CC 05-19-2020 Item No. 24 Below Market Rate Housing Mitigation Procedures Manual_redlined
Amended and Adopted by City Council
May 5, 2015May 19, 2020
Resolution No. 20‐___15‐037
City of Cupertino
Housing Division
Department of Community Development
10300 Torre Avenue
Cupertino, CA 95014
Voice: (408)777‐3251
Fax: (408)777‐3330
Table of Contents
1 Introduction........................................................................................................................................ 1
2 Housing Mitigation Program ........................................................................................................... 2
2.1 Applicability ................................................................................................................................. 2
2.2 Affordable Housing Impact Mitigation Fee .................................................................................. 2
2.2.1 Payment ........................................................................................................................................ 2
2.2.2 Permitted Use of Fees ........................................................................................................... 3
2.3 Affordable Housing Units ............................................................................................................ 3
2.3.1 Minimum Affordability of Residential Units ....................................................................... 3
2.3.2 Fractional Units ................................................................................................................... 4
2.3.3 Affordable Housing Plan ...................................................................................................... 5
2.3.4 BMR Unit Design Requirements ............................................................................................ 5
2.3.5 Initial Maximum Sales Prices and Rents of BMR Units ..................................................... 5
2.3.6 Terms of Affordability .......................................................................................................... 7
2.3.7 Agreement between Developer and City .............................................................................. 7
3 Mitigation Requirements of Non‐Residential Developments ...................................................... 9
3.1 Requirements ................................................................................................................................ 9
3.2 Non‐Residential Fee Calculations ................................................................................................ 9
4 Mitigation Requirements of Ownership Residential Developments ....................................... 10
4.1 Requirements ............................................................................................................................. 10
4.2 BMR Requirements for Developments with One (1) to Six (6) Units ....................................... 10
4.3 BMR Requirements for Developments with Seven (7) or more Units ....................................... 10
5 Mitigation Requirements of Rental Residential Developments ................................................ 11
5.1 Requirements ............................................................................................................................. 11
5.2 Residential Rental Impact Fee Calculations .............................................................................. 11
6 Mitigation Requirements for Mixed‐Use Projects ...................................................................... 12
6.1 Requirements ............................................................................................................................. 12
6.2 Mixed‐Use Impact Mitigation Fee Calculations ........................................................................ 12
7 Alternatives to BMR Requirements .............................................................................................. 13
7.1 Options for Alternatives ............................................................................................................ 13
7.2 Housing Plan for Alternative BMR Requirements ................................................................... 13
8 City Incentives ................................................................................................................................ 15
8.1 Density Bonus ........................................................................................................................... 15
8.2 Financial Assistance .................................................................................................................. 15
8.3 Fee Waivers ............................................................................................................................... 15
8.4 Priority Processing .................................................................................................................... 15
8.5 City Certification of Buyer and Tenant Eligibility .................................................................... 15
[Page intentionally left blank]
BMR HOUSING MITIGATION PROGRAM
PROCEDURAL MANUAL
‐ 1 ‐
1 Introduction
In accordance with the City of Cupertino’s Housing Element, all new residential and/or non‐
residential developments are required to help mitigate project‐related impacts on affordable
housing needs.
As required by Section 19.172.030 of the Cupertino Municipal Code, this manual establishes
procedures for implementing the affordable housing mitigation provisions of the City’s Below
Market Rate (BMR) Housing Mitigation Program.
A separate manual, the “Policy and Procedures Manual for Administering Deed Restricted
Affordable Housing Units” establishes the procedures for the on‐going administration of the
inventory of BMR units created by the City’s Residential Housing Mitigation Program. The City or
its agent will administer the programs.
BMR HOUSING MITIGATION PROGRAM
PROCEDURAL MANUAL
‐ 2 ‐
2 Housing Mitigation Program
2.1 Applicability
A. The Non‐residential and Residential Housing Mitigation Programs are applicable to all
non‐residential and/or residential projects that result in an increase of gross floor area
(for fee‐based program) and/or the number of net new units in a development (for
unit‐based program) with the following exemptions:
1. New gross floor area that is replacing demolished or destroyed gross floor area;
2. Existing space that is being rehabilitated, but not enlarged;
3. Governmental buildings;
4. Institutional buildings;
5. Demolition and rebuild of or additions to existing single family homes;
6. Second Accessory dwelling units and
7. Parking garages (this exemption does not apply to commercial paid‐parking
garages).
The program has two components; a fee‐based program for certain types of development
and a unit‐based program for other types of development.
2.2 Affordable Housing Impact Mitigation Fee
A. Non‐residential and residential affordable housing impact mitigation fee amounts are
set by the City Council.
B. The Affordable Housing Mitigation Ffee may not exceed the cost of mitigating the
impact of the type of development on the need for affordable housing as supported by
nexus studies that may be commissioned from time to time by the City Council.
C. The fee shall be adjusted annually using the Consumer Price Index (all items index for
the San Francisco Bay Area).
D. The City will publish the most recently adopted housing mitigation fees annually in
the fee schedule.
2.2.1 Payment
A. Fees shall be based on the fee schedule in effect on the date that the construction
permit is issued by the City and shall be due and payable on the date of issuance
of construction permits , unless otherwise required by state law.
B. In the event that the applicant is allowed to defer payment of fees and is issued
construction permits, the fees shall be due and payable according to the fee
schedule in effect on the date of fee payment, prior to first occupancy of the
project, unless a negotiated Development Agreement allows otherwise.
BMR HOUSING MITIGATION PROGRAM
PROCEDURAL MANUAL
‐ 3 ‐
C. All fees shall be deposited into the City’s Below Market Rate (BMR) Affordable
Housing Fund (AHF).
2.2.2 Permitted Use of Fees
A. Affordable housing impact mitigation fees deposited into the BMR AHF shall
only be used for the provision of affordable housing in Cupertino.
B. The options for use of the fee revenue include, but are not limited to the
following:
1. BMR Program Administration
2. Land Acquisition
3. New Construction
4. Acquisition and/or rehabilitation of buildings for permanent affordability
5. Preserving “at‐risk” BMR Units
6. Substantial Rehabilitation
7. Rental Operating Subsidies
8. Down Payment Assistance
9. Direct gap financing
10. Fair Housing
C. A portion of the BMR AHF will be targeted to benefit the following groups, to the
extent that these target populations are found, to be consistent with the needs
identified in the nexus study:
1. Extremely low‐income households and
2. Persons with special needs (such as the elderly, victims of domestic violence,
and the disabled, including persons with developmental disabilities).
2.3 Affordable Housing Units
Affordable housing unit requirements are set by the City Council.
A. Affordable housing unit requirements may not exceed the cost of mitigating the impact
of the development on the need for affordable housing as supported by nexus studies
that may be commissioned from time to time by the City Council.
2.3.1 Minimum Affordability of Residential Units
A. When a development provides Ownership Below ‐Market‐Rate (BMR) units, the
affordability requirements for units shall be as follows:
1. Fifty percent (50%) of BMR units as median‐income and fifty percent (50%) as
moderate‐income.
BMR HOUSING MITIGATION PROGRAM
PROCEDURAL MANUAL
‐ 4 ‐
2. If a single BMR unit is provided, it shall be designated for median income.
B. When a development proposes to provide on‐site Rental BMR units, the
affordability requirements for units shall be as follows:
1. Sixty percent (60%) of BMR units as very low‐income and forty percent (40%)
as low‐income.
2. If a single BMR unit is provided, it shall be designated for very‐low income.
C. When the calculations in A or B (above) result in an odd number, the “extra unit”
shall benefit the median‐income group for Ownership BMR units and the very
low‐income group for on‐site Rental BMR units.
Affordability of Units ‐ Example
Ownership BMR Units Rental BMR Units*
# of BMR
Units
Required*
# of Median
Income Units
# of Moderate
Income Units
# of Very‐Low
Income Units
# of Low Income Units
1 1 0 1 0
4 2 2 2 2
9 5 ** 4 5 4***
* See Chapter 7 for BMR rental units.
** See Section 2.3.1 for extra unit
*** See Section 2.3.2 for fractional units
2.3.2 Fractional Units
A. When computations for the number of required BMR units result in fractional
units, the developer’s obligations shall be as follows:
1. 0.00 ‐ 0.49 of a unit: Pay an in‐lieu fee for the fractional unit in compliance
with Section 2.2.1.
2. 0.50 ‐ 0.99 of a unit: Round up and provide one additional BMR unit.
B. Determination of the in‐lieu fee for fractional units:
1. Determine the total Housing Mitigation Fee for the entire project (as though
impact fees will be paid rather than on‐site units provided.) The Housing
Mitigation Fee for the project is calculated by multiplying the gross floor area
of the project by the applicable affordable housing mitigation fee based
on the fee schedule in effect.
2. Determine the Housing Mitigation Fee per affordable unit by dividing the
total Housing Mitigation Fee as calculated in B1 (see above) by the total
number of required affordable units (even if fractional).
3. Determine the in‐lieu fee owed for the fractional unit by multiplying the
Housing Mitigation Fee per affordable unit as calculated in B3 (see above) by
the fractional amount.
BMR HOUSING MITIGATION PROGRAM
PROCEDURAL MANUAL
‐ 5 ‐
Example
Residential project: 42 units; BMR requirement = 8.46.3 units
Gross Floor Area/home = 3,000 sq. ft. (excluding exemptions)
On‐site requirement = 86 BMR units; In‐lieu fee requirement = 0.3 4 unit
Affordable housing mitigation fee = $20/sq. ft (assumed)
In‐lieu fee calculated as follows:
Step 1: Total Housing Mitigation Fee = 42 units x 3,000 sq. ft. x $20/sq. ft. = $2,520,000.
Step 2: Impact fee per affordable unit = $2,520,000 ÷ 8.46.3 BMR units = $4300,000 per BMR
unit. Step 3: In‐lieu fractional impact fee = $400300,000 x 0.3 4 = $120,000.
Note: The fee calculation and estimates above are examples only and may not reflect actual fees.
2.3.3 Affordable Housing Plan
A. For projects that propose BMR units, the applicant shall submit an “Affordable
Housing Plan,” describing how a development project will comply with the
Cityʹs BMR requirements, with the application for the first approval of the project.
B. The plan shall identify the BMR units or parcels in the development.
C. If alternatives are proposed in compliance with Chapter 7, the plan shall identify
how the proposal is equivalent to the BMR requirements of Chapter 4.
D. An applicant may submit a request for a waiver or modification of the Cityʹs BMR
requirements concurrently with the application for the first approval of the
project, based upon a showing that applying the requirements would result in an
unconstitutional taking of property or would result in any other unconstitutional
result. The request must set forth in detail the factual and legal basis for the claim.
The request for the waiver or modification will be processed concurrently with
the affordable housing plan and all other permits required for the project.
D.E. The decision‐making body with authority to approve the project shall review
and may approve, conditionally approve, or deny the Affordable Housing Plan.
However, the City Council shall review and may approve, conditionally approve,
or deny an Affordable Housing Plan that proposes alternatives to the BMR
requirements of Chapter 3, 4, and/or 5 or that requests a waiver or modification of
the BMR requirements. The waiver or modification may be approved only to the
extent necessary to avoid an unconstitutional result, based on the City Attorneyʹs
legal advice, after adoption of written findings based on legal analysis and
substantial evidence. If a waiver or modification is granted, any change in the
project will invalidate the waiver or modification, and a new application will be
required for a waiver or modification.
2.3.4 BMR Unit Design Requirements
A. BMR units shall be comparable to market rate units in terms of unit type, number
BMR HOUSING MITIGATION PROGRAM
PROCEDURAL MANUAL
‐ 6 ‐
of bedrooms per unit, quality of exterior appearance and overall quality of
construction.
B. BMR unit size should be generally representative of the unit sizes within the
market‐rate portion of residential project.
C. Interior features and finishes in affordable units shall be durable, of good quality
and consistent with contemporary standards for new housing.
D. The BMR units shall be dispersed throughout the residential project.
2.3.5 Initial Maximum Sales Prices and Rents of BMR Units
A. For Sale BMR Units
The maximum initial sales prices of BMR units will be determined by the City, or
its agent, based on the maximum affordable housing cost provisions of Section
BMR HOUSING MITIGATION PROGRAM
PROCEDURAL MANUAL
‐ 7 ‐
50052.5 of the California Health and Safety Code and the most recent published
State Department of Housing and Community Development (HCD) income
limits, as follows:
1. Determine the annual median income, based on HCD income tables for Santa
Clara County, for a household size that is one person more than the number
of bedrooms in the BMR unit.
2. Multiply the median income by the following:
a. 110% for a BMR moderate income unit; and
b. 90% for a BMR median income unit.
3. Obtain the maximum annual housing allowance by multiplying the annual
income from Step 2 above by 0.35 (moderate‐income) or 0.30 (median‐
income).
4. Obtain the maximum monthly housing allowance by dividing the annual
housing allowance by 12.
5. Determine the maximum mortgage that can be financed:
a. The City’s BMR ownership program requires a minimum borrower down
payment of 5%; therefore, the first mortgage loan amount will be
calculated at a 95% loan‐to‐value (LTV) ratio. In order to determine the
primary mortgage interest rate at least two City BMR approved lenders
will be contacted for a 30 year fully amortized fixed‐rate primary home
mortgage interest rate quote based on specific BMR sales price scenarios.
Either use the average of the BMR lender interest rate quotes or 0.5%
higher interest rate than interest rate quotes.
b. Determine the maximum home mortgage that can be financed based on
the principal and interest (P&I) mortgage payment as determined by the
interest rate in Step 5a. The total monthly housing expense shall include
the P&I mortgage payment, property taxes, mortgage insurance (if
applicable), homeowner’s insurance, and homeowner’s association (HOA)
fees.
c. Determine the maximum initial BMR unit sales price by adding up the
total monthly housing expense as described in Step 5b. The proposed total
monthly housing expenses cannot exceed the maximum monthly housing
allowance as described in step 4.
B. Rental BMR Units
1. The maximum initial rents for BMR units are set at a level affordable to low
and very low‐income households. The maximum initial rents for BMR units
shall be determined based on:
a. Maximum housing allowance of 30% of gross income for a household size
BMR HOUSING MITIGATION PROGRAM
PROCEDURAL MANUAL
‐ 8 ‐
of one person more than the number of bedrooms in the rental BMR unit,
and
b. For low income units, assume household income at 60% of median‐
income, and for very low‐income units, assume household income at 50%
of median‐income.
2. The maximum rents for BMR units and maximum household income limits
are revised annually following the annual publication of HCD income limits
for Santa Clara County.
3. ʺRentʺ includes monthly rent paid to the property owner, utilities, and all fees
for parking and other housing services. A reasonable utility allowance, as
determined by the tables published annually by the Santa Clara County
Housing Authority, shall be deducted from the maximum monthly rents for
those utilities paid by the tenant.
4. Where affordable housing units are developed with other state or federal
housing program assistance, the rental price requirements of the state or
federal housing program will supersede the price limitations of these
Guidelines where they are more stringent.
2.3.6 Terms of Affordability
Affordable housing is subject to recorded covenants that require the units be
occupied at prices/rents that are affordable to Low to Moderate‐income households
for a period of not less than 99 years from the date of first occupancy of the unit.
These deed restrictions shall run with the land and will remain in effect for
subsequent buyers and owners.
2.3.7 Agreement between Developer and City
A. Prior to recordation of a final or parcel map or issuance of any building permit,
whichever is earlier, an affordable housing agreement shall be recorded against
the property. The affordable housing agreement shall include, but not be limited
to, the following:
1. Total number of BMR units, type, location, square footage and number of
bedrooms, and construction scheduling of market‐rate and BMR units;
2. Provisions to ensure concurrent construction and completion of BMR and
market‐rate units;
3. Affordability levels for each BMR unit;
4. Provisions for income certification and screening of potential occupants of
BMR units;
5. Resale control mechanisms;
6. Financing of ongoing administrative and monitoring costs (City and private);
BMR HOUSING MITIGATION PROGRAM
PROCEDURAL MANUAL
‐ 9 ‐
7. If applicable, a relocation plan for tenants of rental BMR units upon sale of
units or redevelopment of site; and
8. Other reasonably required provisions to implement the Affordable Housing
Plan.
B. Agreements for projects that provide alternatives to BMR requirements shall
additionally contain provisions to ensure that the alternative requirements are
completed prior to occupancy of the market rate development.
BMR HOUSING MITIGATION PROGRAM
PROCEDURAL MANUAL
‐ 10 ‐
3 Mitigation Requirements of Non‐Residential Developments
3.1 Requirements
A. All non‐residential projects that result in a net increase in gross floor area shall be
required to pay the Affordable Housing Impact Mitigation Fee in compliance with
Section 2.2 of this manual.
B. Projects may propose alternatives to the BMR requirement in A (see above) in
compliance with Chapter 7 of this manual.
3.2 Non‐Residential Fee Calculations
Non‐residential affordable housing impact mitigation fees shall be calculated by
multiplying the increase in gross square footage (SF) by the applicable non‐residential
affordable housing impact mitigation fee.
Example Calculation of Non‐Residential Affordable Housing Impact Mitigation Fee
Scenario Applicable
SF
Fee Amount per SF of
Gross Floor Area †
Total Fee
Demolish and rebuild retail project:
Existing Gross sq. ft. = 10,000 sq. ft.;
New Gross sq. ft. = 15,000 sq. ft.
5,000 sq. ft.
$10.00/sq. ft.
$50,000
New construction:
Commercial office = 50,000 sq. ft.;
Police substation = 1,500 sq. ft.*;
Parking garage = 48,000 sq. ft.*
50,000 sq. ft.
$20.00/sq. ft.
$1,000,000
Note: * Exempt
† The fee amounts above are examples only and may not reflect actual fee amounts.
BMR HOUSING MITIGATION PROGRAM
PROCEDURAL MANUAL
‐ 11 ‐
4 Mitigation Requirements of Ownership Residential Developments
4.1 Requirements
A. An ownership residential development is any residential development that includes
the approval of a subdivision map and creates one or more units that may be sold
individually. It also includes a condominium conversion.
B. All ownership projects that result in the net increase in units shall be required to
provide BMR mitigations in compliance with Section 4.2 and 4.3.
C. Projects that propose alternatives to the BMR requirement in A (see above) shall do
so in compliance with Chapter 7 of this manual.
4.2 BMR Requirements for Developments with One (1) to Six (6) Units
New ownership projects adding one to six units may either pay the Affordable Housing
Mitigation Fee in compliance with Section 2.2 or provide one BMR unit in compliance
with Section 2.3.
Example Calculation of Ownership Affordable Housing Impact Mitigation Fee (1‐6 units)
Scenario Applicable
SF
Fee Amount per SF of
Gross Floor Area †
Total Fee
New single family home or townhome:
Gross sq. ft. = 3,025 sq. ft.;
Garage = 425 sq. ft.*
2,600 sq. ft.
$20.00/sq. ft.
$52,000
New 5 unit multifamily ownership development:
Gross sq. ft. = 10,000 sq. ft;
Garage = 4,000 sq. ft.*
6,000 sq. ft.
$20.00/sq. ft.
$120,000
Note: * Exempt;
† The fee amounts above are examples only and may not reflect actual fee amounts.
4.3 BMR Requirements for Developments with Seven (7) or more Units
New ownership projects with seven or more units or lots shall provide at least 1520%
of the units or lots as BMR ownership units or lots per Section 2.3.
Example Calculation of Ownership Affordable Housing Impact Mitigation Fee (7+ units)
Scenario
BMR requirement BMR
units
Fees
New 2524‐unit ownership townhome project
254 x 1520% = 3.754.8 units
45 units*
NA
New 456‐unit condominium development
456 x 1520% = 9.28.25 units
89 units Pay fee for 0.25 unit
per Section 2.3.2
Note: * Additional unit if over 0.49 per Section 2.3.2;
† The fee amounts above are examples only and may not reflect actual fee amounts.
‐ 11 ‐
BMR HOUSING MITIGATION PROGRAM
PROCEDURAL MANUAL
5 Mitigation Requirements of Rental Residential Developments
5.1 Requirements
A. A rental residential development is any residential development that creates new
dwelling units that cannot be sold individually.
B. All rental projects that result in the net increase in units shall be required to
provide BMR mitigations in compliance with Section 5.2 and 5.3.
C. Projects that propose alternatives to the BMR requirement in A (see above) shall do
so in compliance with Chapter 7 of this manual.
5.2 BMR Requirements for Developments with One (1) to Six (6) Units
New rental projects adding one to six units may either pay the Affordable Housing
Mitigation Fee in compliance with Section 2.2 or provide one BMR unit in compliance
with Section 2.3.
Scenario Fee Amount per SF of
Gross Floor Area †
Total Fee
New 5 unit multifamily rental development:
Gross livable sq. ft. = 5,000 sq. ft;
$20.00/sq. ft.
$100,000
Note: † The fee amounts above are examples only and may not reflect actual fee amounts
5.3 BMR Requirements for Developments with Seven (7) or more Units
New rental projects with seven or more units shall provide at least 15% of the units or
lots as BMR ownership units or lots per Section 2.3.
Example Calculation of Rental Affordable Housing Mitigation Fee (7+ units)
Scenario
BMR requirement BMR
units
Fees
New 25‐unit rental project
25 x 15% = 3.75 units
4 units*
NA
New 45‐unit rental project
45 x 15% = 8.25 units
8 units Pay fee for 0.25 unit
per Section 2.3.2
Note: * Additional unit if over 0.49 per Section 2.3.2;
B. † The fee amounts above are examples only and may not reflect actual fee amounts.All new and
redeveloped rental residential developments shall pay the residential affordable
housing mitigation fee in compliance with Section 2.2.
C. If State law is amended to permit the City to require BMR units in rental projects,
then all rental projects of seven units or more shall meet the requirements of
Section 4.3 rather than pay the residential affordable housing mitigation fee.
D. Projects that propose alternatives to the BMR requirements in A and B above
shall do so in compliance with Chapter 7 of this manual.
‐ 12 ‐
5.2 Residential Rental Impact Fee Calculations
Total residential rental affordable housing impact fees are calculated by multiplying
the increase in gross square footage in a development by the applicable residential
affordable impact fee.
Example Calculation of Residential Affordable Housing Impact Fee (Rental Projects)
Scenario Applicable
SF
Fee Amount per SF of
Gross Floor Area †
Total Fee
Demolish and Rebuild Rental Residential Project:
Demolish 10 units = 10,000 sq. ft.;
Construct 10 units = 20,000 sq. ft.
10,000 sq. ft.
$20.00/sq. ft.
$20,000
New 30 unit Rental Residential Project:
Gross Floor Area = 32,400 sq. ft.
Garage = 16,200 sq. ft.*
32,400 sq. ft.
$20.00/sq. ft.
$648,000
Note: * Exempt
† The fee amounts above are examples only and may not reflect actual fee amounts.
‐ 13 ‐
BMR HOUSING MITIGATION PROGRAM
PROCEDURAL MANUAL
6 Mitigation Requirements for Mixed‐Use Projects
6.1 Requirements
A. All new and redeveloped mixed‐use developments shall comply with requirements
in:
1. Chapter 3 for non‐residential components; and/or
2. Chapter 4 for residential ownership components; and/or
3. Chapter 5 for residential rental components.
B. Projects that propose alternatives to the BMR requirements in A (see above) shall do
so in compliance with Chapter 7 of this manual.
6.2 Mixed‐Use Impact Mitigation Fee Calculations
Total residential rental affordable housing impact fees are calculated by multiplying the
increase in gross square footage in a development by the applicable residential
affordable impact fee.
Example Calculation of Residential Affordable Housing Impact Mitigation Fee (Rental Projects)
Scenario
Applicable SF
Fee Amount per SF of Gross Floor
Area †
Total
Mitigation
New mixed‐use project:
Res. condos (2 units) = 3,000 sq. ft.
Office = 5,000 sq. ft.
Parking Garage = 850 sq. ft.*
Res. = 3,000 sq. ft.
Off. = 5,000 sq. ft.
Residential Ownership fee =
$20.00/sq. ft.
Residential Ownership BMR units =
1520%
Residential Rental fee = $25.00/sq.
ft.
Residential Rental BMR Units =
15%
Office fee = $20.00/sq. ft.
Retail & Hotel fee = $10/sq. ft.
$160,000
New mixed‐use project:
Res. rental (120 units) = 110,000 sq. ft.
Retail space = 50,000 sq. ft.;
Hotel (160 rooms) = 50,000 sq. ft.;
Parking Garage = 150,000 sq. ft.*
Res. = 110,000 sq. ft120
units.
Retail = 50,000 sq. ft.
Hotel = 50,000 sq. ft.
18 units plus
$3,7501,000,
000
New mixed‐use project:
Res. Condos (120 units) = 110,000 sq. ft.
Retail space = 10,000 sq. ft.
Office = 25,000 sq. ft.
Parking Garage = 60,000 sq. ft.*
Res. = 120 units
Retail = 10,000 sq. ft.
Office = 25,000 sq. ft.
18 24
units
plus
$600,000
Note: * Exempt
† The fee amounts above are examples only and may not reflect actual fee amounts.
‐ 14 ‐
BMR HOUSING MITIGATION PROGRAM
PROCEDURAL MANUAL
7 Alternatives to BMR Requirements
The Council may, at its discretion, approve other alternatives to Chapters 3, 4, 5 and 6. The
alternatives proposed shall be equivalent to the applicable BMR requirements for the
project.
7.1 Options for Alternatives
A. Options for Alternatives to BMR Requirements may include, but are not limited to
the following:
1. On‐site BMR rental units where ownership units or a fee is required.
2. Purchase of off‐site units to be dedicated and/or rehabilitated as for‐sale or rental
BMR units per Section 2.3.
3. Development of off‐site units to be dedicated as for‐sale or rental BMR units per
Section 2.3.
4. Land for development of affordable housing.
B. The Council may approve, conditionally approve, or deny a proposal to provide
alternatives to BMR requirements.
7.2 Housing Plan for Alternative BMR Requirements
A. If alternatives to BMR requirements are proposed, an Affordable Housing Plan shall,
in addition to the requirements of Section 2.3.3:
1. Demonstrate equivalency of the alternative to BMR requirements
2. If on‐site BMR rental units are proposed as part of an ownership or rental
residential development, to ensure compliance with the Costa‐Hawkins Act, the
City may only approve a proposal to provide rental BMR units if the applicant
agrees in a recorded agreement with the City to limit rents in consideration for a
form of assistance, such as regulatory incentives, specified in the Costa Hawkins
Act, or a direct financial contribution as specified in Chapter 8. Rental BMR units
shall be affordable as shown in Section 2.3.1.
3. If off‐site development of BMR units is proposed:
a. Identify the proposed site and demonstrate site control;
b. Identify the developer for the proposed off‐site BMR project;
c. If not appropriately zoned, demonstrate compatibility of the proposed
project with adjacent uses;
d. Provide a financial pro forma identifying all financing sources to fully fund
an affordable project; and
e. Provide a plan for completion of the off‐site BMR development, prior to
‐ 15 ‐
BMR HOUSING MITIGATION PROGRAM
PROCEDURAL MANUAL
approval of the market‐rate project. The Affordable Housing Plan shall
additionally include, but not be limited to, the following items prior to any
parcel or final map or issuance of building permits for the market‐rate
project, whichever is earlier:
i. Transfer of property to BMR developer;
ii. Recordation of a city‐approved deed restriction against the property;
iii. Discretionary approvals from the City for the proposed BMR
development;
iv. Committed financing for the project in an escrow account or an account
approved by the City with joint signatory authority with the City and
firm commitments from lenders or other sources of financing for the
project; and
v. A contingency plan, including a schedule of timing and agreement to
provide the required on ‐site BMR mitigation, in the event the off‐site
BMR units are not completed prior to completion of the market rate
development.
B. The City may retain a consultant, at the developer ʹs expense, to review the
reasonableness of the proposal and the submitted pro‐forma.
‐ 16 ‐
BMR HOUSING MITIGATION PROGRAM
PROCEDURAL MANUAL
8 City Incentives
8.1 Density Bonus
To maximize housing opportunity and partially assist the developer by reducing or
eliminating the development cost for the affordable units, a density bonus consistent
with Chapter 19.56 of the Cupertino Municipal Code, Density Bonus, will be permitted.
8.2 Financial Assistance
If the project qualifies, the City may choose to utilize BMR AHF monies to create a
greater percentage of affordable units at greater affordability than otherwise required
(very low and low income in for‐sale developments; extremely low and very low in
rental developments).
8.3 Fee Waivers
The City may consider waiving park dedication and construction tax fees for affordable
units.
8.4 Priority Processing
The City shall, wherever possible, consider expediting the processing of developments
with affordable units.
8.5 City Certification of Buyer and Tenant Eligibility
The City or its agent shall certify the eligibility of all proposed buyers and renters of
BMR units.