Unemployed applicants who are receiving no income at all should submit a Zero -Income Affidavit as provided by Administrator in place of income statements. Applicants receiving unemployment benefits do not need to complete the Zero-Income Affidavit as unemployment benefits are considered income.

Additional Notes on Income Calculation

If applicant has recently changed positions with employer, HouseKeys will determine the effect of the change on the applicant’s eligibility and opportunity to receive bonus or overtime pay in the future

If applicant who has historically been employed on a part -time basis indicates that he or she will now be working full time (or vice versa), obtain written confirmation from borrower’s employer

A verbal verification of employment (VOE) may be required for each employer

All material alterations, and/or omissions from the initial Registration, Application ID Questions, Opportunity Drawing Entry Form, Application Submission and Supporting Documents; including but not limited to household size, income and asset information, etc., are not permissible and will render all future re-submissions ineligible for review and approval for a period of one year. Exceptions for re-submissions are significant life events such as a job/career change, marriage, death, or the birth of a child and are at the discretion of the Administrator.

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13. REASONABLE ACCOMMODATION AND EXCEPTION REQUESTS

Accommodations in Program rules, policies, practices, or services, when such accommodations may be necessary to afford person s with disabilities, or a household with a member with disabilities, equal opportunity to apply for a BMR home. The requested accommodation must be reasonably related to the particular disability of the household member, and must be necessary in order to provide the household with equal access to housing.

Households or individual applicants unable to produce any particular document required in the application form for legitimate reasons beyond their control (natural disaster, military service, refugee status, domestic violence, witness protection program, disability etc.) may request an exception for that particular document.

Upon such request, Administrator may request a reasonably equivalent alternative document, and/or any additional supporting documentation deemed necessary by the Program Processor and Program Underwriter to verify eligibility of the Applicant/Co- Applicant and/or their entire Household.

Exceptions related to disabilities (reasonable accommodations) may be requested according to this procedure, with a brief description of the exception(s) needed due to the Applicant’s disability. The City and Administrator will consider the requested exception and will provide a written response within 14 calendar days, stating if the requested exception can be granted in full or part and the reason for such decision. The Administrator may approve or deny such request. If denied, Applicants may submit an appeal of such denial to the City.

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14. LANDLORD COMPLIANCE AND OWNER / MANAGEMENT RESPONSIBILTIES

1. General Compliance: The landlord shall comply with all Program requirements and provide requested documentation to the City/Administrator in accordance with these Program Guidelines, the Developers Affordability Agreement, and the City’s Inclusionary Housing Ordinance.

2. Current Records. The landlord shall keep current and updated BMR tenant/participant records that relate to Program eligibility (e.g. household member occupancy changes, employment loss, income changes, etc.).

3. Annual Recertification: Owner / Manager shall, upon request, provide Administrator with all required Annual Audit documents listed on the Program checklist, for review and approval, as part of the annual recertification process.

4. Tenant Income Changes: Following notification to and verification by Administrator, the Owner / Manager shall terminate the tenant’s lease and send the tenant a notice to vacate if the tenant’s income level exceeds the maximum income limit for that particular PROGRAM unit.

5. Vacancies: Owner / Manager shall notify Administrator in writing, using Exhibit A of the rental guide, upon vacancy of any BMR unit.
a. Administrator will set up a lottery and start processing applications within 60 to 90 days of receiving the notice. b. Administrator will provide a list of potential tenants to the Owner / Manager for review and approval. c. Owner / Manager shall provide Administrator with the following documents for all approved tenants:
1) Copy of the credit report
2) Copy of the background check.
3) Letter of approval once a tenant has been approved by the Owner / Manager for occupancy. 4) copy of the lease agreement
5) Updated rent roll
6) All other relevant reports or documents, as requested by the Administrator / City

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City of Campbell / HouseKeys
Below Market Rate (BMR) Program
Ownership Application Guide
[November 2018 Draft]

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TABLE OF CONTENTS

1. Introduction Page 2

2. Online Web Portal Page 3

3. Establishing An Account Page 4

4. Household Information Profiles Page 5

5. Application Process Page 6

6. Below Market Rate (BMR) Pricing And City’s Option To Purchase Page 11

7. Application File Structure And Criteria Page 12

8. First-Time Homebuyer Education And Title Requirements Page 14

9. Eligibility And Preference Criteria Page 15

10. Application Criteria Page 19

11. Transaction And Document Handling Page 26

12. Reasonable Accommodation Page 28

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1. INTRODUCTION

HouseKeys is the Cit y of Campbell’s Affordable Housing Program Administrator. This Ownership Application Guide includes the guidelines, policies, and procedures that comprise the Affordable Ownership Program for Below Market Rate (BMR) homes.

Buying, owning, and selling an Affordable Below Market Rate (BMR) Ownership Unit differs in many ways from buying, owning, and selling at market rate. It is important that the buyers and sellers of BMR Ownership Units understand the rules and procedures of the City’s Affordable Housing Program (“Program”) fully.

The Program Application Guide and other relevant information (e.g., Ordinance procedures and income limits) will be amended and updated from ti me to time. All proposed changes are subject to approval by the City Council prior to implementation and shall comply with state and federal affordable housing laws.

Updates to this Program Application Guide and other relevant information will be posted on the HouseKeys website

Please contact HouseKeys with any questions or concerns regarding this document or any other question regarding the City’s affordable housing program:

Online: http://www.housekeys2.com

Email: [email protected]
Phone: 1-877-460-KEYS (5397)
Address: 70 N. First Street Campbell, CA 95008

ALL GUIDELINES ARE SUBJECT TO CHANGE WITHOUT NOTICE.

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2. ONLINE WEB PORTAL DASHBOARD OVERVIEW

There are many calculations
involved in an Affordable
Housing Program. From
calculating the income category
of your household, to
determining your maximum
restricted rent price and utility
allowance, it’s important to
understand the math behind
these Programs.

All Application, Opportunities,
Opportunity Drawings, and
Participation Activities are
captured in your Program
Center. As soon as you
complete your initial registration,
this is where you’ll spend the
most time participating in the
Program.

The Program marketplace is
where you can shop for
ownership, rental, and financing
opportunities.

The online community center will
have a classroom, a bulletin
board, and chatroom so you can
stay educated, informed and in
touch with other Program
participants and stakeholders.

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3. ESTABLISHING AN ACCOUNT (HOUSEHOLD PROFILE) IN THE MYHOUSEKEYS (WWW.MYHOUSEKEYS.COM)

The following five (5) actions are the initial steps needed to establish your household’s affordable housing account.

REGISTRATION

PROCESS ACTION OR MILESTONE

1. Initial Signup

2. Complete the
Registration Wizard

3. Browse the
Marketplace

4. Request an
Application I.D.

5. Find an Opportunity
and Enter an
Opportunity
Drawing

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4. HOUSEHOLD INFORMATION PROFILES

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5. APPLICATION PROCESS

5A. APPLICATION PROCESS (ORIENTATION, PRE-APPLICATION, AND PREFERENCES)

The application process is summarized below and on the following pages:

ORIENTATION

• All applicants, co-applicants, married couples, domestic partners, and any person that can or will be on title, must complete the Orientation before being eligible to participate in an Opportunity Drawing. Any exceptions to this rule will be posted in the Opportunity Drawing details. Applicants can sign up for an orientation class on the HouseKeys website.

PRE-APPLICATION AND APPLICATION ID ASSIGNMENT

PREFERENCES AND RANKING

In all instances, the live in Campbell / work in Campbell / work-for Campbell preference (described in Section 9) will be used and verified by HouseKeys during the application process. Applicant Households that meet the stated preference criteria will be assigned a higher ranking. Once the preferred Household list is exhausted, HouseKeys will begin processing the files for the non- preference households.

Continued next page

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5B. APPLICATION PROCESS (OPPORTUNITY DRAWINGS)

Affordable Ownership Opportunities are marketed through an Opportunity Drawing (i.e., lottery). Applicant Households enter an Opportunity Drawing using their Application ID number.

OPPORTUNITY NOTIFICATION

OPPORTUNITY DRAWING ENTRY

• Once the applicant reviews the Opportunity Drawing information and is certain that he/she can meet ALL listed requirements, the applicant can follow the instructions to Enter Drawing
• Applicant must complete Authorization Form for verification and sharing information with Lender • Applicant must complete the Intent to Abide Form to confirm that the applicant understands the Program Requirements • Applicant Households can only apply for one Opportunity Drawing at any one time. If an applicant Household has entered more than one drawing, the lowest ranked submission will be chosen. Applicant Households are allowed to opt out of any drawing as long as the “opt out form” is submitted before an applicant Household enters another drawing. • If there is another Opportunity Drawing available at the same time, the applicant can opt out of one Opportunity Drawing to enter another, if it is done before the Opportunity Drawing submission deadline. • If a household applies for two opportunities at the same time, and obtains two priority numbers, the applicant will be assigned the lower priority number.
• In some cases, the Opportunity Drawing will remain open until all applicable units are sold. Anyone who enters their Application ID into an Opportunity Drawing after the first deadline will be added to the end of the list using the time and date stamp of their Opportunity Drawing entry.
• Ranking and file request numbers are issued to set the processing order for each Opportunity Drawing. A new ranking and file request number will be issued every time an applicant Household participates in a new Opportunity Drawing. Ranking, file request, and Application ID numbers are not transferable.

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5C. APPLICATION PROCESS (OPPORTUNITY DRAWING METHODS)

When an Opportunity becomes available, HouseKeys uses the methods outlined below to determine the order in which Application IDs and files will be ranked and organized for review.

METHOD 1: LOTTERY SELECTION AND ASSIGNMENT

METHOD 2: FORM SUBMITTAL (DATE & TIME STAMP) TIE-BREAKER

Please Note: Applicant Households that do not meet the Occupancy Standard will be ranked last.

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5D. APPLICATION PROCESS (LOAN REQUIREMENTS, APPLICATION FILE REQUEST, AND APPLICATION COMPLETION)

MORTGAGE LOAN REQUIREMENTS

The applicant Household must obtain a loan pre-approval from an Administrator-approved Lender to enter an Opportunity Drawing.

Applicant Household must have acceptable payment-to-income ratios and show enough liquid assets (e.g. cash) to successfully close on the proposed home purchase. Any down payment assistance or closing cost assistance that will be used will need to have a written pre-approval from the program provider as well.

• Applicants must obtain a mortgage pre -approval letter, on mortgage company letter, with loan officer information, including their National Multistate License System (NMLS) ID number and packet must include:
o Uniform Residential Loan Application and Uniform Underwriting and Transmittal Summary o Verification of Employment and Verification of Assets o Credit Report and Automated Underwriting System Findings (e.g. Desktop Underwriter Findings)

APPLICATION RANKING AND FILE REQUESTS

• The Opportunity Drawing Terms and Notifications will indicate when, where and how the Program Application Package needs to be submitted
• Applicants must provide a complete Program Application Package, including exhibits and the supporting documents listed on the Document Checklist, to HouseKeys by the deadline stated in the Opportunity Drawing Notification.

PROGRAM APPLICATION PACKAGE COMPLETION

• Documentation needs to be dated within 30 days of submission. • Applicants/Co-applicants, and or household members who submit inaccurate information, altered documentation, or false documentation or certifications, will be disqualified.
• Once all documents are received, the Applicant will be provided with a Submission ID which will be their file in line for Processing and Underwriting

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5E. APPLICATION PROCESS (APPLICATION REVIEW AND UNDERWRITING)

APPLICATION REVIEW

APPLICATION UNDERWRITING

APPEAL

• If the applicant does not agree with the Processor or Underwriter decision, the applicant Household will have 3 business days to appeal. The applicant Household will need to submit clear and sufficient documentation, along with an appeal form that details why they feel the decision is inaccurate, within the timeframe given. • Administrator Management will review the Appeal and all documentation. • Administrator will contact the applicant regarding the status of the appeal approximately 7 business days from the date the complete Appeal Package was submitted. Administrator will notify the applicant is additional time is needed. • Administrator is unable to hold properties for households in the application or appeal process. Administrator will move on to the next Application ID holder after the initial appeal review

Application Changes: No Application changes are allowed after an application is submitted and after an application deadline has passed unless the change is (1) the removal of an applicant, (2) the addition of an applicant’s s pouse, domestic partner or new household member in the case of an adoption or new guardianship; (3) an update of income qualification, such as a new job or a job that has ended; or (4) correction of technical errors, such as phone number or other non- qualifying information. All applications must be reviewed for income qualification within one hundred and twenty (120) days prior to the Close of Escrow of a BMR Unit.

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6. BELOW MARKET RATE OWNERSHIP PRICING AND CITY’S PURCHASE OPTION

The purpose of the Below Market Rate ( BMR) program is to provide long- term affordable homeownership opportunities for low and moderate-income households. Households that purchase a BMR home will be required to sign affordable housing documents to ensure the home remains affordable, and the homeowner occupies the home, for the entire restricted term (generally 45 years). As agreed to in the affordable housing documents, a homeowner may choose to sell the BMR home during the restricted term; however, the home will be sold at the restricted price. BMR units are priced using the formula defined in the City’s Inclusionary Ordinance:

"Affordable ownership cost" means average monthly housing costs during the first calendar year of a household's occupancy, as determined by the City, including mortgage payments, loan insurance fees, if any, property taxes, reasonable allowances for utilities and property maintenance and repairs, homeowners insurance and homeowners association dues, if any, which do not exceed the following:

1. For lower-income households: one-twelfth of thirty percent of seventy percent of area median income, adjusted for assumed household size based on presumed occupancy levels of one person in a studio apartment, two persons in a one bedroom unit, three persons in a two bedroom unit and one additional person for each additional bedroom thereafter.

2. For moderate-income households: one-twelfth of thirty-five percent of one hundred ten percent of area median income, adjusted for assumed household size based on presumed occupancy levels of one person in a studio apartment, two persons in a one bedroom unit, three persons in a two bedroom unit and one additional person for each additional bedroom thereafter.

Area median income (AMI) is the household income for the median (i.e., middle) household in a region. Each year, the Federal Department of Housing and Urban Development (HUD) calculates the median income for every metropolitan region in t he country. The United States Census Bureau uses a series of terms to determine the definition of a household. The basic meaning of Household is an occupied housing unit. A Householder (Primary Applicant) is the person whose name the housing unit is rented to or owned by. Members of the household share familial ties, living space, expenses, debts and/or assets with the Householder.

If the owner wishes to sell during the restricted term, the City has the option to either purchase the BMR home for the restricted price or assign the BMR home to another eligible buyer for the restricted price. The City is not obligated to purchase but the seller is obligated to give the City the option to do so. Homeowners can sell their home at a market rate price at the end of the restricted term.

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7. THE APPLICATION FILE STRUCTURE & APPLICATION CRITERIA

Program Eligibility and Qualification Criteria

The primary role of a Program Administrator is to determine the eligibility and qualification of applicant Households . A Program Processor serves the role of gathering the documents needed to evaluate the application and a Program Underwriter reviews the application to determine if it meets program requirements.

It is important to understand that there is a lot of information needed to determine whether an application meets all the program requirements. The application criteria used to determine whether an a pplicant Household will be approved fall into one of two categories:

• Program Eligibility Criteria: These are standards that define the characteristics of the target households who are best served by the program and help the program provider meet its intended goals. These standards often follow legal definitions and published documentation requirements. Underwriters evaluate Program Eligibility Criteria to determine if hous eholds “check eligibility boxes” that include, but are not limited to, residence address, employment address, household size requirements, total household income requirements, and whether an applicant meets the legal standard to be defined as a first-time homebuyer. Program Underwriters need to consider program eligibility for up to three years before the application date and up to a year after the estimated close of escrow date

1. • Program Qualification Criteria: Once it is determined that an applicant is eligible for the program, the Program Underwriter must also make sure that the home purchase is affordable for the applicant and that they are mortgage and hom e-purchase ready. In addition to requiring applicants to attend first-time homebuyer classes, an underwriter will evaluate the application to ensure successful and sustainable homeownership.

1 “Up to three years” speaks to the First-Time Homebuyer status that is typically verified using 3 years of tax returns. Since Total Household Income is projected forward, it’s important to understand that the Program Underwriter is considering income circumstances going forward one year.

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8. FIRST-TIME HOMEBUYER EDUCATION AND TITLE REQUIREMENTS

First-Time Homebuyer Education Workshop Requirement

All applicants who will take title to the property must attend and complete a first-time homebuyer in-person education workshop and receive a certificate of completion from a HUD and Administrator-approved First-Time Homebuyer Education Provider before going into contract on a BMR Unit. A copy of the certificate of completion is required and certificates will be accepted for up to two years after completion.

Title Requirements

All adult Household members must appear as an owner or co-owner on the BMR Unit title. They also must co-sign for any purchase loan (unless they are a non-borrowing spouse) and sign all affordable housing documents (as defined on page 2) for the BMR Unit with the following exceptions:

1. Legal dependents of titleholders as claimed on the most recent federal income tax return or legal minor children of titleholders. Spouses or Domestic Partners are not considered dependents;

2. Household members younger than age 24 who are the child of a titleholder who will reside in the BMR Unit as their primary residence, regardless of being named as a dependent on the federal tax form of a titleholder; and

3. Recent immigrants with insufficient credit history as defined as a person who has been in the United States for 2 years or less as supported by entrance documentation or a sworn statement and lender documentation of the reason for a loan denial, including a copy of applicant’s credit report.

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9. ELIGIBILITY FACTORS AND PREFERENCE CRITERIA FOR OWNERSHIP OF BMR UNITS

The City’s Inclusionary Housing Ordinance establishes a priority system for allocating the limited number of affordable rental units .

First priority (for up to ten percent of all affordable units) shall be given to income eligible employees of the City of Cam pbell. Second priority is given to income eligible existing Campbell residents and third priority is given to income eligible persons employed within the city limits of the City of Campbell. If a particular address is in question, Administrator will check with City staff to determine if the property is within the City’s jurisdictional boundaries.

BMR PREFERENCE CRITERIA*
Priority 1: Work for City
(for up to 10% of units)
Must currently work for the City of Campbell government entity at least 20-hours per week, and held their position for at least 6-months Employee must have passed probation
Priority 2: Live in Campbell Must currently live in Campbell and maintained residency for at least 6-months Priority 3: Work in Campbell
Must currently work at a business located in Campbell at least 20- hours per week, and held position for at least 6- months. This category includes Campbell School District employees. The district office is located in Campbell although th e school building may be located in another city.

*Eligibility will be evaluated at the time of opportunity drawing submission and verified again prior to occupancy

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9B. OCCUPANCY STANDARDS FOR BMR UNITS

Applicant/Co-Applicants must occupy the property as their principal residence. This means that the Applicant/Co-Applicants must use the property as their primary place of residence and the property must be owner -occupied upon purchase for the life of the deed restrictions. Use of the property for additional ownership purposes, including temporary leases, sub-leasing or room rentals are not allowed under the program and will trigger immediate action.

To ensure that the City's limited BMR homes are used efficiently, a household must be of a size equal to the number of bedrooms in the BMR unit. Pursuant to fair housing laws, the maximum occupancy allowed in a BMR unit is two people per bedroom, plus one additional person. The table below shows the minimum and maximum household size based on the number of bedrooms. In some cases, an exception to the minimum standard may be made where no other qualified buyers are remaining in the Opportunity Drawing or within 30-days from the time that the first file is requested from Opportunity Drawing entrants.

The City’s BMR Administrator will verify household occupancy once per year for the life of the restriction term (generally 45-years).

Note: Maximum Household size is subject to change per property management or Affordably Housing Agreement documents.

PROGRAM OCCUPANCY STANDARDS
Number of Bedrooms Minimum Household Size Maximum Household Size One 1 3
Two 2 5
Three 3 7
Four 4 9
Five 5 11

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9C. INCOME ELIGIBILITY CRITERIA

Campbell’s housing ordinance presently defines the three income types most often used in their affordable homeownership program • “Very low-income Household” means a household whose household income does not exceed very low-income limits applicable to the County
• “Lower-Income Household” means a household whose household income does not exceed the lower income limits applicable to the County.
• “Moderate-Income Household” means a household whose household income does not exceed one hundred twenty percent of the area median income applicable to the County

It is very important for the applicant Household to know BOTH:

Income earned from assets, such as dividends, interest, rental income, business income, etc., is included in the household’s annual income pursuant to the Code of Federal Regulations, Title 24, Part 5 income inclusions (§ 5.609). Income calculation is also g uided by California Code of Regulations , Title 25, Chapter 6.5 Program Operations, Gross Income (§ 6914). To qualify for the City BMR Program, your household’s combined gross annual income cannot exceed the maximum income limit for your household size, as established by the HCD. All household members ages 18 or older must have their income verified. Household members that do not work or will not have any income in the next 12 months must complete a zero-income affidavit.

Note: The income categories for a particular development may vary in accordance with the Affordable Housing Agreement.

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9D. ASSET LIMITATION CRITERIA

In addition to meeting the income limit, there are restrictions on the amount of assets that a household may have to be eligible for the City BMR Program. For households applying to be an owner of a BMR unit, the limit is 50% of household AMI plus the down- payment up to 20% of the BMR price, post-closing (after the close of escrow).

Asset limit = 50% of household AMI plus the down-payment up to 20% of the BMR price

So for example, the asset limitation for a 4- person household purchasing a 3- bedroom moderate income home with a 20% down payment would be approximately $185,000 where AMI is $150,000 and the BMR price is $550,000.

ASSET LIMITATION EXAMPLE
Maximum Household Income Example Purchase Price Example Asset Limit $150,000: (50% = $75,000) $550,000: (20% = $110,000) $185,000: ($75,000 + $110,000)

There is also a minimum loan amount of 70% of the purchase price. So, for example, with a Sales Price of $550,000 the first loan amount cannot be lower than $385,000. All-cash purchase escrows will not be allowed.

The Administrator will review household income and assets for all owner -occupants, temporary occupants, and other occupants, regardless of such household member’s interest in purchasing or occupying a BMR home. To determine total household assets, HouseKeys will review the household’s total assets according to monthly financial statements and/or other valuations. A six -month average will be calculated just prior to Program application to determine eligibility and avoid applicant “asset dumping” (asset liquidation or transfer to other parties) . Assets held in IRS-recognized retirement accounts (401-k’s, IRA’s, etc.) are not included for the purpose of determining whether an Applicant meets the Program asset limits. However, retirement and insurance payments will be used to determine gross household income.

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9E. FIRST-TIME HOME BUYER CRITERIA

To be eligible for the City ’s BMR homeownership program, all household members on Title must be a first -time homebuyer, except as provided below. A first-time home buyer (FTHB) is an individual who has NOT had an ownership interest in a home in the three years immediately preceding their application date, except as follows:
(1) A displaced homemaker who, while a homemaker, owned a home with his or her spouse or resided in a home owned by the spouse. A displaced homemaker is an adult who has not, within the preceding two years, worked on a full-time basis as a member of the labor force for a consecutive twelve- month period and who has been unemployed or underemployed, experienced difficulty in obtaining or upgrading employment and worked primarily without remuneration to care for his or her home and family; or (2) A single parent who, while married, owned a home with his or her spouse or resided in a home owned by the spouse. A singl e parent is an individual who is unmarried or legally separated from a spouse and has one or more minor children for whom the individual has custody or joint custody or is pregnant; or (3) An existing BMR homeowner who no longer meets the occupancy standards in these guidelines and otherwise qualifies to purchase a larger or smaller BMR home at the time of re-application.

Notwithstanding the forgoing, the following interests shall not by themselves, disqualify an applicant from falling within the definition of first time home buyer:
• Applicants who own a mobile home are not considered home owners under the BMR program and are eligible to participate.

However, if the mobile home unit is not sold and is retained by the homeowner, the property will be included in asset income calculations along with any rental income.
• Ownership in timeshares.
• Beneficiary of a trust for which the trustor/trustee is still living. • Ownership of shares in a limited equity co-op.

To verify FTHB status, HouseKeys will review 3 years of federal tax returns to confirm that the applicant has not claimed any of the tax deductions associated with homeownership (e.g. deductions of mortgage interest or property tax payments). If not legally obligated to file, the applicant must complete a Jurat explaining the reason along with supporting documents. HouseKeys will also review a credit report for mortgage loans and perform title searches to confirm the applicant is not an owner of record on any existing properties for at least 3 years. T he applicant must not be on title for any housing unit at all, whether they live in the unit or not. Other documentation may be requested to determine first time homebuyer status.

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10. APPLICATION CRITERIA – ENTERING HOUSEHOLD INFORMATION INTO THE PROGRAM APPLICATION

10A. Household Size, Location & Member Identification

The Household Location and Member Profiles capture the basic information used by the Program Underwriter to determine who is part of the household and which members will become the title-holding homeowners.

Information
Profile
Criteria Criteria Description
Location
Profile
Verification of
Residence Location
• At least one member of the applicant Household , who will be taking title to the property, must provide the following proof of residency for the 6 months preceding their entry to an Opportunity Drawing:
o One utility bill with a City address dated within 45 days preceding the application date for the BMR Unit. Utility bills can include gas, electric, garbage, or water; or:
o Current paystubs with City address; or
o A current, formal lease with a City address
Location
Profile
Verification of
Employment Location
• Administrator shall verify that a person works in the City by reviewing an applicant’s paystubs. If an applicant’s employer is not based in C ity, or if a person’s paystubs do not reflect a C ity work address, the applicant must supply a letter from the employer stating that the person works primarily in City and demonstrates that at least 75% of their working hours are in City

Member
Profile

IDENTIFICATION

• All applicants will need to provide positive identification including a copy of valid driver’s license and a copy of a valid social security card.

Member
Profile

HOUSEHOLD
SIZE
• Any household members not living in the same household at the time of application will need to be a co- applicant for the fi rst mortgage loan and on title to form a household
• Tax returns and current addresses will be used to determine household size • All applicants, co- applicants, married couples, partners, domestic partners etc. that are on title will have to occupy the property for 45 years per the signed deed restrictions

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10B. Income Review Procedures

Income maximums are based on “gross” income derived from all sources as detailed in Internal Revenue Code (26 USC Section 61), whether or not exempt from federal income tax. Administrator projects future income based on the gross income on each applicant’s past income. In addition to other items deemed necessary to make this income determination, the Administrator may request up to 4 of the most recent year -to-date pay statements and the previous year’s final pay statement. Administrator must review inco me documentation for all Household members 18 years and older, regardless of dependency status. Applicants without income will need to sign a Zero-Income Affidavit provided by the Administrator. Unemployment benefits are considered income.

Continued Next Page

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10C. Income Inclusion and Exclusion

The Federal and State government both have rules that determine how Gross Income is calculated and what income types are included and excluded from the Gross Income total.

Application Criteria Description

The following is an abbreviated list of items that are excluded from income:

• Casual, sporadic or irregular gifts
• Amounts which are specifically for or in reimbursement of the cost of medical expenses • Lump-sum additions to family assets such as inheritances, insurance payments (including payments under health and accident insurance and worker’s compensation), capital gains and settlement for personal or property losses • Foster child care payments
• The value of coupon allotments for the purchase of food pursuant to the Food Stamp Act of 1964 which is in excess of t he amount actually charged the eligible household
• See full inclusion list on the Program Website

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10D. Variable Income (Tips, Overtime, Bonuses, etc.)

Please Note: All Variable Income is subject to Underwriter Approval. Each circumstance is different and must be considered using the documentation in the file. The words below are meant to be used as a basic guide to help prospective applicant Household ’s understand how this income type is considered during the underwriting process.

Tips, Overtime, Bon us, and other “variable income amounts” (amounts that change with each pay period) will be annualized separately from the base income outlined on the chart above. All income will be annualized and totaled unless the applicant can provide documentation from the employer. The employer must be available to complete a verbal verification of employment with the Administrator. In cases, where the variable income item is a one -time occurrence, the amount will be removed from the annualized calculation of income and added in a one-time total to determine the annual income.

Self-Employed Income: All self-employed applicants must submit a notarized Self -Employed Affidavit provided by Administrator. If self-employed for 2 or more years, Administrator will use verifiable (verified using Form 4506-T) federal income tax returns and review the net income for as many as 3 years of tax returns to determine the projected annual in come. If self -employed less than 2 years, Administrator will review the submitted Profit & Loss Statement and use it to determine projected annual income. Additional documentation may be needed from the Self-Employed Household Member in order to determine projected annual income.

Calculating Income from Cash Income: In the case of an applicant who is paid cash for employment, Administrator will require a Verification of Employment from the applicant’s employer to confirm annual income and IRS Tax Verific ation Form 4506-T to confirm that no taxes were paid.

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Variable Income (Continued)

Income from Commercial Property or Land Owned: The net income from any commercial property or land owned by any applicant shall be counted toward the annual Household income.

Additional Notes on Income Calculation

If applicant has recently changed positions with employer, the Administrator will determine the effect of the change on the applicant’s eligibility and opportunity to receive bonus or overtime pay in the future

If applicant who has historically been employed on a part -time basis indic ates that he or she will now be working full time (or vice versa), obtain written confirmation from borrower’s employer

A verbal verification of employment (VOE) may be required for each employer

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10E. Determining Mortgage and Home Purchase Readiness

Affordable homeownership programming requires that applicant H ouseholds who meet the basic requirements for being considered eligible, must also prove that the home purchase fits within their household budget and that they are able to successfully obtain mortgage financing. The following table summarizes the information needed by the Underwriter to approve a household:

Income
Profile &

Expense
Profile

HOUSING

PAYMENT

TO INCOME
RATIO

• To qualify, an applicant’s total housing payment, including principal & interest, taxes, insurance, and association dues cannot exceed 40% of the income for Below Market (BMR) home. For example, if your annual income is $90,000 your maximum monthly house payment cannot exceed $3,000 or $36,000 per year (40% of $90,000 = $36,000 divided by 12 = $3,000).
• Additional debts will also be taken into consideration and cannot exceed 45% of income.
• Non-borrowing applicant’s debt will be added to ratios Expense
Profile
RENT

HISTORY

• Applicants/co-applicants will need to show the last 6 months of rent history • HouseKeys will review the current rent vs. the new housing payment for affordability.

Any circumstance where the new housing payment exceeds 150% of current rent will be considered a “Payment Shock” risk. For example, if your current rent is $1,000 per month, then any housing payment exceeding $1,500 per month would be considered a potential payment shock risk ($1,000 x 150% = $1,500).
• If Payment Shock risk exists, the underwriter may make an exception if compensating factors are present in the file (e.g. post-close reserves) Asset
Profile

DOWN PAYMENT

• The minimum down payment for the BMR program is 3% of the purchase price with first mortgage loan amount equal to 97% of the purchase price. • The minimum 3% of the purchase price must come from the applicant’s own funds, and be present in the applicant’s account for at least 6 months • A gift can be used for any down payment amount more than 3% of the purchase price • Note: In some cases, mortgage financing programs may require 5% of the purchase price in order to be approved

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10F. Public Record and Default Risk

In addition to determining home purchase readiness, the Program Underwriter must also determine the risk of the property being lost to foreclosure or the risk of a lien being attached to the property that can adversely affect the resale process or excess sale proceeds. The following table summarizes the information needed by the Underwriter to reduce risk and approve a household:

Liability
Profile &

Credit
Profile

CREDIT REPORT

AND CREDIT
SCORES
• A credit report is required for all applicants and non-borrowing applicants • The credit report must include information from all three credit bureaus (Experian, TransUnion, Equifax) and use a mortgage-risk model (used by licensed mortgage lenders)
• The lowest median (middle) score is used
• The minimum credit score is 620
• An applicant or co-applicant with an unsatisfactory credit report will be denied. • We will be reviewing the Credit Report to identify all of the account balances and monthly payments
• The monthly payments on your credit report will be used to determine the total debt ratio (total debt and household payments divided by monthly income) • As stated above, the total debt ratio cannot exceed 45% of monthly income Public
Record
Profile

PUBLIC RECORD
SEARCH
(DETERMINED

USING A

STATEMENT OF

IDENTITY FORM)
• An applicant or Co -applicant may apply for consideration under the following circumstances:
• Chapter 13 bankruptcy – after 2 years from discharge or 4 years from dismissal. • Chapter 7 – after 4 years from discharge
• Short Sale/Deed in Lieu - after 4 years
• Foreclosure - after 7 years
• All applicants, co-applicants, and non-borrowing spouse cannot have liens outstanding at the time of the home purchase
• All liens, including IRS liens, or any past due money owed to the IRS, shall be required to be paid off prior to being issued a program approval.

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11. TRANSACTION AND DOCUMENT HANDLING

File Stacking (List of Documents Needed for Each Stage of the Transaction)

If application is approved, and the applicant Household is cleared to move forward with the purchase, the applicant’s lender must supply the following documentation to the Administrator (Financing File Stacking Order ):

1. Lender Checklist (listing all the loan documents)

2. Loan Application with final figures and lending terms (currently known as a 1003)

3. Uniform Underwriting and Transmittal Summary (currently known as 1008)

4. Mortgage Loan Commitment Letter

5. Loan Estimate

Routing documents to the City for signatures can take 10 to 14 business days. Before any transaction documentation can be sent to the City for signature, the following documents will need to be in the Administrator’s file ( Pre-Close Stacking Order):

1. Estimated Settlement Statement – Seller (Re-Sale and Acquisition Transactions Only)

2. Estimated Settlement Statement – Buyer

3. Estimated Settlement Statement – Master

4. Copy of 1st Lender Note & Deed of Trust

5. Copy of 1st Lender Escrow Instructions

6. 1 st Lender Request for Notice of Default

7. Copy of any Subordinate Lender Notes and Deeds of Trust

8. Copy of any Subordinate Lender Escrow I nstructions

9. Subordinate Lender Request for Notice of Default

Continued Next Page

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After closing, the Title Company must provide the following to the Administrator ( Post-Close Stacking Order)

1. Executed BMR Agreements Docs, Notes and Deeds of Trust

2. Recorded Agreement

3. Recorded Request for Notice of Default

4. Final Settlement Statement – Seller (Re-Sale and Acquisition Transactions Only)

5. Final Settlement Statement – Buyer

6. Final Settlement Statement – Master

7. Alta Policy

Length of Escrow and Fall -Out Risk

The typical escrow period for a BMR Unit sale is 90 days. This period can stretch out longer if the property is under construction and there are delays. Applicant Households must be prepared for a long escrow period and to continually keep their file updated to comply with the one hundred twenty -day (120-Day) application review period. Households must be eligible and qualified through to close of escrow. Unfortunately, a change in the application file during the escrow period can cause the applicant Household to become disqualified and lose out on the purchase opportunity.

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12. REASONABLE ACCOMMODATION AND EXCEPTION REQUESTS

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City of Campbell / HouseKeys
Below Market Rate (BMR) Program
Ownership Participation Guide
[November 2018 Draft]

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TABLE OF CONTENTS

1. Introduction Page 2

2. Online Web Portal Page 3

3. Establishing an Account Page 4

4. Household Information Profiles Page 5

5. Program Participation Page 6

6. Resale Price Determination Page 7

7. Price Determination Methods Commonly Used Page 8

8. Ownership and Estate Planning Page 10

9. Compliance and Annual Certification Page 11

10. Refinance and Subordination Requests Page 13

11. Capital Improvements and Special Assessments Page 17

12. Ownership Changes, Re-Sales, and Approved Vendors Page 19

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1. INTRODUCTION

HouseKeys is the City of Campbell’s A ffordable Housing Program Administrator. This Program Participation Guide includes the guidelines, policies, and procedures that comprise the affordable homeownership program for below market rate (BMR) homes.

Buying, owning, and selling an Affordable Below Market Rate (BMR) Ownership Unit differs in many ways from buying, owning, and selling a market rate. It is important that the buyers and sellers of BMR Ownership Units understand the rules and procedures of the Program fully.

The Program Participation Guide and other relevant information (e.g., Ordinance procedures and income limits) will be amended and updated from time to time, so long as such rules, policies and procedures do not violate any affordable housing laws . All proposed changes are subject to approval by the City Council prior to implementation.

Updates to this Program Participation Guide and other relevant information will be posted on the HouseKeys website

Please contact the City or HouseKeys regarding any conflicts between this Program Participation Guide, the Developer’s Affordable Housing Agreement, the owner’s BMR Agreement, and/or the City’s recorded documents.

Please contact HouseKeys with any questions or concerns regarding this docu ment or any other question regarding the City’s affordable housing program:

Online: http://www.housekeys2.com

Email: [email protected]
Phone: 1-877-460-KEYS (5397)
Address: 70 N. First Street Campbell, CA 95008

ALL GUIDELINES ARE SUBJECT TO CHANGE WITHOUT NOTICE

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2. ONLINE WEB PORTAL DASHBOARD OVERVIEW

There are many calculations
involved in an Affordable
Housing Program . From
calculating the income category
of your household, to
determining your maximum
restricted rent price and utility
allowance, it’s important to
understand the math behind
these Programs.

All Appl ication, Opportunities,
Opportunity Drawings, and
Participation Activities are
captured in your Program
Center. As soon as you
complete your initial registration,
this is where you’ll spend the
most time participating in the
Program.

The Program marketplace is
where you can shop for
ownership, rental, and financing
opportunities.

The online community center will
have a classroom, a bulletin
board, and chatroom so you can
stay educated, informed and in
touch with other Program
participants and stakeholders.

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3. ESTABLISHING AN ACCOUNT IN THE HOUSEKEYS SYSTEM

The following four (4) actions are the initial steps needed to establish your household’s affordable housing account.

In some cases, the participant may have already established an online account. If you have not established an account, or you need to update your account, please complete the following steps.

REGISTRATION

PROCESS ACTION OR MILESTONE

1. Initial Signup

2. Complete the
Registration
Wizard

The next step includes additional details about your address and household members. Completion of the Wizard will create a summary of your household and provide you with access to additional features of the Administrator Platform.

3. Request a
Participation I.D.

The Participation I.D. allows the Program Provider (City of Campbell) and the Administrator (HouseKeys) to confirm your identify and match you up with the Program File. It also will be used to track your Service Request Tickets.

4. Open a Service
Request Ticket

Whether you want to remodel your BMR home, refinance your mortgage, sell your BMR home, or ask a general question – it all starts with opening a Service Request Ticket so that the Administrator can gather the information needed to help you. The online form also creates a timestamp, so we can answer your question in the order received and in a timely manner.

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4. HOUSEHOLD INFORMATION PROFILES

When you establish an account in the MyHouseKeys system, Household Information Profiles are used to organize information about your household. This information is used to help you complete your annual certifications. While there are 10 total information profiles listed in the Program Application Guide, the list below includes the five (5) that involve your program participation and compliance.

# Information
Profile Name
Description Purpose
1 Location Profile Where you live and
where you work
Most Restriction Agreements have an owner occupancy certification to confirm that you occupy the property the minimum 10 out of 12 months per year. 2 Member Profile The people who live in
your housing unit
You will be asked to confirm that no renters are living in your household without city notice and approval
3 Expense Profile Documenting monthl y
expense obligations
Every refinance request must be reviewed by the administrator to ensure that the payment-to-income ratio of any proposed financing is in line with the program guidelines.
4 Liability Profile Your Debt Keeping your mortgage paid on time is not only good for your credit report, but it is an important part of making sure that the home is not at risk of loss due to owner default. If a homeowner falls behind on their mortgage (a default of the BMR
Agreement), the City reserves the option to purchase the home at the restricted resale price (minus any money owed) to avoid foreclosure. 5 Public Record
Profile
Collections, Liens,
Bankruptcies and
Foreclosures
Bankruptcies, collections, liens, foreclosures, and divorces shall be reported directly to the City of Campbell / BMR Administrator for the entirety of the BMR term. These types of events are all part of the public record and notices are issued by the County that includes the property address . As the City and Administrator monitor these events, you may be contacted to ensure that the property is not at risk of being lost from the City’s BMR portfolio during the entire BMR term (generally 45-years). Failure of the owner to directly notify the City/Administrator of these types of events is a default of the BMR Agreement and subject to immediate action. The City reserves the option to purchase the home at the restricted resale price (minus any money owed) in the case of default.

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5. PROGRAM PARTICIPATION

The purpose of the Below Market Rate (BMR ) program is to provide long- term affordable homeownership opportunities for low and moderate-income households in the City of Campbell. Households that purchase a BMR home will be required to sign affordable housing documents to ensure the home remains affordable and the homeowner occupies the home, for the entire restricted term (generally 45 years). Homeowners can sell their home at a market rate price at the end of the restricted term (46th year). Between the time the BMR home is purchased and the 46 th year is reached, there will be a series of requests and communications between the homeowner, the City and the Administrator. For example, the homeowner may request to refinance a mortgage, remodel the home, or initiate a property resale. In addition, the City/Administrator will request compliance certifications (generally occurring annually for the entire BMR term), Failure to complete these annual compliance certifications is a default of the BMR Agreement and subject to immediate action. The rules governing these, and other issues of concern, are outlined in the “Occupancy, Resale, and Refinancing Restriction Agreement, with Option to Purchase at Restricted Price” (otherwise known as the “Agreement”), as well as the Program Guidelines.

Generally, when a request is made to review any refinance or sale request, there are three stages of review:

1. Preliminary Review of the Agreement and Program File to determine whether the participant Household is following the program rules and/or the Agreement language allows the homeowner request.

2. Evaluation of the proposed financing package or sale transaction to ensure that it fits program guidelines and complies with Agreement language.

3. Coordinating and tracking the transaction to make sure that approved vendors are used and/or that the home is sold to an eligible purchaser from the program applicant list. BMR Transactions take longer than conventional financing and sale transactions because of the number of payoffs needed, the city authorization required, and the legal documents involved.

Each review stage can take 30 to 90 days to complete, dependent upon the details involved with each request. It is important that any current or prospective BMR homeowner review their Agreement in its entirety to make sure that they understand the conditions and restrictions that they will be expected to adhere to during the Agreement term. BMR homeowners should seek their own legal counsel if further clarification is needed.

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6. RESALE PRICE DETERMINATION

Each resale restriction agreement has a price determination method that outlines how the resale price is calculated if the City were to exercise its option to purchase the unit, assign its option to a designee or eligible buyer, or instruct the Administrator to facilitate a resale to an eligible purchaser. The City / Administrator will use the price determination method contained in the Owner’s BMR agreement unless otherwise determined by the City. There are five primary ways that resale prices are determined:

# Price Determination Method Description
1 Indexed Price Based on
Consumer Price Index

Throughout the year, the U.S. Department of Labor’s Bureau of Labor Statistics publishes a Consumer Price Index for metropolitan areas throughout the United States. This determination method allows for a resale price that is based on the increase in the Housing Component of the Consumer Price Index based on the month and year of purchase. 2 Indexed Price Based on Area
Median Income
Each year, the State of California Department of Housing and Community Development publishes the statewide income limits. This determination method allows for a resale price that is based on an increase in the applicable Median Income based on the y ear of purchase and the year of resale.
3 Equity Share Agreement Some Agreements have an Equity Share Provision that is based on the initial subsidy provided by the City when the BMR Unit was purchased.

4. Shared Appreciation Some agreements require a percentage of the Fair Market Value to be paid to the City as a Shared Appreciation Payment. The remaining appreciation share amount is paid to the Owner.

5. Promissory Note for First Time
Homebuyer Loan or other
Mortgage Assistance Loan
Some Agreements include a loan. Depending on the terms of the promissory note, the principal and interest will be due in full when the home is resold or when the or within a specified term (e.g., 45 years). In other cases, payments may be required more frequently.

6. Promissory Note for
Forgivable Loan
Some agreements include a forgivable loan. Depending on the terms of the promissory note, the loan may be forgiven in full if the approved BMR homeowner remains in the home for the entire BMR term (generally 45 years). If the home is sold before the end of the BMR term, the principal and interest are due in full; however in some cases, the amount due will be reduced by a certain percentage each year until there is no balance remaining.

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7. PRICE DETERMINATION METHODS COMMONLY USED IN CITY OF CAMPBELL AGREEMENTS

Sale Proceeds Due to Owner Vs. Proceeds Due t o City: Depending on the Price Determination Method used, the Fair Market Value of the home, and any liens and/or encumbrances recorded (including any interest or fees owed at time of sale), there wi ll be a portion of the sale proceeds that are due to the Owner and a portion of the sale proceeds that are due to the City. The City’s portion is considered Program Equity or Public Equity.

All BMR Homeowners must be in good standing with the program at the point that they would like to sell their home or refinance their home. If there are outstanding compliance findings, the City reserves the right to reject a request to sell or refinance.

Indexed Price Based on Area Median Income (Inclusionary Housing Units)

Each year, the State of California Department of Housing and Community Development publishes the statewide income limits. This determination method allows for a resale price that is based on an increase in the applicable Median Income based on the year of purchase. The table below includes an example of how the City / Administrator determines the BMR resale price:

Example of Indexed Price Determination Information
Date of Resale August 1, 2018
Date of Purchase March 1, 2005
Original Purchase Price $300,000
Santa Clara County Median Income for Household of 4 at Time of Purchase $105,500 Santa Clara County Median Income for Household of 4 at Tie of Resale $125,200 Dollar Amount Change in Applicable Median Income $19,700 Percentage Change in Applicable Median Income 18.673%
Purchase Price Multiplier (Percentage Change + 1) 1.18673 Gross Maximum Restricted Resale Price Based on Applicable Median Income Change (Original Purchase price multiplied by the Purchase Price Multiplier) $356,019
(300,000 x 1.18673)
Capital Improvement Credit (if Applicable) (All improvements must be pre-approved to obtain credit) $25,000 Deferred Maintenance Deduction Charged to Homeowner (if Applicable) ($5,000) Net Preliminary Maximum Restricted Resale Price $376,019

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7. PRICE DETERMINATION METHODS (continued)

Equity Share Agreement (Density Bonus Units)

Under Campbell’s equity sharing model (if applicable), the owner can sell the home immediately and capture a portion of the equity gained on the property after deducting the City share and the affordable subsidy (the difference between the affordable price and the market price). The City w ill acquire the subsidized difference as well as a share of the appreciation equal to the ratio of the city’s initial subsidy to the fair market value of the home at the time of initial sale.

The Equity Share Percentage (%) is determined by dividing the Subsidy Amount by the Original Market Value. The example below shows two sales scenarios where the unit was purchased for $475,000 with an Original Market Value of $800,000

Example of Equity Share Determination Resale Scenario 1 Resale Scenario 2 Sales Price at Time of Resale $800,000 $1,000,000
Original Market Value at Time of Purchase $800,000 $800,000 Appreciation $0 $200,000
BMR Price $475,000 $475,000
Subsidy Amount (Original Market Value minus BMR Price) $325,000 $325,000 City’s Equity Share Percentage
Subsidy amount divided by Original Market Rate Value

40.625%
325,000/800,000

40.625%
Amount Paid to the City based on Subsidy Percentage $0 $81,250 Total Gross Excess Sales Paid to the City
(initial subsidy plus equity share)
$325,000
($325,000 + 0)
$406,250
($325,000 + 81,250)
Total Gross Excess Sales Paid to the Owner
(this amount does not include the homeowner’s paid principal amount) $0 $108,000

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8. OWNERSHIP AND ESTATE PLANNING

A “Transfer” means any sale, assignment or transfer, voluntary or involuntary, of any interest in the Home, including, but not limited to, a fee simple interest, a joint tenancy interest, a life estate, a leasehold interest (unless the lease is approved in advance by the City), or land contract.

Transfers by devise or inheritance to an existing spouse, Domestic Partner, child, surviving joint tenant, or a spouse as part of a dissolution proceeding in connection with marriage – are not considered Transfer s. All Transfers must be approved by the City in advance and may be subject to the City’s Option to Purchase (See Section 5 to see description of “City’s Option to Purchase”).

Payable-on-Death (POD) Accounts and Transfer -on-Death (TOD) Deeds are two methodologies that will be considered for BMR Owners to designate beneficiaries and avoid having a BMR Unit become part of a probate case.

In the event a Transfer occurs, or a person receives the Home by devise, inheritance, or operation of law due to death of the Owner, the person inheriting the Home (the “Inheriting Owner”) must have their income and eligibility reviewed and approved by the C ity or Administrator to determine if they are an Eligible Purchaser. If approved, new documents will need to be signed and a new BMR term (generally 45-years) will be enforced.

New purchasers of BMR Units may not purchase the BMR Unit through a trust of any kind, including but not limited to living tr usts.

Existing BMR Owners may not transfer ownership of their BMR Units to trusts of any kind, including living trusts.

Owners of BMR Units should keep in mind that the Estate of the Owner is entitled to the Owner due proceeds upon any transfer that takes place during the Agreement term.

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9. COMPLIANCE, ANNUAL CERTIFICATION, & ENFORCEMENT

All BMR homeowners will be re-certified once a year for compliance with their signed and recorded deed restrictions on the property, including but not limited to occupancy, current title, and liens. Homeowners shall provide the program Administrator with all pertaining documents listed on the program checklist (provided annually), in order to complete the full re -certification review and receive a certificate of compliance.

ANNUAL COMPLIANCE CERTIFICATION

1. The Owner will receive an annual notification via US mail for the annual certification process. This notification will include a questionnaire and request for supporting documents ( e.g., most current utility bill, mortgage statement, and insurance declaration page). The owner will have 30 days to comply.

2. If an owner does not comply with the requirements or documentation within 30 days of the annual certification notice being sent, a 2
nd notice will be sent providing a final deadline.

3. If the homeowner does not comply after the 2 nd notice, the City will take enforcement actions, as described on the following page.

CERTIFICATION PROCESS

Once all documents are received, the City or Administrator will:

1. Ensure that there are no inconsistencies with the application file (e.g., misinformation or fraud committed during the application process);

2. Determine if the property is owner occupied and confirm that the BMR home is not being rented;

3. Review all liens against the property to ensure the property is not over encumbered;

4. Review all transfers of title on the property reports;

5. Review default notices or statements of any loans, taxes, or Homeowner Association dues; and

6. Determine if the property is adequately insured and if secondary liens (i.e. down payment assistance loans, city loans or state loans) are referenced on the Insurance Declaration page.

If any of the above review steps require additional information from the Owner, a document request will be made and the Owner will be provided with a deadline to return the requested documents to the Administrator.

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9. COMPLIANCE, ANNUAL CERTIFICATION, & ENFORCEMENT (Continued)

CERTIFICATION OF COMPLIANCE

The BMR Owner will receive a certificate of compliance if the review is approved and in compliance with the requirements above.

ENFORCEMENT ACTIONS AND TIMELINES

If the homeowner does not comply after the 2
nd notice, the City or Administrator will file a Notice of Default with the County Recorder’s Office and the homeowner will be notified. This Notice of Default becomes public record and may trigger additional action by any lenders who have an interest in the property.

If the homeowner is out of compliance on any of the above requirements, the homeowner will be provided with 60 days to comply and will be provided with action steps needed to cure any defaults (if there are possible actions to cure the default).

90 Days from the date that the Notice of Default is filed with the County Recorder’s Office, the City or Administrator will file a complaint with a court of competent jurisdiction. The City or Administrator will negotiate during mediation hearings in good faith prior to a trial date, but if an agreement is not reached, the case will be followed through to conclusion.

If the owner fails to cure the violation, the City will exercise its Option to Purchase the BMR home from the homeowner at a restricted resale price, described earlier in this Guide.

The City/Administrator reserves the option to apply to a court of competent jurisdiction if it deems legal action appropriate

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10. REFINANCE & SUBORDINATIONS REQUESTS

The information below and on the following page outlines the process for refinancing existing City loans, or subordination of any loan or deed of trust associated with a BMR property. Subordination of loans not issued by the City is necessary to protect the City’s interest in maintaining the affordability of the property for the duration of the restriction term (typically 45 years). In m ost cases, the City’s interest will be subordinate to any mortgage loans on the home , as outlined in the deed of trust and/or the signed resale restriction documents.

SUBORDINATION REQUIREMENTS

BMR homebuyers may be allowed to refinance up to 90% of the Maximum Restricted Sale Price described in the signed deed restriction, or the remaining balance of the loan amount, whichever is less. The total payoff amounts for all recorded liens and encumbrance amounts are used to determine the 90% maximum refinance percentage. This percentage is sometimes called the Maximum Combined Loan to Value (Max CLTV). Please note the following requirements:

1. Accrued interest on any subordinate financing will be considered in the Max CLTV.

2. HouseKeys will calculate the maximum restricted sale price according to the deed restrictions.

3. The refinance amount cannot exceed 90% of the maximum restricted sale price.

4. If the remaining balance of the original first loan is more than 90% of the restricted price, the original loan shall be paid down.

5. No cash out is allowed if there are any City loans.

6. Payoff of purchase money mortgages are not considered cash out.

7. Payoff of equity lines or junior financing that are not purchase money loans are considered cash out.

8. Homeowners cannot add or change names to title without approval of the City/Administrator.

9. Any request to change names on title shall be submitted to the City with supporting documents.

10. If the requested change is due to marriage, the person being added will need to be on the first mortgage

11. A ddendums to the BMR agreement will need to be signed by any person added to the title or associated loan.

12. If the requested change is due to divorce, addendums to the subordinate financing and BMR agreement shall be signed.

13. A Performance Deed of Trust is required to protect the BMR deed restrictions and will be recorded against the property.

Continued next page

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10. REFINANCE & SUBORDINATIONS REQUESTS (Continued)

MORTGAGE REQUIREMENTS

1. First mortgage loan terms of 30, 20, or 15-year fixed rate fully amortized

2. Equity lines, lines of credit (HELOCs), etc. or any junior loans are not allowed

3. Adjustable rate, interest only, negative amortization, or balloon payments loans are not allowed

4. Homeowner is required to use a loan officer on the City’s BMR program approved lender list

5. Rate and term refinance up to $1,500 maximum cash out

6. Recurring closing cost will not be allowed to be financed

7. Non-recurring closing cost will be allowed to be financed as long as the new loan amount does not exceed 90% of the restricted value

8. Escrow will be required to be opened with a Title company in Santa Clara County

Please Note: FHA/VA loans do not typically work with resale restricted properties due to federal requirements and/or lender requirements. Please check with your lender to ensure that they have reviewed the restrictions and whether the legal department has accepted the use of Government National Mortgage Association (“Ginnie Mae”) financing with your resale restricted property.

REQUEST TO REFINANCE PROCESS

1. Complete the BMR Homeowners Inquiry Form on the Campbell Program website

2. HouseKeys will calculate the maximum restricted sale price within 14 days of receiving a complete application. However, if more information is needed, the process will be delayed until HouseKeys receives the requested information. Once all of the information is received and a price has been issued, it is valid for 6 months.

3. Homeowners shall then complete the refinance request forms and provide all of the supporting documentation to HouseKeys

4. HouseKeys will review the fully -packaged refinance request file and issue a final approval or denial of the request within 14 days of receipt of all required documents.

Continued next page

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10. REFINANCE & SUBORDINATIONS REQUESTS (Continued)

MINIMUM REQUIRED DOCUMENTS FROM THE HOMEOWNER FOR REFINANCE / SUBORDINATION REQUESTS

OWNER DOCUMENTS

1. Signed BMR refinance application

2. Current mortgage statements with all balances

3. Current Federal Tax returns

4. 2 months consecutive paystubs

5. 2 months current bank statements

6. Copy of Driver’s License and Social Security Card

7. Subordination fee

LENDER DOCUMENTS

1. Borrower’s authorization

2. Credit report

3. 1008 (transmittal)

4. 1003 (application)

5. DU (desktop underwriting)

6. Preliminary Report

7. Appraisal

8. Approval letter

ESCROW COMPANY DOCUMENTS

1. Estimated Closing statement

2. Payoff demand letter

REFINANCE REQUEST APPROVAL

Once all documents are received, HouseKeys will:

1. Determine if the refinance follows the deed restrictions and does not exceed the maximum restricted price

2. Determine if the borrower is in a better financial situation with the new refinance terms.

3. Determine whether all requirements have been met.

4. Review any additional liens on the property.

5. Determine whether all existing loans, HOA dues and taxes are current. If not current, the application will be rejected.

6. Once approved, subordination documents and escrow instructions will be drawn and routed to the City for signatures.

Please note that City signatures can take up to 14 business days to obtain. It is highly suggested that you do not lock any interest rates on your proposed financing until you obtain city signatures.

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11. CAPITAL IMPROVEMENTS AND SPECIAL ASSESSMENTS

Homeowners must receive approval from the City / Administrator prior to making any capital improvements to a BMR home. BMR homeowners may begin claiming capital improvements toward their Maximum Resale Price, no sooner than 1 year after the BMR Unit was first occupied. Exceptions may be made for critical modifications (e.g., accessibility improvements) during the first year, if pre-approved by the City . Following City / Administrator approval for capital improvements, BMR Owners m ay begin submitting documentation of completed work for future credit. The City or Administrator will review all capital improvement claims and categorize them into three distinct categories:

Eligible Capital Improvements: Major structural system upgrades, new additions to the BMR Unit and improvements related to increasing the health, safety and energy efficiency of the property. The Improvements must conform with applicable building codes, and be pre- approved by the City in writing. To receive future credit, the initial cost must exceed one percent (1%) of the purchase price paid by the Owner. Improvements that meet these criteria will be given a maximum 100% credit, as determined by the City / Administrator.

Eligible Replacement and Repair: Eligible Replacement and Repair includes in-kind replacement of existing amenities, repairs and general maintenance that keeps the property in good working condition. Costs that meet these criteria will be given a maximum 50% credit for repairs, as determined by the City / Administrator.

Ineligible Costs: Cosmetic enhancements, installations with limited useful life spans and non- permanent fixtures. Homeowners may undertake these projects at their discretion, however they will not be given capital improvements credit.

Procedure for Submitting Capital Improvements : BMR Owners must submit proof of capital improvements to the City / Administrator for review within 6-months of the completion of the project. In order to document the improvements, each BMR Owner must submit the following documentation: (1) A list of the capital improvements with a description on a form provided by Administrator: (2) The receipt and invoice for each eligible improvement; (3) Proof of payment, such as a cancelled check, bank account statement or credit card bill; (4) A copy of site or building permits, if required; and (5) Contractor’s license number for Projects exceeding $500. Upon receipt of a complete capital improvements claim, the Administrator staff may arrange a site visit to inspect the completed Project.

Once the improvements have been verified, the Administrator will send a written response to approve or deny the capital improvements within 60 days of original receipt. This information will be placed in the property file for use when the property is sold.

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11. CAPITAL IMPROVEMENTS AND SPECIAL ASSESSMENTS (Continued)

Special Assessments

Homeowner’s Association (HOA) initiated special assessments are considered capital improvements and will be added to the resale price of the home at the full amount of the special assessment paid by the BMR Owner. In order to receive credit for special assessments, homeowners must submit the following documentation within 6- months of payment: (1) An invoice for the special assessment; (2) Proof of payment, such as a cancelled check, bank account statement or credit card bill; and 3) documentation from the HOA.

Capital Improvements Cap

At the time of sale, the City will cap all eligible capital improvements at 10% of the resale price. This is to preserve the affordability of the BMR unit.

Maintenance and Insurance Requirements

The Owner shall maintain the Home, including landscaping, in good repair and in a neat, clean and orderly condition and will not permit deterioration of the Home.

The Owner shall maintain a standard all risk property insurance policy equal to the replacement value of the Home, naming the City as an additional insured. The insurance amount shall be adjusted every five years by appraisal, if requested by the City. Additional insurance requirements are set forth in the City Deed of Trust.

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12. OWNERSHIP CHANGES, RE-SALES, AND APPROVED VENDORS

The information below, and on the following page, outlines the process for transferring or changing ownership of the BMR home.

OWNERSHIP CHANGES

• Homeowners must review their BMR deed restrictions in order to determine it title can be transferred. • Outside of divorce, marriage or name change, the new owner must be eligible and qualified for the BMR program, as determined by the City / Administrator.
• Written approval from the City/Administrator is required. • Changes are not permitted if the homeowner has violated any of their Deed Restrictions. • Any request to remove, add, or otherwise change ownership of the BMR home shall be accompanied by the following documents:
• Divorce: Copy of court order
• Name change: Copy of legal documents
• Marriage: Copy of Marriage Certificate
• New ownership: All required documents per the City / Administrator • Trusts are not allowed.
• Inheritance is not permitted, unless otherwise allowed per the deed restrictions

RE-SALES

• The homeowner shall complete a ticket (request) on the HouseKeys website to begin the process for potential resale. • The homeowner shall provide all requested documents to the Administrator in order to begin processing the resale request.

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12. OWNERSHIP CHANGES, RE-SALES, AND APPROVED VENDORS (Continued)

• Once all required documents have been received, the Administrator will:
• Review the deed restrictions along with any liens recorded on the property. • Assignment of Option is required if owners wants to continue with sale • Complete an initial walk-through of the property, to determine the amount of work needed to sell the BMR home. • Schedule inspections of the property (contractors, appraiser, vendors, etc.) • Obtain a preliminary quote from vendors.
• Review quotes and schedule a walk-through of the property with the City. • Adjust contractor/vendor bids, if needed, and obtain a final quote for property improvements. • Obtain approval of the quote from the City.
• Calculate the Maximum Restricted Sale Price per the deed restrictions, accounting for all required and approved improvements to the property.
• Create the listing agreement or purchase agreement if needed. • Prepare the property for resale through the Lottery/Opportunity Drawing process. • All real estate/transaction fees are the responsibility of the seller. • The owner shall sign the Property Pricing form and Opportunity documents.

APPROVED VENDORS

All vendors shall be approved by the Administrator. The table below outlines the minimum requirements for any vendor associated with resale of the property:

CONTRACTORS • Contractors shall have a valid California Contractor License.

LENDER/LOAN

OFFICERS
• Loan Officers shall have previously attended HouseKeys loan officer orientation class. • The lender’s legal department shall approve all BMR documents prior to resale.

TITLE COMPANY • The Title Company shall be based in the County of Santa Clara.

APPRAISER • Appraisers shall have a valid California State Certification or California State License that has not expired.

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City of Campbell
Below Market Rate (BMR) Homebuyers
Eligibility Guide

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INTRODUCTION

On October 3, 2006, the City Council adopted Campbell’s Inclusionary Housing Ordinance ( Chapter 21.24), finding that the lack of affordable housing in Campbell forces many residents to pay a very high percentage of their income for housing. Through the inclusionary ordinance, at least 15% of the units in a new housing development of ten or more units will be price or rent restricted for low - and moderate- income households. Implementation of the inclusionary ordinance is a necessary part of the City's efforts to meet its General Plan Housing Element goals and objectives and its region wide affordable housing obligations.

On June 7, 2016, the City Council selected HouseKeys to administer the City’s affordable housing programs. In addition to general administration of these programs, HouseKeys determines the eligibility of individuals and households interested in owning a Below Market Rate (BMR) home in the City of Campbell.

This Eligibility Guide
1 answers basic questions regarding eligibility for the City of Campbell’s limited number of affordable ownership units, including Campbell’s preference criteria (page 2) , occupancy standards (page 3), first-time homebuyer standards (page 4), asset limits (page 5), and income limits (page 6).

For more information on the City’s Below Market Rate Program:

Online: http://www.housekeys2.com

Email: [email protected]
Phone: 1-877-460-KEYS (5397)
Address: 70 N. First Street Campbell, CA 95008

The City of Campbell reserves the right to change information contained in this Eligibility Guide and used for program implementation without prior notice or obligation.

1 A more comprehensive set of BMR Guidelines is being drafted and will be available at a later date.

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PREFERENCE CRITERIA FOR RENTAL OR PURCHASE OF BMR UNITS

When the City adopted its Inclusionary Housing Ordinance in 2006, the City Council established a preference for allocating the limited number of affordable rental and ownership units. First priority (for up to ten percent of all affordable units) shall be given to income eligible employees of the City of Campbell . S econd priority is given to income eligible existing Campbell residents and third priority is given to income eligible persons employed within the city limits of the City of Campbell. If a particular address is in question, HouseKeys will check with City staff to determine if the property is within the City’s jurisdictional boundaries.

The preference system will be used to establish a ranking of applicants. An eligible household will be ranked according to where they live or work. While an applicant who lives or works within the city limits will have priority over an applicant who does not, residency/employment status is not a requirement for the program, and all individuals and households may apply. Households comprised of applicants who do not reside or work in Campbell may occupy a BMR unit if there are no eligible Campbell residents or workers on the eligibility list for occupancy.

BMR PREFERENCE CRITERIA
Priority 1: Work for City
(for up to 10% of BMR units)
Must work for the City of Campbell government entity
at least 20-hours per week for at least 6-months*
Employee must have passed probation
Priority 2: Live in Campbell Must have lived in Campbell for at least 6-months* Priority 3: Work in Campbell
Must work at a business located in Campbell
at least 20-hours per week for at least 6-months*
*This category includes employees of the Campbell School District even though their physical office or school building may be located in San Jose *Eligibility will be evaluated at the time of lottery submission and verified again prior to occupancy

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Below Market Rate (BMR) Homebuyers

OCCUPANCY STANDARDS FOR BMR UNITS

Applicant/Co-Applicants must occupy the property as their principal residence. This means that the Applicant/C o- Applicants must use the property as their primary place of residence and the property must be owner -occupied upon purchase and for the life of the deed restrictions. Use of the property for rental purposes, including temporary leases or room rentals are not allowed under the program and will trigger immediate action.

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. Pursuant to fair housing laws, the maximum occupancy allowed in a BMR home is two people per bedroom, plus one additional person. Thus, to be eligible to purchase a three-bedroom unit, a household must contain at least three members, but no more than seven members. In some cases, an exception to the minimum standard may be made where no other qualified buyer/renter can be approved within 30-days of holding the lottery.

The City’s BMR Administrator will verify household occupancy once per year for the life of the 45- year BMR Agreement between the City and the homeowner(s).

BMR OCCUPANCY STANDARDS
Number of Bedrooms Minimum Household Size Maximum Household Size One 1 3
Two 2 5
Three 3 7
Four 4 9
Five 5 11

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FIRST-TIME HOME BUYER REQUIREMENT
To be eligible for the City of Campbell’s BMR homeownership program, all household members on Title must be a first - time homebuyer, except as provided below . A First-Time Home Buyer (FTHB) is an individual who has NOT had an ownership interest in a home in the three years immediately preceding their application date, except as follows:

(1) A displaced homemaker who, while a homemaker, owned a home with his or her spouse or resided in a home owned by the spouse. A displaced homemaker is an adult who has not, within the preceding two years, worked on a full-time basis as a member of the labor force for a consecutive twelve- month period and who has been unemployed or underemployed, experienced difficulty in obtaining or upgrading employment and worked primarily without remuneration to care for his or her home and family; or

(2) A single parent who, while married, owned a home with his or her spouse or resided in a home owned by the spouse. A singl e parent is an individual who is unmarried or legally separated from a spouse and has one or more minor chil dren for whom the individual has custody or joint custody or is pregnant; or

(3) An existing Campbell BMR homeowner who no longer meets the occupancy standards in these guidelines and otherwise qualifies to purchase a larger or smaller BMR home at the time of re-application.

However if the unit is not sold the property will be asset income along with any rental income. • Ownership in timeshares.
• Beneficiary of a trust for which the trustor is still living • Ownership of shares in a limited equity co-op

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ASSET LIMITATION

In addition to meeting the income limits, there are restrictions on the amount of assets that a household may have to be eligible for the City of Campbell ’s BMR Program. For households applying to be an owner of a BMR unit, the limit is 50% of household AMI plus the down-payment up to 20% of the BMR price. So for example, the asset limitation for a 4- person household purchasing a 3-bedroom moderate income home with a 20% down payment would be approximately $147,950 where AMI is $107,100 and the example BMR price is $472,000

2. Asset limit = 50% of household AMI plus the down-payment up to 20% of the BMR price

The City will review household i ncome and assets for all owner-occupants, temporary occupants, and other occupants, regardless of such household member’s interest in purchasing or occupying a BMR home. To determine total household assets, HouseKeys will review the household’s total assets according to monthly statements and/or other valuations. A six-month average will be used to avoid applicant “asset dumping” (asset liquidation or transfer to other parties) just prior to Program application in order to meet the asset limits. Assets held in IRS -recognized retirement accounts (401-k’s, IRA’s, etc.) are not included for the purpose of determining whether an Applicant meets the Program asset limits.

However, retirement and insurance payments will be used to determine gross household income.

2 20% of 472,000 = $94,400; 50% of $107,100 = $53,550; $94,400 + $53,550 = $147,950.

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HOUSEHOLD SIZE AND INCOME

Eligibility income limits are based on household size and a percentage of the Santa Clara C ounty Area Median Income (AMI) published by the D epartment of Housing and Community Development. AMI means that fifty percent of all household incomes in the county are more than 100% AMI and fifty percent of the household incomes are less than 100% AMI. In Campbell, the moderate income limit is 120% of AMI, while the low income limit is 8 0% of AMI. Use the table below to determine which income level your household falls under. All household members ages 18 or older must have their income verified. Household members that do not work or will not have any income in the next 12 months must complete a zero-income affidavit.

CALIFORNIA DEPT. OF HOUSING & COMMUNITY DEVELOPMENT
2016 SANTA CLARA COUNTY SINGLE FAMILY INCOME LIMITS (as of MAY 24, 2016) Number of Persons in Household
Income Category 1 2 3 4 5 6 7 8
Moderate Income
120% AMI $89,950 $102,800 $115,650 $128,500 $138,800 $149,050 $159,350 $169,600 Median Income
100% AMI $74,950 $85,700 $96,400 $107,100 $115,650 $124,250 $132,800 $141,350 Low Income
80% AMI $59,400 $67,900 $76,400 $84,900 $91,650 $98,450 $105,250 $112,050

Income earned (or imputed) from assets, such as dividends, interest, rental income, business income, etc., is included in the household’s annual income pursuant to the Code of Federal Regulations, Title 12, Part 5 income inclusions (§ 5.609).

Please also see Section 4 of this document regarding asset limitations.

Note: Income is looked at differently to qualify for a mortgage. It’s possible to be income eligible for the program, but not a loan, and vice- versa.

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City
Council
Report

TITLE: Council Committee Reports

RECOMMENDED ACTION

That the City Council report on activities from their committee assignments.

DISCUSSION
This is the se ction of the City Council Agenda that allows the City Councilmembers to report on items of interest and the work of City Council Subcommittees.

MAYOR RESNIKOFF:

City Attorney Performance/Compensation Subcommittee
City Clerk Performance/Compensation Subcommittee
City Manager Performance/Compensation Subcommittee
Silicon Valley Animal Control Authority Board (SVACA)
West Valley Clean Water JPA
West Valley Mayors and Managers
West Valley Sanitation District
West Valley Solid Waste Authority JPA

VICE MAYOR BYBEE
Advisory Commissioner Appointment Interview Subcommittee City Attorney Performance/Compensation Subcommittee
City Clerk Performance/Compensation Subcommittee
City Manager Performance/Compensation Subcommittee
Cities Association of SCC Representative
Downtown Subcommittee
Finance Subcommittee
Friends of the Heritage Theater Liaison

Association of Bay Area Governments (Alt.)
Cities Association Selection Committee & Legislative Action Committee (Alt.) Silicon Valley Animal Control Authority Board (SVACA) (Alt.) Valley Transportation Authority Policy Advisory Committee (Alt.) West Valley Mayors and Managers (Alt.)

COUNCILMEMBER GIBBONS:

Association of Bay Area Governments Executive Committee** Item: 22
Category: COUNCIL COMMITTEE

REPORTS
Meeting Date: June 7, 2022
22 Packet Pg. 396
Council Committee Reports Page 2 of 3
Campbell Historical Museum & Ainsley House Foundation Liaison Cities Association of SCC Selection Committee & Legislative Action Committee Education Subcommittee
Legislative Subcommittee
Silicon Valley Clean Energy JPA Board of Directors & Executive Committee (SVCE)

County Library District JPA Board of Directors (Alt.)
SCC Housing and Community Development Advisory Committee (Alt.)

COUNCILWOMAN LANDRY
Advisory Commissioner Appointment Interview Subcommittee County Library District JPA Board of Directors
Downtown Subcommittee
Education Subcommittee
Economic Development Subcommittee
Recycling and Waste Reduction Commission of SCC**
Santa Clara Valley Water District: County Water Commission

Cities Association of Santa Clara County Representative (Alt.) State Route (SR) 85 Corridor Policy Advisory Board (Alt.) West Valley Solid Waste Authority JPA (Alt.)
West Valley Clean Water JPA (Alt.)

COUNCILMEMBER LOPEZ:

Association of Bay Area Governments
Economic Development Subcommittee
Finance Subcommittee
Legislative Subcommittee
SCC Housing and Community Development Advisory Committee State Route (SR) 85 Corridor Policy Advisory Board
Valley Transportation Authority Policy Advisory Committee

Campbell Historical Museum & Ainsley House Foundation Liaison (Alt.) Friends of the Heritage Theater Liaison (Alt.)
Santa Clara Valley Water District: County Water Commission (Alt.) Silicon Valley Clean Energy JPA Board of Directors Executive Committee (Alt.) West Valley Sanitation District (Alt.)

**appointed by other agencies

Prepared by:

Dusty Christopherson, City Clerk
22 Packet Pg. 397
To: Honorable Mayor and City Council Date: June 6, 2022 From: Todd Capurso, Public Works Director
Via: Brian Loventhal, City Manager
Subject: Desk Item 14 - Authorization to Issue Request for Proposals (RFPs) for Design Services for Campbell Priority Development Area (PDA) Enhancements Project (CIP No. 22-NN) (Consent Calendar)

Please see the attached rev ised Resolution for Item 14 relating to the RFP for Design Services for Campbell PDA Enhancements Project. This revised resolution adds a clause authorizing the City Manager to award the contract , which is in line with Staff ’s Recommendation, and allowed pursuant to Campbell Municipal Code (CMC) Section

3.20.030 allowing the City Manager to "proceed with the purchase in the manner that he or she determines to be in the best interest of the City" for certain types of contract s, including contracts for ‘special services, consultation or advice in financial, economic, accounting, engineerin g, legal, administrative or other matters from persons specially trained, experienced and competent to perform the special services required.”

If Council concurs with Staff’s Recommendation and a motion to approve is made, the motion should include reference to this desk item modifying the resolution to allow the City Manager to proceed with awarding the contract and enter into a consultant services agreement with the most qualified respondent for an amount not to exceed $500,000.

This Desk Item will be added to the public agenda packet online.

City of Campbell

MEMORANDUM
Public Works Department

RESOLUTION NO. ___________

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CAMPBELL

AUTHORIZING THE PUBLIC WORKS DIRECTOR TO ISSUE REQUEST FOR

PROPOSALS FOR DESIGN SERVICES FOR THE CAMPBELL PRIORITY

DEVELOPMENT AREA (PDA) ENHANCEMENTS PROJECT

WHEREAS, on October 5, 2021, the City Council adopted Resolution No. 12773 authorizing the Public Works Director to resubmit the One Bay Area Grant (OBAG) Program Cycle 2 grant application for the Campbell Priority Development Area ( PDA) Enhancements Project; and

WHEREAS, the grant request was for $550,000 in federal Congestion Mitigation and Air Quality (CMAQ) Program funds, and the City’s local contribution was $100,000 ; and

WHEREAS, on November 4, 2021, the Santa Clara Valley Transportation Authority (VTA) authorized reprogramming $550,000 of OBAG Cycle 2 funds to the Campbell PDA Enhancements Project for the Preliminary Engineering phase of the project; and

WHEREAS, on March 28, 2021, staff learned that Transportation Improvement Program (TIP) Revision 2021-14 had been approved by the Metropolitan Transportation Commission (MTC), California Department of Transportation (Caltrans), and Federal Highway Administration (FHWA); and

WHEREAS, this TIP Revision approval allows staff to request authorization to proceed with the Preliminary Engineering (PE) phase of the project; and

WHEREAS, the Campbell PDA Enhancements Project would design transportation improvements in Historic Downtown Campbell to serve pedestrians, bicyclists, and transit users; and

WHEREAS, consultant services are needed to prepare the plans, specifications, and engineer’s estimate for the project; and

WHEREAS, the areas of expertise required to design this project include surveying, civil engineering, and traffic signal design; and

WHEREAS, the cost of consultant services is estimated to be $500,000; and

WHEREAS, the R equest for Proposals seeks special services, consultation and advice in engineering and other matters from persons specially trained, experienced and competent to perform the special services required; and

WHEREAS, the City has secured $550,000 in federal OBAG Cycle 2 funds and the City Council authorized an additional $100,000 in City Vehicle Impact Fees as a local contribution; and

WHEREAS, this total amount should be sufficient to cover the cost of consultant services and staff costs.

NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of Campbell that the Public Work s Director is hereby authorized to issue a Request for Proposals for Design Services for the Campbell Priority Development Area (PDA) Enhancements Project; and

BE IT FURTHER RESOLVED that the City Council authorizes the City Manager to execute a consultant services agreement with the most qualified respondent for an amount not to exceed $500,000.

PASSED AND ADOPTED this _____ day of _________, 2022, by the following roll call vote:

AYES: COUNCILMEMBERS:

NOES: COUNCILMEMBERS
ABSENT: COUNCILMEMBERS:

APPROVED:

________________________________
Paul Resnikoff, Mayor
ATTEST:

___________________________
Dusty Christopherson, City Clerk

To: Honorable Mayor and City Council Date: June 7, 2022 From: Dusty Christopherson, City Clerk
Via: Brian Loventhal, City Manager
Subject: Desk Item 16 – Ordinance Adding Provisions for the use of Compliance Agreements in Code Enforcement

Please see the attached Desk Item for Item 16 relating to the ordinance adding provisions for the use of Compliance Agreements in code enforcement. This desk item includes a redline version of the proposed ordinance highlighting added text in red.

This Desk Item will be added to the public agenda packet online.

City of Campbell

MEMORANDUM
Public Works Department

California Land Use and Housing Bills 2021 Page 2 of 12

SECTION 1. Section 6.10.015 of the Campbell Municipal Code is hereby amended to read as follow:

As used in this chapter, the following terms shall have the following meanings, unless the context clearly indicates a different intent:
"Building official" means any person authorized to enforce the building regulations of the city.
"City manager" means the duly appointed city manager of the city, or anyone authorized by him or her to carry out his or her duties under this chapter. "Community development director" means the director of the community development department of the city, or anyone authorized by him or her to carry out his or her duties under this chapter.
“Compliance Agreement” shall mean an agreement between the city and responsible person that identifies a schedule with identified milestones to obtain abatement of a violation
"Disturbing the peace" means any of the following:
(1) Any violation of California Penal Code Section 415; or (2) Any act or course of conduct that a reasonable person would know to be likely to unreasonably and significantly disturb another in the regular conduct of their normal life activities.
"Enforcement costs" means all costs incurred by the city in enforcing the provisions of this chapter, whether by abatement, administrative proceedings or civil actions, or any combination of these actions. Enforcement costs shall include the following:
(1) Administrative and regulatory costs: including (a) any time spent by a city employee or contractor for code enforcement activities related to the code violation, such as inspections and reinspections, compliance reinspections, abatement actions, police services, administration, bookkeeping and accounting, legal services, supervision, preparing for and attending hearings, (b) administrative fines and penalties, and (c) other costs related to the enforcement such as costs of abatement, notices, and court costs. Costs based on time spent by city employees or contractors shall include salary, benefits, and overhead; (2) Collection costs: costs incurred in securing payment of any delinquent amount owed to the city;
(3) Attorneys' fees: reasonable attorneys' fees incurred by the city, if the city has elected at the initiation of the individual action or proceeding to seek recovery of its attorneys' fees.
"Enforcement officer" means the building official, city code enforcement officer, police officer, the officials and animal control officers of the Silicon Valley Animal Control California Land Use and Housing Bills 2021 Page 3 of 12

Authority, city department head (to the extent responsible for enforcing provisions of this code), or any other city employee designated by this code, the city manager, or any department head to enforce a provision of this code.
"Excessive littering" means throwing, dropping, placing, depositing, or sweeping, or causing any such acts, of any waste matter on land or water in other than appropriate storage containers or areas designated for such purposes, which cause the waste matter to accumulate.
"Fire marshal" means any person authorized to enforce the fire regulations of the city; "Harassment of passersby" means any of the following conduct when initiated without the consent of the person to whom it is directed:
(1) The abuse of a passerby with words which are offensive and inherently likely to provoke an immediate violent reaction;
(2) Touching a passerby with an intent to intimidate or coerce; (3) Threatening the passerby with physical harm by word or gesture giving rise to a reasonable tendency to produce in the passerby a fear that the threat will be carried out;
(4) Coming closer than three feet to a passerby for the purpose of initiating a commercial transaction through intimidation or coercion; (5) Intentionally blocking or impeding a person's passage; (6) Following a passerby after he or she declines a solicitation with an intent to intimidate or coerce that passerby.
"Hearing officer" means a person designated by the city manager to hear and decide any matter authorized pursuant to this chapter. The designated hearing officer shall be an impartial person, such as: (1) a city employee from a department not involved in the prosecution of the matter to be decided, or (2) a person selected from a panel of hearing officers assembled by the city manager, or (3) a person hired from an organization which provides hearing officers. Hearing officers shall be selected in such a manner that the hearing officer does not have a financial incentive to decide a matter to a particular conclusion. The employment, performance evaluation, compensation and benefits of the hearing officer shall not be directly or indirectly conditioned upon or affected by the amount of administrative citation fines upheld by the hearing officer. "Lewd conduct" means any of the following:
(1) Display or touching of one's own genitals in a place open to public view with the intent or purpose of inducing sexual arousal or gratification in one's self or another;
(2) Engaging in contact with the genitals of another person in a place open to public view with the intent or purpose of inducing sexual arousal or gratification in one's self or another;
California Land Use and Housing Bills 2021 Page 4 of 12

(3) The non-consensual touching of another person with the intent or purpose of inducing sexual arousal or gratification in one's self or another; (4) Physical contact between anyone over eighteen years of age with someone under eighteen years of age with the intent or purpose of inducing sexual arousal or gratification in one's self or another; or
(5) Display by someone over eighteen years of age of his or her genitals to someone under eighteen years of age with the intent or purpose of inducing sexual arousal or gratification in one's self or another. "Loitering" means to delay or linger without a lawful purpose for being on the property and for the purpose or intent of committing a crime as opportunity may be discovered. "Owner" means any person(s) shown as the property owner on the latest equalized property tax assessment rolls.
"Person" means a natural person or a legally recognized entity, including a corporation, partnership or public entity.
"Responsible person" means all of the following:
(1) A person who, by action or inaction (whether acting alone or with one or more other persons), causes, maintains, permits, or allows a violation of this chapter; (2) A person whose agent, employee, or independent contractor, by action or inaction, causes, maintains, permits or allows a violation of this chapter; (3) An owner of real property on which a violation of this chapter occurs; (4) A lessee or sub-lessee with the current right of possession of real property on which a violation of this chapter occurs;
(5) A person that uses real property on which a violation of this chapter occurs; (6) An on-site manager who regularly works on real property on which a violation of this chapter occurs and who is responsible for the business or other activities on that real property;
(7) The owners, majority stockholders, corporate officers, trustees, general partners and any other person with the legal authority to act for a legal entity that is a responsible person under subsections (1) through (6) above; (8) If any of the above persons are minors or incompetent, the parents or guardians of such persons shall be deemed responsible persons. "Unreasonably loud noise" means a noise that a reasonable person would find to be so loud as to cause significant impairment to their normal life activities, or significant mental or physical injury.

California Land Use and Housing Bills 2021 Page 5 of 12

SECTION 2. Section 6.10.030 of the Campbell Municipal Code is hereby amended to read as follows:

Whenever the enforcement officer finds that a nuisance, as defined by Section

6.10.020 exists on any premises located within the city, the code enforcement officer may advise the property owner, or other responsible person of the nuisance and direct that person to abate the nuisance. The notice shall be in writing. The notification shall detail the violations and establish a reasonable abatement period. The notice shall be served either personally on the property owner or other responsible party, or sent by First Class United States mail, or other comparable or superior method of delivery. If there is no known address for the owner or other responsible party, the notice shall be sent in care of the property address. The failure of any person to receive such notice shall not affect the validity of the proceedings. The city may enter into a Compliance Agreement with the property owner to identify a schedule to accomplish the required abatement.

SECTION 3. Paragraph (3) of subsection (c) of Section 6.10.180 of the Campbell Municipal Code is hereby amended to read as follows:

Due Date. All fines and fees for enforcement costs shall be due and paid to the city within thirty days from the date of the administrative citation. The enforcement officer may suspend the imposition of fines through the terms of a Compliance Agreement or for any period of time during which the responsible person has filed for necessary permits, and such permits are required to achieve compliance, and the responsible person is actively pursuing permit approval and full compliance.

To: Mayor Resnikoff and City Council Members

Date: June 7, 2022
From: Stephen Rose, Senior Planner
Via: Rob Eastwood, Community Development Director
Subject: Item #21 – Consultant Services Agreement with HouseKeys (PLN-2022-50)

This afternoon HouseKeys provided an updated fee schedule to be replace the fee schedule included in the Proposed Consultant Service Agreement (FY22- 23) (reference Exhibit A-1). Due to the late receipt of this material, staff will intend to provide a summary as part of the presentation.

In review of the changes to the fee schedule, staff is supportive of the requested changes recognizing that they primarily serve to standardize the fees charged by HouseKeys to the communities it serves and clarify fees being charged to program participants.

The most significant fees being added include a Rental Unit Processing Fee and a Rental Annual Compliance Recertification Process Fee which would only apply to new rental housing projects (existing apartment communities with “Legacy Agreements” would not be charged this fee).

As additional changes, the updated fee schedule separates out refinancing agreements and document processing from loan processing, resulting in an actual cost savings to program participants – reducing the cost from $1,250 per transi tion to $500 per transaction. This will have a minor impact to program revenues, since the City collects 25% of the fee collected, but result in a substantial savings to program participants in an area the City has received complaints in the past.

Finally, the updated fee schedule adds in fees charged (for transparency) to real estate agents and loan officers who receive training by HouseKeys and removes fees charged to applicants applying for opportunity drawings and applications (HouseKeys never charged these fees).

Attachments:

Exhibit A-1 – Updated Fee Schedule (Clean)
Exhibit A-2 – Updated Fee Schedule (Redlines)

City of Campbell

MEMORANDUM

Exhibit A-1
UPDATED FEE SCHEDULE 2022-2023

BMR ADMINISTRATOR - HOUSEKEYS

1 Fees may be lower pursuant to the relevant executed Agreement (e.g., developer agreement, owner resale restriction agreement, promissory note, etc.). These are collectively referred to as “Legacy Agreements.”
2 25% of the $1,250 loan processing fee ($312.50) paid by the owner/lender will be transferred to the City for administration and internal processing.
3 25% of the $500 refinancing & document processing fee ($125.00) paid by the owner/lender will be transferred to the City for administration and internal processing of the subordination / payoff request. # Description Fee1 Fee Cap /
Max Billed To
1 Program Administration $160,000 / year ($13,333.33
/ month) City
2 Rental Unit Processing Fee
(New Construction/ Existing
Vacancies)
Up to
$1,500.00
per lease
transaction
Up to
$1,500 per
lease
transaction
Developer
[Agreement]
3 Rental Annual Compliance
Recertification Process Fee
(100% of resident files)
Up to $150
per unit
Up to $150
per unit
Developer
[Agreement]
4 Project-level Annual Review No fee No fee No fee
5 Tenant-level Annual Review
(10% of resident files) No fee No fee No fee
6 Loan Processing
Transaction Fee
$1,250.00 per
transaction2
$1,250.00
per
transaction
Owner / Lender
7 Refinance & Document
Processing Fee
$500 per
transaction32
above
$500 per
transaction
Homeowner
[Agreement]
8 New Ownership Sales
Transaction Fee
3% of
Sales Price
Maximum
$18,000.00
Homeowner /
Added to Sales
Price
[Agreement]

9 Ownership Resale
Transaction Fee
6% of
New Sales
Price
Maximum
$36,000.00
Homeowner /
Added to Sales
Price
[Agreement]

10 Acquisition and Ownership
Resale / Rehab
Transaction Fee
5% of Resale
Restriction
Price
plus 5% of
New Sales
Price
Maximum
$60,000.00
Homeowner /
Added to Sales
Price
[Agreement]

11 Billing Rate for Projects
Outside of Contract Scope
$250.00 /
hour
$250.00 /
hour City
12 Training Program for Real
Estate Professionals $35 per class $35.00
Real Estate
Agents & Loan
Officers
13 Annual Registration for
Loan Officers and RE
Agents who participate in
Program Transactions
$350 per
agent
per year
$350
Real Estate
Agents & Loan
Officers
11 Application I.D.

Issuance No fee No fee n/a
12 Participant I.D.

Issuance No fee No fee n/a
13 Opportunity Drawing (Lottery)
Entry Fee No fee No fee Applicant
14 Application Fee No fee No fee Applicant
Exhibit A-2
UPDATED FEE SCHEDULE 2022-2023

BMR ADMINISTRATOR - HOUSEKEYS

1 Fees may be lower pursuant to the relevant executed Agreement (e.g., developer agreement, owner resale restriction agreement, promissory note, etc.). These are collectively referred to as “Legacy Agreements.”
2 25% of the $1,250 loan processing fee ($312.50) paid by the owner/lender will be transferred to the City for administration and internal processing.
3 25% of the $500 refinancing & document processing fee ($125.00) paid by the owner/lender will be transferred to the City for administration and internal processing of the subordination / payoff request. # Description Fee1 Fee Cap /
Max Billed To
1 Program Administration $160,000 / year ($13,333.33
/ month) City
2 Rental Unit Processing Fee
(New Construction/ Existing
Vacancies)
Up to
$1,500.00
per lease
transaction
Up to
$1,500 per
lease
transaction
Developer
[Agreement]
3 Rental Annual Compliance
Recertification Process Fee
(100% of resident files)
Up to $150
per unit
Up to $150
per unit
Developer
[Agreement]
4 Project-level Annual Review No fee No fee No fee
5 Tenant-level Annual Review
(10% of resident files) No fee No fee No fee
6 Loan Processing
Transaction Fee
$1,250.00 per
transaction2
$1,250.00
per
transaction
Owner / Lender
7 Refinance & Document
Processing Fee
$500 per
transaction32
above
$500 per
transaction
Homeowner
[Agreement]
8 New Ownership Sales
New BMR Sales
Transaction Fee
3% of
Sales Price
Maximum
$18,000.00
Homeowner /
Added to Sales
Price
[Agreement]
Buyer (via Sales Price)
9 Ownership BMR Resale
(compliant)
Transaction Fee
6% of
New Sales
Price
Maximum
$36,000.00
Homeowner /
Added to Sales
Price
[Agreement]

Buyer (via Sales Price)
10 Acquisition (default) and
Ownership
BMR Resale / Rehab
Transaction Fee
5% of Resale
Restriction
Price
plus 5% of
New Sales
Price
Maximum
$60,000.00
Homeowner /
Added to Sales
Price
[Agreement]
Buyer (via Sales Price)
11 Billing Rate for Projects
Outside of Contract Scope
$250.00 /
hour
$250.00 /
hour City
12 Training Program for Real
Estate Professionals $35 per class $35.00
Real Estate
Agents & Loan
Officers
13 Annual Registration for
Loan Officers and RE
Agents who participate in
Program Transactions
$350 per
agent
per year
$350
Real Estate
Agents & Loan
Officers
11 Application I.D.

Issuance No fee No fee n/a
12 Participant I.D.

Issuance No fee No fee n/a
13 Opportunity Drawing (Lottery)
Entry Fee
No fee
$25.00
No fee
$25.00 Applicant
14 Application Fee No fee
$75.00
No fee
$75.00 Applicant

Campbell City CouncilJune 7, 2022

Campbell City Council
June 7, 2022