Sec. 6A-5-50. Resale requirements for affordable units.

(a) Conditions of Owner-Occupancy Hardship.
(1) For so long as the qualified purchaser (owner) owns the unit, the unit will be occupied solely by the owner and the owner’s immediate family as the owner’s principal place of residency. Notwithstanding the foregoing, however, the community development director may authorize the owner to rent-out the affordable unit, for a cumulative period not to exceed one year, if the owner establishes to the community development director’s reasonable satisfaction that the owner-occupancy requirement would cause hardship to the owner because of:
(A) Divorce or separation of the owner(s);
(B) The extended absence from the affordable unit by the owner because of the serious illness or disability of the owner or a member of the owner’s household or immediate family;
(C) Absolute necessity for immediate relocation of the owner from the greater Sacramento area for purposes for the owners’ employment; or
(D) The owner’s loss of employment.
(2) The purpose of the foregoing limited exceptions to the owner-occupancy requirement is to allow the owner to recover from a temporary inability to occupy the affordable unit or to provide for the orderly disposition of the unit in cases of hardship, and is not intended to permit long-term rental of the unit. For these reasons, the term “hardship” shall be narrowly construed and a condition of hardship shall be considered to exist for the minimum possible time.
(b) Procedure for Resale of the Affordable Dwelling Unit. In order to maintain the affordability of the for-sale affordable units the city shall impose the following resale conditions. No for-sale affordable units shall be offered for resale or resold other than in the manner provided herein until the owner or purchaser has owned the house for ten years or longer:
(1) Prior to advertising the availability of the for-sale affordable unit or otherwise offering the unit for sale, the owner shall provide the city with a notice of owner’s intent to sell the unit. The notice shall indicate the location of the unit and the number of bedrooms contained in the unit. The notice shall provide the city a period of thirty calendar days after receipt of such notice (resale marketing period) to either:
(A) Provide the owner with an active and current list of interested and qualified purchasers; or
(B) Determine that no interested and qualified purchaser is available.
(2) Following the receipt of such notice, the city shall either complete or require the owner to have completed an appraisal report to determine the fair market value of the unit. This appraised value will be used by the city to determine the seller’s equity share provision obligation, equaling the amount which bears the same ratio to the fair market value at the time the note is paid off as the initial value that the equity share baseline had in relation to the original fair market sales price. The city will also use the appraisal of the affordable unit to determine the amount of subsidy in the form of the assumed and possibly increased equity share provision that will be required by the subsequent qualified purchaser of the affordable unit.
(3) Upon receipt of the notice of owner’s intent to sell, the city shall also provide the owner with a disclosure form that must be completed by a prospective qualified purchaser and returned to the city. The primary purposes of the disclosure form shall be to:
(A) Provide the city with information that the city will need to confirm that the prospective purchaser of the unit is a qualified purchaser; and
(B) Ensure that the prospective purchaser of the unit is aware of the owner-occupancy and resale restrictions applicable to the affordable unit.
(4) Within three days after executing any contract or agreement for sale of the affordable unit, the owner shall deliver to the city a copy of the contract or agreement, together with the completed and fully executed disclosure form and evidence supporting the prospective purchaser’s gross income as shown on the disclosure form. The proposed sale shall be deemed approved unless the city, within ten days after receipt of such information, provides notice to the owner either that:
(A) The proposed sale does not comply with the provisions of this chapter; or
(B) Additional information is required.
If the proposed sale is disapproved or if the city determines that additional information is required, the notification shall be accompanied by a statement of the reason(s) for that decision.
(c) Resale to a Qualified Purchaser.
(1) Each qualified purchaser shall be required to purchase the affordable unit with cash, a mortgage secured by a first deed of trust on the affordable unit, or a combination of the two.
(2) At close of escrow the owner shall assign, and the qualified purchaser shall assume, the note, or other applicable document securing the city’s silent second subsidy on the property. The ten-year occupancy requirement and restrictions on re-sale applied to the original qualified purchaser of the affordable unit shall be reset to the date the note or applicable document is assumed by the subsequent qualified purchaser. The subsequent qualified purchaser shall enter into a regulatory agreement with the city which shall be recorded against the property.
(3) The city may provide an additional subsidy (if available) to increase the amount of the equity share provision of the regulatory agreement in order to allow the qualified purchaser to purchase the unit (i.e., increase the percentage of the purchase price which is represented by the equity share baseline).
(4) The city shall subordinate its lien to any commercial lender providing a loan to enable the qualified purchaser to purchase the affordable unit, providing the amount of such loan does not exceed the purchase price for the affordable unit plus the qualified purchaser’s actual share of closing costs and other related expenses. (Ord. No. 1393, § 3 (part); Ord. No. 1487, § 3 (part).)