Chapter 23.76
CONDOMINIUM CONVERSION
Sections:
23.76.010 Application and intent.
23.76.020 Application content.
23.76.030 Ownership association.
23.76.040 Building code requirements.
23.76.050 Building inspection.
23.76.070 Consumer protection provisions.
23.76.080 Sales and lease termination.
23.76.090 Relocation assistance.
23.76.110 Preconversion protection.
23.76.120 Appliance warranties.
23.76.130 Development standards.
23.76.150 Findings required for approval.
23.76.160 Lapse of use permit.
23.76.170 Right to terminate conversion.
23.76.010 Application and intent.
The provisions of this chapter shall apply to the development of all residential condominiums and stock cooperatives including the conversion of existing dwelling units to condominiums, row houses, townhouses, and stock cooperatives.
The existing stock of rental housing provides the majority of housing opportunities for low and moderate income households. A limited number of such units exists, and any reduction in the stock of such units would further reduce the number of rental units available. Conversion of such units into condominiums often results in displacement of low and moderate income households. It is the intention of this section to regulate such conversion and to mitigate displacement where conversion occurs. [Ord. 26-2006 §3, eff. 8-11-2006]
23.76.020 Application content.
No application for a condominium conversion shall be accepted for review or approved when the Citywide vacancy rate for multiple unit housing, as determined by the Director, is equal to or less than five (5%) percent averaged over the previous four (4) quarters prior to application submittal or when the current percentage of multifamily rental units (within complexes of three (3) or more units) is at or below ten (10%) percent of the total number of housing units within the City. This prerequisite is in addition to other restrictions in this division.
Recognizing that the conversion of existing structures which have been previously occupied and constructed as rental units presents unique problems to present tenants and future buyers, the application for a use permit for a condominium conversion project shall include the following information (see EGMC Chapter 23.14, General Application Processing Procedures):
A. The proposed organizational documents, including the covenants, conditions and restrictions to be recorded pursuant to Section 1350 et seq. of the Civil Code. The organizational documents shall provide for the following:
1. Transfer of title to each unit;
2. Assignment of parking for each owner;
3. The management of common areas within the project, and the complex generally;
4. The antidiscrimination provisions set forth in EGMC 23.76.100, Antidiscrimination;
5. Maintenance program and proposed budget.
B. A property report. A property report shall be prepared by the applicant and shall describe the condition and structural integrity of the buildings and estimate the remaining useful life of each of the following elements of each structure situated within the project proposed for conversion: roofs, foundations, exterior paint, insulation, paved surfaces, mechanical systems, electrical systems, plumbing systems, sewage systems, sprinkler systems for landscaping, utility delivery systems, central or community heating and air conditioning systems, fire protection systems including any automatic sprinkler systems, alarm systems, or standpipe systems, structural elements, and drainage systems.
The property report shall list each fixed appliance to be contained in each or any unit offered for sale and shall state whether the appliance is or will be new or used when the unit is first offered for sale. The report shall also state the terms and nature of the warranty offered by the applicant on each such appliance.
Each portion of the property report shall be prepared by an appropriately licensed engineer.
C. A structural pest control report.
D. A building history report identifying the date of construction of all elements of the project.
E. A report identifying all characteristics of the building not in compliance with this title or with applicable building or housing codes.
F. A rental history report detailing the size, in square footage, of the building or buildings and each unit; the current or last rental rate; the name and address of each present tenant; the monthly rental rate for the preceding four quarters for each unit; the average monthly vacancy over the preceding four quarters; the number of evictions over the preceding four quarters. In addition, evidence shall be submitted that tenants have been notified and have acknowledged the applicant’s intent to file a request for conversion for a period of at least 60 days prior to the initial filing of an application for a conversion use permit or tentative subdivision map.
Failure to provide any information required above shall be accompanied by an affidavit or declaration given under penalty of perjury, setting forth in detail all efforts undertaken to discover the information and all reasons why the information could not be obtained.
G. A detailed report describing the relocation and moving assistance information to be given to each tenant, and the steps the applicant will take to ensure the successful relocation of each tenant. The report should state in detail what assistance will be provided for special category tenants, including a discussion of long-term or life-term leases and provisions to allow such tenants to continue renting after conversion until comparable housing, as defined by subsection (D) of EGMC 23.76.050, Findings required for approval, is located and the move can be completed. (See EGMC 23.76.090, Relocation assistance.)
H. A survey of all the tenants in the conversion project indicating how long each tenant had been a resident of the project, how long each tenant had planned to live in the project, whether or not each tenant would be interested in purchasing a unit, to which community area would each tenant choose to relocate if the conversion took place and the tenant did not purchase a unit, and the number of tenants who do not oppose the idea of conversion. Before distributing the survey to the tenants, the Development Services Director, or his or her designee, shall review and approve it only to assure the elements required in this section are addressed.
To comply with this provision, the applicant shall provide a tenant rights handout and a survey (as described in the previous paragraph), in a form approved by the City, to each tenant with an envelope addressed to the City of Elk Grove Development Services Department with postage prepaid. The survey shall direct the tenant to return the completed survey in the envelope provided.
I. The Development Services Director or his or her designee may require additional information that may be necessary to conduct a proper evaluation and enter findings that comply with the said purposes and objectives set forth in the adopted City General Plan, or any specific plan or element thereof in effect at the time of such application. Comparable data as listed below shall include projects with three (3) or more units. Such information may include, but shall not be limited to:
1. A report comparing the units in the conversion project, as both rentals and ownership units, with housing available within the City;
2. A report on availability of comparable rental units at similar rental rates remaining within the City, including vacancy rate information;
3. A report outlining the available low and moderate income housing units (rental and sales housing) within the City;
4. A report showing what percentage of the City’s total available rental units are proposed to be converted, and the resulting change in ratio of rental units within the City. [Ord. 24-2015 §11 (Exh. I), eff. 2-12-2016; Ord. 26-2006 §3, eff. 8-11-2006]
23.76.030 Ownership association.
The developer shall submit to the Planning Commission a copy of the maintenance program and proposed budget by a homeowner’s association or other enforceable means to ensure maintenance of common areas, landscaping, private streets, parking areas, and recreational facilities. [Ord. 26-2006 §3, eff. 8-11-2006]
23.76.040 Building code requirements.
All converted units shall be retrofitted to the standards required of new residential condominiums as required by the Chief of the Building Inspections Division, including energy conservation. [Ord. 26-2006 §3, eff. 8-11-2006]
23.76.050 Building inspection.
After reviewing the property report required pursuant to EGMC 23.76.020, Application content, and after inspecting the structures within the project when deemed necessary, the Chief of the Building Inspections Division shall identify and make available to the Planning Commission and City Council all items evidenced by such reports or inspection to be in noncompliance with applicable building and housing codes or to be hazardous to the life, health or safety of any occupant of the units within the project or the general public. All such items shall be corrected to the satisfaction of the Chief of the Building Inspections Division. An appropriate fee to cover the cost of the Building Inspection Division’s review and inspection may be collected. [Ord. 26-2006 §3, eff. 8-11-2006]
23.76.060 Performance bond.
If the proposed project does not comply with the provisions relating to utilities, personal safety and building code compliance, or if the Chief of the Building Inspections Division identifies items to be corrected as provided in EGMC 23.76.050, Building inspection, any use permit issued pursuant to this chapter shall require the developer to furnish a performance bond or other means of security approved by the City Attorney in an amount to be determined by the Chief of Building Inspections to be the reasonable estimated cost to bring the project into compliance with said codes and to make all necessary repairs. The bond shall run in favor of individual purchasers and the association, and the bond shall provide for reasonable attorneys’ fees in the event of default by the principal. [Ord. 26-2006 §3, eff. 8-11-2006]
23.76.070 Consumer protection provisions.
In addition to the tenant protection provisions set out in the Subdivision Map Act, the applicant shall comply with the provisions in EGMC 23.76.090, Relocation assistance, through EGMC 23.76.120, Appliance warranties, as conditions of any use permit for a condominium conversion project approved pursuant to this chapter. [Ord. 26-2006 §3, eff. 8-11-2006]
23.76.080 Sales and lease termination.
The tenants of the project on the date of application shall be offered the first right of refusal to purchase units. The offer shall run for 90 days from the date of issuance of a subdivision public report by the State Department of Real Estate unless the tenant gives prior written notice of intention not to exercise the right. A tenant of any project proposed for conversion on the date of application for each conversion may terminate any lease after giving 30 days’ notice. The required relocation assistance shall be applicable to all units from the date of final approval of the use permit to the closing of escrow for the final unit in the project. [Ord. 26-2006 §3, eff. 8-11-2006]
23.76.090 Relocation assistance.
The applicant shall offer to each eligible tenant a plan for relocation to comparable housing, as approved by the City Council. The relocation assistance outlined below shall be paid to each eligible tenant who is forced to relocate between the date of approval of the conditional use permit by the City to the closing date of escrow for the final unit in the project. Violators will be cited by the Development Services Department for failure to comply with this requirement.
The relocation plan shall provide, at a minimum, for the following:
A. Assistance to each eligible tenant in locating comparable housing, including but not limited to providing availability reports and transportation, where necessary.
B. Payment of a relocation fee to each tenant who does not choose to stay. At a minimum, such payment shall be equal in amount to two months’ rent and the security deposit amount paid by the tenant for the existing apartment unit. A tenant is not entitled to a relocation fee pursuant to this subsection if the tenant has been evicted for just cause.
C. In the case of eligible tenants who are elderly, handicapped, low income, or single heads of households living with one or more minor children, the following additional provisions must be made:
1. Payment of the first month’s rent in the new complex; and refund of all key, utility, and pet deposits to which the tenant is entitled upon vacating the unit. Cleaning and security deposits, minus damages, shall be refunded to the tenant upon vacating the unit.
2. If the amount of deposits and other fees required upon moving into the new complex exceed the amounts refunded to the tenant, plus damages, the applicant shall pay the difference.
3. If amount of damage to any unit exceeds the deposit, the excess may be subtracted from the relocation assistance payment.
D. In the case of eligible special category tenants, the following additional provisions must be made:
1. Subsidy. Where the rent for the comparable unit is higher than the rent for the current unit, the applicant shall pay the difference for a period of one year from the date of relocation.
2. Evictions. Until each tenant is successfully relocated, the tenant shall not be unjustly evicted.
3. Life-Term and Long-Term Leases. The applicant shall offer eligible special category tenants leases for a term of:
a. Fifty-nine years when the tenant is elderly or handicapped and who also qualifies as low income. Such leases shall provide that annual rent increase shall not exceed the percent of change in HUD’s defined fair market rent.
b. Fifty-nine years when the tenant is elderly or handicapped with a moderate income or greater. Rents may be increased at the prevailing market rate.
c. An annually renewable lease for a term not to exceed five years for low income households when the appropriate authority finds that comparable units are not available for the relocation of low income persons (EGMC 23.76.150, Findings required for approval). Such agreements shall be certified for tenant eligibility each calendar year. Qualification for the Federal Section 8 program or its successor shall constitute certification.
E. The offer to each eligible tenant of a plan for relocation shall be free of any coercion, intimidation, inducement or promise not herein specified and shall not cause the tenant to vacate in advance of, or prior to, a timetable or schedule for relocation as approved in its application for approval of conversion.
F. To comply with the City’s affordable housing program, the applicant shall do one (1) of the following:
1. An affordable housing plan subjecting ten (10%) percent of the total units within the project to affordable purchase obligations, without City subsidy, as part of a conversion. The affordable units shall provide a minimum of four (4%) percent of the total units within the project affordable to very low income households, four (4%) percent affordable to low income households, and two (2%) percent affordable to moderate income households, unless an alternate affordability breakdown is approved by the Development Services Director; or
2. In lieu of fee payment into the affordable housing trust fund for each unit converted, an amount equal to that required by the current resolution. Fees shall be paid prior to recordation of the final map.
G. Parcels that have an existing affordable rent component shall only be converted if allowed by existing regulatory agreements and other controlling agreements. All of the affordable units shall be maintained as affordable units after the conversion. [Ord. 24-2015 §11 (Exh. I), eff. 2-12-2016; Ord. 26-2006 §3, eff. 8-11-2006]
23.76.100 Antidiscrimination.
The applicant or owner of any condominium unit within a project shall not discriminate in the sale, or in the terms and conditions of sale, of any dwelling unit against any person who is or was a lessee or tenant of any such dwelling unit because such person opposed, in any manner, the conversion of such building into a condominium. In a like manner, the applicant or owner shall not discriminate in the sale, or in the terms and conditions of sale of any dwelling unit against any person or household based upon age or household size, when household size does not exceed the Uniform Housing Code standard which states, “Every dwelling unit shall have at least one room which shall have not less than 150 square feet of floor area. Other habitable rooms, except kitchens, shall have an area of not less than 70 square feet. Where more than two persons occupy a room used for sleeping purposes, the required floor area shall be increased at the rate of 50 square feet for each occupant in excess of two (Section 503(b) of the Uniform Housing Code). This antidiscrimination section shall be included in the conditions, covenants, and restrictions for the project. [Ord. 26-2006 §3, eff. 8-11-2006]
23.76.110 Preconversion protection.
From the date of application for a permit to convert, or until relocation takes place or the application is denied or withdrawn, but in no event for more than two years, no tenant shall be unjustly evicted and no tenant’s rent shall be increased (A) more frequently than once every six months nor (B) in an amount greater than the annual increase in utility costs and insurance costs, plus increased operating costs not to exceed two percent per year. This limitation shall not apply if rent increases are expressly provided for in leases or contracts in existence prior to the filing date of the use permit. [Ord. 26-2006 §3, eff. 8-11-2006]
23.76.120 Appliance warranties.
The applicant shall provide free of charge to the first individual purchaser of each unit a one-year warranty on each fixed appliance contained in the unit, whether new or used. [Ord. 26-2006 §3, eff. 8-11-2006]
23.76.130 Development standards.
The following development standards (EGMC 23.76.140) shall apply to all applications for a use permit for condominium conversion and new construction. [Ord. 26-2006 §3, eff. 8-11-2006]
23.76.140 Utilities.
A. Gas. Each condominium unit shall have a separate gas service where gas is a necessary utility. If this provision places unreasonable economic burden on the applicant, the appropriate authority may approve an alternative.
B. Electricity. Each condominium unit shall have a separate electrical service, with separate meters and disconnects, and ground fault interrupters where ground fault interrupters are required by present building codes.
C. Telephone Company Access. The telephone company serving the location under conversion shall have the right to construct and maintain (place, operate, inspect, repair, replace and remove) communications facilities as it may from time to time require (including access) in or upon any portion of the common area, including the interior and exterior of the buildings as necessary to maintain communication service within the project. This provision may not be amended or terminated without the consent of the serving telephone company. [Ord. 26-2006 §3, eff. 8-11-2006]
23.76.150 Findings required for approval.
The Commission shall not approve a use permit unless it finds:
A. That the proposed conversion is consistent with the General Plan and applicable community and specific plans in effect at the time of the use permit application, especially with the objectives, policies, and programs of the housing element of the General Plan designed to provide affordable housing to all economic segments of the population.
B. That the average rental vacancy rate in multiple-family units of similar size in the City affected by the proposed conversion during the four quarters preceding the filing of the application is greater than five percent or that the current percentage of multifamily units (within complexes of three or more units) is above 10 percent of the total number of housing units within the City.
C. In evaluating the average rental vacancy rate in the City and in the building proposed for conversion, the Commission shall consider the rental history of the building, including the number of evictions and increases in rent over the preceding four quarters. In addition, the following sources of vacancy rates statistics may be used: (1) Department of Finance (State of California), (2) Postal Service, and (3) HUD vacancy rates. Notwithstanding any other provision of this chapter, the Commission may deny a use permit if it finds that vacancies in the building have been created by unjust evictions and unreasonable rent increases in order to qualify a project for conversion under this subsection.
D. That the applicant unconditionally offered to each eligible tenant an adequate plan for relocation to comparable housing. In determining whether the housing to which the applicant proposes relocation is “comparable” the Commission must find that the housing is decent, safe, and sanitary, and in compliance with all local and State housing codes; and, that the housing is open to all persons regardless of race, creed, national origin, ancestry, religion, marital status, or gender. In addition, the Commission shall consider the following factors in determining whether the relocation housing is comparable:
1. Whether the housing is provided with facilities equivalent to that provided by the landlord in the dwelling unit in which the tenant then resides in regard to each of the following:
a. Apartment size including number of rooms;
b. Rent range;
c. Major kitchen and bathroom facilities;
d. Special facilities for the handicapped, infirm or senior citizens; and
e. Willingness to accept families with children;
2. Whether the housing is located in an area not less desirable than the area in which the tenant then resides in regard to:
a. Accessibility to the tenant’s place of employment;
b. Accessibility to community and commercial facilities;
c. Accessibility to schools; and
d. Accessibility to public transportation.
A unit is not comparable if it is located in a building for which a notice of intent to convert has been given, except where the rental units of the building will not be offered for sale as condominium units within two years.
E. That every other requirement that is either imposed by this code or which results from the authority this confers upon the Director has been satisfied. [Ord. 26-2006 §3, eff. 8-11-2006]
23.76.160 Lapse of use permit.
A. Except as provided for in EGMC 23.20.020, Revocation, a conditional use permit for condo conversion shall be valid for three years from the date of issuance. Since the regulations related to condominium conversions are unique in that (1) measures come into place with the filing of the application for the use permit; (2) in terms of the financial obligations related to eligible tenants; and (3) rental limitations, the following provision shall apply to use permits for condominium conversions:
A use permit shall be deemed in effect if, within three years from the date of approval, one of the following occurs:
1. A final subdivision map is recorded for all or a portion of the property involved in the use permit; or
2. Pursuant to the approved relocation assistance plan, written evidence has been filed with the Planning Division that more than 10 percent of eligible tenants have been relocated. [Ord. 26-2006 §3, eff. 8-11-2006]
23.76.170 Right to terminate conversion.
Within three (3) years of the approval of a use permit for a condominium conversion or pursuant to EGMC Section 23.76.160, Lapse of use permit, after the use permit is in effect, the applicant may elect not to pursue the completion of all or part of the approved conversion. Upon the acceptance of a notice of termination by the approving authority, along with evidence that all remaining eligible tenants have been notified in writing, the conditional use permit shall be deemed lapsed and void. Acceptance of the notice of termination shall be an administrative authority of the Development Services Director. Such acceptance shall be by a written notice of acceptance which may be withheld to such time as the Director is assured that any required tenant obligations incurred during the preconversion process have been satisfied. [Ord. 24-2015 §11 (Exh. I), eff. 2-12-2016; Ord. 26-2006 §3, eff. 8-11-2006]