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HomeMy WebLinkAbout1979-05-08Approved June 5, 1979 MINUTES HUNTINGTON BEACH PLANNING COMMISSION Council Chambers 2000 Main Street Huntington Beach, Study Session - Civic Center California TUESDAY, MAY 8, 1979 - 7:20 PM COMMISSIONERS PRESENT: Higgins, Russell, Stern, Finley, Cohen, Bazil, Paone COMMISSIONERS ABSENT: None CONVERSION OF EXISTING APARTMENT UNITS' WITHIN THE CITY TO CONDOMINIUMS Chairman Finley outlined the purpose of the meeting - to discuss philosophies, theories, and possible implementation of condominium conversions within the city. Acting Secretary Palin reviewed the history of the draft condominium conversion ordinance which has been distributed to the Commission, outlined the questions to be resolved by the Commission, and asked for direction to staff in regard to preparation 'of a conversion ordinance, a request for a moratorium on conversions, or a recom- mendation to the Council that no ordinance be prepared by the City. Savoy Bellavia-reported that all of the information requested by the Commission at its last meeting was not available and reviewed the information which had been submitted in the Planning Commission packets. Other cities are sending further information and this will be transmitted as it arrives. He informed the Commission that the vacancy factor for Huntington Beach varies depending on which survey is used: HUD submitted a figure of 1.4; however, a recent Lyons Company survey (which was quite limited in scope, covering only about one-third of the apartment supply within complexes of five or more units) has indicated a .7 percent vacancy factor, which is considered extremely low. This Lyons survey also found that about 14.5 percent of those surveyed are senior citizens. - Commission discussion ensued, addressing the following four general areas: 1) Does the Commission want to permit condominium conver- sions in the City at all? 2) If so, is there an existing vehicle by which to accomplish this end? 3) If there is an existing vehicle, would an ordinance banning conversions outright really accomplish that purpose if there is alreddy a legally applicable process which might be used? and 4) Should the City have a conver- sion ordinance and what form should that ordinance take? Minutes, H.B. Planning Commission Study Session - May 8, 1979 Page 2 Commissioner Russell said that it is the obligation of the Com- mission to make a recommendation to the City Council to allow or not to allow conversions. He expressed concern that conversion might eliminate some desirable rental areas from the community and asked for economic information which might pinpoint which areas have become a burden to the City, not so much in regard to contri- butions in tax dollars but those which consistently cost more than others in terms of high crime rate, extra police protection, social services, etc., and suggested that conversion could possibly be pursued in those areas. He added, however, that more economic and demographic information should be developed to preclude eliminating rental units occupied by senior citizens or others on fixed incomes. Commissioner Bazil reviewed the vacancy rates quoted and said that given those factors it is questionable if the city can afford to convert any apartments and lessen -the rental stock still further. These existing rentals, he pointed out, cannot be replaced at the cost of building today, even with the inflated rent structures. Commissioner Paone pointed out that the status of not having an ordinance is very important, in that if the City is not going to adopt a conversion it is necessary to know where we are left without it. If it were, for instance, the intent to prohibit conversions of any kind that act may not achieve its desired end because there may still be existing vehicles which permit it. The Attorney s office must answer the question as to whether or not the State has preempted the City's right to take such a step. Also the legal question of whether or not the City has a right to deny a property owner whose property is zoned for a particular use,.who can comply with code requirements, and whose neighbors have used their proper- ties in a like manner the right to convert his apartments must be answered by the City Attorney. Commissioner Bazil added that there is in the City at least one large apartment complex which was deliberately built to condo standards for the purpose of a later conversion, and it would be somewhat unfair to a developer who had gone to that extra expense to deny him the privilege after the fact. He concluded that an ordinance is needed to spell out the precise criteria under which conversions could take place. Mr. Palin said that ultimately the question has to be addressed And a conversion ordinance prepared; timing will be at the discre- tion of the Commission and the Council, but an ordinance would provide a tool for processing any further requests from apartment owners. It was the general consensus of the Commission to endorse going ahead with an ordinance after additional study and documenta- tion.- Legal counsel James Georges informed the Commission that the City probably does have the ability to apply the Planned Residential Development ordinance to condominium conversions; however, that approach might be open to litigation and might be interpreted by -2- 5-8 '79 - P.C. Minutes, H.B. Planning Commission Study Session - May 8, 1979 Page 3 the courts to read meaning new construction only. He added that approach, if in fact valid at all, is cumbersome and tacking condi- tions of approval onto a conditional use permit is usurping the jurisdiction of the City Council by taking over a legislative function. He noted that he would also apply this criticism to use of the conditional use permit in the processing of new construction as well. Mr. Georges pointed out that conditions on conversions should be uniform from application to application. He emphasized that he is not saying the PRD approach is invalid, but merely pointing out that it is discretionary with the Commission whether it wants to go the PRD route, request a moratorium on conversions, or recommend the preparation of a condominium ordinance. The Commission discussed at length the applicability of the Sub- division Map Act to conversions. Gail Hutton advised that there is pending legislation at the State level proposing to remove the ambiguities in the law and address this problem definitively, as experts in municipal and public law, she said, are equally divided as to whether or not the Map Act applies to this type of project. The meeting was opened for public input. Peter Similak presented information on the rent structures prevalent in the city and discussed legal aspects of conversion. He stated that the staff report is misleading and does not accurately address the impacts of conversion; that the conversion of apartments does not benefit the city as a whole; that it does not in most cases pro- vide housing close to employment centers; that people do not move out of the community to buy condominium units in other cities, as alleged in the staff report; and that the original purpose for which apartments were constructed could not be allowed to be changed. Stating that tax dollars to be expected were not more important to the city than the welfare of the renters, he asked the Commis- sion to allow no conversions of any nature. A representative from the Council on Aging addressed the Commission to ask for a moratorium on conversions until the present critical housing situation has passed. He stressed that he would not like to see a moratorium interfere with the preparation of a conversion ordinance or the construction of new condominium developments. Michael Kirschbaum concurred with the need for an ordinance which would define the requirements for conversion. He added new informa- tion as follows: 1) 25 percent of the people who purchase condos do so for the purpose of speculation only and never actually reside in the unit; 2) conversion removes existing apartments from the rental market, thereby driving up rent on the remaining apartment supply; and 31 it is mandatory that the vacancy rate should be above a certain percentage before any conversions are allowed. He concluded that a moratorium should certainly be in effect during the'interim period of preparation of an ordinance. -3- 5-8-79 - P.C. Minutes, H.B. Planning Commission Study Session - May 8, 1979 Page 4 Warren James addressed the question of what percentage of a city's housing stock should be in rentals. He urged that if the intent o the Commission is to permit conversions under an ordinance they take into account the marketability of a product, which will to a large extent govern the quality of the conversion projects - if it is not a good product it simply will not sell. Therefore, he felt that stringent provisions would preclude the marketplace. Don Mac Dougall (renter and member of the Orange County Renters' Association) addressed the Commission to say that it does not seem wise to put the development of a community into the hands of dev- elopers who may not necessarily be concerned for the community as a whole, but that it is the Commission's obligation to see that the community develops with long-range stability and growth with pro- visions made for all economic sectors of the city. He urged that the vacancy rate be -an important factor tied to conversion, with a possibility that conversions be allowed only in projects where the majority of present renters approved. He also discussed inclusion- ary zoning for low/moderate income housing, the need for restric- tions which would give tenants an idea of what their rents may be in the future, and ordinances of other cities. He noted that Oakland, which seems to have an excellent conversion ordinance, is sending him a copy which he will forward to the Commission for its information. Jim Foxx as resse-cT—the Commission to state that very few rents f� apartments in Huntington Beach are equal to those quoted by Mr. Similak, and that rents have not gone up during the last 10 years at a rate comparable to inflation. He discussed the desired socio- logical mix for Huntington Beach and the cost of new construction. In'response to a question from Commissioner Paone as to what impact on costs would result from the City's picking up the tab for offsite improvements, Mr. Foxx stated that would mean that some of the marginal projects would become economically viable to develop, but that would merely shift the burden to the general city taxpayer. Jim Hudson questioned Mr. Foxx's conclusion that renters have enjoyed rents at less than inflationary rates, citing the advantage of tax and interest deductions accruing to owners. -He'also noted that the association fees do'not remain fixed expense in ownership projects. In regard to the discussion on costs and benefits to a homeowner through deduction of taxedwend interest, Commissioner Cohen cautioned that IRS rules may well-c3iange and those deductions may not always be allowable In the future. The public input section of the meeting was closed-. Commissioner Paone asked legal counsel if the City has authority to impose a condition for a financial package to any conversion approval. Mr. Georges replied that a small down payment could be condition but if it were the intention to require second trust dee to be taken back by a developer or to limit interest rates to 8 or 9 percent, probably not under the present mechanism. However, it was his opinion that by ordinance these types of things could be imposed. -4- 5-8-79 - P.C. 1 Minutes, H.B. Planning Commission Study Session - May 8, 1979 Page 5 Mel Ott asked that any ordinance for condominium conversion contain provisions for a review of all fire protection requirements and upgrading to today's standards. This, he noted, could be negotiable and realistic but provisions should be included in the code. Commissioners Higgins and Bazil pointed out that it is critical that under a conversion ordinance a developer could not construct apartment buildings and then convert them, thereby circumventing the intent of the code and, therefore, the ordinance must contain very stringent requirements. Commissioner Finley stressed that sociologi- cal concerns must be addressed during the formulation of any ordin- ance and urged staff to find out how ordinances are working out in cities that have them in operation. A straw vote on the intent to prepare an ordinance was taken: Commissioner Russell: Yes; -but not so rigid as to make conversion virtually impossible. Commissioner Stern: Yes; with vacancy factor a paramount trigger- ing point. Commissioner Finley: Yes; and if City Council feels it is necessary would like to see a moratorium recommended. Commissioner Cohen: Yes. Requested guidance on method of handling requests in the interim. Commissioner Bazil: Yes; instead of a moratorium ask the one appli- cant with a pending conversion request if he would concur with a delay pending ordinance preparation - if he will not concur, then Mr. Bazil would favor a moratorium. Commissioner Paone: Yes; with requirements at least as stringent as those for new construction. Commissioner Higgins: Yes; with the ordinance similar to the exist- ing planned residential development ordinance. After discussion it was the general consensus of the Commission that the point approach was not favored because it provides too much flexibility. It was pointed out that a project could have amenities in one area of such a nature that a high cumulative point count could be obtained but still leave gross deficiencies in one or more other areas. It was the decision of the Commission that new condominium construction and conversions should both have to comply with the same standards under a very definitive ordinance. Counsel Georges inquired, since it is the responsibility of the Attorney's Office to draft the ordinance, if the Commission wished to have inclusionary zoning as a part of the ordinance. No definite conclusion was reached on this point pending further information. The Commission during the review has requested the following informa- tion to be supplied by staff: 1) percentage of seniors livinq in units of five or more units; 2) how many units in the city within -5- 5-8-79 - P.C. Mintues, H.B. Planning Commission Study Session - May 8, 1979 Page 6 projects of 100 or more apartments; 3) comparison of number of rental units in the city with other Orange County cities; 4) com parison of the rent,structukes"in Huntington Beach and other Oran County cities (particularly coastal cities) to help in determinin the sociological impact of the displacement of persons; 5) apart- ment ratio within the city; 6) number of condominiums in the rental market today; 7) percentage of tenants who would buy into condos if 95 percent financing were available along with other financial incentives; 8) any available information on the workability of condominium conversion ordinances in other cities. Miscellaneous:.Items: Mr. Palin discussed the upcoming tour of Lancer Homes Inc. facili- ties, the tour which has been arranged for mixed industrial/commercial uses, and a study session the City Council has scheduled for June 11, 1979. This study session will include consultants for the Department of Public Works and possibly Ultrasystems, the consultant for the Fiscal Impact Model,.and the Commission was asked if it would like to participate in this meeting as a joint study session. It was the consensus that this would be agreeable to the Commission if the Council also agreed, and Mr. Palin will contact the City Ad- ministrator on the matter and notify the Commission. Mrs. Finley announced that she would like to arrange a Commission meeting with the mayor's Committee on the Handicapped to discuss some of their concerns; she said that this might be a good time t gather more information on the inclusionary zoning questions, as the handicapped could be expected to have a great deal of interest in the matter. Staff will arrange times for the Lancer and commercial/ industrial tours and advise the Commission on the joint study session. Meeting adjourned. J mes W. Palin Ruth Finley, C airman Acting Secretary :df -6- 5-8-79 - P.C.