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HomeMy WebLinkAbout09/10/1985 Meeting M I NUT E S e City Council Capital Project/Revenue Work Session Bloch Room--Eugene Conference Center September 10, 1985 5:30 p.m. PRESENT: Brian Obie, mayor; Ruth Bascom, Roger Rutan, Emily Schue (until 7:25), Freeman Holmer, Richard Hansen, Jeff Miller, Cynthia Wooten, Debra Ehrman, councilors; Mike Gleason, city manager; Dave Whitlow, assistant city manager; Warren Wong, financial services director; Gary Long, ASD director; Carol Calkins, ASD/Finance Management and Analysis; Barb Bellamy, public information director; Barbara McDonald, City Manager's Office; Tim Sercont>e, Lee Lashway, City Attorney.s Office; Jim Boyd, Don Bishoff, The Register-Guard; Kathleen Monje, The Ore~onian; Jerry Drelling, Larry Shoop, KMTR; Kent Mortimore, KVAL; D1Ck Briggs, Eugene Chamber of Commerce; Jim Hale, Joe Dehn, guests. Mr. Obie opened the session, and Mr. Wong reviewed the information in the mail ings and agenda attachments. e 1. PUBLIC INFORMATION/INPUT PROGRAM Ms. Bellamy reviewed the agenda attachments on public response to the Eugene Agenda, saying she was surprised and encouraged by the number of responses received. The airport expansion and Capital Improvements Projects had received the most support in the final survey tally. She a 1 so sa i d a tota 1 of about 50 meetings had been held. Ms. Bellamy also outlined the fall public information program and said it was based on a November 5 el ecti on da te. She said the Council had last asked the public for money for capital project issues in June 1978, and she recommended continuing the publ i c informa ti on effort through the el ecti on da tee Ms. Bellamy said a public hearing was scheduled for September 23, and she added that she would like to do a newsletter and a newspaper ad with a mail-in response form on the ballot proposal before then. She also outlined the steps to be taken after City Council action on October 2, which included a one-page summary of the ballot proposal, a slide show update, meetings with community groups, and a newsprint mailer to Eugene residents. Ms. Wooten expressed her concern that the material be informative rather than an attempt to sell the proposa 1 S. Mr. Holmer suggested experimenting with a voters pamphlet containing a description by a citizen group, but said he would not go as far as including pro and con statements. Ms. Bellamy sa i d the copy dea dl i ne for a mailer probably would be about October 12. Mr. Obi e a greed tha t the ta x needed to be understood clearly by voters and said the information effort also would have to take into account the complexity of the agenda put together by e MINUTES--Eugene City Council Revenue Work Session September 10, 1985 Page 1 f the Counci 1 . Responding to Mr. Obie's question, Ms. Bellamy said she thought - the effort to inform the public would be under a tight deadline but was possible and important. Mr. Obie said it appeared that the opportunity to declare an emergency election probably was not available, so possible election dates were in November or in March. II. DRAFT LEGISLATION Mr. Gleason said the legislation had been drafted based on initial discussion and amounts and specifics still could be discussed or modified. A. Personal Income Tax Mr. Wong reviewed the sunnnary of provisions in the agenda attachments and said representatives from the City Attorney's Office were available to answer ques ti ons. He said the personal income tax would apply to earned and unearned income of residents and to income earned within the corporate city limits by non-resi dents. Ms. Wooten asked about the constitutionality of taxing non-residents, and Mr. Wong said that the issue was addressed by a September 9, 1985 memo included in the handouts. Responding to Mr. Holmer.s question, Mr. Wong said the tax would apply to dividends paid by Eugene e corporations, including interest paid by banks within the corporate city 1 i mi ts . He said the draft act also contained provisions for allocating business income between that taxable and non-taxable. Mr. Wong sa i d the dra ft used a ra te of 1/2 percent, subject to Counci 1 decision, and included provisions for a low-income credit, although a specific opti on s ti 11 needed to be i ndi ca ted. He sa i d revenue wa s dedi ca ted to ca pi ta 1 expenditures and specific projects could be included in the act. He also said the act contained no sunset provision, explaining that financial advisors had reported the sunset provision would make questionable both the bond rating by agencies and marketing of the bonds without stringent reserve and coverage requirements. Ms. Wooten asked whether the ordinance would be a charter amendment or a City sta tute. Mr. Wong said the ballot measure would be a charter amendment that would restrict the rate and use of funds, meaning that the rate could not be changed wi thout a vote. Mr. Miller asked for further explanation of the problem with the sunset provision, and Mr. Wong said the problem was the variability of the income stream, with agencies requiring strict reserves of five years. worth of debt service or an income stream of 150 or 140 percent of the debt service, or both. He said those requirements applied because the tax was an income tax rather than a property tax. Mr. Hansen asked whether credit was being pledged, and Mr. Wong said that with revenue bonds, the solidity of the income - MINUTES--Eugene City Council Revenue Work Session September 10, 1985 Pa ge 2 stream would be examined. He also said a revenue bond could be sold and - backed with the full faith and credit of the City, which would mean levying a property tax if the income stream was insufficient to pay the debt service on the bond. Mr. Wong said using the full faith and credit of the City generally had been done with voter approval, and the only backing on what was being considered was the income tax on the bonds. He added that the differential between a straight revenue bond backed by an income tax and a revenue bond backed by the full faith and credit of the City was about 25 basis points, or about 1/4 percent, meaning that the income stream was being closely examined. Mr. Hansen asked how the ordinance was drafted, and Mr. Wong said the ordinance did not speak to the type of financing instruments. but everything included was based on a straight revenue bond. He confirmed Mr. Hansen's cOl1l1lent that backing with the full faith and credit of the City would cut 1/4 percent off the interest, with the voter approval req~ired for each bond issue. Mr. Wong continued. saying the City had received an opinion stating that it had the authority to issue any type of bond without a vote, however both bond and legal counsel said that had not been tested in court, and Mr. Wong said a sunset provision would be difficult, financially unwise, and was not recol1l1lended. Mr. Miller asked whether it was possible to include the sunset, pledge the full credit, and still receive a decent rate. Mr. Wong said he would have to check, but he thought that was possible. Ms. Ehrman asked whether payments could be made over 10 or 20 years. Mr. Wong said the airport bond would be a 20-year issue, and any projects started later would go for 20 years beyond that. He added tha t 20-year bonds generally have e been used, but shorter ones were possible. Mr. Hansen said he had assumed the City had been pledged to pay back the $14 million in airport bonds. and he thought it was desirable to cut the 1/4 percent if possible by having a sunset provision. Mr. Gleason said he thought it was necessary to keep separate the decisions on how projects are financed and on the kind of revenue notes issued. He said pledging the full faith and credit of the City was a legal concept that included all assets and traditionally had been done only with voter approval. Mr. Gleason said including a property tax pledge would make the proposal more complex. Mr. Wong added that each ballot measure was constitutionally limited to one item. so two or three proposals would require as many ballot measures. Ms. Ehrman asked whether pledging the property would have to be done every year or only one time. Mr. Wong said the vote was one-time, but each bond issuance would require voter approval, unless approval was sought for the total amount of bonding to be done over the next ten years. Responding to a question from Ms. Schue, Mr. Gleason said an income stream to deal with capital improvements was a possibility, and could be pledged, but he did not recommend blanketing the issue now. Mr. Holmer asked whether the income tax in the proposal was being earmarked only for ca pi ta 1 items. Mr. Wong said it was, adding that specifiC projects also could be included. Staff said replacement and maintenance for capital expenditures also were included. Mr. Holmer said his preference was to avoid earmarking. e MINUTES--Eugene City Council Revenue Work Session September 10. 1985 Page 3 Mr. Wong said the act would be administered by the state department of e revenue, with set-up costs of about $400,000, including a separate form, instruction book, and software system. Mr. Wong also said the act provided for a reciprocal agreement with other cities that might enact an income tax, in order to avoid double-taxing. Mr. Hansen said he would prefer a deduction for Eugene residents working in Springfield, rather than excluding Springfield residents from the Eugene tax. Mr. Wong said that deduction was possible. Ms. Wooten asked about five A and B on Page 2, and Mr. Lashway said it was a definition of the term "doing business" and excluded income derived from sales activity inside the city, by non-residents, for orders to be filled outside the ci ty. He said B referred to wholesale activity. Ms. Wooten asked about the definition of resident on Page 3. Sta ff sa i d someone residing in the city for more than 200 days, for example a visiting professor, would be subject to the tax unless he or she proved transitory statu s . Ms. Wooten asked about the definition of permanent place of abode, and Mr. Lashway said that applied to students, for example, residing in Oregon for 1 ess than 30 days. Responding to a question from Ms. Ehrman, Mr. Wong said it would take about a week to prepare informa ti on on a corpora te income tax. e B. Sa 11 ot Measure Mr. Wong distributed a September 10, 1985 memo containing a draft ballot measure and charter amendment. He sa i d the Counci 1 a 1 rea dy ha d the ri ght to impose an income tax without voter approval, and the charter amendment would restrict the personal income tax rate to 1/2 percent and dedicate the funds to capital expenditures and administration. Any change to the rate or use would require another vote on a charter amendment, he added. Mr. Wong said approval would mean that income tax revenue could not be used for opera ting expenses, but only for ma intenance of existing infrastructure, creation of new capital infrastructure, or major repair and renovation, and he said those conditions did not necessarily have to be included. Mr. Rutan asked whether any of the revenue could be applied to principal or interest payments on the Hu1t Center or on operating expenses. Mr. Sercombe said he did not have an answer without studying legislative history, and he reconmended direct legislation. Mr. Lashway said the bond indenture for the Hu1t Center bonds would preclude using the income tax to service the debt, and Mr. Wong said default difficulties could be encountered. Mr. Hansen said he thought the capital improvements terminology was too unclear to be used. e MINUTES--Eugene City Council Revenue Work Session September 10, 1985 Page 4 Mr. Wong distributed a September 10, 1985 memo containing a proposed ballot e title for an ordinance adopting a personal income tax. He said options included doing just the charter amendment, or doing both the charter amendment and a public vote on the ordinance as two ballot measures. He also said the other handouts included an opinion from the City Attorney's Office and some options on tax credits. III. CALENDAR OF EVENTS Mr. Wong reviewed the agenda attachment conta ining a timel ine for the November election and said the three options listed were not the only ones possible. He also reviewed the last two attachments, a timeline for a December emergency election, and costs and time frame for a poll of Eugene voters, adding that a list of voters had been ordered. IV. COUNCIL DISCUSSION Mr. Obie said he thought the public input process had provided a good foundation for decisions, and he suggested that the discussion move toward defining some parameters and testing and developing direction and consensus. Mr. Holmer said he thought a period of citizen education had ITBde people aware of the issues and of the need for a new income stream, adding that he thought e a vote on the best package that could be devised was appropriate, as was an income tax. He also said he did not want to restrict revenue entirely to ca pi ta 1 items. Mr. Holmer said based on the hearings, he thought the Federal Revenue Sharing, including transportation items and maintenance of public buildings, items 8 and 9 of the agenda, had to be replaced. He said the airport seemed to have the most pUblic support and he hoped the library could be included as well. Ms. Schue said she thought a vote should be held in the fall rather than waiting until March, and she agreed with Mr. Holmer1s identification of key proj ec ts . She added that she was concerned about operating expenses for an expanded 1 ibrary and about drawing the defini ti on of ca pi tal improvements too ti ghtly. Mr. Rutan said he thought something specific should be put on the ballot in November. He added that he thought the Council should select the projects that make the most sense and would have the most impact on the community. He said he would support the 1/2 percent income tax and the three key projects mentioned previously. He also said he thought it was important to present a clear understanding to the public of where the money would go now and in the future, and what the flexibility of the Council would be. He sa i d he wa s open to more discussion on the library issue, although he was concerned about the cost, and he also expressed his concern that the ballot title not be overly restrictive to the Council's flexibility. e MINUTES--Eugene City Council Revenue Work Session September 10, 1985 Page 5 Ms. Bascom agreed with Mr. Rutan's comments, adding that she was comfortable e with the rationale for excluding the sunset provision. She said the income stream was inadequate in the present structure and a new one was needed. She also said the areas of use needed to be identified, and added that she felt an election should be held in the fall while the agenda still was on people1s minds. She expressed her surprise and pleasure that the library had emerged with so much support. Ms. Ehrman said she agreed with the airport, CIP, and the library projects, but she woul d not add transporta ti on to the CIP because of the lack of a large majority. She said she was concerned about holding the majority willingness to pay, adding that she favored coming down to 1/4 percent on the rate. If that was not enough money, she suggested taxing corporations to provide the rema i nder. She also agreed that operating expenses for the library should be included, and that the election should be held in the fall. Ms. Ehrman sa i d the sunset provision had not come up often in town hall meetings, although she said the campaign should emphasize what funds were for and when they were expected to end. She added that she did not think an income stream could be passed, but that it would have to be tied to specific projects, of which ca pi tal projects were the most 1 ikely. Ms. Wooten said the residents of her ward seemed less likely to support an income tax than those in other parts of the city. She sa i d, however, tha t she thought the proposed draft ordinance was progressive and fair. She said she would support referral of an income tax at 1/2 percent and would request serious discussion about a higher low-income exemption, perhaps to $7,500 e rather than $2,000. She said she would tie the revenue to capital projects and would try to look at some type of sunset clause that would be workable in terms of the bond rating. She also said she would drop the Riverfront Project because it could be self-financing, along with the pool, for the present, and entrance beautification, adding that she had serious questions about the local cost share of transportation projects to West Eugene. She said she would support funding for the airport, although she had spoken with many people who favored spreading the costs regionally among users. She also said she would support the 1 ibrary and unfunded capital, as long as what was included \\8S c1 early di scussed. She said she thought downtown deserved special attention and discussion, although no proposal was available at present. Ms. Ba scorn said the continuing needs were the reason she favored leaving out the sunset provision. Mr. Miller said he favored referring something to the voters that would have a good chance of passage. He said he had talked with many people who were concerned about finances, and would favor a low-income exclusion and pOSSibly some type of fair relief to individuals who need it. He said he would support the proposal without a sunset provision, as long as the revenue stream was funded with sensitivity toward those in financial difficulty. He sa i d he fel t the two essential projects were the capital improvements and the airport. Mr. Miller added that he was not opposed to the library but suggested listing it as a separate ballot measure. He said he thought 1/2 percent might be prohibitive for some people, suggesting that the first $10,000 of all income be excluded, or that higher incomes be subject to greater percentage rates. He said residents of his area had expressed their belief in the projects, but - not all areas of the economy were advancing. MINUTES--Eugene City Council Revenue Work Session September 10, 1985 Pa ge 6 Mr. Hansen said he also favored referring something with a good chance of e passing and that would make good use of resources for economic development. He said he recognized a general conclusion that the airport was important. He said the operations budget would lack $3 million this coming year, which needed to picked up or painful cuts in operations and capital improvements would be needed. He said he felt the infrastructure improvements and maintenance, including the airport, was necessary, but the library costs were too high, ill-advised, and premature. He said he supported going to voters with the two issues of the airport and shortfall replacement, and with a sunset provision written into the measure for implementation once the airport wa s bu i 1 t. Mr. Obie noted that the airport, CIP, and the library seemed to have fairly consistent support, with further discussion needed on the sunset provision, cost of operating the library, percentage of tax, dedication of revenue, and a low-income exemption. Mr. Obie outlined the costs of the airport project, saying needs started at $1.5 million/year and reduced gradually to nothing over 20 years. He sa i d th e CIP costs were $2.6 million, and administration costs and credits were $.5 mi 11 ion. He proposed putting the library costs in beginning at $125,OOO/year and increasing as the airport costs decrease over 20 years, leaving time to study location and feasibility. He said that would make total costs of about $4,625,000/year, which should convert to about a .4 percent income tax rate. He also said that would leave CIP somewhat undefined. e Mr. Wong said with a 1/2 percent rate, every $1,000 excluded meant a loss of about $.5 million, from a total of $6 million. Ms. Wooten said she was not interested in an exemption for everyone, only for those with low incomes. Mr. Obie said he had heard people express feelings that everyone should pay something a s a contributi on to the communi ty. Ms. Wooten said she thought the proposal was a good one, but issues remaining undecided were what was to be included in the unfunded CIP, downtown, low-income exemption or credit, and whether the library should go on a separate ballot measure. She said she did not favor a separate ballot measure for the library, as some people who did not see the need for airport expansion might support the library. She also said she was worried about a fallback position if the ballot measure failed in November. Ms. Ehrman suggested possibly scaling down the projections for the airport, saying some people had raised questions about the need for meeting rooms. Mr. Rutan said the bare minimum needed was $9 million, and he and Mr. Hansen were recommending $17.1 million, or $1.5 million/year. Ms. Ehrman also said Springfield's mayor had expressed interest in the gas tax, and that might be a fallback position for CIP or road funding. Mr. Obie agreed that a gas tax might be looked at in the future. Ms. Bascom said airport meeting rooms had been supported when it was clarified that only two rooms were planned. She also said another fallback position might include a property tax levy for the airport. She said she supported e those three projects because they had emerged with the most public support. MINUTES--Eugene City Council Revenue Work Session September 10, 1985 Pa ge 7 Mr. Rutan said he thought the definition of CIP still was uncertain and that - it was important to resolve that issue. He said he would like to see some language differentiating between capital and operating expenses. Mr. Obie asked sta ff to work on tha t. Ms. Schue said she still was concerned about operating expenses for the 1 ibrary, adding that she 1 iked the package otherwise and also would 1 ike to see some type of low-income exemption. She said she favored the .5 percent rate over the .4 percent. Ms. Bascom said an accurate update was needed of projected operating costs for the 1 ibrary. Mr. Gleason reviewed cash flow for the next five years, saying operational costs were expected to be about $4BO,OOO/year, or between $300,000 and $400,000 in 19B5 dollars. Mr. Rutan said expanding the library to BO,OOO square feet would mean about $300,000 to $400,000 in net additional operating cos ts . Mr. Gleason said if the forecasting model held true for the next six years, the cash positive side would remain for six or seven years. Mr. Holmer said he believed in the need for a progressive low-income credit, but would like to allow virtually everyone to pay something, adding that he thought a $10,000 exemption was inappropriate. Mr. Hansen said he thought a fallback position was needed and that the Council needed to determine what citizens were willing to do. He sa i d he thought there would be one chance to do the airport and added that he did not want to jeopardize that position by adding too many items. He said both capital and e operating sides were being increased, and unknowns might be a detriment. Ms. Wooten said other options had not been foreclosed if voters did not approve the first ballot measure. Mr. Hansen said he was concerned about keeping momentum, adding that the airport could be scaled back, but that it should be adequate to meet the needs of the community for the next 20 or 25 yea rs . Ms. Ehrman said doing only the airport would not require the full 1/2 percent tax rate. Mr. Hansen said he favored having enough money to do the airport and to continue capital improvements. Mr. Holmer said doing the 1 ibrary woul d continue funding a t about the same 1 evel and woul d bring in the support of those who favor the library as a higher priority. Mr. Hansen said he thought funding needs should be reduced as much as possible. Ms. Ba scorn said she agreed that she would like to win passage of the measure, and she reminded council members that the County library had received a 74 percent yes vote in the last election. She added tha t she suspected more peopl e in Eugene were reached by the library than by the airport. Mr. Obie said he had changed his mind about supporting the library because of the responses received in the public input process, particularly those at the fair booth, which had put the 1 ibrary among the top three or four projects. Mr. Obie also said he thought the three projects made an interesting complement by combining economic development, preservation of good government through CIP, and providing for the educational environment. e MINUTES--Eugene City Council Revenue Work Session September 10, 1985 Page 8 , Mr. Miller said he was concerned with what he perceived to be a resistance to sheltering low-income citizens, noting that they probably would use the amount - of the tax for necessities. He said he also was concerned with those in the middle class and was comfortable with the fairness of an exclusion for everyone, which he thought still could raise the needed revenue. Ms. Ehrman said the same arguments could be used for a corporate tax, noting that the airport would benefit corporations much more than low-income citizens. Mr. Obie said there was a lack of consensus for that. Ms. Wooten suggested discussing in detail a proposal for a .5 percent income tax, including the airport at the $17.1 million figure, the library near $6 million, the Capital Improvements Program, which might include discussion of downtown and replacement of Federal Revenue Sharing money, a low-income exemption up to $5,000 with a graduated credit up to $7,500, no sunset provision, and a charter amendment on the ballot. She asked to see that information on the agenda at the meeting Wednesday night. Ms. Wooten said information in the handouts showed 32,860 in Lane County making $8,000 or less. About 22,000 made $5,000 or less. Mr. Whitlow said staff would try to get an estimate of the net income. Mr. Miller asked about an exemption for everyone, and staff said that would mean a revenue loss of about $2.5 million. Mr. Obie also requested that staff prepare information on the operating expenses of the library. Ms. Wooten noted that non-residents who were subject to the tax should get some type of credit for library card fees. e Mr. Holmer asked to see information on the number of individuals affected by the $5,000 exemption and the total number included. Mr. Hansen said he would like to do the poll by next Wednesday. Ms. Ehrman suggested waiting, until the sales tax vote had been taken. Members said they thought that would be too late. Mr. Obie said the objective of the meeting Wednesday night would be to set a pUblic hearing on what the package would contain. At the public hearing, the Council would then take action regarding putting the issue on the ballot, he said. Ms. Ehrman said she thought one week in between would not leave much time for a public hearing. Mr. Gleason said he thought the information could be prepared by tomorrow. Ms. Bascom said she thought a good publicity job had been done, and the agenda was on people's minds, so that the amount of time might be sufficient. Ms. Ehrman suggested discussing the effects of the tax on other governments such as Lane County and Springfield. Council members agreed to hold the next meeting on September 18 at 5 p.m. p.m. e MINUTES--Eugene City Council Revenue Work Session September 10, 1985 Page 9 M E M 0 RAN 0 U M . September '1, 1985 TO: Eugene City Council FROM: Planning and Eugene Development Departments SUBJ EeT: EUGENE'S CO~DO~INIUM CONVERSION ORDINANCE Introduction Eugene's Condominium Conversion Ordinance and Administrative Procedures have been in effect since June 1980. Si nce tha t da te, a numoer of events ha ve occuried which make it advisable for the council to consider revising the ordi na nce. This memoranoum provides both background information and experi- ence with the ordinance to date, and recommenOs a direction for addressing needed changes in the ordinance, while retaining many of the safeguards as originally adopted. History ~ Condominium conversion first became an issue for the City of Eugene in . September 1979, when two downtown highrises were threatened with conversion. ) Both projects were predominately occupied by elderly tenants. Two major issues surrounded the conversion controversy: 1) the displacement of tenants (particularly low income, elderly, and disabled) without comparable units available, and 2} the removal of rental housing stock from the market--rental housing stock that was in short supply.l On November 28, 1979, Eugene passed an ordinance imposing a moratorium on condominium conversion to be in effect from the cate of passage until June 1, 1 980. The purpose of the moratorium was to allow the City time to study the conversion issue for the purpose of considering corrective legislation to be enacted at the end of the moratorium period. The Condominium Conversion Ordinance \'tas adopted on June 18, 1980. The ordi- nance has been amended only once, in September 1981. It ',"as changed to allow the exemption of limited equity cooperatives if certain conditions were satisfied. 1 The overall housing vacancy rate was just 1.9 percent, comoared to the curient rate of 5.5 percent. . EUGENE1S CONDOMINIUM CONVERSION ORDINANCE Septel'1oer 11, i985 .! Page 2 ~ Ordi.nance Summary Eugene's ordinance regulates the conversion of rental dwelling units to condo- minium units in three major areas: 1. Offers protection to all tenants in a oroposed conversion with the right to stay for 180 days from the time of notice, including rent control and requiring cause to be shown for eviction; 2. Provides additional benefits for Special Category Tenants that are either low income, elderiy, or handicapped. These tenants, in addition to the protections above, receive moving expenses and the services of a housing counse1or to identify comparable housing; and ., Gives protection to prospective purchasers by offering a warranty on "'. the common elements of the building for two years, a replacement reserve account for the unit owners' association at the end of the warranty period, and certain other disclosure provisions. To be eligible to convert a rental project to-a condominium, a develooerjowner must apply to the City for both a preliminary and final perl'1it. Under the .~ ordinance, no developer is allowed to negotiate for the sale of condcminium units or cooperative shares to prospective purchasers until i ssua nce of J preliminary permit to convert. No developer is allowed to transfer ownership of any condominium unit or co-op share until a final permit for conversion has been granted. Before a developer can begin the process of obtaining the necessary permits, it must be proved that the proposed conversion will not exceed the level allowed under the conversion rate formula orescribed in the ordinance. (A copy of the formula, including an explanatlon and data since ordinance adop- tion is provided under separate cover, along with a more complete description of the ordinance and administrative procedures.) Ana 1 ys is Since the adoption of the ordinance in June 1980, 440 units in four separate projects have received final approval as condominium conversions in Eugene. Also, a 22-unit. lower-income, limited-equity cooperative project, sponsored by NEDCO. received an exemption from the ordinance. An additional 230 units located in two projects were the $ubject of an application \'/hich \'Ias dropped midway in the orocess. . . None of the owners of the projects that have received final approval has attemoted to actually convert the properties. and it does not appear :hat they e intend :0 convert the ~rojects in the near future. All have yet to submit the iJrcjects to the State of Oreaon Real Estate Division -:0 beain t.he Stat.e's iequired conversicn process. - Jevelooers ~hat have fulfilled re~uireMents of EUGENE'S CONDOMINIUM CONVERSION ORDINANCE . Sep1:emoer 11, !9cb . Pa ge 3 the ordinance S1:ate that they did so not to begin :he conversion process at that time, but to assure that if ever the time to market condominium conver- sions returned, they would have that option. In all six applications for conversion presen1:ed to the City since adootion. the extended notice period of 180 days was not an issue at any time. Because all of the projects that have =pplied did so in 1981 and 1982, and none has actually converted to condominiums, the reauirements of the ordinance have applied to these projects for years instead of months. Rent control, services of a housing counselor. and payment of moving expenses are all required even though these protections have less relevance because of the extended time factor and because no one has been forced to relocate. Also. the indefinite time period to convert ~ay make the recuired architec1: or engineer report on the expected useful life of all common elements inaccurate which, in turn, affects the calculation of the common element reserve account. In addition to the circumstantial chances described above that affect the tenant orotection ~rcv;sions of the ordinance. State law has been amended , , relati ng to conversi on and rray dupl i ca te some or Eugene 's orci nance provi- sions. . At the time the ordinance was adopted, it was not foreseen t~at the housing ) situation would change so radically. For example~ Eugene's population declined during the period 1980 to 1983 by 2,544. gut in 1984~ population again rose to about 500 over the 1980 level.. Even though there were wide swings in population, the city's multiole-family housing stock still increased by 514 units in the same time oeriod. Basec on this cata, the formula estab- lished in the Drdinance would allow 4,405 units to convert in 1985. This represents nearly 38 percent or the entire multiple-family housing stock. (See attachments for explanation of conversion rate formula.) Althouah some of the conditions under which the ordinance was adooted have altered these past five years, it is staff's opinion that the basic protec- tions provided by the ordinance need to remain in place, should the City again experience a period or grovlth when conversions become marketable. The current 1 un in conversion activity provides the opportunity to ~~ke needed adjust- ments to the ordinance. Suggested Action Direct staff to work with the Planning Ccmmission to uodate the Condominium Conversion Ordinance. Staff has iden1:ified the following general areas I'mich should be reviewed: l. Housekeeoino Items. References to State 1a\'/ and administering ,e aeDaru~enT. neea to be amenaed. The department charged with a&lini- ) s~riltion (Heel no ionger exists ilna State law has been changec since aQopt"ion. .' . EUGENE1S CONDOMINIUM CONVERSION ORDINANCE .') SeptemDer 11, 1985 Pa ge 4 " Simolification of the Administrative Procedures. 3a sed on sta ff '- . experlence in aamln;sterlng the oralnance tnese pa?t five years, the administrative procedures of the ordinance should be reviewed and revised. For example, the ordinance currently requires a three-step approval process. The procedure could be improved and streamlined. In addition, certain reauirements for record keeping and survey i nforma ti on may serve no usefu 1 purpose. 3. Fine-Tunina of Substantive Elements. The following elements need to be reviewed ana posslbly revised: (a) the timing of benefits due Special Category Tenants, (b) the Conversion Rate Formula, ( c) th e post permit requirements, (d) the time-iine for the architectl engineer report, and (e) the requirement for a reserve account Should the council concur, we anticipate that a Planning Commission recommen- dation will be ready for council consideration by February 1986. SB:cjj05l6S " ~ .1 Attached Under Separate Cover: Explanation of Ordinance and Administrative Process Description J Conyers; on Ra te Formula . "'"' ',....