HomeMy WebLinkAboutA001 - Council Action Form dated September 26, 2017 ITEM # 24
DATE: 09-26-17
COUNCIL ACTION FORM
SUBJECT: TEMPORARY MORATORIUM ON ISSUANCE
OF NEW RENTAL LETTERS OF COMPLIANCE
BACKGROUND:
For several decades the City of Ames has limited the number of unrelated people who
can share a rental unit as a means of controlling over occupancy of rental units and the
problems that come from such over occupancy.
Earlier this year, the Iowa Legislature passed a new state law, HF 134, which prohibits
municipalities, after January 1, 2018, from adopting or enforcing any regulation or
restriction related to occupancy of residential rental property that is based upon the
existence of familial or nonfamilial relationship between the occupants of such rental
properties. As the result of this action, the Ames City Council is in the process of
reviewing ways to address issues related to rental properties and over occupancy, given
the new restriction on the City established by state law.
At the September 12, 2017 Ames City Council meeting, the Council heard from citizens
about problems caused by over occupancy and an increasing number of rental
properties in some neighborhoods. Citizens from certain neighborhoods spoke about
the ever-increasing number of single-family homes being converted to rental properties,
and the resulting changed nature of their neighborhoods.
After reviewing numerous alternatives for addressing over occupancy, the Council
decided to pursue several courses of action. One course of action was that the Council
directed staff to draft an ordinance placing a temporary moratorium on the issuance of
new Letters of Compliance for single-family and two-family residences. A Letter of
Compliance is the necessary permit issued by the City for property owners to lawfully
rent or lease a property. Letters of Compliance are established in Section 13.300 of the
Ames Municipal Code and are often informally referred to as "rental occupancy
permits." This moratorium would stop, on a temporary basis, property owners from
converting single and two-family homes into rental properties, while the Council
addresses broader issues.
The City Attorney's office, with assistance from the Inspection Division and the
Department of Planning and Housing, drafted an ordinance to establish the moratorium.
Although a Council resolution could be used to establish a moratorium in some
situations, it is necessary in the current situation to establish the moratorium by
ordinance, since a resolution cannot trump an existing ordinance.
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Subsection (1) of the ordinance states the purpose of the ordinance.
Subsection (2) creates a moratorium on the issuance of new Letters of Compliance
during the moratorium period.
Subsection (3) addresses issues that staff believes may arise during the moratorium
period. Staff felt the need to have the ordinance state clearly, so that there are no
misunderstandings or misinterpretations, that renewals of Letters of Compliance
are allowed during the moratorium, and that property owners who sell their
property to another person during the moratorium may transfer the Letter of
Compliance to the new owner.
Subsection (4) is designed to address issues that staff considered during the drafting of
the ordinance. There are two situations the Council may wish to consider: How does
the Council wish to address: 1) property owners who have already completed and filed
a rental registration application (which is the application to receive a Letter of
Compliance), and 2) potential property owners who have started the process by filing a
pre-sale inspection form (this is the process where the potential buyer of property starts
the process to make certain the property can be turned into a rental property. These
applicants are not yet owners of the property at issue).
Under the language in subsection (4) as drafted, a Letter of Compliance still could be
issued during the moratorium period in situations where an applicant has already begun
the registration process to receive a Letter of Compliance. This sentence states that
property owners who have filed a rental registration application or a pre-sale inspection
form prior to the effective date of the moratorium could still potentially receive a Letter of
Compliance.
The City Attorney's office believes there might be potential liability from a due
process standpoint for property owners who have actually filed a rental
registration application, and recommends that the Council allow the application
process to proceed and potentially a Letter of Compliance to be issued during the
moratorium period for those in this situation.
The Council directive was for a six-month moratorium. For clarity, staff felt it was best
to set a specific date for the moratorium to expire, rather than having it expire six
months from the date it becomes effective, as it is not easy for a member of the public
to determine when an ordinance became effective. Staff chose March 31, 2018, which
is approximately six months from now.
An ordinance requires three readings. If the Council determines the need for a
moratorium is urgent, the Council can vote to suspend the rules and proceed with
the second and third readings.
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ALTERNATIVES:
1. Council may approve the ordinance establishing a temporary moratorium on
issuance of new rental Letters of Compliance, but allowing Letters of Compliance
to be issued during the moratorium for those who had begun the process of
obtaining a Letter of Compliance either by filing a rental registration application or a
pre-sale inspection form.
2. Council may approve the ordinance establishing a temporary moratorium on
issuance of new rental Letters of Compliance, but amend the ordinance by deleting
the words "or a pre-sale inspection form" from subsection (4).
This alternative would allow for new Letters of Compliance to be issued during the
moratorium only for those who have filed a rental registration application before the
effective date of the ordinance. This approach would require a motion to be
approved deleting the words "or a pre-sale inspection form" form subsection (4)
before the vote on the ordinance.
3. Council may approve the ordinance establishing a temporary moratorium on
issuance of new rental Letters of Compliance, but amend the ordinance by deleting
the subsection (4).
This alternative would mean that no new Letters of Compliance would be issued
during the moratorium, even for those who have begun the process in any way
prior to the effective date of the ordinance.
4. Council may not approve the proposed ordinance.
MANAGER'S RECOMMENDED ACTION:
The City Council directed the City Attorney to draft this ordinance creating a moratorium
in order to temporarily address the increasing number of homes being converted to
rental properties and resultant problems in neighborhoods, while the Council considers
other methods of addressing these issues. Because of potential due process
concerns raised by the City Attorney about including in the moratorium property
owners who have already filed a rental registration application, it is the
recommendation of the City Manager that the City Council approve Alternative #2
as highlighted above.
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