AN ORDINANCE TO AMEND CHAPTER 16 OF THE CITY

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AN ORDINANCE TO AMEND CHAPTER 16 OF THE CITY Powered By Docstoc
					 1                  AN ORDINANCE TO AMEND CHAPTER 16 OF THE CITY
 2                  CODE BY ADDING A NEW ARTICLE VIII THERETO,
 3                  CONSISTING OF SECTIONS 16-42 THROUGH 16-58,
 4                  ESTABLISHING ELIGIBILITY REQUIREMENTS, PRICING
 5                  STANDARDS      AND     PROGRAM    PROCEDURES
 6                  PERTAINING      TO     WORKFORCE     HOUSING,
 7                  ESTABLISHING THE WORKFORCE HOUSING ADVISORY
 8                  BOARD AND PRESCRIBING THE MEMBERSHIP AND
 9                  DUTIES OF THE BOARD
10
11                  Sections Added: City Code Sections 16-42 through 16-58
12
13       BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF VIRGINIA
14   BEACH, VIRGINIA:
15
16          That Chapter 16 (Housing and Building Maintenance) of the City Code is hereby
17   amended and reordained by the addition of a new Article VIII, consisting of Sections
18   16- 42 through 16-58, to read as follows:
19
20                            ARTICLE VIII. WORKFORCE HOUSING.
21
22                                    Part 1. General Provisions
23
24   Sec. 16-42. Applicability.
25
26         The provisions of this Article shall apply only to the sale or rental of workforce
27   housing approved by the City Council pursuant to the provisions of Article 21 of the City
28   Zoning Ordinance.
29                                         COMMENT
30
31           The section limits the application of this Article to workforce housing specifically approved
32   as such by the City Council pursuant to Article 21 of the City Zoning Ordinance.
33
34
35   Sec. 16-43. Purpose and intent.
36
37          (a)    The purpose of this Article is to provide eligibility requirements, pricing
38   standards and program procedures concerning initial sales, subsequent transfers and
39   rentals of workforce housing units developed pursuant to the provisions of Article 21 of
40   the City Zoning Ordinance as part of the City’s Workforce Housing Program. It is the
41   intention of the City Council to establish such standards and procedures as a means of
42   achieving the City’s vision for housing and neighborhoods, as stated in the “Housing
43   and Neighborhoods” section of the Comprehensive Plan.
44
45           (b)    The creation of developments containing workforce housing as an
46   integrated component thereof will advance the City’s goal of providing diverse, high-
47   quality and affordable housing in desirable neighborhoods. Allowing a greater mix of
48   incomes within neighborhoods increases the affordability of housing and reduces the
49   isolation of income groups. Further, mixed-income developments are beneficial in the
50   long run because they broaden housing opportunities, increase residents' access to
51   nearby employment and provide a better land use arrangement to accommodate
52   alternative, cost-effective transportation systems.
53
54                                            COMMENT
55
56           Subsection (a) states the purpose and intent of the ordinance. Subsection (b) essentially
57   restates some of the findings set forth in Article 21 of the City Zoning Ordinance concerning the
58   benefits of mixed-income developments contemplated by Article 21 and this ordinance.
59
60
61   Sec. 16-44. Definitions; explanatory material.
62
63          As used in this Article, the following terms shall have the meanings set forth in
64   this Section. Where explanatory material is provided, such terms shall be construed in
65   a manner consistent with such material:
66
67          Affordable. Housing is generally considered affordable by a household if no
68   more than approximately thirty per cent (30%) of its annual gross income is spent on
69   direct housing costs. With respect to home ownership, such costs include mortgage
70   principal, interest, taxes and insurance, but not homeowners’ association dues,
71   condominium fees, utilities or other related housing costs. With respect to rentals, such
72   costs include only rent payments and do not include utilities or other related housing
73   costs.
74
75           Annual gross income. Income from whatever source derived and before taxes
76   and withholdings. Included in the calculation of gross income are base salary, overtime,
77   part-time employment, bonuses, dividends, interest, royalties, pensions, military housing
78   allowance, Veterans Administration compensation, alimony, child support, public


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 79   assistance, sick pay, social security benefits, unemployment compensation, income
 80   from trusts, and other income from business activities or investments.
 81
 82         Appreciation. The Workforce Housing Program uses a shared appreciation
 83   model to recapture the workforce housing discount, plus a fixed percentage of a unit's
 84   appreciation in value.
 85
 86                Gross Appreciation. The difference between the initial undiscounted sales
 87                price of a workforce housing unit and the undiscounted sales price of the
 88                unit upon resale.
 89
 90                Net Appreciation. The difference between the original undiscounted sales
 91                price of a workforce housing unit and its undiscounted resale price, less
 92                the total amount of: (I) the original principal amount of the first mortgage
 93                loan on the unit, (ii) the principal amount of the soft second deed of trust
 94                note on the unit, (iii) closing costs actually paid by the Eligible Buyer in
 95                connection with the purchase of the unit, (iv) the Eligible Buyer’s down
 96                payment, and (v) the appraised value of any capital improvements
 97                approved by the Director of Housing and Neighborhood Preservation.
 98
 99                Shared Net Appreciation. The amount of the net appreciation owed to the
100                City by the purchaser of a workforce housing unit, which shall be equal to
101                the share represented by the City’s investment in the original purchase of
102                the unit in the form of the soft second deed of trust note. For example, if
103                the amount of the soft second deed of trust note equals twenty-five per
104                cent (25%) of the original undiscounted purchase price of the unit, the
105                amount of shared net appreciation owed to the City will be twenty-five per
106                cent (25%) of the net appreciation of the unit. The amount of the shared
107                net appreciation and principal amount of the soft second deed of trust note
108                is repaid to the City upon resale of the unit.
109
110           Area Median Income (AMI). The Area Median Income for the Virginia Beach-
111   Norfolk-Newport News, Virginia Metropolitan Statistical Area (MSA) published annually
112   by the U.S. Department of Housing and Urban Development (HUD) and adjusted for
113   household size. Pricing of workforce housing units and end-user qualifications are
114   partially based on this published data. The initial sales price of workforce housing units


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115   is based on the ratio of housing payments relative to the AMI. Additionally, the end
116   user’s income qualifications are based on the AMI, adjusted for household size.
117
118         City. The City of Virginia Beach or such other entity as the City Council may
119   designate as its agent in discharging the duties and performing the acts prescribed or
120   contemplated by this Article,
121
122           Developer. The developer of workforce housing or other person or entity, such
123   as a homebuilder, who purchases a workforce housing unit for purposes of resale to an
124   eligible buyer.
125
126         Director. The Director of the Department of Housing and Neighborhood
127   Preservation or his designee.
128
129          Eligible Buyer. A household whose workforce housing application has been
130   approved and who meets all the requirements of the Workforce Housing Program for
131   home ownership. Such requirements include, among other things, the household’s
132   gross annual income and financial assets. In order to qualify to purchase a workforce
133   housing unit, a household’s annual gross income must generally be between eighty per
134   cent (80%) and one hundred twenty per cent (120%) of AMI.
135
136          Eligible Renter. A household whose workforce housing application has been
137   approved and who meets all the requirements of the Workforce Housing Program for
138   rental housing. Such requirements include, among other things, the household’s gross
139   annual income and financial assets. In order to qualify to rent a workforce housing unit,
140   a household’s annual gross income must generally be between sixty per cent (60%) and
141   ninety per cent (90%) of Area Median Income.
142
143          Household. One or more persons living in, or intending to live in, the same
144   dwelling unit.
145
146           Initial sale. The original sale of a workforce housing unit to an eligible buyer.
147   The term does not include sales to persons such as homebuilders where such sales are
148   for the purpose of resale to eligible buyers.
149




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150          Workforce Housing Program Revolving Fund. A fund administered by the
151   Department of Housing and Neighborhood Preservation for the recapture of workforce
152   housing discounts, fees and shared net appreciation from the sale of workforce housing
153   units. Funds are reinvested in the Workforce Housing Program for the purpose of
154   preserving or creating affordable housing.
155
156          Soft Second Deed of Trust. A second deed of trust securing the repayment of
157   the loan made by the City to an eligible buyer in the amount of the workforce housing
158   discount, plus the shared net appreciation of the unit. The loan secured by a soft
159   second deed of trust carries a zero percent interest rate, requires no monthly payments,
160   is subordinate only to the purchase money first deed of trust, and is due and payable
161   from the proceeds of the resale or transfer of the workforce housing unit.
162
163          Workforce Housing or Workforce Housing Unit. Dwellings or dwelling units,
164   whether single-family dwellings, duplexes, semi-detached dwellings, townhouses or
165   multiple-family dwelling units, approved by the City Council pursuant to Article 21 of the
166   City Zoning Ordinance. Such housing is generally affordable to households with
167   working members who live or work in the City of Virginia Beach. With respect to home
168   ownership of workforce housing, it includes housing that is priced to be affordable to
169   households with gross annual incomes between eighty per cent (80%) and one hundred
170   twenty per cent (120%) of Area Median Income, adjusted for household size. With
171   respect to rentals of workforce housing, it includes housing that is priced to be
172   affordable to households with annual incomes between sixty per cent (60%) and ninety
173   (90%) of Area Median Income.
174
175           Workforce Housing Application – An application submitted to the City that
176   provides the necessary information to determine if a household qualifies for the
177   Workforce Housing Program. Participation in the program is contingent upon approval
178   of this application.
179
180         Workforce Housing Discount. The difference in sales price between the fair
181   market value of a workforce housing unit and the reduced sales price necessary to
182   make such unit affordable to a household at a targeted income level.
183
184
185
186


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187                                               COMMENT
188
189          The section contains definitions of terms used in the ordinance, as well as explanatory
190   material concerning those definitions.
191
192
193                       Part 2. Sale and Ownership of Workforce Housing
194
195   Sec. 16-45. Initial sales of workforce housing units.
196
197            (a)     The City shall have the right to purchase workforce housing units offered
198   for initial sale as follows:
199
200                 (1)     The City shall have an exclusive right to purchase any workforce
201                         housing unit, not to exceed a total of one-third of the workforce
202                         housing units for sale within a development, by so notifying the
203                         developer of the unit within thirty (30) days from the date on which
204                         the City is notified that the workforce housing unit is available for
205                         initial sale. If the City does not timely exercise its right to purchase
206                         the unit, it may be sold to an eligible buyer.
207
208                 (2)     Any workforce housing unit the City has not elected to purchase
209                         shall be offered for sale exclusively to eligible buyers for a period of
210                         sixty (60) days from the date on which the City's right to purchase
211                         the unit expires. Upon the expiration of such time, any such unit
212                         not sold to the City or to an eligible buyer may be offered for sale
213                         without restriction, provided, that when such a unit is sold, the
214                         developer shall pay to the City the difference between actual sales
215                         price and the price as reduced by the workforce housing discount.
216
217           (b)   The procedure for initial sales of workforce housing units purchased by an
218   eligible buyer shall be as follows:
219
220                 (1)     A developer desiring to enter into a contract with an eligible buyer
221                         to sell a specific workforce housing unit for initial sale shall so notify
222                         the City, which shall verify the eligible buyer’s continued eligibility
223                         under Section 16-46.
224


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225                  (2)     In the event the eligible buyer continues to meet such
226                          requirements, the developer and City shall enter into a real estate
227                          sales contract pursuant to which the developer agrees to sell the
228                          unit to the City at a price incorporating the workforce housing
229                          discount. The City shall assign to the eligible buyer its rights under
230                          the contract and shall receive a promissory note, secured by a soft
231                          second deed of trust from the eligible buyer, in the amount of the
232                          workforce housing discount.
233
234                          The assignment shall further provide that: (i) such loan, plus the
235                          shared appreciation of the unit, shall be repaid to the City upon
236                          resale of the unit and that such obligation shall be secured by a soft
237                          second deed of trust; and (2) that the City shall have the right to
238                          repurchase the unit upon resale, or to assign such right to an
239                          eligible buyer, in accordance with the provisions of Section 16-49.
240
241                                              COMMENT
242
243          Subsection (a) establishes the City’s (or its designated agent’s) exclusive right to purchase
244   up to one-third of the workforce housing units in a development and provides limitations on that
245   right.
246
247          Subsection (b) sets forth the procedures for initial sales of workforce housing units.
248
249   Sec. 16-46. Eligibility requirements for buyers of workforce housing units.
250
251         (a)   In order to be deemed an eligible buyer of a workforce housing unit, a
252   household shall meet the following criteria:
253
254                  (1)     At least one adult, non-dependent member of the household to be
255                          shown on the deed of trust note as a borrower or other obligor
256                          shall, at the time of application to the Workforce Housing Program,
257                          live or work full-time in the City of Virginia Beach, or must have a
258                          bona fide offer of full-time employment within the City of Virginia
259                          Beach commencing within three (3) months of the time of
260                          application;
261



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262                (2)    No member of the household shall own or have a controlling
263                       interest in any other real property;
264
265                (3)    The household’s combined annual gross income shall, at the time
266                       of application, be between eighty per cent (80%) and one hundred
267                       twenty per cent (120%) of Area Median Income, adjusted for
268                       household size; and
269
270                (4)    The net worth of the household shall not exceed fifty per cent (50%)
271                       of the sales price of the workforce housing unit being financed. The
272                       following items shall not be included in determining the net worth of
273                       a household:
274
275                       A.     The present value of insurance policies, retirement plans,
276                              furniture or household goods;
277
278                       B.     The portion of the household’s liquid assets used for the
279                              down payment and to pay closing costs, up to a maximum of
280                              twenty-five per cent (25%) of the purchase price; and
281
282                       C.     Any income-producing assets needed as a source of income
283                              to meet the minimum qualifying requirements for eligible
284                              buyer status.
285
286           (b)   A household shall, in addition to the foregoing requirement, qualify for a
287   mortgage loan from a mortgage lender acceptable to the City. The City may deny
288   eligible buyer status to any household if it determines that such mortgage loan contains
289   deceptive, predatory or abusive terms.
290
291          (c)    Once determined to be an eligible buyer, a household must continue to
292   meet the requirements of subsection (a) through the time of settlement. A household
293   shall be required to certify its continued qualification as an eligible buyer at settlement
294   and at any prior time requested by the City.
295




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296          (d) Workforce housing units shall be made available by the City for purchase
297   only by eligible buyers who have qualified for a mortgage loan in accordance with
298   subsection (b).
299
300                                             COMMENT
301
302           The section sets forth the eligibility requirements for qualification of a household as an
303   “eligible buyer.” Only eligible buyers who have qualified for a mortgage loan may purchase
304   workforce housing units offered under the City’s program.
305
306   Sec. 16-47. Workforce housing pricing.
307
308          (a)    Workforce housing shall be priced so as to be affordable for purchase by a
309   household with a gross annual income between eighty per cent (80%) and one hundred
310   twenty per cent (120%) of Area Median Income, adjusted for household size. Semi-
311   annually, the Workforce Housing Advisory Board shall recommend, and the City Council
312   shall establish, maximum sales prices for workforce housing units based upon current
313   Area Median Income, prevailing mortgage interest rates in the area, real estate tax
314   rates, homeowner’s insurance rates, housing ratios, and the size of targeted
315   households. In determining whether to grant approval pursuant to Article 21 of the City
316   Zoning Ordinance to a proposed development that includes workforce housing, the City
317   Council shall determine whether the proposed pricing of the workforce housing within
318   such development meets the requirements of this section.
319
320           (b)   The Department of Housing and Neighborhood Preservation shall make
321   available to prospective developers of workforce housing a spreadsheet planning tool to
322   assist in determining if a specific development meets the requirements of this section.
323
324                                             COMMENT
325
326          The section requires that workforce housing be priced at a level that is deemed affordable
327   to households within the income guidelines set forth in subsection (a). The maximum sales price is
328   determined by the City Council semi-annually after the Workforce Housing Advisory Board
329   provides its recommendation. The section also requires that the City Council approve the
330   affordability level of the workforce housing at the time it approves the proposed development
331   under Article 21 of the City Zoning Ordinance.
332
333
334
335



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336   Sec. 16-48. Workforce housing discount.
337
338          (a)    All initial sales of workforce housing units shall be at a price that
339   incorporates a workforce housing discount, as defined in Section 16-44. The workforce
340   housing discount shall be sufficient to bring a workforce housing unit’s sales price within
341   a price range that is affordable to households with annual gross incomes between
342   eighty per cent (80%) and one hundred twenty per cent (120%) of Area Median Income,
343   adjusted for household size The actual amount of the workforce housing discount
344   applicable to a specific workforce housing unit shall be subject to the approval of the
345   City Council.
346
347           (b)    The baseline amount of the workforce housing discount shall be twenty-
348   five per cent (25%) of the undiscounted sales price; provided, however, that if the
349   undiscounted sales price of a workforce housing unit is affordable by a household with a
350   gross annual income between eighty per cent (80%) and one hundred twenty per cent
351   (120%) of Area Median Income, adjusted for household size, the required workforce
352   housing discount may be less than twenty-five per cent (25%). The chart below
353   illustrates the required discount applied to a WFH Unit given the affordability of an
354   equivalent market rate unit:
355
356
      Affordability Range of Market      Required Workforce
      Units (as a Percent of AMI)         Housing Discount
           From              To
            0%              80%                    1%
            81%             90%                    5%
            91%             100%                  10%
           101%             110%                  20%
           111%             120%                  25%
357
358
359                                              COMMENT
360
361          The section details the pricing of workforce housing units with the workforce housing
362   discount applied. The baseline workforce housing discount is 25%; the actual such discount,
363   however, may be lower under the circumstances set forth in subsection (b).
364
365
366
367


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368   Sec. 16-49. Resale of workforce housing units.
369
370           (a)   Prior to offering a workforce housing unit for resale, the owner shall notify
371   the City of the owner’s intent to sell the unit. The City shall notify the unit owner of its
372   intention to purchase the unit within thirty (30) days from the date on which the owner’s
373   notice of intent to sell was received by the City. In the event the City determines to
374   purchase the unit upon resale, it shall have the right to assign the contract to an eligible
375   buyer.
376
377          (b)   The City shall tender to the unit owner an offer to purchase such unit at its
378   fair market value. The fair market value shall be determined by the average of two
379   appraisals of such unit based on the sales prices of comparable properties that have
380   recently sold. Such appraisals shall be performed by licensed Virginia real estate
381   appraisers selected by the City.
382
383           (c)     In the event the City decides not to purchase or assign its right to
384   purchase the unit, it shall so notify the owner in writing, who shall thereafter have the
385   right to sell the unit to any other person or entity.
386
387           (d)     In the event the City purchases or assigns its right to purchase a
388   workforce housing unit from the owner of such unit, it shall make such unit available for
389   sale to another eligible buyer for a period of at least ninety (90) days. The City shall
390   notify the eligible buyers on its prescreened list of the availability of the unit.
391
392            (e)   In the event an eligible buyer enters into a contract to purchase the unit
393   within the ninety (90) - day period, the City shall determine whether such eligible buyer
394   continues to so qualify. If such eligible buyer continues to meet the eligibility
395   requirements of Section 16-46, the owner of the unit shall enter into a contract with the
396   City and, if applicable, the City's assignee, to purchase the unit at the fair market value
397   thereof, as determined pursuant to subsection (b). The contract shall further provide
398   that: (i) the amount of the workforce housing discount, plus the shared net appreciation
399   of the unit, shall be repaid to the City upon resale of the unit; and 2) that the City shall
400   have the right to repurchase the unit, or to assign such right to an eligible buyer, in
401   accordance with the provisions of this section.
402




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403          (f)     At settlement, the principal amount of the outstanding soft second deed of
404   trust note, plus the shared net appreciation of the unit, as defined in Section 16-44, shall
405   be repaid to the City from the proceeds of the resale of the unit. All such monies shall
406   be deposited into the Workforce Housing Revolving Fund.
407
408          The City shall finance a portion of the purchase price equal to the amount of the
409   new workforce housing discount by means of a note secured by soft second deed of
410   trust. The new workforce housing discount shall be the same percentage of the
411   undiscounted purchase price of the unit as the percentage of the initial workforce
412   housing discount.
413
414                                              COMMENT
415
416           The section sets forth the procedures for initial sales of workforce housing units. An owner
417   of a workforce housing unit must allow the City a period of thirty (30) days in which to notify the
418   unit’s owner that it will repurchase the property. Such repurchases are at fair market value based
419   on an appraisal. The City may also choose to assign its right to purchase to another eligible buyer.
420   In any case, principal amount of the soft second mortgage loan, plus the shared net appreciation
421   (defined in Section 16-44), must be repaid to the City
422
423
424   Sec. 16-50. Restrictions on refinancing, etc. of workforce housing units.
425
426          (a)     No owner of a workforce housing unit shall:
427
428          (1)     Refinance such unit or encumber the unit with any other mortgage loan,
429                  home equity loan or similar instrument without the prior written approval of
430                  the Director. Such approval shall be requested no later than thirty (30)
431                  days prior to the date of settlement of the proposed refinancing or loan.
432                  The owner or prospective lender shall provide any information required by
433                  the Director, including, but not limited to, an appraisal of the unit
434                  performed by a licensed Virginia real estate appraiser and based on the
435                  sales prices of comparable properties that have recently sold. Such
436                  appraisal shall be subject to the approval of the Director. In addition, the
437                  owner or prospective lender shall be charged a reasonable transaction fee
438                  to cover the administrative expenses associated with processing the
439                  request;
440




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441          (2)     Repay the soft second mortgage loan until the unit is resold by the owner;
442                  or
443
444          (3)     Refinance such unit with a loan having a total loan-to-value ratio greater
445                  than the owner’s proportional share of the initial purchase price. The loan-
446                  to-value ratio is the ratio of the fair market value of the unit to the principal
447                  amount of the refinancing loan.
448
449         (b)     The soft second deed of trust shall not be subordinated to any other
450   mortgage or encumbrance, except a valid purchase money first deed of trust recorded
451   against the property.
452
453                                             COMMENT
454
455           The section places limitations on refinancing workforce housing units and using such units
456   as security for other loans, such as third mortgage loans and home equity loans.
457
458                             Part 3. Rental of Workforce Housing.
459
460   Sec. 16-51.     Eligibility requirements for renters of workforce housing units;
461                   verification.
462
463         (a)   In order to be deemed an eligible to rent a workforce housing unit, a
464   household shall meet the following criteria:
465
466                  (1)    At least one adult, non-dependent member of the household
467                         occupying the unit shall, at the time of application to the Workforce
468                         Housing Program, live or work full-time in the City of Virginia
469                         Beach, or must have a bona fide offer of full-time employment
470                         within the City of Virginia Beach commencing within three (3)
471                         months of the time of application;
472
473                  (2)    No member of the household shall own or have a controlling
474                         interest in any other real property;
475




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476                (3)    The household’s gross annual income shall, at the time of
477                       application, be between sixty per cent (60%) and ninety per cent
478                       (90%) of Area Median Income, adjusted for household size; and
479
480                (4)    The net worth of the household shall not exceed fifty per cent (50%)
481                       of the total of rent payments for a period of twelve (12) months. The
482                       following items shall not be included in determining the net worth of
483                       a household:
484
485                       A.     The present value of insurance policies, retirement plans,
486                              furniture or household goods; and
487
488                       B.     Any income-producing assets needed as a source of income
489                              to meet the minimum qualifying requirements for eligible
490                              renter status.
491
492         (b)     Before a household may enter into a rental agreement for a workforce
493   housing unit, the property owner or manager of the unit shall verify that such household
494   meets the foregoing eligibility requirements. All property owners or managers of
495   workforce housing units for rent shall maintain a list of households it has screened and
496   determined to be eligible renters.
497
498        (c)    Property owners or managers shall also maintain documentation on each
499   household currently occupying a workforce housing unit for rent. At a minimum, such
500   documentation shall include:
501
502                (1)    Verification of residency or work requirements for eligibility
503                       purposes;
504
505                (2)    Composition of the household; and
506
507                (3)    Annual gross income for the household and each of the household
508                       members whose income is included in determining eligibility.
509
510         (d)   Property owners or managers shall ensure that all persons living in a
511   workforce housing rental unit are listed on the rental agreement. It shall be a condition


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512   of the rental agreement for any such unit that the City may inspect the records of the
513   property owner or manager to ensure compliance with eligibility requirements and may,
514   at reasonable times, enter any workforce housing rental unit to verify that it is occupied
515   by an eligible renter.
516
517          (e)    Property owners or managers shall, upon renewal of a rental agreement,
518   but no less often than annually, verify that the occupants of a workforce housing unit for
519   rent continue to meet applicable eligibility standards.
520
521         (f)   If a property owner or manager determines that a household occupying a
522   workforce housing unit for rent no longer meets applicable eligibility requirements, such
523   property owner or manager shall:
524
525                  (1)     Require the household to vacate the unit upon the expiration of the
526                          current rental agreement; or
527
528                  (2)     Allow the household to continue to occupy the unit upon expiration
529                          of the current rental agreement at the market-based rental price
530                          and make the next comparable market-based rental unit available
531                          to an eligible renter at a rental price deemed affordable under the
532                          standards prescribed in this Article.
533
534          The household shall be removed from the list of eligible renters and shall not
535   thereafter be eligible to rent a workforce housing unit for such period of time as
536   applicable the household meets applicable eligibility requirements.
537
538                                               COMMENT
539
540            Subsection (a) sets forth the eligibility requirements for renters of workforce housing units.
541   Subsection (b) requires property managers or owners of workforce housing rental units to verify
542   eligibility of prospective renters and to maintain a list of eligible renters. Subsections (c), (d) and
543   (e) prescribe procedures for verifying that renters continue to meet applicable eligibility
544   requirements during the term of the lease. Subsection (f) requires that eligible renters who no
545   longer meet eligibility requirement shall vacate the rented unit upon expiration of the term of the
546   rental agreement or that a market-rate unit be converted to a workforce housing rental unit.
547
548
549
550
551


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552   Sec. 16-52. Rental property compliance agreement.
553
554          (a)    A property owner desiring to rent property under the Workforce Housing
555   Program shall enter into a compliance agreement with the City. The terms of such
556   agreement shall be prescribed by the City and shall set forth the terms and conditions of
557   the owner’s participation in the Workforce Housing Program, including, but not limited
558   to, occupancy and rent requirements, including maximum rents, means of preserving
559   the long-term affordability of workforce housing rental units, and such other terms and
560   conditions as are, in the judgment of the Director, reasonable and necessary to ensure
561   compliance with applicable provisions of this Article and the goals of the Workforce
562   Housing Program. All workforce housing rental units shall be rented in conformity with
563   the income and rent limitations specified in the compliance agreement for a period of
564   not less than fifty (50) years.
565
566         (b)     Property owners or managers shall, upon request of the Director, provide
567   a copy of their most current tenant selection policy or criteria.
568
569          (c)    Any material failure to comply with the terms of an compliance agreement
570   shall subject the owner to a liquidated damages penalty in the amount of Fifty Dollars
571   ($50.00) per unit for each day such noncompliance continues, unless the Director
572   waives such penalty, in whole or in part, based upon his determination that the owner
573   has taken timely corrective action to cure such noncompliance. Liquidated damages
574   collected by the City shall be deposited into the Second Mortgage Revolving Fund.
575
576                                             COMMENT
577
578          The section requires property owners renting workforce housing units to enter into an
579   agreement with the City setting forth the terms and conditions of the owner’s participation in the
580   Workforce Housing Program. A liquidated damages penalty for material failure to comply is
581   included.
582
583   Sec. 16-53. Rental procedures.
584
585            (a)    Workforce housing units shall be rented only to households who meet the
586   eligibility standards set forth in Section 16-51.
587




                                                     16
588            (b)  A developer building workforce housing units for rental purposes shall
589   notify the Director no later than forty-five (45) days prior to the units being ready for
590   initial occupancy. In the notification the developer shall supply the following information:
591
592                 (1)    The name of the development and its location;
593
594                 (2)    Number of units by type of unit;
595
596                 (3)    The size of units in square feet;
597
598                 (4)    The number of bedrooms and bathrooms in each unit;
599
600                 (5)    The market rental rates of each unit:
601
602                 (6)    The actual rates at which such units will be rented as workforce
603                        housing units; and
604
605                 (7)    Contact information for interested households.
606
607          In addition, the owner or manager of a workforce housing rental unit shall notify
608   the Director within three (3) working days of such unit becoming available for rent. The
609   City shall maintain on its web site a comprehensive listing of all properties with available
610   workforce housing units for rent.
611
612          (c)    Any household desiring to rent a workforce housing rental unit shall submit
613   to the property manager or manager an application for determination of its eligibility to
614   rent a workforce housing unit. Such application shall contain such information
615   concerning the residency, employment, gross income and net worth for each member of
616   the household as may be necessary to determine the eligibility of such household. The
617   property owner or his designee shall determine the eligibility of the household and shall
618   promptly notify the Director of its determination.
619
620          (d)    A household that meets all of the eligibility requirements set forth in
621   Section 16-51 shall be deemed an eligible renter and shall be placed on a waiting list for
622   a workforce housing rental unit at the development at which the household has made
623   application for a rental unit. At such time as a workforce housing rental unit becomes


                                                  17
624   available at the development, the property owner or manager shall so notify the eligible
625   renters on its waiting list, if any. The property owner or manager may review all tenant
626   applications and make tenant selections based on any lawful tenant selection policy.
627
628          (e)    The City shall make available to the general public information concerning
629   the location of workforce housing rental units and such other information as may assist
630   prospective renters in seeking available workforce housing rental units.
631
632
633                                             COMMENT
634
635          The section sets forth the procedures for rentals of workforce housing units.
636
637                                  Part 4. Additional Provisions
638
639   Sec. 16-54. Workforce Housing Advisory Board established; membership; duties.
640
641          (a)   Established.      The    Workforce      Housing     Advisory     Board    is   hereby
642   established.
643
644            (b)  Term. There shall        be ten (10) members of the Board, who shall be
645   appointed by the City Council for      terms of four (4) years; provided, however, that the
646   initial terms of two (2) members       shall be one (1) year, the initial terms of three (3)
647   members shall be two (2) years,        and the initial terms of three (3) members shall be
648   three (3) years.
649
650           (c)   Membership. Two (2) members, both of whom shall have extensive
651   experience in practice in the City of Virginia Beach, shall be either land planners or civil
652   engineers or architects licensed by the Virginia Board for Architects, Professional
653   Engineers, Land Surveyors, Certified Interior Designers and Landscape Architects; one
654   (1) member shall be a real estate salesperson or broker licensed by the Virginia Real
655   Estate Board; one (1) member shall be a representative of a lending institution that
656   finances residential development in the City of Virginia Beach; one (1) member shall be
657   a member of the City Council; one (1) member shall be a builder with extensive
658   experience in the construction of single-family detached and attached dwelling units;
659   one (1) member shall be builder with extensive experience in the construction of
660   multiple-family dwelling units; one (1) member shall be a current employee of the
661   Department of Public Works or Department of Planning; one (1) member shall be a


                                                      18
662   representative of a nonprofit housing organization which provides services in the City of
663   Virginia Beach; and one (1) member shall be a citizen of the City.
664
665          (d)     Duties. It shall be the duty of the Board to:
666
667                  (1)       Make recommendations to the City Council concerning the sales
668                            and rental prices of workforce housing units. Such prices shall be
669                            based on the Area Median Income, as defined in Section 16-44,
670                            and shall be adjusted semi-annually;
671
672                  (2)       Advise the City Council on all aspects of the City’s Workforce
673                            Housing Program, including recommendations for modifications of
674                            the requirements of the Program; and
675
676                  (3)       Report annually to the City Council on the production of workforce
677                            housing units, participation in the Workforce Housing Program,
678                            and achievement of Program goals.
679
680                                             COMMENT
681
682           The section sets forth the membership, term and duties of the Workforce Housing Advisory
683   Board. The Board, which acts in an entirely advisory capacity, makes recommendations to the City
684   Council concerning the sales and rental prices of workforce housing units and all other aspects of
685   the Workforce Housing Program, including modifications thereof. The Board is also required to
686   report annually to the City Council.
687
688   Sec. 16-55.          Director and designated agent to establish written rules and
689                        guidelines; legal instruments.
690
691          (a)     The Director and designated agent of the City shall establish written rules
692   and guidelines supplementing, and in conformity with, the provisions of this Article.
693   Such rules and guidelines shall provide for, among other things, allocation of
694   responsibilities, sharing of information, coordination of activities and procedural
695   protocols for administering the Workforce Housing Program. Such rules and guidelines
696   shall be subject to the approval of the City Council.
697
698         (b)    Any legal instrument used in connection with the purchase, sale or rental
699   of a workforce housing unit shall contain adequate provisions to ensure the eligible


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700   buyer’s or eligible renter’s compliance with the applicable provisions of this Article.
701   Such provisions shall be approved by the City Attorney.
702
703                                                 COMMENT
704
705            The section requires the Director of Housing and Neighborhood Preservation and the City's
706   designated agent to establish written rules and guidelines concerning the administration of the
707   Workforce Housing Program. The rules and guidelines are subject to the City Council's approval.
708   In addition, it requires all legal instruments used in the program (mortgage loans, deeds of trust,
709   etc) to contain adequate provisions, approved by the City Attorney, to ensure that the eligible buyer
710   or eligible renter complies with the provisions of this Article.
711
712   Sec. 16-56. Violations.
713
714          (a)   The following tables list certain violations of the Workforce Housing
715   ("WFH") Program requirements and the penalties for their violation. Where more than
716   one penalty is prescribed, they shall be deemed cumulative, such that any or all
717   applicable penalties may be imposed:
718
719
720   Table 1 (sale/ownership of workforce housing units):
721
722
                Program Violation                                    Penalties
       Falsification of eligibility requirements   Permanent ineligibility for the WFH Program.
                                                   Must sell WFH unit to the City.
                                                   Immediate payment of the City's share of net
                                                   appreciation on the WFH unit at resale.
                                                   Immediate repayment of the soft second
                                                   mortgage.
       Failure to occupy WFH unit as primary       Immediately reoccupy WFH Unit.
       residence
                                                   If unable to reoccupy unit, the following
                                                   penalties apply:
                                                      1. Permanent ineligibility for the WFH
                                                   Program.
                                                      2. Owner must sell WFH Unit to the City.
                                                      3. Immediate payment of the City's share of
                                                   net appreciation on the WFH unit at resale.
                                                      4. Immediate repayment of the soft second
                                                   mortgage.
       Failure to comply with all City             Immediate correction of code violation.
       regulations for property maintenance
                                                   If unable to correct code violations in prescribed
                                                   time period, the following penalties apply:
                                                      1. Permanent loss of eligibility for the WFH
                                                   Program.



                                                          20
                                                     2. Must sell WFH unit to the City.
                                                    3. Immediate payment of the City's share of
                                                   net appreciation on the WFH unit at resale.
                                                    4. Immediate repayment of soft second
                                                   mortgage.
       Failure to comply with refinancing and      Permanent ineligibility for the WFH Program.
       home equity loan requirements of WFH        Owner must sell WFH unit to the City.
       Program
                                                   Immediate payment of the City's share of net
                                                   appreciation on the WFH unit at resale.
                                                   Immediate repayment of soft second mortgage.
       Failure to offer the City first right to    Immediate payment of the City's share of net
       purchase when desiring to sell WFH          appreciation on the WFH unit at resale.
       unit
                                                   Immediate repayment of soft second mortgage.
                                                   Further legal action as deemed appropriate by
                                                   the City.
       End-user enters into a lease-to-            Owner must sell WFH unit to the City.
       purchase agreement for the WFH unit         Immediate payment of the City's share of net
                                                   appreciation on the WFH unit at resale.
                                                   Immediate repayment of soft second mortgage.
723
724
725   Table 2 (rentals of workforce housing units):
726
727
               Program Violation                                     Penalties
      Falsification of eligibility requirements   Permanent loss of eligibility for the WFH
      such as income, residency, employment       Program.
      or persons who will be occupying the        Must move from the units within 60 days from
      unit, etc.                                  date of written notice of being in violation of
                                                  program
                                                  Must pay market rate rent on the unit until the
                                                  unit is vacated
      Failure to occupy WFH Unit as primary       Immediately reoccupy WFH Unit.
      residence
                                                  If unable to reoccupy unit, the following
                                                  penalties apply:
                                                     1. Permanent loss of eligibility for the WFH
                                                  Program.
                                                     2. Must move from the unit within 60 days.
                                                     3. Required to pay market rate rent on unit
                                                  after receiving notice of violation until unit is
                                                  vacated
      Failure to list all persons living in the      1. Permanent loss of eligibility for the WFH
      household on lease; allowing person or      Program.
      persons not listed on lease to move in
      after lease is signed                        2. Must move from the WFH Unit .
                                                   3.Required to pay market rate rent until
                                                  household is in compliance or moves from the
                                                  unit.
                                                    4. Unauthorized persons must immediately



                                                           21
                                             move from WFH unit.

728
729          (b)    In the event the Director determines that there is reasonable cause to
730   believe that a violation has occurred, he shall so notify the eligible buyer or eligible
731   renter who has allegedly committed the violation. Such notice shall be by certified mail
732   to the last know address of the eligible buyer or eligible renter and shall specify the
733   nature of the alleged violation and the facts supporting the Director’s determination.
734   The eligible buyer or renter shall have ten (10) days from the date of mailing of the
735   notice in which to request a hearing before the City Manager or his designee, who shall
736   not be the Director.
737
738          (c)    The City Manager or his designee shall hold the hearing on the earliest
739   practicable date but in no event later than fifteen (15) days from the date the request for
740   a hearing is received. Both the Director and the alleged violator shall be entitled to
741   present witnesses and other evidence in his or her behalf.
742
743           (d)    The City Manager or his designee shall issue a written decision within five
744   (5) working days of the hearing, and shall mail such decision to the eligible buyer or
745   eligible renter by certified mail no later then the following working day. Such decision
746   shall contain a finding that the eligible buyer or eligible renter has committed the alleged
747   violations, or any of them, or that no violations have been committed. In the event he
748   finds that one of more of the alleged violations have been committed by the eligible
749   buyer or eligible renter, the penalty or penalties prescribed in the chart in subsection (a)
750   shall apply.
751
752         (e)     An adverse decision may be appealed to the Circuit Court by an eligible
753   buyer or eligible renter within fifteen (15) days of the date of the decision. No such
754   appeal shall stay the imposition of any penalty except by order of the Circuit Court in an
755   appropriate case.
756
757                                             COMMENT
758
759           Subsections (a) and (b) contain chart showing violations and the corresponding penalties.
760   The listed penalties are not exclusive, such that any or all of them may be applied to the
761   corresponding violation. The remainder of the section specifies the procedures for the handling of
762   violations.
763
764


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765   Sec. 16-57. Application, etc. fees.
766
767         The City shall charge a reasonable application fee and such other ordinary and
768   customary fees in the real estate industry as are reasonable and necessary to cover the
769   costs of the service for which the fee is charged. The amount of such fees shall be
770   determined by the City Council upon recommendation of the Workforce Housing
771   Advisory Board.
772
773                                               COMMENT
774
775           The section requires the City to charge reasonable application and other ordinary and
776   customary fees in the real estate industry to cover the cost of providing the service for which the fee
777   is charged. The Workforce Housing Advisory Board is to recommend the amount of such fees and
778   the City Council is to finally determine their amounts.
779
780
781   Sec. 16-58. Severability.
782
783          The provisions of this Article are severable, and in the event one or more such
784   provisions are determined invalid or unenforceable by a court of competent jurisdiction,
785   the remaining provisions of this Article shall be unaffected by such determination and
786   shall continue in full force and effect.
787
788                                               COMMENT
789
790           The section contains a severability clause stating that any judicial determination that one or
791   more of the provisions of this ordinance are invalid or unenforceable shall not affect the remaining
792   provisions, which shall remain in effect.
793
794
795
796   CA-10475
797   August 22, 2007
798   R-9
799
800   APPROVED AS TO CONTENT:                        APPROVED AS TO LEGAL SUFFICIENCY:
801
802
803
804
805   Dept. of Housing and Neighborhood              City Attorney's Office
806   Preservation



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