Article 24.5 — Residential Condominium Conversions

The conversion of residential structures from one ownership to condominiums or any other form of multiple ownership interests creates special community problems, both social and economic. Given the relative lack of rental construction, conversions may significantly affect the balance between rental and ownership housing within the City and thereby reduce the variety of individual choices of tenure, type, price, and location of housing; increase overall rents; decrease the supply of rental housing for all income groups; displace individuals and families; and disregard the needs of the prevailing consumer market. The purpose of this article is to provide guidelines to evaluate those problems, the impact any conversion application may have on the community, and to establish requirements which shall be included in any conversion approval. The provisions of this article shall apply to any conversion of a residential structure from one individual ownership to any form of multiple ownership, including, but not limited to, condominiums, stock cooperatives, and community housing projects.

(§ I, Ord. 344-C.S., eff. August 25, 1982)

This article is enacted for the following reasons:

(a)

To establish procedures and standards for the conversion of existing multiple-family rental housing to con- dominiums;

(b)

To reduce the impact of such conversions on tenants who may be required to relocate due to the conversion of apartments to condominiums by providing for procedures for notification and adequate time and assistance for relocation to comparable rental housing and rates;

(c)

To assure that purchasers of converted housing have been properly informed as to the physical condition of the structure which is offered for purchase;

(d)

To ensure that converted housing achieves a high standard of appearance, quality, and safety and is consistent with the goals of the City;

(e)

To ensure that the project sponsor provides for improvements or rehabilitation to result in a project which provides housing which is in good condition and without hidden needs for maintenance and repair;

(f)

To provide a desirable balance of rental and ownership housing and a variety of individual choice of tenure, type, price, and location housing;

(g)

To provide the opportunity for low and moderate income persons to participate in the ownership process, as well as to maintain a supply of rental housing for low and moderate income persons; and

(h)

To assure that adequate rental housing is available in the community.

(§ I, Ord. 344-C.S., eff. August 25, 1982, as amended by § I, Ord. 411-C.S., eff. July 25, 1984)

The following procedures and regulations shall apply to condominium conversion applications:

(a)

Use permits: Tentative maps. Condominium conversions may be permitted in any residential district subject to obtaining a use permit as set forth in Article 33 of this chapter and subject to the approval of a tentative map.

Applicants may submit applications for condominium conversions of residential structures to condominiums twice a year, due at the close of business on the last Friday of May and the last Friday of November. Such applications shall contain all the information required for a tentative map and use permit application pursuant to this Code.

(b)

Acceptance. The Planning Administrator shall accept applications for condominium conversions if any one of the following factors exists:

(1)

Conversions may be approved when the vacancy rate of multiple-family developments of three (3) or more rental units within the City, as determined by the Director of Community Development and Services, is equal to or more than five (5%) percent, unless the conversion will result in a decrease of the vacancy rate to less than five (5%) percent.

The vacancy rate of multiple-family rental units shall be calculated on the basis of two (2) consecutive surveys taken during the months of April and October.

Data for determining the City's annual multiple-family rate shall be compiled from a variety of sources, including, but not limited to, United States Postal Service surveys, idle utility meter reports, reports from financial institutions and real estate organizations, and United States Census Bureau data; or

(2)

Tenants lawfully in possession of seventy-five (75%) percent of the units indicate their desire to convert such units (one vote per unit) to condominium ownership in writing to the City. Tenants shall be provided with information on all estimated costs, including, but not limited to, the unit cost, down payment requirements, financing, estimated property management costs, and homeowner association fees. Specific estimates of such costs shall be acknowledged in writing by the City. If the conversion is approved, the developer shall provide information to the City on the number of tenants who actually purchased. If at any time during the conversion approval process a sufficient number of tenants decide not to purchase, or if misrepresentation is discovered, the Commission would have sufficient grounds for denial; or

(3)

The applicant agrees to sell or rent at affordable prices forty (40%) percent of the units to low and moderate income households, with a minimum of twenty (20%) percent of the units affordable to low income households. If the units are to be made available for purchase, the sales price of such units shall not exceed two and five-tenths (2.5) times the annual median income for low or moderate income households as defined by United States Department of Housing and Urban Development guidelines. Resale controls shall be included as a deed restriction as specified by the Commission. If the units are to be for rental, they shall either be included in the County administrated Section 8 Program, or the maximum rent allowed shall keep the units within the low or moderate income housing stock.

(c)

Ranking of applications.

(1)

Applications pursuant to subsection (1) of subsection (b) of this section (vacancy rate) shall be ranked by the Planning Administrator based upon the following criteria:

(i)

The extent to which the proposed conversion will provide housing opportunities for persons of all income levels in the community;

(ii)

The extent to which the proposed conversion's deleterious effect on occupying tenants will be mitigated by relocation assistance and other assistance provisions by the applicant; and

(iii)

The extent to which the project is suitable for conversion on the basis of its physical condition and other amenities.

The Commission shall consider the highest ranking acceptable applications, the total units not to exceed the maximum number of units permitted to be converted based on the vacancy rate, or the rental percentage. Upon a written request, the applicant shall receive from the City a written explanation of the rank given to the conversion application.

(2)

All applications which meet the criteria described in subsection (2) of subsection (b) of this section (tenant approval) and subsection (3) of subsection (b) of this section (affordable housing) shall be considered by the Commission regardless of vacancy or rental percentage limitations. If approved, and after conversion, the loss of rental units shall be included in the vacancy and rental calculations.

(§ I, Ord. 344-C.S., eff. August 25, 1982, as amended by § II, Ord. 411-C.S., eff. July 25, 1984)

The project as a whole should be in good repair on the interior and the exterior when offered for sale. As part of the material necessary for such determination and to aid the review of the proposal, the reports and/or information required by this section shall be submitted to the Commission for review and approval. The cost of all reports shall be paid by the applicant, and the persons preparing the reports shall be approved by the City. The reports shall include information on what improvements, if any, shall be accomplished by the developer and at what point in the conversion proceedings such improvements shall be completed. All improvements cited in the reports, whether required or voluntary, shall be considered conditions of approval.

The applicant shall be responsible for the remedy of physical conditions within individual units or common areas noted by a prospective purchaser and/or tenant which have been missed by inspections or which occur subsequent to the inspections but prior to the close of escrow. In case of disagreement between the applicant and the prospective purchaser as to the actual condition, remedy, or cause of deterioration, the burden of proof shall be that of the applicant.

(a)

Physical elements reports. A report on the physical elements of all structures and facilities shall be submitted.

(1)

A report by a licensed structural or civil engineer detailing structural condition of all elements of the property, including, but not limited to, foundations, electricity, plumbing, utilities, walls, ceilings, windows, frames, recreational facilities, sound transmission of each building, mechanical equipment, and parking facilities. Such report shall also describe the condition of refuse disposal facilities; swimming pools, saunas, and fountains; stone and brickwork; fireplaces; and exterior lighting. The report shall also describe the condition of all structures and facilities with respect to the extent of deferred maintenance, if any. Drainage facilities on the site and their adequacy shall be described. Such report or supplement thereto shall describe the present condition and useful life of all elements as deemed pertinent;

(2)

A report by a licensed appliance repair contractor detailing the following information which shall be submitted as part of the physical elements report: regarding each such element, the report shall state to the best knowledge or estimate of the applicant when such element was built or installed; the condition of each element; when such element was replaced; the approximate date upon which such element will require replacement; the cost of replacing such element; and any variation of the physical condition of such element from the current zoning, building, housing, mechanical, and fire Codes in effect on the date of the use permit application. The report shall identify any defective or unsafe elements and set forth the proposed corrective measures to be employed;

(3)

A report by a licensed structural termite and pest control specialist certifying whether or not all attached or detached structures are free of infestation and structural damage caused by pests and dry rot. The report shall describe what procedures would be necessary to eliminate infestation or damage, if present. Such report shall be updated within six (6) months after the close of escrow, and any infestation shall be remedied prior to sale;

(4)

Existing soils reports shall be submitted for review with a statement regarding any known evidence of soils problems relating to the structures. As required by the Community Development and Services Director, a new or revised report shall be prepared by a licensed soils engineer on soil or geological conditions on-site or off-site which could adversely affect the project site or structures;

(5)

A report by a licensed painting contractor verifying the condition of the painting throughout the project, including building interior and exterior surfaces and an estimate of the remaining physical life of the paint. A statement that new paint will be applied on all building interior and exterior surfaces may take the place of such report. Such statement shall include the brand name of the paint and the exterior colors to be used;

(6)

A report by a licensed roofing contractor verifying the condition of the roofs of all structures and an estimate of the remaining physical life of the roofs. A statement that new roof material will be applied may

take the place of such report. Such statement shall include the type, grade, and color of the proposed roofing material;

(7)

A declaration of the covenants, conditions, and restrictions and rules and regulations which would be applied on behalf of any and all owners of condominium units within the project. The declaration shall include, but not be limited to, the conveyance of units; the assignment of parking and storage areas; and an agreement for common area maintenance, together with an estimate of any initial assessment fees anticipated for such maintenance and an indication of appropriate responsibilities for the maintenance of all utility lines and services for each unit. Such documents shall be approved by the City Attorney and recorded in the office of the County Recorder;

(8)

Specific information concerning the demographic and financial characteristics of the project, including, but not limited to, the following:

(i)

The square footage and number of rooms in each unit;

(ii)

The rental rate history for each type of unit for the previous three (3) years;

(iii)

The monthly vacancy rate for each month during the preceding two (2) years;

(iv)

A complete list of the number of tenants and tenant households in the project, including the following information:

(aa)

Households with persons sixty-two (62) years of age and older;

(ab)

The family size of households, including a breakdown of households with children under five (5) years of age and between five (5) and eighteen (18) years of age;

(ac)

Households with handicapped persons;

(ad)

The length of residence;

(ae)

The age of tenants; and

(af)

The designation of low-income and moderate-income households and whether receiving Federal or State rent subsidies.

When the subdivider can demonstrate that demographic information is not available, this requirement may be modified by the Commission;

(v)

The proposed price range of the units;

(vi)

The proposed homeowners' association fees; and (vii) A statement of intent as to the types of financing programs to be made available, including any incentive programs for existing residents;

(9)

Signed copies from each tenant of the notice of intent to convert, as specified in this article. The subdivider shall submit evidence that a certified letter of notification was sent to each tenant for whom a signed copy of such notice is not submitted; and

(10)

Any other information which, in the opinion of the Planning Department, will assist in determining whether the proposed project will be consistent with the purposes of this article.

(b)

Acceptance of reports. The final form of the physical elements report and other documents shall be approved by the Commission. The reports in their acceptable form shall remain on file with the Planning Department for review by any interested person.

(c)

Copies to purchasers. Prior to any purchaser executing any purchase agreement or other contract to purchase a unit in the project, the subdivider shall provide each purchaser with a copy of all reports in their final form as accepted by the Commission, except that the demographic information and copies of the notice to each tenant concerning conversion do not need to be distributed. The developer shall give the purchaser sufficient time to review such reports. Copies of the reports shall be made available at all times at the sales office and shall be posted at various locations, as approved by the City.

(§ I, Ord. 344-C.S., eff. August 25, 1982, as amended by § III, Ord. 411-C.S., eff. July 25, 1984)

(a)

Compliance with zoning, building, housing, mechanical, and fire Codes. All units, as well as the common ownership facilities, shall be brought into compliance with all applicable State and local zoning, building, housing, mechanical, and fire Codes adopted for use by the City at the time the conversion project was constructed, and, where feasible, the conversion project shall be upgraded to conform with current Codes.

(b)

Parking requirements. Regulations governing parking requirements shall reflect the current City parking standards for apartments.

(c)

Sound transmission characteristics and energy conservation. Condominiums present a unique problem in relation to sound transmission. The following methods shall be utilized to regulate noise transmission:

(1)

Shock mounting of mechanical equipment. All permanent mechanical equipment, such as motors, compressors, pumps, and compactors, which is determined by the Building Official to be a source of structural vibration or structure-borne noise, shall be shock mounted in inertia blocks or bases and/or vibration isolators in a manner approved by the Building Official.

(2)

Noise mitigation and energy conservation. Energy conservation insulation shall be installed in all heated or cooled buildings, including common ownership structures used for assembly purposes, in accordance with Title 24 of the California Administrative Code as amended and in effect on the date building permits are issued for condominium conversion rework.

Exception No. 1. Common walls between dwelling units to be constructed of a two (2″) inch by four (4″) inch wall insulated with not less than R-11 rated insulation, or an equivalent form of noise attenuation control acceptable to the Commission.

Exception No. 2. Common floor ceilings between dwelling units and between dwellings and garages shall be insulated with not less than R-19 rated insulation.

(d)

Fire protection.

(1)

Smoke detectors. Every dwelling unit shall be provided with a smoke detector. Installations shall comply with National Fire Protection Association Pamphlet No. 74. The detector shall be approved by the State Fire Marshal. AC primary power source shall be utilized. The detector shall be mounted on the ceiling at a point centrally located in the corridor or area giving access to rooms used for sleeping purposes. Where sleeping

rooms are on an upper level, the detector shall be placed at the center of the ceiling directly above the stairway.

(2)

Sprinkler systems. A sprinkler system, fire alarm, and other fire protection devices shall be installed as required by the Uniform Fire Code adopted for use by the City at the time of the conversion application.

(e)

Utilities: Location and metering.

(1)

Location. Each dwelling unit shall be served by gas and electric services completely within the lot lines or ownership space of each separate unit. No common gas or electrical connection or service shall be allowed. Easements for gas and electric lines shall be provided in the common ownership area where later service connections shall take place.

(2)

Undergrounding. All new utilities, both on-site and off-site, across property frontage shall be underground.

(3)

Metering. Each dwelling unit shall be separately metered for gas and electricity. Individual panelboards for electrical current shall be provided for each unit. A plan for the equitable sharing of communal water metering and other shared utilities shall be included in the covenants, conditions, and restrictions.

(4)

Modifications. In cases where the subdivider can demonstrate that the standards set forth in this subsection cannot reasonably be met, they may be modified by the Commission.

(f)

Laundry facilities. A laundry area shall be provided on each unit, or, if common laundry areas are provided, such facilities shall consist of not less than one automatic washer and dryer for each five (5) units or fraction thereof.

(g)

Condition of equipment and appliances. The de-veloper shall provide a minimum of a one-year warranty to the buyer of each unit at the close of escrow on any dishwasher, garbage disposal, stove, range or oven, refrigerator, trash compactor, hot water tank, air-conditioning unit, or heating system which is provided. At such time as the homeowners' association takes over the management of the development, the developer shall provide a one-year warranty to the association that any pool and pool equipment (filter, pumps, and chlorinator) and any appliance and mechanical equipment to be owned in common by the association is in operable working condition. The plumbing and electrical systems in both the dwellings and the common ownership areas shall also be covered by a one-year warranty for proper and safe operation and installation

in a safe and workmanlike manner. Such warranty shall be offered by an independent Homeowner's Warranty Service licensed by the Insurance Commission of the State for such purpose, except that new appliances may be covered by the manufacturer's warranty. The developer shall provide options to prospective buyers for new appliances and equipment or, alternatively, acceptance of existing appliances with the warranty described in this subsection.

(h)

Refurbishing and restoration. All main buildings, structures, fences, patio enclosures, carports, accessory buildings, sidewalks, driveways, landscaped areas, and additional elements as required by the Commission shall be refurbished and restored as necessary to achieve a high standard of appearance, quality, and safety.

(i)

Contingency fees. The intent of the City in requiring the creation of a contingency or reserve fund for condominium conversions is to provide a surety for unexpected or emergency repairs to common areas in the interest of the economic, aesthetic, and environmental maintenance of the community as well as to protect the general welfare, public health, and safety of the community. Upon the close of escrow for each unit, the subdivider shall convey to the homeowners' association's contingency fund a minimum fee of Two Hundred and no/100ths ($200.00) Dollars per dwelling unit. When forty-nine (49%) percent or more of the total units in the project have been sold, the subdivider, within thirty (30) days, shall convey such fee for each of the unsold units. The amount of the contingency fee, if conditions warrant, may be increased above Two Hundred and no/100ths ($200.00) Dollars by the Commission. Such fund shall be used solely and exclusively as a contingency fund for emergencies which may arise relating to open space areas, exterior portions of dwelling units, and such other restoration or repairs as may be assumed by the home-owners' association.

(§ I, Ord. 344-C.S., eff. August 25, 1982, as amended by § IV, Ord. 411-C.S., eff. July 25, 1984)

Applications for condominium conversions shall include the following procedures as they relate to tenant notification:

(a)

Notices of intent. A notice of intent to convert shall be delivered to each tenant. Evidence of the receipt of such notice shall be submitted with the application for conversion. The form of the notice shall be as approved by the Planning Department and shall contain not less than the following:

(1)

The name and address of the current owner;

(2)

The name and address of the proposed subdivider;

(3)

The approximate date on which the application and tentative map are proposed to be filed;

(4)

The approximate date on which the final map or parcel map is to be filed;

(5)

The approximate date on which the unit is to be vacated by non-purchasing tenants;

(6)

The tenant's right to purchase;

(7)

The tenant's right of notification to vacate;

(8)

The tenant's right of termination of the lease;

(9)

A statement of no rent increase;

(10)

Provisions for special cases;

(11)

The provision of moving expenses and the tenant's right to claim any penalty imposed if timely payment is not made;

(12)

The anticipated price range of the units;

(13)

The proposed homeowners' association fees;

(14)

A statement of the types of financing programs to be made available, including any incentive programs for existing residents; and

(15)

A copy of the City conversion regulations shall be attached to the notice of intent.

(b)

Notification to tenants.

(1)

Mailing. Two (2) separate stamped, pre-addressed envelopes for each resident of each unit shall be furnished to the City by the developer at the time the developer submits an application for a use permit. The City shall use one envelope to notify the residents by mailing a copy of the Commission public hearing notice to tenants not less than ten (10) days prior to the proposed meeting date on the use permit. The second envelope shall be used to notify the residents of the results of the public hearing by mailing notification of the decision of the Commission not more than seven (7) days following the Commission action. Failure of the City to mail such notice shall not invalidate any proceeding or action taken by the City in considering a conversion. The list of names and addresses of the residents of each unit in the conversion project shall be current as of the day of submittal and shall be certified as such by the developer.

(2)

Notices to new tenants. After the submittal of the application, any prospective tenants shall be notified in writing of the intent to convert prior to leasing or renting any unit.

(3)

Posting notices. The notice of intent shall be posted on site in at least one location readily visible to tenants.

(c)

Tenants' discounts. Any present tenant of any unit at the time of an application for conversion shall be given a nontransferable right of first refusal to purchase the unit occupied at a discount of the price offered to the general public. The amount of the discount shall be based on the longevity of each tenant and shall be ratified by the applicant and a majority of tenants residing in the project at the time of conversion.

(d)

Vacation of units. Each non-purchasing tenant, not in default under the obligations of the rental agreement or lease under which the subject unit is occupied, shall have not less than 120 days after the date of the tentative map approval by the City or until the expiration of the tenant's lease to find substitute housing and to relocate. Tenants shall be permitted to terminate leases or tenancy with one month's notice at any time after a conversion application.

(e)

No increase in rent. A tenant's rent shall not be increased within two (2) months prior to a project application, nor shall the rent be increased for two (2) years from the time of the filing of the project application or until relocation takes place. At the end of the two (2) year period any increase in rent shall be approved by the Commission. When reviewing applications for rent increases, the Commission shall

consider the residential rent component of the Bay Area Cost of Living Index of the United States Department of Labor; the condition of the unit; and prevailing rents for similar units.

(f)

Special cases.

(1)

All non-purchasing tenants sixty-two (62) years of age or older and all non-purchasing medically proven permanently disabled tenants shall receive a lifetime lease. Rents for such tenants shall not be increased for two (2) years after the filing of the project application. At the end of the two (2) year period, any increase in rent shall be approved by the Commission. When reviewing applications for rent increases, the Commission shall consider the residential rent component of the Bay Area Cost of Living Index of the United States Department of Labor; the condition of the unit; and prevailing rents for similar units.

(2)

The following non-purchasing tenants shall receive a minimum of twelve (12) months' relocation time, measured from the tentative map approval, to find replacement housing:

(i)

Tenants with low or moderate incomes; and

(ii)

Tenants with minor children in school.

(g)

Moving expenses. The subdivider shall provide moving expenses of three (3) times the monthly rent to any tenant, in compliance with all the terms of the subject lease and/or financing, who relocates from the building to be converted after City approval of a use permit authorizing conversion of the units. When the tenant has given notice of his intent to move prior to City approval of a use permit, eligibility to receive moving expenses shall be forfeited.

(h)

Relocation assistance. Relocation assistance shall be provided to non-purchasing tenants for a minimum period of four (4) months following the tentative map approval. Information on available rental units in the same general area with costs comparable to the pre-converted apartments shall be provided regularly and updated. Copies of the list shall be posted on-site, dated, and provided to the Planning Department.

(i)

Discrimination. No discrimination in the sale of any unit shall be based on age, and a statement to this effect shall be included in the covenants, conditions, and restrictions. Projects created exclusively for the purpose of providing senior citizen housing shall be exempted from this requirement.

(j)

Certificates of occupancy. A certificate of occupancy shall be approved by the Planning Administrator and issued by the Building Official prior to the occupancy of units after sales.

(k)

Effect of proposed conversions on the City's low-income and moderate-income housing supply. In reviewing requests for the conversion of existing apartments to condominiums, the Commission shall consider the following:

(1)

Whether or not the amount and impact of the displacement of tenants, if the conversion is approved, would be detrimental to the health, safety, or general welfare of the community;

(2)

The role the apartment structure plays in the existing housing rental market. Particular emphasis will be placed on the evaluation of rental structures to determine if the existing apartment complex is serving low- income and moderate-income households. Standard definitions of low-income and moderate-income and low-income and moderate-income rents used by the Federal and State governments shall be used in the evaluation;

(3)

The need and demand for lower-cost home ownership opportunities which are increased by the conversion of apartments to condominiums; and

(4)

If the Commission determines that vacancies in the project have been increased for the purpose of preparing the project for conversion, the application may be disapproved. In the evaluation of the current vacancy level under this subsection, the increase in rental rates for each unit over the preceding three (3) years and the average monthly vacancy rate for the project over the preceding two (2) years shall be considered.

(1)

Findings. The Commission shall not approve an application for a condominium conversion unless the Commission finds that:

(1)

All the provisions of this article are met;

(2)

The proposed conversion is consistent with the General Plan and the adopted Housing Element;

(3)

The proposed conversion will conform to the provisions of this Code in effect at the time of the project approval, except as otherwise provided in this section;

(4)

The overall design and physical condition of the condominium conversion achieves a high standard of appearance, quality, and safety;

(5)

The proposed conversion will not displace a significant percentage of low-income or moderate-income, permanently or totally disabled, or senior citizen tenants and delete a significant number of low-income and moderate-income rental units from the City's housing stock at the time when no equivalent housing is readily available in the Pacifica area;

(6)

The application process has conformed to all the requirements of the Map Act of the State; and

(7)

The dwelling units to be converted have been constructed and used as rental units for at least three (3) years prior to the application for conversion.

(§ I, Ord. 344-C.S., eff. August 25, 1982)