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Exhibit CC 09-20-2016 Item No. 5 BMR sale appealAppeal of Ms. Kimberly Sandstrom Regarding Eligibility to Purchase a Below Market Rate (BMR) Unit SEPTEMBER 20, 2016 Background The City administers the BMR Program using the Policy and Procedures Manual for Administering Deed Restricted Affordable Housing Units (the "BMR Manual).The City contracts with West Valley Community Services ("WVCS")to manage the BMR Program,including the determination of homebuyer eligibility. Ms.Kimberly Sandstrom's income documentation was reviewed and found by WVCS to exceed the established income limit. Ms.Sandstrom completed three levels of WVCS‘s grievance process,each affirmed the initial finding that the income exceeded the established limit. The City requested outside counsel to review the income determination.Outside Counsel concluded that the income exceeded the established limit. On August 11,2016,the Housing Commission heard Ms.Sandstrom's appeal and approved resolution to recommend to the City Council to affirm the determination that Kimberly Sandstrom was ineligible to purchase the BMR unit due to income exceeding the established income limit.The Commission also recommended that Ms.Sandstrom be allowed to retain her current position on the BMR waiting list administered by WVCS. Calculation of Income Documentation used to verify an applicant's sources of income: 1.Federal tax returns for the most recent three years; 2.W2 forms for most recent two years;and/or 3.Copies of the last three consecutive payroll stubs. WVCS used Ms.Sandstrom’s last three consecutive payroll stubs,which listed regular and bonus income,to determine her income eligibility. Calculation of Income Income limit per California Department of Housing and Community Development for a two -person household at a moderate income level in Santa Clara County was $102,050 at the time of Ms.Sandstrom’s BMR application. Calculation of Income Ms.Sandstrom’s gross wages was $3,692.80 biweekly,totaling $96,012.80 per year. Ms.Sandstrom’s total 2015 bonus pay was $7,635.34. The total of Ms.Sandstrom's annual gross wages plus the total bonuses received was $103,648.14 Basis of Appeal Determination of income eligibility should be forward-looking; 24 CFR 5.609(a)(2)states that annual income includes all amounts which "[a]re anticipated to be received from a source outside the family during the 12-month period following admission or annual reexamination effective date." Evidence of lower mid-year bonus and anticipated lower future bonuses should be included. BMR Manual Requirement The City’s BMR Manual at the time of application excluded subsection (a)from its definition of annual income.The Manual explicitly states that income is determined through past evidence of income and,as provided by 24 CFR 5.609(b),bonuses received during the years covered by those documents are part of the income calculation. Income Calculations by Other Jurisdictions BMR programs in other jurisdictions and those administered by BMR program consultants were compared,including the City of Sunnyvale,Alameda County,the City of Emeryville,Palo Alto Housing Corporation,and Housing Trust Silicon Valley. The income calculations used by the City are consistent with those used in other local jurisdictions. Conflict of Interest and Investigation Ms.Sandstrom alleged that the sale violated State conflict of interest laws (Section 1090 and the Political Reform Act)and has asked that the sale be reversed. A formal conflict of interest investigation was conducted and concluded that there is no evidence of preferential treatment or violation of State conflict of interest laws. Housing Commission On August 11,2016,the Housing Commission considered the appeal and recommended that the City Council affirm the determination that Kimberly Sandstrom was ineligible to purchase a BMR home due to exceedance of established income limit, but allow Ms.Sandstrom to retain current position on the BMR waiting list. Recommendation Staff recommends that the City Council approve the draft resolution regarding the appeal of Ms.Kimberly Sandstrom and affirming the recommendation of the Housing Commission regarding the eligibility of Ms. Sandstrom to purchase a BMR unit.