Below Market Rate Rental Information for Owners and Property Managers

Owners and managers of below market rate (BMR) properties can find policies, procedures, and forms for managing their BMR properties below. Owners are responsible for following the City of Berkeley’s procedures for marketing their units, determining eligibility, and certifying tenants. 

Submit marketing plan to the City for approval

The first time you rent out your below market rate units (i.e., at first occupancy), you will need to submit a marketing plan to the City of Berkeley for approval. You will need to submit the plan at least 45 days before beginning to market your below market rate units. The City will review your draft plan to ensure that it:

• Includes all of the marketing plan components listed below
• Reaches a wide cross-section of the Berkeley community

Your marketing plan must include the following components:

• Narrative of development, including overall description of the project, location, total number of units, amenities, and other descriptive features
• Overview of BMR units, including the number of units, breakdown by affordability level, unit square footage, number of bedrooms, and proposed BMR rent
• List of newspapers and/or other publications where units will be advertised
• List of civic groups, churches and other non-profit organizations to which owner will transmit electronic or hard copy information for distribution
• Berkeley local businesses, community areas and other key locations to which owner will transmit electronic or hard copy information for distribution
• List of websites where units will be advertised (i.e., Craigslist, Owner/property-specific website)
• Sample of flyer, electronic notices, and print advertisements
• Start date and duration of initial marketing period
• How random selection of applicants will be ensured (i.e., lottery)
• How the Section 8 and Shelter+Care requirement will be met if your project was approved after December 1, 2016.

Your marketing plan must also include procedures for:

• Distributing and accepting applications, including a description of criteria that will be used for evaluating both BMR and market-rate applicants, e.g., credit history, rental history, income history, and references
• Notifying accepted applicants
• Notifying rejected applicants
• Placing applicants on a waiting list, including policies and procedures for updating the waiting list and removing applicants from waiting list

Set eligibility requirements for the unit

Property owners must include the below criteria in the tenant eligibility requirements. You can add additional eligibility requirements, but must include the criteria below:

• Meet income limits for the BMR unit. 
• Live in the unit at least ten months out of the year as their permanent, sole residence.
• Occupy the unit as their sole, permanent residence within 60 days of the lease start date.
• Have no ownership interest in any residence, either as an investment or alternate residence.
• Have a member of the household who is legally able to execute contracts (i.e., is at least 18 years old)
• Document that the Head of Household, including full-time students, cannot be claimed as a dependent on another person's tax returns.
• Demonstrate that no employment relationship with the property owner or property management company exists.

Gather applicants’ proof of income

Owners are responsible for ensuring that applicants meet eligibility requirements. Owners must ask prospective tenants to provide proof of income to determine income eligibility. Applicants must provide the below documents:

• Two months of most recent bank statements
• Three most recent pay stubs
• Unemployment compensation statements, pensions, financial aid, disability, Social Security, and other forms of periodic non-wage income
• Most recent tax return or W-2

Applicants who were a dependent of someone else within the past year must provide:

• The most recent tax return of that other person (not necessary for foreign tax returns)
• A signed statement from that person stating the amount of the financial assistance within the last 12 months and how much will be provided within the next 12 months

If tenants have unusual circumstances, please have them provide a letter of explanation. The City may request additional documentation to clarify or confirm information. Read more about Income Eligibility Determination.

Certify tenants’ eligibility

Owners are responsible for certifying that tenants are eligible for the BMR unit. The procedures are different for first occupancy, recertification of ongoing tenants, and certification of new tenants after the first occupancy.

For first occupancy, submit certifications to the City

The first time you rent your BMR unit, you must submit documents to the City for final approval. Follow the steps below:

1. Complete Tenant Approval Form 
2. Gather and review tenants’ proof of income documents
3. Submit completed Tenant Approval Form and proof of income documents to the City for approval

Recertify ongoing tenants each year

After tenants have been approved, you will need to recertify the existing tenants on an ongoing basis.

• On the first anniversary of the lease date, tenants must provide the full income documentation listed in the section above.
• Every fifth anniversary of the lease date, tenants must provide the full income documentation listed in the section above.
• Every other year, tenants must complete the Self-Certification Form and owners must complete the Tenant Approval Form 

You do not need to provide these documents to the City for approval. However, you are required to keep these documents on file for the City to inspect upon request.

Certify new tenants

After the initial occupancy, you must certify new tenants but do not need to submit documents for approval from the City. To certify new tenants, please follow the steps below:

• Complete the Tenant Approval Form 
• Gather applicant’s proof of income and verify that they meet eligibility requirements

You do not need to provide these documents to the City for approval. However, you are required to keep these documents on file for the City to inspect upon request.

Monitoring and compliance

The City's Affordable Housing monitor will visit the property and review tenant files for compliance with BMR program. The City will notify owners or property managers of the site visit in advance.

Owners are required to submit annual reports on City Data Services.  Please contact the City if you are a property owner or manager that needs to establish or access a City Data Services account. The reports include the Occupancy Report in which owners will update changes to the tenants, their rents, and their incomes.  The other report is the Narrative Report which contains questions about the marketing procedures and condition of the property.  Each owner or property manager is assigned a user name and password for City Data Services to submit reports.   Unless the City changes the date, annual reports are due February 15. 

Owners must pay an annual monitoring fee of $432 per BMR unit. There is a 10% surcharge for 30 day late fees, 20% surcharge for 60 day late fees, and an administrative lien fee of $125 per lien.

Failure to comply with the BMR program is a violation of the Berkeley Municipal Code.  Owners may be cited for each separate violation each day, beginning on the date the violation is required to be corrected.  The administrative penalties for violation of the Berkeley Municipal Code can be as much as $500 per violation per day.