HomeMy WebLinkAbout7.3 Condo Conversion
CITY CLERK
File # D!J~PJ-[Z]a
AGENDA STATEMENT
CITY COUNCIL MEETING DATE: November 16,2004
SUBJECT:
P A 04-044 Presentation of Policy Recommendations for the
Proposed Condominium Conversion Ordinance.
Report Prepared by: Jeff Baker, Associate Planner ~
ATTACHMENTS:
1.
City Council Resolution 181-04, Initiating Proceedings to
Adopt an Ordinance Regulating the Conversion of Existing
Apartments in the City to Condominiums.
City Council Staff Report dated September 7, 2004, without
attachments.
2.
RECOM~ENDATIO~
\
Provide direction to Staff on policies that should be considered as
part of the Condominium Conversion Ordinance.
FINANCIAL STATEMENT:
No financial impact at this time. Implementation of the
Condominium Conversion Ordinance will have an impact on Staff
time in relation to monitoring policy provisions. The impact on
Staff time is not currently known. Further analysis of this impact
will be presented to the City Council at the time the proposed
Ordinance is presented.
BACKGROUND:
On September 7, 2004, the City Council adopted a Resolution (Resolution #181-04) initiating proceedings
to adopt an ordinance regulating the conversion of existing apartments in the City to condominiums
(Attachment 1). Following that meeting, Staff has studied the various mechanisms for regulating
condominium conversions. This study included a complete review· of the Subdivision Map Act, City of
Dublin General Plan Housing Element and Condominium Conversion Ordinances from fifteen different
cities throughout California, including the cities of Livermore and Walnut Creek. Based on this study
staff has developed a series of policy alternatives for the City Council to consider.
Process:
Implementation of a Condominium Conversion Ordinance will include the development of a new chapter
in the City of Dublin Zoning Ordinance for Condominium Conversions as well as related amendments to
the existing lnclusionary Zoning Regulations and Site Development Review chapters of the Zoning
Ordinance (Chapters 8.68 and 8.104). Following this policy discussion, Staff will prepare a draft ordinance
for review at public hearings before both the Planning Commission and City Council.
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COPIES TO:
In-House Distribution
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ITEM NO. TI-
G:\PA#\2004\04-044 Condo Conversion ZOA\ccsrll-16-04.DOC
ANAL YSIS:
The following is a list of goals that Staff has used as a framework for developing policy alternatives. These
goals were derived from the General Plan Housing Element and the Resolution initiating proceedings to
adopt an ordinance regulating the conversion of existing apartments in the City to condominiums. These
goals help to ensure the creation of policies that are consistent with the City of Dublin General Plan
Housing Element.
Condominium Conversion Policy Goals:
I. Maintain a supply of affordable and market rate rental housing.
2. Provide a reasonable balance of ownership and rental housing and a variety of choices in the type and
price of housing.
3. Establish criteria for the conversion of existing multi-family rental housing to condominiums.
4. Reduce the impact of conversion on residents in rental housing who may be required to relocate due to
the conversion of apartments to condominiums.
5. Ensure that converted housing achieves a high degree of appearance, quality and safety.
Based on the above goals, Staff has prepared policy categories that would be included in a Condominium
Conversion Ordinance. These categories are presented with a Staff recommendation and an alternative
option.
Subdivision Map Act:
The Subdivision Map Act provides some protection for certain groups that may be affected by
Condominium Conversions. However, State Housing Law provides that cities have the responsibility to
use the powers vested in them to facilitate the improvement and development of housing to make
adequate provisions for the housing needs of all economic segments of the community (Gov. Code, §
65580(d». Staffs recommendations would build from and augment the provisions of the Subdivision
Map Act.
A. Condominium Conversion Ordinance
1. Application of the Condominium Conversion Ordinance
Staff Recommendation: The following criteria would be used to identify properties that are
subject to the proposed Condominium Conversion Ordinance:
· Multi-family residential developments containing 20 or more dwelling units under the same
ownership that are held for lease to the general public.
· Multi-family residential rental projects that have received a release of occupancy.
· Multi-family residential rental projects that have not received a public report from the
Department of Real Estate (regardless of whether or not they have a recorded condominium
map).
Analysis: The provIsIOn to make all projects with 20 or more rental units subject to the
Condominium Conversion Ordinance Î$ consistent with the threshold that has been established for
the lnclusionary Zoning Regulations. Implementation of this recommendation would exclude
duplexes and smali apartment buildings from the ordinance. The Alders Apartments is the
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smallest apartment building in the City with only 8 units. The Evan Alan Apartments is the next
smallest with a total of 20 units.
Incorporating into the ordinance the recommendation requiring a public report from the DRE
would have the effect of making units that have been mapped for condominiums subject to the
Condominium Conversion Ordinance, in most if not all cases. In order to convert an apartment
complex to for-sale condominiums, the property owner must record a Condominium Map and
obtain a Public Report from the Department of Real Estate (DRE). State law provides that only
the Public Report vests the building owners' rights to sell the units individually. Without the
Public Report, the development remains subject to new City ordinances regardless of whether the
building is already mapped.
The City has released occupancy of approximately 3,172 multi-family rental units throughout the
City. It should be noted that approximately 1,119 of these units are already mapped for
condominiums. The DRE has not issued a Public Report for any units that have been mapped for
condominiums. If all of these units were converted, the ratio of apartments to ownership units
would be greatly reduced and a significant number of tenants would be displaced. Implementation
of this provision would reduce the potential impact to these tenants.
Fiscal Impact: Implementation of this recommended policy would not have an impact on its' own.
However, depending on the overall policy direction there will be a different amount of Staff time
dedicated to the implementation of the ordinance. This analysis would be brought forward to the
City Council with the draft ordinance.
Alternative Recommendation: The Condominium Conversion Ordinance would be applicable
to multi-family residential developments containing 3 or more dwelling units under the same
ownership. All other recommended provisions listed above would also be included.
Analysis: This would include all existing apartment projects within the City of Dublin but this
would continue to exclude duplexes from the conversion ordinance.
Fiscal Impact: Implementation of this policy will not have an impact on its own. However,
depending on the overall policy direction there will be a different amount of Staff time dedicated
to the implementation of the ordinance. This analysis would be brought forward to the City
Council with the draft ordinance.
2. Limitations on Conversions
The limitations listed below would be utilized by the City to evaluate requests for conversion of
multi-family rental property to condominiums:
Staff Recommendation: Condominium conversions would only be permitted if the minimum
number of rental units within the City of Dublin exceeds 30% of the total housing supply and the
average citywide vacancy rate over the previous year exceeds 5% within the City of Dublin.
Conversion cannot reduce the total number of rental units below 30% of the total housing supply
and cannot reduce the vacancy rate below 5% as estimated through Staff review.
Analysis: This provision sets clearly defined standards that can be used to determine if rental units
may be converted to condominium units and continue to preserve diversity in the housing stock.
When the General Plan Housing Element was updated in 2000, there were 9,597 residential units
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within the City of Dublin. Multi-family rental units represented 2,921 or approximately 30% of
the total housing supply. This was consistent with the composition of the nationwide housing
supply at that time. Implementation of this provision in the ordinance would preserve a core stock
of rental housing consistent with the housing ratio identified in the Housing Element.
The City of Dublin Housing Element (Appendix A, Dublin Housing Stock) indicates that a
vacancy rate of 5% is considered ideal for adequate consumer mobility and choice. A vacancy rate
below 5% indicates a strong rental market with limited availability. A vacancy rate that is greater
than 5% would indicate some excess availability of housing within the City of Dublin. This
provision would help to ensure the availability of alternative housing for residents that are
displaced by conversion. However, implementation of this alternative could limit future
conversions based on the housing and vacancy ratios within the City.
Fiscal Impact: A minimal amount of Staff time would be required to obtain the current housing
ratios and vacancy rates; however, this time could be charged to the Applicant.
Alternative Recommendation: Condominium conversions would only be permitted if the
minimum number of rental units within the City of Dublin exceeds 25% of the total housing
supply and the average citywide vacancy rate over the previous year exceeds 5% within the City of
Dublin. Conversion cannot reduce the total number of rental units below 25% of the total housing
supply and cannot reduce the vacancy rate below 5%.
Analysis: The ratio of rental housing has changed since the General Plan Housing Element was
updated in 2000. As of October 2004, the City has issued or finaled building permits for 15,447
residential units. Approximately 25% of the residential permits that have been issued were for
multi-family rental housing. This alternative would ensure that the rental housing supply as a
percentage of the total housing supply would not drop below the current ratio.
Fiscal Impact: A minimal amount of staff time would be required to obtain the current housing
ratios and vacancy rates; however, this time could be charged to the Applicant
3. Tenant Relocation Assistance Plan
A Tenant Relocation Assistance Plan shall be prepared by the Applicant to indicate how the
Applicant will assist tenants who will be displaced in securing decent, safe, sanitary and affordable
replacement housing not higher in cost than the rent of the existing unit being converted. Staff
recommends that, at a minimum, the relocation assistance plan include moving expenses and an
extension of lease terms as discussed below.
a. Moving Expenses
Staff Recommendation: Payment of moving expenses equal to 2 months rent to all tenants
who reside in the property at the time that the "Notice of Intent to Convert" is issued pursuant
to the Subdivision Map Act (Section 66452.9) or the alternative notice required by the
Condominium Conversion Ordinance for projects that already have final condominium maps.
Payment shall be made within 14 days of relocation. However, any tenant who terminates a
lease prior to receiving a notice to vacate from the property owner or is in arrears of rental or
leasehold payments, unless withholding payment is legally allowed, shall not be entitled to
relocation benefits.
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Analysis: The payment of moving expenses is intended to reduce the financial burden that is
placed on tenants as a result of the property owner's decision to convert and the tenants'
subsequent need to relocate. This money will help to defray the cost of physically moving and
related moving expenses. The Subdivision Map Act does not require property owners to
provide relocation assistance to displaced tenants.
Fiscal Impact: Depending on the policy direction and implementation procedures there will be
a different amount of Staff time dedicated to the implementation of this ordinance provision.
There is a possibility that some type of self-reporting procedure could be implemented that
would minimize Staff monitoring time. Further analysis of the amount of Staff time will be
included when the ordinance is brought back to the City Council.
Alternative Recommendation: Payment of moving expenses equal to 2 months rent only to
tenants that are seniors (age 62 and above), permanently disabled tenants and tenants that
reside in affordable units as defined by the City of Dublin Inclusionary Zoning Ordinance
(Section 8.68).
Analysis: The payment of moving expenses to this select group of tenants will help to reduce
the financial burden for those tenants that are likely to have the most difficulty relocating and
are least able to bear the costs associated with moving. The Subdivision Map Act does not
require property owners to provide relocation assistance to displaced tenants.
Fiscal Impact: Depending on the policy direction and implementation procedures there will be
a different amount of Staff time dedicated to the implementation of this ordinance provision.
There is a possibility that some type of self-reporting procedure could be implemented that
would minimize Staff monitoring time. Further analysis of the amount of Staff time will be
included when the ordinance is brought back to the City Council.
b. Lease Agreements
Staff Recommendation: Staff recommends inclusion of the following provisions in the
Condominium Conversion Ordinance:
A. Rent will not be increased from the date of issuance of a "Notice of Intent to Convert"
pursuant to the Subdivision Map Act (Section 66452.9) or or the alternative notice required
by the Condominium Conversion Ordinance for projects that already have final
condominium maps, whichever occurs first, until 6 months following the receipt of a
public report from the Department of Real Estate, or the tenant purchases a unit or
relocates to other accommodations, whichever occurs first.
B. Provide lease/rental agreement extensions of no less than 3 years to all tenants that are
seniors (age 62 and above), permanently disabled tenants and tenants that reside in
affordable units as defined by the City of Dublin Inclusionary Zoning Ordinance (Section
8.68). The 3-year extension shall start from the date of issuance of the public report from
the Department of Real Estate (DRE). Annual rent increases during this 3-year period may
not exceed 75% of the latest average annual rent increase of the residential rent component
of the Consumer Price Index.
C. Extend leases/rental agreements to families with children in grades K through 12 for a
minimum of 1 year from the date of issuance of a public report from the DRE.
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Analysis: The Subdivision Map Act requires property owners to give 6 months notice of
intention to convert prior to terminating tenancy due to the conversion, and the Condominium
Conversion Ordinance would require a similar notice prior to submission of an application to
convert a project that has already been mapped for condominiums. However, there is a limited
amount of housing that meets the needs of senior, disabled and low-income tenants.
Implementation of Staffs recommendation would provide these tenants with additional time to
find housing within the community and further reduces the potential negative impacts of
movmg.
Providing tenants with school age children a I-year extension will help to avoid moving during
the school year and disrupting the education process. Restricting the ability to raise rent will
limit the potential for property owners to encourage tenants to vacate units and avoid the
noticing requirements of the Subdivision Map Act and payment of relocation assistance
required by the City of Dublin Condominium. Conversion Ordinance. Rent would be held in
place for a minimum of 6-12 months under this provision.
Fiscal Impact: Staff time will be required to enforce these provisions. The amount of Staff
time will be determined as the draft ordinance is developed. Further analysis of the amount of
stafftime will be determined when the ordinance is brought back to City Council.
Alternative Recommendation: The following are alternative provisions for consideration in
the Condominium Conversion Ordinance. Either one or both of these provisions could be
implemented with the Staff recommendations listed above:
A. Provide a lease/rental agreement extension of no less than 1 year from the date of issuance
of the public report from the DRE to all tenants that are seniors (age 62 and above),
permanently disabled tenants and tenants that reside in affordable units as defined by the
City of Dublin Inclusionary Zoning Ordinance (Section 8.68).
B. Permanently disabled or low-income tenants that are also seniors shall receive a lifetime
lease in which rent increases are tied to the CPr. All other recommended lease provisions
listed above would also be included.
Analysis: Implementation of these provisions would provide additional protections that are not
required by the Subdivision Map Act for tenants that are considered to be -difficult to relocate.
The lease extension will provide tenants that are seniors, disabled or living in affordable units
with 6 months more time to relocate than provided by the Subdivision Map Act.
Implementation of this provision would enable certain tenants to avoid relocation altogether
because of the difficulty in finding replacement housing and physically moving.
Fiscal Impact: Staff time will be required to enforce these provisions. The amount of Staff
time will be determined as the draft ordinance is developed. Further analysis of the amount of
staff time will be determined when the ordinance is brought back to City Council.
4. Building Code Requirements
The following recommendations address the application of building code requirements to
condominium conversions:
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Staff Recommendation: Converted condominiums shall be required to meet the building code
requirements in effect at the time of construction. Any retrofitting or remodeling work shall meet
current building code requirements in effect at the time building permits are issued for the work.
Analysis: Many existing residential dwellings, including apartments, within the City of Dublin
were built prior to the current building code requirements. These dwellings are considered safe
and inhabitable structures. Therefore, the City does not typically require costly retrofitting of these
properties to bring them up to current building code requirements. Conversion of existing
apartments to condominiums does not substantially change the use of these structures in a way that
would make them less safe or inhabitable. However, any remodeling or retro fitting work that the
property owner performs would be required to meet current building code requirements.
Fiscal Impact: None. The property owner would be required to obtain a building permit for
retrofitting work. The cost of building inspections is included in the building permit fees.
Alternative Recommendation: All converted condominiums shall be retrofitted to the standards
required of new residential condominiums as required by the Building Official.
Analysis: Extensive retrofitting would be required for many older properties in order to bring
them up to current building code requirements. This is an expensive proposition that would likely
discourage the conversion of older apartment complexes that were not built to current
condominium standards.
Fiscal Impact: None. The property owner would be required to obtain a building permit for
retrofitting work. The cost of building inspections is included in the building permit fees.
B. Inclusionary Zoning Regulations
The following are recommendations regarding the application of Inclusionary Zoning and the
purchase of below market rate rental units in developments that are converted to for sale
condominiums.
. .
1. Application of Inclusionary Zoning
Staff Recommendation: Amend the Inclusionary Zoning Regulations (Section 8.68) to require
multi-family rental projects that are subject to the condominium conversion ordinance to provide
12.5% of the total number of dwelling units within the development as affordable purchase units if
they have not already obtained a public report from the DRE.
Analysis: Approximately 29% of the rental units within the City are located in properties where a
Final Condominium Map has already been recorded. Conversion of these rental units could result
in a substantial loss of market rate and affordable rental units. This provision would· require
property owners to provide affordable units at the time of conversion regardless of whether or not
a Final Condominium Map has been recorded on the property. This is an innovative approach to
providing inclusionary housing with condominium conversions that is not currently used by
surrounding jurisdictions.
Fiscal Analysis: Staff time will be required for Staff to implement and monitor the Inclusionary
Zoning Regulations on all newly converted condominiums.
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Alternative Recommendation: Amend the Inclusionary Zoning Regulations (Section 8.68) to
require condominium projects with 20 or more units to provide 12.5% of the total number of
dwelling units within the development as affordable units if a Final Condominium Map has not
been recorded on the property.
Analysis: As previously discussed, approximately 29% of the rental units within the City are
located in properties where a Final Condominium Map has already been recorded. These
properties would not be subject to inclusionary zoning under this provision. However, properties
that do not have a recorded Final Map would be subject to inclusionary zoning and contribute to
the supply of affordable purchase units within the City.
Fiscal Analysis: Staff time will be required to implement and monitor the Inclusionary Zoning
Regulations on those developments that have not already recorded a Final Condominium Map.
2. Purchase of Existing Below Market Rate Units
Staff Recommendation: Tenants that reside in affordable units as defined by the City of Dublin
Inclusionary Zoning Ordinance (Section 8.68) shall have the right of first refusal to purchase their
current unit at an affordable purchase price in accordance with the provisions of the Inclusionary
Zoning Regulations and the City of Dublin's "Laypersons Guide to Inclusionary Zoning Ordinance
Regulations" .
Analysis: This provision would help to reduce the impact of relocation on low-income tenants and
provide them with preferential treatment in the purchase process. The Subdivision Map Act does
require property owners to offer tenants an exclusive right to purchase his or her respective unit at
market rate. However, implementation of this provision would enable tenants living in affordable
units to purchase their existing unit at an affordable purchase price calculated based on the
lnclusionary Zoning requirements.
Fiscal Analysis: Staff time will be required to verify that low-income tenants receive the right of
first refusal. Additional staff time will be required in order to verify the household's eligibility for
these newly converted units.
Alternative Recommendation: Offer below market rate purchase units to the general public
without preference to the existing affordable tenants.
Analysis: Implementation of this provision would mirror the requirements of the Subdivision Map
Act. No special preferences would be given to existing tenants living in Inclusionary rental units
that want to purchase an lnclusionary for sale unit. All existing tenants would be offered the right
of first refusal to purchase their unit at market rate based on the requirements of the Subdivision
Map Act. Tenants currently living in Inclusionary rental units that wish to purchase an
lnclusionary unit would have to choose from the units that are available at the Inclusionary price.
These tenants might have to move from their existing unit.
Fiscal Analysis: Staff is already verifying household eligibility for existing for sale housing.
Additional Staff time would be required for those newly converted units.
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C. Site Development Review
A Condominium Map is required in order to convert an eXIstmg apartment complex to
condominiums. However, the map process does not provide a mechanism to evaluate the physical
appearance of a property. For example, the City could receive an application to convert an existing
apartment complex with deferred maintenance that creates an eyesore within the community. This
deferred maintenance could include external painting and landscape maintenance to repair sparse or
overgrown landscaping. A Site Development Review Permit would provide the City with a
mechanism to evaluate the physical appearance of the property and require modifications. The
following are recommendations regarding the application of a Site Development Review Permit to
condominium conversions.
Staff Recommendation: Each main building, structure, fence, patio enclosure, carport, accessory
building, sidewalk, driveway, landscaped area and utility shall be refurbished and restored as
necessary to achieve a high degree of appearance, quality and safety.
Analysis: This provision will provide the City Council with the ability to require property owners to
perform deferred maintenance prior to conversion. This will help to maintain the visual appearance of
the City of Dublin. An amendment to include condominium conversions in the Site Development
Review section of the Zoning Ordinance (Section 8.104) would be required in order to implement this
prOVISIOn.
Fiscal Impact: No financial impact. Community Development Department Staff time would be
required to perform a physical inspection of the property and review proposed improvements.
However, the Applicant would be required to apply for a Site Development Review Application and is
then charged on a time and materials basis.
Alternative Recommendation: Require the property owner to establish a reserve fund in excess of
DRE requirements for ongoing maintenance of the property.
Analysis: Condominium associations are required to establish budgets and reserve funds for ongoing
maintenance. This provision would only require additional funds be set aside for such repairs.
However, it does not require the existing property owner or the newly created condominium
association to perform maintenance and repairs. Therefore, multi-family developments could convert
without performing improvements.
Fiscal Impact: No financial impact since no action would be required of Staff.
RECOMMENDATION:
Staff recommends that the City Council provide direction to Staff on policies that should be considered as
part of the Condominium Conversion Ordinance.
9AD~
RESOLUTION NO. 181 - 04
\tt¡ 1
RESOLUTION OF THE CITY COUNCIL
OF THE CflY OF DUBLIN
******"~tt'
INITIATING PROCEEDINGS TO ADOPT AN ORDINANCE
REGULATING THE CONVERSION OF EXISTING APARTMENTS TO CONDOMINIUMS
WHEREAS, State law provides that cities have the responsibility to use the powers vested in them
to facilitate the improvement and development of housing to make adequate provision for the housing
needs of all economic segments of the community; and
WHEREAS, at the loca1level, cities implement state housing law policies through the adoption of
the Housing Elements of their General Plans, which elements are reviewed and approved by the state's
Department of Housing and Conununity Development ("HCD"); and
WHEREAS, among other things, Housing Elements must contain a statement of the community's
goals, objectives and policies related to the maintenance, preservation, improvement, and development of
housing wong with an action program to implement these goals, objectives and policies; and
WHEREAS, the City's 1990 Housing Element included several policies that encouraged and
suggested actions to ensure the availability of rental housing, ,including a policy that required the
monitoring of the availability of rental housing and, if monitoring disclosed that it was necessary, the
enactment of a condominium..conversion ordinance; and
WHEREAS, in accordance with state housing law, the City adopted its 1999-2006 Housing
Element ("the Current Housing Element") in June 2003, and it was certified by HCD on July 11, 2003; and
WHEREAS, the Current Housing Element eI.inúnated the ptognun that required the monitoring of
the availability of rental housing and potential enactment of condominium-conversÎon ordinance, reasoning
that there was little likelihood that existing rental housing property owners would convert their properties
to condominiums due to the strong demand for rental housing in Dublin and the development of
condominiums (including 1396 condominium units currently under constnlction) to satisfY the demand for
condominiums; and
WHEREAS, the CuJTent Housing Element further indicated that the City would assess the need
for a condominium..conversion ordinance each time it updates the Housing Element, if the need arises; and
WHEREAS, since the adoption of the Current Housing Element, conditions in the housing market
have changed markedly, and the Community Development Department has noted that the incidence of
condominium-conversion projects in other communities is increasing; and
WHEREAS, the City of Dublin believes that the following market conditions have led to the
increase in proposals to convert existing multi..family rental projects to condominiums:
a. The higher vacancy rates for apartmeµts as more and more people are able to qualifY for
loans for homes due to historicaUy low interest rates;
b. The increased market for condominiums in the area; and
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ATIÁêHMENT \1.3
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c. The ability of the property owner to maximize profit by selling units rather than renting
them.
WHEREAS. in the past ten years. the City has developed over 1500 residential apartment units for
an overall total of approximately 2,800 units throughout the City. These units and the other rental units in
the provide a type of housing that is one of the keys to providing for the housing needs of all economic
segments of the community; and
WHEREAS, rental units provide housing for persons in all income levels, and they are a valuable
tool for providing workforce housing; and
WHEREAS, the conversion of one or two of the City's apartment communities could have a
major impact on the City's housing market, in that it would remove ftom the market a significant
percentage of the existing rental units; and
WHEREAS, if units are sold rather than rented, the units would no longer be available to a
segment of the community that is not in a position to purchase such units; and
WHEREAS, the loss of these units would likely decrease the vacancy rate and accordingly tend to
increase rents, and this would tend to further exacerbate the City's shortage of affordable rental units; and
WHEREAS, due to these changes in the marketplace and their potential consequences on the
City's ability to provide for the housing needs of all economic segments of the coromunity, the Community
Development Department has begun the development of a condominium-conversion ordinance; and
WHEREAS, the approval of the conversion of existing residential apartment units to
condominiums or other forms of ownership that permit the units to be sold individually, during the period
in which the City is considering the adoption of a condominium~conversion ordinance, could fiustrate the
City's efforts at providing for the housing needs of all economic segments of the community. because it
would result in the removal ofumts ftom. the City's inventory of rental units available to those at lower
income levels and because it would tend to increase the rents of those rental UIÙts that remain; and
WHEREAS, to prevent these goals from being ftustrated, the City desires initiate proceedings to
adopt a condomitúum-conversion ordinance and desires to place potential subdividers on notice pursuant
to Government Code section 66474.2 of the City's intent to adopt a condominium-conversion ordinance,
the effect of which will be to permit the City to apply the condominium-conversion ordinance if it is in
effect on the date the City approves or disapproves the tentative map.
NOW THEREFORE, THE CITY COUNCD.., RESOLVES AS FOLLOWS:
A InitlatioD of Study of Potential Adoption of Coodominium-Convenioo Ordinance.
Staff is hereby directed to study the potential adoption of a condominium-conversion ordinance and, if
deemed necessary due to existing conditions in the City and the marketplace, present such an ordinance to
the Planning Commission and City Council for potential adoption in the manner required by law. This
resolution shall constitute, under subdivision (b) of section 66474.2 of the Government Code. the initiation
of proceedings to adopt an ordinance that regulates, restricts, or prohibits the conversion of existing
residential apartment units held in a single ownerslúp, in whatever form, to condominiums or other forms
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of ownership that permit the units to be sold individually.
B. Notifieation to Subdividen of Intent to Apply Condominium-CoDvenioD Ordinance.
Notwithstanding subdivision (a) of section 66474.2 of the Government Code, the City intends to apply the
condomilÙum~conversion ordinance adopted as a result of the proceedings initiated by this Resolution to all
applications for approval of tentative maps and vesting tentative maps that have not been deemed complete
as ofthe date of this Resolution.
C. Compliance with California Environmental Quality Act. This ordinance is not a
"project" within the meaning of Section 15378 of the State CEQA GuidelinesJ because it has no potential
for resulting in physical change in the environment, directly or ultimately.
D. Severability. If any provision of this ordinance or the application thereof to any person or
circumstance is held invalid, the remainder ofthe ordinance, including the application of such part or
provision to other persons or circumstances shall not be affected thereby and shall continue in full force
and effect. To this end, provisions of this ordinance are severable. The City Council hereby declares that it
would have passed each section, subsection, subdivision, paragraph, sentence, clause, or phrase hereof
irrespective of the fact that anyone or more sections, subsections, subdivisions, paragraphs. sentences,
clauses, or phrases be held unconstitutional, invalid, or unenforceable.
PASSED, APPROVED and ADOPTED this 7th day of September 2004.
AYES: Councilmembers OravetzJ McCornúck, Sbranti, Zika and Mayor Lockhart
NOES: None
ABSENT: None
ATTEST:
ABSTAIN: None
:versions (Item 6.2)
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CITY CLERK
File # D~~
AGENDA STATEMENT
CITY COUNCIL MEETING DATE: September 7, 2004
SUBJECT:
ATTACHMENTS:
RECOMMENDATION:
~
FINANCIAL STATEMENT:
BACKGROUND:
Public Hearing - P A 04-044 Adoption of Resolution Initiating
Proceedings to Adopt an Ordinance Regulating the Conversion of
Existing Apartments in the City to Condominiums
(Report Prepared by; Jeri Ram, Planning Manager)
1.
Resolution Initiating Proceedings to Adopt an Ordinance
Regulating the Conversion of Existing Apartments in the City
to Condominiums.
Notice of Public Hearing to Consider Initiating Proceedings
to Adopt a Condominium Conversion Ordinance.
Copies of Sections from the 1990 Housing Element.
Copies of Sections from the 1999 - 2006 Housing Element.
2.
3.
4.
1.
2.
3.
4.
5.
Open Public Hearing;
Recei ve Staff Presentation;
Question Staff and the Public;
Close Public Hearing and Deliberate; and
Adopt Resolution Initiating Proceedings to Adopt an
Ordinance Regulating the Conversion of Existing Apartments
in the City to Condominiums
No financial impact at this time.
State law provides that cities have the responsibility to use the powers vested in them to facilitate the
improvement and development of housing to make adequate provision for the housing needs of all
economic segments of the community. (See Gov. Code, § 65580(d).) At the local level. cities implement
state housing law policies through the adoption of the Housing Elements of their General Plans, which
elements are reviewed and certified by the state's Department of Housing and Community Development
("HCD"). (See Gov. Code, §§ 65583,65585.) Among other things. Housing Elements must contain a
statement of the community's goals, objectives and policies related to the maintenance, preservation,
improvement, and development of housing along with an action program to implement these goals,
objectives and policies. (See Gov. Code, § 65584(b)-(c).)
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COPIES TO:
In-House Distribution
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The City's 1990 Housing Element included several policies that encouraged and suggested actions to
ensure the availability of rental housing. One policy required that large multifamily projects include a
rental component for a five-year time period. Another policy required the monitoring of the availability
rental housing and, if monitoring disclosed that it was necessary, the enactment of a condominium-
conversion ordinance (Attachment 3). At the time of the adoption of the 1990 Housing Element, there
was a concern that, because there were no condominiums or apartments under development, it was
possible that applications would be submitted to convert existing apartments into condominiums.
On June 3, 2003, the City Council approved the City of Dublin Housing Element (1999 - 2006) ("the
Current Housing Element"), and the State Department of Housing and Corrununity Development certified
it on July 11,2003. The Current Housing Element eliminated the program that required the monitoring of
the availability of rental housing and potential enactment of condominium-conversion ordinance,
reasoning that there was little likelihood that existing rental housing property owners would convert their
properties to condominiums. It concluded that conversions were unlikely because of the strong demand
for rental housing in Dublin coupled with the development of numerous condominiums (including 1396
condominium units then-cUlTently under construction) that would tend to satisfy the demand for
condominiums. The Current Housing Element also noted that the City would assess the need for a
condominium-conversion ordinance each time it updates the Housing Element (Attachment 4).
Since the adoption of the Current Housing Element, conditions in the housing market have changed
markedly. The Community Development Department has noted that the incidence of condominium
conversion projects in other communities is increasing. In addition, Staff has received many questions
from possible investors and purchasers of existing apartment communities about the City's requirements
in relation to condominium conversions; Staff believes that the increase in condominium-conversion
activity due to the following factors:
· Higher vacancy rates for apartments as more and more people are able to qualify for loans for
homes due to lower interest rates;
· An increased market for condominiums in the area;
· The ability of the property owner to maximize profit by selling units rather than renting them.
In the past 10 years the City has seen the development of approximately 1,500 residential apartment units,
for an overall total of approximately 2,800 units throughout the City. It should be noted that
approximately 1,119 of these units are already mapped for condominiums and would not be subject to the
condominium conversion ordinance or the City's Inelusionary Housing Ordinance. Additionally, if all
these units converted, the ratio of apartments to ownership units would be greatly reduced.
The remaining apartment units provide a type. of housing that is a key to a healthy diversity of housing
stock. in the community. Apartments provide housing for al¡levels of affordability in the community and
are a valuable tool for providing work force housing.
In the past seven months, Staff has received inquiries from several existing and potential apartment
developments of their intent to file subdivision documents to convert their projects to condominiums.
These possible projects include:
Existin~ Proiects
Iron Horse Trail Apartments (Dougherty Road) -
Archstone Apartments - Emerald Park (Hacienda Drive)-
117 units
324 units
(.p 1> "'1
New Proiects
Avalon Bay Apartments (Transit Center) -
305 units
Staff believes that the conversion of one or two of the City's apartment commwtities could have a major
impact on the diversity of the City's housing stock, in that it would remove from the market a significant
percentage of the existing rental units. If sold rather than rented, the units would no longer be available to
a segment of the community that is not in a position to purchase such units. In addition, the loss of these
units would likely decrease the vacancy rate and accordingly tend to increase rents, and this would tend to
further exacerbate the City's shortage of affordable rental units. This might cause a lasting imbalance in
the diversity of housing stock in the City. In addition, conversion of apartments without addressing all of
the policy issues would be in conflict with the assumptions that fonned the basis of the City's Housing
Element.
At the present time should a property owner file a request for a condominium conversion, the application
would be processed in accordance with State law under the Subdivision Map Act. The Map Act contains
provisions that require notice to the tenants and gives tenants the right to purchase the units before they
are placed on the market for sale to the general public. State law permits the City to expand upon these
basic requirements through the adoption of a condominium-conversion ordinance. For example, a
condominium-conversion ordinance could limit conversions to maintain a balance of housing stock and
could require the provision of affordable units under the City's Inc1usionary Zoning Ordinance.
Because of market conditions, Staff believes that it is important to begin the development of a
condominium-conversion ordinance. As there are many different mechanisms for regulating conversions
in effect throughout the state, City Staff believes it appropriate at this time to explore the various options.
This study and the eventual drafting would take an unknown amount of time, but Staff anticipates having
an ordinance ready to present to the City Council within 6 months.
Staff is concerned that while the condominium-conversion ordinance is under development, a subdivision
application might be filed to convert an existing apartment complex to condominiums. For the reasons
indicated above. such a conversion could potentially have an impact on the City's ability to provide
housing for all economic segments in the community.
Thus, if the City Council detennines that a conversion of apartments to condominiums might negatively
impact the City's goal and State law obligation to adequately provide for the housing needs of all
economic segments of the community, Staff recommends that the City Council adopt the attached
Resolution initiating proceedings to adopt a condominium-conversion ordinance. The Resolution is
designed to prevent those that file subdivision applications to convert existing apartments to
condominiums or other forms of ownership that permit the sale of individual units from avoiding the
pending condominium-conversion ordinance. Ordinarily, under the Subdivision Map Act, the City may
only apply standards in effect at the time that an application for a tentative subdivision map is deemed
complete. (Gov. Code, § 66474.2(a).) However, if the City initiates proceedings by resolution and
publishes a public notice containing a description sufficient to notify the public of the nature of the
proposed change in the zoning or subdivision ordinances, the City may apply the ordinance enacted or
instituted as a result of the proceedings that arc in effect on the date the local agency approves or
disapproves the tentative map. (Gov. Code, § 66474.2(b).) The City published the appropriate notice as
required by Government Code section 65090 (Attachment 2) and, in addition although not required by
law, provided mailed notice to all the owners of apartments in the City. The attached Resolution would
take the formal step of initiating proceedings.
RECOMMENDATION:
1~1
Staff recommends the City Council Open Public Hearing: receive Staff presentation; question Staff and
the Public; close the Public Hearing and deliberate; and adopt Resolution (Attachment 1) initiating
proceedings to adopt an Ordinance regulating the conversion of existing apartments in the City to
Condominiums