HomeMy WebLinkAboutAttachmt 9 CC StfRept 11-16-2004
CITY CLERK
File # DÆJ~-[2Jc
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 e;,¡..-
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~NDATIO~
\
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 Condominiwn 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 Inclusionary 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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ITEMNO.~
ATTACHMENT q
G:\PA#\2004\04-044 Condo Conversion ZOA\tcsrll-16-04.DOC
ANALYSIS:
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:
1. 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 commWlity (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
Condominiùtn Conversion Ordinance i.c; consistent with the threshold that has been established for
the Inclusionary 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 Condominiwn 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.
Fisca/lmpact: Implementation of this recommended policy would not have an impact on ìts' 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: Condominiwn conversions would only be pennitted 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
va;cancy 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 tenninates a
lease prior to receiving a notice to vacate ttom 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.
Fžscal 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 Inc1usionary 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
Condominiwn 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 lnclusionary 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 Staff's 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 Condominiwn 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 10 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.
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 ORE 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 CPI. 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 detennined 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.
Fiscallmpact: None. The property owner would be required to obtain a building pennit 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.
Fiscallmpact: 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. Inc1usionary 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.
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1. Application of Inelusionary 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 ORE.
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 CondomiIÚum 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 WlÎts within the City.
Fiscal Analysis: Staff time will be required to implement and monitor the Inelusionary 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 Inc1usionary
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
Inclusionary 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 Inclusionary 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
Inclusionary 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 existing 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
buìlding, 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 oV\.'l1er or the newly created condominium
association to perform maintenance and repairs. Therefore, multi-family developments could convert
without performing improvements.
FiscalImpact: 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.
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