Los Gatos Patch reader Larry Arzie wanted to know last Monday why town government officials would want to purchase what he said was a $700,000 to $800,000 townhome at 137 Bersano Lane for below market price housing inventory.
"I realize we need housing at a price for low-to-middle income families, but this price range seems high. AND it is all being done behind closed doors. We might be better off buying it cheap and selling it high and using the money to buy or build to more," Arzie wrote at the end of the which briefly explained the issue as being on the government body's Oct. 1 agenda.
We sent Arzie's query to Los Gatos Town Manager Greg Larson who replied that the town is required by state law to publicly authorize negotiations for any property sale or acquisition on a public agenda.
Further, Larson said, state law allows the Council to provide direction on price and terms for any property transaction in closed session; "otherwise, any negotiations would be meaningless if the Council had to disclose its negotiating position in public and to the other party in advance of the negotiations."
Last, any final acquisition or sale of property also has to be done in public session, after the negotiations are complete, Larson said, adding that the exact same process was used for acquisition of the expanded parking lot 6 on Main Street.
Larson explained the two-bedroom, 1.5-bath Bersano Lane property is already in the town’s Below Market Price program, as described in a staff report found on the town's website as part of the Oct. 1 meeting agenda.
However, he added, the financing entity has issued a foreclosure notice to its current owners, so the town is considering exercising its right of refusal to repurchase the site and retain it in the BMP program.
Any town acquisition of the parcel would be at the below market price levels, well below Arzie's estimated $700,000 to $800,000, Larson said.
If the town does not exercise its right of refusal, then the property could be sold by its current owner, or the financing entity, after foreclosure, at full market value, Larson indicated. The property is subject to the town's first right of refusal as prescribed in its 2007 deed, according to a staff report.
The town’s BMP program allows low- and moderate-income households the opportunity to become homeowners. It has a limited number of homes, typically condos and townhomes, which are sold at a price below the current market value.
In return for the ability to purchase a home at a below-market price, participating homebuyers agree to restrict the price at which they may resell the unit in the future.
To rent a BMP unit, a household may not exceed 80 percent of the area median income, adjusted for household size, as determined by the Department of Housing and Urban Development, or HUD.
For example, the median income for a family of three in Santa Clara County is $94,500, according to HUD. To qualify for one of the units, this family could not exceed a $68,150 yearly income.
To see the rest of the median income levels in the county as prescribed by HUD, please see attached PDF.