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HomeMy WebLinkAbout1981-05-04 City Council Summary MinutesCITY COUNCIL MINUTES' Regular Meeting Mor<dav, May 4, 1981 CITY PALO ALTO ITEM.- PAGE Consent Calendar Termination of Joint Powers Agreement - Fire Training, Mountain View, Palo Alto, Los Altos Rental Housing Acquisition Program Policy & Procedures Committee and. Planning Commission Recommendations re Condominium Conversion Report Human Relations Commission re Lease Renewals and Just Cause Eviction Provisions Adjournment 8 0 6 8 0 6 8 0 6 8 2 1 8 2 4 Regular Meeting Monday, May 4, 1981 The city Council of the City of Palo Alto, met on this date in the Council Chambers at City Hall, 250 Hamilton Avenue, at 7:30 p.m. PRESENT: Bechtel, (arrived at 7:35 p.m.), Fazzino (arrived at 7:45 p.m.), Fletcher, Henderson, Klein, Levy, Renzel , Witherspoon, Eyerly CONSENT CALENOAR Referral Items None Action Items TERMINATION OF JOINT POWERS AGREEMENT - FIRE TRAINING, Staff recommends that the Council terminate the October 11, 1977 Joint Power- Agreement for a Joint Fire Training Center and Program in Mountain View. - RENTAL HOUSING ACQUISITION Communit �eve�a men Block u-ge or isca ear PROGRAM - rant `Fun to artments Cor or -at I on Purchase o erne Resolution Reprogramming d a "d Ordinance Amending ow Palo Alto Housin Staff recommends that Council approve the PAHC purchase of Ferne Apartments (subject to the%r compliance with RHAP provisions included in the PAHC Contract with the City) by approving Resolution and Ordinance. Staff believes that the opportunity for 16 units of permanent low and moderate income rental units (including four Section 8 units) justifies the commitment of RHAP funds and the expenditure of $18,000 of City Capital Improvement funds which were budgeted for landbanking. RESOLUTION 5907 entitled "RESOLUTION OF THE COUNCIL OF THE CITY OF PALO ALTO APPROVING THE REPROGRAMMING OF 1981-1982 COMMUNITY DEVELOPMENT BLOCK GRANT FUND$" ORDINANCE. 3230 . entitled "ORDINANCE- OF_ -THE COUNCIL OF C OF PALO ALTO AMENDING THE BUDGET FOR THE FISCAL YEAR 1980-81 TO INCREASE THE APPROPRIATION FOR CAPITAL IMPROVEMENT PROJECT ND. 78-30 'HOUSING ACQUISI- TION PROGRAM' AND DECREASE THE APPROPRIATION FOR CAPITAL IMPROVVEMENT PROJECT 79-96 'LANDBANK° AND TO APPROPRIATE SPECIAL IN. LIEU HOUSING FUNDS" MOTION: Councilmember'Witherspoon moved, seconded by Renzel, approval of the Consent Calendar actionitems. MOTION PASSED by a vote of 8-0, Fazzino absent. POLICY AND PROCEDURES COMMITTEE AND PLANNING COMMISSION Imponomminme Councilmember ,Fletcher, for the Policy and Procedures Committee, moved. 1. That the first purpose would be to maintain -the supply - of' multi -family rental housing. 2.; An additional purpose be to ensure reasonable balance of rental and ownership housing in the City and a variety of individual choices -of tenure, type, price and -location of housing. 8 0 S 5/4/81 3. A third purpose to reduce and avoid the displacement of tenants. 4. Staff to work on language for a consumer protection clause. (See Page 15, Items 7 & 8, under A, Purposes) 5. To provide priority for purchase to existing, tenants in the event of any conversions. 6. That demolition not be included as an issue in this particu- lar ordinance, 7. There shall be no condominium conversions allowed when the vacancy rate is 3% or below or when it will result in a vacancy rate of 3% or below. 8. That the City ban discrimination in condominium conversions. 9. That there be the same notice provisions that are shown on Page 19, 3a, g, and 4b, subject to the City Attorney deter- mining whether they should be in the ordinance. 10. That Council adopt Item 5, Page. 20 (Tenant can terminate lease upon notice of conversion). 11. Adopt Item 7, Part 1 only, (Page 20) (7 - Notice to new tenants, new and prospective tenants must be informed of con- version process if they begin tenancy during the process of conversion. 12. That Council adopt Item 8c (Right of first refusal) a_ '90 days after issuanee of public report). 13. Adopt 9a (right to quiet enjoyment, Page 20). 14. Add to 9a, a provision with tenant's consent. 15. Cupertino ordinance provision (if the vacancy rate rises above 5%, the City will evaluate several factors in deciding whether to approve a conversion and 'One of the discretionary criteria is that the developer must come up with a relocation plan). 16. That ordinance should include a provision of financial assis- tance to displaced tenants of an amount equal to one month's rent (See Item 10, Page 21.) 17. Adopt Item 11 (Page 21 and 22) a, b and c. 18. Move items 1-6 and 8, with 7 and 9 deleted. 19. To ' he extent that there are conversions, terms for pur- chasers of such units shall relelct the policies of the City with regard to new housing units. Mayor Henderson said that the reason a condominium conversion ordinance; -vas adopted in 1974 was to protect _existing renters not to estao,l ish -.a magic number of rental units; consequently, he pro- posed that all conversions offer protection for exsiting tenants through long-term leases, including lifetime leases, for tenants aged 60 years and over. The rent on -such, leases would be based on the rent at a period sometime prior to the conversion application, allowing., increases, related to the cost of living or some _other indeic, and the same increase - limitation-: for,the 'continue for the life, of the lease. Any conversion would have .to provide'°that pra- „teotion for existing''tenants. Three classifications fair allowing con+!er.sions a) City-wide 3% vacancy rate, or' b) 2/3 vote of existing "tenants, or c) 50% low rand moderate. income -arrangement-. Regarding the 2/3 Vote there -would be. protection such as one° vote per unit or tenant must have resided in unit- at _least -one year or tenant could not :be employed by or related to the owner ,80 7 5/4/81 or manager. The 50% low and moderate alternative would be there in case another Ferne Court opportunity should arise. On all con- versions except the 50% low/moderate alternative, there should be a requirement for 10% low/moderate income units. He felt he could be comfortable with that direction and hopefully the Council would give majority support. At least Council would have a basis for the outright ban on conversions which was what would happen with the 3% vacancy approach. Scott Carey, 151 University Avenue, Palo Alto, expressed that if all Councilmembers have not read 1980 HUD report on conversions, they should not vote on the issue. He felt that conversions had a bad connotation because of possible displacement of existing tenants, particularly seniors, and large profits to the converter at the expense of displaced tenants. He said that currently there are very few housing opportunities in the $60,000 to $150,000 range. He felt conversions were the only way, to produce housing for purchase. The inclusion of 10% on site would not produce additional $MR units stock and he felt the City should have the flexibility of the converter providing additional stock off -site, which would increase the number- of units for Palo Alto. Lifetime leases would prevent the City from acquiring possession of on -site SMR units for. 10-15 years. Mayor Henderson asked if off -site additions for below -market units could be accomplished by a small business. Mr. Carey said that would be difficult and perhaps the City would want to distinguish between the small conversions and the large ones. Janet Owens, 863 Moreno Avenue, was contented that condominium conversions would r=educe the rental housing stock. Generally, she felt: that new rental construction was non-existent because of problems with tax structures and inflation. She did not feel Palo Alto should be compared with the national averages because being a university town, the City had more transients. Losing how/ moderate income units hurt people most because, toward the bottom of the scale, there is no one else to be bumped in the struggle for adequate housing. Rental housing was important because, tra- ditionally, lower -income people are more apt to rent. She urged that Palo Alto protect its existing rental stock. Fred Weiner, 2932 Emerson, Palo Alto felt the price of condominium conversions should be looked fit, but basically it came down to the payments. A $100,000 unit, with a 20% down, would have a payment of about $800. Currently one -bedroom rental units in Palo Alto go for $275 - $350 per month. Affordability would he decreasing when apartments are converted to condominiums. He pointed out th't renters in Palo Alto were below or at median income. Supply . and demand of Palo Alto housing market are elastic, i.e. when .the price changes, there are still the same amount of supply and demand. He recommended 3% vacancy rate as appropriate. Michael Miller, 642 Homer Avenue advised his income 'was about $20,000 and he could not afford to buy a condominium. His rent tins $340 per month on a one -bedroom apartment. Monthly payments for a condominium would be about three times his current. monthly rent and he ' felt he could not afford more than $500 per month. Rentals in Palo Alto are getting more expensive as housing short- age i'icreases especially when there are Stanford Students com- peting for rentals. When he moved into his apartment, in 1975, he paid $175 permonth rent, now he pays $340 per month. . With lesser amounts of rental housing available, . the diversity of people would lessen. Palo Alto would be a,_, city of ,all white-collar professionals. Martin Gordon, 633 Channi ng, felt that con wersi on d'. d not add any- thing to City services. •He felt it was a question of home owner- ship , vs. rental units and believed it was`' outside the scope of City Council legislation. 8 0 8 5/4/81 Herb Borock, 3401 Ross Road, supported the Policy and Procedures Committee recommendations. Condominiums were not more affordable than other types of ownership housing for the tenants who were living in the housing at the time it was converted. He felt Oak Creek was a special case because it would not he covered by an ordinance staff was directed to write, and because whoever pur- chases a unit there would not be able to give the unit and lard to its heirs in perpetuity, so the prices there would be less than someplace else. Most other condominiums in the City would not be affordable to the tenants living there. He urged adoption of the Policy and Procedures Committee recommendations. Mark Chandler, Palo Alto Housing Corporation, 467 Hamilton Avenue, said the PAHC believed that rental housing generally was more affordable than ownership units, at the same time they recognize j that the City had.diversed goals for meeting its housing needs. The original condominium conversion ordinance specified the provi- sion of low and moderate income housing in Palo Alto. The PAHC objected to that goal being removed by the Policy and Procedures Committee and felt that was a commitment to which the City should stick. Basically, he felt there was no moderate income housing available for purchase and moderate income. housing for rental would become lesseavailable as rents rise. The PAHC Board urged that the Council, view convers on, while generally negative, as an opportunity for increasing the supply of other sorts of housing provided that certain conditions are met. They were also con- cerned regarding displacement of tenants and felt that protection should be built into an ordinance against displacement of tenants, particularly elderly even when the vacancy rate is above 3%. Frances Dyer, 501 Forest Avenue, Palo Alto felt that the fear by some residents that they could not control rents was what brought on the freeze of condominium conversions and since rental control failed twice in Palo Alto, a very diligent group were trying to put a freeze on condominium conversions which might help people have affordable housing by the restrictions such as the 50% below market, which seemed preposterous to her, in .order to convert. W• l l i am Anderson, 890 Seale Avenue, Palo Alto, felt the 3% figure :was ridiculous. Palo Alto's housing market was tough, but- he thought the more the economic issues were looked at, the better chances there were of making a positive impact. He thought the Council should encourage Stanford to build more units on their land for their -students and faculty, which would create less of an impact in the City. He felt condominiums should be allowed to run with reasonable qualifications such as those outlined by Mayor Henderson. Councilmember Fletcher ..referred to the report, Revisions to Palo Alto Housing Data, 1976-1981, and said the single-family section reflected substantially no change in the percentage of rentals in the R-1 and an article in the Times Tribune, February 14, 1981 indicated a discrepancy. She wondered where the discrepancy was. Ken Schreiber responded by saying the 1970 census provided the latest information available regarding single-family units which are rented. Councilmember Renzel,.asked Mr. Schreiber or Mr. Abrams exactly what is Council doing tonight. To clarify, the former condo- minium conversion ordinances included exceptions, such as lifetime leases and so forth, which were . basically a pre -requisite to application for a subdivision. In the ,new ordinance, some parts of it, and certainly some parts of both.: the.: Planningg',Commission's._ -and the- Mayor's alternatives are worded _0 though conversion itself is vir-.tually:automatically approved if these conditions are melt. She said she wanted to know whether in all cases they were looking at a pre -requisite ; to application for subdivision, or are. they in the new ordinance, actually setting the criterion. 8 0 9 5/4/81 Mr. Abrams responded that prior to Council action, the exception entitled a person to apply. Thereafter they -must conform with the Comprehensive Plan., etc. If the Council gave some other direction so that it would assure approval, that would be something else. Councilmember Renzel asked if the City was required under the Sub- division Map Act to have hearings and notices, etc., what was the point of pre-emptory approval. Correction See Pg. 994, 7/6/8 Mr. Abrams said that certain findings had to be made, so in that sense approval was not guaranteed, but Council could state in an ordinance that various elements would be found to be in compliance with the Comprehensive Plan, etc., and shortcut the process. Councilmember Eyerly felt the problem was not enough rental housing, and staff had an assignment to investigate ways of pro- viding more rental housing. If Council had a response to that assignment, they could get away from the nit-picking on conver- sions. He asked where staff was on that assignment. Mr. Schreiber responded that staff would return to Council within the next month. The Oak Creek Conversion and the BMR process con- nected with it, were tied in with the staff assignment. He thought the bottom line was that if a project could be put together, with very little or no land cost, and some type of muni- cipal tax-free bond long-term financing, there would still be a negative cash flow unless extremely high rents were looked at. That would indicate how far the market was out of wack with the financial reality of building rental housing. Additional rental housing, given the lack of federal subsidies, would be difficult and providing it would take a lot of creativity. The Oak Creek BMR program, if approved, would be a realistic alternative. SUBSTITUTE MOTION: Mayor Henderson moved, seconded by Witherspoon, that the Council direct the City Attorney to prepare a condominium conversion ordinance that includes the following: 1. Any conversion to include for existing tenants, ten-year leases, except for tenants 60 years and older who would be offered lifetime leases. e. Any conversion to meet one of the following qualifications: a) Existence of a three percent city-wide rental property vacancy rate; or, b) A two-thirds vote of existing tenants in favor of conver- sion; or, c) An offer by the owner, and acceptance by the City, .to pro- vide 50 percent of the total units as below -market -rate -.units. 3. For"any conversion under the three percent vacancy rate or the two-thirds vote requirement, ten percent below -market -rate units will be provided. . The . required long-term leases .,contain restrictions based upon existing rent two .years -=prior to ,tho conversion Application date and increases based upon the cost -of living or other acceptable Index. 5. The, two-thirds vote qualification contain protection against manipulation--e.g. one vote per unit, tenant must have resided in the unit for at least one year, tenant cannot be employed by or related to owner or manager. 6. Tenant receiving long-term or lifetime lease under any "Just Cause's eviction ordinance. protected 8 1 O. :5/4/81 Councilmember Klein understood Mayor Henderson's and Mr. Carey's comments to mean that there were community benefits derived from conversion, but he did not agree. He said the City had a_very low vacancy rate, there was a rental housing` shortage, and no resolu- tion to that problem was in the foreseeable future. He thought the diversity of people that rental units brought added character to the City and was important. He wanted low and moderate income persons in Palo Alto and felt eit would be unfortunate to have A lot of condominium conversions which resulted in Palo Alto's becoming a two -class community --upper class and a lower class which qualified for the few subsidized units. The housing plight of middle -income people, which were people between 120 and 150 percent of median income, should be focused upon because people in that category did not have a downpayment for condominiums and were not likely to have it for several years. He felt those young pro- fessionals who could afford the rentals, but could not afford the downpayment necessary to buy a condominium, were the future leaders of Palo Alto, and it would be a mistake to adopt a housing policy which would discourage those people from living. in Palo Alto. He Supported the Policy and Procedures recommendation that no condominium conversions be allowed if the vacancy rate were less than three percent. He did not support the idea that it was creative to allow a condominium conversion if the proposed con- verter would offer fifty percent below -market -rate units as a concession for the City to allow the conversion because he felt the net result was still a loss -for the people in the middle. Further, he felt it was inappropriate for the City to adopt.- a policy which would hold out a promise to a proposed converter when that promise could not be fulfilled; and, if there were City money, he agreed with Mr, Carey that the money would be better spent on building new units because the City's need was for more units. Councilmember Fletcher believed that the motion should be preceded by a statement of the purpose of the ordinance. The Policy and Procedures Committee, Planning Commission and Human Relations Commission each felt that one overriding purpose should be to maintain at least the present number of multi -family units. That item should be addressed by the Council before a vote was taken on Mayor Henderson's motion. If the vote were to delete that purpose, then it would be necessary to amend the revised Comprehensive Plan to delete that item. Some provisions of the suggested substitute motion would require many regulatory procedures for the City to monitor and she did not feel that staff or Council wanted to deal with citizens who have complaints about the manner in which the votes were handled by their landlord, or the leases written, 'or the manner in w`.ich the leases were implemented.. Regarding the affordability of the condominiums which were converted, she noted a paper by Haphtali Knox entitled the "A. Tale of Two (Maybe. Three) Cities" which said that monthly payments averaged 30.35% higher than previous rent in conversions; and, in addition, the buyer had to make large downpayments which in the short run increased the cost of housing. A 1974 survey also found that conversions tended to reduce the average household size in the community. The converted units generally contained more single person households and fewer housholds with three and four persons than did the same building before they were converted to condominums. Further, the report stated that conversions tended to produce an older commenity. She did not support Mayor Henderson's substitute motion, Councilmeber Fazzino dill _"rot believe that condominium conversions were necessarily evil in and of themselves. He felt they were wrong when tenants were displaced, wrong when affordable housing was not 'provided to : the community, whether : rental or ownership, and wrong when a clear- two-thirds majority of existing tenants would - not support conversion., He believed „a careful, rational approach _ to condominium conversions was needed; one which had as -its primary goals. (1) the protection of tenants and prevention of 8 1. 1 5/4/81 their displacement; and (2) maintenance oe rental housing supply and an increase in affordable housing for low and middle income persons who -wish to buy. Generally, he supported the •Housing Covporation's approach to the issue. He felt the Policy and Procedures Committee recommendation of a three percent vacancy provision before allowing conversion signified an absolute ban on condominium conversion. He questioned the legality .and .rationale of that approach. The provision of significant below -market -rats; units by a developer and:protection of existing tenants in rental would he a tremendous help towards attaining the City's housing goals. - Preserving the status quo was not enough, because in the long run it would not increase the supply of rental units and would not stabilize rent levels. He felt the Henderson/Housing Corp's proposal would reduce costs for potential owners and pre -- serve existing tenant situations; He felt the Mayor's approach best preserved options for low and moderate income people. He liked the 50 percent provision with respect. to BAR units, but pre- ferred a range of 35-50 percent to allow for some smaller projects where 50 percent would be prohibited. He- was supportive of most of the tenant protections afforded by the Policy and Procedures Committee and felt those should be the basis for the amendment= to the present ordinance. He supported lifetime leases, the tightening of rules to the two-thirds vote i.e. residence require- ments and the elimination of empty units from having voting power. He had concerns regarding the Policy and Procedures Committee recommendation about financial assistance. He preferred offering 'assistance through provisions of actual units, and did not like financial assistance as a precedent that it might be included in the condominium conversion ordinance this year, and next year becomes part of a "just cause" eviction ordinance. He believed the Mayor's three -pronged approach was most reasonable because it continued a healthy balance of rentals, BAR units,. protected existing tenants while offering the possibility of conversion in the event of major contributions to affordable housing stock. Counc i l mnember Ski therspoo'n added that one of' the problems with "affordable housing," no matter what the income bracket, was the present horsing financing situation. She expressed hope that Stanford would build a substantial amount of units, some rentals, on the Willow Road site. Although there would always be a .rental shortage, that was not to say that new:units were not being pro- vided, by the private sector. She felt that the Mayor's' proposal was a good compromise and applauded the Palo Alto Housing Corpora- .tion for their advice.- ,She would follow her instincts, Which were to tamper as little as possible with the market; and, where it was - tampered, to assure that only those loopholes which would guide future conversions into areas which Would benefit the community be provided. Counci lme,mber Renzel said r,er primary concern Was the pre= ervation of the rental housing stock. She felt there was -:a strong; public interest in having rental housing in the community. Stanford placed ,a large rental housing demand on a, rental housing stock. She -disagreed with -.Statements that three ._.percent was an -absolute ban oe:ause. the new construction of condominiums could possibly result. in more rentals, acid if that occurred,,. she .felt condominium conversion'woul d be fine... Until then, there was a serious' rental Correct horsing problem in the community and there would not be any pres- ion -, er vation of low and ;moderateAncome housing in any way without: See PT._ some sort of rent control . '?egard i ng; rentals, looking at supply 994': and demand, ,the supply kept diminishing in the face of inr.reased 711V0den;ano, .and_ she felt.._it was. clear that low, moderate,: middle, and almost _everyone- exs�.ept .the wealthy, -wo.utd., be dri ven from the cons mun i ty and,--. ther.efure', :she. opposed the sub'st i t•ute--- motion, Councilmember-$echtel .:be)'eVed that the Council would not be upholding the purpose- included it the Comprehensive Plan of main- taining the supply af. multi -family rental housing if the substi- tute motion were gassed because --sh a felt that the only way to obtain rental housing was to retain what. -was-. currently available. 8`1 2 5/4/81 Councilmember Levy generally was_ not enthused about the issue because he felt sympathetic to a free market and did not like the idea of curtailing it. He felt the character of Palo Alto had been shaped by the free market and that the number of rental units in Palo Alto was a free decision of people to build those rental units. Further, he felt the opposite of restricting rental units to condominiums would be to limit competition for the condominium units. He felt there was also an owner -occupied shortage which had been shown by the fact that owner -occupied dwellings were much more expensive because of the demand of owner -occupied housing. He felt there would have been more rental housing in Palo Alto if they had not banned the conversion of rental unfits into condo- miniums. He was, uncomfortable with the offer by an owner, and the acceptance by the City, to provide fifty percent of the total units as low/moderate income units. He felt it was a form of a bribe. He felt there should be a policy of either allowing con- versions on their merits or not allowing conversions, but did not feel they should be allowed because someone was going to make some sort of a gift offer. Councilmember Fletcher commented that there had been no apartment construction for years because it was not financially viable to construct rental housing. Further, she stated that the substitute motion would allow a conversion on a two-thirds vote and that the Housing Corporation's only exception to the conversion ban would be fifty percent low/moderate income housing units to he provided in conjunction with it. Mayor Henderson said he had just sold a condominium and that most of the persons interested were young couples, some with one child, others were persons whose children had grown and were seeking a smaller home. He said he was taken by the number of young people who were desperately searching for housing'and admitted that the condominium was the only opportunity for buying. He was not attempting to eliminate all the rental stock in Palo Alto and did not feel that would happen under his proposal, but future leaders of Palo Alto would probably found among the homeowners. He added that the turnover of renters was high, especially students. He felt -the problems concerning the Oak Creek ccnversion arose because tit was a new idea, and caught the City off balance. By establishing specific regulations on voting and rent increases for the long-term leases, most of the problems- should be eliminated. Figures could be -easily computed.by having specific requirements in terms of :how rental on a particular unit were to be controlled, going back two years to what the- rental was then, and. having some sort of index controlling it -from that point on. Councilmember Klein felt that the comments ignored the fact that condominiums were being .built., but rentals were not. Those who' were looking for rentals were at a disadvantage and would be more et a disadvantage i r more rept-dl ho.usi ng stock was 'taken a;Iay. He did not feel that theeconcept of .no condominiums was being sug- gekted and those young =couples .who can afford them, more power to them. SUBSTITUTE MOTION PASSED: All motions made... by r‘ayor Henderson plus accepting other than three percent approach, approved in concept by a vote of 5-4 as fol l Ows: AYES: Eyerly, Henderson, Fa,.z 1no, Levy & Witherspoon NOES:" Bechtel, Fletcher, Klein & Renzel Councilmember Fletcher asked if rent control was intended to be added tothe ten-year leases and lifetime leases for senior citi- zens' recommendation ` :' Mayor Henderson said yes. • 8 .I 3 5/4/81 e AMENDMENT TO SUBSTITUTE MOTION: Councilmember Renzel moved, seconded by Fletcher, that Section Ai) of the substitute motion be amended to read that lifetime leases would be offered to existing tenants as well as to tenants 60 years of age and older. Mr. Abrams said the City Attorney's Office was concerned about the lifetime leases as well as the two-thirds consent. Hi-:, analysis of the proposal relied upon the just cause eviction and in the absence of just cause eviction, he felt there would. be tremendous pressure with low rent control to breach the .lifetime leases and force tenants out. When the moratorium prevented two-thirds consent from being obtained, was the eroposal for the 50 percent low and moderate income units introduced.. -That was also when two-thirds consent was given with very stringent rent control pro- visions. He sz.id the City Attorney's' Office was concerned that they would be caught in the middle unable to enforce it, and yet looked upon as the imposing party of the lifetime lease. He added that the- more rent control in a lifetime lease, the greater the pressure to breach that lease.- Absent the just_cause eviction, he felt there .would be serious problems resulting from the combina- tion of exceptions. Councilmember Fletcher felt that tenants who were not owners could be harassed by the condor nium owners' association because the association regulates pareing spaces, who uses the swimming pool, etc., -and she did not feel it was a workable solution. AMENDMENT TO SUBSTITUTE MOTION failed by a vote of 6-3 as fol- lows: AYES: Renzel, Klein & Fletcher NOES: Eyerly, Henderson, Bechtel, Levy, Witherspoon Fazzino Councilmember Levy was esensitive to the City Attorney's concern regarding enforceability of ten-year lease or lifetime lease ordi- nanceand ,reserved the right to carefully analyze what came back to -the Council and change his opinion. SUBSTITUTE MOTION PASSED: Section (1) of the substitute motion passed unanimously, 9-0. MOTION: Mayor Henderson moved, seconded by Witherspoon, that the purposes -for which the condominium conversion ordinance was adopted be to reduce and avoid the displacement of tenants, to ensure a reasonable balance of rental and ownership housing in the City and a variety of individual choices of tenure type price and.. location of housing, and to maintain the supply of multi -family .rental housing for low and moderate income persons and families. Councilmember .Renzel said that at the Policy and Procedures Committee meeting she had moved co delete the language for "low and moderate income persons" because in the absence of rent con- trol there was no guarantee that any multi -family rental housing would be preserved for low and moderate income people other than that` w,iich eras owned by the Housing Corporation or some other non- profit group. SUBSTITUTE MOTION: Councilmember Renzel moved, seconded by' Bechtel, the —(Policy and Procedures Committee recommendation as modified by the Planning Commission that the purposes for which the condominium conversion ordinance was adopted be as follows: (a) To ensure a reasonable' balance_ of rental and ownership housing in the City variety of individual choices of tenure, type, price, and locatio►'.of housing. (b) To maintain the supply of multi -family rental hous\ing. 8 1 4 5/4/81 (c) To maintain the supply of rental housing for low and moderate income persons and families. (d) To reduce and avvid displacement of tenants, particularly senior citizens and families with school age children, who may be required to move from the community due to a shortage of replacement rental housing. (e) In the event of a conversion, to assure that purchasers have adequate information on the ;physical condition of the struc- ture and that the structure meets adequate health and safety standards. (f (g) In the event of a conversion, to ._give priority ror purchase to existing tenants. To meet the goals of the Comprehensive ,Plan, including the below -market -rate program. Mayor Henderson was concerned whether making the statement "to maintan the supply of multi -family rental housing" would be guar- anteeing that when the conversion privilege was approved. Councilmember Levy agreed with Mayor Henderson's concern. He felt they would want to protect renters and that it was not all that critical whether they were renting in one place or another. He wanted to see a community that would allow ample opportunity for residents who want to rent, but that the need to have specifically multi -family rental units should not be a critical element. AMENDMENT TO SUBSTITUTE MOTION: Councilmember Levy moved, seconded by Henderson, to delete "multi -family" from part (b) of the substitute motion. Councilmember Renzel was of the opinion that when any rental housing stock was lost, the pressure of what the market would bear would push out people at the bottom. She felt it was ludicrous to say that the :,apply of rental housing would be maintained .for low, moderate and middle income persons when there was no control over whether the rent would stay affordable to those people, and that the Council should get their obj ectieres straight. In her opinion, it was clear that the most affordable housing in the community was rental, high priced or low priced, rentals were the most afford- Correct 'able. See Pg. 994, 7/6%g1 Councilmember Fletcher agreed with Councilmember Renzel and pointed out that if that purpose was deleted, they would have to revise the Comprehensive Plan because it was voted that that be in the Comprehensive Plan, AMENDI ENI TO SUBSTITUTE MOTION, deleting "multi -family" from part, (b) of the substitute motion, failed by a vote of 5-4 as follows: AYES: Eyerly, Henderson, Levy & Witherspoon NOES: Renzel, Klein, Fletcher, Fazzino & Bechtel SUBSTITUTE MOTION PASSED, regarding Policy and Procedures purposes as amended by the Planning Commission, by a vote of 8-1, Witherspoon voting "no." Councilmember Fletcher said it had . been recommended that the con- version would not result in'a less than 3% vacancy rate, and won- dered whether Substitute Motion.2(a) could be reworded so that if there was: a . large develoOsent which -would result in depleting the rental stock by more than a 3% bottom, that that be the criteria) not the 3% at the time before the conversion. 8 15 5/4/81 SUBSTITUTE MOTION 2(a) PASSED re existence of 3 percent city-wide rental property vacancy rate by a vote of 8-I, Eyerly voting "no Councilmember Klein said he was against the two-thirds vote because the procedure that was being set up was on its way to being a bureaucratic nightmare and he felt the -tiro -thirds vote would add to it and make it an intoleraole burden for staff to administer. Councilmember Renzel was opposed to tI.e two-thirds vote of existing tenants because she felt that as a Council they had to face the fact that they had to look at the housing situation city-wide and view it in an overall prospective and felt that the self-interest of an existing tenant in determining whether a con- domioium conversion took place was not dealing with the overall City needs for housing. Further, she felt that when existing tenants are offered lifetime leases and the ability to buy their own unit, they could take all of the units out of the rental housing stock by their votes and temporarily enjoy the benefits. From then on, the rental -housing stock would have shrunk to a more serious condition than what currently exists. SUBSTITUTE MOTION 2(b) PASSED by a vote of 5.4 as follows: AYES: Eyerly, Henderson, Fazzino, Levy & Witherspoon NOES: Renzel, Klein, Fletcher & Bechtel Councilmember Renzel asked if the City would be free to turn down a condominium application if the owner offered to provide 50% of the total units as low/moderate income units. Mr. Abrams said yes that all of the requirements would have to be shown in some prima facie manner before the application would be accepted and then imposed through the approval process. He did not feel there was any vested right obtained by a developer offering 50%, if the City indicated that they may apply and have the application considered before public hearing. Councilmember Levy opposed the 50% as BMR units because it would enable a conversion to take place even though the tenants dis- approve and there was less than a 36 vacancy rate. He felt it was a unilateral provision that did not recognize the market situation or the rights of the tenants. Further, he felt that the item which said "an offer by the owner, and acceptance by the City" indicated that the City could just turn it down without any reason and the owner who had made an offeee in good faith could not go through with it. He did not feel that was equitable in addition to circumventing the desires of the tenants and the overall vacancy restriction. Mr. Abrams asked what would happen to those tenants who were in the 50% of the units being offered at below -market -rate, would they obtain a lifetime or ten-year lease, or would they be dis- placed from, the unifts"which were proposed to be l lm=ted to low and moderate income persons. Mayor Henderson asked how the 50% below -market situation, could be rectified with the fact that lifetime, or long-term leases, would be` guaranteed. If 50% . were , going to be below -Market, what 'wcul d be done with ,the people that want the lifetime lease and there was net room for them. Sylvia Seman of the Palo Alto Housing Corporation said she under- stood that the lifetime leases would go to that percentage which would be converted. The percentage that was not to be converted and which would stay as low/moderate rental hous1i#g, as in Ferne, 8 1 8 5/4/81 would have no lifetime leases. In the RHAP contract, in order to purchase the units and keep them as low/moderate income housing, it was agreed that the City would not evict any tenants. Mayor Henderson clarified that it was the Housing Corporation that would guarantee that those tenants would not be evicted even though they would not be in the below -market category, they would be living in and paying. for market rate units until those people moved, then those units would become below -market. Councilmember Renzel said that in the case of Ferne Avenue there were two separate parcels, each with half of the units on it. She wondered if, in any other situation where there were not separate parcels, and if half of the units were not condominiumized, would they still be part of the subdivision, if they were divided off as a chunk. Mr. Abrams did not know of any way to subdivide part of a onee structure parcel, and not subdivide the remainder. While it could perhaps be done under the Subdivision Map Act, he felt the Depart- ment of Real Estate would not permit it. He deferred giving an answer pending further research. SUBSTI1UTE MOTION PASSED: Substitute emotion 2(c) that an offer by the owner, and acceptance by the City, to provide 50% of the total units as low/moderate income units as one qualification passed by a vote of 6-3 as follows: AYES: Eyerly, Fletcher, Henderson, Fazzino, Bechtel & Witherspoon NOES: Renzel, Klein & Levy Councilmember Renzel asked if the City or Housing Corporation would purchase the units at cost. She understood that they were not currently provided for free. Mr. Schreiber replied that they were provided at cost. He asked if the intent was that the conversion would meet the City's below -market -rate housing program in the Comprehensive Plan. Mayor Henderson responded that the intention was to have it tie in with the requirements for new construction so whatever was needed to meet the present program, whether it was "units off -site, units on -site, in lieu payments," .was provided. AMENDMENT TO SUBSTITUTE MOTION: Councilmember Renzel moved, seconded by Levy, that in -lieu payments not be permitted in Item 3. Councilmember Witherspoon felt in -lieu payments should not be excluded because they gave a certain amount of flexibility for financing, unlike HUD funds or other ,bond funds. Councilmember Renzel commented that her impression of the in -lieu funds which had been received was that they were . not comparable to receiving actual units, and that in the case of conversions they were talking about existing -buildings that were built at: much less cost than new buildings. These .units should, therefore, be available at much less cost and for that reason, she felt that the° City should expect to receive actual units in a conversion. AMENDMENT TO SUBSTITUTE MOTION FAILED: The motion to eliminate in -lieu payments failed by a vote of 6-3 as f..11 ows: AYES: Renzel, Fletcher A Levy NOES: Eyerly, Klein, Henderson, Fazzino, Bechtel & Witherspoo). 8 1 , 5/4/81 SUBSTITUTE MOTION PASSED: Substitute motion 'teen 3, that for any conversion under the 3% vacancy rate or the 2/3 vote requirement, 10% low/moderate income units will be provided, passed by.a vote of 9-0. Counoilmember Klein pointed out that there was a Bay Area Housing Index and his experience was that housing costs of the landland were not rising as quickly as other elements in the cost of, living index. He felt it was important which index was used and :that it be directly related to costs of owners and landlords so'that the provision would be fair. Mayor Henderson said that the Bay Area Housing Index was beginning to accelerate and he understood that currently rentals were going up at a faster rate than house prices. SUBSTITUTE MOTION PASSED: Item 4 of the substitute motion, that required long-term leases contain restrictions based upon existing rent two years prior to the conversion application and increases based upon the cost_ of living or other acceptable index, passed by a vote of 9-0. Councilmember Fletcher felt it was unwise to permi t the two-thirds vote because the landlord who was planning_ .to- convert could make it a condition of rental one year prior to the intended conver- sion. He could pick and choose his tenants and write into the lease that he intended to convert and it was a condition that a consent be given. She felt the whole idea was a bad one and that the City would be . caught in the middle. She also felt it was hypocritical to permit the two-thirds vote because the Council had voted the purpose of -maintaining multi -family housing stock. AMENDMENT TO SUBSTITUTE MOTION: Councilmember Renzel moved, seconded by Fletcher, that "once condominium eenversion begins no rental increases can take place," be added to Item 5 of the sub- stitute motion. AMENDMENT TO SUBSTITUTE MOTION PASSED by a vote of 7 •2, Levy and Witherspoon "no." AMENDMENT TO SUBSTITUTE MOTION: Councilmember Levy moved, seconded by Renzel, that there be added, "two-thirds of all units to vote." AMENDMENT TO SUBSTITUTE MOTION PASSED by a vote of 9-0. SUBSTITUTE MOTION PASSED: Item 5 of the substitute motion, Oat the two-thirds vote qualification contain protection against manipulation--e.g. one vote per unit, tenant must have resided in unit for at least one year, tenant cannot. be employed by or related to owner: or manager, and as amended, passed by a vote of 9 U. SUBSTITUTE MOTION PASSED: Item 6 of the substitute motion, that ,= tenant receiving long-term or lifetime leases be protected under any "just cause" eviction ordinance, passed by a vote. of 7-1-1 as' follows: AYES: Eyerly,.Renzc Witherspoon. NOES: Fazzino ABSTAIN: Levy Klein, Fletcher, Henderson, Bechtel & MOTION: Councilmember Bechtel moved, seconded by Klein, to add No. 3, 4, 5 and 6 from City Attorney, report of April 30, 1981 as follows: (3) Definition of Condominium Conversion. All types of ownership arrangements set forth in the. Attorney's report, except 8 1 8 5/4/81 limited equity cooperatives. Conversions of two or more units. (Not to include the issue of demolition of rental housing in the conversion ordinance.) Limit on Conversions. Condomihium conversions should be pro- hibited if the vacancy rate is 3% or less. The vacancy rate should continue to be_celculated twice a year. Conversion Regulations. Some regulations should be in place in the event the vacancy rate rises above 3%, Tenant Protections: a. A ban on age discrimination. b. Notice of all public hearings in accordance' with State law. c. 180 dayF' notice to tenants before conversion (and evic- tion) in accordance with State law. d. A Tenant's right to terminate a lease upon notice of con- version. e. Notice to new tenants. f. 90 days for the right of first refusal to be exercised. g• No remodeling without the tenant's consent during the right of fi;'st refusal period; if remodeling is done later, the developer must pay expenses for the tenant's temporary relocation. h. Financial relocation assistance equal trr the last month's rent. i . All tenants' rights set out in a notice. j. Rental mediation service to answer questions. k. Engineer's report of condition of structural and installations to be sent to tenants. components Buyer Protection: Added to present regulations should be all of the Chiet Building Official's recommendations (p. 12) of City Attorney's Report, except numbers ! and .9 Below Market Rate. Provram: The BMR requirement for conver- sions should be more explicitly set forth. (b) Procedure. The Attorney's Office and the Planning staff should develop the appropriate procedure for ` conversion applications. If., a conversion is denied., the developer should` not be allowed to resubmit an Application for one year. Mayor Henderson felt that the bah of age discrimination should read as follows: That if a building has accepted children at any time during the five years prior to the conversion application, the homeowner's association of_,the __converted condominium project may . not, discriminate against . tenants with children. The Mayor felt that emphasis should be placed on new developments that units be buil t that would be for families with children, but felt that to tak.4 people who have been living for years in a particular life style and arbitrarily change it would be a problem. 8 1 9 5/4/81 Councilmember Klein felt that the City should not be put in the position where it encouraged discrimination on the basis of age. He felt that if the e were places which were inappropriate for children, the parents should make that decision. Councilmember Levy felt that age discrimination was an important City-wide issue, and that the broad issue would be coming to the Council and that would be the appropriate time to act on it. He felt the item deserved a sebstantial public hearing and should not be acted until that time. AMENDMENT TO MOTION: Councilmember Witherspoon moved, seconded by Henderson, to defer including the age discrimination issue, Item 5a of motion, until there is a city-wide policy on it. Councilmember Fazzino said there was an extensive public hearing on the issue of age discrimination before the Human Relations Commission two years ago. Lingering legal questions involving a suit in another city resulted in that law being held oft. He sup- ported an overall ban on age discrimination and felt that to the degree possible, it should be adopted. He felt age discrimination would be a small step towards encouraging family ownership. Councilmember Fletcher pointed out that age discrimination was a policy already included in the new Comprehensive Plan, and as to the immediate issue, the ordinance which was considered previously applied only to rental units, so it would not apply to ownership condominiums. She felt it should be addressed in connection with conversions. AMENDMENT TO MOTION FAILED by a vote of 5-4 as follows: AYES: Eyerly, Henderson, Levy & Witherspoon NOES: Renzel, Klein, Fletcher, Fazzino & Bechtel Mayor Henderson felt some type of an exception should be made. Councilmember Bechtel felt that the only people that would be affected would be those tenants who had a lifetime or long-term lease, and, therefore, were existing tenants. Councilmember Klein a so.felt there should be some type of exemp- tion for places that were established for people of age 55 and over. AMENDMENT TO MOTION: Mayor Henderson moved, seconded by Witherspoon, to direct City Attorney to prepare an exemption clause re age discrimination. AMENDMENT TO MOTION PASSED by a vote of 6-2-1 as follows: AYES: Eyerly, Klein,_; Fletcher, Henderson, Witherspoon & Fazzino NOES: Renzel, Bechtel ABSTAIN: Levy AMENDMENT TO MOTION: Councilmember Witherspoon. moved, seconded by Levy, to amend Item 3 to read "Conversions of three or more units." AMENDMENT TO MOTION PASSED by a vote of 5-3-1 as follows: AYES: Eyerly, Henderson, Fazziti, Levy & Witherspoon NOES: Renzel, Klein, Bechtel ABSTAIN: Fletcher 8 2 0 5/4/81 Councilmember Witherspoon objected to the financial relocation assistance equal to last month's rent. She did not see the point. of that because any tenant would have more than 90 days to relocate. Mayor Henderson added that the lifetime leases had been offered and there was no forced relocation. AMENDMENT TO MOTION: Councilmember Witherspoon moved, seconded by Henderson, to delete Item 5h - financial relocation assistance equal to the last month's rent. AMENDMENT TO MOTION PASSED by a vote of 8-I, Bechtel "no." MOTION, AS_ AMENDED, PASSED by a vo':e of 9-0. Councilmember Levy expressed his appreciation to the Planning Commission, Human Relations Commission, and the Policy and Proce- dures Committee for all their efforts. HUMAN RELATIONS COMMISSION RE LEASE RENEWALS AND JUST CAUSE Human Relations Commission recommends the following: 1. Renewal of Leases. Council amend the lease ordinance to pro- vide for renewal of leases after the first year's lease. 2. Eviction for Just Cause. Council adopt an ordinance providing that no eviction on rentals should be effected unless for Jest Cause with a recommended list of just causes. 3. Council endorse in principal the proposed bills of Senator Sieroty (SB 345) and Assemblyman Bates (AB 623) relating to evictions for just cause. MOTION: Mayor Henderson moved, seconded by Klein, that the lease ordinance be amended to provide for renewal of leases after the first year's lease. Councilmember Levy asked if providing renewal of leases after the first year was feasible. Mr. Abrams said yes, recognizing that there would be a new rent established. the end of each year Bill Cant, 636 Webster, Palo Alto, said just cause eviction required landlords to have and state a good reason for subjecting a renter and fami y to the trauma and expense of being forced to move. He felt eviction without cause was a mockery of equal treatment under the law. He urged adoption of just cause evic- tion. Janet Owens, 863 Moreno, President, Midpeninsula Coalition Housing Fund, a nonprofit developer, of assisted housing, felt that a land- lord has to be first a businessman and second an investor. She furtherfelt that just cause eviction would -encourage landlords to screen tenants carefully. She` urged adoption of just cause evic- tion. Fred Weiner, 2.931 Emerson, Palo Alto, urged the adoption of just cause eviction Herb=Borock,_3401 Ross Road, urged the adoption of just cause eviction. Frances. Dyer, 501 Forest Avenue, said that good tenants were not evicted.' She felt the lease law coupled with just cause was added protection for absolute rent control. She felt the offering ,of a lease was enough control: 8 2 1 5/4/81 Mike Miller, 642 Homer, Palo Alto, felt that there should be other conditions in addition to offering the one-year lease. Mr. Abrams said that the Attorney's Office had received a number of calls concerning the one-year lease ordinance complaining that landlords had increased rents because of the one-year lease requirement. Councilmember Renzel felt that landlords drew the leases and determined the terms and added that the ordinance was to provide some predictability for the tenants. Councilmember Fletcher said she received a number of complaints that landlords were abusing and trying to undermind the intent of the ordinance by raising rents excessively. She also knew of some tenants who were threatened with higher rents if they signed the lease, therefore, did not sign the lease, and their rents were raised anyway. She further had received calls from people whose rents had been raised, but were thankful for the assurance that they would be able to live in their apartment for another year. She did not feel this would be being considered by the Council if there were not a several rental housing shortage and that tenants Correct had little option of where they could live, and were entitled to ion some sort of protection. See Pg. 994 Councilmember Eyerly had negative feelings about the HRC recommen- 7/6/81 dations concerning renewal of leases and eviction for just cause because the more restrictions and demands that are placed on land- lords the less opportunity to sustain . rental housing stock or to obtain new rental units. 1 Mayor Henderson said he had also had a number of calls and letters from people who either had exhorbitant increases, with the blame being put on the Council for having provided i.he lease require- ment, or from people who had differing rents dependent upon whether there were to have a one year lease. He was persuaded that people needed protection short of rent control to keep that type of thing from happening. MOTION PASSED by a vote of 6-3 as follows: AYES: Renzel, Klein, Fletcher, Henderson, Bechtel & Levy NOES: Eyerly, Fazzino & Witherspoon MOTION: Councilmember Fletcher moved, seconded by Renzel, that an ordinance be adopted providing that no eviction on rentals should be effected unless for dust Cause, with a list of just causes. Councilmember Renzel felt that there were ample provisions to pro- vide landlords with reasons to evict. Councilmember Witherspoon opposed the motion because she did not think it was fair. She_ felt it takes a lot of time and money to take a tenant to court for eviction. Councilmember Klein was concerned that the free marketplace was not working with regard to real estate, that the City had a low vacancy rate and felt tomethi ng had to be done to help the imbal- ance of , bargaining between landlords and tenants and that tenants were at a disadvantage.. He supported the motion, but was con- cerned that there ryas no exemption for duplexes. or three or four-. plexes in which the landlord occupied one of the units. AMENDMENT TO MOTION: Councilmember Klein moved, seconded by Eyerly, that units of four units or less, one of which is occupied by the landlord as his principal place of residence, be exempted. 8 2 2 5/4/81 Councilmember Klein felt that where there was a close living situation, the landlord should be given more: discretion. Councilmember Renzel recognized that there were personal reasons why a landlord might wish to have closer control over who was in his units, she felt it was important for landlords to screen who they rent to. She felt the landlord that lived in the unit was in the best position to determine who would be put in the units and to get _references, etc., and did not feel that tenants in that situation deserved any less protection. Councilmember Klein did not feel people could be adequately judged on the basis of a half-hour interview. AMENDMENT TO MOTION failed by a vote of 4-4-1 as follows: AYES: Eyerly, Klein, Fazzino, Levy NOES: Renzel, Fletcher, Henderson & Bechtel ABSTAIN: Witherspoon Cour,c•ilmember Levy was uncomfortable with the concept of retalia- tory motives Councilmember Fazzino was not convinced that there was a major problem. He was concerned that this law would be directed towards small landlords who tend to have close, responsive relationships with their tenants. He would oppose the motion. Councilmember Bechtel felt the just cause eviction ordinance. should be adopted, Councilmember Witherspoon- asked for clarification on tenants rights to sue for damages. Mr. Abrams said it provided to the tenant a cause -of action which did not now exists He did not feel it deprived a landlord of any causes of action_, which he might have. Councilmember Fletcher felt there were a number of people who were afraid ef being evicted for any number of reasons and were afraid to speak ups She felt the ordinance was very justified. and expressed appreciation to the HRC and Commissioner Roc for their outstanding job. Mayor Henderson also expressed his appreciation. Councilmember Levy basically opposed the concept of justifying each cause because he too felt- there was not sufficient.:tbuses. He referred to a PAAIRS report which stated that 14 questions were received from tenants and one from a landlord regarding unjust evictions, and did not feel that indicated a large scale abuse. He felt the Council was adopting an ordinance which would increase the amount of litigation and that they would make it more diffi- cult for smell landlord, ..and easier for large landlords. Mayor Henderson said that from the information provided by the Rental Housing Mediation Task Force (RHMTF) there were'` substan- tially more calls with the m:_ -„;-or top;‘-; hL.tt g evictions. Councilmember Renzel commented that RHMTF's total eviction com- plaints over a seven -month period was 268. Counci lmtmber Fletcher rebutted that not al l eviction calls would go to PAA1RS; 8 2 3 5/4/81 MOTION PASSED: The motion to adopt an ordinance providing that no eviction on rentals should be effected unless for Just Cause, with a recommended list of just causes passed by a vote of, 5-4 as follows: AYES: Renzel, Klein, Fletcher, Henderson, Bechtel NOES: Eyerly, Fazzino, Levy & Witherspoon MOTION: Mayor Henderson moved, seconded ' by Fletcher, to support the proposed State legislation: Endorse in principle the roposed bills of Senator Sieroty (SB 345) and Assemblyman Bates (AB 623) relating to eviction for just cause. MOTION PASSED by a vote of 5-3-1 as follows: AYES: Renzel, Klein, Fletcher, Henderson & Bechtel NOES: Eyerly, Fazzino & Witherspoon ABSTAIN: Levy Councilrnember Fazzino encouraged the Council to consider an exemption for small landlords. ADJOURNMENT The meeting adjourned at 12:10 a.m. ATTEST: APPROVED: 8'-4 5/4/81