sr-042710-7b~~
„Y at City Council Report
Santa Dionica
City Council Meeting: April 27, 2010
Agenda Item: ~'
To: Mayor and City Council
From: Marsha Jones Moutrie, City Attorney
Subject: Proposed ordinance amending the definition of "Cooperative Apartment" in
Municipal Code Section,9.20:02.050(g) and addihq Section 4.32.130(c)(4)
to provide for an occupancy permit for property withdrawn pursuant to the
Ellis Act where the property is owned as a tenancy 9n common coupled
with an unrecorded exclusive right to occupy four or fewer units.
Recommended Action
Staff recr~mmends that the City Council introduce for first reading. the attached
Ordinance:
(1) amending the definition of "Cooperative Apartment" in Municipal Code
Section 9.20.02.050(8), which would change the threshold number of units in a property
owned as a "tenancy iri common" coupled with an exclusive right of occupancy from
four to five before City subdivision regulations would apply, and
(2) amending Municipal Code Section 4.32.130(c) to provide for an occupancy
permit following withdrawal of property from the rental market pursuant to the Ellis Act if
that property is owned as a tenancy in common coupled with an unrecorded exclusive.
right to occupy four or fewer units.
Executive Summary
Santa Monica Municipal Code.. Section 9.20.02.050(8) defines a "Cooperative
Apartmeni° subject to the City's authority to regulate subdivisions pursuant to
Government Code. section 66411. Cooperative Apartments are a form of tenancies in
common also known as "TICS." Currently, a Cooperative .Apartment is defined as "a
project of more than three units in which an undivided interest in land is coupled with the
right of occupancy of any apartment located thereon, whether such right is contained in
the form cf a written or oral agreement, when such right does not appear on the face of
the deed." The proposed ordinance would increase the number of units required by the
definition prom four to five before the City's subdivision regulations would apply, aligning
the City's ordinance evith state subdivision final map requirements in a manner
consistent-with case law shielding TICS. It would also allow the Planning Director to
grant an occupancy permit for residential occupancy of property withdrawn pursuant to
the Ellis Act if the property is owned as a tenancy in common coupled with an
unrecorded exclusive rieht to occupy four or fewer units. The Ordinance is attached as
Exhibit A.
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Discussion
The regulation and control of the design and improvement of subdivisions are vested in
the legislative bodies of local agencies pursuant to Government Code section 66411.
Subdivisions are defined by state law as the division of land into units forthe purpose of
sale, lease or financing. An important factor in identifying a subdivision is the award of
the right to an exclusive occupancy of a unit. The term "TIC" is used to describe an
arrangement between two or more people to co-own a parcel of real estate. TICS are
different than condominiums or community apartments. In a condominium
development, each owner owns a particular area of the property delineated on a
recorded map and each has a deed that identifies his or her individually owned area. In
contrast, TIC owners own percentages of undivided interests in the property,. and their
deeds show only their ownership percentages. Tenancy in common ownership
interests may be coupled with an exclusive right of occupancy (ERO) for a particular
unit. If the ERO appears on the face of the deed, the property is classified as a
community apartment under state law. If the ERO is established by ah unrecorded
separate -agreement and is .not on the deed, local subdivision law classifies the
subdivision as a Cooperative Apartment subject to the City's regulatory authority.
Santa Monica Municipal Code Section 9.20.02.050(g) currently defines a "Cooperative
Apartment" as "a project of more than three units in which an undivided interest in land
is coupled with the right of occupancy of any apartment located thereon, whether such
right is contained in the form of a written or oral agreement, when such right does not
appear on the face of the deed." The proposed ordinance would change the number of
units in the definition to "a project of more than four units," thus requiring five units be
the subject of an unrecorded ERO agreement before the City's subdivision regulations
would apply.
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State subdivision law distinguishes between a subdivision of five or more units and one
consisting of four or fewer. Generally, a tentative and final map is required for all
subdivisions creating five or more parcels or dwelling units. On the other hand, state
law imposes less demanding parcel map requirements on subdivisions of four or fewer
parcels, including local agency authority to waive the requirement of a parcel map itself.
The proposed ordinance would follow this distinction in state subdivision law by
subjecting Cooperative Apartments involving five or more units to the City's tentative
and final map subdivision requirements, but exempting those consisting of four or fewer
units from the City's subdivision requirements. As discussed below, the proposed
ordinance amendment is also consistent with the case law shielding TICS and rejecting
local agency efforts to prevent their creation through legislation banning unrecorded
contractual agreements. that provided for the exclusive right of occupancy of units in
properties owned by tenants in common.
In 2004, the Court of Appeal addressed and struck down a local attempt to preserve
rental housing by prohibiting TICS. In Tom v. San Francisco (2004) 120 Cal.App.4rn
674, the appellate court invalidated a San Francisco ordinance that protected rental
housing by prohibiting contractual ERO agreements as to properties owned in common,
unless the ERO was recorded. Finding that the ordinance violated privacy rights, the
appellate court reasoned that "the entire purpose of a TIC into allow home ownership to
those who cannot afford single family homes...." Previous cases had already
determined that the sale of rental property consisting of three units to tenants in
common coupled with an unrecorded ERO agreement did not create a community
apartment project. Tom-:and its predecessor cases call into question local authority to
prohibit T(C conversions. By amending the definition of Cooperative Apartment to align
it with state subdivision. law distinguishing between parcel and final maps, the City
avoids the legal risk of interfering with the creation of TICS involving four or fewer units.
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TICs are currently subject to Municipal Code Section 4.32.130(c)(3), which specifies
that an occupancy permit may. be granted for a_Cooperative Apartment after a property
has been.withdrawn from the rental market pursuant to the Ellis Act if a subdivision map
is obtained pursuant to local law, and a conditional use permit is obtained pursuant to
the applicable subsections of Municipal, Code Section 9.04.16.02.010. Section
9.04.16.02.010 in turn provides that, except pursuant to TORCA, no conversions of
rentals to market-rate condominiums or cooperatives will be permitted unless a number
of conditions are met, including that the rental units demolished or converted in 1978
and 1979 are replaced. The proposed ordinance would also amend Municipal Code
Section 4.32.130(c) to add a section clarifying that a property owned as a tenancy in
common with an unrecorded exclusive right to occupancy that does not meet the
revised definition of a cooperative apartment, i.e. contains four or fewer units, qualifies
for an occupancy permit that may be granted by the Planning Director.
The proposed. ordinance will exempt TICS from these requirements to the extent they
are limited to four or fewer units. Staff will continue to review the applicability of these
and othertocat laws relevant to TICs consisting of five or more dwelling units and return
with analysis and recommendations regarding them.
Environmental Review
The adoption and implementation of this ordinance are exempt from the provisions of
the California. Environmental Quality Act pursuant to CEQA Guidelines section
15060(c)(2) in that there is no foreseeable possibility that the implementation of this
ordinance may have a significant effect on the environment. The change in the form of
ownership of developed real property with four or fewer units to a "Cooperative
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Apartment' does not involve development or other activities that have the potential to
cause a physical impact on the environment.
Financial Impacts & Budget Actions
There is no financial impact.
Prepared by: Alan Seltzer, Chief Deputy City Attorney
Approved:
Forwarded to Council:
.r~~~~
Rod Gould
City Manager
Attachment A: Proposed- ordinance
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City Council Meeting: April 27, 2010
Santa Monica, California
ORDINANCE NUMBER (CCS)
(City Council Series)
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
SANTA MONICA AMENDING THE DEFINITION OF A "COOPERATIVE APARTMENT"
SUBJECT TO THE SUBDIVISION REGULATIONS OF THE SANTA MONICA
MUNICIPAL CODE AND PROVIDING FOR AN OCCUPANCY PERMIT FOR
PROPERTY OWNED AS AN UNDIVIDED INTEREST OF LAND COUPLED WITH THE
UNRECORDED AGREEMENT FOR THE EXCLUSIVE RIGHT OF OCCUPANCY OF
FOUR OR FEWER UNITS FOLLOWING WITHDRAWAL UNDER THE ELLIS ACT
WHEREAS, the regulation and control of the design and improvement of
subdivisions are vested in the legislative bodies of local agencies pursuant to
Government Code section 66411; and
WHEREAS, Santa Monica Municipal Code Section 9.20.02.050(g) defines a
"Cooperative Apartment" subject to the City's authority to regulate subdivisions pursuant
to Government Code section 66411; and
WHEREAS, the City desires to amend its definition of "Cooperative Apartment" to
provide that the number of project units in which an undivided interest in land is coupled
with the exclusive right of occupancy of any unit located thereon, when such right does
not appear on the face of the deed, is more than four units; and
WHEREAS, the proposed amendment of the definition of "Cooperative
Apartment" requires that Santa Monica Municipal Code Section 4.32.130(c) be
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amended to clarify that property owned as a tenancy in common coupled with the
exclusive right to occupy four or fewer units,. where such right to occupancy is
unrecorded, may qualify for an occupancy permit following withdrawal pursuant to the
Ellis Act; and
WHEREAS, these amendments will align the subdivision requirements of local
law for this type of subdivision with the tentative and final map requirements of the state
Subdivision map Act,
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA MONICA
DOES HEREBY ORDAIN AS FOLLOWS:
SECTION 1. Santa Monica Municipal Code Section 9.20.02.050 is hereby
amended to read as follows:
9.20.02.050 Definitions.
The following words or phrases as used in this Chapter shall have the
following meanings:
(a) Advisory Agency. A designated official or an official body charged
with the duty of making investigations and reports on the. design and
improvements of proposed divisions of real property.
(b) .Air Space Lot. A division of the space above or below a lot, or
partially above and below a lot, having finite width, length, and upper and lower
elevations, occupied or to be occupied by a use, building or portion thereof,
group of buildings or portions thereof, accessory buildings or portions thereof, or
z
accessory uses. An air space lot shall be identified with a separate and distinct
number or letter on a final subdivision or parcel map recorded in the office of the
County Recorder.
(c) Block. The area of land within a subdivision which area is entirely
bounded by streets, highways or ways, except alleys, or the exterior boundary or
boundaries of the subdivision.
(d) Community Apartment. A project as defined in Business and
Professions Code Section 11004 in which an undivided interest in the land is
coupled with the right of exclusive occupancy of any apartment.
(e) Condominium. An estate in real property consisting of an undivided
interest in .common in a portion of a parcel of real property together -with a
separate interest in space in a residential, industrial or commercial building on
such real property, such as an apartment, office, or store. A condominium may
include, in addition, a separate interest in other portions of such real property.
(f) Conversion. The creation of separate ownership of existing improved
real property together with a separate interest in space of residential, industrial or
commercial buildings thereon. A conversion may be accomplished by
condominium, stock cooperative, community apartment, or cooperative
apartment.
(g) Cooperative Apartment. Pursuant to the City's authority to regulate
subdivisions not regulated by the Subdivision Map Act as authorized by
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Government Code Section 66411; a project of more than t#3ree four units in which
an undivided interest in land is coupled with the exclusive right of occupancy of
any apartment located thereon, whether such right is contained. in the form of a
written or oral agreement, when such right does not appear on the face of the
deed.
(h) Design. Street .alignments, grades and width; drainage and sanitary
facilities and utilities, including alignments and grades thereof; location and size
of all required easements and rights-of-way; fire roads and fire breaks; lot size
and configuration; traffic access; grading; land to be dedicated for park or
recreational purposes; and such other specific requirements. in the plan and
configuration of the .entire subdivision as may be necessary or convenient to
insure conformity to or implementation of the General Plan or any adopted
specific plan.
(i) Final Map. A map showing a subdivision for which a tentative and final
map is required by this Chapter, prepared in accordance with the provisions of
this .Chapter and the Subdivision Map Act and designed to be recorded in the
office of the County Recorder.
(j) ~=inat Parcel Map. A final map for a parcel:
(k) Final Subdivisian Map. A final map for a subdivision..
(I) General Plan. The General Plan of the City of Santa Monica.
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(m) Improvement. Street work; storm drainage, utilities and landscaping
to be installed, or agreed to be installed, by the subdivider on the land to be used
for public 'or private streets, highways, and easements, as are necessary for the
general use of the lot owners in the subdivision and local neighborhood traffic
and drainage needs as a condition precedent to the approval and acceptance of
the final map thereof; or to such other specific improvements or type of
improvements, the installation of which, either by the subdivider, by public
agencies; by private utilities, by any other entity approved by the local agency or
by a combination thereof, is necessary to insure conformity to or implementation
of the General Plan or any adopted specific plan.
(n) Lot. A parcel or portion of land separated from other parcels or
portions by description, as on a subdivision or record of survey map, or by metes
and bounds, for purpose of sale, lease, or separate use.
(o) Lot Line Adjustment. A minor shift or rotation of an existing lot line or
other adjustments where a greater number of parcels than originally existed is
not created.
(p) Merger. The joining of two or more contiguous parcels of land under
one ownership into one parcel
(q) Subdivision, Map Act. The Subdivision Map Act of the State of
California.
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(r) Parcel Map. A map showing a division of land of four or less parcels
as required by this Chapter, prepared in accordance with the provisions of this
Chapter and the Subdivision Map Act.
(s) Peripheral Street. An existing street whose right-of-way is contiguous
to the exterior boundary of the subdivision.
(t) Remainder. That portion. of an existing parcel which is not included as
part of the subdivided land. The remainder is not considered as part of the
subdivision but must be shown on the required maps as part of the area
surrounding subdivision development.
(u) Stock Cooperative. A corporation as defined in Business and
Professions Code Section 11003.2 which is primarily for the purpose of holding
title to property if shareholders receive the right to exclusive occupancy in a
portion of property and whose right to occupancy transfers concurrently with the
transfer of an interest in the corporation.
(v) Subdivider. A person who proposes to divide, divides, or causes to
be divided real property into a subdivision for the subdivider or for others; except
employees and consultants of such persons or entities acting in such capacity,
are not "subdividers."
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(w) Subdivision. The division, by any subdivider, of any units or unit of
improved or unimproved contiguous land shown on the latest equalized County
assessment roll as a unit or as contiguous units for the purpose of sale, lease or
financing, whether immediate or future. Property shall be considered as
contiguous units, even if it is separated by roads, streets, utility easements or
railroad rights-of-way. Subdivision includes a condominium project, as defined
herein or in California Civil Code Section 1351(f), a community apartment project,
as defined herein or in California Civil Code Section 1351(d), a stock
cooperative, as defined herein or in California Civil Code Section 1351(m), a
cooperative apartment as defined herein, or two or more air space lots as defined
herein, Any conveyance of land to a governmental agency, public entity, or public
utility shall not be considered a division of land for purposes of computing. the
number of parcels. "Subdivision" does not include anything excluded from the
definition of subdivision in the Subdivision Map Act unless otherwise provided for
herein.
(x) Subdivision Map. A map showing a division of land of five or more
parcels as required by this Chapter, prepared in accordance with the provisions
of this Chgpter and the Subdivision Map Act.
(y) Tentative Map. A map made for the purpose of showing the design
and improvements of a proposed subdivision and the existing conditions in and
around it.
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(z) Tentative Parcel Map. A tentative map for a parcel.
(aa) Tentative Subdivision Map. A tentative map for a subdivision.
(bb) Zoning Ordinance. Chapter 9.04 of the Municipal Code.
SECTION 2. Santa Monica Municipal Code Section 4.32.130 is hereby
amended to read as follows:
4.32.130 Permits necessary for occupancy of property following withdrawal
pursuant to the Ellis Act.
(a) No property or rental units therein which have been withdrawn pursuant to
the Ellis Act, Government Code Sections 7060 et seq., shall be subsequently occupied
unless an occupancy permit is obtained in accordance with .the provisions of this
Section.
(b) An occupancy permit for commercial occupancy of a property or any rental
unit therein shall be granted by the Planning Director if the following findings are made:
(1) The occupancy is in conformity with the General Plan.
(2) The occupancy is in conformity with the Comprehensive Land Use and
Zoning Ordinance.
(c) An occupancy permit for residential occupancy of a property or any rental
unit therein may be granted:
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(1) By the Planning Director, if the Planning Director finds that no more than one
unit on the property will be occupied by owners of the property. In such situation, other
units on the property may be occupied, provided such occupants do not have any
ownership interest in the property and do not pay rent as defined in Section 1801 (f) of
the City Charter.
(2) By the Planning Director, if the Planning Director finds that the property or
rental unit therein is to be used for multifamily rental housing, and the Rent Control
Board has certified that the owner has complied with the requirements set forth irr
Government Code Sections 7060.2 and 7060.4 and with applicable regulations
promulgated by the Rent Control Board.
(3) If the property is to be used as a cooperative apartmerit as defined in Section
9.20.02.050, a subdivision eF-parse4 map is obtained in accordance with Chapter 9.20 of
Article 9 of this Code, and a conditional use permit is obtained in accordance with the
requirements of Section 9.04.16.02.010, except that subsections (a), (b), (e), (h), and
(i)(2) shall not apply, and except that the requirements regarding a Tenants' Notice of
Intent to Convert and Tenant Relocation Assistance Plan contained in subsection (c)
shall not apply.
By the Planning Director, if the Planning Director finds that the property is
owned as an undivided interest in land and is coupled with the exclusive right of
occupancy of four or fewer units located thereon whether such right is contained in the
form of a written or oral. agreement when such right does not appear on the face of the
deed.
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Thar Planning Director shall make a written report to the Planning Commission
and the pity Council within five (5) days of approving or conditionally approving an
occupancy permit pursuant to this Section. Any decision of the Planning Director
approving, conditionally approving, or denying an occupancy permit may be appealed to
the Planning Commission in accordance with the provisions in Part 9.04.20.24 of Article
9 of this Code: Any decision of the Planning Commission may be further appealed to
the City Council in accordance with the same provisions.
This Section shall not apply to occupancy of any portion of a property withdrawn
pursuant to the Ellis Act following lawful demolition of that portion of the property, nor
shall it apply. to an entire property withdrawn pursuant to the Ellis Act following lawful
demolitiol? of the entire property.
SECTION 3.Any provision of the Santa Monica Municipal Code or appendices
thereto inconsistent with the provisions of this Ordinance, to the extent of such
inconsistencies and no further, is hereby repealed or modified to that extent necessary
to effect the provisions of this Ordinance.
SECTION 4. If any section, subsection, sentence, clause, or phrase of this
Ordinance is for any reason held to be invalid or unconstitutional by a decision of any
court of competent jurisdiction, .such decision shall not affPCt the validity ofi the
remaining"portions of this Ordinance. The City Council hereby declares that it would
have passed. this Ordinance and each and every section, subsection, sentence, clause;
or phrase not declared invalid or unconstitutional without regard to whether any portion
of the ordinance would k~e subsequently declared invalid or unconstitutional.
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SECTION 5. The Mayor shall sign and the City Clerk shall attest to the passage
of this Ordinance. The.. City Glerk shall cause the same to be published once in the
official newspaper within 15 days after its adoption. This Ordinance shall become
effective 30 days from its adoption.
APPROVED AS TO FORM:
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City Attorney