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HomeMy WebLinkAboutAgenda Statement 1980/08/12 Item 5 r COUNCIL AGENDA STATEMENT Item 5 Meeting Date 8/12/80 ITEM TITLE: Consideration of Planning Commission recommendation for a moratorium on the conversion of occupied apartment units to condominiums SUBMITTED BY: Director of Planning (4/5ths Vote: Yes No X ) BACKGROUND 1 . On July 9, 1980 the Planning Commission recommended denial of a tentative map for the conversion of a 128 unit apartment complex to condominiums. The development is located on the north side of East Orange Avenue west of.the Alpha Beta Center at East Orange and Melrose Avenue. At the public hearing on the tentative map there was a great deal of testimony concerning the inability of the families in East Orange Villas to find comparable rental units and their inability to purchase housing. 2. I have had a growing concer.n .over the. situation in which existing apartment units are being converted to condominiums while at the same time few new apartments are being constructed, creating a squeeze in the rental market. It appears that a number of the condominium conversions as well as new condominium projects are not sel.:ling well in the current market. Thus, there seems to be an adequate supply of condominium units available for sale but relatively few apartments available for rent. It- is my conclusion that this matter should be studied in some depth to determine the dimensions of the squeeze in the rental market and the availability of condominium units. Should this investigation reveal a serious problem it may be appropriate to limit the number of apartment units that can be converted to condominiums on the basis of the number of apartments built in recent years. This is the approach taken by the City of La Mesa several years ago. 3. While we have not studied this situation in depth, the information listed on the attached Exhibit "A" presents enough evidence to raise a concern. It is therefore my RECOMMENDATION: That Council declare a moratorium on the conversion of previously occupied apartment units to condominiums until November 12, 1980 to allow time for a study of the vacancy rate in apartments at various rentals, the number of condominium units available for sale and rent at various rates, and related factors, and the possible preparation of a regula- tion to address the situation. Said moratorium would not apply to condominium conversions which have already received tentative map approval by the City Council . PLANNING COMMISSION RECOMMENDATION On July 9, 1980 in conjunction with their consideration of the East Orange Villa condominium conversion, the Planning Commission voted 5:1 to recommend a moratorium on conversions pending an indepth study of the social impact of such conversions. DJ P:hm by tip^ City Council of Chula Vista, California Dated Form A-113 (Rev. 11/79) EXHIBITS Agreement Resolution Ordinance Plat Notification List Other Exhibit A ENVIRONMENTAL DOCUMENT: Attached Submitted on EXHIBIT "A" CONDOMINIUMS RECEIVING TENTATIVE OR FINAL MAP APPROVAL BY CITY COUNCIL New Conversion 1971 - 46 1972 - 20 1973 233 1974 - 105 1975 - 35 1976 - - 1977 141 16 1.978 361 248 1979 321 238 1980 942 162 Total 1 ,765 1 ,103 = 2,868 Pending--No action by City Council 376 126 = 502 Total 2,141 1 ,229 = 3,370 Approved since November .l , 1979 1 ,014 202 = 1 ,216 Pending 376 126 = 502 Total 1 ,390 328 = 1 ,718 COMMENTS The majority of new multiple family units are being subdivided for possible sale as condominiums as protection against rent control even though the owner may intend to rent them for an indefinite time. Nearly 1400 new condominium units have been authorized by tentative map approval since November, 1979. The 10 year average for apartment construction is approximately 400 units/year, but in 1979 only 144 units were constructed. Permits for 203 apartment units have been issued so far in 1980 with one project accounting for 183 units. The developer of the 183 units intends to file a tentative map soon so that the units can be converted to condominiums at some future time. In the last three years tentative maps have been approved authorizing the conversion of 600 apartments to condominiums. Only 222 of these units have been the subject of recorded final maps. Apartments which have been converted to condominiums sell for 15% - 25% less than newly constructed condominium units. Knowledgable sources indicate that a high percentage of condominiums are purchased by first time buyers who have previously rented. , �r 1 EXHIBIT "A" CONDOMINIUMS RECEIVING TENTATIVE OR FINAL MAP APPROVAL BY CITY COUNCIL New Conversion 1971 - 46 1972 - 20 1973 - 233 1974 - 105 1975 - 35 1976 - - 1977 141 16 1.978 361 248 1979 321 238 1980 942 162 Total 1 ,765 1 ,103 = 2,868 Pending--No action by City Council 376 126 = 502 Total 2,141 1 ,229 = 3,370 Approved since November 1 , 1979 1 ,014 202 = 1 ,216 Pending 376 126 = 502 Total 1 ,390 328 = 1 ,718 COMMENTS The majority of new multiple family units are being subdivided for possible sale as condominiums as protection against rent control even though the owner may intend to rent them for an indefinite time. Nearly 1400 new condominium units have been authorized by ,tentative map approval since November, 1979. The 10 year average for apartment construction is approximately 400 units/year, but in 1979 only 144 units were constructed. Permits for 203 apartment units have been issued so far in 1980 with one project accounting for 183 units. The developer of the 183 units intends to file a tentative map soon so that the units can be converted to condominiums at some future time. In the last three years tentative maps have been approved authorizing the conversion of 600 apartments to condominiums. Only 222 of these units have been the subject of recorded final maps. Apartments which have been converted to condominiums sell for 15% - 25% less than newly constructed condominium units. - Knowledgable sources indicate that a high percentage of condominiums are - purchased by first time buyers who have previously rented. /MtA ASSOCIATED SAN DIEGO ENGINEERING GENERAL CONTRACTORS BUILDING CONTRACTORS AND GENERAL OFAMERICA ASSOCIATION CONTRACTORSASS'N. COMSTRUCT1019UA 438 CAMINO DEL RIO SOUTH, SUITE 206, SAN DIEGO, CA 92108 (714) 299-5363 August 11, 1980 Mayor Will Hyde City of Chula Vista P.O. Box 1087 _ Chula Vista, Ca 92012 Dear Will: I note that item #5 on your agenda for August 12th is "consideration of Planning Commission recommendation for a moratorium on the conversion of occupied apartment units to condominiums" . Although I have not had an. opportunity to review the recommendation, I would like to offer some comments on the subject of condominium conversion for your consideration. Just four weeks ago the County Board of, Supervisors considered and rejected a moratorium on such conversion. At that time we offered the following quoted suggestions that may very well be applicable to the City of Chula Vista. "We recommend that your Board take no action on the staff recommendations at this time, but rather schedule a conference to explore in some depth the housing market characteristics of the San Diego region, of which condominium conversions are but a part. We urge you to invite experts from the real estate, development and financial industries to participate in your conference to present inform- ation aimed at exploring means of expanding both the rental and ownership supply of housing in the unincorporated area. We most strongly urge you to not place a moratorium on the conversion of apartments to condominiums. Such a moratorium would seriously retard the long term production of rental units in the unincorporated area. By taking such action, your Board would further compound the supply - demand relationship for rental units . While you might prevent a few hundred apart- ment units from converting to condominiums over the next year, you will have effectively discouraged several thousand potential apartment units from being constructed over the next few years . You will have Mayor Will Hyde City of Chula Vista August 11, 1980 Page Two signaled to investors that apartment construction can no longer be considered a good investment. Not only would the investors be faced with the negative cash flow noted in your staff 's study, but they would be precluded from the option of converting their apartments to ownership units and therefore receiving a return on their investment. Thus, the investors will turn elsewhere, either out- side of San Diego County or to some form of invest- ment other than new apartments. The end result is the same. Virtually no new apartments will be constructed in the unincorporated area; Yet, the demand for apartments will continue to grow as -the population increases and the cost of homeownership continues to price more people out of the ownership market. Our recently completed consultant study on the housing plans and policies in the San Diego Region, "THE FATAL PARADOX" , is an important contribution toward attempting to address the central concern of housing production, both rental and ownership. We firmly believe the suggestions made in that study, if carried out by your Board and the cities in the region, would alleviate any potential hardships that might exist from apartment conversions . I trust you and your Council will find the foregoing helpful in your deliberations . Sincerely, Robert C. C ens Legislativ irector RCC:gag cc: Each Council Member Planning Director t ' A �.11 11 .3 t ;l IN INN I V I 1 I - � I 77 ol, ——--------- - -—-------- 0/�51�// �'��I77 _�J'fld'�/lL✓_oT �7/{�/ UNANIMOU.S CONSENT FORM IT IS HEREBY REQUESTED by the undersigned that the - following item, with the unanimous consent of the City Council of the City of Chula Vista, be considered and acted upon by the Council pursuant to the provisions of Sec.2.04 .090. of the Chula Vista City Code. Interim Ordinance - Adopting an Urgency Measure and Declaring a Moratorium on the Conversion of Apartment Units to Condominium Owner- ship for a period of 90 days .-commencing on August -12, 1980 �(�ignature) Unanimous Consent of the City Council, as indicated by the following signature t - l or CA-301