• DRA’s “worst case” estimate of the loss in property tax assessment in the City from the purchase of absentee-owned homes and condos by nonprofits under OPA over the next five years is $67 million, or approximately 1.8% of the City’s total assessed valuation of $3.7 billion. This worst-case scenario is highly unlikely because:
o It assumes all absentee-owned homes sold in the next five years are purchased by non-profits and receive a total exemption of property taxes as affordable rental units. Creation of affordable ownership units will result in these units being assessed at affordable prices rather than market prices, resulting in a reduction but not total elimination in the property taxes generated by these units.
o The subsidy required to cover the “gap” between market home price and affordable home prices will be large and few funds are available for such purchases. DRA estimates the total subsidy required to purchase and make affordable at 80% AMI or below all absentee-owned single-family dwellings and condos sold over the next five years at $97 M to create owner housing and $115 M to create renter housing. Lowering the income targeting to 50% AMI increases the subsidy required to $131 M to create affordable owner housing and $145 M to create affordable renter housing. o Subsidizing units purchased under OPA is not an allowable or competitive activity for any of the more than $23 billion in funding sources available for homeless and affordable housing in California in 2022 reviewed by DRA for this assignment. This will limit the number of these purchases and minimize the effect on the City’s tax base. Subsidizing absentee-owned units purchased under OPA will require identification of new local government or foundation funding sources. DRA estimates a realistic number of units to be purchased by nonprofits and subsidized at no more than 2 to 3 units per year.
1. Residential Market Context
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On a national level, the US has been experiencing high housing price growth, which is expected to continue in the years to come. According to Freddie Mac in July 21:
High house price growth has been supported by increased demand due to low mortgage rates, disposable after-tax income that has risen during the current recession and a major shortage of housing supply relative to our population. The increase in house price growth will be less transitory than the increase in consumer prices, as the U.S. housing market will continue to struggle with a shortage of available housing for many months to come. 1
Housing price appreciation has been even more pronounced in California and particularly the Bay Area due to the growth of the technology economy following the Great Recession and further spurred on by the COVID-19 pandemic.
Table 1 shows the growth in the median single-family home price in East Palo Alto and selected Counties since the recovery began in 2012.
Table 1
Appreciation in Single-Family Median Home Prices for Existing Homes East Palo Alto, Selected Bay Area Counties and California 2012 to 2021
Dec. 2012 Dec. 2020 Nov. 2021
Percent Increase
2012 to
2020
2020 to
2021
2012 to
2021
East Palo Alto $285,000 $938,000 $1,030,000 229% 10% 261% San Mateo County $775,000 $1,700,000 $2,222,500 119% 31% 187% Santa Clara County $681,000 $1,375,000 $1,692,500 102% 23% 149% San Francisco County $864,795 $1,581,000 $1,900,000 83% 20% 120% California $365,840 $717,930 $782,490 96% 9% 114%
Sources: Compass Bay Area Market Reports (East Palo Alto); California Association of Realtors (counties, California
1 http://www.freddiemac.com/research/forecast/20210715_quarterly_economic_forecast.page 584
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We are currently in a rising interest rate environment, which factors into the demand and supply of housing equation by influencing the cost of money, financing, and financing proceeds. For investors who are paying all cash, interest rates are immaterial. In fact, in a rising rate environment, all cash buyers are even more advantaged against first time homebuyers who are buying for themselves as owner occupants.
2. Potential Loss in Assessed Valuation from Absentee-Owned Units Purchased by Nonprofit Housing Corporations
DRA evaluated the potential loss in the City’s assessed property valuation associated with the purchase of absentee-owned single-family homes and condominiums by nonprofit housing corporations pursuant to the OPA.
2.1. Purchase of a single-family home by a non-profit housing corporation does not necessarily mean the City will lose the full amount of property tax revenues it receives from that home.
Affordable rental units owned by qualifying nonprofit organizations and restricted to low income households with incomes at or below 80% of area median income (AMI) are eligible for a property tax exemption2.
Affordable owner units sold by nonprofit corporations and restricted for at least 30 years as affordable to low income households at 80% of AMI or below are eligible for a property tax assessment that takes the affordability restrictions into consideration3. This means the property is assessed at the affordable home sales price rather than market value. DRA calculated affordable home prices by 2021 income level, which are summarized in Table 2 for single-family homes and Table 3 for condominiums. Detailed assumptions for this calculation are 2 https://www.boe.ca.gov/proptaxes/pdf/pub149.pdf
3 https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=RTC§ionNum=402.1 585
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contained in Appendix Table A-1 for single-family homes, and Table A-2 for condominiums.
Special assessments will continue to be paid on all units, regardless of assessed value or exemption status.
Table 2
Affordable Home Prices by Income Level and Unit Bedroom Count Single-Family Homes
City of East Palo Alto
2021
50% AMI 80% AMI 120% AMI
1 Bedroom $207,600 $380,100 $610,200
2 Bedroom $234,500 $428,700 $687,500
3 Bedroom $261,300 $476,900 $764,500
4 Bedroom $280,500 $513,400 $824,000
5 Bedroom $299,400 $549,600 $883,100
Source: DRA.
Table 3
Affordable Home Prices by Income Level and Unit Bedroom Count Condominiums
City of East Palo Alto
2021
50% AMI 80% AMI 120% AMI
1 Bedroom $150,900 $323,400 $553,600
2 Bedroom $179,900 $374,100 $632,900
3 Bedroom $208,100 $423,700 $711,300
Source: DRA.
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2.2 DRA estimates a potential “worst case” loss of assessed value over 5 years of $67 million, representing only 1.8% of the City’s total assessed valuation.
DRA’s estimates are based on the following assumptions and data:
• An average of 28 absentee-owned single-family homes and 4 absentee-owned condos sold per year, which equals the average sales rate for all absentee-owned single-family homes and condos in the City between 2017 and 2021 based on analysis of parcel-specific data from Property Radar. This is an increase from the rate of 8 absentee-owned homes and 4 condos sold per year during the 2007 to 2011 period.
Using total absentee-owned units overestimates the result because non-owner occupied units owned by East Palo Alto residents are exempt from the OPA.
• The weighted average assessed values for absentee-owned singlefamily homes and condos in East Palo Alto in December 2021 of approximately $408,000 and $504,000, respectively, are derived from Property Radar data. The average assessed value by unit bedroom count is summarized for single-family homes in Table 4.
Table 4
Average Assessed Value of Absentee-Owned Single-Family Homes1 City of East Palo Alto
December 1, 2021
Total Assessed
Value No. of Units
Average
Assessed Value
1 Bedroom $3,974,848 6 $662,475
2 Bedroom $14,428,751 54 $267,199
3 Bedroom $35,337,100 99 $356,940
4 Bedroom $22,664,495 35 $647,557
5 Bedroom $7,868,800 13 $605,292
6 Bedroom $908,147 2 $454,074
Weighted Ave. -- -- $408,000
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1 Excludes single-family homes Property Radar identifies units as “owner-occupied.” Sources: Property Radar; City of East Palo Alto; DRA.
• Assuming 100% of the absentee-owned homes are sold to nonprofits and are paying no property taxes as qualifying low-income rental units.
This worst case scenario is highly unlikely because:
o
o There are insufficient capital subsidies available to assist nonprofits to purchase all of the absentee-owned homes coming on the market, as discussed further in Section 3.
o Homes purchased by nonprofits and resold as affordable ownership units would not be exempt from property taxes but would pay property taxes based on affordable sales prices.
2.3 The increase in assessed valuation in the City from the resale of existing owner-occupied units is estimated at $183 million over the next five years, vastly outweighing the potential loss of assessed value from absentee-owned units.
DRA estimates the increase in assessed valuation from the resale of existing owner-occupied single-family homes and condos as follows:
• An average of 53 owner-occupied single-family homes and 9 owneroccupied condos sold per year, which equals the average sales rate for owner-occupied single-family homes and condos in the City between 2017 and 2021 based on analysis of parcel-specific data from Property Radar.
• The weighted average assessed values for owner-occupied singlefamily homes and condos in East Palo Alto in December 2021 of approximately $451,000 and $575,000, respectively, derived from Property Radar data.
2.4 In addition, DRA estimates that assessed valuation in the City will increase by another $560 million to $800 million over the next five years 588
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(approximately) as the existing pipeline of market-rate housing is built out.
This estimate is based on the following assumptions:
• Approximately 800 market-rate units in the City’s development pipeline;
• Average assessed valuation ranging from $700,000 to $1,000,000 per unit, based on 2021 average sales prices for existing condominiums and single-family homes in East Palo Alto. These assumed prices underestimate the actual increase in value as average new home prices are expected to be well above existing home sales prices.
3. Capital Subsidy Resources Necessary for Nonprofits to Purchase Single-Family Homes
Substantial capital resources will be required for nonprofit housing corporations to purchase existing absentee-owned single-family homes and/or condos for the purposes of creating affordable rental or owner units. Under the OPA, nonprofits will be required to pay market rate prices. DRA calculated subsidy requirements using an “affordability gap” methodology which compares the amount households at various income levels can pay for housing and the estimated cost of purchasing absentee-owned single-family homes at market prices under the OPA.
3.1. DRA estimates the five-year capital subsidy required to purchase and subsidize absentee-owned single-family homes and condos to create affordable owner or renter housing as follows4
:
50% AMI 80% AMI 120% AMI
Owner $131 M $97 M $52 M
Renter $145 M $115 M $65 M
4 Assumes all units are converted to affordable owner or renter units at the target income level. 589
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These estimates are based on the following assumptions:
• An average of 28 absentee-owned single-family homes and 4 absentee-owned condos sold per year, equal to the average sales rate for absentee-owned single-family homes in the City between 2017 and 2021.
• DRA calculated per unit affordable home prices (as described in Section
2.1 above) and renter supportable mortgages by income level and unit bedroom count. DRA then calculated a weighted average affordable home price and renter supportable mortgage by income level using the distribution of absentee-owned homes by unit bedroom count shown above in Table 4. Detailed assumptions for the calculation of affordable single-family and condo home prices and supportable rental mortgages by income levels are shown in Appendix Tables A-1, A-2, A-3 and A-4. • The weighted average owner and renter per unit affordability gaps to purchase and “buy down” the affordability of these units by income level and tenure are shown in Table 5.
• An average market purchase price of $1,106,000 for single-family homes and $783,000 for condos based on the average sales prices for resale of existing units in East Palo Alto during 2021 from Property Radar.
Table 5
Weighted Average Per Unit Affordability Gaps by Income Level City of East Palo Alto
2021
Very Low
Income
50% AMI
Low Income
80% AMI
Moderate
Income
120%
SFD Owner $847,700 $633,500 $348,300
Condo Owner $613,000 $427,000 $178,000
Renter $905,700 $721,700 $411,700
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3.2. Traditional sources of funding for affordable housing may not be used to subsidize units purchased under the TOPA. This will materially limit the number of sales to nonprofit housing corporations.
• California has an unprecedented level of funding available to tackle the problem of homelessness and lack of affordable housing in the State. • The State Department of Housing and Community Development (HCD) has approximately $1.2 billion in funding remaining under Proposition 1, which authorized $4 billion in general obligation (GO) bonds for housing in 2018. This amount includes funding for the programs listed below, but excludes the Affordable Housing and Sustainable Communities program, which receives ongoing funding subject to Cap and Trade Auction Revenues. None of these funds may be used for OPA homes.
Multifamily Housing Program $394 M
Veterans Housing and Homelessness Prevention Program (VHHP) $129 M Infill Infrastructure Grants (IIG) $124 M
Serna Farmworker Housing Program $96 M
No Place Like Home $496 M
• The California State Budget includes more than $22 billion in funds for housing and homelessness over the next two years. Funding for FY 2021-2022 includes the following programs, which also may not be used to purchase TOPA homes:
Local Homelessness Programs $1.0 B
Dept. of Social Services Homelessness Programs $2.0 B
Rental Assistance (Payment of Overdue Rent) $5.2 B
HCD Pipeline Projects $1.75 B
Project HomeKey $1.45 B
Affordable Housing Preservation $500 M
Infill Infrastructure Grant $300 M
• The California Tax Credit Allocation Committee (CTCAC) awarded more than $511 M in 9% and 4% Low Income Housing Tax Credits to projects in California in 2020. LIHTC’s also are not available for OPA homes. • The purchase and subsidization of units by nonprofits under the OPA does not qualify for the any of the above funding sources and would 591
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require identification of new local government and/or foundation resources.
4. 1031 Exchanges
Under Section 1031 of the United States Internal Revenue Code, a taxpayer may defer recognition of capital gains and related federal income tax liability on the exchange of certain types of real property through a process known as a 1031 exchange.5
4.1 1031 Exchanges only apply to sale of an investment property and replacement purchase of another like-kind investment property of equal or greater value (e.g. sale of one rental property and purchase of another rental property).
4.2 1031 Exchange time limits are measured from when the property to be sold (“relinquished property”) closes. Therefore, sale of a property by an East Palo Alto resident under a 1031 Exchange will not be affected by OPA timelines unless they also are purchasing a replacement investment property in East Palo Alto.
4.3 For East Palo Alto residents selling one investment property and purchasing another investment property in East Palo Alto, the OPA timeline is adequate to complete a 1031 Exchange.
• Measured from when the relinquished property closes, the Exchangor has 45 days to nominate (identify) potential replacement properties and a total of 180 days (including the 45-day nominating period) to acquire the replacement property. The 97-day to 127-day time limits proposed for OPA fits within this 180-day time frame.
5 See https://www.law.cornell.edu/uscode/text/26/1031
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4.3 1031 Exchanges comprise a small percentage (less than 5%) of residential transactions nationally.
• According to a 2020 study by the National Association of Realtors, among residential NAR members, 1031 Exchanges comprised an average of less than 5% of sales transactions, with half of members reporting no such transactions.
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Appendix Tables
594
Table A-1
Affordable Home Sales Price Calculations, Owner Housing Single-Family Homes
City of East Palo Alto
2021
Assumptions
2021 HUD Median Household Income, San Mateo County $149,600 2021 HUD VLI Limit, Household Size of Four $91,350
2021 HUD Effective Median Income, HH Size of Four $182,700 Used in Calculations $182,700
Affordable Housing Expense As a % of Income 30%
No. of Bedrooms Studio 1 Bedroom 2 Bedroom 3 Bedroom
Household Size 1 Persons 2 Persons 3 Persons 4 Persons
Household Size Income Adjust. Factor 70% 80% 90% 100%
Owner-Paid Utility Allowance (1) $188 $208 $265 $324
Monthly HOA Fee/Maint. Cost $200
Monthly Property Insurance $100
Property Tax Rate (% of AV) 1.00%
Mortgage Interest Rate 5.50%
Term (Years) 30
Downpayment (% of Sales Price) 10.00%
Per Unit Affordable Sales Price by Unit Bedroom Count
Studio 1 Bedroom 2 Bedroom 3 Bedroom
50% AMI
Annual Income Limit $63,945 $73,080 $82,215 $91,350
Affordable Monthly Housing Expense $1,599 $1,827 $2,055 $2,284 Less: Monthly Utility Allowance ($188) ($208) ($265) ($324) Less: HOA/Maintenance Expense ($200) ($200) ($200) ($200) Less: Property Insurance ($100) ($100) ($100) ($100)
________ ________ ________ ________
Available for Principal, Interest, Taxes $1,111 $1,319 $1,490 $1,660 Less: Property Taxes 1.20% $217 $258 $292 $325
Supportable Mortgage Before Prop. Taxes $195,671 $232,305 $262,421 $292,362 Assumed Assessed Value at Sale 90.00% $217,413 $258,116 $291,579 $324,847 Available for Mortg. Principal and Interest $894 $1,061 $1,198 $1,335 Supportable Mortgage $157,380 $186,845 $211,068 $235,150 Plus: Downpayment @ 10.00% $17,490 $20,760 $23,450 $26,130 Affordable Sales Price (Rounded) $174,900 $207,600 $234,500 $261,300 80% AMI
Annual Gross Income $102,312 $116,928 $131,544 $146,160 Affordable Monthly Housing Expense $2,558 $2,923 $3,289 $3,654 Less: Monthly Utility Allowance ($188) ($208) ($265) ($324) Less: HOA/Maintenance Expense ($200) ($200) ($200) ($200) Less: Property Insurance ($100) ($100) ($100) ($100)
________ ________ ________ ________
Available for Principal, Interest, Taxes $2,070 $2,415 $2,724 $3,030 Less: Property Taxes 1.20% $405 $473 $533 $593
Supportable Mortgage Before Prop. Taxes $364,572 $425,334 $479,756 $533,649 Assumed Assessed Value at Sale 90.00% $405,080 $472,593 $533,062 $592,943 Available for Mortg. Principal and Interest $1,665 $1,942 $2,191 $2,437 Supportable Mortgage $293,229 $342,100 $385,872 $429,219 Plus: Downpayment @ 10.00% $32,580 $38,010 $42,870 $47,690 Affordable Sales Price (Rounded) $325,800 $380,100 $428,700 $476,900 120.0% of AMI
Annual Gross Income $153,468 $175,392 $197,316 $219,240 Affordable Monthly Housing Expense $3,837 $4,385 $4,933 $5,481 Less: Monthly Utility Allowance ($188) ($208) ($265) ($324) Less: HOA/Maintenance Expense ($200) ($200) ($200) ($200) Less: Property Insurance ($100) ($100) ($100) ($100)
________ ________ ________ ________
Available for Principal, Interest, Taxes $3,349 $3,877 $4,368 $4,857 Less: Property Taxes 1.20% $655 $759 $855 $950
Supportable Mortgage Before Prop. Taxes $589,832 $682,824 $769,300 $855,423 Assumed Assessed Value at Sale 90.00% $655,369 $758,693 $854,778 $950,470 Available for Mortg. Principal and Interest $2,694 $3,118 $3,513 $3,907 Supportable Mortgage $474,407 $549,202 $618,755 $688,025 Plus: Downpayment @ 10.00% $52,710 $61,020 $68,750 $76,450 Affordable Sales Price (Rounded) $527,100 $610,200 $687,500 $764,500 (1) For single-family detached units. Source: San Mateo County Housing Authority, effective 3/1/21 Source: DRA
595
Table A-2
Affordable Home Sales Price Calculations, Owner Housing Condominium Units
City of East Palo Alto
2021
Assumptions
2021 HUD Median Household Income, San Mateo County $149,600 2021 HUD VLI Limit, Household Size of Four $91,350
2021 HUD Effective Median Income, HH Size of Four $182,700 Used in Calculations $182,700
Affordable Housing Expense As a % of Income 30%
No. of Bedrooms Studio 1 Bedroom 2 Bedroom 3 Bedroom
Household Size 1 Persons 2 Persons 3 Persons 4 Persons
Household Size Income Adjust. Factor 70% 80% 90% 100%
Owner-Paid Utility Allowance (1) $155 $168 $212 $262
Monthly HOA Fee/Maint. Cost $600
Monthly Property Insurance $100
Property Tax Rate (% of AV) 1.00%
Mortgage Interest Rate 5.50%
Term (Years) 30
Downpayment (% of Sales Price) 10.00%
Per Unit Affordable Sales Price by Unit Bedroom Count
Studio 1 Bedroom 2 Bedroom 3 Bedroom
50% AMI
Annual Income Limit $63,945 $73,080 $82,215 $91,350
Affordable Monthly Housing Expense $1,599 $1,827 $2,055 $2,284 Less: Monthly Utility Allowance ($155) ($168) ($212) ($262) Less: HOA/Maintenance Expense ($600) ($600) ($600) ($600) Less: Property Insurance ($100) ($100) ($100) ($100)
________ ________ ________ ________
Available for Principal, Interest, Taxes $744 $959 $1,143 $1,322 Less: Property Taxes 1.20% $146 $188 $224 $259
Supportable Mortgage Before Prop. Taxes $131,035 $168,901 $201,307 $232,833 Assumed Assessed Value at Sale 90.00% $145,594 $187,668 $223,675 $258,703 Available for Mortg. Principal and Interest $598 $771 $919 $1,063 Supportable Mortgage $105,392 $135,848 $161,913 $187,270 Plus: Downpayment @ 10.00% $11,710 $15,090 $17,990 $20,810 Affordable Sales Price (Rounded) $117,100 $150,900 $179,900 $208,100 80% AMI
Annual Gross Income $102,312 $116,928 $131,544 $146,160 Affordable Monthly Housing Expense $2,558 $2,923 $3,289 $3,654 Less: Monthly Utility Allowance ($155) ($168) ($212) ($262) Less: HOA/Maintenance Expense ($600) ($600) ($600) ($600) Less: Property Insurance ($100) ($100) ($100) ($100)
________ ________ ________ ________
Available for Principal, Interest, Taxes $1,703 $2,055 $2,377 $2,692 Less: Property Taxes 1.20% $333 $402 $465 $527
Supportable Mortgage Before Prop. Taxes $299,935 $361,930 $418,641 $474,120 Assumed Assessed Value at Sale 90.00% $333,262 $402,145 $465,157 $526,800 Available for Mortg. Principal and Interest $1,370 $1,653 $1,912 $2,165 Supportable Mortgage $241,241 $291,104 $336,717 $381,339 Plus: Downpayment @ 10.00% $26,800 $32,340 $37,410 $42,370 Affordable Sales Price (Rounded) $268,000 $323,400 $374,100 $423,700 120.0% of AMI
Annual Gross Income $153,468 $175,392 $197,316 $219,240 Affordable Monthly Housing Expense $3,837 $4,385 $4,933 $5,481 Less: Monthly Utility Allowance ($155) ($168) ($212) ($262) Less: HOA/Maintenance Expense ($600) ($600) ($600) ($600) Less: Property Insurance ($100) ($100) ($100) ($100)
________ ________ ________ ________
Available for Principal, Interest, Taxes $2,982 $3,517 $4,021 $4,519 Less: Property Taxes 1.20% $584 $688 $787 $884
Supportable Mortgage Before Prop. Taxes $525,195 $619,420 $708,186 $795,894 Assumed Assessed Value at Sale 90.00% $583,550 $688,245 $786,873 $884,327 Available for Mortg. Principal and Interest $2,398 $2,829 $3,234 $3,635 Supportable Mortgage $422,419 $498,205 $569,600 $640,145 Plus: Downpayment @ 10.00% $46,940 $55,360 $63,290 $71,130 Affordable Sales Price (Rounded) $469,400 $553,600 $632,900 $711,300 (1) For single-family detached units. Source: San Mateo County Housing Authority, effective 3/1/21 Source: DRA
596
Table A-3
Affordable Rents and Supportable Mortgage By Income Level City of East Palo Alto
2021
Assumptions
2021 HUD Median Household Income, San Mateo County $149,600 2021 HUD VLI Limit, Household Size of Four $91,350
2021 HUD Effective Median Income, HH Size of Four $182,700 Used in Calculations $182,700
Affordable Housing Expense As a % of Income 30%
No. of Bedrooms Studio 1 Bedroom 2 Bedroom 3 Bedroom 4 Bedroom 5 Bedroom Household Size 1.0 Persons 1.5 Persons 3.0 Persons 4.5 Persons 6.0 Persons 7.5 Persons Household Size Income Adjust. Factor 70% 75% 90% 104% 116% 128% Tenant-Paid Utility Allowance, San Mateo Co. Hsg. Author. (1) Condos/Apts. $92 $110 $148 $186 $224 $264
Annual Operating/Maintenance Expenses Per Unit $8,000
Vacancy Rate 5.00%
Mortgage Interest Rate 6.50%
Mortgage Amortization (Years) 30
Debt Coverage Ratio 1.15
Per Unit Supportable Mortgage Studio 1 Bedroom 2 Bedroom 3 Bedroom 4 Bedroom 4 Bedroom 50% of Median
Annual Income Limit $63,945 $68,513 $82,215 $95,004 $105,966 $116,928 Affordable Monthly Housing Expense $1,599 $1,713 $2,055 $2,375 $2,649 $2,923 Less: Monthly Utility Allowance ($59) ($70) ($95) ($124) ($151) ($184) _________ _________ _________ _________ _________ _________ Affordable Monthly Rent $1,540 $1,643 $1,960 $2,251 $2,498 $2,739 Annual Gross Rental Income Per Unit $18,480 $19,716 $23,520 $27,012 $29,976 $32,868 Less: Vacancy (Underwriting) ($924) ($986) ($1,176) ($1,351) ($1,499) ($1,643) Annual Operating/Maintenance Expenses Per Unit ($8,000) ($8,000) ($8,000) ($8,000) ($8,000) ($8,000) _________ _________ _________ _________ _________ _________ Net Operating Income Per Unit $9,556 $10,730 $14,344 $17,661 $20,477 $23,225 Available for Debt Service $8,310 $9,331 $12,473 $15,358 $17,806 $20,195 Supportable Mortgage Per Unit $109,600 $123,000 $164,400 $202,500 $234,800 $266,300
80.0% of AMI
Annual Income Limit $102,312 $109,620 $131,544 $152,006 $169,546 $187,085 Affordable Monthly Housing Expense $2,558 $2,741 $3,289 $3,800 $4,239 $4,677 Less: Monthly Utility Allowance ($59) ($70) ($95) ($124) ($151) ($184) _________ _________ _________ _________ _________ _________ Affordable Monthly Rent $2,499 $2,671 $3,194 $3,676 $4,088 $4,493 Annual Gross Rental Income Per Unit $29,988 $32,052 $38,328 $44,112 $49,056 $53,916 Less: Vacancy (Underwriting) ($1,499) ($1,603) ($1,916) ($2,206) ($2,453) ($2,696) Annual Operating/Maintenance Expenses Per Unit ($8,000) ($8,000) ($8,000) ($8,000) ($8,000) ($8,000) _________ _________ _________ _________ _________ _________ Net Operating Income Per Unit $20,489 $22,449 $28,412 $33,906 $38,603 $43,220 Available for Debt Service $17,816 $19,521 $24,706 $29,484 $33,568 $37,583 Supportable Mortgage Per Unit $234,900 $257,400 $325,700 $388,700 $442,600 $495,500 120% of Median
Annual Income Limit $153,468 $164,430 $197,316 $228,010 $254,318 $280,627 Affordable Monthly Housing Expense $3,837 $4,111 $4,933 $5,700 $6,358 $7,016 Less: Monthly Utility Allowance ($92) ($110) ($148) ($186) ($224) ($264) _________ _________ _________ _________ _________ _________ Affordable Monthly Rent $3,745 $4,001 $4,785 $5,514 $6,134 $6,752 Annual Gross Rental Income Per Unit $44,940 $48,012 $57,420 $66,168 $73,608 $81,024 Plus: Miscellaneous Income ($187) ($200) ($239) ($276) ($307) ($338) Less: Management Fee/Expense ($8,000) ($8,000) ($8,000) ($8,000) ($8,000) ($8,000) Annual Operating/Maintenance Expenses Per Unit ($1,499) ($1,603) ($1,916) ($2,206) ($2,453) ($2,696) _________ _________ _________ _________ _________ _________ Net Operating Income Per Unit $38,998 $42,210 $52,049 $61,201 $68,983 $76,743 Available for Debt Service $33,912 $36,705 $45,260 $53,218 $59,985 $66,733 Supportable Mortgage Per Unit $447,100 $483,900 $596,700 $701,600 $790,900 $879,800 (1) For condos and apartment units. Source: San Mateo County Housing Authority, effective 3/1/21 Source: DRA
597
Table A-4
Utility Allowances
San Mateo County
East Palo Alto ADU Analysis
2021
No. of Bedrooms Studio 1 Bedroom 2 Bedroom 3 Bedroom 4 Bedroom Apartment/Condo/Duplex
Heating
Natural Gas $17 $21 $24 $26 $29
Electric $16 $19 $24 $29 $34
Cooking
Natural Gas $4 $4 $6 $8 $10
Electric $7 $8 $11 $15 $18
Water Heating
Natural Gas $8 $9 $13 $18 $22
Electric $15 $18 $23 $28 $33
Other Electric $21 $25 $37 $52 $66
Water $69 $71 $90 $111 $133
Trash $27$0 $27$0 $27$0 $27$0 $27$0
_____ _____ _____ _____ _____
Total--All Electric $59 $70 $95 $124 $151
Total--Natural Gas (& Other Electric) $50 $59 $80 $104 $127 Assumed Tenant-Paid Utilities (1) $59 $70 $95 $124 $151 Assumed Owner-Paid Utilities (2) $155 $168 $212 $262 $311 Single-Family Detached
Heating
Natural Gas $25 $30 $34 $38 $42
Electric $34 $40 $47 $54 $61
Cooking
Natural Gas $4 $4 $6 $8 $10
Electric $7 $8 $11 $15 $18
Water Heating
Natural Gas $10 $12 $17 $22 $27
Electric $19 $22 $29 $35 $42
Other Electric $32 $40 $61 $82 $103
Water $69 $71 $90 $111 $133
Trash $27 $27 $27 $27 $27
_____ _____ _____ _____ _____
Total--All Electric $92 $110 $148 $186 $224
Total--Natural Gas (& Other Electric) $71 $86 $118 $150 $182 Assumed Tenant-Paid Utilities (1) $92 $110 $148 $186 $224 Assumed Owner-Paid Utilities (2) $188 $208 $265 $324 $384 (1) Assumes tenant pays electrict heating, cooking and water heating, and other electric. (2) Assumes owners pay electric heating, cooking, water heating, other electric, water, sewer and trash.
Source: Housing Authority of the County of San Mateo, effective 3/01/2021 598
DocuSign Envelope ID: 684C44BD-ABA1-4850-9687-358320598182 475 599
Janet Nunez-Aguilar, SEIU Member
Ana Torres-Mondragon, Human Resources Manager ______________________________________ __________________ Date _______________________________________ __________________ Date DocuSign Envelope ID: 684C44BD-ABA1-4850-9687-358320598182 9/19/2023
9/20/2023
476 600