Housing Policy • September 9, 2005
John Gutierrez's Condo-Conversion Summary
Attorney at law
Business and Real Estate Law
2550 Ninth Street, Suite 202
Berkeley, CA 94710
(The information provided below, and in the related presentation by Mr. Gutierrez, is merely a summary of certain general legal principles and laws applicable to or governing condominium projects. This information is intended merely for informational purposes and should not be construed as legal advice regarding any actual or proposed project. This summary is neither comprehensive in its scope or presentation of the principles or laws described below, nor is it all-inclusive of the legal principles or laws that may apply to any specific project. Consultation with a knowledgeable expert is absolutely necessary prior to undertaking a project of the type described in this presentation.)
SUMMARY OF PROPOSED
CITY OF BERKELEY RESIDENTIAL
(as of September 1, 2005)
NOTE: September 20, 2005 is the current scheduled date for the City council’s “first reading” (for adoption) of the proposed regulations summarized below. To become operative law, the regulations must be “read” twice. Such second reading could occur as early as September 27, 2005, or, if the regulations are further amended, at a later date. To inform yourself or to express your views to the city council regarding the amendment and/or adoption of the final regulations, check the city’s website (www.ci.berkeley.ca.us).
A. GENERAL PROVISIONS.
The proposed regulations summarized below apply to all condominium conversion projects for which owners file a “Request for Selection” AFTER June 17, 2005.
Condominium conversion projects for which owners filed a “Request for Selection” PRIOR TO June 17, 2005 may be eligible for approval under the City’s previous regulations. The City no longer accepts applications for projects under the previous regulations.
B. ELIGIBILITY FOR CONVERSION.
Multi-unit properties. All multi-unit residential properties (i.e., owner-occupied (TIC), rental, mixed owner/tenant-occupied, and vacant rental properties) and live-work projects.
Vacated by means of Ellis Act within twenty (20) years prior to applying for conversion.
Vacated (even a single unit) by means of owner-occupancy eviction within ten (10) years prior to applying for conversion.
Exemptions from quota.
Units that are exempted from payment of the full (12.5%) affordable housing mitigation fee (see Section 5(b) below);
Pre-existing inclusionary units (see Section 7 below); and
Priority based on percentage of “tenant-purchasers” (i.e., tenants that sign nonbinding “intent to purchase” document (to be drafted by City Manager).
One point for each tenant purchaser, except
Two points for each tenant purchaser resident for 5+ years; and
One point for owner-occupants.
Compliance with local laws
Zoning law – all units in property legally created (property records review);
Compliance with tentative map conditions of approval (if any); and
Agreement to pay affordable housing mitigation fee (AHF).
Affordable housing fee.
Amount per unit, generally: (Until 10-28-05) - 12.5% of unit sales price or 90% of appraised value at time of sale, whichever is greater.
“Golden duplexes” (50% owner-occupied on 12-31-79 and at application for conversion date), and
Property fully owner-occupied for seven (7) prior to application for conversion.
For TIC projects with less than five (5) units continuously owner-occupied since 1-1-95, or
If ALL units within building are made inclusionary units (see Section 7 below).
After 10-28-05, AHF to be calculated as the capitalized value of the “increase in the monthly cost of the condominium unit compared to the rental unit for a city-median income tenant” – i.e., a six digit number per unit! – unless the city council elects to extend the 12.5% AHF cap.
If unit owner-occupied at time conversion approved, “sale” occurs when sale or transfer to new owner.
Selection fees (to be determined),
Application fees (currently approximately $6,000 - $8,000, and
Monitoring fees (to be determined).
One-year right of first refusal (from date of DRE final public report (if 5+ units) or date of first offer for sale (if less than 5 units).
Lifetime (nontransferable) leases for ALL non-purchasing tenants (rent increases subject to Rent Stabilization Act).