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HomeMy WebLinkAbout2017-05-09 - AGENDA REPORTS - PROPOSED UPDATES MUNICODE 6.02 (2)Agenda Item: 13 CITY OF SANTA CLARITA AGENDA REPORT NEW BUSINESS CITY MANAGER APPROVAL: fill DATE: May 9, 2017 SUBJECT: PROPOSED UPDATES TO SANTA CLARITA MUNICIPAL CODE 6.02 - MANUFACTURED HOME RENT ADJUSTMENT PROCEDURES DEPARTMENT: Community Development PRESENTER: Erin Lay RECOMMENDED ACTION City Council discuss the proposed changes and provide direction to staff. BACKGROUND Chapter 6.02 of the Santa Clarita Municipal Code (SCMC 6.02) - Manufactured Home Park Rent Adjustment Procedures, was implemented in 1991 to protect manufactured home Park Residents from excessive space rent increases, while recognizing the right of the manufactured home Park Owners to receive a fair return on their property and sufficient rental income to cover reasonable costs. The State of California Department of Housing and Community Development retains jurisdiction for most issues related to manufactured home parks, including park operations, sales and registration, leases, maintenance, and construction permits. The City's jurisdiction and authority extends only to those issues specifically addressed in SCMC 6.02 and 6.04. SCMC 6.02 provides control on the timing and amount of space rent increases in City of Santa Clarita (City) manufactured home parks. SCMC 6.02 also provides for the election of the Manufactured Home Rental Adjustment Panel (Panel) to hear appeals of space rent adjustments filed with the City by Park Residents. The Panel is comprised of two members elected by and from the manufactured home residents, two members elected by and from the manufactured home owners, and a fifth member appointed by the four elected Panel members. Over the last two years, the City Council and staff have heard concerns from Park Residents, Park Owners, and the Panel regarding the difficulty of the appeal hearing process. This item is the City Council's first opportunity to discuss proposed changes to SCMC 6.02, which are intended to address those concerns. The proposed changes were presented at two public comment meetings held on April 3 and 4, and to the City Council Development Committee Page 1 Packet Pg. 202 (Kellar/Miranda) on April 25. Approximately 60 individuals attended the public comment meetings and provided staff with feedback on the proposed changes. Those attending also commented on other issues related to the current implementation of SCMC 6.02. Based on concerns expressed at the public comment meetings, the City intends to reach out to the Park Owners to encourage them to consult with City staff during the development of Space Rent Adjustment Notices, to ensure all the requirements of SCMC 6.02 are being met, and residents are being provided all the information required. The City will also encourage Park Owners to keep open lines of communication with Park Residents if Capital Improvements/Capital Replacements are planned by notifying the residents of the scope and timing of those improvements prior to the start of the project. Other comments are discussed later in this report. The proposed changes have been developed to address a number of on -going concerns related to the administration of SCMC 6.02. In response to updates to SCMC 6.02 adopted in 2015, more appeals are being filed as Park Owners propose higher rent increases to recover funds used to maintain the parks. This trend is expected to continue. In recent years, including years prior to the 2015 update, the appeal process has become more difficult and protracted, with each individual appeal taking months to adjudicate. In Fiscal Year 2015-16, six appeals were heard by the Panel, with the appeal process lasting from November 2015 through July 2016. In Fiscal Year 2016-17, three appeals were heard by the Panel, with the appeal process lasting from November 2016 through February 2017. Panel meetings have become polarized during the appeal process. Issues of Concern Panel members, Park Owners, and Park Residents have contacted staff repeatedly to express their concerns about the difficulty of the appeal process. They have further stated their belief that Panel members make decisions for the benefit of their particular constituency, with Park Owner representatives making decisions which benefit Park Owners, and Park Resident representatives making decisions which benefit the Park Residents. Each year, hundreds of City staff and City Attorney hours are spent on the administration of SCMC 6.02. Time is spent addressing legal issues that arise related to Panel appeal hearings and lawsuits brought by Park Owners related to Panel appeal hearings. In the past two years the City has spent several hundred -thousand dollars on direct staff time and legal services. Proposed Changes The City continues to be aware of the need to balance the needs of the Park Owners and Park Residents. The proposed changes to SCMC 6.02 are crafted with that balance in mind. One of several proposed changes for the City Council's consideration is replacing the Panel with an Administrative Hearing Officer (Hearing Officer) to hear appeals of space rent adjustments. Hearing Officer(s) would be paid independent contractors, would have no ownership or residency interest in any manufactured home or manufactured home park, and would be selected using an objective and unbiased evaluation process, similar to processes used for other City contractors. Other cities utilizing the Hearing Officer concept for manufactured home rent appeals include the cities of Beverly Hills, Oxnard, Sonoma, Santa Cruz, and Hayward. Page 2 Packet Pg. 203 The use of a Hearing Officer to consider appeals addresses many concerns, and is expected to result in faster resolution of appeals, reduced costs associated with implementing SCMC 6.02, and the elimination of perceived bias for either Park Residents or Park Owners. A process led by a Hearing Officer should result in appeals moving forward faster than a Panel -led process, as a Hearing Officer with experience in understanding and interpreting ordinances could make decisions quickly and based upon the facts of each appeal. The City would seek a pool of qualified Hearing Officers, allowing multiple appeals to be heard within the same time frame. The amount of City staff and City Attorney time dedicated to appeals will be reduced, as a Hearing Officer should not need much direct assistance of City staff or the City Attorney. Costs associated with appeal -related meetings would also be reduced, since second meetings to adopt resolutions would no longer be required. Use of a Hearing Officer would eliminate any perceived bias for either Park Residents or Park Owners, since the Hearing Officer is a contracted third -party. Additionally, Hearing Officers would be bound by the limitations and requirements of SCMC 6.02. A number of concerns expressed at the public comment meetings will also be addressed by the use of a Hearing Officer. Some comments were related to the difficulty that the Panel has had in the past with the definitions of Capital Improvement and Capital Replacement, and suggested the possible modifications or the addition of new definitions. The current definitions are based on federal and state tax law, and were not proposed for change in this update of SCMC 6.02. The City believes that a qualified Hearing Officer will have the experience and knowledge -base to apply the current definitions and the current federal and state tax law to any proposed increases. This is expected to result in decisions which are clearly supported by the limits of SCMC 6.02 and by the law. The use of a Hearing Officer who is not involved in the day-to-day administration of SCMC 6.02 should further reassure both Park Residents and Park Owners that appeals are being evaluated in the most impartial way possible. Several other changes to SCMC 6.02 are also proposed, including: • Addition of resident names to "list of affected residents" in the Notice of Space Rent Adjustment • Remove the definition of resident • Expansion of the definition of who may sign on the signature page of an Appeal Petition • A set start -date when adjustments are appealed Other proposed changes include clarifications and explanatory language related to difficulties experienced by the Panel in applying SCMC 6.02 to appeals over the last several years. Those changes include: • Clarification on the timing of the CPI calculation • Clarification of the deadline for a Notice of Space Rent Adjustment • Clarification on the impact of late registration fees related to scheduling appeal hearings • Clarification of the acknowledgement document for the Notice of Space Rent Adjustment The estimated cost for a Hearing Officer is between $250 and $300 per hour. An appeal of Page 3 Packet Pg. 204 moderate complexity is anticipated to take an estimated 12 hours of Hearing Officer time, including the hearing itself, necessary research, and the development of a Notice of Determination. Based upon an estimate of six hearings per year, the total annual cost for the Hearing Officer to hear appeals would be approximately $21,600. Based on the information received from the public and City Council, the potential timeline for the amendments to SCMC 6.02 is as follows: • June 13, 2017: 1st Reading • July 11, 2017: 2nd Reading ALTERNATIVE ACTION Other action as determined by the City Council. FISCAL IMPACT There is no Fiscal Impact associated with this phase of the Update to SCMC 6.02. Page 4 Packet Pg. 205