HomeMy WebLinkAbout16- Adopted Full Affordable Housing Manual City of Bozeman
Affordable Housing Ordinance (AHO)
Administrative Manual
Adopted by Resolution 4659
February 8, 2016
Table of Contents
Purpose of This Manual and Goals of the Ordinance.............................................2
1. Definitions..........................................................................................................3
2. Accessing Affordable Housing Incentives .........................................................5
3. Pricing of Affordable Homes..............................................................................7
4. Timing of Delivery of Affordable Homes.........................................................11
5. Minimum Design and Construction Standards............................................... 12
6. Qualifying,Applying for, Buying and Occupying Lower-Priced Homes.......... 14
7. Marketing and Sales of Lower-Priced Homes..................................................21
8. Recordation and Subsidy Recapture for Lower-Priced Homes.......................23
9. Marketing and Sales of Moderate-Priced Homes...........................................27
10. Administration, Monitoring and Enforcement by the City............................28
Exhibits (See attachment)
A:Template for Affordable Housing Plan
B: Proposed Project Description
C:Template for Maximum Home Price Schedule
D: Intake Application Form
E:Template for Maximum Buyer Income Schedule
F: Preliminary Buyer Certification Form
G: Purchase Transaction Certification Form
H: Disclosure Statement for Buyers of Lower-Priced Homes
I: Homebuyer Certification Checklist
J: AHO Disclosure Addendum to Purchase Contract for Lower-Priced Home
K:AHO Buyer's Guide
L: Form of Affordability Lien for Developer
M: Form of Affordability Lien for Subsidy Recapture
N: Form of Affordability Lien for Down Payment Assistance
O:AHO Disclosure Addendum to Purchase Contract for Moderate-Priced Homes
P:Occupancy Affidavit
1
Purpose of This Manual and Goals of Ordinance
The purpose of this Administrative Manual is to describe the administrative procedures and
policies for administering Chapter 38,Article 43, Bozeman Municipal Code as created pursuant
to Ordinance 1922 (the Affordable Housing Ordinance or AHO).This Manual is intended to be
used as a guide for administrators of the City's affordable housing program, developers of
affordable homes, and other interested parties.
Goals for the Voluntary Creation of Affordable Housing:2016-2017
The City Commission will annually set goals for the creation of affordable housing. For the first
two years of the program,2016-2017,the City Commission set the following goals for voluntary
development of affordable homes,through the adoption of Ordinance 1922:
Affordable Homes,single family or townhomes,to be constructed and sold prior to September
12,2016: fourteen (14)of which a minimum of four shall meet the definition of Lower-Priced
Homes. Of these four Lower-Priced Homes,three must be sold at or below the maximum price
schedule established for 80%of Area Median Income(AMI). One of the Lower-Priced Homes
may be sold at or below the priced scheduled established for 70%AMI.
Affordable Homes, single family or townhomes,to be constructed and sold prior to June 12,
2017: twenty seven (27)Affordable Homes,of which no less than seven (7)shall meet the
definition of Lower-Priced Homes. Of these seven Lower-Priced Homes,five(5) must be sold at
or below the maximum price schedule established for 80%of Area Median Income (AMI).Two
(2) of the Lower-Priced Homes may be sold at or below the priced scheduled established for
70%AMI.
Affordable Homes, single family or townhomes,to be constructed and sold prior to December
12, 2017: fifty four(54)Affordable Homes, of which no less than twelve(12)shall meet the
definition of Lower-Priced Homes. Of these twelve Lower-Priced Homes,three(3) must be sold
at or below the maximum price schedule established for 70%of Area Median Income(AMI).
Should the any of the goals described above not be met by a target date, development
proposals that are submitted after the relevant target date will be required to provide 10%of
the total residential units in the developed as Lower-Priced Homes,30%of the total residential
units as Moderate-Priced Home,or a mix of both types as defined in the Ordinance and this
Manual.
When the voluntary goals are met,the formula for establishing new goals will be based on the
following: Using 10%of a five year rolling average of the number of permits pulled each year for
"single family" residential,duplex,triplex and townhouse construction.
2
1. Definitions
a. Affordable Housing or Affordable Home—A dwelling for purchase by an owner-
occupant that requires no more than 33%of a household's income for housing
payments, is marketed and sold subject to the AHO, and meets the definition of a
Lower-Priced Home or Moderate-Priced Home in the AHO.
b. 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 the AHO,the
city adopted HUD's AMI calculations as an equitable and reasonable method to
determine affordability, based on percentages of AMI specified in the AHO.
c. Buyer Certification—Process by which it is established that a given household meets
the requirements in the AHO and this Manual to qualify to purchase a home produced
through the AHO.
d. 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 of an investor of the
entity owns ten percent (10%)or more of the interest in the property.
e. City's Agent—Refers to a qualified entity selected by the city to carry out aspects of
the implementation of the AHO.
f. Developer—For purposes of the AHO, a developer is the person or legal entity, or
their successor(s) in interest who: (a)submits an Affordable Housing 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 the AHO
during the development phase or a successor in title,such as a builder,obligated to
implement the Affordable Housing Plan required by the AHO with respect to one or
more lots or parcels of land and/or(c) receives incentives for the production of
affordable housing.
g. AHO Maximum Price-The maximum AHO-allowed price of Lower-Priced Homes and
Moderate-Priced homes is determined from a schedule of AHO Maximum Prices
calculated as described in Section 3 and Schedule C of this Manual,to which may be
added (if feasible for financing) up to$3,000 in the costs of"extras"chosen by the
buyer. For Lower-Priced Homes subject to AHO subsidy recapture requirements,the
3
sale price on the Settlement Disclosure statement at the real estate closing may differ
from the AHO Maximum Price for reasons explained in Section 8 of this Manual.
h. Eligible Buyer—A household meeting the AHO's eligibility requirements to purchase a
home that is subject to the conditions of the AHO.
i. Housing Counseling Agency—An organization certified by the US Department of
Housing and Urban Development to provide housing counseling and education.
j. Liquid Assets—Assets such as cash and stocks, bonds or similar that can readily be
converted to cash with no significant loss in value, but excluding long term retirement
assets such as IRA accounts,401K accounts, pension funds, etc.
k. Lower-Priced Home or LPH—Newly created dwelling for purchase,determined by the
city in accordance with the AHO to be affordable to a household with an income
between 65%and 80%of AMI.
I. Market-Rate Home—Any dwelling subject to the AHO that is not an affordable home,
including detached dwellings,attached town houses, and condominium units but not
including housing units that are developed for exclusive use as a rental.The number of
market-rate homes in a development is used to determine the required number of
Affordable Homes, as described in the AHO.
m. Moderate-Priced Home or MPH—Newly created dwelling for purchase, affordable to a
household with an income between 81%and 100%of AMI.
n. Substantial Improvement—any repair, reconstruction or improvement of a structure,
the cost of which equals or exceeds 50 percent of the market value of the structure
either:
i. Before the improvement or repair is started;or
ii. If the structure has been damaged, and is being restored, before the damage
occurred. For the purposes of this definition, substantial improvement is
considered to occur when the first construction to any wall, ceiling,floor or other
structural part of the building commences.
The term "substantial improvement" does not include any project for improvement of a
structure to comply with existing state or local health,sanitary or safety code
specifications which are solely necessary to ensure safe living conditions;or any
alteration of a structure listed on the National Register of Historic Places or state
inventory of historic places.
4
2. Accessing Affordable Housing Incentives
Affordable housing incentives are available to developers who produce Lower-Priced or
Moderate-Priced Homes.
Affordable Housing Plan
To be eligible to receive AHO incentives, a developer must submit an Affordable Housing Plan
(AHP)for review and approval by the city,describing how the requirements of the AHO will be
met and the incentives requested by the developer.An Affordable Housing Plan will most likely
go through several draft iterations. Once the AHP is completed and approved by the city, it
constitutes a written commitment between the city and the developer.
The contents of an Affordable Housing Plan are shown in Exhibit A:Template for Affordable
Housing Plan. Exhibit A also includes directions and a step-by-step process for completing the
AH P.
Submission of Affordable Housing Plan.The AHP submission process begins with the completion
of Exhibit B: Proposed Project Description form,which must briefly describe the pertinent
details of the development such as the total number of units and which incentives the developer
wants to use.This form is submitted in advance of a meeting with city staff to discuss
preparation of the AHP.At this meeting,the developer and city staff review the Proposed
Project Description and city staff provides guidance on completing the AHP. City staff shall
provide the developer with a determination of application completeness within five(5) business
days of submittal.
City Technical Assistance. City staff is available throughout the process to assist with guidance
on drafting the AHP; however,the developer is ultimately responsible for drafting and
submitting the AHP to the city.
Timing of Affordable Housing Plan Preparation; Incentives.A developer may apply for incentives
at any stage of the development process,although applying at the point of subdivision plan
submission may provide the greatest benefit from incentives. In this way,developers can elect
to apply for incentives for a single unit or multiple units.
If an AHP is approved and incentives used, a condition of approval for any subdivision plat or site
plan will be imposed that requires recordation of the AHP.The city may also enter into a
separate agreement obligating the developer to meet the requirements of the AHO.
5
• Project Description: Developer completes and submits to the
city a Proposed Project Description form which includes key
Step J, project details and desired incentives to be accessed.
• Consultation: Developer meets with city staff to obtain
guidance on preparation of draft affordable housing plan.
• Draft Affordable Housing Plan: Using the Affordable Housing
Plan Template, Developer submits draft affordable housing plan
for review by city staff.
• Review and Comments: City staff reviews draft plan and
accepts plan or provides comments for revision of draft to
ta 7: comply with AHO and manual.
• Execution: Once the plan has been found by city staff to satisfy
the AHO and manual requirements, the agreement is executed
- '` _- between the City of Bozeman and the developer.
`+ • Recording: After the agreement has been executed the
agreement is recorded and affordable units or lots are noted on
t= P S the plat or site plan for the development.
6
3. Pricing of Affordable Homes
Schedule for AHO Maximum Home Price
The AHO establishes pricing tiers for Affordable Homes (Lower-Priced Homes and Moderate-
Priced Homes).The pricing tier for Lower-Priced Homes includes a category for an AHO
Maximum Price calculated based on household income of 70%AM, a category for an AHO
Maximum Price calculated based on household income of 80%AMI, and a category for and AHO
Maximum Price calculated based on household income of 90%AMI.The city will calculate the
Maximum Home Prices for each category on an annual basis using the formulas detailed below
and also contained in Exhibit C:Template for Maximum Home Price Schedule.The city will
publish the Maximum Home Price Schedule for the three price categories within 30 calendar
days of HUD's annual release of income limits by household size derived from an annual
recalculation of the Area Median Income for Gallatin County, and become effective the date of
publication.The Director of Community Development is authorized to establish and publish this
schedule.
The formula for calculating the maximum prices at which Developers may sell Affordable Homes
is based on three factors: (1) assumptions about costs of home ownership; (2)the AMI and
fractions thereof for the size of household;and (3)the percentage of AMI that corresponds to
the category of Affordable Home. These factors are explained below.
Assumptions About Cost of Home Ownership.To calculate the maximum prices at which
Developers may sell Affordable Homes the city uses assumptions about the costs of
homeownership as authorized by the AHO.The Director of Community Development may make
de minimis exceptions to the application of these assumptions, and may recalculate the
maximum sale prices if prevailing mortgage interest rates have adjusted by 50 basis points or
more over the assumption used for the most recent schedule.The city may conduct a survey of
a sample of recent home sales and other data sources to determine if any changes have
occurred in housing payment cost assumptions used to determine affordable prices—such as
typical monthly costs of real estate taxes, insurance,association fees, and private mortgage
insurance. If the Director of Community Development determines any such changes materially
affect the schedule,the Director may amend the schedule.
AMI for the Household Size.The annual AMI figures for Bozeman will vary based on the number
of people who make up the household. The AHO establishes the size of home(number of
7
bedrooms)that corresponds to each household size. The AMI used to calculate the AHO
Maximum Price for an Affordable Home is as follows:
Home Size AMI Used:
._..-_.....................
Zero-Bedroom/Studio One-person household
One-Bedroom Two-person household
Two-Bedroom Two-person household
Three-Bedroom or larger Four-Person household
Percentage of Area Median Income.The AHO establishes three levels of AHO Maximum Prices
for Affordable Homes,corresponding to 70% (effective),80% (effective) and 90%of AMI.
(Except for the AHO Maximum Price for 80%AMI,the AMI benchmarks for pricing are set at 10%
8
below the corresponding maximum incomes in order to permit a wider range of buyers to
qualify for the purchases.)
Formula for Determining AHO Maximum Prices
The following is a summary of the formula used to determine the maximum effective sales price
of a two-bedroom, Lower-Priced Home priced at the 70%of AMI level.The example below uses
the AMI for Bozeman in effect as of February 1, 2016.
a) Multiply the annual AMI for the household size by the applicable percentage of Area
Median Income (AMI) (70,80,or 90%):
AMI for a 2 person household is$54,900 x 70%=$38,400 (70%of AMI)
b) Divide by 12 to determine monthly income at that AMI level:
$38,400 divided by 12=$3,203
c) Multiply monthly income by 33%to determine maximum affordable monthly housing
payment:
$3,200 x 33%=$1,057
d) Subtract from the total maximum monthly housing payment estimates for monthly
payments for real estate taxes, homeowner's insurance, mortgage insurance and
homeowners association fees, in this instance a total of$366
$1,057-$366=$692
e) The resulting amount is the maximum principal and interest payment capacity,from
which a mortgage amount is imputed using the prevailing mortgage rate,which is
currently assumed to be 4.5% per annum.
f) The resulting amount equals the AHO Maximum Price for a Lower-Priced Home at the
70%AMI price level. In this pro forma example,the resulting price is$136,404.
The above formula is used to determine the AHO Maximum Prices of Lower-Priced Homes at the
70%and 80%AMI price level,and for AHO Maximum Prices of Moderate-Priced homes at the
90%AMI price level.
Explanation of Elements of the Pricing Formula
9
Maximum Monthly Housing Payment. The maximum monthly housing payment for a buyer is
determined by multiplying a maximum housing expense ratio of 33% by 1/12th of the annual
Area Median Income for a given household size and income level.
Maximum Monthly Mortgage Payment Capacity. For each price tier,the maximum monthly
mortgage payment is calculated as the maximum monthly housing payment less the following
monthly expenses:estimated real estate taxes; homeowner's insurance; homeowner
association fees; and private mortgage insurance payments. For each price tier and
subcategories of bedroom sizes of homes,the result represents the assumed typical amount of
the monthly payment available for principal and interest payments on a home purchase loan.
a) Real Estate Taxes.The assumed rate for monthly real estate taxes will be
.0833%of the maximum home price for each price level as determined by
sample survey of Bozeman home prices and corresponding real estate tax
assessments.
b) Homeowner's Insurance.The assumed rate for monthly homeowners' insurance
costs will be .0292%of the maximum home price for each price level, per a
sample survey.
c) Private Mortgage Insurance.The rate used for assumed mortgage insurance
premiums (PMI) cost will be based on the current rate used for Federal Housing
Administration first mortgages with minimum 3.5%down payment
requirements. It is assumed that a typical buyer of an AHO home will make a
low down payment and thus be required to obtain mortgage insurance.
d) Homeowner Association Fee. The rate used for homeowner/condo association
dues will be established using a sample survey of typical recent projects within
the City of Bozeman.The initial rate assumption used will be$25 per month.
Mortgage Loan Payment Assumptions.The assumed loan type will be conventional or
government insured 30-year(360 month),fixed-rate loan,with 3.5%of the home price as a
down payment.The interest rate used in the calculation of AHO Maximum Prices will be the
average of three current interest rates for 30-year fixed-rate conventional and government-
insured mortgage loans offered by banking institutions loans in Bozeman.The assumed term will
be 30 years.
Formula for AHO Maximum Price(based on 70%of AMI)
The AHO Maximum Price will be based on the maximum monthly mortgage payment capacity at
70%of Area Median Income, adjusted for the number of bedrooms, and calculated at present
value based on 12 monthly payments,for a term of 360 months, and the current prevailing
10
mortgage interest rate.This formula is built into Exhibit C:Template for Maximum Home Price
Schedule.
Formula for AHO Maximum Price(based on 80%of AMI)
The AHO Maximum Price will be based on the maximum monthly mortgage payment capacity at
80%of Area Median Income, adjusted for the number of bedrooms,and calculated at present
value based on 12 monthly payments,for a term of 360 months,and the current prevailing
mortgage interest rate.This formula is built into Exhibit C:Template for Maximum Home Price
Schedule.
Formula for AHO Maximum Price of Moderate-Priced Homes(based on 80%of AMI)
The AHO Maximum Price for Moderate-Priced Homes will be based on the maximum monthly
mortgage payment capacity at 90%of Area Median Income,adjusted for the number of
bedrooms and calculated at present value on 12 monthly payments,for a term of 360 months,
and the current prevailing mortgage interest rate.This formula is built into Exhibit C:Template
for Maximum Home Price Schedule.
Updates to Pricing Schedule
HUD publishes updated Area Median Income calculations on an annual basis,typically in the
first quarter of the calendar year. Because changes in mortgage interest rates have an impact on
the buying capacity of lower-income homebuyers,the city, may update the Maximum Home
Price Schedule during the interim between HUD AMI annual updates if prevailing interest rates
adjust more than 50 basis point (0.5%). Developers with executed Affordable Housing Plans will
be notified of any changes to the Maximum Home Price Schedule.
Applicability of Revised Pricing Schedules
The pricing of Lower-Priced and Moderate-Priced Homes is subject to the Maximum Home Price
Schedule in effect at the time of issuance of building permit.A developer may request that a
newly published Maximum Home Price Schedule apply to a home subject to a previous
Maximum Home Price Schedule.
Limit on Buyer-Selected Upgrades That Are Additive to AHO Maximum Prices
Buyers of Lower-Priced Homes and Moderate-Priced Homes may include up to$3,000 of buyer
upgrades over the maximum home price as long as the buyer have evidenced sufficient
mortgage capacity at the time of Preliminary Certification.
11
4. Timing of Delivery of Affordable Homes
The AHO requires that in each development in which more than one affordable home will be
sold,the Affordable Housing Plan must specify that affordable homes are to be sold
concurrently and in proportion to the sale of unimproved lots or market-rate homes.
Such timing will be represented in an affordable homes pricing and delivery schedule,to be
included in the Affordable Housing Plan.
A developer may always sell affordable homes earlier than required in an Affordable Housing
Plan.
If the city determines a development is out of compliance with the approved Affordable Housing
Plan with respect to its delivery of Affordable Homes,the city may require the developer to
immediately provide a written plan to remedy the non-compliance. If the developer fails to
describe and act on a satisfactory and timely remedy,the city may pursue enforcement actions
as provided for by AHO,which could include but are not limited to a stop-work order for all
construction in the development.
12
S. Minimum Design and Construction Standards
Minimum design and construction standards below for Affordable Homes are intended to meet
the AHO requirement to"ensure livability and compatibility with nearby market-rate homes in
the development."
Minimum Square Footage Requirements
Affordable Homes must provide the following minimum square footage of gross heated living
area (inclusive of partitions, closets, heated utility rooms, halls and stairways, but exclusive of
attics, porches, unfinished basements, garages and unheated storage space). Notwithstanding
these requirements,the Director of Community Development may grant exceptions to these
requirements for developments containing market-rate"small houses"that are smaller than
these minimums.
Detached Homes
Bedroom Size #Bathrooms Minimum Heated Area
1 Bedroom 1 800 square feet
2 Bedroom 1 800 square feet
3 Bedroom 1.5 1,250 square feet
4+Bedroom 2 1,400 square feet
Attached Homes
Bedroom Size #Bathrooms Minimum Heated Area
Studio/1 Bedroom 1 500 square feet
2 Bedroom 1 650 square feet
3 Bedroom 1.5 800 square feet
4+ Bedroom 2 1,100 square feet
Mix of Bedroom Sizes
As described in the AHO,Affordable Homes must represent a mix of bedrooms per unit as
similar as possible to the mix of bedrooms per unit of the market-rate homes in the
development within which the Affordable Homes are located. If the bedroom composition in the
development as a whole is not known at the time of submission of the Affordable Housing Plan,
the following default distribution below may be used.
One-Bedroom 20%
Two-Bedroom 40%
Three-Bedroom 40%
In the case of Lower-Priced Homes,the developer may provide units with a different bedroom
mix than required under the approved Affordable Housing Plan if a different number of
13
bedrooms better meets the needs of the next qualified purchasing household,subject to the
approval of the Community Development Director.
For both Moderate-Priced and Lower-Priced Homes, a developer may elect to build a home with
more bedrooms than the minimum number required under the AHO and Affordable Housing
Manual.
Equipment and Equipment Hookups
Affordable Homes must, at a minimum, include a new kitchen range and refrigerator, hookups
for a clothes washer, dryer,a built-in dishwasher, and a central heating system,except that if
such equipment is not provided in market-rate homes, it does not have to be provided in AHO
homes.
Location within Neighborhood
Affordable Homes must be dispersed among market-rate homes in the development,to the
extent practicable.This distribution should be evidenced on the recorded plat for the
development.
Design and Materials
Affordable Homes must be designed, built and landscaped similar to market-rate homes in the
development, and with similar quality and type of materials, lighting, plantings, and irrigation
systems. Interior finishes may differ from market rate homes but should be functionally
equivalent and good quality.
Other Features
Features of Affordable Homes,such as garages, parking areas, and green-building features must
be functionally equivalent to market rate homes in the development.The extent of the features
of an AHO home do not need to be exactly the same as market-rate homes in the development;
however, if, e.g.,garages are present in market rate units of the same bedroom size as AHO
units, at least one garage or carport bay must be included in the AHO home.
Affordable Homes must have the same amenities as the market-rate homes in the development,
including the same access to and enjoyment of common open space and facilities.
Notwithstanding the foregoing standards, developers must use their own judgment about
possible additions of square footage and amenities over these minimums for the purposes of
marketing Affordable Homes and other homes in the development.
14
6. Applying for, Qualifying, Buying and Occupying Lower-Priced Homes
Background
The AHO establishes two types of Affordable Homes with unique buyer qualification criteria for
each type.
Lower-Priced Homes have AHO Maximum Prices significantly below market rate to make home
purchases more affordable, and may also have received cash and non-cash incentives from the
city at the development and construction stage. Because buyers of Lower-Priced Homes
therefore receive a substantial benefit in the form of below-market prices,the AHO limits the
availability of these homes to lower-income buyers,who generally could not afford to buy a
market-rate home. Besides income caps, buyers of Lower-Priced Homes also have to meet other
eligibility criteria.
This section of the Manual describes how lower-income buyers are qualified to purchase a
Lower-Priced Home and how those qualifications are certified.
The eligibility requirements of this section also apply to those buyers of Lower-Priced Homes
seeking down payment assistance.
Required Intake Form
A prospective buyer must complete Exhibit: D: Intake Application Form and participate in an
initial intake appointment with the City's Agent selected to administer the AHO program.
Prospective buyers must meet all of the criteria described below.The intake form gathers all of
a buyer's self-reported data needed to qualify the prospective buyer.As noted below, buyers
will need to provide additional documentation at the time of intake and possibly more
documentation later in the process for verification purposes.
Each intake form must be signed by the prospective buyer and any co-buyer(s),who must certify
in writing that the information is true and agree in writing to release certain documents to the
city or its agent upon request.Such documents include any future sales contract and Settlement
Disclosure statement related to the purchase of a Lower-Priced Home,as well as proof of
income, proof of residency,and financial documents as described in this section.
Income Limits
To qualify to purchase a Lower-Priced Home that is being sold at or under AHO Maximum Prices
established at 70%and 80%of AMI,the buyer's total household income must be at or below
15
80%of the Area Median Income, adjusted for family size, as defined by HUD annually and
published by the city using Exhibit E:Template for Maximum Buyer Income Schedule.
Method of Income Verification.The income level of the Buyer's household must be established
at the time of initial intake, placement on a waiting list and/or contract to purchase.The method
of verification will be the HUD Part 5 definition (24 CFR Part 5)as applied to the HOME program.
The CPD Income Eligibility Calculator(www.hudexchanse.info/incomecalculator)or another
method acceptable to the city and evidenced using Exhibit F:_Preliminary Buyer Certification
Form may be used to complete the certification.
Treatment of Assets
A buyer whose household liquid assets exceeds$25,000 at the time of closing on a Lower-Priced
Home is not eligible. Liquid assets are defined as cash or other investment assets that can be
readily converted to cash with little or no penalty.This is not intended to include personal
property of the buyer(s)or restricted retirement assets such as 401K accounts, IRA accounts,or
similar funds with tax deferred status.The Director of Community Development may waive
asset limit requirements in unusual circumstances for certain buyers, such as a person close to
retirement age or someone who is permanently disabled and dependent on cash assets for
ongoing living expenses.
Method of Verification. Initial verification will be determined through a review of the asset
information included on the Intake Application Form and verified through a review of all banking
16
and asset documentation provided in an in-person meeting with the City's Agent.The total of
liquid assets will be entered into Exhibit F: Preliminary Buyer Certification Form.
Eligible Household Definition
The households of eligible buyers that will be occupying a Lower-Priced Home must meet the
following definition per AHO, as follows:
A person living alone, or any of the following groups living together as a single nonprofit
housekeeping unit and sharing common living,sleeping, cooking and eating facilities:
a) Any number of people related by blood, marriage, adoption, guardianship or other duly-
authorized custodial relationship;
b) Not more than four unrelated people;or
c) Two unrelated people and any children related to either of them.
d) Persons or groups granted a request for a reasonable accommodation to reside as a
single housekeeping unit pursuant to section 38.35.090.
e) "Household"does not include:
i. Any society, club,fraternity,sorority, association, lodge, combine,federation,
coterie, cooperative housing or like organization;
ii. Any group of individuals whose association is temporary or seasonal in nature;
or
iii. Any group of individuals who are in a group living arrangement as a result of
criminal offenses.
Method of Verification.The applicant must complete a household disclosure as part of Exhibit D:
Intake Application Form.The City's Agent will review the Intake Application Form and household
size as represented on the applicant's most recent tax forms and enter the information in the
Exhibit F: Preliminary Buyer Eligibility Form.The applicant must disclose whether any changes in
household composition are anticipated prior to closing on the home.
Buyer Contribution
The AHO requires a buyer contribute at least$1,000 to either the down payment or closing
costs associated with the purchase of a Lower-Priced Home.These funds must be provided by
the buyer household and may not be a gift from someone outside the applicant's household.
Method of Verification.The buyer must certify a minimum of a$1,000 buyer contribution will be
available at the time of closing. The City's Agent must verify the buyer's certification. Evidence
may include bank statements and income documentation. Final verification by the city or the
17
City's Agent will be evidenced by the buyer cash contribution line in the Settlement Disclosure
statement for the closing.
First-Time Homebuyer
The AHO requires that buyers of a Lower-Priced Home meet the FHA definition of a First-Time
Homebuyer,which requires the household meet one of the following criteria:
a) An individual who has had no ownership interest in a principal residence during the 3-
year period ending with the date of purchase;
b) A single parent whose only prior home was owned with a former spouse while
married;
c) An individual who is a displaced homemaker and has only owned with a spouse;
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.
Method of Verification. The applicants must self-certify they qualify as a first time homebuyer
using the form contained in Exhibit D: Intake Application Forms.The City's Agent must verify
no ownership in the previous three years through a review of the applicant's credit report for
presence of a mortgage credit line. If a mortgage credit line exists,the applicant must provide
evidence for meeting one of the other four criteria that constitute First-Time Homebuyer
status.
First Mortgage Loan Requirements
The AHO requires buyers of Lower-Priced Homes use fixed-rate conventional or government-
insured mortgage financing with a term of no more than 30 years.
Method of Verification.The City's Agent must verify the mortgage qualification type and
sufficient loan qualification amount at the time of contract through review of a mortgage
prequalification letter and note this in Exhibit F: Preliminary Buyer Certification Form. Final
verification will be evidenced through mortgage documents signed at closing and included in
Exhibit G: Purchase Transaction Certification Form.
Owner-Occupancy Requirement
Buyers of Lower-Priced Homes must occupy the home as their primary residence for at least
183 days per year. In addition,a buyer of a Lower-Priced Home may not rent the entirety of
the house to another household.The Director of Community Development may waive the
18
occupancy and no-rental requirements on a temporary basis for extraordinary circumstances,
such as a temporary relocation for work, a serious illness, or other compelling reasons.
If the Lower-Priced Home is not maintained as the primary residence of the original purchasing
household, any city liens on the property become due and payable unless the requirement is
waived temporarily. See Section 8 of this Manual, "Recordation and Subsidy Recapture for
Lower-Priced Homes".
Method of Verification.The City's Agent will mail letters to the buyer annually for the first two
years of ownership requesting certification that the buyer meets the owner occupancy
requirements of the AHO.The buyer must sign and return the certification within 30 days of
receipt.
Buyer Eligibility Certification.The City's Agent is responsible for meeting with prospective
applicants for Lower-Priced Homes and determining initial eligibility. Prior to placement on a
waiting list, or the execution of a purchase contract,the City's Agent must verify the applicant
meets all the criteria for purchase of a Lower-Priced Home as outlined in Exhibit F: Preliminary
Buyer Certification Form.
After closing,the City's Agent must ensure all documents contained in Exhibit I: Homebuyer
Certification Checklist have been collected in the client file and provide the city with completed
copies of the Settlement Disclosure statement and Exhibit G: Purchase Transaction Certification
Form.
Waiting Lists for Purchase of Lower-Priced Homes.The City's Agent must maintain a first-come
first-served waiting list for Lower-Priced Homes,which will be the sole waiting list for all
Affordable Lower-Priced Homes produced though AHO.To be placed on the waiting list, an
applicant household must provide all documentation required for preliminary verification as
outlined in Exhibit F: Preliminary Buyer Certification Form including income and asset
documentation and a prequalification letter from a mortgage lender.This waiting list will be the
basis for referring eligible buyers to developers when a Lower-Priced Home becomes available.
Homebuyer Counseling and Training
To purchase a Lower-Priced Home,the buyer must attend at least one session with a housing
counselor,which can include the program intake appointment,as well as an eight-hour
homebuyer education class.
Buyer Disclosures and Assuring AHO Compliance by Sellers
Disclosures to Buyers.The City's Agent will be responsible for discussing with applicants the
conditions of assistance required by the AHO during an in-person meeting prior to the buyer
executing a purchase contract for a Lower-Priced Home.At this meeting,the City's Agent will
provide the applicant with a form copy of Exhibit H: Disclosure Statement for Buyers of Lower-
19
Priced Homes.The City's Agent will also be responsible for assuring that sellers of each Lower-
Priced Home wishing to have the home count toward the number of affordable homes listed in
Section 10 of the AHO, append a buyer disclosure statement to each contract for purchase.This
standard contract addendum explains the City's pricing,subsidy recapture, and owner
occupancy policies for Lower-Priced Homes. For purposes of assuring the proper AHO pricing,
the addendum will describe the numbers of bedrooms in the home. See Exhibit J:AHO
Disclosure Addendum to Purchase Contract for Lower-Priced Home.
Review of sales contract. Sellers of Lower-Priced Homes wishing to have the home count toward
the number of affordable homes listed in Section 10 of the AHO must provide the City's Agent
with a copy of the executed sales contract.The City's Agent will review the contract for
compliance with the AHO, including:
• That the home price does not exceed the AHO Maximum Price for a home with the
numbers of bedrooms described in the Disclosure Addendum to the sales contract; and
• Whether all other wording of the Disclosure Addendum conforms to AHO requirements.
If a disclosure addendum or other aspects of the purchase transaction as represented in the
contract do not comply with AHO requirements,the City's Agent will report the circumstances
to the City's Director of Community Development and the developer and developer's sales
agent and provide the opportunity for them to correct any deficiencies.
Origination of AHO Lien Documents at Closing.The City's Agent must originate documents
necessary to recapture the buyer subsidies per the AHO, as described in Section 8 of this
Manual, "Recordation and Subsidy Recapture for Lower-Priced Homes."
Sales Price Verification.The City's Agent will review the preliminary Settlement Disclosure
statement from the title company prior to the closing to determine that the AHO Maximum
Price for the home has been properly adhered to—i.e.the sales price on the Settlement
Disclosure statement minus the subsidy recapture lien amount plus buyer"extras" up to$3,000
does not exceed AHO Maximum Price for the size of the home and AMI level of the buyer. If a
buyer and any co-buyer's identity) and the sales price do not comply with AHO requirements,
the City's Agent will report the circumstances to the City's Director of Community Development.
A copy of the final Settlement Disclosure statement for the closing be provided to the city to
evidence compliance and retained in the client file.
Post-closing Responsibilities of Seller. Sellers of Lower-Priced Homes wishing to have the home
count toward the number of affordable homes listed in Section 10 of the AHO must provide the
City's Agent with all required documents evidencing the home was sold to an eligible buyer at
the appropriate qualifying price.
20
The following chart summarizes the process of certifying the eligibility of a buyer of a Lower-
Priced Home.
• Intake Appointment: The potential homebuyer household meets with
the City's agent to complete initial application forms and review income
,i documentation.
• Preliminary Certification: Once application forms are signed, income
documentation has been provided, and a prequalification letter is
obtained,the City's agent will complete a Preliminary Certification.
• Purchase Contract: Preliminary Certification is used to evidence
readiness to execute purchase transaction to a developer and qualification
for any specialized income-restricted loan products.
• Pre-closing Review: Prior to closing the City's agent will review all
purchase transaction documents for compliance and originate any city lien
' documents needed for closing.
• Closing: The Clty's agent will attend the closing to ensure no changes to
the CLOSING DISCLOSURE or mortgage documents, collecting copies for
• the Final Certification and client file.
• Final Certification: After all client documents have been obtained,the
Seller must provide the Clty's agent with all required documents
regarding the sale.The City's Agent will then complete the Final
• Certification Form and provide that with the CLOSING DISCLOSURE to the
city, certifying the transaction as compliant.
21
7. Marketing and Sales of Lower-Priced Homes
Marketing Guide for Developers and Sales Agents
The marketing and sales provisions of the AHO and this Manual are designed to ensure that AHO
requirements are met and that Lower-Priced Homes are marketed and sold as quickly and
efficiently as possible.The developer has the ultimate responsibility for marketing and selling all
Lower-Priced Homes in a development.The qualification of buyers to meet AHO requirements is
the responsibility of the City's Agent.The City's Agent,through the qualification process, may
also provide assistance to the developer in identifying potential buyers for the Lower-Priced
Homes. Successful implementation of the affordable housing program will require close
collaboration between the City,the City's Agent and developers selling Lower-Priced Homes.
Steps in the process are as follows:
Step 1. Intent to Build. When a developer is ready to undertake construction of a Lower-Priced
Home,the developer must notify the City's Agent and provide the City's Agent with floor plans,
elevation drawings, location of the unit and an anticipated construction schedule so the City's
Agent can make prospective eligible buyers aware of the buying opportunity and put them on
the City's waiting list, if qualified.
Step 2. Coordination Meeting. If the Lower-Priced Home is the first such home being marketed
in a development,the City's Agent will set up a face-to-face meeting with the developer and its
sales staff or sales agent to review AHO requirements for marketing,sales, and qualification of
buyers.
Step 3. Identifying Buyers from Wait List. If there are qualified buyers already on the City's
waiting list,the City's Agent will notify the first household of appropriate size on the waiting list
that a home is becoming available, and invite them to inform their housing counselor if they are
interested in buying the home. If the qualified buyer is not interested in the home,the next
potential buyer on the list will be notified,and so forth.The City's Agent will refer the
prospective buyer to the developer. If an eligible buyer has refused two affordable homes that
fit the buyer's requirement for the number of bedrooms needed then the eligible buyer will be
moved to the bottom of the waiting list. (Due to the fact that Moderate-Priced Homes are not
expected to have discounted prices, no waiting list will be required for those homes.)
Step 4: Marketing by the Developer.The developer may begin marketing the home to the
general public simultaneously with Step 3. If the developer finds an interested buyer who has
22
not yet had an intake appointment with the City's Agent,the following procedures must be
followed:
• The developer or its sales agent must interview potential buyers who have not had an
intake appointment with the City's Agent to determine if they believe they meet all of
the qualifications and give them a copy of AHO Buyers Guide (see Exhibit K)which
includes the current income limits and basic qualification criteria.
• All apparently qualified buyers must immediately be referred to the City's Agent for
qualification and—if qualified—put on the AHO waiting list.
Step 5.Sales Contract. When a qualified buyer is prepared to sign a sales contract,the developer
wishing to have the home count toward the number of affordable homes listed in Section 10 of
the AHO will follow the requirements in Section 6 of this Manual for appending an AHO
Disclosure Statement to the purchase contract form.The developer or sales agent will explain
each element of the disclosures to the buyer.
Step 6.Transmit copy of sales contract to City's Agent. Within three business day after execution
of a sales contract,the developer wishing to have the home count toward the number of
affordable homes listed in Section 10 of the AHO must transmit a copy to the City's Agent for
review of compliance.
Step 7. Pre-Closing Tasks. No more than thirty days before the anticipated closing date,the
developer or a licensed sales agent wishing to have the home count toward the number of
affordable homes listed in Section 10 of the AHO will notify the buyer-under-contract and the
City's Agent of the closing timeline.At this time the City's Agent will notify the mortgage lender
that the home is nearing the closing date and request that the lender initiate an appraisal if it
has not already been undertaken.
The City's Agent will originate the appropriate lien documents based on the sales price and the
market value of the home as detailed in Section 8: Recordation and Subsidy Recapture for
Lower-Priced Homes, and provide those documents to the city prior to closing.The City's Agent
will be responsible for providing the completed documents to the title company prior to the
scheduled closing date.
23
8. Recordations and Subsidy Recapture for Lower-Priced Homes
Overview
The city will secure and recapture both its cash and non-cash investments in affordable housing.
Lower-Priced Homes as defined by AHO will generally be subject to three liens.
Type of Lien Purpose Repayment terms
A. Impact Fee To recapture impact fees paid Payable at 0%interest upon sale or
Subsidy Recapture by the city on behalf of the transfer only if the seller fails to
Lien: Promissory note seller. meet the AHO requirements.
and mortgage deed Otherwise it will be extinguished
from the seller when eligible buyer executes lien
(developer)to the #2 below.
city.
B. Buyer Subsidy To recapture the difference Payable at 0% interest upon sale,
Recapture Lien: between 98%of the market transfer, cash-out refinance or
Promissory note and value and the AHO Maximum default on AHO requirements, such
mortgage deed from Price of a Lower-Priced Home. as the requirement for owner-
the buyer to the city. occupancy.
C. Down Payment To recapture the City's loan of Payable at 0% interest upon sale,
Assistance Lien: cash to an eligible buyer for transfer, cash-out refinance or
Promissory note and down payment assistance for default on AHO requirements, such
mortgage deed from the purchase, up to$10,000. as the requirement for owner-
the buyer to the city. occupancy.
A. Impact Fee Recapture Lien for Developers of Lower-Priced Homes
Applicability.A subsidy recapture lien applies to instances in which city has made cash payments
to a developer as a subsidy for city payment of the impact fees.
Lien Extinguished. If a developer abides by the requirements of the AHO,the subsidy recapture
lien will be extinguished when a qualified buyer signs a Buyer's Subsidy Recapture Lien payable
to the city.
Calculation of Lien Amount.The lien shall be equal to the total of all payments made by the city
on behalf of the developer.
Form of Lien. Such liens will be in the form of a mortgage deed and promissory note payable to
the city of Bozeman.The documents will be recorded at the Gallatin County Clerk and Recorders
office.
24
Terms of Lien. Full repayment is due only if: (a)the developer fails to sell a lower-priced home to
an eligible buyer within two years of the origination of this lien; or(b) otherwise breaches the
terms of the lien,which include full compliance with AHO requirements.
Responsibility for Origination. Documents will be prepared by the city or its agent using standard
forms (see Exhibits L, M and NN).The city or its agent will cause all necessary documents to be
recorded.
B. Subsidy Recapture Lien for Eligible Buyers of Lower-Priced Homes
Applicability.The subsidy recapture lien applies to eligible buyers of Lower-Price Homes: (i)
purchased at a discount to market value and/or(ii)that the developer of the home received
cash support in the form of funds from the city, including impact fee payment.
Lien Amount.The amount of this lien is difference between the 98%of appraised value and the
AHO Maximum Price of a Lower-Priced Home at the time of the initial sale
Lien Repayment. Repayment is required when the home is sold,transferred, refinanced, or
when the buyer fails to abide by the terms of the AHO.
Repayment Formula.The buyer agrees to repay most of the discount from market value
represented by the AHO price for a lower-priced home.The formula is as follows:
98%of the appraised value of the home at time of initial purchase(becomes the
contract sales price)
(Minus)AHO Maximum Price of Lower-Priced Home
(Equals)subsidy and dollar amount of lien
The formula uses 98%of appraised value in order to provide homebuyers with a small amount
of net equity.This criterion may also make it easier for lower-income buyers to qualify for
certain first mortgage products.
Appraisal and Calculation of Lien Amount.The appraisal used to calculate the amount of subsidy
may be the appraisal obtained by the buyer's mortgage lender or, if that is not available, a
professional appraisal provided by the purchaser.The lien amount will be calculated using the
formula above.
Form of Lien.Such liens will be in the form of a mortgage deed and promissory note payable to
the city.The documents will be recorded at the Gallatin County Clerk and Recorders office.
Terms of Lien. Repayment is due only when the property is sold,transferred, refinanced for
reasons other than lower rate or shorter term,or when the initial buyer who qualified for the
25
subsidy has failed to abide by the requirements of the AHO as stated in the promissory note.
The interest rate will be 0%.The lien will be expressly subordinate to any first mortgage lien and
possibly other liens (such as the Board of Housing's down payment assistance liens) in
accordance with the City's written subordination policy(see section 12).
Responsibility for Origination
Lien documents will be prepared by the city or its agent using standard forms (see Exhibit L, M
and NN).The city or its agent will forward the documents to the title company that is managing
the closings of the real estate sale and loans.
C. Down Payment Assistance Lien for Homebuyers
Applicability.The City's Community Housing Fund (AHF) provides cash assistance for some
lower-income AHO homebuyers based on availability of funds and other factors.
Calculation of Lien_Amount.The lien amount will be equal to the amount of down payment
assistance provided to the buyer by the city for the purpose of financing the home purchase.
Form of Lien. Such liens will be in the form of a mortgage deed and promissory note payable to
the city of Bozeman.The lien will be expressly subordinate to any first mortgage lien.Any other
subordination will be made in accordance with the City's written subordination policy(see
section 12).The documents will be recorded at the Gallatin County Clerk and Recorders office.
Terms of Lien. Repayment of the principal amount, at 0%interest, is due only when the property
is sold,transferred, cash-out refinanced or when the initial buyer who qualified for the subsidy
has failed to abide by the requirements of the AHO as stated in the promissory note. Failure to
maintain owner occupancy is a reason for a default and a demand of repayment.The lien will be
expressly subordinate to any first mortgage lien and possibly other liens (such as the Board of
Housing's down payment assistance liens) in accordance with the City's written subordination
policy(see section 12).
Commitment Letter. For the purpose of aiding homebuyers in qualifying for first mortgage
financing,the city or its agent will issue a commitment letter after a qualified buyer has signed a
purchase contract for a lower-priced home.
Responsibility for Origination. Lien documents will be prepared by the city or its agent using
standard forms(see Exhibit NN).The city or its agent will forward the documents to the title
company that is managing the closings of the real estate sale and loans.
Waiver of Timing of Repayment.The Director of Community Development may agree to waive
the timing of repayment for all cash and non-cash subsidies when on a case-by-case basis when
(i) refinancing is being proposed by a homeowner for purposes of acquiring a lower interest rate
or reduced term on the principal mortgage as long as the refinance does not include payment of
26
cash to the homeowner;or(ii)the refinance is necessary for the homeowner to address a
medical emergency. In such a case,the lien is not extinguished.
In instances where a cash-out refinance or subordination is allowed,the combined loan-to-value
ratio of the home may not exceed 97%including all subordinate financing. Request for waiver of
under this provision must be submitted in writing for approval by the Director of Community
Development.
27
9. Marketing and Sales of Moderate-Priced Homes
A developer desiring to construct Moderate-Priced Homes must comply with the requirements
of the AHO, as follows.
AHO Maximum Price
The Maximum Price for a Moderate-Priced Home is set at 90%of Area Median Income, adjusted
for household size. Maximum Prices for Moderate-Priced Homes will be published annually by
the Director of Community Development as discussed in Section 3.
Disclosure Addendum to Purchase Contract
The only qualification for purchase of a Moderate-Priced Home is that the home be purchased
and occupied as a primary residence for a minimum of two years. In the purchase contract for
each Moderate-Priced Home,a developer wishing to have the home count toward the number
of affordable homes listed in Section 10 of the AHO must include an addendum describing this
requirement. See Exhibit 0: Disclosure Addendum to Purchase Contract for Moderate-Priced
Home.
Verification of Compliance
In order for the city to verify compliance with the AHO,the developer wishing to have the home
count toward the number of affordable homes listed in Section 10 of the AHO will provide to the
city:
a) A copy of the Settlement Disclosure statement for the closing so that the city may verify
that the sales price was at or below the AHO Maximum Price for the home as shown on
the pricing schedule in effect at the time of the issuance of the building permit. If the
pricing schedule changes after the permit issuance,the developer may elect to use the
updated price if it differs. A cover letter must be provided with the Settlement
Disclosure statement for the closing indicating the number of bedrooms in the home.
b) A copy of Exhibit P. Occupancy Affidavit executed by the buyer certifying that they will
occupy the home as a primary residence for the first two years of ownership.
The City's Agent will mail letters to the buyer annually for the first two years of ownership
requesting certification that the buyer meets the owner occupancy requirements of the AHO.
The buyer must sign and return the certification within 30 days of receipt.
28
10. Administration, Subordination, Monitoring and Enforcement by the
City
Administration
The Director of Community Development or designee may promulgate and enforce all
reasonable rules and regulations and take all actions necessary to the effective operation and
enforcement of AHO and this Manual, including but not limited to:
a) Reviewing a developer's Affordable Housing Plan for compliance with the AHO.
b) Adopting all forms and prescribing the information to be given therein.
c) Monitoring developers' compliance with their approved Affordable Housing Plan,
notifying the developer of noncompliance,and ordering compliance.
d) Imposing any and all sanctions permitted by the AHO.
e) 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
minimis exceptions to the factors considered in calculating the price targets.
City's Agent
The city may choose to retain an agent to undertake certain administrative duties.The City's
Agent must follow the policies and procedures described this Administrative Manual and those
prescribed by the Director of Community Development.
The City's Agent must be a HUD-Certified Housing Counseling Agency with sufficient staff to
provide individual and group housing counseling and education.The City's Agent staff must be
trained to perform HUD-defined Part 5 income determinations and other certifications required
under the AHO and this Manual and have the required administrative capacity to maintain
secure records documenting purchase transactions.
Subordination of Subsidies
The city may use liens as a tool to recapture subsidies as described in Section 8, Recordation and
Subsidy Recapture for Lower-Priced Homes.The City's lien shall be senior to all other liens,with
the exception of the first mortgage,and subordinate financing for the purpose of down payment
or principal reduction assistance provided by the Montana Board of Housing or through funds
provided by the US Department of Housing and Urban Development that require placement in
the second lien position.
29
The city shall only subordinate the AHO liens in circumstances where a buyer of a Lower-Priced
Home refinances for a lower interest rate,or shorter term of first mortgage loan, also referred
to as a non-cash-out refinance.
The city may waive the prohibition on cash out refinance for unusual circumstances where funds
are needed for an essential emergency repair to a Lower-Priced Home that exceeds$5000.
Verification of Purchase Transactions
Compliance with provisions of the AHO and this Manual are ultimately the responsibility of the
city, although tasks that contribute to the completion of certification may be conducted by the
City's Agent.
Review of Purchase Transaction Documents by City staff.Although buyer qualification and
certification of an eligible transaction may be carried out by the City's Agent,city staff should
review the following prior to closing:
a) Subsidy lien documents—prior to closing
b) Exhibit G: Purchase Transaction Certification Form
c) The Settlement Disclosure statement from the closing of the transaction
The City's Agent is required to maintain all detailed records relating to the transaction as
described in Exhibit I: Homebuyer Certification Checklist.These client files must be made
available for inspection at the request of city staff for purposes of auditing completed sales
transactions for compliance with all rules and regulations. Records of transactions must be
maintained pursuant to industry practices and the City's record retention schedules.
The city or the City's Agent will be responsible for verifying owner occupancy of Lower-Priced
and Moderate-Priced Home as described in this Manual.
Updates to Income, Pricing and Cash-In-Lieu Schedules
The city is responsible for publishing an update to Exhibit E: Maximum Buyer income Schedule
within 30 days of HUD's publication of the annual Area Median Income for Gallatin County.
The update of the income schedules will trigger the update of Exhibit C: Maximum Home Price
Schedule.The Maximum Home Price Schedule may also be updated at the discretion of the
Director of Community Development if prevailing mortgage interest rates change more than 50
basis points (.5%) between annual updates as described in this Manual.
30
Non-Compliance
If the city determines a developer subject to an Affordable Housing Plan has failed to comply
with any terms or conditions of the Affordable Housing Plan or the AHO,the Director of
Community Development or will notify the developer of the noncompliance in writing and order
compliance by the most effective and expeditious means as determined by the city. Notification
may describe a date certain by which the developer must be in full,and will describe: (i)the
exact nature of the noncompliance; and (ii)the possible sanctions for noncompliance with this
notification.
Cancellation of Incentives Provided. If a developer sells a home for a price not in compliance
with the approved Affordable Housing Plan or any other recorded documentation obligating
developer to comply with the AHO,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 sales price and the price of the affordable home as set out in the approved
Affordable Housing Plan.
Sanctions for Noncompliance. In addition to other remedies available to the city pursuant to the
AHO, if on a date certain by which compliance has been ordered by the Director of Community
Development or authorized agent,the developer remains in noncompliance,the Director of
Community Development or authorized agent may notify the City Attorney of the
noncompliance and request that sanctions be imposed.The city has 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:
a) Withholding or revoking building permits.
b) Issuing stop-work orders.
c) Withholding certificates of occupancy.
Review of Program Effectiveness
The city will periodically review the program for effectiveness.The city will conduct periodic
audits of program files maintained by the City's Agent for completeness and consistency.The
city may also periodically verify owner-occupancy of AHO homes,and gather information from
buyer about the impact and effectiveness of the program.
Periodic Updating of This Manual and Exhibits
The Director of Community Development may amend this Manual without approval of the
Commission if such changes are administrative or ministerial in nature.Such changes may include
authorizing adjustments to forms used by the City or City's Agent.
31
City of Bozeman Affordable Housing Program
Exhibit A: Template for Affordable Housing Plan
Development name and parcel identifer(s):
Applicant name:
Name&title of principal contact person for applicant:
Email address and phone number for contact person:
1. Required number of Affordable Homes
First Phase(Or Entire Project) Future Phases
Condos Townhomes Detached Total All Types
Total number of homes projected for development* 20 32 40 92 110
Total number of market-rate homes
Required number of Lower-Priced Homes(10%) 2 3.2 4 9.2 16.4
OR,actual number of Moderate-Priced Homes(30%) L6 10 12 281 49
Note: Moderate-Priced Home option is rounded to nearest whole number;not allowed for Lower-Priced Homes
Instructions for#1:
Overwrite the example numbers in the top row with actual number of homes projected for the development.
Required numbers of homes are calculated by formulas in the spreadsheet.
2. Actual number of Affordable Homes to be built
First Phase(Or Entire Project)
Condos Townhomes Detached Total
Total number of homes projected for development* 20 32 40 92
Total number of market-rate homes 0
Actual number of Lower-Priced Homes(10%) 2 3 4 9
OR,required number of Moderate-Priced Homes(30%)
Instructions for#2:
Choose whether to provide Lower-Priced Homes,Moderate Priced Home or a mix of both.
Example numbers indicate a choice of only Lower-Priced Homes.Delete these numbers to complete the table.
Round down Lower-Priced Homes;Round Moderate-Priced Homes to nearest whole number.
If less than 10%Lower-Priced Homes are provided,substitute 3 Moderate Priced Homes for a LP Home
3. Fractional Requirement for Lower-Priced Homes 0.
Instructions for#3
Enter the fraction that was subtracted out to round down.This will determine cash-in-lieu owed for the fractional unit.
Alternatively,add one Moderate-Priced Home in Table 2.
4. Cash-in-lieu owed for fractional Lower-Priced Home $1,769
Instructions for#4:
Multply the fraction in#3 by the appropriate average payment in#8 below.
In this example,the cash-in-lieu amount for a townhome(the source of the fraction)was chosen.Overwrite that formula.
S. Home type and bedroom mix of Lower-Priced Homes to be Provided(if this option is chosen)'
Condos Townhomes Detached
Studio and/or 1 bedroom homes
2 bedroom homes 2 3 4
3+bedroom homes
Totals
Instructions for#5:
Totals must match the numbers in Table 2 above. Overwrite the example numbers.
6. Home type and bedroom mix of Moderate-Priced Homes to be built and sold{if this option is chosen)
Condos Townhomes Detached
Studio and/or 1 bedroom homes
2 bedroom homes
3+bedroom homes
Totals _
Instructions for#6:
Totals must match the numbers in Table 2 above. Overwrite the example numbers.
7. Current maximum home prices
Studio/1
Bedroom 2 Bedroom 3+Bedroom
Lower-Priced Home $158,512 $176,978 5200,613
Moderate-Priced Home $181,080 $204,301 5229.311
Note:These are maximum AHO prices currently in effect.
Actual maximum prices for this development will be those in effect at date of development approval.
8. Current cash-in-lieu amounts Editing Note:these are estimates,not final numbers
Studio 1 Bedroom 2 Bedroom 3+Bedroom Average Fee
Condo WE NEED TO DISCUSS IN-LIEU FOR THIS TYPE N/A N/Al N/A N/A N/A
Townhome $1,4881 $11,4881 $8,022 $14,3971 $8,846
Detached I N/A N/A $23,0221 $29,387 $26,204
9. Cash-in-lieu alternative-for Lower-Priced Homes only
Condos Townhomes Detached_
Studio and/or 1 bedroom homes
2 bedroom homes
3+bedroom homes
Totals
Instructions for#9:
Before proposing this,discuss with city staff.This alternative is not automatically allowed.
Multiply the numbers of units required in#1 times the appropriate dollar amounts in#7.
10. Land donation alternative-for Lower-Priced Homes only
Instructions for#10:
Before proposing this,discuss with city staff.This alternative is not automatically allowed.
City staff will provide requirements for proposing land donations and valuing them in terms of
the number of Lower-Price homes that the donation would offset.
(Enter the description of proposed land to be donated,here)
11.Signature and certifications(all drafts and final version must be signed and certified)
I hereby certify and attest to the following:
I am an authorized representative of the property owner.
I understand that this AHO Plan,when approved,will become part of a recorded development
agreement in which I will agree to comply with all requirements of the AHO Ordinance and
Administrative Procedures including but not limited to:
Requirements for design,timing of delivery,marketing and sale of AHO Homes,
Indication of the location of AHO homes on the plat and/or site plan.
Required AHO Prices and maximum qualifying incomes of buyers that are in effect at
the time of marketing and sale of the homes,and
Requirements for timing and amounts of payment of cash-in-lieu and/or acceptance
and transfer of donated property.
Submitted this th day of ,2016 by
Signature of Owner or Representative
Printed or typed name
City Staff Recommendation for Approval(to be signed only for final,recomeded plan)
I hereby recommend this AHO Proposal for approval by the City of Bozeman
Signature of Community Development Director Date
Printed or typed name
Bozeman Affordable Housing Program
Exhibit B: Proposed AHO Project Description Form
Location (physical address):
Primary Contact:
Phone:
Email:
Mailing Address:
Total Project Size (in acres):
Current Zoning:
Estimated Number of Lots to be Created:
Does the site have any unusual features (terrain etc.)
Will the subdivision be built in phases: YES NO
If YES, how many homes in each phase
Do you anticipate selling finished homes or just lots? Homes Lots
If homes, what mix of bedroom types do you anticipate?
Studio Phase 1 Phase 2 Phase 3
1-Bedroom
2-Bedroom
3-Bedroom +
Are there any other special features within the development (green building etc)?
O O O O 0
O N 0 -It 0
00 m :I, Ln Ln lD
Lr M N rl O
T lD 1l 00 m
.V)- qj,� V). V). V).
O O O O O
Ln I, O O O
Ln Ln c-I Ln c-I
N Ol 00 lD Ln
* Ln LD I, 00
N -Ln i/)-
O O O O O
O N O -cl, 0
W 00 n n LD LD
01 Ln m rl C)
M Lf) w n n
ul. V). V*� -Ln in
C
m O O O O 0
E Ln N O D1 O
y Ln C 0o m Lo rt
N 1l ci 0) w
O Cn Ln Ln LD I,
00 U? V} V). to V).
O a
2` 0
s
u ar
O o 0 0 0
u o 0 N O v 0
c = a r l m o rn D
'a > ,A V� +n to V�
O O ++
C
r0 O Y
E
.O OO1 r � lND 000 E w O LO1n 0 Ln U:)
y 0 (u cr1 O rn 0) Ln ri m m O n W
EO _p 4n in -Ln I.{V} 4Ln G M N if} rq
a +�+ E u E O N ti► N N
O 7 C 0 z p 7 7
C 3 C m > >
al a
_ C O CDO O O o0 � O N N 'P E E Ln
L N O N Ln N00
a � Ln mNLnm
,� *QGo � aJ v cW i O
Lu V) -
2 'c to E
x O -z
+, E L
Y " O E a, C
2 -0 = E s Lono o rn0 3 0 00L„ Ln o 0 0
3 O C N O lD N i O O n Ln ^ M QN1 Ln
L v ei a-i N m N
c_ 3 a c10
N v`"irn vmi o n Ln CD o o 'n
o c =o m tom {n o 0
JE o m v +�
m a aJ m 0
a
Q c o o
C s Ln p C
� w x
C) v _
o z E = s ai o
LL Lu p E E m
U. ` C - u T
Q m c a E o E c o
C7 u o E a o m * n s V)
Z r 7 L e v c m N N }, L o Q
a o m '� al C
t/� ` IA `1 aj:Ea1 E W o 0 0 0 L -p Y O O a) C
O X 1 O a� + LOn ^O O O f° E n m
G cu J 0 ` a N 3 X U ,L., " a)
`� E D_ Q �p 7 O M C C ' in a-+ 7 E
Z aJ 7 ra a1 w O a) ++ O 4' N O L C LU 0 p
Q m Ern o g no E c s - a+�' � � c o d .Ex
N fa -0 -0 m ' p ++
W CL Q .
m m O C H 4- w w N C N E O. L L L
N m o �, p p ` Q api > > 01 a s m c c c
m H a) a> > > a, N w p p o p p p
0o Q z .l u u x x a ni in Q Q w d 2 H I Q 2 2 2
a
m
m
m
L
0
E
a
c
N
t NO
3 rn
00
N CO w 00) N o m w 001 N CO Zr cr m M r, m m O 0)
1.0
C f1 V} VT V} CM V} VT V). f1
� V? M a V) M ri ri ri
V? V? V} V} V} V}
C
O)
7
v m rl o c m r, 0 � m O) m O W �
M m oo Co o Ln
N Vl ri 0 N V) r-I m N lD ri ° m Ln O N m
N ri ri N � N ri �--� N N N N m N
a) ri V> V} V} r♦ V} V} V? V} 41 ri M m m r-I ri ri
V} i/} V} r'I V} VT V)
O
a Ln
c ri C O
tt0 0 C to -1 O O m ui > O cu N O l0 T 00 O n O
Oa � ri cn V1 > O E 'O ri m Ln v m =1 '0 00 ON w N V1 01
a+ O ri ri ri 0 O m 3 ri ri ri ri N > > Q1 O ri
CO T H V) V? V) m Om0 � V) V? V} N H E H V} V} V? Vim, V} V} V}
G aJ omo 0° O
al w u �+
to 0
m o\o N m
O Q tF O m O
'o � o o v a, maaa °' maaa � aaa
0 0 0 0
am+ +� N 00 M L N o o aJ p d o 0 0 10 y � c
to a 0 m u o 0 o a u 0 0 0 u o 00
3 c 0 a ^ c* mi U-q p a` I, oo rn m a I� oo rn
E o
m 3 m o d
u ¢ c 0 •- ° E 'o
E t ° x
In Q m C
�°
_ u t'^ u '^
m fA
U
++ _ °
CL m p u a E
E ram+ vOi U +gs u
C L C
y 0 E N
0 ` C v
>. E a E ° E� g
a E _ = a o � = a'"r c � � x cox
O 3 _ ` (U 2 c v C m aco a, _ c v
0 >' v a01+ w -0 U > 7 -O U '� -O u
N t u_ W m Y .0 d N '�.+ .0 d N U _- N
a) L �+ 7 L L �.+ C
m O a ` ui ° a m O O a m O a
V °0 v '' Q 3 °J Q v °� Q v Q o
a
t» m m 3 Z H en JO 000 M m 1 000 � e n .1 0O0
CC m 0000 m 00 v w
00 0 i--1 N �
n {�} ei r4 + I� O m
M M �--� N N
-Ln �n 4.n
c
0 ca ": 00 00
N w 00 01 N M " 00
ri 4 e-I -1 e-I
G 00 O M
m � M v o o m
`7 l0 I' 00 of r4 -It W C
vn to t� f 0
n v
^y a
u
y a
m y
�o
d a,
f0 M Q ¢ Q c ¢ a Q
u d o \ o dLn
c u 00 0 u 0 0 0
a ,- a
IA T
c x
— o
X
f0 �'
H �
7
E
7 Q
C Ol
00
E tw d
H -
m 4
O m
4�
= cu O1 y
7 E u
Z O a m
ai u 2 •O -
` O
O a o v
E
o � �
3 O
m 000 m L Q
City of Bozeman Affordable Housing Program
Exhibit E: Maximum Buyer Income Schedule
The following represents the maximum income level which is derived
from HUD's published AMI income limits and adjusted for family size.
Household Size 1 2 1 3 4 5 6 7 8
Lower-Priced Home 80%AMI $38,450 $43,950 $49,4501 $54,900 $59,300 $63,700 $68,100 $72,500
Moderate-Priced Home 100%AMI $48,100 554,9001 $61,8001 $68,600 $74,100 $79,600 $85,100 $90,600
Exhibit D: Intake Application Forms
AFFIDAVIT
The undersigned certify the following:
I. I/We have applied for homebuyer assistance through the City of Bozeman.In applying for this assistance,I/We
completed application material containing various information on the purpose of the loan, the amount and
source of the downppayment, employment and income information, assets and liabilities. I/We made no
misrepresentations in the application documents,nor did I/We omit any permanent information.
2. I/We fully understand that it may be a Federal crime and civil offense punishable by imprisonment,
forfeiture of benefits, or all the above, to knowingly make any false statements when applying for
assistance through the City of Bozeman affordable housing program.
3. There are the following people in my household for whom I am responsible and claim as a deduction on my
income taxes,annual income is only required for household members over 18 years of age:
Name Relationship
1. (Household Head)_Age$ Annual Income _Gender
2. (Spouse) _Age$ Annual Income Gender
3. (Dependent) _Age$ Annual Income —Gender
4. (Dependent) _Age$ Annual Income '_Gender
5. (Dependent) _Age$ Annual Income _Gender
6. (Dependent) _Age$ Annual Income _Gender
4. The following persons are full time residents in my home,but are not claimed as deductions on my income
taxes:
Name Relationship
1. ( ) _Age$ Ann Income _Gender
2. ( ) _Age$ Ann Income _Gender
5. Please check the following that applies:
_a)I have not owned a home in the last three years
_b)I have had interest in a home in the last three years but will not at the time of closing
_c)I have had interest in a home in the last 3 years but have divested as part of a divorce settlement
_d)The home I will purchase will be my primary residence
ALL APPLICATION INFORMATION IS TRUE AND COMPLETE TO THE BEST OF
MY KNOWLEDGE.
Borrower Co-Borrower Date
WARNING!Section 1001 of Title 18 of the U.S.Code makes it a criminal offense to
Make willful false statements or misrepresentations to any Department or Agency of the
United States(or their representatives)as to matters within its jurisdiction.
To Whom It May Concern:
1.I/We have applied for the City of Bozeman affordable housing program.As part of the application
process,I/we have authorized the city or it's agent to verify financial information and other documents
required in connection with receiving assistance,either before the home is purchased,after closing or as
part of its quality control program.
2.I/We authorize you to provide to lenders for the purpose of receiving a first mortgage,any and all
information and documentation that they request. Such information includes,but it is not limited to,
employment history and income;bank,money market and similar account balances;credit history;and copies of
income tax returns.
3.I/We authorize the City of its agent to communicate with mortgage lenders and title company to obtain
documents related to the mortgage and purchase transaction for the purchase of a home through the City of
Bozeman affordable housing programs.
3.A copy of this authorization may be accepted as an original.
Borrower's Signature Co-Borrowers Signature
SSN SSN
Date Date
City of Bozeman Affordable Housing Program
Exhibit E: Maximum Buyer Income Schedule
The following represents the maximum income level which is derived
from HUD's published AMI income limits and adjusted for family size.
Household Size 1 2 3 4 5 6 7 8
Lower-Priced Home 80%AMI $38,450 $43,9501 $49,450 $54,900 $59,300 $63,700 $68,100 $72,500
Moderate-Priced Home 100%AMI $48,100 $54,9001 $61.800 $68,6001 $74,100 $79,600 $85,1On $90,600
City of Bozeman,Affordable Housing Program
Exhibit F: Preliminary Buyer Certification Form
Appicant Name
Co-Applicant Name
Household Size
Gross Annual Income
Percentage of Median Income
Lender
Fixed Rate Loan yes
Prequalification Amount
Length of Residency
Under Asset Threshold? F yes
Signature of Counselor
Date
City of Bozeman,Affordable Housing Program
Exhibit G:Preliminary Buyer Certification Form
Ap Kant Name
Co-Applicant Name
Household Size
Gross Annual Income
Percents a of Median Income
Lender
Fixed Rate Loan,term<30 years yes
Loan Amount
Interest Rate
Length of Residency
Or,Employed in Bozeman?
Total Assets After Closing
Address of Unit
Builder
Subdivision
Number of Bedrooms
Sales Price from HUD-1
Effective Price from HUD-1
Buyer Subsidy Lien Amount
Down Payment Assist.Amt.or N/A
I hereby certify that the information above is true and correct to the bests of my knowledge
and that the buyer and transaction complied with the requirements of Bozeman's Affordable Housing Ordinance.
Signature of Counselor
Date
Exhibit H: Disclosure Statement for Buyers of Lower-Priced Homes
An AHO Lower-Priced Home must be sold subject to the requirements of the city of Bozeman's
Affordable Housing Ordinance, including but not limited to the following requirements.
Income Limits—To purchase a Lower-Priced Home,you must have a household income at or below the
maximum income limits published annually by the City of Bozeman at the time of closing on the home. It
is recommended that you speak with a housing counselor to establish your income level as income
certification is a technical process.At least 30 days prior to the closing date, buyers must submit
complete and updated financial data to the city or its agent in order for an income certification process
to be completed.
Maximum Home Price—The price of an AHO home may not exceed the maximum allowed price in the
AHO home price schedule published by the city except that the buyer may select up to$3,000 of buyer
upgrades over and above the Maximum Home Price, as long as they have evidenced sufficient mortgage
capacity at the time of Preliminary Certification by the city or City's Agent.
Homebuyer Counseling Requirement—Buyer must have completed a homebuyer counseling and
education program approved by the city prior to closing on a Lower-Priced Home,
Appraisal Requirements—The buyer hereby agrees to provide an appraisal to the seller and the city at
least 10 working days prior to closing—either an appraisal ordered by an institutional lender or other
professional appraisal acceptable to the city.
Pricing Requirements—At the closing,the contract price will be adjusted to 98%of appraised value if
that amount is higher than the ordinance-required price.
Lien Requiring Repayment of Indirect Subsidy—If the contract price(the price required by the
Ordinance) is lower than 98%of appraised value,then buyer will receive a subsidy of the home purchase
resulting in a below-market price.Such subsidy will be due at least in part to incentives provided by the
city to the builder such as the city's payment of impact fees and filing fees on behalf of the seller.The
ordinance requires that the principal amount of the subsidy be subject to a lien imposed at the closing
of the sale—to be repaid by the buyer at 0%interest upon resale or transfer of the home, or buyer's
default on the terms of the lien.
Lien Subordination—The lien imposed for subsidy of the home may restrict a homeowner's ability to
borrow money against a Lower-Priced Home, including home equity loans or refinancing that results in
cash being paid to the borrower.The borrower is not restricted from refinancing for a lower interest
rate or a shorter mortgage term.This restriction may be waived by the city in unusual circumstances.
Owner-Occupancy_Requirement—The buyer's household must occupy the home as a primary residence,
during which time the home may not be rented to any party.The city may waive this owner-occupancy
requirement for reasons of hardship,in accordance with its written policy for such waivers.
Borrower Signature
Name
Date
Co-Borrower Signature
Name
Date
City of Bozeman Affordable Housing Program
Exhibit I: Homebuyer Certification Checklist
1_ Application form and intake documents
2_ Income tax returns (1040)for the past 2 years with all schedules and W-2.
3_ Pay stubs for the most recent month for all jobs
4_ Employer verification of employment
5_ Three months most recent bank statements for all bank accounts listed on application
6_ Documentation of all real estate owned and other assets
7_ Residency affidavit
As Applicable
8 Proof of additional Income.
9_ Divorce decree and property settlement agreement, proof of child support
paid/received.
10_ Financial statements (including profit and loss statements for sole
proprietor/corporation signed by preparer) if own business,self employed.
Real Estate Documents
1_ Copy of purchase contract
3_ AHO disclosure addendum to purchase contract
4_ Appraisal
5_ Hazard insurance binder with City of Bozeman as loss payee
6 Title binder with lien endorsement
7_ Copy of uniform loan application for first mortgage
8_ Copy of preliminary settlement statement
9_ Copy of first mortgage
10_ Copy of buyer subsidy recapture mortgage deed and promissory note
11_ Final settlement statement from title company
Exhibit J: AHO Disclosure Addendum to Purchase Contract for a Lower-Priced Home
The contract.price must be stated in the body of the contract as"the greater of the contract price of
$ [the Ordinance-required price] or 98% of appraised value.
2. The following standard addendum must be incorporated_in the contract
ADDENDUM TO SALES CONTRACT
The property subject to this contract [agreement] must be sold subject to the requirements of the
City of Bozeman's Affordable Housing Ordinance, including but not limited to the following
requirements:
Income Limits—The buyer must have a household income at or below maximum amounts
published by the city of Bozeman and made available to the buyer prior to executing this sales
contract. At least 30 days prior to the closing date, buyers must submit financial data to the city
or its agent in order for an income certification process to be completed.
Maximum Home Price—The price of an AHO home may not exceed the maximum allowed
price in the AHO home price schedule published by the city and previously given to the buyer by
the seller as part of the "AHO Guide to Buying a Moderate-Priced home; except that the buyer
may select up to $3,000 of buyer upgrades over and above the Maximum Home Price as long as
they have evidenced sufficient mortgage capacity at the time of Preliminary Certification by
NAME OF CITY'S AGENT.
Homebuyyer Counseling Requirement—Buyer must have completed a homebuyer counseling and
education program approved by the city prior to closing on a Lower-Priced Home.
Appraisal Requirements—The buyer hereby agrees to provide an appraisal to the seller and the
city at least 10 working days prior to closing—either an appraisal ordered by an institutional
lender or other professional appraisal acceptable to the city.
Pricing Requirements—At the closing, the contract price will be adjusted to 98%of appraised
value if that amount is higher than the ordinance-required price.
Lien requiring Repayment of Indirect Subsidy—If the contract price (the price required by the
Ordinance) is lower than 98% of appraised value, then buyer will, in effect, receive a subsidy of
the home purchase resulting in a below-market price. Such subsidy will be due at least in part to
incentives provided by the city to the builder such as the city's payment of impact fees and filing
fees on behalf of the seller. The ordinance requires that the principal amount of the subsidy be
subject to a lien imposed at the closing of the sale—to be repaid by the buyer at 0% interest upon
resale or transfer of the home, or buyer's default on the terms of the lien.
Lien Subordination—The lien imposed for subsidy of the home may restrict a homeowner's
ability to borrow money against a Lower-Priced Home, including home equity loans or
refinancing that results in cash being paid to the borrower. The borrower is not restricted from
refinancing for a lower interest rate or a shorter mortgage term.
Owner-occupancy requirement—The buyer's household must occupy the home for as a primary
residence following the closing date of the purchase, during which time the home the home may
not be rented to any party. The city may waive this owner-occupancy requirement for reasons of
hardship, in accordance with its written policy for such waivers.
Borrower Signature
Name
Date
Co-Borrower Signature
Name
Date
City of Bozeman Affordable Homes Ordinance (AHO)
Thinking of Buying an AHO Lower-Priced Home?
Some builders in Bozeman have agreed with the City of Bozeman to sell "lower-priced homes"
at discount prices to comply with the city's Affordable Housing Ordinance (AHO). If you are
thinking about buying one, this is what you need to know.
How do I find out the home price and whether I might qualify?
For each AHO home that is available for sale, the builder must provide a flyer listing the home
price—which may not exceed the AHO maximum price—and the maximum household income
that is allowed.
How do I qualify to buy a discount-priced AHO home?
1. The [CITY'S AGENT NAME] must certify your income and other qualifications. See the
maximum household incomes and maximum home prices on the other side of this page.
2. If you prequalify, [CITY'S AGENT NAME] Lower-Priced Homes waiting list. You may not
get the first AHO home that becomes available.
3. You must complete [CITY'S AGENT NAME]'s homebuyer counseling and training
program prior to closing on the home, which can take up to 45 days.
4. To complete the purchase, you must be able to qualify for a conventional 30-year fixed-
rate mortgage. [CITY'S AGENT NAME] staff will help you get qualified.
Do I have to pay back the discount?
Yes, but only when you sell the home, or it's no longer your primary residence.
You will be required to sign a deed of trust and promissory note that pledges you to pay back
the discount.There will be no interest charges.
The price discount you receive will be calculated as the difference between the appraised value
of the property and the AHO price. [CITY'S AGENT NAME] will explain the details. Here's an
example:
Appraised value of home $250,000
AHO price $210,000
Amount to be paid back $40,000
If you have more questions or want to sign up for homebuyer training,
contact the [CITY'S AGENT NAME] to set up an appointment.
CALL
City of Bozeman Affordable Homes Ordinance (AHO)
[INSERT MAX. INCOME SCHEDULE FOR LOWER-PRICED HOMES]
[INSERT MAX.PRICE SCHEDULE FOR LOWER-PRICED HOMES]
Exhibit L
PROMISSORY NOTE
(For Repayment of City-Funded Fees by Seller)
Date:
1. FOR VALUE RECEIVED, the undersigned (Borrower) promise(s) to pay THE CITY OF
BOZEMAN, MONTANA (Lender) the principal sum of Dollars ($ as
repayment for Lender's funding of certain fees incurred by Borrower related to construction of a Low-
Priced Home as defined by the City of Bozeman's Affordable Housing Ordinance ("Ordinance")
bounded and described as follows:
[INSERT PROPERTY DESCRIPTION]
Fees to be repaid are as follows:
Description Amount
Total amount $
2. This Promissory Note ("Note") does not impose or accrue any interest charges and no payments are
required on the Note until the Note is due or extinguished in accordance with the terms further described
below.
3. This Note shall be due at the earliest of the following times: (a) on the date of the maturity of this
Note, (b) at the time of breach of the terms of this Note or the Deed of Trust securing the Note, or (c) at
the time of the breach of the any senior Note and Deed of Trust; except that the Note and all Borrower's
obligations thereunder will be extinguished if, during the term of this Note, Borrower sells the property
to a qualified lower-income buyer in accordance with the provisions of the Ordinance and requires
borrower to execute a Subsidy Recapture Note and Deed of Trust as required by the Ordinance. If not
paid sooner,the entire principal amount outstanding and Lender's accrued share of appreciation thereon,
shall be due and payable on [DATE]
4. Payments received for application to this Note shall be applied first to the payment of late charges, if
any, and the balance shall be applied in reduction of the principal amount hereof.
5. If the payment required by this Note is not paid when due, or if any default under any Deed of Trust
securing this Note occurs, the entire principal amount outstanding and accrued interest thereon shall at
once become due and payable at the option of Lender (Acceleration). Lender shall be entitled to collect
all reasonable costs and expense of collection and/or suit, including, but not limited to reasonable
attorneys' fees.
6. Borrower may not prepay this Note, due to Borrower's obligations under a separate agreement with
Promissory Note 1 Page 1
Lender to build and sell an affordable home on this property and sell it to a qualified buyer in accordance
with the Ordinance.
7. Borrower and all other makers, sureties, guarantors, and endorsers hereby waive presentment and
notice of dishonor and protest. This Note shall be the joint and several obligation of Borrower and all
other makers, sureties, guarantors and endorsers, and their successors and assigns.
8. Any notice to Borrower provided for in this Note shall be in writing and shall be given and be effective
upon(a) delivery to Borrower or (b) by mailing such notice by first class U. S. mail, addressed to
Borrower at Borrower's address stated below, or to such other address as Borrower may designate by
notice to Note Holder. Any notice to Lender shall be in writing and shall be given and be effective upon(a)
delivery to Lender or(b)by mailing such notice by first class U.S. mail,to Lender at the address stated in
the first paragraph of this Note, or to such other address as Lender may designate by notice to Borrower.
9. The indebtedness evidenced by this Note is secured by a Deed of Trust dated ,and until
released said Deed of Trust contains additional rights of Lender. Such rights may cause Acceleration of the
indebtedness evidenced by this Note.Reference is made to said Deed of Trust for such additional terms. Said
Deed of Trust grants rights in the property described above.
10. etc. OTHER LANGUAGE THAT THE CITY ATTORNEY OR COLORADO LAW MAY REQUIRE.
Signature of Authorized Representative of Borrower
Printed Name
Title of Authorized Representative
Borrower's Legal Name
Borrower's address:
Promissory Note 1 Page 2
Exhibit M
PROMISSORY NOTE
(Subsidy Recapture from Buyer)
Date:
1. FOR VALUE RECEIVED, the undersigned (Borrower) promise(s) to pay THE CITY OF
BOZEMAN, MONTANA (Lender) or order, the principal sum of Dollars ($ ) as
calculated by the City of Bozeman in accordance with the requirements of its Affordable Housing
Ordinance for imposing a lien to recapture subsidies that made the purchase of the property referenced
below more affordable. Those subsidies include but are not limited to impact fees and filing fees
funded by the city on behalf of the seller of the property.
2. This Note does not impose or accrue any interest charges and no payments are required on the Note
until the Note is due on the terms further described below.
3. This Note shall be due at the following times: (a) on the date of the maturity of this Note (after
years), (b) at the time of the sale or other conveyance of the Property, (c) at the time of breach of the
terms of this Note or the Deed of Trust securing the Note, (d) at the time of the breach of the any senior
Note and Deed of Trust, (e) or at the time the Property ceases to be used as the principal residence of
the Borrower.
4. Payments received for application to this Note shall be applied first to the payment of late charges,
if any, and the balance shall be applied in reduction of the principal amount hereof.
5. If any payment required by this Note is not paid when due, or if any default under any Deed of Trust
securing this Note occurs, the entire principal amount outstanding and accrued interest thereon shall at
once become due and payable at the option of Lender (Acceleration). Lender shall be entitled to collect
all reasonable costs and expense of collection and/or suit, including, but not limited to reasonable
attorneys' fees.
6. Borrower may prepay the principal amount outstanding under this Note, in whole or in part, at any
time without penalty. Any partial prepayment shall be applied against the principal amount outstanding
and shall not postpone the due date of any subsequent payments or change the amount of such payments.
7. Borrower and all other makers, sureties, guarantors, and endorsers hereby waive presentment, notice
of dishonor and protest, and they hereby agree to any extensions of time of payment and partial
payments before, at, or after maturity. This Note shall be the joint and several obligation of Borrower
and all other makers, sureties, guarantors and endorsers, and their successors and assigns.
8. Any notice to Borrower provided for in this Note shall be in writing and shall be given and be
Promissory Note 2 Page 1
effective upon(a) delivery to Borrower or(b) by mailing such notice by first class U. S. mail, addressed
to Borrower at Borrower's address stated below, or to such other address as Borrower may designate by
notice to Note Holder. Any notice to Lender shall be in writing and shall be given and be effective upon
(a) delivery to Lender or(b) by mailing such notice by first class U.S. mail,to Lender at the address
stated in the first paragraph of this Note, or to such other address as Lender may designate by notice to
Borrower.
9. The indebtedness evidenced by this Note is secured by a Deed of Trust dated ,and until
released said Deed of Trust contains additional rights of Lender. Such rights may cause Acceleration of the
indebtedness evidenced by this Note.Reference is made to said Deed of Trust for such additional terms.Said
Deed of Trust grants rights in the following legally described property(which is referred to in the Note as the
Property)located in Gallatin County of the State of Montana,
known as (Property Address).
10. etc. OTHER LANGUAGE AS REQUIRED BY THE CITY ATTORNEY AND MONTANA
LAW.
Signature of Borrower Printed Name
Signature of Co-Borrower Printed Name
Borrower's mailing address:
Promissory Note 2 Page 2
Exhibit N
PROMISSORY NOTE
(Down Payment Assistance)
Date:
1. FOR VALUE RECEIVED, the undersigned (Borrower) promise(s) to pay THE CITY OF
BOZEMAN, MONTANA (Lender) or order, the principal sum of Dollars. This Note does
not impose or accrue any interest charges and no payments are required on the Note until the Note is
due on the terms further described below. This Note shall be due at the following times: (a) on the date
of the maturity of this Note (after years), (b) at the time of the sale or other conveyance of the
Property, (c) at the time of breach of the terms of this Note or the Deed of Trust securing the Note, (d)
at the time of the breach of the any senior Note and Deed of Trust, (e) or at the time the Property
ceases to be used as the principal residence of the Borrower. If not sooner paid,the entire principal
amount outstanding and Lender's accrued share of appreciation thereon, shall be due and payable on
DATE
2. Payments received for application to this Note shall be applied first to the payment of late charges,
if any, and the balance shall be applied in reduction of the principal amount hereof.
3. If any payment required by this Note is not paid when due, or if any default under any Deed of Trust
securing this Note occurs, the entire principal amount outstanding and accrued interest thereon shall at
once become due and payable at the option of Lender (Acceleration). Lender shall be entitled to collect
all reasonable costs and expense of collection and/or suit, including, but not limited to reasonable
attorneys' fees.
4. Borrower may prepay the principal amount outstanding under this Note, in whole or in part, at any
time without penalty. Any partial prepayment shall be applied against the principal amount outstanding
and shall not postpone the due date of any subsequent payments or change the amount of such payments.
5. Borrower and all other makers, sureties, guarantors, and endorsers hereby waive presentment,notice
of dishonor and protest, and they hereby agree to any extensions of time of payment and partial
payments before, at, or after maturity. This Note shall be the joint and several obligation of Borrower
and all other makers, sureties, guarantors and endorsers, and their successors and assigns.
6. Any notice to Borrower provided for in this Note shall be in writing and shall be given and be
effective upon(a) delivery to Borrower or(b) by mailing such notice by first class U. S. mail, addressed
to Borrower at Borrower's address stated below, or to such other address as Borrower may designate by
notice to Note Holder. Any notice to Lender shall be in writing and shall be given and be effective upon
(a) delivery to Lender or (b)by mailing such notice by first class U.S. mail,to Lender at the address
stated in the first paragraph of this Note, or to such other address as Lender may designate by notice to
Promissory Note 3 Page 1
Borrower.
8. The indebtedness evidenced by this Note is secured by a Deed of Trust dated ,and until
released said Deed of Trust contains additional rights of Lender. Such rights may cause Acceleration of the
indebtedness evidenced by this Note.Reference is made to said Deed of Trust for such additional terms.Said
Deed of Trust grants rights in the following legally described property(which is referred to in the Note as the
Property)located in Gallatin County of the State of Montana,
known as _ (Property Address).
Signature of Borrower _ Printed Name
Signature of Co-Borrower Printed Name
Borrower's mailing address:
Promissory Note 3 Page 2
Exhibit O:AHO Disclosure Addendum to Purchase Contract for a Moderate-Priced Home
The following addendum must be incorporated in the contract.
ADDENDUM TO SALES CONTRACT
The property subject to this contract [agreement] must be sold subject to the
requirements of the city of Bozeman's Affordable Housing Ordinance, including the
following requirements.
Maximum Home Price—The price of an AHO home may not exceed the maximum
allowed price in the AHO home price schedule published by the city and previously
given to the buyer by the seller as part of the "AHO Guide to Buying a Moderate-Priced
home.
Owner-occupancy requirement—The buyer's household must occupy the home for two
years following the closing date of the purchase, during which time the home the home
may not be rented to any party. The city may waive this owner-occupancy requirement
for reasons of hardship, in accordance with its written policy for such waivers.
Exhibit P: Occupancy Affidavit
OCCUPANCY AFFIDAVIT
The undersigned certify the following:
l. I/We are purchasing a home through the City of Bozeman affordable housing
program. We commit to occupying the purchased through the program as a
primary residence, defined as residing for six months plus 1 day a year, for a
minimum period of two years, commencing on the date of closing on the home.
2. I/We commit to notifying the city in writing if a situation arises where we cannot
occupy the unit as a primary residence.
3. I/We fully understand that it may be a Federal crime and civil offense
punishable by imprisonment, forfeiture of benefits, or all the above, to knowingly
make any false statements when applying for assistance through the City of
Bozeman affordable housing program.
Borrower
Co-Borrower
Date