Sec. 6A-5-30. Procedure for sale of affordable units.

(a) Initial Estimate of Affordable Purchase Prices. Prior to entering into an inclusionary housing agreement, at the request of the developer of a for-sale residential project, the community development department will assist developers in estimating the calculations of maximum affordable purchase prices based on the assumptions provided in this section. These estimations shall only be for the purpose of projecting the feasibility of the project and shall not be binding, as prevailing conditions in the housing market and fluctuations in interest rates may affect the final calculation of affordable purchase prices. The timing and procedure for final calculation of affordable purchase prices shall occur pursuant to the provisions of this section.
(b) Method for Sale of Affordable Units. The method for the sale of affordable units is shown in this subsection. The community development department shall review these assumptions and procedures annually and make revisions as necessary:
(1) Units Appraised at Fair Market Value. At the time that the unit will be marketed and made available for sale, the fair market value of the unit will be determined. This determination will be made by a qualified appraiser who will be selected by the community development director and paid for by the developer.
(2) Calculation of Affordable Maximum First Mortgage. The sale of affordable units will be implemented by a “silent second” mortgage program by the city. After the fair market value of the unit has been determined, the city will calculate the affordable maximum first mortgage amount for a qualified low income purchaser of the unit. The following procedure will be used for determining the affordable maximum first mortgage amount:
(A) Determine the family size appropriate to the unit. For purposes of this calculation, “adjusted for family size appropriate to the unit” means adjusted for a household of one person in the case of a studio unit, two persons in the case of a one-bedroom unit, three persons in the case of a two-bedroom unit, four persons in the case of a three-bedroom unit, five persons in the case of a four-bedroom unit and six persons in the case of a five-bedroom unit.
(B) Determine the household income available for the affordable maximum first mortgage calculation for a low income household based on the appropriate household size using the current HUD area median income figures for Yolo County. The calculation of available household income should be based on eighty percent of area median income for the appropriate household size.
(C) Calculate the amount of income available for housing costs by multiplying the income figure by thirty percent. For the purpose of determining the affordable purchase price, the cost of utilities, property taxes, insurance, primary mortgage insurance, maintenance and repair costs, and like expenses are not required to be included in the calculation. Homeowners’ association dues may be included in the calculation of affordable purchase price if the community development department determines that such costs would place a substantial burden on the low income homeowners’ ability to purchase a home and make monthly mortgage payments.
(3) Limitation of Down Payment Requirement. For purposes of this calculation, required down payments for low income purchasers shall be limited to no more than five percent of the purchase price. The developer or seller may not require a buyer to make a larger down payment but a buyer may elect to make a larger down payment in order to reduce the amount of the first mortgage. This limit to the down payment requirement is intended to provide greater flexibility for low income homebuyers who might find it difficult to provide a higher down payment amount.
(4) Calculation of “Silent Second” and Regulatory Agreement Equity Share. The “silent second” shall be in the amount of one thousand dollars. A note and deed of trust, or other appropriate document, securing the silent second will be recorded and assigned to the city at the time of sale of each affordable unit. The promissory note and deed of trust, or other designated document, will remain a lien against the property, subordinate to the first mortgage. This note will have a thirty-year due date which can be extended by the community development director. The regulatory agreement recorded against the property shall include an equity share baseline in the amount of the difference between ninety-five percent of the purchase price (or purchase price minus down payment amount) and the amount of the affordable maximum first mortgage. The equity share shall be triggered and calculated at the sale of the affordable unit to a non-qualified purchaser or at a non-affordable price.
(c) Payoff of the Silent Second and Regulatory Agreement Equity Share. The silent second may not be prepaid during its first ten years, as long as the low-income purchaser occupies the unit as their primary residence during this period. The amount due to the city under the equity share provision of the regulatory agreement at the eventual payoff of the silent second or the sale of the affordable unit to a non-qualified purchaser or at a non-affordable price shall be the amount which bears the equal ratio to the fair market value at the time the silent second is paid off as the initial value that the equity share baseline had in relation to the original fair market sales price. For example, if the original sales price was two hundred thousand dollars and the original equity share baseline was fifty thousand dollars, the ratio would be twenty-five percent. If the fair market value at the time of payoff were four hundred thousand dollars, the amount due the city would be one hundred thousand dollars, or twenty-five percent of four hundred thousand dollars. In another case, if the property rose in value to two hundred fifty thousand dollars, the twenty-five percent ratio would dictate the payoff amount to the city to be sixty-two thousand five hundred dollars.
(d) Affordable Housing Fund. Funds received by the city through payoffs of equity share provisions of regulatory agreements will be deposited into the city’s affordable housing fund. These funds may be used at the discretion of the community development director to make additional affordable housing loans to income-qualified purchasers to facilitate the purchase of homes, to subsidize affordable multifamily projects, or for any other use to promote the development of affordable housing within the city of Woodland. Up to ten percent of each year’s income from the affordable housing fund may be used for administration and ongoing monitoring of loans made from the fund. (Ord. No. 1393, § 3 (part); Ord. No. 1487, § 3 (part).)