CITY OF SAN MATEO
CITY OF SAN MATEO
Agenda Report
City Hall
330 W. 20th Avenue
San Mateo CA 94403
www.cityofsanmateo.org
Agenda Number: 14 Section Name: {{section.name}} Account Number: 10-3133 File ID: {{item.tracking_number}} TO: City Council
FROM: Alex Khojikian, City Manager
PREPARED BY: Community Development Department
MEETING DATE: June 16, 2025
SUBJECT:
Below Market Rental Rates, Sales Prices and Unit Community Priorities – Adoption RECOMMENDATION:
Adopt a Resolution to establish 2025 maximum rental rates and sales prices for affordable housing as required by the City of San Mateo's Below Market Rate (BMR) housing program; and establish Community Priority for units containing three or more bedrooms, which may allow a developer to provide fewer BMR units in exchange for units with more bedrooms as long as all other BMR program provisions are followed.
BACKGROUND:
In November 1992, the City Council established the BMR housing program that requires new housing developments of 11 or more units to include a certain percentage of the units as "affordable". The affordable housing targets have been revised from time to time. As of February 2020, a rental project must include 15 percent of the units that are affordable to Lower Income households, whose incomes do not exceed 80 percent of the median income ($109,700 - $206,800, depending upon family size). For owner-occupied housing, 15 percent of the units must be affordable to Moderate Income households, whose incomes do not exceed 120 percent of the area median income ($156,750 - $295,550, depending upon family size). These are the minimum requirements; developers may elect to utilize State Density Bonus provisions to provide deeper affordability in exchange for development concessions.
The City receives updated median income figures from the U. S. Department of Housing and Urban Development (HUD) and the California Department of Housing and Community Development (HCD) offices each spring. All BMR units are subject to maximum rental rates and sales prices that are revised by the City Council on an annual basis to reflect changes in the Area Median Income (AMI) as well as average interest rates for mortgages and other monthly ownership housing costs. This year, there was no increase to AMI. However, in 2019, the City Council adopted a 4 percent cap on BMR rental increases to address the significant median income increases over the past few years; this 4 percent increase is reflected in the calculations below.
BMR Rental Rates
The maximum rent figures include the cost of gas and electric utilities, garbage collection, and water, but exclude telephone. Calculated rents cannot exceed Fair Market Rents (FMR) as published by the San Mateo County Housing Authority. Utilizing these formulas, the maximum BMR rental rates for 2025 are:
CITY OF SAN MATEO
Very Low Income Low Income
Studio $1,369 $1,632
1-Bedroom $1,552 $1,869
2-Bedroom $1,751 $2,106
3-Bedroom $1,948 $2,342
4-Bedroom $2,106 $2,527
Maximum BMR rents remain well below current market rents.
BMR Sales Prices
Maximum sales prices for condominiums and townhouses are established by first determining an affordable monthly housing payment, which is defined as 30 percent of 100 percent of AMI adjusted by family size for Moderate Income and 30 percent of 70 percent of AMI for Low Income. An allowance for property taxes, insurance, and homeowners’ association dues is factored into the monthly payment. The sales price is then calculated assuming a 5 percent downpayment and an interest rate based on the 15-year average, as published by Freddie Mac (4.39 percent). Sales prices for single-family detached houses are calculated using the above-mentioned methodology, except that the household income used to calculate the monthly payment for detached single-family houses is 35 percent of 110 percent of AMI.
Utilizing these formulas, the maximum sales prices for 2025 are:
Low Income
Condo/Townhome
Moderate Income
Condo/Townhome
Single-Family
Detached
Studio $319,000 $495,000 n/a
1-Bedroom $355,000 $555,000 $744,000
2-Bedroom $413,000 $638,000 $851,000
3-Bedroom $468,000 $719,000 $955,000
4-Bedroom $515,000 $786,000 $1,041,000
City Council reserves the right to change the prices at any time, in the event of significant changes in the market, interest rates or other conditions.
Community Priority
BMR program revisions effective January 1, 2010, included flexibility in the bedroom count of the BMR units based on City Council adoption of community priorities. An applicant may propose a different bedroom mix in the BMR units other than a straight pro rata of the market rate units, as long as the total bedroom count is the same or more, and that the total number of BMR units equal at least 10 percent of the project.
In previous years, Council adopted a Community Priority in annual resolutions establishing Below Market Rental Rates and Sale Prices. For 2025, the staff recommendation is to continue to adopt a Community Priority for large units consisting of three or more bedrooms, based on the shortage of those units currently in the BMR inventory, compared to the families on the waiting lists. For example, a 40-unit complex consisting of all two-bedroom units could provide the City four three- bedroom units (10 percent) instead of the standard requirement of six two-bedroom (15 percent) units. Council has the ability to change this priority in future years if needs change. Also, it is anticipated that this requirement will be incorporated into the BMR Ordinance in the near future when it is updated to meet Housing Element commitments.
BUDGET IMPACT:
Adoption of this Resolution has no impact on the General Fund.
CITY OF SAN MATEO
ENVIRONMENTAL DETERMINATION:
The establishment of 2025 maximum rental rates and sales prices for affordable housing is not a project subject to CEQA, because it can be seen with certainty that it will not cause a physical change in the environment. (Public Resources Code Section 21065.)
NOTICE PROVIDED:
All meeting noticing requirements were met.
ATTACHMENTS
Att 1 – Proposed Resolution
STAFF CONTACT
Van Diggans, Housing Specialist II
[email protected]
(650) 522-7229