Loading...
HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 05/05/2009 - SECOND READING OF ORDINANCE NO. 045, 2009, AMENDIN ITEM NUMBER: 26 AGENDA ITEM SUMMARY DATE: May 5, 2009 FORT COLLINS CITY COUNCIL STAFF: Felix Lee Mike Gebo SUBJECT Second Reading of Ordinance No. 045,2009,Amending Section 5-261 of the City Code Related to Fees for Rental Housing and Establishing an Incentive Program with Regard to the Payment of Such Fees For Rental Dwelling Units Not Previously Recorded With or Approved by the City. RECOMMENDATION Staff recommends adoption of this Ordinance on Second Reading. EXECUTIVE SUMMARY Council has identified sanitary and safe housing for all Fort Collins residents as one of its primary concerns. On October 21, 2008, Council adopted the Supplemental Rental Housing provisions related to minimum health and safety standards for rental housing. At that time, Council postponed discussion of City Code Section 5-261 relating to fees and"unrecorded/unapproved"dwelling units — housing units created or converted without required City approvals. Council directed staff to consider options for establishing "incentive periods", -- periods of time wherein rental property owners would be encouraged through financial incentives to identify their unrecorded/unapproved rental units and comply with the City's rental housing minimum health and safety standards. This Ordinance, unanimously adopted on First Reading on April 21, 2009, establishes an incentive program with a twenty-five month application period. Property owners will have twenty-five months from May 15,2009,(the date the ordinance goes into effect)to apply for a certificate of occupancy. A one-time fee would be charged for processing the application as follows: $200 during the first thirteen months, increasing to $300 for the next six months, then $400 for the last six months. Owners will also have to pay any fees or taxes that would normally be due upon issuance of a building permit for any work needed to bring their dwelling units into compliance with the Rental Housing Standards. Council had a follow-up request from First Reading relating to requirements for separate water and separate electric utility metering of single-family dwellings that are converted to two or more units. For such unrecorded conversions the following are applicable: • Water meters—Preexisting two-and multi-family buildings with a single water meter may continue. The monthly"base charge"going from a single-family use to a duplex increases from $12.72 to $15.51 with concurrent slightly different increasing tiered "volume" (per 1000 gallons) charges assessed among single-family, duplex-, and multi-family buildings respectively. May 5, 2009 -2- Item No. 26 • Electric meters — Preexisting two- and multi-family buildings with a single electric meter before 1980 are legally grandfathered and may continue indefinitely, provided no major electric system changes occur, which result in significant increased power demand. Additional dwelling units created beginning in 1980 and later, are subject to individual metering with associated plant investment fees and new meter/service installation costs. Council also requested information about the current costs of a minor amendment review. A zoning and engineering review of a new minor amendment project costs approximately$450. A property owner of"unrecorded/ unapproved" dwelling units who comes forward within the first thirteen months will pay only $200 for a minor amendment review. ATTACHMENTS 1. Copy of First Reading Agenda Item Summary - April 21, 2009. (w/o original attachments) ATTACHMENT 1 ITEM NUMBER: 32 AGENDA ITEM SUMMARY DATE: April 21, 2009 FORT COLLINS CITY COUNCIL �� 7_ N STAFF: Felix Lee �I �j � Mike Gebo SUBJECT %=�/ �k� LF Ji First Reading of Ordinance No. 045, 2009, Amending Section 5-261 of the City Code Related to Fees for Rental Housing and Establishing an Incentive Program with Regard to the Payment of Such Fees For Rental Dwelling Units Not Previously Recorded With or Approved by the City. RECOMMENDATION Staff recommends adoption of the Ordinance on First Reading. FINANCIAL IMPACT Adoption of the Ordinance will financially ))pp!1tjthe Ci and the owners of unrecorded/ unapproved rental dwelling unrt� JLL JL Revenue/Savings Costs After Incentive During Incentive During Incentive Period Period Period City Revenues - One Costs-Covered under current Revenues - Fees for: application fee/unit plus Neighborhood & Building development review, building permit fees if Services, Engineering and building permit, and improvements needed to Current Planning budgets past-due impact fees at comply with Rental current rates Standards Property Savings - From waiver of Costs (per rental dwelling No savings - Costs to Owners all past-due fees unit): one_application�fee owners include current ;jplus 11 zany building permit fees fees noted above Y I� �. ENVIRONMENTAL IMPACTS_ J J� Adoption of the Ordinance is expected to improve indoor air quality, safety and sanitation for rental housing residents. April 21, 2009 -2- Item No. 32 EXECUTIVE SUMMARY Council has identified sanitary and-safe housing for all Fort Collins residents as one of its primary concerns. On October 21, 2008, Council adopted.the Supplemental Rental Housing provisions related to minimum health and,safety standards for-ental housing. At that time, Council postponed discussion of City Code Section\\5�refdti�g t6 ee�s�and"unr rded/unapproved"dwelling units — housing units created or converted without required City approvals. Council directed staff to consider options for establishing "incentive periods", -- periods of time wherein rental property owners would be encouraged through financial incentives to identify their unrecorded/unapproved rental units and comply with the City's rental housing minimum health and safety standards. At the February 24,2009 work session,staff presented potential incentive options.Council directed staff to further refine these incentives to engage more people in the community who would be directly affected by unrecorded/unapproved rental housing units (including long term residents and CSU students in addition to the rental housing industry), and to obtain their input on the various incentives. The stakeholder group considered options regarding the length of the application period (12 to 24 months),the amount of the application or filing fee($100 to$600), and whether the application fee should be increased over the application period to provide an incentive for owners to identify unrecorded units as soon as possible. (!(r �) - VWIlowingStaff,in collaboration with commu�y,,stakeehholdersLffers th proposed incentive period for Council's consideration: Twenty-five month application period. Property owners would have twenty-five months from the date the ordinance goes into effect to apply for a certificate of occupancy. A one-time fee would be charged for processing the application as follows: $200 during the first thirteen months, increasing to $300 for the next six months, then $400 for the last six months. Owners would also have to pay any fees or taxes that would normally be due upon issuance of a building permit for any work needed to bring their dwelling units into compliance with the Rental Housing Standards. Staff, the rental industry, and the Affordable Housing Board recommend the proposed incentive period (24 months). In addition to the 24 months, staff proposed another thirty days to assure advance outreach and comprehensive notice to all stakeholders. BACKGROUND TD 7 .7 THE ISSUE ` 11 J I An unknown number of rental dwelling units do not have formal approval by the City in the form of a final inspection or a certificate of occupancy. All rental dwelling units in the City are required to comply with the City's Rental Housing Standards. In addition, the City Code was recently amended by the Council to require that the owners of all rental dwelling units in the City obtain a certificate of occupancy before renting, offering to rent, or continuing to rent such units. April 21, 2009 -3- Item No. 32 The current City Code has no specific procedures for dealing with existing,unrecorded/unapproved rental housing. If City staff becomes aware of such a housing unit, the owner is required to bring the unit into compliance with current minimum health and safety standards. In addition,impact fees are collected at the current rates as-though-such housing-units were created at the time they are discovered. (Impact fees are fees imposed/to offset the added costs of providing public services and infrastructure associated with creating any housing unit.) For a(smgle-family converted to a 1,500 square foot basement-finish duplex t da,,the:impaclt fees would be approximately $12,000. According to the 2007 census data, approximately 80% of the two-family dwellings in the City (duplexes) are occupied by renters. This would be approximately 1,400 duplexes. However,staff has no reliable way of determining just how many rental dwelling units actually exist in the City,much less how many of those units may present a health or safety risk to their occupants or may otherwise fail to comply with the City's Rental Housing Standards. This is partly because many of the rental units were constructed before certificates of occupancy were required for single and two-family dwellings (before 1980), partly because many others have come into existence through the unlawful conversion of single-family residences to duplexes and finally some current owners may be unaware that the rental dwelling never complied with City requirements. In order to ensure that rental units in the City comply with the Rental Housing Standards, staff recommends that the City Cou nc =appr o e-arnin ent ve program t •help identify where those units are located and to determine their suitability for habitation��The purpose of the incentives is to motivate the owners of unrecorded/unapproved dwellmg units to obtain a certificate of occupancy. Prior to issuing the certificate oRoccupancystaff-would world with the property owners to ensure that the units come into compliance with the Rental Housing Standards. Essentially,the incentives consist of lowering the cost of bringing the units into compliance for a given period of time. To accomplish this, the suggested incentive period would afford "amnesty" from past due impact fees and civil infractions for property owners who voluntarily identify their unrecorded/unapproved housing/dwelling units and submit an application for a certificate of occupancy. Owners must still make sure the units meet City Rental Housing Standards and must pay the associated costs if work has to be done to meet these standards. COUNCIL DIRECTION FROM WORK SESSION (See attachment#1) Council expressed general agreement with the importance of an amnesty period to encourage compliance. Council's discussion focused on the proposed length of time allowed for rental property owners to come forward witthh their unrecorded/u nappro d dwelling units. Staff initially recommended a twenty-four-month voluntary application period plus a six-month implementation delay for initial public outreach U Council generally agreed to consider an extended incentive period due, in part, to the current economic conditions. Council directed staff to: • consider incentives to deter property owners from waiting until the twenty-four month deadline to identify their rental units; • continue outreach efforts to neighborhoods and renters; and April 21, 2009 -4- Item No. 32 • verify what enforcement tools are available for unrecorded/non-approved rental housing in the interim. Based upon the Council discussion-awhe�worlvession`and-ffeedback from stakeholders, staff now recommends a twenty-five month program includes anx ,which additional month at the beginning of f I PI Ix-1 I}-" \W the program for outreach. During this extra month,staff will commence an ongoing comprehensive and targeted public outreach campaign to inform all-Affected parties of the incentive program. (See attachment #2) OUTREACH (See attachment#3) From November 2008 to February 2009, staff conducted outreach with a variety of affected parties to gather input on both the problem and proposed solutions, including: rental property owners and managers, landlords, members of CSU Legal Services, citizens, representatives from the Board of Realtors, the Colorado Apartment Association, and the Fort Collins Housing Authority. Since the February work session,staff and various community representatives(including local rental housing industry representatives, long-term residents, and CSU students) have met for the express purpose of developing the proposed incentive option. Councilmember Troxell recommended consulting-w,tth,the-CSU-Everitt School of Real Estate for more data on the number of affected rental housing'units. Toward this end, staff contacted Anne Spry, Administrator for the Everitt Real Estate Center.She stated that the Center did not have any data and referred staff to other agencies`that-r oay1be able tothelp. None of those leads has yet produced specific data regarding the number of unrecorded/unapproved rental housing units in the community. The housing industry (represented by the Fort Collins Board of Realtors, the Colorado Apartment Association,and the Fort Collins Housing Authority),residents,and students collaborated with City staff to develop proposed incentives to encourage widespread compliance with minimum health and safety standards in rental housing. Although there is a consensus within the housing industry that compliance with rental housing minimum health and safety standards is important, there are concerns over the financial impact of having to make necessary improvements during the current economic downturn. The long-term neighbors generally support Council's direction and feel the incentive period should be no longer than twenty-four months.They also generally concur with the early application strategy through progressive fee inereasesvto•deter�owners-from waiting to•the last minute to participate. %! '/ \\ 11 N `'\ H They support the same application pertod(but prefer intervals with fees increased as follows: $200 during the first thirteen months,�ncreasing to $400� 6r the ne t six months, then $600 for the last six months. They felt this was a�reasonable.compromise in lieu of paying impact fees during the incentive period. Students'concerns are related to a possible increase in rents because of needed improvements. They are also reluctant to complain about health and safety violations for fear of retribution by landlords. April 21, 2009 -5- Item No. 32 PROPOSED INCENTIVE OPTION FOR PROPERTY OWNERS With extensive outreach and stakeholder collaboration,together with Council's direction, staff has developed the proposed incentive;option described-below to-encourage widespread compliance. A variety of options were considered. The majority of stakehohders/concur with the proposed course action presented below: r- of )T Twenty-five month application period. Property owners would have twenty-five months from the date the ordinance goes into effect to apply for a certificate of occupancy. A one-time fee would be charged for processing the application as follows: $200 during the first thirteen months, increasing to $300 for the next six months, then$400 for the last six months. Owners would also be responsible for paying any fees or taxes that would normally be due upon issuance of a building permit for any work needed to bring their dwelling units into compliance with the Rental Housing Standards. The proposed approach would provide an incentive for property owners to voluntarily disclose unrecorded/unapproved rental housing properties. If property owners voluntarily provide this information within the application period, they will be charged a one-time application fee (in lieu of the regular development review fee) but will not have to pay any impact fees or City building permit fees for work done in the past when the units were created. To qualify for the voluntary applicati n peg ' riod;'.'thee addedrerentallousing unit(s) must have been i i I 1'l.di \V/ created or converted by December 31, 2008. This date was chosen to be as inclusive as possible to encourage compliance of all existing unrecorded/unapproved-rental dwelling, yet sending a clear message that any newly created rental units (as of January 1, 2009) must comply with current City standards and pay all applicable fees and taxes. Staff believes most unrecorded/unapproved dwelling units would have been created years ago when there were fewer regulations and lower impact fees. In addition, property owners of two-family and multi-family dwellings in zone districts that currently do not allow for such dwellings would have to produce "clear and convincing evidence" that,when the dwellings were constructed or converted to such use,the use was allowed by the City. If there is no clear evidence and current zoning does not allow two-family or multi-family dwellings, the dwelling unit will have to revert back to a single-family unit. Applicants will not have twenty-five months to make necessary corrections for compliance. Required corrections for compliance will follow the City's standard building permit process for completing work. Once the applicationohas been-submitted and the preliminary inspection completed, the time allowed to make an/corrections would\be based on the degree of urgency of the health/safety violations, theycost of any needed improvements, and the time needed to comply with any zoning requirements. �� Staff recommends that any property that undergoes ownership transfer during the incentive period be eligible to participate, provided that the new owner applies within the incentive period. Otherwise,the new property owner would have no incentive to submit an application to comply with the Rental Housing Standards. April 21, 2009 -6- Item No. 32 CONTINUED NON-COMPLIANCE If the owner of an unrecorded/unapproved rental dwelling unit fails to come forward during the incentive period, and the unit later-comes to-the attention of-the Gity;the owner will be assessed all p /i '4 Al . 1� �\ v applicable building permit,de vei opmentL review and i�ct fe\s at the rates in effect at the time such unit is discovered unless,prior to June 15;2012,�fhe owner can demonstrate to the Building Official or to the Building Review Board thatthe dwelling was.purchased.priorDecember 31,2008,and that the owner could not reasonably have known of the program. The City will also require that the property owner bring the unit into compliance with the Rental Housing Standards and pay the normal fees for any building permits needed to accomplish that. STAFF RECOMMENDATION Staff, representatives from the housing industry and the Affordable Housing Board recommend: a. A 25-month application period. b. A one-time application/filing fee of$200,which would apply during the first thirteen months;the fee would increase to $300 during for the next six months, and increase to $400 during the last six months of the program. C. Owners would have to pay any fees and/or taxes that would normally be due upon issuance of a buildingtpermit=for any-work needed to bring the dwelling unit(s) into compliance with the Rental Houstng�Standards. I � I'I 11 4 �. \ d. Owners will not be assessed any City impac ees if they provide a complete application during-,this�25-month/program. e. Owners will not be subject to civil citations during the incentive period. The recommendation is based on: 1. protecting the public interest regarding residents at risk in existing substandard rental housing; 2. ensuring responsible stewardship of City fees; 3. providing an incentive to foster a longstanding community partnership with owners and the housing industry to encourage widespread compliance during the current economic downturn; and 4. allowing a reasonable period of time to make all rental property owners aware of the incentive program and the need to identify their unrecorded/unapproved rental properties. TIMELINE The proposed ordinance becomes effectntenays,from ado�at Second Reading on May 5, 2009. ATTACHMENTS 1. Work Session Summary, February 26, 2009. 2. Communication plan to all stakeholders. 3. Outreach meeting summaries. 4. Power Point Presentation. ORDINANCE NO. 045, 2009 OF THE COUNCIL OF THE CITY OF FORT COLLINS AMENDING SECTION 5-261 OF THE CODE OF THE CITY OF FORT COLLINS RELATED TO FEES FOR RENTAL HOUSING AND ESTABLISHING AN INCENTIVE PROGRAM WITH REGARD TO THE PAYMENT OF SUCH FEES FOR RENTAL DWELLING UNITS NOT PREVIOUSLY RECORDED WITH OR APPROVED BY THE CITY WHEREAS, sanitary and safe housing for all Fort Collins residents is one of the City Council's highest priorities; and WHEREAS, to help ensure the provision of such housing, the City Council adopted Ordinance No. 108, 2008, on October 21, 2008, updating minimum health and safety standards for rental housing (the "Rental Housing Standards"); and WHEREAS, on that same date, the City Council also adopted Ordinance No. 109, 2008, which, among other things, added language to Section 5-260 of the City Code stating that no building containing two or more rental dwelling units in the City can be offered for rent unless a certificate of occupancy has been issued for such building; and WHEREAS, there are numerous unrecorded and/or unapproved rental dwelling units in the City,that is, housing units that were created or converted without required City inspections,permits or certificates; and WHEREAS, City staff has no way of determining just how many rental dwelling units actually exist in the City, much less how many of those units may present a health or safety risk to their occupants or may otherwise fail to comply with the Rental Housing Standards; and WHEREAS,to address this problem,the City Council has directed staff to develop financial incentives that would encourage the owners of unrecorded/unapproved rental dwelling units to obtain certificates of occupancy and comply with the Rental Housing Standards; and WHEREAS, City staff and community stakeholders, have jointly recommended to the Council a twenty-five month incentive program during which the owners of unrecorded/unapproved rental dwelling units could apply for certificates of occupancy for their dwelling units and also apply for such building permits as may be necessary to bring such units into compliance with the Rental Housing Standards, without having to pay the fees and taxes that would normally be payable upon the issuance of building permits for construction or conversion of the rental dwelling units; and WHEREAS,the application fee rorSUCh certificates of occupancy during the incentive period would increase during this period of time, starting at $200, increasing to $300, and ultimately to $400; and WHEREAS,the City Council believes that such incentive program would:(1) help eliminate health and safety risks in existing substandard rental housing;(2) encourage widespread compliance with the Rental Housing Standards; (3) allow a reasonable period of time for all rental property owners to become aware of the incentive program, and (4) be in the best interests of the health, safety and welfare of the residents of the City. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT COLLINS as follows: Section 1. That Section 5-261 of the Code of the City of Fort Collins is hereby amended to read as follows: See. 5-261. Fees. Whenever a building permit or certificate of occupancy is required under this Chapter or under any other provision of the City Building Codes, all applicable City fees and taxes shall be paid by the property owner. Section 2. That the following incentive program is hereby approved by the Council: a. Notwithstanding any provision of the City Code or Land Use Code to the contrary, the owner of any dwelling containing two (2) or more dwelling units that was constructed or converted to use as a two-family or multi-family dwelling on or before December 31, 2008,and that, according to the records of the Building Official, has not previously received a certificate of occupancy or other written evidence of approval from the City, may be issued a certificate of occupancy for such dwelling and, if such of occupancy is issued, be relieved of the obligation to pay all City fees or taxes that would normally be payable under the City's Building Codes or Land Use Code, as long as the following conditions are met: (1) if the use of the dwelling as a two-family or multi-family dwelling is not currently allowed under the zoning regulations of the Land Use Code, the owner of the dwelling must produce clear and convincing evidence that the dwelling was first used as a two-family or multi-family dwelling at a point in time when such use was permitted in the zone district in which the dwelling is situated; and (2) The owner's application for such certificate of occupancy must be filed with the City no later than June 15, 2011, and the owner must pay an application fee as specified herein. Prior to June 15, 2010, said application fee shall be in the amount of Two Hundred Dollars($200); between June 16, 2010, and December 15, 2010, said fee shall be in the amount of Three Hundred Dollars($300); and between December 16, 2010, and June 15, 2011, said fee shall be in the amount of Four Hundred Dollars ($400). b. After June 15, 2011, the owner of any such dwelling shall pay all fees and taxes applicable at the time the owner applies for a certificate of occupancy, unless the owner came into -2- ownership of such unit on or before December 31,2008,and demonstrates to the satisfaction of the Building Official or the Building Review Board, prior to June 15, 2012, that he or she could not reasonably have known about the incentive program established by this Section 2, in which event the owner's application for a certificate of occupancy shall be processed as if it had been received prior to June 15, 2011. C. Nothing herein shall relieve the owner from obtaining,and paying all associated fees for, such building permits and inspections as may be required to bring a rental dwelling unit into compliance with the requirements of this Chapter. Introduced, considered favorably on first reading, and ordered published this 21st day of April, A.D. 2009, and to be presented for final passage on the y of May, A.D. 2009. i Mayor ATTEST: City Clerk Passed and adopted on final reading on the 5th day of May, A.D. 2009. Mayor ATTEST: City Clerk