The City Council has directed staff to draft an emergency ordinance which would establish a temporary moratorium on development in the City=s multi-family residential districts so that the status quo may be maintained while the City promptly evaluates its options for preserving the City=s character, diversity, and quality of life in this time of radical change. The proposed ordinance responds to that direction. See Ex. A. The proposed emergency ordinance would place a temporary moratorium on the acceptance of applications for permits to build condominiums and apartments in the City=s multi-family districts subject to limited exceptions. Staff recommends that the Council adopt the proposed emergency ordinance.

In the last six months, City residents have appeared before the City Council on several occasions to express concerns about the City=s future. They expressed the fear that rampant change is threatening the character and diversity of the City and that, unless such change is recognized and managed, it will imperil the City=s welfare and quality of life. The residents noted and explained a number of specific issues which contributed to their overall concerns. One major issue is the loss of affordable housing units and an attendant loss of economic and social diversity. Another major issue is the loss of older structures which have been a hallmark of the City=s aesthetic make up for decades. In particular, speakers expressed their fear that apartments built in a style that promotes human interaction are being replaced with monolithic structures. The loss of courtyard style apartments was a specific concern.

In response to the Council=s direction, staff has assessed the changes occurring in the multi-family neighborhoods. Staff=s analysis substantiates residents= complaints.

There has been a drastic decline in the number of affordable housing units within the City. Statistical information compiled by Rent Control staff shows that between January 1 and March 31, 1999, nine hundred and fifteen (915) vacancy registrations have been processed by the Rent Control Board. See Ex. B. These registration forms set forth the new rent levels for units decontrolled by the Costa-Hawkins Rental Housing Act of 1995 (ACosta-Hawkins@). The vacancy rent increases have resulted in the loss of 582 units affordable to low income households. It is projected that as a result of Costa-Hawkins, the City could lose 10% of its affordable housing stock this year alone. This loss of affordable units will inevitably impact the economic and social diversity which have long been valued as defining characteristics of this City. It may also impact the City=s ability to meet state guidelines for the provision of affordable housing.

Staff=s review also substantiates residents= complaints about construction in the multi-family districts. Over the last five years there has been a significant increase in multi-unit construction. For instance between 1996 and 1997, the number of multi-family units approved for construction almost tripled. This year=s figure will be substantially higher than last years. See Ex. C. In summary, there has been a significant increase in the amount of construction occurring in the multi-family neighborhoods. Moreover, the vast majority of new, privately built units are for upper income individuals. See Ex. D. Only a very small number of newly constructed units are affordable to those individuals or families with very low or low incomes.

The City anticipated that Costa Hawkins would bring change. That was one of the reasons that the City amended its Housing Element last year. However, the full impacts of the change could not be predicted with certainty. Nor could the options that would be available for managing this change to ensure the City=s long-term welfare. In January of this year, after the Housing Element was revised, the state gave cities a new option for meeting affordable housing requirements. Under that option, cities can Acount@ rehabilitated units toward their fair share requirements under certain conditions. However, the new law which permits counting rehabilitated units is very complicated. For this reason, and others, it is difficult to tell whether this new opportunity will serve the City well. Nevertheless, this option should be assessed because it may afford the City a new possibility for satisfying its affordable housing needs in a manner most consistent with its strong commitment to neighborhood preservation.

A temporary moratorium would allow time to assess this option and others for meeting the City=s need to preserve its character, diversity, and quality of life while continuing to provide adequate affordable housing. The attached emergency ordinance would impose a temporary moratorium on applications for permits to build condominiums and apartments in the multi-family districts. Two classes of applications would be exempted: (1) those for permits to build projects on vacant sites or projects replacing single family homes ; and (2) applications to build wholly affordable projects. The latter exemption is suggested as consistent with the purposes of the moratorium. The former is suggested to safeguard the ordinance from legal challenge.

If adopted, the proposed ordinance would be in effect for forty-five days. Prior to the end of that period, staff will make recommendations as to the length of any extension needed to evaluate possible changes in City law or policy. In general, staff intends to propose the shortest possible moratorium period consistent with the City=s needs.

The proposed emergency ordinance would take effect on the date of its adoption. Staff does not recommend retroactive application because of possible legal challenges. However, if the Council determines that retroactivity is necessary to safeguard the City=s welfare, staff recommends that Council consider adopting a hardship exception.

There is no direct fiscal and budgetary impact because the ordinance=s duration is only 45 days.