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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 detail s 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 dea th 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 s igned 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 2nd 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 fil ed 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 si gned 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. Addendums 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 r eviewed 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 capi tal 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 i mprovements, each BMR Owner must submit the followi ng 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 c ancelled 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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Below Market Rate (BMR) Homebuyers
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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Attachment: BMR Guidelines; established by CC Res. 12375 (BMR Housing Program Update and City of Campbell Eligibility Guide
Below Market Rate (BMR) Homebuyers
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 st aff 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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Attachment: BMR Guidelines; established by CC Res. 12375 (BMR Housing Program Update and City of Campbell Eligibility Guide
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, t he 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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Attachment: BMR Guidelines; established by CC Res. 12375 (BMR Housing Program Update and City of Campbell Eligibility Guide
Below Market Rate (BMR) Homebuyers
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.
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 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
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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Attachment: BMR Guidelines; established by CC Res. 12375 (BMR Housing Program Update and City of Campbell Eligibility Guide
Below Market Rate (BMR) Homebuyers
ASSET LIMITATION
In addition to meeting the income limits, t here 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 approximat ely $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 st atements 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. A ssets 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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Attachment: BMR Guidelines; established by CC Res. 12375 (BMR Housing Program Update and City of Campbell Eligibility Guide
Below Market Rate (BMR) Homebuyers
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 inco me 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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Attachment: BMR Guidelines; established by CC Res. 12375 (BMR Housing Program Update and City
Council
Report
TITLE: Reach Code Updates
RECOMMENDED ACTION
That the City Council receive the report and provide direction to staff on potential Reach Code updates.
PURPOSE
In April 2023, the Ninth Circuit Court of Appeals found the City of Berkeley’s natural gas ban ordinance was preempted by the federal Energy Policy and Conservation Act (EPCA). On January 2, 2024, the Ninth Circuit affirmed the April 2023 decision and denied a petition for rehearing. In response to the decision, the Court has determined that cities may not expressly prevent natural gas connections or gas appliances.
Given the Ninth Circuit Court of Appeals decision on California Restaurant Association v. City of Berkeley , Campbell has suspended enforcement of the electrification requirements in its Reach Code , and all projects are currently able to use natural gas and natural gas appliances. This report intends to inform the Council of options going forward, that include the repeal and replacement of the City’s adopted Reach Code with alternative approaches, so the Council can provide initial direction to staff on an approach that should be pursued.
BACKGROUND
Campbell’s Previous Reach Code Initiative
One of Council’s four main strategic priorities identified for Fiscal Year s 2023 and 2024 is Sustainability. In pursuing Sustainability objectives, the City adopted a Reach Code that created higher environmental standards in building construction, by reducing greenhouse gas emissions and reliance on fossil fuels, to meet sustainability principles.
At its regular meeting of November 1, 2022, the City Council voted unanimously to approve an Electrification Reach Code ( Ordinance 2290 ), which became effective January 1, 2023. The Reach Code applied to new construction and major remodels for residential buildings and commercial buildings, with exemptions for commercial cooking, any gas -dependent processes, emergency services, and if all -electric equipment was Item: 16
Category: NEW BUSINESS
Meeting Date: June 18, 2024
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deemed cost-prohibitive. The following table summarizes the key differences between the 2022 State Building Code and Campbell’s Reach Code:
Appliance 2022 State Code Campbell Reach Code
Water Heating Gas or Electric Electric Required (All Buildings) Space Heating Encourages Electric Electric Required (All Buildings) Cooking Gas or Electric Electric Required
Outdoor (SF Res) N/A Electric Required (allows for portable LP appliances)
Specialized Processes
(Industrial / Restaurants)
Gas or Electric Electric with Exemptions
Ninth Circuit Ruling on Berkeley’s Gas Ban and Electrification Reach Codes In April of 2023, a three -judge panel of the U.S. Court of Appeals for the Ninth Circuit held that the plain text and structure of the Energy Policy and Conservation Act (EPCA) preempts state and local building codes concerning the energy use of natural gas appliances, including Berkeley’s building code which prohibits natural gas piping into new buildings and thereby prevents those appliances from using natural gas. On January 2, 2024, the U.S. Court of Appeals for the Ninth Circuit denied Berkeley’s request for review by the full Ninth Circuit and the panel’s decision was reaffirmed.
On May 8, 2024, the City received a letter from the attorneys that represented the California Restaurant Association. Upon reviewing the City’s Reach Code Ordinance, the attorneys contended that they are functionally indistinguishable from Berkeley’s Ordinance and are therefore preempted. On May 9, 2024, the City suspended enforcement of the electrification requirements of the Reach Code.
DISCUSSION
The following discussion presents options including alternative approaches that support the City sustainability goals of reducing harmful greenhouse gas emissions in new construction and major remodels
Option 1: Repeal Existing Reach Code
The Council may elect to repeal parts of Campbell’s Reach Code as currently adopted that prohibit gas appliances. Allowing gas appliances would satisfy the ruling of the Berkley decision; however, it would not achieve the City’s Sustainability goal of reducing greenhouse gas emissions.
Option 2: Energy Performance Standards Approach
An alternative approach to a Reach Code is the implementation of more stringent energy efficiency criteria, leveraging Title 24, Part 6, of the California Building Standards Code. By setting high performance standards for energy use in new construction and major remodels, buildings are encouraged to adopt all -electric designs to meet the required benchmarks. This approach thus encourages electrification, reducing greenhouse gas emissions and improving overall energy efficiency; however, it does not require electrification.
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Energy Performance Standards can apply only to water heaters and space heating and/or space cooling systems, as those are already regulated by the California Energy Commission but cannot regulate other appliances (e.g. cooking). This approach mitigates legal risk by allowing the use of natural gas, as long as the overall efficiency of the building meets the compliance margin.
Energy performance standards also ensure that buildings are future -proofed against rising energy costs and more stringent environmental regulations. This approach requires extensive energy efficiency analysis with each application and will make the building permit review process more complex, requiring additional energy efficiency calculations and reviews. In addition, this approach requires the preparation of a cost effectiveness study by the City and review and approval by the California Energy Commission (CEC).
This approach has been taken by the Cities of Los Altos, Piedmont, Santa Clara, South San Francisco, and others.
In summary, under this approach the City would repeal the existing Reach Code and adopt more stringent energy efficiency standards into the Building Code that strongly encourage all-electric designs for water and space heating systems (but not cooking), and subsequently prepare a cost effectiveness study for review and approval by the CEC.
Option 3: Air Quality Approach (Staff Preferred)
An alternative approach to requiring building electrification is to incorporate a ban on nitrogen oxides (NOx) -emitting equipment inside new buildings . Zero NOx -emitting equipment is defined as any equipment or appliance that emits 0.0 nanograms of nitrogen oxides. Currently, there are no natural gas appliances that meet this standard.
Emissions from natural gas building appliances account for a similar amount of NOx pollution as passenger vehicles in the Bay Area. As a group, building appliances are one of the largest emitters of nitrogen oxides and are known to contribute significantly to the formation of ground -level ozone and particulate matter (PM2.5) in buildings.
Exposure to NOx has been linked to coughing, wheezing, difficulty breathing, asthma, and increased susceptibility to respiratory infections. Exposure to particulate matter has been linked to asthma and other respiratory conditions, neurological disease, heart attack, stroke, lung cancer, and premature death.
By focusing on air quality improvements, the City could mandate that all new construction and major remodels utilize only NOx -free appliances and heating systems, thereby eliminating a significant source of indoor air pollution. Zero NOx -emitting equipment can apply to all appliances (e.g. space heating, water heating, cooking, clothes drying).
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Air quality is regulated by the Clean Air Act, rather than the Energy Policy and Conservation Act (EPCA). This approach not only aligns with state and federal air quality standards, but also ensures a healthier living environment for residents and helps mitigate the adverse impacts of climate change.
This approach has been taken by both the City of Los Altos Hills, as well as the Bay Area Air Quality Management District (BAAQMD). BAAQMD’s regulations state that only zero-emission, electric water heaters can be sold or installed in Bay Area homes or businesses starting in 2027, and furnaces starting in 2029. Large commercial water heaters will need to be zero -emissions by 2031. BAAQMD estimates that these amendments could prevent up to 85 premature deaths per year, avoid up to $890 million per year in health impacts, and decrease exposure to PM2.5, especially in communities of color.
Under this approach, the City would repeal the existing Reach Code for replacement with new code requirements , under Title 6 (Health and Sanitation) of the municipal code, mandating that all new construction and major remodels utilize only NOx -free appliances and heating systems.
A summary of the options going forward, and the pros and cons of each, is summarized below for ease of reference and comparison.
Option Pros Cons
1. Repeal parts
of the existing
Reach Code and
allow natural gas
in new buildings
and major
remodels.
• Avoids legal risk • Allows for continued use of
natural gas, contributing to
greenhouse gas emissions
and poor air quality.
2. Repeal parts
of the existing
Reach Code and
replace with an
alternative
Reach Code
using Energy
Performance
Standards.
• Uses established
processes through Title
24 of the California
Building Standards Code.
• Legally sound – only
increases compliance
margin.
• Requires cost effectiveness
study and California Energy
Commission approval.
• Requires additional resources
and adds complexity during
implementation.
• Doesn’t address stoves,
dryers, fireplaces, pool
heating, etc. Only addresses
space and water heating.
• Doesn’t prohibit new gas
infrastructure.
3. Repeal parts
of the existing
Reach Code and
set a Zero NOx-
emitting
• It is comprehensive and
can cover any appliance
that uses gas and emits
NOx.
• Simple to enforce and
• Hasn’t been legally tested.
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appliance
threshold that
regulates Air
Quality.
conforms with upcoming
BAAQMD regulations.
• Does not require a cost
effectiveness study or
California Energy
Commission approval.
• Can be an amendment to
the City’s Title 6, meaning
this would not be a Reach
Code.
Staff Recommendation
In review of the options and considerations outlined in this report, staff recommends the City pursue the Air Quality Approach, amending Title 6 (Health and Sanitation) of Campbell’s municipal code.
Staff believes this entails a simpler, more holistic approach that better addresses the overall impacts of emissions, as it offers comprehensive benefits for both the environment and public health. By prohibiting NOx emissions in new buildings, the City can directly mitigate these harmful pollutants. This approach thus reduces respiratory and cardiovascular issues linked to poor air quality, while also supporting our broader climate action goals of reducing greenhouse gas emissions. Unlike the Energy Performance Standards Approach, the Air Quality Approach explicitly targets the elimination of NOx emissions, making it a more effective strategy for protecting both environmental and human health.
Staff recommends that the replacement standards retain the exemptions from the existing Reach Code that allow gas in certain industrial processes and restaurants.
These provisions acknowledge the technical or business needs of these industries and will act to minimize the City’s potential legal risk should there be challenges from industry groups. The City has not had any new commercial construction since the adoption of the current Reach Code.
Next Steps
Subject to Council direction, staff will next conduct community/stakeholder outreach and anticipates returning to Council in August with a new ordinance repealing and replacing our current Reach Code.
FISCAL IMPACT
There is no fiscal impact to the City associated with adoption of an Energy Performance Standards Reach Code or the adoption of a zero NOx ordinance.
ALTERNATIVES
1. Repeal the current Reach Code.
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2. Provide direction for Performance Standards approach.
3. Provide direction for Air Quality approach.
Prepared by:
Tiffany Hudson, Environmental Program
Specialist
Reviewed by:
Rob Eastwood, Community
Development Director
Approved by:
Brian Loventhal, City Manager
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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 section of the City Council Agenda that allows the City Councilmembers to report on items of interest and the work of City Council Subcommittees.
MAYOR LANDRY
Advisory Commissioner Appointment Interview Subcommittee City Attorney Performance/Compensation Subcommittee
City Clerk Performance/Compensation Subcommittee
City Manager Performance/Compensation Subcommittee
Education Subcommittee
Economic Development Subcommittee
West Valley Mayors and Managers
DCBA Liaison
Santa Clara County Housing and Community Development Advisory Committee Santa Clara Valley Water District County Water Commission Santa Clara County Library District JPA Board of Directors Cities Association of Santa Clara County - City Selection Committee Friends of the Heritage Theater Liaison (Alt.)
West Valley Clean Water JPA (Alt.)
West Valley Solid Waste Authority JPA (Alt.)
VICE MAYOR LOPEZ
City Attorney Performance/Compensation Subcommittee
City Clerk Performance/Compensation Subcommittee
City Manager Performance/Compensation Subcommittee
Economic Development Subcommittee
Finance Subcommittee
Legislative Subcommittee
Silicon Valley Clean Energy Audit Committee
Item: 17
Category: COUNCIL COMMITTEE
REPORTS
Meeting Date: June 18, 2024
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Bay Area Quality Management District Board of Directors** League of Cities Peninsula Division Executive Committee** Valley Transportation Authority Board of Directors**
West Valley Mayors and Managers (Alt.)
Cities Association of Santa Clara County:
Board Representative (Alt.)
Legislative Action Committee and City Selection Committee (Alt.) Silicon Valley Clean Energy JPA Board of Directors (Alt.) West Valley Sanitation District (Alt.)
COUNCILMEMBER BYBEE:
Finance Subcommittee
Legislative Subcommittee
Cities Association of Santa Clara County:
Board Representative
Legislative Action Committee
Silicon Valley Animal Control Authority Board (SVACA)
Silicon Valley Clean Energy JPA Board of Directors
Campbell Historical Museum & Ainsley House Foundation Liaison (Alt.) West Valley Sanitation District (Alt.)
COUNCILMEMBER FURTADO
Advisory Commissioner Appointment Interview Committee
West Valley Clean Water JPA
West Valley Sanitation District
West Valley Solid Waste Authority JPA
Association of Bay Area Governments (ABAG)
Silicon Valley Regional Interoperability Authority (SVRIA) Santa Clara County Emergency Operational Council (EOAC)** Silicon Valley Animal Control Authority Board (SVACA) (Alt.) Valley Transportation Authority Policy Advisory Committee (Alt.)
COUNCILMEMBER SCOZZOLA
Campbell Historical Museum & Ainsley House Foundation Liaison Friends of the Heritage Theater Liaison
Education Subcommittee
Silicon Valley Clean Energy JPA Board of Directors
Silicon Valley Clean Energy Finance and Legislative Committees Valley Transportation Authority Policy Advisory Board
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Santa Clara Valley Water District: County Water Commission (Alt.) DCBA Liaison (Alt.)
Santa Clara County Housing and Community Development Advisory Committee (Alt.) Santa Clara County Library District JPA Board of Directors (Alt.) Association of Bay Area Governments (Alt.)
**appointed by other agencies
Prepared by:
Kristen Epolite, Deputy City Clerk
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To: Honorable Mayor and City Council
Date: June 18, 2024
From: Andrea Sanders, City Clerk
Subject: Desk Item 8 – Revised Resolution (Axon Agreement)
The purpose of this desk item is to reflect a revised resolution. The staff report and resolution reflected a contract year term of si x year s and it should have been seven years.
Attached is a revised resolution reflecting a seven year contract term.
City of Campbell
MEMORANDUM
City Clerk’s Office
RESOLUTION NO. ________
RESOLUTION APPROVING AN ADDENDUM TO THE CONTRACT WITH AXON AND
AUTHORIZING THE CITY MANAGER TO SIGN THE CONTRACT ADDENDUM AND
DISPENSE WITH BIDDING REQUIUREMENTS AS SPECIFIED IN CAMPBELL MUNICIPAL CODE SECTION 3.20.030(7).
WHEREAS, the Axon’s Draft One artificial intelligence draft narrative generator is consistent with the City’s goal of adopting technologies that enhance public safety and improve officer efficiency; and
WHEREAS, the Campbell Police Department has used Draft One on a trial basis and officers have realized 50% time savings across all crime report types; and
WHEREAS, Campbell Police Department Officers make the most arrests and write the most reports per officer in the County of Santa Clara; and
WHEREAS, improved efficiencies realized by the adoption of advanced technologies will assist the Campbell Police Department in maintaining high service levels despite the challenges of population increase and decreased staffing levels; and
WHEREAS, improvements in quality, detail, and standardization in reporting improves the services provided to the community and our justice partners; and
WHEREAS, Draft One is a software option available to Axon Body Worn Camera and RMS users only and is specifically compatible with the Axon ecosystem. Axon’s Draft One is the only AI assisted report writing system in the industry; and
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Campbell that the City Council adopt a Resolution approving a seven-year addendum to the contract with Axon and authorizing the City Manager to sign the contract and dispense with bidding requirements as specified in Campbell Municipal Code Section
3.20.030(7).
APPROVED:
___________________________
Susan Landry, Mayor
ATTEST:
____________________________
Andrea Sanders, City Clerk