17.138.100 Shared equity purchase program.
When a residential development project includes affordable housing units for sale in excess of the inclusionary housing requirement for the project, the additional units may be offered under the shared equity purchase program.
A. Under this program, the qualified buyer of a designated affordable dwelling unit shall enter into a shared equity agreement with the city. Said agreement shall be recorded as a lien against the purchased property, at no interest, securing and stating the city’s equity share in the property. The city’s equity share shall be calculated by the director, and shall be the decimal percentage of the property’s value resulting from:
1. The difference between the property’s market value and the actual price paid by the homeowner, divided by the market value; and/or
2. When applicable, the amount of subsidy provided by the city to the homeowner to purchase the property, divided by the property’s market value.
B. Upon sale, the city’s equity share shall be repaid to the city from the proceeds of the sale, less the city’s percentage share of title insurance, escrow fees, and documentary transfer taxes, at the close of escrow. The proceeds from the sale shall be deposited into the city’s affordable housing fund and shall be used for the purposes set forth in Health and Safety Code Section 33334.2(e).
C. In the event of “early resale,” owners of properties subject to the shared equity purchase program shall either: (1) pay an equity recapture fee to the city as described in the schedule below, in addition to the city’s equity share, or (2) sell the property to another eligible household.
If the owner chooses to pay the equity recapture fee, the recapture fee shall be paid to the city upon resale at close of escrow, based on the following schedule:
Table 8-2: Percent of Equity Build-up Recaptured | |
|---|---|
Year | % of Equity Build-up Recaptured |
0—3 | 100% |
4 | 75% + City’s Equity Share |
5 | 50% + City’s Equity Share |
6 | 25% + City’s Equity Share |
7 and after | 0% + City’s Equity Share |
The recapture amount shall be determined prior to the calculation of escrow closing costs. (Ord. 1719 § 3, 2022)