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HomeMy WebLinkAboutOrdinance No. 18535ORDINANCE NO. ~_~~~'~ AN ORDINANCE RELATI~3G TO THE C4NVER5I4N of APARTMENT BUILDINGS To CONDOMINIUMS; AND DECLARING AN EMERGENCY. The City Council of the City of Eugene finds that: The conversion of apartment buildings to condominiums is a matter of concern to the citizens of the City of Eugene. As the same appear herein, the following .words and phrases mean: Condominium - land, whether leasehold or in fee simple, and all buildings, improvements and structures thereon, where the ownership of such land is shared in undivided interests except for exclusive and separate ownership of each residential unit located on the land. "Condominium'" shall include all property subject to the provisions of Oregon Laws, 1979, Chapter 65~. Condominium Conversion ~- the process whereby resi- dential real property is converted from ownership in whole by a person or group of persons to ownership by several persons where ownership interests are separate as to each residential unit located on the real property. "'Condominium conversion" includes the process described and regulated under the provisions of Oregon Laws, 1979, Chapter 654, Sections one through five. on the basis of staff reports, written and oral testimony and submissions, and its own investigations, the City Council of the City of Eugene makes the following specific findings: Ordinance - l 18535 1. Conversion of apartment units to condorr~inium units has been and is occurring locally and nationwide. Widespread concern associated with the issues of dis-~ placement and depletion of the rental housing stock has resulted in numerous municipal ordinances restricting the conversion process and the introduction of national legislation ~HR 5175 proposing a three-year national moratorium on condominium conversion. Among those locali- ties imposing moratoria on condominium conversions are: Chicago, Evanston and ukokie, Illinois; Alameda, Tiberon, Palo Alto, San Jose, Santa Barbara, and San Francisco, California; fi~ashington, D.C.; and Zynnwood, Edmonds, and Seattle, Washington. 2. Inadequate production of new multiple family resi- dential units has increased pressure for condominium conver- sions. This decrease in multiple-family building starts has occurred locally. In 1977, building permits for 73l multiple--family units were issued in Eugene,; in 1978, 687 were issued; and only ~D9 have been issued this year throe h g September. Rapidly increasing construction costs and inter- est rates, together with depressed rent levels, have con- tributed to this decline. Rents have not kept pace with inflation, while home ownership costs have increased at a higher rate than inflation. The Portland, Oregon Consumer Price Index far July, 1979, shows a rent index of 189.6, a home ownership mortgage} index of 311.1, and a general con- sumer price index of 27.9. ordinance -- 2 18535 3. This inadequate production of multiple-family hous- ing units has contributed to a low vacancy rate for that type of housing. The May, 1979 vacancy rate for all housing units in Eugene was 1.9 percent, combining a rate of 1.4 percent in single-family units and 3.0 percent in multiple-- family units. Housing market analysts recognize the desir- ability of maintaining vacancy rates in the rental housing stock of approximately 5 to 7 percent to maintain adequate choice in housing price, location, and quality. 4. Using data current as of September, 1979, Eugene has a housing stock of 42,323 dwelling units. Of this amount, 45.80 are occupied by renters. 30Q X12,640 units} of this stock are multiple family units. Most ~95.1p} of the multiple family units are rented and a good portion X35 a or 4, 466 units} of the multiple-family units are lo-- sated in th.e central city census tracts. 5. Condominium conversion represents an increase in the owner-occupied housing stock and a decrease in the renter-occupied housing stock. If demand far rental units does not decrease consequent with the decrease in number of rental units, lower-income households could face a reduction in housing choice. 6. There will likely be a large number of condominium conversions in this area in the near future due to the dimin- ishing size of the average household, the financial advanta es g of home ownership, and th,e relative expense of single family structures, and because the financial return to condominium Ordinance -- 3 18535 developers, for properties in relatively new and adequate condition and within acceptable operating cost limits, is mare attractive than the comparable return on rental prapert . Y 7. The national experience suggests that condominium conversion rates increase in areas, such as here, where the rental vacancy rate is extremely ,low. Since l9?7, 240 Eugene residential rentals in multiple--family structures have been converted to condominiu~ ownership. This represents approximately 2a of the total number of present multi le- p family. units. ~n additional 210 condominium units, or 1.70 of the multiple-~~ar~ily unit stock, have been built since 1974. 183 rental units in the Patterson Tower and ~~~illamette Tower developments are presently targeted for condominium conversion. 8. The conversion process creates both positive and ne a- g tine local et~ects. Th.e benefits .include: a greater choice to a purchaser resulting frv~n lo~rer comparative costs for convert-~ ed units than for new condominiums or single-family residential units, tax and equity aduanta~ges accruing to the condominium owner, a possible upgrading of the physical, appearance and habitability o~ condominium units converted from apartment dwellings, and an increase in assessed property tax valuation of zeal property. 9. The negati~re effects of condominium conversions are serious and particularly acute in areas, such as here, with law rental vacancy rates. These negati~re effecta include: forced displacement of those renters unable or unwillin ~' to purchase condominium una:ts from the owner; a dispropor- tionate burden on older, handicapped, or low income renters• Ordinance ~- 4 18535 an exacerbation of rental unit shortages; and a short--term and possible long term increase in housing casts and rents. The scale with which that displacement occurs is more sig- nificant in large structures than in small ones. l0. A survey was made by the Eugene Commission an the Rights of Aging and published October l9, 1979. Residents of Patterson Tower, Willamette Tower, Zane Tower, and Eugene Manor were surveyed with. a 77,Za response. These buildings are presently targeted for, or likely prospects for condo- minium conversions. That survey found that: 85.5a of the respondents were over the age of b0; 83.8Q had incomes of less than $15,404 annually; 54.4 had lived there over 5 years; 55.30 had sold their homes before moving to their current residence; 77~ did not wish to purchase candomin-- iums at any price; and 8~% had physical disabilities makin g it difficult to move. 11. The City of Eugene has legal authority to take action to preserve available housing opportunities within the community and to. prohibit community uses therein which are detrimental to the health, safety, and welfare of the citizens and residents of the City. 12. Numerous. documents and applicable local and state policies regarding housing require a strong emphasis on the right of the residents of this city to choose housing from a variety of types, including rental units. Included anion g these are: the 19.74 Eugene Community Goals and Policies, which sets as a policy to "endeavor to provide a maximum Ordinance - 5 18535 choice of pausing far all citi2ens"; and, the 190 Plan which sets as objectives to "provide a range and choice of housing types and densities", "encourage a variety of residential development types for all income and age groups where consistent with designated density and character of the area", and "Fincrease the supply of reasonably located, sound housing for low to moderate-income people, students, and minority groups." l3, LCDC Goals and Guidelines ~ Goal l0, requires that comprehensive plans and local land use planning shall "encourage the availability of adequate numbers of housing units at price ranges and rent levels which are commensur- ate with the financial capabilities of ~regan households and allow for flexibility of housing location, type, and density," Based upon the above findings, the staff reports, and written and oral testimony, the City Council of the City Qf Eugene con- cludes that: 1. Because of an increasing rate o~ condominium con- versions within the City and the liklihood of a great nu1~t- ber of such conversions in the near future, all of which will result in a decreased supply of rental housin the g forced displacement of a substantial number of tenants, a short-term and possible long-term increase in rents, with a disproportionate impact on the elderly, the handicapped, and low-income. persons, the City of Eugene is confronted with an emergency regarding its supply of housing, particu- Ordinance - ~ 18535 larly housing for elderly persons, the handicapped, and per- sons of law income, without curtailment or regulation of the condominium conversion process at a local level, the rental housing supply will not neet demands, ~. The city staff has embarked on studies of this prob- lem with a view toward new legislation regulating such con- versions in the interest of public health, safety, and welfare. 3. Further conversions of apartment buildings to con- dominiums will hinder and impede such studies; the effects of conversions during the study period will be largely ir- reversible; and the results of that study may be made moot without a moratorium on cond~,minium conversions during the period of such study. 4. The purpose of such a moratorium is to allow time to study the causes and effects of condominium conversions with a view toward corrective legislation to be enacted at the end of the moratorium period. too violation of LCDC Goal 14 occurs by virtue of such a moratorium because the ur ase p p of the moratorium is to prepare legislation designed to preserve the availability of an adequate number of rental units at rent levels co~rnensurate with the financial means of a substantial number of Eugeneans and to allow for con- timed flexibility of rental, types, locations, and densities. 5. Such study shall be completed by May 1, 1950, and shall recommend legislation, Any such recommendation shall be made in order to accomplish the following purposes: aR establish criteria for the conversion of existing multiple-family rental housing to condo- Grdinance - 7 18535 miniums; b. Reduce the impact of such conversions on residents in rental housing who may be required to relocate; c. Assure that purchasers of condominiums have been adequately informed as to the physical condition of the structure which is offered for purchase; d. 2~.sure that converted housing has good appear-~ ance, quality, and safety, and is consistent with the goals of the pity of Eugene; e. Attempt to provide for a reasonable balance of ownership and rental housing to insure a variety of choices of tenure, type, price and location of housi • ng, f. attempt to maintain a supply of housing for low and moderate income persons, the elderly, and the handicapped; and, g. Encourage the development of multiple-unit housing in the downtown area. 6. Such study shall consider, among other things, the following options for condominium regulation: a. Real property transfer tai on condominium conversions; b. Private or governmental replacement of rental units that axe removed ~ro~n the marJ~et because of the conversion process; c. private or governmental provision of financial or other tenant relocation assistance; ordinance -- 8 18535 d, Public acquisition of converted condominium units; e. Governmental downpayment or mortgage finan- vial assistance for low or moderate income purchasers of condominium units; f. Requiring right to stay or life tenancy for tenants in buildings proposed to be converted. g. Elongation of the notice periods required under state law; h. Requiring partial or staged condominium con- version processes; i. Requiring a specified percentage of tenant approval prior to conversion; and, j. Making any such conversion contingent upon the rental vacancy rate being above a particular level. 7. In ,making such study and recommendation, the city staff shall attempt to harmonise the policies applicable to housing as they relate to condominium conversions, as set forth in the T~CDC Goals, the Eugene/Springfield Metropolitan Area 1990 Plan, Eugene Housing Policy Reso~,ution No. X507 the Eugene Community Gods and Policies, the City of Eugene Hous- ing Assistance Plan, the City of Eugene Housing Dispersal Policy Plan, the Eugene-Springfield Area Transportation Plan ~,T-2444}, and applicable neighborhood plans. ~dow, therefore, based upon the findings and conclusions set forth above, Ordinance - 9 Id535 THE CITE OF EUGENE DOES ORDAIN AS FgLLgWS: { 1 } Before Tune 1, 19 S 0 , and after the effective date of this Ordinance, na person may execute, acknowledge, record in the office of the Lane County recording officer, or cause to be so recorded, a declaration, as defined by ORS 91.504 {.9 } , for the purpose of sub-- rnitting a building for condominium conversion pursuant to the provi- sions of gregon Laws, 19?9, Chapter 654. { 2 } Before June 1, 19 S D , and after the effective date of this Ordinance, no person may execute or send the notices or offers to purchase to tenants required under Oregon Laws, 19?9, Chapter 650, Sections 5 and 7, as preconditions to the condominium conversion process. { 3 } Before June 1, 19 S D, and after the effective date of this Ordinance, no person who owns such a building or site or who holds a property right in the building or site other than a tenancy, may allow another person to do an act proscribed by subsection {1} or {2} of this section. {4} A person who violates this section shall pay the City $15,040.00, or $1,000.00 per day, whichever is the greater, for each day between the time of the violation and June 1, 1980, for each apartment or rental unit, for which a notice is sent in vio- lotion of subsection {.2} of this section, or declaration declared in violation of .subsection ~l} of this section. {5} An amount that becomes due the City under this ordinance constitutes a debt that the Finance Officer shall collect, if neces- sary by appropriate legal action in the name of the City and in a Court of competent jurisdiction. The City Manager is also auth- Qrdinance - 10 I$535 orized to seep injunctive and equitable relief to enforce the pro- visions of this ordinance in any Court of competent jurisdiction. ~6} So long as unpaid, this amount owed to the City consti- tutes a lien on the building and site that are pertinent to the vio- lotion that gives rise to the obligation, The Finance officer shall cause the lien to be entered in the lien records of the City and shall take whatever action he deems most expedient for effecting payment of the obligation that constitutes the lien. Dorf i nn 7 ~.l} any person having a financial interest in any parcel or parcels of property devoted to apartment use in the City of Eugene and who claims that the Moratorium established by this ordinance creates extraordinary hardship for such a person, may file a peti- tion, not less than ten ~lD ~ days prior to th.e date requested for hearing, with the City Manager for relief from the provisions of this ordinance. ~2} Such petition shall be accompanied by a filing fee of Two Hundred Dollars ~$2~Q~ and shall state in writing with parti~ cularity all facts and other infor~nativn which petitioner avers establishes an extraordinary hardship. ~ 3 ~. The City Manager after receipt of such petition shall study the sane, make an investigations and issue a recommendation on the merits of the petition prior to the time set for the hearing. ~.4} A subcommittee of the City Council consisting of two de- signated councilors shall hold a hearing on the petition at a desig- nated time and place. Such subcommittee may grant the relief re- quested if the petitioner proves by a preponderance of the evidence that: ordinance - 11 18535 {a} Petitioner, or his pxopert~.es are so situated that the ordinance creates an extraordinary hardship upon either ar both. "E~traordinary~ hardship" shall mean hard- ship of a substantially different kind and degree than that experienced by other property owners affected by this ordi- nance and may include a showing that the operation of the ordinance threatens the petitioner with insolvency and the removal of his yr her properties from the rental market; or {.b~ An unusually adverse effect upon the studies spe- cified in this ordinance, or which ray be later commenced during the r-~oratorium period, or upon the policies of the City of Eugene, will not be created by granting the relief requested. Section 3. This moratorium and the provisions of sections one ar~d two of this ordinance shall not apply to: {:a} Condominium conversions for which written consent of ~0 ~ of all tenants, occupying at the time of the effec- tive date of this ordinance the apartments proposed to be converted, has been obtained. Such written consents shall be filed with the City ~~tanager and shall be accompanied by a notarized affida~rit of the owner of the building or his agent attesting that no coercion ar threat of rent increase eviction, or termination of tenancy, has been used in secur- ing any such consent. fib} Condominium con~rersions which result in a "rental pool" arrangement whereby all un%ts after conversion are owned by investors who do not reside therein, and no dis- ordinance - 12 t 18535 placement of pre--conversion tenants occurs by such conver- sion to condominium ownership. Section 4. If any section, subsection, sentence, clause, phrase or portion of this ordinance is, for any reason, held in-~ valid or unconstitutional by any court of competent jurisdiction, such portion shall be deemed to be a separate, distinct and inde- pendent provision and such holding sha11 not affect the validity of the remaining portions of this ordinance. Section 5. For the reasons stated in the findings and con- clusions of this ordinance, an emergency is hereby declared to exist, and this ordinance shall become effective immediately upon its passage by the City Council and approval by the Mayor. Passed by the City Council this day o f ~eM1~g~ , 19 7 9 /~ _ . /f • / l I! • l~GT/Ilk City Reco~/der y Approved by the Mayor this ~8~ day of pVg~ er . 1979 Mayo ordinance -~ 13.