Mammoth Lakes Housing, Inc. Purchasable Workforce Housing Policies and Guidelines Summary

Purchase Policies & Guidelines 9-01-2005 Mammoth Lakes Housing, Inc. Purchasable Workforce Housing Policies and Guidelines Summary Mammoth Lakes Housing, Inc. s (MLH) mission is to cause the creation of workforce housing for a sustainable and viable community. These Policies and Guidelines govern tenant eligibility criteria for workforce housing, as well as waiting list procedures for workforce housing units, controlled by MLH. Purchase prices for workforce housing units are intended to be affordable to persons and households earning low to above moderate incomes. The Tax Credit Allocation Committee (TCAC) of the State Treasure s Office annually publishes the Area Median Income (AMI) for Mono County, based upon data furnished by the United States Department of Housing and Urban Development (HUD) which serves as the basis for affordability levels and incomes. The most recently published AMI is used in the calculations pertaining to these Guidelines. Part I Workforce Housing Categories Purchase prices are based upon a household s annual income. There are five (5) Levels of purchasable property. Each Workforce Housing unit is assigned a Level (3-7). The Level of housing an individual or household qualifies for is based upon the number of people in applicant s household (including all children, adults and seniors), and the total combined annual income of the household. Each Level (3-7) has an associated income and asset limit that cannot be exceeded at the time of purchase. Refer to Table 1. Example: The Smith family is a household of 3 persons with a total annual income of $50,000. The Smith family is eligible to purchase a Level 4 unit or above, but not a Level 3 unit. Table 1 2005 Levels (Including Income and Asset Limits for Various Household Sizes) Level 3 4 5 6 7 No. Persons 80% 100% 120% 150% 200% 1 $33,520 $41,900 $50,280 $62,850 $83,800 2 $38,240 $47,800 $57,360 $71,700 $95,600 3 $43,040 $53,800 $64,560 $80,700 $107,600 4 $47,840 $59,800 $71,760 $89,700 $119,600 5 $51,680 $64,600 $77,520 $96,900 $129,200 6 $55,520 $69,400 $83,280 $104,100 $138,800 1

7 $59,360 $74,200 $89,040 $111,300 $148,400 8 $63,120 $78,900 $94,680 $118,350 $157,800 Net Assets Not in Excess of : $55,000 $65,000 $65,000 $65,000 $65,000 1. Employment Qualification PART II Purchasing Workforce Housing Section 1 Qualifications to Purchase Workforce Housing All eligible purchase applicants must have at least one household member who is a qualified employee. A qualified employee is defined as a person who: Has been employed for at least one year, at least 30 hours per week on average, in Mammoth Lakes. 2. Primary Residence All household members over the age of 18 must occupy the unit as their primary residence. A primary residence is the sole and exclusive place of residence. If an owner accepts permanent employment outside of the Town of Mammoth Lakes, or resides in the unit fewer than nine (9) months out of any twelve (12) months, the unit is no longer their primary residence. 3. Developed or Undeveloped Residential or Commercial Property No member of the household can own developed commercial real estate in Mono or Inyo Counties. If applicant owns developed residential property, applicant has two choices: a) Applicant may sell the property prior to, or simultaneously with, closing on the workforce housing unit. The net sale proceeds will be included in applicant s asset/income calculation; or b) Applicant may choose to rent the property instead of selling. However, applicant will only be eligible for purchasing workforce housing if that property is rented as workforce housing according to these Guidelines at a rental rate determined by MLH. All net rental income after expenses will be included in applicant s gross annual income calculation. If an applicant owns undeveloped (vacant) land in Mono and/or Inyo Counties, the land must remain unimproved. If the land is improved with a residence, applicant must either relinquish the workforce housing unit by listing and selling the applicant s ownership interest, or the applicant may rent the newly developed property as workforce housing according to these guidelines and at a rental rate determined by MLH. All net rental income will be included in applicant s gross annual income calculation. 2

4. Income and Asset limitations A household's gross income and assets, and household size will be used to determine the housing Level, as identified in Table 1. Gross income is defined as: The sum of all gross incomes from all occupants over 18, regardless of their legal status. Not more than 25% of a household income can come from non-employment sources. Net assets in excess of limits set for each Level, as indicated in the bottom row of Table 1 above, will be converted to income. Each $20,000 in assets above the published limit for the base income is converted to $1,500 in annual income. For example, if you are a single person household earning $40,000/yr (Level 4), and you own a condominium worth $240,000, your assets are $175,000 above the asset limit for your income category. That $175,000 converts to an additional $13,125 in annual income. The result of this calculation is that your annual gross household income is considered to be $53,125, which places you in the Level 6 income category for the purposes of purchasing a workforce housing unit. Example: Property Asset $240,000.00 Allowable Assets per Level 4 -$65,000.00 Assets above limit per Level 4 $175,000.00 $175,000.00 divided by each $20,000.00 In assets over the limit = 8.75 8.75 multiplied by $1,500.00 conversion = $13,125.00/yr additional income Base income ($40,000.00) + additional income = $53,125.00 total income $53,125.00 = Level 6 If any applicant has sold property within the last two years it will be considered in their income/asset calculation. Section 2 Initial Qualification to Purchase Process MLH must have documentation on file to verify applicant s eligibility for purchasable workforce housing. Documentation will be requested to provide proof of applicant s residency, employment, and income and assets. Applicants will need to complete the necessary forms and supply the requested documents that may include: 3

1. Income and Asset Verification Previous years (or most current) Federal Income Tax returns. Current income and financial statement (including identification of any property, real or otherwise, owned in part or whole by any household member). 2. Employment Verification All W-2 forms from current or previous years. Wage stubs (if W-2 s are not available). Employer(s) name, address, telephone and dates of employment. Landlord verification of residency starting dates. Valid California driver s license. Valid California voter s registration. Verification of telephone service in Mono or Inyo Counties. Divorce Decree or Separation Agreement, including alimony and child support. A copy must indicate that it has been entered in the record with all exhibits and supplements attached. 3. Pre-approved Mortgage and Payment Obligations Applicants must submit a pre-approved mortgage for the maximum amount of financing applicant wishes. Applicants must have the necessary down payment, demonstrated to the satisfactory of the lender. 4. Certification of Accuracy Applicants must sign a document that states all the information supplied is true and accurate. If it is determined not to be so, applicant may be disqualified from the process and face additional penalties as allowed by the law. 5. Applicant Unit Allocation Applicants are subject to a minimum and maximum occupancy restriction when purchasing workforce housing. Applicants must meet the income restrictions for their household size. Applicants will be able to choose the actual size of a unit based on applicant s ability to finance and meet payment obligations and household size. Applicants will specify in their application if they want to be considered for 1 bedroom or less, a 2 or 3 bedroom unit, more than 3 bedrooms, etc. 4

Table 2 Minimum and Maximum Occupancy for Purchasable Units BEDROOMS Minimum Maximum 0BR 1 1 1 BR 1 2 2 BR 1 4 3 BR 2 6 4 BR 3 8 6. Qualification Process Applications that are complete and eligible will be processed and assigned a position on an appropriate waitlist based on their income and household size. Couples or roommates planning on holding joint title may apply and be on a waitlist individually (they must qualify individually) or jointly, but not both. 7. Initial Qualification Fee A non-refundable payment of $25 must accompany all Applications. Section 3 Recheck Process When a unit becomes available and applicant is ready to purchase, MLH will recheck all information on the initial application, including: Proof of continued employment in the Town of Mammoth Lakes per guidelines for the entire time applicant is on the waitlist. Ensure all requirements as per Section 1 above and the guidelines are met. Proof of current pre-qualified mortgage. 1. Meeting Detailed Check Requirements If for any reason an applicant does not meet the re-check criteria and is disqualified by MLH, applicant will have one decline placed against their application. If an applicant does not wish to be considered for the unit offered or does not make an offer that is acceptable to the purchaser, the applicant will have one decline placed against applicant s application. If an applicant fails a re-check, declines to place an offer on a unit, or makes an unacceptable offer on a unit for a total of five declines, the applicant will be moved to the bottom of the waitlist. 5

Details on waitlist management are in Part III. MLH reserves the right, in its sole discretion, to make exceptions to eligibility requirements as it deems appropriate. Section 4 Enforcement of Ownership Units Owners must meet all qualifications items under Part II, Section 1, 1-3 to continue ownership. Roommates are permitted in home ownership units. All potential roommates must be qualified through MLH. MLH will do random audits on all the ownership units as to employment and ownership of other property with in Inyo and/or Mono County. Owners are considered to have ceased to use unit as their primary residence if they accept permanent employment outside of the Town of Mammoth Lakes. Owners are considered to have ceased to use unit as applicant s primary residence if they live in it fewer than nine (9) months out of any twelve (12) months. Re-qualifications will occur at least every two years. When MLH re-qualifies owners they are charged a $15 fee. Workforce housing owners must fully cooperate with any MLH audit or inquiry to remain eligible under the program. Section 5 Owner Leave of Absence If an owner wishes to vacate their unit for more than 3 months and retain ownership of their unit, applicant must apply to MLH for a leave of absence. MLH may consider granting, in its sole discretion, a leave of absence for a maximum of 2 years. Owners must provide clear and convincing evidence, satisfactory to MLH, explaining their reason for leaving and their intention of returning. The unit must be rented if allowed by the deed and the homeowner s association. The owner may choose to whom the unit is rented, but the renter must meet the income guidelines for the specific unit, and all other aspects of being a qualified employee. MLH will specify terms of the rental if they are not part of the property s deed. 6

Section 6 Roommates or Tenants in Purchase Units Roommates are allowed only under the following conditions: 1. The unit s deed and homeowner s association must specifically permit roommates. 2. The roommate must be a qualified employee. 3. The employee must meet the income guidelines for the specific unit, and all other aspects of being a qualified employee. 4. Owner must continue to reside in the unit. 5. A roommate or tenant must be given a lease or rental agreement approved by MLH. Copies of the completed leases or rental agreements must be filed with MLH. 6. The maximum rental rate is governed by these guidelines and will be determined by the size of the unit, how many rooms are rented, and actual homeowner costs to the owner. 7. MLH must be immediately notified in writing of any changes regarding roommate status. PART III Waitlist Management Applicant may be on both rental waitlist(s) and purchase waitlist(s) at the same time. MLH will update each waitlist once per year. All waitlisted applicants will be notified by current mailing address to update their information and confirm interest. Applicants are responsible to keep their information current and to notify MLH if their family situation, income, etc. changes. Applicants are responsible to keep their current mailing address and telephone number on file. Applicants who do not respond within 90 days of mailing out the yearly review and update will be removed from all waitlists. Declining Offers An applicant may decline a unit five times, and then they will be placed at the bottom of all purchase waitlists. An applicant who is not prepared for any reason to enter into an agreement to purchase a unit when offered will be considered to have declined the unit. If the applicant is offered a unit but fails to meet the Re-Check Process (Part II, Section 3) they will be considered to have declined the unit. If applicant makes an offer that is unacceptable to the owner in terms of purchase price or closing dates, it is considered a decline. An applicant who has inaccurate information on file which may lead to failure of a Recheck (Part II, Section 3) will be considered to have declined a unit. No response to an offer to purchase a unit is considered a decline. 7

If an applicant purchases a unit but wishes to remain in the waitlist system to purchase a different unit, they will be moved to the bottom of all applicable lists. If an applicant purchases a unit, they will be removed from all rental waitlists they may be on. If an applicant rents a unit but wishes to remain in the waitlist system to purchase a unit, they will keep their current waitlist position on the Purchase waitlist. Applicants are responsible to keep track of how many declines they have against them. In the event of a dispute, MLH s records as to the number of declines shall prevail. An applicant on a waitlist must be an eligible employee as per the Guidelines for the entire time they are on the waitlist prior to occupying or purchasing a unit. PART IV Purchase Prices Section 1 Setting Initial Purchase Price All units will have an initial deed restricted value assigned to them along with a housing Level. The maximum resale price of purchased units will be adjusted yearly based on changes in the AMI published by TCAC. Section 2 Resale Purchase Prices When an owner wants to sell his/her unit, the maximum resale price will be restricted to the combined total of the following: the price applicant paid for the unit, plus a percentage equal to the percentage increase in the Area Median Income from the time of owner s purchase to the present sale, plus any allowance for capital improvements as permitted under Part IV, Section 3, or the appraised value, whichever is lower. After an initial sale to the first buyer (with respect to properties that are subject to these restrictions) all properties will be offered by the Owner to MLH for purchase based upon the deed restrictions recorded on the property. MLH will assign, transfer, or sell its interests to the next qualified buyer on the waitlist, or rent the property in accordance with the rental guidelines A qualified purchaser must meet the do not exceed Level on the deed of the property and must also pre-qualify for financing to the extent necessary. Section 3 Capital Improvements to Sale Units For capital improvements to be reflected in the future sales price of the owner s unit, they must be qualified and permitted by MLH. MLH will maintain a list of qualified capital improvements. Applicant must receive prior approvals from MLH for these qualified capital improvements. These approvals will remain on file for reference when applicant sells the unit. 8

Applicant may make qualified capital improvements that increase the value of the unit by 15% of the price the owner paid for the unit. Owners may make qualified capital improvement in excess of the 15%, and owners may also do non-qualified capital improvements to their unit, but these will not be reflected in the property s resale price. PART V Procedures for the Sale of a Workforce Housing Unit Section 1 Process 1. Consult with MLH to determine the maximum sales price permitted under the formula. 2. Notify MLH in writing of your decision to sell your property. 3. MLH maintains an option to purchase the property for the Maximum Sales Price, or the appraised value whichever is lower, as determined in the recorded deed restrictions. Should MLH elect to purchase the property, it will notify you within 30 days of written notification from you of your intent to sell the property. At that time, MLH will determine whether or not an appraisal is required and will pay for the costs if required. 4. MLH may assign or transfer its interests in the option to purchase at its sole discretion. 5. MLH will open escrow with an approved escrow company should it elect to exercise its option. 6. Closing will be scheduled to occur not later than ninety (90) days after MLH has notified you in writing of its election to exercise its option to purchase. 7. Closing cost will be as per custom in Mono County, with each party paying its appropriate costs, in escrow. 8. Should MLH choose not to exercise its option to purchase the property, it shall notify you in a timely manner, and shall take steps to remove the deed restrictive covenants, conditions, and occupancy restrictions, so that you can sell or rent your property without continuing restriction. 9. All sellers and purchasers are advised to consult independent legal counsel at their own cost. 10. Only one workforce housing units may be owned at any one time. MLH reserves the right to allow variances or exceptions, as appropriate, to this provision. Section 2 Deed Restriction When applicants purchase a unit, they are required to sign a document acknowledging they are aware of and understand all of the terms and conditions of the unit s deed restrictions, and that these restrictions will reduce the value of the property at resale. 9

Section 3 Co-ownership and Co-Signature 1. Co-ownership title to the property other than community property with rights of survivorship, joint tenancy or tenancy in common must be approved by MLH. 2. A person other than the applicant or a person on the application as a household member may be used to qualify for a mortgage. 3. A co-signer may be approved for ownership of a unit but shall not occupy the unit unless they qualify under MLH guidelines. Part VI Pet Policy Pets may be allowed in purchasable units subject to each property s CC&R s and Home Owners Association s regulations. Part VII Special Review and Grievances Section 1 Special Reviews Special review requests for a variance from the Guidelines may be requested through MLH, and decisions regarding the requirements will be at the sole discretion of MLH as it deems appropriate. There is a special review application fee of $50. MLH reserves the right, in its sole discretion, to vary from these guidelines in situations where MLH determines that variance would be appropriate. Section 2 Public Employer A qualified public employer may apply for a variance from the Guidelines on behalf of their employee. A qualified public employer includes: The Town of Mammoth Lakes; Mono County; Mono County Office of Education; Mammoth Unified School District; Mammoth Hospital District; Mammoth Lakes Fire District; Mammoth Community Water District; United States Forest Service; State of California, National Park Service and United States Postal Service. There is a standard application fee of $25. 10

Section 3 Priority Employer MLH may enter into special agreements with entities or organizations to help facilitate the provision of workforce housing. These agreements may allow for priority access to workforce housing controlled by MLH, and may allow MLH to waive these Guidelines for such entities and organizations. Section 4 Decisions and Grievances Decisions, determinations, or approvals required by MLH, as referenced in these policies and guidelines, shall be made by the MLH Executive Director. There will be a process for grievances through MLH. A separate grievance policy will be maintained by MLH and utilized with any grievances submitted. Part VIII Amendments These policies and guidelines will be amended by MLH as the need arises, and all participants agree to be bound by any amendments to these guidelines. A copy of the current policies and guidelines will be maintained for inspection and review in the MLH office. Written notice of all amendments adopted will be provided to each purchasable workforce household and shall become effective 30 days after the date of the notice. In the event of disputes between these Guidelines and the recorded Agreement and Declaration of Restrictive Covenants, Conditions and Restrictions for Occupancy and Resale of Property, the later shall prevail. PART IX Glossary Please note this Glossary defines some of the applicable terms. The Glossary also contains additional provisions and requirements of the program. Please read carefully. Applicant The household that is applying for or on a waitlist for workforce housing. Area Median Income A Department of Housing and Urban Development statistic that reflects annual median for different sized families for each county. For purposes of these guidelines, the Area Median Income is for Mono County. Assets Anything owned by an individual that has commercial or exchange value. Assets consist of specific property or claims against others, in contrast to obligations due to others. See also Gross Assets and Net Assets. 11

Capital Improvement Unless otherwise defined in the deed restriction of the workforce housing unit, any MLH approved fixture erected as a permanent improvement to real property excluding repair, replacement and maintenance costs. Co-signer A joint signatory of a promissory note who shall not occupy the unit unless qualified by MLH. Deed Restriction A contract entered into between the MLH and the owner or purchaser of real property identifying the conditions of occupancy and resale. Deed Restricted Covenant The document that contains the details the applicable deed restriction. Developed Property Any real residential property within Mono and/or Inyo counties that has on it a dwelling unit or mobile home. Employer A business whose business address is located within the Town of Mammoth Lakes, whose business employs employees (as defined herein) within the Town of Mammoth Lakes, and whose business taxes are paid in the Town of Mammoth Lakes. If an employer is not physically based in Mammoth Lakes, an employee must be able to verify that they work in Mammoth Lakes a minimum of 30 hours a week on average in a calendar year. Financial Statement A statement detailing all personal assets, liabilities and net worth (the difference between assets and liabilities) as of a specific date. Gross Assets Anything which has tangible or intangible value, including property of all kinds, both real and personal, includes among other things, patents and causes of action which belong to any person, as well as any stock in a corporation and any interest in the estate of a decedent; also, the entire property of a person, association, corporation, or estate that is applicable or subject to the payment of debts. Gross assets shall include funds or property held in a living trust or any similar entity or interest, where the person has management rights or the ability to apply the assets to the payment of debts. Gross Income The total income received, including but not limited to alimony, child support, income derived from a business, trust, employment, and from income -producing properties before deductions for expenses, depreciation, taxes, and similar allowances. Household All individuals who will be occupying the unit regardless of legal status, marital status, or relationship to one another. Household Net Assets Combines net assets of all individuals who will be occupying the unit regardless of legal status. Household Income Combined gross income of all individuals who will be occupying the unit regardless of legal status. Adjustments to the gross for business expenses can be made for persons who are self-employed. Household Size The number of all individuals regardless of age and legal status who will occupy the unit. 12

Income From Non Employment Sources Income that is part of a household s total gross income that is not attributed to payment for work performed, including but not limited to: investment dividends, trust funds, income from real property and allowances. Joint Tenancy Ownership of real estate between two or more parties who have been named in one conveyance as joint tenants. Upon the death of one tenant, surviving joint tenant(s) have the right of survivorship. Level Corresponds to the income and assets limits for various household sizes. Level 3 = 80% AMI Level 4 = 100% AMI Level 5 = 120% AMI Level 6 = 150% AMI Level 7 = 200% AMI Mammoth Lakes Housing, Inc. or MLH A California Nonprofit Public Benefit Corporation based in the Town of Mammoth Lakes, which is responsible for developing and managing workforce housing. Net Assets Gross assets minus liabilities. Retirement accounts will be reviewed on a case-bycase basis to determine whether or not they shall be included as a net asset. Primary Residence The sole and exclusive place of residence. The owner or renter shall be deemed to have ceased to use the unit as his/her sole and exclusive place of residence by accepting permanent employment outside of the Town of Mammoth Lakes, or residing in the unit fewer than nine (9) months out of any twelve (12) months. Qualified Employee A person who is employed on the basis of a minimum of 30 hours worked per week on average over a 12-month period, in the community of Mammoth Lakes, and must reside in the unit a minimum of nine (9) months out of a year. If self employed, the worker must provide verification of the work done in the community of Mammoth Lakes. Tenancy In Common Co-ownership in which individuals hold an undivided interest in real property as if they were a sole owner. Tenant A person who is leasing or has leased a deed restricted unit which is subject to these Guidelines, and any qualifying potential lessee or past lessee of any such deed restricted unit, but only with respect to any issue arising under these Guidelines. Undeveloped Property Any real residential property within Mono and/or Inyo counties that is strictly bare land with no dwelling unit or mobile home. Workforce Housing Dwelling units restricted to the housing size and type for individuals meeting asset, income and minimum occupancy guidelines approved by Mammoth Lakes Housing, Inc., Town of Mammoth Lakes Town Council or other local agencies, whichever shall apply. 13