General IZ Info
Frequently Asked Questions (FAQ)
Eligibility is based on the income and asset limitations established for a household buying the unit.
All IZ units must initially be marketed to households with less than 80% of Area Median Income (AMI). See this chart for incomes based on family size. Some units must be marketed to households with lower AMI levels. The developer will tell the buyer what the income limit is for each available unit. The AMIs change annually in March, and are determined by the Federal Department of Housing and Urban Development (HUD).
The City will count gross income from all the members of the household over the age of 19 from the previous tax year, or their projected income for the current tax year, based on current earnings. For persons who are dependent upon their parents, a guardian, or trust for more than half their income, the City will count the household income of the parents, guardian or trust.
Documented proof of income will need to be provided in the form of either a copy of the filed income tax returns from the previous year, or three current wage receipts.
Yes, a developer will include a bonus in the measure of income eligibility, whether it is one-time or routine.
A developer will qualify a household on the basis of their income at the time of application or offer to purchase.
A developer will qualify a household on the basis of who lives in the unit, and count all of the income of those adults participating in the workforce. Someone who is 19 and living with his or her parents and earning income should be counted, both in terms of income and in terms of household size.
Within 30 days of the date of closing on a property, the City or the first mortgage lender will have a market rate appraisal conducted on the property in order to determine what the full fair market value of the property would be if it were not on IZ property with a restricted sale price.
Using that appraisal, the City will calculate its relative share of value in the property according to the formula used in the example below:
IZ Set Sale Price:
Per the IZ ordinance, at the time of sale the City's Option price shall be the City % share of 95% of the appraised value at time of sale. So:
If at time of sale by first homeowner the sale price is $300,000, the City would be owed ($300,000 x 95%) x 12.5% = $35,625.
If the City exercises its option, it would pay the seller the full $300,000 less its share of value, or $263,375. The property would be resold by the City to an income eligible buyer.
If the City declines to exercise its option to purchase, the owner would sell on the open market for no less than the appraised value, repay the City $35,625, and the IZ regulations for that property are removed.
Yes. The purchaser of a unit builds equity on their full investment in the property. They do not earn equity on the value of the unit that they did not pay for when they bought the home (the difference between the appraised fair market value and the IZ set price of the home).
At the time an owner wishes to sell a unit, the City will have the Right of First Refusal on the unit, which means the City will have the right to buy the unit at the appraised value at the time the unit is being sold.
Yes. However, because the City will take a second mortgage for the full difference between the full fair market appraised value of the property at the time the unit is purchased and its IZ set sale price, the City will not allow the contract sales price or purchase price to exceed the IZ set price for the unit. Therefore, any improvements must either be owner financed at purchase or must be covered by a third mortgage.
The City Assessor will base the property taxes owed on the full fair market value of the property.
The City will monitor 5% of the owner inclusionary dwelling units to determine if the household qualified for the program at the time of the sale, and to determine if the household qualifying for the program at the time of the sale is still the occupant of the property.
Yes. However, an owner may rent out their IZ property for no more than 12 months in any seven-year period of their ownership.
Yes. At the time the owner wishes to sell the unit, the City will allow a 5% deduction from the market value of the unit at that time in calculating its equity share as a way to allow an owner to recoup some (if not all) of their improvement equity.
Yes. The IZ ordinance allows an owner to both refinance a unit and to borrow against their share of equity appreciation, but limits the ability of the owner to borrow against the City's share of the equity in the property. The homeowner is required to notify the City Planning Director and the CDBG Office when they wish to refinance a unit. In no case, however, may the owner borrow against the City's equity share of the property.