06/11/1980 Meeting - Laserfiche WebLink

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Mr. Lieuallen stated he feels this is coming close to eliminating the purpose of the ordinance and asked for clarification from the members on the task force. Mr. Delay stated he does not want to stand in the ~ way of new multi-family construction. If the rationale for the conver- ~ sion formula creates a cloud on investment and financing possibilities, he wondered if this would still be the case if this were moved to only an advisory role. He does not feel this changes the thrust of the ordinance very much. It does eliminate the existing regulation, but they could enact the formula at any time. He indicated he would like to hear more of the entire package of considerations. Mr. Sercombe stated that the two disincentives to investors were the tax and the possibility of future limitation of conversion. Investors are afraid there will not be enough allowable conversions under the formula to allow recovery of their investment due to balloon financing. Warranty and displacement factors will not be strong disincentives. The cost of compliance due to displacement would be about $300 or $400 per unit. The staff recommendation is to keep the formula in an advisory capacity until more is known. Mr. Obie felt this would not mean doing away with the ordinance as the council has set out to concern itself with special categories, not to discourage investors. Ms. Smith stated that in addition to the yearly review of the results of the conversion rate 'formula" she would also like to see included in the review information on the availability of rental housing units and administrative costs to the City. Mr. Lieuallen stated that, according to builders in the past, if rules are not clearly spelled out, it makes it difficult to do future planning. Therefore, the argument that putting this formula into effect would be putting a cloud on ~ investment is not a very clear one. He is not convinced that having .., the formula used in an advisory role is a very sensible one since there may be a lot of pressure in the future to convert. Betty Niven stated she had derived the conversion rate formula. The main consideration is if the council wants to have the formula, it must be without Mr. Delay's amendment. Since financing is not regularly available, people would convert at the earliest possible opportunity. She feels that the council does not wish to discourage conversions nor do they wish to encourage early conversions. Under Councilor Delay's proposal, with 1,400 units, each unit would be counted; when 1,400 is reached, newer units can still convert but older ones cannot. It seems that older units would be converted first if more than one structure is owned by an investor. People who bought in 1973 are just as bad off as those who bought later, if they have balloon financing. Ballooning does not necessarily occur at the ten-year period. Age or other limitation factors could possibly encourage premature conversion. Investors, not builders, are who one should be concerned with. Mr. Lieuallen said he understood the Delay pro- posal to relate more to the kind of financing mechanism rather than the timing, as with a certain class of construction which was bought with certain financing that assumed later conversion. He asked for clarification. e 6/11/80--4