HomeMy WebLinkAbout0368.092-
July lD, 1992
HONDRABLE ern C8UNCTl
Palo Alto, Cal iforT,;,:,t
Attention: Po1"ic.V' and Services Co;n:::;itt€€
M;smbers tlf the-Council:
HI-PORT IN BRIEF
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This report forwards to Council a request b,Y the Palo A1to Housing Corporation
(PAHC) that the City consider reinstating the concept of a consulting
relat'onsh1p with PAHC and a change in the source of C~ty funding fer PAHC.
The request is o~tlined in the attached letter dated July 20, 1992.
BACKGROUND
In January 1991, offiCials from the Department of Housing and Urba~
Development (HUD) began a series of site visits and monitoring reports
!"ega:-ding Hie Citj's mandgement of the Community De'.elopment Slock Grant
(CDBG) prcgr~m. City staff has: had to injti~te numerous changes in order to
bring the CDBG program into corr.pli,ance with existing HUD rt=gulations.
Some of the (flanges di rectly affected the use of COBG funds by PJ1HC. PriOl" to
19S1-1992. the City used the CDSG program to f~nd PAHC for prcj~ct-specific
~€velopment costs, non-specific pre-housing development, project management,
planning and adrnin'stration, and consulting_ PAH( ~as paid in twe1\e equal
monthly ir.stal1ri1f'nts. f'AH( \l'iS also re-spor,sible fDr sales and resales of
Below Market Rate (8MR) units in the City program but was ~ct reimbursed
specifically for these e~penses, sinc~ they are not generally CDBG income
eligible.
The HUD monitoring reports identlfi~C several issues in the contractuai
relationship betwe~~ the City and PAHC, includIng the fact t~at of the above
reimbursed items, only prcJ~ct-specific development costs were being expended
properly under HUn reguiat1ons.
For the past year, ~ta(r ~nd PAH( ha~e been wor~ing to correct these
deflciencies "T,d to fInd ap~ropr,ate PAHC activities that tan be funded hJ
City funds arl>:~ COBG funds" Un: 1992-1993 City contract w;th PAHC specifies
that PAHC wtll be reimb:,J(sed up tl) $2B,000 from CUBG funds. fLlr HOlIsing
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Information and Referral sero'ices, al'Jd up to HO,CC'O from the City's. HO.1sing
Reserve Funds, fo~ administration of s.ales and r~sales of the Cjtj 8MR units.
R~imbursement will be for actual time sp~nt, includi~~ an allowable for
indirect ccsts.
1n addition, $293,99~ of CCBG f~oding js awajla~~e for site-specific projects
relat~d to downtown Single Room Occupancy (SRO) housing. Admjnistration
expenses ca~ be reimbursed from t~e $293,995, but a specific SRO proposal j$
required to be approved by the Council before reimburseme~t can he made.
1he time management repcrtlng and the indirect cost anour.ting systems that
were put in place th~s year by P/HiC will allow staff and PAHC to evaluate the
~ctual c.ost of services provide:L lncome generated from past. pr€seJit and
future activities funded with COBG f~~ds must be returrled to the City and
prograr.rned for new 'uses consistent with CDBG funciir,g pTocedur~s. BecalJse of
thes~ program ir.-:.ome requirements, some for:.', of H"~.:'se o(cQunting systems ... ·il1
be reGtlired "in the future wheth(-r or not cor:tinued PAt-!C fl.Jndirig tomes from
WSG.
ISSUES AND fi]SCUSS fON ITEMS
The PAHC proposal ralses several issues t~at should be discussed:
Belpw "'arket Rate / BM8J ...... Pr...Q.illS;:rI
PAHC has administered the City BMR ~1r"c,gram since th~ pr09ra.1r,'s inc~ption.
Since t.he pr·'Jgram particiilants are general1y {'\ot C08G-lnccme e1i91b1e under
HUO guidelines, administration of the program is not an el igible (PSG expense.
TMe City corrected that omission in 1991·92 and is now reimbursing PAHC from
Housing Reserve Fur:ds for actnl costs to admini stH the BMR program.
ConsuHfrJ.9
One of the major HUD findings was the status cf the relationship between tile
Cal' and PAHC. The probl em ~d$ t:'at the Ci ty treated P.o,HC as a s01 e source
provider and did not require competitive bidding fer saine of the consulting
SE:rvlces provided t,), PAH( to the City. KJO staff co~(1'Jded tr.at c: n!JlT1ber of
orga:lizaUons could pn1Vide the sE'nices trllt PAHC prc'~id€s, arid thus the City
needs to utilize a Request for Proposal (RFP) prucess befo~e awarding a
contract for these types :Jf services. If PAHC is to be considel"ed by tne City
as a ccnsultant and is federally funded, the~ proper procurement procedures
are rcq-uired.
Providin9 consulti~g servjc~s to the City is the specific area that PAHC is
req!Jesting reinstatement of fundlng. In the past, PAHC has ad~is~d the City,
other ~on-proflts and for-profits on the development of 'ow income housing and
tho!! merits of proposed projects. PAHC has a1so beEfi reimowrsec D)' the City
for assi~tance in prep~ratjon and re~jew of the Hou~ing Eleme~t of the
Comprehel'1sh'e Phl'1 and 0,.a.5 (Corcprehenslll'E-Hous'rr.g Affordability Strat€:gj).
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HUD's San Francj~cc office has indicated thst e~!n if appropriate procurement
procedu":"es are follo~Jelj, P~HC 'fIIil1 be in a ;: .. ,r;flict of int~r-est_ position on
specific dell.elopmf'l:t projects rece'h{~ng f~dera: f:mds, If P,AHC is reimtlursed
by tOe Citi for COr1sult::'n!: activjtl~s 5uch E re'.,-iEw"ing ot~er appljcants.'
propcsils, advislng the City on the experdlture of f~nds and prowiding
contextual input into the ~ousj~g Element and (HAS. l~iS would preclude PAHC
from being eligible for lise of federal f\Jnds admjf1ister~d by th~ City Dr. any
P~HC projects.
Planning ar:.d Admir1nLli""?lntiml
One of the underljing issues is the fund1ng cf P~HC planning and
admInistration actlvittes. This in(l~des su(~ lterns as re~!fW of the
multiple-family regulations, preparation of reports on th~ federal at-risk
hot..'sing units and employee tlou~ing, $eni~g on CO:~[!lHt~p.s related to SRO
housing and homeless 1ssues, and general activities associated with th~
development of low income housing. These jtems are eligible CDBG expenses,
out only under the 20 percent rOBC program ad~jnjst(ation cap. The full 20
percent of program ad:ninistratjon funih is req",;'"fd for the-City staff
necessary to properly admini::.ter tile (OBG progri!'!'.
PAHC has concentrated their work in the unique at~a5phere of Palo Alto. This
has not allowed for the de~elapmEnt of a l~rger number of units, which
increases the poten~1al for management fees as well as develDpment fees.
Conversely, ?A.YC has provided spectalized a::!v';ce ard c\iunsel to the Cit,)'.
Since PAHC is irl tile ~roces'.s of hiring a r.2)" ~jr€.ctor, jt is impurtant to thol;li;
that precise direction from th~ City be given. for example, if the City is
not going to fund gelleral planning and administration. 1t will be necessary
that f'AHC reassess their rolE 1n the com!!'unity arid in tn'2 regioli.
Use of T10!Jstrg Resen'e Funds
PAHC is requesting that HOllsing Reserve Funds be considered for funding of
the'r administrative costs. lhe guidelines fDr use of the Housing Reserve
Funds (attached) allow far two "Eligible Uses ~~ Support Df Existing
low/Moderate income HOUSir.g.~ Th;:-:€ a~€' 1) Costs in support of the City's
Rental Housing Acquisitlon PrDgra~: ~nd ~) ReasQn3bl~ expenses necessary to
administer the City's Below ~ar~et Pate Program or ot~er City-sponsored
hOlJsing programs. Ite::, 1 r'~l~te." tc 2:::tual c.osts a'3s.{)':ia~ej wi.ttl t~E
acquisition of exis.ting housj~g and not general ad~j~istratjve costs. Under
it~m 2, the City began, in the 1991-1992 PAHC contract, to reimburse PAHC far
actual expenses re1at€d t-o saTes <Inc res.a1e: of the BMR units. Sirce these
e11gible uses are specific<ll1y listed under s~pport of existing housing, the
funding source is the residential account, whicM currently has 5250,000.
These regulatlons. are City ~vlic~~ and subject to change by the Caurlcil.
The iSSl.!E is whetnt-r it is apPI"Cprlate to pay PAHC's gene'fal adrn~nistr-atlv-2
costs from the Ho~sinq Reserv~ Fund reSidential and cQm~ercial aCCD~nts.
These accounts are funded bj fees cclTected fro~ devel pers in accDrdance ~ith
cnapter 16.47 of the PAM(, "Appron:l of Projects with rnpacts on Housing"
(copy attached) and Program 13 of the Ho~sing Element f the (cmprehens.iv~
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Plan (copy attached). Staff has reser.'at O~'"IS abl)ut the use of Hausing Reser\le
Fl:nds for ani administrati'~e C(lstS. Ad~i ;.strative cost~ a'~soci,at'?d with an
approved capital project may be approprla e. but net for general operating
costs.
Staff concern for using Housing R~serye Funds for admjni~tritiv~ c~sts 1150
exte~ds to the administrat10n of the eM~ ~rogra~. Alternativ@ sourCES to use
of ~ousin9 Reser~~ Funds, such as a processing fee collected at the time of
sale of each unit) shou'~ be jr\€stigated.
Citv General fund'S
PAHC 9,=,neniT administrativt costs cC\J1d be paj(j fro;:: Generil'l FU'lds-. This
~ould reqtiire either a speCIfic alloc~tio~ set aS~Ge for PAHC, c~ PAHC would
be required to compete against ather social service agencies durirlg the Human
Sen.'ic.es Resource Allccatio'l Pro(ess.
AnnLial Funding Source
PAHC desires an annual and conSistent funding source in nrdtr to properly
staff and budget for their office. At this time, PAHC is keeping track of
actual time spent on tile HOUSing InformctiQrI and Referral progrd1T1,
administration of the BMR program, and pre·development site-specific costs of
approved projects. In the com;f1'~ months, the City ar.d PAHC shouid ha .... e a
better idea of the cost to deliver services. Adjustments might be made in the
future for a set fu~dirg a!!!ount for 9MR .?fid Hou:>ing Infv(lnation a..,d Referral
costs that would average expenditures over several year-so
Effect on fun~.i.Jlg
PAHC's operating budget for 1992-1993 is 5275.000. Even if PAHC is able to
use the falloMiing City s.vurcE'~ to the fullest extent. they expect to have to
use S22,OOO of their OW¢rI capita1 to maintain operations. City funding
inclu~e:s.;
HO'JS'ii';9 Reserve Funds: Up to S';O,COO fc .... saies arld rf''Sa 1 e of BMR urlits.
Reimbursement will be based on ~ctual expendltures. Appraxim~teli
135,600 was paid in 19;1-1992 for sale and resale of 14 units. If f~wer
units are PTOCf'5Sed or less tjm~ is requlred to process units 1n ]992·
1993. t~e actual reimburs.cment to P~ljC ~ilT be less.
Housing rnformat~on 3nd Referral: Up tc 528,000 is ~vailable fro~ CDBG
for a Housing infon,1at"ion arrd P.eferri:ll program. Thjs ir,cludes pro'widing
information to income el igible hause-holds on ~ousjng options, adl/'ice on
i\lailable housin'9 units, informaUon on subsidy programs and .illiiilable
sources, referrals to 1-oca1 agen.:ies and sendee as an advDcate far
indtvlduals. Reimbursement will be based on actual expenditures. Sj~ce
no pre1icus records are availabl@ and the categorjps of items to be
reimbursed are still beino evaluated, tr.e actual reimbursement is not
Imo .. n at this time. -
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Project-Specifjc Costs: Approximate~y S35,000 is a~ailab'e for
admlristratjon costs related tc acquisition cf th~ Barker Hotel
development of a downtcwn SRO. These fu!!ds ~ust be app~ied for
of developme~t plans for the projects.
and
.2.5. part
lhe maximum avatlable from the City is 5IC4,000, although PAHC does ~ot expert
to be able to use all of the funds. Gi~en r~rren! ~ar~et conditions, BMR
sales and resales (ould be S10,000 less than tile maxj~um $40.COO. Actual
reimblJrs~mEr.t LmdH the HO'us~rlg Informatlon and Refi?rI"al Program is un~nown
but could be as much as ene-half Of the budgeted a~ount. Dependi~g on project
progress, project-sp€cific costs coulj also be approxi~at~ly one-~alf of the
budgeted S36,OOO. Total reimbur~eme~t to PAHC co~ld be ~s lo~ as $62,080 with
the resulting need for FAHC to fi~d aMthH S28,COO frDm nOrL-Citj sources, not
counting PAHC's own projected 522;000 snortf~l I,
A summary of ttle primary is:>ues and s.tc=ff COii'l~i1€'nts. a~s as fellows:
(onsultjng: The broad-based consu1ting that has. been performed by PAHC
in the past is probablY not d!2sirable to fein~tate, considering tne
probable conflict of i~terest iss~es a~d resulting loss for PAH( of
access to federal fUf1ds adm~llistered by the City that r:!5ult for
specific development project funding, Certain reports and information,
such as the reports on at-risk units and employee housing, could be
reimbursed on a contrict basis without t~e necessity for a full scale
RFP process, provided t~at several contractors were considered and a
reasonable basis made for th,: dr:cislon to choose a s.pecific contractor.
PTanning and Admi;'li>tratior: Th-e 1$$Ue is \I.'n,'tr,er F'AHC '1I.nd the Cll,)'
continue the relationship of the past jears wherein the City provides
money to PAHC on an anlluai basis. f0r plannins' 03.fld ad1'Jnnistration which
15 analogous to da,)'-to-day operation). Sir,ce CDSG program
admini5tr~tian f~nd5 are not an available funding s.ource, the funds
.... ould have to come from eit.h€!" th~ General Fl.lnd, ttoe ';10usir,g Reserve
Fund or other PAHC source~, PAHC is anticipating that they will be
522,000 short of operating fu~ds after the ~~xim~~ addition o~ SlD4,OOO
in fundi~g from City S.oun;es, 1f :he City fur-ding sourCd (i,i:, (OBG
and HOlJslng Reserve FL1nds fer BMR ajministratic1'l) will n:ot r€ach tl1€
maximum available, PAHC ~stimates that they need in excess of 550,000
for plarnlng and administration in order to balance their budget ~ithout
drawing on their capital furd~,
Housing Reserve Funds: Housi~g Reserve runds. are collected from
developers for the express purpOSE of proyidjng affordable ~ousing
units. Staff does not believe it is appropriate to use thes€ funds. for
PAHC's geroeral administra:ticn, Moreover', alter"nathe $lJlJrces, such as a
processing fee, should be cor5iderej fcr' ~dch BMR 5ale and res.ale,
Annual Funding: In order to staff and budget properly, PAKe is seeking
stable and cconsistent fund:n9, Staff is cf th-2 opinion that during this
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fiscal year, annualized funding amcunts c01Jld be est~bli5hed for the BMR
Prog~am and the Housing rnfor~atioG and Referral progra~.
RECOltMENQA 1):lli
Staff reco,'1'lIT1ends that the Policy and S£'r,,~cEs COrTInlittee-r~(or:l:-2nd to the
(ourlei 1 that:
]. Housing Reserve funds should not be used for additional FAHC
administrative activities: however, PAHC may consider applying
through the H~man Servjc~s Resource Allocation Process for (lty
General Funds.
2. Staff and PAHC explore alternative meth.vds Of f\H,oi;;-g BNR sales
and resales.
3. The City not enter into a con5ultlng relationship with PAHC, but
should utilize PAHC for special contracts as the ~eed arises and
according to the proper procurement pr'ocedures of the City a1d the
COBG regulations.
4. C.ity staff and PAHC (DntinL!e to i,':1prove the housing !nfon!littion
and Referral program to allol!<' fQr m3:(lmu'11 rt.'imburserT1er~t under tne
CDSG prcgnn.
5. Staff and PttJ1C continue mr:mitoril'lg of the ti'!'-e an-j actu1!l cC'sts of
service delivery. with the goal of establishing an annual contract
amOU!1t for the 8MR and HCLtsing Information and Referra1 programs.
KENNETH R. SCHRtlSER
Dir€ctor of PlanninQ ar.d
CommUf1 i ty Ell 1/ i rOl1mer1 t
Att~chme~ts: 7/20/92 letter to William Za~cr. City Manager, from
Sylvia Sernal'1, P .. lc Alto Housing Corporation
Housirg Reserv2' Guidelines of the CHy Df Palo Alto
PA~C Chapter 16.47, Approval of Projects with Impacts
or. l1ousin9
E~(erpts from Housing El~ment, Palo A1tc (omprehenslve Plan
,t: Palo Alto Hou~ing Corporation
COS{l Citizens Advisory Comnnttee
CMR:3€B:92
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7;30/92
Page 6
July 20, 1992
Mr. William z-mer
City Manager
City of Palo .0\110
Palo Alto Housing Corporation
Enclosed is the letter we discussed asking the C(mnciI to consider reinstating th~
concept of a consulting felationship with the Palo Alto Housing Corporation (pARe).
We also ask for funding, other than CDBG, to permit that service to wntinue and to
pennit P AJ-IC p1anning and admini~trati ve costs to be funded.
As you recall, at the m~~g of the Policy and Services Coon minee I July 7, 1992, we
said that we would be sending such a letter. The Committee members indlcated that
the proper procedure wou~d be to have the matter .agendized or. the Council'!Ii consent
calendar for refer.:a1 to t..'Iem, Accordingly, we so reque<;t this of you, and would very
much appreciate it if the item could be heard at the Policy and Services Committee
meeting of Aug",,1 4, 1992.
If you have any questions or wish additional ~nform2tion, please contact me.
Sinc~""ely.
Sylvia 1. SemaJ1
Executive Di ... ector
Enclosure
540 Cowper Street. Suit~ G, Palo Alta, California 94301. (415) 321·9709
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Palo Alto Housing Corporation
July 20, 1992
Honorable Cirj Council
Palo Alto, California
Members of the Council:
During t"epast year the Palo AI,o Housing Corpontion (PARC) and the Ci'y staif
have been struggling to fit our long tenn practices te stricter interpretation of HUD
.regulations ro Lltat mllch of our activities could continue to be funded from Community
Development Block Grant (CDBG) moneys.. We feel that, bec<!usc the spirit of H1JD
regulations derive from unfortunate situations in other parts of the country. not
applicable to Palo Alto, our approach to pro\·!.:JlOg housing does not fit the current
H"'JD CDOO mold and C2...i not be made to fit. As a result, the excellent 22 year
consulting relationship bet\l,;een the City and me HOlJsing Corporation is in dartge!" of
bemg sacrificed to compliance with hyper-technical federal CDBG regulations.
The PARe requests that the Council refer to L1.e Policy and $e-n.'ices Commlttee the
task of exploring with us sources of funding, ollier than CDBG, for our low/moderate
illcome hilusing and planning and consulting activities. This would include a look at
1) whether any City restriction predude~ the rontinuation of the contractual consulting
I"'""Jations1"Jp for PAHC bousing services and 2) whether the Housir.g Reserve Fund
gl!ideli...1es can be amend..:-a to include certain PAHC acti .... ities: as ehgible uses.
Badgrmmd
PAHe was created. as a result of action of the City Council in 1969 to foster and
develop Iow-a.'1C moderate-income housing in Palo Alto. Since 1970, the PARe has
:>erved the City continuously as :a housIng consultant under a cont..-act that has been
reviewed and rene\.lie{f annually. PARe has served many rote:; with uniquo:: succes5.
A. Development of LowfModerate Income Hoasing U nil'>
This has been a major role for the PAHC under )ts contractual scope ofser-'ices. The
foUOWL"1g projects have been completed:
Nt:w Houllilg
Colorado Park Apartments
1141 Colorado A ,ren ue
Webster \Vood Apartments
941 Web,'er Stree,
60
68
540 Cowper Street, .Suite G, Palo A!to, Cc:[]for.,ia 94301. (415) 321·9709
-'~"~'''"{''''''-:'''-----"
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B!.rch Coun Condominiums
2502-2518 Bircr. St. and 302-362 Grant A'¥e. 40
Tennan Apartments
4230 Terman Drlve
California Parl:: Apartment;
2301 Park Boi.lievard
School Site Duplex. Units
7 J 8-720 Ashby on ve
3722-3724 Ortega Court
m-774 Talisman Court
922-924 Bautista Court
TotJil
B. Acquisition and Rehabilitation of Housing
92
45
313
The Rental Housing Acquisition Program (R,HAP) is an excellent example of what the
consultant relationship has been able to achieve in the City. The idea was developed ~.
the PAHC and then incorporat<d by the City as a program in the Housing Element of
the Comprehensive Plan. Uoder RHAP, we have acquired, rehabilitated and managed
92 Ina..t-Jcet-rate housing l.mits. As rurnC'vers natural I)' occurred, we have achieved a
tenant population comprising 75% of very 10 ...... -and low-income tenants in the
following location s:
FRAP Properties
Elm Apartments
129 Emerson Street
Ferne Townhouses
101-131 Feme Avenue
Emerson South
3067 Emerson S tree!
Curtf'.er
300-310 Curtner A yen tie
Waldo
3039 Emerson Stree(
Kumber of Ur:irs
11
16
9
6
2
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"' Pme Srree! :House
1259 Pine 5 treet
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Oai: Manor TO'.li.'Tlhouses
<530 Los Robles Avenu:
Plum Tree Townhouses
3020-3038 Emerson Street
Total
c. BMR Program
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92
The P . .o\HC, as consultant, worked with City staff to create and imptemenr the Below
z...farket R2.te (BMR) program through which nearly 250 mod'eretc-inccme individuals
and farr.ilies ha.ve been ablt! to purchase !'lomes in new developments. An additional' 30
BMR re."tU units have also been created in three market rate .apartrr,ent complexes.
D. General Housing Consultation
The City fu.s. utilized !i1e consdting services of PARe for a variety of subjects, ranging
from 3.ru!lysis of housing development propo>a.ls, the Housing Elements, the eHAS,
multi-family zoning regulation'S, Lie Palo Alto Medlc.al Foundation bousing
contn'bution and city employee housi ng. to research of methods for protecting the
existing subsidized housing developments at risk or cf')nverslon to markcl-raJe hO';sing,
preservation of the existing stock of SROs and homele5s issues.
As consultant to the City we have also assisted other non-profit and for-profit
organizations to produce low/moderate-income housing.in Palo Altai including Lytton
Gardens, Arastradero PMk, Palo Alto Gardens and Sheridan Apartments.
The community has benefitted from frtis long-time fubliciprivale partnership. First,
and perhaps most importantly, we have provided long term affordability for all PAHC
units. Each of OUf deveiopments is attral..-"tive, well-managed and an asset to its
neighborhood. The fa .. milies w-e seNe a.--e able to live close to their jobs and obtain
exceilent educations for their children .. We have developed expertise on City needs
through our ccnsulting assignments such as work on the housmg eJements .. \Ve
combirH~ that with our kno ..... ledge ()f funding sources frolTl federal, state and private
programs to bring add~uona! resources to bear in Palo Alto .. OUf goals and the City's
goals are ldcI'_ticaJ. and lhe City knows e-·,J.l it car. tru.:;'t and rely on us to produce
quality projects and manage programs and projects that meet CIty goals ..
As we have del/eloped and frown over the years and deveioped new funding sources,
the percentage of City supper! we ha\ie received to run Lie PARe has diminished from
100% in the first few years to abouT 45% in the 1990-91 year .. \Ve think this is
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appropriate. However. we realize now that we ca."1r.ol continue pruvidi:r.g the kJr:d C'f
services tho: City ~xpects. and t'1e Corporatio!'" wishes to provide, if the City:s funding
of our ilcti";'ties depends sllbstamia11y upon HUO.:controlled CDBG funds.
Present Fundir'i! Siruap.2n
City staff advise that HUD':; \:urrent interpretation of the CDBG regulations wiU not
permit the City to utilize CDBG funds fOI consulting services v.ithout issuing formal
Requests for Proposals (RFP). This apparently is to fester competition and avoid the
appeara."lce of "sweetlleart" deals. However, the RFP prlJC!:ss, combrned \!w'ith the
cnoo funding cyc::J.'t, would not work: weLl l,I,'Ith most of ihe consulting tasks that
P ARC performs for the City.
City needs for general consultation on housing can arise aI1Y time of the year and
cannot usually be planned six montbs in advance and placed in competition for CDSO
f.mding. Additionally, lfthe City needs advice about issues where time i.5 of the
~, such as potential conv.:rsions of the SROs, the RFP process v..'in simply be. too
lengthy to be useful.
A great deal of time and effort must be expended in ::;eeking suitable sites in PaIo Alto
for new housing cvnstru:tion. OpponuTIities to funner our purpos.e of fosterii'g and
developing ]0""" and moderate-income housing do not conform tv CnSG funding
cycles. Actual deveiopment of a project can work: within the CDBG process, but anI)
on the rare occasion where all factors come together perfectly within the framework of
the process. On these occasions, PARe would expect to apply for COBG funds. On
those occa£ons where it does nO{ work, we would hope to be able to provide the City
with our expertise and pruposal s irrespective of the CD BG process.
Ukewise, availability of properti~ for acquisition cannot be timed to coincide 'With an
RFP process or annual CDBG aliocation. The PAHe pride-s ilSelf on being aware of
good opportunities when they occur. The City would lose those opporrllr.ities if they
must be hostage to a iengthy process. Som~times the approach appropriate in Palo +.bJto
for acquisition ofa propcrt}, although highly successful in pro0.ding affordabre
housing to members of the community, would not compry wiLi. BUD regulations.
For example, the 1991 putchase under the RHAP program of Oak Manor Townhouses,
the 33 unit apartment building at 630 Los Robles Avenue, would have been impo..")ssible
under current HUD regulatiom.. The property was not eligible for CDBG funds.
because all of the resident fa.11ilies had incomes above CDBG eligibility levels.
According!y. we requested Housing Res.er,re funds for the acquisition, stating t:i.at in
10-20 years as over-income tenants moved OlJt we would replace wese market rate
families with those of ,'ery-Iow or low+income. ApproxImately aile year after the
purchase, the Housing Authority of Santa Clara County announced new funding: for the
Sectior.8 Moderate Rehabilitation Program. ft had been several years since this
funding had been available. \Ve have just been informed that our application for Oak
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Manoi' has been selec!ed in the competition for funding. As K'On as rehabilitation work
is completed, Wf' ex.peet to be able to serve 19 of Lie 33 househGlds under this re'-l.ta!
suhsldy program. The ability tc aci promptly and with fiexibility provided a vaIuabre
housing asset te the City and mad~ it affordable IT\ore rapidly w-ithout any HUD
required relocation eJ!!)ense.
Formaly. a portion of Ute CDBG funds allocated. to PARe co .. ered arl.mlrustra.tive
activities, such as staff time necessary to make a p:upo~.al to t.ie City for a site for a
new development or a RRbJl apanment complex acquisition. However, in view of the
increase in City staff expenses to manitor ~:!"id supe.."'Vlse CDBG al~tivities, there are no
longer any administrative funds available to PAHC u.nder the '"cap" HUD allows for
this category,
Ir.stead, some of PAHC's existing activities are befng -retrofitted" to other CDW
categories, The approved 528,000 of CDBG f""d, for 1992-93 are allocate<! to cover
the estimated costs for our inforrnation~ referral and hOllsing counseling services.
Through these .services, PARe provides infonnation to low-income people abv1Jt
WaitL."ig lists for subsidized housing. The CDEG Advi.sory Committee suggested we
amplify these functions through ex.tensive out-reach. We que.';tion the logic of
expanding this activity simply because it is eligible for CDBG mcney. because we
believe that the goals of the City, the PAHC and even HUD are better se;ved through
fundiD'S of our activities that create new housing rather thar. new waiting lists.
txt.ensivc: records must be kept to justify the information and referral activities in order
to obtai"l CDBG reimbursemen f ~ but should more thaIl the allocated amount be .spent on
the activity, the PAHC would not be reimbursed for the excess. LU::e'",rise, should less
than the allocated amount be spent, PAHC would have to finar:ce the resuljog
deficiency in the amount of CDBG income we bad budgeted.
The PAHe operating budget of $275,000 for 1992-93 assumes the continuation of
consulting services as we ha\o'e concu'ted t.1em in the past. Without fU':"lding beyond
the $28,000 CDBG amou.nt, we will need to use capital fu01d!. to the extent of about
$58,000. We do not feel we can justify.or sustain such a drain. Even if CDBG
funding is increased by .$Jti,OCIO to include activlJes. in the "pool" such as acquisition of
the Barker and development of a new SRO, PAHC would stilI have 10 use
approximately $22,000 of capital to maintain operations. Smce PAHC's operations;
require staff continuity. we need to have assured annual fundtng sources and amOlInt'>
in order to employ and retain qualified personnel.
During the course of this past difficult year, we had t.f:Le opportunity to give a HUD
omcial a tour of the varied housing accomplis.hments the City has been able to achieve
through the continuing relationship with the PAHC. He was very impressed, and
expressed regret that CDBG guidelines do not permit this kind of straightforward
relationship to be funded. He hoped that other funding WOL!ld be secured to continue
the successful efforts in the community.
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C£mduvoO': and Recommendation
A kneW-ledge of the community's goals as a whole and a sensitivity to neigliborhood
concerns are critical in order to be effective in creatir':g a~foraabre housiI1g tha~ is
appropriate in OIJr community. HUn's format does not fUlly appreciate Lut dynamic.
'W'hile rules and regulations may prevent bad things from happening, tn.ey also prevent
good things from happening, make it impossible to respund to rapidly changjn~
situations.. a.'ld build wasted time iiIlrl effon into the .organization.
The problem of providing affordable housing in Palo AltC will not go .away. The City
has expresserl its commitment to working on the problem in its Heusing Element in !:he
ComprdI"",;ve Plan, L'le CRAS and other piaruting documents. We believe the broad
based """suIting arrangement between the City and the PARC has produced excellent
results. in developing and fostering low .and moderate income hQusing in Palo Alto, and
PARC is ready, willing and able to continue tilat special relationship so long as the
City desires and is able to finance its fair share of the costs l.IlYotVed. The ongoir.g
CitylPAHC consultir.g relationship has been a forc;€ enabling Palo AJto to be in th~
forefront national] y in housing issues.
We conclude that it is impractical to tap CDBG funding for the kinds of coniulting
sen'ices PARe has provided to the City in the past, in vie ... · of tile restrictions now
governing the allocation and use "f CDBC fu,nds. We ask for policy di.-ection
regarding the continuation of PAHC' s broadly-based housing consulting :;ervices to the
Cit-i. We also ask for exploration with us of other SOl.:rces of City funding, such as the
Housing Reserve~ &.z1: col11d permh funding for consulting, planning and administrative
activities for our low-and moderate-income housing programs and projects.
Sincerely,
Palo Alto Housing COI}XJrntion
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)jOseph Martignetti, Jr.
President
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tfcrJS1HG RESERVE GU1DHH'[S
The Rousing P.es~r\le (t~e J:le.sene} is i! separate C~t/ fund s-:t ;:si(j", for t'h~
specific purp~se of assjsti~; i~ t~e de~e'opmcnt of housing t~~t is affordable
.to .. 10100', moderate and .;liodle jr:C01'lE' fcrr.i)ies and,ir; assisting in the busing
ne~ds of 10"'" and mor1er3:te ir,C.:li:'€ pen·Jns. ;\,11 rllonies cCI'1:';itljJte'1 t=, tMe
Reser",'e ar:d inter2st ear;;oings ac::cn:ed ~hdll be used so1e>t for tt"le.:i.'e' pu:-,PC'se:s •
.sucject ,to .guldelines set forth be1cl"I.
The Reserve is made up of two accH.nts, tf1~ "lr.dus;:..-;al-Commercldl" C!nc the
"Resicential-I'lisce-l1anLolJs" aClOunts. 1-10nies rE'cr?i"ec frcm incustr'a:l end
cOf!llTlercial develope:rs. pl'rsuant to C1'1i!ptu 16.<7 of eE' Pa1'J Alto 1'!l.'.'".icipo:l
Code"". art" deposited t1y th~ C~t] findnce D.epart~n'::. 111 Ule Jndu~t:i.;1-
CC17lmel'"ciai account. flor':fes recejved from resi,jentiGl del/eloper.s, in-lie:! of
p,oviding housing under the Cit.v's Eelow I~ni:et Rate (81·:1<:) PrG:::/rdrr, rpro~ram 12
of the HOl/sing EleInC'nt). are "I:po.sjte~ by the· Finance' Depa:-tmer:t in the
Re5i(fential-Hiscelian~ou5 account. "r.'1i.s sec:ol"'c z,,:,cour.t :1:1so includes ~ordes
frc;m miscellaneouS 5cvrces th.at are inlenQed for ~,ou.si..'1g purpos~s {e.g ...
rlortgage Revenue 8or,d fee payment, ~eb~ter '.1ood ~ay~ents, C!nC 2 . .,.1 re;Jayment of
10ans from tne Reserve ..
The Reserve-... i11 tie L'~o?C to red::.::::e tr,f" cost of housing to lelle-is tr"1et ~re
affordable to low~ mederatL!' and midd1e income fClmilies, .a:; d'efir,cc in tl1:;'
City's C01Jllrehensi .... e Plan. A preference 'Nfll be givE,' to projects ~Iith hOI.'sir.5l
for famjit"s with minor children, ~o'Never, this pr~fL!'rence aoes not precl~~( ~he
t;S:;O of funds for 0 tiler type5 of housi"0 .:: ffo,..ddblF! to the 1<)',1, 1i1{::.d~r.a t:.e ~f1d
;l1Cldle income. j·io.,ies tr:a[ I"talo'", been credited tc 01e lndustrial-(crrmerciiil
accour.t must t,e lJs"~ to support the constnJctiOf1 of f1e .. ' ~o,,'sing cfe lie 1opr!',crn,
.... herea~ Qlonies credited to tile EesjC:~r-tial-(jjsce'!lC::leous lccour." may rJe tl~e-:l.
for either ne~ or existing ho~sln6. Eli9ibTe uses inclUde, ~ut are not limlted
to. thi;: f011owinS':
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Purc~ue of 1arod or .ilr rlO;;,"1t5 fer
to facjlitate .hotlsi"9 de'o'eiopr;1e::;t
househo ldS;
res.:.le to
for 10,',
Reduction of in~~r~~t r2tes fer ccnstruction
used' OJ' oeve lopers or pl.o.rch':'!.2!"S of le' •••
housing;
~E~elopers 3t 2 red~ced co~t
r;";':JC:::e:-~t:; ~nc !;,)c,::nc; inOr7~
loans cr pE'r"IZ;.er,~ f j[lCf'1(:ir.g
rr.o~er"'te anc middle irocofT.('
-lnclU'Oin9 pi!jr;;ents reQuired pur-SI.,'aflt to the Cclifcrdc: C"vironj;'l.'n .. .al Quclit)'
)ct prior to eni!(tr;-ent of Chcpter 16.<7.
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Payreent of pre-development and deveiopment cos.ts, :r.clUd"ing the ,,"sts
lSs.ocfated with obtaining Mor.!9ag~ Re"enue Sond fHl1HIClfl9; ind
Fayment of off-site cos"ts ciirectly rehtlng to 10 .... , moderat~, a'ld.lI1idC:le
ir.co!l'E ~nusin9 de ... elO.f.iment (e.9.~ utility connec:tion.s, read irnprc·,'er::o:?nts).
(llgible Uses ii1 Sup~ort of E~i_.!) __ tirlg l..Qw/,'1oderate Income .YClusir,q
1. CfJSt5 in support of t.~e City's Rer:tal Housing Acquisition Program; an~
2. Re'asonao1e expenses necessary to administer the City':s geb .... Mar~c!'t Rat~
Pro.s>ralll or other (ity-spor.sore~ hc~~irl9 prosrams.
Procedures
Request f.or use of ti"1e t::eserve funds shall be subll','itt'!:'d to tr.e City Manager
for revlelo' a:-Id reco!lll"lendation to the Cit)· Council.
A request fo: funding sflo<.l1d provide the fonm.ing minlmLIm i~fonr.ation:
1. Siz~ of lean or grant requested;
2. A description of the prcposa1 to be fwnded and the organ12atfons invo1ved
in the project. Pul:llic. benefit and relevant Cor.t;Jrener.!ive Pl.an Housing
policies and prosrams should be i~entified;
3. Identification of the number of 10100 lI1':lderate, and" middle incnrr.e persons to
be ilssisted and the sJ::Ecific income nnge of these a.ssisted";
4. ReasQnS why a grant, ratl'ler than a loan, is :-eqtJestea (if applicable);
5. I6entificatio,'l; of loan rate an<j terms, security or collateral. and :source
of repay~ent funds (if applical:lleJ; and
6. Identiffcation of ieverag€ aenie-vee' tnrough City g;-ant 0, loan.
Audit
At the close of each fiscal year, the D"irector of F"inar.ee end" the Director of
Plannin9 ~nd" Corrmunity Er;viroment shall report on activity durin:; ttl!! pr-e\lio~.s
year (deposi ts ar'ld tril'lsfc-rs) and a· ... a 11ab1e fllnds_ The Ci ty ,I.udi tor's {lffi ee
.shall periodfcally e;:r..amil1e this report .and all Hou:sing Reser-ve fur.6s. and sh~ll
report on the resu1ts of this ~~aminaticn.
Guidelines revie· ... ed" anC! approved by the Fille Alto City CfJuncil on February 3~
1566.
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AL.{OVAL OF PROJECTS L n.OlO-16.47.020
Chapter 16.47
APPROVAL OF PROJECTS WITH IMPACTS ON HOUSING
Sections:
16.47010
16.47.010
16.47.030
16.47.040
16.47.050
16.47.060
Declaration of goal and pu!po~.
Applicability.
Exemptions.
Housing requirement
Penalties.
SeverabiJi:y .
16.47.010 Declaration o(,oal 2nd purpose. The goal and pu!pcse of this
chapter is to lessen the shortage o( low·income and moderate-income
housing in P";o Alto by requiring developers of large commercial and
industrial projects, as a condition o( u>ing land for the privilege of cevelop
ment, to contribute to pnognms that increase the city's low-income .. nd
modeTat~income housing stock. (Ord. 3560 § I (part), I 984).
16.47.020 Applicability. This chapter shall apply to the follov.·ing
developments. except those exempt under Section 16.47.030:
(a) AIly new gross square footage of two thousand flve hundred gross
square feel or greater On a site once the gross square fooul" of "on exempt
uses on a site has reached twenty thousand gross square feet:
(e) Any gross square footage of two thousand five hundred gross
square feet or greater on a slte trlat is converted from aI"'. exempt use to :a
nonexempt use OfiCf! the gross square footag· .. of nonexempt uses c'n a site
has reached twenty thousand gross square feet:
(c> Any new gross square footage in • development, or gross square
footage that is convened from an exempt use to a nonexempt use. if such
de\'eJopment removes from the city"s housing stock two Dr mort iegal d\4'elJ
in~ un'ts that have last been used for housing:
(d) New gross square (ootage that replaces nonexempt us.e' shali nOl be
considered gross square footage for the purposes of the ordinance codified in
this cnapter. "Repiaces" me3!15 that the new gross square footage receives
design approval punsu2r.l to Chapter l6.48 within one year of the previous
nonexempt uses being demolished;
(e) New gross square footage in a development used for (I) an on-site
cafeteria. recre-ational facility, andior day car~ facility. to be provided for
employees and/or their children ar.d no! open to the general pubhc. or (~)"
hazardous materials storage facillty shall be exempte-d (rom the requlrrments
of this chapter. I( any square footage exempted under Ihis subsection «) is
converted to a nonexempt use, the entire amoa.;.nt of gross square footage
converted must meet the ... quirements of this chapter. regardless of the
number of ,,<uare reet convened. COrd. 3597 § I, 1985: Ord. 3560 § I
(pm), 1984).
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16.47.030-16.47.WO ;'UILDING REGULATIONS .-.,
16.4'.030 Ex.mptions. The (ollowing "ses. a, defined in Title 18 o(th.
P"lo Alto Municip.1 Code. :ire exempt (rom this chapter:
(a) Residential uses:
(b) Chu rche."
(c) Colleges and universj·jes:
(d) Commercial recreatlon;
(e) Hospitals and convalescent facUities:
(f) Private c1ubs,lod~s. and fraternal "rganizations:
(g) Private educational facilities:
(h) Public facilities lOrd. 3560 § 1 (part), 1984).
16.47.040 Housing requirement. (.) Developments mu,t provide the
number of low-income and moderate-income hOtlsin~ unit' determined by
the formula set forth belo'" or provide an in-lie" fee as sel forth in Section
16.78.04O(d) below:
Gross Square Feet x .017 = Number of units required
350
(b) This formula is based on the reasona!;l, approximation of the
amount of hOllsing necessary to satisfy ten percent of the demand for !O\,' to
moderate-income housing based on the average nLlmber of low to moderate
income empl"yees generated per average household by the average
commercial and industrial developmen!.
(c) Housing units may be sold or rented [0 low-income and moderale
income buyers pursuanl 10 tl1e city's below market rate (BMR) program and
may be pro.ided either on the site of the proposed development or ofi-site.
If the unit is provided an sile, ils design and location sha:J be part of the
architectural review application of the entire proposed development. If the
unit is orf-site 1 the director of plar.ninl and community enviror.ment must
approve the size, condi~ion and location of the units.
(l) A housing unit if sold, shall be sold to the dry, or ciry's designee.
at the cost of construction .nd ftnancing, excluding land costs and profit:
provided. that the cost shall not be greater than that affordable to buyer.;
under the current income limits for the Palo Aito below market rate
program, published YUTly by the depanment of planning and comm"niry
envjronment and Oil me wlth tht city clerk,
(:) A housing unit. if rented. shall be rented for a minimum of fifty
nine ye:.rs 5ubjec:t to Palo Alto's below market rate rental pro,gr;Jm. or for a
I .... ' period: provided. tha, it is sold in ",cordanee with subdivision (I) of
this sectlor,.
(3) A below market nt. agreement shall be enter.d into be,ween the
city and the developer at the tim. of design approval of the de'elopment
pursuant to Chapte, 16.48.
(d) If hou!)ing units are ncr to be provided. the deve-lope-r sh;:111 make iln
in-lieu payment to the dry·s special housing fund of fifry rhou5.:lnd dollars
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APPROVAL OF PROjECTS 16_47.050
per required unit as a reasonablt approximador. of the cost of consUucring
an ovorage below market rate unit. This sum is the equivalent of two dollars
and fort)'-thru cents per squar. foot of proposed developmenL The fifty
'thou .. nd doll." per unit shaJJ be .djusted annually fro", t.~o date of
appro,aJ of the ordinance coditied herein by the percentage changes in the
Consumer Price Index, all urban consumers index, for !.~o San Francisco
Oaklar,d area .. ~d cor.:;c:quently the two dollars and (or!y-three ceng per
square foot may fluctuate.
(e} Half of the in-lieu payment must be paid within ten calendar days
of the d .. elop.r's receiving the first grading or building penni! for a project
or the permit shalJ be null and void. The remainder of the payment must be
made before the developer receives a use and occup .. ~cy pe!TI1ir for the
project. For a phased project, payments may be made for each portion of a
phased project within ten calendar days of the first gradin" or buiJding
permit for that phase and as tlle certificate of use and occupancy for that
phase is applied (or.
(f) If the formula as applied to a propo,;ed development resulls in a
fraction of. unit. the developer ,hall provide for the fraction cf a unit either
• whole Unil or a prorated in-lieu payment, based on the above fonnula.
(J) AI the time of a developer-s appfication for architecrural review
pursuant to Chapter 16.48, cr, if no architectural review is necossa,)·, at the
time of an applicalion for a certificate of use .. ~d occupancy, the deveJoper
must r.otify the director of planning and community environment whether
units or an in-lieu payment will be provided to the cilY. The housing require
ment shall then be placed as a condition on the direclor's approval of L~e
project pursuant to Chapter J SAg or as a condition or: the issuance of a use
and occupancy pennit by the division of inspectionai se!Y~ce~.
(h) Exception for Mixed Use Developments_ In a mixed housing and
commercial or industrial development, the developer~s hous.ing requirement
pursuant to this chapter and the deveJoper"s below market rate hOllsing
requirement porsuant 10 program 10 of the housing eiernen! of the compre
hensive plan both should be calculated. The developer shall be required to
meet only the larger of the t""o requirements. (Ord. 3560 § I (part), i 984).
16.47_050 Penalties. (aj All "medies provided ior in this chapter shall
be cumulative and not exclusive,
(b) Violation of an:, provision of this chapter. including. but nor
limited t':l. convening arl exempt use to a r.onexempt use without tendering.
th~ approprian: houslng mltigation to tho. city, is a misdemeanor punishabJe
.s provided in this code_
(c) Each person or ent,ry is guilty of. separate offense for eoch arod
every day during any portion of which an:,.' vioJaUon of .any pro\'ision of this
chapter is committed. c;onti."1ued or pennitted by such person OT ~nIjty and
sh~1 be punished accordingly.
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16.47.060 BL1LDlNG REGULATIONS
. Cd} Any perron or entity viol~tirig any provision of this chapter. in
cludinl1. but nol limited to, converting 011 exempt use to a nonexempt use
withot t."dering the appropriate housing mitigation to the city, may be
liable civilly in • sum 110t to exceed rIVe hundred (!"lIars for .ach day in
which such violation occurs.
(e) Perrons employed in the following designated employee positions
are authorized to exercise the authority provided in Penal Code Secti,,"
836.5 and are authorized to Issue cjutior.s for violations of this chapter:
chief building omew, assistant chief buildins omew, and ordinance com-
pli .. ,ce inspector. (Ord. 3608 § 2, 1985). .
16.47.060 Severability. If any provision or clause of litis chapter or the
application thereof to any person or circumstance is held to be unconsti
·tutional or to be otherwise invalid by any coun or competent jurisdiction,
such invalidity shall not arrect other chapter provisions, and clauses or this
chapter are declared to be severable. (Ord. 3608 § I, 1985; Oro. 3560 § )
(pan). 1984).
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EXCERPTS FROM HOUSING ELEMENT
F;',LQ ,~.L TO (iJMPPEHEI~S!iJ: PLAN
R~ntal Hous1ng
Policy 6: Hailltai:l at 7east the present number Qf ffliJ!tfp7e-farr;iiy renta7
/,mits while working fa increa.se the "I/era!] sl..'ppiy of rental iiOJ.!siJ7g.
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Pr(jgra~ 8: Continue the adDpted condorni~ium c.on"ersion crdina!l-:e.
Program Responsibility: Plan~ing Di~ision
Most of the lower-rost housing in Palo AHo is rental nousing. 8etween 1968
and 1974, nine apartment projects co~taining 231 un1ts ~~re converted to con
dominiums, threa:ening to reduce the rental housing supply st:bstantiallj.
Conver~ions in Palo Alta had a displacement rste of 82 percent, according to a
1974 survey. Most tenants were fcrced out because of higher costs, because
the-monthly carrying CGst of a condominium is almost always higher than rent
an a comparabh unit. A Fe .. tenants moved out OeCallH!, at that time, they
would rather rent than own. A 1974 condominium Conversion ordinance greatly
reduced the number of con'o'erSion ,applicati.ons Lir.ti1 two large applications
were received and apprcved in 1980. Neither of these two projects, however~
was ultimately converted. The 1974 condominium conwarsion ordinance was re
placed in 1981 by'a ne" oY'Cinance which allows an applica~ion for conv€rsioTl
to be filled only if ther'e is 3 Citywide rental 'r'aca~r:y rate ...-hich exceed')
three percent, or regard1ess of the vacancy rate, if:
o One below-market-rate rental unit is provided for ever)' two non
be1ow-marKet-rate units to be (onverted.
o Tne tenants of at Jeast two-tnirds of the rental units consent to the
(on'Jer::;j'Jn.
There have been no co~dornj~ium conversions sinc~ this ordinance became law.
Program 9: For ani residential dev~bpment in multipla-faml1y zonp.s which
causes the loss of rental housing unfts, subdivision approval (including
condominium maps) may be granted if any two of the following three circlJ;,!;
stances ire met:
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o The project ~ill result in a signjfjcant ~et gain to the City hou~ing
supply (defined as 100 percent more units than those pre~iously ex
isting on the site) end comply with the Cit)' BMR program;
o The number of rental units to be provided by the projects is at least
equal to the number of existing rental units;
o Not less than 20 percent of the unlts pro~ided are BMR units.
Program Responsibility: ?lanni~g Division
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This program establishes an acceptab1e tradeoff between th~ number ar.d type of
rlew IJr1its in 1 conGominil.;m subdi"v;si"ort and the loss of rental u~Hs. The
first condition provides only for redevelopment within existing zonlng leve~s.
The intent of this ~onjjt1an is to discourage d~molition of rental units where
there is an ins'gnif~cant ~et gain in units.
Program ]0; The City should discourage con'/eniorl of lands designated as
residential to non-residential useS.
Program Respon~ibility: Planning Division
Aff~rda~le Housing
Pol1cy 7: Encourage and foster the de't'e'op.7lent af new qnd existing housing
unIts affordable to iO~-J moa'er~te-t and middle-{ncome h'Juseho7ds, espedaUy
thOSE ,~cusehCi1ds with chi7dren.
The City shouid work with nonprofit housing organizations and thi: 10cal
develGpment cOmTIunity to enSUT! that all affordable housing. including fami1y
housing anc units for seniors on fiAed incomes) remains affardab1e o~er time.
TI'1ese unit5 1 for (lithEr ownership or rental. should be dispersed th,·oughout
the CHy.
Program 11: Continue support for the Palo .Alto 'Housing Corporation in the
provisior. of low-~ modente-and middle-incame nou::;ir.:g •• ith primary em-'
phasis on the low-and moderat~-income sectors.
The P310 Alto Housing Corporation was eshblished" ir\ 1969 to encourage and
develop lcw-and moder~te-income housing in Palo Alto. It is an independent.
nonpT"ofit organization whose board members serve witnout pay. In addition to
its development actil/ities, the Corpor.ticn ha.s. pro\lided consuHing ~~r'olit:es
on ~ousing to the City under contract Since 1970. The pr09rams and services
of the Cor~oration have been partially funded by the City's Corl:munity Dev~lop
me~t Block Grant Prcgram.
The Corporation nas sought to use every means to produce housing at .1owet·
costs without sacrificing Quality. Construction and permanent financing at
lo~est available intfrest rates, reduction of land costs through l~nd banking
or other mear-as, utilization of 0.11 avaiTable subsidy programs. and deve:opment
by experienced nonprofit ~ousing organizations can combine to yield affordable
housing.
Projects serving low-. moderate-and middlf-income households de'Je1oped t,t t!'1e
Corpontion include Colora.do Park, Webster wotld, Birch Court. Terma~ Apart
ments and the California Park Ap.artmi!nts (refer to t~ble on page 17). Tr.e
Corporation also owns and operates the Elm, Ferne. Emerson South. Curtner and
Waldo Apartments, and a single-famiiy home on Plne Street. TM c.orpora.tiDn
has also developed eight duplex units wlthin new subdi~ision$ at four surplus
school sites.
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Program 12; To ma.ke multiple-family hOt!sing attr-ac.thie for hr.'lilies wit!'!
thildren, such housing 5houl~ provide suitable open spac.e ar€iS for chl1-
oren's play.
The City's revised m~ltiDle-familj zoning reg~lations include req~i~ements for
adequate common ope~ area on ~he grau~d le~el as well as mi~!mu~ private ope~
areas. The regulations inclYde landscape and design gu~delines to assure that
~pen areas ~re b~th functional and attractive_
Program ]3: In housing developm~nts of three or more units, not less than 10
perce~t of the u~its should be prov1ded ~t belew-market rates to lo~-and
li1oden.te-inCClne families (for proje::ts of tJ1ree t~ nir-.e units a prop:::r
tionate in-lieu payment '.dll be accepted). Fer ead 8tiR unit provid€d
over a.nd above the requirement, a developer shall be permitted to build
one aoj.jiti(.nai m.o:rket-rate unlt tip to a maximum unit increase over .the
al1')wable zoroing nf 15 pen:er.t, ard co~sistent ioIith all other ZGn:ng
req'-Ji rements.
Program Responsibility: Planning Di¥ision, Palo Alto Housi~g Corporation
The tHy of Palo Alto's B~'R Prcgram is intended to ~n-crease t'le r:ousin,g supply
for individual sand fdmil ies who have low-and modera:te-·'ncnmes. ~s 1 and
available for housing becomes more scarce, carrtributions f:Jward the EMR pre
gr~m ~il1 be ne~ded from both large and small housing proje:ts ~o increase the
number of BHR units. Since the beginni"g of the program ir 1974, 153 for-saTe
unlts and 30 rental units have 'been occupied, and a~other 10 units have been
c::ommitted to the program (refer to table On page 19). The primary objective
is to obta-ir. actual hcu~in;: urdts rather Han €quivaler:t ca,~. OCCl.'panCf for'
BMR units is determined according to City Ccur.cil-establlsr.d guidelines from
those on a r1umbered waiting li:>t, mair.tained for the Cit.v bi the Pale AltD
Houslng Corporatio~_
The inittal selli~g price of BHR units is based on ~hat would be affordable to
families whose incomes are no higher thar. 100 percent of the me~ian income
n:lated to family size. as established from time to time by HUD for Santa
Clara. County (BMR Income Guidelines). Because ccntj~ued affordability is a
major goal of t:-'e program, deed restrictior.5 provide the mechanism to corttrol
the resal~ price that jnsur~s that succeeding buyers can also afford tnose
units. (or1sequ£ntly. ZJ2 famjl1~s ~ay~ be~n served si~ce the inception of th~
program.
Before acceptance of plans for re'liew by Palo Alto (itf staff, a deveToper of
a comp1ex of three or mare residentlal units shouTd asree to cne or a combina
tion of the fol10~ing alternative5 that are listed in order of priority. Pro
vision by the deve10per and .acceptance b)' the City of the BMR arrangement will
be part of t~e application for development.
On-Site BMR Units
F?r ~ach ten units,dew~lo~ed, not less than one of such u~its should be pro
vldea as a B."lR unlt wlthln the dev2'lop:uent. The pric~ fDr such BMR units
should ~e. Estab ... 'ishec_ at the time of apprlJval of the, tentatiwe subdiwision map
by the ... lty_ .tie pnce should be based on the estlmated direct construction
a~d f~nancing cost of the ~MR unit .[excluding land c::~st. marketlng cost, off
sl~e ,mprovements and proflt), but 1M any event, shOUld be consistent with the
pnce ranges allowed by the 9MR Income GUidelines in effect at the time_
Fractions of required BMR units shculd be harodled by equ: ..... alent in-lieu
payments.
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for each BMR unit provided over Ind ib~ve the requirement. a dev~loper sha11
be permitted to build one addi':.Hlnal lIIiT-5:.et-rate unit. However, in IiQ e',lcnt
shall the totil number of units 1n Ii developm~nt be ~ore t~an 15 pel'cent over
the number otherwise allowed ty zoni~g.
Off-SIt. B~R UnIts
Prc!{ide en or be fOri! c:or.JpleUoIl of iny development cf te.": or more IJnits not
less Ulan one BMR unit elselJihert in the Cit\; for each nifle units developed.
These units may b~ new or eX1stin~ and lIlust" be appro\led by the CitYI takir.g
fnto consideration .such factors 15 s~ze. location, amenities, and condition.
in-lieu Payments Bas~ on Sties Price
The City will ccn.:iider an in-lieu payment alternative to actual unHs, for
projects of tt:11 or more units, on'} if the de'i~'oper slJbstantiate:s that the
direct construction and financing costs of the BMR units (excluding land cost,
marketing cost, off-sHe imprcvements and profi:tj exceed He selling prices
a110wed by the BMR Income Guidelin!s.
The in-lieu pa~nt fer projects of ten or ~re units is to be five percent of
the actual sa1es price of each unit sold. Tne payment will be made to the
City upon the sale of each unit in the subdivision.
In-lieu payments for frictions of BMR units .... ill be deternjned:
o Disregarding any bonus units.
o As a percentage of the selling price af each of the units for ~hich
no BMR unit i. provided, by the following r.tes:
Numbe-r
IN-LIEU FEE CONTRISUTIONS
FOR FItO,CTlONS OF BMR UNITS
of Units Percentage
10. 5
9 4,75
S 4,5
7 4,l5
5 4,0
5 3,75
4 3.50
3 3,25
Rale
If the developer retains any completed unit as .a re:"ltal. either for its Qlofn
accou!1t or through subsidiary or affi~iated organ1z"tiollS, tr,e in-lieu payment
for sud unit should be negotiated between the deveioper ar.d the City.
EQu1v~lent A1ter~at1'ies
The City may consider r~aso~ably equivalent alternatives to these ·guid~lines.
Sites Larger than Five Acres
De ..... -e1opers who build on sites lnger t.~an fi\,le acres are ~xpected to prov~,:!e
more than 10 percent BMR ur.its ar'l'd/or to set aside land for assis.ted housing
La be bUllt by others. Appropriate BMR contributions j~ such ca5es shall be
individually negotiated betwEe~ the developer and the City.