Adopted Budget (Final Document)

Housing Programs (continued)

Fund 235 - Senior Housing Trust This fund was established by a one-time developer contribution and was intended to be used for senior housing-related support services. The Housing Division in the past contracted with the non profit, Rebuilding Together of Silicon Valley (RTSV) to administer and manage a rehabilitation program funded by the Senior Housing Trust. RTSV has been providing the South County with home repair service for thirty years and provides a “life line” Home Repair Rehab Program for fixed income seniors in Morgan Hill, as well as lower income tenants. This fund has been exhausted and this program is now funded by the Community Development Block Grant for which Morgan Hill participates in through a Joint Powers Agreement with the County of Santa Clara. Fund 236- Inclusionary Housing In-lieu Fee Prior to issuance of occupancy permits, housing in-lieu funds are collected from market rate housing developers who are required to comply with the Inclusionary Housing Ordinance (IHO). In 2018, the City of Morgan Hill adopted an IHO requiring residential developments to provide 15% of the units (and 10% in Downtown) as part of the City's efforts to create and maintain an income-based affordable housing inventory. The IHO policy was created to replace the loss of the City's Residential Development Control System (RDCS) growth management program which has been the mechanism for the City to obtain Below Market Rate (BMR) housing units for many years. In December of 2021, the City Council adopted a change to the IHO to enhance an existing funding mechanism that will allow the City to advance projects that meet the City's Regional Housing Needs Allocation (RHNA) goals. The City now allows for up to 50% of the IHO affordable housing requirement to be satisfied with an in-lieu fee. This fee would provide the City with a funding mechanism to support projects that produce units that contribute to meeting the City's RHNA requirements and the Council’s housing priorities. In-lieu fees are already allowed in the IHO; however, this change allows the fee to be by right provided that a minimum of 50% of the project’s affordable units will continue to be built on site. This programmatic change will help the City meet its very low income and extremely low-income goals by allowing the City to build up enough housing in-lieu fee funds to both shape and fund projects. Historically this Fund has fluctuated over time and is the only remaining on-going source of income for the City’s legacy Housing Program. In FY 2018-19, an analysis by Keyser Marston Associates was conducted resulting in a change in the fee amount. The current fee for For-Sale Residential Projects outside of Downtown is $19.70 per habitable square foot of the residential building area of the market-rate housing to satisfy the 15% Inclusionary Housing Requirement and the fee for For-Sale Residential Projects within the Downtown is $13.20 per habitable square foot of the residential building area of the market-rate housing to satisfy the 10% Inclusionary Housing Requirement. The fee for Rental Residential Projects outside of Downtown is $29.00 per habitable square foot of the residential building area of

288 DEVELOPMENT SERVICES