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: 12 Section Name: CONSENT CALENDAR Account Number: 34-3133 File ID: 26-11386 TO: City Council
FROM: Alex Khojikian, City Manager
PREPARED BY: Community Development Department
MEETING DATE: July 20, 2026
SUBJECT:
Below Market Rental Rates, Sales Prices and Unit Community Priorities — Adoption RECOMMENDATION:
Adopt a Resolution to establish 2026 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 a Below Market Rate (BMR) housing program that required 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 periodically over the years. As of February 2020, a rental project must include 15 percent of the units in a new housing development as affordable to lower-income households, defined as households whose incomes do not exceed 80 percent of the Area Median Income (AMI). For owner-occupied housing, 15 percent of the units must be affordable to moderate-income households, defined as households whose incomes do not exceed 120 percent of AMI. These are the minimum requirements; and developers may elect to utilize State Density Bonus provisions to provide deeper affordability in exchange for development concessions as provided by State Law.
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) each spring. In 2026, the AMI for a family of four in San Mateo County is $200,800, an increase of 7.6 percent from 2025. State income limits, which follow the definitions in the California Health & Safety Code Sec. 50079.5 and 50093, are shown below. 2026 State Income Limits – San Mateo County
Household Size Extremely Low
Income
Very Low Income Low Income Median Income Moderate
Income
1 44,150 73,550 117,700 140,550 156,750
2 50,450 84,050 134,500 160,650 179,100
3 56,750 94,550 151,300 180,700 201,500
4 63,050 105,050 168,100 200,800 223,900
5 68,100 113,500 181,550 216,850 241,800
6 73,150 121,900 195,000 232,950 259,700
7 78,200 130,300 208,450 249,000 277,650
8 83,250 138,700 221,900 265,050 295,550
Source: California Department of Housing and Community Development
CITY OF SAN MATEO
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), in addition to mortgage interest rates and other monthly ownership housing costs.
BMR Rental Rates
Per the BMR Guidelines (Section V(a) - Rental Rates), the City Council annually adopts maximum allowable rental rates, adjusted by unit size, via resolution. These rental rates may not exceed 30 percent of the gross monthly income for households earning between 50 and 70 percent of AMI, adjusted for household size, and in no event may they exceed four percent from the prior year. Note that the maximum BMR rent figures include the cost of gas and electric utilities, garbage collection, and water. Maximum rents for 2026 are shown below:
Maximum Rents for City BMR Units - 2026
Unit Type Very Low Income Low Income
Studio $1,424 $1,697
1BR $1,614 $1,944
2BR $1,821 $2,190
3BR $2,026 $2,436
4BR $2,190 $2,628
With this four percent increase, the City’s maximum BMR rents remain well below current market rents and 30 percent of gross monthly income for households earning 50-70 percent of AMI.
BMR Sales Prices
Maximum sales prices for condominiums and townhouses are established by first determining an affordable monthly housing payment. This is defined as follows for very low-, low- and moderate-income households:
•Very Low Income: 30 percent of 50 percent of AMI
•Low Income: 30 percent of 70 percent of AMI
•Moderate Income Townhome/Condominium: 30 percent of 100 percent of AMI •Moderate Income Single Family: 35 percent of 110 percent of AMI An allowance for property taxes, insurance, and homeowners’ association dues is factored into the monthly payment. The sales price is then calculated, assuming a five percent downpayment and a mortgage interest rate based on the 15-year average for a 30-year, fixed-rate mortgage, as published by Freddie Mac (4.51 percent in 2026). The maximum sales prices for 2026 are shown below.
Maximum Sales Prices for City BMR Units - 2026
VERY LOW INCOME
STUDIO $211,000
1 BEDROOM $225,000
2 BEDROOM $258,000
3 BEDROOM $292,000
4 BEDROOM $328,000
LOW INCOME
STUDIO $335,000
1 BEDROOM $366,000
2 BEDROOM $418,000
3 BEDROOM $469,000
4 BEDROOM $519,000
CITY OF SAN MATEO
MODERATE INCOME - CONDO OR TOWNHOME
STUDIO $521,000
1 BEDROOM $579,000
2 BEDROOM $657,000
3 BEDROOM $735,000
4 BEDROOM $806,000
MODERATE INCOME - SINGLE FAMILY DETACHED
1 BEDROOM $779,000
2 BEDROOM $882,000
3 BEDROOM $986,000
4 BEDROOM $1,077,000
Please note that 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 to 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 2026, 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. For example, a 40-unit complex consisting of all two-bedroom units could provide the City with four three-bedroom units (10 percent), instead of the standard requirement of six two-bedroom units (15 percent). Council has the ability to change this priority in future years, if change is needed. It is anticipated that this requirement will be incorporated into an updated BMR Ordinance in the near future, when the Ordinance is updated to meet Housing Element commitments.
BUDGET IMPACT:
Adoption of this Resolution has no impact on the General Fund.
ENVIRONMENTAL DETERMINATION:
This Resolution is not a project subject to CEQA, because it is an organizational or administrative activity that will not result in direct or indirect physical changes in the environment. (CEQA Guidelines Section 15378(b)(5).)
STRATEGIC PLAN ALIGNMENT
This staff report supports the Housing initiative.
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