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HomeMy WebLinkAbout05-10-18 Correspondence - B. LaMeres (on behalf of CAHAB) to Commission - Affordable Housing Ordinance 38.43. Amended 5/8/18 Page 1 of 17 Sec. 38.43.010. - Legislative findings. The city commission hereby finds: A. The Bozeman Community Plan establishes a goal to encourage an adequate supply of affordable housing and land for affordable housing in Bozeman. A lack of affordable housing affects the ability of many residents to find housing which is adequate for their basic housing needs. A lack of adequate housing affects health, social stability, and other issues which can have negative and intergenerational effects. To fulfill this goal, the community plan establishes an objective to promote the development of a variety of housing types, designs, and costs to meet the wide range of needs of Bozeman residents. B. The Affordable Housing Action Plan: 2012—2016 (action plan) analyzed housing needs and existing market conditions and determined housing affordability has become an acute problem as demonstrated by the number of households paying over 30 percent of their incomes for housing. A 2015 update to the city's housing needs analysis (action plan update) concluded that the group of home buyers with significant affordability gaps have incomes at or below 80 percent of the area medium income and are in need of subsidies and/or below-market home prices. The action plan update also determined that buying opportunities are increasingly scarce for home buyers with incomes between 60 percent and 100 percent of AMI, and that housing and land prices have increased faster than incomes for many of Bozeman's residents. C. Since the adoption of the Bozeman Community Plan and the action plan, the median sales price of housing has continued to climb. According to the action plan update, as of the end of November 2014, the median home price was $287,000.00. D. The Action Plan Update states that the number of detached homes priced below $250,000.00, a rough indicator of housing affordability for a family of three at 100 percent of AMI, has fallen from 48.4 percent of the market in 2012 to just 18.6 percent in 2014. E. There is a critical shortage of dwelling units affordable to Bozeman households with incomes at and below the area median income, as currently calculated by the U.S. Department of Housing and Urban Development. As a result, some residents pay excessive amounts of income for housing, reducing the amounts available for other necessities and a decent and adequate standard of living. F. Limited housing opportunities within the city requires households to seek housing outside of the city limits which has a negative impact on transportation infrastructure by adding unnecessary trips to the network. Increased driving distance to affordable housing also negatively impacts air and water quality. To maintain a sufficient resident workforce in all fields of employment, and to ensure 38.43. Amended 5/8/18 Page 2 of 17 the public safety and general welfare of the residents of the City of Bozeman, affordable housing needs must be addressed. G. The city can achieve its goals of providing more affordable housing and its goal of achieving an economically balanced community only if part of the new dwelling units built are affordable to households with low and moderate incomes. H. The inclusionary housing regulations codified in this article will substantially advance the city's legitimate interest in assuring that additional dwelling units built in the city are affordable to residents, including low- and moderate-income households and dispersed throughout the city in order to encourage economic integration of the city's residents. I. This article is adopted pursuant to the city's self-governing powers and the city's independent general police power to protect public health, safety, and welfare. Requiring affordable housing within certain developments is consistent with the community's housing goals of protecting the public welfare by fostering an adequate supply of housing for persons at all economic levels and maintaining both economic diversity and geographically dispersed affordable housing. J. Requiring developers of newly created dwelling units to provide some housing affordable to low and moderate-income households is reasonably related to the impacts of their projects because: a. Rising land prices are a key factor in preventing development of new affordable housing. New market-rate housing construction in Bozeman has generally created strong and increasing demand for a finite stock of unbuilt land within the city, and thus continues to drive up the price of remaining land. New development without affordable units reduces the amount of land development opportunities available for the construction of affordable housing. b. New residents of market-rate housing place demands on services provided by both public and private sectors, creating a demand for new employees. Some of these public and private sector employees needed to meet the needs of the new residents earn incomes only adequate to pay for affordable housing. Because affordable housing is in short supply in the city, such employees may be forced to live in less than adequate housing within the city, pay a disproportionate share of their incomes to live in adequate housing in the city, or commute ever increasing distances to their jobs from housing located outside the city. These circumstances harm the city's ability to attain employment and housing goals articulated in the community plan and place strains on the city's ability to accept and service new market-rate housing development. Sec. 38.43.020. - Purpose. The purpose of this article is to promote the public health, safety, and welfare by ensuring that the affordable housing needs of the residents of Bozeman are addressed. In addition, the purpose of this article is to ensure that 38.43. Amended 5/8/18 Page 3 of 17 quality housing is dispersed throughout Bozeman's neighborhoods for households of a variety of income levels including low- and moderate-income residents to meet the goals of the community plan and the action plan by encouraging a mix of housing types throughout the city and integrating affordable housing so as to not concentrate affordable housing in a particular area. In addition, the article is intended to alleviate the impacts that would result from the use of available residential land solely for the benefit of households that are able to afford market-rate housing and to mitigate the service burden imposed by households in new market-rate residential developments by making additional affordable housing available for service employees. The article is also intended to mitigate environmental and other impacts that accompany new residential development by reducing traffic, transit and related air quality impacts, promoting jobs/housing balance and reducing the demands placed on transportation infrastructure. The article provides residential developers and builders with a variety of options for satisfying the requirement of this ordinance to provide affordable dwelling units on the same site as market-rate residential developments, and provides incentives for housing developers and builders to ensure that dwelling units are constructed and sold in a manner that furthers the city's affordable housing goals. Finally, the article provides incentives for housing developers and builders who are not legally required to comply with the requirements for construction of inclusionary housing, but nevertheless choose to construct affordable housing. Sec. 38.43.030. - Applicability. A. This article applies to: 1. Subdivisions and site plans which are greater than one acre in size or propose ten or more dwelling units, to be created through development, new construction, substantial improvement or reuse. 2. Annexations where the net developable area of the annexing parcel when considering the applicable zoning could result in ten or more dwellings units. In such a case, the annexation agreement shall require the provision of affordable housing pursuant to this article. 3. Developments seeking to use incentives to develop affordable housing. B. Contiguous tracts under common ownership and control. A developer may not avoid the requirements for construction of affordable homes by submitting piecemeal applications for development. At the time of the initial application for approval of a subdivision or site plan, the developer shall identify all contiguous 38.43. Amended 5/8/18 Page 4 of 17 property under common ownership and control in the affordable housing plan required by section 38.43.100. C. Development applications approved prior to the effective date of this article. A site plan or subdivision having received sufficiency approval as of the effective date of this article or a preliminary site plan or preliminary plat granted approval prior to the effective date of this article may apply for one or more of the incentives described herein. Only that portion of the amended preliminary plat or site plan pertaining to the request for approval of one or more incentives will be subject to review. The requirements of section 38.19.130 for the amendment of plans will not apply. D. Newly proposed residential developments which include affordable housing in excess of this article's requirements for building affordable homes are eligible for incentives as provided in section 38.43.130. Such request shall require the preliminary plat or site plan to evidence compliance with all other requirements of this article. Sec. 38.43.040. – Definitions. 1. Affordable dwelling unit. A dwelling unit that requires no more than 33 percent of a household's income for housing expenses and meets the definition of a lower-priced dwelling unit, moderate-priced dwelling unit or affordable rental unit. 2. Area Median Income or AMI. As calculated by the U.S. Department of Housing and Urban Development (HUD), AMI is the median income for a family of four within a specific geographical area, such as Gallatin County. For each such region, HUD adjusts this AMI calculation for households of different sizes and updates the calculations annually based on estimated changes in area incomes. For purposes of this article, the city hereby adopts HUD's AMI calculations as an equitable and reasonable method to determine affordability, based on percentages of AMI specified in this article. 3. Affordable rental unit. Newly created dwelling unit for rental determined by the city in accordance with this article to be affordable to a household with an income at or below 60% of the AMI. 4. Builder. For purposes of this article, a builder is the person or legal entity, or their successor(s) in interest who constructs dwelling unit(s) subject to the requirements of this Ordinance and/or receives incentives for the production of affordable housing. 5. Common ownership or control. "Common ownership or control" refers to property owned or controlled by the same person, persons, or entity, or by separate entities in which any shareholder, partner, member, or family member 38.43. Amended 5/8/18 Page 5 of 17 of an investor of the entity owns ten percent or more of the interest in the property. 6. Developer. For purposes of this article, a developer is the person or legal entity, or their successor(s) in interest who: (a) submits a plan for a subject property along with other submissions required for land use approvals, zoning, or permit reviews by the city, and/or (b) is the owner of property subject to this article during the development phase or a successor in title obligated to implement an affordable housing plan as required by this article with respect to one or more lots or parcels of land; and/or (c) receives incentives for the production of affordable housing. 7. Dwelling Unit. Any structure intended for residential occupancy. 8. Liquid assets. Assets such as cash, stocks, bonds or similar that can readily be converted to cash with no significant loss in value, but excluding long retirement assets such as IRA accounts, 401K accounts, pension funds, etc. Explicitly excluding retirement. 9. Lower-priced dwelling unit. Newly created dwelling unit, determined by the city in accordance with this article to be affordable to a household with an income below 80 percent of AMI. 10. Market-rate dwelling unit. Any dwelling unit subject to this article which is not an affordable home. The number of market-rate dwelling units in a development is used to determine the required number of affordable homes, as described in this article. 11. Moderate-priced dwelling unit. Newly created dwelling unit, affordable to a household with an income between 81 percent and 100 percent of AMI. 12. Qualified Buyer. A person or persons meeting the income guidelines necessary to qualify for purchase of a lower-priced or moderate-priced dwelling unit provided under this ordinance. 13. Qualified Tennant. A person or persons meeting the income guidelines necessary to qualify for rental of an affordable dwelling unit provided under this ordinance. Sec. 38.43.050. - Requirement to increase the supply of affordable dwelling units. All development subject to this article must include affordable dwelling units. Sec. 38.43.060. - Requirement to provide for affordable dwelling units. 38.43. Amended 5/8/18 Page 6 of 17 Developers and builders must separately meet the requirements of this ordinance pertaining to actions available to each as described below. A. Developers must ensure that covenants, deed restrictions, or other encumbrances on the development do not preclude the inclusion of affordable housing. Developers must provide for affordable housing by doing one of the actions below or a combination thereof approved by the Director of Community Development: 1. Providing a minimum of 20% of the lots in the development be at a size of between 2,000 and 2,500 square feet and lot coverage be restricted to no more than 50%. 50% of these lots to be provided at cost to the City, HRDC, Habitat for Humanity, a builder submitting an approved plan for construction of affordable dwelling units, or other approved provider of low income housing. Reduced setbacks or row houses are encouraged for dwelling units constructed on lots less than 2500 square feet in size. 2. Providing a minimum of 25% of the lots in the development be at a size between 2,000 to 4,000 square feet and lot coverage be no more than 50%. Fifty percent of these lots to be provided at cost to the City, HRDC, Habitat for Humanity, a builder submitting an approved plan for construction of affordable dwelling units, or other approved provider of low income housing. 3. Providing a minimum of 15% of the lots in the development be at a size of between 2,000 and 2,500 square feet and lot coverage be restricted to no more than 50%. 25% of these lots to be provided at zero cost to the City, HRDC, Habitat for Humanity, a builder submitting an approved plan for construction of affordable dwelling units, or other approved provider of low income housing. 4. Providing 5% of the lots in the subdivision at zero cost to the City, HRDC, Habitat for Humanity, a builder submitting an approved plan for construction of affordable dwelling units, or other approved provider of low income housing. 5 .Making 10% of the lots available at cost to the City, HRDC, Habitat for Humanity, a builder submitting an approved plan for construction of affordable dwelling units, or other approved provider of low income housing. 6. Making a payment in lieu of providing for affordable housing equal to 10 % of the average selling price of 20% of the lots in the development. A lien requiring that 10% of the selling price of the lots 38.43. Amended 5/8/18 Page 7 of 17 chosen be paid to the Affordable Housing Fund will be placed on the lots at the time of platting. 7. Providing 10% of the lots to builders at a price affordable to a person purchasing a low priced home ( if land cost averages 25% and a low priced home is $200,000 including land) then the lot in this case should be provided at $50,000). 8. Providing 20% of the lots to builders at a price affordable to a person purchasing a moderate priced home. For the purposes of this ordinance, the lot cost for a 2 bedroom or smaller affordable home shall be set at 25% of the cost of an affordable dwelling unit as defined in this ordinance; the lot cost for a 3 bedroom or larger affordable home shall be set at 25% of the cost of an affordable dwelling unit as defined in this ordinance. 9. 30% of lots are deed restricted to require homes be built with Accessory Dwelling Units which must be rented to a Qualified Tennant at below the fair market rental rate per the guidelines of the Department of Housing and Urban Development for a period of at least 5 years. 10. Providing an alternate plan to provide affordable housing for low income individuals approved by the Director of Community Development. B. Builders must ensure that affordable dwelling units are constructed of durable materials, as approved by the Community Development Department, and meet all current life safety requirements. Affordable dwelling units, constructed to satisfy the requirements of this ordinance, must be sold, rented, or leased at or below the prices for affordable dwelling units stipulated in this ordinance. The affordable dwelling units required by this ordinance must be sold, rented, or leased to buyers, renters, or lessees qualified as low or moderate income persons under the terms of this ordinance. C. Within 30 days of the Community Development Department’s approval of an affordable housing plan required by this ordinance, developers are required to provide sales information to the City’s designated agent sufficient to facilitate the sale of the lot to a qualified purchaser. D. Within 30 days of the Community Development Department’s approval of a dwelling unit as plan required by this ordinance, the builder of the dwelling unit is required to provide sales information to the City’s 38.43. Amended 5/8/18 Page 8 of 17 designated agent sufficient to facilitate the sale of the dwelling unit to a qualified purchaser. E. In the event that within 90 days of completion of an affordable dwelling unit constructed to comply with this ordinance there is no qualified buyer, renter, or lessee for that affordable dwelling then HRDC, Habitat for Humanity, or other approved nonprofit housing provider will have the Right of First Refusal to purchase or rent the dwelling unit at the affordable dwelling unit price. Should HRDC, Habitat for Humanity, or other approved nonprofit housing provider refuse to purchase or rent the unit then the affordable dwelling unit is released from all encumbrances placed on that unit by this ordinance and will count toward the construction of affordable dwelling units as required by this ordinance. Sec. 38.43.070. - Purchase and Rental Rates A. The city will calculate on an annual basis the maximum sales price a builder may charge for each category of affordable dwelling unit required by this article as follows: 1. Lower-priced homes. The maximum sales price for lower-priced homes will be calculated based on a household income of 70 percent of AMI. 2. Moderate-priced homes. The maximum sales price for moderate-priced homes will be calculated based on a household income of 90 percent of AMI. B. Affordable home sales price schedule. 1. The city will annually publish a schedule of sales prices for low-priced homes and moderate-priced homes within 30 calendar days of the HUD's annual publication of updated AMI calculations. The sales price schedule will be effective on the date of publication by the city. The sales price schedule will apply to applications for building permits received on or after the effective date of the sales price schedule. 2. The city, at the city's sole discretion, may recalculate the sales price schedule if prevailing mortgage interest rates have changed by 50 basis points or more from the assumption used for the previous schedule. 3. Considerations. The following factors will be considered by the city in calculating the sales price schedule. The director of community development may make de minims exceptions to application of these factors: a. AMI for the Bozeman area; b. Gross monthly income will be calculated as the appropriate HUD AMI calculations income divided by 12; 38.43. Amended 5/8/18 Page 9 of 17 c. The maximum monthly payment will be 33 percent of gross monthly income. The maximum monthly payment will include costs directly applicable to a mortgage such as payment of principal, interest, as well as assumptions for typical costs of taxes, public assessments, property insurance premiums, mortgage insurance premiums (assuming the higher of either government or private mortgage insurance), and homeowner/condominium association fees; d. The interest rate will be determined by the city by a survey of at least three local mortgage lenders, averaging their current rates for loans for homes with price ranges within the low-priced homes range and the moderate-priced homes range; and f. A borrower will typically contribute $1,000.00 toward the purchase price. C. Household occupancy assumptions. To determine the maximum sales prices of affordable dwelling units with different numbers of bedrooms, the city will base its calculation on the AMIs for households of different sizes, as follows: 1. Zero bedroom or studio unit: AMI for a one-person household; 2. One bedroom unit: AMI for a two-person household; 3. Two bedroom unit: AMI for a three-person household; and 4. Three bedroom unit or larger: AMI for a four-person household. D. Affordable rental rate schedule. The maximum rental rates for affordable rentals covered by this ordinance, will be 60% or less of the maximum allowable Housing and Urban Development rental rates published by the Montana Board of Housing and in effect at the time the application for construction of the rental unit was submitted. Sec. 38.43.080. - Timing of delivery of affordable lots and dwelling units. Required lots for affordable dwelling units must be provided in accordance with the following: A. In each development in which more than one affordable dwelling unit is required to be provided, the affordable housing plan shall specify that lots for affordable dwelling units are to be provided concurrently and in proportion to the provision of unimproved lots or market-rate homes. Such timing of compliance will be represented in an affordable lots and dwelling units pricing and delivery schedule as described in section 38.43.100. B. A developer may provide affordable lots and a builder may build and sell affordable dwelling units earlier than required in an affordable housing plan. Sec. 38.43.090. - Minimum design and construction standards for affordable homes. 38.43. Amended 5/8/18 Page 10 of 17 A. Standards for design and construction. The city shall define reasonable standards for the design and construction of affordable dwelling units. Affordable dwelling units must be constructed with durable materials and finishes as required by city design standards for affordable housing and must meet the design guidelines for the neighborhood. B. Amenities. Affordable dwelling units shall have access to the same amenities as the market-rate homes in the development, including the same access to and enjoyment of common open space and facilities in the development. Sec. 38.43.100. - Submission of affordable housing plan; approval. A. Affordable housing plan. The applicant for any development required to create affordable housing subject to the requirements of this article must submit an affordable housing plan in a form provided by or approved by the city that describes how the requirements of this article will be satisfied. When approved by the city, the affordable housing plan must be incorporated by reference in the recorded subdivision plat, site plan or annexation agreement. The applicant will provide only one affordable housing plan to meet the requirements of this article. B. Affordable housing plan as binding agreement. An affordable housing plan approved by the city will be considered a binding contract between the developer and the developer's successor in interest to the lot. Such plan will be included in a separate recorded written agreement between the developer and the city, or incorporated into another recorded document wherein the developer is required to implement the affordable housing plan. C. Contents of affordable housing plan. The affordable housing plan submitted by the developer must include, at a minimum: 1. The method by which the requirements of this affordable housing ordinance will be satisfied; 2. Number of market-rate homes in the development; 3. Location of affordable lots in the development; 4. Dimensions and squarefootage of the affordable lots and; 5. Any other information that is reasonably necessary to evaluate the compliance of the affordable housing plan with the requirements of this article. D. Approval of affordable housing plan. The affordable housing plan will be reviewed as part of the initial application approval process for the type of development proposed. A condition shall be attached to the approval of any subdivision plat or site plan to require recordation of the affordable housing plan or other separate agreement obligating the developer to meet the requirements of this article. Sec. 38.43.110. - Marketing, sales and occupancy of affordable homes. 38.43. Amended 5/8/18 Page 11 of 17 Lots and dwelling units subject to this article shall be marketed and sold through the City’s agent in accordance with provisions described in the city's published instructions for affordable housing. The City’s agent will provide services such as waiting list management, marketing of affordable homes, actions to be taken in the event of inability to identify qualified buyers, procedures for certification of buyer eligibility, purchase contracts, and full disclosures to buyers of their obligations and rights under this article. In order to be considered as satisfying the requirements of this ordinance dwelling units must be sold rented or leased to and occupied by a Qualified Buyer or Qualified Tennant except that if 90 days after the of completion of an affordable dwelling unit constructed to comply with this ordinance and provision of all required information to the City’s agent no qualified buyer, renter, or lessee has entered in to a contract to purchase, rent, or lease the unit then HRDC will have the right of first refusal to purchase or rent the dwelling unit at the affordable dwelling unit price. Should HRDC, Habitat for Humanity, or other approved nonprofit housing provider refuse to purchase or rent the unit then the affordable dwelling unit will be released from all encumbrances placed on that unit by this ordinance and the unit will count toward the construction of affordable dwelling units as required by this ordinance. Sec. 38.43.120. - Recording requirements upon sale of affordable home. The city or its agent shall cause to be recorded in the offices of the Gallatin County Clerk and Recorder, simultaneously with the recording of the deed of conveyance, a restrictive covenant, deed of trust or other legal instrument, approved as to form by the Bozeman City Attorney that fulfills the resale and recapture requirements described in section 38.43.160. Sec. 38.43.130. - Incentives available for developers of affordable housing. Developers will be granted any or all of the following incentives to facilitate the provision of affordable housing. Incentives Description Lower Priced Dwelling Units Moderate Priced Dwelling Units 70% AMI 80% AMI 90% AMI Waiver of subdivision pre-application Waive pre-application for subdivision when ten percent of units are designated for lower price homes. X X Reduction of Delete any parkland requirement for affordable housing lots. X 38.43. Amended 5/8/18 Page 12 of 17 parkland 1 Parkland dedication is not required for affordable housing lots within a mile of an existing or planned park Reduced minimum lot sizes Per the provisions in this chapter, affordable homes may utilize reduced setback requirements and reduced sized lots. The reduction in lot size shall be allowed to create an increase in maximum unit density beyond the maximum currently allowed in a given zoning district. X X X Concurrent infrastructure housing construction Concurrent construction of infrastructure and housing development at the installation of gravel-base roads, provided the developer has provided assurance through a performance bond, letter of credit or other financial security acceptable to the city attorney ensuring the completion of infrastructure. This provision applies to affordable dwelling units and up to 50% of the market rate homes in a development which includes affordable dwelling units. X X Expedited review for affordable housing 1+1 Detached homes and attached homes in groups of less than six units will receive expedited (three business day) building permit review for affordable housing. For each building permit for an affordable home, a market rate unit will receive the same expedited review. X X X Reduced parking requirements Reduced parking requirement of two spaces per three-bedroom dwelling. X X Longer Block Lengths When 10 or more lots in a development are provided for affordable housing, block lengths in the development may be up to 800 feet without the provision of trails. X X X Park Access Parks in developments providing 10 or more lots for affordable housing are required to have streets on only two sides X X Building Permits When the developer has provided assurance through a performance bond, letter of credit or other financial security acceptable to the city attorney ensuring the completion of infrastructure, Building Permits for up to 20% of the lots in the development will be issued before the infrastructure is complete and punch list items have been corrected. X X X Sec. 38.43.132. - Incentives available to builders of affordable dwelling units. Builders will be granted any or all of the following incentives to facilitate the provision of affordable housing. Incentives Description Lower Moderate 38.43. Amended 5/8/18 Page 13 of 17 Dwelling Units Dwelling Units 70% AMI 80% AMI 90% AMI Low Priced Lot Builders will be provided low priced lots made available by developers through the city or its agent when they agree to construct on the lot a low or moderate priced dwelling unit that will be sold to a qualified buyer X X X Dwelling Unit Bonus Upon Completion and sale of a low or moderate priced dwelling unit to a qualified buyer the builder will receive a dwelling unit bonus, subject to availability of funds $8,000 $6,500 $4,000 Rental Dwelling Bonus Upon execution of an agreement with the City to provide low income rental units to qualified tenants for a period of not less than 10 years the builder will receive a dwelling unit bonus, subject to availability of funds $1,000 per unit $800 per unit Energy Efficiency Builders may apply for an energy conservation bonus when using construction techniques, materials, or systems that substantially reduce the energy requirements of the dwelling unit Open Open Open Sec. 38.43.134. - Incentives available to qualified buyers of affordable dwelling units. Qualified Buyers will be granted any or all of the following incentives to facilitate the provision of affordable housing. Incentives Description Lower Dwelling Units Moderate Dwelling Units 70% AMI 80% AMI 90% AMI Down Payment Assistance Subject to the availability of funds, the city will provide on a first-come first-served basis, down payment assistance not to exceed $10,000.00 per home benefiting households. Down-payment assistance will only be provided directly to the qualifying homebuyer. This assistance shall be secured with a lien instrument due upon sale, transfer or non-rate/term refinance of the home. Down payment assistance will be forgiven at a rate of 10% per year for each year the owner occupies the home. X X X Dwelling Unit Purchase Facilitation The City will provide through its agent assistance for qualified purchasers to become pre-qualified to purchase dwelling units that may become available through this ordinance. X X X 38.43. Amended 5/8/18 Page 14 of 17 Sec 38.43.140 – Alternative Means of Compliance This Section has been deleted in its entirety. 38.43.150. - Qualification of buyers of affordable homes. A. Lower-priced homes. To qualify for purchase of a lower-priced home, a buyer must meet the following criteria: 1. A household income below 80 percent AMI, as verified and certified by the city; such certification must have been provided no more than one year prior to the closing date of the purchase. Income verification will be performed using HUD's online income certification tool or a similar method that meets Code of Federal Regulations (CFR) 24 Part 5, as amended, which adjusts gross incomes based on extraordinary expenses and imputation of assets to income. De minims exceptions to the income limits may be made by the Director of Community Development. 2. Maximum liquid assets of $25,000.00 at the time of income certification. Exceptions may be granted by the director of community development based on extraordinary circumstances. 3. The household occupying the lower-priced home must meet the definition of "household" in 38.42.1420. 4. The buyer must meet one of the following definitions of "first-time homebuyer": a. An individual who has had no ownership interest in a principal residence during the three-year period ending with the date of purchase; or b. A single parent whose only prior home was owned with a former spouse while married; or c. An individual who is a displaced homemaker and has only owned with a spouse; or d. An individual who has only owned a principal residence not permanently affixed to a permanent foundation in accordance with applicable regulations; or e. An individual who has only owned a property that was not in compliance with state, local or model building codes and which cannot be brought into compliance for less than the cost of construction a permanent structure. 5. The buyer must contribute at least $1,000.00 towards the purchase of the home unless waived in writing by the city because of extraordinary circumstances, such as death of primary or secondary income earner or qualification as displaced homemaker. 38.43. Amended 5/8/18 Page 15 of 17 6. The household in a lower-priced home must occupy the home as its primary residence for a period of at least 5 years. Lower-priced homes may not be rented to another party, since the intent of the program is to provide these homes only for income-qualified owner occupants, with the exception of rentals for a limited period of time necessitated by a family hardship or a temporary move for one year or less, if approved in advance by the city. B. Moderate-priced homes. To purchase a moderate-priced home, a buyer must occupy the home as a primary residence for a period of not less than 5 years and meet the following criteria. 1. A household income below 100 percent AMI, as verified and certified by the city; such certification must have been provided no more than one year prior to the closing date of the purchase. Income verification will be performed using HUD's online income certification tool or a similar method that meets Code of Federal Regulations (CFR) 24 Part 5, as amended, which adjusts gross incomes based on extraordinary expenses and imputation of assets to income. De minims exceptions to the income limits may be made by the Director of Community Development. 38.43.160. - Subsidy recapture. To ensure that the community investment in affordable housing is perpetuated and that beneficiaries of affordable housing programs do not receive a windfall financial benefit, the city requires that if a valuation greater than the original purchase price plus a 4% increase in the value of a home acquired under this ordinance has been attained, as determined by an appraisal, then the buyer of the home made available through the affordable housing ordinance shall be required to return $4,000.00 to the City of Bozeman Affordable Housing Fund if the dwelling unit is sold, transferred, or refinanced with equity converted to cash out, within 10 years of the date of purchase or when the initial buyer who qualified for the subsidy has failed to abide by the requirements of this article. The return requirement will be recorded as a lien against the property at the Gallatin County Clerk and Recorders office. B. Use of repayments to the city. The city shall only use repayments of the lien amounts to fund: 1. Down payment assistance for buyers of dwelling units created as a result of this ordinance. 2. Any other use approved by the city commission that increases affordable homeownership opportunities for residents of Bozeman. 38.43.170. - Administration. 38.43. Amended 5/8/18 Page 16 of 17 A. Director of community development authority. The director of community development or an agent designated by the city commission shall have authority to promulgate and enforce all reasonable rules and regulations and take all actions necessary to the effective operation and enforcement of this article, unless such authority is expressly reserved to the city commission or another city official, including but not limited to: 1. Reviewing a developer's affordable housing plan for compliance with this article; 2. Adopting all forms and prescribing the information to be given therein; 3. Monitoring developers' compliance with this article, notifying the developer of noncompliance, and ordering compliance; 4. Imposing any and all sanctions permitted by this article; and 5. Calculating the annual pricing targets for affordable homes and causing a sales price schedule to be published. The director of community development may make de minims exceptions to the factors considered in calculating the price targets. B. Administrative manual. The city will publish administrative rules and instructions approved by the city commission, including but not limited to instructions for completing the affordable housing plan, and valuations required by this article. C. Verification of sales prices and income certification prior to closing. The Director of Community Development may create standards for documentation the city will use to verify the sale price of a home created pursuant to this article. The final sales price may not exceed the maximum price for a specific affordable home as described on the approved affordable housing plan. D. Monitoring completed sales. Upon receipt of a settlement statement for an affordable home, the city will determine if the completed affordable home sale complies with the approved affordable housing plan and the requirements of this article, and if not, respond to the noncompliance as provided in section 38.43.180. 38.43.180. - Noncompliance; sanctions. A. Discovery of noncompliance. If the city determines a developer or builder subject to an affordable housing plan has failed to comply with any terms or conditions of the affordable housing plan or this article, the director of community development or authorized agent shall notify the developer or builder of the noncompliance in writing and order compliance by the most reasonable and expeditious means as determined by the city. Notification shall describe a date 38.43. Amended 5/8/18 Page 17 of 17 certain by which the developer or builder must be in full compliance (which may not be less than one week or more than one year from the date of the notice), and shall describe: (i) the exact nature of the noncompliance; and (ii) the possible sanctions for noncompliance with this notification. B. Cancellation of incentives provided. If a developer or builder sells a dwelling unit or lot for a price not in compliance with the approved affordable housing plan or any other recorded documentation obligating developer to comply with this article, the developer must, prior to the release by the city of the dwelling from the affordable housing plan or binding agreement, pay the city the difference between the sale price and the price of the affordable home as set out in the approved affordable housing plan or provide an alternative method of compliance approved by the Director of Community Development. C. Sanctions for noncompliance. In addition to other remedies available to the city pursuant to this article, if on a date certain by which compliance has been ordered by the director of community development or authorized agent, the developer or builder remains in noncompliance, the director of community development or authorized agent shall notify the city attorney of the noncompliance and request that sanctions be imposed. The city shall have the authority to impose one or more sanctions including but not limited to the following which the city deems most effective and appropriate considering the nature of the noncompliance: 1. Withholding or revoking building permits; 2. Issuing stop-work orders; and/or 3. Withholding certificates of occupancy.