21.28.070 Affordable housing mitigation fee.
A. Except as provided in Section 21.28.080, any conversion of other types of housing units to condominium units pursuant to this chapter shall be subject to the payment of an affordable housing mitigation fee, unless otherwise exempted. The purpose of the fee is to mitigate the loss of affordability that results from the conversion of rental units to condominium units. The formula for calculating this nexus-based mitigation fee is as follows:
1. The costs of occupying a unit as a condominium will be determined by adding monthly mortgage payments, taxes, and homeowners’ association fees, and multiplying the sum by 12. Mortgage payments will be the current average fixed rate 30-year mortgage as reported by the Federal Housing Administration applied to 95% of the purchase price.
2. Rental costs shall be the current rent of the unit at the time of filing an application for conversion under this chapter, also multiplied by 12. If the unit is owner-occupied or has not been rented within the previous 12 months, the rental costs shall be the monthly rental rate for comparable recently rented dwelling units within a reasonable radius of the property. “Comparable units” are as defined in California Civil Code Section 1954.51(a).
3. The difference between the condominium ownership costs of the unit less the rental costs shall then be divided by the current fixed mortgage rate as set by the Federal Housing Administration to determine this fee.
B. In the event a converted unit is sold, the affordable housing mitigation fee under this chapter shall be based on the actual sale price. If the sale price is questioned by the City as being unreasonably low, based on comparable sales or other similar evidence, it must be supported by a credible appraisal performed by a Certified Residential Appraiser (AR) licensed by the California Office of Real Estate Appraisers. If the appraisal is within 10 percent of the actual sales price, the cost of the appraisal shall be deducted from the total mitigation fee amount owed to the City.
C. All of the sums collected pursuant to this chapter shall be apportioned as follows:
1. Not more than 10% of revenues shall be used for Housing Trust Fund program delivery.
2. Not more than 10% of revenues shall be used for Housing Trust Fund program and project monitoring and enforcement.
3. Not less than 80% of revenues shall be placed into the City of Berkeley Housing Trust Fund to finance activities described as eligible in the City of Berkeley Housing Trust Fund Program Guidelines.
D. A fee agreement, in a form specified by the City, indicating the formula by which the affordable housing mitigation fee shall be calculated and which implements the requirements of this chapter shall be executed and recorded with the County Recorder on the date of conversion. Such agreement shall be supplemented by a promissory note and deed of trust in favor of the City in an amount equal to the estimated affordable housing mitigation fee for each converting unit. The City shall agree to subordinate the deed of trust for purposes of refinancing property as long as doing so will not in its reasonable judgment impair the adequacy of its security. Upon full payment to the City of the fee for any unit(s) or for the entire property, the City shall record a release of the promissory note and deed of trust with the County Recorder, against any unit(s) for which the fee was paid. (Ord. 7070-NS § 5, 2009: Ord. 7025-NS § 1, 2008)