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HomeMy WebLinkAbout75A - PH - PREPREQUEST FOR COUNCIL ACTION CITY COUNCIL MEETING DATE: AUGUST 20, 2007 TITLE: PUBLIC HEARING - CONTINUATION OF THE PROACTIVE RENTAL ENFORCEMENT PROGRAM (PREP) i CITY MANAGER CLERK OF COUNCIL USE ONLY: APPROVED ^ As Recommended ^ As Amended ^ Ordinance on 1~' Reading ^ Ordinance on 2ntl Reading ^ Implementing Resolution ^ Set Public Hearing For CONTINUED TO FILE NUMBER RECOMMENDED ACTION 1. Approve an ordinance to extend the $17.50 per unit annual rental inspection fee and extend the Proactive Rental Enforcement Program (PREP) for four years. 2. Approve continuation of the Gold Seal Incentive Program and funding to recognize exemplary rental properties. DISCUSSION The Proactive Rental Enforcement Program (PREP) was initially approved by the City Council in 1992 in response to a study prepared by community leaders. The study, entitled the "Mayor's Task Force on Neighborhood Standards and Preservation", proposed establishing a systematic proactive rental inspection program to address poorly maintained rental properties that were negatively impacting the quality of life of tenants and surrounding residents. After an extensive series of negotiations between representatives from the City, the rental housing industry and the real estate association, a program and operational guidelines were agreed upon. The program was to be compliance driven versus punitive and would sunset in December of 1999. Upon completion of inspections in several designated neighborhoods and one round of city-wide inspections, the program was twice renewed for four years, first in 1999 and later in 2003. When the PREP program was initially approved, the rental housing industry requested a provision be included that would reward rental owners who have displayed exemplary maintenance and management practices, and who have not created service demands from Community Preservation or the Police Department. This provision was labeled the Gold Seal Incentive Program. The primary benefit for rental owners who can successfully complete a three stage qualification process and receive Gold Seal recognition is an exemption from the annual $17.50 per unit fee for a period of four years. Through 2006, three Gold Seal application periods 75A-1 Continuation of PREP August 20, 2007 Page 2 have been held. The exemptions for rental owners currently participating in the Gold Seal program are scheduled to sunset along with the PREP program in December 2007. An early continuation of the program by the City Council will allow time for a Gold Seal application period to be conducted in 2007 and no break in rental fee exemptions for those that can re-qualify. The present funding for the Gold Seal program is $110,000, which provides for 6,285 units to receive exemptions from the $17.50 per unit annual fee. The primary concentration of the PREP inspections is on the exterior maintenance of rental properties, such as poor landscaping, unsightly paint, damaged fencing, illegal storage or inoperable vehicles. Should a condition be observed that leads to suspicion of a more serious issue being present on the property, or within the structure, a thorough inspection is conducted. The PREP team also responds to all complaints received by Community Preservation pertaining to rental properties As awareness of the PREP program has grown, rental owners understand their properties will be routinely surveyed. This has led to an increasing number of owners regularly monitoring their properties and correcting unsightly conditions as they may occur. Unfortunately, another sizable number of rental owners still does not demonstrate diligence in their management and lets their properties to repeatedly regress into eyesores. These are the properties requiring continued regular proactive inspections by the PREP staff. Each year, PREP inspectors survey one-fourth of the City, using the Police reporting districts as a guide. All rental housing in the quadrant is surveyed and those with deficiencies are issued notices to correct the conditions. The on-going challenge for PREP is to maintain improvements made in the completed areas, while moving on to conduct inspections in the next quadrant. Properties that rapidly deteriorate generate most of the complaints received by the PREP staff. Two notable achievements of the PREP program since inception are a dramatic decrease in the number of complaints being received for rental properties and a substantial financial reinvestment to upgrade Santa Ana's rental housing. The percentage of complaints for rental properties has dropped from 75~ in 1992 to 14~ in 2003. This is due to the proactive nature of the program and inspectors addressing conditions on the rental properties before the neighbors are compelled to file a complaint. In terms of reinvestment, PREP inspections have been responsible for in excess of $4 million dollars being put back into the City's rental housing stock through 2006. The PREP program has proven beneficial to Santa Ana by maintaining the City's rental housing at an acceptable standard. The program receives positive reviews from residents for the improved appearance of their 75A-2 Continuation of PREP August 20, 2007 Page 3 neighborhoods and from the rental housing industry for abiding by the approved guidelines and not generating complaints to their respective associations. As both apartment associations will attest, there have been very few complaints regarding PREP since inspections began in 1993. Almost all the complaints received were from property owners who were denied Gold Seal benefits. The owners had an opportunity to appeal their denial to the Rental Housing Task Force, which could either uphold or overturn the denial. With proven success in reducing complaints received for rental properties, noticeably improving the appearance of many rental properties and maintaining continued support of the rental housing industry, the Planning and Building Agency is requesting the extension of the PREP program for another four year term to allow continued inspection of all rental housing in the City. It is also requesting the authorization of the required funding for the Gold Seal Incentive Program. The Rental Housing Task Force has unanimously endorsed extending the PREP program for another four years contingent upon no changes to program guidelines, policies, or funding, and continuation of the Gold Seal Incentive Program (Exhibit 1). Environmental Impact The PREP program is exempt from CEQA pursuant to Section 15061(b)(3) of CEQA Guidelines in that it can be seen with certainty that extension of the existing rental inspection program will have no possible significant effect on the environment. Additionally, extension of the PREP program is further exempted pursuant to the Class 21 Categorical Exemption, Section 15321 of the CEQA Guidelines, which exempts enforcement actions of regulatory agencies. Categorical Exemption No. ER 2007-123 has been.. adopted for this program. FISCAL IMPACT Funding for the Proactive Rental Enforcement Program is derived from a $17.50 per unit per year fee for all rental units in Santa Ana. Annual revenue is expected to be $454,160 with program costs anticipated to be $641,923.92. The costs not funded by the PREP fee will be accounted for in the Planning and Building Agency's operating budget. APPROVED AS TO FUNDS AND ACCOUNTS: M. Trevino ~~'rancisco Gutierrez Executive Director Executive Director Planning & Building Agency Finance & Management Services Agency~+' DH:rb rb/reports/PREP Cont Aug 2000 75A-3 RENTAL HOUSING TASK FORCE PROACTIVE RENTAL ENFORCEMENT PROGRAM July 18, 2007 Jay Trevino, Executive Director Planning & Building Agency City of Santa Ana P. O. Box 1988, M-20 Santa Ana, CA. 92702 Re: PREP Program Deaz Mr. Trevino: This letter is to advise you that, at the June 26`h meeting of the Rental Housing Task Force, of which I am Chairman, the members voted unanimously to endorse extension of the PREP program for an additional four years through December 31, 2011. Our endorsement is conditional with the understandinG that there will be no chances to the current oaerational Guidelines, the fee structure or to availability of the Gold Seal Incentive Program. I represent the Apartment Association of Orange County and have been a member of the Task Force since the inception of PREP in 1992. I have been pleased with the City of Santa Ana's commitment to operating the program in complete compliance with the originally approved policies and procedures. The other members and I look forward to this cooperative working relationship continuing. The Rental Housing Task Force is requesting the Santa Ana City Council to approve the four yeaz extension of the PREP program with the understandings stated above. Sincerely, /~- l ~-- Ray Ma i, Chairman Rental Housing Task Force cc: Miguel Pulido, Mayor Dave Ream, City Manager EXHIBIT 1 75A-4 a a 0 0 0 0 U U a c L d u ° ° o on on C C R R L iR.. p p a y vi W 6~ d G~ d ~, c,., ci.w d d O ~ ~ a O O O ~+ ~+ L' a+ ~+ ~+ w R R R R R O O 6> a ++ Y~~~ W W R .O O R R ,~ R. G d d ~ ~ ~ d d d G> GJ 6> 6> ~~ p d~ c~a;rxc~ Fx a ~~ ~~ 3 ~aaa w~ a L~ ss~ ~ EE~E c a. o o u 8 E 8 E v ~ ~ dd v°~v°~ A: UUUU cG ~ ~ o O Z W a c W H.y .. ,~ o y ~u Q ~ ~ ~ ~ w ~ •~ y O F- O Z ~ ~~ d o d d _ C axi ~ = ~° ~ a~L•~o w ~~ R~ ~ ~~°~N a u ~H U v>> ~ o ~ u s U w u ,., m ~j ~ L vi C7 ~..~ C m R ~ ti a R i" ~ C1. R y r '~ C as ~~ w3 >o ww3~~ ~' L •O d d Q-i/ r C y ~ ~' R ~ 3 0 =_~ .L ~, ~ °o~ R U ~ C ~ C Q! ~ ~ ~ ~ ~ ~ `° ~ U 'i1"i e3e u pa ~ a~ U u ~ ~~/ C~~C R rL~, x ~ ~C~C~I A ~ ~ N N A A M Q/ 'k /-i ~ W~ -X Jwf/lar 8.20.07 ORDINANCE NO. 2007- AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SANTA ANA AMENDING SECTION 21-120r.1(a) OF THE SANTA ANA MUNICIPAL CODE TO EXTEND THE FEE CHARGED TO FINANCE THE CITY'S PROACTIVE RENTAL ENFORCEMENT PROGRAM. THE CITY COUNCIL OF THE CITY OF SANTA ANA HEREBY ORDAINS AS FOLLOWS: Section 1. The City Council hereby finds, determines and declares as follows: A. In June of 1990 the Mayor's Task Force on Neighborhood Standards and Preservation recommended the implementation of a mandatory inspection program for all residential rental properties in the City of Santa Ana. B. On July 19, 1992, representatives from the Planning and Building Agency and various apartment associations met and reached agreement on the Proposed Proactive Residential Enforcement Program. C. The purpose of the proposed program was to promote public health, safety and welfare through a proactive program of periodic and systematic inspections of all residential rental properties in the City of Santa Ana. D. The spirit of the proposed program was to promote environments in which unsanitary conditions and life safety hazards are reduced for occupants of residential rental properties and inspection would ensure that building systems providing water, sewage disposal, heating and electricity are safe and operational and encourage the residential rental industry to affect repairs and conduct preventative building maintenance before deteriorated conditions upon rental property reach gross proportions. E. The adoption of the Proactive Rental Enforcement Program necessitated increased staffing to focus enforcement efforts exclusively on the identified proactive rental inspection areas. Ordinance No. NS- _ Page 1 of 6 75A-6 F. The additional staff positions and operational costs were proposed to be borne through the adoption of an annual inspection fee assessed to members of the residential rental industry who voluntarily chose to engage in the business of residential rentals. G. All fees assessed under proposed program bear a direct correlation between the amount of the fee and the actual cost of the services provided. Therefore, all fees charged under the Proactive Rental Enforcement Program are used only to pay for the administration, enforcement, implementation and other services specifically related to PREP. H. The $17.50 per unit annual fee was proposed to cover only the cost of the additional staff and operational costs associated with the Proactive Rental Enforcement Program and would be used to fund only the cost of the program and not on-going complaint-driven code enforcement activities. The Program's focus shifted in 1999 to include complaint-drive code enforcement activities related to rental housing. In light of the fact that the Planning and Building Agency did not have the necessary resources for the collection of the proposed inspection fee and for the ease and convenience to the residential rental business industry, the $17.50 surcharge fee was proposed to be collected with the business license tax already paid by persons operating such a business on an annual basis. J. The proposed program provided for initial inspections of all residential rental properties, unless exempted, within designated proactive rental housing code enforcement areas; as well as, reinspection of each property after completion of the initial inspection period. K. On August 3, 1992, in response to the recommendation of the Mayoral Task Force committee and to address the growing concerns of the community regarding the deterioration of residential rental units in the City as it related to issues of life, health and safety, the City Council of the City of Santa Ana adopted an ordinance creating a $17.50 surcharge fee to fund the cost of a residential rental inspection program. L. The ordinance established a sunset date of December 31, 1999 for the $17.50 fee to allow fora "seven year period to undertake the program and evaluate its impact", thus "providing a time frame sufficient to fully monitor [itsj results". M. The ordinance also provided that any extension of the surcharge fee beyond the sunset date would require further action by the City Council. Ordinance No. NS- _ 2 Page 2 of 6 75A-7 N. On June 20, 1994, the City Council adopted Resolution No. 94-026, which approved and adopted the "Gold Seal Incentive Program" whereby particular residential properties or residential apartments may be certified as having met standards of excellence in property maintenance and as certified, would be exempted from payment of the surcharge fee for a three-year period. O. In October 1999, the City Council adopted Ordinance No. NS-2408 which extended the PREP fee until December 31, 2003 based on a fee study. P. This 1999 fee study reported that funding the cost of the required staff and operational costs associated with the continuation of the Proactive Rental Enforcement Program would amount to an estimated $608,410. The 2003 fee study for PREP reports an increase in required staff and operational costs from $608,410 to $617,360. O. In 1999, business license records indicated an inventory of 28,500 rental units generating $498,750 in revenue. Business license records for calendar year 2003 indicated an inventory of 27,231 rental units, 958 less than in 1999 which, at $17.50 per unit, generated annual revenue of $476,542. R. From 1999 to 2003, the decrease of 958 rental units and increase in staffing and operational costs created a further widening of the deficit between program costs and revenue generated by the Rental Inspection Fee. S. To offset a percentage of the revenue versus costs deficit in the 1999 program budget, and given that inspection emphasis for the extension was to be placed primarily on the exterior of the rental properties, PREP staffing was reduced form six to five inspectors. T. Staffing for the PREP program during the extension period of calendar years 2004 through 2007 was reduced from five to four. U. It is anticipated that, for the 2008-20011 extension, the Proactive Rental Enforcement Program will generate $454,158.73 a year in revenue based upon the $17.50 fee per unit and the estimated number of units (approximately 25,951). V. A fee study conducted for the calendar year 2006-2007, found that the Proactive Rental Enforcement Program will cost the City of Santa Ana $641,923.92 a year. W. It is anticipated that the deficit for the Proactive Rental Enforcement Program will be $187,765.19 a year for the extension period of 2008-2011. Ordinance No. NS-_ Page 3 of 6 75A-8 Currently, the PREP program continues to have four inspectors and based upon the revenue and costs projection, that is not expected to change. X. Continuation of Proactive Rental Enforcement Program is essential to the neighborhoods in Santa Ana to provide assurances that the rental housing will not be allowed to revert to the condition which led to the initial concerns for the implementation of an inspection program in 1992. Y. Recurrent poor management by rental owners has become a challenge for the Proactive Rental Enforcement Program inspectors in maintaining improvements gained in the previous areas while conducting inspections in the next neighborhood. Z. In an effort to continue monitoring the results of the program, PREP will continue for another four-year period, commencing on January 1, 2008 and will sunset on December 31, 2011, to allow for review of the program Section 2. In accordance with the California Environmental Quality Act, the recommended action is categorically exempt from further review per section 15321, Class 21, as the project involves an enforcement action by a regulatory agency to allow the continuation of an inspection program. A Categorical Exemption for Environmental Review No. 2007-123 will be filed for this project. Section 3. Section 21-120r.1 of the Santa Ana Municipal Code is hereby amended, which amendment only extends the sunset clause currently in said section from 2008 to 2011, to read in full as follows (deleted text in strikeout and added text in bold are included for tracking purposes only): Sec. 21-120r.1. Residential Rental Surcharge. (a) Except as otherwise provided in subsection (b) of this section, the business license tax for residential property rental and residential apartment rental shall consist of the amount set forth in subsections (2) and (3) of section 21-120r plus an annual surcharge of seventeen dollars and fifty cents ($17.50) per each property rental unit or each apartment rental unit. The surcharge hereby established shall be due and payable and shall be paid at the same time and in the same manner that the amount due under section 21-120r is due and payable. No business license shall be issued unless the surcharge is paid. Penalties and interest shall be assessed upon the total amount due and unpaid at the rate specified in this chapter until such time as both the amount due under section 21-120r and the surcharge due under this section are paid in full. All provisions for the enforcement, collection and recovery of unpaid business license taxes shall likewise apply to the enforcement, collection and recovery of any unpaid surcharge. Notwithstanding any provision of Ordinance No. NS- _ 4 Page 4 of 6 75A-9 this chapter to the contrary, the amount of the surcharge shall not change except by amendment of this section. This section shall expire on, and be of no further force or effect after December 31, 2092 2007. (b) The city council may, by resolution, establish a program whereby particular residential properties or residential apartments, licensed pursuant to this chapter, may be certified as having met standards of excellence in property maintenance. In such event, the executive director of the planning and building agency shall be responsible for the implementation of that program. Owners of property certified pursuant to that program shall be exempt from the payment of the surcharge specified in subsection (a) of this section for the three (3) tax years next succeeding the time of such certification. The executive director of the planning and building agency shall provide the executive director of the finance and management services agency with listings of licensed properties certified under this program, which shall be periodically updated to reflect changes. The city council may provide for such financial limitations on the exemptions to be granted from the surcharge as the city council deems appropriate. Section 4. If any section, subsection, sentence, clause, phrase or portion of this ordinance is for any reason held to be invalid or unconstitutional by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this ordinance. The City Council of the City of Santa Ana hereby declares that it would have adopted this ordinance and each section, subsection, sentence, clause, phrase or portion thereof irrespective of the fact that anyone or more sections, subsections, sentences, clauses, phrases, or portions be declared invalid or unconstitutional. Section 5. Neither the adoption of this ordinance nor the repeal hereby of any ordinance shall in any manner affect the prosecution for violation of ordinances, which violations were committed prior to the effective date hereof, nor be construed as affecting any of the provisions of such ordinance relating to the collection of any such license or penalty or the penal provision applicable to any violation thereof, nor to affect the validity of any bond or cash deposit in lieu thereof, required to be posted, filed or deposited pursuant to any ordinance and all rights and obligations there under appertaining shall continue in full force and effect. ADOPTED this day of 2007. Miguel A. Pulido Mayor Ordinance No. NS-_ Page 5 of 6 75A-10 APPROVED AS TO FORM: Joseph W. Fletcher, City Attorney By: Laura Rossini Deputy City Attorney AYES: Councilmembers NOES: Councilmembers ABSTAIN: Councilmembers NOT PRESENT: Councilmembers CERTIFICATE OF ATTESTATION AND ORIGINALITY I, PATRICIA E. HEALY, Clerk of the Council, do hereby attest to and certify that the attached Ordinance No. NS-XXX to be the original ordinance adopted by the City Council of the City of Santa Ana on ,and that said ordinance was published in accordance with the Charter of the City of Santa Ana. Date: Clerk of the Council City of Santa Ana Ordinance No. NS- _ 6 Page 6 of 6 75A-11 75A-12