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SR-407-000-02 . tj(}?,...~{JO-I)Z- .';>/~ ~ O-A- (; + f--i, ~~ -" + ~iAN 2 4 1989 CA:RMM:11483/hpc City Council Meeting 1-24-89 Santa Monica, California STAFF REPORT TO: Mayor and city council FROM: City Attorney SUBJECT: Ordinance Amending Municipal Code Sections 9304, 9311, 9312, and 9346 Relating to City Subdivision Requirements and Adding Section 4812a Relating to Local Land Use Requirements Applicable to Rental Units withdrawn from the Rental Housing Market Pursuant to the Ellis Act At its meeting on January 10, 1989, the city Council held a public hearing on a proposed ordinance regulating the use of properties from which tenants have been evicted pursuant to the Ellis Act. Following the public hearing, the City council voted unanimously to continue the public hearing for two weeks in order to allow for further public input. In addition, the City Council directed the City Attorney to mail notice of the public hearing to interested organizations in the city. In response to this direction, the ordinance was mailed to a number of tenant and landlord groups as well as to a number of interested individuals. The notice indicated that revisions of the ordinance might occur prior to the January 24, 1989 City Council meeting, but that the concept of the ordinance would remain the same. In response to comments made by the public and the City Council at the January 10, 1989 meeting, various revisions were made to the ordinance as described in more detail below. Copies of this Staff Report and the accompanying ordinance were also mailed on January 19, 1989, 7-'" - 1 - JAN 2 4 1989 . . to the same interested organizations and individuals who received the previous ordinance. RESPONSE TO PUBLIC AND CITY COUNCILMEMBER COMMENTS 1. Lack of Conflict Between state and Local Law. In Adler v. Elphick, 184 Cal. App. 3d 642 (1986), when three co-owners acquired a two-unit residential property with the intent of having two co-owners occupy one uni t and the other co-owner occupy the second unit, the Court held that a community apartment was not created because the right to exclusive occupancy of a particular unit was not specified on the face of the deed. In Bakananauskas v. Urdan, 88 Daily Journal D.A.R. 15645 (Opinion filed December 14, 1988), two co-owners executed a written agreement pursuant to which one owner was entitled to exclusive occupancy of one unit, and a second owner was entitled to exclusive occupancy of a second unit. The Court held that this arrangement did not create a "community apartment" for purposes of state law, reaffirming the earlier holding in Adler. The ordinance which was initially prepared was intended to respond to these two cases. The courts have determined that an arrangement involving co-ownership of real property coupled with the right to exclusive occupancy of a partlcular unit does not constitute a "community apartment" unless such right appears on the face of the deed for purposes of state law. The Adler and Bakananauskas decisions do not limit local regulation of the types of situations addressed therein. The city clearly has the authority to regulate subdivisions that are not regulated by the SUbdivision Map Act. Government Code Section 66411 states: - 2 - . . 66411. Regulation and control of the design and improvement of subdivisions are vested in the legislative bodies of local agencies. Each local agency shall by ordinance regulate and control subdivisions for which this division requires a tentat1ve and final or parcel map. In the development, adoption, revision, and application of such ordinance, the local agency shall comply with the provisions of Section 65913.2. Such ordinance shall specifically provide for proper grading and eras ion control, including the prevention of sedimentation or damage to offsite property. Each local agency may by ordinance regulate and control other subdivisions, provided that such regulations are not more restrictive than the regulations for those subdivisions for which a tentative and final or parcel map are required by this division, and provided further that such regulations shall not be applied to short-term leases (terminable by either party on not more than 30 days' notice in writing) of a portion of the operating right-of-way of a railroad corporation defined as such by Section 230 of the - 3 - . . Public utilities Code unless a showing is made in individual cases, under substantial evidence, that public policy necessitates the application of such regulations to such short-term leases in such individual cases. since significant confusion has arisen because of the use of the term "community apartment" to refer to situations in which an undivided interest in land is coupled with the right of occupancy of an apartment thereon, where such right is contalned In the form of a written or oral agreement separate from the deed itself, the proposed revised ordinance refers to such situations as 11 coopera ti ve apartments II instead of .. commun i ty apartments. 11 Therefore, there is no longer any appearance of conflict between the interests regulated by the state Subdivision Map Act and the city's SUbdivision Ordinance. 2. Incremental Legislation. Several members of the public have asserted that the proposed ordinance unfairly discriminates against those owners of properties who have opted to withdraw their properties from the rental housing market pursuant to the Ellis Act. This claim is without merit. The City is currently experiencing an abuse of its land use regulations by owners who have withdrawn properties from the rental housing market pursuant to the Ellis Act. In connection with properties which are vacated by means other than the Ellis Act, other City laws, including the Rent Control removal permit - 4 - . . requirement, already exist to regulate the conversion of those properties to other uses. For these reasons, the proposed ordinance principally addresses properties withdrawn pursuant to the Ellis Act. It is well-established that legislative reform need only proceed one step at a time; it need not address all similar problems at one time. In addition, the accompanying revisions to the city's subdivision requirements relating to cooperative apartments apply to all units. 3. Riqhts of Family Members of Owners of Properties Withdrawn Pursuant to the Ellis Act. Confusion was expressed about the ability of family members to occupy properties withdrawn pursuant to the Ellis Act. The language of the ordinance has been re-drafted to clarify the rights of family members to occupy former rental units so long as such family members are neither renters nor owners. 4. Occupancy Permit as Alternative to Conditional Use Permit. The Ordinance has been revised to require that an occupancy permit be obtained from the Planning Department instead of a conditional use permit. This means that the Planning Director can grant the permit in all cases except those requiring a subdivision or parcel map. SECTION-BY-SECTION ANALYSIS Section 9304(c). This section retains the current Municipal Code definition of "community apartment" which corresponds with - 5 - . . the definition of this term under the Subdivision Map Act, as interpreted by the courts. Section 9304(e). This Section amends the Current Municipal Code definition of IIconversiontf to include II cooperative apartments. II Section 9304(f). This Section creates a new definition for a "cooperative apartment. II This section defines a cooperative apartment as an undivided interest in land coupled with the right of occupancy of any apartment, where the occupancy right is contained in a written or oral agreement other than on the face of the deed. Section 9304(u). Code definition of This section amends the current Municipal "subdivision" to include "cooperative apartments." Section 9311. This section has been amended to include cooperative apartments containing five or more units as a category for which tentative subdivision maps and final subdivision maps shall be required. This requirement currently exists for condominiums, community apartments, and stock cooperatives. Section 9312. This section has been amended to include cooperative apartments containing four or less units as a category for which tentative parcel maps and final parcels maps shall be required. This requirement currently exists for condominiums, community apartments, and stock cooperatives. Section 9346. This Section has been amended to provide that the Planning Commission may not waive the requirements for a tentative and final parcel map for cooperative apartments. This - 6 - . . restriction currently applies to condominiums, community apartments, and stock cooperatives. section 4812(a). This Section requires that an occupancy permit be obtained where property owners seek to occupy a property which has been withdrawn from the rental housing market pursuant to the Ellis Act. An occupancy permi t is required whether the owners seek authorization to occupy the property for a commercial use or a residential use. section 4812(b). An occupancy permit for commercial occupancy of a property withdrawn pursuant to the Ellis Act shall be granted by the Planning Director if the findings are made that the occupancy is in conformity with the General Plan and with the Zoning Ordinance. Section 4812(c). An occupancy permit for residential occupancy may be granted in anyone of three situations. First, the Planning Director may grant a permit if he or she finds that no more than one unit on the property will be occupied by owners of the property. (This subsection would not preclude owners from making alterations to the property to enlarge that unit if desired.) This subsection clarifies that family members may occupy other units on the property so long as they are not owners and no rent is being paid. (If family members who are also owners wish to occupy more than one unit on the property, Section 4812(c) (3) applies. If family members pay rent to live in units on the property, Section 4812(c) (2) applies.) A deed restriction is required as a condition of approval of such an occupancy. - 7 - ~ .. . . Second, an occupancy permit may be granted by the Planning Director for use of the property as multifamily rental housing so long as the owner has obtained certification from the Rent Control Board of compliance with the requirements set forth in the Ellis Act and Rent Control Board regulations regarding re-entry into the rental housing market. Finally, an occupancy permit for occupancy of the property as multifamily housing by more than one owner of the property may be granted, but only if a subdivision or parcel map has been obtained pursuant to applicable sections of the Municipal Code and a conditional use permit is obtained in accordance with certain provisions in section 9061.1. Section 4812(d). This subsection establishes a process whereby the Planning Director's decision on an occupancy permit may be appealed to the Planning commission. A Planning Commission decision on an occupancy permit may be appealed to the City Council. section 4812(e). This subsection provides that this Section does not apply to any occupancy following a lawful demolition of units withdrawn pursuant to the Ellis Act. This subsection exists because in conjunction with a demolition permit, compliance with other applicable City laws will have been obtained. RECOMMENDATION It is respectfully recommended that the accompanying ordinance be introduced for first reading. PREPARED BY: Robert M. Myers, city Attorney Laurie Lieberman, Deputy city Attorney - 8 -